| |
|
Course contents ( Business in Russia)
- Russian economy. Historical background. Foreign trade.
- Natural resources. Agriculture.
- Industry and energy. Yukos Oil. Gazprom.
- Environmental outlook in Russia.
- Banking and finance.
- The labor force.
- Transportation.
- Russian customs.
- Doing business.
- Negotiating in Russia
|
|
Summary:
Russia: largest country, one of the world's richest countries in raw materials, 20% oil and gas production. Modernization and productivity ...
Russia is the largest country in the world; it covers a vast amount of
topographically varied territory, including much that is inaccessible by
conventional modes of transportation. Russia is one of the world's richest
countries in raw materials, many of which are significant inputs for an
industrial economy. Russia accounts for around 20 percent of the world's
production of oil and natural gas and possesses large reserves of both fuels.
The performance of the Russian economy since the 1998 crisis has been
impressive. Between 1998 and 2007, Russian GDP expanded by an estimated 69
percent, real incomes of the population grew by 82 percent and poverty
(headcount) rates were cut more than in half to below 14 percent. The growth has
been increasingly driven by domestic demand supported by ample liquidity due to
high prices on Russia's main export commodities - oil,
gas and metals.
Unprecedented macroeconomic stability was achieved in the context of strong
budgetary and current account surpluses. Important reforms in areas such as
taxation, budgetary institutions, and the removal of administrative barriers to
business facilitated the rapid development of market institutions in many areas.
Modernization and productivity growth outside the oil and gas sector have been
important contributing factors to the recent expansion, although major
strengthening of oil, gas, and other prices on Russia's commodity exports also
gave a new boost to economic growth since 2003.
Russia's GDP, estimated at $1,250 billion at 2007 exchange rates, increased by
8.1% in 2007 compared to 2006. Continued average inflation of approximately 10%
and strict government budget led to the growth, while lower oil prices and ruble
appreciation slowed it. As of November 2007, unemployment in Russia was at 5.9%,
down from 10.4% in 2000. Combined unemployment and underemployment may exceed
those figures. Industrial output in 2007 grew by 6.3% compared to 2006, driven
by investment growth and private consumption demand.
The transportation system during the Soviet period was organized in the form of
vertically integrated monopolies controlled by the central government. Thus, for
example, the same administrative agency owned and operated the airports,
airlines, and enterprises that manufactured aircraft.
Privatization in Russia has prompted profound changes in the socioeconomic life
of the country, including fundamental shifts in society, capital, and political
power. The outcomes of privatization efforts will in many respects determine
socioeconomic and political conditions in Russia not only during the
contemporary transitional period but also far into the future.
Economists have predicted several worst-case scenarios for Russia. A drop in oil
prices coupled with a strengthening ruble could lead to a banking crisis as the
flow of currencies reverses. In other variant, Russia could catch "Dutch
disease:" high export prices strengthen the currency, encouraging imports and
collapsing local industry.
Foreign companies, which are planning to do business in Russia, will have to study
Russian mentality. They have to take into consideration the Russian character, learn to understand the Russian people and build upon it. Overall, the best way to do business in Russia is to understand, and accept, that things happen differently. Therefore you have to adapt and evolve your own mindset accordingly in order to fully exploit the market. The benefits of understanding Russian business etiquette cannot be underestimated.
Russian and the European Union / World Trade
Organization
Russia has signed aprotocol with the European Union on its terms for entry
into the World Trade Organization. The EU's support removes a major obstacle to
Moscow's ambition of becoming a member of the trading bloc.
It also important to remember that, not so long ago there was the largest
country in the world, the USSR. It consisted of 15 republics that all worked
together under one system and towards one common goal. The whole economics of
the USSR was build upon dependency of one republic upon another. A manufacturer
of military aircraft in Uzbekistan was getting many components from factories in
Armenia, different spare parts from manufacturers in Belarus, equipment from
Ukraine, etc... This was the way everything was functioning and working. Despite
its break-up, connections between former Soviet Republics are still strong.
It should be remembered that Russia and the other former Soviet Republics are
now in times of deep economic and social transformation which are not, by any
means, finalized.
A decade after the implosion of the Soviet Union in December 1991, Russia is
still struggling to establish a
modern market economy and achieve strong economic growth. In
contrast to its trading partners in Central
Europe - which were able to overcome the initial
production declines that accompanied the launch of market reforms within three
to five years - Russia saw its economy
contracts for five years, as the executive and
legislature dithered over the implementation of many of the basic foundations of
a market economy. Russia achieved a slight recovery in 1997, but the
government's stubborn budget deficits and the country's poor business climate
made it vulnerable when the global financial crisis swept through in 1998. The
crisis culminated in the August depreciation of the ruble, a debt default by the
government, and a sharp deterioration in living standards for most of the
population.
The economy subsequently has rebounded, growing by an average of more than 6%
annually
in 1999-2001 on the back of higher oil prices and the 60% depreciation
of the ruble in 1998. The ruble's real appreciation back to its 1998 level
is making Russian goods exports less competitive both domestically and abroad.
Economic growth fell to
4% during 2002. These GDP numbers, along with a renewed government
effort to advance lagging structural reforms, have raised business and investor
confidence over Russia's prospects in its
second decade of transition.
Yet serious problems persist. Russia remains heavily dependent on exports
of commodities, particularly oil, natural gas, metals, and timber, which
account for over 80% of exports, leaving the country vulnerable to swings in
world prices. Russia's industrial base is increasingly dilapidated and must be
replaced or modernized if the country is to maintain vigorous economic growth.
Other problems include a weak banking system, a poor business climate
that discourages both domestic and foreign investors, corruption, local and
regional government intervention in the courts, and widespread lack of trust in
institutions.
Russia has proven oil reserves of 60 billion barrels, most of which are
located in Western Siberia, between the Ural Mountains and the Central Siberian
Plateau. In the 1980s, this prolific region, also known as the "Russian Core,"
made the Soviet Union a major world oil producer, allowing for peak production
of 12.5 million bbl/d in 1988 (most of which came from Russia).
Russia holds the world's largest natural gas reserves, with 1,680
trillion cubic feet (Tcf)--more than twice the reserves in the next largest
country,
Iran.
With 173 billion short tons in estimated recoverable coal reserves,
Russia holds the world's second largest coal reserves, behind only the
United States which holds roughly 274 billion short
tons. Russia's power sector includes over 440 thermal and hydropower plants
(approximately 77 of which are coal-fired) plus 30 nuclear reactors.
Russia is beneficiary of the Cotonou Agreement (European Union).
Available Language: 
Master
Executive in International Business, Global Marketing and Internationalization
- Master in Emerging
Markets
- Business in Europe
Scholarships RUSSIAN FEDERATION Россия
Russian, Economy, Agriculture, Industry, Energy, Banking, Transport, Customs, Russia, largest country, world, richest countries, raw materials, 20% oil, gas production, Modernization, productivity, Master, International Business
|
