present

ECONOMIC DEVELOPMENT IN RUSSIAN FEDERATION (1991 – PRESENT] Yeltsin Era ( )Putin Era (1999-present) Shock Therapy privatization stabilization liberalization Era of Oligarchs Financial Crisis Ruble Collapse IMF to the rescue *Weak state unable/unwilling to bring economic order continuation of economic liberalization increasing strength of state root out forces of anarchy & economic order restored

SHOCK THERAPY

RESULTS OF SHOCK THERAPY Crony capitalism Phony investment schemes Capital flight Tax evasion Unstable & ineffective laws Hyperinflation 40% of Russians in poverty Declining life expectancy Decline in population Short Term

Large National Debt Higher Interest Rates Overvalued Ruble Collapse in oil prices led to ruble devaluation Financial system collapsed

ECONOMY UNDER PUTIN (1999- PRESENT) scrapped the graduated income tax for a flat tax (13%) encouraged growth of small and medium size businesses by streamlining start up process (increased 7% a year) legalized sale of land used for agriculture in 2002 expanded country’s infrastructure, social services, and education by increasing taxes on energy and manufacturing sectors encouraged the growth of the service sector to diversify Russia’s economy used legal system to allow state control over energy sectorused legal system to allow state control over energy sector and reward loyalists for their supportstate control over energy sectorreward loyalists for their support