Russia Moves Into The Global Economy

The aim of this study is to explain the present state of Russia's political economy in the light of the past, for the future. Three phases have been identified in Russia's successful economic transition since the crisis of August 1998. Phase one was associated predominantly with an effective depreciation in the value of the ruble, which is a necessary condition for macroeconomic stabilization. It brought Russia's cost-price structure - in the non-energy fields - in line with international competitive conditions. This phase had practically nothing to do with the price of oil. Phase two was driven primarily by the sharp rise in world energy prices. The third phase represented a continuum of phases one and two, with successes and setbacks of President Putin's administration. This phase incorporated, as much as intellectual decencies permit, an objective analysis of the Yukos crisis. The evidence indicates that the crisis had a seriously damaging effect on the performance of the Russian economy.