The Struggle For Economic Reform

By Isis, Dennis, and Jayden

Steps Towards Capitalism

After the Soviet collapse, Russia tried to move quickly toward a capitalist system.

In January 1992, Russia removed the price controls that had been set by the Soviet government on goods sold within the country, which the prices of many goods increased by 250 percent.

In that same year, Russia began to sell government-owned businesses to individuals and private companies. this process was called privatization.

Russia began to sell government-owned businesses to individuals and private companies. In 1998 an economic crash in Russia happened because people could not pay there vouchers. In spite of this shaky start over 60% of percent of the country's workforce worked in the private sector.

By the end of the 1990s nearly 40% of the Russian population lived far below the poverty line.

Obstacles to Economic Reform

Distance Decay

Distance decay is where there is long distances between places make communication and transportation difficult.

Russia covers 11 time zones. There are a total of 89 different regional governments.

In the spring of 2000, Russian President Vladimir Putin created seven large federal districts to gain more control over regional leaders.

Organized Crime

Russian Mafia was formed in the 1990s.

By the end of the decade the mafia created its own economy. In 1998 it was estimated criminals controlled 40% of private companies and 60% of state-owned enterprises.

The growth of organized crime has slowed economic reform by rewarding illegal activity over honest business.

Russian officials have taken initiatives to combat organized crime, which includes the addition of more officers to a special tax police.

Future Prospects

In 2001 there was a report of increased revenues.

Global economic crisis in 2008 struck Russia hard and unemployment increased drastically. By 2010, the situation had improved somewhat.

Russia's political future is also cause for concern. President Putin had tightened control of Russian's freedoms.

Later in 2008 Dmitry Medvedev was elected president of Russia, but Putin was named Prime Minister.