Russia

Amber Sansoni

Overall score: 52.1 World rank: 143

Russia Facts/United States

Population: 142.9 million/ 316.4 million

GDP: 2.097 trillion/ 16.8 trillion

GDP Growth: 1.3%/1.9%

GDP Per Capita: $17,884/$53,101

Unemployment: 5.8%/7.5%

Inflation: 6.8%/1.5%

Foreign Direct Investment: $94 billion/$187.5 billion

Legal System

Small groups of people control most of the legal system. The judiciary branch is vulnerable and does not enforce the laws as strongly as possible. The constitution states that the judicial branch is independent from the other branches. Russia does not have Checks and Balances.Property rights are very weak. Russia's legislature is divided into two chambers- the upper federation council and the lower state duma.

Competitive Markets

There is not much competition in Russia because of privatization and the geography. Price controls have been lifted on more than 90% of wholesale and retail goods. Manufacturing is not involved in competition because of structural impediments. Most industries are single and not merged with others. New markets are small and there is an abundance.

Limits on Government Regulation

Obstacles and regulations make Russia difficult. Getting a business can take less than four actions, completing requirements still takes over 200 days. The labor code limits employment growth. The government uses subsidies, state-owned companies, export taxes on products, and other means to influence prices. Most people will take things into their own hands rather than through the government.

An Efficient Capital Market

Russia’s tariff rate is 5.0 percent. Barriers make trade difficult. The government can discriminate against foreign investment, and investment in several parts of the economy. The financial part stays subject to state interference. The government has some ownership in the banking, and the central bank has become a single financial market regulator. Russia needs stronger enforcement to help their regulations.

Monetary Stability

Even though the Russian authorities have maintained financial stability, the financial system is still weak. The crisis has set back progress toward a banking system for the future. The recent supervision of banks is an opportunity for strengthened oversight. A more structured action plan and a unified administration plan for all banks, with powers for the administrator, would help strengthen the system.

Low Tax Rates

Russia has high tax rates and it totals 28.7% of income. Russia’s top individual income tax rate is 13 percent, and its top corporate tax rate is 20 percent. Other taxes include a value-added tax and an environmental tax. Government costs amount to 37.5 percent of production, and public debt is equal to 13 percent of products.

Free Trade

Russia has trade agreements with many places. They will sometimes use national currencies. Russia gets raw materials from the places they trade with. Some trades improve business investments. Due to competition customers will benefit from lower prices and higher quality.
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