- David Robinson, and David Owen
- Published Date:
- September 2003
© 2003 International Monetary Fund
Production: IMF Multimedia Services Division
Cover design: Massoud Etemadi
Russia rebounds/David Owen, David O. Robinson, editors - [Washington, D.C.: International Monetary Fund, 2003].
Includes bibliographical references.
1. Russia (Federation) - Economic policy. 2. Russia (Federation) - Economic conditions. 3. Taxation - Russia (Federation). 4. Banks and banking - Russia (Federation). 5. Debts, Public - Russia (Federation). I. Owen, David Edwin Wynn. II. Robinson, David O. III. International Monetary Fund.
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David O. Robinson
David O. Robinson
David O. Robinson
There have been many extraordinary economic developments in Russia over the last 10 to 15 years. Some of the most important were not predicted by Russians or outside observers.
First, the old centrally planned system was abandoned in the late 1980s and early 1990s. The first steps were taken by the Soviet Union, for example, when the government permitted non-state forms of property ownership, split the monobank (Gosbank) into a central bank and specialized commercial banks, and introduced a commercial exchange rate that responded somewhat to market forces. The fatal blows against the centrally planned system were delivered in 1992 when prices were liberalized and many thousands of enterprises were freed from State Planning Committee controls.
Second, the collapse in output as the old system fell apart was larger and longer than had been expected. Measured GDP in 1996, before the first upturn, was less than half the peak of 1990. Such an enormous collapse, even if it was not as serious on the ground as the statistics suggest, had a major adverse impact on living standards and the provision of public services such as health and education.
Third, the financial crisis of August 1998, involving a default on public debt and a devaluation of the ruble, was a massive shock to the system. It was also a considerable surprise to both Russians and foreign investors who, a year before, had believed that the worst was over.
Fourth, the recovery in the Russian economy since the 1998 crisis has been dramatic. Not only has the macroeconomic performance been impressive, but the strengthening of economic reform policies also represents a break with the very slow progress of reforms before 1998. These positive developments contrast sharply with the gloom about prospects for Russia immediately after the crisis, and the negative views that developed outside Russia following the various revelations in 1999 about corruption.
All of these extraordinary economic developments, and many others, deserve a detailed analysis and assessment. However, this book’s focus is only on the last episode, namely the recovery since the 1998 crisis. It explains why the recovery was so strong and looks ahead to the future. The emphasis is on macroeconomic and financial issues, which are of central concern to the IMF. Structural and sectoral issues are not discussed in detail, apart from the banking sector.
All of the authors are IMF staff members who have worked on Russia and know the economic situation there well. Many of the analyses and assessments in the book were those of the IMF as an institution, and some elements have been published elsewhere.1 However, the authors alone are responsible for the particular views expressed here.
This book is essentially the work of a team. The main authors of Chapters 2-7 are shown on the contents page. Many authors contributed to Chapter 1, especially Geoffrey Barnard, John Dodsworth, David Owen, Poul Thomsen, and Siddharth Tiwari. In addition, I would especially like to acknowledge the contributions of John Dodsworth, David Owen, David O. Robinson, Poul Thomsen, and Siddharth Tiwari, who coordinated the work and pushed forward the preparation of the book despite the other demands on their time. In addition to the main chapter authors, many IMF colleagues commented on various sections and chapters and the authors are grateful for their valuable contributions. I would also like to thank Marina Primorac, of the External Relations Department, who provided editorial assistance and coordinated the production, and Aidar Abdychev, Tracey Lookadoo, and Cecilia Pineda for their technical and administrative support.
Director, European II Department
International Monetary Fund
1 Accounts of this period include IMF, 2000, Russian Federation—Selected Issues, IMF Country Report No. 00/150 (Washington: International Monetary Fund); and IMF, 2002, Russian Federation—Selected Issues, IMF Country Report No. 02/75 (Washington: International Monetary Fund), and the papers prepared for the Conference on Investment Climate and Russia’s Economic Strategy, held in Moscow on April 2000. Additional references are cited at the ends of the chapters in this book.