Russia's Shift to a Market Economy

• As Russia works to strengthen its economy, citizens also face ethnic unrest, rising crime, and declining health and social services.
• Under Communist leaders, the Soviet Union operated as a command economy where the government owned banks, factories, farms, mines, and transportation systems.
• The government emphasized heavy industry, making the Soviet Union an industrial giant and a world power, however consumer goods suffered.
• By the 1970s and 1980s, Western and some Asian countries shifted focus from heavy industry to computer technology and global communications.
• The Soviet economy stagnated as it did not shift focus.
• When Gorbachev came to power in 1985, he began a move away from a command economy to a market economy and started a reform program.
• Boris Yeltsin expanded Gorbachev's process.
• When Russia and other Soviet republics became independent, they eliminated most remaining economic controls.
• Boris removed 90% of price controls and encouraged mass privatization of state-owned companies and industries.
• Widespread corruption complicated the privatization process in the new Russia.
• Illegal behavior damaged the economy and absorbed investment funds
• The Russian economy experienced ups and downs throughout the 1990s.
• Between 1990 and 1995, the total value of goods and services produced in Russia fell by 50%.
• Following a 1998 financial crisis, the ruble, Russia's currency, lost 75% of its value, prices rose again.
• Yeltsin resigned as president of Russia in 1999, Vladimir Putin replaced,
• Problems weakening Russia's economic stability:
  • Inefficiently managed government
  • Budget shortfalls
  • Unclear property rights
  • Unstable currency
  • Corruption
  • Organized crime
• Under the Soviet system, farms were organized into state-controlled kolkhozes and soukhozes.
• In 1991, Yeltsin started restructuring state-run farms to better function in a market economy.
• Russia's most important industry is petroleum extraction and processing; Russia is one of the world's largest producers of goods and services.
• Most industries are in the Volga Valley, near Moscow and St. Petersburg, and in the Ural Mountains.
• A major highway system links Moscow with other Russian cities, many roads are in poor repair.
• Due to its size and climate, Russia depends on railroads and waterways for most transportation
• The Trans-Siberian Railroad is the greater part of the rail route from Moscow through Siberian steppes to the Pacific port city of Vladivostok.
• Private car ownership doubled in the 1990s, however public transportation remains a practical option for Russians.
• Once the only passenger airline in the Soviet Union, at its peak, Aeroflot carried 35 million people a year.
• A complex maze of pipelines crisscrosses Russia, providing major cities and parts of western Europe with fuel.
• During the Soviet Union, the state owned and controlled all mass communication systems.
• Russia is increasingly focused on becoming a full partner in the global community by expanding international trade and building political and financial relations.
• Russia makes up a major source of energy and fuels
• Top trading partners include the US, EU, other former Soviet republics, China, and Japan.
• Russia became a member of the Asia-Pacific Economic Cooperation forum in 1998 to strengthen its industries.
• Negotiations continue for Russia's membership in the WTO

Section 2

• Russia's main challenge is managing its resources while addressing past environmental disregard.
• Improving the environment and repairing damages are the second challenge.
• The timber industry is one target for improvement.
• People have joined to oppose a mining operation in remote Kamchatka
• The Kamchatka Committee for the Protection of Natural Resources demanded mining companies meet strict environmental standards.