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Extra paragraphs - export earnings have allowed Russia to...

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As both countries developed, they needed some assistance. China purchased many of their goods using some form of credit leaving them in $315 billion in external debt. Although debt accumulated, China never asked to receive economical aid. Russia, on the other hand received over a billion dollars in economic aid. From the United States in 2001, the Russians were given $979 million, including $750 million in non-proliferation subsidies, and in 2001 the European Union gave Russia $200 million in 2004. Russia also accumulated external debt, though not as much as China, it was comparable. Russia owed $282 billion in external debt to a number of countries and only recently finished repaying these debts. Over the past several years, Russia has used its stabilization fund based on oil taxes to prepay all Soviet-era sovereign debt. Much of this debt is owed to Paris Club creditors and the IMF. Foreign debt has decreased to 39 percent of GDP, mainly due to decreasing state debt. However, commercial debt to foreigners has risen strongly. Oil
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Unformatted text preview: export earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to over $315 billion at the year-end of 2006. Both countries began as communist countries with a communist economy. Over the years, communism has remained but the economy has changed. China’s process of slowly integrating free-market values into their system proved extremely successful in terms of profit. As a very traditional country, it modernized itself slow enough to withstand the transition and earlier enough to reap the benefits of capitalism. Russia’s rapid transformation proved to be galvanizing, leaving its rulers with one choice – shock therapy. While the country was dealing with the Cold War, Russia was not economically prepared to join the global free-market. The conversion proved to stressful for Russia’s underdeveloped economic infrastructure. With debt and economic aid, Russia emerged through adversity, though it was a long journey filled with hardship....
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