Varsity-Packet-Final

The last thing moscow needs is heightened market

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: poorest is widening. Against the backdrop of Middle East uprisings, a combination of top-level complacency, corruption and conspicuous consumption is potentially risky. Experts suggest conditions in Russia are very different from the Middle East. Poverty is far less extreme, its leadership has not been in power for decades; its population is passive and ageing. Polls suggest support for President Dmitry Medvedev and Vladimir Putin, prime minister, remains at about 70 per cent. 9|Page Russian Oil DA Affirmative BDL Internal Link Turn – High Oil Prices Discourage Russian Economic Reform [____] [____] High prices result in economic stagnation and civil disorder Aleh Tsyvinski and Sergei Guriev, Professor of economics at Yale University, Director of the New Economic School in Moscow, 2010 (July – August, Russia's "Resource Curse": How High Oil Prices Are Stunting Reforms, http://www.oilandgaseurasia.com/articles/p/123/article/1273/) Can Russia escape the "resource curse” implied by high oil prices, or will it succumb to what we call a "70-80” scenario? That is the question confronting Russians today, and we fear that their fate will be the latter: if oil prices remain at $70-80 per barrel, Russia is likely to relive key features of the Brezhnev era of the 1970s and 1980s ― with a stagnating economy and 70-80 percent approval ratings for its political leaders. The resource curse means, of course, that Russian elites will prefer to postpone restructuring the economy and modernizing the country’s political and economic institutions. This will undermine economic performance, making it very unlikely that Russia will catch up with the advanced economies in the next 10 -15 years, as officials promise. Fast and sustainable economic growth requires the rule of law, accountable, meritocratic, and noncorrupt bureaucrats, protection of property rights, contract enforcement, and competitive markets. Such institutions are difficult to build in every society. In Russia, the task is especially problematic, because the ruling elite’s interests run counter to undertaking it. In post-crisis Russia, the resource curse is reinforced by two factors. First, massive renationalization since 2004 has left state -owned companies once again controlling the commanding heights of the economy. These firms have no interest in developing modern institutions that protect private property and promote the rule of law. Second, Russia’s high degree of economic inequality sustains the majority’s preference for redistribution rather than private entrepreneurship. Russia’s leaders acknowledge the need for modernization, and pay it frequent lip-service, as is evidenced by President Dmitri Medvedev’s manifesto "Go, Russia!” But the incentives to escape the resource trap are weakened by the overwhelming importance of the resource rents to the wider political elite. When the economy was near collapse during the recent crisis, we thought that the government would recognize the need to push ahead with radical reforms that would eventually lead to a diverse, de-centralized, and fast-growing economy. But, whil...
View Full Document

Ask a homework question - tutors are online