The economy of Russia. History and conclusions

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The economy of Russia. History and conclusions

In 1991 (December 25), a new state emerged – Russia.

The economy is young, but not a market economy. In the 1990s, the growth of the gap in the economic development of the country’s regions was also determined. The culture of business turnover in industrial and business circles has not been fully formed, a sufficient number of rules for the operation of the market have not been created, and movement in this direction is extremely slow. Perhaps the support of leading industries and the manual recovery of the economy by the authorities after the collapse of the USSR, which continued after the severe fall of the economy as a result of the devaluation and default of 1998, became a pattern. Perhaps the Russian economy is moving towards the economy of manual management (the type of economic management is “manual”, “state” in the format of a planned economy).

General description of the market: the raw nature of the domestic market of Russia with a low volume of processing industries and insufficient production of goods for household needs of the population. Industrial production has been widely developed since the times of the USSR. It remains relevant today. The production of goods for the needs of the population was widely developed during the Soviet era. Due to the global development of technologies for the production of goods for the needs of the population, the production of this type began to become very outdated in Soviet times. The nature of the production of the USSR and subsequently the Russian Federation: the wide scope and slowness of any changes, the inability to carry out innovative processes. The market for the production of industrial equipment and specialized equipment in Russia has been preserved. Many industrial products are strategic in nature. The market for the production of consumer goods was lost. Attempts to restore this market by internal forces failed, this opened up prospects for Western and American companies that filled it for decades (household appliances, household chemicals, furniture, the automotive industry, tires for cars, etc.). Russia bought everything (toothpaste, cosmetics, shoes, clothing, fabrics, products, etc.) that was finished goods from abroad, because it was better than what was produced in the Russian Federation, raw materials for the production of goods inside the Russian Federation with the standards of foreign-made goods, both on its own and by the forces of those working in the Russian Federation corporations. The Russian domestic market was open to global food brands.  

Possible reasons for the loss of production of goods for consumption in the domestic market: the crisis of the political management model, the change of the economic formation and the collapse of the USSR under the influence of the USA and the West on the politicians of the USSR and Russia, the uncertainty of politicians in the correctness of the economic course and the correctness of the economic model, the blow to education and the reduction of the layer of professional managers, the adoption of universal management models of the Western and the American model, the tricky, weak and unreliable models of Western and American management (MBA and so on), the rejection of these models, the dusty state and dilapidation of own management models, the informational impact and the enhancement of the image of office workers, the catastrophic decline in the image of working specialties, the physical destruction of technical schools at the federal level (secondary vocational education). Recent events have dealt a blow to the industry as a whole. Industrial enterprises began to open their training centers.

The sanctions crisis was a chance to pick up and develop production on their own, but there are not enough professional managers, workers. Foreigners have a presence at all strategic production facilities in Russia. We can say that many productions belong to Russia only by location, but not by ownership.  The authorities thought they were “friends” with nimble financiers and politicians of Western countries. Perhaps there will be shifts in this regard. Today, capital and funds are being redistributed in the upper layers of government. Perhaps some funds (factories) will remain not in demand.

In such an economy, the state begins to control everything, to interfere in the internal affairs of business under the pretext of development assistance. All this is now being observed in our country. There is practically no legislation creating conditions for commercial activities, including requirements for such activities, rules for working in a particular market, prohibitions, restrictions. This indicates the lack of state responsibility to the sectors of the real economy. The state does not create conditions for the market, but issues directives on the development of certain industries with precise plans for such development. This speaks about the mechanisms of development of the Russian market according to the state ideology. In all other, non-system-forming sectors of the economy and the market, the state is not very trusted, although they are obliged to interact with state authorities for licensing and licensing purposes, when exercising control and supervisory functions by the state.

At the same time, the capabilities of the state are not absolute, in the format of assistance or control. In the 90s, the state was engaged in large and especially large production funds. The fixed assets of the production facilities were built under the USSR. Everyone who was bolder was engaged in medium-sized small ones. The shadow economy flourished.

Today, there is a proliferation of the state apparatus and a decrease in its effectiveness. In the 1990s, the level of taxation of individuals and legal entities in Russia was excessive and, despite the constant tightening of tax legislation, enterprises engaged in massive tax evasion. There is a significant tax burden today, there is no tendency to reduce it, on the contrary, measures are being taken to implement tight current control to fulfill the state’s plans to fill federal and regional budgets with tax funds. These are various additional checks, financial monitoring. Business, in turn, tries not to demonstrate the full volume of its income, there are trends towards an increase in cash turnover.

Business does not really like to interact with the authorities directly because of the activity of the authorities (appropriate and not), because of the large amount of time, because of the mass of specifics on such interaction (including electronic digital signatures and their turnover).

Serious overregulation of all spheres of activity aimed at establishing a large number of rules, prohibitions, the occurrence of senseless violations, a large number of regulatory authorities with the right and plans to bring business to financial responsibility, to a greater extent non-functional replenishment of federal and regional budgets creates unstable and not quality foundations for the Russian economy.

The existing market in the vastness of such an economy and business units that are not tied to the Russian authorities suffer from this internal policy, all this makes the Russian market difficult for foreign business. This determines the need for business to be “undercover” and further narrows the free market and its development prospects. This increases corruption in the Russian public administration system, ensures the bloating of the management apparatus, stimulates the expansion of the areas of attention of state bodies to the regulation of business activity of the market, and creates facts of direct conduct of market activity. Due to the lack of a free market in Russia, the burden on the state is increasing and social tension is growing. The state is trying to dilute tensions through social programs, without solving the basics of such problems; the state largely shifts responsibility to business (increasing the workload, creating requirements, and so on). The existence of a free business in Russia is possible under a very professional consulting service that we provide. Since 2008, we have been working effectively in the interests of our customers and the state and have accumulated serious experience. We are responsible for the fact that you need to know a lot about working in Russia. We monitor changes in all technical and commercial areas of activity, effectively solving incoming problems. For those who realize this, the Russian market opens up. Coming to Russia, despite its peculiarities and difficulties, makes sense, since the Russian market is raw, relatively free and has enormous potential for any kind of activity.

08.07.2022

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