Dutch disease is a very common condition among resource-rich nations but its effects on the body of the economy, as well as the potential cure, are always country-specific. What would it take for Russia, both politically and economically, to wean itself off the hydrocarbon windfall?
Transitional institutions cannot be effective unless economic agents are confident that the state will fulfill its commitments and that the rules of the game do not depend on the discretion of a ruler. Empirical evidence shows that democracy protects investors from expropriation better than dictatorships do, thereby resulting in faster economic growth.
Watching the drama of Russia’s private banks collapsing one by one naturally triggers fear: of more than 3,000 registered banks, about 2,600 have already lost their licenses. After the bailout of Otkritie and BIN, the government’s share in Russia’s banking system assets exceeds 80 percent. Fixing Russia’s banking system requires addressing the deep and systematic flaws in the central bank and the financial sector at large.
The Carnegie Moscow Center hosted a discussion on the changing global energy market at a time of abundant supply and high policy uncertainty, particularly in regards to American energy politics under the Trump administration.
Andrey Movchan explains what lessons Russia can learn from Mexico, the United Arab Emirates, and Venezuela to deal with the perennial “resource curse.”
Authors of more recent studies almost unanimously state that even though it’s unclear whether the resource curse generally menace on average over the group of resource-rich countries, it definitely threatens nations with weak institutions.
During a recent media call, Andrew Weiss and Andrey Movchan discussed the current stand of the Russian economy.
Carnegie Moscow Center hosted a discussion on the impact of resource dependency on the economic development of Russia and other major petrostates in a comparative context.
Having found itself in a lose-lose situation, the West will most probably do nothing—keeping sanctions in place and freezing the situation. The Kremlin will be happy. Russia won’t stop meddling in Ukraine or give up Crimea.
Russia faces bleak economic prospects for the next few years. It may be a case of managed decline in which the government appeases social and political demands by tapping the big reserves it accumulated during the boom years with oil and gas exports. But there is also a smaller possibility of a more serious economic breakdown or collapse.