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|Print version. Published on site Rusnet.NL 6 November 2003
The Russian Federation inherited a Marxist-Leninist command economy from the Union of Soviet Socialist Republics (USSR). Chief among the characteristics of the economy was an almost total absence of private productive capital. All enterprises were owned by the state, with each person receiving a salary for his or her efforts.
Farmland was also almost entirely state-owned: 95% of all farmland was either state-owned or collectivised. All economic planning was done by government officials based in Moscow. Market forces played no part in their decision-making. The workforce was estimated at about 70 million persons in 1989.
During the Gorbachev era many of the basic elements of the Soviet command economy were weakened. The policies of Glasnost and Perestroika loosened social controls. Limited private ownership of businesses and land was granted, and prices were allowed to rise in accordance with market forces.
Following the failed August Coup and independence, the assets of the Communist party were seized and a new era of a market-based economy was proclaimed. Companies were given permission to become private entities, except for those enterprises employing over 10,000 workers or providing gas, oil, or pharmaceuticals.
In 1991, Russia joined with other countries of the Commonwealth of Independent States (CIS) in a loose affiliation aimed in part at establishing a co-ordinated economic policy.
In 1992, the Russian government promised to give citizens shares in many industries, and in 1996, farmers and others were permitted to buy and sell land for the first time since the Bolshevik revolution in 1917. The rapid change from a severely controlled system to the beginnings of a market economy created chaotic conditions; some Russians profited greatly, but most suffered economic hardship as privatisation and other economic reforms progressed.
By late 1997, inflation appeared to have been brought under control and industrial production had begun to slowly increase. The country was once again plunged into economic upheaval, however, when the rouble plummeted in August 1998, following a crisis in Asian financial markets. Unable to pay its foreign debts, Russia struggled to restructure loans and keep its new financial services sector from collapsing.
By 2001, however, the Russian economy recovered and benefited from economic reforms under President Putin. Exports are dominated by natural resources, particularly oil, natural gas, nickel, and timber.
The Russian Federation possesses a well-developed road and rail network in its European third, a more limited network in Siberia, and a negligible number of roads and rail lines in the Russian Far East. Barges on the vast network of inland waterways can carry a huge amount of traffic. In E Siberia, ships carry virtually all heavy freight. Most of Russia's cities and towns are connected by air.
Physioeconomically, the Russian Federation may be conveniently divided into 9 major regions: the Central European Region, the North and Northwest European Region, the Volga Region, the North Caucasus, the Ural Region, Western Siberia, Eastern Siberia, Northern and Northwestern Siberia, and the Russian Far East.