The Russian Economy Introduced
The Russian economy has gone through some pretty dramatic changes in recent years and these changes look likely to continue. For many years Russia had a state controlled economy. Then they privatized it pretty much all at one time. This lead to some real chaos and the result has been a free market economy in which ownership is very unevenly distributed. There is a small group of very wealthy people in the country and a very large group of people who are quite poor. This situation is not good for future growth and it will need to change. Despite the fact the country is a free market economy there is still a great deal of government interference.
The economy of Russia is largely based on its natural resources; the country is huge and is blessed with many resources. The main one right now is oil; in fact this is becoming a real problem. There has been a lot of talk about the strong growth of the Russian economy in recent years. Unfortunately almost all of that growth has been as the result of rising oil prices. Most of the other industries have lagged behind. The only other industry that has seen any real growth in recent years has been agriculture. The country is now a major exporter of agricultural products.
One of the areas where there is a real need for improvement is in the manufacturing sector. During the days of the Soviet Union the country was a major technological innovator. This hasn't continued as Russia. In large part this is because of the lack of management skills. Russian scientists and engineers are world class; unfortunately nobody ever learned how to manage a factory so that it can be run at a profit. The way things were done during the Soviet days don't work in a free market economy. Until this deficiency is addressed the manufacturing sector is going to continue to lag behind.
A big part of the problem with the Russian economy is that there is too much interference on the part of the government. In reality this interference is outright corruption. There is also the problem that there is way too much regulation. Starting a business in Russia is very difficult for a Russian and virtually impossible for a foreigner. This serves to really discourage foreign investment, which keeps the economy from growing.
There is a lot of potential in the Russian economy but there are also a lot of issues that need to be addressed. Right now the strength of the Russian economy is a mirage. High oil prices have made it look better than it really is. This has served to discourage the government from making the changes that need to be made; they simply point to the GDP growth and say things are going great. In reality things aren't great and unless major changes are made the Russian economy is headed for real trouble.