84. Russia in the second half of the 1990s

The economy was in a state of crisis that lasted almost 10 years. The volume of GDP in 1999 in relation to 1991 decreased by 40%. Capital investments have failed significantly. The largest drop was experienced by mechanical engineering, instrument making, light and food industries. The production equipment is worn out and outdated, which has led to a decrease in the quality and competitiveness of Russian products.

Agriculture was in trouble. Prices for machinery, fuel, fertilizers and building materials have risen much more than for agricultural and livestock products. As a result, the costs of most agricultural products (grain, meat, etc.) exceeded the selling prices, and the producer was captured by intermediaries who repeatedly inflated retail prices.

Inflationary rise in prices - one of the main obstacles in the development of production. The inflationary process has a number of features. Inflation is generated by outstripping growth of prices for products of "natural" monopolies, inflationary expectations, instability and instability of economic development. Inflation is accompanied by a reduction in the nominal exchange rate, a reduction in the purchasing power of the ruble. In 1994, one ruble was worth 41 cents; in 1999 - 4 cents.

Rejection of the currency monopoly and transition to the principles of currency regulation was carried out in the country through a quick and drastic restructuring of the previous system without the formation of appropriate prerequisites. A massive leak and non-return of foreign exchange earnings began. As a result, the inconsistency and inconsistency of financial policy, combined with adverse events in the world financial markets, led to an acute financial crisis in 1998.

The quality of life of the majority of the population has deteriorated. Monetary income of every third Russian is below the subsistence level; 70% of the population have less than 10% of the total income, and 0% have 2% of the national wealth.

While the real sector was in a state of crisis, the shadow economy was expanding in the country. In Moscow in 1996 every third enterprise did not submit reports and did not report to the tax authorities.

Strict financial regulation, carried out according to monetarist schemes, led to a drop in investment and undermined incentives for production growth. This kind of regulation has become increasingly destructive. Attempts are being made to correct the economic course.

Beginning with 1999 g. There has been some progress in economic development. It did not happen due to qualitative, structural changes in the economy.

The main source of positive indicators, favorable international conditions, high prices for Russian export products (fuel, metal, gas), which ensured the influx of dollars, an increase in foreign exchange reserves, and the formation of a deficit-free budget.

At the same time, an internal factor also worked. The fourfold depreciation of the ruble against the dollar (after August 1988) made a considerable part of imports unprofitable. This revived light industry and created more favorable conditions for agricultural production.

An enterprise with a short production cycle and a relatively high profitability (15-20%) has the opportunity to take a loan at 24% and pay it back within a year. A short cycle takes place in the food, light industry.

There is a need for a resolute implementation of a more flexible and efficient tax policy. Support was needed for leading industries, especially science-intensive and export industries (aviation, space). So far, the search for conditions for intensifying investment activity has not yielded results.

Authors: Zilbertova T.N., Takhtomysova D.A.

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