What political impediments exist to the reform of the Russian economy?.
After the collapse of the Soviet Union, in 1992 Russia inherited a failing economy. Although post-soviet Russia is rich in raw materials and minerals, such as, crude oil and gas, the economy was still in a downwards spiral. In 1992 Russia's Economy had reached its lowest in many years, Russia's annual percentage growth of GDP reach a dramatic -18.5% , GDP according to one report fell as much as 83% and capital investment by also fell by 90% . Except for energy resources, Russian produces very little apart from is key raw materials and most of the consumer goods are imported, especially in the large cities. This means large amount of revenue is going out of Russia rather than coming in. The failing economy also had serious spin off effects on other parts of Russia, including; a huge increase in poverty; a large increase in unemployment; malnutrition has become the normal attire amongst school children; and a worryingly large drop in life expectancy, in 1992, it was recorded that the life expectancy for men dropped to 58.
The structure of Russia's economy before reform was mainly state owned, with 85% of the activity being state owned industry or agriculture, with very little private and small scale commercial activity. One-way forward is to break up the many monopolies, in the three key sectors: energy, transportation and agriculture. There was a large neglect in services such as, hairdressers and electricians and Russia was missing out on hard currency areas. There was also a great loss in foreign investment in Russia. .
At the end of 1991, after the decision for the much-needed reform, plans were produced to try and improve the state of Russia's economy. Yeltsen felt there was no alternative but reform, and was greatly needed for re-growth and to refresh the economy. A Shock theory attempt was launched in 1992, with the key aims of: Stabilization, liberalization, and privatisation.
