RUSSIAN & U.S. ECONOMIES.   Term Paper ID:26423 Click to get this paper

Essay Subject: Describes & compares health of national economies, as of April, 1999.... More...

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Paper Abstract: Describes & compares health of national economies, as of April, 1999. Paper Introduction: Introduction Since the mid-1980s, the economic system in the former Soviet Union has ostensibly moved toward a more open and capitalistic system. The implementation of capitalism has met with varying degrees of success in the various states which have emerged from the former Soviet Union. In Russia, the once centrally planned economy gave way to markets which were much more open, but the results of those open markets was decidedly mixed. As the Russian economy has encountered problems in recent years, there have been calls for a return to an economic system which is more planned than that which currently exists. This research examines the economic systems of Russia and the United States as a new millenium begins. The Economic Environment in Russia In general, Russia wa Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Not only were smallindividual transactions conducted without money, but as many as 7 percentof all transactions among industrial organizations involved no money. The Economic Environment in the United States The United States version of capitalism is far more in keeping withtraditional views of that economic system. It was the best of times, it was the best of times. One of the most significant impediments to reform was the fact thatRussia had labored under a centrally planned economy much longer than manyother former members of the Soviet Union. Brookings Review, p. By the mid-199 s, the Russian economy was in a situation where many ofthe goods which were being produced, often in the same manner that theywere produced under the Soviet system, could not command prices whichcovered the costs of production. Thegoal was to increase consumption standards and become more competitive inthe international market; this gave considerable support to those whowanted to reduce military expenditures (Gaddy & Ickes, 1999, p. This is not to say that all transactions involve currency;increasingly, transactions are electronic and no currency actually changeshands. Hovey, J. The shadow economy became even more entrenched as Russiansworkers did not receive wages, Russian factories did not pay bills, andRussian banks rarely had money. 33. Lacking this information, international funds are not likelyto be invested in Russia, while they will seek the relatively stableeconomies of the United States and other countries which are more"traditional" in their economic systems. Westernanalysts place the blame for this situation on the failure of thegovernment to force unproductive enterprises out of businesses during theprivatization years. BusinessWeek, p. In Russia,the once centrally planned economy gave way to markets which were much moreopen, but the results of those open markets was decidedly mixed. By protecting the businesses and their managers atthat time, the government ensured that business would no be forced todevelop efficient practices which would make them competitive in the long-run. (1999, April 17). There are reasons for concern, however, even in this apparently robusteconomy. Shifting to private support for agriculture and industry wouldtake time, and many Russians were quickly disillusioned by the higherprices and shortages of goods that rapid reform brought. 27). 69. Gaddy, C. Inflation as measured by the consumer price index rose by only .2 percent in March (an annual rate of 2.4 percent) despite significantincreases in oil. Comparison Both of the economies of the United States and Russia are effectivefrom the point of view of their participants, although their effectivenessis greatly debated by outside observers. Taxpayments made by both individuals and businesses often involved barter andother nonmonetary transactions. In August 1998, the government defaulted on $4 billionworth of short-term treasury bills and the Russian financial marketscollapsed. Despite these concerns,analysts are not yet predicting the imminent collapse of the US economy assome are forecasting for the Russian economy. G., & Ickes, B. But the foundation of the transaction, whether the wages paid toworkers or the payment of industrial invoices, is based on money. The Economist, p. Nation'sBusiness, p. Business Week, p. References A nice straight line. 44). W. The Economic Environment in Russia In general, Russia was hesitant about implementing market reform.Many Russian citizens actively opposed reforms while some politicians sawmarket reform as a way to fix the inefficiencies of the old system ratherthan as a new system. Private agriculture had beennearly eliminated in Russia, and most industries were run by thegovernment. The problem is that the international financial community does notknow how to interpret an economy which is not based on financial (monetary)transactions. Yet Russian workers continued to procuregoods and Russian factories continued to produce those goods. If Russia is not able toimplement reforms which meet the needs of the international community, itmay find itself as isolated as a capitalist country as it was under Sovietleadership. This lack of investment means thatcapital equipment and facilities which were outdated and inefficient in theearly 199 s remain so today, and capital which once flowed into the Russianeconomy in anticipation of strong financial returns is now seeking othermarkets where the returns are likely to be monetary and quantifiable(Hovey, 1999, p. Where Russia has an economybased on company coupons and barter, the economy of the United States isbased on money. 22). (1999, April 24). Businesses and individuals begandeveloping "creative" approaches to pricing in order to overcome thisproblem, with the result that a non-monetary based economy developed. 22. 32). Interest rates are low, consumer spending is healthy andmost Americans report being "better off" today than ten years ago ("ItWas," 1999, p. The Economist, p. Russia's economic quagmire. 33). From this standpoint, Russian implemented programson top of the former system rather than creating a separate system. In the intervening years,however, Russians have embraced the shadow economy as a critical part oftheir survival, and the reform measures which Western analysts have deemednecessary to the long-term stability of the Russian economy mean additionaleconomic hardship. 27). For example, while the Dow Jones industrial average has topped11, points, the broader market as a whole has not performed as well:more companies have seen their stock price go down than go up. 44. Russia: What happens when markets fail. 27. Unemployment continues to be low, incomes are increasing at more thantwice the rate of prices, and the Dow Jones industrial average, whichtracks 3 stocks on the New York Stock Exchange, has reached all-timerecord highs. As theRussian economy has encountered problems in recent years, there have beencalls for a return to an economic system which is more planned than thatwhich currently exists. Thisshadow economy, based often on barter, had the effect of effectivelyoverpricing goods and services in that it hid the cost of production. Recently, the government concentrated its efforts on collecting taxesin hard currency rather than in barter, but faced the problem of a greatlydevalued ruble. For example, investment in the economy has fallen to 17 percent of199 levesls with regard to the productive sectors of the economy. Because nearly all American transactions are denominated indollars, the pace at which prices advance or decline can be measured, ascan the rate at which the economy as a whole (the gross domestic product)expands or contracts. It could even be argued that an IOUdiffers little (in theory) from a purchase order. Getting realistic aboutRussia. At the same time, there have been changes in the Russian economicinfrastructure which make reform far more difficult today than in yearspast. (1999, April 26). Introduction Since the mid-198 s, the economic system in the former Soviet Unionhas ostensibly moved toward a more open and capitalistic system. Since the barter system is used sopervasively in Russia, it is difficult to quantify the actual output ofthat economy. Reform will be difficult to implement in Russia. This research examines the economic systems ofRussia and the United States as a new millenium begins. (1999, April 12). With the dollar serving as the basis for the economic system in theUnited States, various quantitative measures can be applied to the economywhich are difficult, if not impossible, to use in the Russian economicenvironment. (1999, Winter). The core rate of inflation measures the economy withouttaking either food or oil into account, and it rose .1 percent in March1999 ("A Nice," 1999, p. Theimplementation of capitalism has met with varying degrees of success in thevarious states which have emerged from the former Soviet Union. 32. Prices are not accurately represented in a barter system,and it is nearly impossible to gauge the productivity of the system as awhole. Increases in the energy sector were offset by decreasesin food prices. Foreign investors deep pockets. The greatest difference betweenthe two economies, the degree of their reliance on money, makes itdifficult to compare them directly. International aidprovided by the International Monetary Fund (IMF) and others often did notspecify how the funds were to be used, and the economy drifted withoutdirection as reforms introduced in 1991 and 1992 brought additionalhardship to the nation ("Russia," 1999, p. Theshadow economy permeated Russian economic life. (1999, April). A nonmonetary based system provides ampleopportunity to camouflage bribes, money laundering and insider dealings.Middle-level bureaucrats in the government and in private enterprise havebuilt powerful organizations which provide high levels of payback. 69). In the early 199 s,reform might have been possible if the private sector had received theincentives it needed to reach a robust state. Inmachine building, engineering and metal-working industries, investment isonly 5.3 percent of its 199 level. In the midst of this unexpected variation on capitalism, corruptionand insider deals are rampant. There are, however, similarities between the barter/IOU system inplace in Russia and the increasingly cashless transaction system in placein the United States. Marginalprofit (the profit realized from each additional unit of output) is alsodeclining and the nation continues to maintain a high trade deficit with anumber of countries ("It Was," 1999, p. Currently, the United States is in its ninth year of economicexpansion. Both systems are based on companies agreeing toissue payment (in some form) in the future; payment flows from one companyto the next in a highly complex chain. Throughoutthe economy, IOUs have become commonplace, and are often used to payobligations to the point that when payment is finally received for an IOU,it may ultimately be paid to someone far removed from the originaltransaction ("Russia's Economic," 1999, p. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.