Roots of Russia's Economic Dilemmas: Liberal Economics and Illiberal Geography

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• Valuing the Russian GDP at the official exchange rate (as opposed to Purchasing Power Parity-PPP-estimates) understate s the actual extent of economic activity in Russia but it is an accurate gauge of the economy's capacity to service its hard currency external sovereign debt, which is estimated at $148 billion in early 2001. Thus, if we calculate Russia's GDP per capita at the prevailing exchange rate, it is $1360 for 1999, while in PPP terms it is $4660, or more than three times as high; gross GDP in PPP terms for 2000 would be ca. $700 billion versus ca. $200 billion in dollar exchange rate terms. Actual GDP may be somewhat higher in light of the significant volume of unregistered economic transactions. Still, while Russia's shadow economy may account for as much as 40% of all transactions, it is generally agreed that the unofficial economy involves much more distribution than production. See Economist Intelligence Unit, Country Forecast. Russia (July 2000) and Bard, Investitsionnye problemy, pp. 211-212.
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• Mkrtchyan, p. 185.
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• 2000 . Nezavisimaya gazeta , 18 November The illegal export of non-ferrous metals has become a major crisis affecting Russia's power and transport infrastructure. Of Russia's 700 000-750 000 tons of non-ferrous scrap metal exported each year (at ca. $1000 per ton), only half is genuine scrap metal. The other half represents stolen rail track, copper overhead power lines etc. From 1995 to 1998 the export of copper scrap jumped from 28 600 tons to 365 000 tons, while that of aluminum leapt from 11 900 tons to 367 500 tons. Theft from power lines resulted in 700 cases of non-fatal electrocutio n throughout Russia in 1999 and more than 500 deaths from electric shock
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• 2000 . Rossiiskaya gazeta , 17 November The 1999 estimate breaks down as follows: non-return of foreign exchange earnings : $2.3 billion; non-receipt of goods or non-return of advance payment on imports: $3 billion; transfer of advance payments for fictitious import contracts for the provision of services : $5.5 billion ; export of cash dollars in Xerox boxes and the like: more than $ 12 billion (the figure for 1998 was $21.6 billion); transfer of rubles to correspondent accounts in Russian banks: indefinite; non-receipt in Russia of foreign exchange earnings from the sale of goods in 'duty free zones' like the Black Sea area: indefinite. Economist, 13-19 January 2001
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• Ibid, p. 234.
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• For provocative thoughts along these lines see Ryszard Kapuscinski, Imperium (Paris, Feux Croises/Plon, 1994, French translation from the Polish by Varonique Patte), p. 339.
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• Andryanov, p. 26. Possibly employing a different calculus, and no doubt influenced by the prevailing artificially high exchange rate for the Soviet ruble (almost parity against the US dollar), Economist estimated that in 1987 Soviet agricultural labour productivity was one quarter of that of Western Europe and one-eighth of that of the United States. "The Soviet Economy', Economist, 9-15 April 1988, p. 9.
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