Government Also Play An Important Role In Russia Economics Essay

Russia, besides known as Russian Federation is the largest state in the universe, which is covering more than one eighth of the Earth inhabited country. Moscow is the Russia ‘s capital, the largest metropolis and besides an of import centre for economic, cultural, concern and transit. Russia occupies much of easternmost Europe and northern Asia, stretching from Norway to the Pacific Ocean and from the Black Sea to the Arctic Ocean with an country of 17,075,200 ( Country,2006 ) . The clime is different in Russia, there is a cold north-polar clime in the north Siberia and there is a sub-tropical hot clime near the Black Sea. Harmonizing to the World Bank, the population of Russia is 141.9 million people in 2011. The National Day was on 12 June whereas the twenty-four hours of the Russian Federation province flag autumn on 22 August ( Shoemaker, 2012 ) .[ 1 ]Russia has gone through many alterations in recent old ages, as communism ended in 1991. It has steadily moved from initial pro-western policy towards one that combined elements of co-operation particularly on economic issues and efforts to confirm Russia ‘s position. There are many facets in Russia that must be taken when prosecuting international concern involvements such as political systems, economic systems, legal systems and civilization.

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Political systems

The political system of a state shapes its economic and legal systems. We need to understand the nature of the different political systems before discoursing economic and legal system. Political system can be defined as the system of authorities in a state ( Hill, Udayasankar, & A ; Wee, 2012 ) . Political system can be assessed harmonizing to two dimensions. First, the grade to which stress Bolshevism as opposed to individuality. Second, the grade to which stress on democratic and dictatorship. These dimensions are interrelated systems that emphasize Bolshevism tend toward dictatorship whereas those that topographic point at high value on individuality tend to be democratic. The Russian Federation has a centralized political system, its concentrated in a president and a premier curate, a weak multiparty political system dominated by the opinion United Russia party and a bicameral legislative assembly ( Federal Assembly ) . The Federal Assembly consists of a lower house ( State Duma ) and an upper house ( Federation Council ) .

In 1990, Boris Yeltsin became the first president of Russia and he makes a transmutation on an bossy system that pattern in communism ( Yeltsin, n.d ) . The surrenders of Yeltsin license Vladimir Putin to be the president in March 2000. Vladimir Putin has been replaced on November 2008, so he was re-elected as president on the first ballot in a widely criticized election. Russian Federation was the largest state to emerge from the separated of Soviet Union, it was traveling toward democracy but remains profoundly flawed in term of its democratic certificates, overpoweringly tainted by corruptness, and massively influenced by the power and personality of president known as Vladimir Putin. He had controlled the fundamental law by pull stringsing the Torahs to profit himself and the concern proprietors in Russia while decreasing the non-profit organisations that are established and determines the basic domestic and foreign policy, is the commander-in-chief of the armed forces, can blackball legislative measures, resolutenesss issues of citizenship of the Russian Federation, awards province ornaments and grants forgivenesss. ( Glasser, 2004 ) .

Furthermore, authorities besides play an of import function in Russia. Government responsibilities were split between a figure of ministries which have federal services and federal bureaus answerable to them. The caput of authorities, known as the premier curate, was appointed by the president and confirmed by the State Duma. The authorities was housed in the alleged White House in Moscow. The authorities was to guarantee the execution of domestic and foreign policy, works out the federal budget, oversees the execution of fiscal and pecuniary policy, ensures the regulation of jurisprudence, human rights and freedoms. In add-on, authorities formulates the province budget, and submits it to the State Duma and issues a study on its execution. In late 1994, the parliament successfully demanded that the authorities begin subjecting quarterly studies on budget outgos and adhere to other guidelines on budgetary affairs. If the State Duma rejects a bill of exchange budget from the authorities, the budget was submitted to a conciliation committee.[ 2 ]

Russian parliament ( Federal Assembly ) consists of two chamber that is State Duma and Federal Council. Both its Chamberss are located in Moscow. Parliamentary blessing is required merely for the premier curate. State Duma is the lower house in Russian Federal Assembly and the most powerful chamber and the chief legislative organic structure in Russia. Duma has 450 members ( deputies ) which elected for five old ages. Besides that, Duma can decline to the president ‘s nomination, but at a high monetary value ‘blocking ‘ three back-to-back nominations consequences in the disintegration of the Duma. The picks of Boris Yeltsin and Vladimir Putin ( premier curates ) have been a-political i¬?gures which are ‘technocrats ‘ , calling administrative officials and professionals.[ 3 ]The Russian authorities allowed the Organization for Security and Co-operation in Europe to transport out merely limited-scale monitoring of the ballot which is 200 proctors. In May 2011, Russia ‘s Central Election Committee adopted a declaration purely restricting the activities of election perceivers, including prohibiting Russian citizens to be members of international monitoring missions ( Report, 2012 ) .

The Federation Council of Russia is the upper house of the Russian Parliament in 1993. Council has 168 members ( senators ) . It was to move as a voice of Russia ‘s federated entities. The Council has explicitly stated that no political cabals are to be in the upper house. Unlike the State Duma, the Council is non straight elected. It consist two representatives of Russia ‘s federal entities. One is elected by the entity ‘s legislative assembly and the other is nominated by the entity ‘s caput ( Country, 2006 ) . The footings of the members are n’t nationally fixed, but depend on the footings of the regional organic structures that chose them. The Council works with the lower chamber to finish and vote on bill of exchange Torahs. The Federation Council besides has particular powers of its ain, including the declaration of a presidential election, impeachment of the President and determinations on the usage of the armed forces outside Russia ‘s district. It besides has the duty to corroborate or take proxy general every bit good as the Judgess of the constitutional tribunal, the Supreme Court, and the higher Arbitration Court upon the president ‘s recommendation. It has less political power so province Duma ( Country,2006 ) .

Economic systems

The economic system of Russia is considered by International Monetary Fund ( IMF ) and World Bank. Nowadays, Russia is the 9th largest economic system in the universe which measured by Gross Domestic Product ( GDP ) in current dollar ( Aslund & A ; Hufbauer, 2011 ) . Since the prostration of Soviet Union, Russia has experience important alterations and traveling from a globally-isolated economic system to a globally-integrated economic system ( The World Factbook, 2012 ) . The primary exports of Russia are oil, natural gas, metals and timber because Russia has an copiousness of these resources. Therefore, the entire value of exports is around US $ 429.4 billion ( Economy Watch, 2010 ) . The chief exports spouses in Russia state like European Union ( 44.8 % ) , United States ( 6.0 % ) , China ( 5.8 % ) , Turkey ( 4.9 % ) , Ukraine ( 3.7 % ) . On the other manus, the entire value of import in Russia is around US $ 247.7 billion. The chief imports of Russia are machinery, conveyance equipment, plastics, medical specialties, Fe and steel. Harmonizing to Economy Watch ( 2010 ) , the primary imports spouses consist of European Union ( 50.2 % ) , China ( 14.1 % ) , Ukraine ( 5.3 % ) , Japan ( 3.8 % ) , and Belarus ( 3.4 % ) .

Harmonizing to World Bank, the existent GDP in Russia was show that 7.3 % in 2003, 7.18 % in 2004, 6.38 % in 2005, 8.15 % in 2006, 8.54 % in 2007, 5.25 % in 2008, -7.83 % in 2009, 4.3 % in 2010 and 2011.[ 4 ]From the graph, the GDP declined 0.92 % from 2003 to 2005. In 2006, the GDP with 8.15 % addition to 8.54 % in 2007. The increase was 0.39 % between these two old ages. This state of affairs because the rise was quickly spread outing oil and gas gross revenues, authorities revenue enhancement reforms, and improved investor assurance. The GDP decreased approximately 3.29 % in 2008 due to the planetary fiscal crisis. Russia ‘s GDP shrank by 7.83 % in 2009, while the stock index fell 80 per centum from its extremum ( Aslund, Guriev & A ; Kuchins, 2010 ) . The graph 1 below show that the existent GDP between old ages 2003 to 2011 in Russia.

Beginning: International Monetary Fund ( 2011 )

Russia has been a hard twelvemonth in 2009 with larger expected losingss in end product, employment and a crisp rise in poorness. The Russian economic system is get downing to turn around easy by higher oil monetary values and stronger planetary demand. In 2010, it could turn modestly. The downside hazards remain, associated with weak domestic demand and staying structural restraints. The planetary fiscal crisis in 2008-2009 caused more serious to Russia economic system than other states. Russia ‘s economic state of affairs has been deteriorating quickly due to the jobs of planetary fiscal crisis and falling oil monetary values.[ 5 ]Some of the larger companies in Russia went to ruin due to the fiscal crisis. However, a terrible drouth and fires in Russia cut down agricultural end product and bring on a prohibition on grain exports of the twelvemonth. Dansie, Lanteige and Overland ( 2010 ) province that the budget is depend on oil grosss, which calculated on the footing of an estimated USD 70 a barrel in early 2009.

In add-on, rising prices or hyperinflation will be a major economic job in Russia. The rising prices rate are 13.68 % , 10.86 % , 12.68 % , 9.68 % , 9.01 % , 14.11 % , 11.65 % , 6.86 % and 8.44 % from old ages 2003 to 2011 in Russia ( The World Bank, 2012 ) . The Russian cardinal bank could non command the rising prices rate by take downing rediscount rates in order to do commercial bank borrowing easier. It continued to contend a high one-year rising prices rate of 11.65 % in 2009. Vladimir Putin promised to forestall rising prices degrees in 2008, the twelvemonth he was sworn in as president. He seems to hold kept his promise – rising prices as measured by the consumer monetary value index ( CPI ) has dropped from 14.11 % in 2008 to 6.86 % in the early 2010.[ 6 ]The graph 1.1 is show the rising prices rate in Russia from old ages 2003 to 2011.

Beginning: International Monetary Fund ( 2011 )

In footings of agricultural, Russia has potential on its, limited by clime and dirt factors of the state ‘s land country. The entire country of cultivated land in Russia was estimated to 1,237,294 in 2005, which is the 4th largest in the universe. However, it has been farther depleted by policies like excessively intensive agriculture, overexploitation of chemicals, and inappropriate harvest pick. The limited sale of agricultural land was approved merely in 2002 because of the political sensitiveness of the issue ( Country, 2006 ) . From 2003 to 2005, the mean one-year addition was 3 % . Nevertheless, the farm substructure has declined and husbandmans lack financess to buy cardinal inputs. In 2005, grain still remained the largest harvest, occupies more than 50 % of cultivated land. The chief harvest of agricultural were wheat, barley, oats, maize, rice and beans whereas the chief end products were cow ‘s milk, beef and veau, eggs, and porc in Russia ( Country, 2006 ) .

Furthermore, Russia is one of the universe ‘s energy human dynamos. The primary energy beginnings were natural gas, oil, coal, hydropower, and non-conventional oil. In 2011, Russia became the universe ‘s prima oil manufacturer which exceling Saudi Arabia and besides be the universe ‘s 2nd largest manufacturer of natural gas and coal.[ 7 ]Russia possesses abundant resources for energy production, doing it a net exporter of electric power and the largest manufacturer of energy in the universe. Besides that, Russia has used this place as a geopolitical lever to act upon the provinces of the former Soviet Union and universe energy monetary values. The oil and gas industry contributed every bit much as 25 % of GDP, and oil accounted for 35 % of Russia ‘s exports in 2006 ( Country, 2006 ) . However, an estimated 45 % of all Russian energy was lost in production, conveyance, transmittal or inefficient ingestion ( Dansie, Lanteigne, & A ; Overland, 2010 ) .

Legal systems

The legal system of a state is evidently of import to international concerns. The differences in legal systems of a state may impact the attraction of its market or investing site. The judicial system in Russia divided into three types of tribunals ; there are constitutional tribunals, tribunals of general legal power and specialised province commercial tribunals, named “ arbitrazh ” tribunals. Arbitrazh tribunals are separate from regular tribunals and its chief map is to defuse the commercial and economics differences.[ 8 ]Today, Arbitrazh tribunals are used to decide the belongings and commercial differences between legal entities and registered enterprisers. They besides examine claims such as revenue enhancement and land seeking to annul governmental Acts of the Apostless involved go againsting rights and legitimate involvement of the registered enterprisers or legal entities. In Arbitrazh Courts, the Code of Arbitrazh Procedure is applied. It is different from the procedural regulations in general legal power tribunals ( Bank & A ; Swartling, 2011 ) .

Furthermore, like other states, legal system in Russia divided into common jurisprudence, civil jurisprudence and theocratic jurisprudence. However, Russia patterns more civil jurisprudence in economic minutess. Some distinguishable characteristics of civil jurisprudence include the function of the justice in the procedure of cogent evidence pickings, proxy in civil procedure, judgement in the “ supervisory ” case and the original position of judicial case in point. Civil jurisprudence system besides known as statute legal system ( Code Law ) which is based on a elaborate set of Torahs organized into codifications. It is fixed by arbitrary methods and composed a comprehensive set of codifications which clearly spell out the Torahs applicable in all possible legal state of affairss. It has 3 types of them such as commercial, civil and condemnable. When grip with concern affairs, commercial codifications have precedence than other codifications. The chief difference between common jurisprudence and civil jurisprudence is that that common jurisprudence is based on the tribunals ‘ reading of events while civil jurisprudence is based on the manner that the jurisprudence applied to the facts. Therefore, a civil jurisprudence system tends to be less hostility than a common jurisprudence system. ( Maleshin, 2007 ) .

The general Contract Law in Russia contained in Civil jurisprudence. Its construction follows the form common in European like Netherlands and Germany codified legal systems. Russian contract jurisprudence is based on the freedom. Independent parties are free to contract on their ain hazard and understanding with the purpose of deducing net income from the usage of belongings and public presentation of plants. Contract can be in signifiers of bilateral or multi-lateral, conditional or unconditioned, and written or unwritten. An offer is a proposal which addressed to a specific individual and it is used for showing the purpose of the acquirer to entry into the contract. The contract footings can be classified into imperative norms and dispositive norms. The regulations of imperative norms can non be changed by the understanding of citizens and organisations. It apply to a contract regardless its footings and conditions. The footings or conditions that struggle with imperative norms will be deemed invalid. Harmonizing Russian jurisprudence, the invalid footings in a contract does non take to the invalidness of the whole contract. However, dispositive norms allow alterations in the norms by understanding of the parties.[ 9 ]

Furthermore, both of the Constitution and Civil Code in Russian Federation defend the right to have private belongings. Property rights are the legal rights over the usage to the resource that put and the income that may deduce from that resource ( Hill, Udayasankar, & A ; Wee, 2012 ) . In Russia, the Land Code is formed on October 2001 and other statute law is adopted farther to the Land Code ‘s clauses implement the rule farther. The different types of rights are applied to different land secret plans and edifices ( Baker & A ; McKenzie, 2010 ) . Besides that, Property rights can be divided into private action and public action. Private action refers to theft, buccaneering, blackmail and menaces by private persons or group. A weak legal system may unable to protect concern from offense. For illustration, in Russia in the helter-skelter period following by the collapsing of communism, an out-of-date legal system, coupled with a weak constabulary force and judicial system, offered both domestic and foreign concern scrimp protection from blackmail by the Russian Mafia.

Besides that, Russia besides developed assorted types of revenue enhancement in concern dealing. The Tax Code of the Russian Federation consists of three degrees. There are federal, regional and local. Federal revenue enhancements included Value Added Tax ( VAT ) , personal income revenue enhancement ( PIT ) , corporate income revenue enhancement ( CIT ) and so on. Regional revenue enhancements involved corporate belongings revenue enhancement, transit revenue enhancement and chancing revenue enhancement whereas local revenue enhancements contain land revenue enhancement and single belongings revenue enhancement ( Baker & A ; McKenzie, 2010 ) .The chief revenue enhancements that use in concern dealing are VAT, PIT and CIT. AVT is imposed on the supply of goods and services. The standard rate of VAT is 18 % but 0 % on export goods. However, the VAT rate that levied on some goods such as basic grocery, footwear and medical equipment is reduced to 10 % ( PKF, 2011 ) . PIT is the revenue enhancement that imposed on occupant and non-resident persons regardless they are or are non citizen of Russia. PIT rate is 13 % for occupants but 35 % for non-residents.[ 10 ]CIT is imposed to companies include partnerships. Foreign legal entities are capable to CIT with 20 % and 15 % on net incomes derived from concern activities carried on through a lasting constitution in Russia ( Russia Personal Income Tax, 2010 ) .

Corruptness is an action that hurt to the lawful involvement of the province and society. Russia formed the Anticorruption Law to put up the legal and organisational model for forestalling corruptness and cut downing the effects of corruptness. The freshly adopted Russian Anti-corruption Legislation was officially published on December 2008. It has introduced a new administrative discourtesy into the Administrative Code which is besides known as Article 19.28 “ Improper Compensation on Behalf of a Legal Entity ” . This article forbid the illegal transportation on behalf of a legal entity to a public functionary or single executing the direction maps in a commercial of money, securities or other belongings ( Kurochkin, 2010 ) . The punishment sum that set up for this legal entity is ternary based on the amount of the money, securities or other belongings transferred ( Baker & A ; McKenzie, 2010 ) . The Anti-corruption Law is besides applied to foreign companies or single if the corruptness is occurred in Russia and involved Russian functionaries. The companies or single that involved is responsible in conformity with the Torahs of the legal power ( Kurochkin, 2010 ) .


Culture defined as a system of shared value, and norm together within a group of people. Culture is associated with cognition, beliefs, art, ethical motives, and imposts that member of society used to interact with each other. Harmonizing to Hill, Udayasankar, & A ; Wee ( 2012 ) , cultural differences are plays an of import function when running an international concern. For case, different civilization may act upon the costs of making concern. Since each state have their different belief and value, it is really of import to raise the consciousness of cultural issue when making international concern. The determiners of civilization are includes faith, societal construction, linguistic communication, instruction, culinary art, and health care.

Religion is a cultural establishment that straight guides human behaviour. Higher spiritual beliefs stimulate economic growing because it may assist to prolong facets of single behaviour that lead to higher productiveness ( Hill, Udayasankar, & A ; Wee, 2012 ) . The faith in Russia includes Christian, Islam, Buddhism, Judaism and Protestantism. Filatov and Lunkin ( 2006 ) stated that more than 55 % Russian citizen or 82 % of cultural Russia identify themselves as Orthodox Christianity. For Orthodox Christians, Holy Tradition is an of import beginning of religion. They believe that saints can mediate with God on behalf people who are alive and request for their memory. Furthermore, one of the major rules of Islam is covering rightly and equitably with others. Muslim adult females should dress in a certain mode. All Muslim must prohibit the ingestion of porc and intoxicant. Buddhism bases its patterns and rules on the virtuousnesss of peace, loving kindness and wisdom. Buddhism obeys Noble Eightfold Path which emphasizes right visual perception, believing, address, action, life, heedfulness and speculation.[ 11 ]

The cultural groups in Russia involve Russian, Tatar, Ukrainian, Bashkir, Chuvash and others ( Pausch, 2006 ) . The tabular array 1 show the per centums of cultural group in Russia. The Russian household is dependent upon all its members. Most of them live in little flats with 2 or 3 coevalss. Russians frequently married at immature age, around 18-22 old ages. Most household have merely one kid due to adult females concentrate on their calling. In Russian, adult females ‘s values differs less among societies than adult male ‘s values because male is the caput of the household. Single adult females have a low position although they have a good business or high income. Both of male and female have buying power on goods and service. The belief of Tatar is Hanafite Muslim. There are assorted group of Tatar, which include Crimean Tatar, Volga Tatar and Siberian Tatar.[ 12 ]Tatar peoples that populating in rural countries are still keep their pre-Revolutionary traditions. The of import constituent of Ukrainian individuality is Ukrainian heroic poems and Ukrainian artistic such as clayware and wood carving. Music and art play an of import life in Ukrainians civilization life. Most of the Bashkir people are Muslims and normally live at peasant communities.

Table 1: The per centums of cultural group in Russia

Cultural Group

Percentage ( % )













( Beginning: United States of Department of State, 2012 )

In add-on, values from the bedrock of a civilization. The basic values included emotionalism not-having-control, unreason, and judgemental attitudes towards universe, effectivity of direction manner, and the result of concern dialogues ( Bergelson, 2003 ) . The most of import values among Russians people are relationships, spiritualty and nationalism. For illustration, parents provide their kids with emotional and fiscal support until kids were able to stand on their pess. In return, kids provide full attention to parents when their parents were acquiring old. This means that for Russians relationships are more of import than the world. Therefore, Russian people are characterized by strong spiritualty which combines spiritual values and superstitious. Russians people are believed in marks. For case, they will halt if a black cat runs over their manner. This strong inner spirit aid Russian to last against hazard and other states try to occupy Russia. Patriotism helps to maintain relationships and spiritualty. Russian nationalism means love and devotedness to Motherland.

The five chief constituent of Russian culinary art were bread, murphies, meat, egg and butter. These nutrients were high in saccharides and fat instead than protein. Other popular nutrients were included chou, milk, rancid pick, curds, mushrooms, lard, Cucumis sativuss, and so on. Fresh fruit and veggie are used in soups, but uncommon as dishes. The traditional Russian repast typically begins with appetisers which called zakuski.[ 13 ]Zakuski may incorporate of fish, pickled, boiled egg, pea, onion and stuffed veggies. Russian will hold soup after the zakuski. The basic soups in Russia include shchi, borsch, rassolnik, ukha and solyanka. Pelmeni is a meat-filled dumpling which filled with beef and served with butter. For desert, Russian more prefer to hold ice pick, bars and cookies.

The nucleus of Russia ‘s wellness attention system is a big outpatient installation which knows as polyclinic. General doctors and assorted specializers were employs by polyclinic. Healthcare in Russia is free of charge and available to all citizens. However, the load of payment for obtaining medical intervention from a physician was addition ( Manning & A ; Tikhonova, 2009 ) . In add-on, Russia has a low criterion of health care due to miss of financess, medical equipment available and trained medical staff. Therefore, the authorities reform the health care system by puting a high precedence and encourages company to supply health care. Government improve the health care system by increasing the figure of physician trained, medical equipment and immunisation programme. Government provide the basic bundle of free wellness attention under the Government Guarantee Programme.[ 14 ]The free service that covered in the bundle includes primary attention, pharmaceutical drugs used for impatient attention.

Education systems play a cardinal function in society Russia. It was divided into three phases which are primary, basic, and secondary general instruction ( Nikolaev & A ; Chugunov, 2012 ) . The general instruction is developing the rational, emotional, moral and physical of the person in Russia. The period of survey was around 11 old ages. The primary instruction take 4 old ages to finish whereas basic instruction take 5 twelvemonth to finish and secondary instruction take 2 old ages to finish.[ 15 ]Student was compulsory to take part in concluding scrutiny every phase of instruction. They will be awarded a certification which allows them to go on their higher instruction after they pass the concluding scrutiny. Nowadays, new types of secondary schools have emerged called secondary school and secondary school. This type of secondary schools can be both owned and private. The instruction systems in this school can be more advanced, but the period for survey longer than secondary general instruction. The figure of skill labour can increase through a good instruction system, so productiveness addition.

4 old ages

Primary Education Figure 1.1: Education system in Russia

5 old ages

Basic Education

2 old ages

Secondary Education

( Beginning: International Credential Assessment Service of Canada, 2005 )

Language is really of import facet of civilization in order to accomplish the successful in international concern. The official linguistic communication is Russian but 100 other linguistic communications besides spoken in Russia.[ 16 ]Language is critical in communications, included mass communications such as advertizements and gross revenues publicities. The footings and words in Russian linguistic communication are different than other states. In other words, different linguistic communication is one of the barriers that companies face on the way of internationalization. The figure of life linguistic communications listed for Russian Federation is about 135 ( Lewis, 2009 ) . Lewis ( 2009 ) stated that there are 100 autochthonal linguistic communications and 35 immigrant linguistic communication. The chief official linguistic communication that used in Russia is Russian. Other minority linguistic communications in Russia include Ukrainians, Chuvash, Bashir, Mordvin, Circassian and Chechen and others.


Russia has involved 4 chief facets such as political systems, economic systems, legal systems and civilization. In Russia, these 4 chief facets play an of import function to accomplish the successful in future. In the political systems, Russian was embrace to democracy. Citizens may elect persons to stand for them. The elective representative will organize a authorities and do determinations on behalf of the electorate. In economic systems, an copiousness of natural resources in Russia contribute in GDP growing. The nature resources enable Russia do the international trade with other states. Russia patterns 3 types of legal systems such as common jurisprudence, civil jurisprudence, and theocratic jurisprudence. In add-on, Russia besides applies a few of trade policy in their international concern dealing to protect their domestic endeavors. Last, Russia has an alone civilization which included faith, instruction, linguistic communication, wellness and culinary art.


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