Russia’s People and Globalization

The key facts on the global economy’s impact on Russia.

September 25, 2001

The key facts on the global economy's impact on Russia.

Initial enthusiasm for capitalism in Russia has given way to frustration — and at times even nostalgia for the old regime. As Russia’s Vladimir Putin tries to steer his country towards economic development, our Globalist Factsheet explores how the global market affects the Russian people.

How do Russians plan to cope with the new market economy?

When asked what is needed to become wealthy in today’s Russia, 88% picked connections — and 76% chose dishonesty. Only 39% said hard work.
(Milken Institute)

Is it easy to become rich?

Between 1990 and 2000, 20.1% of Russians earned less than 50% of Russia's median income. Between 1996 and 1999, over 50% lived on $4 a day.
(United Nations)

Where is Russia’s economic center?

Some 85% of Russia’s financial assets are concentrated in the capital city of Moscow — where less than 10% of the country’s people live.
(The Globalist)

What is one of the worst developments at present?

As of 2004, life expectancy in Russia is 71.9 years for women and 58.5 years for men. This 13.4-year difference is the world’s largest gap.
(Washington Post)

How does that compare to other countries?

In 1999, outside AIDS-swept Africa, only Haiti recorded higher male mortality than Russia.
(Washington Post)

What is the state of Russia’s previously solid healthcare system?

As of late 2000, there are still 12,000 hospitals and 20,000 clinics in Russia. But one in 10 Russian hospitals was built before 1914 — and one in five had no running water.
(New York Times)

What is one of the most pressing problems?

In 2002, alcohol poisoning killed 40,000 Russians, topping 2001’s figures by over 2,000 deaths. In contrast, in the United States — with nearly twice Russia’s population — alcohol poisoning kills only about 300 people a year.
(Washington Post)

How much is the Russian state involved in all this?

The Russian government controls the 162 distilleries that make virtually all the pure alcohol used in legal Russian vodka.
(New York Times)

What about illegal alcohol production?

As of 2003, Russia’s budget loses up to $400 million annually from illegal sales of alcohol products.
(Pravda)

How does the Russian government collect its revenue?

Russia has 1.1 million tax collectors and inspectors, but only 890,000 registered small and medium enterprises.
(Princeton University)

Can the government still afford to hire people?

In 2000, 30,000 Russian government employees were hired. That means a new Russian government employee was hired every 18 minutes that year.
(State Committee of the Russian Federation)

How popular is Russia with foreigners?

In 2002, as many as 23.3 million tourists, businessmen, foreign experts and sailors came to Russia, spending a total of $16 billion. However, worldwide, only 1% of tourists travel to Russia.
(The Statesman)

What about foreign direct investment?

Between January and October 2003, foreign direct investments into Russia’s economy totaled $24.7 billion.
(Russian Economic Development and Trade Industry)

But how much capital is being taken out of Russia?

In 2003, Russian net capital flight amounted to an estimated $8.6 billion.
(Financial Times)

What is the accumulative effect?

As of 2003, it is estimated that the Russian budget loses up to $60 billion every five years due to illegal capital outflow.
(Russian Audit Chamber)

Has communication between Russia and the United States improved?

In June 2001, U.S. President George Bush and Russian President Vladimir Putin’s meeting in Slovenia marked the first time a Russian leader has ever spoken at any length in English to a U.S. President.
(Washington Post)

How wired is Russia’s President?

At the July 2000 G8 summit in Japan, Russian President Putin suggested that the G8 leaders begin communicating by e-mail.
(Washington Post)