Putin’s first and second presidential terms were like two different regimes

Quantitative indices of Russia’s economic development ceased to proceed to qualitative ones by the end of Putin’s second term. That is why the new president will have to find a new paradigm of the economic development. Nowadays, the nation reaps the fruits of the 1990s, but those resources are running out fast.

Qualitative indices of the eight-year economic development do not give grounds to question the government’s successes. The growth of the GDP and people’s well-being, of the processing industry and the service sector can exemplify that. The GDP gained by 72 percent from 2000 to 2007, the industrial production rose by 56 percent and the agricultural production increased by 34 percent. The turnover of retails sales increased fivefold, whereas real incomes of the population increased 2.5 times.

“The success is unlikely to root in high oil prices alone, but a certain economic growth that started in May of 1999 coincided with the rise of oil prices from 13 up to 19 dollars a barrel within the period of May-August of 1999,” Igor Nikolayev, a senior spokesman for PKF, one of the largest auditing corporations, said.

Against the background of obvious quantitative governmental achievements the qualitative ones are not so indisputable. According to Igor Nikolayev, reforms in the fields of health service, education, pension benefits, agricultural and housing industries, natural monopolies and administration are rather unsuccessful.

According to Nikolayev, the successful reforms were made during Putin’s first term in the office: the tax and budget reforms and the banking reform. Then there was an incentive given to develop the national stock market and to form the agricultural market.

“Putin’s first and second terms are like two different regimes,” said Evsei Gurvich, the head of the Economic Expert Group. “At the beginning of the first term the reforms were made very quickly and a lot of institutional reorganizations began. During the second term instead of developing the market economy, they developed business, created a lot of state monopolies, corruption started growing and the quantity of administration worsened,” the specialist said.

“The Russian economy is based on confidence. People trust the president and do not trust the authorities on the whole, rumours about the collapse of the ruble continue to spread,” the economist explained.

In social politics quantitative achievements contradict to qualitative ones. On the one hand, the amount of the poor decreased twice during the last eight years, but for the worst-to-do population the inflation rate turns out to be higher than for the rich. Last year, inflation was about 20 percent for budget-dependant employees, military men and pensioners, while the official inflation rate was 11.9 percent, which reduces to nothing the indexation of salaries and welfare benefits. A new president will meet more difficult tasks. The first thing to do will be to curb inflation.

“Any reform that has been initiated in foreign countries during the recent eight years, for example in the USA, takes 15 years for its implementation, so it would be unfair to blame the Russian government for ill-success,” said Sergei Guriev, the head of the New Economic School. High oil prices bring their profit to oil companies alone.

Translated by Julia Bulygina
Pravda.ru

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Author`s name Dmitry Sudakov
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