Although Russia continues to grow at relatively high rates, the main factors underpinning current growth are transitory. The gains in competitiveness that Russian producers enjoyed after the 1998 financial crisis have now largely disappeared. Moreover, there appears to be little scope left for Russian industry to go on raising output by increasing capacity utilisation without substantially greater investment. Finally, the impact on growth of commodity price increases will inevitably attenuate even if oil prices remain high, as the economy will adjust to the new terms of trade.Strategic investment, public sector reform, health reform, all these things happen more readily and more effectively in a society that has democracy and the rule of law.
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posted by delmoi at 12:18 PM on April 9, 2007