NCPA - National Center for Policy Analysis

Russian Economic Evolution

April 11, 2002

Much has changed for the better in Russia's economy since the dark days of August 1998 -- when it devalued its ruble and defaulted on government bonds. Observers say Russia is now in the midst of a radical economic turnaround.

  • A new labor code makes it easier to hire and fire workers -- and private ownership of urban land has been legalized.
  • On Jan. 1, the tax on business profits was slashed to 24 percent from 34 percent.
  • At the same time a 13 percent flat tax on personal income want into effect.
  • That lifted tax revenue 30 percent in the first half of 2001, according to the American Enterprise Institute's Leon Aron.

Lower costs and wealthier Russian consumers have helped foreign investment blossom, observers report.

Still, the county remains poor by western standards and people who are 50 or older -- who are relics of the communist system -- are often unable to adjust to the new realities.

But those in their 20s and 30s have better work habits and are eager to learn new skills.

Source: Paul Katzeff, "Basket Case Now a Breadbasket: Putin's Crew Transforms Russia," Investor's Business Daily, April 11, 2002.

 

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