The phase in the business cycle that Russia is in is prosperity. Prosperity is the high point of the business cycle.
The Gross Domestic Product is $796 billion. Russia is a partner with Germany in importing and exporting. The number of imports is $33 billion, and the number of exports is $66 billion. The national budget is $56.
Russia’s education is free and compulsory from ages 7 to 17. Additionally, they have 1 radio per 2.9 people and 1 telephone per 5.9 people. The country’s education system is supported by a budget of 6 billion dollars.
The unemployment rate is 8 percent. The inflation rate is 85 percent, and it could increase further if monetary policy is relaxed. Russia was mostly an agricultural country until the late 19th century when industrialization began in European Russia. Economic development was then interrupted by World War 1 and the Civil War that followed.
Modern development was initiated by Stalin, whose frantic industrialization drive in the 1930s made the Soviet Union an industrial giant. Under Stalin and his successors, the less settled frontier regions of Central Asia and Siberia were developed. Several of the world’s largest dams were built in the former Soviet Union, and the world’s first atomic station was opened in 1954. By the 1980s, about 40 nuclear reactors were operating in the Soviet Union.
In the late 1970s, the economic backwardness of the Soviet Union became so self-evident that no amount of political propaganda could obscure it. Western developed countries began to enter the Information Age, introducing new communication technologies and electronic links among institutions and individuals. The Soviet Union still relied on rigid planning and pervasive controls, leaving no room for initiative and inventiveness. When Mikhail Gorbachev became head of the party in 1985, the huge country began to move.
Gorbachev surrounded himself with a number of reform-minded economists and soon formulated the main pillars of economic restructuring called perestroika. The major goals of perestroika were to make Soviet enterprises more self-governing and to give them more freedom, while at the same time giving them more responsibility for their performance. In the planned economy before perestroika, all enterprises were totally dependent on central planners who determined where to buy materials, what to produce, and where to sell it. This system encouraged inefficiency because the companies did not have to compete with any other companies. Additionally, since the workers could not be fired, they did not work very hard. A number of new laws were made to proclaim that it was possible for individuals or small groups to start their own enterprises.
Restaurants, taxis, recycling centers, and repair shops were opened in many places, but party bureaucrats often hampered these new initiatives. Another goal of perestroika was to fight against cheap products. Better quality control was introduced in many companies, but it was often resented by workers and led to drops in production, which would be a recession.
