Russia (на английском языке)

Signed Statement

I declare that this dissertation has not already been accepted in substance for any degree and is not concurrently submitted in candidature for any degree. It is the result of my own independent research except where otherwise stated.

Abstract

The main goal of the research was to determine ways of economic development of Russia in the process of unprecedented transition.

The objectives of the research were: to study Socio-Political Context of the drama of 2008: from economic miracle to economic crisis, i.e. to define the peculiarities of the present crisis, the causes of the crisis and ways of reaction to the crisis; to study Monetary and Budgetary Spheres and determine Main Measures in the Monetary and Credit Policy Area; to analyze investments of pension savings in the system of mandatory pension insurance in Russia; to develop scenarios of Development of Russian Economy in 2009;to analyze the activity of Real Sector researching Macrostructure of production, Influence of Internal and External Demand on GDP Dynamics and Structure, Dynamics and Proportion of Gross Saving and Gross Accumulation in GDP, foreign Investments; identifying problems with Attracting Foreign Institutional Investors to the Russian Market.

The hypothesis of the research was that Russia has a great economic potential that can lead to the economic growth not only of Russia but of the World Economic System.

Two major methods were used in the research: making the Computable General Equilibrium (CGE) models and The Vector Autoregressive Model (VAR).

The findings suggested that the impact of economic development of Russia on the world economic system was great. A few possible scenarios of development of Russia’s economy in 2010;2011 were represented. The forecasts were built on the basis of a structural econometric model designed by the Institute for the Economy in Transition.

The results of the scenario-based forecasting calculations of the dynamic of the basic macroeconomic indicators of RF evidenced that the average annual price level for oil (Urals) was assumed at the level of USD 41/barrel, while the capital outflow from the country (with account of the article «Omissions and mistakes» of the balance of payments) was set at the level of USD 80bn. The volume of the federal budget expenditures was assumed to amount to Rb. 9.69trln, with the federal budget deficit financed primarily from the Reserve Fund of RF. The Euro/USD exchange rate was assumed to remain stable at the level of USD 1.35/Euro. It was the most probable scenario (the basic one) in the frame of which Russia has a chance to survive through the year with minimal macroeconomic shocks, which might form a favorable starting position for exiting from the crisis and will lead to higher level of economic relations with other countries.

Contents Page

Introduction 8

The Literature Review 11

Research Methodology 19

Presentation of Findings and Discussion 24 Conclusion and Recommendations 47

Appendices 52

Bibliography 53

List of Abbreviations

CGE — Computable General Equilibrium models

GTAP — Global Trade Analysis Project

VAR — Vector Autoregressive model

ECM — error-correction model

SAM — social accounting matrix

IAS — international accounting standards