Russian Economy after Transition





Russian Economy after Transition

Different factors enable the growth of cities and countries. Some of these factors are dependent on the government’s ability to provide clear strategies and an effective way forward in the achievement of progress. A country’s political ideologies are essential in determining the approach that businesses use. Russia transformed to a capitalist society and this encouraged free markets. However, the country’s growth was not only dependent on clear business practices and market policies, but organized crime was an influential factor as well.

The article notes how the breakup of the Soviet Union changed the Russian cities, businesses, and people. Rural areas no longer received subsidies and restrictions to population migration were eliminated. Businesses had to learn how to operate under the new system. Migration made it possible for people to move and relocate to wherever they wanted. Moreover, many people wanted to move from the rural and remote areas because they wanted to take advantage of economic incentives. This increased the number of people moving to bigger cities. The increased population provided enough labor for businesses.

According to the article, migration follows economic and market incentives, as people are attracted to regions that offer better quality of life and higher incomes. In the case of Russia, specialization in fossil fuels, favorable location, good transport infrastructure, and neighbor effects have been essential factors in determining the success and growth of a region. However, as it is clear from the video, such economic and market incentives are not always noble and well meaning. People will do whatever they can to get an income and to survive so long as the market supports it. The emergence of the red mafia in the cities is such an example. The intention of the mafia is to make money using whatever means possible. The Russian mafia was formed from all organized crime groups from the former soviet republics.

The mafia was involved in many criminal activities. It was powerful and estimates indicate that 80% of all businesses had to pay protection fees to the mafia. Moreover, the mafia controlled most of the country’s banks. Other than that, it was involved in smuggling of weapons, exhortations, kidnappings, and murder. It extended its influence to regions outside Russia. Members of the Russian mafia felt that there was need to bring the Russians who were working in North America under Russian control. They traveled to Canada and the US, and they used the same strategies of extortion, threats, and murder, as they had done in Russia. They also engaged in other crimes including money laundering, smuggling, and conspiracy

The fall of the Soviet Union was the beginning of capitalism in Russia. The decision to change to a free market economy was an advantage to the red mafia. Many of them interpreted the law to mean that they could continue operating their illegal and criminal affairs in the open. The free market economy was meant to enable more people to engage in small businesses and to contribute to the country’s economy. According to the article, centripetal forces dominated and metropolises won the competition for scarce resources during the first years of transition. The article fails to mention how the various entities realized their accomplishments. The video highlights the role of the mafia, crime, and corruption in enabling the forces in authority to dominate.

Russia underwent a great and significant transformation after the fall of the Soviet Union. Many people migrated from the remote areas and they moved to the urban areas. This meant that there was sufficient labor for the industries in the urban areas. However, competition for resources increased and this contributed to increased crime. The corruption that was evident in many areas of government was essential in enabling the spread of crime in the country.


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