Russia: A Power Beyond Raw Materials

Abstract

Russia has changed much since it began its dramatic transition from being an isolated, centrally planned economy to becoming a more market-based, globally integrated economy. In the course of this transition, Russia became the ninth largest economy in the world. During the past decade, its GDP has grown by an average of 4.9 % per year which heavily fueled “Russian Consumerism”. In terms of overall living standards, electricity supply and food production Russia is close to Western norms, but from early 2014, growth numbers sharply decreased. The Ukraine crisis, decreasing oil prices and Western trade sanctions have taken a heavy toll on Russia’s economy and outlook. In addition, Russia is suffering from a high dependence on natural resources as well as a low level of competition that is caused by inefficient antimonopoly policies, corruption as well as strong restrictions on trade and foreign ownership. Western managers in Russia know one thing for sure: Western logic does not work here. You do not just go in, invest and sell. Doing business in this country is far more complex and needs a comprehensive understanding of the local context of government, business and consumption.