Meagan Pugh 1-31-07
Fin 3318 Chapter 2 Homework
In “Prospects for the Russian Economy: Transformation and Growth,” by E.G.
Yasin discusses central issues to the future of Russia’s economy and the potential
solutions to Russia’s economic issues. Though Russia has made significant strides
toward a sustainable and prosperous economy, many obstacles still remain.
Modernization of all sectors and strengthening of institutions are crucial to Russia’s
success. Yasin examines the various issues facing Russia and required reform.
During the early transition years after the fall of Communism, Russia fell behind
its Eastern European counterparts after liberalization. Russia did not have key systems
and institutions in place to sustain a growing economy. There were many distortions
affecting the economic environment. Additionally, key institutions such as banks, were
not able to support a complex economy. Further, for a economy to continue to have real
growth there must be a strong, established foundation. The economy was not able to
respond accurately to changes and could not work properly.
Regarding oil prices there are three projected scenarios, pessimistic, optimistic,
and realistic. The three scenarios all forecast indicators of the federal budget for 2003-
2004 including the price of Urals grade oil per barrel in dollars, GDP growth rate, and
inflation. The optimistic scenario anticipated the average price of Urals would increase
to 35,5 in 2002 from 23,3 in 2001 but ultimately decreasing in 2003 to 19,3. Both the
realistic and pessimistic scenarios predicted the average price to decrease to 18, 5 and
15,0 respectively. Also all three scenarios projected an overall decline in GDP growth
rate with the pessimistic scenario anticipating GDP growth rate to falling from 2,5 in
