Twenty years ago, on 9 August 1999, came to power Vladimir Putin. First as Prime Minister and in less than six months as President. The past two decades, much mythologized figure of our “eternal” ruler. In the first half of this period, it seemed that everything was possible: the economy grew, revenues grew. In the second half — the impression is the opposite: a long-term stagnation, sometimes resulting in serious loss of revenue. As when one ruler could turn out two such different result of the Board?
Actually there is no mystery there. It is necessary only slightly to understand the working mechanisms of the economy. And pay attention to the fact that she’s started to grow already in 1999, when Putin just came to power and still could not manage to do anything for her recovery.
Growth began not long after the arrival of Putin to power, and after the August 1998 crisis. If the political cycle is assumed, then the six-year presidential term (as of now) and Yeltsin left his post in 2002, he would have walked away the Victor. By this time, the economy would have quickly grown for the past three years, incomes rose, and Boris could probably even think about having to stay in the Kremlin for some time. And certainly his successor is not perceived to be a miracle worker.
The fact that
the 1998 crisis included a natural mechanism of import substitution. One that works on a purely market basis, not on orders from the Kremlin.
The ruble in August 1998 failed. This fall is automatically made the importation of foreign goods in Russia are much more expensive for business. If some imported goods worth one dollar, before the crisis, he was sold to Russia a little more than 6 rubles, and in the beginning of 1999 already more than 30. Importer, try in such a situation to keep the ruble price at the old level, or raise not too hard, just could not gain from the sale of as many rubles as you need to re-purchase on the foreign exchange market the amount of dollars needed to purchase the same quantities of goods abroad. The importer would have incurred losses, and as the business cannot operate at a loss, he was forced to raise the ruble price in the Russian market in accordance with the appreciation of the dollar.
However, the return of Russian buyers at this moment rose, and someone even fell as in the crisis, people sometimes lose their jobs. To buy foreign goods at the new price many could not. The volume of imports began to fall. Shops began to close down his business. But the need for the goods after will not go away. The people who import have stopped buying, it was willing to buy substitute goods at the old price or at least at a price in half to two times (not five times) greater than the old one. And here it was that the Russian business without any decree about import substitution, without accompanying a noisy propaganda campaign and without bureaucratic fuss over domestic producers suddenly began to fill the empty shelves.
Who destroyed the economy? In order to ruin, the “liberals” in the government simply do not have enough powers. They have security forces
Domestic enterprises was suddenly profitable to produce that cannot be imported. After all, if the importer, as we have seen, the costs for the purchase of goods has greatly increased, then the manufacturer’s cost is not increased. If raw materials were domestic and the employee is also their own, homegrown, the cost of the organization of production has not changed in connection with the devaluation. Well, maybe a little bit increased, if the business wanted to support an increase in salary my work team or imported some components, but still more expensive domestic goods was not comparable to the more expensive foreign ones.
In General, since 1999, Russian business has started to work better than before. It was a bit of a shock for many since the early 90s, when the ruble fell heavily, the domestic producer was not raised. In the late 90s, everything was different: for several years the market rose to his feet, learned to work and now was able to quickly ramp up production of their products instead of imported. And the quality was much better than in the late 80’s, when due to the trade deficit, we were forced to sweep away from the shelves of any rubbish.
Putin to this story of the rise of the Russian economy in General no relation has.
As well as it has no relationship to growth in oil prices, which helped to support GDP growth until 2008. The Kremlin has used to consolidate his power by those economic results, which were formed irrespective of it.
Alas, such a development is the objective restrictions. As for how we grew incomes in the zero years have increased and our solvency. We again began to buy a lot of imports along with domestic goods. And when in the summer of 2008 collapsed the price of oil, our pay has fallen, and we began to buy less. As a well as branded. The growth stopped, started stagnating. And then revealed that Putin in General can not do anything to develop the country as never done this before.
So another crisis has dispelled the myth in Putin-the miracle worker, which emerged after the crisis of the previous one.