ABSTRACT
By 2001 the World Bank had taken Russia off the ‘crisis list’. Russia had become a market economy. By 1998 Russia was ranked tenth in the world in terms of purchasing-power parity (PPP), below Brazil but above Mexico.2 Russia’s integration into the world economy was ‘shallow’, mostly accounted for by a rise in trade with the developed economies and focused primarily on primary materials and energy exports. Nationalists argued that Russia’s economy had become ‘Kuwait-ised’. Deeper integration would be accompanied by more FDI and structural changes in the economy. Under Putin production became more profitable, and certainly more politically expedient, than asset-stripping, especially in the context of high commodity prices. The ‘initial accumulation of capital’ phase appeared over as enterprise managers sought to add value rather than seize cash flows and export commodities. The great challenge facing Russia was to restore the micro-economic tissues of an entrepreneurial and active society combined with marketenhancing macro-economic policies. The weakness of the banking system and contract law and the presence everywhere of street hawkers and market hustlers, robber taxi drivers and organised crime, gave birth to the image of the ‘Wild East’, a riotous freefor-all on the fringes of the emerging market. This in turn gave way by the time Putin left office of a state once again trying to implement an anachronistic model of state-directed development.
