Discuss about the International Business Management for Economic Growth.
The report is all about the closing Case of Putin’s Russia. This case is all about the Russian economy, Vladimir Putin’s political power in Russia, and how Western business started to invest in Russia.
After the wreck of the Soviet Union and the ruble crash there was an economic growth of Russia which is considered to be the best till date. The era between 2001 & 2013 witnessed the progressive trend in oil and natural gas which benefitted Russia’s economy to boost up as this nation mostly depends on its oil natural gas resources (Durkalec & Kroenig, 2016). In 2001 the nation’s President Aliyev authorized the privatization of nearly a hundred of state owned entities belonging to the fuel and energy sectors like the oil and natural gas sector along with machine building of the chemical sectors.
The economy of Russia ran into trouble in 2014 due to Russia’s oil and natural gas prices fell out. The prices of the fuel got slacked as there was an increase in the supply of oil and natural gas globally by United States. The Russian ruble lost its value by half percent against USA, the countries of European Union and the weakening of the ruble (Dawisha, 2015).
Starting his career as an officer in KGB Foreign intelligence, Putin dedicated 16 years of service before being the Lieutenant Colonel and joining the politics in 1991.After moving to Moscow he joined the administration of President Boris Yeltsin soon after he became the acting President in the year 1999. He won the presidential elections of 2000 by a major margin and again got reelected as the President in 2004 (Jonson, 2015). Russia witnessed a boom in the commodities and oil prices. Putin was unable to contest the election for the third consecutive time in accordance to the constitutional limits. Putin was then appointed as “tandemocracy” by then President Dmitry Medvedev in 2008 (The Economist, Februar, 2014). It was in 2012 March when the presidential tenure was extended to six years and Putin again contested in the elections and won with around 65% (Jonson, 2015). Putin became the leader who was internationally recognized as one of the most powerful leaders globally along with high ratings of domestic approval (Sutela, 2013).
Putin has been controlling Russia with extreme power. But with the recession that has hit Russia in 2015 has left Russia to stagnant and decline. Russia is the result of Putin’s leadership and had proved to grow under his leadership (Rutland, 2014). Along with certain poor decision made in military and economy such as invasion and annexation of Crimea and lower the fuel export price Putin seems to be strong but inefficient in controlling the fall of Russia into the abyss.
Being mostly depended on its fuel resources Russia needs to find out ways to export its oil and natural gas and counteract the major share of exports globally by US to Iraq. The nation needs to alter the threat of natural gas reserves into the strongest opportunity. The manufacturing of more number of military and defense ships ,tanks, aircrafts and others transportation modes will boost Russia’s economy (Dawisha, 2015).
The “Shock Therapy “ by Yelstin in 1991 regarding privatization of the state owned enterprises gave encouragement and opportunities for the foreign countries to invest in Russia. This was an era in which the foreign investors looked for opportunities. However, the condition for foreign investments does not seem favorable. The companies which had been functioning in Russia for years find it difficult to withdraw and are forced to accept losses that are partial in nature or subsequently lowered their activity levels. The investors however, see a long term profit in the natural gas reserves and there is a decline in the natural oil and gas resource (Durkalec & Kroenig, 2016). Thus, those investors are choosing not to withdraw from Russia. Moreover Russia has applied the lessons from the post communism disrupted structures of economy to get some relief. The education sector appears promising from investment point of view as the quality of education is very high and establishment of production facilities would be effectively implemented.
In spite of the fall in the economy by 4% there is a considerable growth in the food and agricultural industry. The devaluation and restraint on the European food made way for the macroeconomic alterations in this sector. The Russian government continuously expresses enthusiasm in drawing foreign investments. Foreign investors need to look for opportunities and growth carefully (Dawisha, 2015). The foreign investors who are seeking to gain or increase ownership beyond a particular verge needs to get governmental approval from a commission headed by the Prime minister of Russia.129 among 137 foreign investments have already been approved which denotes scope for foreign investments in Russia even in present scenario.
This report finds out answer to some facts like how Russian economy underperformed in 2014, the political power of Vladimir Putin’s in Russia, and how Western business started to invest in Russia.
Durkalec, J., & Kroenig, M. (2016). NATO's Nuclear Deterrence: Closing Credibility Gaps. The Polish Quarterly of International Affairs, 25(1), 37.
Dawisha, K. (2015). Putin's kleptocracy: who owns Russia?. Simon and Schuster.
Jonson, L. (2015). Art and protest in Putin's Russia (Vol. 61). Routledge.
Rutland, P. (2014). The Pussy Riot affair: gender and national identity in Putin's Russia. Nationalities Papers, 42(4), 575-582.
Sources: “Putin’s Russia: Sochi or Bust,” The Economist, February 1, 2014? “Russia” Economy: The S Word,” The Economist, November 9, 2013? Freedom House, Freedom in the World 2014: Russia, www.freedomhouse.org/report/freedomworld/2014/? K. Hille, “Putin Tightens Grip on Legal System,” Financial Times, November 27, 2013.
Sutela, P. (2013). The political economy of Putin’s Russia. Routledge.