Russia: Globalization, Structural Shifts and Inequality
By introducing convertibility of the national currency and liberalizing both current and capital accounts of her balance of payments, Russia fully exposed herself to globalization. In this chapter, a narrow functional meaning is ascribed to globalization: convertibility – with minor exceptions, the exchange rate regime in force from the end of 1994 until August 1998 – combined with free movements of capital and hard currency, pushed local producers into global competition. For Russia, with an economy historically built upon absolute and relative prices (and production costs) totally different from prevailing world prices, entering into global competition was an enormous shock. Seen in this perspective, globalization is the driving force in Russia's transition. The chapter is organized in six sections: post‐Soviet and economic chaos; external liberalization; dual economic structure; “shadowization” – the shift of a substantial part of production and consumption outside official recognition (a salient feature of the Russian transition) to the shadow economy; segmentation of the labor market; and conclusion.
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