By comparison with other countries in our sample, poverty in Russia has been slow to fall in response to the resumption of growth since the 1990s. Underlying this slow response, this chapter argues, is a shift away from labour-intensive and previously heavily protected manufacturing towards the more tradable, but more capital-intensive, oil, gas, and minerals sectors, which are only to a very limited extent capable of providing livelihoods for the millions shaken out of the non-traded sector by the process of adjustment. In some places poverty and even mortality have continued to increase during the fast growth of the 2000s. Where these locations coincide with existing ethnic and other resentments, the Russian state is still vulnerable, this chapter argues, in spite of its resounding success in recent elections. The chapter analyses the local response of poverty to growth (the ‘poverty elasticity’). It finds that political forces, in particular the capacity and skill of the authorities in buying off local resentments by fiscal means, interact with local levels of labour-intensity to determine the rate at which poverty declines in response to growth. Thus both at local and national level, pro-poor policies have been used to hold in check the continuing fragilities in the apparatus of government – contrary to a conventional wisdom which insists1 that, especially in strong and centralised states like that of Russia, the poor are unlikely to have political leverage.
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