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What specific economic policy changes would you undertake, and how fast would Russia grow under your plan (GDP growth)?

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closed as off-topic by RonJohn, Frostfyre, sphennings, Aify, L.Dutch Mar 19 '18 at 6:57

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    $\begingroup$ I'm voting to close this question as off-topic because it belongs on Economics. $\endgroup$ – RonJohn Mar 18 '18 at 22:27
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    $\begingroup$ Growing from USD1.5T to USD7.0T in 17 years requires 9.5% annual growth. That's a lot. $\endgroup$ – RonJohn Mar 18 '18 at 22:30
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    $\begingroup$ Trotsky ousts Stalin in 1927 instead of the other way round. Anything after that is probably too late. $\endgroup$ – A. I. Breveleri Mar 19 '18 at 0:45
  • $\begingroup$ To those voting to close. I doubt the economics site would accept questions that are speculative. Being a fit on another site DOES NOT make it off topic for world building. $\endgroup$ – James Mar 19 '18 at 17:26
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I would start by pointing out that prior to invading Crimea, Russia's Gross Domestic Product was much higher than it is today. Its best year was 2013 with $2.23 trillion (United States dollars). It seems quite feasible that making a change that ended the responding sanctions would fix a lot of problems. In particular, just restoring the 2013 value would reduce the necessary growth to about 6.6% (from about 10.5% needed from the 2016 value).

Realize that the US will have inflation during that time. So while nominal GDP growth would be about 6.6%, real GDP growth might be only 4% (assuming inflation of about 2.5%). Real GDP growth of 4% happens in some years for the US. A sustained period of seventeen years is not out of the realm of possibility for a country that is behind the first world in production. Note that China's real GDP growth hasn't dropped below 4% since 1990.

Oil could help in the short term, but what Russia really needs is increased industrialization. They need to produce more with less labor in general.

You could also increase their GDP by adding population. Assuming the GDP per capita stayed the same, a 1% increase in population would cause a 1% increase in GDP. A 4% increase in population would give the 4% increase required. Or mix and match. A 2% increase in population would allow a 2% increase in per capita GDP to create a 4% increase in GDP.

The growth formula is

$$(1 + r)^t = \frac{\text{GDP}_\text{desired}}{\text{GDP}_\text{current}}$$

or

$$r = e^\frac{\ln\frac{\text{GDP}_\text{desired}}{\text{GDP}_\text{current}}}{t} - 1$$

You can substitute 10 for $e$ and common log for the natural log if that's easier. Remember to switch both at once if you do that. The base of the log needs to match the base of the power.

$r$ is the growth rate needed, represented as a decimal
$t$ is the number of time periods (17 years for annual growth rate from 2018 to 2035 in this example)
Hopefully desired (\$7 billion in this example) and current are clear. I used \$2.23 trillion as current here under the assumption that sanctions would end. I used $1.2832 trillion (2016 GDP) to calculate the growth rate without that.


Example scenario: Donald Trump and Vladimir Putin negotiate a deal. Putin's Russia will take over Syria, Kurdistan (minus the Turkish parts), and Iran. Russia will crack down on sponsorship of terrorist activity. Putin will get two warm water ocean ports (Syria and Iran). In return, Russia will withdraw from Crimea and support the West in subduing the rebels in eastern Ukraine. Europe and the US will drop the sanctions and provide some backchannel economic assistance. Perhaps some European manufacturers will be encouraged to open factories in Russia.

I am having some difficulty envisioning a scenario that does not start with the end of sanctions that leads to sufficient growth. It's not impossible, but it's not trivial either. It would require a heavy investment in industrialization and possibly some improvements in general governance (less corruption and better regulation).

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  • $\begingroup$ Very fine! Glad to see you combined political & economic factors. A major crack-down on corruption could channel wealth into more profitable sectors (if their luck holds). Not investing in defence, which generally isn't productive. Investment in health as well as industry. Economic questions usually don't get good answers. Yours is the exception. Plus one. $\endgroup$ – a4android Mar 19 '18 at 4:10
  • $\begingroup$ Russia will withdraw from Crimea Not a snowballs chance in Hell. Would burn the Russian soul to do it. A political non-starter for Russians, I think. $\endgroup$ – StephenG Mar 19 '18 at 16:27
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Oil is the thing that first comes to mind, as Russia was badly hit by the drop in oil price. Thus, a sustained oil price boom would boost the economy.

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  • $\begingroup$ Quintupling the GDP would require a lot of oil, so no, that wouldn't work. $\endgroup$ – RonJohn Mar 19 '18 at 0:16
  • $\begingroup$ @RonJohn Wouldn't work? Sounds comparable to the OPEC oil crisis of the 1970s when oil prices went through the roof. Would it happen again? Probably, not. History only repeats as farce. $\endgroup$ – a4android Mar 19 '18 at 3:04
  • $\begingroup$ @a4android If Russia's complete GDP was in oil+gas exports, then the price of oil would have to go up to $310/barrel. $\endgroup$ – RonJohn Mar 19 '18 at 3:38
  • $\begingroup$ @RonJohn Sure thing. To grow any economy takes more than price rises in one or two commodities. The whole economy would need to be boosted. $\endgroup$ – a4android Mar 19 '18 at 4:03
  • $\begingroup$ @a4android but Russia is a kleptocracy with an alcoholic population in an anti-reproductive death spiral. $\endgroup$ – RonJohn Mar 19 '18 at 4:31

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