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Essay / Impact of resource extraction and demographic problems on Russian economic growth
Modern Russia is a powerful superpower, it also has the status of a developed country. However, its economy is fragile and depends on the energy sector. One of the reasons for this problem is the Soviet Union's great attention to oil and gas production. The Russian energy sector grew during the Soviet period and the USSR was the largest producer and second largest consumer of oil and gas in the world (Besedkina, Romashkova, and Tantsura 2019, 117). This process is the origin of Russia's “Dutch disease”. Although Russia is considered a developed country and recognized as a global superpower, its gross domestic product (GDP), heavy dependence on the energy sector and difficult demographic situation are not competitive with other developed countries . Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”? Get the original essay Modern Russia is a contradictory country due to its fragile economic situation and heavy dependence on the energy sector, while it is considered one of the most powerful countries in the world and has the status of a developed country. Russia is one of the largest oil and gas producers in the world with a market share of 13% and 80% of Russian exports are raw material exports. The role of the manufacturing industry in the economy is therefore small. According to Besedkina, Romashkova, and Tantsura (2019, 117), “the energy intensity of gross domestic product is 1.9 times higher than the global average, twice higher than the energy intensity of the United States, and three times higher than the energy intensity of the United States. main European countries. The role of the oil and gas sector in the Russian economy is therefore very important and its GDP depends on the primary sector. Between 2000 and 2008, Russia's GDP grew by 7% each year, but in 2009 it declined sharply by 7.8% when oil prices collapsed (Mironov and Petronevich 2015, 97). One of the main dangers of Dutch disease is deindustrialization, which means a decline in manufacturing if oil prices rise. During growth periods, most investments go into oil and gas extraction and processing. Research by Algieri (2011, 261) found that oil prices boost GDP growth and decrease manufacturing production. In fact, Russia's economic development is based on oil and gas exports. The main evidence of this is the correlation between GDP growth and oil prices. Algieri claims that "the Russian 'economic miracle' was mainly triggered by high oil prices." The other correlation is the ruble's dependence on oil prices, as it has been found that an increase in the manufacturing sector does not lead to an appreciation of the ruble, while a fall in oil prices leads to depreciation (Mironov and Petronevich 2015, 108). Considering all these facts, one could assume that the Russian economy is based on the export of raw materials and that the domination of the primary sector leads to the stagnation of the secondary and tertiary sectors, or to the process of industrialization. Another problem is the instability of the ruble, which is subject to changes in oil prices. These are the main manifestations of the signs of Dutch disease in the Russian economy. The Russian economy is therefore very vulnerable to oscillations in the global economy. The development of non-industrial and manufacturing sectors is essential for Russia:10.1080/09668130500301337.