Tuesday, October 31, 2006

Forget Putin And Halloween ... The Russian Post-Soviet Middle Class Is Finally Beginning To Develop Economically And Politically

..."After the hardships of the 1990s, Russia is finally witnessing the rise of a prosperous post-Soviet middle class.

Politically and economically, this has become one of the most important, and least talked-about, trends in Russia today. While international attention has focused on President Vladimir Putin’s increasingly authoritarian approach, that tends to obscure what many Russians believe to be his main legacy – the extent to which they have, materially, become better off under his presidency.

Some international observers feel, moreover, that if democracy, press freedom and the rule of law are to flourish in Russia, that may depend on an assertive middle class pushing for such rights.

Those economic conditions are being created. Although the country is known abroad primarily as an exporter of raw materials, companies from carmakers to cosmetics giants now list Russia alongside China and India among their most dynamic consumer markets....

The consumer boom is the fruit of nearly eight years of economic growth averaging 6.6 per cent – thanks in part to record oil and natural gas prices – since Russia’s debt default and financial crisis in 1998. Real wages and consumer spending are growing twice as fast. The average monthly wage was up 13.6 per cent year-on-year in September to $415 – still low, but four times what it was when Mr Putin became president in 2000.

Low housing and utility costs mean a relatively high proportion of Russians’ wages goes straight into disposable income. A lingering suspicion of banks, born of the 1998 crisis, also means spare cash is more likely to go into flat-screen television sets or washing machines than into savings accounts.

Russians are less wary of borrowing, however. Consumer credit has mushroomed from zero a few years ago to about $40bn – though at barely 5 per cent of gross domestic product, one-tenth of western European levels, there is plenty of room for growth.

Yet despite the progress, yawning inequalities exist – and overall trends are not wholly encouraging. Tatyana Maleva, a sociologist at Moscow’s Independent Institute for Social Policy, led a study in 2000-01 of Russia’s social structure. Analysing salaries and factors such as savings and property ownership, she classed fewer than 1 per cent of Russians as a super-rich elite. At the other extreme, 10 per cent of the 144m population lived in real poverty [a smaller percentage than in the United States].

In between, 20 per cent formed a more-or-less comfortable middle class; just under 70 per cent were lower middle class – struggling, but able to afford a few consumer luxuries.

The picture already differed sharply from Soviet times. Then, too, says Ms Maleva, there was a privileged elite and poor underclass. But 80-90 per cent of Russians formed a middle layer" ...

Neil Buckley "Russia’s middle class starts spending" Financial Times October 30, 2006


Moscow, Russian Federation satellite image

Topics in Economic and Human Development: Will Western-style overconsumption flourish in the new Russian Federation, Ukraine, and Belarus?


"Moscow, the political and economic heart of Russia, sits on the far eastern end of Europe, roughly 1300 kilometers (815 miles) west of the Ural Mountains and the Asian continent. The city boasts a population of nine million and encompasses an area of 1035 square kilometers (405 square miles). The Moscow River runs through the center of the city, and the Kremlin, the seat of the Russian government, lies in the direct center.

Moscow is thought to have been founded in the 12th Century by Yury Dolgoruky, Prince of Suzdal, who hosted a big feast on the site. The city was shortly after established as a trading route along the Moscow River. Ivan III, who is largely credited with uniting all of Russia, built the Kremlin’s cathedrals and declared Moscow the capital of his new kingdom in the 15th century. In the 17th century, Ivan the Great moved the capital to St. Petersburg, where it remained until the Bolsheviks brought the seat of government back to Moscow in 1918. Over the years the city has been sacked and burnt to the ground by the Tartars, the Poles, and the French. Thanks to the resilient spirit of the Russian people, the city remains as vital as ever. Now it is as capitalist in nature as London or New York, and everything from Big Macs to BMWs can be found on its streets.

The blue-gray pixels in this false-color image are urban areas. The light green areas surrounding the city are farms and the brown regions are more sparsely vegetated areas. This image of Moscow was acquired by the Enhanced Thematic Mapper plus (ETM+), flying aboard the Landsat 7 satellite. July 23, 2002, marks the 30th anniversary of the Landsat program."

Photo and caption credit: Ron Beck, USGS EROS Data Center Satellite Systems via Wikimedia Commons. With thanks.


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