Friday, May 25, 2012

Economics Research Paper Sample

Economics Term Paper

1. Write a comparative analysis of regional features of contemporary economy in:

a) Moscow and Moscow Region
Apart from its role as the major regional commercial and cultural center, the city of Moscow boasts a diverse portfolio of enterprises in “various industry sectors, including engineering, metalworking, building materials, and defense” (Russia Profile, 2009, “Moscow”). The “industries generally rely more on the city’s skilled labour force than on raw materials” (Encyclopedia Britannica, 2009, “Moscow”, “Manufacturing”, para. 2). Engineering sector specializes in ball bearings, machine tools (particularly in grinding lathes, precision cutting tools, and textile industry equipment), aerospace design and measuring instruments, including watches. Chemical industry, previously oriented at producing dyestuffs for textile industry, such as natural-fiber and synthetic cloth, now makes synthetic industrial rubbers and rubber tires, paints, plastics, pharmaceutical goods, and perfumes, mostly derived from Moscow’s oil refinery processing petroleum of the Volga-Urals oil field (Encyclopedia Britannica, 2009).

Services, especially banking, finance and telecommunications, are becoming increasingly important each year, as oil riches keep fueling Russian economy. It is also necessary to note the role of Moscow as an important transportation hub. Moreover, the area has historically been an R&D centre, despite the attempts to create so-called “academic towns” in remote parts of the country during the Soviet times. At the moment, 20% of all scientific organizations in Russia are situated in Moscow Region. The region “includes two special economic zones for technology research - Dubna and Zelenograd” (Russia Profile, 2009, “Moscow Region”).


A peculiar feature of Moscow’s economy is that “although a disproportionate share of national wealth was concentrated there under the Soviets, the degree of concentration has significantly increased since 1990” (Encyclopedia Britannica, 2009, “Moscow”, “Economy”, para. 1). The city has accounted for one-fourth of Russia’s wealth by the beginning of this millennium, not taking into consideration unreported transactions. Average salary is much higher in Moscow than in other regions, yet salaries constitute only a quarter of city dwellers’ earnings (compared to three-fifths for all Russians) who derive a large share of their income from entrepreneurship and property renting: real estate prices in Moscow are traditionally high.

b) Western Siberia
West Siberian economic region, one of twelve economic regions of Russia, comprises Altai Territory, Altai Republic, Kemerovo Region, Khanty-Mansi Autonomous Area, Novosibirsk Region, Omsk Region, Tomsk Region, Tyumen Region and Yamalo-Nenets Autonomous Area. Therefore, economic conditions vary considerably across the region. The economy of Altai Republic relies on agriculture, such as distant-pasture livestock raising, breeding horses, deer and downy goats, as well as bee-keeping. As for Altai Territory, it has well-developed industry, such as engineering, metalworking, and chemicals: the region produces “1/6 of all tractors in Russia, 90% of the tractor plows, about 50% of the generators, and all railway freight cars” (Russia Profile, 2009, “Altai Territory”). Moreover, the territory is Russia’s third-largest grain and milk producer and the fifth-largest meat producer. Sunflowers, soybeans and sugar beets are grown as well.

Agriculture is among the main activities in Novosibirsk Region, too. Grains, potatoes, vegetables, flax, milk, eggs, wool, beef, pork, lamb, and poultry are produced there; horse breeding, beekeeping, and fur and fish farming are also important activities. As Russia Profile (2009) informs, “80 percent of the industrial potential of the oblast is concentrated in Novosibirsk with processing industries providing 95% of the total production volume” (“Novosibirsk Region”). The city is the center of business activity in West Siberia; the Siberian Interbank Currency Exchange is located there, together with numerous offices of Russian and foreign companies. Industries in Novosibirsk Region include machine-building and metallurgy, namely production of electric generators for turbines, machines for metal-cutting, wood-processing and textile industries, polymers, electronics, plane parts, and chemicals.

Khanty-Mansi Autonomous Area is “Russia’s main oil and gas region of the world’s largest oil-producing areas” (Russia Profile, 2009, “Khanty-Mansiisk Autonomous Area”). Tyumen Region, which ranks first in Russia in terms of industrial output, also relies heavily on oil and gas. Production of milk, eggs, greenhouse vegetables, fishing and reindeer herding are the most important sectors of agriculture.

It is evident that most West Siberian regions specialize in oil extraction and processing, and the same applies for Omsk Region where “smaller sectors [also] include woodworking and timber and also manufacturing for defense” (Russia Profile, 2009, “Omsk Region”). Tomsk Region has large reserves of iron and peat, in addition to petrochemicals. It is “home to the Siberian Chemical Complex, one of Russia’s largest nuclear industry enterprises, that produces nuclear power and heating” (Russia Profile, 2009, “Tomsk Region”). Four years ago, the city of Tomsk was designated as a special economic zone for R&D. As for Yamalo-Nenets Autonomous Area, oil and gas account for 93% of its industrial production; at least 90% of Russia’s natural gas and 12% of its oil are produced there. Kemerovo’s primary industry is coal mining – its Kuznetsk Coal Basin is among the largest on the planet. Engineering and chemical industries are also well-developed in Kemerovo (Russia Profile, 2009).

c) Ukraine
The steep economic decline Ukraine suffered after the collapse of the USSR, together with the loss of nuclear armaments, embezzlement of national wealth and earning the image of a country with non-market economy created a fairly negative perception of Ukraine among foreign investors. Foreign investors were wary about entering the market up until late 1990s. International donors like the IMF and the World Bank relied on “shock therapy” – rapid privatization of state assets and deregulation of markets – in dealing with the post-Soviet crisis. Redistribution of wealth in early 1990s gave rise to several oligarchs and left the rest of the population in abject poverty. People who were considered Soviet intelligenzia, such as artists and scientists, suffered the most, as the new government was unable to finance science and culture. Many highly skilled specialists, as well as young people, emigrated to the U.S. and Europe during the decade.

Before the collapse of the Soviet Union, Ukraine was responsible for a quarter of USSR’s GDP at its worst times. Other sectors that were particularly developed included metallurgy and mining. They still form the backbone of the country’s economy, yet other sectors – such as chemicals, textiles, agriculture and services – are becoming increasingly important. Ukraine was among the countries hit the most by the global financial crisis. A rapid fall in price of its main export, steel, coupled with the shutdown of international capital markets caused distress in both the banking sector and real economy. The situation required a loan from the IMF to stabilize (IMF, 2008).

d) Georgia
Rapid economic development of the country started after it became a recipient of economic assistance from the IMF and World Bank in 1995. Another boost took place after the construction of the Baku-Tbilisi-Ceyhan oil pipeline, which provided employment opportunities for many Georgians. Still, the majority of population works in agriculture: it is “the main sector of the economy of the country, contributing nearly 21% towards her GDP. Other sectors making significant contribution towards the country’s GDP include hotels (17%), financial services (20%), communication (19%) and construction (33%)” (EconomyWatch, 2009, “Georgia Economy”, para. 2). Reforms in mining, construction and banking sectors are necessary. Georgia, by virtue of being reliant on the influx of foreign capital, suffered significantly from the global credit crunch. In September 2008, it went to the IMF for an emergency loan “aiming to rebuild gross international reserves and bolster investor confidence” (IMF, 2008, para. 1).

e) Kazakhstan
As EconomyWatch (2009) informs, Kazakhstan has a lot of commercially valuable natural resources like fossil fuel reserves and metals. Main Kazakhstani exports include metals, machinery, oil, ferrous materials, chemicals and grain; GDP growth is 8.5%. Services are the biggest component of the economy contributing 54.8%, followed by industry (39.4%) and agriculture (5.8%). Around 13.8% of population lives below poverty line. Foreign investment is of paramount importance for the country, since it comprises 30.3% of total GDP. Major export destinations are China (15.6%) and Germany (11.5%). Moreover, “[t]he immense steppe lands exhibit prime agricultural potential [and] South Kazakhstan is known for its walnut and apple production” (EconomyWatch, 2009, “Kazakhstan Economy,” para. 1).

2. Characterize the major features of the environment, and contemporary economic and social conditions in the Russian Arctic
Almost all of the lengthy northern coast of Russia is well above the Arctic Circle. Furthermore, many islands also belong to the Arctic region; they are situated in the Barents Sea, Kara Sea, Laptev Sea, East Siberian Sea, Chukchi Sea and Bering Sea. The population of the region is mainly comprised of indigenous tribes such as Nenets, Saami, Komi, Enets, Chuckhi, Chuvans, Koryaks, Eskimos, Aleuts and others. However, a lot of Russian settled there before and during the Soviet times to work at numerous ports and sea military bases.

A development which is most likely to produce a devastating impact on both economy and social fabric of Russian Arctic is the climate change. Its effects are already felt in the region. Since many of the indigenous tribes living there – some of the nomadic – depend on hunting, fishing and reindeer herding for their survival, a gradual increase in temperatures may be very dangerous for their traditional way of life. Tribes in Russian Arctic migrate northwards in summer and southwards in winter; for some of them, it implies crossing frozen rivers and lakes. Every year people and their reindeer have to wait longer to start their pilgrimage, since the ice does not get thick enough to cross. For reindeer, it means less available pasture (Harding, 2009).

However, this is not the most pressing environmental problem. The most dangerous consequence of climate change is melting permafrost, which increases the frequency of landslides and releases huge amount of methane into the atmosphere. If the trend is to continue, the region can turn into and impenetrable swamp. Some people hope “it might bring benefits to one of the world’s coldest countries, freeing up a melting Arctic for oil and gas exploration, and extending the country’s brief growing season” (Harding, 2009, para. 9). Yet indigenous tribes are well aware of the fact that they are interconnected with nature and dependent on it for their survival and preservation of their culture and lifestyle. Russian politicians are urged to pay greater attention to the problem: in addition to all the above mentioned factors, a large part of railway that crosses the region is built on permafrost. Polar bears had to migrate south from their natural habitats and now are often seen rooting through rubbish in human settlements (Harding, 2009). Moreover, indigenous peoples of Arctic used to store food in the soil in winters. Nowadays “the thaw often comes in the middle of winter and the meat can no longer be preserved. The tundra is no longer a reliable natural refrigerator” (Koerkamp, 2009, “Shorter winters”, para. 9).

Arctic is a contested zone between Russia and other countries, such as Canada, Denmark, Norway and the United States. This autumn, the Russian government approved a plan to make Arctic its main resource base by 2020, given that climate change has allowed for oil drilling in previously inaccessible areas. A railroad was opened in September to “serve Russia’s biggest gas field Bovanenkovo at the top of Yamal [a peninsula in Northwest Siberia] which will feed the Nord Stream pipeline to Germany from 2012” (Ferris-Rotman, 2009, “Broken deer legs”, para. 2). Same month, the Russian government “proposed tax breaks to entice foreign firms to drill the frozen mass of land, which has field reserves of 16 trillion cubic meters” (Ferris-Rotman, 2009, “Broken deer legs”, para. 5), eager to develop the region as soon as possible.

Another possible change associated with warmer climate is the retreat of North Pole ice which makes it possible to navigate Northern seas without icebreakers: “[T]he northern passage could become an attractive, much shorter alternative for existing routes like the one via the Suez Canal” (Koerkamp, 2009, “The Arctic as a future trading route”, para. 5). Therefore, it is possible to conclude that climate change will produce a serious impact on Russian Arctic, although Russian scientists doubt that rising temperatures should be attributed to human activity and forecast cooling of Arctic to happen soon.

In any case, it appears that the exploration of the area will bring more disadvantages than benefits to many indigenous tribes living there, while oligarchs in Novosibirsk and Moscow cheer at new developments. Amie Ferris-Rotman (2009) of Reuters reports that to date “compensations for pasture degradation and land withdrawals tended to be absorbed by local government and did not reach [indigenous tribes]” (“Broken deer legs”, para. 10).

3. Characterize contemporary Russia-Ukraine relations
Ukraine declared its independence from the Soviet Union in 1991. Grounds for that were prepared by the nationalist People's Movement of Ukraine, Rukh, founded in 1989. It was one of the forces behind the referendum in 1991 in which 90% of Ukrainians voted in favor of independence (Beissinger, 2002).

Since the collapse of the Soviet Union, Russia-Ukraine relations went through several stages. At first, Russia cherished hopes that the Union might be restored or replaced with a different yet closely integrated geopolitical arrangement. However, Ukraine saw its future as an independent state. The major conflict in the 1990s was over Ukraine’s decision to give up its strategic and tactical nuclear weapons - world’s third largest nuclear arsenal at that point. The West promised to provide security assurances to the ex-Soviet country in return for disarmament. However, as the relations between Ukraine and Russia continued to sour, the West was increasingly perceived as unwilling to protect Ukraine from its Eastern neighbor.

Voices in Ukrainian foreign policy establishment arguing disarmament was a gross mistake are particularly strong now, eighteen years later. In the light of Russia’s war with Georgia in 2008, the ongoing conflict over the Black Sea fleet, secessionism in Crimea, and annual gas rows, Ukraine’s geopolitical standing is severely compromised and under threat from Russia.

Examining recent developments in Russia-Ukraine relations is most appropriate in two different aspects, namely political and economic. Russia is very important for Ukraine as a trading partner and supplier of energy resources. At the same time, Russia relies on Ukraine for transporting its oil and gas to Europe. In fact, it is very hard to draw a clear line between politics and economics in Russia-Ukraine relations.

In fact, the question of Russia is the most salient issue in Ukrainian politics. It was the divisive line between East and West during the so-called Orange Revolution. President Viktor Yushchenko and Prime Minister Yulia Tymoshenko are in favor of Westernization and integration into NATO and possibly the EU, while Yanukovich’s Party of Regions holds a firm pro-Moscow position. He and several other politicians were advocating closer ties with Russia and more independent stance in the relations with the West. In such a way, during the Orange Revolution, Ukraine got to be divided into those who supported deeper integration into global institutions and those who believed that such integration poses a danger to Ukraine’s national interests and equaled participation in the global processes with surrendering to Western imperialism. Some people think that the sensationalization of the otherwise inexistent divide between the Western Ukraine and Eastern Ukraine was artificial. Western Ukraine is predominantly Ukrainian-speaking and Western-oriented, while the East is populated mostly by Russian speakers willing to maintain strong cultural and political ties with Russia. Roughly speaking, the West voted for Yushchenko, while the East voted for Yanukovych.

After the highly contested presidential election in November 2004, it became clear that the incumbent Leonid Kuchma’s regime rigged the elections to the advantage of his protégé and Moscow’s darling, Viktor Yanukovich. The opposition led by Viktor Yushchenko declared that the elections were stolen and called upon a nationwide protest. Some protestors called for taking over governmental buildings, like their counterparts did in Georgia during the rose revolution the year before that, but Yushchenko ruled out any action that might provoke violence (Aslund & McFaul, 2006). There was a realistic threat of secessionism. Whether to give Russian the status of the second official language remains stumbling block in all political struggles in Ukraine.

Four years after the Orange Revolution, the mood in Ukraine is generally disillusioned, as former “Orange allies”, Viktor Yushchenko and Yulia Tymohenko are endlessly bickering for power. Little of the real change, which had been so eagerly anticipated, actually took place.

In September 2008, Yushchenko-Tymoshenko’s ruling coalition collapsed over the President’s condemnation of the Russia’s war with Georgia. Tymoshenko’s party joined the opposition, Party of Regions, and approved legislation limiting presidential powers. For years, Tymoshenko has been a vocal advocate of estrangement in the relations of Russia. Yet lately rumors of her striking a deal with Kremlin behind everybody’s back have been astonishingly persistent. Her article for The World in 2009, the annual collection of predictions for the year ahead compiled by The Economist, cites the post-1945 reconciliation between France and Germany as a model for Ukraine and Russia (Tymoshenko, 2008). Some people started to call Tymoshenko a “Russian agent in Ukraine” and suspect her of promoting Russian business interests.

At present, many believe it was wrong to move away from Russia. Rapprochement with Russia is often framed as a debate between idealism and pragmatism: autonomy is agreeable but economically devastating. Aggressive assertion of independence immediately translates into higher gas prices, trade disturbances, and withdrawal of Russian businesses and capital. Ukraine’s commodity boom was to a large extent made possible by Russia’s energy subsidies. Yet as Ukraine moves out of Kremlin’s orbit, a peculiar tradition has emerged. Every year around Christmas, Russia unilaterally renegotiates the contract for gas supply and raises prices. Allegedly, it’s being done to bully Ukraine into selling its gas transport network. At the beginning of this year, the row ended in Russian gas supply to the EU being cut for many days, amid accusations of Ukraine stealing gas transported through its territory.

Early in 2009, Ukraine’s Prime Minister turned to Russia, the U.S., the European Union, China and Japan for financial assistance in order to meet IMF requirements. Possible Russian loan to Ukraine was dismissed by Yushchenko as a threat to national security: in the 1990s, Russia has persistently offered economic assistance to Ukraine, yet Ukraine has so far refused it, preferring more expensive loans from Washington for geopolitical reasons.

The inauguration of the Eastern Partnership – a new framework for relations with ex-Soviet countries of Eastern Europe and Caucasus instead of any pre-accession talks – in May 2009 angered Russia, since the EU was seen as an intruder into the Russian sphere of “privileged interests”, which was painted as a compromise of its security. At the same time, Moscow was to a certain extent relieved to hear the EU does not plan to include Ukraine as its member anytime soon, probably never.

The future of Russia-Ukraine relations depends to a great extent on who will win the upcoming 2010 presidential elections in Ukraine. Yushchenko and Tymoshenko, allies during the Orange Revolution but likely rivals in the nearing elections, are grappling for power while Viktor Yanukovych, the opposition leader, is quietly seeing his ratings rise as the two undercut each other, whatever the costs to the maimed economy are.
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