PRINT THIS PAGE Reflections on Russia24/08/2001. Source: McKinsey Quarterly. Alexei Beltyukov, M. James Kondo, William W. Lewis, Michael M. Obermayer, Vincent Palmade and Alex
Privatisation has failed to transform the economy in Russia. No new business thrives there – instead new and old businesses struggle to survive. Here, the McKinsey Quarterly examines the reasons behind the dramatic fall of the Russian economy.
Russia's economy is being undermined by government manipulation of and protection for inefficient operators. Surprisingly, however, only about 25 per cent of the country's industrial capacity is subscale or obsolete; the rest could become competitive with better management, modest investment—and enough political will to force change.
This article shows just how far Russia's economy has fallen since the collapse of the Soviet state; per-capita GDP is down by 30 per cent, for example, and productivity now stands at less than 20 per cent of the US level. The article quantifies the sad state of ten key sectors of the economy, describes government practices and policies that have contributed to their problems, and points to some potential signs of life, such as a relatively healthy software sector.
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Taken from The McKinsey Quarterly, 2000 Number 1
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