Resource Rich Economies - Essay Example

Resource rich economies by The of the The of the School The and where it islocated The Date Resource rich economies Summary This paper examines the case of Russia, proving that resource rich economies are often poor, underdeveloped and politically instable. This is performed through application of these elements to the available evidence. Thus, it was found that the industrial sector of Russia is dominated by oil and gas industry; this means that when these resources become less abundant or disappear, the industrial structure is likely to collapse because it was not designed properly. In addition to that, the current population of billionaires does not share its wealth with the rest of the people which leads to a gradual accumulation of money in one group. Moreover, the middle class in Russia is poorer and less active than its counterpart from other countries. The fact that the country in question is underdeveloped can be seen in the following: the manner in which industry is organized in it is not sustainable; the citizens are deprived of various freedoms such as freedom of speech; scientists want to leave the country because they can apply their knowledge more effectively abroad. Finally, the political instability of Russia is seen in the fact that a part of the population objects the situation when the major decisions are made by a small group of people. As a result, the government has to perform actions, often risky in order to seek approval of the people in order to reinforce its legitimacy. Finally, the opposition provides people with the much desired alternative to the political world that is dominated by the government. Introduction It is rather obvious that various countries of the world choose different paths of development. However, it must be noted that in the majority of the cases this choice is conditioned by the environment and availability of resources. Thus, those countries that are deprived of natural resources compete using other valuable materials. For example, Japan that can hardly boast any oil or gas is a widely known leader of technology. On the other hand, those countries that were blessed with natural resources often make emphasis on their export, forgetting about other ways of becoming successful. That is why it is often suggested that resource rich economies are poor, underdeveloped and politically unstable. If one compares countries all over the world, one learn that Russian as an exceptional country since a considerable part of its export is comprised by mineral resources. In other words, it might be described as a banana republic, but instead of bananas it sells one of the most valuable resources in the world – petroleum. This paper will analyze the example of Russia and prove that abundance of resources can have a negative impact on a country. Poverty The first aspect of the above mentioned negative influence that will be explored is poverty. While many might conclude that poverty is most connected to economic area of social life, they should keep in mind that poverty also deals with deprivation of opportunities (Chalk, 1998). Indeed, industrial development of Russia is limited to production of mineral resources and their export. In other words, the resources define the developed of the industry, not the other way around. One would make no mistake that the current levels of oil and gas production can hardly be maintained forever. That is why the industry is likely to face a dramatic change in the distant future. However, if the major trend of its development dealt with producing oil and gas, the industry is not likely to adapt to new conditions when these resources become scarce. So, the more Russia relies on export of raw materials the more it contributes to the crisis that it will experience in the future when the resources disappear. One should also keep in mind that poverty should be explored from the point of view of income distribution. It is a widely known fact that there are many wealthy people in Russia: they are included in Forbes lists and were able to make a fortune (Blinnikov, 2011). However, one of the peculiarities of them focuses on the fact that they do not share their wealth. For example, Bill Gates, the wealthiest person on the planet, is known to have donated a significant sum of money to charity not only in his home country, but also abroad. If one considers the Russian billionaires, one will be able to see that they are less likely to help their compatriots and are willing to invest abroad more. For example, Roman Abramovich bought Chelsea football club in England and this was seen as manifestation of the Russian wealth. However, it is obvious that he could have bought one or even several football clubs in Russia and pay for the best equipment and players for them. However, Abramovich decided to invest his money in a foreign football club which means that he is not willing to share his wealth with his compatriots. Finally, one should also keep in mind that the status of the middle class can be regarded as an effective measure of poverty of a country. One of the peculiarities of the middle class in Russia focuses on the fact that it does not reach the universal standards (Silverman & Yanowitch, 2000). There are several points that should be mentioned here. First of all, the people who belong to the Russian middle class are often poorer than their counterparts from other countries. In other words, in Russia the middle class is the category of people who are not fabulously rich and not terribly poor. In addition to that one of the characteristics of the middle class is its activism with regard to the social life. However, in Russia the people who belong to this part of the society are rather passive. What is more important is that a decent standard of living is witnessed primarily in the big cities. Contrary to that, life in small villages is difficult and people there hardly make the ends meet. Lack of development It has already been mentioned that the industry of Russia can be characterized by the prevalence of oil and gas production. However, as these resources are not renewable, it is quite understandable that such structure of economics is not sustainable (Blum, 2008). Indeed, the present imbalance in the structure proves that it is underdeveloped. One would make no mistake suggesting that developing the economy with the help of extensive export of mineral resources is the easiest method to boost it. However, while the short term consequences of such decision can be tempting, the long term consequences are terrible. Moreover, since oil and gas production are well developed, the government does not see reasons to develop other industries since this is not economically effective as the above mentioned two are able to contribute to GDP while the other can hardly be successful in terms of finances. All this leads to the understanding that the industrial life of Russia will remain underdeveloped because there is no imperative to direct research into other areas, The next element of being underdeveloped can be found in the fact that freedoms of the citizens are limited in various ways. In spite of the fact that the Russian Constitution protects freedom of speech, it is obvious that all mass media is being monitored by the government and the latter is able to block any voices that criticize it (Josephi, 2010). That is why the opposition often tries to use the Internet as its major platform because it is outside the direct sphere of influence of the government. All this shows that the citizens are oppressed though they may not know it. For example, for many generations deprivation of freedom of speech seems to be the common order of things. In other words, people do not criticize the government openly because they are not used to the fact that their criticism can have any significant impact. For example, the result of the civil rights movement in the United States was the abolishment of racial segregation and improvement of the social status of the people who belong to minorities. This is a significant change which was achieved by ordinary people. However, the level of understanding of the people in Russia has not developed so far. In addition to that, one should also point out that the issue of brain drain is a nagging problem for Russia (Graham, 2008). Indeed, scientists and different specialist prefer to leave their country because they are not able to pursuit a successful career there. As a result, they are willing to relocate to a country that is likely to provide them with opportunity to continue their research. However, it is obvious that when these people leave Russia, they take their ideas with them. That is why they are able to achieve great results in other country. If one takes a look at the Nobel Prize statistics, one will be able to see that the Russian scientists may have made their fair contribution, but they are outnumbered by their counterparts for other country. Of course, by no means this can be interpreted as the fact that the Russians are not as smart as other nations. It simply shows that Russian scientists might want to live in a different country because the latter will provide the required conditioned for making scientific breakthroughs. Political instability Exploration of political instability is able to shed some light on the third characteristic aspect of being a resource rich economy. First of all, one should point out that the major decisions in Russia are made by a small group of people, mostly by the President (Lansford, 2015). While some might think that this as an indication of quite the opposite, namely stability, it is obvious that if the political world had indeed been stable, the President would have been able to make decisions collectively, not individually. By far, this state of affairs upsets a considerable number of people. They feel that they are excluded from the decision making process. In addition to that, the population cannot fully trust the elections since the results of it can be easily predicted. As a result, on the elections day, the only thing that people actually do is folding the paper and putting it into the ballot box. The rest is decided without them. Considering the case of political instability in Russia, one should keep in mind that the government is seeking the approval of the public in order to appear popular (Gill, 2012). For example, at the present moment the rating of Vladimir Putin is extremely high and nobody has doubts about his reelection. Therefore, in order to stay legitimate, the government must be approved at least superficially by the population. This highlight the political instability of the country since the government and the people are regarded as the opposing sides of the political spectrum. As a result, the former may perform certain actions that would make the latter happy in the short run, but in the long run these decisions may not bring positive outcomes. For example, in 2014 Russia annexed Crimea and this contributed to the rise of patriotism and increased the popularity of the President. However, one should also keep in mind that at the present moment the referendum in Crimea is not recognized by the global community and Russia is heavily influenced by various economy sanctions implemented by the Western countries. Lastly, it may be particularly significant to state that Russian political world is rather vulnerable for foreign influence (Saideman, 2001). Indeed, the government tries to dominate the major areas of social life in order to make sure that its authority is not questioned by the citizens. However, it is obvious that the government is not able to control all the areas. The latter attract people who are not satisfied with governmental policies and as a result the oppositional movement emerges. Indeed, when the people see that there is no other option, but to vote for the dominant party or other parties that will inevitably support it, they are eager to find an alternative. One would make no mistake suggesting that the opposition to the Russian government is more influenced by the desire to influence the political world rather than actual rejection of governmental policies. A similar thinking can be witnessed at the time of the Soviet Union when the citizens could buy the goods which were manufactured in their country and any imported product, no matter what quality it was became popular simply because it was produced abroad. Conclusion One would make no mistake pointing out that Russian can hardly be recognized as a traditional banana republic; however, being a resource rich economy, it suffers from the same drawbacks, such as increased poverty, lack of development and political instability. All this has been shown on concrete examples from Russian reality. Speaking of poverty, one should keep in mind that the industry of Russia is likely to collapse as well as the resources that it is based on become scarce of extinct. This means that the country will go through a tough time when it will have to change the orientation of the development of the industrial sector. Another point that should be states is that though there are many billionaires in Russia, they prefer not to share their wealth. As a result, the middle class is not what it is in other countries. The facts that Russia is an underdeveloped country is seen in several aspects, such as imbalance in the industrial structure, lack of freedom of speech and brain drain. The political instability is recognized in the fact that the government has to appease the population in order to support it status. References Bryant, R 2014, Policing digital crime, Ashgate Publishing, Farnham. Chesher, M & Kaura, R 1998, Electronic commerce and business communications, Springer, London. Deflem, M 2008, Surveillance and governance crime control and beyond, Emerald, Bingley. Garfinkel, S 2000, Database nation: The death of privacy, O’Reilly, California, USA. 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