Shleifer and Triesman (2005) as a disclaimer state that they are not the first to use the term 'normal' in reporting the current state of Russia's progress since the fall of communism. However, they fail to consistently define what normal is. Rosefielde (2005) in his rebuttal to the Shleifer and Triesman perspective point out that the definition put forth by the authors fluctuates between two definitions used interchangeably depending upon the point they are trying to make. According to Rosefielde, these two definitions are:
As Rosefielde points out the second definition is uncontested. The mid level income status is statistically documented and the second portion implies that anything is possible. The controversy of opinions lies in the first definition and that will be the definition of normal which will be used in our examination.
The first area to examine then becomes the status of Russia's free market economy. As Rosefielde succinctly points out this is done by evaluating several factors: "the characteristics of ownership, property rights, rule of contract law, price determination, market entry, profit maximising, utility maximising, efficient equilibration, and state regulation responsive to popular will" (2005, 4).
The 2007 Index of Economic Freedom published by the Heritage Foundat...
The 2007 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal which was released January 17th addresses many of these main areas of concern. In this year's report Russia's economy was rated 'mostly unfree' with a ranking of 120th from the 157 countries analysed. Among it's geographically counterparts, Russia ranks 39th of 41. Figure 1 below displays the rankings based on various economic freedoms.
Russian Economic Freedom Ranking Indicators
("2007 Index", 2007, 1)
From the above chart, several of the categories indicate that Russia is near the world-wide average. However, in several categories there is a great deal of disparity, most notably investment freedom, financial freedom, property rights and freedom from corruption.
The government restricts investment in many lucrative sectors including aerospace development, natural gas production, defence manufacturing and electrical power. In a free economy foreign invest must be scrutinised; however, restricting investment in entire sectors limits the growth potential of the country and the overall economic health of the country. In addition to these transparent barriers imposed by the Russian government, it was noted that within the culture of the country there are many instances of clandestine barriers which hamper Russia's move to a more free economy. Corruption, according to the report, is rampant which further hampers investments.
Shleifer and Triesman (2005) who asserted that Russia was a normal country concede that there is widespread corruption and graft within the country as reported by annual reports presented by the World Bank and Transparency International. However,