Russian economy largest in Europe

Discussion in 'The Russian Economy' started by Morgoth, Jul 3, 2013.

  1. Morgoth

    Morgoth Office Registrar (13th class)

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    The data from the World bank for 2012 is finally out, as preliminary data indicated, Russia did indeed overtake Germany in economic output and became the largest economy in Europe and the 5th largest in the world.

    http://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD?order=wbapi_data_value_2012 wbapi_data_value wbapi_data_value-last&sort=desc

    On the GDP per capita side, Russia continued to close the gap with the west with its GDP per capita rising to 65% of British and French levels. It seems that Russia will overtake Greece in per capita terms this year as in 2012, it reached 95% of Greek levels and the continued decline in economic output in Greece and increase in economic output in Russia is bound to equalize their GDP per capita's.

    In addition, Russia's GDP per capita has reached 47% of American levels, a level which the Soviet Union was never able to attain, it failed to lift its GDP per capita above 40% of American levels. Russia today is closer to the west in terms of economic development than it has ever been in the
    past. In this sense, the current government of Russia has been more successful than any in the past in achieving economic convergence with the west.
  2. AKarlin

    AKarlin Generalissimo Staff Member

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    Thanks Morgoth for this. I will be sure to post about it soon!
  3. Morgoth

    Morgoth Office Registrar (13th class)

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    It will be interesting to see that rate at which Russia will converge in per capita terms with nations such as France or the UK. I suspect that it is likely to be around 2%, with Russia growing between 2 - 3% per annum and the nations of western Europe growing by 0 - 1% in per capita terms through to 2020.
  4. North Asian

    North Asian Office Registrar (13th class)

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    I bet the data isnt even 100% accurate and russia has some billion more for sure like its always.

    I remember correctly before they made this GDP data in 2012 as an update russia had 3.1 trillion not 3.2. Now it has 3.2, and more earlier it was 3 trillion.
    You can see that on comparison estonia and russia, russia never had higher gdp per capita than estonia before but in fact it was even since 2010 as worldbank corrected their data.


    And if you look at nominal gdp both worldbank now and imf when they made their report in april russias gdp for 2011 was 1.899 trillion and in 2010 1.5 trillion. We all know their so called final data for these years were 1.85 and 1.4 trillion.
  5. Alexander Mercouris

    Alexander Mercouris Ship Secretary (11th class)

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    Thank you Morgoth for this.

    I am going to make a prediction, which is that economic growth in Russia will begin to rise steadily from 2014-2015. Given the growing savings rate with inflation falling a 5% growth rate does not seem to me unrealistic. If that happens in a low inflation environment then convergence will be much faster.
  6. Morgoth

    Morgoth Office Registrar (13th class)

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    e

    I agree that the potential for an acceleration in the economic growth rate exists but the crisis in Europe is likely to restrict Russia's economic growth rate as it is restricting growth in the rest of Eastern Europe although Russia seems to be suffering less than other Eastern European nations such as the Czech Republic and Hungary which have already registered negative rates of growth this year.

    Interestingly enough, Ukraine which is the poorest nation in Europe has also registered a negative rate of growth meaning that even its low level of development, something that normally allows for greater levels of growth is not helping it deal with a dysfunctional government that no idea of how to deal with the economy. Convergence for Ukraine with the developed world is likely to be a long and arduous path.
  7. AKarlin

    AKarlin Generalissimo Staff Member

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    I will agree with that. Though not sure about the 5%; even South Korea/Taiwan barely managed that at Russia's current level of development. Maybe 3%-4% is a bit more likely.
    Morgoth likes this.
  8. Morgoth

    Morgoth Office Registrar (13th class)

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    I also agree Russia is unlikely to grow above 4%, I would also add that it is almost impossible for Russia to grow as fast as South Korea or Taiwan did at Russia's current level of development. If we analyse when Korea's and Taiwan's GDP per capita reached 45 - 48% of American levels, this occurred in 1992 for Taiwan and 1999 for Korea and calculate average per capita growth for the next five years, the figures are 4.7% for Korea and 5.4% for Taiwan.

    The reason I don't believe Russia will be able to achieve these rates of growth are two-fold.

    1. The global economic environment is much less conducive to economic growth than it was in the 1990s, the global economy is growing at slightly over 2% vs over 3% in the 1990s.

    2. Russia's genetic IQ potential is lower than the East Asian nations meaning that they have an inherent advantage in regards to human capital, the most important ingredient in economic success.
  9. gbordakov

    gbordakov Office Registrar (13th class)

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    Any evidence of that?
  10. Morgoth

    Morgoth Office Registrar (13th class)

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    The PISA test which includes a large number of nations and measures the skills of high school students across a range of fields constantly show East Asian students at the top of the performance range.
    http://www.oecd.org/pisa/46643496.pdf

    Also IQ tests constantly show East Asians as having the highest results. Any look at data from any one of the numerous IQ tests that have been conducted show East Asians clustered at the top of the rankings.

    The reason these high results in East Asia can be attributed to genetics is due to the fact that the investment in the education system in say Japan or Western Europe is largely similar and cultural factors alone cannot explain the difference in performance.

    Although I must say that if you plot IQ against GDP per capita, the GDP per capita of nations such as Japan of South Korea is significantly below what would be suggested by their IQ's, this I put down largely due to the differing attitudes towards how the economy should operate, for example in Japan there exists a different attitude towards long term employment and its importance than the attitude that prevails in nations such as France or Germany.

    This means that Russia even with a lower IQ has the potential to reach levels of GDP per capita seen in Japan or South Korea and even exceed them, however I do believe that having a lower IQ potential is one reason that Russia's economic convergence is not likely to be as fast as South Korea's or Japan's was even if it will finally reach the same level of GDP per capita that exists in say Japan.
  11. North Asian

    North Asian Office Registrar (13th class)

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    there are studies that show russia can even out perform some east asian countries in education

    http://russiadebate.com/threads/russian-and-east-asian-students-are-the-smartest-study-shows.59/

    Second Japan and korea have so low gdp per capita because they lied in asia for most of the time during their industrialization which is much poorer now but not for long. Korea only recently industrialized and japan was more isolated to trade with more developed countries, but japan isnt that much poor now if you look at gdp per capita its equal to uk or france and it has more people than both together.
  12. Morgoth

    Morgoth Office Registrar (13th class)

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    I agree that on certain tests which measure academic performance more so than IQ, Russia performs better relative to other nations, this may be because the Russian education system is well designed to train students to achieve high levels of aptitude whereas schools in East Asia have started to become corrupted with what I call the "liberalist educational theory" which results in students form even high IQ nations under performing and results in worse economics outcomes for the nation.

    In regards to your point on GDP per capita, Japan's GDP per capita over the last 15 years or so has remained more or less stable relative to the UK or France despite its IQ level being higher by at least 5 points or more, if Japan was going to significantly surpass the levels of GDP per capita which are seen in Western Europe, it would have already done so but it has not leading to the conclusion that the current level o GDP per capita seen in Japan relative to Western Europe its natural "ceiling".

    This means that Japan's GDP per capita does under perform relative to its IQ, I have put fort some reasons and would be glad to hear more for why Japan's GDP per capita does not significantly surpass the GDP per capita's of nations which have IQ's which are in excess of 5 points lower.
  13. Patrick Armstrong

    Patrick Armstrong Commissar

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  14. AKarlin

    AKarlin Generalissimo Staff Member

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    Well, not like Russia has any right to be smarmy on that front, Patrick. ;)

    Incidentally, as regards the topic of the post, just in case anyone missed my Da Russophile post on that here it is. It was a few days after Morgoth's, who was right on the bat, while it took media outlets like RIA and RT a week or two to realize that. Sluggish...

    Although apart from that there has been virtually no coverage of this milestone in the Western media.
  15. MarkPavelovich

    MarkPavelovich Commissar

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    Who, today, who is reliable and respected, backs the notion of genetic IQ? I'm not saying nobody says it, but an awful lot of them seem to be Klansmen and John Birchers.

    I disagree western and Asian academic conditions and curriculum are similar, and suggest there are factors such as the drive to succeed academically among Asian cultures which are all but absent in western cultures, at least in public schools. This is getting worse in western educational institutions, where competition is now thought to be unfair because it hurts the feelings of those who can't keep up. But that's a far cry from an inference that Japanese kids are just born smart.
  16. Morgoth

    Morgoth Office Registrar (13th class)

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    I am still waiting to see a story in the Economist about this milestone, I doubt there will be one, neither has there been anything in the corporate owned western media thus fur about the fact that Russia has become a high income country.
  17. Robert

    Robert Collegiate Registrar (14th class)

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    Vineyard of the Saker on the Russian economy "overtaking" Germany

    http://vineyardsaker.blogspot.co.uk/2013/07/russia-breaks-into-top-5-world.html

  18. MarkPavelovich

    MarkPavelovich Commissar

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    Well, BMW is a good example, because of course there is no comparable product in the same class that originates in Russia; BMW need lose no sleep over that, and it is helpful if people realize - for example - it is export of raw timber which has offset BMW's profits (those are getting so common in Canada now that you can't swing a cat by the tail without hitting a BMW, by the way, they must be doing a roaring export business). However, all the pretzel statisticizing and equalizing in the world cannot obscure the fact that the Russian economy continues to advance when most world economies are floundering and faltering, and despite the often-derisive accusation that all Russia has is oil and gas. That being the case (which, obviously, it isn't), how would Russia continue to grow its economy as energy prices sink? Only genius reinvestment and a cooperative FDI would allow that to happen, and FDI in Russia faces a daily assault from outsiders who seek to derail it for their own purposes.

    It remains to be seen what will happen to the Russian economy if the USA stumbles when it is no longer able to maintain a "loosened monetary policy" - comfort code for endless rounds of quantitative easing in the form of chucking $85 Billion per month into buying its own treasury notes and mortgage securities. I notice the recent announcement by Bernanke that the government believed it might see an end to loosened monetary policy by August 2014 was greeted by a precipitous drop in the market, shrieks of dismay from Corporateville and a rapid reversal by Bernanke only days later; the free lolly will continue for as long as we can keep it up. How long will that be, I wonder?
  19. gbordakov

    gbordakov Office Registrar (13th class)

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    I really meant evidence directly related to IQ rather than to quality of an education system (of course the argument that quality of education is a major contributor to economic success is even more valid that one for IQ).
    I am no expert in these matters, just googled it and basically found no IQ data outside of US/UK. So I am naturally interested in any more or less representative data for IQ tests administered in China, Russia, India, Germany, etc. Much debated "Bell Curve" IQ superiority/inferiority statements are based on data collected on emigrants in US, so the sample is not representative of genes or culture.
    I am not talking about genetic IQ here, which can only be investigated with twins studies, but "socio-cultural" IQ would be interesting. Another interesting topic is how to measure verbal IQ uniformly across different languages. Any data and not very long explanation are welcome.
  20. MarkPavelovich

    MarkPavelovich Commissar

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    Lewis Terman, developer of the Stanford-Binet Standard IQ Test which was used for decades in the USA, originally espoused a theory that genetics determined IQ, and there was a flurry of excitement at the time (of the test's development) centered around "breeding for brightness" and a lot of codswallop about how your own intelligence was directly influenced by the number of scientists and groundbreaking researchers you could count in your family tree.

    http://en.wikipedia.org/wiki/History_of_the_race_and_intelligence_controversy

    Terman later renounced his earlier theory, realizing a multitude of factors including environment, diet and societal/cultural mores influence IQ, quite apart from the fact that the Stanford-Binet test might not be a reliable instrument to assess intelligence, albeit it's probably the best we have. The best explanation I can offer for the high placement of Asians in the testing we have available is a combination of emphasis placed on academic excellence, and discipline. But you would have to look at academic performance across time to see if Asian placement was consistent and - if so - what variations there were in the factors I mentioned across the period. The PISA tests have simply not been running long enough to tell us that.

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