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Middle-Class Poverty in Russia Alleviated by Retail Market

Middle Class Poverty in Russia
For most of Russia’s history as a developing nation, foreign direct investments have taken the form of oil and land. The consumer market within Russia has remained a small part of its economy because of a consistently weak Russian currency- ruble, market volatility and consumer hesitation in purchasing durable goods such as cars and other less-liquid assets.

Russian Economy

A weakened economy and increased embargoes from the United States and other Western nations have led to the worsening of middle-class poverty in Russia. Russia’s gross domestic product (GDP) fell on average 1.5 percent yearly between 2014 and 2016. GDP is a measure of the country’s finished goods and services produced within its borders and sold to trade partners.

If a country’s GDP is decreasing, the nation’s consumers have fewer goods and services to purchase. As a result, this adversely affects the country’s economy and consumer market. As of 2016, the population living below the poverty line in Russia rose to 23 percent and amounts to around 20 million people. A rebound in oil prices coupled with a growing agricultural sector has improved Russia’s chance for a massive economy turnaround. Increased trade with China has also given room for economic improvements to the developing nation.

Middle-Class Poverty in Russia and Retail Market

In turn, middle-class poverty in Russia is being addressed through a revitalization of consumerism in malls and small shops across large Russian citizens such as Moscow, St. Petersburg and Saransk. A renewed interest in mass consumerism across this Eastern nation has inspired thousands of businesses to open and offer a variety of goods to consumers.

Mass production of commodity items mimics the consumerism attitude in the United States. Historically, Russian consumers have taken rubles out of the country and purchased goods and services abroad because of lower prices and an increased purchasing power. However, because Russia is producing and selling its own goods and services, consumers are remaining in the country and spending their money with Russian businesses.

As a result of increased consumerism and small to medium-sized enterprise business growth, additional Russian business owners have flooded the market with new enterprises. As of January 2019, Russia’s employment rate is 59.90 percent. The developing nation has seen unemployment continuously fall as a result of improved geopolitics and business within its borders.

The Future Opportunities

Within the next 10 years, Russia’s consumer market is expected to grow internally and the economy is expected to improve. Currently, Russia’s economic freedom score is 58.2 on an index of 100, ranking the country globally as the 107th freest in the 2018 index. Compared to the United States, ranked at the 18th place with a score of 78.8, Russian consumers exercise a significantly lesser degree of economic freedom in their daily purchases and investments.

The Russian government intends to reverse this downward trend with increased investment in malls and shopping centers across the country. The burgeoning consumer market is one solution to alleviating middle-class poverty in Russia as it creates more jobs and opportunities for less-skilled laborers.

Additionally, Russian can begin to encourage more multinational businesses and franchises to do business within its borders. The presence of well-known global brands works cooperatively with Russia’s present goals of increasing consumerism and mall traffic. Russia has a long way to go yet before it improves its global ranking as an economically free country of consumers. The present geopolitical landscape lends itself to a much-needed overhaul of economic policy within Russia.

Russia is combatting economic strife and political pressure from the rest of the world by revitalizing its consumer market. Brand development is a key success factor in this revitalization process. If the country continues to mimic the United States of America in the rebuilding of its consumer market, the middle-class poverty in Russia can potentially be eradicated and lead Russia into the new decade of economic growth and prosperity.

– Nicholas Maldarelli

Photo: Pixabay

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Work and Travel USA: A Russian Student’s Way Out

Work and Travel USA
The Work and Travel USA program is a United States’ government program that offers foreign students an opportunity to work and travel across the country through the provision of a J1 work visa. The program allows over 100,000 students to come to the U.S. into a variety of cities and towns across the country each summer.

Advantages of Work and Travel USA

Prior to moving to the U.S. for the summer, students find an employment opportunity in the U.S. through their respective work and travel agencies. Upon arrival, four months of work are defined and nearly a month’s time of travel and leisure for each student, depending on their savings throughout the summer. The program offers foreign students the unique opportunity to earn thousands of U.S. dollars, experience American life and culture through personal interaction and work experience as well as the privilege of repatriating thousands of dollars back into their respective country’s currency when they inevitably return home. Unless they decide not to return home.

Middle Classes of US and Russia

According to the Pew Research Foundation, approximately half of the U.S. population that totals to around 320 million citizens reside in middle-class households. Despite a strong representation of middle-class American citizens, financial gains for middle-income Americans during this period were modest compared with those of higher-income households, causing the income disparity between the two groups to grow.

Contrary to the United States, Russia’s middle class has shrunken to the point of nonrecognition. In developed countries, the middle class is an essential class, the guarantor of social and political stability, legislator of norms of socio-economic and cultural behavior. Its representatives are characterized by independence and critical thinking that facilitate the development of civil society and the efficiency of state management. In Russia’s developing nation, the middle class is parceled into ultra-rich oligarchs that, in fact, represent the elite and the derelict poor on the opposite side of the spectrum.

Motivations for Work and Travel Program

Russian student candidates for the Work and Travel USA program fall somewhere in the middle. They are aged from 18 to 28 years, have a proficiency in English, belong to a travel agency with a work arrangement, they have obtained all legal documents to work in the U.S. for three to four months and have successfully completed at least one semester at their home university.

The motivations for applying to the Work and Travel USA program appear obvious, but American laborers and academics seldom realize the hidden incentives behind a J1 visa and its political power. On average, candidates for the Work and Travel USA program initially put up over $1,200 in program fees and paperwork in order to be afforded a J1 visa and to work in the United States. The granting of this visa grants temporary freedom to a Russian student that he or she is seldom likely to experience while living, studying and working in Russia.

Matters of poor higher education standards and poverty in the form of household income, per capita GDP, social exclusion on the basis of sexual orientation and gender and geographic/geopolitical disenfranchisement are the primary motivations for a select few Russian J1 visa holders to defy the Work and Travel USA agreement and ultimately overstay their visas in pursuit of residency, a green card and, ultimately, American citizenship.

Misuse of Work and Travel USA

The J1 visas awarded to students through the Work and Travel USA program have become a solution to middle-class poverty students in Russia for escaping the country. Rather than committing to a broken system of higher education or working tirelessly in a blue-collar trade, many young Russians are overstaying their visas while in the U.S. in preparation for a new life. Due to matters of conflicted interest, Russian travel agencies and the U.S. government do not disclose precisely how many J1 visa holders overstay their visitor status.

The issue of overstayed J1 students obviously concerns the internal environment of Russia and its connection to poverty. Young Russian citizens know better than to assume the state of affairs in Russia will improve to the point where poverty will be alleviated nationwide. Thus, students fortunate enough to make the cut and receive the J1 visa often pursue the Work and Travel USA program with nefarious and permanent intent.

There are real solutions to solve this suboptimal state for young Russians in the middle class. The establishment of lobbyist groups to improve higher education standards will begin to set positive trends in motion. There is however the persisting issue of Russians wanting to visit the USA with the intent of returning home. Programs and measures taken must work to encourage all Russian J1 holders to return home without disadvantaging those who seek the program with integrity.

Conversely, the issue of overstaying can be reframed entirely. Perhaps the U.S. can begin to set up incubator programs for foreign students who overstay their visa in order to afford them the necessary legal resources so they may make legitimate claims to the residence. If Russia refuses to enact policy that addresses its middle-class poverty issue, perhaps it is time for the United States to step up and show how far legislation can go to improve the lives of law-abiding people.

– Nicholas Maldarelli

Photo: Pixabay