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Poverty in Russia and the Wealth Gap

Poverty in Russia and the Wealth Gap
Russia is a massive country with a population of 143 million.  With 18 million people living in poverty in Russia, however, the issue of alleviating poverty has become a serious issue for the administration of President Vladimir Putin.  According to the Russian auditing company FBK, the minimum wage in Russia is grossly incompatible with the cost of living. The average monthly living cost is 210 US dollars/month in Moscow.  The average monthly salary for a minimum wage worker there is 155 US dollars.  Statistics from the government of Russia indicate that the wealthier classes have been hoarding wealth at an exponential rate while the abject poor remain stagnant.  There are currently 97 billionaires in Russia, and their wealth is only increasing.  The fall of the Soviet Union was the impetus for this growing income gap, as moguls were able to take advantage of an increasingly more free-market economy.

On a positive note, poverty levels have gone down in Russia since the late 1990s, when over 20% of the population was below the poverty line.  Russian sociologist Natalya Bondarenko notes that “15 to 20 % of Russians (in the late nineties) considered their income enough only to buy food as opposed to just 5 to 6 % of Russians who say the same thing now.”  President Putin has also alluded to a policy in which politicians as well as the heads of companies would be required to make their salaries public.  Hopefully, the government of Russia will take steps to confront the issue of extreme poverty within her borders.  In order for stability to be maintained in post-Soviet Russia, the Motherland must look after her children.

– Josh Forget

Sources: The Telegraph, Forbes
Photo: Guardian

Defining an Emerging Market

Defining an Emerging Market
The term “emerging markets” was coined in 1981 at the International Finance Corporation when promoting the first mutual funding investments in developing countries. While the term is sometimes considered unhelpful, it is important to identify and define these markets. Emerging markets are a hot topic as they are predicted to surpass the US, German, and UK economies in the future.

There are three factors that distinguish an emerging market from a developed market. Firstly, rapid economic growth defines emerging markets. Great examples of emerging markets are Brazil, Russia, India, China, and South Africa (BRICS). In recent decades, these developing countries have boosted their large economies based on global capital, technology, and talent. The GDP growth rates of these countries have outpaced those of more developed economies, lifting millions out of poverty and creating new middle classes and large new markets for consumer products and services. The large labor pools of these countries give their economies a huge advantage over more developed economies.

The second factor that defines the emergence of a developing economy is how much competition it offers in comparison to developed markets. Along with the rapid pace of development, these countries pose serious competition to current dominant economies in developed countries such as the United States, the United Kingdom, Germany, France, and Italy.

Lastly, emerging markets are often defined in terms of their financial situation and infrastructure. While their rapid growth and competitiveness are positive growth indicators, the amount of red-tape and inconsistencies involved in dealing with these markets marks them as emerging. Unfortunately, some argue that the corruption in these markets will halt them all together despite other growth factors.

While the economies of Brazil, Russia, India, and China are well on their way to surpassing “emergence”, the predicted emerging economies of the future are Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa (CIVETs). According to John Bowler, director of Country Risk Service at the Economist Intelligence Unit, the sizeable populations of some of these countries and the wealth of natural resources in others, just might make them the economic boomers of the next decade.

– Kira Maixner

Source CNN , Forbes
Photo ACF

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Russia Institutes Public Smoking Ban

Russia Institutes Public Smoking Ban
Russian President Vladimir Putin signed a bill into law that has created Russia’s first public smoking ban. People will no longer be allowed to smoke in restaurants, trains or entranceways into public housing. Additionally, beaches, children’s playgrounds and other public places are now off-limits to smokers.

The measure had been a significant part of the government’s plan for bettering overall public health. Its effects include rolling prohibitions on where people can smoke, as well as new limits on marketing and selling tobacco products. All but one member of the State Duma voted in favor of the bill.

Lung cancers are the fourth-biggest cause of death in Russia, and more than 40 percent of Russians smoke cigarettes. The World Health Organization (WHO) conducted a study of smoking in Russia in 2011, and the results pointed out many of the deficiencies which this bill solves. For example, “the retail price of a pack of 20 of the cheapest brand of cigarettes in 2010 was 11 roubles.” This is the equivalent of 36 US cents or roughly one-third of the cost of a bottle of water in Moscow.

Russia’s new smoking laws on public smoking ban increase the minimum price allowed to be charged for a pack of cigarettes, hoping to reduce the amount people spend on tobacco while increasing the tax revenue for each pack sold.

– Jake Simon

Sources: BBC, World Life Expectancy, Numbeo