The Role of the Outside World in the Economic Development of Post-Communist States: The Russian Case.

Abstract

Currently Russia is one of the world's developing countries that relies on outside world assistance to regain its power. IMF & the US have been very active in loaning money to Russia to make improvements in the economy and politics. However, the conditionality of these loans has not necessarily resulted in a solution of problems. With internal problems such as, government instability, economic underdevelopment, and corruption, Russia has been unable to meet the numerous conditions imposed on it by lenders. The GDP and the inflation rate have fluctuated without reaching the desired point. The ideology in the government has changed numerous times from pro-Western to pro-Soviet and vice versa. Corruption has become a synonym for Russia while money gained from illegal activities or loans is groped into private pockets. These are only a few of Russia's problems, which IMF has tried to fix by using loan conditionality. The existence of conditions in loaning money to Russia is a necessity. However, after the summer research I realized that these conditions have to be less quantitative and more qualitative. With every loan IMF should impose a few conditions, and follow not only Russia's efforts to meet such conditions, but also the actual results. IMF should be more consistent and strict with its conditions throughout all disbursements of the loan, and most importantly it should concentrate on economic developments and situation of the country, instead of making loan conditionality a political issue.