Deprivatization's effects on investment and economic stability in Russia

Property Right Security in Russia Deprivatization

The deprivatization process in Russia

What impact will the prospect of deprivatization have on investment by managers of privatized firms?

Managers willing to invest in Russia will have second thoughts when engaging into business in this country. First of all the economic and political instability is not good for business, as companies are not able to plan their activities. And the deprivatization, the reverse process of privatization infringes even the most sensible aspect in business - private property and the right to use it in order to obtain profit.

What effect will deprivatization have on foreign investment in Russia?

Taking into account the past financial crisis (1998) in Russia, it is not excluded that this unwise political movement, surely influenced by personal and not patriotical reasons, would lead to another capital movement out of Russia. As a result, on the foreign exchange market, the demand for Russian national currency will decrease, leading to an appreciation of Russian Rubbles in terms of Western currencies. This will heavily affect the national exports, worsening the balance of payments and the current account deficit.

Do you think that mass deprivatization is in the long run best interests of Russia?

I do not consider that mass privatization is in the best interest of Russia, not for the short-term nor the long one. As it was mentioned above, this political decision will impact on the country's overall welfare, employment will increase (flight of capital, the growth reduction registered by the import-export companies as a result of Rubbles appreciation)

Who gains from deprivatization? Who loses?