Russia Globalization the Economic Intelligence Unit Ranked

Russia Globalization

The Economic Intelligence Unit ranked Russia near the bottom of its list of globalized countries, giving it a ranking of 55th among the 60 countries surveyed (St. Petersburg Times, 2010). When the Soviet Union collapsed, there was tremendous hope that the burgeoning trend of globalization would spark a bright future for the Russia. Those hopes quickly faded. Despite its considerable resources wealth, including the world's largest natural gas reserves and 8th largest proven oil reserves (CIA World Factbook, 2011), the country quickly descended into hyperinflation and human misery (Saunders, 2001).

The Putin era has seen Russia only take tentative steps towards globalization, the country remaining mistrustful of the neoliberal ideology that drives the globalization process. Russian nationalism rose as a response to the "alien culture" of capitalism, and has guided Russian policy ever sense (Ponarin, 2004). When the opening of markets increased the level of human misery, Ponarin argues, the response was to shy away from free market capitalism as it became associated with negative outputs rather than the positive ones that most nations see.

Russia is one of the more promising markets in the world, as a populous middle income nation with established distribution channels. It forms one of the BRIC nations that are seen as driving global economic growth in the coming years. Russia is awash with oil and gas, and these resources drive the nation's economy. When oil prices plunged during the global economic downturn, the impact on the Russian economy was severe (CIA World Factbook, 2011).

One of the tentative moves that Russia has made -- albeit very slowly -- is the move to join the World Trade Organization, one of the most important organs of globalization. Russia's accession into the organization has come with reservations, mostly notable about human rights (Mauldin, 2011). It is precisely this type of intrusion of the international community on Russia's domestic affairs that has made the Kremlin so skeptical of fully embracing globalization as an ethos. In order to join, Russia has also had to phase out tariffs on a number of goods and waive flyover royalties for international airlines flying over Siberia.

Other issues that have arisen during the WTO accession process that have slowed down the pace of Russian globalization are concerns about Russia's role in regional geopolitics. In recent years, Russia has exerted itself more forcefully in its traditional sphere of influence, including military action in the Caucasus Mountains and more direct involvement in Central Asian and Eastern European issues (no author, 2010). Russia has sought to strengthen its political role in the world, but generally takes its own path, in contrast to the more open spirit of globalization.

Despite the country's reluctance to become significantly involved in the globalization process, Russia is often affected strongly by the impacts of globalization. This is because of the dependence that Russia has on oil and gas for revenues. When the global economic downturn caused oil prices to fall sharply, Russia's revenues decreased, crippling this economy. Similar impacts are felt for example when the euro struggles. Declines in the euro mean a stronger dollar, and that lowers oil prices, which again hurts Russia's revenues (Gilman, 2010).

Kochtcheeva (2010) characterizes Russia's response to globalization as a 'third path', a balance between the Europeanization and Americanization of its domestic policies as a response to globalization. Russia, she argues, is striving for "political, economic and social self-determination." This means that Russia is attempting to build its own reality with as little involvement from external actors as possible. This again highlights the country's mistrust of foreign involvement and the Western path of development, which it still views as having caused significant problems in the 1990s.

Russia's view of globalization therefore is one of skepticism, while simultaneously embracing the trend because of the importance that oil and gas revenues play in Russia's development. The country became accustomed over the course of the 20th century to guiding its own policy, and is therefore uncomfortable with a role in the world that would allow outside interests to dictate not only internal domestic policy but any policy the country might have. Russia is determined, therefore, to submit to the globalization process at its own pace, and under its own terms.

Russia's economy, certainly, has benefited from the trade afforded it by globalization. Opening the country's markets has resulted in a dramatic increase in revenues from fossil fuel extraction, and it has also invited significant foreign direct investment into the manufacturing sector. The latter has benefited from improvements in the country's crime and corruption scene, as well as modernization of the legal system. With improve socio-economic structures, Russia is able to enjoy some of the benefits of globalization (Kochtcheeva, 2010).

However, Russia's unease with the neoliberal aspects of globalization (Ibid) causes the country to globalize at a very slow pace. Thus, the shape of Russia's globalization thus far emphasizes trade, but de-emphasizes culture integration with the rest of the world, technology diffusion and the exchange of technology and ideas (St. Petersburg Times, 2010). Russians are getting out into the world more, however, at least to places like Israel, Vietnam and Beijing as well as the Ukraine, but they remain isolated and most Russians have very low exposure to the world outside of their country. This hampers the globalization process by emphasizing nationalism instead.