The Economic Position and Energy of Russia - Research Proposal Example

INTRODUCTION

Russia is considered among the developed countries in the world. Owing to its increased economic growth, industrialization, and economic stability, the country has remained an integral and imperative part of the G8 countries (Youngblood Coleman 2014). The presence of Russia in the summit, though repeatedly faced with political and economic criticism, has for a long time made the country an important focus of economic research. With the growth of the world market and the irreversibility of the economic globalization, the impact that the external forces have on the internal economic frameworks is enormous (Youngblood Coleman 2014). However, this impact has not been adequately addressed in research. This paper is a research proposal into the issue of the impact of global imbalance on the economic position and energy of Russia.

Based on the existing research evidence, major world economies have been hit hard by the instability of the global money market (Stone 2014). However, when other big economies seem to have had a leap back to a good course after the 1998 economic crisis, Russia remained behind and quite reluctant to take advantage of the situations and the expanding global market to regain its place on the global map. In addition, even with the massive natural resources reserves, Russia still has policy issues that repeatedly threaten its economic stability. Its overdependence in the power of foreign currencies such as the dollar makes it an exception among the G8-summit countries all of which have strong currencies in place that are not as dependent on the dollar as the rouble (Plotnikov & Volkova 2014). The external forces such as the global economic imbalances and instabilities, therefore, seem to have a major impact on the economic status of Russia.

This paper proposes a research into the identified impact. The proposal will explore the economic status of Russia in greater details, looking into the historical development and growth of the economy as well as the economic drivers identifiable in research. The proposal will also explore the research methodology to be used in the research and the limitations and the delimitations of the research as well as the threats to validity.

The Background of Russian Economic Growth

Russia has become a powerful country due to its potential to grow its economy with little dependence on the external forces. Although with many economic and historic problems, the country has been able to move up the economic ladder and make its position felt at the top of economic development. After the Soviet Union had collapsed, Russia underwent a serious transition from a communist dictatorship system to a democratic system that encouraged involvement in the global market. However, this transition has not been easy due to massive economic hardships that resulted from the encouragement of the external involvement (Youngblood Coleman 2014).

Before the breaking of the Soviet Union, there were steps by the government under the last leader Mikhail Gorbachev to reform the economic status after a long period of instability and political wrangles. Through legislation, the government allowed companies greater autonomy from regulatory agencies. This promoted the private sector uprising aimed at correcting the deficiencies in the command economy (Stone 2014). However, the measures did not focus on encouraging a market-based economy and hence the impacts of the legislation was only limited. After the 1991 revolution, Russia was formed. The new leader Boris Yeltsin intended to undertake radical economic changes to revolutionise the economic situation of the country that had seen wars and instability for a long time. As the first measure, the government lifted price controls on almost all goods. This lead to massive benefits in the private sector which witnessed a 70% increase in growth. However, as the outside forces took toll of the situation, major private companies were taken over by foreigners and hence the benefits were not felt in Russia. This led to a disaster with the GDP shrinking by half between 1991 and 1998 (Treisman 2011). The privatisation efforts were a failure. Instead of benefiting the common Russian, the privatisation brought enough wealth to few oligarchs to control the economy and even the governance. Consequently, the average wages reduced, and the life expectancy at birth for Russian men and women reduced by an average of 4 years. The chronic decline in the economic status and the financial reputation of Russia was witnessed during these years. Russia defaulted on its international debts, and the local currency lost more than two-thirds of its value (Plotnikov & Volkova 2014).

Following the rock-bottom decline, the rouble was greatly devalued making the economy to be competitive in the 1998 economic crisis. This competitiveness triggered faster economic growth especially due to the increased global oil and gas prices. The growth which characterised the Russian boom years, the economy grew by an average of 6.4% per year between 1999 and 2008. This growth was attributed to global changes such as the increased oil and gas prices and the political stability which were fuelled by the global popularity of President Putin (Treisman 2011).

The economic crisis of 2008-2009, however, did not spare Russia. The economy which had experienced massive growth in the ended decade shrunk by 7.8% in 2009. The global economy caused a decline in the oil prices and increase on food prices. Being dependent on oil exports, the Russian economy shrunk. However, the country was able to recover due to the strong will-power and political stability. However, the global instability and imbalances have always had an impact on the economic situation of Russia. This research is about the impact that this imbalance has had on the economy in Russia. The focus of the research proposal is to create the need for further research on the impact of global imbalance on the Russian economy (Stone 2014).

THE CURRENT CONTEXT

Global imbalances refer to the increasing fluctuation in the accounts surpluses and deficits in the economic world. This implies that at one time, there is either increased flow of goods and money into the economy and at a different instant this flow is reduced leading to increased deficits. Based on the principle of supply and demand, the fluctuating accounts lead to an increased fluctuation in the prices of goods and services in the global market. As the world economy stands today, no individual country or economy can survive without depending on the others. The economic globalisation dictates that countries can be divided into two, labour abundant and capital abundant. The category that any country belongs determines its position in the global market as well as its influence in the specific sector of the market. With imbalances in the market, therefore, the country is impacted either positively or negatively (Visser et al. 2012). Russia is a resource-rich country with an energy based economy. Its attempts to get fully integrated into the global economic community has been affected greatly by the changing exchange rates which make exporters uncompetitive in the international market. It has become hard therefore for it to shift dependence from the resources and base it on the global markets as such. Currently, its economy is only partly globalised while most of it is dependent on the oil and gas prices with the major bargaining chip being the oil and natural gas reserves rather than the foreign currency reserves (Youngblood Coleman 2014).

Following the continuous growth of economic globalisation, there has been an unprecedented increase in economies that are dependent on the global markets. This implies that a number of economies in the world survive under conditions of massive influence from the global situations. After the 2009 global economic crisis, the Russian economy has experienced slowed growth which began in 2011. This slowing of economic growth is seen as a result of the drop in the global investment activities (Stone 2014). However, strategists are found to have gone wrong by failing to target real improvement in the economic policies and focusing on improving the image of the country in the World Bank ranking of the ease of doing business. This, according to experts is intended to increase the entry of the foreign direct investment and improving the economic status. However, being a natural resource-rich country, the economy is expected to be a too overdependence on the external forces rather than creating a locally strong structure (Visser et al. 2012).

The major impacts of the global imbalance are the failure of the Russian economy to rise after a global financial crisis. This research will, therefore, focus on the impacts of the globalisations in several key areas of the Russian economy. The results of this inquiry are expected to provide a guideline to the policymakers and the economists in analysing the situation of the costs of over-saving and underinvesting; foreign exchange reserves; and the overall cost of the global financial crisis to the Russian economy (Plotnikov & Volkova 2014).

The Purpose and Objectives of Research

The purpose of this research will be to investigate the impact of the global economic imbalances on the stability of the Russian economy. Based on this purpose, the research will be based on a major aim and several vital objectives.

The aim of the research is to study how global imbalances have impacted on the economy in Russia over the last three decades. The specific objectives of this research are;

To study the economic stability of Russia in the last three decades.

To explore the relative ability of Russia to positively respond to the global economic crisis.

To explore the positive and negative impacts of global imbalances on industries and home economies in Russia.

To explore the available options for Russia economic stability in the current global economic conditions.

Significance of Research

The globalisation of the economic sector is an irreversible and a sure concept in the world. This, therefore, implies that all economies are becoming inevitably connected in a global market, this interaction has affected even the reserved countries whose economies have traditionally depended on internal forces. The economic globalisation has therefore resulted to external influences affecting world economies, as opportunities help improve economies, challenges and threats to one economy and the existing imbalances also have an impact, directly or indirectly, to all other economies involved in the system. Russia as an economy has been dependent on energy and internal policies. However, like any other player in the world trade, the economy is being impacted by what is happening in the world. As such, it is necessary to point out and describe this impact and help in policy making to ensure that the economy is not adversely affected.

RESEARCH METHODOLOGY

Introduction

Research methodology refers to the approach by which data is extracted to be clearly understood. The development of a strategy for conducting research is the third step of identifying a problem and completion of the literature review. This chapter will, therefore, discuss the following: research design, target population, sampling strategy, data collection instruments and process and analysis of the data

Research Method

This research will be the study of the impact that the existing global imbalance has had on the economy of Russia. The research, to be complete will entail a study into the experts’ views and the relevant statistical, economic and governmental reports that will address the research questions. In addition, the study will link these results with the existing literature and come up with possible recommendations that the government of Russia, as well as the stakeholders in the economy, can use to ensure that global imbalances do not adversely affect the economy.

The research will be a mixed qualitative and quantitative research. The data required to meet the outlined objectives and effectively answer the research question is greatly varied. The data will have to include reports from economic and financial experts which is qualitative as well as statistics and financial figures from the economic database of Russia will comprise the quantitative data.

Research Design

The descriptive study design will be used to carry this research. And survey type research will be conducted, through the questionnaire experts’ opinion and perception about the impact of global imbalance on the economic status and stability in Russia. The descriptive design will be used to collect relevant data from all the sources indicated and also to help in achieving the research objectives. This design will focus on describing the context of global imbalances in the world economies and relating this to the impacts of the phenomenon that are seen in the Russia economy.

The Research Questions

This research will be further guided by several specific research questions as proposed by the researcher;

What has been the trend in Russian economic growth in the last three decades?

What are the capacity of Russia to rise above global instabilities and economic crisis?

What are the impacts of economic globalisation on Russia’s economy?

What lessons can Russia and economists learn from the Russian economy as impacted by global instability?

Research Hypothesis

The research hypothesis for this research is proposed as follows;

H0: Global imbalances have had no major impacts on the economic development and stability in Russia over the last three decades.

H1: Global imbalances have had major impacts on the economic development and stability in Russia over the last three decades.

Research Sample and Data Collection

The research will collect data from a variety of sources depending on the type of data. The qualitative data will first be obtained from financial reports and government statistics spanning over the last thirty years. This will then be backed up by reports from experts and economic institutions and the primary data collected from experts through questionnaires. The quantitative data will be collected from the governmental statistics and experts reports as well as from the questionnaires and interviews to be conducted.

For the secondary data, the research sample will include annual reports on the financial status of Russia throughout the thirty years. These reports will be collected from the governmental statistics as well as from the World Bank and International Monetary Fund archives. Further, experts’ reports on the economic status of Russia and the increased global imbalances will be compiled to bring out a meaningful piece.

Primary data will be collected from experts and resource persons within the Russian economic sector and who have a vast economic knowledge and expertise in international finance. A total of ten interviews will be conducted in this line and about twenty online surveys done to help in aligning the reports used as secondary data with the current perception of the stakeholders involved. The interviews and questionnaires will focus directly on the impact that the global imbalance has had on the economy of Russia in the study period.

Data Analysis and Presentation

Data analysis for the three research tools will be done separately. First, the analysis will focus on the secondary data, and this will be analysed based on the research questions and objectives. Data analysis for research entails an examination of the collected data, categorizing and tabulating the information or putting it into recombination that will make it easy to understand and make meaning. This is aimed at addressing the initial proposition of the research and to address the research objectives fully. The data obtained from the secondary sources will be compiled into tables and graphs with the aim of answering the research questions. The information obtained from the surveys will be analysed using the open coding technique whereby the questionnaire questions will be broken down into several categories each with specific questions. These questions will be combined to represent a single perspective of the research. Comparing and contextualising these perspectives will lead to a coherent and comprehensive analysis. The interviews will also be analysed using coding of the collected data and aligning these codes to the

Validity and Reliability of Research Instruments

Validity

The validity of research instrument is the ability of the instrument to measure the aspect of research that it was supposed to measure. This means that the validity should be measured by how well the instrument brings out the expected meaning of a phenomenon. In this research the instruments used, the interviews and the questionnaires will be validated regarding content validity. Pre-tests will be conducted to ensure that the instruments are valid and that they lead to relevant and accurate information that will lead to the aims of the research.

Reliability

Reliability is the extent to which research is consistent and applicable in a variety of situations, settings, and conditions with similar or related results. To test the reliability of the research instruments used in this research, the researcher will conduct a pre-test and re-test techniques. Using SPSS the reliability of the questionnaire will be computed.

Limitations of the Research

This research will be conducted using both primary and secondary data. This means that there is a likelihood of obtaining information from poorly researched reports and articles and use them to make conclusions in this research. However, this will be covered by the primary data to be collected and reputable data from the government databases and the experts’ reports.

Ethical Issues

The research will be conducted partly in the community and also from an online database. This means that the ethics of research will have to be applied throughout the research. First, unless reports are publicly available, reproduction of any form will have to be done only after permission from the copyright holders. Secondly, no respondent will be involved in the research without their due consent and acceptance. For this reason, no respondent involved will be below the legal age of 18y years. In addition, the information collected in this research will only be used for professional and academic purposes, as indicated in the consents signed, and no names of respondents will be indicated on any part of the research.