"Middle-income Trap": Russia’s Challenges And Responses

Russia’s economic had developed rapidly from2000to2008. The average of GDPgrowth rate of Russia was7%and the per capita GDP increased from$1775in2000to$11700in2008.Russia had become one of the world’s ten largest economies. But sincethe2008financial crisis, Russia’s economic growth rate slowed down, GDP growth rateof2010and2011was4.3%, which was lower than the average rate of emergingeconomies, and was not expected to improve. Russia’s economic structure is distorted,which is heavily dependent on resource type industry. At the same time the ingredient ofstate ownership is extremely high, and it is difficult for Russia to overcome thebottleneck of technical innovation. Russia is facing growth transition dilemma.In addition to the economic field, new problems are also inevitably emerging in thesocial and political fields of Russia. In the social filed, the Gene coefficient of Russia is0.421in2010, which was higher than the "warning line" of income distribution gap0.4.In the political field, with the resolution of basic living problems, people will have moredemocratic appeal. With the emergence of middle class, the appeals will be stronger. Badsigns in economic, social and political fields indicate Russia’s risks of falling into"middle-income trap".In order to deal with "middle-income trap", Russia’s government formulatescomplementary growth policies, innovative growth policies and constructs democraticsystem, which can maintain a virtuous cycle of economic growth and social stability.Although the implementation of complementary policy has not solved the problem ofpolarization between the rich and the poor (Gene coefficient is not improvedsignificantly), but per capita income is rising sharply, which means people have sharedthe fruits of economic growth. The implementation of innovative growth policy has notgot obvious effects so far and the construction of democratic system has a regressivetendency.Putin began his third term on May7th,2012. Putin has outlined an ambitiousagenda in order to cope with the challenges and lead Russia to leap "middle income trap".Because the transition is hard, Russia still needs a series of conditions to leap the trap. This paper adopts the revised elite governance mode of Kenichi Ohno and conductsthe research of Russia’s “middle-income trap " problem using interdisciplinary analysismethods. The article is divided into six parts: the first one is the introduction, whichmainly describes the background and significance of the topic, objectives and methodsof the research, and domestic and foreign related research of " middle income trap ". Thefirst chapter explains the analytical framework of “middle income trap ", and focuses onthe meaning of "middle income trap ", reasons of falling into the trap, and conditions toleap the trap. The second chapter mainly shows that bad signs had emerged in social,political, and economic fields, and Russia is in the danger of falling into the"middle-income trap ". Analysis is conducted in the third chapter on the policies Russiahas implemented, which also reveals the effect of the policies. With the help of the aboveanalysis and according to Putin’s campaign platforms and policies, the fourth chapterfocuses on Russia challenges. The last part is conclusion, which elaborates conditions ofRussia to leap "middle income trap".