Introduction

The early years of Russia’s economic transition were marked by a substantial and persistent decline in economic activity as many obstacles to the functioning of a market economy remained to be overcome. Russia’s cumulative decline of output in the 1990s was about 40 %, much larger than the decline that occurred in the United States during the Great Depression. Only in 1997 was a modest positive rate of growth achieved, but this was interrupted by crisis of 1998, which reflected an inconsistent configuration of domestic policies combined with significant external shocks. By the year 1999, growth had revived as the effects of the crisis had worked themselves out and as fundamental uncertainties about the course of economic policies were attenuated under President Putin. In the years 1999-2002, Russia’s GDP growth averaged close to 6 %, obviously benefiting from high oil and gas prices in world markets and a renewed confidence on the part of domestic and foreign investors.