Russian Drama: Inherited Development Underperformance and Eroding Global Dominance

The new normal is a conceptual situation where economic and political agents are economically convinced and politically motivated to adapt to temporary austerity in economic growth and political participation. The concept entails a remarkable and rare mix of economics and politics. Focusing on Russia, the paper draws on results from two studies that reflect on underlying weak links in the benchmark economy that support expectations of moderation in economic growth and political participation. One study examines the tendency and causes for the Russian development underperformance (slow growth and sticky distribution when compared to other leading countries). The study makes use of social accounting matrix multipliers. The tendencies are partly due to structural imbalances inherited from the past economy with its state-led shadow agents, and its ethnic regional disparities. The other study looks forward into the future and examines Russian prospects for leadership and influence at the global level. This study makes use of a dominance index composed of the relative sizes of transforming agents (i.e., population) and transformed value (i.e., GDP). Results for Russia suggest that global dominance is eroding, and global marginalization is imminent. Both studies point to difficult choices that Russian leadership have been increasingly facing and continue to face in a drama-like sequence. We briefly comment on likely responses.