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Simon Gerards Iglesias / Michael Hüther IW-Report No. 51 11. October 2022 Economic development through regression - on the prospects for the Russian economy

The war in Ukraine will have profound geopolitical and economic consequences for Russia. The West has imposed sanctions on Russia on an unprecedented scale, largely dissolving decades of economic interdependence.

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Economic development through regression - on the prospects for the Russian economy
Simon Gerards Iglesias / Michael Hüther IW-Report No. 51 11. October 2022

Economic development through regression - on the prospects for the Russian economy

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German Economic Institute (IW) German Economic Institute (IW)

The war in Ukraine will have profound geopolitical and economic consequences for Russia. The West has imposed sanctions on Russia on an unprecedented scale, largely dissolving decades of economic interdependence.


At the same time, Russia is experiencing a massive brain drain, especially of young, well-educated people and numerous scientists, as a result of the increasing repression of its civil society. What are Russia's medium- to long-term economic prospects against the background of these developments? The historical structure of the Russian economy shows that a diversified endogenous development does not seem possible due to institutional barriers that still have an impact today. Moreover, the 'Dutch disease' - deindustrialisation as a result of massive trade surpluses caused by the commodity export boom - together with the exogenous import shock Russia is suffering due to the sanctions, could further intensify the loss of prosperity. In addition, due to the break with the West, Russia will have to develop a development strategy without access to a market for modern technologies, imported goods and capital investments, and seek stronger ties with other markets such as China and India.

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Economic development through regression - on the prospects for the Russian economy
Simon Gerards Iglesias / Michael Hüther IW-Report No. 51 11. October 2022

Economic development through regression - on the prospects for the Russian economy

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German Economic Institute (IW) German Economic Institute (IW)

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