2017 Index of Economic Freedom

Russia

overall score57.1
world rank114
Rule of Law

Property Rights47.6

Government Integrity38.2

Judicial Effectiveness44.5

Government Size

Government Spending61.5

Tax Burden81.8

Fiscal Health93.4

Regulatory Efficiency

Business Freedom74.8

Labor Freedom50.8

Monetary Freedom57.3

Open Markets

Trade Freedom75.2

Investment Freedom30.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 143.7 million
  • GDP (PPP):
    • $3.7 trillion
    • -3.7% growth
    • 1.2% 5-year compound annual growth
    • $25,411 per capita
  • Unemployment:
    • 5.8%
  • Inflation (CPI):
    • 15.5%
  • FDI Inflow:
    • $9.8 billion
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Russia’s economy is severely hampered by blatant disdain for the rule of law and for the concept of limited government. The private sector remains marginalized by structural and institutional constraints caused by ever-growing government encroachment into the marketplace. Rising inflationary pressure jeopardizes macroeconomic stability. Large state-owned institutions have increased their domination of the financial sector at the expense of private domestic and foreign banks.

The inefficient public sector dominates the economy. The risk of state meddling in the private sector remains high in Russia’s repressive political environment. The judiciary is vulnerable to corruption, and the protection of property rights remains weak, undermining prospects for dynamic long-term economic development.

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Background

Vladimir Putin was reelected president in March 2012 following hotly disputed December 2011 Duma elections. Russia illegally annexed Ukraine’s Crimea Peninsula early in 2014 and continues to supply weapons and troops in Ukraine’s Donbas region. Western economic sanctions have led to capital outflows. Russia’s economy depends heavily on oil and gas exports. The low price of oil, the financial burden of annexing Crimea, and the desire to rearm the Russian military have strained public finances. The economy has been in recession since 2015. Russia’s bid to join the Organisation for Economic Co-operation and Development has been postponed as a result of its recent actions in Ukraine.

Rule of LawView Methodology

Property Rights 47.6 Create a Graph using this measurement

Government Integrity 38.2 Create a Graph using this measurement

Judicial Effectiveness 44.5 Create a Graph using this measurement

Weak property rights are a significant impediment to economic progress and a deterrent to foreign investment. The rule of law is not maintained uniformly across the country, and the judiciary is vulnerable to political pressure and inconsistent in applying the law. Corruption in government and the business world is pervasive, and a growing lack of accountability enables bureaucrats to act with impunity.

Government SizeView Methodology

The personal income tax rate is a flat 13 percent, and the top corporate tax rate is 20 percent. The overall tax burden equals 35.3 percent of total domestic income. Government spending has amounted to 35.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.9 percent of GDP. Public debt is equivalent to 17.7 percent of GDP.

Regulatory EfficiencyView Methodology

Burdensome regulations continue to hinder private-sector development. The regulatory system suffers from corruption and a lack of transparency. The rigid and outmoded labor code continues to limit employment and productivity growth. Pharmaceuticals are affected by price-setting. The nontransparent processes by which regulators set rates for utilities and transportation have turned rate-making reform into a major political issue.

Open MarketsView Methodology

Trade is important to Russia’s economy; the value of exports and imports taken together equals 51 percent of GDP. The average applied tariff rate is 4.9 percent, and export taxes interfere with trade. Foreign investment is screened, and investment in several sectors of the economy is capped. State-owned enterprises distort the economy. The financial sector is subject to government influence. State-owned banks dominate the banking sector.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.50.5
2Estonia79.11.9
3Ireland76.7-0.6
4United Kingdom76.40.0
5Georgia763.4
6Luxembourg75.92.0
7The Netherlands75.81.2
8Lithuania75.80.6
9Denmark75.1-0.2
10Sweden74.92.9
11Latvia74.84.4
12Iceland74.41.1
13Finland741.4
14Norway743.2
15Germany73.8-0.6
16Czech Republic73.30.1
17Austria72.30.6
18Macedonia70.73.2
19Armenia70.33.3
20Romania69.74.1
21Poland68.3-1.0
22Kosovo67.96.5
23Bulgaria67.92.0
24Cyprus67.9-0.8
25Belgium67.8-0.6
26Malta67.71.0
27Hungary 65.8-0.2
28Slovakia65.7-0.9
29Turkey65.23.1
30Albania64.4-1.5
31Spain63.6-4.9
32France63.31.0
33Portugal62.6-2.5
34Italy62.51.3
35Montenegro62-2.9
36Bosnia and Herzegovina60.21.6
37Croatia59.40.3
38Slovenia59.2-1.4
39Serbia 58.9-3.2
40Belarus58.69.8
41Moldova580.6
42Russia57.16.5
43Greece551.8
44Ukraine48.11.3
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