2013 Index of Economic Freedom

Russia

overall score51.1
world rank139
Rule of Law

Property Rights25.0

Freedom From Corruption24.0

Limited Government

Government Spending54.4

Fiscal Freedom86.9

Regulatory Efficiency

Business Freedom69.2

Labor Freedom52.6

Monetary Freedom66.7

Open Markets

Trade Freedom77.4

Investment Freedom25.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 142.4 million
  • GDP (PPP):
    • $2.4 trillion
    • 4.3% growth
    • 2.8% 5-year compound annual growth
    • $16,736 per capita
  • Unemployment:
    • 6.6%
  • Inflation (CPI):
    • 8.4%
  • FDI Inflow:
    • $52.9 billion
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Russia’s economic freedom score is 51.1, making its economy the 139th freest in the 2013 Index. Its score is 0.6 point higher this year, with sometimes significant improvements in six of the 10 economic freedoms largely offset by notable declines in labor freedom and financial freedom. Russia is ranked 41st out of 43 countries in the Europe region, and its overall score is below the world and regional averages.

Russia’s economic environment remains “mostly unfree.” Despite relatively high economic growth, achieved mostly through sales of oil and gas, the foundations for long-term economic development remain fragile without an efficiently functioning legal framework. Corruption, endemic throughout the economy, is becoming ever more debilitating. The state maintains an extensive presence in many sectors through state-owned enterprises. Large state-owned institutions have increased their domination of the financial sector, outweighing domestic private and foreign banks.

Progress with market-oriented reforms has been uneven and often reversed at the urging of those with an interest in maintaining the status quo. Russia’s restrictive and burdensome regulatory environment discourages private-sector growth and severely hampers meaningful economic development. Increasing inflationary pressure poses a major risk to overall macroeconomic stability.

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Background

After serving as president from 1999–2008 and prime minister from 2008 to 2012, Vladimir Putin was again elected president in May 2012 on the heels of hotly contested December 2011 Duma elections. Opposition protests continued in 2012. The state has reasserted its dominant role in the mining and oil and gas industries and depends heavily on exports of natural resources, especially hydrocarbons. Russia’s reputation for cronyism, corruption, and a hyper-regulatory environment has damaged its investment profile. The economy began to grow again in 2011, but at modest levels. In April 2012, China surpassed Germany as Russia’s largest trading partner. Russia became a member of the World Trade Organization in December 2012.

Rule of LawView Methodology

Property Rights 25.0 Create a Graph using this measurement

Freedom From Corruption 24.0 Create a Graph using this measurement

Russia’s legal framework has not been fully modernized. 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. Protection of private property rights is weak, and contracts are not always secure. Infringements of intellectual property rights continue. Corruption remains a major problem for businesses and investors.

Limited GovernmentView Methodology

The income tax rate is a flat 13 percent, and the top corporate tax rate is 20 percent. Other taxes include a value-added tax (VAT) and an environmental tax. The overall tax burden equals 27.2 percent of total domestic income. Government spending has decreased to a level equivalent to 39 percent of GDP, turning the budget balance to surplus thanks in part to oil revenues. Public debt has been reduced to under 10 percent of total domestic output.

Regulatory EfficiencyView Methodology

The business environment has improved only marginally, and regulations remain burdensome. Bureaucratic obstacles and inconsistent enforcement of regulations make entrepreneurial decision-making very uncertain. The outmoded labor code continues to limit employment and productivity growth. The state influences prices through extensive subsidies and numerous state-owned enterprises.

Open MarketsView Methodology

The trade-weighted average tariff rate is 3.8 percent. Despite concessions made to join the World Trade Organization in 2012, remaining non-tariff barriers distort the flow of goods and services. Except in the oil and gas sector, growth in foreign direct investment has been elusive due to the deficient investment framework. State-owned financial institutions have further solidified their position by taking market share from domestic private banks.

Country's Score Over Time

Bar Graph of Russia Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Russia to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81-0.1
2Denmark76.1-0.1
3Ireland75.7-1.2
4Estonia75.32.1
5United Kingdom74.80.7
6Luxembourg74.2-0.3
7Finland741.7
8The Netherlands73.50.2
9Sweden72.91.2
10Germany72.81.8
11Georgia72.22.8
12Lithuania72.10.6
13Iceland72.11.2
14Austria71.81.5
15Czech Republic70.91.0
16Norway70.51.7
17Armenia69.40.6
18Belgium69.20.2
19Cyprus69-2.8
20Slovakia68.71.7
21Macedonia68.2-0.3
22Spain68-1.1
23Malta67.50.5
24Hungary 67.30.2
25Latvia66.51.3
26Poland661.8
27Albania65.20.1
28Romania65.10.7
29Bulgaria650.3
30France64.10.9
31Portugal63.10.1
32Turkey62.90.4
33Montenegro62.60.1
34Slovenia61.7-1.2
35Croatia61.30.4
36Italy60.61.8
37Serbia 58.60.6
38Bosnia and Herzegovina57.30.0
39Moldova55.51.1
40Greece55.40.0
41Russia51.10.6
42Belarus48-1.0
43Ukraine46.30.2
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