This is a really good question and the answer is well worth reading. It really does take time for cultures to adapt to both modernism and to free market activity. It further explains similar conditions in Latin America.
It is also true that they are cognizant of their flaws and are striving to overcome them. Thus it is only a matter of time and perhaps joining the EU ASAP. That would permit proper suppression of criminal elements and a massive investment in productive assets.
Most important is that the worst is well behind them now. A twenty year old from 1990 is now a forty plus established citizen and at his prime. They had to handle to most change and got through it all.
Consolidation with Europe now would be successful and lead to a far stronger Eurasia with a strong Russian component helping to face down global extremism.
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What prevents Russia from having an economy akin to modern China?
- Russian mentality, as well as Spanish (and Latin American) one is not trade-oriented. Unlike Italian, Dutch, English, German and French gentry, Russian nobles never invested money in trade or industry. Russian merchants were not influential under the tsars and were completely exterminated by Stalin. The formation of the capitalistic elite in Russia is painful and contradictory. This is one of the reasons why Russia is not successful enough to fight corruption.
- Russian mentality is too much straight-forward. When Russia is hit by somebody, it hits back. China tries to sidestep from the blow and prefers not to hit directly a stronger or equal adversary. The latter strategy is usually better.
- Russia has a tradition of extensive development. It is very hard for Russia to learn how to intensify its strength using limited resources.
- China’s market is simply bigger. Russia had much better chances to compete when it had the population of the USSR, almost twice bigger than it has now.
- Russia has low population density. It hampers the development of infrastructure, especially in its Eastern regions.
- Russia is better in inventing new products, but it is not persistent enough to make them eventually perfect. Neither is it good in copying somebody else’s technology.
- Unlike the USSR, Russia does not possess anymore the complete chain of any production. It depends on foreign suppliers.
- Russia lost too much competence during the deindustrialization in the 90-ies.
- This being said, Russia is still competitive. The new generation of Russian elites will be able to show better performance.
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