Economic Growth in Russia after the Collapse of the Soviet Union Essay

Economic Growth in Russia after the Collapse of the Soviet Union - Essay Example Russia’s economic performance â€Å"after the fall† has been negatively described by many including members of the United States Congress. But in 2003, President Bush praised Russian President Putin over his democratic ideals in ruling present-day Russia. Let us examine first how Russia encountered those challenges in the early years after the fall of the Soviet Union. Russia first experienced currency devaluation due to large deficit. The newly-independent states (NIS) experienced a dramatic drop in the Gross Domestic Product by more than 40% for the period 1990 to 1995 (qtd. in Mondal 140). This situation led to numerous reforms in the economy, particularly the reconfiguration of the public finances. The international community helped to provide economic reform and infuse foreign aid. This led to an improved GDP. At the start, Russia had to depend on foreign capital to sustain economic growth because of internal factors like slow revenue collection and excessive state expenditures. The government was also encountering low savings rates and Russian banks refused to provide finance for domestic investment. Research on the Russian economy found that the legal system was â€Å"an obstacle to foreign investment† and there was no proper legal regulatory framework to provide efficient foreign trade arrangements. Other factors considered obstacle were spot-market and hierarchical transactions which are common in low-performance economies. The strategy of liberalization and internationalization changed the configuration of demand, price signals and transaction costs because of Russia’s â€Å"large territorial distances and fragmented economic space† even if Russia has rich natural resources and human capital. ... nalization changed the configuration of demand, price signals and transaction costs because of Russia’s â€Å"large territorial distances and fragmented economic space† (qtd. in Kirkow 80) even if Russia has rich natural resources and human capital. Liberalization and new foreign trade arrangements were faced with bureaucratic encroachment by means of export and import tariffs and quotas as these were opposed by resource-based industries (in metallurgy, oil, etc.) and â€Å"crony legal entities.† There were also external factors like export restrictions imposed by EU regulations and international cartels (Kirkow 81). These factors impeded the flow of foreign capital, technology and technological knowledge, and prevented the creation of new jobs and industries. Two industrial sectors supposed to attract FDI in Russia in 1993-1994 were not considered labor-intensive, and manpower was not a major FDI magnet. Moreover, there was a linking of the traditional and new a pproaches since the Russian government had â€Å"active state participation† over matters relating to Russian exports. This policy applied to what the government called â€Å"strategic resources,† such as military hardware, natural gas and precious metals. There were also export restrictions conducted by the government, like issuance of export licenses and quotas, taxes, the limitation of export producers, the monopoly of FTOs in acquiring export products on the domestic market and the policy to remit a portion of the hard currency revenues to the government (Kirkow 82). State-owned banks set up during the Soviet era and still operating abroad continued to provide state control and coordination of foreign trade. These banks were set up to provide credits for Russian firms at lower than domestic interest rates and

SouthWest Airlines Case Analysis Study Example | Topics and Well Written Essays - 3250 words

SouthWest Airlines Analysis - Case Study Example The company sells seats on a one-way basis. Fares are set on the basis of demand for particular flights and by reference to the period remaining to the date of departure of the flights. Higher fares are charged on flights with higher levels of demand made nearer to the date of departure. The company provides various ancillary services and engages in other activities connected with its core air passenger service. These include non-flight scheduled services, the in-flight sale of beverages, food and merchandise and Internet-related services. As part of its non-flight scheduled and Internet-related services, the company distributes accommodation services and travel insurance through both its website and its telephone reservation offices. Southwest also sells bus and rail tickets onboard its aircraft and through its website. Southwest Airlines was established in 1971 in Texas with three Boeing 737 planes and routes between Dallas, Houston and San Antonio. The company's business model was simply: "If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline." (Southwest Airlines Co., 2010) Rollin King and Herb Kelleher decided to start an airline that is distinct and unique in terms of services and fare. They envision an airline that caters to the travelling businessmen and other passengers who requires frequent point to point flights. With President Lamar Muse at the helm, Southwest Airlines took off on its maiden voyage in 1971 and began service between Dallas, Houston, and San Antonio. In 1979, innovative self-service ticketing machines were introduced and utilized in ten cities to make the ticketing faster and more convenient for customers. (Southwest Airlines Co., 2010) By 1980s, Herbert D. Kelleher comes aboard as permanent President, CEO, and Chairman of the Board for Southwest Airlines, and Southwest spreads its wings to San Francisco, Los Angeles, San Diego, Las Vegas, Kansas City, and Phoenix. Three additional Boeing 737-200s are purchased, and Southwest flies over 9,500,000 satisfied Customers. And in 1989, it reaches its billion dollar revenue mark and become a major player in the airline industry. (Southwest Airlines Co., 2010) By 1994, the company introduced Ticketless Travel in four cities and became available system wide by January 1995. And in 2004, the company began offering online boarding passes via southwest.com. Today Southwest Airlines is the largest airline in the United States, based on domestic passengers servicing 68 cities with a fleet of 537 planes and is on its 37th straight year of profitability. Southwest became a major airline in 1989 when it exceeded the billion-dollar revenue mark. Southwest is the United States' most successful low-fare, high frequency, point-to-point carrier. (Southwest Airlines Co., 2010) B. Business Vision and Mission Statements Figure . Southwest's vision and mission statements ( (Southwest Airlines Co., 1988) C. External Opportunities and Threats Fuel Price Impact Fuel prices can have a significant impact on Southwest's profitability. Volatile fuel costs, coupled with a continued domestic economic downturn, had a significant effect on Southwest and the airline industry, in general. In 2008, the higher fuel prices during most of the year led to industry-wide capacity