The bear hungers on: will Russia get--and keep--its act together? The major republic of the former Soviet Union is full of economic possibilities--and major pitfalls.

• Author: Weidenbaum, Murray L.
• Position: Economics

AMERICANS NEED TO rethink their views about Russia. That nation is a geographic superpower, and may still be a military giant. However, its economic might does not equal that of the former Soviet Union. That situation, though, could change substantially--for better or worse.

A few comparisons will provide some context. Russia has the largest land mass of any nation, almost double that of the U.S.-17,000,000 square kilometers versus America's 9,500,000. It extends over 11 time zones. That makes it difficult for the folks in Moscow to do business with people in Siberia--who are asleep much of the time that Muscovites are at work. In comparison, the lower continental U.S. covers four time zones, seven when Alaska, Hawaii, and Puerto Rico are added. Yet, Russia's economy is only the planet's ninth largest. It ranks somewhere between Italy and Brazil with an annual gross domestic product of 1.5 trillion dollars. That contrasts with America's GDP of 10.5 trillion dollars.

By international standards, Russia's average living standard is quite modest. Its current per capita GDP is about $9,000, compared to the U.S.'s $38,000. The Russian number is equal to that of nearby Poland or Botswana in central Africa. A major reason for this poor economic condition is that the nation has seen its population slip. Granting independence to the non-Russian Soviet Republics meant losing the most rapidly growing part of the USSR. Russia itself is down to 144,000,000 people. That is one-half of the population of the U.S. From a demographic point of view, Russia has a low, European-style birth rate and an unusually high death rate. The latter is due to a rough combination of alcoholism, smoking, crime, and poor medical facilities. There is some indication of recent improvement. However, the Population Division of the United Nations forecasts a further decline in Russia's population numbers over the next 20 years.

Important regional changes also are taking place. The population of the Moscow area is stable, supported by some in-migration. Yet, the far eastern sector of the country is emptying out. There are 16% fewer people there today than in 1989. That region is where important energy developments are occurring.

Many of the difficulties facing the Russian economy were inherited from the Soviet Union and its communistic policies. For example, the Russian economy is not only much smaller than that of the U.S., but its ownership is far more concentrated. Manufacturing...