Italy and Russia are two very different economies yet both have similar problems in building a strong economic structure. Both countries need to take a closer look at certain key areas in order to build the strong economy they both desire. Russia's economy has long been in crisis and its priorities remain to curb inflation, balance the budget and reschedule foreign debt.1 Italy on the other hand, is focused on cutting taxes, tackling unemployment, enhancing competitiveness and reducing the budget deficit.2 When both economies are given a closer look, it is obvious that Italy's economy is stronger than that of Russia's.
Today, a decade after the collapse of the Soviet Union in 1991, Russia is still struggling to overcome the legacy of Communism. Creating a democratic political system and a modern market economy to replace the bureaucracy and centralism of the past has proved a difficult goal to achieve. Russia's development has been hindered by many problems over the years, including the financial crisis of 1998.
3This financial crisis was the devaluation and domestic debt default - the culmination of a long running financial crisis - which caused severe setbacks to Russia's growing economy and proved that sustainable long term growth will require the implementation of far- reaching structural reform.
In contrast to its trading partners in Central Europe - which were able to overcome the initial production declines that accompanied the launch of the market reforms within three to five years - Russia saw its economy contract for five years, as the executive and legislature hesitated to implement many of the foundations of a market economy4. Russia achieved a slight recovery in 1997, but the government's stubborn budget deficits and the country's poor business climate made it vulnerable when the global financial crisis swept through in 1998. The crisis...