Economies of Russia & Central Asia

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  • 0:00 The Economy of Russia
  • 2:30 The Economy of Kazakhstan
  • 4:08 More Economies of Central Asia
  • 5:43 Lesson Summary
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Lesson Transcript
Instructor: David Wood

David has taught Honors Physics, AP Physics, IB Physics and general science courses. He has a Masters in Education, and a Bachelors in Physics.

After watching this video, you will be able to describe the economies of Russia and Central Asia in terms of freedoms, economic sectors, imports and exports. A short quiz will follow.

The Economy of Russia

Thanks to Russia's history as a superpower, when you think of big, important countries, it's one of the first that comes to mind. But by comparison, Central Asia is hardly ever thought about by most people in the Western world. Central Asia and Russia contain a total of six countries: Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Turkmenistan, and Uzbekistan. Our goal for today's lesson is to summarize the economies of these countries. So, let's start with the biggest: Russia.

The Russian economy is considered to be a mixed economy, which is a mix of free market economies, where the economy is determined by the buyers and sellers, and command economies, where the economy is controlled by the government.

Before the fall of the Soviet Union, the economy was a command economy, but in the 1990s, free-market reforms were put in place to grow the Russian economy, including privatizing most of the state-owned industries. But the changes were not done with much care, and the huge amount of corruption led to the collapse of the Russian economy in the late '90s as influential people grabbed all the money they could. Since the turn of the century, things have gotten much better for Russia, and the changes have had positive effects, but the process is a slow one.

One way to evaluate economies is through gross domestic product, or GDP, which is basically a number that represents how much money is earned and describes the size of an economy. Like most successful modern economies, Russia's is dominated by the service sector at about 60% of GDP, as of 2014. And about 36% of GDP is from the industrial sector. Due to Russia's militaristic past, the country has the ability to produce incredible war machinery: weapons, fighter jets, air defense systems, ships, you name it. Only the United States provides more weapons to the world than Russia.

Despite selling arms, by far the biggest percentage of Russia's industrial economy comes from natural resources like oil, gas, and precious metals. These are also their main exports (68% of exports were oil and gas in 2013). Some have suggested that Russia should move away from this reliance on oil and gas, because being so dependent on any one thing is a bit dangerous.

Only 4% of Russia's GDP is from agriculture. Although agriculture tends to provide a lot of jobs, it doesn't result in a high GDP because agricultural produce is sold relatively inexpensively.

The Economy of Kazakhstan

If you love apples and walnuts, and want to frolic across vast plains, Kazakhstan is the place to be. Kazakhstan has the largest and most successful economy in Central Asia. And no, it isn't all because of apples and walnuts, but they certainly help. Much of it is really because of, you guessed it: oil, oil, and more oil. Kazakhstan also has lots of minerals and metals. Natural materials really are the royal family of economics, and oil is king. As of 2012, about 70% of Kazakhstan's exports (by dollar value) comes from oil and mineral fuels, which go to China, Russia, France, and Germany, among others.

Kazakhstan also contains some of the most fertile land in Central Asia for agriculture. That's where the apples and walnuts come into the picture. Its vast steppe plains have plenty of them. But Kazakhstan even builds machinery and launches rockets into space on behalf of Russia and the United States. So there are quite a few irons in Kazakhstan's economic fire.

Thanks to all these things combined, its GDP has been growing at an astonishing rate. Russia might have a larger economy than Kazakhstan overall, but Kazakhstan is more economically free. Kazakhstan has a great potential for agriculture with its highly fertile land. As of 2014, around 5% of its GDP comes from farming, and 26% of the workforce is employed in agriculture.

While it's not formally part of most trade organizations, it's looking like Kazakhstan will soon be admitted into the WTO.

More Economies of Central Asia

Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan are collectively the poorest countries in Central Asia. They all struggle in various ways.

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