Russia
Joseph Stiglitz: October, 2002,
interview
Q: Let me ask you about Russia. President Putin has been a prominent advocate
of the need to shift the fiscal base away from people's wages and savings
and on to the rents of natural resources. But this strategy flew in the face
of conventional tax wisdom, which favored a "broad tax base" that
included the use of "stealth" taxes. The IMF, by its actions (if
not its public declarations), strenuously opposed the Putin strategy. What
might President Putin do to remain engaged in the process of pro-market reforms
while retaining the support of foreign investors and at the same time shifting
the tax base on to the rents to be derived from Russia's natural resources?
JES: Russia provides another good example of what I've
been talking about. The fact is that their economy has been
imploding. And it's
become nothing
more than a natural resource economy as a percentage of
the GDP — about
60 to 70%. At that point, natural resources become the
only major source of revenue. So they've been forced to move in that direction
by necessity.
And, obviously there's a political economy tension: the
rich
guys don't want to give it up. But that's the distinction
they're going
to move
in because
there's no alternative. ... read the entire interview
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