[tugboat]

The Russian economy seems to have rebounded after the USSR collapse but I'd like to know more about the mechanics of the change. The ruble was not worth anything but that has changed. How?

[MOCKBA]

Russia forfeited their "heavy"/capital intensive economy in exchange for resource exports paired with capital light service economy. In other words, before Russia was poor, but it was self-sufficient, manufacturing their own tools, machinery, etc. Today, most of the manufacturing is lost or is being lost because of under investment, tools and machines are imported in exchange for natural resources.

To illustrate the ills, let's look at food processing as an example of changes in Russian economy. It takes less then $1M to import food processing line from Germany and you could make about $10M worth of so sages over time. On the other hand it would take more then $1B to manufacture a car which would make you $2.5B over the same time. Russians are going for making $10M vs. making $2.5B and this is where "fake rebound" is coming from (Mind that this is only an illustration and actual numbers are a bit different).

As far as ruble being not worth anything, consider that until Breton Woods felt apart 0.6RUB would buy you $1. The price of a loaf of bread was 0.12RUB in USSR and $0.25 in USA. So like any money, RUB was on par with other money.

As far as books go, read Soros books. He doesn't describe how Russians screwed themselves with "turn around", but he points out where it could have been done better.