It is hard to find more solid proof of capitalism’s victory in Russia than the upward trajectory of its consumer market. If the supremacy of manufacturing is no longer recognized as the core imperative for a healthy economy, Russia can claim to be one of the world’s most advanced countries. It has now become Europe’s largest consumer market – retail trade generates a quarter of gross domestic product. In the past 10 years, personal consumption has been stubbornly overtaking production, and the gap between domestic supply and demand is increasingly being filled by imports. By all estimates, whether or not Russia joins the World Trade Organization, this gap will remain; the question, however is how the WTO will affect its size.
Russia has already become a part of the global market without the membership. To see how it belongs to world economy in terms of satisfying consumer needs, it is only necessary to look at one of the best consumer market mirrors – retail hypermarkets.
The rapid development of organized retail trade in Russia is an economic phenomenon that by itself proves the wonders market forces can do when they are not overregulated by red tape. The increase of personal incomes beginning in the last 1990s combined with a growth in domestic fixed capital outlays resulted in an explosion of organized retail trade, starting in Moscow and St. Petersburg and then extending to the rest of the country. In the last 10 years, retail trade in Russia has attracted over $20 billion of direct foreign investment.
It’s likely that with Russia’s accession to the WTO, price and availability of these imported goods will improve, to the benefit of Russian consumers. On a recent trip to the market, Auchan customers seemed more concerned with the price and accessibility of their purchases than their provenance. Potatoes from the Ryazan region, not far from Moscow were cheaper than potatoes from Israel, Egypt or Saudi Arabia, but they were also packed in a less-convenient way, which kept them on the shelves longer. The Russian garlic was offered in kilogram packs each priced at 107 rubles while more popular Chinese garlic was sold in packages of three cloves in small knitted bags for 18 rubles. Perhaps WTO access will also allow Russian suppliers to benefit from the marketing tools employed by their foreign counterparts.
Source: www.freshplaza.com