The term oligarchy refers to a form of government where a given small group of people controls a large amount of resources which are enough to influence the national politics. In the Republic of Russia, the term is used to denote a businessman who controls sufficient resources in the country hence is able to also control the politics of the nation. Whether oligarchy is likely to harm the economic development of the country or improve it remains a subject of debate. While others consider it as an engine of Russian economic recovery, opponents claim that the system has drastically weakened the economy of the country.
The proponents of oligarchy consider it as being an engine of Russia’s economic recovery as well as institutional reforms. According to them, oligarchy is the only currently feasible counterweight to the current corrupt bureaucracy of Russia as they provide a unique constituency which is willing and able to spearhead the development of the market institutions. The proponents also argue that oligarchy is the only group which is able to invest as well as restructure industries in Russia especially those located in very hostile business environment. Therefore, their ability to invest as well as restructure most industries located in hostile environment makes them agents of economic recovery.
On the other hand, the opponents of oligarchy believe that the adoption of oligarchy government have greatly weakened the economy of Russia. According to them, oligarchy have stripped assets from the Russian firms to abroad as well as brought ideas of corporation and private property into disgrace. Furthermore, the oligarchs have weakened the democratic institutions of Russia, by causing tremendous inequality in the country. This has been made possible through the capture of both the state and the federal politics.
Reliable sources show that the oligarchs have exploited the rich natural resources available in Russia and developed infrastructural facilities that the country had inherited from the USSR which is mainly concentrated in commodity-based industries. The easy wealth they acquire from these resources did not motivate them to upgrade the assets. As a result, the economy is believed to have failed to change from a commodity-based to amore technological economy. Besides, the system of oligarchy has greatly weakened competition in the country. Actually, competition is always the mother of development and therefore, without stiff competition in the country, the economy is likely to remain constant for quiet sometime.
In brief, though the proponents of oligarchy system of government believe that it is important for economic development of Russia, I strongly believe that it has weakened the economy because of weakening democracy as well as competition in the country. This is because without democracy and fair competition in the country, the economic development is likely to be slowed down.
Stiglitz, J. (2004). Globalization and Its Discontents. New York:: W. W. Norton.