H. Shane Hansen and Dr. Phillip J. Bryson, Business Management

A look at the economic development in the Bashkir Autonomous Republic of the Russian Federation provides an extremely interesting example of Russia’s transformation to a marketbased economy. While the Republic of Bashkortostan has accomplished great strides economically in modernization and exploiting natural resources since 1991, there remains ample room for improvement. Due to strong republic-wide nationalism, Soviet-style mentalities, weak judicial precedence, and limited foreign investment, the rate of economic development in Bashkortostan proceeds rather slowly. Each of the aforementioned factors has a detrimental affect on the overall liberty of the average citizen. Increasing the liberty of the people in the Bashkir Autonomous Republic would accelerate the economic development immensely.

Stark contrasts separate the economic development in urban, as compared to rural parts of the republic. This disparity results primarily from personal liberty or a lack thereof, with those in major cities enjoying far greater liberties than those in rural areas. The standard of living in urban areas affords residents greater opportunities for and access to education, transportation, employment, housing, consumption, etc. Many rural inhabitants, if not most, are forced to rely completely upon the land for their support. Because of the closing and bankruptcy of many communal farms and factories in rural areas, residents find themselves stuck in unprofitable farming with little government support. One trip to the average rural settlement exposes the suffering and misery, the results of lost liberty to progress, grow, or change. Unfortunately, children and the elderly take the brunt of the misfortune, being less able to locate more favorable conditions. Farm work often prohibits education, which in turn decreases the chance of employment. Regrettably, this vicious cycle seems to be starting anew with the upcoming generation.

In the urban portions of the republic the outlook of economic development is seemly not as bleak. By contrast, however, the bureaucratic barriers and nationalistic hurdles in the cities impede liberty as well as frustrate the population. The vast majority of jobs in divisions such as healthcare, education, government agencies, and government-owned enterprises are dispersed according to nationality rather than qualification. The more competent candidate is often passed by as the Bashkir or Tatar counterpart receives employment. Not only does this produce biasbased policies, but it also undermines the education system as few university graduates succeed in finding employment in their area of specialty. Inequality also eliminates competition that builds and strengthens government institutions, universities, and organizations as jobs and favors are given to acquaintances who serve as replacements for merit and capability. The same principles are deeply intermingled in the private sectors as well. Business is done with those one knows as opposed to those who offer better prices or superior goods and services. The economy appears to be developing around the past ideas of central planning with the ever lengthening arm of the government reaching into every possible direction.

Although the negative aspects of the republic’s development are more visible and receive more national and international attention, positive features are easily found. The communication sector, for example, is increasing rapidly. The access to home telephone lines, cell phones, internet, and other forms of communication are expanding in both urban and rural areas. Likewise, financial institutions are slowly building confidence and stability in the republic. Despite the generalized negative image of many banks, the populace is beginning to rely more and more on the services banks provide. These types of developments, if they succeed in minimizing corruption, will lead to hastening of growth in other areas of the republic’s economy and its role in the Russian national economy. Growth and development in the communication and financial sectors will prove critical in ensuring citizens with the liberty necessary to speed up and participate in the overall economic development of the Bashkir Autonomous Republic.

My original research began as I worked on an Honors Thesis. As I became more and more involved and interested in the topic and associated problems I decided to make a trip to Russia. Using the funds received through ORCA I was able to see much of the republic and meet with numerous people living in the region. After completing my Honors Thesis I felt that my research had only just begun. Accordingly, I applied for a Fulbright grant to spend 10 months in Ufa, the capitol of the Bashkir Autonomous Republic. I have been continuing to conduct research throughout the republic since September 2003. Bashkir State University has facilitated many of my research needs and the professors there have been very helpful in assisting me. They have helped me gain a first-hand understanding of how the local economy functions and why things are as they are.

Naturally, a large part of my research has been directly related to the Russian and Bashkir languages. I have had the opportunity to grow much in my abilities to speak, write, and communicate in both Russian and Bashkir. Similarly, Dr. Phillip J. Bryson has been vital in providing the much needed support in economic theory. He has been a reference base for me throughout my studies, educating me with his vast experience, various viewpoints, and in-depth analysis.

While in Russia I have also had several opportunities to travel and experience much of the country. Visits to Moscow, St. Petersburg, Novgorod, Ekaterinburg, Chelyabinsk, Novosibirsk, Irkutsk, Ulan Ude, and other cities and villages have supplied me with a rich understanding of the Russian Federation. My travels have also supplied me with fascinating perceptions of Russia’s overall economy, its vastness, and diversity.

I plan to complete me research in July 2004 and publish two articles explaining my findings. One will focus on the liberty available in the Bashkir Autonomous Republic. The second will focus on the roles that foreign companies and foreign direct investment play in the development process of the republic. I am currently interviewing various business leaders throughout the republic to gather information and data for my research. I believe that my thesis of growth through liberty is essential for the Bashkir Autonomous Republic and its people.