MOSCOW — Medvedev will be inaugurated Russia's new president on Wednesday. Whether he can improve Russia's economy after he takes office is far less certain.
To be sure, Vladimir Putin's administration appears to have left Russia's economy in a rosy state. Economic growth averaged 7.2 percent between 1999 and 2008. Foreign reserves stand at 30 percent of GDP and are the third highest in the world in absolute terms. The stock market is up 20-fold. The middle class is buying foreign cars, vacationing abroad and dining on sushi, and surveys show that life satisfaction has increased across the board.
Russia's economic success is partly attributable to high oil and commodity prices. But oil is not the whole story. Tax reforms of 2001 improved incentives to work and decreased tax evasion by introducing a flat 13 percent income tax one of the world's lowest.