How large is the putin gap?
How much higher would the ordinary muscovites' incomes be hadn't the little person in the kremlin been ignoring their welfare for years?
Spoiler: The little person in the kremlin is a failure. Not only on the battle field but also as an econonomic policy maker. The muscovy economy is a low-tech economcy characterised by a large state presence both in terms of ownership, but also in terms of excessive bureacracy, corruption, and cleptocracy. The little person in the kremlin has turned muscovy into a rent-seeking economcy where oligarchs control important sectors of the economy on the condition that they are loyal and pay tributes.
This has made ordinary muscovites poorer that they would have been had muscovy grown as most Middle-Income countries.
Some years ago, I wrote a post about the little person’s home-made Middle-Income trap. Here it is.
In that post, I compared muscovy’s annual growth of GDP per capita 2008-2019 to other Middle-Income countries growth rates. Here’s a graph showing that comparison.
I did not try to calculate how much higher muscovy GDP per capita in 2019 would have been if it had grown at a higher rate. Which higher rate would that be? There are of course many different ways to calculate this, but I have chosen what I believe to be three natural candidates; the average growth rate for all countries, the median growth rate for all countries, and the upper quartile growth rate.
These annual growth rates amounted to 1.63%, 1.76%, and 2.8%. The muscovy growth rate was 0.73%. Applying these growth rates to GDP per capita in 2008, shows how much higher the GDP per capita in 2019, could have been.
If muscovy GDP per capita had grown at the same annual average rate as the average middle-income countri between 2008-2019, muscovy GDP per capita would have been 10% higher in 2019.
If muscovy GDP per capita had grown at the rate as the median, muscovy GDP per capita would have been 12% higher in 2019.
But some of those countries were growth disasters as you can see in figure 2 above. So, let’s not include all countries. If muscovy GDP per capita had grown at the same annual rate as the upper quartile, muscovy GDP per capita would have been 25% higher in 2019.
According to World Bank data, GDP per capita amounted to 27,000 in PPP 2017 international dollars. In the alternative scenarios, GDP per capita would have been 2,800, 3,200, and 6,800 dollars higher respectively. The accumulated losses for all years are of course much higher: 21,600, 23,900, and 43,800 dollars higher respectively.
But the little person in the kremlin couldn’t care less. He’s not interested in growth, he’s interested in stability and security. That’s why he spends his day in a bunker.