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Rising Inequality


There are 190.6 million hectares of farmland in the country, 13.6 million of which are occupied by family subsidiary plots - very small patches of land, on average 0.4 hectares. Family subsidiary farming accounts for 92 percent of potatoes, 77 percent of other vegetables, 59.4 percent of meat, 49.7 percent of milk, 29.5 percent of eggs, and 0.9 percent of grain produced nationwide. Family subsidiary farming is one of the cornerstones of the survival economy. 


The Gini coefficient, a standard measure of inequality in the distribution of total money income of the population, increased to 0.4 at the start of this decade compared to 0.26 at the start of market reforms. The gap between the average income of the lowest and highest fifth parts (quintiles) of the population, which was only 2.6 in 1991, jumped to 13.8 ten years later. Inequality growth in Russia has been among the fastest in the world.

Rising inequality is a worldwide phenomenon accentuated by economic globalisation. Russias case is particularly noticeable because it combines the effects of a change from a socialist to a capitalist type of economy with those of rapid integration into world markets.

In 1990, under communism, non-labour income accounted for only 8.9 percent of total personal income while in 2000 its share rose to 24.2 percent. These figures do not tell the whole story because incomes of the entrepreneurial class, corrupted bureaucrats, and organised crime are underreported to the extent of 20 percent of the GDP.

Globalisation adds to inequality in more than one way. A direct negative influence is seen in the trend of consumer prices to gravitate towards the much higher level of imported goods while wages lag far behind due to the system of low medical, educational and housing costs partly retained from socialism. As a result, real wages, even though they recovered from all time low of 44 percent in 1998 compared to their 1990 level, were still only 51 percent as high in 2001, or about half of their pre-reform value.

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