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Measuring output at current prices and exchange rates suffers from several flaws. It can be misleading, particularly if judgments are being made about relative living standards. Haircuts and taxi journeys are much the same all over the world, but their value in countries with limited export capability is recorded at a much lower figure than in countries that are export champions. A further and well-recognised weakness is that exchange rates can move erratically in response to temporary and reversible changes in market conditions for a nation’s exports and imports. Russia suffers from this difficulty at present, because it is a major energy exporter, and the prices of oil and gas are depressed.

An alternative approach is to calculate national outputs at so-called “purchasing power parity”. The idea is easy enough in principle. The average Russian citizen may have a much lower income, when translated into dollars, than the average American, and could not on that income pay at all for a taxi journey or afford a decent haircut in the US. But — because prices in roubles in Russia are much less — he can comfortably afford the occasional taxi and a smart haircut in his own country. As it happens, both the World Bank and the International Monetary Fund conduct research into these awkward measurement issues. Indeed, the IMF regularly publishes data on its members’ share of world output, where output is measured (or perhaps one should say guesstimated) on a purchasing-power-parity basis.

Forecast numbers for 2016 are available, and are incorporated in Chart Two. With PPP-adjusted data, 17 nations have output that exceeds 1 per cent of the global total. The nations do not overlap precisely in our two charts, which shows how difficult the subject can be. A salient message is that Russia is much more important with this different method of calculation. Whereas it accounts for about 1.75 per cent of world output on a current-price-and-exchange-rate basis, the figure is 3 per cent on a PPP basis. It ranks 13th in the world on the former approach, but sixth on the latter.

But does that make it a great power? Can a particular state swagger around and puff itself up relative to the rest of the world if the rest of the world produces more than 30 times as much as it does? And is not this sort of bravura rather odd, when we remember that its relative economic position is flattered by a generous estimate of the value of domestic service production, including such items as haircuts and taxi journeys? Of course, there is ample scope for debate about the merits of the various methods of measuring different nations’ income and output. But it should be emphasised that, on the most favourable possible interpretation, Russia in the early 21st century is no more than a medium-weight power in economic terms.

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Tom Burroughes
March 28th, 2017
2:03 PM
The article is fine as far as it goes but misses an important point: a country doesn't have to be rich to be a nuisance, or be aggressive. Indeed, countries that are running out of money and have domestic problems can use foreign adventures/wars to try and distract a discontented home population. Consider Argentina in 1982 (Falklands), as an example. It might also be worth reflecting that when Putin goes, or is overthrown, whoever takes over is probably going to be worse.

Lawrence James
March 16th, 2017
4:03 PM
What was Russia's economic position in 1853 when it invaded Turkish Romania, in 1876 when it attacked Turkey and in 1905 when it fought Japan.

March 6th, 2017
5:03 PM
Peter from Oz: then imagine how proud the Russians can be: they have a tenth of Chinese population, and their GDP is just 6- or 5-fold less than Chinese one... Indeed, Russian GDP per capita make Chinese look like beggars...

March 6th, 2017
4:03 PM
Are we seriously to believe that Russia, with a GDP around that of Mexico’s, can develop advanced missile defence systems comparable to Nato’s? - But it's NOT doing it. Russia is developing missiles and warheads with an increased capability of "dribbling" the possible US ABM defense, Faster and more "maneuverable" warhead, etc. It's logical, after all. Since to produce new missiles is more or less mandatory (and so, it's an expens eyou can't avoid, if you want to keep being credible as a nuclear power), better off invest on better missiles (and warheads), with a small increase on the price you have to pay anyway, than on an huge and madly costly "star shield". It's "asymmetric" answer, again...

March 6th, 2017
4:03 PM
Jonty Corfield, if Argentinian generals would have had the weapons and the men displayed by Russians in Syria (Kalibr, Raduga, Su35, Buratino thermobaric rocket throwers, speznaz, etc.), it would have been a very harder work for the soldiers from the Queen to retake the islands... Besides that, you keep dreaming Putin can be fool enough to attack baltic states and trigger art. 5. But why should he do it? He does not need it. If and when he would like to get Balts cry uncle, he has economic leverages strong enough to set aside brute force at all: embargo on baltic goods on the Russian markets (right now, Balts are one of the most damaged countries for Russian countersanctions), custom tariffs, change of destination of Russian freight ships (no more Balic ports)... Less choreographic than an armored brigde marching on Vilnius or Tallin or Riga, but, on the long run, it hurts where it takes... And no art. 5 at all...

Shoigu's Cat
March 6th, 2017
9:03 AM
FYI, nobody in Russia cares a fig about Britain. You are just not that interesting.

Peter from Oz
March 3rd, 2017
4:03 AM
It's great to see that Australia with 24 million people is fighting it out with Russia (population 144 million) for 12 place in world's biggest economies.

February 17th, 2017
3:02 PM
"But, when its stooge in Kiev was removed by democratic elections" LOOOOOOOOOOL British guys . Author do not respect you . He lies in so basic things .

January 14th, 2017
6:01 PM
If Trump and Putin can normalise relations then the people can prosper and islamist terrorism will be eliminated. Stalin was necessary in the alliance that eliminated Nazism. Brexit inspired the USA, France and Holland in the 21st century. It was like the Civil War without muskets , magnificent and a glorious victory. A red,white and blue Brexit is what we will get. And a pro-Israel one.

December 25th, 2016
5:12 PM
The Russians are coming! The Russians are coming! Mangled diction and all. I have to say I found no comfort in knowing that Russians have a lousy standard of living. Or that Putin has no "strategy." Russia's advanced (and advancing, we are told) nuclear arsenal trumps (sorry!) the economic story. Putin may be less popular, but since when has that mattered to a tyrant who makes a habit of liquidating his opposition?

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