1. JoshuaShea
Vollrath
China Vs. Russia
In myessayI will argue whyinstitutionismore importantthangeography.Chinahashadsome of the
mostrapid growthinthe worldinthe past decade.China'sgrowthrate is10.4% while Russia'sis4.5%in
2010. Chinaismore than doublingRussia'sgrowth.
Both countrieshave hador still have communistregimes.Chinahashada more competitive
environmentdue tohowthe governmentissetup.Chinaissetup by regions(m-form).The regions
allowthe promotionof growthsothat itsgovernmentofficialscangainranksand earnmore money.
While Russiaisonlyone bodywhichcontrolsall of itsmajorcompanies(u-form).Competitionisnot
presentedinthismodel whichleadstogrowthbeingstagnantora verysmall percent.
We can alsosee howRussiaand chinadifferwhenwe lookatcorruption.Chinawasrank70 whichtells
us that the countryis verycorrupt.Russiacomesinat 127. Now we can see whychina hasmore growth.
Theircountryofficialstake lessof theircountriesGDPwhich inturn allowsforhigherpercentGDP
growth.Neithercountiesare perfectincorruptionbutthere isa starkdifference. We can alsosee how
evidence of corruptionthroughthe gini coefficients.China’sgini coefficientin2009 was42.1 while
Russia’swas40.1. Thisshowsthat the countriesare corrupt and a small percentof the populationis
gettinga large percentof the money.Thisisevidentinchinawith90% of governmentofficialsbeing
millionaires.We canalsosee thisinRussiawiththe oligarchsand presidentowningmuchof the market.
We can alsolookat propertyrightsto describe whychinahashad more froththan Russia.De Soto
statedthe importance of propertyrightsandhow dead capital can freeze upalot of the countries
assets.China's propertyrightindex is5.5while Russia'sis4.5 anothercar agora that China'sinstitution
leadsRussiain.Withmore secure lawsonpropertypeople have the abilitytomove capital inthe market

2. JoshuaShea
Vollrath
and to alsogaincapital.
Foreigndirectinvestmentcan alsoleadtohigherGDP growthrates.Chinahas leadmostcountriesinthe
worldinFDI for years.Chinahad243,703,434,588 while Russiahad43,167,700,000. Chinahas200
billiondollarsmore dollarsflowingintotheireconomyinjustone year.Thiscan be explainedbytheir
corruptionindex.Chinahasarelativelylowercorruptioncoefficientat70 than Russia's127. This affects
the amountof FDI greatly.Countrieswill investmore moneyintothe countrywithlowercorruption
ratesor regionsthatpromote lesscorruptbehaviorbecause theyknow thattheirmoneywill be putto
betteruse.Inthe lowercorruptedcountriesthere ismore chancesof the investmentshavingpositive
returnswhile investingmoneyincountrieslikeRussiaisverydiscouraging.
Geographydoesmatterbutnot as importantas the infrastructure of the country.The reasonwhyI state
thisisbecause bothof the countrieshave strongcontrol overtheirresources.While chinaismajorly
endowedinagriculture Russiaisendowedinenergyex (fossil fuels).Bothare hugcountrieswithlarge
amountsof land andpeople.Chinaisalsonexttoa bodyof waterwhichhasprovento induce economic
activityinthose regions.
Where we see thatthe institutionismore importantiswhenwe take alook at china. Chinausesthe
mostresources,buttheyare constantlybecomingmore efficientatusingthem. It isbecause of the
workof the institutionthe encouragementof competitionthathasmade geographyandnatural
resourcesimportant.Russiaalsohas large resource endowments.Russiahas30% of the world’snatural
resourcesinthe entire economy. Russiahasall these resourcesthatcouldmake themaneconomic
poweror giant,butbecause the governmenthasn’tworkedefficientlytheyhave notreapedthe
benefits.Russiahasn’ttappedintomanyof these resourcesyet.Theycouldgainaccesstothemif they

3. JoshuaShea
Vollrath
make habitable workingconditionsnearthese resourcesforexample roads,houses,andother
communitysystems.Otherproblemsare governmentnotbeing able topayforrepairs,andgovernment
regulationshave heldthemback.Alsoinflationhascausedtheirmoneytobe weeksotheyhave had
trouble tradinginthe openmarket.The institutioninRussiaandChinaare quite different.Russiaisnot
as competitive aschinaandthe governmenthasn’tactedappropriatelytogainrewardsfromFDIor their
natural resources.

4. JoshuaShea
Vollrath
Work Cited
Korabik, Kevin M. "Russia's Natural Resources and Their Economic Effect." Russia Contains
over 30% of All the Natural Resources in the World. Until Just Recently, after the Fall of
Communism, These Resources Were Primarily Used by the Former Soviet Union. Now That
Communism Has Fallen, and the Russian Economy Is in Ruins, Th. N.p., n.d. Web. 05 May
2014. <http://www.ems.psu.edu/~williams/russia.htm>.
"ChinaOutpacingRestof World inNatural Resource Use - UNEP."China Outpacing Restof World in
NaturalResourceUse- UNEP.N.p.,n.d.Web.05 May 2014.
<http://www.unep.org/newscentre/default.aspx?DocumentID=2723&ArticleID=9584>.
"GDP Growth (annual %)." Data. The World Bank, n.d. Web. 04 May 2014.
<http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG>.
"Global Property Guide." Global Property Guide. Global Property Guide, n.d. Web. 05 May
2014. <http://www.globalpropertyguide.com/Europe/Russia/property-rights-index>.
"Countryand RegionComparison." InternationalProperty RightsIndex 2013. N.p.,n.d.Web.05 May
2014.
<http://internationalpropertyrightsindex.org/compare?locations[]=China&locations[]=Russia&locations[
=]=&locatoins[]=>.
"Foreign Direct Investment, Net Inflows (BoP, Current US$)." Data. The World Bank, n.d. Web.
05 May 2014. <http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD>.