Russia after Communism

RUSSIAN ECONOMY SINCE 1991

Russia has probably been the subject of the most drastic economic and political changes 

for the past 15 years. In fact, it was clear in the 1980's that the Union of Soviet Socialist Republics was showing signs of collapse, with a leadership losing its authority, with an economy gone bankrupt, with its industries dilapidated, and with a workforce unable to meet the basic necessities of life. And to understand the current economic status and the economic rebuilding efforts of Russia, one needs to go a few decades back and understand the reasons lying beneath the secession of one of the two superpowers of the Bipolar World.

http://www.culture-of-peace.info/soviet-collapse/introduction.html

According to David Adam, political scientist and U.S. Ambassador to Panama, simply 

everyhting was working against the USSR in their race against the United States of America, and the rest of the "Capitalist Western World". Economically, politically, and socially, the USSR edging closer towards the breaking point every passing year.

However, one development is the key in the collapse and that is the arms race 

triggered by the former-U.S. President Ronald Reagan. The effects of this arms race were also felt in the United States in the form of a gigantic budget deficit and a high rate of uemployment.

However;

1) The U.S. GDP was a lot larger than that of the Soviet Union

2) The U.S. was engaging in free trade and all the other benefits 

of Capitalism, which the Soviets could not

This race has caused the USSR to try producing way beyond its Production Possibilities Frontier.