ECONOMICS FINAL PAPER: COMPARISON OF
RUSSIA AND HONDURAS’ ECONOMIC SYSTEMS
JOSEPH LADNER
ECNA439
September 18, 2016
The two countries I selected to compare economic statuses and well beings with are Russia and
Honduras. They are both very similar countries and also have many similarities with their
dealings in the way their economies are constructed and how their government controls it
.
In Russia the Property rights is calculated at a 20/100 because they have a large amount of
corruption within the state that controls the nation’s assets and its Laws (Which are inconsistent
throughout the countries different regions). (Russia Economy 2016) Their freedom from
corruption is at a 27/100 due to the elitists that want to keep control of the Country and thus keep
themselves in power through the election cycles; the judicial structure is very corrupt because of
the elitist problems mentioned above. Their government spending is at a 56.2/100 and fiscal
freedom of 82.2, they have a flat tax rate for individuals of 13% and the top corporate tax rate is
taxed at 20% max. Their overall tax burden is a 34.8% of total domestic income while their
government spending is at 38.2% of GDP and the public debt is under 20% still.
Compared to Honduras’ economic state has a rating of 30/100 for property rights, Honduras’
mainland is just as corrupt as Russia is due to the small country that it is. Their freedom from
corruption is at 29% (just a hair over Russia’s 27%); they have a very corrupt government that
relies on keeping themselves in power over their citizens’ well beings. Their government
spending is at a 72% and their fiscal freedom at an 84.2 (Both higher than Russia), they have
more freedom individually with their fiscal policies than Russia does. The top individual tax is a
25% rate, while corporations tax is at 27.5% (2.5% of that is a social contribution tax paid to the
government), they also have capital gains tax and a general sales tax that is applied to items in
the stores there. Their overall tax burden is at 18.1% of total domestic income while their
government spending is at 30.6% of total GDP and the total debt of the public is at more than
45% of total income which makes it hard for families to provide for each other.
Honduras’ Business freedom is up to a 58% currently, they instituted new laws and procedures
that reduce the number of days and procedures required to start a new business. In spite of these
new procedures the start up cost is still more than twice the annual income for a citizen (Which is
a large burden to overcome). Labor freedom is also up to 31% while monetary freedom has
dropped to 74.8%.
Compared to Russia’s business freedom which dropped to 72.2% due to inconsistencies with
enforcing the regulations for these businesses, Honduras is still under 12% of what Russia
currently sits at. Russia’s labor freedom is also down to 57.6% (Which still sits above Honduras’
31%) due to new subsidies the Russian government has tried to use to control the domestic
prices; their monetary freedom has also dropped to 62.9% as compared to Honduras’ 74.8%.
Russia has a tariff of 6.3% on goods and their trade freedom has also dropped to 72.4% due to
the state owned enterprises distorting Russia’s economy by taking market shares from the private
banks to increase their own lending power. Investment freedom has remained at 25%; there is not
much room for investment trading for individuals in Russia due to the restrictions the
government places on them. Financial freedom has also remained at 30% due to the restrictions
for investments by individuals.
Honduras has an average tariff rate of 5.8% with additional barriers to restrict outside agriculture
importation. Their trade freedom is up to 78.4%; their citizens have fewer restrictions than
Russia does so they can trade more freely. Their investment and financial freedom are both
remaining at 60% as they have freedoms to invest (within a few regulations) and the citizens that
save their money have freedom to try and start businesses. (Honduras Economy 2016)
Over the last several years, Russia has had political issues which affected their oil supply/sales,
limited their sanctions, etc. due to the invasion of Crimea, overreach of the Russian government
into foreign countries among other issues. Despite this their labor market condition has remained
stagnant through the years instead of collapsing completely. Russia also reportedly has around
80,000 in its job bank, this is believed to help with the layoffs that the bigger corporations were
