Since the collapse of the Soviet Union in 1991, a new political order has been established in Russia and economic growth is now steady, following a downturn in the early 1990s. Russia has capitalized on its vast natural resources, especially oil and gas, and by 2000 was the world's largest non-OPEC oil exporting country. The service sector, including banking, insurance and property-related services, has also expanded rapidly and now accounts for over half of Russia's economic output.

However, the challenges facing the government have been enormous, and many economic, social and political problems remain. Rapid economic growth has led to a concentration of power and wealth in the hands of a small minority, while it is estimated that around 25% of the population live below the poverty line. There is a massive informal economy that reportedly employs around 40% of the Russian population, and organized as well as petty crime is rampant. The taxation and legal systems are not properly functional, leading to much abuse. The ancient infrastructure in many areas of the country remains poor, and the administrative machinery is reportedly slow and inefficient. There is also an ongoing threat to security and political stability from the Chechnyan separatists, who frequently resort to terrorism.

Although Russia is now formally a democracy, the government has been widely criticized for being non-democratic in its policies, including control of the media, and for its methods of warfare against the Chechnyan separatists, carried out in the name of the fight against international terrorism.

Despite its ongoing problems, Russia has made major progress since its formation in 1991, and one of the factors helping to drive this has been the influx of western businesses into the country, including international oil companies and a large number of American commercial companies. As a result, there are now significant numbers of expatriates living and working in Russia, especially in Moscow and St Petersburg.