Well, economy works when people can trade and do stuff better than others. If I'm good at making the wooden part of spears, and you are good at making the tips, we trade and we both profit.
Really sucks for the one that can produce only 3 tips of spears in the time it takes you to make 5. Eventually, he will fall behind and perhaps find something he's better at. Also, it is hardcore for countries to be exposed to higher competition before they are ready. Probably the main reason RF suffered so much in the 90s and still are very protective. Shock doctrine was a massive disaster, although I believe the intention was good.
Anyway, sooner or later, things have to change.. You can't keep doing things same old way forever, the people will get sick of the stagnation.
atm In Russia, you can probably answer this better than me, but if you are best at producing spearheads, someone will come and take the business from you, with the help of a corrupt judge, and run it to shits. So there's really little incentive to get good at making them in the first place..
Look at how expensive Sochi was
This makes whole society rotten from the top down!! When everything is affected by incompetence, the guy transporting the spearheads, the shop that sells them, the incompetence of the users..you can multiply those ineficciencies and what took 10 man hours to do in the west takes suddenly 100 in Russia.