March 5, 2011
At the end of February Prime Minister Vladimir Putin met with the prominent Russian experts and committed them to analyze and develop an update to the so-called “Strategy for Social and Economic Development of Russia until 2020”. Carefully selected experts formed 21 working groups to research and discuss various subjects -- from microeconomics and health care to administrative blocks and Russian penetration to global markets. The discussion within the expert community has already started and the results came out as at least controversial.
Vladimir Mau, rector of Russian Presidential Academy of National Economy and Public Administration (left); Yevgeny Yasin, academic adviser at the Higher School of Economics
In the beginning of March a working paper published by the expert group “New Model of Economy Growth” listed major obstacles that impede the country’s development. According to Evsey Gurvich, head of the economy experts’ working group, they are: illegality of property, large share of non-market sector (state companies and state corporations), numerous non-competitive firms, discrepancies between Russian and international management standards, closed economy and large-scale shadow business. Vladimir Mau, rector of Russian Presidential Academy of National Economy and Public Administration, and another member of the experts’ working group, pointed to the flight abroad of not only capital but of the middle class and political elite as well. The reasons for that are low level of personal security and major disbelief in the capability to influence political life in Russia. Mr. Mau also mentions institutional degradation that takes place due to huge amounts of cheap money gained by selling natural resources and not by increasing labor efficiency. The major challenge for Russia at the moment is non-competitiveness, says Yevgeny Yasin, academic adviser at the Higher School of Economics. He explains that Russia falls behind the developed countries in innovative sector and lags from the developing countries in delivering low-cost labor.
Overall, the current model of Russian economy (state control over the demand and investments) was named inefficient and in desperate need of global reform. The expert group recommended a fundamental transformation of the relationship between the state, businesses and society in order to build a new growth model. They also suggested two alternative policies to achieve it. First one, backed up by Vladimir Mau and Aleksey Moiseev, chief economist of VTB Capital Bank, is based on increasing domestic demand and modernizing the raw materials sector. Second one, offered by Messrs. Yasin and Gurvich, considers institutional modernization which involves transformation of economical, social and political institutions.
So far, the government made no official statements regarding the experts’ offer. But as the spokesperson for the Prime Minister Dmitry Peskov mentioned a while ago, one should not expect global change in government policies, “it would be more like a post-crises retouch”.
