Not tall enough

Published: August 5th, 2016

Five measures for the country's transition to sustainable development has been named

Russian President Vladimir Putin stressed that the challenges facing the economy, "require concerted action for sustainable and balanced growth" and called to seek additional development incentives together in order to more fully realize the industrial, scientific and technical, innovation potential, "in a timely manner to respond to changing market conditions markets and outline the transformation of the global technological order. "

"Russian Newspaper" and the Free Economic Society of Russia held a "Council of Experts" on the topic "The Russian economy, new sources of growth." How should a new concept of economic development look? What should include structural reforms? Is GDP growth an end in itself? These and many other questions were answered by leading economists of the country.


The President has set the Economic Council the task of preparing of the new concept of economic development: what is the fundamentally different in approaches proposed by different groups of experts?

Sergey Bodrunov, president of Free Economic Society of of Russia, Director of the Institute of the new industrial development namedafter S. Vitte:


- At the meeting of the Presidium of the Economic Council were represented two fundamentally differing views on economic development: first - through the implementation of structural reforms to create a favorable investment climate in the country, to gradually begin to leave the path of sustainable growth through improving the quality of public institutions and the reduction of geopolitical risks then, and the second - to activate the role of government in the economy, actively stimulate the economy, so in the short term to achieve economic growth and then to start structural reforms.

I believe that the development of such a large and complex set, the Russian economy can not be limited to a single rigid frame of the scientific school, or the "general line." In systems theory there is such a thing as the emergence of that integrated system acquires new properties that are not inherent in both its individual components and their sum. Such a qualitative change in a positive state of our economic system expert community should come to the discussion and development of a new concept of economic development of the Russian state.

The container is stuck in the port


According to the base scenario of the Ministry of Economic Development of Russian average annual growth rate of GDP for the 2016-2019 biennium. It amounts to 0.6 per cent, and the target - 1.9 per cent. At the same time the global economy will increase the rate of more than 3 percent, including US - 2.5 percent, the EEC - 1.5 percent. Is it possible in the next year or two to change the situation or will it take more time?

Alexander Dynkin, vice president of Free Economic Society of Russia, Director of the Institute of World Economy and International Relations, Russian Academy of Sciences, Academician:


- What to do? Loosen the regulatory, supervisory and tax pressure on business. In the 1st half of 2001 it was adopted in 1717 standards at the federal level acts. In 2015 - 5169, to 28 per day, counting weekends.

Reduce administrative barriers: last year in September on the East Economic Forum, it was announced that from 1 October 2015 Vladivostok and 14 ports of Primorye will become a free port. This did not happen. Container handling in the port of Vladivostok still takes 72 hours and 450 kilometers to the south, in the port Dalian (Dalniy) - 18 minutes, including customs clearance.


It is only two strokes to failures of state administration. Its reform is knocking on the door. Together with judicial reform is the best anti-crisis and counter-cyclical policies that can lead to a path of sustainable growth.

Dmitry Sorokin, vice president of Free Economic Society of Russia, scientific director of the Financial University under the Government of the Russian Federation", Corresponding Member of the Russian Academy of Sciences:


- A sharp increase in the rate of growth will not be possible this and in the next year. After all, the material cause of the current stagnation is in a backward technological base. Therefore, more and more talk about the re-industrialization, ie, retooling our economy. Given our scale, such an operation is impossible to carry out in a year or two. After all, we still have to prepare personnel for new technologies.

Another issue (and here I share the view of many economists), that during the said period, you can implement a number of organizational and economic measures to allow in yaer 2018 to enter the rate of 4-5 per cent per year with the existing capacities and resources . First of all these are measures that remove the uncertainty over the development of the economic situation. By priority I would attribute to ensure the stability of the ruble. Without this it is impossible to overcome the existing population and the business sector, expectations of further depreciation. In these circumstances, it is impossible to develop production.

You cannot catch up with the rich

Some experts have come out with proposals to "freeze" wages, indexation of pensions, etc. as a means to accelerate growth. In these scenarios Ministry of Economic Development suggests that in 2019 real wages and the average size of pension will be lower than in 2014. Do you agree with these suggestions?


Dmitry Sorokin: This is a new word in economics. In my opinion, the authors of such proposals are already tired of explaining that wages, as it is written in all textbooks on the economy, should grow up in a measure of labor productivity growth, and our economic troubles due to the fact that all we have done the opposite. However, it does not recall that by 1999, the average real wage fell by three times compared to 1990. In this case we are talking about the accrued and unpaid wages. Maybe, before quoting textbooks of the relationship between wages and labor productivity, it was necessary to pay the accumulated debts? Restoration of the level of real wages has occurred only in 2007. However, not all. After all, the income gap between the 10 percent of high-income and low-income segments of the population was 16.7 times in 2007, which is 4 times higher than it was in the early 1990s. Today, the average real salary is just over 20 per cent above the 1990 level, and the income gap between rich and poor is almost the same 16 times.

It is now proposed to raise the productivity of labor, reducing wages. I recall that in the past year in reducing real wages by 9.3 percent labor productivity fell by 3.3 per cent. How, reducing real wages in 2019 to 7.2 per cent in comparison with the year 2014 in the baseline scenario and by 6.2 per cent - on target, Ministry of Economic Development is going to raise labor productivity by 2.8 and 5.6 percent respectively in the same period - I do not know. Maybe due to the millions of new high-tech jobs? However, low wages - and it is known from all the textbooks are the enemy of technological progress.

Reforms for patching the holes

What do you mean by structural reforms on the need of which the president and the government, and experts are saying?

Michael Eskindarov, vice president of Free Economic Society of Russia, Rector of the Financial University under the Government of the Russian Federation:


The purpose of structural reforms is to change the current image of the Russian economy from a state where almost the main factor of growth are conditions of export commodities, to the economy, capable of producing a wide range of competitive ready products and services. To make this transition, you need to transform the technological base of the economy. This requires changes in the personnel structure in the direction of extension of highly skilled workers who can master the new technologies. The preparation of such workers is not possible without structural changes in the social sphere, primarily in income, housing conditions, health, education, culture, finally, in the provision of pensions, etc. In addition, unnecessary differences in the living conditions of different regions of the country. It is obvious, with which everyone agrees. However, if over a long period of time there is no change, the case in the structure of relations that govern this type of change. This means that it is necessary to change the social and economic mechanisms that guide the activities of all participants of the economic life. It is important that such conversion should be carried out comprehensively, coordinating changes with each other and subjecting them to a common goal. Pulling individual links for the solution of current problems - for example, carry out a pension reform to close the deficit of the Pension Fund or the large-scale privatization, to reduce the budget deficit - it is not structural reforms, but "patching the holes" that will do no good.


Alexander Nekipelov, vice president of Free Economic Society of Russia, Director of the Moscow School of Economics of Moscow State University named after M.V. Lomonosov, academician of Russian Academy of Sciences:

- Structural reforms are essential to the long-term perspective; to associate with them the possibility of comingin on the path of dynamic development in the near future should not be. At the same time we have large reserves to improve the situation by streamlining the current economic policy.

One of the main problems - an existing executive branch conflict of interest related to the fact that it simultaneously acts as a regulator and owner. Power sees a way out of the conflict solely on the privatization path. From my point of view, much more effective and socially comfortable is another solution - not subject to the formation of government-owned assets to the state management system in the market regime. Privatisation will also be useful when the proceeds are used to implement large-scale projects, especially infrastructural rather than plugging holes in the budget.

Everybody needs benefits

Can you name the first five measures, which should be carried out for the country's transition to sustainable socio-economic development?


Michael Eskindarov: Such measures, of course, should be more than five. I would certainly have included the following.

First. Blocking reduction in real incomes of the population, especially in terms of real wages and pensions.


Second. Change of monetary policy.

Third. Improvement of inter-budgetary relations.


Fourth. Review of all existing federal target programs, leaving only those activities over the next few years, which is absolutely necessary to prevent the growth of negative tendencies, and a ban on the adoption of new programs and economic reforms that have long-term effects, to the adoption of the strategy of socio-economic development and strategies for spatial development of the country in accordance with the Law "On the strategic planning in the Russian Federation."

Fifth. Termination of the public debate between the leaders of the federal socio-economic departments of the need of certain reforms and the creation of the Interagency Council under the leadership of the president of Russia with the participation of key ministries (economic, social, finance, industry) for strategic decision-making.


In terms of the strategy the preparations for the general industrial census (as is already being done in agriculture) should be started immediately. Without this, developing a realistic program of socio-economic development is impossible, since current statistics do not give picture of the production potential of the country.

Victor Ivanter, member of the Senate of the Free Economic Society of Russia, Director of the Institute of Economic Forecasting of the Russian Academy of Sciences, Academician of the Russian Academy of Sciences:


- First. Provide at an undervalued level of the ruble exchange rate stability even with the resumption of growth in world prices for hydrocarbons in order to ensure the expansion of the money supply without forming devaluation expectations.

Second. The steady decrease in the level of interest rates on loans for the real sector of the economy by, for example, the introduction of incentives for the banks, which in exchange for a reduction of interest rates loans provide certain lines of business and take on the risks. One of the main objectives of reducing the cost of borrowing is to prevent excessive flow of funds from the manufacturing sector in the financial sector.


Third. Normalization of the situation with refinancing needs of Russian companies in investment and working capital.

Fourth. Exclude the increase in the tax burden on businesses and the public.


Fifth. To limit the rise in prices for services "infrastructure monopolies" (electricity, gas, transport), as well as motor fuel, outside the coverage objectively rising costs of natural monopolies.

Alexander Nekipelov: First. To ensure the stability of the ruble exchange rate, lower interest rates on loans for the real sector and to introduce a reasonable control over the export and import of capital.

Second. Develop a more effective system of insurance of risks associated with hard to predict movement of world oil and gas prices. Unleash the expense of foreign exchange reserves funds for domestic investment, create state reserves of fuel and raw materials used for intervention in the market in order to impact on domestic prices of resources.


Third. To increase public demand for domestic products to increase the loading of existing capacities, launching large-scale projects based on public-private partnership.

Fourth. Urgent setting economic policy instruments (especially the tax system) to stimulate innovation.


Fifth. To ensure real participation of the regions in making important national decisions.

Installation is sure to bring the rate of inflation in the next year up to 4.5 per cent I believe to be counterproductive. Gradual decline in inflation in the next few years is preferable from the point of view of economic dynamics.

Source: Russian Newspaper

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