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Russia 2035

June 02, 5:19 UTC+3
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Alexey Kudrin, Chairman of the Board, Center for Strategic Research Foundation; Deputy Chairman, Economic Council under the President of the Russian Federation

CHALLENGES:

  • Stagnation and low labour productivity

“In the 2000s Russia had its economic growth as high as 7 or 8%, of which 4 to 5% were contributed by improving productivity. That meant the country's economy was becoming more efficient with the help of international best practices, equipment, and technologies. The government invested heavily into the infrastructure. Whereas in the recent decade we have been growing at a CAGR of just 1%.”

  • The challenge of implementing strategies

“All the earlier strategies, i. e. Strategy 2010, Long-Term Development Concept to 2020, the May decrees, are all delivered by no more than 40–50%.”

  • Russia is underrepresented in the global high-tech market

“Out there in the world links are established, new industries are founded to grow several-fold to hundreds of billion of dollars in size within a span of only a few years. We are either tapping these markets timidly or simply aren’t there at all.”

  • Russian trading volumes have reduced alongside non-resource exports

“Non-resource export volumes back in the Naughties used to be as high as USD 140 billion. Now that figure stands at USD 109 billion. <...> Only 1 business out of 150 is trying to tap the export market today. The target here is at least 1 out of 70.”

  • Russian science is less than competitive across many areas

“Russian science is only represented in 3% of all academic research, if you count a solid, average level of representation. We do not come up with new scientific knowledge on the scale it is created elsewhere in the world. <...> Whereas computer sciences is now a lost foothold for Russia.”

  • Russian businesses underinvest into R&D and innovation

“The Russian government invests into R&D about 1% of the GDP, which exceed the investments of Japan, Canada, UK and Switzerland. However, businesses in those countries contribute three to four times more than the government. Whereas Russian companies don't feel that their future in five to seven years from now is in any way related to innovation.”

“Only 9% or Russian enterprises would roll out new technologies or innovations every year. We need 40 to 50% of enterprises to generate novel innovative solutions. R&D investments are to rise to 2–3% of the GPD, counting in the contribution of the business community.”

  • Excessive regulations

“Every year would see about two million audits of every kind. Audits are now the constraint.”

SOLUTIONS:

  • Technological revolution

“On top of boosting startups we need major consortia, which would mean that two or three private companies could join efforts in their search for a technological breakthrough while mitigating their risks at the same time. Such consortia must enjoy support from the government.”

“We need 100–150 universities having mastered the cutting edge of technology, equipped with modern labs, thriving on their experience of working with industrial companies to implement the novel solutions. We only have about a dozen of those, including the St. Petersburg Polytechnic University.”

  • Boosting non-energy exports alongside with the quality of goods

“Unless Russia manufactures hallmark products recognised across the globe, this hurdle will not be cleared.”

  • Free trade areas

“Russia has much less preferentialism compared to an average nation. Outside the CIS space, we only have 1% of such areas shared with other countries. Our benchmark is to hit 20% of free trade areas within six years from now. On the average, the US and countries in Western Europe have up to 40%.

  • Higher efficiency of public administration and supervisory  controls

“We need fewer government functions, which would help shift focus to those most reflecting the modern agenda. We need to review the approach to audits, involve Big Data to analyse and monitor businesses from the outside. We must not try to punish before we warn. Digitisation must be rolled out across a broader range for government bodies.”

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