Silvana Malle

Economic modernisation and diversification in Russia. Constraints and challenges

This paper examines the plans for modernisation of the Russian economy in the light of the challenges posed by both the global crisis to Russia in 2008–09 and the possible resurfacing of the crisis in 2012–13. Both developments help to understand the weaknesses of a process of change that after twenty years seems still to be incapable of supporting a sustainable and competitive market economy. Will liberal forces make their way through to finally challenge the obstacle to competition with accession to WTO? This paper addresses this question taking into account the possible impact of the reform-minded components of the new government formed in May 2012, but also that of forces hostile to change. The third mandate (2012–2018) of President Putin and his personal approach focused on the accelerated developments of some branches and far eastern regions send contrasting signals with regard to the balance between state and market policies in the pursuit of medium to long term goals. Whether new programmes are feasible under increasing competition from abroad after the 2012 entry into WTO and the controversial corporatist political system are also questions discussed by this paper.

Soviet legacies in post-Soviet Russia: insights from crisis management

This paper singles out elements of continuity in the Russian path to development and growth after transformation to market under the assumption that Soviet legacies have a bearing on current policies and provide some insights as to how the Russian market system may develop in the future. Drawing from the development and the specifics of the financial crisis in Russia, the paper focuses on the frame of mind, behaviour, goals and means of Russian policy-makers that are reminiscent of Soviet formal and informal institutions and may have an impact on post-crisis developments and structures. A sui generis corporate state is emerging, the basic features of which range from the complex of the great power and belief in the state as a driver of growth to secrecy, mutual distrust, lack of transparency and accountability, and efforts to increase command on resources. The seeds of a Russian-style corporate state that emerged in the early 2000s with the creation of goskorporatsii are reinforced by economic slow-down and Russia-specific market failures. Competition for power – the President versus the Premier – may help strengthen the demand from below for a stronger state and limited property rights. Retrenchment from competition, openness to Foreign Direct Investment and commitment to entry into the WTO expose the country to the risk of prolonged technological backwardness and possible regression to a society where private elite organisations are closely tied to the state and institutions are subservient to the leadership: a framework highly unsuitable for modernisation and growth.

Economic Transformation in Russia and China: How Do We Compare Success?

One of Europes leading international economists compares the economies of Russia and China by tracing the evolution of their transformation from central planning to market-oriented systems. The paper singles out the respective structural and policy constraints and the importance of political decisions in moving ahead with reforms in crucial years when the dangers of reversals have materialized. It analyzes, inter alia, the reasons for present growth in both countries, which is robust in Russia and impressive in China. While macroeconomic performance indicators are commonly used to compare success and work out projections, the author argues that underlying structural and political contexts as well as institutional problems of a different nature in each country provide the key to our understanding of the respective obstacles to sustainable growth.

Russia and China in the 21st century. Moving towards cooperative behaviour

Political and economic rapprochement is taking place between Russia and China in a number of fields: energy, arms production, trade in national currencies and strategic projects in transport and supporting infrastructure. This development, fostered by Western policies and actions, including sanctions related to Ukraine, appears to be strengthening despite reservations related to uneasy precedents, contrasting visions and uncertain economic projections. Chinese policies aiming at European markets via the revival of the Silk Road assist this development. The One Belt-One Road is projected as an alternative, or supplement, to the maritime routes made unsafe by contiguous countries’ unrest, criminality and the assertive control of the seas by the United States. While Russia, promoting friendly investment structures, moves eastwards to develop the Russian Far East bordering China, the latter expands westwards engaging in laborious negotiations with Central Asian countries and costly investments in infrastructure and logistics. In each area, the article maintains that both countries, despite economic and political competition and fear of losing control, have interest in cooperation and discusses the areas where this is taking place, albeit slowly and with difficulty. Whether economic cooperation can develop into a strategic alliance including defence is discussed in the light of joint military exercises, arms trade and plans to broaden the scope of the Collective Security Treaty Organisation, the Shanghai Cooperation Organisation (of which India and Pakistan have recently become members), and the Common ASEAN Community. This path is difficult and marred by members’ conflicting interests. But some positive outcomes should not be ruled out.

The All-Russian National Front – for Russia: a new actor in the political and economic landscape

Abstract The All-Russian National Front (ARNF), created by Vladimir Putin in 2011, has rapidly increased its power and influence in policy-making. The Front has been used to monitor regional policies and to check both the effectiveness and loyalty of regional governors in carrying out central government policies. This article examines the main activities of the Front and its membership since its creation, and considers the implications for future economic development in Russia.

The pendulum moves from Europe to Asia. Modernizing Siberia and the Far East. Economic and security issues

Under the current Presidency of Putin two main areas of concern are discernible: the modernization of defence industry and the accelerated development of Siberia and, in particular, the Far East. To a certain extent, development programmes prioritized within increasingly tight budget constraints overlap, since important sections of the defence industry are located beyond the Urals. In response to Chinas rapidly increasing economic and military strength, there is a need both to modernise infrastructure in order to boost trade opportunities eastward and to enhance and diversify industrial capabilities, a task in which the defence industry has a role to play. The article examines the policy and financial implications of the current shift eastwards. Resistance to policy changes is strong. Private investments will need strong encouragement while the role of the state needs to increase in the short-medium term. Nationalism and ideological inclinations add to a lively policy debate often marked by harsh tones. This major turn in strategy needs to entail a certain degree of decentralization as specific long-term projects are hardly manageable from Moscow. The existing structures are manifestly inadequate. While the need for a special authority endowed with the necessary powers for coordination and control of branch and territorial projects is discussed, the appropriate balance between the representation of regional interests and federal development plans is unclear. The article argues that more could be done to stimulate the regional powers to assume their own responsibility in selecting the most suitable projects consistent with federal priorities, offering good administrative services and, when necessary, tax incentives. While establishing nation-wide economic goals, federal government should be more receptive to local demands, while strengthening its command over security issues. Mutually supportive and respectful interaction between regional and federal bodies would improve the ability to assess in an informed way opportunities and constraints for growth and better discriminate among alternative projects on the basis of their respective outturn, feasibility and cost.

Russia and China: Partners or Competitors? Views from Russia

Russia’s interest for the East can be dated back to the aftermath of the 2008/09 global economic and financial crisis. The effects of the crisis revealed Russia’s dramatic exposure to Western developments. Until then the economic potential of fast growing China had been neglected. Developments in 2013–14 were crucial, since Russia finally turned to the East when international tensions linked to conflicts in Ukraine erupted, making her weak- oil price-dependent—economic recovery even more problematic. Building a new Sino-Russian partnership, however, entails risks, since competitive pressures could derail a mutually profitable venture. The challenge for Russia and China is to strengthen their cooperation through dialogue.

Labour Redeployment and Cooperatives in the Soviet Union

Policy approach towards employment has changed under perestroika. The emphasis is falling on the release of labour from the material branches and on its partial redeployment in the service sector in general and in the cooperative sphere in particular. The pattern of labour redeployment, however, does not suggest that under perestroika the labour market has become less taut. Since cooperative and individual activities draw out of the state sphere the best cadres, the inefficiency of the state economy could increase. Recurrent criticism against cooperatives and price control measures indicate that political and ideological barriers against private enterprise are still considerable.

The Demand for Labour

The planning and control of the demand for labour reflects the planning of production capacity. The latter is relevant not only to additional demand but also to the replacement of existing manpower. Capital/labour ratios are embodied in the installed capacity. Thus, in principle, the planned volume of output determines both capacity utilisation and employment. However, in practice, it is up to the enterprises to decide the volume and composition of employment. This section, therefore, focuses on the behaviour of enterprises and on the indicators used to determine their demand for labour.

Labour-saving: Concept and Indicators

The meaning of labour release (or labour-saving) in Soviet planning cannot be separated from the technical concept of full employment discussed in chapter 1. Assuming that all labour resources are employed, each new plan sets the task of increasing labour productivity; this must in turn be the result of higher efficiency of the employed labour as well as of the higher capital intensity obtained in the previous plan. Labour release, in this context, does not need to entail redundancies. This chapter discusses the meaning of labour-saving in Soviet planning, draws attention to the indicators used to convey labour-saving signals to the enterprises and examines the utilisation of limits on employment set from above.