Historically, obtaining the latest technology in the most essentials sectors of the economy has determined whether a country would take a leading position in global economy. Countries have consistently fought for technologies, this battle having significantly intensified in the past years. This is a result of transition to new technological practices, a process where it is important to take most beneficial positions in emerging global value generation chains at the right time. Consequently, countries have engaged in trade or sanctions wars, and Russia is no exception.
On the one hand, Russia has to develop technologies under the toughest sanctions pressure; but on the other hand, the Russian economy has all the resources not only to achieve technological advantage against other countries but also to achieve certain sovereignty.
The recent developments in the world have shown that one may have most advanced technology (for example, for semiconductor production) but the launch of production will be impossible without necessary resources, including oil, gas and rare metals. Additionally, it is important to understand that people involved in development and production will subsequently be consumers of the goods supplied to the market, and their shortage will also reduce the country’s economic potential.
Therefore, the notion of technological sovereignty currently includes more than just technology but also all the conditions necessary for using this technology in production and further marketing. There may be plenty of examples confirming it.
If we look at the sanctions war between China and the United States, after China restricted its exports of rare metals (gallium and germanium) as an attempt to limit the capacities of the United States in the production of microchips, the United States had to swiftly close a strategic deal with Vietnam, the second largest country after China for rare metal reserves. If we look at the Japanese economy, on the one hand, Japan is the most technologically advanced country in the world with the highest diversification of production in its economy; but on the other hand, Japan is highly dependent on natural resources supply. Moreover, the mean age in Japan is 49, which indicates that the share of the senior population is the largest as opposed to other countries. Analysts predict that, due to this complicated demographic situation, the Japanese population will go down by 50 million by 2050. Whether it will be able to stay at the cutting edge of technology is a big question. A similar example is South Korea. While being considered one of the world’s most innovative economies, the country has the lowest fertility rate in the world (0.8 points) due to the fact that it’s common to work 12 hours a day and young people are highly motivated to work and earn extra. As a result, South Korea may expect a serious depopulation in the near future.
All these developments considered, the strategy for the Russian economy, outlined by Russian President Vladimir Putin in his Address to the Federal Assembly in late February, becomes clear. The strategy includes investment into scientific brainpower, creating conditions for Russian companies to develop their research and development potential, and supporting national projects. The program pays particular attention to the demographic situation that can be improved by developing the support program for large families that should become a standard in Russia. Developing necessary infrastructure across the country, including for obtaining additional sources of natural resources is also a fundamental aspect of achieving technological sovereignty.
Additionally, it should be noted that any external sanctions pressure mobilizes the economy and forces the economy to concentrate on obtaining the most breakthrough technologies that would contribute to further development without external help. The economy thus becomes more competitive thanks to being highly resilient against external shocks. Some past examples include the Soviet Union during World War II, modern Iran and some other countries.
Therefore, Russia has every chance to achieve technological sovereignty amidst the sanctions pressure and become one of the most successful and self-sufficient economies in the world.
By Yekaterina Novikova, Ph.D. (Economics), Associated Professor of Economics at the Plekhanov Russian University of Economics