Effective model of economy functioning in modern Russia

Since 2014, Russia has been under the influence of international economic sanctions, which tightened significantly in 2022. Aggravation of political confrontation, rupture of production chains, reduced cash flows and the discontinuation of supply of a number of goods dictate the need to find a fundamental basis for development of our economy. The new development strategy should provide, first, Russia’s security and sovereignty, and on the other hand, growth of well-being of the population, improving level of education and culture.

Neoliberal approach involving self-regulation of the system, leads to market failures with such negative consequences as poverty, environmental problems, poor product quality, monopolization, etc. For our country, included in the world economy as a supplier of commodities, such a policy is especially disastrous, since it conserves the position of the periphery.

Therefore, it is fundamentally important to organize competently state regulation for achieving long-term goals. The basis of state regulation should be planning. In science, it is customary to distinguish between directive and indicative planning. If the former is not compatible with the market type of economy, then the second can be applied by direct and indirect methods directing chaotic movements of economic agents towards the goal. In a number of publications in scientific journals, as well as in speeches at conferences, we proposed our own planning vision for Russia. Having analyzed Soviet experience of the NEP and the experience of countries such as Japan, Korea, France and China, we have shown that the application of indicative planning has always given outstanding results, enabling the development of strategically important industries, which, in turn, ensured the growth of the entire economy.

What are the peculiarities of planning in modern Russia?

  1. The ultimate goal of planning should be to increase the production of goods with high added value and improving the well-being of the population as elements of domestic demand.
  2. It is necessary to revise all industries and identify points of growth in the form of not only availability of advanced technologies or scientific and production potential, but also of multiplicative effects on other industries. Based on the conducted assessment, there should be drawn up a long-term plan, which in turn, will become the foundation for setting more specific tasks.
  3. It is necessary to form internal value chains taking into account raw materials and research and production potential available in the country.
  4. Among the support measures we should note concessional lending, with the loan price lower than the profitability of production, as well as subsidizing priority industries, methods of tariff and non-tariff protection of domestic producers from competition of imported products, and public procurement.
  5. The importance of R&D development and training of employees for ensuring the development of key industries should also be noted.

Since the existence of a plan in itself does not guarantee its implementation, that was demonstrated by “Strategy 2020”, it is necessary to identify the mechanisms of control. For this purpose, a special public body should be authorized, which would be in close cooperation with scientific institutes, including employees of private enterprises. As for development of infrastructure and large industrial projects, then the state should have full control over them.

By Katerina Volkova, lecturer at the Department of Political Economy and History of Economic Science, Member of the Council of Young Scientists of the REU named after G.V. Plekhanov

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