Dmitry Evstafiev – Professor of Communications, Media, and Design Department/School of Integrated Communications at National Research University Higher School of Economics
Although Russian economic entities seem to continue pursuing the old economic policy of heightening fiscal pressure on the population, it looks like Russia needs a more efficient economic development model.
The Russian economy needs new development drivers to complement the favorable foreign economic environment.
However, the situation is aggravated by the Government’s economic stance: the officials responsible for economic policies insist on restoring the former conditions of Russia’s presence in European markets; the Government’s macroeconomic experts openly agree with projected economic growth rates not only lower than the global level, but even lower than the European ones. According to their logic, the import substitution strategy should be replaced by export expansion. In particular, Minister of Economic Development Maxim Oreshkin said at a Valdai Club meeting in June 2018:
“I would say import substitution is a topic from the past. Exports and access to foreign markets play a much larger role on Russia’s economic agenda now”.
This statement probably reflects a certain shared position of the macroeconomic officials in the Government, while the export expansion program is viewed as a component of a wider economic development strategy.
The problem is that the economic management system is not prepared to move to a higher level of import substitution, where foreign participants will be inevitably shut out from the critical segments of technological chains. Such actions will trigger strong resistance from influential interest groups not only abroad, but also in Russia, and most importantly, they will reflect a profound transformation of Russia’s economic policy.
The Government’s concept of accelerating the economic growth by increasing exports looks vulnerable in the context of objective economic and political circumstances. Any strategies that involve competition for foreign markets and promotion of domestic products pose a certain risk. The world economy is undergoing significant changes which, in addition to the pressure on Russia, are due to the trade wars that will inevitably result in gray areas for pushing second-rate products being eroded from the wealthiest markets, especially in the areas of high-tech production.
The Siluanov-Oreshkin Strategy built on expanding export presence and tougher domestic fiscalization is only feasible if Russia changes its foreign policy course and reaches a wider compromise with Western countries, primarily with the United States. In other circumstances, the said strategy is nothing more than a political slogan which has no substance in terms of actual resources and capabilities of modern Russia and no consideration for key global processes.
There are several conditions that could facilitate expanding quality export and use the economy’s foreign market retargeting to drive the economic growth forward.
- Balanced and diversified exports;
- Favorable financial climate not only in bilateral relations but also in the regional context;
- Favorable domestic policy and long-term understanding of key development vectors;
- Importance of political support for complex export projects, which means entering into politically binding agreements with other countries and groups of countries, and power support in specific cases.
Even if we put aside the political aspects, exports cannot develop in the middle of an ‘investment cemetery’ that was manually built in the Russian economy over the past years. Therefore, it is highly unlikely that the strategy outlined by ministers of the economic bloc will move beyond the propaganda unless the domestic economic policy changes.