Ulyukayev tells what Russia should do next
The Russian Minister of Economic Development Alexei Ulyukayev published an article titled 'What to do next?’ in the Vedomosti newspaper today. He outlined his program of actions which would allow the Russian economy to grow every year by 7%, as it was in the early 2000s.
The Minister based his arguments on the premise that the world economy has changed dramatically and only those developing countries that are able to adapt to these changes will keep high growth rates.
"In this situation, Russia's economic policy should be aimed at increasing the potential growth, which can be achieved through better use of labor resources, accumulation of capitals through the growth of investments and increasing productivity," Ulyukayev believes.
If Russia is not able to adapt to new changes in the world economy, it can get stuck in its development at the average economic growth rate of 2%. Therefore, one of the top priorities for the Russian economy is to achieve the GDP growth of 4%", which is quite realistic.
According to Ulyukayev, investments, primarily in the infrastructure, will become the main engine of the economic growth.
The second locomotive of Russia's development, according to Ulyukayev, is investments in high-tech and innovative sectors, including science, education and health.
At the same time, the Minister of Economic Development has recognized the fact that the domestic market cannot satisfy the demand for Russian goods, therefore, it is necessary to use the macro-economic conditions created by the devaluation of the ruble.
"We need to mobilize the entire arsenal of the state, financial and non-financial support for exports," Ulyukayev stressed.
In addition, the economic development of Russia can be promoted by finance measures to support exports, simplification of administrative procedures, reducing the size of the import customs duties on components and equipment, as well as more efficient use of the human capital and the labor market flexibility.
Speaking about the labor efficiency in Russia, the minister proposed to simplify the employee dismissal procedures and raise the retirement age for men and women up to 63-65 years.
Among the rational measures to increase the labor market efficiency in Russia, Ulyukayev listed the rental market development, as well as the removal of administrative barriers to social services and childhood education after parents change the place of residence.
"The complex use of measures aimed at the extensive and intensive development of the production factors is able to ensure the growth potential with long-term and stable dynamics," Alexei Ulyukayev summed up in his article 'What to do next?'.
Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, speaking to a correspondent of Vestnik Kavkaza, confirmed that the Russian economy urgently needs investment in the infrastructure. "Speaking about the infrastructure, I mean railways, roads, different communications, for example, cellular communications and the Internet. In my opinion, a public-private partnership, when the state outlines where it wants to develop infrastructure and shows its interest, ensures future operation of facilities isthe most appropriate and efficient form for the current state of the economy. The public-private partnership will provide the development of infrastructure in our country," he said.
In the first place, the development of exports requires the leasing of state-owned banks if it comes to exports of aircraft and heavy-duty vehicles. "If we talk about small business, for example, the export of grain and other agricultural products, the state may regulate tax benefits and other parameters to quicken the farmers' interest in exports. And we should not interfere with the export of grain," Yuri Yudenkov noted.
A professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, also praised Ulyukayev's initiative regarding investments in infrastructure. "This is very promising and may contribute a lot to the Russian economy. The main question here is how the domestic savings will be used. When it is done through development institutions it does not justify itself, so we need to create a normal environment, so that people could accumulate their money in some funds, whereas private money would be invested into the infrastructure. I think that effective investment in the infrastructure will work if there is a normal system of private savings in Russia, but so far we have heard no proposals to that end," he said.
As for the support of exports, there are two important directions. "Private medium-size business should become the exporters in the first place. Its potential should be used, but this requires a proper business environment. The second direction is more transparent export channels. For example, the Chinese company 'Alibaba' creates a system that allows part of the Russian entrepreneurs to sell products in China, and there are no similar Russian systems yet. We need to create a system of global e-commerce, and it should be a private system, not a state-run one," Alexander Abramov suggested.