Long-term challenges to Russian economic policy

Russia’s economic growth slowed substantially over the past decade. To improve its long-term growth outlook, Russia must deal with structural problems. While the country has not lacked for ambitious development plans, the results of late have been rather thin. We discuss some of the key challenges facing the Russian economy and policy responses. Considering Russia’s recent economic policy in light of the economic literature and potential reasons for its successes and failures, we suggest the focus of the country’s current economic policy framework is too narrowly drawn to achieve a significant acceleration in long-term growth.

Sisällysluettelo

Contents
Abstract ..... 3
1. Introduction..... 4
2. Economic growth and policies that support growth..... 5
2.1 Factors of economic growth..... 5
2.2 Evolution of growth and development policies ..... 6
3. Russia’s economic policies over the past two decades.... 7
4. A shrinking labor force and aging population ..... 11
4.1 Raising the fertility rate..... 11
4.2 Longer working lives..... 12
4.3 Tackling labor force participation and informal labor markets ..... 13
4.4 Confronting migration issues..... 14
4.5 Enhancing human capital..... 15
5. Russia lacks investment ..... 16
5.1 Macroeconomic environment & financial markets.... 18
5.2 Investment promotion policies..... 19
5.3 Business environment ..... 20
6. Stuck in a low-productivity trap..... 23
6.1 Structural transformation and diversification ..... 24
6.2 Boosting innovation ..... 25
6.3 Digitalization, a new priority ..... 27
6.4 Changing the state’s role in the economy ..... 28
6.5 Infrastructure.... 30
7. Assessing past and future performance of Russian economic policy ..... 31
7.1 What explains the limited success of Russia’s development policies?.... 32
7.2 Can Russia’s current development policies accelerate future growth?... 33
8. Concluding remarks.... 35
References.... 37