Russian economy is becoming more and more primitive

By Vestnik Kavkaza

According to the Western mass media, despite the launch of economic and visa sanctions by Washington, exports of American goods to Russia grew – in May their volume reached a new record - $1.2 billion. However, the sanctions have caused a capital outflow from Russia and ruble exchange fluctuations. The recession of the Russian economy is influenced by the unstable situation in Ukraine and difficult negotiations on gas.

According to the director of the Economics Institute of the Russian Academy of Sciences, Ruslan Grinberg, the Russian economy is developing in accordance with factors we cannot control: “We were experiencing rapid economic growth when prices for oil were increasing, now the oil prices remain the same and the economy is not developing. The geopolitical situation in the world, deplorable as it is, is still favourable for Russia.”

Grinberg thinks that the macroeconomic situation is not so bad, but Russia has no alternative to large-scale state investment, the so-called massive projects, a comprehensive industrial policy with specifying of priorities and financing the most important programmes. “We have to develop a certain mechanism to make it work. We have a number of state-run corporations. They work fine, but their plans are often not fulfilled. Especially those companies not connected to producing natural resources, failing to meet their plans. The main problem is that no matter whether we have economic growth or not, our economy is becoming more and more primitive. The economic structure is not improving. I believe what we need is serious state investment and state capitalism. Of course it's risky, because we are not accustomed to working. The question is who will do what. It's not clear where we will find modern workers and well-educated engineers. It's a very serious problem, a great risk.”

Grinberg said that he had just visited Sochi. “In fact, I was against this project, but when visited the city, I changed my mind. They did a great job there. The city is very beautiful. The people are different, life itself is different there. I think it's great. Still, the problems the economy is facing are much more serious. Anyway, I believe some very important decision will be made soon. And I would not like to be in President Putin's place.”

Meanwhile, the difficult economic situation makes the authorities take steps on import substitution, while the weakening of ruble could make Russian products cheaper on the international market, and revenues of the budget will grow, improving the competitiveness of Russian companies.