Russia's economy needs innovation

We need to continue working on structural changes in the transition of the economy from a raw-materials model to an innovative one, Russian Prime Minister Dmitry Medvedev said yesterday at a meeting on sustainable economic development and social stability in 2015.

 

"As for the long-term tasks - in fact, it is a medium-term plan, it was adopted two years ago. The decisions we laid in it should expand the economy from a raw-materials model to an innovative format, to give impetus to the movement in this direction," he said. "Such decisions were made, and there was a movement in this direction, but, of course, it is insufficient for now. It is important to continue working on the planned structural changes," RIA Novosti cited the prime minister. 

 

A leading researcher at the Institute of Applied Economic Research of the Russian Presidential Academy of National Economics and Public Administration, Alexander Abramov, told 'Vestnik Kavkaza' that any non-oil economic model for Russia is innovative now."Most likely, it is a question of encouraging the development of industries, ranging from the production of weapons, to the innovation center Skolkovo, which focuses on new production, new technologies, a new structure of the Russian economy," he said.

According to the expert, "a complete transition to a new economic model will require 5-10 years. Today it is important to understand how this transition will take place, and what its essence is. I think that the government lacks a certain clarity of understanding of such a strategy," Abramov said. However, he pointed out that "sanctions do not exclude the possibility of such a transformation, but certainly very complicate it". "This is not only because of the limitations on capital, but also because of the restrictions on access to new technologies and markets. Sanctions may slow down the process a year or two, but it seems to me, the main generator of such transformations is still the desire of the internal authorities and businesses to implement them. The sanctions are a kind of additional obstacle, but they cannot stop the process," he concluded. According to the associate professor of stock markets and financial engineering of RANEPA, Vasiliy Yakimkin, the basic idea is to develop the processing industry based on modern technologies. "Do not send raw materials abroad, but make the goods ourselves. For example, Gazprom supplies gas to Europe, from which factories make polyethylene, water bottles, bags. As a result, the extra cost may be about 1000%. So maybe it makes sense to build the plants themselves and to produce and deliver all this stuff - then we will have 1000%, not the Germans," the expert said.

 

According to the expert, "a complete transition to a new economic model will require 5-10 years. Today it is important to understand how this transition will take place, and what its essence is. I think that the government lacks a certain clarity of understanding of such a strategy," Abramov said. 

 

However, he pointed out that "sanctions do not exclude the possibility of such a transformation, but certainly very complicate it". "This is not only because of the limitations on capital, but also because of the restrictions on access to new technologies and markets. Sanctions may slow down the process a year or two, but it seems to me, the main generator of such transformations is still the desire of the internal authorities and businesses to implement them. The sanctions are a kind of additional obstacle, but they cannot stop the process," he concluded. 

 

According to the associate professor of stock markets and financial engineering of RANEPA, Vasiliy Yakimkin, the basic idea is to develop the processing industry based on modern technologies. "Do not send raw materials abroad, but make the goods ourselves. For example, Gazprom supplies gas to Europe, from which factories make polyethylene, water bottles, bags. As a result, the extra cost may be about 1000%. So maybe it makes sense to build the plants themselves and to produce and deliver all this stuff - then we will have 1000%, not the Germans," the expert said.

 

In addition, he expressed the view that the transition to a new economic model will take decades. "This transition will be carried out in very tough competition. It will be necessary to engage in advertising and logistics or no one will know about our innovative products and will not buy them. But we must begin with the courts, of course, to form a legal economy in Russia," Yakimkin said.

 

"The Russian Federation has a competitive advantage. Firstly, we have low productivity. If we increase it and at least reduce the gap between the German and the Dutch, then it will be cheaper to produce products that we buy from them in Russia. Secondly, we have the raw materials - it does not need to be sent to Germany or the Netherlands. Our production costs will be lower. Now is very good moment, when the devaluation due to double revenues decreased by half. We have a competitive advantage in almost all sectors. And it should be used," the assistant professor summed up.