Trajectories of Economic Transformations. Lessons from 2004 for 2024 and Beyond. Valery Kushlin

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СКАЧАТЬ said: “After the 1998 financial crisis, Russia experienced significant growth over the next three years… This growth came as a real surprise to most Western observers. The Russian government, born out of the 1998 crisis, did not enjoy the sympathy of Western observers, who were more lenient with previous governments. Recall that in April 1999 the IMF provided for a decrease in GDP to -7% for the current year. However, the year ended with an increase of +5%. The error amounted to more than 12 points of GDP – a gap that is infrequent and unexpected for the estimates of well-known professionals. But it must be emphasized that this mistake occurred at a time when relations between the IMF and the Russian government, headed by Yevgeny Primakov, were bad, and the probable causes of the mistake must be sought in a misunderstanding34 of the mechanisms of the Russian economy.

      Sapir, like other serious experts, points to the lack of an effective investment policy as the reason for the crisis state of the Russian economy. He notes the illusory hopes of some members of the Russian government for foreign direct investment and, in contrast to this, points to the importance of intensifying investment in the private sector. “Resources derived from both domestic trade and exports,” Sapir writes, “have been only partially reinvested.” At the same time, he states that from 1994 until the financial crisis of 1998, Russian oligarchs “played big.” They “actively used their financial resources to facilitate the re-election of Boris Yeltsin, and then played the card of devaluation of the ruble on the export of raw materials, when world prices fell as a result of the Asian crisis.”35

      Balancing Ideals and Results

      Comprehending the results and the course of transformations in Russia, analyzing the experts’ assessments, we must conclude that the percentage of negative phenomena in the overall balance of the results of transformations was exorbitantly high. Russia as a state has lost almost a quarter of its territory with the richest mineral reserves, half of its population and half of its economy, assets worth more than $500 billion have been exported abroad, and our military-strategic potential has been reduced by dozens of times.

      The main destructive influence stemmed from two circumstances. First, it was the wrong choice of the conceptual basis of economic reforms and turning it almost into a religion. Secondly, from the inability (unreadiness) of society to resist the egoistic pressure of the criminals, who were increasingly merging with the authorities. Moreover, these circumstances taken together were well used by external forces interested in weakening the former political rival.

      As is well known, our “elite” did not hesitate to choose certain refined principles of the free market as a conceptual basis for economic reforms, reduced to the form of universal recommendations of the “experienced” West for “newcomers” entering the market world. But more and more well-known economists of the world are forming an opinion that the standard reform policy, recommended at a certain stage by international economic and financial institutions as a model for developing countries and countries with economies in transition, in fact turned out to be quite ineffective and clearly does not correspond to the realities and requirements of the future. This type of economic policy is associated with a set of provisions developed in the early 1990s, called the Washington Consensus, and it remains the basis for existing Russian economic programs.

      In fact, sharp criticism of the concept of the “Washington Consensus” now comes even from the circles directly involved in its development. The already mentioned Professor Stiglitz, who until recently served as senior vice president and chief economist at the World Bank, argues that the attractive simplicity of this scientific doctrine is in fact “using a very simplistic model of calculation.” He notes that these programs do not include effective financial regulation, measures to stimulate technology transfer, maintain competition and enhance the transparency of markets.

      For example, as can be seen from Table 4.3, the structure of industrial production in Russia over the years of market transformations has undergone a clearly negative shift towards a decrease in the role of mechanical engineering and metalworking and a noticeable increase in the share of the fuel industry, metallurgy, chemistry and petrochemistry. Some progress has been made in the development of the food industry, but it is taking place based on the expansion of foreign capital and is often several steps behind the world’s highest technological level. A clear degradation is observed in the light industry sector.

      The most tragic consequence of the mistakes of the economic course since the beginning of the reforms is the consolidation of the trend towards the degradation of the productive forces of our country, the transition to economic dynamics based on the consumer attitude to the resource potential of the nation. Clear evidence of this is the strengthening of the raw material orientation of the economy and the sharp curtailment of the manufacturing sector and high-tech industries, the outflow of capital from the country many times higher than foreign investment, the degradation and squandering of scientific potential, the brain drain and, in general, the best genetic fund abroad, a sharp weakening of control over the environment for the sake of current economic interests, etc.

      As a justification for the absence of any active innovation and industrial policy with the start of economic transformations, interested politicians and experts usually refer to the lack of investment resources. But this reason is secondary. The main thing lies in the unsatisfactory structure of motivations at enterprises, in the orientation of the behavior of management in economic structures and employees of the relevant state bodies. Table 4.4 shows that there was a serious decrease in 1990—1993 in the share and volume of depreciation deductions, which, as is known, is the most important source of investment in fixed assets. The table also shows how little economic influence the item of labor costs has on the interests of entrepreneurs and workers in the real sector. If the share of labor costs in total costs is 11—13%, and 2/3 of the total costs are material factors, then the creative components of motivations, which are concentrated in the labor potential of enterprises, objectively cannot be properly developed.

      The situation in many branches of industry, which in Soviet times reached indicators comparable to the best world ones in terms of technological level and scientific intensity, is very sad. Here is just one of the testimonies (published in 2002) concerning the domestic aviation industry. “Russian aviation has been in a severe crisis for more than a decade. To understand the depth of this crisis, suffice it to say that until 1991 we produced more than 80 long-haul aircraft per year, and in the last five to seven years – two or three, production has decreased by thirty to forty times. And if in 1990 the USSR controlled more than 25% of the civil aviation equipment market, i.e. every fourth aircraft in the world was produced in our country, then since the mid-1990s our share is practically zero. For many years now, the world’s largest aircraft manufacturers have not only not taken us into account, but simply not mentioned us in their marketing studies.”36

      The Russian market economy, which did not yet have training in complex market bindings, easily succumbed to new attractive trends in the global financial and economic space, including those related to the separation of financial turnover into an independent business sector, isolated from the real economy, where the dynamism and profitability of operations seemed to be the highest. Under the influence of this circumstance, the formation and development of banks, one of the decisive components of a normal market economy, in Russia, the path of participation in speculative operations rather than the provision of investment and other services to the real sector has taken the path of participation in speculative operations. Most of them limited themselves to performing the functions of financial offices. Overall, the Russian financial СКАЧАТЬ