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Can Russia Compete?

Can Russia Compete?

Copyright Date: 2008
Pages: 183
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  • Book Info
    Can Russia Compete?
    Book Description:

    In recent years the Russian government, concerned about sustaining its economic performance, has sought to promote more diversified and broader economic growth beyond the profitable natural-resource sector. Economic officials would like to see something closer to a "knowledge-based economy." One of the areas in clear need of upgrading is the manufacturing sector. This book quantifies and benchmarks the relative strengths of that sector, identifying opportunities to increase Russian productivity and competitiveness. Drawing on original survey data from Russian firms of all sizes, the authors formulate proposals that aim to • enhance the innovative potential of Russian firms, • upgrade the skills of their workforce, and • develop a business-friendly climate of lower administrative costs and greater policy certainty. This book examines the underlying firm-level determinants of knowledge absorption, competitiveness, and productivity, with an eye to improving workers' skill levels and improving the investment climate, which should in turn enhance the innovation needed to keep up in a globalized economy. The original research and analysis of Desai, Goldberg, and their colleagues will be of use to anyone interested in the problems of building manufacturing competitiveness, especially in Russia and the post-Soviet transition economies. It will also be of interest to organizations planning to do business with Russia or to invest in it.

    eISBN: 978-0-8157-0161-3
    Subjects: Political Science, Business, Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Foreword
    (pp. vii-xii)
    Strobe Talbott and Fernando Montes-Negret

    Consider Russia’s economic transformation in the past ten years. In 1999,Russia’s economy was essentially bankrupt; it was leaking foreign exchange reserves; it was heavily indebted to the International Monetary Fund and highly dependent on financial assistance from the West; and it had been shrinking at about 6 percent a year since the breakup of the USSR. Today, Russia’s stock of foreign reserves—which it has been accumulating at an average rate of almost 50 percent ayear—now stands at about 25 percent of its total GDP. Russia holds one of the largest current account surpluses in the world, and...

  4. Acknowledgments
    (pp. xiii-xiv)
  5. one Introduction
    (pp. 1-11)
    Raj M. Desai and Itzhak Goldberg

    The Russian economy has been growing at an average nominal rate of 6 percent annually for the past decade. Among the most important factors contributing to its expansion has been the skyrocketing cost of oil and gas. In 2000, when Vladimir Putin took office, the cost of oil was approximately $20 a barrel; at the end of his term, it was five times higher. During Putin’s presidency, Russia earned about $1 trillion in oil and gas revenues. Meanwhile, the competitiveness of Russian enterprises has become increasingly fragile because of the appreciating ruble, climbing resource prices, and rising wages as well...

  6. two Productivity
    (pp. 12-34)
    Mark Schaffer and Boris Kuznetsov

    In the fifteen years since the collapse of the Soviet Union, the institutions and structure of the Russian economy have changed greatly. Although much can be said about the inconsistency of the transition and the incompleteness of many structural reforms, there is little doubt that Russia has moved from a centrally planned economy to a genuine market economy. All three main goals of the economic reform initiated fifteen years ago have been largely achieved. Prices are liberalized. Privatization is more or less complete. And the economy is now at least as open to international competition as many other market economies....

  7. three Fostering Knowledge Absorption
    (pp. 35-68)
    Itzhak Goldberg, Enrique Blanco-Armas, John Gabriel Goddard and Smita Kuriakose

    The Russian Federation devotes considerable resources and manpower to research and development (R&D), yet the Russian economy lags behind other large OECD and middle-income economies in R&D-based outputs. Microeconomic evidence shows that firms facing stiffer competitive pressures also innovate more—and that firm-level R&D has a strong, positive, and significant association with technological and organizational innovation and knowledge absorption. The Russian government’s initiatives to promote innovation do not appear to recognize the significant role of competition in fostering innovation and absorption.

    Improving absorptive capacity—the ability to tap the knowledge in the world technology pool—can be a major driver...

  8. four Upgrading Skills
    (pp. 69-90)
    Hong Tan, Vladimir Gimpelson and Yevgeniya Savchenko

    Russia, even with its highly educated workforce, faces a growing shortage of skilled workers in industry. In the transition to a market economy, Russia’s workforce underwent a wrenching reallocation of labor across industries and occupations, and many specialized and technical skills that workers acquired under central planning were no longer in demand.¹ Mismatches in the labor market became widespread, with sharp shortages of some types of skilled workers coexisting with excess supplies of others. The formal education system and the specialized vocational and technical training institutions in particular were poorly prepared to operate under the new market conditions and to...

  9. five Improving the Investment Climate
    (pp. 91-112)
    Raj M. Desai

    In addition to the skill base of the workforce and the capacity of firms to absorb technology, the investment climate—government policies and actions that shape the opportunities and incentives for firms to invest productively, create jobs, and expand—also affects the productivity and growth of Russia’s economy. Following the financial crisis of 1998–99, a combination of favorable macroeconomic conditions and major regulatory reforms to the business environment in 2000–02 propelled Russia’s economic expansion.

    However, the Russian investment climate, although much improved in recent years, is still characterized by significant administrative costs, policy-induced risks, and formal and informal...

  10. Appendix 1
    (pp. 113-116)
  11. Appendix 2
    (pp. 117-124)
  12. Appendix 3
    (pp. 125-141)
  13. Appendix 4
    (pp. 142-162)
  14. Appendix 5
    (pp. 163-167)
  15. References
    (pp. 168-174)
  16. Contributors
    (pp. 175-176)
  17. Index
    (pp. 177-184)
  18. Back Matter
    (pp. 185-186)