Russia should pursue an active industrial policy
in order to avoid economic crises and develop in the most balanced
Center of Macroeconomic Analysis and Short-term
Prognosis has recently released a report titled "Long-term
trends of the Russian economy." Economic crises forecast
in the report sparked the interest of the press and public. The
authors of the report predict three crises which by a curious
coincidence should happen at the time of election campaigns.
The document contains a full description of various
development trends for the world and Russian economies for the
next 10-15 years. It even has figures forecast for four main scenarios.
However, the report can be hardly regarded an
economic forecast. It looks more like a manifesto of a group of
state-oriented economists and politicians in the Russian government.
The group is becoming an influential force in the government.
The authors conclude that Russia should pursue an active industrial
policy in order to avoid economic crises and develop in the most
balanced way. The industrial policy should include large-scale
government investments and moderate protectionism in foreign trade.
According to authors of the report, a social
crisis will break out in Russia in 2007-2008. The crisis will
stem out of public discontent with a high level of inequality.
A crisis of infrastructure is expected in Russia in 2011-2012
due to massive decommissioning of infrastructure facilities and
housing stock. And, finally, a third crisis will be caused by
depletion of some natural resources, which bring about the need
for economic restructuring. It is obvious that all those crises
can be avoided or minimized by applying a sensible state policy.
That is why the picture is not so black as may appear. On the
contrary, the report is quite optimistic in terms of Russia's
The reports consider four scenarios of long-term
economic growth. The most optimistic scenario requires an ideal
industrial policy pursued by the state. The most pessimistic one
becomes a reality provided that the state does nothing. Russia's
annual GDP will grow by four-six percent no matter which of the
scenarios is in place. The growth rate is probably not enough
to double GDP every year. However, the rate is quite solid and
sustainable by international standards, it will enable Russia
to catch up with the developed nations in the long run. In case
of the last scenario, the depletion of natural resources in 2015-2016
will decrease annual growth to one-two percent. However, GDP is
not expected to drop sharply due to growth rate decrease.