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“Structural Transformation” of the Russian Economy and Economic Policy

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Abstract

The article examines structural shifts in the Russian economy caused by external sanctions restrictions and reactions of the Russian government in the period after February 2022. The specifics of changes in the allocation of resources between sectors of the economy are described in the context of the theory of structural transformation. The features of the current transformation in Russia are revealed, in particular, a general decrease in efficiency and well-being, including due to the intensification of the development of industries focused on the government demand, as well as relative changes in profitability, which determines the volume of investments in fixed assets. It notes the limited capacity of public policy to directly stimulate transformation and justifies measures that, after mitigating the initial shocks, should be aimed at facilitating the market-driven reallocation of productive resources. This requires efforts to manage state-owned companies, infrastructure policy, as well as measures to develop financial markets and the non-banking sector.

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Notes

  1. In a special volume on structural transformation [3], it is defined as follows (p. 1): the movement of a country’s productive resources (natural resources, land, capital, labor and know-how) from low-productivity to high-productivity economic activities.

  2. Interestingly, a quarter of a century after the well-known late Soviet dichotomy “acceleration – perestroika” in modern Russia the preferential accumulation of capital was developed as one of the target indicators of the “May Decrees” of 2012, which set the task of bringing the level of investment in fixed assets to 25% GDP. But at the same time, another task aimed at creating 25 million modern jobs rather indicated the need for structural change.

  3. This is one of the obvious reasons for the emerging fiscal crisis in the Russian economy.

  4. Government resolutions of August 1 (no. 1365) and December 13 (no. 2290), 2022, give military industrial enterprises the right to increase the intensity of the use of labor force (including involving staff without their consent in overtime work, work on weekends and holidays, limit employee vacations, move labor resources from other regions, etc.).

  5. According to the methodology of the Bank of Russia, the net balance of estimates is calculated for each indicator from the survey as the difference between the shares of responses of the “greater” type (increased, improved, etc.) and responses of the “less” type (decreased, worsened, etc.) in percent to the sum of the answers. Thus, the change in the balance of responses, which is in the range between –1 and 1 (from –100 to 100 basis points), compared to the previous month, displays the direction and intensity of ongoing processes [19].

  6. The latest available Rosstat indicator refers to 2021; however, this figure has been steadily increasing in recent years.

  7. Unfortunately, data on selling prices and costs for various segments within the manufacturing industry are not publicly available.

  8. See the so-called “disorganization” effect and its striking manifestations in Russia [28, 29].

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  1. Moscow State University, 119991, Moscow, Russia

    O. V. Buklemishev

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Buklemishev, O.V. “Structural Transformation” of the Russian Economy and Economic Policy. Stud. Russ. Econ. Dev. 34, 456–463 (2023). https://doi.org/10.1134/S1075700723040044

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