Russia: The situation is not changing fast enough to make a difference

Read more on:  Economy, Skolkovo, Modernization

Valdaiclub.com interview with Piotr Dutkiewicz, Director of the Center for Governance and Public Management at Carleton University

How do you assess Russian economic potential and the steps taken in Russia for its modernization?

There is a gap between the Russian economic potential and the Russian economic performance. We were discussing the reasons for this gap at the XII International Academic Conference on Economic and Social Development, and most economists are of the opinion that the gap is related to the not very supportive investment climate in Russia. One of the reasons that the economy is not performing so well – is the need for new technologies, more privatization, and so on and so forth. One of the reasons that the economy is not performing so well is the lack of a proper investment climate in Russia. That's exactly what the president, Dmitry Medvedev, was discussing in March in his eleven points. So that seems to be one of the major reasons, but there are probably others also – more deep concerns related to this. It's not only about the corruption, obviously. It needs three elements. One is that foreign investment in the real economy in Russia will come if they see that Russians are investing in their own country; what we see now is outflow, not only of investment from Russia but we see it also in Russian investors, who are investing in Europe, in the United States, in Canada, in China, but investing less and less in Russia. So that's one point. The second is the lack of a state tax policy that would encourage investment. Third is still not very transparent areas that are related to strategic industries. It's obvious, of course, that there are some areas that should be protected by the state, and investors shouldn't go there, but at the same time, it would be good to see that in areas where they can, the situation were more transparent than it is at the moment. So those are probably the areas in which we see the potential for improvement.

Does the modern Russian model of modernization satisfy the requirements of the era of globalization?

You know, that's a very good question because what we see on paper is very good. Or, not on paper I should say, but what we see as a program sounds very attractive. And it sounds attractive to everybody. It sounds good, I believe, to the Russian population because the economy would be more effective and modernised and to foreign investors because this would be more attractive. But at the same time, we have not seen for the last two years too many changes in the implementation of this program. So the worry is that the program is attractive, but the situation on the ground is not changing fast enough to make a difference. So that's the concern for the future.

Attraction of the new and innovative technologies is one of the prerequisites for the modernization. Today this trend is urgent, however, there are some difficulties. What problems should be solved for an economy to be considered innovative?

Again, I believe that the program is set up, that we have not only the Skolkovo Project, but other projects as well – for instance, support for the engineering programs in the country. In engineering and science research in the country, there's a massive flow of money from the government towards the improvement of research in innovative areas and in technology. There is a visible drive towards reevaluating educational programs to be more effective in the area of technology. There are technological parts that are quite attractive. So, in other words, we see here a lot of movement and a lot of support – financial support – from the Russian government in this area. We see three areas as crucial. The first area of importance, I believe, is communications. The second is the area of new energy resources. Third is the area of agriculture and biological research to improve the quality and efficacy of agriculture. I believe those areas are very important.