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The future of Russia’s economy depends on two factors – the availability of oil export revenues and institutional development. This was the argument put forward by the leading Russian and foreign experts who gathered at the IX Annual Summit of the Valdai Discussion Club.
21-25 October 2012 – St. Petersburg and Moscow, Russia
The experts, discussing scenarios for Russia’s economic development proposed by a working group of Russian authors, expressed their concern about the development of the global and national economy, stressing the need to recover from the 2008-2009 crisis and reformulate the global economic framework.
The IX Annual Summit of the Valdai Discussion Club started in St. Petersburg with a discussion of the four scenarios for Russia’s economic development, which are dependent on the availability of resources and the rate of reforms in Russia. The scenarios, dubbed after the four types of temperament as sanguine, melancholic, phlegmatic and choleric, dealt with the possible results of the steps taken by the federal government and the dependence of the state coffers on revenues from oil and gas exports.
Under the “Sanguine” scenario, which envisages high oil prices and successful reforms, Russia would outpace global economic growth. However, if oil prices are low and no reforms are implemented, the economy would all but grind to a halt – this is aptly named the “Melancholy” scenario. If reforms do occur, but oil prices fail to rise (the “Phlegmatic” scenario) the economy will experience more growth than it would if oil prices remained high but there is no institutional reform (the “Choleric” scenario).
The lack of institutions was one of the main concerns of the conference participants. As one Russian expert noted, this problem goes deeper than just development institutions, and includes corruption, political instability and the independence of the courts. The experts agreed that if no institutional reforms are implemented in Vladimir Putin’s third presidential term, Russia will pass the point of no return, where global development is likely to outpace Russia and global challenges will be met with an inadequate response.
The experts agreed that lack of institutions leads to the inability to use Russian resources internally. As one expert puts it, “Russia exports oil, capital and people.” He noted that Russia cannot make effective use of its competitive advantages: high-level education and vast natural resources. However, one of the conference participants told the audience that in the 21st century Russia should become a “global thinker” instead of a “global energy stockpile.”
This issue was lamented by Russian business ombudsman Boris Titov, who told the conference that it is highly unprofitable for Russian entrepreneurs to develop their businesses inside Russia. He noted that the high volatility of the markets, heavy dependence on bureaucracy and high prices make the Russian market more interesting for foreign investors, who are able to benefit from the lower credit rates offered by Western banks.
Among other things, the experts focused on the political infrastructure, expressing their fear of stagnation at the highest levels of executive power. They underlined the need to instigate reforms, but commented on the lack of political will to change the system that was already in place in Russia. As one of the participants noted, Vladimir Putin needs to hold together different sections of the Russian population and maintain social stability more than he needs institutional development.
Russian and international experts presented an in-depth analysis of the global economic crisis of 2008-2009. They argued that this crisis has little in common with the previous crises due to the fact that the foundation of the global economic system fell apart and proved to be inefficient in dealing with large-scale challenges. The experts from the global governance institutions, including the World Bank and the UN, outlined the main features of the 2008-2009 crisis, stressing Russia’s performance was significantly hampered by its reliance on oil and gas exports and foreign investment instead of domestic investment.
The crisis in the Eurozone and its influence on the Russian and global economy was among the most heatedly discussed topics at the forum. One high-ranking German speaker noted that the crisis in the Eurozone could have a serious impact on the global system, thus making financial stability in Europe a major goal for the international and European community. A Chinese participant said that Beijing was keeping a wary eye on the development of the situation with the euro and expected the crisis to be deeper and longer than predicted.
Some Western conference participants proposed that in the future the Russian economy should be based on its already established strong industries – agriculture, oil and gas, and the service industry. One speaker said that Russia should abandon the idea of reindustrialization, which has no clear aims and goals and is likely to end in failure, toppling the whole country in the process. However, many senior Russian analysts and experts disagreed, dismissing the idea of Russia as a non-industrial country and noting that if Russia lacks some specific industrial centers of excellence it should create them.
Representatives of the World Economic Forum in Davos held a special panel session devoted to forecasting Russia’s economic development. The WEF group highlighted three scenarios and divided the Valdai experts into six groups, who were to focus on the in-depth results and possible measures to be taken in each scenario. According to some of the participants, the workshop format proved to be an interesting source of insights and a new experience which added to the traditional Valdai Club conference format.
The final report, which will bring together all the comments and suggestions made by the conference participants, will be presented at the World Economic Forum in Davos, Switzerland.
During the conference Russian and international experts met with leading Russian newsmakers, ranging from the Governor of St. Petersburg Georgy Poltavchenko to Russian President Vladimir Putin . During the Moscow part of the conference the Valdai Club experts attended the Sberbank of Russia Business Breakfast on the topic Managing Risks Through Leadership.
Approximately 100 Russian and foreign economists, political scientists and international relations experts from 19 countries, including the United States, China, India, Iran, Western and Eastern Europe, and Latin America attended the event.
21-25 October 2012 – St. Petersburg and Moscow, Russia
The experts, discussing scenarios for Russia’s economic development proposed by a working group of Russian authors, expressed their concern about the development of the global and national economy, stressing the need to recover from the 2008-2009 crisis and reformulate the global economic framework.
The IX Annual Summit of the Valdai Discussion Club started in St. Petersburg with a discussion of the four scenarios for Russia’s economic development, which are dependent on the availability of resources and the rate of reforms in Russia. The scenarios, dubbed after the four types of temperament as sanguine, melancholic, phlegmatic and choleric, dealt with the possible results of the steps taken by the federal government and the dependence of the state coffers on revenues from oil and gas exports.
Under the “Sanguine” scenario, which envisages high oil prices and successful reforms, Russia would outpace global economic growth. However, if oil prices are low and no reforms are implemented, the economy would all but grind to a halt – this is aptly named the “Melancholy” scenario. If reforms do occur, but oil prices fail to rise (the “Phlegmatic” scenario) the economy will experience more growth than it would if oil prices remained high but there is no institutional reform (the “Choleric” scenario).
The lack of institutions was one of the main concerns of the conference participants. As one Russian expert noted, this problem goes deeper than just development institutions, and includes corruption, political instability and the independence of the courts. The experts agreed that if no institutional reforms are implemented in Vladimir Putin’s third presidential term, Russia will pass the point of no return, where global development is likely to outpace Russia and global challenges will be met with an inadequate response.
The experts agreed that lack of institutions leads to the inability to use Russian resources internally. As one expert puts it, “Russia exports oil, capital and people.” He noted that Russia cannot make effective use of its competitive advantages: high-level education and vast natural resources. However, one of the conference participants told the audience that in the 21st century Russia should become a “global thinker” instead of a “global energy stockpile.”
This issue was lamented by Russian business ombudsman Boris Titov, who told the conference that it is highly unprofitable for Russian entrepreneurs to develop their businesses inside Russia. He noted that the high volatility of the markets, heavy dependence on bureaucracy and high prices make the Russian market more interesting for foreign investors, who are able to benefit from the lower credit rates offered by Western banks.
Among other things, the experts focused on the political infrastructure, expressing their fear of stagnation at the highest levels of executive power. They underlined the need to instigate reforms, but commented on the lack of political will to change the system that was already in place in Russia. As one of the participants noted, Vladimir Putin needs to hold together different sections of the Russian population and maintain social stability more than he needs institutional development.
Russian and international experts presented an in-depth analysis of the global economic crisis of 2008-2009. They argued that this crisis has little in common with the previous crises due to the fact that the foundation of the global economic system fell apart and proved to be inefficient in dealing with large-scale challenges. The experts from the global governance institutions, including the World Bank and the UN, outlined the main features of the 2008-2009 crisis, stressing Russia’s performance was significantly hampered by its reliance on oil and gas exports and foreign investment instead of domestic investment.
The crisis in the Eurozone and its influence on the Russian and global economy was among the most heatedly discussed topics at the forum. One high-ranking German speaker noted that the crisis in the Eurozone could have a serious impact on the global system, thus making financial stability in Europe a major goal for the international and European community. A Chinese participant said that Beijing was keeping a wary eye on the development of the situation with the euro and expected the crisis to be deeper and longer than predicted.
Some Western conference participants proposed that in the future the Russian economy should be based on its already established strong industries – agriculture, oil and gas, and the service industry. One speaker said that Russia should abandon the idea of reindustrialization, which has no clear aims and goals and is likely to end in failure, toppling the whole country in the process. However, many senior Russian analysts and experts disagreed, dismissing the idea of Russia as a non-industrial country and noting that if Russia lacks some specific industrial centers of excellence it should create them.
Representatives of the World Economic Forum in Davos held a special panel session devoted to forecasting Russia’s economic development. The WEF group highlighted three scenarios and divided the Valdai experts into six groups, who were to focus on the in-depth results and possible measures to be taken in each scenario. According to some of the participants, the workshop format proved to be an interesting source of insights and a new experience which added to the traditional Valdai Club conference format.
The final report, which will bring together all the comments and suggestions made by the conference participants, will be presented at the World Economic Forum in Davos, Switzerland.
During the conference Russian and international experts met with leading Russian newsmakers, ranging from the Governor of St. Petersburg Georgy Poltavchenko to Russian President Vladimir Putin . During the Moscow part of the conference the Valdai Club experts attended the Sberbank of Russia Business Breakfast on the topic Managing Risks Through Leadership.
Approximately 100 Russian and foreign economists, political scientists and international relations experts from 19 countries, including the United States, China, India, Iran, Western and Eastern Europe, and Latin America attended the event.
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