The purpose of the course is to bring the basic knowledge on the specific aspects of Russian economy that had significant impact on the latest development trends in Russia. This course will provide you with knowledge on: 1) the basics of economy; 2) understanding the role of market reforms in developing the key features of modern Russian economy; 3) understanding specific aspects of Russian economy; 4) cause-effect relationship of the most significant trends in Russia’s economic development; 5) instruments for analysis of Russian economy; 6) business climate in Russia and skills required for doing business in Russia. Currently, different aspects of economy have some influence on us and our behavior - e.g. currency exchange rates, inflation and other things define the way in which we distribute our income between savings and investments. In order to understand these principles it is required to have the basic knowledge on economics. So it is not only a lecture on Russian economy. Another main objective of the course is to develop knowledge on the basics of economy as such. So the course will disclose universal patterns by analyzing trends in Russian economy. FAQ: Q: What is targeted audience for this course? What are the course prerequisites? A: The course is mainly developed for students pursuing their master’s degree in the field of international economy and for those who have professional interest in Russian economy. It requires basic knowledge of economic terms. Q: What are the minimum requirements to pass the course? A: In order to pass the course and receive a Course Certificate you will need to have at least 80% of correct answers in each quiz. Welcome to the course “Understanding Russian Economy. Problems of Transition”!
International division of labor. A new thinking on self reliance
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From the course by 国立高等经济大学
Understanding Russian Economy. Problems of Transition
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From the lesson
Fundamental challenges to the Russian economy
Welcome to the Week 7! Special focus will be on difficulties which Russia has faced as a result of the transition. There is rather long list of current challenges to Russian economic development. These problems have different roots, which we will consider. Please finish with the weekly quiz, which will help you to refresh your knowledge and help us to assess them.
Meet the Instructors
Vladimir ZuevProfessor
Department of Trade Policy
[MUSIC]
So let us think about, technological gap, self-reliance.
These are the topics, which are really important for
the current development of the Russian economy and let's first
have a glance into the history of the revolution of thinking on self-reliance.
When we talked about technological gap,
we discovered that there are a lot of really disastrous
figures demonstrating this technological gap between
the Russian economy and the leading economies of the world.
I would suggest a couple of figures more taken
from forum of technologies held back in the year
2010, you can see here on the slide.
And then there are a lot of statements from that forum and
concluding that the waste technological gap was
really dramatic, and we have to overcome it.
And then at the end of this forum, we had a statement from
president of Russian Federation from Vladimir Putin.
And he said that and I quote,
we are very interested in technological transfer from the West.
We are ready to buy technologies and
innovative products from the western countries.
The report was published in all the leading newspapers.
You can see the publication on this event was mainly
done on the 1st of July on the year 2010.
That was a very important change in the economic policy in that period of time,
because that demonstrated kind of a shift in thinking.
A new mental horizon, as far as transfer
from technologies from the West were
concerned in this particular case.
And really, if we think in a rational way in economic theory terms,
then definitely all the theories would suggest that it is not possible and
it is not economically rationale to reproduce all the innovations
by own effort by an effort from local producers at home.
So international division of labor theory still valid and
wasn't ever questioned and that kind of reality was
some how confirmed by the Russian leadership,
and they have finally confessed or they were finally
in accordance with the concept of buying leading
technologies from major western economies.
And thus, it was demonstrated during that forum and
on many other political and economic events and that kind of new
thinking emerged not only in relation to economic policy issues.
I should try to demonstrate in the next slide the way it was going on.
I have entitled it new thinking to foreign made.
Again, a short look into the history.
I guess that somewhere from the middle of the last decade,
new thinking was about to emerge in Russia and
that was really a new concept emerging in
relation to the common traditional stance.
If we remember the history of Russian economic development and
Soviet economic development,
that was always kind of a national pride to do everything by the self-effort.
We will always claiming that we were among the leaders and
we could do everything we wanted to do.
Atomic bomb, we could not.
I produce a topic about bone.
Space race, we were the leaders in the space race and
we launched directly the first man in space was Gagarran.
If we wanted to do something else,
we always claim that Russia was able to do it itself and
that was kind of a medal of national pride.
That was kind of a deep-rooted national thinking.
We are great enough to do everything by ourselves.
And then step by step, we started to realize that, probably
reproducing everything by the self-effort was not the rational kind of thinking.
It was not the rational kind of economical thinking.
It could be demonstrated by national car history.
Larger car was always supported Russian made car was
always kind of priority for Russia to build a Russian car,
which would compete with foreign made cars.
And that was always an effort made by Soviet Union or
then by Russia to develop the national car,
which would be a matter of pride of the national industries, but we couldn't.
We couldn't,
because car production means a lot of different variety of new technologies.
It's not only the car.
It's not only the design.
There are many other features inside the car and that means that
you have to progress on technological development at a large scale of
different industries, and that's not easy, and not rational.
The similar approach and that's kind of a joke,
but to better understand that kind of thinking,
we can look back into the sports development.
Russia always wanted to be the champion of the world in football.
Football is really a national pride for boys.
Most popular sports game in the world.
So to be the leader, to be the number one in football means
to demonstrate ability of the nation to achieve a certain goal.
So, we always wanted to become champions only by our own effort.
Initially, all the players
were Russian nationals.
Coach was from Russia and that was like that, and
we never succeeded to become number one.
So then, we changed our stance.
We started to invite foreign players.
We started to invite foreign coaches.
Well, the result is not yet achieved, but that's something different.
The stance, the approach, the attitude to achieving a goal is different and
that's kind of a very different thinking in relation to a traditional approach.
So I would say, there should be no exaggerated feeling of the national pride.
If you take the best things from other nations, there's nothing to worry about.
That's a normal thing.
If somebody invented internet or
if somebody invented mobile telephone,
as nothing wrong taking that achievement
from somebody who was the first to do it and
then make full use of it.
And not necessary to wait years or
a decade to develop that kind of technology by a self-effort.
So I think that is really kind of a new thinking that was
about to emerge In that period of time when I quoted Putin,
saying that we were ready to buy technologies from the West.
But then [COUGH] and
that's another sad part of the story,
because that kind of a change was
really in a positive direction.
We should have welcomed that kind of a change in a stance.
But then, two major negative events happened.
That represented a blow to this emerging new concept and
then I would say, now we alas should state that we
came back to the old self reliance concept.
So definitely, the first event to mention was the financial and
economic crisis, global economic crisis.
And then as Russia demonstrated its dependence
on other leading economies, namely on USA economy,
because the world economic crisis started in the USA from sub prime.
Real estate crisis.
And definitely, as Russia turned out to be involved and
attached [INAUDIBLE] by that crisis,
we demonstrated some kind of dependence on the world economy.
And this kind of dependence was perceived as a kind of a humiliation,
as a kind of a not strength enough in the Russian economy.
And then definitely, there was the first draw back in the emerging
concept of self-reliance, which we consider right now.
So public support was not in favor of further integration into the world
economy, further and more increase dependence from the world economy.
Of course, that was the reality.
So, and second terrible blow to the emerging concept
was definitely made by economic sanctions.
Since relations between Russia and major western
countries came to a stage of economic sanctions,
then definitely a much stronger humiliation of being dependent was felt.
No matter to which extent we were dependent,
either from hard currency in flows or from oil and
gas equipment, energy equipment, no matter.
If there was even a minor dependence for a great nation, it could not be accepted.
And as it could not be accepted,
then it provided an effort such an enormous effort to simulate
import substitution with all the subsequent measures and
then we came back to the Russian made and self-reliance concepts.
Again, everybody is claiming that everything should be done in Russia.
That we should only rely on our own industries,
our own technologies, our own efforts.
So, the sad reality of this development is that we are coming back for
the self-reliance concept.
And of course, that's a for the development of the national economy.
So, when we make this kind of statement that we are coming back
to the self-reliance concept and Russian made concept.
Now let's think about it in another way,
who are those companies we plan to rely upon?
Because if we come back to the Russian m ade concept, that means that everything
should be made by the Russian companies by the local domestic producers.
Let's make an additional thinking,
who do we trust those product services to be made?
[MUSIC]
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