From “development of the country” to “reengineering of institutions”: how the Kremlin sees the priorities of the new economy

The “new model” of economic development for the coming years will be based on six basic principles, said Maxim Oreshkin, aide to the President of Russia, during his speech at the educational marathon of the Knowledge Society.

The first is the “development of the country,” said the assistant to the president. Not enough attention has been paid to this in previous years, he added. In particular, in Russia, the share of imports in domestic consumption is 23%, i.e., every fourth product or service consumed by citizens and companies was imported. In the United States, for example, this share is 15%, “this is the example to strive for,” Oreshkin said. The transition to this level means an opportunity to increase domestic consumption by about 40%. The creation of infrastructure will play a key role in “development”, Oreshkin said.

The second is the reduction of geographical and social inequality. It is already happening thanks to programs to support families with children from 0 to 17 years old – in the case of low income, such families can receive payments, Oreshkin recalled. An increase in income also leads to an increase in consumption, which stimulates the development of the economy, he added.

The third is new international cooperation, the presidential aide noted. It should be based not on simple import and use of foreign platforms, but on technological partnership and industrial cooperation, Oreshkin emphasized. The change will occur due to a change in the vector of international cooperation to the east and south, as well as the involvement of small and medium-sized businesses in the circuit. According to Oreshkin, marketplaces will also help small companies enter the international market.

The fourth is technological and personnel sovereignty. For this, investments in the education system are now being increased, the assistant to the president noted.

The fifth is a new level of economic efficiency. We are talking about automation, lean manufacturing, optimization of procedures, robotization, Oreshkin pointed out. For the labor market, this is lifelong learning, the acquisition of new competencies in the course of work. The competitive advantage of the Russian economy should be high labor productivity and technological platforms. The growth of production efficiency will also lead to an increase in wages, said the assistant to the president. According to Oreshkin, in April wage growth should be 10% compared to last year.

The sixth is the reengineering of institutions and the platformization of industries based on big data and artificial intelligence, the assistant to the president noted. “When, for example, through the application”Yandex.Taxi, you call a car, you actually use the platform and image of the new market, which is much more efficient thanks to data analysis,” Oreshkin explained, adding that this is already a planned market structure in which the algorithm determines pricing, location of cars, schedule work. Platformization will capture more and more industries, increasing the efficiency of the economy – in this direction, Russia can make a big leap forward, the presidential aide believes.

“Our strategic agenda is to build a country with its own self,” Oreshkin said. According to him, the basic condition for the success of the new economic model is the preservation of the principle of justice and equal opportunities. Russia is waiting for a change in the system of government and elites, the presidential aide emphasized. Now management will be built on the basis of big data, he pointed out.

The theses named by Oreshkin can be called ideological and this may be one of the options for the economic development of the next years, says Dmitry Belousov, head of the direction of analysis and forecasting of macroeconomic processes of the TsMAKP. According to him, the key now is to find a balance between priorities. If we consider them as a quadrangle, then on the sides there will be: security (sovereignty, financial stability, import substitution, food security), stimulation of economic growth (resources for development), social effect (acceptance of this economic model by the population, dialogue between government and society) and technological modernization.

Conceptually, the current model of economic management lacks three elements, says economist Alexander Isakov. First, it is necessary to transfer more powers to the level of regions to stimulate GDP growth and at the same time maintain the centralization of demand management policy in the government and the Central Bank, he noted. Secondly, social support measures should be complemented by incentives for active participation in the labor market, the expert continued. For example, a deduction from personal income tax on labor income could help – this would reduce costs for employers and the level of poverty, Isakov suggested. Thirdly, a policy of strengthening confidence in the domestic financial market should be pursued – it is necessary to minimize arbitrary decisions that reduce the cost of investing citizens in Russian shares and debt, the economist concluded.

In general, these priorities are being implemented now by the government, notes Associate Professor of the Department of World Financial Markets and Fintech of the Russian University of Economics. Plekhanov Denis Perepelitsa. For example, the National Wealth Fund is investing in infrastructure projects, subsidizing lending rates for small and medium-sized businesses, and developing trade with new partners in the East. According to the expert, the main factor in Russia’s development may be a new industrialization – the creation of large enterprises that produce final competitive products that have markets in friendly countries and within the country.

“Now is the time to reflect on where we are, where we are shifting towards security through growth, where we have new development zones, where we are ready to take risks in order to increase economic dynamics,” Belousov said. According to him, the discussion about the future of the economy has now resumed, firstly, due to the fact that the first tasks of stabilization after the imposition of sanctions have been solved, and secondly, it is necessary to determine how the economy will grow further. There is a year left before the presidential elections – therefore, it is important to form a new language in which the agenda of the new political cycle will be discussed and then implemented, the economist emphasized.

Following the results of the previous two presidential elections, economic policy in Russia was determined by strategic documents – the May 2012 and 2018 decrees. (national development goals – in 2020 were extended until 2030), as well as national projects (signed by the president in 2018 with a deadline in 2024). The May 2012 decrees were based on 11 documents in the field of economic and social policy, demography, education and science, healthcare, the military-industrial complex, and public administration. National projects are formed in 13 areas: demography, safe quality roads, housing and urban environment, healthcare, culture, small and medium-sized businesses, science and universities, international cooperation and exports, education, labor productivity, ecology, digital economy, a comprehensive plan for modernization and expansion of the main infrastructure.