Less the state!

President of the Center for Strategic Development Mikhail Dmitriev - The New Times

## less than the state! The Center for Strategic Development (CSR), which once was responsible for the Gref program, is preparing a large-scale study of long-term challenges for the development of Russia. Excessive state regulation and depressing state of institutions are among these calls. The President of the Central Administration of the Central Administration

Mikhail Dmitriev - Maxim Blanet and Andrei Kolesnikov

Why are we behind

What do we lack to build a post -industrial economy?
The post -industrial sectors need developed institutions of self -regulation and state regulation. This instantly gives rise to such extremely complex problems, as a problem of protecting intellectual property and copyright. There is a lot of other problems that today, according to all the analytical data, Russian society and existing institutions are simply not ready. Our institutions are not ready. And if we are now in the existing form-virgin-first-to dip in a post-industrial society, then the development of the country will simply stop. In terms of the level of development of many key institutions, such as the property protection system or institutions of regulation of the financial sector, Russia is one of the 25% of the most problematic countries.

There is a fairly common opinion that the quality of institutions in Russia is not improving, but rather, seriously worsens. How true is this statement?
Yes, if we look at the international indices of the last three to four years, indeed, despite the fact that in some aspects there is an improvement in the quality of institutions, in other aspects we observe a deterioration. The country has very much lost in a number of indicators related to the quality of state institutions - for example, corruption has grown.

What are the reserves

Most long -term forecasts converge in the fact that a demographic crisis will be a serious challenge for Russia. Will this problem become the main brake for development in 2020?
In principle, for countries with the Russian level of development, we have a lot of examples of prolonged economic growth rates of 6-7 % per year. But in history there is not a single historical example at all when a country would develop at this rate in which the population of working age is reduced annually by 1%. Therefore, no one can vouch that such growth rates are possible in Russia if the situation in the labor market does not change. However, according to available estimates, measures of demographic and migration policy are able to slow down the drop in the number of working -age population by only 40%. But there are other reserves: our country and the labor potential that is, uses extremely inefficiently. According to our estimates, these reserves are more than sufficient to compensate for the expected losses in the number of economically active population. We tried to evaluate in which areas these reserves are located, although our list is not exhaustive. For example, the problem of low territorial mobility of the labor force leads to the fact that approximately two million working hands today in Russia are not used only because they cannot move from labor -resources in the field with a shortage of labor resources. The analysis, which at our request was conducted by CEFIR ¹ , showed: with favorable development scenarios, regional mobility in Russia can increase sharply by the middle of the next decade. This may be due to the fact that economic growth by that time will ensure the formation of a full -fledged housing market. As a result, the main barrier for territorial mobility will be broken - the lack of housing at a new place of work. As soon as this barrier is overcome, the pace of territorial mobility will increase several times.

The state is like a barrier

In recent years, there have been trends in the state -owned economy, stopping structural reforms. Have you once taken into account this in the analysis?
By the time Russia, the task of transition to the post -industrial innovative development path, existing institutions, including those related to the attempt to strengthen the role of the public sector in the economy will become an insurmountable barrier. The creation of monopolies under the state patronage in the industrial industry does not provide competitiveness in world markets. The negative experience on this topic has many countries - from Great Britain to Korea and from Brazil to Indonesia. Given the received lessons of Korea, famous for its Cheboles ² , in recent years has been conducting radical reforms aimed at developing a competitive environment. Similar goals pursue structural reforms in Japan. And from this point of view, the creation of new companies in Russia only enhances future barriers to development. This does not mean that our ineffective institutions will stop the development of the country in the near future. And here it is necessary to draw a line between what is happening in Russia today, and what will happen as it approaches the post -industrial stage. Russia is still found in the regime of catching up, when in fact, pre -industrialization occurs in the country. Direct foreign investments and own investments of companies in modern technologies in many cases increase labor productivity by 4 to 6 times simply because we are so behind the leaders in the relevant industries. For such investments, acceptable conditions in Russia today already exist. And we have no reason to believe that in the next 3 to 5 years, it is precisely the problems in the institutional sphere that will stop the development of the Russian economy. If we look at countries that, like Russia, are in the stage of catching up, we will find that developed market institutions are not yet a decisive condition for successful development. In terms of institutional reforms, the leaders are two regions - these are the countries of Latin America and the countries with the transitional economy of Central and Eastern Europe. In many of these countries, the indexes of institutional reforms, one might say, go off scale. The pace of changes sometimes cause amazement. For example, Bulgaria and Romania on the eve of joining the European Union were able to radically reduce corruption. But if we look at what pace these countries develop, we will find not the most encouraging picture. The average annual growth rate in Latin America at the end of the last century and the beginning of this was at the zero level. Only in recent years in Latin America a new wave of economic growth begins, although until now the pace in most countries does not exceed 4 - 5% per year. If we look at the countries of Central and Eastern Europe, mainly the pace also hesitates from 3 to 5%. If we are interested in which countries are developing at the fastest pace, then these are countries of Southeast and East Asia and the CIS countries. From the point of view of the development of institutions, most of these countries look depressing. Nevertheless, the countries of Latin America, Central and Eastern Europe are developing slowly, and the CIS countries, Eastern and Southern Asia, whose institutions are still far from the desired state, develop at the fastest pace.

This point of view is now popular: let's solve all problems with the help of state corporations, we will modernize industry, increase labor productivity, make a competitive sector with high added value - and then we will gradually proceed to the post -industrial model. How much is this path?
He is not feasible! This is evidenced by the world and Russian development of recent years. Wherever we create the enterprises of the public sector, their performance indicators are inferior to indicators of the effectiveness of non -state enterprises. If we take the oil sector, state -owned companies have much less high performance than non -state, and are in the lower part of international efficiency ratings for the oil sector. Or mechanical engineering: labor productivity at AvtoVAZ is several times lower than that of its international competitors, not to mention the technological level of its products. The state monopoly only leads to the fact that the corresponding industry is even more closed from competition in international markets. In the modern world, vertical integration, even even high -tech sectors, which actually closes the domestic market from competition and prevents companies into international production chains, and one way or another leads to a loss of competitiveness. In this area, another way is effective - the creation of modern transnational corporations based on Russian companies built into global production chains and competing with other same companies in world markets.

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1 Center for Economic and Financial Research and Development.
2 The South Korean form of business conhering, which is a group of formally independent firms owned by certain families and under a single administrative and financial control.

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