Modernization of the Russian economy

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Modernization of the Russian economy

While the Soviet economy was developing under Communist ideas for 75 years. capitalism in other countries modernized agriculture and industry allowing to create service-oriented economies that outstripped the Soviet state. Since the collapse of the Soviet Union Russia has undergone significant changes moving from a globally-isolated, centrally planned economy to a more market-based and globally-integrated economy. But to boost growth and competitiveness it needs active introduction of innovation. The President of the country has formulated top five priorities for Russian economy’s modernization: energy efficiency, nuclear energy, information products both ground and space-based and pharmaceuticals. Let’s consider them closely.

Energy resources has always played the leading part in the economy of the country. In 2009 Russia was the world’s largest exporter of natural gas and the second largest exporter of oil. Thus it was one of the hardest hit by the 2008-2009 global economic crisis as oil prices plummeted. Only in the second quarter of 2009 the GDP rose by 7.5 per cent indicating the beginning of economic recovery. But the situation shows insufficiency of the economy dependent on the raw materials. That’s why now Russia’s leadership has targeted its efforts at moving away from raw-material based economic growth and paying more attention to oil and gas refining and creating alternative sources of energy.

Another sphere of modernization, nuclear energy, has always been a trump card of Russia. With a total net nuclear energy capacity of more than 20,000 megawatts, the country is the largest producer of nuclear-generated electricity among the three former Soviet republics with operating plants. It provides nearly one third of European uranium needs and is also selling diluted ex-military uranium for civil use through the USA. Now the country is moving steadily forward with plans for much expanded the role of nuclear energy, nearly doubling output by 2020. For this purpose Russia is keen to be involved in various international projects.

The President has put great emphasis on cutting edge information products. Russia is now the world’s third biggest destination for outsourcing software behind India and China. This is caused by a number of factors. One of them is the supporting role of the Russian Government. Numerous attempts to create IT-oriented technology parks (technoparks) and business incubators all over Russia have been made and recently the government has stepped up its efforts to create a high-tech hub in the Moscow suburb of Skolkovo, so-called Russian Silicon Valley. Another factor stimulating the IT sector growth in Russia is the presence of global technology corporations such as Intel, Motorola, Sun Microsystems, Boeing and others, which have intensified their software development activities and opened their R and D centers in Russia. Thus the country is becoming a full-fledged participant in the global Information Revolution.

One can’t also overestimated the role of domestic pharmacy industry as “we must produce our own medicinal drugs qualitatively and at affordable prices”, says Medvedev. The new Pharma 2020 programme will give local companies more preferences as the government seeks to increase Russian firms’ share of the market up to 50 per cent. Today it is also important for the country to have a good scientific and technological basis for the production of radiopharmaceuticals, many qualified professionals, and a positive experience with the most advanced diagnostic techniques and treatment. Russia still lags behind the global average in broad use of these techniques.

All the above mentioned changes in the Russian economy show that the country’s modernization campaign is about putting it on an innovative technological track. Modernization needs to be rapid and of a high quality, and be attractive for ordinary people and for business. But while there are challenges to face, the Russian economy, with the one of the best educated labour forces in the world and a good share of the world’s energy and mineral recources, is certainly capable of growth in the long term.

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