OREANDA-NEWS. June 22, 2012. A Mercury Club meeting held at the Moscow World Trade Center at 12, Krasnopresnenskaya Embankment was dedicated to re-targeting of the federal economic policy towards new industrialization of the country.

Club Director Valery Kuznetsov opened the meeting and welcomed its participants – representatives of ministries and departments, members of the State Duma and the Federation Council of the Federal Assembly, scientists, businessmen and politicians. He said that the meeting results would be presented to the national government and might be used in solving economic problems.

Club President, Russian Academy of Sciences Academician Yevgeny Primakov chaired the meeting. He made an introductory speech. He said he had asked the Institute of World Economy and International Relations of the Russian Academy of Sciences to draft a chart “Economic Structure of a Number of Countries in Invariable Prices (Percent of GDP).” Some conclusions may be drawn from the chart data. Traditionally healthcare, education and social services are the most underdeveloped sectors of the Russian economy. Retail and wholesale trade in Russia is hypertrophied; it accounts for nearly a third of the GDP. That’s an abnormally large percentage, which results from a big number of inefficient and, frequently criminal, middlemen. The mining industry’s share in GDP is not hypertrophied as compared with other large countries.

However, the mining sector in Russia presents a number of problems. The remaining resource orientation of the economy may transform Russia into a world supplier of energy, resources or even financial capital that does not find a use for itself in the home country. The trend may be overcome only with new industrialization of the country and profound structural shifts to high-tech industries, primarily processing.

The economic structure cannot change without an active industrial policy, the regulatory activity of the government, the academician said. The mining industry should naturally be an object of state regulation aimed at economic restructuring. Certainly, the budget should collect a bigger part of super-profits, primarily those of oil and gas companies, than it does now on condition the revenues kept by companies are sufficient for survey and production modernization.  Support to small and medium companies in the oil and gas production in Russia and termination of the current monopoly of several large companies would have a large significance, Yevgeny Primakov said.

Re-orientation of the economic policy requires the search for solutions to such problems as HR support to economic diversification, modernization of the banking system for re-industrialization of the country, imports of high technologies through the acquisition of relevant assets and attraction of direct investments and so on, Yevgeny Primakov said.

Deputy Director of the Institute for Economic Forecasting of the Russian Academy of Sciences Marat Uzyakov said re-orientation of the economic policy towards new industrialization would be impossible without long-term economic development forecasts. Meanwhile, it is impossible to make a forecast without a profound analysis of the economic potential and its weak and strong points. For instance, the country has a substantial growth of GDP per capita; the indicator is rather good. However, there is a notion of economic growth quality: how the indicator is achieved and what the sources of growth are. The indicator does not look that good in this context. The growth is not supported with innovations and processing industries’ performance. Resources remain the cornerstone. Besides, the country is inefficient in using its resources; it is stuck on the level achieved several decades ago.

CCI of Russia President Sergey Katyrin indicated certain problems Russia was encountering in the shift to new industrialization.

The first problem is the link between economic and political reforms, Sergey Katyrin said. A certain part of the business and expert community insists that political liberalization must go first. However, the negative experience of the late 1980s tells the opposite. There is a political flavor to the accelerated privatization of large governmental assets, too. Did private property prove its advantage everywhere? No. Western enterprises in collective property, where workers are also owners, are frequently more efficient than others. The CCI of Russia calls for making privatization decisions, including those with regard to state industrial and financial assets, with due account of the opinion of specialists and scholars of various scientific schools. Not so much budget revenues as privatization serving the goal of economic restructuring should be the high priority.

The second problem is the use of planning mechanisms. There is not a single developed country in the world without various degrees of state planning and forecasting. The hope for omnipotence of market regulators leads to inefficiency of capital investments for new industrialization goals. This is vividly proven with the work of organizations created in the energy sector reform; the costs were borne by electric power consumers.

The third problem is sources of financing new industrialization. More than USD 600 billion are needed for the reconstruction of fixed assets of processing industries alone. The government should become the main source, naturally, in a partnership with domestic private businesses. Meanwhile, the federal budget of 2012-2014 cuts allocations for the national economy, which, in our opinion, is not good for the objective, the CCI of Russia Head said. It is necessary to make more efficient the governmental financial policy and to cut the huge gap between the savings ratio and the rate of accumulation.  There is a need for a serious public evaluation of target programs and adjustment of the program list. Finally, business awaits clear and unambiguous decisions of the authorities regarding ‘the tax maneuver’, which may bring private investments to processing industries.

There is also a problem of confidence between the government, business and the civil society, without which it is rather difficult to supply the real economic sector with resources. The fifth problem is personnel. Obviously, most of the 25 million highly productive jobs suggested by the Russian president must appear in the industries. Experts say the number of vacancies may be ten times larger than the number of specialists in a few years. It is time to complete the protracted drafting of education laws and to adopt target programs on their basis for spurring up vocational training and professional development, the CCI of Russia Head concluded.

EurAsEC Secretary General Tair Mansurov, Director of the Institute of Economics of the Russian Academy of Sciences Ruslan Grinberg, Assistant Head of the Russian Presidential Administration, Chairperson of the CCI of Russia Committee for the Promotion of Modernization and Technological Development of the Economy Yekaterina Popova, EurAsEC Deputy Secretary General, Russian Academy of Sciences Academician Sergey Glazyev, deputy of the State Duma of the Russian Federal Assembly, Head of the Liberal Democratic Party faction Vladimir Zhirinovsky, Russian Deputy Economic Minister Andrei Klepach, Deputy Director of the Institute of World Economy and International Relations Yevgeny Gontmakher, First Deputy Chairperson of the State Duma Budget and Tax Committee, Chairman of the CCI of Russia Committee for Social Policy Oksana Dmitrieva, Chairman of the Board of Directors of Rodex Group and JSC Silan, Chairman of the CCI of Russia Committee for Investment Policy Anton Danilov-Danilyan and other participants took part in the discussion.

They considered various aspects of Russian economic restructuring aimed at new industrialization.

Results of the Mercury Club debates will be summarized and presented to the state goverment.