The analysis of economic policy of any state requires to the maximum exact understanding what conceptions it is built of, on what criteria, how the current status of home economy is evaluated and what stands as reference points of its development. The well-known economist Arkady Vladimirovich Dvorkovich, Head of the Presidential Expert Department gave his consent to share with us his vision of answers to all of these questions. Interviewers are Boris Dolgin and Mikhail Zakharov.
The very different figures are cited for substantiation of one or another thesis about the status and prospects of development of Russian economy. What are, in your opinion, the indexes giving us the most certain appraisal of our economy?
In any country (as well as by international comparisons) some set of integral indexes is used for evaluating the status of economy. There is also certain number of qualitative indexes characterizing deeper, more fundamental changes in the state of economy. Among the integral are usually: the gross domestic product (GDP), including the gross domestic product per head. In international comparisons it is calculated on the parity of purchasing capacity. The indexes of poverty level are also used, although they differ in various countries by methodology of calculation, as well as the indexes of unemployment and inflation - as a measure of financial instability.
From the point of view of these indexes everything that has taken place lately in our economy was not so bad, even decent one might say: the gross domestic product has been progressing at a good pace for such big economy (although lower than in China). The inflation was gradually decreasing. The fact that it has been getting gradually is evidence of fundamental reasons which must be discussed separately.
The poverty has also been decreased, although according to the alternative methods was still rather high. The alternative methods are those ones taking into account the self-feeling of citizens and giving a comparison not with the minimum cost of living, but with some more related to the life indexes. The unemployment stayed more or less moderate, although it’s evident that in official data a considerable “short count” always existed.
However, when we evaluate the economic development, we also pay attention to other activities. First of all - to efficiency indexes of the use of resources in economy. Thus, the index of energy efficiency is much lower than in overwhelming majority of countries in the world. And we are remaining behind by several times the advanced countries at the level of economic development. The second qualitative index – the index of labour productivity. Here there is also a significant difference depending on different branches, but in most spheres we are remaining behind not by percents, but by times.
On the one hand it’s bad, but on the other hand it evidences a huge potential of economic growth without increasing the use of economic resources. It makes us speak about such qualitative indexes of development as share of knowledge in economy, share of intellectual labour, elaboration of new ideas… By this index we are incredibly far from the leading countries and the quality of education still continues to be backward.
Remain backward comparing with whom?
First of all with the advanced countries, but if to speak about the rates of changes then with other fast-growing countries too, for example Singapore, South Korea and even with “ourselves”, for example with development of fundamental sciences and education in the USSR.
As to the applied sciences, we were always not good in them, that why one can not say that we remain here behind comparing with what it was before, but in fundamental questions we remain behind, both in qualitative indexes and efficiency of the use of available resources. For example the number of schools and teachers per 10 thousand of population has increased, but it does not witness the growth of quality. The individual studies at schools can not be considered always to be the best issue. As proved the experience of many countries, group studies are the best way for receiving education.
Continuing to increase expenses, we don’t create any stimuli for increasing the quality of teaching, of instruction. The same thing can be said about the quality of scientific researches. In such way we use ineffectively those resources that could be used for wholesome purposes.
And what can be the scenarios of economic development of Russia proceeding from the most essential criteria? Can there be a leap, break-through?
The inertial scenario is possible, as well as the leap. Under the inertial scenario we shall come across with substantial drop of rate of economic growth, since those sectors, which ensure it, have a restricted potential, and there are no enough new knowledge and ideas that can be applied in industry (whatever it is: goods, services, jobs…), neither mechanisms of their application in industry.
We already come across in many directions with resource limitations while the potential of increasing the efficiency of the use of resources is not enabled.
In inertial scenario we’ll simply set against these limitations – in some branches we already do. For example in many regions it concerns already power-capacities: the investment projects can not be started here, as there is no possibility of connecting to the power-capacities.
In the case of dwelling construction we come across a problem of the absence of roads – there are no roads in places where the houses could be constructed. There is a lack of qualified staff for realization of many business projects…
Thus the collision with resource limitations is happening already – now only on the dotty level, but it will be on the global one very soon.
The demographic decline which still continues, regardless some improvement of indexes during last years leads to the deterioration of situation.
The inertial scenario it’s a drop of the rate of growth as well as the rate of improvement of the quality of life, and it means the further lag of Russian economy and society from other countries.
Due to what is possible such a leap?
Due to support of the initiatives on modernization of abovementioned spheres. The creation of such system is necessary, under which this support would be realized with the help of constantly functioning institutional mechanisms. When the projects nascent from bellow would be supported politically, organizationally and financially – by all possible means. It concerns everything: business, regions, municipalities and all of the structures of civil society, which can put forward such initiatives.
It must be said, that the national projects are in a way such institute of support. For example, in the sphere of education the innovation programmes are supported. Inasmuch as I was a member of the competitive commission I can confirm that in the majority of cases it happens not because of sympathies or antipathies – people consider consciously the suggested programmes, understand their pluses and minuses and vote for one or another higher educational establishment starting from the quality of these programmes.
Or, for example, the programme of complex projects of modernization of education and public health service starts now in regions. The regions sent their applications, there will be a contest and not just funding will be provided, but the modernization of finance system in these spheres will take place: transfer to the normative-headed financing, transformation of low-completed institutions, conversion of hospitals into an outpatient basis in medicine – where it’s necessary to do. All this is aimed among the rest to the creation of normal motivation for those people who will work in these spheres. And not because more money will be given, but due to more efficient use of money and of all available resources.
One of such institutions is an Investment Fund, isn’t it?
Yes, it has already started its work, but is still on the initial stage of utilization. It’s one of the elements of such constantly operating mechanism.
After a time the Bank of development will work…
Yes, it’s also one more element.
And what elements can be else?
For example, Russian venture company, which has been founded right now, and the work has not been started yet. Then techno-parks in the field of IT, special economic areas…
We have different Funds, but they are in a stagnant condition: Fund for Fundamental Research, Fund for Technological Development, Humanitarian Scientific Fund. We have already grants, which are distributed to the non-commercial organizations by recommendation of the Public Chamber.
There must be many mechanisms of such kind, in order something starts working. We have a huge country, and we must not have only one window, while if you are turned down in it, no other way out left.
Can not it turn out so that it looks so nice on paper, but the reality will be less friendly?
Well, look what happened three years ago: much of abovementioned did not exist. And now it begins to appear.
As to reproaches that these are somebody’s personal interests, then for example in the Investment Fund the examination is being made not only by officials, but also by banks who value their reputation. The other question, there is lack of competency in preparing good business-projects, which can be supported not only for political, but also for commercial reasons.
When and in what point it will be possible to say which variant of graph the history follows – inertial or break-through scenario?
I think the budget is a good indicator . The ratio of current expenses and expenses for large-scaled investment projects is very significant: if the current expenses increases faster then the growth of gross domestic product, it will mean that everything is going to a wrong side. For the time being they are accumulating and we consequently have not passed the turn point although there are sings of it meaning that we are approaching it.
What in your opinion besides these inhibitory moments are the hottest economic and social problems of our country?
So far the pages of the history are not closed, where people appreciate the state as their debtor, and first of all it concerns the provision of pensions and poverty on the whole. At that, these problems don’t coincide: officially the pensioners don’t’ belong to the poor, their level is a bit higher this border, although most of the pensioners must be referred to the poor.
This is the problem for further development, because there is no trust between people and state and public institutions, and therefore there is no stimulus to work, make savings, to thing not only about tomorrow and to live somehow, but about the future, about the education of their children and most of all to feel comfortably in their own country, not just survive.
To this category of problems belongs the non-regulating of relations between business and state. They are built on the absence of presumption of innocence. The state still considers, that the main aspiration of business is to evade the law and not to pay taxes, the entrepreneur’s community still has to pay for those problems, which took place in 1990-s. As to business, it sees that the state is not ready to support it, forgetting about the previous violations of the law and to give an opportunity for many branches to develop. It concerns the relations with customs, many controlling units, taxation service. This problem is fundamental, because now people are already prepared to observe the law, to pay taxes, customs duties, to invest money in long-term projects, but as soon as they begin doing it, they are beaten on their heads.
If to ask a question to a businessman: “Why are you paying taxes?”, he answers: “In order not to be imprisoned ”.
Nowhere one likes to pay taxes, and the stimulus of avoiding punishment is very important. But another positive stimulus also works if people see that the state works efficiently, these taxes go for improvement of their lives, then along with negative stimulus the positive one also starts working. At least, the aversion becomes less.
What’s then happening with us? The primary function of the state is protection. The conditions in the army are improving gradually, the number of servicemen is diminishing, a transfer to an annual term of service is getting in the army. At the same time the number of security guards, the employees of security services in economy is constantly increasing. Now, as far as I know it exceeds one million people. We have the highest expenses for the security comparing with any other country in the world. A man thinks: “Why must I pay taxes, if the state can not even secure me and I have to make it myself?” It’s not to tell about the public health where everybody pays for himself. In terms of this no positive stimulus arise.
And how this problem of distrust between the state and business can be solved? There are even formal reasons making the state bodies require more and more of business: the plan on tax collecting and customs duties.
We have been talking about it already not the first year. The formal plans were abolished, but it did not change anything – all the same if it is written in budget, that it’s necessary to collect this much, it’s going down right up till the regional inspector in such a form, that he must collect his hundred rubles.
And there is also a plan on arrears.
These plans are just going off. And we have recently discussed it with Deputy Finance Minister Sergey Dmitrievich Shatalov who unexpectedly for me he put forward an idea, that all figures of revenue should be excluded from the text of the Budget Law.
Only concerning these services or in general?
All figures in general. We have a taxation system – legislatively established taxes, and the taxation service must be guided by Taxation Code, not by the Budget Law. The same concerns the customs. It’s an additional psychological stimulus to act in this direction.
Is there any chance that it will be realized?
We shall try. Although even inside the government there is no full comprehension of what is necessary to do. It could be observed on the session of the government that was devoted to the taxation changes for the next three years. Very diverse statements of the members of the government took place: the ones emphasized how much money have been collected, the others – on legislation fulfillment.
In any case one must understand, that the character itself of the customs service and the system of tax collection are not in full measure correspond to the structure of economy and to the objectives of the economic policy. It concerns also the control functions of the state. Now there are some moves in the right direction: the administrative regulations are being elaborated on each of the functions of control and supervision. At least then one will be able to chase, how they are fulfilled, if the order of actions and procedure of one or another function is kept, and in case of non-fulfillment one will be able to take it into court.
So there is a move, although it is going slower than perhaps one would like. But psychology that underlies all these actions will change much far slower than the documents. Apparently, the generations of the officials must change before anything seriously changes.
Will it not happen so that as psychology is changing slower, the transformations will suspend? Surely, due to this tendency the people who are thinking exactly in such way will stay, while those thinking in a new way will leave?
It depends on the political leadership. The same thing is at the regional level: much depends on the governor, vice-governors. If a minor group of people understand in which direction one should move, many things change. If they want to stay on the piece of cake and divide what it is, then nothing happens. The differentiation of regions on this basis is very strong – a great deal depends on personnel.
Occasionally the claim is heard, that many social and social-economic transformations are postponed. How much can you agree with this thought?
I agree especially if to compare it with other countries. In Kazakhstan, for example, the major part of transformations, we are talking now about, was held about ten years ago. It concerns for example the housing system. It was getting painfully and with costs for citizens. We were not ready to do that at the time, but now we are paying off by inefficiency, and then by slower rate of rising the living standards. The same thing concerns public health and education – all this had to be done not now, but 5-7-10 years ago.
But may be it was impossible to do it at the time?
That’s true. Now we took advantage of felicitous external economic current situation, which serves a safety-cushion in a way. If we are mistaken – will underestimate expenses or loose revenue as a result of these transformations – we have what to “inject” our budget with.
I repeat – it could be done at the time, but then it would be much more tough from the point of view of social climate. To judge the history here would be incorrectly. One must not forget in which conditions our country had lived not so long ago. I’ll remind you that after 1998 we received some result in the form of growth, including, at the expense of considerable decline in living standards of citizens, such decline that not many countries experienced in peaceful time, when the wages, pensions fell down by 40%. It’s an ordeal. Now we restored the level of income that had been before, but that period was very difficult.
Today one can already do what was impossible to be done earlier, and not at the expense of the standard of living of citizens, but due to the accumulated resources.
And it is been doing?
It is, but beginning with “pilot” projects in regions. And it is probably right. We support those regions, which are ready to do that, and the majority of transformations are in the sphere of regional and municipal credentials. We don’t move it aside, covering ourselves by the fact that these are regional and municipal credentials, but we on the contrary support the realization of the projects.
I think that if we move so as we started, then we’ll be able to complete these transformations during 3-5 years, they leading us not to the drop in wages and standards of living, but to their growth, because of increase in the efficiency of use of resources. But it must be done carefully, because behind the words “increase in the efficiency of use of resources” is hidden the dismissal of a number of people employed today in some sectors of economy. It means some money has to be spent on their retraining, creation new working places near the enterprises where they are working now, so that these people did not loose the job. One must not forget about it.
At present there are already state institutions engaged in retraining, but they work ineffectively.
Ineffectively, as there was no any complex comprehension of this questions, no strategy in this regard. Simply reactive work: a man comes – we try to place him in a job without taking into consideration the demands of the labour-market.
This work is starting properly only now, we have reflected on it while working with migratory policy, including the resettlements programmes for our compatriots. What we have started doing for this programme, i.e for people who will potentially come to Russia, is actual for those working in Russia now. We began to realize what forward-looking projects that will require people there are in many regions.
Little by little it starts working. There are already examples: the project of development of Lower Priangarye (the region in the low place of the river Angara). The need in people there is enormous, both in people who can come from abroad and outright living in that or another region. There are plenty of such projects in the Investment Fund: South Yakutia, Transbaikalia (region beyond the lake Baikal), there is a large-scaled construction now in the Far East, the dimensioned programme of development in Krasnodar Territory, in the Altai, where the recreation zone and a number of productions are being founded, in Tatazstan and in Moscow region.
If we continue the theme of the state, but not already its control functions but its participation in economy: many analysts have such a feeling, that the role of the state and state companies has increased, may be abundantly. How do you see, is there any optimal balance (how it must be), what is your forecast (how it will go further, will this participation increase)?
I think the number of spheres, where the state must have a higher impact is minimal, and it must be minimal. At present they are a oil and gas complex, military-industrial complex, and perhaps that’s all if to talk seriously.
Partly machine-building, forest…
Forest – completely not, as to machine-building – it’s close to military-industrial sphere, although there are single examples in other spheres as well, which I would name just single examples, but not somewhat strategic line. These are, it to talk, for example “AvtoVAZ” or “Uralmash”.
Different motives work in different sectors: in oils and gas sector the main motive is connected with interests in the international market, and here one must understand, that a small number of big companies compete in energy market. In gas sector the company was initially a state company. It has becomes lately more and more private and public, and I would like to repeat a figure, cited by D.A.Medvedev: the foreign stockholders of “Gazprom” possess the share holding, which makes up more 10% of Russian GDP and in such conditions is absurd to say, that the company is an absolutely state company and that private shareholders don’t have their interests. From the point of view of both private shareholders and the state, the expansion of “Gazprom” – is absolutely normal thing. As a normal thing – the increase of the efficiency of use of resources, that there are in this company and we all hope that it will continue.
As to RAO “EES” for example – it’s a company, which is controlled by the state, but now the process of conversion is going, in the framework of which in the near future will appear both the companies controlled by the state (first of all integrated) and a considerable number of private generative companies where the state will not play any role. That’s why it’s necessary to separate clearly the aims of the state in these sectors from those of private companies.
An absolutely different situation is in the military-industrial complex and adjoining branches. These sectors during many years were falling into awful neglect and to a greater extent were existing at the expense of two sources: the defence order, which has increased a few lately and military-technical cooperation, where the considerable growth may be observed also during last years. The civil part of production continued to degrade. The aim of consolidation of assets (first of all in aircraft building and shipbuilding) their conversion and putting in normal state, so that they were attractive to investments, so that these companies began to realize projects both of military and civil purpose including with private and foreign companies.
What is concerning for example The United Aircraft-Building Corporation, now the active weekly consultations on cooperation in different projects with EADS, Boing, Italian Finmeccanica, Bombardie, with producers of engines, etc are being held. The same thing will begin soon in shipbuilding. Until there was not consolidation, nobody wanted to talk to our single companies, because nobody understood what their goals and objectives were. And now the persons appeared whom one can associate with.
There are apprehensions that the most part of qualified staff has left the enumerated spheres during the last 15-20 years.
It’s a fare observation. First of all one should try to overcome the temporal gap and to get back to the key positions a part of those who has left. The foreign companies partly helped in it, for example Boeing opened the ingineering center in our country: they could keep and even attract the considerable number of engineers, creators from Ukraine, who are starting work now for our companies, including the elaboration of a new regional airplane, fighter of fifth generation. There is an engineering centre EADS – it’s smaller than Boeing, but is also rather considerable. There are people left for other countries, other enterprises, whom one could try to return.
Simultaneously one must start preparing new personnel. Now in priority order we supported among other innovation programmes, the programmes of technical including aviation higher educational establishments. These are good programmes, we supported them not only because they are dealing aviation projects – we did not support for example MAI, but at the same time we supported the Kazan technological university, the Irkutsk university as far as I remember, at last year the Samarsk university.
What branches of Russian economy in your view work today with maximum effectiveness, which are not effective at all, and which will become effective enough in five years?
In every branch there are own pluses and minuses, but in the first place those branches work effectively where the technological modernization took place. The matter is not in the whole branches, but in clusters of each of them. For example, in food industry many enterprises were modernized. Import of most foodstuffs was substituted by Russian production – it’s a splendid index of the efficient work of Russian brands and foreign investments: Nestle, who invested in many factories, the production of nonalcoholic drinks, etc, - all this can be enumerated a long time. Further on: the mobile communication. Not the production of telephones but the communication itself. It’s one of the most effective branches in the world.
I also think that it partly concerns the metallurgical enterprises. Not completely, because we have not still come on the production of higher repartition, but we began to do the first repartition rather well from the point of view of both power inputs and ecology.
And as to the pulp and paper industry?
According to the indexes of energy-efficiency and ecology the pulp and paper industry are on the antediluvian level. There are some workshops where the situation has been improved, but on the whole it’s not efficient.
Then the car production. We have a great leap in income of assembly lines the last years, but it concerns only assemblage, and it’s not exactly what we want, that’s why our further task is to produce the competing parts in Russia. The investors should be attracted and engaged in it.
Returning to the state: in what fields in your opinion it can become stronger and it what fields its role will be diminished?
I hope its role will not become stronger in none of the fields. The privatization must be held where no serious reasons for the state’s presence are as well as the transmission of management to private companies on the basis of the concession agreement. The latter primarily concerns the airports. The management can be improved there without privatization as well as the establishment of reciprocal liabilities on investments. The state could be represented in the person of federal structures or regions, which would like to be engaged in it (many governors ask to hand them over airports so they would invest their funds, but according to the law they don’t have such right). Private investors would be occupied at the same time with terminals and all attendant services.
This is an example of a branch from which the state will be “leaving”. At the same time to invest in this infrastructure more, but to “leave” from the point of view of property and management.
The state banks can be also mentioned. “Sberbank” (Russian Savings Bank) has already carried out the “national” placing of additional stock emission …As to “Vneshtorgbank” (Foreign Trade Bank), the decision was taken by the committee of directors that this largest bank would be gradually withdrawn from the state.
And as to the oil sector?
There is no any governmentalisation strategy in the oil sector. Consolidation of assets is a private business of companies, but not the question of the government.
And if to continue the theme of the state, in what do you see the tasks of its investment policy? Where else besides the investments in break-through projects we have already discussed?
First of all it’s infrastructure – roads. We need to combine all the mechanisms: turnpikes and free roads, restoring them to the normal state that corresponds with the existing road-normative system, and that means big resources. The same thing concerns ports and airports, power engineering, where the integrated economy is a subject of responsibility of the state. It can not be solved completely by invest-fares – at least at this stage. It could become possible in prospects, but at present the state has to finance a big volume of infrastructure. We have so far non-equipped capacities of generation, but they cannot be equipped without development of integrated infrastructure. One can think out the systems of private investments, but in my opinion the overwhelming part will be the state’s responsibility, at least in the near future.
