Russian Federation

Russia's economy grew 3.4 percent in 2012, down from 4.3 percent in 2011. The economy of Russia slowed in the second half of the year due to weak net exports, negative... Show More + base effects, and destocking at the end of the year. More than four years after the global financial crisis hit, the world economy remains sluggish. Industrial production lost momentum throughout last year, exports expanded only at a moderate pace, and imports even declined for three month during autumn 2012. Growth declined mainly due to weaker performance of investment. Inventories were flat as the restocking cycle after the crisis came to an end, and fixed investment expanded only moderately as business remained cautious about future prospects. The weaker performance of the tradable sectors reflects sluggish global demand and the poor agricultural harvest but also low competitiveness in parts of the industry, as growth declined for all three subsectors. The capital account strengthened in 2012 as net capital outflows decreased. According to preliminary estimates, the capital account deficit amounted to US$40.9 billion or 2 percent of Gross Domestic Product (GDP) in 2012, compared to US$76.2 billion or 4 percent of GDP in 2011. The labor market remains tight. The unemployment rate declined across the country, and vacancy and replacement rates increased. The number of poor people in Russia reached a record low. In the first nine months of 2012, some 17.2 million of people were below the poverty line, three million less than a year ago and the lowest number in the last two decades. The weak external environment, high inflation, flat oil prices and sluggish domestic demand are set to postpone a pickup in growth towards the second half of 2013. Nevertheless, modest growth and lower inflation are projected to reduce poverty further. Show Less -

Established in 2010, the Eurasian Customs Union (ECU) carries significant economic weight as three of its member countries represent a potentially large consumer market.... Show More + Drawing on existing literature that has studied the likely impacts of the ECU in Central Asia, this note discusses the ECU's pitfalls and potential benefits. After briefly describing the main features of the ECU, this note assesses whether the changes introduced after its establishment have benefitted all of its members equally, and concludes with a discussion of what will need to change to achieve the ECU's full potential. Available evidence suggests that the Russian Federation has been the main beneficiary in the short term, but that there are several benefits to be gained by other members in the medium to long term. Full realization of these benefits, however, will require political commitment and steadfast action to reduce nontariff barriers (NTBs), improve trade facilitation, and reduce the costs of trading across borders in the region. Show Less -

Despite Russia's strong economic growth, over 14 percent of its population, more than 20 million people, still live in poverty. In 2008, the Japan Social Development... Show More + Fund (JSDF) provided a grant of US$1.98 million to help make the justice system in Russia more accessible and accountable to the poorest and most vulnerable groups in two regions of the country, Leningrad Oblast and Perm Krai. The grant was strongly supported by the Embassy of Japan and Russian regional authorities, who were involved from conceptualization to completion. The grant piloted two models of legal aid in these two areas, and it launched a collaborative initiative that enabled local executive and judicial branch officials and nongovernmental organizations (NGOs) to work together to achieve common goals. This JSDF grant has yielded some promising results. However, the sustainability of the legal aid networks established under the grant depends on ongoing support from the local authorities in each region. Show Less -

This paper explores fundamental issues affecting technology commercialization of publicly funded research and development (R&D) in the Russian Federation. Despite substantial... Show More + R&D investments, Russia has experienced a decline in scientific output and employment. Nevertheless, the innovation system remains strong in several technological fields. This paper develops an analytical framework to discuss conditions for technology commercialization, which hinge on the innovation system research base, governance of research institutions, alignment between specialization and sector prioritization, availability and performance of scientists and engineers, intellectual property (IP) regime for publicly funded discoveries, and early stage finance. The paper identifies areas for policy and regulatory improvement to incentivize research institutes and scientists to undertake research with market potential. These include: stronger results-based management that rewards commercialization efforts and focuses not only on high-technology sectors, but also on sectors where Russia has technological comparative advantages. In addition, researchers' career development could consider performance metrics that include entrepreneurial achievements, as well as support for young scientists and for international collaboration. Moreover, the IP regime for federally funded R&D may consider transferring full ownership of research discoveries to research organizations. Finally, to increase deal-flow of new ventures, enhancing the supply of early-stage financing for new technologies may be considered. Show Less -

This tenth edition of Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying... Show More + with relevant regulations. It measures and tracks changes in regulations affecting eleven areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 185 economies, from Afghanistan to Zimbabwe, over time. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why. This economy profile presents the Doing Business indicators for the Russian Federation. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2012 (except for the paying taxes indicators, which cover the period January - December 2011). Show Less -

After 18 years of negotiations, Russia has joined the World Trade Organization. This paper assesses how the tariff structure of the Russian Federation will change as... Show More + a result of the phased implementation of its World Trade Organization commitments between 2012 and 2020 and how it has changed as a result of its agreement to participate in a Customs Union with Kazakhstan and Belarus. The analysis uses trade data at the ten digit level, which allows the first accurate assessment of the impact of these policy changes. It finds that World Trade Organization commitments will progressively and significantly lower the applied tariffs of the Russian Federation. After all commitments are implemented, tariffs will fall from 11.5 percent to 7.9 percent on an un-weighted average basis, or from 13.0 percent to 5.8 percent on a weighted average basis. The average "bound" tariff rate of Russia under its World Trade Organization commitments will be 8.6 percent, that is, 0.7 percentage points higher than the applied tariffs. Russia's commitments represent significant tariff liberalization, but compared with other countries that have acceded to the World Trade Organization, the commitments of the Russian Federation are not unusual, especially when compared with the Transition countries. Show Less -

This paper examines whether natural resource dependence has a negative influence on various indicators of institutional quality when controlling for the potential effects... Show More + of other geographic, economic and cultural initial conditions. Analysis of a panel of countries from 1996 to 2010 indicates that a high degree of resource dependence, measured as the share of mineral fuel exports in a country's total exports, is associated with worse government effectiveness, as well as with reduced levels of competition across the economy. Furthermore, estimation of long-run elasticities suggests that government effectiveness and the intensity of domestic competition decrease over time as the dependence on natural resources increases. An illustration of the Russian case shows that the negative effects accumulate in the long run, leading to a worse deterioration of government effectiveness in Russia than in Canada, a country with a comparable resource endowment but far better overall institutional quality. This result is corroborated by a significant negative correlation found between regional resource dependence and an indicator of regulatory capture in Russian regions, which indicates that the regulatory environment is more likely to be subverted in regions that are more dependent on extractive industries. Overall, the findings would be consistent with a situation in which a generally weak institutional environment would allow resource interests to wield the bidding power accruing from export revenues to subvert the content of laws and regulations, as well as their enforcement. The fact that this is associated with negative externalities for the rest of the economy, notably by undermining a level playing field across non-resource sectors, sheds light on a potential channel for the resource curse. Show Less -

Russia’s science and technology diaspora is too visible and successful to evade attention from home. However, the public debate in Russia so far has been focused almost... Show More + exclusively on return migration and on science diaspora, rather than on successful techno-entrepreneurs. The primary objective of the current Chapter is to help to refocus the debate on ‘brain circulation’ facilitation of business links between high-tech entrepreneurs in diaspora and in home, and for this reason to understand better the current demand in Diaspora for stronger contacts of this kind, as well as identify the existing barriers that hamper such cross-border business contacts. Another objective of our analysis is to identify a number of success stories and key people behind such successes -- so-called ‘overachievers’ in the diaspora (successful individuals in the position to share their professional success with the business community in the home country). These people may become a core of future diaspora networks that could be instrumental in upgrading the nature of Russia-diaspora cooperation. As experience of other countries suggests, such networks have a potential for supporting various Russia’s initiatives in the area of innovation policy, including promotion of early stage venture capital, innovation start-ups and spin-offs.
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This study is intended for non-Russian researchers wanting to get familiar with the education system of the Russian Federation and more generally for all those involved... Show More + in education and education policy. It does not represent exhaustive information on the Russian education system and all problems and challenges existing there, but briefly describes its main features. The report has the following structure. The opening chapter provides an overview of the education system in Russia and briefly reviews the most evident emergent trends. Chapters two through five are devoted to description of education system by level. The chapters are arranged by ascending order of educational level and each chapter's present information in a progression from the most general to the most specific. First, data on the current state of education system is provided. They characterize the human and financial resources allocated to education; describe the network of educational institutions across the country, and show regional disparities of spending on education. Next in each section key problems and challenges are examined; the focus is mainly made on access to and quality of educational services. Third, information on recent and ongoing reforms in the education sphere addresses each subsector separately and defines features typical for each of them. Fourth, there is discussion of policy options and analysis of what can be improved in the Russian education sphere. Finally, section six is devoted to lifelong learning. First, the section focuses on the condition of and development trends in lifelong learning. Then it examines the state of policy, staff training including financing and coverage, and learning for socially deprived groups of people. The section concludes with policy options and possible measures for improvement. Show Less -

Half a year ago, Russia's economic prospects looked uncertain. The global economy was losing momentum, the expansion in the euro area was grinding to a halt and commodity... Show More + prices were beginning to fall. Yet, while output growth is slowing this year in line with weaker growth in Europe and elsewhere, Russia's latest economy performance has been solid, though aided by favorable oil prices. The economy returned to the pre-crisis peak towards the end of last year, supported by strong consumption, as growth held steady at the same rate as in 2010. In 2011, measured in current dollars, Russia's economy was the ninth biggest in the world, compared to the eleventh biggest in 2007. This year, Russia's output might exceed US$2 trillion. Equalizing for prices difference with purchasing power parity, Russia's economy is already the sixth biggest today. The current account looks strong thanks to a large surplus in the trade balance, and the Central Bank of Russia added again in 2011 to its stock of foreign reserves. Employment returned to pre-crisis levels even earlier than output, and wages grew at a solid pace. Inflation reached its lowest level in two decades. Inequality declined and consumption levels of low-income households improved. The fiscal balance returned to a surplus. And while average public debt levels in advanced economies exceeded 100 percent of growth domestic product (GDP) in 2011, Russia's public debt was no more than 10 percent of GDP. Economic policies can help to shore up Russia's resilience in a volatile economic environment, diversify its economy, and strengthen its growth potential. First, fiscal policy should be used to rebuild fiscal buffers while oil prices are high. This will not only help to prepare for the next crisis, but also make sure that fiscal policy does not become procyclical as the output gap closes. Furthermore, monetary policy should continue to focus on low inflation, and financial policies on strengthening oversight. Finally, removing structural barriers to growth can help to bolster investment and productivity. Improving the business environment will go a long way to make the most of the economic benefits of Russia's World Trade Organization accession in summer 2012. Show Less -