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Russia: Modernization of Economy - XI Higher School of Economics (HSE) International Academic Conference on Economic and Social Development Problems

April 7, 2010

Moscow, April 6-7, 2010 – Moscow hosted the XI HSE International Academic Conference on Economic and Social Development Problems sponsored by The State University-Higher School of Economics with support of the World Bank and the International Monetary Fund. The organizing committee of the conference is chaired by Professor Evgeniy Yasin.

Over the past decade, the Conference has become a prime vehicle for fostering public policy and economic debates in Russia and one of the major international events in Moscow. The Conference brings together macroeconomists and government officials as well as theoreticians and practitioners of economic development. It also offers them an opportunity for a dialogue with Russian and foreign experts from the private sector and academia. Thus, the Conference has become a major platform for knowledge sharing on challenges facing Russia’s economic development. This year the conference brought together some two thousand participants. This year, for the first time, the Conference will feature The National Prize in Applied Economics, under the main theme being "Companies and Markets" and "Preserving the People." The theme "Preserving the People," – recalling Alexander Solzhenitsyn's words -  touches upon one of Russia’s most complex problems, the secular population decline.  For if Russia’s economy to grow rapidly in the long run, the population decline must be compensated by productivity gains and a flow of highly productive investments.

The Russian Government was represented at the Conference by Deputy Prime Minister and Minister of Finance Alexei Kudrin,  Deputy Prime  Minister Aleksander  Zhukov, Minister for Economic Development and Trade Elvira Nabiullina,  Minister of Health and Social Development Tatiana Golikova, Minister of Education and Science Andrei Fursenko as well as First Deputy Head of the Central bank of Russia Alexei Ulyukaev, German Gref, Chairman of the Board of the SberBank of Russia and an Aide to President of Russia, Arkadi Dvorkovich.

The first day of the conference began with the plenary session “Modernization of Economy: Markets, Firms and Structural Shifts" chaired by  Evgeny Yasin, HSE Academic Director and Alexander Shokhin, President of The Russian Union of Industrialists and Entrepreneurs (Employers) /RSPP/. The main topic of discussion was “Companies and Markets". According to professor Yasin, “Russian markets do not yet function efficiently. Key structural problems of the Russian economy are weak competition and substantial interference of the  state”.

The World Bank was represented at two plenary sessions of the conference by Otaviano Canuto,  Vice President and Head of the Poverty Reduction and Economic Management Network, as well as Indermit Gill, Chief Economist of the Europe and Central Asia Region of the World Bank. In addition, the World Bank organized two special sessions on macro-micro dimensions of the global crisis and the end of transition, featuring Luca Barbone, World Bank’s PREM (economic policy) Director of the Europe and Central Region and Pedro Alba, the World Bank’s Country Director for the Russian Federation, as well as several World Bank lead economists.

Otaviano Canuto,  Vice President and Head of the Poverty Reduction and Economic Management Network, The World Bank, in his presentation “From crisis management to long term growth drivers: Perspectives from Brazil” expressed his views on the emerging lessons from the global crisis that could be of particular interest for policymakers in large middle income countries such as Brazil and Russia.

“The crisis has provided an opportunity everywhere to rethink the existing growth models––relying on high commodity prices and capital inflows––with a view towards building a more efficient public sector, a resilient financial sector, and a more diversified economy that are less vulnerable to similar shocks,” said Mr. Canuto.

Indermit Gill, World Bank’s Chief Economist of the Europe and Central Asia Region of the World Bank, presented a spatial perspective on Russia’s development challenges. He stressed that for Russia to modernize effectively, people will have to become much more mobile across Russia’s vast territory and this is likely to lead to greater agglomerations, competitiveness and diversification.

Pedro Alba, World Bank Country Director and Resident Representative in the Russian Federation, has co-chaired a session on “The End of Transition,” noting that Russia’s faces similar structural challenges to those of many large middle income countries: the need to strengthen financial sector, improve investment climate, better target safety net, and foster innovation and productivity.

Luca Barbone, World Bank’s Director for Economic Policy for the Europe and Central Asia Region presented a paper on comparative fiscal policy in the region. He noted that Russia and many other countries significantly strengthened fiscal institutions in the years preceding the crisis that helped contain the impact of the crisis  but not prevent it  altogether. He stressed the importance of fiscal prudence in Russia before  the crisis and the use of the oil stabilization fund (later reserve fund) in macroeconomic policymaking during the crisis.

In the framework of the conference round-table, special sessions were organized on major development issues in Russia and the broader Europe and Central Asia Region. Zeljko Bogetic, Lead Economist of the World Bank for Russia presented the main messages of the most recent Russian Economic Report (www.worldbank.org/ru). He noted that the crisis has hit Russia hard but the social impact was less deep than feared, partly due to the large anti-crisis response by the government. Looking ahead, Russia faces robust but a relatively jobless recovery led by domestic demand although constraints in labor and credit markets will limit the pace of recovery in 2011.

Salman Zaidi, Lead Economist of the World Bank based in Almaty presented the Bank’s recent book on the impact of the crisis on households entitled “Crisis Hits Home.” He stressed that the crisis had impacted households  through three channels: labor market, financial markets, and product markets, stressing the importance of developing wall targeted transfer programs before such downturns in order for government to have an effective instrument in place to moderate losses in welfare among the poorest.

Juan Zalduendo, Lead Economist of the World Bank of the ECA region chief economist’s office, discussed the findings of the Bank’s recent book “Turmoil at Twenty,” reviewing the transition experience over the past twenty years and noting the diversity of experiences among different countries in the Europe and Central Asia Region.

The third day of the Conference began with the memorial session devoted to Yegor Gaidar. The Conference featured reports on his contribution as a reformer and social scientist.