In order to follow through on its promises to the people, the Russian government needs to take a serious look at the country’s economy and make the changes necessary for sustainable long-term growth.Over the last six months, the Russian government has been concentrating on winning elections – from United Russia maintaining its majority in the State Duma to Prime Minister Vladimir Putin returning to the presidency. Now, in order to justify its resounding mandate, the political establishment has to turn its attention to delivering sustainable and long-term economic growth for the Russian people.
Recent record levels of capital flight suggest that investors are not entirely convinced of the sound-ness of the government’s current economic strategy, which centers around expanding and diversifying the manufacturing base. It is time to accelerate Russia’s transition to a post-industrial economy in which high-value knowledge and service industries play a bigger role.
As a middle-income country with a large public sector to support, neither labor costs nor taxes are low in Russia. Although Chinese labor costs are rising, they are still a third of those in Russia, which gives the Chinese a massive advantage in the global marketplace for manufactured goods. Read More
