The Russian Economy: From Rebound to Rebuilding

Bridging the gap in competitiveness of Russian companies with intangible bricks

“…The scholars who deal with the phenomenon of the transition of the Russian economy diverge into two main streams. Sapir (2001) affirms that in the early 1990s, Russia took a very unique fast track in terms of economic and political reforms. This transformation has borne the fruit of an abnormal level of economic growth in the beginning of the twenty-first century.…”

“…That is a key challenge faced by Russian companies. For that to occur, as asserted by Beck et al (2007), Connolly (2011), Sapir (2001) and McCarthy et al (2014), Russian sectors and institutions require pivotal transformation. Summarizing the most frequently raised issues about sustainable development for the Russian economy that might help to close the competitiveness gap, we highlight the following factors: long-term strategic orientation of companies provided by an auspicious investment climate, such as a stable institutional environment, low interest rates, incentive taxation, etc.…”

“…This high growth was driven mainly by internal forces and was only enhanced by external conditions. By "internal forces", Sapir (2001) and Ahrend (2006), mean growth in productivity mostly derived from competitive advantages in costs. Other studies, such as those by McCarthy et al (2014), Connolly (2011) and Gaddy (2007), see the origin of Russian economic growth only within the very positive conjuncture of the world market for commodities.…”

“…A high level of imports of highly technological products, along with the predominance of the raw materials in exports, led to the considerable dependency of the Russian economy on the value of the rouble and world prices of commodities, mainly hydrocarbons (Ahrend, 2006). The problem of an insufficient competitiveness of Russian companies was considerably exacerbated by the knowledge-based economy, as stated by Sapir (2001). Most Russian sectors lag behind their main global competitors, both in quality and in costs of the products, caused by obsolete technologies, depreciated assets and an insufficient level of investment in human resources and marketing (Ahrend, 2006).…”

The General Rate of Profit in a New Market Economy: Conceptual Issues and Estimates

“…The situation is further aggravated by the dramatic decline in capital formation and by massive capital flight. During the 1990s, an estimated $15-20 billion, or between one-fifth and one-third of national savings, were leaving Russia every year, whereas the inflows of foreign investment were minuscule (Popov 1999;Buiter 2000;Lushin and Oppenheimer 2001;Sapir 2001). 1 The overall level of investment in the Russian economy continued shrinking until 1999 (see table 1).…”