Prospects for Developing the Competitiveness of the Russian Economy

Russia should increase the export of non-energy goods by not less than 6 %

“The structure of exports must be completely and swiftly overhauled. Our goal is to ensure that annual growth of non-oil and gas exports exceeds 6 percent.”

Russian President V.V. Putin

Address to St Petersburg International Economic Forum, 23 May 2014

The issue of increasing the international competitiveness of Russian companies and products, as well as implementing an import substitution programme in Russia, were discussed by leading experts on 30 September 2014 as part of a business forum - “The Russian business’s Global competitiveness”. The event, which took place in Moscow's World Trade Centre, was attended by specialists of RISS.

Generally, experts regard Russia’s future with cautious optimism and regard the country as a major participant in international economic relations with continued potential as a promising and attractive market.

Of particular note was the presentation given by E.M. Primakov, Academician, Russian Academy of Sciences, and President of the Mercury Club. He commented on the need for increased support for the export of products with high added value, as well as an integrated industrial policy instead of disparate mechanisms to facilitate foreign trade. Mr Primakov underlined the impossibility and undesirability of self-isolation by Russia or withdrawing from international organizations. In this regard, the tools of global structures must be fully utilised in order to improve the competitiveness of the Russian economy.

A.A. Slepnev, Trade Minister of the Eurasian Economic Commission, stressed the need to develop foreign trade relations with new partners, due to the introduction of economic sanctions against Russia by Western countries. In his opinion, the most promising potential partners may be Vietnam, India, Israel and Egypt. A new formula of relations on the basis of the increase of the index of Russia's participation in global supply chains needs to be developed with traditional partners. Mr Slepnev noted the importance of Russia's participation in the activities of regional economic organizations, as well as the conclusion of bilateral free trade agreements

A.N. Klepac, Deputy Chairman of Vnesheconombank, stressed the need for implementing bold and ambitious projects in Russia to stimulate high-tech production and exports. The expert assessed current economic policy expert as too conservative and centred on anticipating crises.

A.A. Mordashev, General Director of Severstal, drew participants’ attention to the regimentation of foreign economic activity in Russia. Whereas 5-6 documents are required abroad, participants of foreign economic activity in our country must provide over 70 documents. This increases the time required to clear customs formalities and reduces the competitiveness of Russian companies. Mr Mordachev urged business representatives to activate participation in the work of simplifying national customs legislation.

P.V. Fradkov, Director General of the Export Insurance Agency of Russia (EXIAR), noted the importance of stimulating exports and improving the competitiveness of Russian companies. EXIAR has actively supported Russian exporters through credit and political risk insurance of export credits. For this purpose alone, over 200 billion roubles have been allocated over the past 3 years, and a single centre of credit insurance export support is planned.

In addition to the discussion of the Russian economy’s competitiveness, one of the objectives of the Forum was the presentation of a special project by the Russian Chamber of Commerce, World Trade Centre Moscow and the Kommersant publishing house: "Russian Export Potential”. The basis of the project is an online database of products, manufacturers and potential buyers. According to its developers, the internet-based system allows you to search for partners by country or foreign economic activity commodity code.  One of the project’s priorities is to implement direct connections between potential exporters and the team of specialists negotiating agreements on free trade zones to promote export.

In our opinion, despite the relevance and necessity of such systems, this project duplicates the information portal operated by the Ministry of Economic development of the Russian Federation since 2010.  As such, it would be more appropriate, especially in a difficult economic environment, for the efforts of public and private organizations in providing information support for exports to be merged. This would more effectively improve the competitiveness of Russian business in international markets.