Thursday, Dec 14, 2017
Industry & Trade | Eastern Europe and the CIS | Russia

Russia´s knowledge-based economy driving forward


5 years ago

His Excellency Sergey I. Kislyak Ambassador Extraordinary and Plenipotentiary of the Russian Federation to the United States of America
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Oil and gas a key stimulus in country´s growth

Russia´s economy is currently enjoying a strong recovery from the 2008-2009 global financial crisis. Due to its oil and natural gas exports, the country is set to grow by an average of 4% through 2015. At the moment it is the world´s sixth largest economy and it is expected that within the next 10-15 years, it will be amongst the top five. The country is entirely self-sufficient in its natural resources. The most important ones are energy, space and agriculture and Russia also has the biggest fresh water reserves in the world.  There has been an enormous transformation in Russian society;  twenty years ago the state owned everything whereas the current generation of inhabitants have a situation where over 60% of the country´s wealth is in the hands of private ownership.

During its years of recovery, the government was in a position to be able to maintain all the social programmes and privileges (for example pensions). Another important factor in the rehabilitation of the county is its improvement in debt level. After the collapse of the Soviet Union,  Russia´s debt was higher than its GDP. At the moment Russia´s debt is 10% less than its GDP.

“The most important asset that we have is our people who can work and like to work,” His Excellency Sergey I. Kislyak said.

A huge amount of Russia´s success depends on its oil and gas. In addition, there is also a population of 145 million people with income levels highest amongst developing countries. It is moving towards an economy that it more knowledge-based. International relations with the World Trade Organisation are ongoing and a lot of additional advantages and added reforms are likely. Companies that have been protected by things such as tariffs will start receiving huge competition from abroad as the tariffs are lowered. In banking, a foreign presence will be allowed in Russia as the nation becomes a more integrated player of the world economy.  The better assimilated Russia will be, the better it will be able to compete.

President Vladimir Putin has also established a bilateral commission, several of which are working on economic issues in some way. American companies such as Google have already seen Russia as an area of investment. Cisco has invested over $1 billion. General Motors is another firm which has looked to Russia and PepsiCo has been investing in the country since 1974. Russia is also a huge market for the American film industry.

Another advantage Russia has is its building of reliable power stations. These stations are built in the country but also in China, India, Iran and Europe. Intriguingly the United States has not built a power station for over 25 years. However with the Russian economy now advancing, there are ample opportunities for the US and Russia to work together on a global scale.

“If we work together we have a much better chance of addressing global issues, because we have a lot of capabilities. We would like to see our relations develop in almost all spheres, based on the quality and mutual respect of each other’s interests. We can do a lot together,” Mr Kislyak added.

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