The Russian economy fell into the “middle income trap”, and in order to escape, you need to “build muscle” to develop the institutions, said the ex-Minister of Finance, the head of the Board of the Center for strategic research (CSR) Alexei Kudrin at the session of the SPIEF—2016, where also was the Minister of Finance Anton Siluanov and the Chairman of the Central Bank Elvira Nabiullina.
Without better decisions from the point of view of institutions and human capital management economy will grow by 1-2%, lagging behind the world pace, warned Kudrin. “The institutions we have today work poorly. I would compare their work with that of the pilot who guides the ship between the reefs, and this requires a navigation system — the system of public administration, significantly more effective than today,” he said.
In 2000, when Kudrin was the Minister of Finance, the government, he said, was “ready to reform”. “We had oil in the frame. We grew out of it, it prevents us. The price [of oil] have fallen and the muscles were not inflated,” said Kudrin.
Kudrin, recently brought by President Vladimir Putin to seek new sources of economic growth, believes that the state and society have not learned to “manage the change”. “There is a need of change corresponding to the call time corresponding to a changing world. You can be afraid to lose political rating, to quarrel with any social group in the way of these changes, but I think that today it has become a problem,” he said.
According to Kudrin, there is no single solution in order to put the economy on a new track. “Neither the provision of investment incentives or adding some money into the economy in order to destabilize the inflation, nor the creation of ten “SKOLKOVO” — one solution, one direction of the economy is not removed from this state,” he said. Among the problems that hinder development, he cited “the state’s share in the economy, lack of competition, the dominance of state-owned companies and close to the state companies over the rest of the private independent sector” and the role of courts and law enforcement agencies, “providing an excessive burden on business”.