in the Russian Federation and the OECD, 2010
Indeed, Russia s solid GDP growth over the past decades has been accompanied by growing productivity. In transition economies, productivity growth is often a reflection of increasing capacity utilization; this is also the case in Russia., after correcting for capacity utilization, out of the 6.5 percent growth achieved on average during 1999-2005, about 4.15 percent was attributable to gains from resources that were used 6 .of this growth in productivity has been the result of efficiency gains within sectors rather than reallocation among sectors. Overall, productivity growth that took place within the firms-that is, growth that occurred through greater efficiency in production processes, the shedding of surplus labour in the course of the privatization process, and better organization of administrative functions-explains the largest share of efficiency gains, accounting for about 30 percent of total manufacturing productivity growth from 2001 to 2004.2 Much of this was a result of labour shedding in the initial transition period.the shrinking of the manufacturing sectors is a process that most transition economies have undergone, the decline of Russian manufacturing beyond the initial transition period remains a worrying trend for a number of reasons.most important is that, while the number of jobs in manufacturing is declining, employment in the government sector is growing, pointing to a move toward a growing role of the state that is built on the redistribution of resources rather than creation of value. Furthermore, the Russian Federation is well positioned to be competitive in high-end manufacturing sectors. It could aim at improving the business environment and creating favourable conditions for the development of these industries.number of studies show that the decline in manufacturing competitiveness in Russia is due to the combination of an increase in real wages and shortcomings of the business climate 7, which puts Russia at a disadvantage in international comparison.productivity in the country is higher than in India and China, high Russian salaries mean that for each dollar of wage, a Russian worker produces half the output of his or her Chinese or Indian peers. Competitiveness enhancing reforms will improve the business environment, strengthen efficiency, and align manufacturing productivity better with international wage-productivity ratios. This will make Russia more attractive as an exporter of goods and tradable services as well as a destination for foreign direct investment (FDI).
3. Global competitiveness assertion
3.1 The state of Russian competitiveness according to the Global Competitiveness Index
ranks 66rd out of 139 countries covered by the GCI 2010-2011 (See figure 3). The country lags behind the OECD member countries on average (on a scale of 1 to 7, Russia achieves a score of 4.2 against 4.9 for the OECD) as well as the BIC economies (score of 4.5) 8. The country remains stable compared to the previous year, keeping the same rank., In the course of the past five years, Russia s performance in the GCI stagnated and the country remained in the 5th deciles of the GCI sample. A considerable improvement was observed prior to the financial crisis (in the 2008-09 edition), although it deteriorated the following year.the challenges that Russia will have to address in order to raise productivity are above all the poorly functioning institutional framework, as it belongs to both public as well as private institutions.addition, competition and demand conditions do not contribute to the efficiency of goods markets to the same degree as in OECD and BIC economies. Furthermore, financial markets trail the two comparator groups in terms of efficiency as well as trustworthiness and confidence.but not least, the country s business sector is significantly less sophisticated than enterprises in peer economies or OECD member states. The following sections of the chapter explore in more detail the competitive strengths and weaknesses of the Russian Federation identified by the GCI analysis as the key areas for policy reform.can be summarized in a simple «three-plus-five formula» - building on three strengths and addressing five priority challenges, the Russian Federation could reap considerable productivity gains. Improvements in these five areas by +2030 would lead to improved competitiveness by this time, which would correspond to a significant increase in prosperity in Russia.
3.2 Russian growth in detail: exploring performance at the industry level
productivity gap between Russia and the OECD countries is determined by the level of productivity in individual industries and the variation...
