vidual industry level and the shift up the value chain to sectors that depend less on natural resources and are more competence based.
3.3 Place in the world
Russian Federation drops three ranks to 66th position this year 10. The drop reflects the fact that an improvement in macroeconomic stability was outweighed by deterioration in other areas, notably the quality of institutions, labour market efficiency, business sophistication, and innovation. The lack of progress with respect to the institutional framework is of particular concern, as this area is likely to be among the most significant constraints to Russia s competitiveness.the rule of law and the protection of property rights, improving the functioning of the judiciary, and raising security levels across the country would greatly benefit the economy and would provide for spill over effects into other areas. In addition to its weak institutional framework, Russia s competitiveness remains negatively affected by the low efficiency of its goods market. Competition, both domestic as well as foreign, is stifled by market structures dominated by a few large firms, inefficient anti-monopoly policies, and restrictions on trade and foreign ownership.despite many efforts, its financial markets remain unstable, with banks assessed very poorly (129th). Taken together, these challenges reduce the country s ability to take advantage of some of its strengths-particularly its high innovation potential (38th for capacity for innovation), its large and growing market size (8th), and its solid performance in higher education and training (27th for the quantity of education) 11. The full information may be found in the Appendix 1., there is no doubt that Russia is a country of great-and unrealized-potential. But despite its well-educated population, the abundance of its natural resources and its favourable geographical location it has not yet grown at the same pace as many other emerging markets.
Conclusion
was proved that there is no inherent reason why the Russian economy could not enter a period of high, sustained growth in coming years. It has a number of structural features which create the conditions for rapid growth: it is likely to benefit from gains in efficiency associated with the continued elimination of remaining distortions from its central planning past; it has an impressive natural resource endowment which is likely to stimulate continued and growing interest among foreign investors, particularly in the all-important energy sector. The human capital stock is on balance, a competitive advantage, and remaining skills shortages-while sharply limiting in many ways in the public sector-are gradually being addressed.has an impressive tradition of world-class research in the basic sciences, including seminal contributions to mathematics and physics. But the brain drain has been a blow to the country s ability to quickly move back to the outer limits of the technology frontier. The basic machinery to do so, in the form of higher education establishments that support scientific research, and the commitment to excellence that was the distinguishing feature of Russian culture and science during much of the past century will have to be revitalized.conditions in the global oil markets suggest that the external environment is likely to remain favourable to Russia, creating an ideal opportunity to push ahead with structural and institutional reforms. The alternative is to pursue these in the middle of an economic downturn or a crisis, a scenario that is traditionally more difficult.IMF is certainly correct in suggesting that a loosening of fiscal policy-particularly one aimed at boosting public sector wages and pensions, not investments in education, public health, and infrastructure, all of which would boost productivity and thus enhance the permissible level of real appreciation of the rubble-will «strengthen tensions between exchange rate and inflation objectives.» beyond these issues, it is put on the authorities to broaden their focus, and deal with a broad range of emerging stresses. Foremost among these are how to arrest the disturbing demographic trends, how to better utilize surplus public resources to enhance the economy s capacity for innovation, and how to put the country back on a path of world-class scientific and technological achievement, so that Russia may join the ranks of the most competitive economies in the world.
Bibliography
1. Ahrend, Jurgen (2004), Accounting for Russia s Post-Crisis Growth, Economics Department Working Paper No. 404, ECO/WKP (2004) 27, OECD: Paris.
2. Aslund, Anders (2006), The Hunt for Ru...
