Russia » Economics
Author`s name Dmitry Sudakov

To become Europe's strongest economy by 2050, Russia needs to exit Washington Consensus

Russia has every opportunity to make a breakthrough in increasing labor productivity. To achieve this goal, Russia needs  to pull out from the Washington Consensus, in particular from the American patent law, economist Vasily Koltashov believes.

By 2060, Russia will lag behind the United States of America even more - experts at the Organisation for Economic Cooperation and Development (OECD) said. Without reforms, per capita GDP in Russia will grow by only 0.7 percent in the next 12 years, economists predict. Labor productivity in Russia has not grown in recent years, and in 2018-2030 it will accelerate only to 0.5 percent. Experts advise Russia should increase labor productivity through the public administration reform, as well as by increasing the duration of school education and reducing trade tariffs.

Vasily Koltashov, the head of the Centre for Economic Studies at the Institute of Globalisation and Social Movements, told Pravda.Ru that OECD economists say the following: the USA will be just fine, and Russia will be just bad. "This is a strange affirmation, because the Russian economy has been developing in recent years in conjunction with processes in the global economy."

"In China, the economy is growing, an economic growth is possible in India, but in most countries there is stagnation. In the European Union, there is depressive stagnation. If we look at the United States, their GDP growth is actually equal to the growth of the USA's public debt and costs for its servicing. Strangely enough, no one says that the Americans have their salaries too high and their labor productivity too low in proportion to their wages, which makes their products completely uncompetitive," Vasily Koltashov told Pravda.Ru.

According to the economist, Russia can ensure the economic growth if the country ensures the development of its own production capacities. This is what the import substitution policy is aimed at - to expand the export range. "Russia needs to import only what Russia needs. We should not import poultry from the USA as we did during Yeltsin's times. We should import, for example, equipment that we cannot make ourselves," the expert said.

OECD experts give harmful recommendations, Vasily Koltashov said in an interview with Pravda.Ru. The era of free trade is over, and one needs to fight on the world market. Therefore, "trade duties must be kept high and it is necessary to fight smugglers mercilessly."

"It is highly important Russia should no longer obey the rules of the Washington Consensus. Instead, Russia should start dismantling those rules. We should refuse to obey the American patent law. Having started the war of sanctions, the Americans violated all rules of free unlimited trade, because politics has no right to interfere with commerce. We must have complete freedom to use technology, and then we will quickly overcome the backlog in productivity," the expert told  Pravda.Ru.

Western experts always speak about the reduction of the role of state in economy. "Yet, they talk about our state, but not theirs. Their state can interfere in our economy as much as it wishes. Yet, even if we try to follow their pieces of advice, the Russian economy will collapse, just like the economy of any other country, because the time for such recipes has passed," Vasily Koltashov told Pravda.Ru.

It is worthy of note that PricewaterhouseCoopers (PwC) published a report in 2017 titled "The World in 2050". PwC experts predicted that the Russian economy would become the strongest in Europe by this time.

Reference: The Washington consensus is a type of macroeconomic policy that the IMF and the WB  recommended at the end of the 20th century for application in the countries that experience financial and economic crises. Recommendations to such countries reflected the common position of the US administration, and major international financial organisations, such as the IMF and the World Bank, as well as leading American think tanks.

Pravda.Ru

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