March 23, 2018, UFA Gaidar Readings on “Medium-Term Economic Development Agenda: Focus on the Regions” took place in Ufa on March 23, 2018.
The Readings were organized by the Gaidar Institute for Economic Policy and the Academy of Sciences of the Republic of Bashkorstostan.
The Conference was opened by Alexander Degtiarev, Vice – President of the Academy of Sciences of the Republic of Bashkortostan, and Sergey Prikhodko, Executive Director of the Gaidar Institute.
Alexey Vedev, Head of RANEPA’s Center for Structural Research, Leading Researcher of the Gaidar Institute Financial Studies Department , in his presentation tackled the issues of the sustainable growth revival of the Russian Federation's economy.
In the last fifteen years (2001–2016), every 53-57 Roubles of the 100 roubles of domestic demand’s appreciation have been covered at the expense of the increase of prices for goods and services, and 22–25 roubles have been covered at the expense of imports. Alexey Vedev mentioned: Thus, only 1 of every 5 roubles of domestic demand’s appreciation has been covered by the growth of production of Russian enterprises.
The Scenarios of monetary policy implementation suggest the selection of a model of economic growth that is either based on consumption expansionor on the use of investments. According to the expert, this selection is complkcated by circumstances, which are way beyond the mechanisms of monetary policy. Thus, if the policy aimed at , encouraging economic growth by domestic demand’s expansion is to be implemented (through the growth of consumption and crediting), there is a realistic threat that a major part of the domestic demand’s appreciation will be covered by imports, especially, when therouble becomes stronger. As long as the savings are stimulated, the risk remains that investment activity will stay at a low level and that domestic savings will be redundant for the real economy and the banking system. The economic growth model based on investments suggests not only growth of savings but also the encouragement of investment activities through the improvement of the business climate, financial stability, tax privileges, participation of the state, as well as other factors.
The speaker underlined the fact that the efficiency of the economic policy was decreasing due to institutional limitations.
Sergey Drobyshevsky, Academic Director of the Gaidar Institute, dedicated his speech to the economic agenda of 2018–2024. He mentioned the positive results of the year 2017, in particular, the revival of growth of real GDP (about +1,5%), growth of investments in fixed capital. However, according to the expert, one can hardly say with good reason that the consequences of the crisis of 2008-2009 have been dealt with, and that Russia has entered a new trajectory of sustainable growth and that the risk of a new recession has passed, even in the short-term perspective, in 2018 or 2019. Among the primary measures to be taken in the framework of economic policy which, when announced, could positively impact on the expectations, Sergey Drobyshevsky mentioned the following ones: budget flexibility suggesting the increase of the share of productive expenses, including through the optimization of unproductive expenses; large – scale deregulation of economy, which will break the tendency to narrow the space for private initiative, have a favorable impact on the development of Russian financial markets, allow to attract investments from abroad and set the prerequisites for the quality improvement of corporate management; change in the system of foreign currency regulation, i.e., the substitution of foreign currency control by tax control, as well as control measures designed to prevent money laundering and financing of terrorism.
The presentation by Georgy Idrisov, Head of the Center for Real Sector of the Gaidar Institute, was dedicated to the modern view of industrial policy. Not only theoretical concepts or approaches towards the use of different mechanisms of industrial policy, but also their practical implementation were considered in the course of the presentation. The expert presented the most relevant solutions for sectoral development included in the current agenda, based on the most meaningful current challenges to Russia's development.
Rustem Akhunov, Vice-Chancellor for Strategic Development of Bashkir State University , , tackled in his presentation the issues and perspectives of the social and economic development of Bashkortostan.
Vladimir Komarov, Director of IPEI RANEPA Center of Regional Development Strategies, spoke about the experience in the elaboration of strategies of territorial social and economic development.
The expert highlighted the best practices of modern territorial development strategies: humanistic environment, the individual is the focus (humanistic environment, opportunities for self-realization, retention of specialists); sustainability of development, search for vision (active environmental policy, green economy and renewable resources); indicators of life quality and personal happiness (extended block of indicators characterizing the quality of life from different angles); specificity and compactness, clear strategy “tree” (moving away from diagnostics and description of the current state, specific measures, user – friendly for society); effect of cooperation and collaboration (cluster based policy, smart specialization in certain segments); module block/urban development (transportation framework and agglomeration efficiency, interregional cooperation).
The presentation by Ilia Sokolov, Director of the IMEI VAVT, Leading Researcher of the Gaidar Institute Budget Policy Department, embraced the budget maneuver as a factor of economic growth.
According to the speaker, the budget maneuver suggests that expenditure be maintained at the level of 33.5–34.0% of GDP over the period 2019–2024. Productive expenditures by 2024 will be increased from 11% to 13.5% of GDP, which corresponds to the average European level; that the chronic underfinancing of expenditure be overcome, securing long term development in accordance with the international standards as well as with the prioritized requirements of the domestic policy; to finance the items of expenditures, having a priority for the citizens; that expenditure be financed alongside its increasing efficiency and structural changes in the sectors; and that the structure of expenditure be altered in accordance with changes in the priorities of development.
In accordance with the forecast put forth in the presentation, the altered expenditure structure of the budget system should significantly influence the country’s economy. Thus, by 2024, GDP should increase by 30%, real disposable household income should increase by 25%, poverty should be reduced by 25%, and annual economic growth should be 3.6%.
Among other things, the budgets of the subjects of the Russian Federation will increase as a result of the budget maneuver from 11.6% of GDP in 2017 to 11.8% of GDP in 2020, and to 12.0% of GDP in 2024. At the same time, the expenditures will go down by the year 2020 from 11.7% to 11.4% of GDP, and will again to 11.7% of GDP by 2024. As a result, the overall budgets’ deficit amounting to 0.1% of GDP in 2017 will be followed by a budget surplus of 0.4% of GDP in 2020 and 0.3% of GDP in 2024. Therewith, the number of “deficit” subjects will be reduced from 47 in 2017 to 29 in 2024, and the number of “budget surplus” subjects will be increased respectively from 38 to 56.
The presentation by Alexander Deriugin, Senior Researcher of the RANEPA budget policy laboratory, Researcher of the Gaidar Institute Budget Policy Department, was dedicated to the ways of improving budgeting rules in the regions. Among the issues related to the budgeting rules in the regions of Russia, the speaker mentioned lack of flexibility, lack of built-in stabilizers for the regions with a relatively high accumulated debt, their subsidizing discrimination, the actual switchover to “manual mode” management, and lack of responsibility for rules’ violation.
According to the speaker, the following measures should contribute to the improvement of the budgeting rules in the regions: discontinuation of linking of the fiscal constraints’ on debt and deficit with the level of subsidies alolocated to the region; the introduction of differentiated deficit limitations for the regions that have negative dependence on their debt burden; the opportunity for temporary easing of the deficit and debt constraints during crisis and extraordinary situations; the abolition of those budgeting rules that are difficult to control and linked to the selection of expenditure structure, and not the parameters of fiscal sustainability, i.e., debt and deficit, including the restraints for the amount of expenditures for the payment of wages and salaries and upkeep of the public authorities, as well as restraints for the expenditures not linked with the decisions on matters in the competence of the public authorities of the subjects of the Federation.
Ms Natalia Kalugina, Deputy Minister of Finances of the Republic of Bashkortostaan, spoke about new mechanisms of fiscal sustainability in the Republic; Grigory Tomchin, President of the Foundation for Support of Legislative Initiatives, spoke about the development of small and medium – sized business in the regions and about federal regulation of the business climate; Damir Gainanov, Director of the UFARAS Institute for Socio – economic research, spoke about the regional specificities of economic strategizing with an eye to the spatial development of the Republic of Bashkortostan; Azat Iangirov, Director of the ISIRB Institute for Strategic Research, spoke about the strategic focuses of territorial development of the Republic of Bashkortostan.
The presentation delivered by Alexander Degtiarev, Moderator of the conference, Vice – President of the Academy of Sciences of the Republic of Bashkortostan, dedicated to the strategy of scientific/technological development of the Republic of Bashkortostan, concluded the Gaidar readings in Ufa.
Presentations to the reports:
Vedev A. Problemy vyhoda ehkonomiki RF na traektoriyu ustojchivogo rosta
Idrisov G. Opyt razrabotki strategij social'no-ehkonomicheskogo razvitiya territorij
Komarov V. Opyt razrabotki strategij social'no-ehkonomicheskogo razvitiya territorij
Deryugin A. Sovershenstvovanie byudzhetnyh pravil na regional'nom urovne