Alexey Vedev on Structural Changes in the Russian Economy

The new national goal set by RF President Vladimir Putin and formulated as “technological leadership” is meant to ensure the country’s independence in all key areas and achieve full innovation autonomy. This will become a key line of work of the new Government. Alexey Vedev, Head of the Financial Studies Department of the Gaidar Institute told the Expert magazine about structural changes facing the Russian economy.

The contribution of the public administration and, in particular, the defense sector to GDP is tangible and noticeable, says Alexey Vedev. However, the flip side of the coin is structural imbalances in the economy and distortion of market incentives because of low competition and huge government investments in unproductive sectors of the economy. “For example, numerous enterprises, especially in the military-industrial complex, do not care now about lending costs because they have received guaranteed orders and the loan goes towards costs,” Alexey Vedev noted. According to Alexey Vedev, the task of the new government, particularly Andrei Belousov, recently appointed Defense Minister should consist in levelling out such imbalances.