On April 28, the regular Gaidar Readings -- “Digital Technologies in Management of the Region” – where held in the city of Arkhangelsk.

The sponsors of the the Gaidar Readings were the Gaidar Institute and the M.V. Lomonosov Northern (Arctic) Federal University.

PROGRAM >>>

The plenary session was opened by Sergei Prikhodko, Executive Director of the Gaidar Institute. Welcoming address was delivered by Igor Orlov, Governor of the Arkhangelsk Region, Yelena Kudryashova, Rector of the M.V. Lomonosov Northern (Arctic) Federal University and Olga Epifanova, RF State Duma Deputy Chairman.

    

Igor Orlov, Governor of the Arkhangelsk Region spoke about the challenges and prospects of digitalization in the Arctic territories. Alexei Kudrin, Chairman of the Center for Strategic Research, Chairman of the Supervisory Board, Researcher-in-Chief of the Gaidar Institute presented the report: “Strategic Challenges and Their Solutions for Russia”.

Alexei Kudrin started his report with identification of the range of threats to Russia’s economic development. According to him, a loss of the status of a technological power means reduction of growth rates and a failure to ensure a decent life for people. Alexei Kudrin stressed that the position of Russia in the new industrial revolution leaves much to be desired. If one compares labor efficiency in Russia and the US, this index in Russia amounts to $25.9 per man-hour, while in the US it is equal to $68.3. The unit weight of the entities which engage in technological innovations amounts only to 7.9% in Russia, compared to 55% and 38.4% in the UK and Estonia, respectively.

Also, Alexei Kudrin, elaborated on seven priorities identified in the 2018–2024 Strategy developed by the Center for Strategic Research.

The first set of priorities deals with development of the human capital through provision of high-quality and modern education, healthcare and social support.

The second set of priorities is focused on the technological revolution and Russia’s place in it. The objective of this set of priorities is to form in Russia by 2024 a critical mass of high-tech companies and modern technologies applicable in the new technological revolution. It is important to increase by more than 30% labor efficiency in the Russian economy, facilitate Russia’s entering the list of the top ten leading countries as regards the number of issued international patents and advanced technology know-how, ensure Russian higher education establishments’ sustainable place in the top hundred of 75% of global academic ratings and switch over all the critical infrastructure components to the standards of the digital and platform economy.

The “Country of Opportunities” set of priorities sets a goal to make it possible for each individual in Russia to implement his/her potential and personal initiatives. To promote economic growth rates and form a developed economy and society, Russia has to expand largely its business sector and advance competitive environment. With these measures implemented, the number of people intending to open up their own business within a period of three years will increase from 1.5m people to 2.9m people, while the share of individuals employed at small and mid-sized enterprises is expected to grow from 27% to 35%.

Also, a particular attention is paid in the Strategy to reduction of the government’s share in the country’s economy through privatization of large companies, modernization of the sector, replacement of direct control by sectoral monitoring, introduction of a real corporate governance practice at state-owned companies, establishment of the center for transformation of state-owned companies and the IPO orientation of state-owned companies which intend to go public.

In the context of priorities related to achieving key positions in the global economy, a goal is set to increase non-resource based exports and services from $109bn to $200bn, expand exports of agricultural products from $17bn to $27bn, become a net exporter of food, increase exports of services from $50.5bn to $70bn, reduce foreign trade costs, secure positions on prospective markets, switch over to modern technologies in foreign trade operations and reduce on a mutual basis the barriers for Russian exports on the entire Eurasian continent. According to Alexei Kudrin, growth rates of 3.5% - 4% are feasible only in case of doubling of non-resource based exports by 2024.

As regards development of regions and cities, an objective is set to upgrade individuals’ living standards all over Russia and promote economic growth rates of regions and cities. To achieve that, it is necessary to expand the powers and potential of regions, make a breakthrough in development of the transport infrastructure of cities and the urban milieu and substantially reduce pollution of the environment.

Within the limits of the “State for Individuals” set of priorities, a goal is set to form modern high-tech bodies of state authorities which take decisions and carry them out in the interests of individuals. The value of general confidence for civil servants increases to the level of minimum 80%. 50 most required public services for individuals and businesses will be provided completely on a digital basis with minimum participation of civil servants. Expenditures on federal issues of budgets of all the levels are expected to decrease from 2.2% to 1.9% of GDP. Russia will secure a place in the top 35 countries on international ratings of regulatory policy high standards.

Also, a special attention is paid to the “Defense, Security and Justice” set of priorities whose goal is to facilitate a peaceful and dynamic development of Russia by way of ensuring higher protection of individuals from foreign threats, crimes and infringements of law. The share of modern samples of weapons and military and special equipment in the armed forces, troops and military formations and units will be equal minimum to 75%. According to the results of victimization surveys, the level of security of individuals will increase. The share of those who turned to the police of the total number of theft crime victims will grow from 45% to 60%. The number of prisoners will decrease by 30%. According to independent surveys, confidence in the judicial system will grow and, consequently, public assessment of its work will change for the better.

Alexander Tsybulsky, Acting Governor of the Nenets Autonomous Region delivered the report: “The Digital Technology is a Way of Promoting Living Standards in Northern Regions”.

Alexei Vedev, Leading Researcher of the Gaidar Institute delivered the report on “Mid-Term Economic Risks in the Russian Federation”. In his report, Alexei Vedev spoke about the dynamics of prices of energy commodities, dependence of the Russian economy on oil and dynamics of labor efficiency. Speaking about the banking sector, Alexei Vedev said that the deficit of resources in that sector was made up for by foreign loans or loans from the RF Central Bank. Alexei Vedev stressed that Russia saw excessive lending to individuals. So, despite a low level of households’ debt (13% of GDP against 78% of GDP in the US as of the beginning of 2017) the banking debt is short-termed and quite expensive. The average term of 2/3 of the loan portfolio was less than a year. Based on the results of 2016, the cost of the entire loan portfolio amounted to 16.6% per annum.
The economic policy scenario suggests selection of an economic growth model: either at the expense of consumption, or at the expense of investments. However, selection of the model is complicated by factors beyond the economic policy domain.

So, in case of a policy suggesting stimulation of economic growth through expansion of domestic demand (by way of promotion of consumption and lending), there is a real threat of a large portion of growth in domestic demand being covered by imports, particularly, amid appreciation the rouble.

On the contrary, in case of stimulation of savings there is a risk of investment activities remaining at a low level and domestic savings being unwanted both by the real sector and the banking sector. Economic growth model based on investments suggests not only growth in savings, but also promotion of investment activities on the back of upgrading of the business climate, financial stability, tax privileges, state participation and other factors.

According to Alexei Vedev, efficiency of the economic policy is falling due to institutional limitations.

Sergei Drobyshevsky, Academic Director of the Gaidar Institute touched upon application of the blockchain technology. This technology permits to fulfill smart-contracts, an algorithm that makes it possible to simplify or automate conclusion of contracts. With smart-contracts available, there is no need in intermediaries for entering into a contract because the terms of contracts are written in a software language. Also, they use mathematical instruments (for example, public-key cryptography).

The blockchain technology can be used for electronic voting (such experience has already been utilized in Estonia) and in carrying out letter of credit operations (the Alfa-Bank is implementing it in its pilot project). The blockchain technology can be applied in cadastral accounting (Georgia) and in issuing of bank guarantees which makes it feasible for potential users, that is, banks having the right to issue guarantees, trading sites, legal entities, individuals and state authorities to receive from the register the information on guarantees on deals.

Maria Shklyaruk, Vice President of the Center for Strategic Research, Head of the Center for Institutions and the Society delivered the report: “Digital Transformation of Public Management”.

The second part of the Gaidar Readings was divided into three topic sessions.

   

Within the framework of the first session: “Digital Transformation of Regional Management: Challenges, Security and Prospects of Development of the Arctic Territories” under moderation of Sergei Drobyshevsky, reports were delivered by Lev Levit, Representative of the Governor of the Arkhangelsk Region for Arctic Development (the report on “The Prospective Lines of Introduction of Digital Technologies in the Arctic Territories”) and Nikolai Rodichev, Minister of Communications and Information Technologies of the Arkhangelsk Region (the report on “Digital Transformation of State and Municipal Governance”).

Ilya Sokolov, Leading Researcher of the Gaidar Institute delivered a report on “Integration of the Cycles of Strategic and Budget Management with Utilization of Information (Digital) Solutions”. In his report, Ilya Sokolov touched upon the legal frameworks of strategic and budget management, as well as the issues of combining both the management systems. In particular, Ilya Sokolov pointed out that the procedures for budget management and strategic management are completely autonomous. For example, the result of the review of the summary annual report on fulfillment of state programs had not been determined yet, nor used in development of the draft of the budget for the next period. Also, passports of state programs on compliance with the requirements of the Budget Code were submitted to the State Duma, but not considered in substance while “unapproved projects” of state programs and modifications thereof were analyzed.

Ilya Sokolov pointed to the formal nature of evaluation of efficiency of strategic and budget management and lack of utilization of results of such an evaluation (evaluation of efficiency was carried out by drafters on the basis of their own methods).

According to Ilya Sokolov, management of expenditures is independent from the existing practice of strategic management. This manifests itself in “the manual and order” format of management as a superstructure over the formal departmental procedure for approval and management of state programs. Also, there are problems related to interdepartmental networking in realization of strategic planning documents and lengthy and painstaking procedures for approval thereof.

Within the framework of the session, reports were delivered by Vladimir Klimanov, Head of the Department of Government Management of the Economy, RANEPA (report on “Strategic Planning in Regions in the Context of Digital Economy”); Oleg Bacherikov, Deputy Head of the Administration of Severodvinsk for Financial and Economic Issues (report on “Digital Technologies: A Municipal Aspect”; Vera Stepanova, Professor, M.V. Lomonosov NArFU (report on “Evaluation of Development of Digitalization of Regions of the Arctic Zone of the Russian Federation”); Vladimir Myakshin, Assistant Professor of the Department of Economics and Business, M.V. Lomonosov NArFU (report on “Evaluation of Attractiveness of the Arctic Zone of the Russian Federation in Terms of Investments Based on the Balanced Scoring Criteria”).

Within the frameworks of the second session, participants discussed business management in digital economy: innovative technologies and competitive advantages. Andrei Tutygin, Head of the Department of Modeling of Social and Economic Systems, Institute for Comprehensive Arctic Research, Federal Research Center for Comprehensive Arctic Studies of the Russian Academy of Sciences delivered a report: “The Business Community of the Region: Localization, Cooperation or Integration?”. Vassily Sidorovsky, President of the Chamber of Commerce and Industry of the Arkhangelsk Region spoke about integrated digital systems in business. Svetlana Zhura, Assistant Professor of the Department of Constitutional and Municipal Law, M.V. Lomonosov NArFU touched upon application and the prospects of development of digital technologies in business. Sergei Ershov, Assistant Professor of the Department of State and Municipal Governance, NRU HSE delivered a report on “Feasibility of Utilization of a Blockchain Register in Supply Chain Management”. Alexander Pogorletsky, Professor of the Department of the Global Economy, St. Petersburg State University presented a report on “the Effect of Digital Technologies on Taxation and Tax Administration (in Terms of Excises on Beer)”.

The moderator of the third session – The Potential of Development of an Individual and the Society in the Context of Digital Economy – was Sergei Prikhodko. Within the framework of the session, Grigory Tomchin, President of the Fund for Support of Legislative Initiatives elaborated on challenges and prospects of development of institutions amid digital transformation of management; Remes Seppo, Professor of the Technological University in Lappenranta, Finland spoke about his country’s experience in digitalization stressing that “for Finland it was a matter of life and death”; Mikhail Myagkov, Senior Researcher, M.V. Lomonosov NArFU, Professor of the Oregon University delivered a report on “the Applied Aspects of Social Network Large Data Analysis”; in her report Irina Sivobrova, Assistant Professor, M.V. Lomonosov NArFU touched upon social risks related to digital transformation of the society; Olga Troitskaya, Assistant Professor of the Department of Experimental Mathematics and Informatizational Support of Education, Institute of Mathematics and Information and Space Technologies, NARFU presented the report: “An Individual in Digital Economy: Educational Technologies and Competences”.

Presentations to Reports: