Russian economy in 2005. Trends and outlooks (Issue 27)

Publication date
Thursday, 11.05.2006

Authors
V. Mau; S. Drobyshevsky, P. Trunin; P.Kadochnikov. S. SinelnikovMourylev; D. Polevoy; V. Nazarov, I. Trunin; A. Shadrin;O. Izryadnova; Yu. Bobylev, S. Tsukhlo;E. Ilyukhina; N. Karlova, P. Mokshina, E. Serova, T. Tikhonova, O. Shick; I. Dezhina; I. Rozhde

Series
Russian Economy: Trends and Perspectives

Contents
Table of Contents 49202216
Section 1.The SocioPolitical Background 9
1.1. Economic Policy in 2005: Identifying Priorities 9
1.1.1. Main Outcomes 9
1.1.2. Economic Growth: Debates and Politics 12
1.1.3. Models of Russia's Socio
Economic Development over a Long
Term Perspective 23
1.1.4. Tendencies and Challe
nges of Socio
Economic Development 28
Section 2. Monetary and budgetary spheres 32
2.1. Monetary Policy 32
2.1.1. The Money Market 32
2.1.2. Inflation 36
2.1.3. State of Balance of Payments 41
2.1.4. Basic Measures to be Implemented by CBR in the Sphere of Monetary Policy 45
2.1.5. Long
Term Problems of Monetary and Exchange
Rate Policies 47
2.2 State Budget 52
2.2.1. General Structure of the Budget of the Russian Federation for 2005 52
2.2.2. Analysis of Tax Proceeds to the State Budget of the Russian Federation 54
2.2.3. State Budget Expenditures 57
2.2.4. 2006 Federal Budget 59
2.3. Interbudgetary Relations and Subnational Finance 65
2.3.1. Main Trends of Development of Relations between Budgets of Different Levels 66
2.3.2. The Problem of Soft Budget Constraints for Regional Governments 74
Subsidies to Budgets of Subjects of the Russian Federation on Supporting Measures on
Provision of Stabilization of Budgets of Subjects of the Russian Federation 79
2.3.3. Methodology of Allocation of Subsidies from the Federal Fund for Co
Financing of Social Expenditures between
Subjects of the Russian Federation for 2006 87
2.3.4. Methodology of Allocation of Subventions from the Federal
Fund for Compensations between Subjects of the Russian Federation
on Payments for Housing and Communal Services to Individual
Categories of Citizens and on Provision of measures of Social
Support to Individuals Awarded with the "Honorary Blood Donor
of the USSR" and "Honorary Blood Donor of Russia" signs for 2006 89
2.3.5. Application of a New Methodol
ogy of Allocation of Subsidies
on equalization of Budgetary Sufficiency of Subjects
of the Russian Federation 89
2.3.6. The Impact of the New System of Elections of heads
of Subjects of RF on Interbudgetary Relations 92
2.4. Financial Markets in Russia 101
2.4.1. National Debt Market 101
2.4.2. The Market for Subfederal and Municipal Borrowings 109
2.4.3. Stock Market 121
Section 3. The real sector 141
3.1. Macrostructure of Production 141
3.1.1. Trends and Factors of Changing Final Demand 141
3.1.2. Specific features of GDP Formation by Incomes 152
3.1.3. Dynamics and Structure of GDP Production 156
3.2. The IET Business Surveys 183
3.2.1. The 2005 Dynamics of Demand for Industrial Output 183
3.2.2. Enterprises' Assessments of Effective Demand in 2005 186
3.2.3. Constraints to Industrial Growth in 2005 190
3.2.4. The Dynamics of Competition Relationship in Russia's Industrial Sector in 2005 197
3.3. Investment Processes in the Real Sector of the Economy 201
3.3.1. Domestic Investment in Fixed Assets 201
3.3.2. Flows of Foreign Investments in the Russian Economy 210
3.4. Russian Agrifood Sector: Basic Trends in 2005 218
3.4.1. Dynamics and Factors of Growth 218
3.4.2. Financial Performance of Russian Agriculture 221
3.4.3. Novelties of Domestic Agrifood Policies 223
3.4.4. Trends on Selected Agrifood Markets: Market of Meat 231
3.4.5. Foreign Trade in Agricultural and Food Products 237
3.5. The Situation in the Sphere of Research and Development 244
3.5.1. Strategic Targets for the Sphere of Science and Innovations 244
3.5.2. Reform in the Public Sector of Science 247
3.5.3. Modification of Fundamentals of Public Funding of Research and
Development 257
3.5.4. Overse as Funding to Russian Science 259
3.5.5. Solutions to the Cadre Problems Faced by Science 261
3.5.6. Private Companies In the National Innovational System 262
3.5.7. The Problem Associated with the Intellectual Property Rights Created at the Expense of
Budget Funding 264
3.5.8. Shapin
g a New Innovative Infrastructure 265
3.5.9. New Programs and Venture Funds for Financing Innovation 271
3.6. The Sociocultural Sphere 275
3.6.1. Health Care 275
3.6.2. Education 284
3.7. Foreign Trade 294
3.7.1. Foreign Trade Turnover 294
3.7.2. The State of Affairs on the World Markets 296
3.7.3. Export 297
3.7.4. Import 301
3.7.5. Geographic Structure of Foreign Trade 303
3.7.6. Regulation of Foreign Trade 304
3.7.7. On Progress with Negotiations on Russia's Accession to WTO 308
3.8. Military Economy and Security of Russia 310
3.8.1. Military Policy and Military
Economic Activity in 2005 310
3.8.2. Military Expenditures in the 2005 Federal Budget 316
3.8.3. Urgent Problems of Russia's Military Economy in the Current Period 325
Section 4. Institutional and Macroeconomic Challenges 327
4.1. Contradictory institutional background 327
4.2. Policy in the Sphere of Property Relations 330
4. 3. Public Sector: Size, Regulatory Innovations, Factors behind the Dynamics 343
4.3.1. Size, Components and Major Characteristics of the Public Sector 343
4.3.2. Major Changes in the Regulatory and Legal Framework 349
4.3.3. Major Factors Affecting the Development of the Public Sector 354
4.4. Property expansion of the state: a new stage 362
4.4.1. The state on the corporate control market 362
4.4.2. Motives for expansion: an attempt of interpretati on 370
4.4.3. Perspectives and consequences 375
4.5. Corporate Management Reform: Unsteady Demand 380
4.6. Russian Stock Market in 2005: Success or "Soap Bubble" Growth? 385
4.7. Merges and takeovers: dynamics, factors,branch peculiarities 400
4.8. Some Innovations in the State Regulation 406
4.8.1. Development of the Contemporary Legislation on Privatizing the State and Municipal
Property in the Russian Federation 406
4.8.2. Hostile Takeovers as an Object of the Respective State Regulation:
Some Legislative Modifications 415
4.8.3. Problems of Legislativ e Regulation of Competition and Monopolistic Activities on the
Commodity and Finance Markets 424
4.9. The Housing Market of Moscow Region 429
4.9.1. The Secondary Housing Market 430
4.9.2. The Primary Market for Housing 433
4.9.3. Housing as a Priority National Program 439
4.9.4. Fostering Mortgage 442
4.9.5. Prospects of the Real Estate Market 446
4.10. Efficiency of Banking Operations in 2005 448
4.11. Problems of Introduction of the Municipal Reform 455
4.11.1. The General Characteristics of the Progress with the Reform in 2005 455
4.11.2. Evolutionary Stage of the Reform Implementation 456
4.11.3. Problems with Implementation of the Municipal Reform 459
4.11.4. Struggling for the Reform - Results and Consequences 461
4.11.5. The stage of Regionalization and Compromises 462
Annex 1.
An Overview of Legislation Adopted in 2005 in the Sphere of Tax Regulation 466
Annex 2.
Changes in the Taxation of Small Businesses in 2005 492
Annex 3.
Reforming of theSystem of Accounting in Russia 499
Annex 4.
Establishment of Special Economic Zones and their Prospects
for Creation of Motivation to Speed
Up Social and Economic
Development of Russia 514

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