On May 7, Stepan Zemtsov, Senior Researcher of the Innovation Economy Department, Gaidar Institute delivered a report on the topic “The Pandemic, Crisis and Digitalization:  How Should Russian Regions Adapt?” at the seminar on the global and regional economies  which was held at the Lomonosov MSE MSU.

The seminar was moderated by V.M. Polterovich, Academician and Member of the Russian Academy of Sciences, D.Sc. Economics, Professor, L.B. Vardomsky, D.Sc. Economics, Professor and M.Yu. Golovnin,  D.Sc. Economics, Corresponding Member, Russian Academy of Sciences, Professor.

Stepan Zemtsov   noted that the scenario of digital transformation of employment in the wake of the pandemic and change in technologies will require the retraining of millions of professional employees in Russia. The future economy will need primarily STEAM experts: science, technology, engineering, art and mathematics. It is important to render support and training to the entrepreneurial business.  

There are objective processes which slow down the change in technologies in Russia: low-cost labor, low level of introduction of technologies and institutional limitations. So, social risks related to the digital economy were quite low, but the sped-up modernization spurred by the pandemic and the crisis is feasible in future.

The risks of formation of the economy of ignorance are growing as the high rates of adaptability of the labor market are required, but nearly 80% of the employed are not prepared for permanent retraining, competition with robots and participation in creation and utilization of new technologies.  The formation of new “old industrial” and “old service” regions is feasible.

The speaker noted that: “Despite the fact that informal institutes and individual sociocultural norms (mistrust of people, corrupt practices, nepotism, high distance of the authorities and other)  limit the prospects of adaptability to the ongoing processes of digitalization and automation  through the development of free enterprise, the processes related to the change in technologies can be perceived positively by people. Russia is a country with the highest share of people who believe that the scientific and technological progress may solve most problems and robots, in a number of cases, are more trustworthy than people.”

As a result of the digital transformation, no non-digital businesses will actually be left, the expert of the Gaidar Institute believes.  All companies will be using, one way or another, the Internet: for making orders and selling goods and services, making payments, collection of customer data, personalization and other.  Business which fails to carry out digital transformation will partially marginalize in narrow spheres and remain in the informal sector. The non-digital business with high-end goods and services will be on the opposite side. In other words, mass services and products can be consumed online (online education, telemedicine and other), elite ones, only in the offline mode within the framework of face-to-face communication with a mentor, teacher, doctor and other.

If in the economy negative trends triggered by the pandemic prevail till July, the most serious social implications can be expected in the North Caucasus and Crimea where over a half of the employed are workers of the SMB sector or the self-employed  and the level of digital inequality is quite high”, concludes Stepan Zemtsov.  

Presentation to the report

References to the authors’ research used in the  report: 

  • Zemtsov S. New technologies, potential unemployment and ‘nescience economy’ during and after the 2020 economic crisis // Regional Science Policy & Practice. 2020.
  • Zemtsov  S.P., Yu. V Tsareva. Trends of Development of the Sector of Small and Mid-Sized Enterprises Amid the Pandemic and Crisis. The Online Monitoring of Russia’s Economic Outlook: Trends and Challenges of Socioeconomic Development. 2020. Issue No.10 (112). pp.155-166.
  • Zemtsov  S.P., Baburin V.L. The Coronavirus in Russian Regions: The Specifics and Implications of the Outbreak // Public Service. 2020. 2(22). 50-57
  • Zemtsov  S.P., Krasnoselskilh A.N., Tsareva Yu.V., Barinova V.А. The Measures of Support of Small and Mid-Sized Businesses Amid the Pandemic and Crisis // The Online Monitoring of Russia’s Economic Outlook: Trends and Challenges of Socioeconomic Development.. 2020. Issue No.8 (110). April. pp. 105-115.
  • National Report “High-Tech Business in Russian Regions”. Issue No.3 /edited by Zemtsov S.P. – Moscow: RANEPA, 2020.
  • Zemtsov  S., Barinova V. Semenova R.  Risks of Digitalization and adaptability of Regional Labor markets in Russia // Foresight and STI governance. 2019. Issue No.2. pp. 84-96