‘We Need Solutions That Will Allow Russian Business not to Look to Offshore Companies, but to Gain Profitability in Russia’
HSE’s XX April International Conference opened with a plenary session devoted to Russian economic development and fiscal policy. Mr. Anton Siluanov, Russia’s First Deputy Prime Minister and Minister of Finance, discussed the solutions proposed by the Russian government to stimulate economic growth and business development.
Economic Stability and Political Predictability
According to the minister, in recent years the Russian government has managed to lay the foundation for further reforms and structural changes. Macroeconomic imbalances have been eliminated, and budgetary resilience to external conditions and impact factors (such as oil prices and sanctions restrictions) has improved. Regional finances have strengthened—debt levels of Russian provinces have not only ceased to increase, but have even begun to decrease. All this made it possible for Russia in 2018 to maintain an economic growth rate of 2%—not high, Siluanov admitted, but surpassing the country’s average rates over the past 10 years.
Balancing the budget at the primary level is now possible at a price of $45 per barrel. The Minister noted that the budget surplus in 2018 was 2.6%, and reserves were formed.
Unlike other countries with developing economies, Russia did not increase its debts, but pursued a balanced budget policy
Russia’s national goals, as outlined by President Putin, stipulate growth rates not lower than international ones, as well as Russia's entry into the top five largest world economies. ‘That is not an easy task,’ says Mr. Siluanov. One of the ways we can achieve this goal are national projects, so a resource base has been formed in order to finance them. Regional governments are also involved in this endeavor.
For high growth rates, investments of at least 25% of Russia’s GDP are necessary (investments currently make up 21%). According the minister, this amount should not consist of only or mostly budgetary funds: ‘We are working with business in order to reduce the risks of investing and create incentives for it.’
The government is also focused on ensuring the stability and predictability of budgetary and fiscal policies (for the next six years there will be no major changes in the tax system). Another task is leveling the field of competition for different business entities. Siluanov agreed: the criticism that preference is given to state-owned companies is fair. At the same time, as the state improves administration procedures, it is closing tax loopholes, and this benefits certain companies.
In terms of reducing administrative burdens and eliminating obstacles, we have already had some success, the minister says: the time it takes to start a business is decreasing, customs procedures have been simplified (in part thanks to the introduction of electronic forms). Russia has risen from below the top hundred countries to within the top thirty in the international ‘Doing Business’ ranking.
In the future, regulatory measures (including those of a technical nature) that may adversely affect business development must be implemented with a delay of two years, so that businesses can prepare for them.
Opportunity for Domestic Investment
‘We are taking measures to encourage the return of business to our jurisdiction,’ the minister says. Russia will continue to provide capital amnesty. Two special administrative districts have been established that have essentially the same status as those foreign zones where the capital used to go.
Siluanov stressed the need for business to participate in the realization of large investment projects. It is necessary to negotiate with large and medium-sized businesses in order to transform resources that are in the economy (such as business’ profits) into concrete projects. A governmental and entrepreneurial working group has been formed, which eliminates administrative restrictions that affect business. Two bills have been prepared: a new version of special investment contracts and a law encouraging investment in the Russian economy.
‘We are taking a path of long money development,’ says Siluanov. ‘Legislation of the voluntary pension savings system is a tool for both raising pensions and long-term investments.’ Such resources, according to the minister, are especially important in cases when restrictions are imposed on attracting funds from foreign jurisdictions.
Industrial measures developed by the government include subsidies and tax incentives, especially in the field of petrochemical chemistry, which will be actively developed and will contribute to economic growth.
Siluanov also noted national projects on infrastructure development, digitalization (which will facilitate business operations and make the economy more transparent), labor productivity and the development of small and medium-sized businesses.
Plans for 2019 include loans to small and medium-sized businesses that are ten times bigger than last year’s, which amounted to 80 billion rubles
Another task, without the achievement of which it is impossible to improve Russia’s competitiveness and economic growth is to increase its exports. ‘Within six years, we need to almost double the volume of non-primary exports,’ the minister says. Companies working in this endeavor will receive state support.
At the request of the business sector, the Russian government is preparing to liberalize currency legislation in terms of currency earnings returns and the elimination of vestiges of the Soviet era, during which this was criminalized. In general, by 2021, a reevaluation of currency laws should be complete and outdated measures that were implemented a decade ago and hinder businesses today will be eliminated.
‘These measures are our responses to the current limitations and challenges, and they will encourage Russian business not to look to the West and offshore companies,’ Siluanov asserts, ‘but to work in Russia and gain high profitability.’
The HSE Centre for Studies of Income and Living Standards studied the dynamics of the middle class and its behaviour with regard to paid services. The study was based on data drawn from the HSE Russian Longitudinal Monitoring Survey (RLMS-HSE) for the years 2000 to 2017, and the results were presented at the 20th April International Academic Conference hosted by HSE.
HSE offers applicants a large selection of master's programmes in business management and development. Jonathan Linton, Head of the Laboratory for Research in Science and Technology at the Institute for Statistical Studies and Economics of Knowledge (ISSEK) at the Higher School of Economics, discusses the qualities managers and innovators need in today’s world.
Reproductive behavior is modernizing at different rates in post-Soviet countries. Things are changing faster in Russia, Armenia, Georgia and Ukraine, where, over the last fifteen years, the average maternity age has increased and the contribution of women in their thirties to their countries’ birthrates has grown. Meanwhile, old reproductive patterns persist in Azerbaijan, Kazakhstan and Kyrgyzstan, where firstborns are usually born to parents under 30, demographers Vladimir Kozlov and Konstantin Kazenin note in a paper delivered at HSE’s XX April International Academic Conference.
More than half of school graduates in medium-sized Russian cities will change their place of residence either forever or at least for a long time. According a report on internal migration presented by HSE demographers at the XX April International Academic Conference, these people are lost to their cities.
As part of the Management session of the XX April International Conference, Carl F. Fey from Aalto University School of Business, Finland, presented his paper on Facilitating Innovation in Companies in Russia: The Role of Organizational Culture. In his talk, Professor Fey spoke about the results of three studies he has been conducting with his team.
How does digital technology affect the behavior and health of schoolchildren? What opportunities does it proved teachers and school administrators? These and other issues were discussed by participants in the plenary session ‘Children’s Wellbeing in the Digital Age’ at the XX April International Scientific Conference of HSE.
Implementing a digital analytical platform, opportunities for Big Data, and other prospects for the development of Russian statistics were discussed by participants at a plenary session of the XX April International Academic Conference.
Dr. Dorothy Espelage (University of Florida) presented a comprehensive account of her research into youth bullying spanning more than two decades in an invited paper ‘Prevention & Intervention of Youth Bullying and other Forms of Youth Aggression: Research Informed Strategies’ at the XX April International Academic Conference.
The role of regional and industrial institutions of higher education in achieving national development goals must increase, and leading universities will help them. This was the conclusion reached by participants of the plenary session on Russian higher education that took place as part of the XX April International Academic Conference.
The plenary session ‘Strategy of Russian Presence at Global Food Markets’ took place as part of HSE University’s XX April International Academic Conference, where participants discussed the prospects for Russian agricultural exports to Asia, as well as the use of nonconventional investment models, such as Islamic financial tools.