Russian Economy General News: #1

Viktor wrote:According to World Bank - As of 2012 Russia is 5th economy of the world.

http://databank.worldbank.org/data/download/GDP_PPP.pdf

also in 2012 Russia entered club of high income states  

sepheronx wrote:Sorry if I come off as a jerk, as you do not deserve it (I would say you are probably one of the most informative and produce a lot of good info compared to most members on sites like MP.Net).  Sorry again.

But yes, US does have a similar law, as I have pointed out on MP.net.  We also have a similar law in Canada too, as it would be in the interest of other parties vs our own if someone outside decided to fund our government.  Although, it is no secret that the US funds my government, as we have such stupid agreements that hurt our development more than theirs, it is called NAFTA.

Easier said than done.  In order to have growth rate, you need to have proper trade balance as well as a diversified economy.  Russia is diversifying its economy, as there are plenty of other information out there regarding it (I started a thread on this subforum about it), but that will take time, years, in order to see the fruit of such efforts.  Right now, Russia has a strong industrial base, second to Germany, as well as a lot of potential thanks to smart people in the country (programmers as well as a growing semiconductor industry), but those alone will not make it rich.  Sad reality is that today, cheap manufacturing and resources makes a country rich, no innovation.  China is very lacking in innovation, so is India, yet they are growing massively, and it is really thanks to a huge work force that is highly underpaid, and lack of regulation, making it easy for industries to indulge in corruption as well as piss poor safety regulations, which saves companies plenty of money, at the expense of endangering the workforce.  Russia also is quite a high corrupt government and people, thus it has similar issues, but the media makes light of a lot of it, so it is becoming harder and harder for officials to actually induldge in corruption without getting into the limelight.  In the end, eventually, corruption will start to fall because of fear of persecution and or losing the job.  But still, a lot of money, a LOT of money is being lost due to corruption of either people themselves or government.  There is something like 20% of GDP lost per year because of business people (private is a huge part of it) that indulge in blackbooking (I was actually told by someone who owns a business in Russia that they do this) in order to avoid certain taxes, and ultimately, 20% is a LOT of money lost because of such acts.  There is also stupid tax laws in some respects that hurt the small businesses, as even though it adds up to $90 a month, that is a lot for small businesses in villages who have to rely on every kopek to survive.

Viktor wrote:Well Russia is diversifying its economy. We have growth in:

- construction industry
- civil aviation industry
- military industry
- electronics industry
- IT industry
- agriculture and food processing industry
- green energy industry
- nuclear industry
- naval industry
- car industry
- machinery industry
- pharmacy industry
- telecommunication industry
etc etc

Every single one is finding its way in todays world with the help of oil and gas money and that is what is important - because those are the things that will in future generate even more income.

Significant part of this equation is high and steady oil and gas prices and huge expand of Russian oil and gas market

Austin wrote:If it is all growing then why are quarterly GDP figures low  

Austin wrote:If they have more money they better save it or spend on Infra , Health Care or Education.

I think they are already spending the best on defence , I am not a great proponent of spending on defence , MIC can be a black hole  look at US MIC.

Austin wrote:Officially growth is low because Europe is in crisis and 50 % of Russia export is to Europe and Russian economy itself didnt do well , ie it didnt grew as was expected.

Spending for Education and Health Care has decreased as military spending has increased

http://www.itar-tass.com/en/g44/2629.html

Austin wrote:Officially growth is low because Europe is in crisis and 50 % of Russia export is to Europe and Russian economy itself didnt do well , ie it didnt grew as was expected.

Spending for Education and Health Care has decreased as military spending has increased

http://www.itar-tass.com/en/g44/2629.html

sepheronx wrote:You mentioned this before on MP.net, and it was mentioned that even though spending for military is up, education and health is also up, just not as much.  As well, it is now provincial and territorial control rather than federal, so the spending is dealt by those government authorities.  Andy_UA mentioned it.

Weren't you the one who posted the article about billions being poured into infrastructure development that Putin promised?  Something like 32B?  Kinda odd you would ask the question when you provided an answer to your own question earlier.

Mr Anderson compared Russia with China in terms of infrastructure positioning. He said it is incorrect to compare Russian and Chinese infrastructure development directly. Russian total investments account for 21–22% of GDP, close to the global average, while China is the global outlier, with total investment of around 40% of GDP.

2.6% growth is still growth.  Inflation is lower this year as well than it was last year, which is good too.  Inflation though is still high.

If you are interested in knowing about technological development in Russia, please go to either both of these sites:

http://marchmontnews.com/ (all in english)

and

http://sdelanounas.ru/ (ignore the blog points, cause a lot of them are personal views not actual facts.  I would rather just concentrate what is posted by Rosstats and what not).

Biggest thing to hit Russia recently in the past years is Technoparks.  It is starting to appear that technoparks are hitting almost every major and even non-major cities through Russia, in all regions.  Saratov, Daegestan, Tomsk, Irkutsk, Sarov (Nihzniy Novgorod), etc.  With the most infamous of them all, Skolkovo in Moscow which is a technopark but better classified as an inograd due to it being centeralized and being its own area outside of Moscow.

Technoparks are technically set locations that have infrastructure that is either (usually) government built and or private/JV, and is considered a tax safe haven for businesses.  They get the proper energy, as well as infrastructure to run their R&D facilities.  These areas are more or less incubators for Reasearch and development centres for major industries in and outside of Russia, with benifits like I mentioned, Tax safety as well as proper access to logistics and infrastructure.  Very important for development, and these will be the deciding factors for huge portions of Russian economy and its development.

The next step, is to solve some major issues that is stunting high tech growth in Russia: The communication between universities, and such facilities and logistics.  In USA, it is very common to have Universities to work along side major industries, to get the high tech development out on the market, while in Russia, Universities act like isolated chambers, where nothing goes out, even after they make breakthroughs.  I remember reading years ago about a Russian university coming up with a new form of hard drives using magnets in order to create significantly more space, have much higher read/write times, and more efficient.  But it really did not reach outside of the university so that gem of technology, is on a shelf collecting dust.  Let us hope they do not do such a move with the recent breakthrough in quantum computing technology.  Cause really, Russia is technically a high tech Giant, it just lacks proper communication and business structure.  I mean, Russia would end up being second country in the world to offer commercial quantum computing.

What about MCST?  The Elbrus line of microprocessors are quite impressive.  Yes, SPARC is outdated and most are moving away from it, but the Elbrus R1000 is a 1GHZ SPARC processor that is quite efficient and effective for what it does, or the MCST Elbrus-2C, which, even though is 500mhz, it is quite efficient and has higher performance than a 2ghz Intel Atom processor.  There is massive potential of Russias semiconductor industry, but due to no real interest from officials and other industries to try to push out the products, many of it is kept away for special purposes (Elbrus-2C used specifically for military as it has 2DSP cores and thus great for radar applications).  But there is a push for apparently a new processor developed by MCST ordered from the Ministry of Industry, and I think it is Elbrus 4S, which would be fantastic, especially when under its own linux kernal environment.

Phew, that was long.  But point I am trying to make is, that there is indeed lots of development going on.  Technoparks do not get a lot of limelight, but they are going to be the massive drive for future development, as well as future growth for MANY regions.   They cover various fields like Skolkovo with its Energy, Pharma and Mechanical R&D, while Dagestan, it will be Agriculture and chemical, etc etc etc.  So there is plenty being done, just it will not bare fruit for many years, as these are projects being developed now, in the works or are completed but only recently opened up with few already working.

Agriculture is going to be major importance for Russia, next to construction, as the world increases its population, people need to eat.  Russia is second to Germany in terms of industrial strength, but Industrial strength can only take your economy so far, especially when you rely on outside sources to purchase your goods and there is already high demand from countries that produce it for cheaper due to cheaper labour (China/India).