kvs wrote:Karl Haushofer wrote:medo wrote:
This is exactly what I said for some time ago. Russia will become extremely powerful concurent for the West in the international market. They produce their products now with the same high quality as the west with similarly economically and ecologically effective industry, but Russia not only have cheaper currency, but also far lower taxes and debts to pay. EU have large debts and they simply could not lower the taxes, actually they are increasing taxes, that they could pay interests for public debts and to pay public sector.
There are a few reasons why the GDP/capita in Russia is lower than in the West. One of them is that the Russian economy and industries are not as well developed and efficient than their Western counterparts. So I think the highlighted part of your post is not correct. Russia is not yet on par with the West in this regard.
You have no clue what you are talking about. Your so called efficiency is nothing of the sort. This bogus metric is obtained by dividing
the GDP by the active population and called "efficiency". Total, ludicrous nonsense. Efficiency is related to, you know, actual production.
So you cannot use the whole GDP which includes the fluff called the "financial industry" and all of the extra territorial economic revenue
you generate thanks to transnationals. You have to use the fraction of the GDP related to domestic production. Manufacturing in
the USA is less than 20% of GDP. So start by comparing apples to apples.
I will give you a counter example that utterly destroys this NATO propaganda BS. Russia can produce six Project 636.3 submarines
for $2 billion dollars. One Japanese Soryu class sub which is no better and in the same category of diesel-electrics goes for $2 billion. Clearly
Russia is way more efficient at producing this high tech product and the exchange rate of the ruble to the dollar simply cannot explain
a factor of six difference in the price.
Haushofer has nothing but valid points.
You bring up the Defence Industry, which is an industry in which Russia is for the most part, cutting-edge and in fact more competitive than any Western country in, especially with the current rouble devaluation.
And you know what, if all Russian industries were like Russia's military one - then Russia might well be one of the most developed, richest countries in the world. But they're not, and it's not.
Let's go over some of them:
1). Textiles/Garments/Leather - neither Europe's quality, nor Asia's cheapness; Russia is still trying to find itself here, and it better do so soon as this industrial sector has been slowly dying for the last 20 years. It has some successes, there are definitely a few successful brands and factories here (Lutch, Slavyanka, etc...); but hardly any with any substantial export orders or international recognition - maybe only Bosch. The rest are held back by quality issues, lack of evolution from Soviet-era industrial practises, or lackluster branding and P&R efforts. There is definitely quality to be seen here though, some of the military and camo outfits are good examples.
This sector employs a fair amount of people in Russia, particularly in the Volga and Central provinces, but pay is generally low, facilities often look run-down, the firms are often stuck in the past - it's a big industrial sector where Russia is nowhere close to European standards. Europe's firms in this sector by comparison are far more lean, modern, dynamic and export-orientated.
2). Handicrafts/Masterworks (samovars, wooden carvings, laces, traditional headscarves, pottery, paintings, miniatures, religious icons, tableware, musical instruments, traditional knives, etc..). Russia actually does good here, some real high-quality stuff done by old masters and specialists, knowledge passed on via apprenticeships and family businesses in villages where such crafts have been practiced for centuries.
Problem is - in comparison to Europe's equivalent businesses; Russia hasn't secured much export interest here. This stuff stays in Russia, and this limits expansion and demand. A shame, because there are some real treasures here.
3). Watchmaking, was a huge industry in the Soviet Union, which manufactured millions of watches every year, mostly for export. Several huge factories (2 in Moscow, 1 in St. Petersburg, 1 in Uglich, 1 in Penza, 1 in Chelyabinsk, 1 in Chistopol, others too).
Now? Shadow of its former self; a couple of the surviving factories have massively downsized and are still barely profitable, or were until recently - the one in Chelyabinsk has been downsizing for 20 years and only in the past 2 years has started talking about expansion. Other factories collapsed, and their machinery and premises was divided up among small splinter-firms, that get by using old stocks of Soviet-era mechanism or new ones from China to build some dubious quality-watches.
There are a couple masters in this field too, such as Konstantin Chaykin, that has his own very successful firm making his own ultra-luxury watches of extremely high quality using his own custom-built mechanisms.
However, other than the ultra-luxury sector, there are really only 2-3 or so Russian companies able to compete with Swiss or Japanese watch firms here. One of them is the Petrodvorets Watch Factory, which all but collapsed in the 90s and was all but a ruin until it was revived and turned around completely by a French investor a few years ago. Now it's a very, modern dynamic firm with great prospects and able to compete with some of the lower-end Swiss segment.
In comparison with Europe, this Russian sector still secures many export orders, however the quality is generally worse, and many companies are still struggling. There are some world-famous Russian brands; but mostly they are just reflecting their Soviet-era past and glory; of the new wave we haven't seen a real breakthrough yet. IMO though, it's only a matter of time before Russian watches make a come-back and rejoin the world's leading nations.
4). Metallurgy, Russia is pretty much as competitive here as the Europeans or anyone else; which is why Russian metallurgical products are exported around the world and integrated into the global economy. By and large, no problems here.
5). Power generation and machinery, if we talk about nuclear power - Russia probably has the most competitive industry in the world, it's already taken over 37% of the world market for NPP construction (and rising).
If we're talking about other types of power plants, Russia builds mostly for itself, with the exception of occasional hydroelectric dam contracts. Once again, this limits profitability and expansion; I'm pretty sure US, German and Japanese firms have more export orders than Russia's ones that build thermal, hydroelectric, solar, wind power units and associated equipment.
2 bright points though. Firstly, Russia has many borders with many countries, and a unified electricity network - which allows it to efficiently export electricity to a large amount of neighbours and it makes a brisk trade from doing so - this is something Europe can't do as well.
Secondly, Russia does a roaring trade selling power turbines and other specific equipment, it definitely has some very competitive companies in this field.
Overall it's a mix, but if we factor in nuclear power - Russia definitely has the edge on Europe and everyone else; because it's nuclear export success is so phenomenal. But on everything else; it can stand to improve.
6). Infrastructural development. Russia has infrastructural companies that can develop roads/railways/airports/cosmodromes/ports/highways/etc... problem is, even in their own home market - they regularly lose tenders to European/Turkish/Chinese firms, and them securing export orders is almost unheard of. Perhaps with the exception of Russian Railways - but even they've had a pretty small amount of export success considering the amount of high-level government support, funds and resources that they enjoy.
So yeah, Russia is losing out to Europe here for sure. Hopefully all the new contracts in Russian infrastructure might give them a jump-start.
7). Construction. Much the same as with infrastructure development, only there are more local Russian companies doing it; but still a lack of presence on outside markets. They are competitive only in Russia itself. Don't see any sign of improvement on the horizon.
. Alcohol; huge amount of companies of varying qualities, but almost all of them are geared towards Russian and CIS markets. Compare this to European alcohol corporations, particularly beer producers, and how they've expanded and spread all around the world, their brand recognition, etc...
Even though Russia is basically competitive here, it's success has been limited.
Of course, there are success stories, successful Russian vodka exporters, other high-quality spirits, Baltica brewery (albeit its now owned by Europeans too), etc... but generally, less than there should be. And I don't see much progress on this front.
9). Agriculture, still a huge amount of old Soviet-style collective farms, if not in organization than certainly in methods and equipment, where things are being done as they were 25 years ago. A lot of the land being cultivated, is not cultivated as efficiently as land in Europe is. Agriculture in Russia tends to be more weather dependent than in Europe, there is a greater risk of bad harvests. Infrastructure for storage, transportation and export of grain and cereals is not as developed as in Europe, this leads to higher losses.
This sector has much improved over the last 10 years mind you, and is growing quickly. We were all until recently, eating dairy products from the Baltic states, now we are eating our own; and not only dairy, but grains, meat, fruit & vegetables - it's all rapidly rising in Russia. The government programs, for loans, new equipment, land grants, etc... are all doing their part too. But the infrastructural challenges remain, even with the government focusing on that too.
The greater abundance and lower cost of land should ensure that Russian agriculture will soon become more competitive than its European competitors, which are right now going through a crisis - however we are not there just yet.
10). Financial sector. Well what Russia has here, is basically pretty good. Moscow City, the St. Petersburg stock exchange and so on. The trouble is that what it has is rather small relative to Russia's size and economy, while the Financial Sector is extremely profitable so having a bigger financial sector would really pay off. Countries with a bigger financial sector automatically have quite a boost to their GDP. Per capita, I think almost all European countries have a bigger Financial sector than Russia has.
11). Small and Medium sized Businesses. Again, what Russia has here is not that bad. And again, relative to the Russian economy's total size - this sector is not particularly large. Which is a shame, as again, in developed countries, it tends to account for a huge amount of the GDP. Russia has problems here with excessively high-interest loans, a perception of bureaucratic hurdles and instability (in actual fact its improved significantly, but the perception remains), lower faith in the legal system to secure business rights than it perhaps deserves, and so on.
12). Chemical and Petrochemical production; everything is more or less good here, can't knock it, some of these facilities are the largest or most modern in the world; again this is another sector where Russia is quite competitive, and it shows because its products here are used all around the world.
13). Space services and industry. If it weren't for the fact that Russia has a monopoly on parts of this industry, there really wouldn't be anything that special about many of Russia's companies here. Yes it has a lot of contracts, a lot of partnerships, and a lot of money is being made; but much has been lost too - due to negligence, low quality standards, sub-standard parts, etc...
I suppose this is a sector where Russia wins on default as Europe barely has a space sector, but really, Russia needs to keep reforming it and shaking it up; the Europeans and Americans are moving forth with their own plans and Russia will have to work hard to maintain its market-share in the coming decades.
I could go on and on for hours more, challenges, problems and unfulfilled promises in food processing, tourism, automobile industry, hydrocarbon extraction services, retail, logistics, machinery-tool production, shipbuilding, etc... but I think that you guys get the picture.
Far from a rosy picture, actually.
A mix of the competitive, the non-competitive, and the somewhere in the middle - not that great yet but with a lot of potential.
That's the Russian economy in a nutshell. As you can see, there is plenty of work to be done, and plenty of objective reason, why Russia is poorer than Germany, Japan, France, the US, Canada, Great Britain, Sweden, South Korea, Australia, etc...
Yes, some of it is just spreadsheet magic, financial and currency focus-pocus and whatnot, but most of it is grounded in reality on the ground - Russia has to catch-up and just the fact that its nuclear sector, defence industry, etc... happen to be doing well is not enough.
So please, no more ridiculous chest-beating Russia-***** BS.