Vladimir79 wrote:Problem with that is, the state owns all defense enterprises and small industries have nothing to do with it. It is all part of the state machine. For it to bring FDI, they would need to sell off stocks. For it to be competitive on the global arms market, it has to be of such high quality that it would cost billions to overcome the competition which would be unfeasible given our economic situation.
I don't quite understand. Even if the defense industries may have large amounts of stock which is held by the state, and if sold off for private use, then why would anything change? Russia already operates in the high tech industry. The way you make it sound like, is that your country is backwards, which it is not (develops competitive technology like USA, UK, Germany, France, Japan, China, etc). The defense industry being one of the largest. If Russia decided to privatize it, it would open even more possibilities with various other investments from various other countries and alike.
All that you speak of talks of a closed economy. This is not how the world operates today. Today it is all about comparitive advantage, that which you can make better and/or cheaper than anyone else. This especially applies to the defence sector which sells mostly abroad. The French have sold us production rights to the Catherine thermals, with this we have been able to obtain orders for over a thousand T-90S. Su-30s could not have been sold in many cases without French products installed. Since we have such high orders for it, why should we bother reinventing the wheel when we can buy and produce it for much less with production rights? We now have Catherine thermals and Domacles targetting pods being produced at Ural Optics going on all new tanks and bombers. It is a huge leap in technology and ability for pennies compared to what it would cost to develop it ourselves. Since we have the machines to build it, no one can cut us off. Our security is not threatened.
As far as basic economics, providing everything in your own country decreases quality of life for your citizens since you do not have comparative advantage in everything. The price of your good would be so expensive, few people could afford them. This is why trade has made the West so wealthy.
Not really. After the end of the second world war, USA decided to "lend" a hand in re-development of infrastructure of countries whom where attacked by Germany and are not part of the USSR aftermath. In doing so, Europe and Asia owed a large dept (and still do) to USA, and to which, gave USA such a huge credit rating. And that is what makes one country have a higher GDP then another, credit. If the country has industry and various other systems that makes it worth a lot to loan out, then that country has a higher GDP. It was not necessarily trade that gave USA the advantage, it was the fact that everyone owed USA money, and USA opened American industries around the world. The imports was goods that cost very little, and where still gained through industries which are owned by the USA.
The advantage that Russia has, it has pretty much every known resource in the world, on her land. There is a huge amount of land that is good for agriculture and since there are around (and somewhat above) 1 billion people who starve in this world, food is a commodity that is much needed. But what would make things even better, is the facilities to create new items that can be sold as specialized items to various countries. Yes, cost of food and other gadgets will go up, but that is why you still purchase food and various other commodities from other countries. You can sell high quality beef, chicken, corn, wheat, etc to other countries, and import for your own people. It is like the relationship between USA and Canada here. We sell oil, Beef, natural resources to USA. They sell us: Beef, Technology, and fabricated oil. See what I am getting at (we (Canada) used to have our own fabrication facilities for our Oil, but most of them where sold off to USA. We only have a couple left, and one of them is in Edmonton Alberta).
Edit: Anyway, by the sounds of things, Medvedev sure knows what he is doing. He is being honest (best policy in any job) and is telling the truth. Once the truth gets out their, they know the president is angry, and in doing so, will fix the problems. Russia is a country with over 100M people, vast land with tons of natural resources which are needed on a global scale. There is possibly no way Russia can screw up. This economic downturn is an eye opener and proof that what Russia was doing would not last forever, and they know it. So, they are taking other actions and doing other stuff in order to make sure that 1) this does not happen again and (2) That the GDP will be back at a large growth rate.