- January 28, 2015
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In the latest ranking of economic freedom, which every year is the American Foundation Heritage Foundation, Russia ranked 143rd place, down for the year in three steps.
the freest economy in the world in the new rating was Hong Kong, in second place was back to Singapore, and it suggests that free enterprise is not directly related to the extent of government intervention in market processes. However, in Russia, as usual, a special way.
Lead “Fifth Floor” Michael Smotryaev talks to the director of the Institute for Industrial and Market HSE Andrei Yakovlev.
Download the podcast show “Fifth Floor” here.
MS.: is a number of circumstances, and the drop in oil prices and the general complexity of the Russian economy and the events of the last year, which to some extent undermined the credibility of Russia as a whole. Suggesting that this index – not a universal truth, and the reference point?
AY.: This is a reflection of a certain mood, in this case – in expert community.
MS.: Can you talk about what kind of a one-time action, such as the annexation of the Crimea and the events that followed in the Ukraine, was sufficient that with the growth of the important indicators that form the final assessment of the country, Lower bounds?
AY.: It should be understood that the index reflects the positions of different countries, and changes in Russian occur simultaneously with changes in other countries. Some increase in the number of points that gets Russia on this index if it is slower than in other countries, Russia in this rating will go down, which is what happened this year. I would not connect it directly to the events in the Crimea and Ukraine, because there is no direct political indicators. But in the economic sphere, for example, over the past year, there were quite contradictory trends. On the one hand, the government is trying to improve the economic climate. It was a continuation of the policy announced by Putin back in 2012, during the last presidential campaign, but in parallel – a return authority to initiate criminal cases on tax formulations without the consent of the Internal Revenue Service – clear regression. This affects the behavior of investors, and th is, in turn, on the estimates of experts.
MS.: The site with the rated data broken down according to the parameters that make up the index, and everywhere about Russia written unflattering words. This also applies to corruption, and government involvement and regulatory procedures, and open markets. And it seems to me that in the case of Russia, the economy and politics are linked. Russia’s behavior in the political arena, in addition to the momentary decrease in investor confidence, and has long-term consequences?
AY.: I agree. The problem is – how policy is being implemented in Russia. In addition, for example, the security aspect, there are economic aspects. There is some split consciousness of the Russian political elite. These people at the same time make mutually exclusive things. With one hand, improve the business climate, and other business experts to run the search and seizure of information, and the like. This led to the departure Guriev, the largest federal economic adviser. This nullified at least half of the efforts that the government is taking to improve the business climate. This is a reflection of deep contradictions of the policy, although it is unknown how it recognize people who make and implement decisions.
This creates a high degree of uncertainty in the business, and the same figures on capital outflows, which were published last year, show the mood of investors who think not in terms of decades, but only a few years. The outflow of capital – a very important indicator. Russian tax environment is better than in many countries – and tax rates, free trade is characterized by a good value. But this is combined with the worst indicators of freedom of investment, issues of ownership, where a negative role played by business Evtushenkova, “Bashneft”, very low figures for freedom from corruption. That is, a number of parameters all good, including in comparison with the major economies, and in some settings, all falls through the floor.
MS.: 143 th out of 178, and eight countries have no data. This is not a position where you can show off. And leaders occupy leading positions is not the first year. And Hong Kong, and Singapore pure democracy is absolutely not. Hong Kong is really a special area for the Chinese government carefully monitors. Investors, however, does not prevent it differentiate. CPC, the building of communism, censorship, bans, state security – and on the other hand, Hong Kong, where you can make money for anything without fear. The situation is similar in Singapore, but without communist plaque. So if you want the state, not really sacrificing their ideological values, can create a favorable climate for investors for accelerated development of its own economy. Why it does not work in Russia? After all, China also has territorial claims against its neighbors, and that they do not interfere?
AY.: We have to see that China is going to happen next in the next five to seven years. Ceychas generational change leaders, came a new leader, and this can have different effects. He seems very ambitious, and some changes in domestic policy is already happening. There is a model of liberal democracy, which developed countries last 25-30 years have tried to carry the rest of the world. But the success stories of the last decade were alternative models – the same China, Hong Kong and Singapore, caused a little bit earlier, but also other models. This is such a liberal-conservative reorganization, when economic liberalization was not accompanied by political. The Russian political elite, the question naturally arises whether such approaches are applicable to Russia. Unfortunately, the attempt to introduce liberal democracy in the 90s did not take place. Given the mood of the population, support the Crimea, and the rest, I have serious doubts that an other attempt to build such a model in the coming years can have any success.
MS.: We have such attempts in the near future and do not shine. Why then, in the amplification of state power and features, such as shoot corrupt, after so many years of oil prosperity, having financial resources why it was not directed to those areas of the economy where needed.
AY.: In short, before the crisis of 2008-2009, we built a model of the type of state capitalism in South Korea 1960-1970′s, with the dominance of the military elite in politics, with a high degree of corruption, but development-oriented. Stories about Sochi, Vladivostok, state corporations not only about how to transfer money to his comrades, but also to create something. But the crisis of 2008-2009 showed that today, this model does not work, as 50 years ago. The world has become more dynamic and uncertain. And they went to try to find a new model. Another attempt to break down in 2011, not only on political protests in the country, but also in the Arab Spring.
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