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 | How Can Russia Compete? | | 03.10.2003 | | Russia Meeting 2003 | Augusto Lopez-Claros, Chief Economist and Director, Global Competitiveness Programme, World Economic Forum, opened the session with a few words of explanation on the broader concept of competitiveness as defined in The Global Competitiveness Report. Data collection for the report takes the form of a survey in 102 countries involving more than 10,000 CEOs who are asked 200 questions related to what represents impediments to growth. Answers are sought in the form of a rating from one to seven and the results are then used to create a quantifiable index. Andrei Illarionov, Adviser to the President; President's Personal Representative to the G-8, Russian Federation, agreed in general with the statements made about Russia’s performance in the Report: the country performs well in terms of macroeconomics but the rankings for institutions and technology are low. Or as Illarionov put it himself, "High for macroeconomics, so so for ICT, but dismal and worsening when it came to institutions."
Echoing Illarionov’s comments, Irina Khakamada, Deputy Chairman of the State Duma, Russian Federation, elaborated upon the serious inadequacies of Russia’s institutional framework. She bemoaned the weakness of those organizations representing the interests of the middle classes. Russia lacks a tradition in the shaping of such institutions. Russian entrepreneurs have never been taught to uphold their interests in a court of law. Bribery is their habitual first recourse. Institutions established under the aegis of regional government are viewed simply as yet another administrative resource for the benefit of regional officials. There is little understanding of the need for dialogue between business and local government and no established tradition of constructive lobbying. "It is time for people to learn to lobby in a civilized way," said Khakamada. She continued: "All reforms were imposed from above - society at large was never involved - in the West, society hires the government; in Russia, no government has ever been hired by society."
Illarionov also identified the Russian "mindset" as a serious impediment to growth and competitiveness and suggested some additional questions for the survey relating to "the state of ideas in society, especially among government officials." He went on to elaborate, saying that "one of the most serious problems in Russia today is rooted in the minds of those who prefer to distribute and redistribute wealth, rather than create it."
Sergio Giacoletto, Executive Vice-President, Europe, Middle East and Africa, Oracle Corporation, Switzerland, presented some striking statistics: Russia’s total IT industry is currently worth between 4.5 and 5.5 million dollars, the same as Austria’s. The Russian software market is valued at US$ 300-400 million as compared to US$ 15 billion in Germany. Put another way, Russia currently spends just US$ 30 per year per capita on IT, compared to US$ 800 in the European union. This illustrates the enormous potential that exists in Russia for the IT sector. The basic IT infrastructure exists but the country must modernize and improve its productivity to realize this potential. Regions with progressive governors could provide sites for what Giacoletto described as "technological parks" emulating Silicon Valley.
Anna Belova, Deputy Minister of Railway Transport of the Russian Federation, made the point that a National Council on Competitiveness has recently been set up that is comprised of business leaders, members of the Duma and government officials. Such an inclusive dialogue should hopefully go some way to improve Russian competitiveness.
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Russia Meeting 2003 |
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