Dean of the Moscow State University: Now comes the clinical death of the Russian economy

Doctor of Economics, Dean of the Faculty of Economics of Moscow State University University Alexander Auzan said that the situation in which the Russian economy is how to revive and what to bet in the future.

“Now comes the clinical death of the economy. This is a condition where the heart stops economic - investment engine. The slowdown comes from 2011, it is not a surprise to economists. The sanctions fall in oil prices will only exacerbate and accelerate what would have happened anyway,” - Site Auzan said Harvard Business Review.

“Russia 50 years, since 1965, with the opening Samotlor - Russia’s largest oil field - struggled with the desire to retire. The field was discovered at a time when Kosygin tried to pursue economic reforms. And the government has decided to god with them, with reforms where there is oil. Since the decision was repeatedly reproduced by different authorities. Seven or eight years ago, the economists working on the strategy in 2020, said in unison: “Raw care model, domestic demand is not enough, so you need to change the model, otherwise there will be irreversible.” This is irreversible and there is “- said the economist.

According Auzan, there are two ways to revive the Russian economy.

The first - to carry out structural reforms to create an attractive investment climate, and then start working magnet attracting private investment, domestic and foreign.

“This is a course on which insist the government and the Central Bank of Russia. I believe that it should be done, but the effect will not be: in order to investment flowed, enough to improve the investment climate. Because there is a war - cold, economic, which periodically erupts and how hot is not in the civil war in Ukraine - it’s much broader and more serious. This fact is in sharp contrast to the liberal economic policy of the government. If the sanctions regime, which may be foreign investment ?! Plus the war - is always a risk to domestic investment: it is not clear what to expect and what will be, “- says an economist.

The second method of treating the economy - public investment stuffing.

“Unfortunately, they are much less than many seem to, because we do not have to consider the reserves of the National Bank as a source of investments: they only need to maintain macroeconomic stability. Today, government investment can make to different estimates from seven to nine trillion rubles, and this not much. Before the crisis, annual investment in Russia was 15 trillion, so that current resources will not be enough for a year. In addition, public investment - is a kind of electric stimulation of the heart. It comes knocking, but then again can stop.

If you do a massive stuffing of public investment, will certainly want to enter foreign exchange restrictions on the perimeter, or the money will disappear - they quickly and quietly for us to absorb the world market. Enter these restrictions is easier than stopping cold war.

13 June 2015

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