Russia’s Dual Economy as an Obstacle to Modernization

Wednesday, 23 January 2013, 2:00pm - 3:30pm, IWM library
In this seminar Dr. Inozemtsev will look at the structure of Russia’s economy, which is dominated on the one hand by resource-producing companies and, on the other, by state-owned corporations. This makes, he will argue, a “dual” economy dependent both on commodity prices as well as on the will of ruling political elite. Under such conditions both resource-producing companies and state corpo¬rations become interested in monopolizing their grip on economy and are able to rise prices constantly without any obstacles. Thus the so called inflation in Russia is not a classic one, but rather a result of a constant process of coordinated price hikes sanctioned by the state. This is the reason why entrepreneurs are not interested in making their businesses more effective, and why – if one takes for granted that modernization is aimed at growing efficiency – there is no room for modernization in that country. There is also the problem of “innovation enforcement” in Russia, showing that the very logic of Russia’s economy is hostile to any innovation and/or modernizing process.

This presentation will point out the political and ideological obstacles to Russia’s modernization, arguing that the only exit strategy for Russian political elite may be to execute regular devaluation of the national currency, in order to resume the fading economic growth, while neglecting the tasks of modernization once and again.

Vladislav Inozemtsev is Director of the Centre of Post-Industrial Studies in Moscow and Chairman of the High Council of “Civilian Force” Party; currently he is a Visiting Fellow at the IWM in the framework of the “Russia in Global Dialogue” Fellowship program