Published July 16th, 2009 by Future Atlas
Russia: More Sick Than BRIC
This week David Ignatius argued in the Washington Post that Russia is clearly declining, “a developing country trying to pretend that it is a developed one,” combining the worst aspects of free markets and command economies.
He notes that a Russian editor does not foresee true economic modernization until the economy is run by people with no memory of the Soviet system, more than a decade from now.
Ignatius cites these factors:
- Russian industrial production declined between 1994 and 2008, while “China’s grew fourfold and India’s more than doubled.”
- Russian industrial exports totaled only $32 billion last year, only 2% of the $1.4 trillion in industrial exports from the other three BRIC countries.
- While Russia is relying on energy exports, “its oil and gas production is stagnating because of corruption, underinvestment and mismanagement,” American energy consultant J. Robinson West tells him. Gazprom spends only a third of what other major oil companies spend on R&D.
- Energy and raw materials cost three to four times more in Russia than in China, and road-building costs three times more than it does in Western Europe.
Unless Russia realizes it is not rich and adopts real modernization policies, it will “end up in a mess like Venezuela, Nigeria or Angola,” a Russian economist tells him.
These economic issues are multiplied by Russia’s dire demography.
The upshot is that Russia is unlikely to be a dangerous challenger — though wounded pride and sense of grievance can still make a country dangerous.