Half a decade on – Reflection on Russia’s little-known successes

In 2016, as the new World Bank Senior Economist for Russia, I started writing about Russian economic issues. Now is the time to say goodbye. As a professional analyst of the Russian economy over the past 5 years, I can sum up my experience in one sentence: Things in Russia are never as bad as they seem, but they are never as good as they are. ‘neither can they.

In the last 6 years alone, Russia has managed to achieve remarkable macro-stability. Inflation, which was in double digits, is now in manageable territory. The country is less dependent on oil and gas today than it was 5 years ago. These are not small achievements. On the other hand, as I have written – and many others have written – slowing potential growth holds back progress. But these problems are well known. In this last column, I would like to recognize three lesser– well-known Russian development successes that often go under the radar screen.

The first is the increase in life expectancy in Russia – from 65.3 years in 2000 to 72.7 years in 2018. This is mainly due to a decrease in the number of deaths caused by noncommunicable diseases (that is, that is, diseases that are not infectious or contagious such as heart disease). strokes and strokes) and external causes (such as traffic accidents and homicides). Adult and especially child mortality rates have also declined since the 2000s. Even more recently, infant mortality declined 36 percent from 2011 to 2017 and maternal mortality declined 49 percent over the past decade. same period. As the pandemic engulfs us all, it is worth taking a longer-term perspective to recognize the legitimate improvements in life expectancy in Russia.

Second, Russia’s progress in financial literacy. Russia is no stranger to financial crises. While governments everywhere and everywhere have the primary responsibility to prevent and manage them, one important factor that is only recognized is the need for individuals to be better informed about making financial decisions.

As an early adopter, Russia recognized the benefits of financial literacy and made remarkable strides in increasing literacy for both adults and schoolchildren. This is due to both the top-down efforts of the Ministry of Finance and the Central Bank of Russia, and the bottom-up efforts, which have included the use of schools, libraries and other community platforms to reach a large segment. and diverse population. Indeed, Russia was ranked first out of 132 countries in the Child & Youth Finance International Global Inclusion Awards in 2016. It also ranks in the top 10 G-20 countries for financial literacy.

Third, Russia’s progress in improving its tax administration. The history of taxes in Russia dates back to medieval times, when Prince Oleg imposed the first known “homage” to dependent tribes. Catherine the Great is known for saying “Taxes for a government are the same as sails for a ship. They are used to bring it more quickly to a port without falling under their burden ”.

Building on the lessons learned over centuries, Russia is today at the global forefront of real-time operating technology and source data and has successfully shifted from a culture of escape tax compliance. Tax non-compliance, especially with regard to value-added taxes, for example, has gone from double digits a few years ago to less than 1% today, with minimal human involvement. Russia’s success in modernizing its tax services is not as well known as it should be, but global interest is growing slowly but steadily.

Certainly, these achievements are not the end of the road. Regarding life expectancy, the life expectancy of men is almost 10 years behind the life expectancy of women, and this gap must be reduced. Financial literacy, consumer protection, and privacy and data protection guarantees must keep pace as cryptocurrencies and digital fraud become more common. And the gains in tax administration can be wiped out without complementary tax policies. Yet these little-known successes deserve more recognition, both inside and outside Russia.

One of the more unusual analyzes undertaken by the World Bank has been to determine how rich Russia is. We have found that Russia’s wealth does not lie in its abundant natural resources (as important as they are) or in its physical infrastructure (as powerful as some of them may be). On the contrary, Russia’s wealth comes from the ingenuity and creativity of its people. Indeed, almost half of all of Russia’s wealth comes from its human capital – the cumulative experience, knowledge and skills of Russians. Only then is it followed by physical capital (around one-third) and natural capital (around one-fifth). For the anecdote too, I can reaffirm that this is the case. In my interactions with students from various universities and high schools, I have witnessed their keen commitment, their pointed and pointed questions, their sense of humor and, above all, a passion for improving their country. I am indeed privileged to have played a small part in this trip.

PS: There is another area that I would like to draw your attention to, and that is climate change. While politics is what it is, science and economics are undeniable. In Russia, besides federal initiatives, it is encouraging to see positive signs emerging within Russian regions, such as Sakhalin and Murmansk, which are struggling to become carbon-free zones. As I wrote earlier, the only mistake not to make about Russia is to treat it as a single unit of analysis. It would be like ignoring that a Matryoshka doll is not empty! Indeed, Russian regions may be at the forefront of the fight against climate change and we might have a (pleasant) surprise – so this space is worth watching.

First appeared in Russian on Kommersant.ru via the World Bank

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