BRICS Business Magazine English Issue #1(25) 2020
For a long time, Russia was a country of extensive development. The almost endless space fed us and forgave us our many mistakes, but it also weaned many off from systematic improvements in productivity, thrift and even environmental friendliness. At a time when the whole world is transitioning to a new technological paradigm, yesterday's competitive advantage can turn into a stone around our neck. The mentality of the entire country cannot change overnight, of course, but those eternally restless people who want to invent, fix or improve something, which we call entrepreneurs, can achieve it. However, they will not be able to do it all by themselves.
Our problems are not only in the lack of efficiency and openness to new ideas. A significant share of the Russian economy is concentrated in large companies, and they, in turn, are concentrated predominantly in the capital. As a result, Moscow and the region devour the lion's share of all investments in the country, and the enormous expanse of Russia is gravitating towards this central point. And this current state of affairs is, in fact, a long-term trend that cements the existing inequality between regions. Another way to look at the situation is through demography. The majority of regions and republics of the Russian Federation suffer from a population outflow. In addition to Moscow and St. Petersburg, only Novosibirsk has managed to establish growth through educational migration, and the distribution of young people is in many ways a measurement of success.
The asymmetry in the development of the regions is terrible not by the discrepancy of the gap between the champions and the outsiders, which are supported by the budget, it is terrible for those in the middle. These are the regions in which nothing happens. They have no obvious direction to set course, they have no competitive advantages in the form of minerals or megacities. They require institutional progress and political support, and they need incentives to develop their large cities. Ideally, they need targeted assistance. In order to overcome these and other barriers ('Moscow syndrome', demographic decline, falling income of the population, federal aid that does not lead to growth, and the sustainability of the current status quo), the system must become more involved. There must be more joined-up thinking and action.
One possible way out, which implies moving rapidly towards a new technological paradigm and the active involvement of business, is to create multiple points of growth. We have only one Skolkovo, but a country as large as Russia needs dozens, if not hundreds of clusters of this kind (not only in Moscow and St. Petersburg). A high concentration of talented people supported by investment always improves the situation in a region. By and large, finding and connecting talents through the creation of such projects is a systemically important area that deserves the attention and investment from both large companies and the government.
One of the biggest questions of the digital era is whether the fruits of the technological development will help to solve the world’s biggest socio-economic problem – the one of unacceptable inequality of distribution of wealth. Or, on contrary, will they lead to a new version of Marxian gloomy prophecy of “rich get richer, and the poor get poorer”? The problem became to be known in late 1990s as the ‘digital divide’, the disparity in economics and social opportunities created by the lack of access to modern technology by certain social groups, regions or nations.
Talking about the achievements of the Russian nanoindustry, the head of RUSNANO, Anatoly Chubais, likes to build his speech around the formula ‘previously there was no, but now there is’. He claims that the industry has met the expectations, and RUSNANO itself has been turned into a self-financing tool for the reproduction of innovations, capable of doubling the number of new high-tech enterprises about once every 10 years.Innovations
AS HE ENDEAVOURS TO BUILD A MOST EXCEPTIONAL AND EFFICIENT COMPANY, HEAD OF PHOSAGRO ANDREY GURYEV HAS COMPLETE FAITH IN RUSSIA'S BRIGHT FUTURE AS AN AGRICULTURAL SUPERPOWER THAT WILL FEED THE ENTIRE WORLD WITH WHOLEFOOD. ON HIS PART, HE IS KEEN TO GIVE EVERY FRUIT OF THE EARTH THE NUTRITION IT NEEDS.
Digital transformation is a global megatrend that Russia takes part in along with other leading countries. Enterprises of Rostec state corporation are leaders in a number of priority breakthrough areas. Among them are the digitalization of urban economy, transportation, ‘digital factories’, and cyber threat protection systems.
While the world economic growth is gradually slowing down, new emerging markets evolve on the map, Africa is one of the fastest growing spots representing unprecedented number of business opportunities. As for now six of 10 fastest growing economies are African countries with Gnana, Ethiopia and Côte d’Ivoire being the leading performers; the continent’s average growth rate is estimated at 3.2% comparing with world’s 3% this year, and according to the IMF forecasts, Africa average growth rate will continue rising up to 4.2% by 2024.
Africa has seen a bevy of political events in recent months. After the deterioration of the security situation in the Sahel, as well as the forced departures of historical leaders from Algeria and Sudan via the streets, where will the political risks manifest in the second half of the year? Using its quantitative political risk model, Coface intends to identify – beyond the pace dictated by current events – recent political risk trends and thus the countries to be monitored.
Numerous forces are changing the labour market dramatically. In this fast-paced ever-changing environment self-employment and gig economy are fast on the rise, meaning that having a successful entrepreneurial workforce will make for a more economically stable society. Yet, there is still a vast disparity between Western powers and the developing world. The 2018 Global Entrepreneurship Index (GEI) ranked the USA and UK as 1st and 4th, respectfully, whereas the BRICS countries ranked below 40, with Brazil at the bottom (98th).Opinion