October 16 2006, 12:00 p.m. - 1:00 p.m.
(the text below has been cited from the Woodraw Wilson International Center for Scholars website )
Event Summary
At a recent Kennan Institute talk, Vladimir Kvint, a professor at American University's Kogod School of Business, discussed the development of Russia's economy and business environment. He criticized Russia's political elite, saying they have no economic strategy and are creating an uncertain investment climate, while at the same time noting that Russia's economic indicators show growth, a strong ruble, and a positive balance of trade with the United States. He also noted that there was a stark income disparity between the business elite and the general population.
The economic history of Russia reveals much about the current environment, Kvint said. For most of Russia's history, its leaders have had a similar "mentality," saying they valued "the power of the territory," and have been consumed with preventing the disintegration of Russia. There has been a long history of explaining problems as the result of conspiracies. Kvint went on to note that Russia's leaders see their country as the Third Rome, and are part of a very hierarchical social structure in which one's superior is always right.
Kvint also stated that Russia historically has favored the "extensive" model of economic development, which emphasizes the size and breadth of economic enterprises and the quantity of output. Kvint contrasted this to the "intensive" model used in developed countries, which has a highly-educated workforce, and works efficiently to produce greater output with fewer resources.
Russian rulers have attempted to battle corruption since the reign of Tsar Boris Godunov in the 17th century, and corruption remains a crucial problem for Russian business culture and the Russian economy today. Businesses have a difficult time turning a profit when they are forced to pay bribes to officials. Kvint noted that comparisons have been drawn between the corruption in the Russian and Chinese economies, but he criticized these comparisons, saying that China has been successful in eliminating corruption at the highest levels even while tolerating it at the lowest.
Kvint observed that in many cases, it is the competition between national and local interests that is causing problems for Russia. For example, domestic oligarchs are attempting to use their influence to keep Russia out of the WTO, because they fear competition from efficient foreign firms. Domestic oligarchs gained power during the mid-1990s when power devolved from the center to the regions, which, according to Kvint, almost led to the collapse of Russia. Part of Putin's agenda has been to recentralize power in order to prevent this.
A big concern for most observers of Russia is the upcoming presidential elections in 2008. Kvint said he is convinced that President Putin will leave the presidency, but that he will not stop being influential. Predicting what will happen once someone new occupies the position of president is very difficult, he said.
In foreign policy, Kvint said that Russians had been very pro-Western and pro-capitalist in the early 1990s, but mistakes made during the process of privatization and a lack of economic strategy led to a collapse in support for pro-market reforms and the United States. The possibility of regional cooperation among Russia, India, and China was exaggerated, according to Kvint, because the three players had very different interests in the global marketplace and in global politics.
Kvint also stated that Russia historically has favored the "extensive" model of economic development, which emphasizes the size and breadth of economic enterprises and the quantity of output. Kvint contrasted this to the "intensive" model used in developed countries, which has a highly-educated workforce, and works efficiently to produce greater output with fewer resources.
Russian rulers have attempted to battle corruption since the reign of Tsar Boris Godunov in the 17th century, and corruption remains a crucial problem for Russian business culture and the Russian economy today. Businesses have a difficult time turning a profit when they are forced to pay bribes to officials. Kvint noted that comparisons have been drawn between the corruption in the Russian and Chinese economies, but he criticized these comparisons, saying that China has been successful in eliminating corruption at the highest levels even while tolerating it at the lowest.
Kvint observed that in many cases, it is the competition between national and local interests that is causing problems for Russia. For example, domestic oligarchs are attempting to use their influence to keep Russia out of the WTO, because they fear competition from efficient foreign firms. Domestic oligarchs gained power during the mid-1990s when power devolved from the center to the regions, which, according to Kvint, almost led to the collapse of Russia. Part of Putin's agenda has been to recentralize power in order to prevent this.
A big concern for most observers of Russia is the upcoming presidential elections in 2008. Kvint said he is convinced that President Putin will leave the presidency, but that he will not stop being influential. Predicting what will happen once someone new occupies the position of president is very difficult, he said.
In foreign policy, Kvint said that Russians had been very pro-Western and pro-capitalist in the early 1990s, but mistakes made during the process of privatization and a lack of economic strategy led to a collapse in support for pro-market reforms and the United States. The possibility of regional cooperation among Russia, India, and China was exaggerated, according to Kvint, because the three players had very different interests in the global marketplace and in global politics.
Read the full article on the Woodraw Wilson International Center for Scholars website.
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