Russia’s place in the global economy: economic growth, scale, and the contours of economic policy

The paper sequentially examines the necessity of economic growth, possible policy targets (target growth rates), constraints affecting the choice of public policy, and the principles and contours of economic policy itself.

The first section discusses the necessity and inevitability of economic growth for Russia. The question of whether economic growth—measured quantitatively through changes in gross domestic product—is needed was actively debated worldwide during the 1990s. Most developed countries, with the notable exception of the United States, broadly accepted the idea that living standards and quality of life could continue to improve even in the absence of significant economic growth in quantitative terms. However, halting global growth without denying all people the right to a similarly decent standard of living is impossible. Moreover, aspirations for global or regional leadership, as well as basic considerations of national security, make economic growth an indispensable objective of state policy.

The second section examines the growth parameters required to achieve these objectives. We argue that an average annual economic growth rate of 4–5 percent should be adopted as a strategic target. Such a rate would allow Russia at least to maintain its position in the global economy and, as international experience demonstrates, can be achieved without a substantial acceleration of inflation.

The third section reviews a number of challenges, structural features, and constraints affecting Russian economic policy. We focus only on those issues that are critical for the subsequent discussion: the crisis of trust, instability of policy priorities, the substitution of competitive market conditions with promises and commitments, insufficient confidence in systemic policy instruments, challenges posed by platform-based business structures, and the imbalance in favor of the financial sector. Recognizing these problems and constraints is a necessary prerequisite for designing effective measures to address them.

The fourth section outlines ten principles, or directions, of economic policy. The first five relate to the choice of priorities: balancing growth and inflation, increasing attention to the depth of resource processing and value addition, concentrating priorities around a core group of industries and a “safety belt” of supporting sectors, targeting global markets, and stimulating growth across the entire economy. The remaining principles concern approaches to governance: treating traditional values as competitive advantages, combining planning, digitalization, and market freedom, emphasizing systemic solutions and self-selection mechanisms, encouraging freedom to experiment, and fostering initiative.