Future of Russia: Macroeconomic Scenarios in the Global Context

Abstract

The recent global crisis has “devalued” many pre-crisis forecasts and strategies, including those in Russia. This fostered the redesigning of science, technology and innovation (STI) policy frameworks to adjust the scope and priorities of STI funding and to elaborate a new set of long-term strategic planning documents, in particular, to revise the Russian Long-Term S&T Foresight. Since S&T and broader socio-economic processes are closely interrelated, the new macroeconomic forecasting is a key building block for updating Russian Long-Term S&T Foresight; it is carried out by the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF). The article presents interim results, namely, a set of possible scenarios of global development and their projections for Russia.

The scenarios at the global level are determined by the pace and nature of the economic recovery worldwide, as well as by the opportunities and consequences of technological breakthroughs in the energy sector, which is expected to have the largest impact on development of the world economy. The energy sector transformation is encouraged by new technological solutions, and these can translate into large-scale market transformation with huge economic effect. The content of scenarios at the national level depends on the adaptation of the economy to the changing context of the world markets. Adaptation, in turn, determines the patterns of managing resource rents and foreign investment, as well as positioning in growing markets.

The “inflation technological breakthrough” scenario presupposes the availability of abundant savings worldwide, whose targeted investment could result in the next technological breakthrough. It will help integrate Russia into global production chains. If the “boom” on financial markets does result in technological breakthrough, however, the world will be subjected to high inflation, and the high oil prices will spark the development of non-traditional hydrocarbon fuels (“energy inflation” scenario). There are two options for Russia in this case, each of which has its pros and cons. The first presumes recapitalizing traditional assets. The second relies on building competitive advantage through the development of public-private partnerships, attracting direct portfolio investment, updating scale production and reforming institutions.

Finally, if a recovery from the global crisis is protracted, the best “recipe” is “creative destruction” — eliminating the outdated and inefficient industries while creating opportunities for the development of more advantageous companies that will provide a qualitatively new basis for growth.