By The Gaidar Forum is an institutional platform for discussing the key challenges facing the world today. This year, the forum focused on global post-crisis development, macroeconomic risks and the possibility of another recession, the role of infrastructure in ensuring sustainable development, the outlook for energy markets and contradictions of resource-based economies, social stability and an effective healthcare system.
Dmitry Medvedev's opening remarks:
Good afternoon, colleagues, ladies and gentlemen. Winter has returned to Russia. It's not as severe as in the United States, but at least the country looks like Russia again.
I'd like to express my gratitude to the forum organisers for inviting me to address you. I am particularly pleased to take part in this discussion because it is the fifth time that the forum is being held. Although this is not a long time, I would like to congratulate you on this anniversary nevertheless.
Dmitry Medvedev: "Russia looks stable against the troubled global economic backdrop. Our economy is not growing fast, but it is growing. We have a balanced budget, small sovereign debt and a low unemployment level, and we are monitoring inflation."
Over its short history, the forum has become a respected discussion platform and many leading economists and representatives of the business community and international organisations have made it a tradition to begin the new year at the Gaidar Forum in Moscow.
Today you have started discussing the issues on the modern economic agenda, our outlook, global challenges and problems and ways to deal with them. The majority of countries that have been hit by the global crisis are now on their way to resolving their economic problems. Their efforts to improve their financial systems, to promote global trade and to maintain investment efforts have brought positive results. This is true, and we can see this from changes of the Gaidar Forum's discussion agenda over the past few years. Several years ago - after 2008, of course - it mostly discussed ways to revive the global economy, but today we are focused on finding points of sustainable growth.
This is positive change - both in the forum's agenda and in the global economy - but we are now facing a challenging task of sustaining the growth trajectory. No government and no country has a ready formula. There are no standard models or patterns for drawing up a post-crisis world order and dynamic development. But as Mr Mau has said, economic crises create new opportunities for growth, change the traditional directions of global growth and the established (though not always fair) geopolitical and geo-economic balance of forces, and also promote the rise of new growth leaders, production technology and entire industries. In this sense, it can be said that the world is in a new period of creative destruction, a phenomenon that, according to Joseph Schumpeter, creates the conditions for a new stage of economic development.
During the Sochi forum last September, I said that the time for simple solutions is over. We are facing a major intellectual challenge, and the solution to it will determine our post-crisis development and Russia's role and place in the global world.
On the face of it, Russia looks stable against the troubled global economic backdrop, as many have noted. Our economy is not growing fast, but it is growing. We have a balanced budget, small sovereign debt and a low unemployment level, and we are monitoring inflation.
However, as everyone will agree, our development pace is cause for concern. In 2010-2012, the quarterly growth rate was nearly 4.5%, but in the second and third quarters of 2013 it slumped to 1.2%, although the average annual oil price was one of the highest ever.
Of course, there are external reasons for this, such as the economic recession of our largest trade partner, the European Union, but this is not the main point. The current economic slowdown is rooted above all in our internal development problems, in the structural and institutional limitations that prevent us from advancing to a fundamentally new stage of development.
On the one hand, we have reached a high level of prosperity by Russian standards, but on the other hand, we are approaching the time when we will have to limit the price of our workforce, which is very considerable. At the same time, we are also limited by the inadequate development of our institutions. This can affect our competition with the developed economies, which have skilled personnel and export innovative technology, as well as with low-income economies with a low pay and cheap industrial production. This is the middle-income trap, described by Barry Eichengreen, when economic growth slowdowns occur at certain mean per capita GDP.
More to be posted soon...
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