Russia moves up in the World Economic Forum's global competitiveness index

30 october 2018 | Gudok

Ksenia Bannikova, head of the Department for Foreign Economic Activity of the Analytical Center gave an in-depth interview to a correspondent of the Gudok Magazine on Russia moving up in the World Economic Forum's global competitiveness index.

Ksenia Bannikova
Ksenia Bannikova
Department for Foreign Economic Activity

In the global competitiveness index that the World Economic Forum published for 2018 Russia was rated 43rd out of 140 while last year it was rated 45th out of 135. Which sectors of the economy do you believe have allowed Russia to move up in this ranking?

According to the Global Competitiveness Index of the World Economic Forum Russia is rated 43rd out of 140. In 2018, the methodology used by the Global Economic Forum has changed since last year and with the reassessed ranking for 2017 taken into account Russia moved up two spots in the ranking.

According to the WEF, Russia has improved its competitiveness as a country as a result of more consistent macroeconomic performance and specifically as a result of much lower inflation compared to 2014-2016 and relatively low sovereign debt.

Russia has been performing the best on such metrics as the global market share (6th place), the development and use of information and communications technologies and specifically the development of mobile communications and internet access (25th place), which has resulted, among other things, from the active efforts to digitize the country's economy as well as engagement with global infrastructure projects, including the One Belt One Road project as well as better opportunities for innovation (36th place), which has resulted, among other things, from improved quality of research organizations, more spending on R&D and more research publications.

Have the economic sanctions had an effect on the index?

It's too early to talk about the impact of the new sanctions against Russia that were introduced in 2018 on the country's position in the World Economic Forum's global competitiveness index. It, however, has to be acknowledged that these sanctions, which target specific industries (such as major industrial sectors like machine engineering and metal production), may have an impact on Russia's competitiveness, for example, with regards to the development of infrastructure and the country's share in the global market (both are metrics that are included in the ranking). However, this impact is bound to be offset as Russia gets engaged with more and more infrastructure projects with Asian and Persian Gulf countries, some of which I'm going to say more about later.

Which of the big transport infrastructure projects do you believe improved Russia's positions and will help us maintain or improve them in the future?

First of all it is the One Belt One Road project which back in 2015 began to transform into a new project called the Digital Silk Road. This project combines both transport and the development of digital technologies and telecommunications. Thus, the Digital Silk Road project envisions the creation of such major telecommunications corridors (whose goal is to expand international communications for the transfer of digital and voice data) as China-Mongolia- Russia and the new Eurasian overland corridor that is going to go through such countries as Kazakhstan, Russia and Belarus.

Mention should also be made of the North-South International Transport Corridor that is being created at the moment, here the goal is to expand transport cooperation between Russia and the countries of the Caspian Basin, the Persian Gulf countries and South Asian countries. The transport corridor project anticipates increased shipments between India, Iran, Azerbaijan and Russia.

How is Russia doing in other global ratings, for example those compiled by the World Bank and how important is the WEF rating for the country's economic development?

Well, it is worth noting Russia's place in the World Bank's Ease of Doing Business ranking. Thus while back in 2017 (Ease of Doing Business 2017) Russia was ranked 40th, this year we've gone up to the 35th place out of 190 (up5 spots). Significant improvements compared to other countries can be seen in such areas as connection to electricity grids (Russia went from the 30th to the 10th place here), getting credit (from the 44th to the 29th place), trading across borders (the 100th place this year as opposed to the 140th place the year before).

To some extent these changes (especially on the last two counts) had to do with the efforts to promote exports of non-raw materials non-energy products and services that Russia has been engaging in since 2016. These efforts also include reducing administrative barriers for exporters and creating new financial products for them.

Source: Gudok Magazine