Russia needs new environment and socio-oriented economic model

26 february 2015

The presentation of the annual Report on human development in Russia "Human development under economic instability conditions" took place at the Analytical Center. Within one and a half decades the report was under the Program of development of the UN, and since 2014 its preparation and the edition is organized by the Analytical Center.

In his opening remarks, Konstantin Noskov, the Head of the Analytical Center thanked authors of the Report and noted that it addresses the main value - the development of the world in terms of human development. "Preparation and publication of the report will be one of priority areas of activity for the Analytical Center of in subsequent years", Mr. Noskov said. In response, Natalia Voronkova, the project manager of UNDP, noted, that the latest, 16th report, prepared by the UNDP, was presented at the Analytical Center. "We give it in good hands", the expert said.

The Report was edited by Leonid Grigoriev, the Chief Adviser to the Head of the Analytical Center, and Sergei Bobylev, the Professor of Environmental Economics of the Economics Faculty of the Lomonosov Moscow State University (MSU). Moderating the event, Leonid Grigoriev emphasized that the context of economic crisis in Russia makes this report unique because it was prepared in 2014. "In fact, we have recorded pre-crisis situation, the cross-section of the social situation in the country before the recession", said the expert.

Authors also spoke at the presentation. Sergei Bobylev described in detail the concept of sustainable development: "It is generally accepted that sustainable development is determined by the growth of GDP, but the stability is impossible without social and environmental quality growth. New approaches to development are being actively developed in the world, where fundamental human capacities and the depletion of natural resources are fundamental". The Professor presented the Human Development Index, a kind of "antiGDP", based on these principles. According to the index, the first position from in terms of human development capabilities is occupied by Norway, Australia is on the second, the third position is occupied by the United States. Russia is on the 55th position, and here we lag behind Belarus and Montenegro. "The biggest threat to stability is focus on GDP growth. We need a new economic model”, said Mr. Bobylev. “In recent years, the world has gone the other way, which is characterized primarily by a green economy". However, first steps in this direction have already been made in Russia: in July 2014, the Federal Law "On Amendments to the Federal Law "On Environmental Protection" and some legislative acts of the Russian Federation" was adopted, which established a new concept of development of the country, which is closer to a European one, according to the expert.

Liliya Ovcharova, the Director of the Independent Institute for Social Policy, professor at the Higher School of Economics (HSE), talked about the income of Russian families. According to her calculations, the household sector is quite rich now, people can invest not only in survive, but also in human development, but incomes fall as a result of the crisis, and systemic problems in this area can be observed. One of the most important problems is that Russia is among ten countries with the highest inequality, the entrepreneurial activity is not high that is not conducive to economic development. Russia has tax instruments to change the situation (the establishment of a wealth tax) and development tools. What are these tools? It is necessary to adjust consumption to the principle "the rich pay for themselves, the government supports the middle class and pays for the poor", according to the expert. Now most affluent segments of the population are mainly financed. At the same time people have very low beliefe in financial institutions that reduces the possibility of investing in the economy. There is also no sufficient conditions for business development. To establish the partnership, the government should negotiate with the population, especially in the field of housing, education and healthcare.

Alexander Kurdin, the Head of the Department for Strategic Studies in Energy of the Analytical Center spoke about the relationship between political institutions, economic development and human capital. "Resource" economies traditionally show little investments in human capital", he said.

"Education is a key component of human development, reduce social tensions, economic growth and quality of life of the individual in the modern world", said Mark Agranovich, the Head of the Center for Monitoring and Statistics in Education of the Federal Institute for Educational Development. He noted that despite the high level of education of the Russians (the 1st place in the world for secondary education and the 10th for higher), it gives a much smaller economic impact than in other countries. "The fact is, our education is of a very poor quality, which is confirmed by numerous studies”, Mr. Agranovich said. “It does not meet demands of the outside by the content, quality and structure."

In the housing sector the situation is not better. "If the the cost of housing and communal services is high, so, there is not enough resources for human development", considers Victoria Gimadi, the Head of Department for Fuel and Energy Sector of the Analytical Center. The cost of housing services per person is growing not due to increased consumption of services, the burden on low-income households is high and is not going to decrease". Tariffs in any case should not be increased, because incomes are reduced, and Russia needs to move to target methods to support the low-income citizens, according to the expert.

Alla Salmina, the research scientist of the Laboratory of comparative studies of the mass consciousness of the Expert Institute of the Higher School of Economics talked about the extremely acute problem of inequality. "Inequality is not just high, it is excessive, that is plays the role of disincentives in the economy. It is dangerous, as it can lead to negative social consequences that are an impediment to economic growth, such as lost productivity, increased morbidity, suicide and crime. In 1913 the 54% of the population suffered from effects of excessive inequality, these were the Russians with incomes below three subsistence minimums, including teachers and doctors that are directly relevant to the development of human capital", said the expert.

Speaking about the the climate change impact on the economy, Igor Makarov, the associate professor of the Department of World Economy of the Faculty of World Economy and International Affairs of the Higher School of Economics, said that, when planning the development of human potential, it is necessary to consider that the climate in the West and the South of Russia will be drier, and in the North and East it will be warmer, in the not too distant future. The south of the Far East, some regions of Siberia and the Southern Federal District, as well as the Russian Arctic are most susceptible to the climate change. To counter possible threat, the expert community should prepare a full picture of it on the regional level.