Russian Ex-Finance Minister Says Russia's Economy Is Obsolete, ‘Exhausted’ & Has Failed To Transition To A Better, Modern Model

Chairman of the Accounts Chamber of the Russian Federation Alexey Kudrin in St. Petersburg, Russia. © Sputnik  

RT: Russia’s economy is obsolete, ‘exhausted’ & has failed to transition to better, modern model, says ex-finance minister Kudrin 

 Russia is still running an old economic model that has outlived its usefulness, and the country needs to transition to a modern, investment-based economy to stimulate growth, boost exports and have more of an impact worldwide. 

That’s according to Alexey Kudrin, the head of Russia’s Accounts Chamber, the parliamentary body that oversees the country’s finances. Kudrin is also a former deputy prime minister and served as the minister of finance. 

In his opinion, Russia should stop focusing on domestic consumption and turn its focus to exports, while investing at home.  

"We have an old economic model, which has now exhausted itself and will not give us the desired results,” Kudrin told Moscow daily RBK. “The economy does not make any breakthroughs or new goods.” 

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WNU Editor: It is not mentioned in the above article, but Alexey Kudrin's main beef is that Russians and the Russian government have an aversion to debt. Debt, if handled properly, can accelerate economic growth, and IMHO this has hurt the Russian economy. But Russians also know what can happen if debt is not handled properly. The 1990s was a lost decade for Russia because of the economic crisis brought about from having unsustainable levels of debt, and that experience is still remembered by many Russians (this blogger included).

As to exports. the former finance minister does not appreciate the fact that aside from exporting raw materials, there are sanctions in place that puts limits on exporting finished Russian goods and minerals and/or investing in Russia itself. He also underestimates the enormous role that Russia's underground economy plays, which I have already mentioned in previous posts. But he does have a point that reforms are necessary. I have always argued that Russia needs to reform its laws pertaining to contracts and handling business disputes. I have heard and seen to many cases where some of these disputes were decided in favor of those who know how to "game" the system, even though the contract clearly favored the other party.