Fri, Feb 09, 2018 - Page 9 News List

Russia’s economic stagnation unlikely to be reversed soon

As Russia’s GDP-growth continues to stagnate, the few options for reform are out of reach without dramatic changes to its nationalist policies and authoritarian rule

By Konstantin Sonin

Economic reform begins with political change. In a mature democracy, such change often comes after an economic crisis, with citizens voting for new leadership that has committed to implementing reforms. In a country without strong democratic institutions, that change might come in the form of a revolution or a peaceful, though sometimes non-democratic, transition of power.

However, for Russia, political change does not seem to be in the offing. In next month’s presidential election, Putin — who has the full support of Russia’s elites as well as full control of the media and state apparatus — will run against token opponents.

Alexey Navalny, a popular opposition leader, is campaigning on an anti-corruption platform that actually addresses the structural challenges affecting Russia’s economy and includes some necessary pro-market reforms, but he is barred from actually being on the ballot.

So, Putin is almost certain to win a fourth term in office. And with no short-to-medium-term threat to his regime in sight, there is little reason to think that much of anything is going to change in the foreseeable future.

To be sure, there is one historical example of economic reform happening without political change. In the late 1950s, when then-Spanish prime minister Generalissimo Francisco Franco was in its third decade of rule, his government undertook technocratic reforms. The result was the so-called “Spanish miracle” — a decade-and-a-half-long spike in economic growth.

However, given that there are dozens more examples of economic development being derailed by political stagnation, the Spanish experience does not inspire much hope. Moreover, Russians have a long tradition of approving of their leaders in times of famine, civil war, or foreign invasion. For Russians, economic stagnation is unlikely to spur a political change, no matter how much it hurts.

Konstantin Sonin is a professor at the University of Chicago Harris School of Public Policy, a visiting professor at the Higher School of Economics in Moscow and an associate research fellow at the Stockholm Institute of Transition Economics.

Copyright: Project Syndicate

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