Import substitution is not the goal, but the result
Import substitution is not a new word in the Russian economic lexicon. After the default of 1998, it entered into circulation and was quickly filled with material support. With the onset of the fatty zero, the term fell out of use, and the process designated by it ordered to live long. As a result, in the 2013 year Russia imported machinery, equipment, vehicles for 150 billions of dollars, 15 times more than in 2000-m, food - in 6 times.
Make a breakthrough in two or three years
Now, in half of the sectors, according to the Minister of Industry and Trade Denis Manturov, imports account for more than 50 percent of total sales. In heavy engineering and even more - from 70 to 80 percent, pharmaceuticals - 80-90, in aviation on board foreign production last year accounted for 95 percent of all traffic. This is in a country that considers itself an aviation power. No better in agriculture. We produce meat in 6, milk - 4 times less than in 1990. We buy abroad beef, pork, poultry, fish, milk and dairy products, butter, cheeses, potatoes, tomatoes, onions, garlic, cucumbers, apples and even sunflower oil.
How to solve the problem of import substitution in these conditions? Answers to this question were proposed at the State Council on Economics, held in the Kremlin on September 18. The tone was set by the statement of Vladimir Putin: “Over the next one and a half to two years, it is necessary to make a real breakthrough in improving the competitiveness of the Russian real sector, to do what it would take, maybe even years, to do before.” The style, whether we want it or not, causes historical parallels and, of course, contains a mobilization charge. It is about the formation of such an economic policy and strategy, in which all the efforts of federal and regional authorities are reoriented to the development of the real sector. Moreover, this needs to be done in a situation where the Russian economy is at the crossroads of three crises - structural, cyclical and sanctioned, exacerbated by our own sores. We are in stagnation, and the debate in government circles is only about whether it will go into recession or remain for a long time in a framework, delicately expressed, of zero growth.
In contrast to the short-term euphoria of Russian society regarding the fact that sanctions are a gift from domestic industry and the agro-industrial sector, in managerial instances, according to the observation of the Director of the Institute of Economics of the Russian Academy of Sciences Ruslan Greenberg, panic is emerging. They counted up - they shed tears at the thought that they would have to deal with import substitution along the whole front of commodity positions.
Of course, this is both impossible and absolutely unacceptable. Selection of strategic priorities, optimal mechanisms and directions will be required. It means that a change in milestones of economic development is inevitable, no matter how much one wants it. Otherwise, they will crush us, for the demonization of Russia as the main carrier of democracy on the planet continues. Therefore, it seems to me that one of the business captains asked a pretty simple-minded premier at a recent investment forum in Sochi: what can be done to calm the talk about returning to a “mobilization economy”?
Of course, everyone puts their own content into this concept. One thing is indisputable: to run in two or three years a distance that normally takes an order of magnitude more time, without mobilization efforts at all levels of government and economics is impossible. While maintaining the previous course and the basic principles of macroeconomic policy, such a task is hardly solvable. We need a large amount of resources, a high degree of state support and new approaches to public administration. Are all parts of the state machine ready for this? A roadmap has yet to be worked out.
Stimulating domestic demand
The position of the country's leadership is more than clear. This is not the first time that the President is speaking about the adjustment of the current economic model. In February, for example, he recognized that the economic growth that had taken place before was essentially a function of the rise in energy prices, and this source was exhausted in a certain sense. In 2014, the GDP growth rate, according to forecasts of the Ministry of Economic Development, will be about half a percent (slightly more than 1 percent on average over the past five years). Vladimir Putin called priority steps - ensuring the availability of loans and new conditions of business financing that are competitive by world standards, infrastructure development, and training qualified personnel for the real sector.
The basic principles of the new model of economic growth that were formulated by the Governor of the Belgorod Region Yevgeny Savchenko in a report at the aforementioned State Council coincide with these promises. They are based on sound import substitution and active stimulation of domestic demand and consumption.
Identified specific mechanisms for its launch. These are access to investment resources for 3-4 per cent per annum on the basis of development institutions, implementation of projects in the form of project financing with a share of their initiators from 15 percent of cost, compensation for the third part of investment costs after the project reaches the planned capacity, increase in the share of domestic goods in the structure of commodity resources in commerce. At the optimal import substitution scale in 100 billion dollars (4 trillion rubles) for 2-3, it will be possible to create 1 million new jobs and get additional taxes on 0,5 trillion rubles.
Two projects-drivers of economic growth for the next decade have been proposed. The first is the construction of modern highways 50 thousands of kilometers long, connecting the regional and most regional centers. The second is a large-scale construction of individual housing and related infrastructure with the introduction every year up to 1 a million homes.
In such approaches, the positions of the authorities and large Russian businesses operating in the real sector are close. But in order to bring them to life, it is necessary to eliminate discriminatory relations between credit financial organizations and industrial enterprises, to make monetary resources available for business. This comes up against a balanced exchange rate - the main factor of competitiveness, tax legislation (proposals for replacing VAT with a turnover tax are becoming more and more active), solving the problem of chronic underfunding of science (by attracting the resources of large companies and corporations) and, finally, transition to project-oriented management model in both economic and humanitarian spheres.
Everything is simple and difficult at the same time, as it is necessary to abandon a number of exhausted economic decisions and ingrained dogmas of the “Washington consensus”.
How do financial authorities (the Central Bank and the Ministry of Finance) react to the demands of the real sector of the economy, the leaders of the regions and the Government of the Russian Federation? For this year alone, the Central Bank raised interest rates three times in total by more than 60 percent. Every excess ruble is taken abroad, so that in the current year, the Reserve Fund has increased by 18,5 percent. The focus on curbing inflation by squeezing the money supply does not justify itself; it is best to fight it by increasing production efficiency. This is unthinkable without its growth and the introduction of new technologies, recalls presidential adviser Sergey Glazyev.
The stumbling block is unavailability of credit for industry. The introduction of sanctions, he is sure, gives a unique chance to replace external sources of credit with internal ones and create a sovereign financial system that focuses on the development of its own production. Until the financial unit takes concrete measures to expand the money supply, no import substitution will take place. By and large, the question is about import substitution not only and even not so much for goods, but for finance, namely, external loans.
Sovereignty and infrastructure
How does the real sector perceive the task of import substitution in a purely practical sense? This was discussed at the meeting of the profile section of the Moscow Economic Forum in the Chamber of Commerce and Industry of the Russian Federation, where politicians, scientists and industry representatives gathered.
There is no doubt that in the choice of priorities it is necessary to proceed from the fact that import substitution must first of all ensure the sovereignty and infrastructure of Russia. It's about the national settlement system, software, antitrust policy. In the Ministry of Economic Development, first of all, they are oriented toward compensating the replacement of critical imported technologies. This is an electronic component base, high-tech machine-tool industry, tool industry, equipment for the oil and gas complex, production of catalysts for chemistry and petrochemistry.
“We have everything for dynamic development - land, people, traditions of production, a huge domestic market and access to foreign markets. Only a competent economic policy is lacking, without which it is impossible to modernize production, ”said Konstantin Babkin, President of the Industrial Union“ Novaya Sodruzhestvo ”. Her three whales: focus on domestic economic demand, long money for medium-sized businesses, project financing.
The policy of import substitution requires easing the burden of excessive costs on the economy in the form of corruption and arbitrary monopolies, modernization of the infrastructure in the broad sense of the word, reasonable protectionism, added his director of the Institute for Globalization Problems, Mikhail Delyagin. The possibilities of ruble devaluation as a means of preventing an economic downturn have already been exhausted. To support the economy, it is necessary to raise, wherever possible, import duties, and where it is impossible to introduce standards and technical regulations. And, in addition, to form additional direct incentives for technological progress, forcing it to be clever by economic methods, and all the rest by administrative ones.
A separate question is the WTO. The imposition of sanctions against Russia showed that its mechanisms were not viable in the current political situation, and the liberal economy and free trade are incompatible things. Therefore, there are voices that sanctions can be qualified as force majeure, during which WTO rules do not apply. The accession of our country on unfavorable conditions only aggravated the position of the Russian economy. Lost and business, and the population, not waiting for the promised reduction in prices for goods.
Take the situation in the food market. Domestic agricultural products, now evident to everyone, are often not competitive compared to foreign products simply because in all states the agricultural sector receives an order of magnitude greater state support. Now, for example, Russian dairy companies are losing to Belarusian ones, our neighbors have a high level of state support, control over the level of costs and prices for infrastructure services.
And even in such conditions, Russian agricultural producers have achieved great success in import substitution. In total, for the 5-7 years, the poultry industry has increased the production of chicken meat 2,5 times and covers the demand for it already by 90 percent. Pig production, which, it must be said, two years ago was on the verge of collapse, received state support and perked up. Next in line are dairy farming, fruit growing, vegetable growing, including greenhouses. Investments in protected ground, the area of which has decreased by half in the twentieth anniversary, is just beginning to pull up.
Given the lack of resources, it’s impossible to squander, warned the chairman of the Supervisory Board of Belaya Dacha Group of Companies Viktor Semenov. Unfortunately, today the agro-industrial complex depends on foreign resources in a number of key positions, and above all in technology and food supply. Breeding livestock has been lost, so the "parent flock" is imported from abroad. Talking about sanctions is about to be lifted, the attitude is nervous. It is necessary to create a “road map” by sector, since agricultural producers want to know what will happen tomorrow. After all, if the sanctions are removed in six months, then today's investments will fall into a trap.
Risks and odds
Another interesting question is the situation with retail chains. Deputy Chairman of the State Duma Committee on Economic Policy, Innovative Development and Entrepreneurship Nikolai Arefiev drew attention to the fact that 90 percent of them belong to foreigners. They do not take domestic agricultural products: “In August, I drove Kalmykia, Astrakhan and Volgograd regions. I saw our peasants selling self-made tents along the roads selling environmentally friendly watermelons, eggplants, peppers, and we in supermarkets buy imported good nitrate. Benefit from foreign merchants and the closure of collective farm markets and small trading business. Should we not nationalize trade? ”
In the defense complex, the main problems of import substitution are related to technological equipment, high-precision machines whose production is virtually lost in our country, some types of materials and components, said Mikhail Remizov, President of the National Strategy Institute, Chairman of the Presidium of the Expert Council of the Military-Industrial Commission under the Government of the Russian Federation. The defense industry is still controlling the line of final products, in contrast to the civilian sector, in which the market for final products is largely lost.
High-tech industry is indirectly affected by sanctions. The Superjet-100 aircraft, largely consisting of foreign components, has so far not been confronted with a supply crisis, but with a customer confidence crisis. Fearing the risks of non-delivery of components, they are afraid to order new cars. A huge stake was made on the project. In short, put all the eggs in one basket.
Yevgeny Primakov, Academician of the Russian Academy of Sciences, described the development of science and technology as the core of import substitution. He is supported by the Chairman of the Supervisory Board of the Institute for Demography, Migration and Regional Development Yuri Krupnov: "Advance import substitution is impossible without restoring technological sovereignty, therefore, this goal should be set in the law on industrial policy." Import substitution is an extreme necessity, but not a campaign to isolationism, reminds the well-known economist Yury Boldyrev: "We must perceive from there (from Western culture. - LG) what is effective, not what is imposed on us."
Surprisingly, our government, which is still pursuing a policy of doors wide open to the world economy, adopts a decree in which, according to 66, important transport positions limit our purchases to two addresses - Belarus and Kazakhstan. It is unlikely that it will benefit the economy. On the other hand, it is strange to continue to import cars from Germany and the Czech Republic into the country at a time when Russian enterprises that assemble foreign cars work one day per week. Neglecting our jobs, we load strangers.
There are two aspects to the problem of import substitution. With tactical, everything is obvious. The strategic is that import substitution is not the goal, but the result of the country's economic development. This has become the keynote of most speeches. The main emphasis should be placed not on the own production of the final product, but on what makes it possible to produce it - high-precision machine-tool construction, seed farming, agriculture, and so on. The chances of success are as much as the risks - such is the conclusion of analysts.
No matter how sad, perhaps, only in two sectors (food and light industry) Russia today can be completely independent of foreign supplies. The rest require re-industrialization and modernization. And not the sanctions to the cause, but the current economic model. Sanctions - the same roasted rooster, which pecked us and with the inexorable arrow of the compass showed the vector of correct movement. A country like Russia simply cannot depend on the goodwill of its partners in life-supporting parameters. Therefore, there is only one way out: not to grumble about the absence of Parmesan and jamon, but to increase one’s own industrial and technological self-sufficiency.
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