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Russians Face Sustained Declines In Standard Of Living For Foreseeable Future – OpEd

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Dmitry Prokofyev, a St. Petersburg economist, says that barring an unexpected shock, Russia faces declines of its GDP of 1.0 – 1.5 percent a year for the foreseeable future, a trend that will exacerbate differences between life in the megalopolises which may improve somewhat and life elsewhere which will deteriorate.

In an interview to the “Svobodnaya pressa” portal, Prokofyev says that “the most probable prognosis for the coming years is a deepening of the structural recession of the present. With each year, things will become a little worse, and even a rise in oil prices will not guarantee economic growth” (svpressa.ru/society/article/148523/).

“In the best case,” he continues, “there could be a return to the 2010 level of incomes,” although he is clearly skeptical about that.

“The specific nature of the current situation is that it could drag on for decades, if of course some sort of shock … does not occur,” in large measure because “the basic model of the economy” of Russia – trading resources for technology – “isn’t changing” and indeed hasn’t changed since the days of Ryurik.

Why should anyone expect it to change in the next ten or twenty years? “One shouldn’t lie to oneself! It is better to think how to use these resources,” putting money aside in the “fat” years and spending it in the “thin” ones. But even that will not save the standard of living for a all Russians but only in “powerful urban agglomerations like Moscow, St. Petersburg, Leningrad oblast, and Kazan with their adjoining regions.”

Those who go on and one about saving the Russian village and maintaining “’traditional ways of life’” are engaging in “economic charlatanism,” Prokofyev says. “Megalopolises tied to together by a network of air routes” is the only way to hold the Russian economic space together and improve the lives of those who life in the biggest cities.

According to the economist, “the Russian people have understood this for a long time, and all who can are running to the big cities. To oppose this trend is senseless and unproductive.” There is simply no way for Russia to develop as an agrarian country. Its agricultural output accounts for a maximum of three percent of GDP.

Summarizing his argument, Prokofyev says that in the next few years, “the level of consumption and the incomes of the population will continue to fall. Instead of the economic growth that Russians are promised, there will be a loss of 1.0 to 1.5 percent of GDP annually, a trend that will result in a kind of ‘return’ to the beginning of the 2000s.”

No reforms being discussed will make much of a dent on this, he continues, because the economy is “a very inert system.”

Looking out further, the economist argues, “by 2030, the quality of life of Russians will depend to the largest extent on the place of residence – much more strongly than now. ‘Conditionally-unsuccessful’ regions will begin to lose their human capital while ‘successful’ ones will gain it.”

This is “objectively” the most likely pattern, he says. “Could there be changes for the better?” Yes, he says, “they are possible, but they will need time” to be implemented and have an impact.

Paul Goble

Paul Goble is a longtime specialist on ethnic and religious questions in Eurasia. Most recently, he was director of research and publications at the Azerbaijan Diplomatic Academy. Earlier, he served as vice dean for the social sciences and humanities at Audentes University in Tallinn and a senior research associate at the EuroCollege of the University of Tartu in Estonia. He has served in various capacities in the U.S. State Department, the Central Intelligence Agency and the International Broadcasting Bureau as well as at the Voice of America and Radio Free Europe/Radio Liberty and at the Carnegie Endowment for International Peace. Mr. Goble maintains the Window on Eurasia blog and can be contacted directly at [email protected] .

4 thoughts on “Russians Face Sustained Declines In Standard Of Living For Foreseeable Future – OpEd

  • May 15, 2016 at 10:51 am
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    Paul you forever write about Russia’s problems as though we in America don’t have our own. Russia has thousands of nukes with which to protect itself. They are now the biggest exporter of wheat, have weapon sales comparable to those of the U.S. ,have vast energy and mineral resources of all kinds, selling nuclear reactors all over the world, extending their influence in the middle east, have turned to China now that sanctions have been imposed on them, have joint maneuvers with China, ETC.ETC. So get with it Paul. Pull your head out of your so that you can see the world more clearly.

    Reply
  • May 15, 2016 at 12:35 pm
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    We in the USA are becoming worse than others. High unemployment and inequality, high prices of social services, lower wages, very low productivity and economic growth which indicates a decline in standard of living, and disintegration of infrastructure. On the top of these bad elements we are at wars and have lost our civil freedom for countering terrorism that we have created. Working people are getting upset with the globalized monopoly capitalism. In addition, when we see daily the Clintons and the Bushes and Ted Cruz and Marco Rubio and other failed people who are making millions, then our standard of living declines further. At least the Russians do not see those B52 carpet bombing entourage. Finally, try to help Americans before attacking Russians: If you like in a glass house, do not through rocks on others. Remember that the Russian destroyed Hitler and now destroying Daesh.

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  • May 15, 2016 at 10:28 pm
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    I can think of a number of reasons why driving the Russians into desperate circumstances might not be a good idea. The unsinkable Titanic was unsinkable. No storm at sea could have sunk that ship, but the people operating the ship managed to do it. The American empire may indeed be invincible, but the arrogant think-tank commandos who are governing it might succeed at sinking it.

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  • May 16, 2016 at 6:53 am
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    All countries in the world are experiencing sustained decline in the quality and standards of living, including USA and EU, not only Russia. Sustained stereotypes often lead to self-created misperceptions.

    Reply

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