Russian economy in 2007. Trends and outlooks (Issue 29)

Publication date
Wednesday, 05.03.2008

Authors
Е.Gaidar; V.Mau; V.Dashkeev, L.Freinkman P.Trunin; S.Drobyshevskiy I.Sokolov; М.Kazakova; P.Kadochnikov, V. Nazarov, S.Sinelnikov-Murylev;– А.Mamedov, V.Nazarov; N. Burkova;А.Shadrin; L.Mikhailov, L.Sycheva; Е.Astafieva, Yu.Bobylev, О.Izriadnova; S.Tsukhl

Series
Russian Economy: Trends and Perspectives

Contents
Table of Contents
Section 1. Socio-Political Context 9
1.1. Global Economic Environment and Russia 9
1.2. Economic Policy in 2007:Successes and Risks 29
1.2.1. Achievements and Problems  29
1.2.2. The problems of Economic Growth 34
1.2.3. Institutional Factors of Economic Growth 39
1.2.4. Trends and Risks 45
1.3. Lasting Institutional Stagnation Sets the Background for Economic Recession Risks 48
1.3.1. Specific Features and Risks of Economic Growth in Current Russia 49
1.3.2. Institutional Development as a Key Diversification Tool 53
1.3.3. Correlation of the Dynamics of Economic and Institutional Development Indicators: Russia's Experience
in the Context of International Development 56
1.3.4. Some conclusions on the nature of present institutional dynamics in Russia. 65
Section 2. Monetary and Budgetary Spheres 70
2.1. Monetary and Credit Policy 70
2.1.1. Monetary Market 70
2.1.2. Inflation Processes 74
2.1.3. State of Balan ce of Payments 77
2.1.4. Global Credit Market Crisis and its Impact over the Russian Monetary Market 83
2.1.5. Basic Measures in the Sphere of Monetary and Credit Policy 87
2.2. Forecast Models of the RF Economic Development over a Medium-Term Prospective with Regard to the Trade Balance Dynamics 91
2.3. State Budget 96
2.3.1. A General Overview of the Budgetary System of the Russian Federation 96
2.3.2. An Analysis of the Execution of the RF Federal Budget in 2007 101
2.3.3. An Analysis of Revenues from the Main Taxes Received by the RF Budgetary System 106
2.3.4. Expenditures in the Budgetary System 118
2.3.5. An Estimation of Budget Parameters Cleared of the Contribution of the Oil and Gas Sector and of the Influence of  Global Oil Prices 119
2.3.6. The Federal Budget for 2008 and for the Period until 2010 122
2.4. The Long-Term Sustainability of Russia's Budgetary Policy 129
2.4.1. Implementation of the Measures from the Conception
for the Long-Term Socio-Economic Development in Russian
Federation: Evaluating the Consequences to the Budget System 129
2.4.2. An Analysis of Possible Scenarios of Boosting Up the Balance of the B
udgetary System in 2008-20 137
2.5. Interbudgetary Relations and Subnational Finances 141
2.5.1. Main Trends in the Development of Relations between Budgets of Different Levels 141
2.5.2. Changes Introduced into the Budget Code of the Russian Federation 147
2.5.3. The Federal Budget for the Year 2008 and the Period until 2010, in the Part of Interbudgetary Transfers Allocated to Other Levels of the Budgetary System 149
2.5.4. The New Methodology for the Distribution of Dotations to Equalize the Budget Sufficiency
of Subjects of the Russian Federation 156
2.5.5. Issues Relating to the Redistribution of Taxes between Levels of State Authority 159
2.5.6. The Distribution of Subventions Transferred to the Budgets of Subjects of the Russian Federation
to Cover the Dotations to the Budgets of Closed Administrative and Territorial Units 163
2.6. Russian Financial Markets 170
2.6.1. The Market for Government Securities 170
2.6.2. The municipal and subnational borrowing s market 176
Settlement of regional budgets' stale debt 188
2.6.3. Stock Market 189
2.6.4. Investment of pension savings in the system of mandatory pension insurance 204
Section 3. Real Sector 216
3.1. Macrostructure of Production 216
3.1.1. Trends and Factors of Final Demand Changes 216
3.1.2. Characteristic features of GDP formation by Incomes 222
3.1.3. The Dynamics and the Structure of the Production by the Kinds of the Economic Activities 229
3.2. The Situation in Industry 246
3.2.1. The Dynamics of Demand and Finished Stock in Russian Industry 246
3.2.2. The Obstacles to Growth of Industrial Production 253
3.2.3. The Dynamics of Competition in Russian industry 258
3.2.4. The Creation of a Competitive Environment in Russian Industry 268
3.3. Investments in Real Sector 279
3.3.1. Internal Domestic Investments in the Fixed Assets 279
3.3.2. Foreign Investment 286
3.4. Foreign Trade 291
3.4.1. Foreign Trade Turnover 291
3.4.2. Situation on the World Market 294
3.4.3. Export 295
3.4.4. Import 300
3.4.5. The Geographical Structure of Russia's Foreign Trade 303
3.4.6. Foreign Trade Regulation 305
3.4.7. Accession to WTO 312
3.5. Russian Agrifood Sector: Basic Trends in 2007 314
3.5.1. Agricultural Performance 314
3.5.2. Financial Performance of Farm Producers 319
3.5.3. Production of Agricultural Inputs 321
3.5.4. Food Industry 321
3.5.5. Foreign Trade in Agricultural and Food Products: Trends and Policies 322
3.5.6. Agrifood Policies 333
Section 4. Social Sphere 349
4.1. The Population's Finance and the Consumer Market 349
4.2. Migratory Processes 351
4.2.1. 2007 Legislation in the Sphere of Migration Regulation 351
4.2.2. The Dynamics of Migratory Flows 354
4.2.3. External migration, long-term and for purposes of permanent resettlement 355
4.2.4. Temporary Labor Migration 359
4.3. Main Trends on Labor Market 368
4.4. Social-Cultural Sphere 374
4.4.1. Education 374
4.4.2. Public Health Care 393
4.5. The Situation in the Sphere of Science and Innovation 410
4.5.1. Major Outcomes of the Implementation of the Strategic Plans of the Government in the Sphere
of Science and Innovation Policies 410
4.5.2. Human Resources Policy in Science 412
4.5.3. Problems of Material Base of Russian Science 419
4.5.4. Institutional Reform of Science 422
4.5.5. Creating Incentives for Innovative Activities 434
Section 5. Institutional Problems 446
5.1. The State of Property Relations, the Public Sector, and Privatization 446
5.1.1. The Property Policy of the State: Some General Outlooks 446
5.1.2. The Size of the State Sector, its Constituents and Basic Characteristics 450
5.1.3. Medium-Term Privatization Plans and Current State of Privatization 463
5.1.4. The Activity of Big State Companies 465
5.1.5. State Corporations as a New Element of the State's Property Policy at the Present Stage 471
5.1.6. Changes in the Normative-Legal Base Regulating the Functioning of the State Sector 475
5.2. Public Corporations as an Essential Element of Institutional Policy in 2007 478
5.2.1. Distinctions in "Pubic Corporation" Legal Incorporation Form 480
5.2.2. Incentives for "Public Corporations" Legal Incorporation Form Introduction to the Russian Legislation
and its Distinctions before 2007 481
5.2.3. Grounds for Expansion of Public Corporation Legal Form by the Government in 2007 482
5.2.4. Distinctions in Discussion and Adoption of Laws
on the Establishment of Public Corporations 490
5.2.5. Public Corporations Potential and Related Problems 492
5.2.6. Types of the Established Public Corporations 499
5.3. Seizure and Reserving of Land Plots by the State 504
5.3.1. Vagueness of the Rights of the State and the Rights of Owners, Possessors and Leasers
of Land Plots in the Domain of Seizures of Land Plots for State or Municipal Needs,
and Reserving of Land 504
5.3.2. Expansion of the Powers of State Bodies in the Domain of Land, in Absence of Efficient Mechanisms
for Administrative Control 507
5.3.3. The Problems Faced by Owners, Possessors and Users of Land when Receiving Compensation for a Seized Land Plot, as well as for the Losses Incurred as a Result of Seizure of Land 508
5.3.4. The Introduction of a Special Procedure for Seizure of Land Plots in Krasnodar Krai in
Connection with the Conduct of the Olympic Games in the City of Sochi 510
5.4. Russia's Housing Market 515
5.4.1. Price Situation: Main Outcomes of 2007 516
5.4.2. Regularities of the Advancement of the Housing Markets of Russia's Cities in the Medium Run 520
5.4.3. Housing as the National Priority Program 525
5.4.4. Moscow City Mortgage Housing Market 530
5.4.5. Forecast and Main Conclusions 537
5.5. Russia's Military Economy and Military Security 541
5.5.1. The Socio-Economic Aspects of Military Personnel Policy 541
5.5.2. The Provision of Technical Equipment and the Ensuring of Functioning
of the RF Military Organization 549
5.5.3. The Military Expenditures of the Federal Budget 551
5.5.4. The Trends and Outlooks of Development of Russia's Military Economy 561
5.6. Municipal Reform: Accumulation of Problems and Search for Solutions 564
5.6.1. Changes in the Federal Legislation in 2007 564
5.6.2. Changes in the Regional Legislation 567
5.6.3. Need to Change Approaches to the Territorial Organization of Local Self-Government 570
5.6.4. Ways of Efficient Resolution of Issues of Local Importance of Settlements 576
5.7. Legal aspects of the functioning of development institutions 582
Annex. Review of the Law in the Area of Tax Regulation and Civil Legislation 590

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