Russian Economy in 2014. Trends and Outlooks. (Issue 36)

Publication date
Thursday, 18.06.2015

Authors
V. Mau, A. Bozhechkova, A. Knobel, A. Kiyutsevskaya, P. Trunin, M. Khromov, S. Belev, M. Deshko, E. Fomina, A. Alaev, A. Deryugin, A. Mamedov, A. Abramov, A. Shadrin, O. Izriadnova, S. Drobyshevsky, M. Kazakova, S. Tsukhlo, Yu. Bobylev, N. Shagaida, V. Uzun, N. Karlova, R. Yanbykh, N. Volovik, S. Misikhina, L. Karachurina, T. Kliachko, I. Dezhina, G. Malginov, A. Radygin, E. Apevalova, N. Polezhaeva, Ju. Simachev, M. Kuzyk, G. Zadonsky, G. Sternik, I. Starodubrovskaya, K. Kazenin, V. Zatsepin, V. Tsymbal

Series
Russian Economy: Trends and Perspectives

Contents

Section 1. Russia's Socioeconomic Policy:Emergence of New Horizons 9
1.1. Global Crisis and the Discourse on the Post-crisis Economic Agenda 9
1.2. Russia: the Economic and Political Trends  15
1.2.1. Overlapping Crises 15
1.2.2. The Ideological and Political context  17
1.2.3. The Economic Specificities of the Year 2014 19
1.2.4. Economic Policy in the Contex t of Accumulated Experience  25
1.3. The Discourse on Economic Policy and Growth Stimulation  27
1.3.1. Two Models  27
1.3.2. Growth-boosting Mechanisms 29

Section 2. Monetary and Fiscal Policies 34
2.1. Monetary policy  34
2.1.1. Money market 34
2.1.2. Inflation processes 40
2.1.3. The main decisions concerning the monetary
and exchange rate policies  43
2.1.4. Balance of payments and ruble's exchange rate  49
2.2. The State Budget 55
2.2.1. The Main Parameters of the Budgetary System of the Russian Federation in 2014  56
2.2.2. Analysis of the Receipts of Main Taxes in the Federal Budgetary System  57
2.2.3. The Expenditure of Russia's Budgetary System in 2014 62
2.2.4. Government Debt of the Russian Federation in 2014 64
2.2.5. The Prospects for Medium-term Budget Policy 66
2.3. Interbudgetary Relations and Subnational Finance  67
2.3.1. Analysis of the Main Parame ters of the Consolidated Budget of Subjects of the Russian Federation  67
2.3.2. Financial Aid from the Federal Budget  74
2.3.3. An Analysis of the Situation with Government and Municipal Debt 76

Section 3. Money Markets and Financial Institutions 81
3.1. Market recovery from the crisis  81
3.1.1. Comparing the two crises' parameters in Russia  81
3.1.2. Long-term and short-term financial crises  83
3.1.3. Specific recovery features in the markets of BRICS countries  85
3.2. Russian stock market competitive power  87
3.2.1. Stock markets' liquidity 87
3.2.2. Stock market's capitalization  90
3.2.3. Competition with foreign stock exchanges  92
3.2.4. Moscow Exchange performance results 94
3.3. Stock market of Russian equity shares 101
3.3.1. Stock market reliance on global price trends  101
3.3.2. Stock market dependence on foreign portfolio investors  104
3.3.3. Money market segments in the Moscow Exchange 107
3.3.4. Competition between market participants in the domestic stock market 111
3.4. Ruble-denominated bond market 113
3.4.1. Government securities market 113
3.4.2. Corporate bond market 120
3.4.3. Competition in the corporate and regional bond markets 126
3.5. Stock market contribution to economic growth 132
3.5.1. Corporate bonds and economic growth 132
3.5.2. The share offer IPO effect on the economy 133
3.6. Investors in the Russian stock market 135
3.6.1. Domestic institutional investors  135
3.6.2. Domestic individual investors  137
3.6.3. Foreign conservative investors  139
3.7. Risks in the money market 144
3.7.1. Financial risks in 2014 144
3.7.2. Risks of domestic money market's heavy reliance on foreign investors' behavior 146
3.7.3. Equity stock value and dynamics of crude oil prices  148
3.7.4. Risks of ruble depreciation in the mid run  149
3.7.5. Risks of banks and non-financial companies servicing their foreign debt  150
3.7.6. Transaction risks in the stock market and derivatives market  152
3.8. The Market for Municipal and Subfederal Borrowings 154
3.8.1. The dynamics of market development 154
3.8.2. The cumulative debt structure  155
3.8.3. Structure of borrowing 155
3.9. The Russian banking sector in 2014 162
3.9.1. Key trends 162
3.9.2. The slowdown of the resource base growth 166
3.9.3. Deterioration of the quality of assets 168
3.9.4. Decrease in profitability of the banks 172

Section 4. Real sector of the economy 173
4.1. Production macrostructure  173
4.1.1. Dynamics of the Russian economy in 2014  173
4.1.2. The Use of GDP in 2010–2014 180
4.1.3. Structure of GDP formation by income sources 184
4.1.4. Dynamics and structure of production by types of economic activity 187
4.1.5. Characteristics of demand and use of the workforce  188
4.2. The Decomposition of Russia's GDP Growth Rate in 1999–2015 193
4.3. Russian industrial enterprises in 2014. (analysis on the basis of surveys) 200
4.3.1. Dynamics of the main indices of Russian industry 201
4.3.2. The effect of the Ukrainian crisis on Russian industry 212
4.3.3. Reserves of production capacity in Russian industry 215
4.3.4. Industry staffing problems 219
4.4. Investments in fixed assets  222
4.5. Oil and Gas Sector  230
4.5.1. Dynamics of the World Oil and Gas Prices 230
4.5.2. Dynamics and Structure of Production in the Oil and Gas Sector 232
4.5.3. Dynamics and Structure of Oil and Gas Exports  235
4.5.4. Dynamics of Prices for Energy Products on the Domestic Market 237
4.5.5. Tax Regulation of the Oil and Gas Sector  238
4.6. Russian agriculture: the impact of sanctions  241
4.6.1. General Outline of Agricultural Performance 241
4.6.2. Impact of Sanctions and Retaliatory Sanctions on Relationships within the Eurasian Economic Union  245
4.6.3. Situation on Selected Food Markets 246
4.6.4. Shift of Budget Support Priorities  252
4.6.5. Ways for Improving Agricultural Policies in the Current Situation  255
4.7. Foreign Trade  257
4.7.1. World Economic Situation  257
4.7.2. Conditions for Russian Foreign Trade: Price Trends
for Basic Items of Russian export and import  260
4.7.3. Basic Indicators of Russian Foreign Trade in Commodities 263
4.7.4. Geographic Structure of Russian Foreign Trade  270
4.7.5. Regulation of Russian Foreign Trade  272

Section 5. Social Sphere 280
5.1. The Living Standards of Russia's Population in 2014 280
5.1.1. Population income 280
5.1.2. Socioeconomic differentiation  283
5.1.3. Subsistence level and poverty 283
5.1.4. Socio economic features and important political values of the middle class in the Russian Federation  288
5.2. Migration Processes  289
5.2.1. The Effect of Migration on the Number
of the Country's Population 289
5.2.2. Legislative Innovations 291
5.2.3. Forced Migration 294
5.2.4. External Labor Migration 296
5.3. The Higher Education in 2014: In consistency of Reform Measures  303
5.4. The State of Science and Innovation 316
5.4.1. Federal budget: change of priorities 317
5.4.2. Debates around assessments of the performance of scientific organisations 19
5.4.3. Approaches to the restructuring of former academic institutions  321
5.4.4. Science in HEIs: successes of the leading institutions 326
5.4.5. First results of the activities of the Russian Science Foundation  327
5.4.6. Development of a new draft bill on science  329
5.4.7. Mobility and the exodus of scientific personnel 330
5.4.8. The impact of sanctions 332
5.4.9. The state of innovation  333
5.4.10. Infrastructure development: technology platforms and innovation clusters 336

Section 6. Institutional Changes 340
6.1. The Situation in the Public Sector and Privatization  340
6.1.1. The Dynamics of the Public Sector in the Russian Economy  340
6.1.2. Privatization Policy 348
6.1.3. The Presence of the State in the Economy and Structural Policy 362
6.1.4. The Issues of Management of Economic Subjects Operating in the Public Sector of the National Economy  365
6.1.5. State Property Management and the Program and Targets of the New Three-year Budget 374
6.1.6. The Budgetary Effect of Government Property Policy  376
6.2. Issues of RF State Treasury Property Management 383
6.2.1. The Place of Treasury-owned Property with Regard to the Structure of Federal Ownership in the 2000s  385
6.2.2. State Treasury Property in Privatization Programs  391
6.2.3. Treasury-owned Property in the Framework of the Government Program Federal Property Management 393
6.2.4. Changes in the Treasury-owned Property Complex of the Russian Federation Since the Beginning
of the State Program's Implementation 398
6.2.5. Possible Approaches to Implementing the Government Policy on Treasury-owned Property Entities  401
6.2.6. Property Comprising the RF Treasury and the New Government Program Federal Property Management 405
6.3. Innovations of corporate legislation and regulation: changes
in the Civil Code and the new Code of Corporate Governance  409
6.3.1. Civil legislation reform; legal entities 409
6.3.2. The New Code of Corporate Governance 423
6.4. Public Policy for Stimulating Scientific and Industrial Cooperation 428
6.4.1. The evolution of public policy for promoting scientific
and industrial cooperation in the 2000s: a brief summary  428
6.4.2. Key areas and tools of public policy in the field of development of scientific
and industrial cooperation 431
6.4.3. Peculiarities of public policy for stimulating scientific
and industrial cooperation; inherent problems and lessons for the future  458
6.5. The Real Estate Market of the Russian Federation  467
6.5.1. The Market of Land Plots  467
6.5.2. Home Equity Lending 470
6.5.3. Building, Commissioning and Supply of New Housing  477
6.5.4. Pricing Situation on the Residential Property Market  481
6.5.5. The Situation on the Real Property Market of Specific Cities and the Role of Mortgage Support  486
6.5.6. Prospects of Development of the Housing Market 489
6.6. North Caucasus: The New Management Model and Old Problems  491
6.6.1. Changes in the management structures and priorities  492
6.6.2. Budgetary funding of resettlement programmes and payment of compensation 494
6.6.3. The dynamics of terrorist threats  497

6.7. Military Economy and Military Reform in Russia 500
6.7.1. Updated Military Doctrine of the Russian Federation  500
6.7.2. Recruitment and enlistment policy and social policy  501
6.7.3. The military-technical policy 504
6.7.4. Military and financial policy 509

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