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19 Nov, 2008 04:42

Financial crisis puts the spotlight on Russian competitiveness

Russia could use the impetus of the financial crisis to enhance its competitiveness on the world market. Diversifying the economy and increasing exports are the key to making that happen.

Protectionists measures could be the easy option for countries in crisis, despite the consensus that they should refrain from doing so during the G20 Washington summit last weekend.  That's according to President Dmitry Medvedev, speaking at a meeting of the State Council in Izhevsk on Tuesday.

Medvedev said its crucial to support exports at both the federal and regional levels, as well as to promote efforts to access new markets.  And Economic Development Minister Elvira Nabiullina has called for Russia to use the current world economic crisis to improve competitiveness.

“The global financial crisis – is, in fact, a test of our competitiveness. During the past years our competitiveness, in whole, has grown. In particular, we were able to maintain a relatively high rate of growth in labour productivity, 6-7 per cent. But we are still only approaching being a competitive economy.”

Economists – like Zeljko Bogetic, Head Economist for Russia, at The World Bank, say Russia has a long way to go…

“This is a long-term structural concern that is related to a narrow industrial base that Russia has, and this has to be addressed  long-term in order to avoid that high level of vulnerability.”

Everyone agrees Russia has to diversify its economy to be more competitive – but how to do it has no simple answer.