Working Day

1 october, 2008 19:50

Background material for the October 1, 2008 Government meeting

The following issues are scheduled for discussion at the meeting of the Government on October 1, 2008:

1. The drafts for the long-term national programme of social and economic development through 2020 and the Government action plan to implement it

The long-term programme of social and economic development of Russia was drawn on the President's directive following the State Council meeting of July 21, 2006.

The Programme determines the ways and means of ensuring sustained improvement of public prosperity, national security and dynamic economic development in 2008-2020, and strengthening Russia's position in the world.

Accordingly, the Programme formulates:
- the targets of long-term social and economic development with consideration for impending challenges;
- relevant strategies (methods, approaches and deadlines) and the forms and instruments of goal-oriented strategic state-business-community partnership;
- the targets, target codes and priorities of long-term developmental policies in the social sphere, R&D and structural economic reforms;
- targets and priorities of foreign economic policy;
- the geography of national economic development, and the targets of long-term territorial development.

The middle of the present decade put the Russian economy face to face with lasting all-round challenges reflecting the trends of, and obstacles to global and national development.

The first problem is the exacerbation of global competition, which concerns not only long-established commodity, capital, technological and labour markets but also national leadership, promotion of innovation, and progress of the human potential.

The basic trends of global economic development with a major impact on social and economic development of Russia in the next 10-15 years are as follows:
- probable resumption of dynamic world economic progress at an annual average 4% after the crisis is overcome in 2010;
- transformation of China and India into the principal vehicles of global economic development, the emergence of new centres of global economic development in Asia and Latin America, and their growing influence due to the financial crisis;
- overcoming energy barriers to development through enhancing energy efficiency and promotion of alternative energy sources with the trend of persistent growth of energy prices;
- increase of development limitations due to environmental factors, fresh water shortages and climate change, which creates additional opportunities for Russia;
- persistence and probable increase of imbalance in global trade and capital flows to change world currency rates and restructure world economic agencies (world economic order);
- the ageing of developed countries' populations accompanied by rapid population increase in the developing countries to intensify global migration and increase the pressure on developed countries' welfare systems.

The upcoming period will see global economic restructuring as the balance of economic centres is shifting and the role of regional economic alliances is becoming stronger.

The American mortgage crisis is starting to turn into a global financial crisis, which threatens to develop into a global production crisis with raw material prices plummeting and global economic development dropping pace in 2009-2010. Global economic restructuring due to the crisis enhances demands to Russian economic stability and ability to neutralise the negative impact of world markets. The ups and downs of world and Russian stock and raw material prices make it all the more urgent for Russia to create a diversified innovation economy and a formidable autonomous financial system.

Global economic restructuring gives Russia new opportunities to develop transnational economic integration, improve its position in the world market, and promote technology and capital imports if it overcomes the weakness of its export positions.

Increasing global economic competition goes hand in hand with exacerbating geopolitical rivalry-in particular, the race for scarce mineral, energy, water and food resources. Russia realises the need to strengthen its national economic security while retaining and enhancing its economic openness and active participation in forming new approaches to global financial and raw material market regulation.

Another challenge comes with an anticipated new wave of technological changes, which will greatly enhance the role of innovations in social and economic development and devalue many traditional growth factors.

The next decade will see the developed countries starting the formation of a new technological basis for economic systems.

The available research potential and high technological production makes it possible for Russia to reap the benefits of disseminating new technologies.

The third challenge stems from the increasing role of human capital as the key factor of economic development.

The competitiveness of the contemporary innovation economy increasingly depends on the efficiency, socialisation and cooperation of its personnel. Russia should overcome the existing negative trends in human development, if it is to respond to this challenge.

There is also another challenge, mainly due to domestic rather than global factors. That is the exhaustion of sources for development based on raw material exports. The crisis of this developmental mode of the Russian economy might speed up if global demand for hydrocarbons falls with active development of alternative fuels and energy sources and the economic progress of China and India slows down.

Goal orientation

Russia's strategic goal is to rise to an economic and social developmental level worthy of its status as one of the leading 21st century countries with advanced positions in global economic competition, and guaranteed national security and citizens' constitutional rights. In 2015-2020, Russia should become one of the five countries leading the world for gross domestic product, with purchasing power parity.

High standards of living

Russian public incomes and quality of life should, by 2020, get on a par with what the developed countries have today, which implies high standards of personal safety, access to quality education, healthcare and culture, quality housing, and clean environment.

Gross per capita domestic product with purchasing power parity, which is the most general index of living standards, will grow from $13,900 in 2007 (42% of the OECD average) to more than $30,000 in 2020 (70%) and approximately $50,000 in 2030.

Social harmony and accord

A community based on confidence and responsibility is emerging in Russia. It implies public confidence in government and private economic institutions. The middle class will account for more than half of the population, with a large group engaged in creating the pioneer knowledge-driven economy, technologies and human development.

Leadership and innovation economy

Russia will not merely remain the world leader of the energy sector and raw material mining and procession. It is progressing towards a competitive economy based on knowledge and high technologies. By 2020, it will have an opportunity to occupy a significant 5-10% of the high tech and intellectual service markets in five to seven sectors.

Globally competitive economy

Russia will strengthen its leadership of Eurasian integration and gradually develop into one of the global nodes of economic links-in particular, as an international financial centre. It will maintain balanced all-round economic contacts with partners in Europe, Asia, the Americas and Africa.

The comprehensive tackling of posed objectives presupposes Russian transition from an economy based on raw material exports to innovative socially oriented development. It will enable Russia to compete, on the one hand, with the cheap workforce of China and India and, on the other hand, with leading-edge quality products from the United States and the European and Asian developed countries.

The transition to innovative socially oriented development presupposes catching up with the developed countries and their growth.

This transition demands new patterns of social development.

There are several contradictions intrinsic to the existing pattern of development. One of them is that the increase of public incomes outpaces the growth of GDP as it largely rests on incomes from natural resources, i.e., oil, gas and raw material export super-profits. It takes new social development patterns, brought into balance with the economic resource potential and innovation effectiveness, to overcome this contradiction. The goal demands all-round reforms mutually coordinated in terms of resources, stages and deadlines in the following aspects of the Russian economic transition to innovative socially oriented development:
- developing the Russian human potential;
- the establishment of a highly competitive institutional environment which promotes enterprise and attracts capital to the economy;
- structural economic diversification on the basis of innovative technological progress;
- enhancing Russia's global benefits in competition in the long-established spheres-energy, transport, agriculture and mineral procession;
- improving Russia's foreign economic situation and enhancing its effectiveness in the global division of labour;
- transition to a new geographic model of economic development.

Innovation development demands the greatest possible benefits for enterprise, making Russian private companies more competitive and attractive for investment, and enhancing their ability to work in open global markets, with their tough competition, because private enterprise is the basic vehicle of economic development. The state is able to promote business and create a favourable climate, but it should not substitute its own activity for private enterprise.

The stages of innovative development

Innovative socially oriented development demands the use of traditional competitive advantages in the energy and raw material sector side by side with the establishment and promotion of new factors of economic progress which would cope with the challenges of the long-term period. These are: a breakthrough in enhancing the effectiveness of human capital and in the creation of a beneficial social environment; liberalising economic institutions and increasing entrepreneurial competitiveness; rapid implementation of leading-edge technologies in the economy and promotion of high technologies and, last but not least, more dynamic foreign economic policies. Put together, all those measures will guarantee Russia sustainable economic growth at an average 6.4-6.5% a year.

Innovative economic development of 2008-2020 will fall into two stages, with differing conditions, factors and hazards of social and economic progress, and differing priorities of state economic policy.

The initial stage, 2008-2012, is based on implementing and enhancing the global competitive advantages of the Russian economy in its traditional spheres-energy, transport, agriculture and mineral processing. Institutional prerequisites and technological buffer stock will be made at the same time.

The second stage, 2013-2020, demands a breakthrough in increasing global competitiveness of the Russian economy as it shifts to a new basis of information, bio- and nano-technologies, structurally diversifies, and improves human resources and the social environment.

Development after 2020 implies Russia strengthening its world economic leadership to make innovations the leading vehicle of economic progress, and achieving a balanced social structure.

Foreign economic policy

The global economy will increase its impact on Russia's social and economic development against the background of toughening global competition, the advance of innovative developmental factors in the leading countries, and a change of the world economic order. The situation demands a more prominent part to be played by foreign economic policy as one of the key factors of Russia's social and economic development, innovation, enhancing economic competitiveness and the tackling of social priority problems.

The available model of Russian participation in the international division of labour is based on energy exports and cannot provide a stronger position in the expanding world markets. Even if energy and raw material exports grow steadily 1-2% a year, the overall increase of Russian exports will badly lag behind the predicted increase of world trade by 6-8% a year. Thus, Russia will account for an ever smaller share of world exports in the medium term. Russia will be doomed to recede into the global economic background and be no longer an effective participant of the international labour division unless it breaks through to the new commodity and service markets with their high surplus value.

Regional development

Russia will balance out its territorial development and orient it to creating conditions for every region to obtain necessary and sufficient resources for decent living standards and all-round economic progress with competitiveness increased. All that will go hand in hand with guarantees of political and legal unity of Russia.

This goal will be achieved as the state implements its regional policy aimed at fulfilling every region's development potential, overcoming infrastructural and institutional barriers, provision of equal opportunities for people, promoting their development, effective efforts to promote federal relations, and reforms of public administration and local self-government.

Balanced social and economic development of Russian regions as one of the goals of national social and economic development demands synchronising three components of regional policy:
- promoting economic development through establishing new economic growth centres in the regions on the basis of their competitive advantages;
- coordination of government investment in infrastructure and regional private investment strategies with due consideration for the geography of developmental priorities, and the limitations of demographic and other resources;
- levelling out living standards between and within regions through effective social and budgetary policies guaranteeing the growth of the human potential all over Russia.

5. The draft federal law On the Technical Regulations of Low Voltage Equipment Safety

Objects of technical regulation the draft law concerns comply with New Approach Directive 73/23/EEC of the European Commission on low voltage equipment (LVD).

The draft law On Low Voltage Equipment Safety Regulations is based on the following principles:

- demands of low voltage equipment with consideration for the amount of danger thereof;
- the greatest possible closeness to the procedures and patterns of confirmation of conformity as stated in the New Approach and Global Approach directives of the European Commission with using the modules of confirmation of conformity based on the manufacturer's acceptance of the declaration of conformity, and accounting also in the regulation certification schemes established in the Scheme of Mutual Recognition of Test Results for conformity with the standards of the International Electrotechnical Commission, whose member Russia is;
- the opportunity of voluntary use of national standards brought into harmony with international standards;
- the opportunity of using the test base available in Russia and accredited within the GOST R Certification System for the confirmation of conformity with technical regulations;
- consideration for practical experience stored during the work for the confirmation of low voltage equipment conformity in the Electrical Equipment Certification System and the International Certification System for Electrical Equipment Conformity to Safety Standards;
- the use of standards unified for all objects of technical management in the elaboration of technical regulations, and granting the manufacturer/seller the opportunity of choice of the forms and schemes of confirmation of conformity.

The technical regulations have been drafted in the form of a federal law and come through public discussion.

September 30, 2008

* Press releases by the Department of Press Service and Information contain the materials submitted by the executive federal bodies for discussion by the Presidium of the Government of the Russian Federation.