Industrial development under sanctions pressure: evidence from Russia

Ilmir Nusratullin,Lyudmila Shubtsova,Anastasia Sheina,Maxim Kuznetsov,Nikolai Sergeev

doi:10.34069/ai/2020.28.04.51

Abstract

One of the most important sectors of the economy in Russia is industry. In this regard, the state seeks to stimulate the development of innovations in this area. Over the past few years, many industrial sectors in Russia have been in a crisis situation, which is caused by several factors: a decrease in the level of real investment, a decrease in the solvent demand of enterprises-customers and public consumers, and the introduction of financial and economic sanctions in 2014 against Russia by the United States and the European Union countries, as well as the effect of other macroeconomic factors independent of the activities of industrial enterprises. This study aims to identify the main trends in the development of industrial production in Russia in recent years, and an explanation of its causes. This topic is relevant in connection with the foregoing and may be of interest to academic economists studying industry development trends in developing countries. The aim of the study is to analyze the state of industry in Russia from 2015 to 2018 during the period of sanction pressure on the industrial and financial sectors of the Russian economy. Having examined the latest data on the results of the activity of Russian industry as a whole, one can note positive trends in the development of industrial production in Russia despite a number of negative internal and external factors. It is concluded that today, for Russia, the strategic tasks in industrial policy are reduced to overcoming technological backwardness and carrying out technological modernization of industries based on the use of innovative achievements, as well as import substitution for the sectors of the economy that are sensitive to foreign sanctions.

Highlights

The need for orientation of the innovation system, formed in Russia over the last decade, towards a technological breakthrough is recognized by scholars and practitioners as the basis for industrial policy in Russia
It is concluded that today, for Russia, the strategic tasks in industrial policy are reduced to overcoming technological backwardness and carrying out technological modernization of industries based on the use of innovative achievements, as well as import substitution for the sectors of the economy that are sensitive to foreign sanctions
Industrial production is growing at a faster pace than the Russian economy as a whole, which indicates a more dynamic growth in industrial production than in other sectors

Summary

Introduction

The need for orientation of the innovation system, formed in Russia over the last decade, towards a technological breakthrough is recognized by scholars and practitioners as the basis for industrial policy in Russia. Russia may for a long time be far from modern trends in world scientific and technological development. The rates and real results in the technological development of Russia cannot be considered satisfactory. The technological development of Russia is currently carried out in the conditions of severe external constraints. Russia has to rely more on its own resources and search for new longterm reliable partnerships in terms of technology and cooperation. In these conditions, the role of the state and large economic structures in the technological development of the national economy is growing (Faskhutdinov, 2015; Kudrin and Gurvich, 2015)

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