The problem of reducing the dependence of the Russian economy on primary product exports and economic policy alternatives

Abstract

This paper discusses the causes and consequences of the high dependence of Russia’s socioeconomic development on the world market prices of hydrocarbon resources and their production volumes. The author analyzed the mechanisms underlying this dependency using a model of centrally planned economy without technical progress. The author shows that growth in raw materials production and prices leads to the “Dutch disease,” which is, hence, an economic growth paradox typical of open economies and having a resource-technological and structural character. The author’s conclusion is that welfare growth opportunities are underutilized under Dutch disease conditions in case of government restrictions on primary product exports aimed at conserving the trading sector. The case is made for increasing labor productivity in the Russian economy in order to overcome its dependence on the oil and gas exports.