Russian Industry: Institutional Development
In order to remain competitive, firms need to keep the quantity and composition of jobs close to optimal for their given output. Since the beginning of the transition period, Russian industrial firms have been widely reporting that the quantity and composition of hired labour is far from being optimal. This paper discusses what kinds of firms in the Russian manufacturing sector are unable to optimize their employment and why. The main conclusion is that the key issue is an excess of nonviable firms and a shortage of highly efficient firms because of weak selection mechanisms. The main solution is seen to be the creation of institutional conditions that stimulate a more efficient reallocation of labour. The analysis presented in this chapter is based on data from a large-scale survey of Russian manufacturing firms.
The chapter is devoted to the analysis of industrial development in Russia since 2005. Characteristic features of the Russian industry are considered. It is shown that Russian industry is specific both by its structure and high heterogeneity. The mining and quarrying sector and related manufacturing industries play a significant role in the Russian economy and major role in industrial production. In the foreseeable future, these sectors can strengthen their leading positions.
Considerable attention is paid to the analysis of industrial policy of the Russian government, which has traditionally been one of the leading actors of industrial development. The main directions of industrial policy are singled out: compensation of negative changes, catching-up, and advance development. It is noted that the role of government is ambivalent: on the one hand, it seeks to develop high-performing companies, including new and fast-growing ones, on the other hand, it often supports large, low-performing enterprises. With the declared continuously emphasis of industrial policy on innovation and modernization, low innovativeness of Russian companies remains. Based on the analysis of modern conditions, as well as new objects and instruments of industrial policy, some prospects for future industrial development have been revealed.