DOI: 10.32609/j.ruje.5.49417

Authors: Marek Dabrowski

Abstract: In the decade of the 2010s, the pace of economic growth in Russia slowed down to an annual rate of below 2% and most forecasts suggest that this is will be the new “normal” for the Russian economy at least in the medium-term. While politically and socially disappointing, such a growth slowdown is unavoidable due to adverse demographic trends. A combination of a shrinking working-age population and population aging must lead to a lower growth pace as compared to the period when the working-age population was still increasing and the effects of population aging were limited (the decade of the 2000s). Compensatory measures such as a gradual increase in the retirement age and an open labor migration policy, although economically positive, can only partly mitigate the negative effects of a shrinking domestic labor force. In this respect, Russia does not differ from other European countries and some Asian countries. However, demography and shrinking labor supply cannot fully explain low potential growth. Stagnation in total factor productivity is another reason. It results from a poor business and investment climate, difficulty in diversifying away from the dominant role of the hydrocarbon sector, and deteriorating political and economic relations with the US and EU which limit trade, investment and innovation opportunities. To increase its potential growth, Russia needs comprehensive economic and institutional reforms that, in turn, will be conditioned by political reforms and by improved economic and political relationships with the US, the EU and Russia’s neighbors.

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DOI: 10.3897/j.ruje.4.30166

Authors: Anatoly Vishnevsky, Ekaterina Shcherbakova

Abstract: The current stage of demographic changes in all countries that have experienced a demographic transition is characterized by two main features: (1) cessation of population growth; (2) a progressive increase in the total dependency ratio, which until recently, despite the long-run population ageing, was declining. Both of these features are unfavorable from the economic point of view. In Russia, the situation is aggravated by the peculiarities of the population pyramid, heavily deformed by the social and military upheavals of the 20th century. The article shows that, for a long time, the demographic trends in Russia favored its economic development, but now the country is entering a long period of unfavorable demographic changes. The cessation of growth of the Russian population, the reduction in the working-age population and its ageing and the increase in the dependency ratio will have a deterrent effect on economic development and, at the same time, make it more difficult to solve social problems. In particular, these factors will create greater problems for the pension system for people older than working age. The issue of using the migration resource to mitigate the negative consequences of demographic changes is discussed.

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DOI: 10.1016/j.ruje.2015.12.002

Authors: Evgeny Goryunov, Lawrence Kotlikoff, Sergey Sinelnikov-Murylev

Abstract: The fiscal gap is an indicator of the long-term balance of public finance and is calculated based on the intertemporal government budget constraint, which links government tax revenues and expenditures over long intervals. The estimate of the fiscal gap for the Russian general government has been determined according to three scenarios with varying assumptions regarding demographic trends, productivity growth rates, oil and gas prices and the quantity of extractable reserves. The calculations show that the current fiscal policy cannot provide for the stability of public finance in the long run. The main factors of budget imbalances are the growth of pension and health care expenditures caused by demographic trends and the gradual decline in tax receipts from the oil and gas sector.

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