na
Still, the economy's future remains exception-
ally difficult to predict. It continues to be tied
to the vagaries of the global market for oil,
natural gas and other raw materials but not
in straightforward ways. On the one hand,
revenue needed for fiscal and social stability
in the near term, as well as the means to invest
in long-delayed infrastructure and industrial
modernization. On the other, it would sustain
Putin's vision of Russia Inc. a vision that
most economists (and perhaps Russia's cur-
rent president) believe will inhibit the evolu-
tion of the sorts of institutions needed for
balanced long-term growth.
formally adopted in November 2008, ac-
knowledged the adverse consequences of liv-
need for greater economic diversity nurtured
by market-friendly institutions. But it was
more a wish list than a practical plan for eco-
nomic development.
percent range. This course pre-
supposed far-reaching market
and governance reforms and
human capital initiatives devel-
opments that would require high
oil prices that recent history sug-
gests are inconsistent with the
painful process of subjecting
business to competitive pressures,
rooting out corruption and deliv-
ering government services effi-
ciently. Similarly, the govern-
ment's "inertia scenario" assumes
that 3.9 percent growth would be
possible without significant re-
forms a prospect few neutral
observers think is plausible with-
out oil prices above $75 per barrel.
assumptions. The country is rapidly aging
thanks to exceptionally low birth rates, and
the total population is actually declining be-
cause death rates are very high for a middle-
income country. Fewer young people are en-
tering the labor market, while widespread
health problems make it difficult to extend
the productive life of workers. Nonetheless,
the model assumes a stable population and
work force rosy projections for an economy
that almost certainly faces a future of both
chronic labor shortages and high dependency
rates that will overwhelm the pension system.