The following is the Executive summary of the OECD assessment and recommendations, taken from the Economic survey of the Russian Federation 2006, published on 27 November 2006.
The Russian economy has been enjoying a period of robust growth, thanks largely to steadily rising terms of trade. The challenge confronting policy-makers is to facilitate Russia’s transition into a period of self-sustaining, investment- and innovation-led growth. This will require a sound macroeconomic policy framework to manage the economy’s adjustment to sustained high oil prices and a range of structural reforms aimed at creating better framework conditions for business.
Fiscal discipline is critical to managing the adjustment to high oil prices
The efficient and prudent management of commodity windfalls is the principal macroeconomic policy challenge facing Russia today. An uncontrolled surge of windfall revenues into the economy would drive up inflation and undermine competitiveness. While monetary policy can play a supporting role, fiscal policy will remain the primary instrument for reducing inflation while avoiding excessively rapid exchange-rate appreciation. Policy should be based on a clear, credible fiscal rule, aimed at insulating the economy from commodity-price volatility. This basic fiscal rule could be operationalised by strengthening the legislative framework governing the Stabilisation Fund.
Public administration reform would benefit citizens, entrepreneurs and policy-makers
The inefficiency and corruption of the state administration impose a heavy burden on business and limit the government’s ability to implement any policies that make significant demands on the state’s administrative or regulatory capacities. Effective, consistent implementation of the government’s plans for administrative reform should therefore be a first-order priority. Russia needs to improve the institutional environment within which the bureaucracy operates by strengthening the rule of law, adopting freedom of information legislation and enhancing parliamentary oversight of the executive; to empower citizens by adopting clear, accessible public service standards and creating an effective system of administrative redress for complaints; to fight corruption by strengthening enforcement and adopting whistleblower protection legislation; and to reduce state control and bureaucratic interference in business.
Russia can do much to make innovation policies more effective
Russia’s innovation potential is considerable but its innovation performance remains disappointing. Realising this potential will require further steps to create a healthy, open business environment, as well as steps to stimulate greater private R&D and strengthen the domestic IPR regime. Reform of the large but inefficient public science sector could make it more responsive to business needs and more dynamic as an engine of knowledge creation. Specific innovation-promotion schemes, like special zones or technoparks, should be limited in scope, carefully targeted and rigorously assessed in order to avoid deadweight losses and market distortions.
Healthcare reform is needed to achieve better care, increased efficiency and greater equity
Russia’s healthcare system today is characterised by a number of fundamental imbalances that need to be addressed in order to ensure that rising healthcare expenditure is used to best effect. The major priorities for reform include closing the gap between formal commitments to the population and available resources; shifting the structure of provision greater reliance on integrated primary care; adopting payment schemes in the healthcare sector that encourage more cost-effective therapeutic choices; and modernising the system of mandatory medical insurance.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded. It contains the OECD assessment and recommendations but not all of the charts included on the above pages.
The complete edition of the Economic survey of the Russian Federation 2006 is available from:
For further information please contact the Russia Desk at the OECD Economics Department at email@example.com. The OECD Secretariat's report was prepared by William Tompson and Christian Gianella under the supervision of Andreas Wörgötter.