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Vladimir Putin: raw materials-based development reserves exhausted
12.12.2012 17:39 "Agro Perspectiva" (Kyiv) —
The Russian budget cannot stay hostage to the financial and raw materials markets of other countries, President Vladimir Putin said in his first annual message to parliament since he took office in May, Voice of Russia reports.
Though still dependent on raw materials exports, the Russian economy requires a major overhaul, he said, adding that this is the only way to ensure sustainable growth.
The lop-sided raw materials-based economy is preventing Russia from fully exploiting its potential, the president said. He stressed that the future growth should be driven by competition, and state capitalism should become a thing of the past.
«Today, the budget is virtually a hostage to the financial and raw materials markets of other countries. The lop-sided economy based on raw materials exports is vulnerable to external shocks, but the main problem is that it fails to ensure demand for human potential, which, by definition, generates inequality. Finally, the reserves of the raw materials-based model are exhausted. Russia’s development interests require an annual growth of 5%-6% of GDP over the coming decade and real structural changes in the economy. We must regain the lead in branches where we traditionally led and we should also create new ones. The development of small and medium-scale businesses — these are key issues. I am convinced that a new development model should be based on economic freedom, private ownership and competition. We need a modern market economy and not state capitalism.»
Putin pointed out to imbalances in regional development resulting from the raw materials-oriented economy. He proposed to create an investment map of Russia that would send investors a clear signal which regions are more attractive and what kind of government support businesses may count on. Russia’s membership in the World Trade Organization paves the way for the deployment in Russia of businesses oriented not only towards the domestic market but also export-oriented productions, the president said.
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