Russian Economy General News: #1

Sujoy wrote:Productivity in India is low only among the manual labor class . Among the white collar workers who work in Finance, Real Estate , IT , Pharma , BPO it is among the highest in the world

Yes these sector are better off compared to others but they also represent the tip of spear not the spear itself.

What would have really done good for our Economy Growth is manufacturing , This is where what makes the difference between us and China ...we should have gone for manufacturing goods and been exporting it to the world that China does which did not happen

The problem is India's high current account deficit  primarily because of a huge trade gap ( imports are more than exports). What that translates into is India is using its capital assets less efficiently than before . However , India is still growing @ 5% p.a which is higher than the global average of 3% and far far higher than the negative growth rate in the EU and US .

Not just CAD but we have a High Budget Deficit and High Public Debt

India's budget deficit woes




But to me these are structural issue that can be solved over time , The more serious issue that affects the common man and most Indians are Corruption , Bad Infrastructure , Low Spending on Health and Education and Poverty ..... we take care of the first it will have cascading and positive effect on all the others.

Austin wrote:Labor productivity

This week Ekspert magazine published about a survey conducted by the Audit and Consultancy Group Finexpertiza (CPA Associates International in English) which calculated the labor productivity in several countries. The calculation is simple. How many people does a country need to produce 1 million dollars of its GDP? It turns out that Russia’s labor productivity is 5 times lower than those of the developed countries, but 3 times higher than that of China and 6 times higher than that of India. To produce 1 million dollar of its GDP Russia needs 57 people. Brazil needs 62 persons, China 152 and India 340. In Germany it takes only 13 people to produce 1 million dollars of its GDP, In the US this number is 11.

So Russia has a long way to go to be productive , even bringing it to German Standards would mean improving productivity 4 times  

Hahahahahaha. Nice one.

If the US worker is so productive and the Chinese or Indian worker so unproductive, why is all the manufacturing gone to China and India?

Austin, its not your fault, but what you have posted is very deceptive.

Let the US or German worker produce clothes, shoes, toys or other inexpensive consumer goods and lets see how much GDP he/she will contribute versus the Chinese or Indian worker.

The reason for the high US or German labor productivity is due the expensive nature of goods they produce compared to the goods that the Chinese or Indian workers produce.

The above figures should not be used to judge the efficiency of a workforce.
A more correct method would be to gauge the amount of time a worker from a country needs to produce x-good versus the amount of time a worker from another country to produce the same quantity of the same x-good.

That is a standard way to measure productivity globally and I didnt invent those

The calculation is simple. How many people does a country need to produce 1 million dollars of its GDP?

The Reason why Manufacturing is going to China and Software is going to India is because its cheaper to do this than compared to doing it in Europe , US or Russia ......affects MNC bottom line

Austin wrote:That is a standard way to measure productivity globally and I didnt invent those

The calculation is simple. How many people does a country need to produce 1 million dollars of its GDP?

The Reason why Manufacturing is going to China  and Software is going to India is because its cheaper to do this than compared to doing it in Europe , US or Russia ......affects MNC bottom line

I know you didn't invent those. As I mentioned in my post : "It's not your fault".

Some of these "standard ways to measure" are just bullocks.

With their "standard ways of measuring", some of these ultra rich Arab Sheikhdoms with very high GDPs must be having very high labor productivity, yet these countries produce........nothing!

Austin wrote:What would have really done good for our Economy Growth is manufacturing , This is where what makes the difference between us and China ...we should have gone for manufacturing goods and been exporting it to the world that China does  which did not happen

True , India has to focus on manufacturing . However, exporting service is a lot more cost effective than exporting manufactured goods simply because manufacturing is a capital intensive exercise.

That said the cost of hiring manual labor in China is so low that even countries like Vietnam cannot compete with China . China also manipulates the value of it's currency to make it's exports more attractive . This is something that India can do .

Austin wrote:Not just CAD but we have a High Budget Deficit and High Public Debt

High Budget Deficit and High Public Debt are a result of Current Account Deficit . The Govt. doesn't have enough money so it goes on a borrowing spree.

And this will remain as long as the oil import bill is not brought down substantially . Among the BRIC counties India pays the maximum for importing oil .

Austin wrote:The more serious issue that affects the common man and most Indians are Corruption , Bad Infrastructure , Low Spending on Health and Education and Poverty ..... we take care of the first it will have cascading and positive effect on all the others.

These are problems that the urban middle class faces . 65% of the population lives in rural areas and they are not much affected nor are the affluent class.

Corruption is prevalent everywhere . It can slow down growth but cannot destroy it because corruption survives on growth .

As long as we keep voting for corrupt governments we will continue facing corrupt practices . But then India grows not because of the Govt. but despite the Govt.

Its not the case the Rural Indians are not affected by Corruption , Health and Education , Poverty and Infra issue ....it affects both ......The problem in India is few have many and most have few to none.

We cannot wish away the corruption in India because others are corrupt too.that wont solve our problem because others dont have the poverty that we do and its not like things are looking better  now ..... 20 years down the reform line we have more scams in 5 years then we had in past decades.

Second Gas Exporting Countries Forum: Results and Prospects

The shale gas economy

Austin wrote:We cannot wish away the corruption in India because others are corrupt too.that wont solve our problem because others dont have the poverty that we do and its not like things are looking better  now ..... 20 years down the reform line we have more scams in 5 years then we had in past decades.

20 years of reform has also resulted in more prosperity . The thing with scams is that more scams are now being reported by the media as the number of TV stations has increased . Corruption sure is a problem . And since the middle class does NOT ask for good governance they don't get it .

Rpg type 7v wrote:russia should be using that money to build new renewable sources of energy as fast as possible.

They are doing in that direction, but maybe not as fast as they want.

http://www.cleantechlaw.org/2013/04/russia-unveils-draft-renewable-energy.html

http://www.quickiwiki.com/en/Renewable_energy_in_Russia

Moscow, Beijing taking on the dollar

Russia and China have united their efforts in the fight against the dollar as the main reserve currency, an influential American trader, Russ Winter, said. The expert says that Moscow and Beijing have been putting into practice, for a long time now, the first part of their plan aimed against the hegemony of the dollar on the world markets. Really, Russia and China have decided to give up the dollar in most cases involving international payments and to strengthen their own currencies through buying up gold.

Moscow is actively encouraging trans-border rouble remittances and restricts foreign currency remittances. For its part, Beijing is gradually introducing direct exchanges between the Chinese yuan and the euro, and also the pound sterling and the yen . Parallel with this, China has increased the import of gold considerably and is now buying much more of it than it produces. The higher the backing of the yuan by gold, the weaker the positions of the dollar as the main reserve currency become.

However, analysts say that this is only the consequence, and that the real reason is a drop in the dollar solvency, and a slowdown in the US economic activity as a result. Because of the growth of the money mass, the US currency may devalue twice in the coming three years. Beijing and Moscow have to protect their currencies against an undesirable turn of events, and therefore, they are converting their reserves into gold.

Russ Winters says that the two allies have a very simple plan : to gradually raise the convertibility of both the rouble and the yuan and to increase their role in international trade, which in time will make it possible to present them as reserve currencies. The USA, where the level of the state debt is approaching 110 per cent of the Gross Domestic Product (GDP), will simply not be able to respond to this challenge. Of course, it takes time to score a victory over the dollar, the euro and the pound. A reserve currency should meet certain demands, Head of the Trustee Management Department at Absolyut Bank Ivan Fomenko says.

“ First, the full openness of the currency market and the convertibility of this currency. Second - the reliability and openness of the financial institutions of countries which would like their currencies to heave a reserve currency status. Third – the consistency of actions of the monetary authorities. And fourth, which is the main thing here - the willingness of the companies to sign agreements with the yuan as the basic currency” .

Analyzing the conduct of Moscow and Beijing in recent years, one can say that the American trader is right. In 2009, China said that the domination of one currency in the world may cause the spread of a crisis. Russia also came out for an increase in the number of reserve currencies and even proposed the rouble as a reserve currency. Russia, Iran, Angola, Sudan, and Venezuela agreed to carry out payments for oil supplies in the yuan. The yuans are used to pay for 5 million barrels of oil per day. In the middle of July, it became clear that the volume of direct trading between the yen and the yuan had doubled only one year after the launching of such operations. On July 4th, Singapore began to offer clearing services in operations involving the yuan. And as regards Moscow, there is no information about its agreements with Beijing on the support of the yuan. And still, steps taken by it offer proof that it is supporting the Chinese course, an expert from the Higher School of Economoics, Alexei Maslov, says.

“Russia’s role is mainly technical. There is no direct agreement between China and Russia over the blockade of the dollar. And, as it seems to me, Russia is only one of the players in China’s big plan. However, from the tactical point of view, it is benficial for it. And from the strategic point of view, the strengthening of China may cause concern”.

Russ Winter says that another step – buying up the gold - resembles an attempt to kick out a stool under the seat of the United States. For this Russia and China must ensure the gold backing for their currencies, which they are already doing, as was mentioned before. The majority of analysts believe that this stool is very strong, and that at least from 5 to 10 years will be needed to make it rickety.

There was also talks about using the Rouble and the Yuan as trading currencies between the two countries for nearly every product of sales.

Precise processing

From the current 16.2 million tons capacity of Siberian railway will be increased to 55 million tons of cargo by 2018

$17Bln 'Optimal' for Siberian Railroad Upgrade – Transport Minister

So things are getting serious and Russia finally decided to resolve this problem

Action to change the situation are ready. The Prime Minister said, need to "expand the list of machine tool products" for which "there is a special order purchases." In 2011, the government banned defense companies to buy from the budget of foreign machines, if their counterparts produced in Russia. Minister of Industry Denis MANTUROV explained that when this decision was made, the domestic machine tool builders "did not produce a number of nomenclature," but now the equipment list will be expanded. Stimulate the production of new products should, according to the Trade Ministry, the Federal Target Program "Development of the domestic machine tool industry for 2011-2016", the total amount of funding for which is about 26.5 billion rubles. According Manturova, "introduction" of domestic machines will come from the consolidated state order, first of all, within the framework of the Federal Program "Development of the defense industry until 2020." He stressed that "such conditions are not inconsistent with WTO rules," since we are talking about the "public sector"

The estimated sources, publications, orders defense industry until 2020, including imports, may be about 500 billion rubles. In this MANTUROV said that the order book only on Russian production could reach 150-200 billion rubles., Which will ensure the industry's growth by 30-35% per year. The minister stressed that up to 80% of the total machine tool orders in the next seven years will occur in defense companies.

LINK

But at the moment when the decision was made, machine tool companies, unfortunately, did not produce a number of nomenclature. So we came out with a proposal to amend the terms of expanding the list of products, analogues of which are produced in Russia when it comes to public procurement or, more precisely, the capital costs due to the state budget - not to buy abroad, and procure appropriate products of the Russian manufacturer which is produced in Russia. Therefore, starting from this year, we are completing the first phase of the development program of machine-tool industry. We have developed a wide range of products, which now runs in the series, so businesses are counting on orders from industrial associations, the military-industrial complex, in particular in the framework of the modernization of enterprises.

If we talk about the script without any additional government stimulus measures, the minimum 150-200 billion by 2020 - this is an order for our businesses, that is, it will ensure the growth of at least 30-35% per year for the Russian machine-tool industry. This is a fairly significant growth, but we have set ourselves ambitious goals and objectives

LINK

The share of domestic machine tools in the domestic consumption has declined from 19% in 2008 to 9% in 2012, while the share of machine-building industry in Russia's GDP is only 0.03%, while Germany, China and Japan - 1%. "The difference is almost 100 times," - said Dmitry Medvedev and assessed the situation in the machine tool industry as "not brilliant".

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Viktor wrote:From the current 16.2 million tons capacity of Siberian railway will be increased to 55 million tons of cargo by 2018

$17Bln 'Optimal' for Siberian Railroad Upgrade – Transport Minister

So exactly how will they build this capacity and what is part of upgrade any idea ?

Will they build newer tracks/lines , have more trains running ...... was curious

Lets get this thread back on track.

Austin wrote:

Viktor wrote:From the current 16.2 million tons capacity of Siberian railway will be increased to 55 million tons of cargo by 2018

$17Bln 'Optimal' for Siberian Railroad Upgrade – Transport Minister

So exactly how will they build this capacity and what is part of upgrade any idea ?

Will they build newer tracks/lines , have more trains running ...... was curious

There is this Austin:

http://sdelanounas.ru/blogs/37106/

and this:

http://sdelanounas.ru/blogs/36955/

were posted in the other thread development and modernization of Russia.

They are preparing themselves for such a big endeavour.  Fact that Siberia will be a huge transport hub for South East Asia to Europe, as well as interconnecting various CIS countries to Russia, is indeed a very important program, and of course, there will be those who will get rich off of this (this is as big as the Trans African railway), and plants seem to be getting opened or modernized in order to deal with the need for rails.  Not to mention locomotives are sold like crazy:

http://sdelanounas.ru/blogs/37310/

Read through this: http://www.bsr-russia.com/en/transport/item/3977-trans-siberian-railway-getting-new-lease-on-life.html

sepheronx , Thanks will check those link up

Russian Energy Deals with Asia Mark Shift Away From Europe

Also check this link on National Savings , Quite amazing data and quite updated.

http://www.economywatch.com/economic-statistics/economic-indicators/Gross_National_Savings_Percentage_of_GDP/

Austin wrote:sepheronx , Thanks will check those link up

Russian Energy Deals with Asia Mark Shift Away From Europe

Have you access to a whole article so you can post it here?

^^ No , When I clicked on the linked it worked for me now it doesnt

Polar Thaw Opens Shortcut for Russian Natural Gas

Makes a Nice Read

Siberia and the Far East as a path to Russian globalization

It is inevitable.  Europe, as big as it is, has far too any small nations in between the big players (German/France and Russia), and they are not wealthy states either.  There has been issues of gas/oil supply because the smaller states (I am looking at you Ukraine) would siphon off some of the resources (blatantly stole) and or other ones step in the way of good deals because they are still upset about the "fall of the Polish empire" or "formerly ruled by Russia" so they always have to "stick it to the man" at any given chance.  In so, Russia loses quite a bit of opportunities with Europe and are being forever pushed into the South East Asian hands rather than European hands (even though Russian's are more European than they are Asian).

China, even with all these articles popping up in the west (total bulldung BTW) about how Russia and China are always preparing for a war between each other, is a FAR better investor in anything Russian than Europe.  Europe may sell certain equipment to Russia and even open up some facilities in Russia, but China has huge investments in Russia and a lot of Co-developed industries, thus it only makes sense that China would also get into lucrative deals for resources with Russia too.

Austin wrote:^^ No , When I clicked on the linked it worked for me now it doesnt

Polar Thaw Opens Shortcut for Russian Natural Gas

Makes a Nice Read

Siberia and the Far East as a path to Russian globalization

I remember a while ago about talk about moving the capital from Moscow to St. Petersburg, and I got thinking: "why not move it to Siberia?" Because first off, Siberia is more "center" of the country, as well, with the main federal offices being in Siberia, they would end up pushing huge amounts of investments in infrastructure development just to have all the lucrative and fancy facilities that politicians need. That would really push development fast, and create a third Moscow (After Moscow itself, and St. Petersburg). The future for Russia is Siberia, as Siberia is huge for technological development and resources. Tomsk and Irkutsk are the countries two most highly technical cities next to of course Moscow and St. Petersburg, and they have already a functioning technoparks (compared to semi-functional and over budget Skolkovo) and strong universities with highly skilled people being churned out. As well, a lot of development in things like cement and oil/gas. Only problem is, that location in Russia is highly underdeveloped in nearly everywhere else in terms of transportation and in order to increase money flow, they need to really connect the towns/cities/villages, and if main federal HQ is located there, then they would put more emphasis on building that connection. Cause it seems that anything not under the federal watch, is usually under developed.

Don industry is increasing production / Statistics

The index of industrial production in the Rostov region on the basis of half-year was 105.7% compared to the previous year. The Deputy Governor of the Rostov region - Industry and Energy Minister Alexander Grebenschikov the briefing.
Traditionally faster pace develops military-industrial complex. Rapidly developing major enterprises of the region showing the highest results. For example, "ROSTVERTOL" and "Beriev. GM Beriev "signed long-term contracts, which allows to predict a steady increase in production and shipment of up to 2013.
In enterprises related to the activity "Manufacture of transport equipment", the index of industrial production for the first half amounted to 110.5%. By the activity "Basic metals and fabricated metal products," the figure for January-June is 108.7%. In the "Manufacture of electrical and optical equipment 'industrial production index was 115.5%, and the" Textile and clothing industry "- almost 107%.

Read more at the link

Good, production is up. Various regions are seeing growth, it seems that the already heavily developed regions (and more expensive to operate in as well) regions are not fairing as well.

Russia, Belarus and Kazakhstan set up interstate high-tech center

Russian, Belarus and Kazakhstan will go ahead with their new Eurasian Economic Community (EurAsEC) high-tech center project, the EurAsEC official website announced.

The three countries are the most active players in this currently five-member supranational organization that also includes Central Asia’s Tajikistan and Kyrgyzstan, all parts of the former Soviet Union.

The EurAsEC Interstate Council first approved the high-tech center idea back in 2009. Russian Venture Company (RVC), Russia’s government-owned fund of funds for innovation, acts as a project operator on the Russian side.

The new entity will bear the full name of “EurAsEC Innovation Technology Center Venture Company, LLC.” The future company will pursue a multiple goal of “creating an effective institution for innovation activity in EurAsEC, investing and buying stakes in legal entities that engage in commercialization of innovation, and developing consulting services for other organizations that focus on innovation.”

For example, Belarus has already suggested that the new high-tech center fund five of its innovation projects in new materials, nanocarbon technologies, and powder metallurgy.

The EurAsEC Innovation Technology Center may soon be given for management about 15 sizable innovation projects. The core sectors to support will include supercomputers, space technologies, medicine, petroleum processing, nanotechnologies, and eco-friendly use of natural resources.

The screened and selected projects will be funded as part of private-public partnerships (PPPs). Each project may expect between $3m and $90m in funding.

Dmitry Mityaev, the CEO of EurAsEC Innovation Technology Center Venture Company, said earlier this year that his fund had plans to start by supporting five-to-seven projects at the inception stage. Once those are considered successful from an ROI point of view, the new company will move to backing more projects.

Good, a joint technopark between these countries will definately not only boost trade amongst these three countries, it will also pool together funding as well as specialists from each country to create a multinational talent pool. This will definitely help development.

Regarding moving Russian capital to Siberia... I read a suggestion by a Russian official that every 10-15 years the Russian capital should be moved... the idea is bourne from the fact that a lot of money is spent on the infrastructure of the capital to allow it to be the capital of Russia and that such investment always on one place does little to stimulate growth elsewhere in the country.

Changing every year would be expensive and wasteful, but every decade to decade and a half would allow infrastructure upgrades to be fully implemented.

GarryB wrote:Regarding moving Russian capital to Siberia... I read a suggestion by a Russian official that every 10-15 years the Russian capital should be moved... the idea is bourne from the fact that a lot of money is spent on the infrastructure of the capital to allow it to be the capital of Russia and that such investment always on one place does little to stimulate growth elsewhere in the country.

Changing every year would be expensive and wasteful, but every decade to decade and a half would allow infrastructure upgrades to be fully implemented.

most bullshit idea i ever heard, a pure joke, not only from the crazy planned econmy point of view but also would make us look internationaly like a joke of a country, lets move the capital around... this is not a fucking game, and our country is not a apartment building

the capital is one for a reason, the investment ther is also not goverment ones, the goverment cant do much thing right or effective, cant bearly pave roads, nobody will change to a diffrent location abandoning any done and proven system of work becouse some other place is now called capital, if other citys want to bring in investments then they need to do somthing to make themselfs atractive for it.
-reduce the crazy bureaucracy
-simplify and reapeal the local laws
-establish tax low zones

the goverment wont and cant do anything, it cant force anybody to change its location or to bring somebody to you, at its best it might pave some roads at its best, why on earth should i open my bakery/restaurant/brick factory in belogorsk if the regulations are unfreadnly to me? while the ones in saratov are much welcoming, of corse im going to saratov then, economics 101

most bullshit idea i ever heard, a pure joke, not only from the crazy planned econmy point of view but also would make us look internationaly like a joke of a country, lets move the capital around... this is not a fucking game, and our country is not a apartment building

No it is not a game, but many countries focus funding on the big centres and ignore the other areas... the result is one nice apartment... owned by the building owner... and the rest are in an awful state with no running water etc etc.

Perhaps a better idea is to have military capitals for the four main military districts that will serve as communications and distribution hubs.

-reduce the crazy bureaucracy
-simplify and reapeal the local laws
-establish tax low zones

Great ideas... don't think it is just a problem in Russia... even here in NZ everything you build on your own property needs building consents and the permission of the local council.

It is only going to get worse.