Page 13 - RusRPTNov18

2.5 Russia most competitive economy in its region
Russia moved two ranks up to the 43rd place in the Global Competitiveness Index (GCI) compiled by the World Economic Forum, and together with China (28th place) being the only two BRICS economies in the top 50 of the index.
Russia is the most competitive economy in its region, and as compared to the last year was helped the most by the macroeconomic stability (88 points and 55th place in the ranking). Russia’s advantage is traditionally the size of the domestic market (84 points and 6th place).
Notably, the report this year focused on the new Industry 4.0 methodology, and among crucial high tech developments Russia showed solid level of information technology penetration (72.1 points and 25th place). However, the Industry 4.0 weaknesses of Russia include weaker scores on labour force skills (50nd place) and human capital (85th place).
In 2017, as the Russian government and experts cited the country's technological lag as a serious brake on economic growth in the coming years, Russia slid 14 places to 26th place on Bloomberg's Innovation Index 2017 of the world's most innovative economies.
"The weaknesses are related to the development of the financial sector, limited regulation and competitiveness in certain sectors, as well as weak institutional environment," the partner of Strategy Partners and the head of the GCI project in Russia Alexei Prazdnichnyh told Kommersant daily.
"The issues of healthcare and absence of education fitted to the needs of the new economy becomes the growing source of Russia's competitive weakness," he added.
2.6 IMF says share of state in Russian economy 30% not 70%
IMF estimates that the government sector and public sector firms account for a third of Russia’s GDP. The International Monetary Fund seeks to clarify the interpretation of the figure of 70% it published in 2014. That is the ratio of the income of the government sector and public sector firms to GDP. This is not the same thing as their share of GDP, as it is often misinterpreted, reports Bank of Finland Institute for Economies in Transition (BOFIT) .
The IMF has now calculated their share of GDP to be one-third. In the economy’s market-based block, the estimate is based on their share of income. In blocks where the income formation of firms and organisations is not market-based, it is based on their share of workers. The calculation includes the subsidiaries of the 20 largest state-owned enterprises (excl. banks) in Russia. The one-third share is estimated for 2016, but according to the calculations it was practically the same in 2012.
The IMF emphasises that the negative effects of public sector firms within the economy can be wider than suggested by their nominal GDP share, e.g. through excessive concentration and the lack of competition in some branches, lack of transparency in procurements of the government or SOEs, as well as preferred treatment through easier access to financing.
Researchers at the Russian Academy of National Economy and Public Administration and the Gaidar Institute published their own assessments of the public sector’s contribution to GDP earlier this year. The government sector’s share of GDP appears in Rosstat’s GDP figures as just under 20%, and this
13 RUSSIA Country Report November 2018 www.intellinews.com