Russia is a country of missed opportunities

In 1998, a default occurred, the economy fell by 5.34% in annual terms, the dollar rose from just over 6 rubles to almost 21, public finances and the banking system required a complete reboot.

And it happened. Important reforms were carried out between 1999 and 2003: tax and pension reforms improved public finances, the approach to monetary policy and the exchange rate regime changed, barriers to market entry were sharply reduced, negotiations began on WTO accession, and the process of reforming bureaucracy began. All these reforms are part of the "Program for the socio-economic development of the Russian Federation for the period 2000-2010" adopted by the Government in 2000 (the Gref Program).

The reforms have borne fruit. The growth of the Russian economy began before oil prices began to rise rapidly (somewhere in the middle of 2004):

• 2000 - 10% (here, of course, the effect of recovery growth)
• 2001 - 5%
• 2002 - 4.7%
• 2003 - 7.3%
• 2004 - 7.1%

Since 2004, many reforms have been halted, and Gref's program has only been completed by a third. But a number of important things were done (however, reforms continued in macroeconomics and finance - the stabilization fund, the deposit insurance system, etc.), which introduced "macrostability" into our lexicon. And the prices for hydrocarbons have been rising all the way. The bottom line: in 10 years (1999-2008) Russian GDP grew by 94%, and per capita - exactly 2 times. This is the most outstanding decade in Russian economic history - with the exception of the economic recovery after the Civil War during the years of the NEP.

But this growth model was exhausted by 2008. The return on the creation of markets typical of modern economies was declining, oil was growing, but not so rapid. A transition to a modern growth model was required, and this required reforms. And there were counter-reforms.

Instead of 6% per year, the average annual GDP growth rate in 2012–2018 amounted to 1%. And yet, even in such conditions, we developed fintech, we developed the IT sector, we got Vkusvill, Magnit and FC Krasnodar with its academy, we had cool projects in oil and gas, a competent and qualified Central Bank, cool services (from delivery to streaming), we have good educational and cultural projects, excellent restaurant spaces and bars, craft breweries, as well as elements of everyday life in modern cities.

Given the scale of Russia, all this, of course, is a few drops in the ocean, but still - this is the very thing that inspired optimism. And this optimism is about the potential of the Russian economy. Unfortunately, it does not happen that development becomes massive, intense and long-term, if there is an information autocracy around.

Russia is a country of missed opportunities.

Grigory Bazhenov 2022-05-06