Modernizing Russia: Round III. Russia and the other BRIC countries: forging ahead, catching up or falling behind?

Abstract

The term 'BRIC countries' - Brazil, Russia, India, and China - traces its roots to investment banking, Goldman Sachs coined the term in 2001. The idea of large emerging economies catching up with, and challenging, the West has captured social scientists and policy-makers alike. However, the sheer size and different historical legacies dictate that there are enormous differences between the BRIC economies. Russiaÿs situation is in three ways unique among the BRIC countries. First, Russia was an industrialized nation long before the others, secondly, it experienced unprecedented economic decline in the 1990s and by 2008 Russia barely reached the GDP level of 1989; thirdly, unlike Brazil, China, India and in fact most of the developing world, Russia is not a member of the World Trade Organization (WTO). These unique features beg the following questions that this document seeks to (at least tentatively) answer: first, what is the structural legacy of the decline in the 1990s in terms of technological and industrial capabilities in Russia; and second, what can and should Russia learn from the WTO experience of the rest of the BRIC economies until today. We argue, in brief, that while the decline of the 1990s is relatively well-known and documented on the macro-level (GDP) and more controversially in some of its micro-level and sociological impacts, there seems to be little awareness of the magnitude of devastation that took place during this period within Russiaÿs industry. Along with a massive increase in income from natural resources, a partial disintegration of the R&D system, and a greatly diminished policy capacity, the structural changes of the 1990s continue to pose grave challenges to Russiaÿs economic policy making. In fact, in many areas Russiaÿs technological and industrial capabilities have simply been lost.