[lbo-talk] Russia's economy (was Kvetching, Sarkozy etc.)

ravi ravi at platosbeard.org
Thu May 10 09:42:55 PDT 2007


On 9 May, 2007, at 12:21 PM, Doug Henwood wrote:
> On May 9, 2007, at 12:02 PM, ravi wrote:
>
>> So it seems like India is a Russia (large intellectual/technical
>> skill base, pent-up consumer demand, etc, including the imported
>> stuff: products, brands, etc) without the oil. Would those of you
>> predicting or suspicious of doom for Russia say the same of India? Or
>> is my analogy wrong?
>
> India's pretty complicated, with a large and very poor rural sector
> and some very impressive basic industry and high-tech. Russia's not
> really like that - it just doesn't have those extremes. But on a pure
> investment level, India's halfway between Russia and China, and
> rising.
>
> INDIA: GROSS FIXED CAPITAL FORMATION
> % of GDP
>
> 2004 26.3
> 2005 28.1

I follow (though I cannot claim to clearly understand) your point regarding investment: if I get it right, GFCF is how much money local corporations invest in fixed assets. This I assume is a good thing because it shows that industries are growing their infrastructure, etc. Two questions arise: (a) Is this investment possible because the Indian companies are making higher margins in comparison to Russian ones? (b) or is it that the Indians are spending the money in such build-out while the Russians are eating up the profits?

Returning to more general terms (broached by both of us above), Russia (from my second hand knowledge) seems to have the upper hand, given that they do not suffer the extremes that India does while at the same time being an technical [skills] powerhouse (or have things changed so drastically in the last decade including me, before which every Indian student looked up to Russian texts as authoritative). Russia is after all the country that put the first Indian in space and supplied a large chunk of India's "defence" arsenal -- keeping in mind that the sophistication of defence products is a good indicator of scientific achievement.

I would also assume that Russia suffers lesser from issues of population, lack of infrastructure, resource over-exploitation, communal and regional conflict, entrenched corruption (not just in a bureaucratic sense), religiosity (;-)) including caste systems and so on, lack of natural resources, etc, etc. (with English being to India's advantage).

So, if all of the above is true, Russia can trivially (trivial in a technical sense, not in terms of the political will) replicate the Indian "success" and do so in a more sustainable manner. Or so it seems to me. I am guessing though that I am missing something...

--ravi



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