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NEWS RELEASE
June 25th, 2007

Sitra:
We and they – Russia in comparative perspective

Why is Russia's competitiveness still lagging behind that of the West and some other competing emerging markets? And above all, what should Russia do in order to increase its competitiveness and bridge that gap? These are questions extremely relevant in today's Russia.

The book We and They: Russia in Comparative Perspective, edited by Vladimir Mau, Alexey Mordashov and Evgeny Turuntsev being published today contains six articles that analyse Russia's current competitiveness from various angles. It is written by prominent Russian scholars who explain Russian competitiveness through historical, economical, cultural, sociological and geographical factors. Since its publication in Russia, the book has been an important driver in the ongoing debate about how to improve Russian competitiveness. It provides insight into a better understanding of Russia and Russian thinking for Finnish and international audiences. Besides the macroeconomic level, We and They unravels the Russian way of individual thinking and helps in the understanding of Russian organisations and their modes of operation.

Understanding Russia, the key to success

“Understanding the competitive environment of today’s Russia is the key to success,” said Esko Aho, President of Sitra in his opening notes. “This book provides valuable information about Russian argumentation and as the dialogue that gave rise to this book started in Finland back in 2003, Sitra is proud to finally publish it in English for Finnish and international audiences,” Aho continued.

“The book provides interesting information about the logic of the social and economic aspects of Russian development in comparison with that of other developed countries,” said Professor Vladimir Mau. “The pattern of Russian transition is often considered to be a phenomenon very different from Western patterns. This analysis shows that Russia mostly follows its own path. This is very important for a better understanding of the basic trends in Russian development.”

“This book provides a Russian answer to the question, Why is Russia not Finland?, which was asked in a previous study in this series by Finnish researchers. It is a comparative study of our economy with five other leading nations, not only Finland. We hope that this research helps both ourselves and foreign observers to discover more about our country. Severstal is happy to have the opportunity to support such research,” said Alexei Germanovich, Vice President of Severstal OAO.

“This book provides valuable information about Russian academic debate,” said Simon-Erik Ollus, Economist from the Bank of Finland in his commentary on the publication. “The articles are quite heterogeneous and provide no general conclusion as to what Russia should do to improve its competitiveness, but they help explain the reasons behind the current low competitiveness,” he continued. “It’s not about geography but more about culture,” argues Vladimir Kagansky in his analysis. “From a very similar, neutral foundation Russia and Finland have built quite contrasting cultural landscapes, where Finland is developing its resources while Russia is acquiring new ones and wasting them. Geographical determinism – the differences in economic and social development can be explained by geography alone – is still popular in Russia but it just does not work any more.

“Christian orthodox characteristics explain much of Russia's backwardness,” writes Igor Yakovenko in his article. He compares Russian society to German, Finnish, Italian, American, Brazilian and South Korean ones. Interestingly he shows that all Protestant societies have been modernised, while only a few Catholic countries have succeeded in doing that. All Christian orthodox societies – Russia being one of them – are in crisis, and only secularised Turkey of the Islamic world is somewhat modern in economic terms.

“Russian labour ethics are similar to those of Israel, Germany, Austria and Finland,” argues Elena Danilova in her article. “Russia is more individualistic than collectivistic and more feminine than masculine. Therefore the American business models are not so well adopted in Russia.”

“The Russians prioritise work more than the Finns, Germans and Americans,” argues Vladimir Magun. “The Russians appreciate their salary and are more than willing to trade leisure to work but are not willing to put extra effort into their work, which is necessary for high end results.”

In the fifth article, Irina Soboleva compares Russian human development and especially the labour market trends with those in Germany, the U.S., Italy, Finland, South Korea and Brazil. Russia is the only country in this group where human development based on the United Nations HD Index has reversed since 1980, and only Brazil scores lower than Russia. Russia scores much better in education, but Russian education is ineffective.

“Only a lawful and politically stable state can be competitive,” writes Vladimir Rukavishnikov. “In Western countries political trust in democratic institutions is high, while in developing countries like Russia people often mistrust their politicians. It is said that a market economy can develop without real democracy, which is why democracy is not always seen as a necessary condition for fast economic growth. However, the argument ignores the fact that today the least competitive countries are those with somewhat undemocratic regimes and widespread corruption.”

Sitra’s Russian Programme has opened discussion on Finland’s economic strategy in Russia and contributed to the establishment of Finnish businesses in the Russian market. We and They provides Russian wisdom on these matters and serves as an important guide for Finns on Russian collaboration.

Further information
Maaret Heiskari, Executive Director, Sitra +358 (0)9 6189 9467, firstname.lastname@sitra.fi
Publication data
We and They: Russia in Comparative Perspective
V. A. Mau, A.A. Mordashov and E. V. Turuntsev (Eds.)
Helsinki: Sitra, 2007. ISBN 978-951-563-587-7.

www.sitra.fi


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