Nizhny Tagil, Nov. 25, 2015: Russian President Vladimir Putin (R) during a meeting on the import substitution policy that the government hopes will help Russia weather economic and financial sanctions that have followed the annexation of Crimea (source: dpa)

As sanctions take their toll, Russia turns to import substitution

As the Russian economy’s difficulties deepen, the Kremlin is putting a brave face on things. It maintains that Western sanctions have been beneficial and that its own anti-crisis program is working. Moreover, the government is talking up a new “Strategy 2030” to boost domestic self-sufficiency based on import substitution. The new measures, however, are unlikely to steer the Russian economy toward modernization and better integration with the global economy.

Moscow’s argument that the sanctions have had a positive effect is not entirely without merit. They were imposed before the price of crude oil began to plummet, and actually helped the government prepare for the fiscal adjustments...

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Professor Stefan Hedlund
Russia has abundant natural resources and human capital. What is lacking is an institutional framework that can transform those resources into high-quality output
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