Russia faces a very specific and difficult challenge – the task of diversifying its economy, ending its heavy reliance on exports of oil, gas and other minerals. The new publication of the European Bank for Reconstruction and Development looks in detail at policies that can help to achieve economic diversification. The report argues that sustainable long-term growth in Russia requires economic diversification to reduce the country’s dependence on natural resources. To achieve this, Russia needs to broaden and refocus its diversification strategy. This requires much greater efforts to improve education and skills, as well as the business environment, at both the regional and the national level. Russia’s enormous regional diversity can be leveraged in order to achieve these aims. While there is also a need for targeted policies in support of innovation, these should focus on improving incentives for market-relevant research and development and complementing private sector-led sources of finance for early-stage firms. The report pays particular attention to Russia’s regional diversity and uses evidence from a number of surveys conducted jointly by the EBRD and the World Bank, including the Business Environment and Enterprise Performance Survey and the Life in Transition Survey. It also uses primary data from a number of other unique surveys, including a Management, Organization and Innovation survey and a survey of recruiters in the Russian regions.
