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21-08-2014

Ukraine | Russia | Economic Issues | EU

Economist Says Food Ban 'Certainly Against Russian Economic Interests'

www.rferl.org

Sergei Guriyev, former dean of the prestigious New Economics School in Moscow, and now a professor at Instituts d'etudes Politiques (Sciences Po) in Paris, left Russia in 2013 amid a crackdown on liberal intellectuals critical of the Kremlin's authoritarianism.

He speaks to RFE/RL's Charles Recknagel about Russia's ban on Western food imports and the dangers protectionist policies pose for the country's economic growth.

RFE/RL: Russian Prime Minister Dmitry Medvedev has sought to put a positive spin on the food import ban by saying it will stimulate Russia's own domestic food industry. Do you agree with this logic, which raises the question of whether protectionism rather than free-market interaction with the West offers Russia the best conditions for economic growth?

Sergei Guriyev: I think indeed this food ban is good news for Russian producers but if, on balance, the Russian government and the Russian president thought that such moves are better for Russian economic and social development, then they would have done it before. And the very fact that they have not done that before and, moreover, that [Prime Minister] Dmitry Medvedev has led the charge and President [Vladimir] Putin agreed to that in 2012, to join the World Trade Organization, suggests that under normal circumstances the Russian government thought that integration into the global economy is better for Russian society and economy.

Protectionism in this very stark form, where the country simply bans imports of certain goods from other countries, creates opportunities for [domestic] producers and improves the welfare of the producers because they are protected from competition. But of course it hurts consumers because they have less choice and have to face higher prices, and economic theory directly predicts that prices will go up as a result of this decision and under reasonable assumptions economic theory predicts that the consumers lose more than producers gain, and in that sense the country as a whole loses.

These predictions were taken into account by the Russian government in the past and that is why the Russian government in the last 20 years integrated into the global economy and chose policies [different] from protectionism and autarky that were pursued by the Soviet government. And that has actually been one of the important factors behind growth of the Russian economy and growth in consumption, and therefore the raising of living standards, which, in turn, actually contributed to rising support for the Russian government among ordinary Russians, who enjoyed this prosperity and growth of consumption and living standards.

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