Will a new model of economic growth take place in Russia?

Given the present level of institutional quality and the significant role of the government sector in the economy, the Russian Federation has depleted the potential of the current model of growth which is based on commodity exports. The dramatic deceleration of the GDP growth rate down to less than 2% in the end of 2012 and the beginning of 2013 bears the evidence to this proposition. At the moment, the government considers the choice between expansionist and conservative scenarios, which both lie on the assumption of long-term conservation of existing imperfect institutions. However, according to our estimates, it is impossible to create a new model of growth ignoring the role of private initiative, healthy institutions of market economy and investment in human capital. We distinguish two groups that are increasing their influence nowadays and can potentially become the driving force of a new model of Russian economic growth: 'new business', dynamic companies that are oriented at the development in the market conditions but lack incentive to invest within existing institutional framework; 'new bureaucracy', consisting of progressive regional elites, who are interested in the development of their area, and efficient professionals of the federal level. Reprinted by permission of "Voprosy Ekonomiki"