HSE experts assessed the results of import substitution in Russia and its prospects

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HSE 15 February 2023 18:28

Russia has been pursuing an import substitution policy for 15 years and has been able to reduce the share of imports in many positions. In recent years, the use of imports in the industrial complex of Russia has not exceeded 40%. This is lower than that of Canada, the Netherlands, Poland, Australia, Germany, Saudi Arabia and other major economies, and about on par with the United States and India.

At the same time, dependence on imports in certain sectors of the domestic economy is still critical. Under the conditions of sanctions pressure, the import substitution policy should take into account the need to ensure technological sovereignty while maintaining the openness of the economy and reorientation to the markets of friendly countries, experts emphasize.

Higher School of Economics with the participation of the RSPP and the Institute of Research and Expertise of VEB.The Russian Federation has prepared an analytical report "Import substitution in the Russian economy: yesterday and tomorrow". The authors of the study define import substitution as "the cultivation of domestic industries capable of completely or partially replacing imported goods with Russian products, which is accompanied by a change in the commodity structure of imports."

 "Imports are not a negative factor. Economic development, as a rule, is closely connected with integration into world economic relations," explains Yuri Simachev, Director of the HSE Center for Structural Policy Research, head of the author's research group. According to the study, Russia's industrial complex depends on imports by less than 40%, which is about 2 times lower than in Hungary, Slovakia, Slovenia and the Baltic countries. In Germany, the import is 50%, and in the USA and India it is comparable to Russian.

The report notes that in most sectors of the Russian economy in recent years there has been an increase in the availability of domestic products, the most significant — in mechanical engineering for the food industry, agricultural and heavy machinery.

The highest level of availability of Russian products is in the building materials industry (96%), transport engineering (92%) and ferrous metallurgy (90%). Least of all — in the machine tool industry (24%), pharmaceutical industry (35%) and in the children's goods industry (31%).

Few people believed that after the departure of foreign car companies last year, Russian automakers would be able to recover quickly. But, for example, KAMAZ immediately promised that it would launch the production of the fifth-generation trucks without partners from unfriendly countries. And in February of this year, the first updated mainline tractor of the K5 series (KAMAZ-54901) with improved technical characteristics was assembled.

Even before the sanctions tsunami of 2022, the production of household appliances in Russia was constantly growing. From 2017 to 2021, it grew by 1.7 times. "Thanks to the development and localization of production, the industry was largely protected from sanctions related to the departure of Western manufacturers," said Mikhail Kuzyk, Deputy director of the HSE Center for Structural Policy Research, co—head of the author's group.

Experts report that the level of import use in the economy and in certain industries only indirectly allows us to judge the real import dependence. A high level of imports may not be a problem if they are low-risk imports.

The policy of import substitution in the new conditions "should be aimed at achieving structural effects, and not at "frontal" import substitution in all directions." It also needs to be balanced so that the tasks of ensuring both the stability of the economy and technological sovereignty are solved. There is no universal policy for all industries, "multidimensional, time—spaced solutions are required with maneuvering in the space of the following resources: production capacity, human capital, R&D," summarizes Yuri Simachev.


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