• V. Popov — Searching for New Sources of Growth. Are the Developing Countries Catching up with the Developed Ones?
• A. Abramov , A. Radygin, M. Chernova — Long-Term Portfolio Investment: New Insight into Return and Risk

• A. Koval — PFI OECD — Framework for Strong Investment Policy

Abstracts

The article considers social and economic tasks that Russia faces in the context of the present-time global transformation. The key technological, economic, and social trends, which determine the contours of the post-crisis world, are analyzed. The long-term agenda of the country’s development aimed at securing a new quality of economic growth is proposed.

JEL: E02, E60, H10, H50, H60, O10, O30.
Keywords: Russia’s economic policy, innovation economy, public administration.

This paper examines the trajectory of growth in the Global South. Before the 1500s all countries were roughly at the same level of development, but from the 1500s Western countries started to grow faster than the rest of the world and PPP GDP per capita by 1950 in the US, the richest Western nation, was nearly 5 times higher than the world average and 2 times higher than in Western Europe. Since 1950 this ratio stabilized — not only Western Europe and Japan improved their relative standing in per capita income versus the US, but also East Asia, South Asia and some developing countries in other regions started to bridge the gap with the West. After nearly half of the millennium of growing economic divergence, the world seems to have entered the era of convergence. The factors behind these trends are analyzed; implications for the future and possible scenarios are considered.

JEL: N00, O1, O40, O43, O47.
Keywords: convergence, divergence, per capita income, economic growth, institutional capacity of the state.

The article examines the influence of investment horizon increase on comparative advantages of main asset classes and on the principles of investment strategy development. Unlike in the traditional approach of portfolio management theory, the study shows that for long-term investments corporate bonds have the advantage over equity in terms of return—risk tradeoff. This fact argues in favor of the fixed-income oriented (including infrastructure bonds) investment strategies for pension funds and institutional investors. The article draws special attention to the importance of regular portfolio rebalancing for long-term investors. In this case the variation of returns decreases and the variation of risks increases with the holding period. Consequently, with horizon increase a long-term investor should allocate more assets in the low-risk financial instruments in order to keep a certain level of return—risk tradeoff. This argument becomes increasingly important for the purposes of pension savings management.

JEL: D14, G11, G12, G15, G17, G23, H55.
Keywords: pension savings, long-term investment, investment horizon, return on equity and bonds, investment risk, portfolio diversification.

The article considers debt management practices by Russian regions and municipalities, within a framework set by federal budgetary legislation and practices of state-controlled banks. Key drivers of regional and municipal debt policy are analyzed, and Russian regions are stratified by their debt policy. Current recession is likely to produce higher level of regional debt and changes in its structure, lowering reliance on market funding and decreasing variations in pursued debt policy.

JEL: H74, R12.
Keywords: Russian regions, fiscal balance, debt management, interbudgetary loans, municipal bonds, credit ratings.

The paper identifies and assesses the closeness of the connection between incremental indicators of the financial development in the regions of Russia with the incremental regional GDP and the investment in fixed capital. It is shown that the positioning of the region as an independent participant of public debt market matters: the regional GDP and investment in fixed capital grow more rapidly in the regions which are regularly borrowing on the sub-federal bonds market. The paper also demonstrates that the poorly developed financial system in some regions have caused the imperfection of the growth mechanisms since the economy is not able to use the financial system’s functions.

JEL: G18, G21, G28, O10, O18, O43.
Keywords: financial market, financial systems, economic development, Russian regions.

The method for evaluating protectionism rate in regional public purchases is developed. It is tested with data for 2011—2013. The presented regional rankings of protectionism show that high-level protectionism covers a majority of regions accumulated steadily about 80% of total regional public purchases’ volume. The federal contract system is considered as an instrument of public regional policy that could contribute to the interregional trade and strengthen internal economic space. Main forms of allowable protectionism in regional public purchases are identified (regional list of protected products, territorial price preferences) and suggested to be legalized.

JEL: R12.
Keywords: regional protectionism, state procurements market, regions ranking, regional economic integration.

This article presents the analysis of product and destination variety of exports in Russian regions in 2002—2010. In particular, it considers those geographical markets and product groups that are most often revealed in the export structure. The analysis allows to identify five clusters of manufacturing industries which products are intensively exported by Russian regions. Accordingly, these industries may become the basis of non-primary export expansion in the Russian economy. Based on the analysis presented in the paper, the authors propose a new approach to regional groupings in Russia that synthesizes the characteristics of regions associated with the type of socio-economic development and qualitative characteristics of the export dynamics.

JEL: F14, R1.
Keywords: export, product diversity, geographic diversity, Russian regions.

The improving investment climate objective requires a comprehensive approach to the regulatory framework enhancement. Policy Framework for Investment (PFI) is a significant OECD’s investment tool which makes possible to identify the key obstacles to the inflow foreign direct investment and to determine the main measures to overcome them. Using PFI by Russian authorities would allow a systematic monitoring of the national investment policy and also take steps to improve the effectiveness of sustainable development promotion regulations.

JEL: F210.
Keywords: Policy Framework for Investment, PFI, investment policy, OECD, economic growth.