• D. Foley — Mathematical Formalism and Political-Economic Content
• D. Kadochnikov — Money Demand in Structural Models of Exchange Rate Determination

• V. Mau — Human Capital: Challenges for Russia
• T. Klyachko, S. Sinelnikov-Murylev — About the Higher Education Financial Reform

• International Monetary Fund — Russian Federation — Concluding Statement for the 2012 Article IV Consultation Mission (Moscow, June 13, 2012)

• Yu. Kvashnin — Greece Political Crisis: New Parties and Old Ideas

Abstracts

The paper considers the main stages in the evolution of the Russian financial development institutions in the last decade and a half, models and conditions for their activities, the main results. The authors analyze features of the current development institutions system as a whole, its key changes and main trends. Particular attention is paid to the study of internal imbalances in the development institutions system, as well as external constraints to improve its effectiveness.

JEL classification: O2, O31.
Keywords: development institutions, innovation policy, market failures.

This article is dedicated to identifying innovative firms. A wide-spread process for identifying innovativeness in firms and its relationship to the high-tech­ sector is exposed to criticism. It is confirmed that large expenditures on R&D in a firm’s sales, which, according to international methods, is a sign of a high-tech focus within a firm, is not typical for many types of innovation, particularly in industries dealing with the diffusion and application of knowledge­. The special role of non-high-tech innovations for modernizing the Russian economy is emphasized.

JEL classification: O31, O33, O38, L26.
Keywords: modernization, national innovation system, demand for innovations, low-tech innovation, high-growth firms.

The conceptual model of a network engineering platform, which provides the transfer and cross-application of technologies among the knowledge generation­ environment (universities and research institutions), the environment where the knowledge is technically realized (industry) and the equipped environment­ of development catalization (venture funds and agencies) is presented in the article. The analytical design of the issue has been assumed as a basis for building­ an expertise and engineering consortium that provides the combination of research and production aimed at rapid technical realization and innovations ­com­modification.

JEL classification: I23, I25, O31, O32, O38.
Keywords: knowledge ­com­modification, transfer of technologies, innovation partnership, engineering platform.

Nanotechnology clusters found in Russia are studied. The overview of innovation regional programs is presented. It is shown that institutionally Russian regions are not ready for modern technologies implementation. The main ideas of regional experts on perspectives and tendencies in nanotechnology are reviewed. The mathematical model that describes the dynamics of innovative clusters is presented. Its application in some cases in regard to nanotechnology is shown. The issue of deliberate changes in society development (that is equivalent to changes of model parameters) by appropriate measures is discussed.

JEL classification: C53, C63.
Keywords: innovations, nanotechnologies, high technology clusters, Russian regions.

Mathematical methods are only one moment in a layered process of theory generation in political economy, which starts from Schumpeterian vision, progresses to the identification of relevant abstractions, the development of mathematical and quantitative models, and the confrontation of theories with empirical data through statistical methods. But today the relevant abstract problems of political economy are modified to fit available mathematical tools. The role of empirical research in disciplining theoretical speculation, on which the scientific tradition’s integrity rests, was undermined by specific limitations of nascent econometric methods, and usurped by ex cathedra methodological fiats of theorists. These developments­ ­systematically favored certain ideological predispositions of economics­ as a ­discipline. There is abundant room for New Thinking in political economy starting from the vision of the capitalist economy as a complex, adaptive system far from equilibrium, including the development of the theory of statistical fluctuations for economic interactions, redirection of macroeconomics and financial economics from path prediction toward an understanding of the qualitative properties of the system, introduction of constructive and computable methods into economic modeling­, and the critical reconstruction of econometric statistical methods.

JEL classification: A11, A12, B23, B40.
Keywords: mathematical methods, economic methodology, formalism, models.

The demand for money is the key element uniting major structural models of exchange rate determination. The author analyzes the history of money demand theorizing in connection with the development of structural models of exchange rate determination. The author demonstrates that the evolution of the theory of money demand shaped the evolution of the theory of exchange rate. The paper also contains suggestions regarding the approach to criticizing structural exchange rate determination models on methodological grounds and the manner of teaching the economics of exchange rates.

JEL classification: B1, B2, E41, F31.
Keywords: exchange rate, demand for money, theory of money, history of economic thought.

Education, healthcare and pension system are the key sources of modern economic growth. They need profound transformation based on post-industrial challenges. The new principles of transformation of these sectors include individualization of services, their privatization (a rising role of private spending), life-long demand for them, globalization (international competition), and development of radically new technologies to provide them.

JEL classification: E24, G23, H75, I15, I18, I25, I28.
Keywords: human capital, education, healthcare, pension system, social and economic policy.

The article deals with higher education reform in Russia. Special attention­ is paid to the innovations after the Federal law No 83 was adopted (2010). The authors analyze whether the reforms lead to financial self-dependence of universities­, whether they do create a more competitive environment (which promotes­ a better education), and how the normative per capita financing affects the higher education system. Аnalysis of the first reform steps shows: the results are contradictory, many applied methods do not lead to the desired effect. The main obstacles are other institutions: first of all the system of higher education­ institutions accreditation and licensing. For further efficiency growth of higher education political (administrative) methods are needed. Only after application of administrative methods the economic methods will work properly. During the reforms it is also necessary to account for the social situation in the country.

JEL classification: I2, I22.
Keywords: higher education, welfare state, human capital.

The Russian economy has recovered from the 2008—2009 crisis and is now running close to its potential. While demand pressures risk overheating the economy in the short run, medium-term growth prospects are constrained. To address these challenges Russia should continue to strengthen the conduct of macroeconomic policy and tackle long-standing structural bottlenecks. An ambitious fiscal adjustment is needed to ensure that economic growth is balanced, fiscal policy is not pro-cyclical, and oil wealth is spent equitably across generations. Meanwhile, monetary policy should be tightened to keep underlying inflation on a declining path. The increased exchange rate flexibility has been a major policy advancement and is helping the Russian economy absorb external shocks, including spillovers from the international financial turbulence. A stronger supervisory framework is key to promote sound financial intermediation. Critically, the new government should deliver promptly on long-awaited structural reforms, including measures to improve the investment climate.

JEL classification: E52, E58, E60, E61, E62.
Keywords: macroeconomic policy, monetary policy, structural reforms, Russian economy.

The article deals with the programs of Greek political parties and key results of snap elections in May and June 2012. The main questions are: will the austerity policy, implemented since 2010, continue, what is in store for Greece, if further reforms become politically unacceptable, and what are the chances that the Greek political crisis spreads to other South European states. The author concludes, that neither Greek nor EU decision-makers can propose effective program to establish economic growth. In these circumstances we see the rise if radical and populist political parties. If other European countries face the same economic problems, their political landscapes can undergo significant changes.

JEL classification: E60, H0, P4.
Keywords: Greece, euro crisis, European integration, economic crisis, elections.