Russia should change the conditions for doing business in order to overcome the economic crisis, Sir Christopher Pissarides, Nobel prize-winning economist told a press-conference in TASS on Wednesday.
“You can come out of this apparent isolation through your actions internally. You should not wait for the West to change the views about Russia with you sitting back and doing nothing,” the economist said.
According to Pissarides, the sanctions, inflation, and lower demand are not the most serious issues the Russian economy is facing now.
“I don’t think the main issue being faced now by the government is expansion of demand. There is always inflation risk. The Russian economy has far more serious problems than deficiency of demand. The most serious problem that it is facing is how to decouple itself from natural resources in particular oil. For as long as the economy depends on oil and other natural resources for its revenue it will be a third world economy it just cannot be a modern economy,” he said.
Pissarides suggested that Russia could follow “industrial policy and the market policy that essentially ignores the fact that there is oil in Russia”
“Just put the oil to one side and let it accumulate in one fund that you don’t touch and develop your economy separately from that,” he said.
Business also needs transparent economic policy of the government, he added.
“Transparency of policy is absolutely essential. Whatever the government intends to do, they should be absolutely clear about their program and they should follow their program as stated. Confusion caused by uncertainty is the worst enemy of the market,” Pissarides said.