Effectiveness of government management in the Russian Federation

Vladimir V. Moiseev,
Professor,
Department of Sociology and Management, Belgorod State Technological University named after V. G. Shukhov,
Russia

The efficiency of the state is ensured by the well-functioning system of state bodies, the ability to articulate and to protect legally the public interest, to implement successfully the state social and economic policy, ensuring not only the interests of the state or the ruling class, but also the entire population, certain social groups and every human being.

In the Russian Federation, owing to permanent crises, stagnations and recessions, the toughening of anti-Russian sanctions, the decrease of real income of the major population, the lowering of living standards of Russians, the issues of efficiency of public administration, as well as criteria, by which one should assess this effectiveness, are actively discussed.

The author attempts to justify theoretically an assessment of the public administration effectiveness through the comparison procedure of the results of certain managerial decisions, as well as the degree of achievement of the key objectives when implementing the state policy on the whole and solution of its separate relevant problems. Specific examples, official statistics, comparing them with the developed countries of the world, the authors clearly show the inefficiency of the Russian public administration when solving both economic and social problems.

According to the Rosstat data, over a 2.146 million people worked in the state bodies, local self-government bodies and election commissions, including 1.410 million in the federal government. Over the previous 15 years, the number of civil servants per 1,000 people employed in the economy increased by almost twice, from 18 to nearly 32 people. In the vast Soviet Union, which consisted of Russia, Ukraine, Belarus, Kazakhstan and 11 other Soviet republics, the number of officials and managers was much less. The personnel of state officials of the Russian Federation in 1988 consisted of 1.16 million people or 81 officials per 10,000 people (20% less than nowadays). State budget expenditure on the maintenance of the two-million army of officials and managers exceed half a trillion Rubles a year, and the expenditure is constantly growing.

How efficient is this huge army, the maintenance of which consumes the lion’s share of the state budget? Let us consider the effectiveness of state management by the example of regulating the economy.

Unfortunately, Russia has not followed the beaten path to prosperity, unlike the USA, England, France, Germany, Japan, South Korea and other developed countries, but chose its own special way. After the first decade after the restoration of capitalism under the leadership of President Boris N. Yeltsin, the country has lost more than a half of its industrial potential and in 1998 announced its default. The second President of Russia initially managed to achieve some success in building a capitalist society with strong social policies. The Russian leadership managed to improve the socio-economic situation in the country: gross domestic product (GDP) has almost doubled, and the population’s real incomes increased 2.5 times on average. The number of people living below the poverty line has decreased more than 2 times.

Pensions and wages increased significantly. However, the achievement of high results was not facilitated by active and purposeful work of the state apparatus, but rather the favorable world conjuncture of prices for oil and other commodities exported by Russia. Owing to petrodollars, the flow of which was increasing until the autumn of 2008 (and the oil price rose to 149 dollars per barrel), the government managed to generate a budget surplus, when revenues exceeded expenses by 1.5-2 trillion Rubles.

However, as experience shows, the “’oil curse’ and petrodollars eventually become an obstacle to years of tumultuous changes have not allowed our country to get rid of its humiliating dependence on raw materials”.

Despite this, the government preferred to wait till the resumption of higher revenues from the sale of oil and gas and practically did not diversify the economy and transfer it from raw materials to the innovation way of development. Numerous economic and social problems, unresolved by the two-million army of officials-managers in the so-called “prosperous years” revealed the global financial and economic crisis of 2008-2009. Dmitry A. Medvedev, ex-President of Russia, in the article “Russia, forward!”, admitted that, “the global economic crisis has shown that our affairs are far from being the best. Twenty years of tumultuous changes have not allowed our country to get rid of its humiliating dependence on raw materials”.

However, the fall in raw material prices in 2008-2009, 2014-2016 and 2020-2021 again showed low efficiency of public administration in the Russian Federation. As a result, our country cannot develop dynamically like, for example, China. A comparative analysis of the development of the economies of Russia and China in recent years allows us to draw a well-grounded conclusion about significantly higher GDP growth rates in the People’s Republic of China. This is evidenced by the following table.

Table 1. Growth rates of the Russian economy in comparison with China (in %)

Unlike Russia, China during the period of radical and successful reforms, as a result turned into a powerful economic power, building the second largest economy (after the United States) in the world, the country’s leadership modernized state administration. Many bureaucratic barriers were removed, the investment climate improved, taxes were reduced, an uncompromising fight against corruption was organized by introducing the death penalty and confiscation of illegally acquired property of officials and public figures. In order to accelerate socio-economic development, China is developing its own education system, widely using the training of its students abroad (especially in the United States and Japan), encouraging the import of technologies that make it possible to develop such progressive sectors of the economy as the production of software, new materials, biotechnology, and healthcare.

In modern Russia, illegal methods of seizing profitable enterprises and other objects of the economy have become widespread. One of these methods was the mass arrests of businessmen in order to force them to transfer the management of enterprises to others. The scale of illegal influence on entrepreneurs under President Vladimir V. Putin can be judged from Table 2.

Table 2. Аrrests for so-called “economic crimes” in Russia

The table shows that over the past 10 years, more than 2.376 million businessmen and entrepreneurs have been arrested in our country. More than half of them (and according to Vladmir V. Putin, more than 80%) have completely or partially lost their business due to illegal actions of law enforcement and other power structures of modern corrupt Russia.

President Vladimir Putin’s appeals to the investigating authorities and the prosecutor’s office to “pay special attention to this” to protect private property and businessmen did not yield any results.

As a result of pressure on business in recent years, the flight of capital abroad, registration of enterprises and firms in offshore companies has not decreased. As a consequence of the pressure on business in recent years, the flight of capital abroad and the registration of enterprises and firms in offshore areas have not diminished. This is evidenced by Table 3.

Table 3. Capital exports from Russia in 2008-2019 (in billion dollars)

From the table it follows that from 2008 to 2020, more than $ 818 billion was withdrawn from Russia. This amount (more than 59.45 trillion Rubles at the rate of the Central Bank of Russia as of March 15, 2021) exceeds three annual state budgets of the Russian Federation.

The offshore economy hinders the socio-economic development of our country.

Low efficiency of public administration in Russia, so far the author’s opinion, is a consequence of poor personnel policy. Indeed, if the president is not well versed in the laws of economic or social development, he should have formed a team of effective and competent specialists who know the sector of the economy that he is entrusted with leading. However, contrary to logic and common sense, President Vladimir Putin appointed German Gref, who had no economic education, as Minister of Economic Development, and Yelena Skrynnik, a cardiologist by training, was appointed Minister of Agriculture by presidential decree. Since 2012, the Minister of Industry and Trade of the Russian Federation has been a sociologist Denis Manturov, and Roscosmos is headed by Dmitry Rogozin, an international journalist by basic education.

Corruption at all levels of state and municipal government, inappropriate economic policy, offshorization of the economy, an unfavorable investment climate, high dependence on imports, all these and other reasons hamper Russia’s socio-economic development, demonstrating the ineffectiveness of public administration. Therefore, our country cannot yet become a prosperous country, even though it owns untold natural resources, the volume of which is greater than in other countries of the world.

The author makes quite a reasonable conclusion that Russia cannot become a prosperous country due to ineffective public administration.

Expert article 3035

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