Import substitution is ... Import substitution program

The Russian economy is experiencing not the most stable times today. To a large extent this is due to the large dependence of individual branches of the national economy on foreign suppliers. In this regard, in the economic development of the country, import substitution becomes especially important. What is this process? For which sectors of the Russian economy is it particularly needed?

Definition

Import substitution is, according to a widespread interpretation, a process at the level of the national economy, which ensures the production of goods necessary for the domestic consumer by producers operating domestically. This process can be proactive or reactive. In the first case, import substitution products are issued in order to prevent competing foreign suppliers from entering the market. In the second, foreigners are displaced from the corresponding segments.

In turn, both variants of import substitution can be implemented on the basis of predominantly market mechanisms or through administrative intervention of various political structures. In the first case, successful import substitution is a fair result of competition. The domestic manufacturer thus proves to the buyer that he produces goods better and cheaper than the foreign supplier. It is, however, possible that this process will be implemented due to administrative prohibitions on the conduct of activities imposed on foreigners.

The Russian scenario

The economic situation in Russia today is such that in our country, import substitution is necessary, as many analysts believe, in several key industries at once. At the same time, in some segments, the corresponding process can proceed under more or less market conditions, while in others the Russian producers will have advantages due to the administrative factor. Thus, import substitution in Russia is likely to occur within both scenarios, depending on the specific industry.

Agriculture

The food embargo against Western European suppliers of agricultural products is an active stimulus for the development of domestic businesses in the relevant sphere. Russian farmers received an unprecedented chance to implement a large-scale import substitution. The list of goods that fall under the ban on imports is very wide. This is dairy products, and vegetables, and fruits, and meat, and nuts. The market capacity of some segments of trade between Russia and Western countries in the agricultural sector is estimated by experts in billions of dollars.

Of course, in this area there will be competition: in particular, the supply of products from the countries of Asia, South America, Africa, as well as from the Customs Union countries can be carried out to Russia freely - there are no sanctions for the corresponding activities. But, despite the availability of alternative agricultural products for Europe, for Russia, import substitution in agriculture is among the most priority directions of economic development in the near future. The main issue, experts believe, is how effective the interaction of farmers and retail outlets will be in practice.

Industry

Regarding this area, the need for an alternative to the products of foreign suppliers from Russian consumers arose primarily because of a fall in the ruble exchange rate. Imported goods have become more expensive. In many industrial sectors, this also predetermined the increase in prices for manufactured products within the country. Importing, say, machines or some electronic components, the Russian manufacturer faced significantly increased costs, which in many cases became possible to compensate in one way - raising prices for domestic consumers.

At the same time, import substitution in industry, if we talk about the Russian scenario, can be far from being only forced. The fall of the ruble, in the opinion of many experts, has played a certain positive role for the economy. The fact is that in fact the depreciation of the Russian national currency, many production costs, as well as wages in dollar terms, as well as, relative to most other major world currencies, have decreased very significantly. In the Russian industry, as a result, it became profitable to invest.

If you look at the reports of the Ministry of Finance for the year 2014 concerning trends in the economy, you can see that industrial production in the Russian Federation has appreciably increased - by about 1.4%. While GDP, according to preliminary estimates, in 2014 grew by about 0.6%. Also, some experts note: even in some quite uncharacteristic segments, it would seem, for our national production, import substitution takes place. The list of products that are actively produced in Russia, in particular, form household appliances, electronics, while most of the inhabitants are accustomed to the fact that it is produced in Asia. Although there is a version that such figures are caused by a situational surge in demand for this or that product. And therefore, you need to wait to make sure the fundamentality of this trend.

The import substitution in the industry of Russia, thus, is expressed in two aspects. First, it is the desire of consumers to have access to cheaper products. Secondly, this is the attractiveness of the Russian economy in terms of production costs.

Industry: Dependent Spheres

In which spheres of industry in Russia, the question of the need for import substitution is most acute? Among the industries most dependent on external supplies are machine tools. In it, the share of imports, according to some analysts, is about 90%. In heavy engineering, not much less - about 80%. Strong dependence on imports also in the light industry - the figures in some of its segments also reach 90%. In pharmacy, in the food industry, the dependence is comparable.

Concerning production, experts believe, a large-scale program of import substitution, largely supported by the state, is needed. Work in this direction is generally conducted. If it is successfully implemented by competent agencies, in the next few years it is quite possible, according to some analysts, to reduce the dependence of each of the industries by about 30%, and maybe even more.

IT industry

The Russian IT industry is one of the most dynamically growing in the economy. It can also be noted that many IT products from the Russian Federation are well known abroad. That's why our IT school is quite competitive. At the same time, as some analysts have calculated, the dependence of the Russian IT sphere on Western solutions is very significant. About 70% of software used by users, both private and corporate, is supplied by foreign developers. And this despite the fact that in many areas of software there is a Russian alternative, which, according to many experts, is in no way inferior to foreign samples in terms of functionality and quality.

One of the key arguments in favor of using domestic IT-solutions, analysts call the need to ensure the security of the use of software in most business segments. The work of many enterprises is connected with the transfer of secret data. Many of the leaders of Russian firms tend to have doubts about the use of foreign software in such cases. Also, the work of many companies is related to the need to maintain exceptionally smooth operation of server systems, which can sometimes be provided only by those suppliers that are located directly in the Russian Federation.

The corresponding program of import substitution in Russia, experts believe, has all the resources for successful implementation. Even in such technologically challenging segments of the IT industry as the development of operating systems, programmers from the Russian Federation have something to offer as an alternative to Western suppliers.

Thus, import substitution is a process that can concern any industry. We identified several key ones. The economic situation in Russia requires an early import substitution in many segments of the national economy, but it is not always easy to implement it in practice. Why? Let's consider the basic nuances connected with realities of carrying out of corresponding work.

Problems

Import substitution is a multifactorial process that is not easy in terms of practical implementation. Its successful implementation depends on the solution of a number of problem nuances that are characteristic of the Russian economy. What, for example?

First of all, this is a very limited, as many experts believe, access of Russian businesses to loans. The fact is that the sanctions imposed by the EU and the US against many companies from the Russian Federation do not allow them to carry out loans abroad, which in many respects helped out in the past. In turn, loans within Russia are currently not very profitable: the refinancing rate of the Central Bank is now 15%, and the enterprise is likely to receive a loan with a percentage that will not be less than this value. To develop production with profitability, which will make it possible to close credit payments on such terms, will be problematic.

What can be a possible solution to the problem of availability of loans? Some experts believe that many Russian businesses could get accustomed to the project financing market or, for example, in the sphere of venture investments, thereby gaining access to loans on a more profitable basis or to capital on condition of concessions on shares in the ownership of the company.

Such a prospect, of course, will not suit all businesses, but it is probably better than waiting for some news from the Central Bank. There are options with government subsidies for some projects. Also, many businesses can develop directions related to the production of new goods under contracts under public procurement.

Another problem that accompanies import substitution in Russia is the lack of qualified personnel in a number of industries. In 1990, many citizens of the Russian Federation, choosing a profession, focused on the humanitarian branch, on services. Engineering, working specialties were not too popular. As a result, in many segments there is a shortage of personnel.

You can solve this problem in many ways. The most accessible is retraining. Fortunately, in Russian educational institutions, in general, there is a developed scientific and production base, which can be used to train specialists of various branches. Another option is to attract people from abroad, which, however, can be complicated by virtue of the low ruble rate: not all cases in Russia will be more profitable for a person to work for. At the same time, the Russian government is taking significant steps to facilitate immigration to the country. In particular, the program of obtaining simplified citizenship for people who have significant ties with Russia is open - related, linguistic, cultural.

International dimension

Another possible barrier to successful import substitution is Russia's obligations in the framework of WTO membership. The fact is that due to the signing of international treaties with other states of this structure, Russia does not have too many options with interference in the economic processes of government structures, which can be used, for example, to protect the national market in the aspect of trade with the participation of foreign suppliers.

Therefore, in order to obtain more powers, the government of the Russian Federation is not very numerous. There is absolutely radical - to withdraw from the WTO. At the same time, as some experts note, within the framework of the current norms prescribed in the WTO agreements, the states are generally endowed with a significant amount of tools to protect the interests of the domestic producer. The question is how to correctly use this resource. For example, in 2015, as some analysts point out, Russia can use the right to adjust tariff obligations so as to effectively protect a number of segments of the domestic market in a fairly effective manner without violating the current WTO rules.

Factors of success

The policy of import substitution in Russia, despite the mentioned difficulties, has an excellent chance of success. This is due to a large number of factors. First, Russian enterprises in most cases have no problems with access to the necessary raw materials, natural resources. Secondly, the production costs in the opening of production in Russia in many cases will be lower than abroad, in fact, due to the relative cheapness of some natural resources. Also in Russia is quite cheap electricity. On the benefits of wages that arose in connection with the depreciation of the ruble, we have already said. Thirdly, Russia has a tangible technological potential. So far, it is being implemented in practice in a small number of industries - mainly in the military-industrial complex, in the exploration of outer space. However, if necessary, as many analysts believe, it is always possible to translate certain military developments into the civilian sector.

The role of the state

The extent to which the import substitution plan in Russia will be successful in this or that sector largely depends on the position of the state. To what extent are the authorities of the Russian Federation ready to perform the function so necessary for the country's economy? In general, the Russian government approaches the question of import substitution seriously enough.

In particular, in August 2014 the Government of the Russian Federation issued a decree, in accordance with which a new structure, the Industry Fund, was created. The key task that this institution will perform is just providing the necessary loans to businesses. It is assumed that the conditions under these loans will be more profitable than when the company applies to a commercial bank.

The import substitution program developed by the state includes a number of other noteworthy initiatives. So, for example, in June 2014 the Government developed a new law "On Industrial Policy in the Russian Federation." The provisions contained in it, experts believe, can become a basis for implementing key strategic directions in the development of the industrial sector in the country. The industrial program of import substitution in Russia, therefore, will be implemented with the significant participation of the state.