Russia Needs 100 Years to Catch Up with OECD Countries in Terms of Wealth of Its People, World Bank Says

Paul Goble

            Staunton, December 5 – A World Bank investigation, How Wealthy is Russia? (documents.vsemirnyjbank.org/curated/ru/402431575351416107/pdf/How-Wealthy-is-Russia-Measuring-Russias-Comprehensive-Wealth-from-2000-2017.pdf) concludes that at current rates of growth, Russia will need a century to catch up with the OECD countries in per capita terms.

            As Moscow’s Kommersant says in reporting on this 67-page study, “wealth includes an assessment of human capital, natural resources, productive capital and also foreign holdings.” It is thus more than income as it includes all the resources that individuals control or have access to (kommersant.ru/doc/4181162).

            This the first such “all-embracing assessment of the wealth of Russia” the World Bank has made, Apurva Sangi, the bank’s chief economist says, stressing that this conception of wealth is different from income and GDP and that stagnation of real incomes and the fall of oil prices have had a significant impact on Russians’ wealth.

            Today, the study says, “the dimension of human capital per capita in Russia is only a fifth of the average figure for OECD countries. In 2001-2008, the median income of Russia rose nine percent, in 2009-2010, only 4.5 percent; and in 2010-2015, the rate of increase fell to 1.6 percent.”

            If the average rate of growth of human capital in Russia were to remain at 3.5 percent, Russia would need 50 years to catch up with the OECD average. If the rate stays where it has been since 2010, 1.8 percent, then the Russian Federation will require “almost a century” to do so, the World Bank says.

            Because so much of Russia’s wealth now is tied up with natural resources, the rate of increase is at risk of falling because of international efforts to reduce carbon emissions, the report continues.  Despite that, however, it says that demand for Russia’s other natural resources is likely to increase.

            Kommersant reports that “the World Bank advises the Russian authorities to boost human capital by improving education and health care,” by reducing monopolies and state control, by protecting renewable resources like forests, and by making the tax system more progressive in order to spread the wealth.