Team Russia
TI: Lauren Kiek
CEO: Joe Meyer
Part A
In looking at several different graphs from the IF system, those that most caught my notice were those dealing with economic growth and on the quality of life. In looking at the economic side of Russia’s future it is important not only to look at overall forecasts but where the economic growth is originating and where the money to drive that growth is coming from; in hope of deriving this information I look at the Knowledge society, investments, and saving indexes, as well as the physical quality of life index. In looking forward a 20 year projection is used, closing the horizon at year 2025.
In first looking at the Knowledge society Index to try to discern the educational and research trends it is clear that all the projections anticipate a relatively steady increase on the Knowledge base index—the question is at which speed it is to increase. The graph shows that Russia is currently in the lower half of the index slowly moving toward the top quarter. According to the graphical projection the best general courses of action to maximize the potential improvement along the Knowledge based index would be “Policy” or “Sustain,” which have roughly the same effect. The worst course to take in attempting to maximize the index would be “Security.”
In looking at the Investment trend projection we are looking for funds made available for the development of industries. All the generic policies with the exception of “Markets” project a slump of investments beginning roughly in 2009. The least beneficial course would be “Security.” When looking at the projected slump in the Investment Trend and the projected growth Savings rates it is clear that much of the long term growth in the country will ultimately be driven by internal savings rather than FDI.
Following the investment trend it is important to look at where the money for investing is coming from; if there is not sufficient savings within the country for investment firms must obtain monetary support elsewhere or go without. The Savings trend is somewhat alarming with the step decline currently being experienced. This trend projects not only a decrease in savings but to the point that the trend runs into a deficient position. The only general policy approach that minimizes the short term (3-5 years) decline is in the “Market” policy but over the medium (5-10 years) to long term (10-20 years) it does not lead to the best savings rate. After the projected bottoming out of the savings rate, the “Sustain” Approach projects the best long term benefit.
While looking for economic growth is very important it is useless if the masses do not reap a level of benefit beyond the costs. Following Russia’s Drift according to general policy in regards Physical Quality of Life Index the best outcome would be to follow a “Sustain” policy, the worst would be along the “Security” trend. However, it is important to note that the margin within which Russia is working is relatively small, within the high 80’s to the low 90’s of the index.
Following the aforementioned projections the overall best course in maximizing these areas of interest would be to follow a “Market” and “Sustain” approach while moving away from the “Security” policies. While the “Market” and “Sustain” scenarios have differing focuses they can work together with overlapping, or compromising strategies. The largest incongruity between these two scenarios is in dealing with energy. As far as the goal to minimize the “Security” scenario’s impacts, this is largely fulfilled in moving toward the scenario parameters of “Market” and “Sustain,” as they run counter to each other. Essentially the main goals include overall economic liberalization, increased spending on healthcare, education, and research and Development, while decreasing military expenditures—easier said than done.
Part B
Overall the goals mentioned above should be readily accepted by members within the group and encouraged by external nations. The two vocations which would naturally be resistant to these changes is the military and intelligence branches as a decrease in military spending could be viewed as a decrease in the ability to maintain current military commitments and a decrease in the country’s ability to protect against internal and external threats to national security. Another problem associated with the proposed agenda is that there is the necessity to pay for the social programs.
The fact that only 30% of the current military personnel are serving under contract as opposed to conscripted service makes downsizing a slightly more simplistic matter. However, the country’s disputed territories and border areas increased dramatically with the dissolution of the Soviet Union; until these conflicts are resolved the threat of military action against the country remains unabated. Despite the perceived military threats to the country the downsizing to a military comprised of a greater percentage of contract soldiers could actually improve to overall effectiveness of the military, creating a more streamlined and less expensive military force (World Factbook, http://www.cia.gov/cia/publications/factbook/geos/rs.html).
In the years since the fall of the Soviet Union, Russia has liberalized a great deal. However, there is plenty of room remaining for further economic liberalization. Additionally, further social liberalizations and improvements in the observance of human rights are necessary (Dept. of State, http://www.state.gov/r/pa/ei/bgn/3183.htm). Small movements toward the freeing of various institutions would have a dramatic impact on the aforementioned goals. These changes would be strongly supported by other nations; not only does this liberalization appeal to the mentalities of the several largest economic countries but it also helps to foster trade creating a more accessible market to foreign producers.
One of the best investments a country can make for future economic sustainability and advancement is in education. It is noted that education is quickly on the rise in Russia , however, the fastest growing segment of education is in the Social arena (business, law, ect) not in the Natural arena (sciences, engineering, ect) (HDR, http://hdr.undp.org/docs/reports/national/RUS_Russian_Federation/Russia_Federation_2004_en.pdf). While this form of education does help to create a more fulfilling existence and streamline business it does not help to put/keep the country in the technological forefront, nor does it develop new industries. In order to move away from a majority of the country’s exports being derived from natural resources the country must develop new industries and R&D.
Notes on IF scenarios:
Market approach: Increased liberalization of trade; liberalization of domestic economies; accelerating democratization; Increases in global migration; Increases in foreign direct investment; Increases in the production rate of natural gas; Accelerations in discovery rates of oil and natural gas; Increases in annual productivity gains of .45%
Sustain: Attention to energy demand that reduces it by 50%; Increase in educational spending in OECD countries of 10%; Increase in health spending 10%; Increase in R&D spending 10%
Security: opposite policies of above except include decreases in military spending by 20%
Part C
As Russia’s CEO, I feel it is imperative for the well being of my country and of the people to increase health care standards, educational spending and reform, the country’s infrastructure, and to see military reforms aimed at improving readiness through efficiency and moral improvement. To achieve these ends we, as a nation, must increase economic inflows and encourage the growth of internal investments/ reinvestment.
As a leadership style I believe in the inverse pyramid. The CEO is not at the top but rather the base; he (I) am not served by all others but is (am) rather a servant of all others. In light of this philosophy I am obligated to encourage and assist my constituents in the promotion of policies where they serve the aforementioned ends. Our CIO (Sylvia Jurado) says we need to promote Healthcare and Education, in this I am in wholehearted agreement. Our CTO (Kaprice Rita) speaks of the need to encourage Exports, again this is one of my main aims. The CBO (Ryan Kelly) says that we must increase trade to improve our citizens’ standard of living; and that we have a large problem of Corruption and a weak Banking System and to counter this the government is dealing with organized crime (CSO-Sean Sumida) to decrease the negative internal influence. The country’s CFO (Courtney Canter) claims we need to improve our Infrastructure and promote a clear Foreign Policy. This Foreign Policy, supported by our CMO (Andrew Hodge), is: we do NOT seek or desire military conflict, our only aim is to defend and improve the lives of our citizens; this we hope to accomplish through mutually beneficial trade and understanding. We believe in our own country’s sovereignty and the right of other nations to have theirs, to this end we shall support our CSO (John Donahue) in his firms trade of Russian produced goods and labor.
Russia is a proud country with proud people, and rightfully so, but we are experiencing hard times; as such, I beseech the richer nations of the world to increase foreign aid in the form of medical, technological, and financial aid. This Aid will be returned to the world through a decrease in the trans-global HIV threat and promote health, productivity, and happiness of an entire nation of people and, indeed, the entirety of the world. Although the danger of our dependency on foreign aid has been pointed out by our CFO the benefit to our people outweighs the threat.
Ours is a resource rich country and we hope to engage in fruitful international trade of our resources. However, we will not merely expend our resources without reciprocation. We hope that our current and future trading partners will invest in us with their technology and innovations as we invest the goods of our lands in their growth. We have a growing internal demand for (foreign) produced goods as such we offer a growing market to foreign firms.
Peaceful solutions are always the most attractive of options and we hope to encourage peaceful cooperation between nations with the aim of a safer world.
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CFO: Courtney Canter
Section A
The above graph shows the Power Index of Russia from the year 2000 to the year 2020. From the graph we can see that the power index of Russia peaked in about 2004, and it’s pretty much a slow decline to 2020. Through trade, alliances, and strong advocacy of technology education, Russia can take steps to avoid this outcome. As a land that is rich in natural resources such as timber, minerals, natural gas, and oil, we can be a valuable trade partner. According to the IFs model, Russia’s GDP has increased since the year 2000, and will continue to do so in the future. Russia can use this money to pay off its debts and invest in the education of its people and the infrastructure of its people.
According to the CIA’s world factbook, while Russia possesses a “wide natural resource base including major deposits of oil, natural gas, coal, and many strategic minerals, (and) timber…formidable obstacles of climate, terrain, and distance hinder exploitation of natural resources (World Factbook).” If Russia can develop technologies to combat these factors, it would undoubtedly be one of the most valuable trade partners, especially for countries who are dependent on imported sources of energy. If Russia were to supply these natural resources to countries, such as the United States, it’s power would certainly increase as those countries would be dependent on Russia.
The above graph shows the dependency of Russia on foreign aid. As the graph clearly shows, Russia becomes increasingly dependent, borrowing an upwards of four billion dollars by the year 2020. These figures should be a cause of concern for Russia, as we struggle to regain our place in the international community, not as a developing country, but as a self sufficient country and a powerful ally. Russia needs to lessen its dependence on foreign aid to be respected within the international community. Russia has more natural resources than any other country and it also is the largest country in the world (in terms of land, not population). Once Russia is able to utilize its own resources, it can take its natural place as a world power and as a strong partner in trade.
This forecast is important, as we realize that in order to be an international power, we cannot be dependent on foreign aid. As I mentioned earlier, Russia’s GDP has increased over the past six years, and continues to increase every year. Russia can use some of the money from its growing economy to pay off foreign debts. Our group is also seriously considering selling many of our nuclear weapons to help us pay off our debts and to also invest in our infrastructure.
Section B
Since the fall of the Soviet Union, Russia has struggled to establish itself as a democratic capitalist society. In order for Russia to once again become an international power, it must work from the inside out. Revamping the infrastructure of Russia will allow for increased productivity, hence increased trade and power. Making alliances will be key to the development of Russia’s economy, and the security of the nation.
Even though Russia is by far the largest area country in the world, it ranks 12th in the number of roads it has. According to the CIA’s World Factbook, roughly 33% of Russia’s roads are unpaved, which is definitely limits transportation accessibility. This is just one example of an area of infrastructure that needs to be changed. Building and fixing roads will allow development to areas where that may not have been previously possible due to inaccessibility. And according to the CIA’s World Factbook, “Russia's manufacturing base is dilapidated and must be replaced or modernized if the country is to achieve broad-based economic growth. Other problems include a weak banking system, a poor business climate that discourages both domestic and foreign investors, corruption, and widespread lack of trust in institutions. (World Factbook)”
Increased trade will allow for Russia to increase it’s GDP while forming alliances and friendships with other countries. Russia’s largest exports are oil and natural gas. According to the World Factbook, Russia is the second largest producer of oil, and the largest producer of natural gas in the world. While these resources are extremely beneficial, it would be advantageous to the Russian economy to invest in technology and other forms of energy. Russia can remain a leader in exporting energy if we develop new, more fuel efficient and environmentally friendly sources of energy. While, for now, oil and natural gas remain the main sources of energy, eventually as these resources run out, the world will need energy alternatives.