How to reform the Russian economy

Russia's economy faces tough medium-term challenges: over-dependence on oil and gas, state-dominated industries and meddlesome bureaucrats. If Russia wants to avoid Brezhnev-era stagnation, it needs audacious reforms. Sergei Guriev argues that the best way to create a pro-reform constituency would be to privatise state-owned companies and make it easier for small businesses to grow. Private entrepreneurs would then lobby for a better business environment. Russia would also benefit from an outside anchor for reforms. However, Russia's ruling elites gain handsomely from the current opaque and skewed economic environment; they have little interest in radical change.

Sergei Guriev is Morgan Stanley Professor of Economics and Rector of the New Economic School in Moscow.