Experts say today's global economy is in deep decline, starting with 250 mln jobs lost globally and ending with the monetary expansion raising inflationary risks. What could be the future outlook?
Saint Petersburg State University of Economics and Finance (UNECON) is among the leaders of classical economic education in Russia. And it has a fantastic story behind its foundation. It all started as a private-fee five-month-long course established in 1897 to train ordinary bookkeepers. But nine years later, it was given a status of a higher educational institution. Since then, the University has been enlarged six times by incorporating Moscow and St. Petersburg's field-specific universities. Over the years, it changed many names until becoming St. Petersburg University of Economics and Finance in the early 1990s. Despite another merger, which took place in 2012, its colloquial name Finec is still widely used.
In this interview, Igor Maksimtsev, the Rector of the University, says what principles the new economic model should be based on to lift Russia out of the crisis. He also explains the oil & gas sector's role in this model and answers why Russian scientific inventions remain largely unimplemented.
The global economy and international economic relations obviously cannot be considered outside energy politics. What are your expectations from being a part of the Nedra Consortium?
St. Petersburg University of Economics and Finance has readily accepted the invitation to join the Nedra Consortium. We think it is absolutely correct that it unites both mining-engineering universities and those teaching in related fields. We also see great potential in this cooperation and believe it resulting in a synergistic effect. The University's contribution to developing the Consortium may include proposals linked to such disciplines as Energy Economics & Energy Politics or Economics of Sustainability.
Over the last few years, the University has established several energy-related departments. Where does this come from? Is it a sort of a response to some trends or events?
Socio-economic study fields remain our top priority, but the oil & gas sector's role in defining the strategical development of UNECON has significantly increased over the last decade. Since 2011 we have been a flagship university of Gazprom. In these years, we elaborated a multilevel labour-training programme tailored to the oil & gas industry's needs and established numerous industry-specific academic structures. Following Alexey Miller's initiative, in 2014, we opened the country's only 'Gazprom Specialised Department', which is successfully developing ever since. As part of the collaboration with the company and its subsidiaries, we implement research and consulting projects, corporate professional development and retraining programmes, master's programmes, organise applied science conferences and joint image-building events. Between 2008 and 2020, over 4,000 Gazprom's executives and specialists took part in the training programmes.
In 2020, the global economy faced its worst decline since the Second World War. You gave an interview in which you said that the existing model of economic relations was obsolete. What is your vision of the new model?
he coronavirus pandemic has highlighted and exacerbated all the global economy's problems. First is the monopolisation of decision-making in developing the global economy and finance by a limited number of either underperforming organisations (UN, IMF) or structures lacking a consolidated position (WTO). Another problem is connected with using instruments of primitive political pressure limited to the electoral cycles of individual politicians when dealing with economic issues that require rational, balanced assessments. The existing economic model underlain by the principle of extensive economic growth is actually undergoing a severe crisis. The new objective requirement for formulating national and cross-national development models is sustainability, a transition to which drawing on liberalisation is impossible. The regulatory function of a state is essential here.
The new model must reflect the realities of the global economy. If developing countries' economic power is effectively growing, they must be given the right to vote and influence the decision-making process. For instance, they can participate in global regulation through the increased quota in the IMF and further extension of the G20 formation. Therefore, the idea of economic expansion should prevail over that of national expansion.
What is the state of the oil & gas industry in economic terms? Is its value subject to change in the new development pattern?
As for the oil & gas sector, the OPEC+ cartel shows significant coordination efficiency compared to most international organisations and industry associations. This is a mechanism that really works and helps improve the petroleum market efficiency. The industry is now on the rise: there is a trend towards diversification, with many foreign and Russian fuel & energy companies switching from either oil or gas to oil & gas organisations, or even energy ones. Company executives realised the need to develop traditional and renewable energy projects simultaneously. Energy corporations are nowadays more of a business portfolio. The Sustainable Development Goals and climate agreements urge to look for new solutions on reducing the carbon footprint.
The fuel & energy sector is becoming one of the most innovative ones, and Russian companies, forced to search for alternatives to import technologies, do it with success. Today's most important focus areas for energy companies include:
- Extending supply chains.
- Establishing successful partnerships with chemical companies.
- Expanding the range of petrochemical products and launching them into export markets.
One promising export market is China. It cannot happen quickly, but Russian companies are already working on it. I am convinced of the high innovative potential of the Russian oil & gas sector and its role in intensive economic growth.
Credit mechanisms for stimulating consumer demand are losing their effectiveness. What tools are relevant these days?
It is essential to understand that consumer demand cannot be stimulated artificially. There is only one mechanism - increasing the welfare of citizens. Concessional lending or price management are only temporary half-measures. We need a systematic approach to elaborating macroeconomic policies that would stimulate production in Russia in all sectors. One of the critical tasks is to ensure successful medium-sized enterprises emerge. Nowadays, we mostly have micro and small businesses operating, as well as large corporations. Hence, when we graduate economists, we realise they may have difficulties finding jobs because there are not enough industry organisations to employ them. It also explains why Russian inventions remain unimplemented - there is no industrial production to introduce them into.
Systematic macroeconomic policies also include:
- Fiscal policies.
- Incentives for enterprises manufacturing high value-added products.
- Ensuring a healthy and competitive environment.
There is also a new and relevant tool that is worth a mention - a special investment contract. In our opinion, it is the right direction for the development of state industrial policy. We need a shift from a finance-centric to an industry-centric system in which the financial sector performs a service function, as it should be.
In March, the First Rectors Forum of Russia and Thailand was held on the premises of UNECON. There is no denying that the pandemic has had a considerable impact on international cooperation among university communities. What is your opinion on the prospects for recovery and academic mobility in the post-COVID era?
Undoubtedly, the pandemic has primarily affected international cooperation - academic mobility has been virtually non-existent, most students have declined their internships. However, unlike teachers and researchers, they can still travel abroad to study. Motivation suffers from fear of international travel, reluctance to end up quarantined, the need to study online at the host institution's campus, and so on. There are also other reasons: falling incomes and the problem with the recognition of distance learning. In contrast, international experience as such (not just academic or scholarly) is now of its highest value ever.
When the pandemic is over, we will undoubtedly see an explosion in student and faculty mobility - whether it be inbound or outbound. The geography of mobility will change: countries having problems with handling the pandemic will be less attractive for internships; some countries may not even open their borders immediately. Our challenge is to be prepared for the new wave, rethink the goals and objectives of mobility. Scholarship programmes will be required to support our students and teaching staff. We also need to make internships more focused, e.g. keep above all scientific internships and work placements abroad, reduce the length of studies from a semester/year to a few weeks/months. Of course, a balance between online and offline learning will have to be sought.
Would you share some of the University's most significant developments of recent years? What is their designation? Do they enjoy demand among businesses?
Most of our R&D activities aim to solve the socio-economic problems of our region and the state. As a flagship university of Gazprom and a partner of Russian Railways, the University does a great deal of research for these companies, notably in energy and transport logistics. The development-related costs over the past 3 years exceed 300 million roubles. Among the most significant developments are a comprehensive study on elaborating a blockchain-based technology of smart contracts for Russian Railways and solutions for enhancing innovation activities, improving workforce capacity, developing sustainability and energy-efficient projects for Gazprom.
The demand for any university's scientific developments is demonstrated by the annual increase in commercial research and the applied nature of conducted studies.
