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Why Belarusian economy repeats an old joke

Почему Белорусская экономика повторяет старый анекдот

In the previous article we were talking about the instruments (institutions) needed to bring our economy out of the crisis. Continuing the theme, we note that the choice of those or other tools, of a system of economic governance strongly depends on the purpose of a particular model of the economy that would be welcome.

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Since independence, according to former Chairman of the State Committee for industry, V. I. Kurenkov, the government was actively debated the question of choosing this model. Mostly with variations of the selection was discussed between the German and Austrian models.

The German model implied the existence of powerful corporations, subcontracting which has many small firms. And medium-sized firms to some extent are the needs of large. Technical and price requirements of large firms and define the technical policy of all the others. The requirements are very strict, but supported by access to cheap credit and the availability of engineering and consulting firms. What guarantees for them and the ability to export.

Austrian model assumed “national Champions” in the form KB + service and sales service with minimum production apparatus, there is a broad, well-proven cooperation with German, Italian and French firms. Typical such “champion” was VOEST-Alpine AG, which, for example, to build a us FAB, yet the same plant in Ribnita, several vessels for the USSR, several companies in India and other countries with 1,400 employees. Many small firms (only 2% of enterprises had a number of more than 500 employees), not focusing on the needs of “Champions”, independently fit into the markets of Germany, USA, Balkan countries. And also relied on powerful banks, cheap credit, and system state support.

Then, under pressure from “red Directors”, the purpose was chosen the German model. The decision was made to build the economy on the basis of former Soviet giants, had almost closed production cycle. The subsequent formation of the “Belarusian model” only cemented this decision.

Although this decision seemed logical, based on the image of Belarus as the “Assembly shop” for the enterprises of the former Soviet Union and several similar to the German structure of our economy, strategically, in the long term, it was disastrous.

Large German corporations are world, with self-service and distributor networks. Our major plants have nothing of the sort. The technical level is not commensurate. Only at the first stage, in the 90s, relying on the remnants of the Soviet distribution networks, our businesses could compete with the German in the post-Soviet markets. As you build there German (and now Chinese) competitors own networks our enterprise began to actively displace.

German corporations rely on a wide network of sub-suppliers with a high technical level. Our enterprise in the conditions of the collapse of the early 90s involved part of the production equipment by creating almost “on the knee”. Technical level, and insufficient drop. Chronic neocapitalist our enterprises and their low profitability (including because of the need to contain the extra numbers and funds) allow the modernization of sufficient pace. The required investment for competitiveness obviously exceeded the capacity of the state. Private capital investment had stalled.

If large corporations in the German model form the supporting framework, the skeleton of the economy, many small companies form its “muscle”. Orders of major corporations, sometimes not determine the volume, ask technical level of production, access to cheap credit provides a timely opportunity to upgrade, the high technical level of production ensures liquidity of the business. Exports, including for small businesses, actively supported by the state.

In our economy the large enterprises in the fight for “the preservation of labour collectives” involved in the production configuration, by arranging for them even on unsuitable base, not paying attention to the profitability and the technical level of such facilities. And more recently, using the policy of “cheap dollar”, began to import. For the most part from China. Completely depriving our small business marketing. A “from scratch” for export to come out is very difficult. Besides the regular non-payment state-owned enterprises doing the work of their sub-suppliers high-risk business. Conditions for development of small industrial business in the country, whatever legislation was adopted.

In German, in Austrian models the crucial role played by access to capital, cheap loans, including investment. Our banking system is an empty wallet: if the assets of the EU banking system exceeds 200% of GDP, we have never reached 50%. If money is the lifeblood of the economy, our current “tight” monetary policy is a real bloodletting.

Thus, in comparison with the German model “skeleton” of our economy is shaky, “muscle mass” — distrofija, “circulatory system” is sick with anemia. And what was supposed to be the result?

At the same time, the implementation in our country of the counterpart to the Austrian model also did not look like a panacea. Not all of it so easy. So, with the go and can’t remember where without support died analogues of enterprises with the structure “CB + sales and service network”. These small businesses were, and even quite successful. But zakulisi at their level, not try to grow, and, having spent the potential has missed its chance. And it is not necessary to refer to specific Belarusian conditions. It is really heavy. But it would be desire — able the following stages of development take place both in Russia and in the Czech Republic. For the most part and not tried.

Today we built, in the framework of the “Belarusian model”, the German pseudoana the structure of the economy is a dead end, this economy is already dead. Enterprise just waiting for the competitors will take them and the remains of the markets. Having no forces to resist. To go to the Austrian model in droves nothing prepared, and have neither the strength nor manpower. To develop such system we had in the 90s, when we still had sufficient human resources. Over the years the “Belarusian model” was left a little bit.

Besides, in a world crisis of overproduction. Free market niches there can be. Even if this niche is formed by chance and we will be able to get into that right behind us there will come the competitors. With the organization of production and the technical level that we have is throw away instantly.

I don’t think the solution to the problem in the mass creation of small private enterprises. Small business is just food for large. No time for him to appear promising niche in the market, or the company will be redeemed (as Facebook did recently), or competitors (most likely Chinese) will fill a niche analogous. As in the jungle, where, in the words of the poet, “somebody’s watching thee closely, someone leaves you for later”.

Innovative economy — an old joke

Anyway, we have to build a new economy. And to a significant extent on “manual mode”, systematically. Is it good or bad is immaterial. Just no other options.

Strictly, like the Koreans, the Austrians, to act within the framework of industrial policy. That is yet to be developed. All measures of state support, all possible incentives to implement only in accordance with this policy. Supporting and state-owned enterprises, and private owners: enough resources so any help is valuable.

The problem is that today it is impossible to choose perspective directions for investment: the crisis is far from over, and the contours of the post-crisis world economy is still completely visible. However, some policy conclusions can be done already

First, almost no prospects for Belarus any mass production: niche is densely occupied by China, which is gradually replacing India, Vietnam, Bangladesh. Competition with them very difficult to maintain. For Belarus promising “niche” production, and are focused on territorial needs of high-tech enterprises of General profile.

Secondly, as soon as possible to forget the nonsense about the new economy. Here to the place of an old joke.

Arrived in the early 90s in a small home of the emigrant from Israel. Stated that he would like to organize here business. In local administration, he said, “we Have 12 hairdressers and no cleaning. Can take?”. He was like, thought and opened the 13th Barber shop.

There is a lot of sense. There are 12 hairdressers — so there is a demand. Left to become worse. But the demand for dry cleaning or not is a question dark.

And with innovations. To organize a demand for a new product is expensive and long. The whole experience of SKOLKOVO Prokhorov and show that it is not enough to have a good development. Marketing of an innovative product can only be managed by powerful companies. Otherwise, developing innovative product — work on “uncle”. Who will come and “skim the cream”.

On the world market today can not be empty niches. Should look for those where you can become not last. And to work on increasing its share.

Yes, most of these niches detects the trader. But in our national interests to help him. So that production remains in Belarus. For example, passing in very long leasing of vacant space and unused equipment. And promotion — and other measures. Yes, such a little while. But you can invite authors of promising startups from Russia and Ukraine. While they work on their own production capacity.

Search future in niche market today, it is advisable to conduct a broad front. Helping all where marked ability to export. And at the same time, focusing the engineering staff, cook in the prospects for companies like VOEST-Alpine AG, to lead the reorganization of management, to create tools for investment. Yes, there is no money. But so far no projects for investment. Will normal projects — and investors will be found. Profits will be shared, but better some than zero. And salaries in the country will be.

Money — control

Another aspect. In terms of expansion of domestic demand, probably, it is necessary to impose currency controls. Anyway — for state-owned enterprises. It is absolutely unacceptable that deficitara in the country currency is spent for nothing. As an example: delivery of a large number of sets of equipment for dairy farms. Formally, the manufacturers are Belarusians. But the production of them “screwdriver”. In fact, plenty of nuts, pipes, tanks made of stainless steel are purchased with currency. But the productions of the kind were idle. And there are many such examples.

While, in the first stage, it would be enough expertise not to miss a payment currency contracts where purchased can be made in Belarus. And the payment for the procurement of serial products is not hard at all to exclude. Except, perhaps, a separate node for it.

And yet. As before, I am sure that the most promising niche for Belarus development and production of non-serial spetstekhnologiya equipment. Competition in this market is small, prices are sky-high, likely to compete quite a lot.

And experience a no: “Invocant” equips “Samsung”, “Atari” exports in the US, the medical equipment, the Petrograd praised Belarusian equipment for the food industry. Worth remembering that the first robots with machine vision in Minsk did back in the 80’s. Just in the framework of the “Belarusian model” such production was not in demand: the officials did not see enough “tasty” financial flows. Oil because it is easier to speculate. But here measures should be taken urgently: qualified engineers, can do this, there’s not much left.

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