Why is Russian productivity so low?

Discussion in 'Europe and Russia' started by average american, Feb 10, 2013.

  1. average american

    average american Senior Member Senior Member

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    According to one of the studies, by Strategy Partners, a Moscow management consultancy, Russia's average labor productivity is just 17% of the U.S. level. The amount varies by sector, from a low of 6% in machine building to a high of 22% in the natural resource industries. But the room for improvement is colossal everywhere. "If, in Russia, a mere 10% of workers had the same level of productivity as in the U.S., Russia's GDP would increase by one and a half times," notes Alexander Idrisov, managing partner of Strategy Partners.

    Similar conclusions have been reached by the U.S. consultancy McKinsey, which has also just published a report examining Russian productivity. McKinsey, which focused on six sectors, concluded that Russian productivity was around 26% of the U.S. level. That's an improvement on 10 years ago, when McKinsey estimated Russian productivity at 18% that of the U.S. But widespread inefficiencies remain. For example, it takes three times as many workers to produce a ton of steel in Russia as it does in the U.S.

    Outdated Technology

    Why is Russian productivity so low? "Why should it be high?" asks Boris Kuznetsov, chief researcher at the Higher School of Economics in Moscow. "Let's look at the history. Very few big enterprises were constructed in the last 20 years, so the technology is old. In China, you have very cheap labor and up-to-date technologies because they were imported recently."

    But though outdated technology is often a problem, many experts emphasize that it isn't the actual root of Russia's productivity woes. "It's a big myth that we have low productivity because we have old technology," says Idrisov from Strategy Partners. "In general, the major factor is very ineffective business processes and organization."

    Why Is Russia's Productivity So Low? - Businessweek

    Good luck on the PAK FA and other Russian Military Equpment, you are going to need it.
     
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  3. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Your argument to bring PAKFA here is of least relevance. First of all for India, there is no replacement to PAKFA category anywhere else in the world. Our experience with MKI is not bad. Regarding productivity rate, GOI has started to slap fine on Russian manufacturers if they fail on goal timeline. Last but not the least, our Defence production policy is about bringing manufacturing plants to country where India will itself produce defense hardware by purchasing technology or licenses. Same is getting reflected in several recent deals. Added informed advantage is that Indian labor productivity is 20% better than Russia.

    Don't forget that Russia is going through major transition, and reforms happen under socioeconomic imperatives.


    And since that you have linked military purchases to industry productivity, lets not forget that while USA is far more sincere on their business delivery but the complex issues like CISMOA, EULA agreement coupled with low degree of ToT(transfer-of-technology) in military deals is a major disadvantage for USA in defense market where only India has the big ass shopping basket. So given the circumstances, Indian establishment may compromise on few issues with Russia in deals with less urgency & at the same time quickly sign papers with French/Americans in expedite cases.
     
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  4. JBH22

    JBH22 Senior Member Senior Member

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    Russian ingenuity makes up for this they do much with little. no fancy products but reliable ones.
     
  5. average american

    average american Senior Member Senior Member

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    I bet you believe in the tooth fairy too,

    List of countries by research and development spending - Wikipedia, the free encyclopedia

    Spending on research and development.

    United States 405.3 billion a year.

    China 139.7 billion a year

    India 36.1 billion a year

    Russia 23.8 billion a year

    In the real world there is a saying you get what you pay for.
     
  6. JBH22

    JBH22 Senior Member Senior Member

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    What are you trying to say?
    for a country that just recovered from its ashes I believe its doing not bad and instead of doing your Russian bashing I would suggest you to read all sorts of pathetic articles announcing the decline of USA hegemony.
     
  7. average american

    average american Senior Member Senior Member

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    I guess I am trying to figure out why India is buying advanced technological miltiary equipment from a country that is consdered less developed then India as well as the rest of the world and spends less on research and development for over 20 years then even India and about 5 percent of the US spends
     
  8. no smoking

    no smoking Senior Member Senior Member

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    Because even after 20 years of low level R&D development, the weapons from Russia are still considered to be better than India own products.
    The technical gap is not that easy bridged.
     
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  9. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Russia inherited the Soviet knowledge and infrastructure, but all that has declined as lack of investment has taken its toll. Almost all of its weapons are based on Soviet designs. India and even China hasn't surpassed the military tech yet.
     

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