|By Roger Strukhoff||
|February 8, 2014 11:31 AM EST||
With the Sochi Winter Olympics opening, it seems a good time to take a look at how Russia does in our research. There is some good news, although the country could certainly do much better.
No serious discussion of Russia today is possible without mention of country President Vladimir Putin. Indeed, this strongman is clearly on a personal mission to go into the history books alongside Peter the Great and Lenin as his country's most influential leaders.
Putin's influence is such that he's considered to be the most powerful person in the world by Time magazine, among other sources. His control over Russia's politics, media, culture, and business seems to be absolute.
Thus it may seem ironic to President Putin that his power is his country's biggest obstacle to progress. A few noteworthy items:
His country is perceived as being very corrupt, according to the Perception of Corruption Index, one of the factors we use in our research. Russia's PCI number ranks it 92nd among the 102 nations we survey - worse than Syria and Pakistan, for example.
A large income disparity that arose during Boris Yeltsin's time as Russia's leader does not seem to be improving under Putin. Russia finishes 68th in this category in our rankings, lower than China, Senegal, and the Ivory Coast, for example. Its ranking here is in dramatic contrast to neighboring Ukraine and several former Soviet satellite nations.
Business leaders who challenge Putin politically can get thrown into prison. This has had a chilling effect on foreign investment. Although Putin touts a recent tripling of foreign direct investment into the country (reaching $55 billion in the first half of 2013), capital outflow has exceeded outside investment in the country for several years. FDI is not one of the factors we measure, a lack of it will show up in the technology factors that we do measure.
In our overall rankings, Russia lags not only globally, but more important, in comparison to many of its neighbors. Russia finishes 80th in our overall rankings, and dead last among the 33 European countries we survey. It badly trails all of the former Soviet satellite states. Within its income tier (countries with per-person incomes between $13,000 and $30,000), Russia finishes 15th among 17 nations we survey, leading only Saudi Arabia and Oman.
Hope Spring Eternal
There is a glimmer of hope in our raw rankings, which de-emphasize the socio-eonomic factors. Here, Russia finishes is actually considered to be one of our "Goldilocks" countries - the dynamics of its ICT infrastructure shows an impact that is neither growing too rapidly (too hot), nor to slowly (too cold), but "just right." Other Goldilocks nations in the region include Latvia, Poland, the Czech Republic and Slovakia, and Slovenia.
Putin has reputedly authorized more than $50 billion to be spent on the Sochi Olympics, an absurd amount that is more than six times the amount spent by Vancouver to hold a perfectly beautiful Olympics in 2010.
The $50 billion is equal to 2.5% of the country's GDP - this is comparable to spending $400 billion in the US. This amount is also enough to build new power plants for about two-thirds of Russia's population, or an entire year's worth of all the new datacenters in the world.
We make no judgements on the form of governments in the nations we survey or on local politics. Our view is that the combination of factors that we integrate into our unique algorithms creates an accurate picture of what a nation's government is doing for its people.
For Russia right now, it's not a pretty picture. Although I stay quite busy, I will take Vladimir Putin's call if he tries to ring me. I doubt he will, as he seems not to listen to many people.
However, I do encourage him to look at his country's resources and people, and ease up a bit on his totalitarian tendencies. Investors would be happy to get excited about Russia again - as they did in 1991 - and work to improve a promising technology infrastructure that will only improve the lives of the country's people if developed more robustly.