For a comparison, total spending on ALL infrastructure in Trump's 2018 budget is $200 billion. Factor in that due to a much lower cost base, including labor, building materials, and domestic technology, Russians can build major infrastructure significantly cheaper than the US, in the case of roads, approximately by a factor of 8. So this is the equivalent of the US investing $1.6 trillion on roads.
Earlier today, we wrote about Russia's new focus on investing in domestic programs at the expense of military spending: 'Russia First'? Putin Cuts Military Spending to Boost Domestic Programs. This roads announcement is an example of this.
Full Transcript:
A conference for Russia's transport workers took place in Moscow on Monday. In his speech, the President has confirmed the goal he set in his recent address to the Federal Assembly. The goal was to allocate 11 trillion RUB in the next 6 years for the construction and modernization of highways.
This is twice as much as what was spent in the past 6 years. The money is intended for the government to fix city and regional roads.
Basically, this is just one clause of the address, in which the President set a task to create a more competitive economy in Russia than it is now. And it's nowadays that it becomes possible. Before, we had to worry about the necessary conditions for such a breakthrough. For instance, enforcing the defense to provide groundwork for decades ahead. For example, understanding which of our foreign partners is more reliable and what our high-potential markets are. For instance, learning how to handle domestically global economic crises and provide room for growth in the presence of ridiculous sanctions.
Putin:
We have radically curbed the inflation. We've created a solid financial safety air bag. We needed to support our science and provide steady progress for our agriculture, determine our priorities in education, healthcare was also in need of steady groundwork. Finally, we need to complete the current election cycle, and determine a management team, which will lead the large-scale project of rebuilding Russia, the country with a very stable system and economy, that's ready for take-off.
So, what does the project consist of? Essentially, out of people and people's preservation. In the next 6 years, the poverty level must decrease by half. Employment pattern is to become more dynamic and modern, so that workforce productivity increases. This is the main source of overall growth. People will earn more and live better. An ambitious goal from Putin is to place Russia in top-5 economics in the world. GDP per capita is to be increased by1.5 times in the next 6 years. This is the only way to provide the needed development for healthcare, education system, environmental health, so that people live to be over 80 on average.
Putin has set a goal for a new government in a strategy for Russia's spatial development, digitization of economy, technological developments, growth speed above the average global indicators, and large social projects, including a large-scale program to fight cancer.
Where will the money come from? From 4 basic sources. Workforce productivity (it's an entire complex), increasing investments (government ones, among others) to 25-27% of GDP, support the development of small businesses, so that the proportion of small business will grow to 40% of GDP by the mid 2020s. And, fourthly, the development of non-resource exports. Here, the goal is $250 billion per year. This includes 100 export services, like education, healthcare, tourism, and transport. 50 billion is from engineering products.
All this is in the conditions of expanding freedom for everything, mainly for entrepreneurship. Obviously, each of these schematically defined goals has been developed way deeper.
They will require mass efforts, but a lot has already begun.
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