Russia spent years trying to wean itself off imported goods to fortify its economy against Western sanctions.
Now, the impact of sanctions imposed after Russia’s invasion of Ukraine has made it clear that Moscow’s efforts didn’t work. Russia’s continued dependence on imports means it is facing a painful economic readjustment.
Parts of Russia’s auto industry are shutting down for lack of foreign parts. The country’s flagship homemade passenger jet gets its engine and other key parts from overseas suppliers. Foreign pet food and medication have disappeared from store shelves.
“Import substitution has failed to achieve its goal of making Russia less vulnerable to sanctions like these,” said
a specialist in the Russian economy at the German Institute for International and Security Affairs. “The Russian ambitions were unrealistic to start with because a small economy like Russia’s isn’t able to produce complex and high-tech goods by itself. It’s just simply not possible.” Replacing the foreign products could take years, he added.
Import substitution is supposed to replace foreign goods with homemade ones. Though most economists believe that building everything domestically is costly and inefficient, the Kremlin embraced the strategy to combat sanctions that followed its takeover of Crimea in 2014. It was part of a multiyear plan to protect the economy, dubbed by observers as Fortress Russia.
But Russia’s dependence on imports actually worsened over the years. In 2021, some 81% of manufacturers said they couldn’t find any Russian versions of imported products they needed. More than half were dissatisfied with the quality of homegrown production. Both figures were the highest recorded since the survey by Russia’s Gaidar Institute for Economic Policy began in 2015.
In 2020, imports accounted for 75% of sales of nonfood consumer goods in the Russian retail market, according to a study by the Higher School of Economics in Moscow. In some sectors the share was even higher, rising to 86% for telecommunications equipment, the study found. Imports equaled around a fifth of GDP in 2020, compared with 16% in China and higher than other big economies such as India and Brazil.
Russia’s auto makers have been especially hard-hit by a lack of imported components such as computer chips. On Wednesday, the leader of Russia’s Tatarstan region warned in televised remarks that truck maker Kamaz was facing a production drop of up to 40% and that some 15,000 of its employees could be idled until the company’s supply-chain issues are resolved.
A Kamaz spokesman described the leader’s comments as a worst-case scenario and said the company was shifting more of its production to truck lines made with Russian parts.
Technology products are among the most critical goods cut off by the sanctions, including semiconductors, computers, lasers and sensors. The ruble, meanwhile, has plummeted in value, raising the price of the goods Russia can still import.
Another high-risk area for Russia is its energy industry. Russia relies on Western technology for its aging oil and gas fields. Earlier sanctions forced Russian energy companies to delay or cancel projects while domestic technology has often proven inadequate, analysts say.
Until last month, Russia was highly integrated in the global economy. Untangling itself from international supply chains will be a slow and difficult process.
has acknowledged the hardships ahead.
“Our economy will need deep structural changes in these new realities, and I won’t hide this—they won’t be easy,” Mr. Putin said Wednesday.
Russian officials say domestic companies will benefit from the situation. “Previously it was unprofitable to produce certain goods inside the country whereas now this is becoming more interesting for businesses,” central bank governor
said Friday. Still, she acknowledged that this will come at a cost, including rising inflation.
Some imported products are deeply integrated in companies’ operations. Up to 90% of Russian banks and companies use Western software, estimates
visiting senior fellow at the Finnish Institute of International Affairs.
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“It was possible to replace low-tech items like pipes, things that don’t require a lot of know-how and R&D investments,” said Ms. Shagina. “But anything that is high-tech is still very much reliant on Western technology, Western software, Western know-how.”
Even prestige projects that the Kremlin has touted as examples of the resurgence of Russian industry have proved to be stubbornly dependent on imports.
The Sukhoi Superjet 100, unveiled in 2007, was a bid to revive the country’s flagging civilian aircraft-construction sector. But Russian officials have said around half the cost of parts used to build the Superjet comes from imported parts. French aerospace firm
—which produces the jet’s engines, landing gear and engine covers—said it would stop all activities in Russia because of Western sanctions.
A planned version of the plane made almost entirely of domestic parts won’t enter mass production until 2024, officials have said.
Sanctions have also hit consumers used to getting imported products. Svetlana Ryabova, a 36-year-old Moscow resident who helps run a rescue program for stray cats, said foreign pet food and medicine had become harder to find. Some brands such as Monge have disappeared from stores, and vaccines such as Nobivac and Purevax—both made by foreign pharmaceutical companies—are in short supply, she said.
Ms. Ryabova hopes domestic manufacturers will make up the shortfall. “We have them, of course, but people are in a panic and buying up everything,” she said.
Russia launched the import-substitution drive by barring many Western food imports. French cheeses, Spanish ham and other delicacies appreciated by the country’s wealthier urban elite disappeared from store shelves. The import substitution drive later expanded to other industries, including medicine and technology.
Between 2015 and 2020, authorities allocated over 2.9 trillion rubles, or $27 billion, to the import substitution program, equivalent to 1.4% of budget expenditures over the period.
But the policy didn’t boost the Russian economy, which was suffering a double blow from sanctions and low oil prices. Its gross domestic product growth has been slower than the world average since 2014 and Russians are poorer than before the Crimea annexation: by the end of 2020, real incomes had fallen by 9.3% from their 2013 level.
While Russia notched some successes, including the development of dairy and meat industries, the food ban pushed up prices, costing consumers 445 billion rubles, or $4.1 billion, a year, according to a 2019 study published in the Russian Journal of the New Economic Association.
A big wild card is China. Already a large Russian trading partner, Beijing could replace the U.S. and Europe as a supplier of many goods. But that could mean jeopardizing its already fraught trade relations with the West. China also doesn’t produce some of the chips and other tech products Russia needs.
As the sanctions bite, Russian leaders have gone to great lengths to promote self-sufficiency, even praising the Soviet economy.
“The U.S.S.R. really lived under sanctions, developed and achieved tremendous success,” Mr. Putin said earlier this month.
Others disagree. “The Russian economy will be much more primitive now,” Mr. Kluge said.
Concordia invests $2M in the Circular Economy Fund – Concordia University News
The Concordia University Foundation and the Greater Montreal Climate Fund (GMCF) are investing $2 million and $500,000, respectively, in the Circular Economy Fund (CE Fund).
The commitments total more than $18M, bringing the EC Fund closer to its objective of $25M, to which Fondaction is also adding $5M in co-investment.
Unique in Canada, the EC Fund was launched in March 2021 by Fondaction, in partnership with the City of Montreal and RECYC-QUÉBEC. The fund aims to accelerate ecological transition through the circular economy, notably by reducing the production of residual materials and supporting their recovery, in addition to reducing greenhouse gas emissions.
It encourages innovation and the exchange of solutions between startups and the largest Quebec companies.
Partnerships anchored in the mission of the Circular Economy Fund
Marc Gauthier, treasurer and chief investment officer of Concordia, says this investment with the GMCF and Fondaction in the Circular Economy Fund represents a second important co-investment for the sustainable innovation sector.
“Earlier this year, we joined Fondaction in the Urapi Sustainable Soil Management Fund. It is with great pleasure that the Concordia University Foundation is now co-investing in the Circular Economy Fund,” he says.
“Like Urapi, this Fund is perfectly aligned with our goals for sustainable investments and investments with social and environmental impact.”
Marie-Claude Bourgie, executive director of the GMCF, says investing in the Circular Economy Fund allows the Greater Montreal Climate Fund to carry out a mission that is close to its heart: to accelerate the implementation of climate solutions in the metropolitan region.
“It is by supporting entrepreneurs dedicated to meeting the challenge of putting raw materials back into circulation that we can rethink the production chain and thus reduce our greenhouse gas emissions.”
With this second closing, Fondaction will be able to help more companies that want to optimize the use and recovery of resources as well as the reduction of residual materials and greenhouse gas emissions, explains Marc-André Binette, assistant chief investment officer at the investment fund.
“We are pleased to have wise financial partners who have made the circular economy a major pillar in the fight against climate change,” he adds.
Getting involved in the city’s ecological transition
Since the EC Fund was deployed, four companies (Still Good, Groupe Onym, Ferme Tournevent and CarbiCrete) have received an investment from the Fund to increase their production, open a new plant, increase research and development and test an innovative product.
These companies operate in different sectors, such as agri-food, recycling, resource recovery and eco-construction, but their missions are all part of the circular economy concept.
According to the Pôle québécois de concertation sur l’économie circulaire, this economy is closely linked to practices that optimize the use of natural resources in order to reduce the environmental footprint and contribute to the well-being of the population.
By creating the EC Fund, Fondaction and its partners are investing for the future and these two new investors open up new investment opportunities for the EC Fund and fuel the development of responsible and sustainable innovations.
Find out more about the Circular Economy Fund (CE Fund).
Oakville's economy 'remains strong,' says Economic Development Report | inHalton – insauga.com
Published May 26, 2022 at 4:58 pm
The growth of Oakville companies like Geotab were highlighted in the Town of Oakville’s 2021 Economic Development Report. FACEBOOK PHOTO
The attraction of new companies like Amazon and growth at existing ones like Geotab resulted in some 1,000 new jobs, highlight the Town of Oakville’s 2021 Economic Development Report.
Released at the Town Council meeting on Wednesday night, the annual report provides an overview of the town’s economic activity in 2021, highlighting local economic growth, recovery, and resiliency.
“Oakville’s economy remains strong because our livability and our pandemic recovery plan continues to attract new investments that are essential to supporting the pandemic recovery, job creation, and the long-term health of our local economy,” said Oakville Mayor Rob Burton.
“The town remains committed to helping local businesses recover from the pandemic and remain resilient because together, we can help ensure business and people continue to thrive in our community.”
Some key highlights from the report include:
- Oakville welcomed several new companies across various industries, including Wiseacre Studios, Amazon and NVA Canada, and saw growth at existing companies, including Geotab, Terrestrial Energy, and SteriMax, resulting in approximately 1,000 new jobs.
- When compared to 17 surrounding municipalities Oakville’s commercial market remains highly competitive, ranking within the top five in the cost comparison for taxes and development charges.
- Oakville’s industrial market is comparatively less competitive in the areas of land sale values and taxes, ranking more costly than half of the municipalities reviewed. Cost competitiveness for industrial development charges has improved, and industrial market demand overall remains high.
- The Town’s Economic Development department continued to focus efforts on supporting pandemic recovery through its participation on the Recovery and Resiliency Committee, patio program, workplace self-screening rapid antigen testing program, and Digital Main Street.
- In an effort to address the rise in office vacancy rates in Oakville, which reached a peak at 20.7 per cent in the third quarter of last year, the town developed the Where Living Works campaign, which promoted Oakville’s livability as a key differentiator for investment. While office vacancy rates rose across Ontario last year, the market remains optimistic with numbers declining in the fourth quarter. Many companies have also reintroduced return to office plans, with a focus on the hybrid work model.
- For the third year in a row, Site Selection Magazine, an international business publication covering corporate real estate and economic development, listed the Town of Oakville in the top 20 of Canada’s Best Locations to invest based on significant investment and facility expansions at existing companies as well as new company arrivals.
Long COVID fuelling brain health crisis disrupting workforce, economy – Financial Post
An estimated 10 to 30 per cent of COVID-19 survivors are currently experiencing a range of long COVID symptoms, which means that more than one million Canadians, or about five per cent of the Canadian labour force, could be affected.
Though long COVID affects the entire body, many of the most persistent symptoms are linked to brain health. These symptoms include headaches, “brain fog,” chronic fatigue, impaired memory or concentration, anxiety, depression and insomnia. Such symptoms directly limit a person’s ability to work or be productive at their former, pre-pandemic levels. That has implications for the economy. Knowledge-based economies rely on optimal “brain capital” for economic prosperity, and so without brain health, we compromise our wealth.
What’s more, long COVID is striking people in their prime working years. According to a survey conducted in May 2021 by Viral Neuro Exploration (VINEx), the COVID Long Haulers Support Group Canada and Neurological Health Charities Canada, nearly 60 per cent of the more than 1,000 long haulers polled are between the ages of 40 and 59. Their top symptoms include fatigue and “brain fog,” which have impacted their work. Nearly 70 per cent of long-haulers said they were forced to take a leave from their jobs and more than half had to reduce their hours. Over one quarter had to go on disability, but nearly 44 per cent were unable to access disability insurance.
Long COVID brain health symptoms have persisted, and so have its impacts. In a follow-up survey and report conducted this spring, more than 80 per cent of respondents said the virus has negatively or very negatively affected their brain health. More than 70 per cent had to take a leave from work, which in some cases stretched beyond a year. Still others had to leave the workforce altogether. Troublingly, more than 30 per cent of survey respondents felt they weren’t believed when initially describing their symptoms to a health-care professional.
Women appear to be bearing the brunt of long COVID symptoms; more than 87 per cent of the survey respondents identify as female. This is consistent with other studies showing women are disproportionately affected by as much as a four-to-one ratio to men, impacting women’s labour participation rate and further aggravating gender inequalities.
The brain health crisis in Canada isn’t new. Even before COVID-19, one in three people were estimated to have been directly impacted by a disease, disorder or injury of the brain, with indirect costs to families, the workplace, economy and society. But the pandemic, which led to shutdowns that caused social isolation and anxiety about an uncertain future, along with the virus itself and its lasting effects on long-haulers, only increased the prevalence of neurological and psychiatric disorders, putting additional stress on overall brain health.
We are now facing a global mental health crisis. In the United States, “an overwhelming majority of Americans believe the U.S. is in the grips of a full-blown mental health crisis,” according to a USA Today/Suffolk University poll. President Joe Biden also announced a strategy to address national mental health issues as part of his first state of the union address. In Canada, the federal government created a cabinet position dedicated to mental health. The minister of mental health and addiction has a mandate to create a comprehensive, evidence-based plan “to address the crisis in mental health,” and establish a Canada Mental Health Transfer to help expand the delivery of mental health services, including for prevention and treatment.
These investments in mental health are to be lauded, as is the the greater awareness of long COVID. But they fall short of what is needed for people living with persistent COVID symptoms, mental health impacts from the pandemic, and for those whose brain health is otherwise not optimal.
Lost productivity and increased insurance payouts have resulted from this accelerated brain health crisis. The Centre for Addiction and Mental Health estimates poor mental health costs the Canadian economy more than $50 billion annually, of which more than $6 billion is due to lost productivity. And according to the Canadian Life and Health Insurance Association’s latest data, Canadian insurers paid out $420 million in psychology claims in 2020, a staggering 24 per cent increase from 2019.
Much of the discussion about the “new normal” at the workplace has focused on how we will work. But we need to pay more attention to ensuring people are able to fully participate in the labour market. We are already facing labour shortages thanks to a shift in demographics and as workers choose to retire earlier or leave the workforce because of the pandemic.
Long COVID: The invisible public health crisis fuelling labour shortages
Why the fight against COVID-19 won’t end with a high vaccination rate
Don’t let the two-dose summer fool you — there is a long battle ahead against COVID-19
There is a way forward: we need to treat the post-pandemic brain health crisis with the same urgency as the pandemic crisis. The development and deployment of vaccines bridged existing technology and research from basic to clinical trials; showed us the power and potential of global collaboration across disciplines, institutions, sectors, and countries; and brought together business and science leadership. We can apply these lessons to both research and care, beginning with long COVID. Governments and funders must move away from traditional silos, and think differently about how these may link to a bigger story about brain health. Here’s what that looks like:
- We need to continue the work to develop a concise definition of long COVID and develop a single test for diagnosing long COVID. This will allow us to better understand the size and impact of the problem;
- We need to bring attention to the stories of people with lived experience and counter the stigma being faced by those who are not believed because the illness is not well-defined and not always properly diagnosed. Beyond the mental health stress, this has an impact on the ability to access unemployment benefits and disability insurance;
- We need to establish more multidisciplinary care clinics to be able to treat the different dimensions of long COVID;
- We need to increase funding for multidisciplinary research and longitudinal studies, in order to advance our understanding of what causes long COVID, how to treat it, and the potential long-term impacts, which may include contributing to the development of neurodegenerative diseases in the future. This is not just up to governments. Businesses and the private sector have a role to play and a stake in funding such research; and
- Finally, from a workplace perspective, employers need to provide more flexibility and a gradual return to work for those ready to come back.
We cannot leave long-haulers behind and let long COVID mine the full potential of up to a million Canadians who may be in their prime working years. Brain health is our most precious asset; the health of our workplaces and of our labour force is a function of our brain health. Acting now to ensure it remains optimal will yield higher productivity, and a more dynamic, creative and resilient workforce.
— Inez Jabalpurwala is global director of VINEx.
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