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. Last Updated: 07/27/2016

Will the Poor Benefit From GDP Growth?

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The central theme of the World Economic Forum meeting held in Moscow 10 days ago was the much-touted goal put forward by President Vladimir Putin to double GDP in a decade.

However, Russia's industrial growth and success are not just about facts and figures on a balance sheet. It is vital that any such development should improve the lives of the Russian people and that secure livelihoods and a secure future for all should be the fruits of economic growth and stability. The strength of the economy depends on the country having transparent public institutions and a vibrant private sector that help to meet people's needs.

According to Goskomstat estimates, in 2002 Russia had 39.9 million people living below subsistence level, and the gap between rich and poor widened. Goskomstat also shows that 10 percent of high-income-earning Russians shared 29.6 percent of total cash revenues in the first quarter of 2003, while 10 percent of low-income families shared just 2 percent.

An increase in GDP could lead to a substantial improvement in people's standard of living, but this cannot be taken for granted. It would be a bitter irony if, despite GDP rising, poor people were plunged further into poverty.

The focus, therefore, should be much more on sustainable and equitable economic growth. This issue is already on the agenda and at the WEF meeting there was some reference made to the need to enhance the income and employment security of ordinary Russians. For example, Andrei Illarionov, chief economic adviser to the president, sagely observed: "Only when people see the benefits of economic reform at the household level can you bring about more sustainable growth." This understanding that the polarization of rich and poor can lead to greater instability and social disenchantment is particularly pertinent, as in Russia there is increasingly striking evidence of pockets of poverty existing side-by-side with excessive wealth.

There is a fundamental need for the development of small and medium-sized businesses, which could potentially help bridge the gap between rich and poor. They could be given a boost if steps were taken to reduce over-regulation and inspection, and a simpler taxation system was introduced. SME development could be an important engine for sustainable and equitable growth, with small entrepreneurs not only securing a stable income for their families but also providing employment for others. Oxfam's experience in many parts of the world is that this can provide a path to stability and sustainable growth within communities.

The impact of sustainable and equitable economic growth could be enormous, providing stability and security for people in even the poorest regions of Russia.

Vitaly Kartamyshev is policy officer at Oxfam's Russian office, which opened in November 2002. He contributed this comment to The Moscow Times.