Russia and China facing the ‘Great Wall’: how to succeed in the second structural transition

Abstract

This article looks at the prospects of two emerging economic powers, Russia and China, to become major players in the world economy. The main economic thesis formulated by the author is that economies not only grow, but also undergo structural change. And to successfully accomplish second structural change – from the industry-driven to human capital-intensive services driven economy – it is not enough to increase economic freedom. Civic and even political freedom must emerge or increase to stand a chance to pass the ‘Great Wall’. Russia and China are, then, analyzed from the foregoing perspective. Additionally, many structural and economic policy distortions are pointed at in the case of both countries. Moreover, in the case of Russia, it is stressed that it is not so much an emerging power, but the failed superpower of the past.