Reviews | How Russia’s grim demographics could thwart Putin’s global ambitions
With a vast territory and abundant mineral reserves, Russia since the time of the tsars has bet on the transformation of natural wealth into geopolitical power. The strategy of becoming an “energy superpower” has always been dubious, but especially today. Putin struggles against the history of modern economic development. The wealth of modern nations is overwhelmingly generated by human beings and their abilities. Natural resources (land, energy and everything in between) have accounted for a dwindling share of global production over the past two centuries, with no end in sight.
So, for all its vaunted oil and gas wealth, Russia’s export earnings last year were actually lower than Belgium’s. Like other western democracies, Belgium manages to increase and release the economic value that resides in human beings. Putin’s petro-kleptocracy is woefully inept on both counts.
When Putin pays attention to demographics, he is obsessed with numbers – for him, “capitas” is more important than “per capita”. It focuses on increasing birth rates and seizing neighboring territory instead of improving the abilities and productivity of its entire population.
Russia is depopulating – even after Putin annexed Crimea in 2014, its total number is lower today than when the Soviet Union collapsed. Russia’s working-age population and its pool of potential 18-year-old conscripts are also declining. Declining societies can thrive, as Germany and Japan have shown. Kremlin policies virtually prevent this path for Russia.
It’s not that Russia lacks talented, enterprising and impressive people, as anyone who has spent time there knows. Nor does it suffer from a shortage of formal education. According to a major global assessment, the average number of years of schooling of the Russian working-age population (15-64 years) was comparable in 2015 to the levels of Denmark, France and Sweden, and much higher than those from Austria and New Zealand. The problem is that Russia has somehow managed to create a society with high levels of education and low human capital. The syndrome was evident under the Soviets, but is even more acute under Putin’s malevolent regime.
Consider the vast dimensions of Russia’s development failure:
- In 2019, according to the World Health Organization, Russia’s overall life expectancy at 15 years (male and female combined) was lower than that of Sudan or Bhutan – places designated by the United Nations as “the worst countries”. less advanced.
- Urbanization increases human productivity, bringing development gains everywhere, but somehow the ratio of city dwellers to the general population of Russia has stagnated for decades. In shrinking societies like Germany and Japan, on the other hand, the urban population and rates of urbanization have increased.
- Despite Russia’s huge and formidable cadre of highly educated men and women of working age, commercially valuable ‘knowledge production’ today seems marginal. According to the United Nations World Intellectual Property Organization, Russia accounted for less than 0.5% of international patent applications in 2019. And Russia’s “patent yield” – international patent applications divided by population of working age with higher education – was well below. That of South Africa.
- Russia’s record of creating value from its human resources is miserable. It has the ninth-most populous population in the world, but its exports of commercial services – traded knowledge and skills, such as banking or insurance – ranked 26th in 2019, behind Thailand and Turkey. Since the invasion of Ukraine, some of the best Russian talent has voted with his feet, going abroad in every way possible.
- National wealth is essential to state power and human well-being, but the Russian system produces remarkably little private wealth. According to Credit Suisse, total private wealth in Russia in 2020 was $3 trillion: one-ninth that of Japan, one-sixth that of Germany, and barely more than that of Sweden (a country whose population is 14 times smaller).
Meanwhile, much of the rest of the world beyond Russia’s borders is rapidly advancing with improvements in health, education, innovation, and wealth. Russia’s serious basic demographic problems are relatively well known – its declining potential global shares of total population, working-age workforce, and so on. But the demographics of Russia’s wasted human potential further cloud its outlook.
Putin’s acknowledgment of this sad reality may have fueled his appetite for ever greater risk-taking in Georgia, Crimea and now Ukraine. His nuclear saber strike is a leader’s tactic playing a weakened hand. An open and liberal Russia might still thrive, but it cannot become a normal country under the rule of a petro-kleptocracy.