KEF-2017: Foundations of the future

For long Belarus was a ‘puzzle’ where the economy grew fast without implementing a comprehensive set of market-oriented reforms envisaged by Washington Consensus. Many papers were written explaining this puzzle, and later many papers explained why it turned to stagnation. Indeed, Belarusian annual average growth rate fell drastically – from 9.9% a year between 2004 and 2008 to -0.5% a year between 2012 and 2016. Global growth also decelerated, but not so dramatically.

The gap is too wide not to embrace reforms. The content, the design, and the timing of reform package was elaborated extensively (including through KEF), but implementation was far from comprehensive. The economic authorities achieved great progress in terms of macroeconomic stability, prepared directions were to give more room for private sector, restructure the state direct role in several industries, and move from ‘micromanagement’ towards regulation when it comes to the state role in the economy. All these with an eye to keep the country’s social contract where possible – and several key reforms got stuck because of concerns about possible social unrest, first of all SOEs reform. Still, for a country that was competitive because of relatively cheap resources building efficient markets is a necessary condition to escape the low growth trap. But it is not sufficient anymore: external challenges call for actions that go beyond the ‘must’ of Washington Consensus prescriptions.

Globalization and arising crowd based capitalism challenge the role of the state and put it into the limelight of local politics in the core of the Western world. Growing inequality questions adequacy of the existing policy and institutional setup. Technological progress, spread of technology, changes of conventional social and business framework influence labor markets, government finance, legal systems, and values. The economies should now catch up and compete in terms of their social contract, legal, institutional, and infrastructural setup that would fit the needs of knowledge based society, as well as capabilities to combine innovation with traditions what keep societies at peace.

“The elements of the conflict now raging are unmistakable, in the vast expansion of industrial pursuits and the marvelous discoveries of science; in the changed relations between masters and workmen; in the enormous fortunes of some few individuals, and the utter poverty of the masses; the increased self-reliance and closer mutual combination of the working classes; as also, finally, in the prevailing moral degeneracy. The momentous gravity of the state of things now obtaining fills every mind with painful apprehension; wise men are discussing it; practical men are proposing schemes; popular meetings, legislatures, and rulers of nations are all busied with it – actually, there is no question which has taken deeper hold on the public mind.”This quote of current relevance is taken from the document which was written more than 125 years ago – encyclical of Pope Leo XIII on capital and labor “Rerum Novarum”. Quarter century later, revolution in Russia changed the course of the world’s history, and its aftermath undermined attractiveness of socialist ideas in the Western world. And now after 100 years the world should respond to similar challenges.

KEF-2017 seeks answers that would help to lay foundations of the future and close the gap between policies and practice. The first day shapes the global context: trends in the global economy, shifts in values and their impact on policies, and prospects of Russia as the most important neighbor and economic partner of Belarus. The second day opens discussion on the directions of the two fundamental reforms: legal and educational. Belarusian legal system fit the previous economic model of the country, and its serious revision is required, taking into account changes that have already happened and that have not yet come to pass. Regarding the educational reform, KEF-2017 focuses on the secondary education that prepares kids for the lifetime learning in the arising knowledge based society. The conference is summarized by the discussion panel on ‘Minsk Consensus’. It is an attempt to re-think – taking into account the contemporary global challenges – approaches and principles of other consensuses (Washington, Beijing, Post-Washington) in a country that seeks to reconcile in its model of development different ideologies, not questioning the value of its national sovereignty.