In Belarus cost of monopoly?

Illustrative photo

The lack of competition creates hothouse conditions for state-owned enterprises.

In Belarus, competition is not going smoothly, although she is known to be the basis for the development of the entire economy. First of all, the creation of competition in the country is hindered by the dominance of the public sector.

“We still have to prove what the advantages of competition and explain why it is needed,” – said at the seminar of the Center for economic research and outreach of the national Bank the head of the company YUNITER Roman Osipov, writes

According to him, the argument that competition is the engine of progress, a mechanism that increases the efficiency of business entities, crash all the time on the criticism related to the fact that the competition may be affected state-owned enterprises, which we have positioned as socially-oriented.

“The public sector bear the social burden, and it is always the main argument when it comes to competition,” said Roman Osipov.

Meanwhile, the expert admitted that no assessment, what is actually the volume of social assistance of the state-owned enterprises.

“Now, I think, is very scanty, if you compare with what it was five years ago, and today much of it is just words,” – said Osipov.

The lack of competition leads to favorable conditions

Competition forces to change something in your business, and to change something – it essentially means innovation, drew the attention of the head of YUNITER.

“As we foster innovation in state enterprises? All of our hospedarte working on indicators, he said. – Although the meaning of innovative products that it sold to grow its share of the grocery range.”

Osipov added that we do not.

“If we follow the fate of these innovative products on state-owned enterprises, they subsequently decay and after two or three years remain the same Soviet products, which is always kind of like okay sold. The reason for this prescriptive method and the performance,” – said Roman Osipov.

The lack of competition leads, in the opinion of the expert, to favorable conditions for state-owned enterprises, the lack of pressure on management from the point of view of introducing modern technologies.

“So, for example, we calculated how many dollars of dairy industry enterprises to earn with the processing of one liter of raw milk. It turned out, private companies exhaust is 1.4 times greater than that of the state”, – said the head of YUNITER.

Osipov said that this did not happen at the expense of more complex machines and mechanisms or trading houses, but at the expense of innovation, operate the brand.

The situation is similar in other industries.

The cost of monopoly?

Osipov asked whether, in his view, to achieve competition without privatization.

The expert cited the example of the situation in the insurance sector.

“If we compare the ratio of collected insurance premiums in Belarus to GDP, we get 1%. Why so few? Because the five largest insurance companies in the state. They all live in a hothouse environment, getting compulsory insurance”, – he said.

“Whether privatization of Belgosstrakh and other insurance companies in order to develop the insurance market and to reach at least 2% of GDP? You can do without privatization, it is only necessary to liberalize the insurance market. But again interferes with the thesis that the service performs social functions, works in villages, etc.” – said Roman Osipov.

According to the expert, the monopolization of the industry has led to the fact that there are no investors, there are no interesting products, they do not offer, develop, and nobody wants to change anything.

“Therefore, the development of equal competition, privatization, development of competition is still to create such market conditions that the private sector felt more confident, was able to predict something and to work”,- said the expert.

The rejection of monopoly and development of competition entered into Roman Osipov, give GDP growth per year of 1.3-1.5%.