The new normal in Russia and China: Between past embedded structures and future global dominance

The new normal is a conceptual situation where economic and political agents are economically convinced and politically motivated to adapt to temporary austerity in economic growth and political participation. The concept entails a remarkable and rare mix of economics and politics. The alternative is to actively plan towards changing the underlying benchmark. Focusing on Russia and China, the paper draws on results from two studies that reflect on underlying weak and strong links in the two benchmark economies. One study examines the tendency and causes for slow growth and sticky distribution in Russia, when compared to China, making use of social accounting matrix multipliers. The Russian weak tendencies are partly due to structural imbalances inherited from the past economy with its state-led and parallel shadow counterparts. The other study looks forward into the future and examines Russian and Chinese prospects for leading roles and their relative influence potential in the global economy. The study makes use of a dominance index composed of the relative sizes of transforming agents (i.e. population) and transformed value (i.e. GDP). Results for Russia suggest that in a few decades global marginalization is imminent, unless agents and production change course and actively link and substantially integrate with other world blocs.