Russia’s public sector planning a shift to domestic software

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/32

At the end of July, prime minister Dmitri Medvedev approved a plan aiming at the federal administration renounce foreign computer software and switch to domestic software by the end of 2018. Under the plan, the practice would be extended to include other administrative levels and state businesses by the end of 2020.

Software for public procurement was already earlier subject to import restrictions as part of Russia’s import substitution policies. Other product categories subject to restrictions include e.g. pharmaceuticals and textiles. The economy ministry estimates that Russia’s public procurement amounts to about 8 trillion rubles (€120 billion, 10 % of GDP) a year. Of that, about 1 trillion rubles was last year subject to import restrictions and preferential treatment for domestic producers. The economy ministry estimates that these policies have increased the prices of public procurements. The average price of public procurements subject to these policies rose 40 % last year, whereas the average price of all public procurements fell nearly 20 %. There has been discussion on extending import restrictions to cover also the purchases of enterprises owned by the public sector, but nothing concrete has materialised so far. The economy ministry put the 2015 value of these purchases at 23 trillion rubles or 30 % of GDP.

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