It takes more than oil to lubricate the Russian economy

But on this analysis growth prospects are not encouraging. You can only use up spare resources until the unused stock has been used up. Russia may already be close to this point. At the same time, higher oil prices can only bring higher incomes while prices are rising.

When they have stopped rising, further growth depends upon the same factors which determine the growth rates of ordinary, non-resource rich countries, namely the inputs of labour and capital and the efficiency with which those inputs are combined and managed. The smart thing is to use the revenues created by high oil prices to establish a basis for future prosperity which is not dependent on oil. This is the strategy adopted by Dubai.
The prospects of this happening in Russia do not look good. The industrial sector has performed much less well than the consumer sector. Economic growth could slow to 5pc by the end of the decade and 4pc beyond that.

These rates may sound good by normal European standards but remember that Russia is still not fully developed. Her GDP is less than half the UK’s. She should be experiencing growth rates of 6pc plus over many years. After all, Chinese growth is 10pc. But there is no sign that Russia is going to become the new China.

Indeed, there is a good deal of evidence that large endowments of natural resources can be a curse rather than a blessing. There are umpteen examples of resource rich countries which squander wealth. The cornucopia of gold and silver from South America did not bring Spanish economic take-off in the 16th century but rather the reverse.

Telegraph