Belarusian sector of information technology reached growth limits in existing economic model

Among other obvious factors, the protests in Belarus were the result of global changes in the economy. The old model, the tangible industrial one, is more and more moving aside, and it is being replaced by a new, information technology model generally known as postindustrial.

For 30 years of independent history, Belarus has cultivated industries that it inherited from the Soviet Union. They determined the development of all spheres of public life from education to public administration.

But the changes taking place in the world economy have come to Belarus as well. The slowdown in the growth of the usual kinds of activities made the Belarusian authorities pay attention to new directions, primarily to the IT sphere. As a result of objective and subjective factors, over 10 years this industry has come to the third place in terms of its contribution to the country's GDP. Only industry and trade are ahead. At the same time, the IT sector's contribution to the GDP growth has been the main one for the second year in a row.

The positive influence of average wages in the information and communication sector on the national average values is growing. Thus, the average salary in the sector grew from BYN 2,033 in 2017 to BYN 3,221 in 2019. Over January-July 2020, the average salary in information and communications amounted to BYN 3,967, while the number of people employed in the industry rose from 99 thousand people in 2017 to 125 thousand people in 2019. At the moment, the share of wages in the sector is almost 10% of the total wages. It is comparable to the shares of agriculture, healthcare, education, trade, construction, following the share of industry.

At the expense of the export of the IT sector, one manages to maintain a positive foreign trade balance of Belarus. The export growth in the IT sector is increasing: from USD 1.2 billion in 2017 to USD 2.1 billion in 2019, which is 22% of exports of services and more than 5% of total exports of Belarus.

In H1 2020, exports amounted to almost USD 1.2 billion. At the same time, the export growth rate rose from 15.5% in 2017 to 22% in 2019. In H1 2020, the export growth rates of the industry were almost 29%.

If other areas of the non-material sector, which are brought together under the name of professional, scientific, and technical activities, join the information and communication sector, then the total contribution to the GDP of the new economy exceeds 10% (for comparison, the contribution of trade is less than 9.5%, of construction – 6%, of transportation – 5.5%, agriculture – 4.5%, housing and public utility sector – 4%).

It is no wonder that the new economy wants to have the same impact and opportunities as existing core businesses. But the problem is that the new economy does not fit into the "Procrustean bed" of the current industrial model. It requires a new model, which does not exist in Belarus and cannot appear within the framework of the current rules.

While the share of the new economy was small, this discrepancy did not have a strong impact on the main processes in the country. But everything has changed now: within the framework of the current model, the new economy has come to the limit of its development. It needs new rules of the game and a microclimate to move forward.

Due to the rapid growth of the new economy, it did not manage to grow and nominate its lobbyists to the governance structure of Belarus. And the current officials from the IT sphere are more concerned with increasing benefits for financial flows than with the conditions for the development of the industry. It is not surprising that the main activity of the enterprises of the new economy is outsourcing rather than the creation of new products. The growth rates of the IT sector are good compared to other kinds of activities of the Belarusian economy, but they do not reflect its potential. In the case of creating your own products, exports can increase significantly.

The current situation is a direct consequence of the current rules of the game. Moreover, the sphere itself is very mobile, and "flows" from country to country like water. One has to fight for it, and one should go beyond benefits.

Among other things, the representatives of the sector hoped the last elections to change the current rules to those that would allow the industry to develop. Amid distrust of the official election results, the understanding that the development conditions would not be revised increased the protests.

The current elites have no answers to these challenges yet. Therefore, even if the protests loose strength, the problem of creating conditions for the development of the new economy will remain. If Belarus does not want to change them, then the problem of the new economy will eventually fix itself. It will "flow out" from Belarus to other countries where it will have conditions for growth and development. Moreover, almost all neighbors of Belarus have already announced their readiness to host IT companies.

So, about 100 IT companies have already announced relocation. Even more companies announced their readiness to consider this option. This can reduce the GDP rates by 0.1-0.2% that will not be able to leave the red area.

Although these figures may seem insignificant, the economic losses will grow significantly in first companies relocate successfully and nothing changes in Belarus.



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