Russian human capital in times of sanctions and counter-sanctions: Some redistributive implications

Abstract

The paper argues that the combination of sanctions, counter-sanctions and total importsubstitution taken together creates a strong shock on the human capital, and affects its utilization and reallocation. This effect can go along two major lines. First, one can expect underutilization of previously accumulated knowledge and skills due to the technologically regressive import-substitution. Second, those players who have previously lost in the global competition may take over the key role in formation and adjustment of the human capital to the changing demand. This shift in power and resources is likely to make the regress endogenous. These processes concern technological developments as well as R&D and higher education. As a result, one may expect that a significant part of the human capital that was created for utilization in more open and competitive environment can be lost.