Russia's brain drain has become its economy's biggest problem

Russia's brain drain has become its economy's biggest problem. This is the view of London Business School’s Professor Richard Portes who was recently interviewed about the Russian economy by Business Insider.

Russia's biggest problem isn't related to sanctions or its diminished energy trade. Its greatest dilemma is that it is losing its mostly highly skill workers, says Portes. These are people who are leaving in their droves amid the grinding conflict in Ukraine.

Portes predicts the future will largely be shaped by the countless Russians who have already fled the country, with Russia losing around a million of its own citizens in the year after it began its invasion of Ukraine.

Many of those citizens were from Russia's youngest and most educated demographics: 86% who left Russia in 2022 were under the age of 45, and 80% of those who left had a college education, according to an analysis from the French Institute of International Relations.

Many of those who left were also among the wealthier cohorts of Russian society, and they've taken their cash with them. The nation lost nearly $42 billion in 2022 as Russians transferred their personal savings abroad.

Those losses have coalesced into a Russian brain drain, and its impact has already been acutely felt, Portes said, adding that it will exacerbate other problems Russia is dealing with, such as a growing inflation crisis.

Over the next decade, Russia's economy could devolve into one dependent mainly on its natural resources rather than on the most innovative industries, Portes speculated. That's similar to what other economic forecasters have predicted, with some warning Russia's economy could become de-industrialized as its resources are siphoned off by the war.

That also means a poorer quality of life for Russians, Portes said. as the quality of everything from education to medical care to public services declines.

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