Russia's opportunity to diversify economy

Russia's current crisis, prompted also by the 30 percent fall in oil prices, could also provide an opportunity for it to push forward policies to diversify the economy away from its dependence on exporting natural resources.

Russia could push for industries that use Russia's natural resources, and add more value to products before exporting them, or leverage Russia's traditional strengths in technology that sadly has been eroding over the past 20 years.

Many do not understand how dependent Russia is on oil today. Taxes from the oil industry account for about half of the Russian government's budget. So, a decrease in the price of a barrel of oil by $1 results in a yearly loss of $2.1 billion in revenue for Russia. Luckily, Russians are good at dealing with crisis, and therefore Russia will fare better in the crisis than one might expect. It will rebound but experience plenty of pain before that.

Russia has taken some steps in recent years to diversify away from oil but it has to do much more. Russia's universities, among the best in the world in Soviet times, now lag behind those in other parts of the world. Policies need to be adopted to favor innovation over trade to make quick money. And better tax incentives and more investment in research and development, among other things, are needed to bolster the Russian economy.

Hopefully, Russia will take advantage of the opportunities the crisis has presented, by encouraging industrial diversification away from oil, to minimize the risk of future dangers.

The author is dean of Nottingham University Business School China.