In recent years Russian top policy-makers have increasingly emphasised that joining the ranks of the most advanced market-oriented countries requires modernisation of the economy. There is a broad consensus that it will not be possible in the long run to rely on continuous improvements in the terms of trade and the mobilisation of idle resources to sustain rapid economic growth. Increases in output will need increasingly to come from making better use of the available factors of production as well as new ways of producing goods and services. This means creating an environment in which innovation and investment, including in human capital, can flourish, something which will require further reforms in many areas. The current initiative to modernise the Russian economy marks a break with the past, with the approach being to achieve modernisation by making it attractive to live, study, work and innovate in Russia, with the development of democracy, including stronger participation of civil society, and a cleaner environment.