How Competitive Is the Russian Economy?
Table of contents
Introduction 2
The Concept of Competitiveness 3
Created versus inherited prosperity 3
Indicators and enablers of competitiveness 5
Determinant of Competitiveness 6
EMPIRICAL EVIDENCE ON RUSSIA’S OIL PRICE , DEPENDENCE AND THE RISK OF THE DUTCH DISEASE 10
THE ROLE OF RAW MATERIALS IN RUSSIA’S EXPORTS 10
THE ROLE OF RAW MATERIALS IN DOMESTIC PRODUCTION 12
IS RUSSIA SHOWING SYMPTOMS OF THE DUTCH DISEASE? 15
2008 Economic Crisis 18
Conclusion 22
Introduction
Since I could choose a country from Commonwealth of Independent States (CIS), the choice was pretty natural for me. I have chosen the major member which has the biggest global influence among the other participants. The country which has actually formed the CIS is Russia.
The point of the whole research is to put oneself in the shoes of en exporter or investor. What does the investor want? He wants to gain as much return on investment as possible. What does this factor depend on? Actually, it depends on lots of nuances, but the most important is economic growth of a country. What if several countries show the same performance on average? The investor should choose between the ‘competitors’.
Any favorable environment attracts new businesses and investments that increase its competitiveness. There are lots of factors to be taken into consideration when estimating the competitiveness of a county. Most of them have an impact on country’s GDP, so a brief look on it will give us a general picture of the state of a country’s economy and therefore its competitiveness.
Russia has been showing stable GDP growth over the past years, which is certainly good. However, I strongly believe that the growth was rather artificial. Mainly because Russia’s economy is highly dependant on raw materials and most important - on its export prices.
In this paper some theoretical concepts of competitiveness of Russia and its determinants are covered. In the second part Russia’s oil price dependence and
Introduction 2
The Concept of Competitiveness 3
Created versus inherited prosperity 3
Indicators and enablers of competitiveness 5
Determinant of Competitiveness 6
EMPIRICAL EVIDENCE ON RUSSIA’S OIL PRICE , DEPENDENCE AND THE RISK OF THE DUTCH DISEASE 10
THE ROLE OF RAW MATERIALS IN RUSSIA’S EXPORTS 10
THE ROLE OF RAW MATERIALS IN DOMESTIC PRODUCTION 12
IS RUSSIA SHOWING SYMPTOMS OF THE DUTCH DISEASE? 15
2008 Economic Crisis 18
Conclusion 22
Introduction
Since I could choose a country from Commonwealth of Independent States (CIS), the choice was pretty natural for me. I have chosen the major member which has the biggest global influence among the other participants. The country which has actually formed the CIS is Russia.
The point of the whole research is to put oneself in the shoes of en exporter or investor. What does the investor want? He wants to gain as much return on investment as possible. What does this factor depend on? Actually, it depends on lots of nuances, but the most important is economic growth of a country. What if several countries show the same performance on average? The investor should choose between the ‘competitors’.
Any favorable environment attracts new businesses and investments that increase its competitiveness. There are lots of factors to be taken into consideration when estimating the competitiveness of a county. Most of them have an impact on country’s GDP, so a brief look on it will give us a general picture of the state of a country’s economy and therefore its competitiveness.
Russia has been showing stable GDP growth over the past years, which is certainly good. However, I strongly believe that the growth was rather artificial. Mainly because Russia’s economy is highly dependant on raw materials and most important - on its export prices.
In this paper some theoretical concepts of competitiveness of Russia and its determinants are covered. In the second part Russia’s oil price dependence and
Bibliography: • Competitiveness at the Crossroads: Choosing the Future Direction of the Russian Economy by Michael E. Porter and Christian Ketels, with Mercedes Delgado and Richard Bryden (2006) • Long-term growth prospects for the Russian economy by Roland Beck, Annette Kamps and Elitza Mileva (2007) • Summary of the presentation given on December 22, 2008, by Boris V. Kuznetsov • www.gks.ru