Russia after the Global Financial Crisis

Two prominent American specialists on the Russian economy present a fundamental analysis of basic economic factors explaining how the global financial crisis has played out in Russia and its implications for the country's future. More specifically, the authors examine the consequences of Russia's dependence on and addiction to resource (oil and gas) rents and of the management system put in place under Vladimir Putin to maintain, secure, and distribute these rents. They then investigate how each of these factors has emerged from the crisis and how it might evolve in the years ahead. Focusing on the distinction between rent dependence and addiction, the authors question the conventional wisdom that diversification of Russia's economy (away from oil and gas) is a desirable objective that will render it less vulnerable to external shocks. Journal of Economic Literature, Classification Numbers: E020, F020, G010, O130. 15 figures, 44 references.     

Resource Rent from the Oil and Gas Sector and the Russian Economy

Three specialists on Russia's oil and gas sector examine the process whereby resource rent has been extracted from oil and gas production and distributed within the Soviet (and later Russian) economy. A particular focus is on changes in the way such rent now is collected and allocated to different levels of the territorial-administrative hierarchy as a result of a transition from command to market economic relations. Special attention is devoted to the introduction of new taxation regimes and other mechanisms of rent extraction and redistribution. 4 tables, 42 references.     

Reflections on a Geographic Dichotomy: Archipelago Russia

A noted economic geographer and Sovietologist conceptualizes Russia's current economy as an archipelago, consisting of widely scattered nodes of viable, integrated activity separated by an enormous expanse of "dead space." The dichotomy between metropolitan Russia and its hinterland is developed through an examination of contrasts in such major indicators of well-being as natural gas consumption, access to education, the middle class, retail trade and services, undeclared income, and port-hinterland multiplier effects. Also discussed are the major types of hinterland (classical, or resource frontier, versus backwater), the special case of the Russian Far East and Transbaykalia, and contrasts with developments on the North American continent. Journal of Economic Literature, Classification Numbers: O10, O18, O50. 38 references.     

Oil Exploration in Russia: Prospects for Reforming a Crucial Sector

Two seasoned observers of the Russian oil industry analyze the country's policy response to developments in its mineral resources base (often perceived as an exploration crisis), with a focus on oil. The authors review and discuss trends in exploration (including its organization and efficiency), recent developments in its financing, and the reorganization of exploration activity. The evolution of Russia's licensing system is presented, drawing attention to changes that have affected incentives, risks, and barriers to potential resource users, both Russian and foreign. Also identified are conflicts between the objectives of resource managers and broader political goals and interests. Journal of Economic Literature, Classification Numbers: L710, Q310, Q380, Q410. 4 figures, 40 references.     

Russia's Energy Policy: A Framing Comment

A prominent specialist on the Russian economy provides a framing comment on two preceding papers entitled "Russia's Energy Policy" (by Vladimir Milov, Leonard Coburn, and Igor Danchenko) and "Russia's Energy Policy: A Divergent View" (by Matthew J. Sagers). The author argues that Russia's current energy policy should be viewed as an outcome of competition between three overlapping programs. In this context, he identifies three policy models—the old Soviet, the liberal or oligarchic, and the most recent state capitalist. The latter is currently supported by President Putin, who prioritizes diversification of the country's economy at the expense of diminished investments in the oil and gas sector. Journal of Economic Literature, Classification Numbers: L71, O13, Q40, Q48. 2 tables, 2 figures, 22 references.     

Russia's European policy under Medvedev: how sustainable is a new compromise?

This article argues that Dmitry Medvedev's term in office, despite the continuity in Russia's foreign policy objectives, brought about a certain change in Russia's relations with the European Union and the countries of the Common Neighbourhood. The western perceptions of Russia as a resurgent power able to use energy as leverage vis‐à‐vis the EU were challenged by the global economic crisis, the emergence of a buyer's market in Europe's gas trade, Russia's inability to start internal reforms, and the growing gap in the development of Russia on the one hand and China on the other. As a result, the balance of self‐confidence shifted in the still essentially stagnant EU–Russian relationship. As before, Moscow is ready to use all available opportunities to tighten its grip on the post‐Soviet space, but it is less keen to go into an open conflict when important interests of EU member states may be affected. The realization is slowly emerging also inside Russia that it is less able either to intimidate or attract European actors, even though it can still appeal to their so‐called ‘pragmatic interests’, both transparent and non‐transparent. At the same time, whereas the new modus operandi may be suboptimal from the point of view of those in the country who would want Russia's policy to be aimed at the restoration of global power status, it is the one that the Kremlin can live with—also after the expected return of Vladimir Putin as Russia's president. Under the current scheme, the West—and the EU in particular—does little to challenge Russia's internal order and leaves it enough space to conduct its chosen course in the former Soviet Union.     

Putin's Second Term Is Likely to Differ from His First: A Rebuttal

The author of "Russia's Economic Transformation under Putin" replies to comments and critical assessments of his paper by two prominent Western specialists on the Russian economy. His rebuttal to the more severe critic of the two emphasizes the prospective change in Putin's approach to economic reform during his second presidential term. The author believes that economic policymaking in the Kremlin, rather than the impact of world oil prices, will tend to shape Russia's considerable economic growth. Journal of Economic Literature, Classification Numbers: E60, E63, F13, H20, H60, P21. 8 references.     

The Geopolitics of Terrorism: Russia's Conflict with Islamic Extremism

A British specialist on the Russo-Chechen wars and international terrorism examines Russia's role in the Global War on Terror and, in particular, its long-term campaign against both separatists and Islamic extremists in Chechnya and elsewhere in the North Caucasus. The author advances the argument that Russia's Eurasian (as opposed to European) mode of governance, equating self-determination with separatism and cultural/religious differences with extremism, has generated societal pressures conducive to heightened political violence and terrorism. The implications of such pressures for the future incidence of terrorism in Russia are explored. Journal of Economic Literature, Classification Numbers: H770, O180, P300. 2 figures, 52 references.     

The Cost of Illness,Disability, and Premature Mortality to Russia's Economy

An American specialist on Russia's health and demographic situation calculates the economic burden of morbidity, disability, and premature death on the country's economy in 2003, applying a cost-of-illness model commonly used in Western settings. The paper disaggregates direct costs (spending specifically on health care) and indirect costs (productivity lost due to illness and death, measured in terms of lost wages), and distinguishes between current-year versus out-year losses and the costs incurred due to different categories of illness. The paper first analyzes the situation for Russia as a whole before briefly exploring regional variations in elements of cost of illness. Journal of Economic Literature, Classification Numbers: I12, I18, J28, O15. 10 figures, 6 tables, 46 references.     

Perspectives on the Potential of Russian Oil

A prominent American specialist on the economy of the former USSR comments on Russian oil in light of a preceding paper on the subject. Noting the congruence of Russia's economic growth with world oil prices, the author points out that the country's growth is endangered by sharp declines in those prices. He also recalls how an oil windfall shaped Russian thinking in the 1970s, questions how long Russia can pump oil at its maximum level by invoking the American experience from 1859 through the peak in 1970 until the present, analyzes the two corporate models in the Russian oil sector, and briefly outlines Putin's new approach to foreign investment in the sector. Journal of Economic Literature, Classification Numbers: L71, O13, O18. 3 figures, 8 references.     

Observations on the Influence of High Oil Prices on Russia's GDP Growth

A noted economist and observer of post-Soviet affairs presents a study probing the influence of high oil prices on Russia's GDP growth. The paper analyzes the contributions to the country's GDP by sectors of origin and final use, and pays special attention to the influence of trade margins produced by oil and gas but recorded and placed by Goskomstat Rossii in Russia's trade sector. The author's interpretation of statistical data released by Goskomstat Rossii as well as by Russian customs authorities enables him to conclude that the present-day economic boom in Russia can be characterized as consumption-led growth fueled by oil and gas export revenues. Journal of Economic Literature, Classification Numbers: C67, C82, E23, L71, Q43. 2 figures, 10 tables, 20 references.     

Electoral Behavior in the Russian Far East, 1995-2000: Contextual and Compositional Effects

A group of political scientists specializing in Russia's post-Soviet electoral behavior explores the question of whether genuinely regional effects of voting behavior can be discerned (and at what scale) by controlling for variations in compositional characteristics measured by aggregate social and economic data. The paper seeks to identify situations in which contextual effects may be operating, using a scale of analysis that is intermediate between regional (oblast)-level case studies and nationwide surveys—that of the Russian Far East macroregion. Journal of Economic Literature, Classification Numbers: H10, O50, Z10. 4 tables, 40 references, 1 appendix.     

Shifting Electoral Geography in Russia's 1991 and 1996 Presidential Elections

This research note reexamines Russia's 1991 and 1996 presidential elections, focusing—unlike studies emphasizing stability of Russia's electorate—on differences in electoral geography in the two elections, with oblast-level vote totals for Boris Yel'tsin in 1991 and 1996 being only poorly correlated. Although Yel'tsin's performance in both elections was better in urban than in rural regions, the urbanrural divide in 1996 is shown to differ from that in 1991. Nonetheless, the Russian electorate is stable after 1993, regional voting patterns between 1993 and 1996 being both similar to each other and different from that in the 1991 election. Journal of Economic Literature, Classification Numbers: H10, O50, Z10. 6 tables, 14 references.     

Can Russia Compete in the Global Economy?

A noted British economist and analyst of current developments in Russia investigates that country's competitiveness in global merchandise export markets by seeking to determine its trade specialization and comparative advantage in a global context. In search of consistent trends, the author compares Russia's scores in 2000 on the Balassa Index of Revealed Comparative Advantage with those of 2004, and also for that year with a selected list of international competitors (Brazil, India, China, Turkey, and the United States) as well. He then discusses recent (through June 2006) government efforts to stimulate export growth in sectors currently underrepresented in Russia's trade profile and assesses prospects for improvement in the balance of Russia's export profile. Journal of Economic Literature, Classification Numbers: E20, F14, F40. 7 tables, 20 references, 1 appendix.     

Urban Transition and Interstate Relations in a Dynamic Post-Soviet Borderland: The Xinjiang Uygur Autonomous Region of China

Two noted American geographers examine transition in the Xinjiang Uygur Autonomous Region (a de facto Soviet protectorate in the 1930s and early 1940s) within the context of that region's strategic position. The paper, based on field work exploring urbanization in the People's Republic of China, investigates the area's role as a bridgehead and corridor for emerging economic relations between China and the neighboring republics of Central Asia. The focus is on the demographic dimensions of urban growth and the underlying geopolitical and economic factors. Considerable attention also is given to the implications of increased trade and improvements in transportation links with the newly independent Central Asian states. Journal of Economic Literature, Classification Numbers: F14, F15, O15, O18. 4 figures, 6 tables, 51 references.     

Observations on Changes in Russia's Comparative Advantage, 1994-2005

A senior Japanese specialist on Russia's economy and its oil- and gas-producing sectors calculates that country's Revealed Comparative Advantage (RCA), Revealed Comparative Disadvantage (RCD), and Trade Specialization Index (TSI) on the basis of foreign trade data compiled by Russia's Federal Customs Service. The focus is on changes in comparative advantage of Russia's major export and import commodities over the 1994-2005 period. The results of the analyses make it possible to test the assertion that the increasing competitiveness of oil and gas exports (and secondarily those of armaments, selected base metals, roundwood, and fertilizers) must compensate for declining competitiveness in (and increasing imports of) meat, plastics, and automobile production and stagnation in the machinery sectors. Journal of Economic Literature, Classification Numbers: F02, F14, 011. 4 figures, 8 tables, 11 references.     

Russian Accession to the WTO: An Assessment

A senior World Bank economist presents a study focusing on issues controlling Russia's accession to the WTO in 2007. The paper discusses the principal reform commitments that Russia has made in an effort to become a member of the organization and addresses the question of whether the country faces excessive demands due to political considerations. While exploring such issues as potential relations with foreign exporters and investors, the author summarizes the relevant parts of his recent joint study of Russian import tariffs that casts a new light on a complex aspect of international trade. Among other problems relating to Russia's entry, he discusses in some detail branch banking and the tradedistorting subsidies in agriculture. Journal of Economic Literature, Classification Numbers: F13, F40, O19. 3 tables, 26 references.     

Russia's Accession to the World Trade Organization

A prominent specialist on the Russian economy presents a timely assessment of Russia's accession to the World Trade Organization. The author discusses the reasons that prompted Russia to seek membership and scrutinizes the major obstacles, such as complexities of the accession process and the country's institutional malaise. An analysis of the effects of possible membership on the Russian economy is followed by a focus on Putin's first term (2000-2003) when he supported entry, and the second (2004-2007) when he lost interest. Also presented are two scenarios projecting reinvigorated pursuit of Russian membership, or abandonment of the goal. Journal of Economic Literature, Classification Numbers: F13, F40, O19. 1 table, 46 references.     

The Russian Steel Industry, 1990-2009

A noted specialist on Russia's industries surveys the restructuring of Russia's steel industry in response to the challenging conditions of the 1990s (collapsing domestic markets, the nonpayments crisis, and insider privatization) and its subsequent stabilization during the early years of the 21^st century due to effective implementation of a "survival model" at many plants. The author examines the major elements of that model, namely an export orientation made possible by relatively low labor and energy costs, reliable access to basic raw materials, a focus on crude (rather than specialty) steel, not inconsequential investment in process modernization, and effective control exercised by new private ownership. The paper's concluding section explores the new challenges faced by the industry due to the global financial crisis of late 2008-2009, and particularly the decline in world steel and company share prices, the extreme tightening of credit, the difficulties of servicing existing levels of debt, and provisions of a government assistance program that appear to preclude major capacity closures as a means of reducing costs. Journal of Economic Literature, Classification Numbers: D290, L610, O140, P230. 3 figures, 1 table, 97 references.