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The Russian Nonfuel Sector: Signs of the Dutch Disease? Evidence from EU-25 Import Competition

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It is evident that the Russian economy is largely based on the energy sector. This fact has caused concern in academic circles as to whether Russia is to some degree affected by the Dutch disease, i.e. whether a sharp rise of commodity prices might result in an appreciation of the real exchange rate, which would undermine the competitiveness of manufacturing and could lead to the deindustrialization of the economy. We focus on this possible final outcome, which has not been studied much in the literature so far: We compare Russian industrial import growth (based on figures of the volume of EU-25 exports to Russia) with domestic industrial production growth (disaggregated by industries) in the period from 2002 to 2006. In all manufacturing sectors except electrical, electronic and optical equipment and strongly protected foodstuffs, Russian imports are found to be expanding faster than domestic output. In some sectors, imports have even exceeded domestic production. Import competition is therefore strong and rising. We conclude that Russia may be facing incipient deindustrialization at least in some parts of the manufacturing sector. This could indicate that the Russian economy has contracted the Dutch disease, although it should be noted that other factors could also have driven sectoral changes. While it is beyond the scope of our study to examine whether the other chain links of the Dutch disease hold as well, the study does provide evidence of some movements in the direction of deindustrialization, which is in line with the Dutch disease theory.

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  • Stephan Barisitz & Simon-Erik Ollus, 2007. "The Russian Nonfuel Sector: Signs of the Dutch Disease? Evidence from EU-25 Import Competition," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 150-166.
  • Handle: RePEc:onb:oenbfi:y:2007:i:1:b:6
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    Cited by:

    1. Ono, Shigeki, 2013. "The effects of foreign exchange and monetary policies in Russia," Economic Systems, Elsevier, vol. 37(4), pages 522-541.
    2. Philip Hanson, 2007. "The sustainability of Russia's energy power: implications for the Russian economy," UCL SSEES Economics and Business working paper series 84, UCL School of Slavonic and East European Studies (SSEES).
    3. Mironov, Valeriy V. & Petronevich, Anna V., 2015. "Discovering the signs of Dutch disease in Russia," Resources Policy, Elsevier, vol. 46(P2), pages 97-112.
    4. repec:zbw:bofitp:2015_003 is not listed on IDEAS
    5. Balázs Égert, 2012. "Dutch diease in the post-soviet countries of central and south-west Asia: How contagious is it?," Post-Print hal-01385841, HAL.
    6. Ono, Shigeki, 2017. "Financial development and economic growth nexus in Russia," Russian Journal of Economics, Elsevier, vol. 3(3), pages 321-332.
    7. Égert, Balázs, 2009. "Dutch disease in former Soviet Union: witch-hunting?," BOFIT Discussion Papers 4/2009, Bank of Finland Institute for Emerging Economies (BOFIT).
    8. Kristina V. Shvandar & Vsevolod Y. Cherkasov & Tatiana F. Burova, 2017. "Dutch Disease: Applying the Budget Rule and the Role of Structural Reforms," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 20-32, October.
    9. Fakhri Hasanov, 2010. "The Impact of Real Oil Price on Real Effective Exchange Rate: The Case of Azerbaijan," Discussion Papers of DIW Berlin 1041, DIW Berlin, German Institute for Economic Research.
    10. Bernardina Algieri, 2011. "The Dutch Disease: evidences from Russia," Economic Change and Restructuring, Springer, vol. 44(3), pages 243-277, August.
    11. Balázs Égert, 2009. "Dutch Disease in Former Soviet Union: Witch-Hunting," CASE Network Studies and Analyses 0380, CASE-Center for Social and Economic Research.
    12. Yulia Vymyatnina, 2014. "Spillover Effects in the Customs Union of Russia, Kazakhstan and Belarus," EcoMod2014 7160, EcoMod.
    13. Dülger, Fikret & Lopcu, Kenan & Burgaç, Almıla & Ballı, Esra, 2013. "Is Russia suffering from Dutch Disease? Cointegration with structural break," Resources Policy, Elsevier, vol. 38(4), pages 605-612.
    14. repec:zbw:bofitp:2009_004 is not listed on IDEAS

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