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Economic diversification and Dutch disease in Russia

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  • Victoria Dobrynskaya
  • Edouard Turkisch

Abstract

Despite the impressive economic growth in Russia between 1999 and 2007 there is a fear that Russia may suffer the Dutch disease, which predicts that a country with large natural resource rents may experience de-industrialisation and lower long-term economic growth. This article examines whether there are any symptoms of the Dutch disease in Russia. Using a variety of Rosstat publications and the CHELEM database, we analyse the trends in production, wages and employment in Russian manufacturing industries, and we study the behaviour of Russian imports and exports. We find that, while Russia exhibits some symptoms of the Dutch disease, e.g. the real appreciation of the ruble, the rise in real wages, the decrease in employment in manufacturing industries and the development of the services sector, manufacturing production nonetheless increased, contradicting the theory of the Dutch disease. These trends can be explained by the gains in productivity and the recovery after the disorganisation in the 1990s, by new market opportunities for Russian products in the European Union and in CIS countries, by a growing Chinese demand for some products and by a booming internal market. Finally, investment in many manufacturing industries was largely encouraged, whereas investment in the energy sector was strongly regulated, which contributed to economic diversification.

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  • Victoria Dobrynskaya & Edouard Turkisch, 2010. "Economic diversification and Dutch disease in Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 22(3), pages 283-302.
    • Handle: RePEc:taf:pocoec:v:22:y:2010:i:3:p:283-302
    DOI: 10.1080/14631377.2010.498680
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    References listed on IDEAS

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    1. Victoria V. Dobrynskaya, 2008. "The Monetary and Exchange Rate Policy of the Central Bank of Russia under Asymmetrical Price Rigidity," Journal of Innovation Economics, De Boeck Université, vol. 0(1), pages 29-62.
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    Cited by:

    1. Mironov, Valeriy V. & Petronevich, Anna V., 2015. "Discovering the signs of Dutch disease in Russia," Resources Policy, Elsevier, vol. 46(P2), pages 97-112.
    2. El-Shagi, Makram & Tochkov, Kiril, 2022. "Divisia monetary aggregates for Russia: Money demand, GDP nowcasting and the price puzzle," Economic Systems, Elsevier, vol. 46(4).
    3. Mironov, V.V. & Petronevich, A.V., 2015. "Discovering the signs of Dutch disease in Russia," BOFIT Discussion Papers 3/2015, Bank of Finland Institute for Emerging Economies (BOFIT).
    4. H. Lehmann & M. G. Silvagni, 2013. "Is There Convergence of Russia s Regions? Exploring the Empirical Evidence: 1995 2010," Working Papers wp901, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. repec:zbw:bofitp:2015_003 is not listed on IDEAS
    6. Kojo, Naoko C., 2014. "Demystifying Dutch disease," Policy Research Working Paper Series 6981, The World Bank.
    7. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    8. Julia Skretting, 2022. "Oil Windfalls and Regional Economic Performance in Russia," Working Papers No 02/2022, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    9. Kudrin, Alexey & Gurvich, Evsej T., 2015. "A new growth model for the Russian economy," BOFIT Policy Briefs 1/2015, Bank of Finland Institute for Emerging Economies (BOFIT).
    10. repec:eco:journ2:2017-04-02 is not listed on IDEAS
    11. Wang, Di & Wang, Dong & Wang, Weiren, 2012. "A case of Timor-Leste: From independence to instability or prosperity?," MPRA Paper 43751, University Library of Munich, Germany.
    12. Giovanni Covi, 2014. "Dutch disease and sustainability of the Russian political economy," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2014(2), pages 75-110.
    13. Serge Svizzero, 2015. "The collapse of the Únětice culture: economic explanation based on the “Dutch disease”," Post-Print hal-02150097, HAL.
    14. Bernardina Algieri, 2011. "The Dutch Disease: evidences from Russia," Economic Change and Restructuring, Springer, vol. 44(3), pages 243-277, August.
    15. Ito, Katsuya, 2017. "Dutch disease and Russia," International Economics, Elsevier, vol. 151(C), pages 66-70.
    16. Falkowski Krzysztof, 2017. "Long-Term Comparative Advantages of the Eurasian Economic Union Member States in International Trade," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 53(4), pages 27-49, December.
    17. Yang, Jinxuan & Rizvi, Syed Kumail Abbas & Tan, Zhixiong & Umar, Muhammad & Koondhar, Mansoor Ahmed, 2021. "The competing role of natural gas and oil as fossil fuel and the non-linear dynamics of resource curse in Russia," Resources Policy, Elsevier, vol. 72(C).
    18. 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.
    19. Mamoudou Camara, 2023. "Bauxite mining and economic growth in Guinea over the period 1986–2020: empirical evidence from ARDL and NARDL approaches," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(1), pages 157-179, January.
    20. Kudrin, Alexey & Gurvich, Evsey, 2015. "A new growth model for the Russian economy1," Russian Journal of Economics, Elsevier, vol. 1(1), pages 30-54.

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