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Free Trade between the EU and Russia - Sectoral Effects and Impacts on Northwest Russia

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  • Kaitila, Ville

Abstract

We analyse the implications of free trade between the EU25 and Russia using GTAP, a computable general equilibrium model. We review the sectoral effects by countries and make a tentative assessment of the impact on the regions in Northwest Russia. Free trade on its own would have a negative terms-of-trade effect in Russia and cause a small decline in welfare. If coupled with an increase in productivity, welfare would increase. This emphasises the importance of reforms in the Russian economy. The quantity of production in Russia in ferrous and non-ferrous metallurgy, machine building and metal working, and wood and paper are the principal declining sectors with free trade. Production in capital goods, fuel industry, and services increases. Thus there are some symptoms of Dutch disease. Due to its production structure the northwest would seem to benefit slightly less than Russia on average in terms of the volume of gross regional product. In this respect there are differences between the regions of northwest Russia.

Suggested Citation

  • Kaitila, Ville, 2007. "Free Trade between the EU and Russia - Sectoral Effects and Impacts on Northwest Russia," Discussion Papers 1087, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:dpaper:1087
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    References listed on IDEAS

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    Cited by:

    1. Suni, Paavo, 2007. "Oil Prices and the Russian Economy. Some Simulation Studies with NiGEM," Discussion Papers 1088, The Research Institute of the Finnish Economy.
    2. Pelipas, Igor & Tochitskaya, Irina & Vinokurov, Evgeny, 2014. "Quantifying Economic Integration of the European Union and the Eurasian Economic Union: Methodological Approaches," MPRA Paper 61858, University Library of Munich, Germany.
    3. Honkatukia, Juha & Kaitila, Ville & Kotilainen, Markku & Niemi, Janne, 2012. "Global trade and climate policy scenarios – Impact on Finland," Working Papers 37, VATT Institute for Economic Research.
    4. Paavo Suni, 2008. "Effects of Energy Price Changes on Russian Economy," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(02), pages 9-15, July.

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    More about this item

    Keywords

    EU; Russia; free trade; integration;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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