Question

What are key general facts of Russia's economy?

What are Russia's institutions that affect total factor productivity (ex. rule of law)?

What characteristics of Russia's economy make it interesting?

Answer 1

Russian economy:-

Russia relies on energy revenues to drive most of its growth. Russia has an abundance of oil, natural gas and precious metals, which make up a major share of Russia's exports. As of 2012, the oil-and-gas sector accounted for 16% of GDP, 52% of federal budget revenues and over 70% of total exports.

In other word -Russia is rife with oil, and its economy is heavily dependent on the resource. By the end of last year, Russian oil production was at an all-time high, at 11.16 million barrels a day, according to Reuters. In 2017, gas made up 59% of Russia's exports and 25% of its total revenue, according to the World Bank

GDP growth: : 0.3% (2016) 1.6% (2017); 2.3% (2018e) 1.0% (2019f);

GDP by sector: agriculture: 4.7%; industry: 32.4%; services: 62.3%; (2017 est.)

Key general facts-

1. Natural resources

The basis of the Russian economy is the extraction, processing and export of various types of mineral raw materials: oil and natural gas, coal, iron ore, apatites, potassium salts, phosphorites, diamonds, gold, silver, nickel, platinum, copper, etc.

Russia is one of the world leaders in production of oil (547.5 million tons in 2016) and natural gas (640.2 billion cubic meters in 2016). The total reserves of coal are more than 200 billion tons (more than 5% of world reserves). The main extraction is conducted at the Kuznetsk coal basin. In 2016, Russia produced 385.4 million tons of coal.

In Yakutia, there is the Elkon uranium deposit - the richest of the explored uranium deposits in Russia, one of the largest in the world. It accounts for more than half of the explored uranium reserves in the country - about 344 thousand tons.

The Russian company ALROSA is the world’s largest company in the exploration, production and sale of diamonds. In 2015, diamond mining in Russia amounted to 38.26 million carats. In 2016, Russia produced 288.55 tons of gold.

Russia accounts for about 3% of the world’s copper reserves. The Udokan deposit is one of the largest in the world. There are large reserves of copper in Norilsk.

According to the Institute for the Economy of Growth, a technical recession in the economy of Russia can be recorded this year. In the first half of 2019, the number of employees of small and medium enterprises decreased by 1.6% (more than 257,000 people), the number of such enterprises decreased by 7-8% (18,200 small and 1,500 medium enterprises).

2. Agriculture and industry

Russia has about 10% of all arable lands in the world located mainly in the Central Volga region, the Northern Caucasus, the Urals and Western Siberia.

The country is a major exporter of agricultural products, the world leader in wheat exports. The main crops are cereals (119 million tons in 2016, 4th in the world), sugar beet (48 million tons, 1st in the world), sunflower (11 million tons, 2nd in the world), soybean (3 million tons), potatoes (31 million tons, 3rd in the world), vegetables (16 million tons).

The main types of livestock products produced in Russia are meat (beef - 1.6 million tons, pork - 3.1 million tons, poultry - 4.5 million tons), milk (30.8 million tons), eggs (42.6 billions), wool (56 thousand tons), honey (68 thousand tons).

The food industry is relatively well developed, oriented mainly to the domestic market. Other important sectors of the economy include the oil refining industry, metallurgical production, chemical production, engineering (defense industry, automotive, railway and agricultural machinery).

Russia is one of the world leaders in power generation. Electricity is produced at thermal, nuclear and hydroelectric power stations. Russia exports electricity in significant quantities, mainly to Finland, Lithuania, China, Mongolia.

3. Transport system, Internet and tourism

The transport system in Russia is one of the most extensive in the world, including more than 120,000 km of railways, 1 million km of roads, 230,000 km of main pipelines, 100,000 km of inland waterways.

The huge territory and severe climate predetermined the paramount importance for Russia of all-weather types of land transport - railway and pipeline. They account for the bulk of freight. Water transport plays a much smaller role in Russia due to the short navigation period.

Today’s Russia has one of the most developed in the world market of mobile communication. It is the largest country in Europe in terms of the number of Internet users. More than 40% of the population has broadband Internet access.

Russia occupies one of the leading places in the world in the field of international tourism. In total, there are more than 100 resorts: resorts on the Black Sea coast of the Caucasus (Sochi), a group of resorts of the Caucasian Mineral Waters. Other popular objects of international and domestic tourism are St. Petersburg and the surrounding area, Moscow, Kazan, the cities and towns of the Golden Ring of Russia, the Volga River (cruise routes), Lake Baikal, Kamchatka.

By 2016, a number of paradoxes have clearly become apparent in the Russian economy: the first - a lot of poor working people, the second - unemployed men aged 25-35 years engaged in housekeeping, the third - working pensioners, the fourth - extremely high mortality among men of working age.

Russian institution affect total factor productivity

IIn recent years, Russia’s low economic growth has been attracting particular attention. More and more often, trying to find the reasons for this slowdown, experts resort to structure factor analysis, which means that they increasingly associate the lower growth with potential growth limitations. Bank of Russia officially estimates that the country’s structural growth is between 1.5 and 2%, which is generally in line with IMF and World Bank estimates. The Gaidar Institute’s (in Russian) estimates are also between 1.5 and 1.8%, while OECD has the most conservative views, estimating Russia’s potential growth at 0.5%. Thus, potential growth estimates are between 0.5 and 2%.

1. Investment- slow growth and weak structure

2.Constraints in the labor market

3.Total factor productivity issues

4.Calculation using the production function

5.Alternative estimates of the potential growth

6.Potential output losses due to sanctions

Russian economy interesting characteristics

1. Russia loses 700 people ecery day

2. Russia has more than $460 billion in reserve funds

3. Russia's economy output plummeted 45% in the decade after the soviet union broke up

4. oil and gas make up 59% of russia export

5. more then 13% Russian live in poverty

6. Russia has more then 70 billionaires

7. Russias currency the ruble has dropped in value by 50% in decade

8. average monthly wages in Russia is $ 670

9. Ikea owns 20% of russia furniture market

10. Russia vodka consumption has dropped by more than 50% in past 20 year

11. Asbest russia produced 315000 tons of asbestor last year

12. Russia invested more then a quarter of a billion dollarin Zimbabwe diamond industry