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Economic Diversification and Dutch Disease in Russia

22 Pages Posted: 24 Nov 2012  

Victoria Dobrynskaya

National Research University Higher School of Economics

Edouard Turkisch

Université Paris

Date Written: October 1, 2009

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 a de-industrialisation and a lower long term economic growth. In this paper we study if 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 the 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 rouble, the rise in real wages, the decrease in employment in manufacturing industries and the development of the services sector, the 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, investments in many manufacturing industries were largely encouraged, whereas those in the energy sector were strongly regulated, which contributed to the economic diversification.

Keywords: Russia, Dutch disease, economic development, monetary policy

JEL Classification: E23, E58, F43, P24

Suggested Citation

Dobrynskaya, Victoria and Turkisch, Edouard, Economic Diversification and Dutch Disease in Russia (October 1, 2009). Post-Communist Economies, Vol. 22, No. 3, 2010. Available at SSRN: https://ssrn.com/abstract=2179895

Victoria Dobrynskaya

National Research University Higher School of Economics ( email )

26, Shabolovka st.
Moscow, 119017
Russia

HOME PAGE: http://www.hse.ru

Edouard Turkisch (Contact Author)

Université Paris

17, rue de la Sorbonne
Paris, IL 75005
France

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