Real Effective Exchange Rate of Rouble and Competitiveness of Russian Agrarian Producers

Abstract

A number of development projects were launched in Russia to support agro-producers, emphasizing increasing potential and perspective significance of Agrarian sector in the Russian economy. In light of this, it becomes interesting to investigate the position of agro-producers both in comparison to producers from other domestic sectors and relatively to its main foreign competitors. An analysis of the recent dynamics (from 2000 to 2014) of the real effective exchange rate of Russian rouble serves in the present study as an indicator of price competitiveness, which determines relative position of domestic producers in external markets. The actual competitive state of Russian agro-producers is analyzed by the means of revealed comparative advantage indices proposed by Balassa, Vollrath and Lafay. The calculations have shown that the entire analyzed period can be generally characterized as the period of significant real appreciation of the Russian rouble and the reason behind this is the difference in inflation rates in Russia and its main foreign trade partners. This predetermined the relatively low price competitiveness of agro-producers, which was mostly confirmed by calculated values of Balassa Revealed Comparative Advantage (RCA) index, Vollrath Revealed Competitiveness index (VRC) and Lafay Trade Specialization index (LFI). The short-term real depreciations of the rouble did not have any expected substantially positive impacts on their competitive position.

Türk Tekstil ve Hazır Giyim Sektörünün Uluslararası Rekabet Gücünün Analizi

“…Bu indeksin pozitif değer alması karşılaştırmalı rekabet avantajını, negatif değer alması ise karşılaştırmalı rekabet dezavantajını göstermektedir [6,12]. Formülde; i ülkeyi, j ürünü, N seçili ürünler takımını (analiz edilen öğelerin sayısını), x i j i ülkesinin j ürünü ihracatını, m i j ise i ülkesinin j ürünü ithalatını göstermektedir [22,23,24,25]. Lafay indeksinin pozitif değer alması söz konusu üründe rekabet avantajının olduğunu ve ilgili alandaki uzmanlaşmayı gösterirken, negatif değer alması rekabet dezavantajını ve ilgili alanda uzmanlaşma olmadığını gösterir [23].…”

The Success of Economic Policies in Russia: Dependence on Crude Oil vs. Export Diversification

“…According to the methodology of the Russian Federation's Central Bank, while constructing REER to a basket of foreign currencies into account have to be taken those foreign trade-partners' currencies, the weight of which in total foreign trade turnover is not less than 0.5 % (Maitah, et al 2016). The number of these countries over the period under analysis was not the same.…”

“…For that reason the calculation and analysis of REER index of Russian ruble will be done in relation to those currencies, which take a dominant position in Moscow Interbank Currency Exchange. Taking into account the fact that payment for the supply of main exported by Russia products is carried out in USD, namely the USD takes the dominating position on the Russian currency market (Maitah et al, 2016). At the same time, the average total share of Euro in currencies turnover of Moscow Interbank Currency Exchange is around 3 %, whereas the share of Euro in the basket of foreign currencies accounts up to 45 %.…”

“…The strongest negative impact of the rapid appreciation of the ruble is perceived by business, since the internal costs start to exceed the costs of similar products producing in other countries. The decrease in price competitiveness is not compensated by the growth of technological efficiency, because appreciation restrains exporting abilities of medium and high technology industries (Maitah et al, 2013;Maitah et al, 2016). "The dependence of the exchange rate policy on oil prices has been especially high after the August crisis in 1998.…”

Leading methods for promoting finished product quality

“…Given all the variety of impact factors affecting the economic efficiency of modern industrial production, improving and providing the quality of finished products is the most important task faced by employees of the national economic system at the present time (Svatoš and Smutka 2010;Abrham et al 2015;or Maitah et al 2016;Zeibote et al 2019).…”