Russia's Output Collapse and Recovery: Evidence from the Post-Soviet Transition

Abstract

This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the authors and are published to elicit comments and to further debate.The health of the Russian economy still depends heavily on natural resource revenues. The history of the economic collapse and recovery in 1970-2004 provides new evidence on the sources of Russian economic growth, while a survey of the economic literature suggests that the Russian economy could be viewed as a weighted combination of virtual and normal forces. If the Russian economy is considered to be dominated by normal market economy forces, higher energy export receipts provide an opportunity for structural reforms while compensating for social costs, making the economy less vulnerable to decline in world energy prices. However, the domination of virtual forces-value transfers from the energy sector to strategic enterprises-suggests that high world energy prices are masking an inefficient manufacturing sector, and that the Russian economy is highly vulnerable to energy price declines.

Political connections and strategic choices of emerging market firms

“…Missing domestic market institutions and profound deficiency in the supply side led to newly opened international borders that facilitated trade, foreign investment, and intermediary relations. Newly created businesses that replaced the command and control public institutions introduced commercial activities, where profits were instantaneous and the demand ever-increasing (Kvintradze, 2010). Continuous changes in legislation and excessive taxes along with galloping inflation-led new businesses to rely on network-based trading.…”

J-Curve of Productivity and Growth: Indian Manufacturing Post-Liberalization

“…The J curve has also been illustrated at an economy level by the experience of Eastern European countries and Russia after the fall of the Berlin wall Blanchard (1997), Kvintradze (2010). However, these countries were subjected to a systemic shock that transformed virtually the entire political-administrative system and fundamental economic institutions.…”

Temporal and Longitudinal Mercury Trends in Burbot (Lota lota) in the Russian Arctic

“…These decreasing THg trends coincide with a large-scale decline in both the number and activity of industrial operations (namely machinery plants, oil and gas enterprises, mining and processing of metals and gems, and paper and pulp mills) which surrounded the collapse of the former Soviet Union (USSR) in 1991. For instance, Russian economic output declined by 6.3% annually from 1989 to 1998, amounting to a cumulative decline of about 44% during this time . This decreasing industrial activity may have reduced both atmospheric GEM emissions and release of Hg-containing effluent into nearby rivers, , thereby decreasing burbot exposure to Hg over time during the study period.…”