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Foreign Trade Arrangements in Russia and its Regions: Relying on Foreign Capital to Generate Growth?

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  • Peter Kirkow

Abstract

This article examines to what extent Russia's increasing reliance on foreign capital could potentially kick-start the economy and generate growth. The analysis highlights more fundamental issues of governance and institutional arrangements, for which the focus on foreign economic activities serves merely as an example to reflect on pathologies of the Russian economy as a whole. The article consists of a theoretical framework, discussing the change of institutional arrangements in the first section and analysing crucial issues of corporate governance and property rights in the last, while empirical information is compiled for Russia as a whole and its constituent regions in the second and third core sections. The article concludes that the Russian map of high foreign trade activities will be shaped only by patchy growth spots, located either where the domestic market is largest or opportunities for export exist, mainly in large urban agglomerations (economies of scale) and commercial hubs, resource-rich and gateway territories (gravitation to international trading blocs). Major investment disincentives will remain as long as the existing system of taxation has not been substantially changed, property rights are not protected, land and bankruptcy legislation is not properly enforced and local authorities are not prevented form rent-seeking activities.

Suggested Citation

  • Peter Kirkow, 1999. "Foreign Trade Arrangements in Russia and its Regions: Relying on Foreign Capital to Generate Growth?," Post-Communist Economies, Taylor & Francis Journals, vol. 11(1), pages 79-98.
    • Handle: RePEc:taf:pocoec:v:11:y:1999:i:1:p:79-98
    DOI: 10.1080/14631379996057
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    References listed on IDEAS

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    1. Stefan Hedlund & Niclas Sundström, 1996. "The Russian economy after systemic change," Europe-Asia Studies, Taylor & Francis Journals, vol. 48(6), pages 887-914.
    2. William Tompson, 1997. "Old habits die hard: Fiscal imperatives, state regulation and the role of Russia's banks," Europe-Asia Studies, Taylor & Francis Journals, vol. 49(7), pages 1159-1185.
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