Architecture and dynamics of Russian‐German economic relations

Purpose - Trade and economic cooperation between Russia and Germany is traditionally among the most advanced areas of bilateral relations. In the framework of bilateral cooperation in both directions are the flows of goods, direct investments, credit and financial resources, transport – logistics, construction, consulting services and market know‐how, the exchange of labor and high technologies. The overall macroeconomic situation in Russia is clearly not an obstacle to operate on the Russian market, although some accompanying phenomena deter investors. The aim of this paper is to explore the architecture and dynamics of Russian‐German economic relations. Design/methodology/approach - It is necessary to take notice of the rules relating to the protection of property, business liability and compliance with contractual relations. It is important not only to decrease taxes, but also to provide a tax system which is understandable and transparent, to avoid arbitrary exactions carried out by local authorities. Political stability, reasonable and predictable economic policies and an enabling institutional environment of business in Russia are the most important conditions for the growth of capital investments by German companies in the Russian economy and the development of trade relations. It is also necessary to solve particular problems, especially those related to financial risk coverage, both investors and exporters. It is advisable to raise the question of the establishment of special insurance fund, which would not have proceeded from political problems, and performance evaluations of specific projects for both sides. There are extremely important balanced and worked out laws as well as the presence of mechanisms for their implementation. The Russian authorities must develop and implement a clear strategy to support business in a foreign country and make great efforts to diversify exports, aware that initially it will be associated with certain costs. Findings - Priority should be given to the promotion of scientific and technological cooperation between our countries and promoting joint ventures in high technologies. It is exactly in the sphere of high‐tech, but not in the primary sector Russia has got a good chance due to the great intellectual potential, and education in Russia is one of the best in the world. Very promising – although it is not granting a quick and large‐scale impact – it is supporting participation on both markets as small and medium‐sized firms engaged in production activities. The paper has already established some bases for expansion of mutual presence: only in Moscow there are 739 representative offices and branches of German companies and legal entities in 2110, and in general in Russia there are 5205 German entities. In Germany also there are about 300 Russian trade associations, joint ventures and individual firms. Originality/value - The paper shows the dynamics of Russian‐German economic relations during the period from 1970 until 2011. The paper considered the interaction structure of both economics. Statistical data of macroeconomic and foreign trade indicators are given.