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

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  • Mansoor Maitah

    () (Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences, Prague 165 21, Czech Republic)

  • Elena Kuzmenko

    () (Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences, Prague 165 21, Czech Republic)

  • Lubos Smutka

    () (Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences, Prague 165 21, Czech Republic)

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.

Suggested Citation

  • Mansoor Maitah & Elena Kuzmenko & Lubos Smutka, 2016. "Real Effective Exchange Rate of Rouble and Competitiveness of Russian Agrarian Producers," Economies, MDPI, Open Access Journal, vol. 4(3), pages 1-19, June.
  • Handle: RePEc:gam:jecomi:v:4:y:2016:i:3:p:12-:d:72831
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    References listed on IDEAS

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    1. Viktors Ajevskis & Ramune Rimgailaite & Uldis Rutkaste & Olegs Tkacevs, 2014. "The equilibrium real exchange rate: pros and cons of different approaches with application to Latvia," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 14(1-2), pages 101-123, December.
    2. Ballance, Robert H & Forstner, Helmut & Murray, Tracy, 1987. "Consistency Tests of Alternative Measures of Comparative Advantage," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 157-161, February.
    3. Lall, Sanjaya, 2001. "Competitiveness Indices and Developing Countries: An Economic Evaluation of the Global Competitiveness Report," World Development, Elsevier, vol. 29(9), pages 1501-1525, September.
    4. A. Blank & E. Gurvich & A. Ulyukaev., 2006. "Exchange Rate and Competitiveness of Russia’s Industries," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 6.
    5. Boltho, Andrea, 1996. "The Assessment: International Competitiveness," Oxford Review of Economic Policy, Oxford University Press, vol. 12(3), pages 1-16, Autumn.
    6. Brodsky, Boris, 2006. "The Influence of the Ruble Real Exchange Rate on the Russian Economy," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 4(4), pages 90-104.
    7. Thomas Vollrath, 1991. "A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(2), pages 265-280, June.
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    More about this item

    Keywords

    real effective exchange rate; agrarian producers; economic sectors; competitiveness; Balassa index; Vollrath index; Lafay index; Russia;

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • F - International Economics
    • I - Health, Education, and Welfare
    • J - Labor and Demographic Economics
    • O - Economic Development, Innovation, Technological Change, and Growth
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics

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