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Economic diversification and Dutch disease in Russia

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  • Victoria Dobrynskaya
  • Edouard Turkisch

Abstract

Despite the impressive economic growth in Russia between 1999 and 2007 there is a fear that Russia may suffer the Dutch disease, which predicts that a country with large natural resource rents may experience de-industrialisation and lower long-term economic growth. This article examines whether there are any symptoms of the Dutch disease in Russia. Using a variety of Rosstat publications and the CHELEM database, we analyse the trends in production, wages and employment in Russian manufacturing industries, and we study the behaviour of Russian imports and exports. We find that, while Russia exhibits some symptoms of the Dutch disease, e.g. the real appreciation of the ruble, the rise in real wages, the decrease in employment in manufacturing industries and the development of the services sector, manufacturing production nonetheless increased, contradicting the theory of the Dutch disease. These trends can be explained by the gains in productivity and the recovery after the disorganisation in the 1990s, by new market opportunities for Russian products in the European Union and in CIS countries, by a growing Chinese demand for some products and by a booming internal market. Finally, investment in many manufacturing industries was largely encouraged, whereas investment in the energy sector was strongly regulated, which contributed to economic diversification.

Suggested Citation

  • Victoria Dobrynskaya & Edouard Turkisch, 2010. "Economic diversification and Dutch disease in Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 22(3), pages 283-302.
  • Handle: RePEc:taf:pocoec:v:22:y:2010:i:3:p:283-302
    DOI: 10.1080/14631377.2010.498680
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    References listed on IDEAS

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    1. Victoria V. Dobrynskaya, 2008. "The Monetary and Exchange Rate Policy of the Central Bank of Russia under Asymmetrical Price Rigidity," Journal of Innovation Economics, De Boeck Université, vol. 0(1), pages 29-62.
    2. Katerina Kalcheva & Nienke Oomes, 2007. "Diagnosing Dutch Disease; Does Russia Have the Symptoms?," IMF Working Papers 07/102, International Monetary Fund.
    3. Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September.
    4. Rhodes, Tim & Mikhailova, Larissa & Sarang, Anya & Lowndes, Catherine M. & Rylkov, Andrey & Khutorskoy, Mikhail & Renton, Adrian, 2003. "Situational factors influencing drug injecting, risk reduction and syringe exchange in Togliatti City, Russian Federation: a qualitative study of micro risk environment," Social Science & Medicine, Elsevier, vol. 57(1), pages 39-54, July.
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    Citations

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    Cited by:

    1. Dülger, Fikret & Lopcu, Kenan & Burgaç, Almıla & Ballı, Esra, 2013. "Is Russia suffering from Dutch Disease? Cointegration with structural break," Resources Policy, Elsevier, vol. 38(4), pages 605-612.
    2. H. Lehmann & M. G. Silvagni, 2013. "Is There Convergence of Russia’s Regions? Exploring the Empirical Evidence: 1995 – 2010," Working Papers wp901, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Mironov, Valeriy V. & Petronevich, Anna V., 2015. "Discovering the signs of Dutch disease in Russia," Resources Policy, Elsevier, vol. 46(P2), pages 97-112.
    4. Bernardina Algieri, 2011. "The Dutch Disease: evidences from Russia," Economic Change and Restructuring, Springer, vol. 44(3), pages 243-277, August.
    5. repec:eco:journ2:2017-04-02 is not listed on IDEAS
    6. repec:eee:inteco:v:151:y:2017:i:c:p:66-70 is not listed on IDEAS
    7. Wang, Di & Wang, Dong & Wang, Weiren, 2012. "A case of Timor-Leste: From independence to instability or prosperity?," MPRA Paper 43751, University Library of Munich, Germany.
    8. repec:spr:minecn:v:31:y:2018:i:1:d:10.1007_s13563-018-0153-z is not listed on IDEAS
    9. Kojo, Naoko C., 2014. "Demystifying Dutch disease," Policy Research Working Paper Series 6981, The World Bank.
    10. Giovanni Covi, 2014. "Dutch disease and sustainability of the Russian political economy," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2014(2), pages 75-110.
    11. repec:eee:rujoec:v:1:y:2015:i:1:p:30-54 is not listed on IDEAS

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