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Impact of Russia’s WTO Accession on the Structure of the Russian Economy

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  • Kharitonov, Vitaly
  • Walmsley, Terrie Louise

Abstract

In this paper we use a global computable general equilibrium model to examine the economic effects of Russia’s accession to the World Trade Organization (WTO) on the Russian economy. We employ the comparative static GTAP model and the version 5.4 Data Base, modified to take account of increasing returns to scale in several vital sectors; including oil and gas extraction, ferrous and non ferrous metals industries, and motor vehicles. We examine the impact of both complete elimination of tariffs and compare this with the more modest tariff reductions currently being proposed by Russia. The liberalization of services is also expected to be an important factor in Russia’s negotiations. We therefore also examine the impact of services liberalization in communication and business and financial services sectors. The results indicate that in the short run changes in Russia’s aggregate welfare are quite small -- however there are considerable structural implications resulting from trade and services liberalization. Expansions are expected in investment, the services sectors, motor vehicles and construction, while output of Russia’s traditional export commodities declines. These implications are found to be sensitive to the extent to which trade is liberalized and whether entry/exit is allowed in those industries which are subject to increasing returns to scale.

Suggested Citation

  • Kharitonov, Vitaly & Walmsley, Terrie Louise, 2004. "Impact of Russia’s WTO Accession on the Structure of the Russian Economy," Conference papers 331285, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331285
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