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Is Russia Sick with the Dutch Disease?

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  • Victoria Dobrynskaya
  • Edouard Turkish

Abstract

Despite impressive economic growth 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 a de-industrialisation and a lower long term economic growth. We study whether there are symptoms of the Dutch disease in Russia. Using Rosstat and CHELEM databases, we analyse the trends in production, wages and employment in the Russian manufacturing industries, and we study the behaviour of Russian imports and exports. We find that, while Russia exhibited some symptoms of the Dutch disease, e.g. a real appreciation of the rouble, a rise in real wages, a 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, investments in many manufacturing industries were largely encouraged, whereas those in the energy sector were strongly regulated, which contributed to economic diversification.

Suggested Citation

  • Victoria Dobrynskaya & Edouard Turkish, 2009. "Is Russia Sick with the Dutch Disease?," Working Papers 2009-20, CEPII research center.
  • Handle: RePEc:cii:cepidt:2009-20
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    File URL: http://www.cepii.fr/PDF_PUB/wp/2009/wp2009-20.pdf
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    References listed on IDEAS

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    1. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
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    Cited by:

    1. Alena Petrushkevich, 2013. "Russian Federation: Drivers and Challenges of Economic Growth and Development," Competence Centre on Money, Trade, Finance and Development 1305, Hochschule fuer Technik und Wirtschaft, Berlin.
    2. Christos Nikas & Student Anastasia Blouchoutzi, 2014. "Emigrants’ Remittances and the “Dutch Disease” in Small Transition Economies: the Case Of Albania and Moldova," Romanian Statistical Review, Romanian Statistical Review, vol. 62(1), pages 45-65, March.
    3. Alexander S. Skorobogatov, 2014. "An Ongoing Reversal Of Fortune Among Russian Cities: City Age, Natural Resources, And Changing Spatial Income Distribution," HSE Working papers WP BRP 60/EC/2014, National Research University Higher School of Economics.
    4. repec:ejn:ejefjr:v:5:y:2017:i:2:p:110-140 is not listed on IDEAS
    5. repec:eee:juecon:v:104:y:2018:i:c:p:16-34 is not listed on IDEAS

    More about this item

    Keywords

    RUSSIA; DUTCH DISEASE; COMPETITIVENESS; MONETARY POLICY;

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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