IDEAS home Printed from https://ideas.repec.org/p/hhs/hasite/0038.html
   My bibliography  Save this paper

Russia’s Oil Dependence and the EU

Author

Listed:

Abstract

Russia’s macro economic fate has for a long time been connected to its vast natural resources and oil in particular. This paper shows just how deep Russia’s dependence on oil is when it comes to its macro economic development (at least) since the break up of the Soviet Union. Although many analysts and policy makers discuss Russia’s oil dependence, not everyone fully appreciates its quantitative importance and what it means for Russian policy making. This paper provides a detailed analysis of the link between Russia’s economic growth and international oil prices, both when it comes to actual outcomes and the forecasts that are crucial for policy makers and other economic actors. The strength of the relationship is staggering. Depending on measures and time periods used, international oil prices account for 50 to over 90 percent of Russia’s actual growth or forecast errors. Since international oil prices are exogenous to Russian policy makers it means that they do not really control the fate of their economy. Good macro economic management, in particular a flexible exchange rate, can mitigate some macro economic volatility that are due to changes in international oil prices but structural reforms to support diversification are needed to take control of the country’s macro economic future. Investors and consumers in the EU could be Russia’s prime partners to make this happen and it would benefit a vast majority of citizens both in Russia and the EU. However, it will require significant policy changes on both sides that currently look doubtful for other reasons than simple economics.

Suggested Citation

  • Becker, Torbjörn, 2016. "Russia’s Oil Dependence and the EU," SITE Working Paper Series 38, Stockholm School of Economics, Stockholm Institute of Transition Economics.
  • Handle: RePEc:hhs:hasite:0038
    as

    Download full text from publisher

    File URL: http://swopec.hhs.se/hasite/papers/hasite0038.pdf
    File Function: Complete Rendering
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anne D. Boschini & Jan Pettersson & Jesper Roine, 2007. "Resource Curse or Not: A Question of Appropriability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(3), pages 593-617, September.
    2. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    3. Vladimir Popov, 2010. "The Long Road to Normalcy: Where Russia Now Stands," WIDER Working Paper Series wp-2010-013, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guan, Jialin & Kirikkaleli, Dervis & Bibi, Ayesha & Zhang, Weike, 2020. "Natural resources rents nexus with financial development in the presence of globalization: Is the “resource curse” exist or myth?," Resources Policy, Elsevier, vol. 66(C).
    2. Muhammad Atif Khan & Muhammad Asif Khan & Kishwar Ali & József Popp & Judit Oláh, 2020. "Natural Resource Rent and Finance: The Moderation Role of Institutions," Sustainability, MDPI, vol. 12(9), pages 1-23, May.
    3. Shahbaz, Muhammad & Naeem, Muhammad & Ahad, Muhammad & Tahir, Iqbal, 2018. "Is natural resource abundance a stimulus for financial development in the USA?," Resources Policy, Elsevier, vol. 55(C), pages 223-232.
    4. Ahmed, Khalid & Mahalik, Mantu Kumar & Shahbaz, Muhammad, 2016. "Dynamics between economic growth, labor, capital and natural resource abundance in Iran: An application of the combined cointegration approach," Resources Policy, Elsevier, vol. 49(C), pages 213-221.
    5. Czujack, Corinna & Flôres Junior, Renato Galvão & Ginsburgh, Victor, 1995. "On long-run price comovements between paintings and prints," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 269, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    6. Lisbeth Funding la Cour, 1995. "A Component® based Analysis of the danish Long-run Money Demand Relation," Discussion Papers 95-18, University of Copenhagen. Department of Economics.
    7. Muhammad Shahbaz & Vassilios G. Papavassiliou & Amine Lahiani & David Roubaud, 2023. "Are we moving towards decarbonisation of the global economy? Lessons from the distant past to the present," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2620-2634, July.
    8. Yap, Wei Yim & Lam, Jasmine S.L., 2006. "Competition dynamics between container ports in East Asia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 35-51, January.
    9. Blanco, Luisa & Grier, Robin, 2012. "Natural resource dependence and the accumulation of physical and human capital in Latin America," Resources Policy, Elsevier, vol. 37(3), pages 281-295.
    10. Ely, David & Salehizadeh, Mehdi, 2001. "American depositary receipts: An analysis of international stock price movements," International Review of Financial Analysis, Elsevier, vol. 10(4), pages 343-363.
    11. Candelon, Bertrand & Lieb, Lenard, 2013. "Fiscal policy in good and bad times," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2679-2694.
    12. Abbas Alavirad & Sanhita Athawale, 2005. "The impact of the budget deficit on inflation in the Islamic Republic of Iran," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 29(1), pages 37-49, March.
    13. Paresh Kumar Narayan & Seema Narayan, 2008. "Do Permanent Shocks Explain Income Levels? A Common Cycle–Common Trend Analysis Of Regional Income Levels For China," Pacific Economic Review, Wiley Blackwell, vol. 13(5), pages 656-662, December.
    14. Liu, Yaping & Sadiq, Farah & Ali, Wajahat & Kumail, Tafazal, 2022. "Does tourism development, energy consumption, trade openness and economic growth matters for ecological footprint: Testing the Environmental Kuznets Curve and pollution haven hypothesis for Pakistan," Energy, Elsevier, vol. 245(C).
    15. Luis Eduardo Arango & Carlos Esteban Posada, 2006. "The Time-Varying Long-Run Unemployment Rate: The Colombian Case," Borradores de Economia 389, Banco de la Republica de Colombia.
    16. Juan Carlos Cuestas & Karsten Staehr, 2014. "The great (De)leveraging in the GIIPS countries. Domestic credit and net foreign liabilities 1998–2013," Bank of Estonia Working Papers wp2014-4, Bank of Estonia, revised 10 Oct 2014.
    17. Costola, Michele & Iacopini, Matteo, 2023. "Measuring sovereign bond fragmentation in the Eurozone," Finance Research Letters, Elsevier, vol. 51(C).
    18. Juan de Dios Tena & César Salazar, 2008. "Explaining inflation and output volatility in Chile: an empirical analysis of forty years," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, December.
    19. Ansharullah Tasri, 2019. "The Flypaper Effect Phenomenon: Evidence from Indonesia," European Journal of Engineering and Formal Sciences Articles, Revistia Research and Publishing, vol. 2, 2019.
    20. Grigori Fainstein & Igor Novikov, 2011. "The Comparative Analysis of Credit Risk Determinants In the Banking Sector of the Baltic States," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 20-45, June.

    More about this item

    Keywords

    Russia; Macro; Oil; European Union;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F00 - International Economics - - General - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:hasite:0038. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dominick Nilsson (email available below). General contact details of provider: https://edirc.repec.org/data/sihhsse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.