IDEAS home Printed from https://ideas.repec.org/p/rif/dpaper/1087.html
   My bibliography  Save this paper

Free Trade between the EU and Russia - Sectoral Effects and Impacts on Northwest Russia

Author

Listed:
  • Kaitila, Ville

Abstract

We analyse the implications of free trade between the EU25 and Russia using GTAP, a computable general equilibrium model. We review the sectoral effects by countries and make a tentative assessment of the impact on the regions in Northwest Russia. Free trade on its own would have a negative terms-of-trade effect in Russia and cause a small decline in welfare. If coupled with an increase in productivity, welfare would increase. This emphasises the importance of reforms in the Russian economy. The quantity of production in Russia in ferrous and non-ferrous metallurgy, machine building and metal working, and wood and paper are the principal declining sectors with free trade. Production in capital goods, fuel industry, and services increases. Thus there are some symptoms of Dutch disease. Due to its production structure the northwest would seem to benefit slightly less than Russia on average in terms of the volume of gross regional product. In this respect there are differences between the regions of northwest Russia.

Suggested Citation

  • Kaitila, Ville, 2007. "Free Trade between the EU and Russia - Sectoral Effects and Impacts on Northwest Russia," Discussion Papers 1087, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:1087
    as

    Download full text from publisher

    File URL: http://www.etla.fi/wp-content/uploads/2012/09/dp1087.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Rutherford, Thomas & Tarr, David, 2006. "Regional impacts of Russia's accession to the World Trade Organization," Policy Research Working Paper Series 4015, The World Bank.
    2. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2007. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 482-496, August.
    3. Oleh Havrylyshyn & Ron van Rooden, 2003. "Institutions Matter in Transition, But So Do Policies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 45(1), pages 2-24, March.
    4. Pekka Sulamaa & Mika Widgrén, 2005. "Economic Effects of Free Trade between the EU and Russia," Economics Working Papers 036, European Network of Economic Policy Research Institutes.
    5. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    6. Laura Alfaro & Areendam Chanda & Sebnem Kalemli-Ozcan & Selin Sayek, 2006. "How Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on Linkages," NBER Working Papers 12522, National Bureau of Economic Research, Inc.
    7. Kamal Saggi, 2002. "Trade, Foreign Direct Investment, and International Technology Transfer: A Survey," World Bank Research Observer, World Bank Group, vol. 17(2), pages 191-235, September.
    8. Peter Egger & Michael Pfaffermayr, 2001. "A note on labour productivity and foreign inward direct investment," Applied Economics Letters, Taylor & Francis Journals, vol. 8(4), pages 229-232.
    9. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2004. "Entry and Productivity Growth: Evidence from Microlevel Panel Data," Journal of the European Economic Association, MIT Press, pages 265-276.
    10. Pekka Sulamaa & Mika Widgrén, 2004. "EU-Enlargement and Beyond: A Simulation Study on EU and Russia Integration," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 31(4), pages 307-323, December.
    11. Vaittinen Risto, 2000. "Eastern Enlargement of the European Union - Transition in applicant countries and evaluation of the economic prospects with a dynamic CGE-model," Research Reports 64, VATT Institute for Economic Research.
    12. Jasminka Sohinger, 2005. "Growth and Convergence in European Transition Economies : The Impact of Foreign Direct Investment," Eastern European Economics, Taylor & Francis Journals, vol. 43(2), pages 73-94, March.
    13. Joze Mencinger, 2003. "Does Foreign Direct Investment Always Enhance Economic Growth?," Kyklos, Wiley Blackwell, vol. 56(4), pages 491-508, November.
    14. Görg, Holger & Greenaway, David, 2002. "Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Investment?," CEPR Discussion Papers 3485, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Suni, Paavo, 2007. "Oil Prices and the Russian Economy. Some Simulation Studies with NiGEM," Discussion Papers 1088, The Research Institute of the Finnish Economy.
    2. Pelipas, Igor & Tochitskaya, Irina & Vinokurov, Evgeny, 2014. "Quantifying Economic Integration of the European Union and the Eurasian Economic Union: Methodological Approaches," MPRA Paper 61858, University Library of Munich, Germany.
    3. Honkatukia, Juha & Niemi, Janne & Kaitila Ville, Kotilainen Markku, 2012. "Global trade and climate policy scenarios – Impact on Finland," Working Papers 37, Government Institute for Economic Research Finland (VATT).
    4. Paavo Suni, 2008. "Effects of Energy Price Changes on Russian Economy," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(2), pages 9-15, July.

    More about this item

    Keywords

    EU; Russia; free trade; integration;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:rif:dpaper:1087. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kaija Hyvönen-Rajecki). General contact details of provider: http://edirc.repec.org/data/etlaafi.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.