Resource information
Russia's exports became further
dominated by petroleum and natural gas over the last decade.
The sector experienced double-digit annual export growth in
the last decade and represented almost 65 percent of
Russia's exports value in 2009 a product of higher
commodity prices and higher export volumes. Export growth
rates of the non-oil and gas sector were also notable. Such
industries as machinery, electronics, transportation
equipment and chemicals reached a combined growth rate in
export value of 10 percent in the last decade. This more
positive comparison, however, hides relevant structural
limitations in Russia's trade performance. Moreover,
Russia's revealed comparative advantage seems
concentrated in the 'periphery' of the
product-space map, which may limit the potential for export
diversification. This includes industries such as raw
materials (26 products) and forestry (11 products) out of a
total of 97 identified products. (At the center of the
product-space are industries such as metallurgy, vehicles,
machinery, etc, in which Russia does not show comparative
advantages). Such specialization is sometimes considered
problematic because the capabilities developed in those
sectors are not easily redeployed to other industries,
hindering the process of economic diversification. Yet,
several resource-rich countries have managed to expand their
comparative advantages beyond the traditional, natural
resource-intensive products. Russian firms are, on average,
larger than the average firm in the ECA region but too few
firms export. It is a well documented fact that only a
minority of firms in an economy export. Economic
modernization and export diversification are priorities in
the Russian economic policy agenda, with several measures
being undertaken in recent years to promote growth in the
non-oil and gas sectors. Yet the reason why some firms
succeed in breaking into foreign markets while others do not
is far from fully understood. In this note, the author tries
to identify the binding constraints to export
diversification in Russia. Using firm-level data, the author
identify which investment climate factors are affecting
Russian firm's propensity of engaging in export
activities. Results show that lack of competition and
entrepreneurial innovation are relevant obstacles to the
emergence of new, potentially exportable products.
