When High Growth is Not Enough: Rethinking Russia's Pre-Crisis Economic Performance

16 Pages Posted: 4 Aug 2014

See all articles by Ilya B. Voskoboynikov

Ilya B. Voskoboynikov

National Research University Higher School of Economics; Groningen Growth and Development Centre

Laura Solanko

Bank of Finland - Institute for Economies in Transition (BOFIT)

Date Written: June 6, 2014

Abstract

Based on newly available data, we argue that multifactor productivity increases over the period 1995-2008 generated only about a half of Russia’s GDP growth, a smaller increase than most previous estimates. Further, growth in multifactor productivity seems to have contributed to a smaller share of GDP growth in 2003-2008 than in the first seven years of our observation period. These results imply that increases in capital inputs, and consequently investments in fixed capital, are more important than previously thought for Russia’s economic growth. Detailed analysis of industry-level data reveals two drivers of economic growth in the period: the extended oil & gas sector and high-skill-intensive services. Our analysis indicates that growth in the extended oil & gas sector reflected increased capital inputs, while growth in high-skill-intensive services seems to be part of catching up with more advanced markets. Neither sector is likely to spur growth in the coming decade.

Keywords: growth, Russia, productivity, structural change

JEL Classification: L16, O47

Suggested Citation

Voskoboynikov, Ilya Borisovich and Solanko, Laura, When High Growth is Not Enough: Rethinking Russia's Pre-Crisis Economic Performance (June 6, 2014). Available at SSRN: https://ssrn.com/abstract=2455877 or http://dx.doi.org/10.2139/ssrn.2455877

Ilya Borisovich Voskoboynikov (Contact Author)

National Research University Higher School of Economics ( email )

Moscow

HOME PAGE: http://www.hse.ru/en/org/persons/503434

Groningen Growth and Development Centre

Postbus 72
Groningen
Netherlands

Laura Solanko

Bank of Finland - Institute for Economies in Transition (BOFIT) ( email )

Helsinki 00101
Finland

HOME PAGE: http://www.bof.fi/en/suomen_pankki/organisaatio/asiantuntijoita/solanko_laura/

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