Staunton, February 28 – Vladimir Putin and some Russian analysts are celebrating what they see as a shift away from the dominance of raw materials in Russia’s exports as a sign that the country’s production and sales of processed materials and industrial goods are rising. But that is “a bookkeeping illusion,” according to scholars at Moscow’s Stolypin Institute.
The declining share of raw material exports, they say, simply reflects the collapse of prices for oil and other raw materials rather than any growth in exports from other sectors. Thus, Russia remains as much dependent on the export of oil and gas as it was, but the prices for these things have fallen (ng.ru/economics/2021-02-28/4_8091_dependence.html).
And despite what those who accept illusion for reality, the Stolypin Institute says, the reduction in earnings from the export of oil and gas is hitting the non-raw materials sector as well, limiting investment in those sectors and making their output even less attractive to foreign buyers than would otherwise be the case.
Between 2008 and 2020, the share of oil and gas earnings fell from 47 percent to 28 percent of all export sales. Putin and others have taken great pride in this as an indication that the Russian economy is changing and that the country is no longer simply an exporter of raw materials. But that pride is misplaced, the Stolypin Institute analysts say.
It reflects two things. On the one hand, it isn’t the case the Russia is earning much more from the export of products compared to raw materials but rather the price of the latter has declined so much that it has made the percentage of the earnings from exports higher without in fact reflecting a significant rise in them.
And on the other, because oil sales abroad play such a key role in funding the government, leaders like Putin are especially sensitive to its decline and have overread the significance of what is in fact merely a bookkeeping anomaly, the analysts at the Stolypin Institute say.
Not all Russian analysts are as pessimistic as the Stolypin ones, Anatoly Komrakov of Nezavisimaya gazeta says. But they too suggest that the powers that be have overemphasized a bookkeeping effect and confused it with the real changes that they have long hoped to see occur in Russia.
Sergey Khestanov of the Russian Academy of Economics and State Service speaks for many when he says that “the structure of the economy in general changes slowly. The shortest time over the course of which real changes can take place is 10 to 15 years.” Moreover, he suggests, what the Russian government has been doing likely will extend this time far longer.