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|Date 20.08.20101 What We Know and What We Should Know about Economic Growth in Russia Russia KLEMS Progress Report for the First Harvard World KLEMS Conference,

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Presentation on theme: "|Date 20.08.20101 What We Know and What We Should Know about Economic Growth in Russia Russia KLEMS Progress Report for the First Harvard World KLEMS Conference,"— Presentation transcript:

1 |Date 20.08.20101 What We Know and What We Should Know about Economic Growth in Russia Russia KLEMS Progress Report for the First Harvard World KLEMS Conference, August 19-20, 2010 Ilya Voskoboynikov (University of Groningen)

2 |Date 20.08.20102 What is Russia KLEMS ? Started in 2007 (on the initiative of Dale Jorgenson) Partners GGDC (University of Groningen) State University - Higher School of Economics (Moscow) Supported by the Ministry of Economic Development of the Russian Federation In collaboration with the Federal State Statistics Service (Rosstat)

3 |Date 20.08.20103 Introduction: What are sources of growth in Russia in 1995-2006? 1995- 2006 1995- 1998 1999- 2006 Real Value Added 4.57-2.387.35 Labor 0.58-2.331.11 Labor Productivity 3.99-0.056.23 Real value added growth rates contributions (yearly av. growth rates, in percent. points) Source: The Russia KLEMS database H0: Extensive growth story (inputs driven) Growth engines before transition Labor (till late 1950s) Capital (till late 1980s) Energy (1973-1985) Growth engines after transition Sectoral structure inertia Energy directly (low prices/energy inputs) Energy indirectly (investments) Exports (terms of trades)

4 |Date 20.08.20104 Introduction: What are sources of growth in Russia in 1995-2006? 1995- 2006 1995- 1998 1999- 2006 Real Value Added 4.57-2.387.35 Labor 0.58-2.331.11 Labor Productivity 3.99-0.056.23 Real value added growth rates contributions (yearly av. growth rates, in percent. points) Source: The Russia KLEMS database H0: Extensive growth story (inputs driven) H1: Intensive growth story (productivity driven) Growth engines after transition Better inputs allocation (no Price Fog - ref. to Harberger 1998) No export rent (low oil prices in 1992-1999) Initial fall of MFP due to disorganization

5 |Date 20.08.20105 Introduction: What are sources of growth in Russia in 1995-2006? 1995- 2006 1995- 1998 1999- 2006 Real Value Added 4.57-2.387.35 Labor 0.58-2.331.11 Labor Productivity 3.99-0.056.23 Real value added growth rates contributions (yearly av. growth rates, in percent. points) Source: The Russia KLEMS database H0: Extensive growth story Growth engines after transition Energy directly (low prices/energy inputs)Energy directly (low prices/energy inputs) Energy indirectly (investments)Energy indirectly (investments) H1: Intensive growth story Growth engines after transition Better inputs allocation (no Price Fog)

6 |Date 20.08.20106 Introduction: novelty and structure Novelty New dataset - 35 industries - in 1995-2006 Real Value Added based on Double Deflation Labor productivity decomposition by industries Influence of labor reallocation on labor productivity growth rates Capital Services Structure Data (What we know…) - Output & SUTs - Labor - Capital Methods - Double deflation - LP decomposition - Growth Accounting Results/Discussion Project in progress (…should know) - Statistics - Analysis

7 |Date 20.08.20107 Data: Output and Deflation Classification problem (old -> new in 2003-4) Supply and Use Tables (SUT) in current and constant prices, consistent with Russian NA Based on the benchmark tables of 1995; Final Demand and Gross Output data of 1995-2006 Volume Indices of Gross output Detailed bridges btw the classifications

8 |Date 20.08.20108 Data: Labor and Capital Labor A number of workers Based on the Labor Force Survey (LFS) Firms-reported data is used for further disaggregation Capital (for the old classification only) Investments in constant prices by types of assets Benchmark is the net capital stock of 1990 Exogenous rate of return

9 |Date 20.08.20109 Methods 1. Labor productivity decomposition, total - within – between (OECD Prod. 2001): 2. Real Value Added based on Double Deflation (OECD Prod. 2001): 3. Growth Accounting (EU KLEMS Meth.; OECD Cap. Measur. 2009)

10 |Date 20.08.201010 Results by sectors Contribution to labor productivity growth (in percentage points) Source: The Russia KLEMS database Comments LP of economic growthLP is a major source of economic growth With VA gr. rates in 4.571995-2006: 4.57 pp 7.351999-2006: 7.35 pp Sectors1995-2006 1999-2006 WthBtwTot WthBtwTot TOTAL3.400.593.99 4.991.246.23 Market Services2.100.362.462.620.753.37 Energy-intensive & exp. goods 0.440.020.461.070.081.15 Agriculture0.430.050.480.740.250.98 Non-exp. Goods0.37-0.030.340.63-0.060.57 N.-M. serv.0.070.190.25 -0.060.210.16

11 |Date 20.08.201011 Results by sectors Contribution to labor productivity growth (in percentage points) Source: The Russia KLEMS database Comments LP is a major source of economic growth LP are driven by Market ServicesLP are driven by Market Services The role of Energy- intensive & exp. is relatively modestThe role of Energy- intensive & exp. is relatively modest Sectors1995-2006 1999-2006 WthBtwTot WthBtwTot TOTAL3.400.593.99 4.991.246.23 Market Services 2.100.362.462.620.753.37 Energy-intensive & exp. goods 0.440.020.461.070.081.15 Agriculture0.430.050.480.740.250.98 Non-exp. Goods0.37-0.030.340.63-0.060.57 N.-M. serv.0.070.190.25 -0.060.210.16

12 |Date 20.08.201012 Results by sectors Contribution to labor productivity growth (in percentage points) Source: The Russia KLEMS database Comments LP is a major source of economic growth LP are driven by Market Services The role of Energy- intensive & exp. is relatively modest Labor reallocation is a substantial source of LP growthLabor reallocation is a substantial source of LP growth Sectors1995-2006 1999-2006 WthBtwTot WthBtwTot TOTAL3.400.593.99 4.991.246.23 Market Services2.100.362.462.620.753.37 Energy-intensive & exp. goods 0.440.020.461.070.081.15 Agriculture0.430.050.480.740.250.98 Non-exp. Goods0.37-0.030.340.63-0.060.57 N.-M. serv.0.070.190.25 -0.060.210.16

13 |Date 20.08.201013 Results by industries of M. Services Contribution to labor productivity growth (in percentage points) Source: The Russia KLEMS database Comments Wholesale trade and Inland Transport dominates among M. ServicesWholesale trade and Inland Transport dominates among M. Services Sectors1995-2006 1999-2006 WithinBtwTotalWithinBtwTotal TOTAL3.400.593.994.991.246.23 M. Services2.100.362.462.620.753.37 W-sale trade 0.360.300.671.010.651.67 Inl. transport 0.56-0.010.560.730.010.73 Construction0.320.000.320.35-0.030.32 Oth. M. Serv.0.850.060.91 0.530.120.65

14 |Date 20.08.201014 Results by industries of the Energy- Intensive and Exp. Goods sector Contribution to labor productivity growth (in percentage points) Source: The Russia KLEMS database Comments Basic Metals and Mining & Quarrying are engines of this sectorBasic Metals and Mining & Quarrying are engines of this sector However, a contribution of the sector is almost the same as of Agriculture Sectors1995-2006 1999-2006 WithinBtwTotal WithinBtwTotal TOTAL3.400.593.99 4.991.246.23 En.-intens & exp. Goods 0.440.020.461.070.081.15 Basic metals0.280.020.300.820.060.88 Min. & Quar.0.360.000.360.580.010.59 Others-0.210.00-0.20-0.330.01-0.32 Agriculture0.430.050.480.740.250.98

15 |Date 20.08.2010 Results: Growth Accounting for Major Industries of the old classification (1999-2004) 15 LP and Hours worked contributions to VA growth rates Capital Intensity and MFP contributions to VA growth rates

16 |Date 20.08.2010 Results: Growth Accounting for Major Industries of the old classification (1999-2004) 16 Capital Intensity and MFP contributions to VA growth rates MFP contribution dominates in most industries Capital intensity is substantial for Communications and Trade NOTE: in the old classification Manufacturing = Mining (C) Manufacturing (D) Energy distr.(E) Trade = Wholesale trade Retail trade Other Services

17 |Date 20.08.201017 Conclusion: What we know... H0: Extensive growth story Energy directly (low prices/energy inputs) (-) (-) Mining and Energy-Intensive sectors do not provide major contribution to LP growth (+) (+) Substantial Role of Capital Intensity in Communications and Trade H1: Intensive growth story Better inputs allocation (no Price Fog) (+) (+) Substantial positive influence of labor reallocation on LP growth

18 |Date 20.08.201018 Conclusion:...what we should know Data/Statistics (in collaboration with Rosstat) New detailed benchmark SUTs (in progress; expected in 2012) Detailed Russian National Accounts in 2002-2009 (in progress; new release of 79 industries is expected in September of this year) Detailed National Accounts in the new classification in Retrospect since 1990 Analysis Capital services and growth accounting in the new classification (in progress) Labor composition effects (in progress) Further decomposition of Market Services and Inland Transport What services are important for growth? (gas export or something else)

19 |Date 20.08.201019 Thank you!

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