When high growth is not enough : Rethinking Russia's pre-crisis economic performance

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Title: When high growth is not enough : Rethinking Russia's pre-crisis economic performance
Author: Voskoboynikov, Ilya B. ; Solanko, Laura
Organization: Suomen Pankki
Bank of Finland
Department / Unit: Siirtymätalouksien tutkimuslaitos (BOFIT)
Institute for Economies in Transition (BOFIT)
Series: BOFIT Policy Brief
ISSN: 2342-205X
Series year: 2014
Series number: 6/2014
Year of publication: 2014
Publication date: 6.6.2014
Pages: 16 s.
Subject (yso): talouskasvu
Keywords: Venäjä; talouskasvu; tuottavuus; rakennemuutokset; bkt; Bofit-kokoelma; Russia
JEL: L16; O47
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.

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