|date 20.08.20101 what we know and what we should know about economic growth in russia russia klems...
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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, August 19-20, 2010
Ilya Voskoboynikov (University of Groningen)
|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)
|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 -2.38 7.35
Labor 0.58 -2.33 1.11
Labor Productivity
3.99 -0.05 6.23
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)
|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 -2.38 7.35
Labor 0.58 -2.33 1.11
Labor Productivity
3.99 -0.05 6.23
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
|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 -2.38 7.35
Labor 0.58 -2.33 1.11
Labor Productivity
3.99 -0.05 6.23
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 Energy directly (low prices/energy inputs)(low prices/energy inputs)
•Energy indirectly (investments)Energy indirectly (investments)
•H1: Intensive growth story
•Growth engines after transition
• Better inputs allocation Better inputs allocation (no “Price Fog”)(no “Price Fog”)
|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 & SUT’s- Labor- Capital
Methods- Double deflation- LP decomposition- Growth Accounting
Results/Discussion Project in progress
(“…should know”)- Statistics- Analysis
|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
|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
|Date 20.08.20109
Methods1. Labor productivity decomposition,
total - within – between (OECD Prod. 2001):
j
jjL
jVA
j
QIj
jVA
QI LdssLPdsLPd lnlnln
2. Real Value Added based on Double Deflation (OECD Prod. 2001):
QIj
IIGO
QIjVA
GO
QIj IIdsGOd
sVAd j
jj
j
lnln1
ln
3. Growth Accounting (EU KLEMS Meth.; OECD Cap. Measur. 2009)
|Date 20.08.201010
Results by sectorsContribution to labor productivity growth (in percentage points)
Source: The Russia KLEMS database
Comments
•LPLP is a major source of economic growth of economic growth With VA gr. rates in
•1995-2006:4.574.57 pp
•1999-2006:7.357.35 pp
Sectors 1995-2006 1999-2006
Wth Btw Tot Wth Btw Tot
TOTALTOTAL 3.40 0.59 3.993.99 4.99 1.24 6.236.23
Market Services 2.10 0.36 2.46 2.62 0.75 3.37
Energy-intensive & exp. goods
0.44 0.02 0.46 1.07 0.08 1.15
Agriculture 0.43 0.05 0.48 0.74 0.25 0.98
Non-exp. Goods 0.37 -0.03 0.34 0.63 -0.06 0.57
N.-M. serv. 0.07 0.19 0.25 -0.06 0.21 0.16
|Date 20.08.201011
Results by sectorsContribution 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 LP are driven by Market ServicesMarket Services
•The role of Energy-The role of Energy-intensive & exp. is intensive & exp. is relatively modestrelatively modest
Sectors 1995-2006 1999-2006
Wth Btw Tot Wth Btw Tot
TOTAL 3.40 0.59 3.99 4.99 1.24 6.23
Market ServicesMarket Services 2.10 0.36 2.462.46 2.62 0.75 3.373.37
Energy-intensive & exp. goods
0.44 0.02 0.460.46 1.07 0.08 1.151.15
Agriculture 0.43 0.05 0.48 0.74 0.25 0.98
Non-exp. Goods 0.37 -0.03 0.34 0.63 -0.06 0.57
N.-M. serv. 0.07 0.19 0.25 -0.06 0.21 0.16
|Date 20.08.201012
Results by sectorsContribution 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 Labor reallocation is a substantial source a substantial source of LP growthof LP growth
Sectors 1995-2006 1999-2006
Wth Btw Tot Wth Btw Tot
TOTAL 3.40 0.590.59 3.99 4.99 1.241.24 6.23
Market Services 2.10 0.360.36 2.46 2.62 0.750.75 3.37
Energy-intensive & exp. goods
0.44 0.02 0.46 1.07 0.08 1.15
Agriculture 0.43 0.050.05 0.48 0.74 0.250.25 0.98
Non-exp. Goods 0.37 -0.03 0.34 0.63 -0.06 0.57
N.-M. serv. 0.07 0.190.19 0.25 -0.06 0.210.21 0.16
|Date 20.08.201013
Results by industries of M. ServicesContribution to labor productivity growth (in percentage points)
Source: The Russia KLEMS database
Comments
•Wholesale trade and Wholesale trade and Inland Transport Inland Transport dominates among M. dominates among M. ServicesServices
Sectors 1995-2006 1999-2006
Within Btw Total Within Btw Total
TOTAL 3.40 0.59 3.99 4.99 1.24 6.23
M. Services 2.10 0.36 2.462.46 2.62 0.75 3.373.37
W-sale tradeW-sale trade 0.36 0.30 0.670.67 1.01 0.65 1.671.67
Inl. transportInl. transport 0.56 -0.01 0.560.56 0.73 0.01 0.730.73
Construction 0.32 0.00 0.32 0.35 -0.03 0.32
Oth. M. Serv. 0.85 0.06 0.91 0.53 0.12 0.65
|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 Basic Metals and Mining & Quarrying are Mining & Quarrying are engines of this sectorengines of this sector
•However, a contribution of the sector is almost the same as of Agriculture
Sectors 1995-2006 1999-2006
Within Btw Total Within Btw Total
TOTAL 3.40 0.59 3.99 4.99 1.24 6.23
En.-intens & En.-intens & exp. Goodsexp. Goods
0.44 0.02 0.460.46 1.07 0.08 1.151.15
Basic metals 0.28 0.02 0.30 0.82 0.06 0.88
Min. & Quar. 0.36 0.00 0.36 0.58 0.01 0.59
Others -0.21 0.00 -0.20 -0.33 0.01 -0.32
Agriculture 0.43 0.05 0.48 0.74 0.25 0.98
|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
|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
|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
|Date 20.08.201018
Conclusion: “...what we should know”•Data/Statistics (in collaboration with Rosstat)
•New detailed benchmark SUT’s (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)
|Date 20.08.201019
Thank you!