Trade Integration, Geopolitics and the Economy of Russia
The project TIGER (Trade Integration, Geopolitics and the Economy of Russia, project No. 228244 funded by the Research Council of Norway) was an interdisciplinary project during 2013-2016 with main focus on economics and political economy analysis, with NUPI (Norwegian Institute of International Affairs) as coordinating institution and partners in Russia (CEFIR - Centre for Financial and Economic Research and researchers at Gaidar Institute) and Finland (BOFIT - Bank of Finland Institute for Economies in Transition). The project has resulted in about 20 publications, and about 60 academic or popular presentations or media appearances in Norway and abroad.
In the project, several papers focus on Russia's trade policy. A key theme is the impact of the Eurasian Economic Union (EAEU) that was established from 2015 including Russia, Belarus, Kazakhstan, Armenia and the Kyrgyz Republic. With common EAEU policies influenced by Russian levels, other countries had to raise their external tariffs considerably. This promotes Russian exports to the rest of the EAEU and leads to substantial transfers from the other countries to Russia. Similar asymmetries were a reason why earlier Eurasian trade integration efforts failed, and in the project we ask whether the EAEU will fare better. The problem of tariffs is alleviated since Russia's accession to the World Trade Organization will substantially lower the common external tariff and reduce the transfers to Russia under the EAEU. Further, the EAEU aims to create a single market by reducing non-tariff barriers and agricultural subsidies. If these ambitions are fulfilled, this could make the EAEU positive for Kazakhstan and the other members. And the right to work for migrants may dominate these issues for Armenia and the Kyrgyz Republic. As of early 2016, however, the EAEU has not improved trade facilitation or reduced non-tariff barriers, so the eventual economic impact of EAEU for the participating countries is yet uncertain. Other papers from the project support the view that eliminating non-tariff barriers is a key issue for the success of the EAEU over time. For the EAEU, a major challenge is also that main participants (especially Russia and Kazakhstan) are largely commodity exporters. In the project, we also examine whether the EAEU may contribute to export diversification and the conclusion is yes, to some extent that may be the case.
At the global level, one contribution in the project suggests that the impact on Russia of 'megalaterals' such as TPP (Trans-Pacific Partnership) or TTIP (Trans-Atlantic Trade and Investment Partnership) would be modest, but Russia could benefit from participating in broader integration schemes such as FTAAP (Free Trade Area of the Asia Pacific). Such agreements would however be difficult to implement so the authors suggest that similar gains could be obtained through the WTO (World Trade Organization) and Russia could benefit from a more proactive approach there.
Several papers examine Russia's shift towards Asia, with sharply increasing imports from China combined with growing reliance on commodity exports. Three project papers analyse empirically Russia's growing interdependence with China during the last decade. Commodities are also analysed in several contributions from the project, including a new book on Russia's aluminium sector, building on 16 years of work in the field. Commodities are also part of the 'geographical economics' component of the project, where Russia and other large countries such as China and India are decomposed into regions and we study the trade and trade policy using numerical simulation of a world trade model with 110 regions, countries and country groups. With its vast territory and large distances, Russian regions and post-Soviet states face large 'natural trade costs' that can only to a limited extent be eliminated by trade politics. These costs impede the industrial development in the former Soviet area and poses limits to what regional integration can achieve. Trade within the area is tiny compared to e.g. trade within Asia or within Western Europe. A large share of Russia's economic mass is to the west, and this remains a fact in spite of the EAEU or Russia's 'pivot' to China. In the project, we augment modern international trade models by incorporating commodities, and use this to examine the trade and trade policy issues of Russia, as well as the impact of improved infrastructure such as the 'New Silk Road'.
Publications
Blakkisrud, H., Wilson Rowe, E. and R. Vakulchuk (2018) Russia's Far East Initiatives in Troubled Geopolitical Times, Valdai Discussion Club, Valdai Papers, No. 92.
Böhringer, Christoph, Thomas F. Rutherford, David G. Tarr and Natalia Turdyeva (2015), “Market Structure and the Environmental Implications of Trade Liberalization: Russia’s Accession to the World Trade Organization,” Review of International Economics, Vol. 23(5), 897-923. DOI: 10.1111/roie.12197
Dmitriev, M. And N. Turdyeva, 2015, Accounting for agglomeration effects of transport investment: new railroad projects in Russia, mimeo.
Godzimirski, J., 2018, The Political Economy of Russian Aluminium. Between the Dual State and Global Markets, Palgrave Macmillan, International Political Economy series, monograph.
Hoekman, Bernard, Jesper Jensen and David Tarr (2014), “A Vision for Ukraine in the World Economy,” Journal of World Trade, Vol. 48 (4), 795-814. Available at: http://yes-ukraine.org/.
Knobel, A. & R. Vakulchuk, 2018, “Impact of Non-Tariff Barriers on Trade within the Eurasian Economic Union”, Post-Communist Economies Journal, 30 (4), pp. 459–481.
Malokostov, A. and N. Turdyeva, 2014, Impacts of trade ‘meta-agreements’ on Russia, CEFIR working paper, presented at BRICS-TERN Workshop (March 17th, 2014, Rio de Janeiro) and published in BRICS-TERN web publication, at http://ccgi.fgv.br/sites/ccgi.fgv.br/files/u5/Program%20Final_0.pdf.
Melchior, A., 2015, Post-Soviet trade, the Russia Far East and the shift to Asia, Chapter 3, pp. 61-96 in J. Huang & S. A. Korolev (eds), 2015, Developing Asia Pacific’s last frontier: Fostering International Cooperation in the Development of Russia’s Far East and Siberia, Palgrave-Macmillan.
Melchior, A., 2018, Free Trade Agreements and Globalisation: In the Shadow of Brexit and Trump. Palgrave/MacMillan 2018. https://link.springer.com/book/10.1007/978-3-319-92834-0, hardcover ISBN 978-3-319-92833-3.
Simola, H.: BOFIT Policy Brief 6/2016: Economic relations between Russia and China – Increasing inter-dependency? 2016. 28 pages.
Solanko, L.: BOFIT Policy Brief 8/2016: Opening up or closing the door for foreign trade – Russia and China compared. 2016. 13 pages.
Tarr, David G. (2016), “The Eurasian Economic Union among Russia, Belarus, Kazakhstan, Armenia and the Kyrgyz Republic: Can it succeed where its predecessor failed?” Eastern European Economics, Vol. 54(1), 1-22. DOI: 10.1080/00128775.2015.1105672.
Vakulchuk, R. (2018). Russia’s New Asian Tilt: How Much Does Economy Matter? In: H. Blakkisrud and E. Wilson Rowe (eds). Russia’s Turn to the East: Domestic Policymaking and Regional Cooperation. Cham: Springer International Publishing, pp. 139–157. https://www.researchgate.net/publication/322158426_Russia's_New_Asian_Tilt_How_Much_Does_Economy_Matter
Vakulchuk, Roman (2014). “Kazakhstan’s Emerging Economy: Between State and Market”. Peter Lang Press: Frankfurt/Main. 302 pages.
Vakulchuk, Roman (2016). “Economic Sanctions, Import Substitution and Path-Dependence in Russia’s Fishing Industry”. NUPI Working Paper No. 872. To be submitted to Journal of Eurasian Studies.
Vakulchuk, Roman (2016). “Public Administration Reform and its Implications for the Foreign Petroleum Companies in Kazakhstan”, Published in March 2016: International Journal of Public Administration, available at: http://dx.doi.org/10.1080/01900692.2015.1072214
Vakulchuk, Roman (2016). “Russia, WTO: Does it Make a Change?”. NUPI Working Paper No. 871. To be submitted to Post-Communist Economies.
Vakulchuk, Roman and Farrukh Irnazarov (2014). Central Asia Regional Economic Cooperation Case Study — Bringing the Economic Corridor in from the Cold?, in “Economic Corridor Development for Inclusive Asian Regional Integration: Modeling Approach to Economic Corridors”, ADB Regional Cooperation and Integration Series. Manila, Asian Development Bank. pp. 82–96.
Vakulchuk, Roman and Farrukh Irnazarov, “Analysis of Informal Obstacles to Cross-Border Economic Activity in Kazakhstan and Uzbekistan”, Submitted in March, 2016, Eurasian Geography and Economics.
Vakulchuk, Roman and Zafar Salmanov, “The Eurasian Customs Union and Sanitary and Phytosanitary Measures (SPS): The case of Kazakhstan”, NUPI Working Paper No. 857, 2016 / Submitted in July 2016, Post-Communist Economies.
Volchkova N., Kuznetsova P., Turdyeva N. (2016) Eksportnye vozmozhnosti stran EAES ot integratsii [Economic Integration and New Export Opportunities for the Eurasian Economic Union]. INTERNATIONAL ORGANISATIONS RESEARCH JOURNAL, vol. 11, no 4, pp. 127-148 (in Russian and English), at https://iorj.hse.ru/en/2016-11-4/198201070.html.
Seminars and presentations
There were several presentations at all the project workshops:
Project workshop, Moscow 27-28 February 2014.
Project workshop, Helsinki 16-17 September 2015.
Project workshop and participation at Higher School of Economics (HSE) Spring Conference, 19-22 April 2016.
Presentations at NUPI’s Russia Conference in Oslo 10 November 2016: Russia’s turn to the East – promises and pitfalls. This was also the final conference of the project, with one of three main sessions at the conference.
Panel 3 Trade integration, geopolitics and the economy of Russia
Chair: Laura Solanko
- David Tarr | Consultant and former lead economist of the World Bank, US
The Eurasian Economic Union: Can it succeed where its predecessor failed?
- Arne Melchior | NUPI, Norway
Trade integration and the economic geography of Russia
- Natalia Volchkova | CEFIR, Russia
Capital Structure and Exporting: Evidence from Import Tariff Changes.
- Roman Vakulchuk | NUPI, Norway
Import Substitution, Barriers to Trade and Path-Dependence in Russian Far East Fishing Industry
Open seminar, CEFIR, Moscow 27 February 2014: “A Trade Vision for Ukraine”. Main speaker: David Tarr (consultant, former lead economist at Development Economics Group, the World Bank).
Arne Melchior, Post-Soviet Trade and the Shift to Asia, presentation at the conference “Norway-Russia: Research cooperation and development in the High North”, arranged by the Research Council of Norway in Oslo 19-20 November 2014.
Arne Melchior: Norwegian-Russian Chamber of Commerce, Oslo 1.9.2015 “Trade integration, geopolitics and the economy of Russia”.
Arne Melchior: Norwegian-Russian Chamber of Commerce, Oslo 6.9.2016 “Geopolitics and trade integration – where does Russia go?”
David Tarr: Can the EAEU succeed where its predecessor failed?” The Gaidar Forum, Moscow, Russia, January 13-15, 2016. This conference is partly academic and partly popular, with wide media coverage.
Vakulchuk, Roman. “Energy Security in Eurasia and the EU: Can Iran Change the Regional Dynamics?” / Seminar - “Iran at a Crossroads: Assessing the Changing Geopolitical and Energy Landscape”, NUPI, Oslo, 8 June.
Op-eds and media
Knobel Alexander: Impossible Trio: How Russian Sanctions Destroy the Customs Union. Forbes.ru 02.12.2014. http://www.forbes.ru/mneniya-column/gosplan/274627-nevozmozhnaya-troitsa-kak-rossiiskie-sanktsii-razrushayut-tamozhennyi.
Knobel Alexander: Eurasian Economic Union: Winners and Losers. Vedomosti.ru № 3617, 26.06.2014. http://www.vedomosti.ru/newspaper/articles/2014/06/26/eaes-vyigravshie-iproigravshie.
Knobel Alexander: Eurasian Union in SCO: In a Search for Sources of Growth. Vedomosti.ru № 4019, 19.02.2016, http://www.vedomosti.ru/opinion/articles/2016/02/19/630669-evraziiskii-soyuz-rosta.
Knobel Alexander: Eurasian Union: Just a Name Change or Something More? Forbes.ru 02.06.2014 http://www.forbes.ru/mneniya-column/gosplan/258949-evraziiskii-soyuz-smena-nazvaniya-ili-chto-bolshee.
Melchior, Arne: Interview in Norwegian-Russian Business Journal No. 1/2015, p. 19. NUPI and research on the economy of Russia.
Melchior, Arne: Russia’s trade policy in the making. Interview in Norwegian-Russian Business Journal/ Norwegian-Russian Chamber of Commerce No. 2/2016, p. 23.
Vakulchuk, Roman (2014). Overcoming Informal Trade Barriers in Central Asia. Asian International Economists Network (AIEN), 15. Januar.
Vakulchuk, Roman and Alexander Knobel (2016). “Integration: Who Needs Barriers.” Vedomosti, 30 November, No. 4214.
Vakulchuk, Roman and Farrukh Irnazarov “Sanksjoner Ikke Russlands Største Problem” (2015). Dagsavisen, 12. August.
Vakulchuk, Roman and Indra Øverland (2014). “Kan Kina Redde Russland?” Dagens Næringsliv, 26 May.
Vakulchuk, Roman and Indra Øverland (2014). Kan Kina redde Russland? Dagens Næringsliv, 26. Mai.