Studies Eastern European Markets
Eastern European Markets
The Research Institute of The Finnish Economy

Sergey Sturin, Vladimir Sherov
RUSSIAN REGIONS AND FOREIGN TRADE
(Discussion Papers no. 995)

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    Abstract
    For large, sparse and heterogeneous Russia, regional aspects are of utmost importance. Russian economy is becoming more open, but this process goes unevenly, aggravating existing disparities among regions. The goal of this paper is to examine diversity of Russian regions and its relationship with regions’ foreign trade. We start with the general overview of Russian regional structure, examine commodity structure and geography of foreign trade by federal districts of Russian Federation and discuss the factors influencing foreign trade patterns of specific regions. Regression analysis is used for explaining regional import per capita and for testing dependence of incomes on foreign trade. Significance of export incomes for regions, special role of Moscow, St. Petersburg and Kaliningrad in import flows
    Conclusions
    Concluding remarks can be divided into two parts. The first one deals with the essence of topics under consideration, the second one concerns peculiarities of statistical data and possibilities of explaining relevant indicators. Both parts are united by one well known feature of Russian reality: there are a lot of contrasts within Russia, and Moscow is a very untypical region of this country.
    • Russian regions vary greatly not only by scale and natural conditions, but also by prices and per capita economic indicators and by foreign trade intensity. Foreign trade is more intense in richer regions of Russia. Moscow and Tyumen province are the richest and most intensively exporting regions; Moscow and St.Petersburg are main importers. But even oil-exporting regions get access only to the small part of export revenues; hence their import does not correspond with their export. North Caucasian ethnic republics of Russian South show the lowest figures of incomes, price levels and of involvement in foreign trade.
    • Artificial openness and unfair privatization of early 90s increased not only social but also regional polarization. Oil, gas and metals exporting regions gained bread crumbs from oligarchs’ table, thus becoming wealthier than regions, not endowed with mineral resources and possessing no metallurgic plants.
    • Centrally located regions are most integrated with the CIS – and less integrated with the rest of the world, at least by import, than boundary regions in the west (especially, North- West) and in the east. Germany is the leading partner for regions of European part of Russia, while China is the first partner for Siberia and Far East.
    Statistics of regional foreign trade is based on customs data, which attributes trade flow to the region, where relevant company is registered. It gives biased picture of import to regions. Regional export and import are statistically independent. The best explanatory power for import intensity in Russian regions is given by the set of dummy variables, reflecting the special role of two capitals and the unique position of Kaliningrad, and by expenditures per capita and price levels. Per capita incomes in regions are sufficiently explained by regional export, with special dummy necessary to explain Moscow city per capita incomes.
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