Donato De Rosa

Russian Manufacturing and the Threat of 'Dutch Disease' - A Comparison of Competitiveness Developments in Russian and Ukrainian Industry

This paper examines the development of Russian industry in comparison with that of Ukrainian industry during 1995–2004 in an effort to ascertain to what extent, if any, Russian manufacturing showed signs of succumbing to ‘Dutch disease’. Ukraine and Russia began the market transition with broadly similar institutions, industrial structures and levels of technology, and the economic reforms implemented in the two countries were also similar, although Ukraine was reckoned to lag behind Russia in many areas. The main difference between them is Russia’s far greater resource wealth. It follows that differences in industrial development since 1991 may to some degree be attributable to differences in initial natural resource endowments. In short, Ukraine could provide a rough approximation of how a resource-poor Russia might have developed over the transition. Le secteur manufacturier russe et la menace du « syndrome neerlandais » Comparaison du developpement de la competitivite des industries russe et ukrainienne Cette etude analyse le developpement de l’industrie russe en le comparant avec celui de l’industrie ukrainienne sur la periode 1995-2004, afin d’etablir - si tel etait le cas - dans quelle mesure l’industrie manufacturiere en Russie serait affectee par le ‘syndrome neerlandais’. L’Ukraine et la Russie ont commence leur transition vers l’economie de marche avec des institutions, des structures industrielles et des niveaux de technologie globalement similaires et les reformes mises en œuvre dans les deux pays ont egalement suivi une voie similaire, meme si l’Ukraine est consideree comme etant en retard par rapport a la Russie dans beaucoup de domaines. La difference principale entre les deux pays est la richesse en ressources naturelles, bien plus importante en Russie. Il en resulte que les differences dans le developpement industriel depuis 1991 peuvent, dans une certaine mesure, etre attribuees aux differences de dotations intiales en ressources naturelles. En resume, l’Ukraine peut fournir une approximation fruste de la maniere dont une Russie pauvre en ressources naturelles aurait pu se developper sur la periode de transition.

Are natural resources cursed ? an investigation of the dynamic effects of resource dependence on institutional quality

This paper examines whether natural resource dependence has a negative influence on various indicators of institutional quality when controlling for the potential effects of other geographic, economic and cultural initial conditions. Analysis of a panel of countries from 1996 to 2010 indicates that a high degree of resource dependence, measured as the share of mineral fuel exports in a countrys total exports, is associated with worse government effectiveness, as well as with reduced levels of competition across the economy. Furthermore, estimation of long-run elasticities suggests that government effectiveness and the intensity of domestic competition decrease over time as the dependence on natural resources increases. An illustration of the Russian case shows that the negative effects accumulate in the long run, leading to a worse deterioration of government effectiveness in Russia than in Canada, a country with a comparable resource endowment but far better overall institutional quality. This result is corroborated by a significant negative correlation found between regional resource dependence and an indicator of regulatory capture in Russian regions, which indicates that the regulatory environment is more likely to be subverted in regions that are more dependent on extractive industries. Overall, the findings would be consistent with a situation in which a generally weak institutional environment would allow resource interests to wield the bidding power accruing from export revenues to subvert the content of laws and regulations, as well as their enforcement. The fact that this is associated with negative externalities for the rest of the economy, notably by undermining a level playing field across non-resource sectors, sheds light on a potential channel for the resource curse.

Product market regulation in Romania : a comparison with OECD countries

Less restrictive product market policies are crucial in promoting convergence to higher levels of GDP per capita. This paper benchmarks product market policies in Romania to those of OECD countries by estimating OECD indicators of Product Market Regulation (PMR). The PMR indicators allow a comprehensive mapping of policies affecting competition in product markets. Comparison with OECD countries reveals that Romania’s product market policies are less restrictive of competition than most direct comparators from the region and not far from the OECD average. Nonetheless, this achievement should be interpreted in light of the fact that PMR approach measures officially adopted policies. It does not capture implementation and enforcement, the area where future reform efforts should be directed if less restrictive policies are to have an effective impact on long-term growth prospects. Part II: Outward-oriented Policies with some suggestions for the next steps.

Barriers to competition in Croatia: the role of government regulation

This paper examines product market policies in Croatia by benchmarking them to OECD countries and highlighting how policies that are more conducive to competition would stimulate a more efficient allocation of resources and, in consequence, facilitate convergence to higher income levels. OECD indicators of overall regulation in product markets indicate that Croatias policies in 2007 were generally more restrictive of competition than were the policies in OECD countries. This is especially true for policies concerned with the degree of state control of the economy and with barriers to entrepreneurship. Regulatory obstacles to trade and foreign direct investment, by contrast, are in line with those of pre-accession European Union countries (Czech Republic, Hungary, Slovak Republic, and Poland in 2003, as well as Bulgaria and Romania in 2006), albeit well above the OECD average. Regulation of post, electricity, gas, telecoms, air, rail, and road transport, as estimated by the OECD energy transport and communication sectors indicator, is also less liberal than in the OECD, highlighting the positive knock-on effects for the rest of the economy that could derive from further liberalization of network industries.

Russian Manufacturing and the Threat of ‘Dutch Disease'

This paper examines the development of Russian industry in comparison with that of Ukrainian industry during 1995–2004 in an effort to ascertain to what extent, if any, Russian manufacturing showed signs of succumbing to ‘Dutch disease’. Ukraine and Russia began the market transition with broadly similar institutions, industrial structures and levels of technology, and the economic reforms implemented in the two countries were also similar, although Ukraine was reckoned to lag behind Russia in many areas. The main difference between them is Russia’s far greater resource wealth. It follows that differences in industrial development since 1991 may to some degree be attributable to differences in initial natural resource endowments. In short, Ukraine could provide a rough approximation of how a resource-poor Russia might have developed over the transition.

Product Market Policies in Romania: A Comparison with EU Partners

Romanias European Union accession in 2007 has resulted in a substantial reduction of the formal barriers to integration with the European Union Single Market. This study takes stock of the progress by benchmarking product market policies in Romania to those of European Union countries, as measured by the OECD indicators of Product Market Regulation. These indicators allow for a comprehensive mapping of policies affecting competition in product markets. Comparison with European Union countries reveals that, for half of the policy areas covered by the study, Romanias product market policies are more restrictive of competition than most direct comparators in the region, whereas for other indicators Romania is on a par with the European Union average or has achieved best practice. Nonetheless, these results should be interpreted in light of the fact that the Product Market Regulation approach measures officially adopted policies and does not capture implementation. Future reforms should be directed both at improving official regulation and, where policies that favor competition are already in place, toward effective enforcement.

Regulation, Trade and Productivity in Romania: An Empirical Assessment

Inappropriate regulation can influence productivity performance by affecting incentives to invest and adopt new technologies, as well as by directly curbing competitive pressures. Results of a labor productivity growth model for European countries suggest that improving the regulatory environment -- proxied by the Worldwide Governance Indicators regulatory quality indicator -- and boosting effective exposure to competition through increasing trade integration -- expressed as the ratio of exports plus imports to gross domestic product -- have positive effects on productivity growth. In Romania a 10 percent increase in openness to global trade over 1995-2010 would have boosted productivity growth by 9.7 percent per year. A 10 percent increase in openness to European Union trade, in particular, would have led to an annual increase in productivity of 7 percent. Realizing the benefits from trade integration depends to some extent on regulation. In this regard, the effects of regulation on productivity growth are found to be positive, regardless of the indicator used to measure regulation, and both through direct and indirect channels (by increasing the speed at which a country catches up with productivity leaders). Simulation results also show how countries with different levels of regulatory quality would benefit from a regulatory improvement: had Romania improved its regulatory environment to the same level as Denmark in 2010, its annual productivity growth would have been 14 percent higher over 1995-2010.

Regulatory Institutions: A Blueprint for the Russian Federation

The paper develops an architecture for regulatory institutions that could be feasible in the current Russian context. The paper examines two specific areas: first, establishing a regulatory oversight unit, located at the centre of government, responsible for the strategic co-ordination of regulatory reforms and oversight of regulatory quality; and second, redefining the mandates and strengthening the capacities of the competition authority and regulators of network industries. The paper draws on OECD experience and provides a number of lessons which could direct Russias future efforts in regulatory reform onto a track more similar to the one observed across the OECD.

Explaining Russian Manufacturing Exports: Firm Characteristics and External Conditions

This paper examines the exporting behaviour of Russian manufacturers by considering the effects of firm characteristics and external conditions. Two measures of export behaviour are considered: the decision to export and the share of exports to developed markets. I find that specific exporting experience is the main determinant of both export status and destination. Contrary to studies for other countries, firm features, with the exception of firm size, are irrelevant for export status, while labour productivity is important in determining the intensity of exports to developed markets. There is also evidence that spillover effects from agglomeration have an effect on exporting. At the same time, a lower degree of regulatory capture and a less corrupt judiciary matter for orientation towards more developed markets, while regional resource dependence does not hinder manufacturing exporting.