Philip Hanson

The Russian Economic Puzzle: Going Forwards, Backwards or Sideways?

The question addressed in this article is whether the recent strong growth of the Russian economy is sustainable. The main difficulty is assessing the conflicting evidence. Developments since the financial crisis of 1998 are reviewed, including growth performance and macro-economic management. There is an analysis of the nature and extent of Russian economic dependence on exports of oil and gas and the direction towards state control since 2003 is described. The article reviews the interaction of competitive power politics among the political elite with economic policy and assesses factors favoring and factors working against continued rapid growth over the next five years. One conclusion is that informal rules operating in the economy differ across sectors, and Russian economic development is in part robust; but there are powerful influences working towards a slowdown in growth.

The Resistible Rise of State Control in the Russian Oil Industry

A noted British specialist on Russias economy reviews the rise of direct state control in that countrys oil industry in light of international experience. The author notes Russias unusual position among major oil-exporting countries in the extent of private ownership of its oil industry. The expansion of the countrys state-controlled companies is analyzed and discussed, along with the relationship between state and private oil companies operating in Russia. The paper presents arguments to the effect that in current Russian circumstances the political elites objectives of maintaining a monopoly on power and siphoning off resource rents may be served as well or better by private companies controlled by allies than by state concerns. It is suggested that any judgement that the oil industry will in time be wholly or very largely nationalized is therefore premature. Journal of Economic Literature, Classification Numbers: L720, P260, P280, Q400. 3 tables, 37 references.

Foreign Economic Relations

Between the mid-1950s and the mid-1970s Soviet policy-makers conducted an economic ‘turn to the West’: at first gradual, then strongly accelerating in the late 1960s and early 1970s.1 During the last five years or so they have in certain respects turned away again. Why? And is this turn away from the West essentially a short-term tactical manoeuvre or something more enduring? These are the questions to which this chapter is directed.

Observations on the Costs of the Yukos Affair to Russia

A prominent senior British specialist on the Russian economy reviews some consequences of the Russian states dismemberment and partial re-nationalization of the Yukos oil company. The implications for state interventionism of Russias engagement in international markets are assessed, and the effects of market feedbacks to Russian policymakers analyzed. Also considered is the question of whether Russian economic structure is changing in ways that could lessen the vulnerability of business to state action. Journal of Economic Literature, Classification Numbers: F21, F23, F32, L71. 4 figures, 1 table, 16 references.

Russia's Inward and Outward Foreign Direct Investment: Insights into the Economy

A prominent British economist reviews the recent growth, partner-country composition, and sector composition of foreign direct investment in and out of Russia from a comparative international perspective, based on UNCTAD and Central Bank of Russia data as well as selected case studies. Two hypotheses are tested: that foreign policy significantly affects the host-country pattern of Russias outward foreign direct investment (OFDI) and that domestic institutions significantly impact the host-country pattern of Russias OFDI and the sectoral pattern of its inward foreign direct investment (IFDI). Quantitative evidence of foreign-policy influence could not be found, while domestic institutional influences do appear to be present, most notably in the form of system-escaping OFDI.

The end of import-led growth? Some observations on Soviet, Polish, and Hungarian experience in the 1970s☆

Abstract This paper presents an assessment of the performance of the Soviet, Polish and Hungarian economies during the 1970s in utilizing imports of Western capital goods and the technologies embodied in them to raise exports to the West. Trade data grouped by branch user (imports) and branch of origin (exports) are used. None of the three countries performed well on this test but balance-of-payments outcomes differed substantially. Differences between the three countries, it is suggested, derive from differences in policies, resource endowments and economic size, as well as (to a limited extent) from systemic factors.

The Potential For Autonomous Regional Development in Russia: The Case of Primorskiy Kray

A detailed study of Primorskiy Kray in the Russian Far East is used to investigate the extent to which current regional development and economic reform in Russia is imposed from above by the center vis-a-vis internally generated, based on local resources and initiatives. In the process, it provides an interesting exposition of how unique local factors are interwoven within center-periphery disputes over resource ownership and revenue sharing. A wide range of factors impinging upon the krays capacity for autonomous development is surveyed—the situation within specific economic sectors, opportunities for cross-border trade, sources of budgetary income and expenditure, and local politics. 7 tables, 50 references.

The Turn to Statism in Russian Economic Policy

Since 2003, state control in the Russian economy has increased significantly. This has affected mainly, but not only, the oil industry. This policy development gives some grounds for concern about Russias long-run growth. Its origins lie in power struggles within the political elite, in efforts by members of that elite to enrich themselves and in a profound distrust on the part of that elite of any sources of power that they do not themselves control. One result is that business confidence has been dented, the growth of oil output has slowed, and future GDP growth depends more heavily than before on further growth in oil prices.

Russia’s Accession to the World Trade Organization

Two noted British economists survey a range of issues linked to Russia’s forthcoming accession to the World Trade Organization (WTO) and its implications for the Russian economy. They describe the far-reaching commitments Russia has undertaken in the realm of tariffs, non-tariff barriers, and openness to inward investment, identifying factors that tend both to support and challenge realization of these commitments. They follow with a brief historical account of the reasons why the accession process for Russia was so protracted and an assessment of the likely medium- and long-term economic impacts of accession for the country as well as for its particular regions and social groups. The arguments suggest that the likely direct impacts of accession will overall be modest (at least over the near- to medium-term), and focused in spheres in which a foreign presence may enhance the productivity of Russian firms in the domestic market (e.g., business services). Potentially, more substantial indirect benefits will largely depend on the scale and seriousness of domestic reform policies launched in support of WTO compliance (i.e., effects of accession on Russia’s political economy). Journal of Economic Literature, Classification Numbers: F130, F500, P330. 3 figures, 6 tables, 54 references.

Russian Political Capitalism and its Environment

There are two main arguments in this chapter. First, the indicators putting the Russian economy in the liberal market economy category mask an economic role for the state that is much greater than that in established market economies of any kind. We are not putting forward a normative argument, that Russia should become a liberal market economy. What we are saying is that the Varieties of Capitalism approach is not helpful in understanding systemic developments in Russia: it has been developed on the basis of a set of criteria that, when applied to Russia, produce a misleading picture. We believe Russia can be more easily understood as an example of Weberian political capitalism. This might change in time, and Russian economic institutions might eventually be classifiable in ways that fit established capitalist societies.