can the russian far east open to the pacific?
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Can the Russian Far East Open to the Pacific?. What Can Be Done About the Growing Gap Between Economic Potential and Performance in Asian Russia? Judith Thornton Department of Economics University of Washington. Why Do We Care About the RFE?. - PowerPoint PPT PresentationTRANSCRIPT
Can the Russian Far East Open to the Pacific?
What Can Be Done About the Growing Gap
Between
Economic Potential and Performance in Asian
Russia?
Judith ThorntonDepartment of EconomicsUniversity of Washington
Why Do We Care About the RFE?
Due to its size, resource wealth, and strategic location in North East Asia
Its proximity to prosperous and rapidly growing Asian markets could afford potential for growth and integration into the Asian economy
It serves as a barometer of the storm winds ahead for federal government policy-makers in Russia
Evidence of Growing Regional Problems
Percent Unemployed by Age
05
101520253035404550
20-29 30-39
Large inflow of funds for infrastructure from Moscow
Investment by Gazprom and Rosneft in energy
Rising per capita income of the employed
Yet, weak total investment Little private foreign
investment Slow growth of labor
productivity
Is Russian Systema a Barrier?
Alena Ledeneva’s “Can Russia Modernize?” says Russian government institutions create incentives for evasion, corruption, kickbacks, informal activity and capital flight. Investment lags.
Total Investment Agriculture Fishery Extractive
Manufac-turing Energy,Gas
Construc-tion Trade Other
Far East 927,545 7,527 3,532 189,871 31,253 90,278 17,415 3,960 583,710
Sakha 148,015 889 2 33,361 788 27,764 7,381 932 76,899
Kamchatka 26,195 204 991 1,237 701 959 389 13 21,701
Primorye 256,931 1,378 771 1,504 7,887 31,179 1,862 1,431 210,918
Khabarovsk 168,733 2,200 210 7,857 20,542 6,854 3,054 841 127,175
Amur 113,020 2,048 0 18,263 372 13,614 2,915 360 75,449
Magadan 15,554 23 106 4,811 92 4,819 371 75 5,256
Sakhalin 168,436 426 1,450 117,156 596 2,270 1,070 185 45,285
Jewish Aut Obl 21,484 58 0 2,354 140 1,664 89 29 17,149
On the Eve of Transition Everyone Was in the Wrong Place and Doing the Wrong Thing
Siberia’s mono-cities were placed in remote, hostile environments with ten times more people above the Arctic Circle in Russia than in Canada.
Large sectors of RFE economy and capital stock were
unprofitable at world prices, including fishing and logging.
Repressed inflation, capital flight, and institutional collapse; Goods disappeared from shops. GDP fell 15 percent. Government deficit rose to 16.5 percent of GDP. Exports fell 40 percent, imports fell 84 percent.
Closure of military bases, cuts in production of military hardware, and loss of central subsidies led to unemployment and a collapse in incomes.
RFE Enjoyed Steady Recovery of GRP After 1996, Notably in Sakhalin
Far East Real GRP Indices 1996-2010
0
50
100
150
200
250
300
350
1994 1996 1998 2000 2002 2004 2006 2008 2010
RF
199
6 =
100
Far East Federal District Sakha Primorye
Khabarovsk Amur Magadan
Sakhalin
Real Income Fell to 60 Percent of 1994 but Grew Steadily after 2000
Far East Real Income 1994 to 2010
0
50
100
150
200
250
1990 1995 2000 2005 2010 2015
Russian Federation Far East Federal District
Sakha Primorye
Khabarovsk Sakhalin
Population Outflow Largest in the Far Eastern Federal District
Population Change from 1990 to 2011 by District
0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40
Far Eastern District
Northwest District
Siberian District
Volga District
Urals District
Central District
North Caucasus District
Moscow City
Russian Federation
RFE Population Fell 22 % between 1990 and 2011, Including 30% on Sakhalin
Population Fell 22 Percent from 1990 to 2011
0.00 0.20 0.40 0.60 0.80 1.00 1.20
Chukotka Auton OkrugMagadan
KamchatkaSakhalin
AmurJewish Auton Obl
KhabarovskPrimorye
SakhaFar Eastern DistrictRussian Federation
Murder Rates Remain High,But Infant Mortality Rates Fell
Infant Mortality Rates 1990, 2000, 2011
0 5 10 15 20 25 30
Russian Federation
Central District
Moscow
Far Eastern District
Sakha
Kamchatka
Primorye
Khabarovsk
Amur
Magadan
Sakhalin
Jewish Aut Obl.
Rat
e
1990 2000 2011
0.00 0.10 0.20 0.30 0.40
Rate Per Thous
Moscow City
Southern District
Central District
Volga District
St Petersburg
Russian Federation Average
Northwest District
Tiumen
Urals District
Siberian District
Far Eastern District
Murder Rates by District 2005 and 2009
Industry Employs a Small Share of the Population
Working Age
Pop 2010Total Employed
2010 Ratio
Far Eastern District 3997343 3313300 0.83
Sakha 613134 481100 0.78
Kamchatka 211118 189100 0.90
Primorye 1234356 980100 0.79
Khabarovsk 855445 729400 0.85
Amur 517915 437900 0.85
Magadan 104426 89900 0.86
Sakhalin 317170 288700 0.91
Jewish Aut Oblast 109770 81300 0.74
Chukotka 34009 35900 1.06 0 5 10 15 20 25
Ag andForestry
Extractive
Mfg, elec, gas
Construction
Trade, services
Transport,communication
Real estate
Education,health
Communalservices, other
Far Eastern District Primorye Khabarovsk
Investment in the RFE Shows Little Increase
Investment in Fixed Capital
0
500000
1000000
1500000
2000000
2500000
1998 2000 2002 2004 2006 2008 2010 2012
Thous
$
Central District Moscow Urals
Tiumen Siberian District Far Eastern District
Investment Focuses on Energy in Sakhalinand Sakha, Gold Mining in Chukotka
RFE Investment Fixed Capital
0
50000
100000
150000
200000
250000
1998 2000 2002 2004 2006 2008 2010 2012
Th
ou
s $
Sakha Kamchatka Primorye Khabarovsk
Amur Sakhalin Chukotka
China is Russia’s Largest Trading Partner
Value of Exports and Imports 2010 Russia to Partner Partner to Russia
$ million Export Import
Russian Federation Total 427,800 260,000
China 19,781 39,033
Including
Crude oil 7,303
Natural gas liquified 65
Japan 12,501 10,300
Including
Crude oil 5,338
Natural gas liquified 2,203
Republic of Korea 10,404 7,267
Including
Natural gas liquified 629
Mongolia 937 79
DPR Korea 46 16
Germany 15,860 26,616
USA 12,033 9,840
Russian Deliveries of Oil to China Grow
The first phase of the $23 billion ESPO pipeline opened in 2009, bringing crude from fields in east Siberia to Skovorodino near the Chinese border. The second phase, which doubled capacity and extended the line to Kozmino.
Crude oil supplies to China via the ESPO pipeline began in 2011. According to the agreement concluded in 2009, Rosneft and Transneft pledged to supply 15 million tons of oil to China for 20 years in exchange for Chinese loans totaling $25 billion.
Transneft expects ESPO to operate at maximum capacity of 30 million metric tons a year, or 600,000 barrels a day, by 2015.
Chinese President Xi Jinping Visits Moscow in April 2013
State-owned Rosneft will triple supplies to China to a million barrels per day, making China Russia's single biggest oil customer. Total exports to rise from 34 million tons to 50 million tons by 2018.
The Chinese offer Rosneft $30 billion in loans, which Rosneft will use to finance its purchase of the British-Russian TNK-BP at a cost of $55 billion.
Rosneft promises China National Petroleum Corporation (CNPC) a share in eight upstream projects including a deal to explore and exploit Russia's Arctic reserves.
Gazprom and CNPC agree that Russia will deliver 38 billion cubic meters of gas a year to China from 2018, although Russia and China remain far apart on prices.
China's Shenhua Group and Russia's EN Group agree to develop coal resources and RFE to expand Russian coal exports to China.
Expanded Oil Pipeline Network
What Can Be Done About the Gap Between Economic Potential and Performance in Russia?
Excerpts from Medvedev’s Report on the Government's performance in 2012, April 2013.
“First, as part of the National Entrepreneurial Initiative, procedures have been identified that cause the biggest problems for business. ..We are making good progress in some areas, for example, tax administration, and not such good progress in other areas.”
“Speaking of capital outflow, it is still very large. In countries with
comparable economies this kind of outflow doesn't exist and it means something is amiss in our country.”
“Last year Russia became a full member of the WTO. The accession talks, I wish to remind you, lasted 17 years.” (Yet, Russia has imposed a “scrapping fee” on import of foreign automobiles.)
Reducing the Gap Between Potential and Performance
Washington Post May 31, 2013: “Sergei Guriev, Russian economist critical of Putin flees to France, escaping ‘bogus’ legal pressure”
Modernization is threatened by lack of security of person, civil rights, and property rights.