The Framework of the long-term socio-economic development of the Russian Federa- tion until 2020 stipulates that «without penetration to new markets of goods and services with high value added share, Russia’s role in the global economic development and its efficient participation in the international division of labour are doomed to decline». The priorities of the social and economic policies, according to the Framework, include «in- creasing integration of manufacturing industries in the world economy on the basis of their involvement in the global value chains».
In this regard, it is widely believed that Russia, due to the orientation of is exports towards raw materials, is not involved in the international production networks, and the inclusion in these networks requires a radical diversification of the economy with the ac- celerated development of its manufacturing industries.
An economic and statistical tool, which has recently become available to researchers, is capable of producing relatively accurate estimates with regard to the above statements, and to analyse the position of Russia in global value chains. A computational method based on inter-country input-output tables has been proposed to identify the flows of value added driven by final domestic demand and exports, and to distinguish their sectoral and national origin and destination.
Using the inter-country input-output computational framework and new OECD in- put-output data in this study leads to a conclusion that Russia’s integration is quite high in the downstream value chain. It is the mining sector – i.e. mostly extraction of oil and gas – that is responsible for this level of integration that may not be optimal, but is significant by global measurements. Meanwhile, a comparison with other countries casts doubt on the assumption that the reliance on manufacturing industries would allow Russia to derive greater value added from its exports.
Gross exports accounting is a novel sub-area of research that seeks to allocate the value added in gross trade flows to its true country and sector of origin and country or sector of destination. Various frameworks have been recently proposed to perform such decompositions. This paper presents another effort to generalise the accounting framework so that it may be easily interpreted, customised and implemented in matrix computation software. The principal contribution is therefore a relatively simple way to derive the formulae for the decomposition of cumulative value added flows embodied in international trade. The underlying accounting approach is found to be largely similar to that of [Koopman et al., 2012; Stehrer, 2013], but the block matrix formulation allows the user to simultaneously decompose all bilateral flows at the country and/or sectoral level. The refined framework is applied to describe Russia’s export performance from the global value chain perspective using the data from the World Input-Output Database (WIOD) for 2000 and 2010. According to the findings, the countries that directly receive most of Russia’s exports are not exactly those that use most of Russia’s value added. Russia’s mining sector is found to be an intrinsic part of a complex downstream value chain where it indirectly contributes value to partner exports.
The existing international trade statistics is an indispensable tool of economic analysis, though its relevance may be questioned. In the world of global value chains, it is essential to understand that a good or service produced in one country and purchased in another one tend to embody value added of diverse national and sectoral origin. The article reviews the analytic capabilities offered by an alternative estimation of international trade in value added terms. Experimental data from OECD, WTO and World Input-Output Database project are used to quantify Russia’s role as an exporter of value added within the global value chains.
The article explores the issue of capturing the value added in international trade flows using international input-output frameworks. We review the methodology employed by foreign researchers to develop an approach for a decomposition of gross trade flows into value added components of certain origin and destination and to comprehensively analyse global value chains. Two sets of inter-country input-output tables provide statistical input to derive new and easy-to-handle indicators that show Russia’s role in the global value chains as at 2005. Russia appears to be an active part of the European value chains thanks to its exports of raw energy resources. Demand for the latter is created by the direct importers, but is also indirectly fuelled by consumption of third countries, i.e. further downstream. We provide evidence that the value added originating in Russia’s oil and gas sector is hidden in other countries’ and other sectors’ exports. However, these multiplicative effects are significant for Russia’s total trade rather than its partners’ trade, with the exception of some Eastern European economies, primarily Baltic countries. This is perhaps a sub-optimal model of integration into the global value chains, but secures Russia’s position as a relatively large net exporter of value added alongside top contributors among developed and developing countries. We supplement our results with a brief description of the analytical capabilities of the international input-output frameworks, existing experience and prospects of their use for policy making.
In early 21st century, the economic interdependence in Asia Pacific reached a historically high level. Gravity forces between economies break existing barriers. What used to be an imaginary development, nowadays has become real: negotiations for a single East Asian economic grouping centered on China and a Trans-Pacific block propelled by the US. EU follows the suit and signals a pivot towards Asia by launching free trade negotiations with Japan and a few ASEAN members.
The author argues that a new reality of economic integration is emerging in Asia Pacific. To explain its patterns, he distinguishes de facto and de jure economic integration, or regionalisation and regionalism.
De facto integration occurs thanks to market forces and comparative advantage, where production systems evolve from local clusterisation towards international fragmentation, therefore enabling international production networks, or supply chains. This phenomenon is well known in Asia Pacific as it lead to the emergence of the ‘Factory Asia’. The author uses various measures to show that East Asia has already become a highly interdependent and integrated production base featuring sophisticated supply chains largely oriented to meeting final demand from the US and Europe.
De jure integration results from reciprocal commitments to open national markets and harmonize trade policies, formalised through inter-governmental agreements, primarily free trade agreements (FTAs). Several waves of regionalism may be discerned since 1950s but it was only in 2000s that the economies of Asia Pacific became active FTA proponents. East Asian economies which have long championed integration by markets rather than integration by agreements, are now deeply involved in regionalism and bilateralism.
Finally, the author asserts that 2010s brought about a new reality, integration of mega-regionals: US and Japan within the Trans-Pacific Partnership, Japan–EU Economic Partnership Agreement and US–EU Trans-Atlantic Trade and Investment Partnership. China, South Korea and Japan have also launched negotiations for a trilateral FTA. Mega-regional blocks are likely to shape the future global trade system. In Asia Pacific alone, two mega-negotiations are under way: for the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership. Author suggests that the new reality is no good news for Russia which is caught in a belated regionalism trap: it needs pursuing its own integration initiative with the Eurasian neighbours, at the expense of being left out of the Asia Pacific economic integration.