Analysis of exports and related processes is important for a number of reasons. First, export volume, structure and dynamics characterize a country’s place in the international division of labor and its role in the world economy. Second, export is Russia’s major source of foreign-currency income.

Therefore, a comprehensive analysis of the national economy in general, and export potential in particular, is essential for the elaboration of a well-founded strategy for developing the country’s export-oriented industries.

As things stand, Russia’s competitive export items include fuel, raw materials and products of the so-called primary-processing industries, such as metals, timber and lumber and chemicals. In these industries, the share of exports in production (the so-called export quota) is excessively high. For example, for pulp it equaled 84 percent in 2000 and 85 percent in the first quarter of this year; for mineral fertilizers it was 81 percent and 79 percent, respectively; for crude oil 44.7 percent and 44.9 percent, for petrochemicals 36 percent and 34 percent and for natural gas 35 percent and 36 percent. In the light and food industries, Russia’s competitive export items include alcoholic beverages, fish products, leather and furs, and on the market for machines and equipment Russia can effectively compete, supplying hardware and high-tech equipment that is produced in small quantities or even one-of-a-kind, including military equipment.

Russian exporters are facing a number of unfair and unprincipled barriers created artificially in the form of various discriminatory measures imposed by foreign competitors with the aim to prevent Russian products from entering the world market. These measures first of all include the anti-dumping claims that create obstacles on the way of Russian high-tech products, i.e. precisely where Russia has obvious competitive advantages.

Besides, Western standards, rules and testing and certification procedures work to ignore Russian competitive advantages. As of early 2000, 24 countries had imposed 87 non-economic restrictions on Russian goods. According to expert estimates, these unfounded restrictions and limitations cause Russia to lose up to $2 billion every year.

Nevertheless, in 2000, Russia’s export, in dollar terms, set record for the decade at $103 billion. Last year, Russia’s exports grew faster than imports, outpacing the latter by more than 25 percent, and this helped the country achieve a positive foreign trade balance of $69 billion (the difference between exports and imports, not counting the so-called "shuttle" trade). The corresponding figures for 1999 and 1998 were $42.6 billion and $28.2 billion, respectively.

The growth of Russia’s export tended to decelerate in this year: the increase amounted to only 4 percent (in dollar terms) for the year’s first three months, compared to 52 percent for the same period last year.

In terms of geography, the proportion of the C.I.S. states tends to decline while that of the other foreign countries tends to increase. In 1994, the proportion of the C.I.S. states in Russia’s export was 22.3 percent and that of other countries 77.7 percent, while in 2000 the corresponding figures were 13.4 percent and 86.6 percent, respectively.

This trend has continued into this year: During January through March 2000 the proportion of the C.I.S. countries in Russia’s total of exports was 15.3 percent, while in the first quarter of this year it equaled 13.7 percent. For other countries the picture is just the opposite: 84.7 percent in the first quarter of 2000 and 86.3 percent in the first quarter of this year.

In dollar terms, the growth of Russia’s export to countries other than the former Soviet Union is above the composite figure, while that of exports to the C.I.S. states is below. In 2000, Russia’s export was up 41.3 percent from 1999, while separate figures for the C.I.S. states and other countries of the world were 28.8 percent and 43.4 percent respectively. In January through March of this year Russia’s exports to countries other than the former Soviet Union increased 6 percent, while exports to C.I.S. states declined by nearly 7 percent.

Here it is necessary to note that export volume expressed in dollar terms is affected by two factors – the physical amount of exported goods and market prices – and contributions of these factors are different for exports to the C.I.S. states and to other countries.

Last year’s growth of export to the C.I.S. states comprised a 12.5 percent increase in physical volume of exported goods and a 14.5 percent increase in average prices. At the same time, growth of exports to other countries comprised a 9.9 percent increase in the physical volume of exported goods and a 30.6 percent increase in the prices. In the first quarter of 2001, the Russian export growth to countries other than the former Soviet Union showed a 1.7 percent increase in physical volume of goods and a 4.2 percent increase in prices.

The decline in Russia’s export to the C.I.S. states in the first quarter of this year was mainly due to a dramatic slump (by 8 percent) in the physical volume of exported goods, while prices during that period increased by only 1.2 percent and hence could not compensate for the effect of the reduction in physical volume.

Russia's exports in 2000 and first quarter of 2001 

Exports total

Breakdown

2000

Jan.-Mar. 2001

Countries other than former Soviet Union

CIS

2000

Jan.-Mar. 2001

2000

Jan.-Mar. 2001

Total, $ billion

103.0

24.8

89.2

21.4

13.8

3.4

Growth, % up from previous year

141.3

104

143.4

106.0

128.8

93.1

Share, %

100

100

86.6

86.3

13.4

13.7Goskomstat

It must be noted that the growth of Russian exports in the year 2000 resulted primarily from the changes in the world market situation which were beneficial for Russia. In 2000, world market prices for the major items Russia exports continued to increase, but the first quarter of this year saw a reversal of the trend, specifically on the market for combustible materials.

As of late 1999, one metric ton of Russian oil sold for $156, on average, and the price increased further to $186 by the end of 2000, but slumped to $158.5 during January-March 2001. Prices for petrochemicals on the world market increased by nearly 50 percent during the year 2000, but dropped 20 percent during the first quarter of this year.

Russian exports have traditionally been clearly biased in favor of fuel and raw materials and this tendency persisted last year and the first quarter of this year. Moreover, the bias was aggravated during 2000 and the first quarter of 2001. During 2000, the proportion of the fuel and energy sector in the structure of Russia’s export showed a sizable increase.

Again, in January-March 2001, compared to the corresponding period of 2000, the proportion of the fuel and energy sector in the structure of Russian export went up by 1.1 percent and the proportion of timber and pulp went up by 0.4 percent. Also, the proportion of ferrous and nonferrous metals dropped by nearly 2 percent and the proportion of machines, equipment and vehicles fell by 0.3 percent.

Major items of Russia's export (in percentages of the total)

Product

1999

2000

Crude oil

19.4

24.6

Natural gas

15.6

16.2

Copper, nickel, aluminum

8.0

6.7

Civil purpose machines and equipment

7.6

6.3

Petrochemicals

7.5

10.5

Ferrous metals

7.4

6.5

Arms and military equipment

4.4

3.6

Timber and lumber

2.9

2.2

Fertilizers

2.0

2.0

Pulp and paper

1.1

1.1

Other goods

24.1

20.3

Total

100.0

100.0Goskomstat

Another trend characteristic of the period under consideration is the reduction of export efficiency (export price expressed in percentages of the domestic price) for the major types of fuel. Thus, export efficiency for crude oil dropped from 280 percent as of the late 1999 to 153 percent as of the late 2000. The corresponding figures for gasoline for automobiles were 103 percent and 98 percent, for fuel oil 185 percent and 148 percent and for electrical power 210 percent and 132 percent.

In elaborating a strategy for the development of Russia’s export sector, it is necessary to see to it that favorable conditions are created for effective cooperation between the raw-materials, fuel, energy and high-tech industry sectors.

The raw-materials, fuel and energy sectors will remain, in the medium term, the main suppliers of hard-currency resources that should be used for funding Russia’s future breakthroughs in the most promising industries. Investors should provide for adequate development of the country’s major export-oriented industries.