Embed Size (px)
Citation preview
Russia• Land 1.8 times the size
of U.S.• 10 time zones • Population:143 mil
– Russian 80% – Tatar 4%– Ukrainian 2%
• The richest in resources– Oil, natural gas,
coal, many strategic minerals, timber
– most resources in remote areas
Rank Country2008 GDP
(purchasing power parity) 1 World $ 69,490,000,000,000
2 European Union $ 14,820,000,000,000
3 United States $ 14,290,000,000,000
4 China $ 7,800,000,000,000
5 Japan $ 4,348,000,000,000
6 India $ 3,267,000,000,000
7 Germany $ 2,863,000,000,000
8 United Kingdom $ 2,231,000,000,000
9 Russia $ 2,225,000,000,000
10 France $ 2,097,000,000,000
11 Brazil $ 1,990,000,000,000
12 Italy $ 1,821,000,000,000
13 Mexico $ 1,559,000,000,000
14 Spain $ 1,378,000,000,000
15 Canada $ 1,307,000,000,000
16 Korea, South $ 1,278,000,000,000
Economic Regions in Russia1. Central (Machinery)
2. Central Black Soil
(Agriculture)3. East Siberian
(Coal, gold, graphite, iron ore, aluminum ore, zinc, lead mining)
4. Far Eastern
5. Northern (Oil)6. North Caucasus
7. Northwestern
8. Volga (Agriculture)
9. Urals
10. Volga-Vyatka (Agriculture)
11. West Siberian (Oil)12. Kaliningrad
Western Russia
Central Economic Region
Central Black Earth Region
North Caucasus
West - Central Russia
Northwest Economic Region
Volga Region
Volga-Vyatka Region
Central Russia
Northern Economic Region
Urals Region
West Siberian Region
Eastern Russia
East Siberian Economic Region
Far Eastern Region
Kaliningrad Region
Russian GDP Breakdown
Russia’s Trade, 2006 Export (%)Import
(%) 1 Food and Agricultural Products 0.9 13.32 Mineral Goods (Gas,Oil,Petrol,Ores,Coal etc.) 65.1 1.03 Chemical Products and Rubber 5.6 13.44 Leather Raw Materials, Furs and their products 0.1 0.35 Wood, Timber, Pulp and Paper Goods 4.0 4.06 Textiles and Footwear 0.4 3.77 Precious Stones and Precious Metals 4.2 0.48 Ferrous and Non-Ferrous Metals and Products 13.8 6.99 Machinery, Equipment and Transport Equipment 5.8 40.3
10 Other goods 0.9 4.2Trade surplus: >US$100bn
Ownership Concentration• 23 largest companies control 57% of
GDP • 10 largest ownership groups account
for 60% of Russian stock market • Small and medium-sized enterprises
account for <15% of GDP– 50% or more in more advanced
transition countries• Power concentrated in the hands of
corporations • Corporations hold key positions in
political, economic, ideological, informational, financial spheres of life
• Widespread use of force and violence in various forms toward opponents
• Weakening of public and state institutions
• Start-ups held back – stifling regulations– strong position of incumbent
industrial enterprises
Oligarchy under Yeltsin
Mikhail Khodorkovsky(YUKOS)
Boris Berezovsky(member of State Duma)
Vladimir Gusinsky(Media-Most)
Government
Industry
Services
Mass Media
Agriculture
Oleg DeripaskaResidence: Moscow, Russia
Occupation: Chairman of the Supervisory Board of Basic Element Company
Net worth:▲US$28.6 billion (2008)
Viktor Vekselberg
•Chairman of the Board of Directors of Renova (1993)
•co-owner and chairman of Tyumen Oil (TNK), one of Russia's largest oil and gas companies (1996)
•Net worth: $5 billion (Forbes, March 2005)
•Giant Soviet oil company Sibneft
•the main owner of private investment company Millhouse LLC
•A net worth of US$23.5 billion (Forbes, March 2008)
Roman Abramovich
New President – New Regime• Putinism• Limiting oligarchs' political
involvement • Prosecution and arrest of
oligarchs as a consolidation of own positions
• 2001 Putin’s bargain with oligarchs:
We overlook dubious ways your business empires were built in murky privatization of 1990s.
You stay out of politics, stop bribing officials, pay taxes
New President – New Regime
Mikhail Khodorkovsky imprisoned in Krasnokamensk for fraud and tax evasion
Serving 8 years in a Siberian jail
Government nationalized part of Yukos
Boris Berezovsky left Russia, currently lives in London.
Vladimir Gusinsky currently lives in Tel Aviv.
Forbes 2004: 100 Richest People in
Russia• Typical Oligarch’s Profile
– male, was 31 years old in 1988 – born outside Moscow– studied in Moscow– made small fortune importing computers in late 1980s – started a bank– exported raw materials – created large industrial conglomerates
• acquired companies for a fractions of what they are worth• operated outside the law
– now owns a majority stake in oil or metals company – now buying into insurance, retail and agriculture– wife and children live abroad
• 66 inherited companies from USSR• 34 started new businesses (telecommunications,
construction, retail stores, food production)– Combined net worth of 36 Russian billionaires is 24% of
GDP– Combined net worth of 277 US billionaires is 6% of US
GDP
Rank CountryOil - production
(bbl/day), 2007 1 World 85,540,000
2 Russia 9,980,000
3 Saudi Arabia 9,200,000
4 United States 8,457,000
5 Iran 4,700,000
6 China 3,725,000
7 Mexico 3,501,000
8 Canada 3,425,000
9 United Arab Emirates 2,948,000
10 European Union 2,676,000
11 Venezuela 2,667,000
12 Kuwait 2,613,000
13 Norway 2,565,000
14 Iraq 2,420,000
15 Nigeria 2,352,000
16 Brazil 2,277,000
http://www.cia.gov/cia/publications/factbook
Rank Country Natural gas – production, 2007 (cu m)
1 World 3,021,000,000,000
2 Russia 654,000,000,000
3 United States 545,900,000,000
4 European Union 197,800,000,000
5 Canada 187,000,000,000
6 Iran 111,900,000,000
7 Norway 99,300,000,000
8 Algeria 85,700,000,000
9 Netherlands 76,330,000,000
10 Saudi Arabia 75,900,000,000
11 United Kingdom 72,300,000,000
12 China 69,270,000,000
13 Turkmenistan 68,880,000,000
14 Uzbekistan 65,190,000,000
15 Malaysia 64,500,000,000
16 Qatar 59,800,000,000
Global Gas Production – Top 10 Producers
0
10
20
30
40
50
60
70
Russia
U.S.
Canad
aIra
n
Norway
Alger
ia UK
Indone
sia
Saudi
Nethe
rlands
BC
F/D
Current Gas ImportersCurrent Gas Importers
BP Statistical Review of World Energy 2008
Current Oligarchs (increasing number of wealth)
Effects of Oligarchy on Post-USSR Russia
NEGATIVE
POSITIVE
Oil Pipelines• 95% of total crude oil
exports are through pipelines
• state-owned and operated by 100% federally-owned company, Transneft.
• capacity constrained• cheap routes:
terminating in the Russian Black Sea ports
• expensive routes: across second or third countries -Belarus,Ukraine.
• export price of crude oil is higher than domestic price.
www.eia.doe.gov
EIA’s Petroleum Navigator
Oil and Gas• Technology intensive• Developing new reserves need
investments• Crude oil
– Export duty: 65% of market price above $25/bbl
– Extraction taxes– Payroll tax – Profit tax– Total effective profit tax:
92% • Lack of clarity about
ownership of subsoil resources
•Energy used as a foreign policy tool–Gazprom does not own part of pipelines that goes through Ukraine and Belarus
–Russia briefly cuts supply of gas for Ukraine, Belarus, reduces supply to Europe
–Countries refused to pay oil customs duty and introduced tariff on Russian oil transits
More State Control
Russia: As State Companies Gain Control Of Oil Production, Growth Moderates
MMB/D
BP Statistical Review of World Energy 2008
Proved oil reserves
Electricity Generation by Fuel in Western Europe
avg. GW
BP Statistical Review of World Energy 2008
Oil consumption per capita
BP Statistical Review of World Energy 2008
Natural gas consumption per capita
Global Gas Resource BaseProved Reserves
Current Net Gas ExportersCurrent Net Gas Exporters
• Country Energy Profiles.
• Gazprom: State-run natural gas monopoly
– 90% of Russia’s gas– 1/3 of world’s gas reserves – Russia’s largest earner of hard
currency– Tax payments account for 25%
of federal tax revenues – Operates gas pipeline network– Must supply natural gas to
domestic market at government-regulated prices ($28 per thousand cubic meters, 15-20% of the market rate)
•State expands ownership of strategic sectors (oil, gas)
• Gazprom acquired Sibneft, former part of Yukos
Gazprom Credit Rating as of 01.06.2008
BP Statistical Review of World Energy 2008
Proved natural gas reserves
What is happening to petrodollars?
• Trickle down effect of oil & gas boom– Construction, manufacturing, defense,
transportation, machine-building– railway wagons - to transport oil from
Russia and Kazakhstan, to Europe and Asia • Stabilization fund est. in 2004
– to accumulate windfall profits from high oil prices and hold back inflation by neutralizing influx of petrodollars
– Fund initially intended to be invested in highly-liquid foreign debt
– Instead money converted into foreign currency and placed in Federal Treasury forex accounts with the Central Bank
• 45% in U.S. dollars • 45% in euros • 10% in British pounds
• Repaid $21.3 billion Soviet foreign debt
Rank Country Current account balance, 2007
1 China $ 368,200,000,000
2 Germany $ 267,100,000,000
3 Japan $ 187,800,000,000
4 Saudi Arabia $ 151,000,000,000
5 Russia $ 97,600,000,000
6 Norway $ 84,350,000,000
7 Kuwait $ 65,210,000,000
8 European Union $ 51,400,000,000
9 Venezuela $ 48,440,000,000
10 Netherlands $ 47,000,000,000
11 Libya $ 43,330,000,000
12 Switzerland $ 40,810,000,000
13 United Arab Emirates $ 36,410,000,000
14 Algeria $ 35,800,000,000
15 Sweden $ 35,220,000,000
Rank Country Reserves of foreign exchange and gold
Date of Information
1 China $ 2,033,000,000,000 31 Dec2008 est.
2 Japan $ 954,100,000,000 31 Dec 2007 est.
3 Russia $ 435,400,000,000 12 Dec 2008
4 Taiwan $ 296,400,000,000 31 Dec 2008
5 India $ 250,000,000,000 31 Dec 2008 est.
6 France $ 204,400,000,000 2008
7 Korea, South $ 201,200,000,000 31 Dec 2008
8 Brazil $ 197,400,000,000 31 Dec 2008 est.
9 Singapore $ 168,800,000,000 31 Dec 2008 est.
10 Hong Kong $ 165,900,000,000 31 Dec 2008
11 Algeria $ 150,500,000,000 31 Dec 2008 est.
12 Germany $ 136,200,000,000 31 Dec 2007 est.
13 Thailand $ 106,300,000,000 31 Dec 2008 est.
14 Malaysia $ 104,400,000,000 31 Dec 2008 est.
Resource Curse? Dutch Disease?“Resource curse”: • presence of natural resources in an economy enhance rent-
seeking activities relative to productive activities• detrimental to institutional development:
– structural reforms postponed, corruption– mis-industrialization (big industrial enterprises addicted
to oil rents, claiming part of oil rents) – non-transparency (don’t know which output to cut back
on and who is the legitimate claimant)Dutch disease:• Discovery and export of natural gas led to appreciation of currency • Other exports less competitive• Other exports decrease• Bad for long-term growth
Roland (2005): • No sign of Dutch disease • Natural resources are Russia’s
comparative advantage
Hoff and Stiglitz: Greater ratio of natural resources to industrial assets decreases political constituency for the rule of law and the likelihood that it will emerge
Natural resource sector is less contract-intensiveNo rule of law – easier to borrow money, renege on the debts, strip assets, hide
them abroad
Macro Economy
• Rule of 72 :• If something is growing at Y % per
time period, it will be twice as big in approx. 72/Y time periods
Growth Rate
Years until GDP doubles
1% 722% 363% 244% 185% 14.46% 127% 10.3
10% 7.220% 3.6
Consumption•Real signals of recovery: rebound in consumption, investment•Real personal incomes increased
– Average per capita income $300– 88,000 millionaires – 8 mil people earn >$2,000 month – 3,5 mil people earn >$4,000 month
•Middle-class consumption patterns – Moscow shopping centers expanded 10-fold since 1998– Number of cars per 100 households more than tripled
from 1990– 50% more college students in 2000 than in 1992 – >20% of Russians are regular internet users– >6 million Russians traveled abroad in 2004 (<0.5 million
in 1994)– Sales of foreign cars in 2005 up 57% from 2004– Number of cell phone sales up 30 times since 2000
Rank Country Military expenditures(% of GDP)
Date of Information
1 Oman 11.40 2005 est.
2 Qatar 10.00 2005 est.
3 Saudi Arabia 10.00 2005 est.
4 Iraq 8.60 2006
5 Jordan 8.60 2006
6 Israel 7.30 2006
7 Yemen 6.60 2006
10 Macedonia 6.00 2005 est.
12 Syria 5.90 2005 est.
13 Angola 5.70 2006
16 Kuwait 5.30 2006
17 Turkey 5.30 2005 est.
20 Singapore 4.90 2005 est.
22 Bahrain 4.50 2006
25 China 4.30 2006
28 United States 4.06 2005 est.
30 Russia 3.90 2005
NUCLEAR POWER PLANTS
• working life of a reactor is 30 years• 9 of Russia's 31 plants are 26-30 years old
International Atomic Energy Agencywww.iaea.org
Russia expands nuclear and hydropower generation to export more fossil fuels
