Download technical progress and its factors in russia`s economy

ECONOMIC ANNALS, Volume LV, No. 186 / July – September 2010
UDC: 3.33 ISSN: 0013-3264
Scientific Papers
DOI:10.2298/EKA1086007S
György Simon, Jr.*
TECHNICAL PROGRESS AND ITS
FACTORS IN RUSSIA’S ECONOMY
ABSTRACT: In this paper long-term
growth in Russia’s economy is viewed in
the context of technical progress, based on
both neoclassical and endogenous theories.
The dynamics of economic growth with
some aspects of catch-up development are
examined, as well as capital deepening.
TFP is quantified in terms of both output
and productivity increases to reveal the
leading role of embodied technical progress
in productivity growth. An endogenous
growth model helped to discern three
complex factors of technical progress in the
Russian economy, to which at the macro
level a factor related to natural wealth
(oil and gas resources) was added. This
enabled the author to conclude that the
most important macroeconomic factor
of Russia’s technical progress in the half
century from the early 1960s to the late
2000s was its immobile component. At the
manufacturing level the situation was more
complicated, as the initial leadership of
creative technical progress was superseded
by the dominance of the mobile factor.
The collapse of the Soviet Union made the
Russian economy more service-oriented
and radically changed the conditions
of economic modernisation, in which
technology transfer ensured by FDI began
to play a more prominent part, particularly
after the default of 1998.
KEY WORDS: technical progress, national
economy, manufacturing, foreign direct
investment, Russia
JEL CLASSIFICATION: O33, O47, O14, C51, C22, F21, O53.
*
Independent Researcher, Corvinus University of Budapest, [email protected]
7
Economic Annals, Volume LV, No. 186 / July – September 2010
1. Introduction
Technical progress implies the use of advanced scientific and technological
achievements in the economy in order to raise the efficiency and quality
of production processes for the better satisfaction of people’s needs. It is a
continuous improvement of all sides of social production, on the basis of a
mutually conditioned and complex development and ubiquitous utilisation of
the achievements of science and technology, for a practical solution of socioeconomic problems. In other words, it is an uninterrupted process of introduction
of new technology, new methods of organisation of production and work, based
on achievements of scientific knowledge.
The present paper deals with technical progress and its factors in the Russian
economy, including its pulling sector, the manufacturing industry, in nearly half
a century from the early 1960s to the late 2000s when the current global crisis
broke out. The investigation is aimed at discerning types and factors of technical
progress in the Russian economy and determining their contribution to economic
performance. In this connection it should be stressed that the acceleration of
technical progress is indispensable for Russia’s successful affirmation as one of
the leading world powers in the 21st century, which can be achieved by promoting
innovations and strengthening creativity and competitiveness.
Different aspects of this subject have been discussed in specialist literature.
Suvorov (2002) presented the methods and results of parameter estimations of a
model of technological changes for the Russian economy in the period 1970–1990,
including an estimated macroeconomic production function. He concluded that
economic growth in Russia would have inevitably decelerated and declined even
if the Soviet system had been retained. Trofimov (2002) estimated that a 3.5%
– 4.7% average annual rate of technical progress in the next 15–20 years would
result in the American level remaining twice as high as the Russian level.
Braguinsky and Myerson (2007) elaborated a macroeconomic model of the
Russian transition, which, by emphasising the role of oligarchic property rights,
especially regarding natural resources, can adequately explain both the steep
decline suffered by the Russian economy at the first stage of transition and
the subsequent turnaround. Kalyuzhnova and Nygaard (2008) analysed the
connection between resource nationalism and financial sector intervention in
Russia and Kazakhstan. They found that the hydrocarbon sector boosted domestic
credits through a number of direct and indirect routes. However sovereign wealth
funds that were established in the majority of energy rich emerging economies
8
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
may, to the extent that they enable the selection of winners in specific economic
sectors, create path dependency or exacerbate longer term allocative inefficiency
arising from the governance structure associated with resource nationalism.
The contemporary situation in Russia’s manufacturing is characterised by
diminishing competitiveness, segmentation, and structural problems of growth.
Therefore it is necessary to strengthen sectoral competitiveness by raising the
efficiency of production. A particular problem of Russian manufacturing is its
unbalanced technological capital and an inadequately efficient use of the latter’s
components. Thus an extreme obsolescence of equipment and a low level of
expenditure on research and development (R&D) coexist with relatively high
indicators of applied information and communication technologies (ICTs),
endowment with qualified cadres and a relatively developed organisational
infrastructure: R&D divisions and computer networks with ISO (International
Organisation for Standardisation) certificates on management quality standards.
All this evidences the necessity of integrating innovations with the investment
process (cf. Golikova et al., 2007).
Ahrend (2004) investigated a wide range of issues related to industrial
restructuring in Russia. Based on sectoral data, he particularly examined labour
productivity and unit labour costs (ULCs), and revealed comparative advantages
for several industrial sectors. He found that from the late 1990s onwards there
were impressive productivity increases in all major sectors, with the exception of
those which were still predominantly state-controlled or suffered from strong state
interference. Relative ULCs also adjusted considerably, as less competitive sectors
experienced relatively slower wage growth and larger workforce reductions.
However international competitiveness, as measured by revealed comparative
advantage, remained limited to a small number of sectors that mainly produced
primary commodities, in particular hydrocarbons, with a tendency to further
specialise in resource-based exports.
In this context the report by Golikova et al. (2007) already mentioned above
focused on a firm-level microeconomic analysis, carried out by the method of
direct interviews with top managers of Russia’s representative manufacturing
companies. Ahrend, de Rosa, and Tompson (2007) examined the development
of Russian and Ukrainian industry during the period 1995–2004 in an effort to
ascertain to what extent Russian manufacturing had shown signs of succumbing
to “Dutch disease”. They emphasised that Russia and Ukraine had begun to
implement a similar strategy of market reforms with broadly similar institutions,
industrial structures and levels of technology, the main difference being Russia’s
9
Economic Annals, Volume LV, No. 186 / July – September 2010
far greater mineral wealth. In their opinion Ukraine could provide a rough
approximation of how a resource-poor Russia might have developed over the
transition.
The present paper has the following structure. After some theoretical
considerations the main characteristics of Russia’s long-term economic growth
will be examined, with a special emphasis on its capital coefficients, important
from the viewpoint of technical progress. This will be followed by a detailed
investigation of various types and factors of technical progress, employing the
analytical tools of both the neoclassical and endogenous growth theories. Then
structural changes and the economic role of foreign direct investment (FDI) will
be analysed. Finally, the relevant conclusions will be drawn.
2. On the Function of Technical Progress
The technical progress function is a concept originally developed by Kaldor
(1957) to explain the growth rate of labour productivity as a measure of technical
progress, which idea is also accepted in this paper. Kaldor described his function
in the following statements:
1. The larger the growth rate of capital/input per worker, the larger the growth
rate of output per worker, or labour productivity. The latter is thus explained
by the growth rate of capital intensity.
2. In equilibrium, capital/input per worker and output per worker grow at the
same rate, the equilibrium growth rate.
3. At growth rates below the state of equilibrium, the growth rate of output per
worker is larger than the growth rate of capital/input per worker.
4. At rates above the equilibrium state, the growth rate of output per worker is
smaller than the growth rate of capital/input per worker.
Let us set off from the standard neoclassical production function (see Solow,
1956, 1957) presented as follows:
,(1)
where Y is output, AO is a multiplier of efficiency, K is capital, L is labour, t is
time, while αO, βO, and λ are the elasticity of output by capital, labour, and
time, respectively. It is assumed that αO+βO =1, from which βO =1–αO, and that,
10
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
in a situation of equilibrium, the parameter αO corresponds to the profit share.
Furthermore, in this case it is also true that
.(2)
By putting in a logarithmic form both sides of this relation, we obtain
(3)
If AO =1, then lnAO =1. Thus, in order to quantify the role of embodied technical
progress in productivity growth, the standard neoclassical model can be written
down in the following form:
,(4)
In relation (4), productivity growth is broken down into three main components.
The first component is the embodied technical progress, showing the effect of
change in capital intensity, the second is neutral technical progress, or total factor
productivity (TFP, elasticity of output by time) and the third is a logarithmic
residual (∆ε), which for the most part depends on cyclical fluctuations. Thus the
standard neoclassical model essentially assigns change in productivity to the
effect of two factors: embodied technical progress and TFP.
For the rates of economic growth, the following relation can be defined:
.(5)
Here the expression
can be interpreted as the rate of technical progress,
or TFP. This residual implies that fluctuations in output are closely followed by
technological changes.
Thus we have a dynamic production function of a Cobb-Douglas type, which
is first-degree homogeneous, with a variable marginal efficiency and a constant
elasticity of output and which has an elasticity of factor substitution equalling
unity. This function is characterised by constant returns to scale, a situation when
11
Economic Annals, Volume LV, No. 186 / July – September 2010
a proportional increase in the quantity of all production factors used leads to an
increase in output in the same proportion. Applying it to the Russian economy,
the parameter values cited in Table 1 were obtained by the ordinary least squares
(OLS) method for the period 1960–2008 (see the initial data in the Appendix).
Table 1. Parameters of the neoclassical production function for Russia
Sphere
National economy
Manufacturing
AO
4.949
2.92
lnAO
1.599
1.072
αO
0.372
0.43
βO
0.628
0.57
λ
0.00037
0.00023
Source: calculated from the Appendix.
Economic growth is essentially an interaction of fundamental production
factors, which results in the emergence of output. On this basis Simon Sr. (2008)
elaborated an endogenous growth model that can map three fundamental types
of technical progress, and thus economic growth and development, based on
immobile, mobile, and creative effects. These effects reflect learning by doing, the
equipment of workers with physical capital (fixed assets, arable land, and mineral
resources) and the joint result of research intensity and education, respectively.
The first two components operate at the place of application of new technology,
the third one at the place of its creation. Any type of technical progress emerges
as a common effect of several growth factors; therefore its mapping function is a
complex factor.
In the Simon model1, Y is the volume of output (gross domestic product or value
added), K is fixed capital, L is employment, M means working and H schooling
years, R is the number of researchers, i.e. scientists and engineers engaged in
R&D, O is oil and gas resources, Z is arable land, and t is time in years. All these
variables are a function of time. The time index (t) is put out in the case of retarded
effects. In the formulas, a capital letter denotes a function and a small letter a
parameter (except the variable t, see a detailed description in the Appendix).
The model in its full form can be written down as follows:
Y = gM exp[FK(GI + GM + GKR + GO)],(6)
where the parameter g is the output produced without fixed capital during a
working year that approximately corresponds to an economy’s initial level of
1
12
First called so by Ligeti (2002: 134).
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
productivity. Among the components in parentheses, GI is a function concerning
the immobile, GM the mobile, and GKR the creative technical progress, whereas
GO is a function pertaining to the effect of oil and gas resources.
In formulas:
GI = 1– exp{–gI FK – gZ FZ};
GM = gM FK exp(–gKM FK – gZM FZ);
GKR = GH GR GT ,
where GH = gH FH exp(–gKM FK), GR = 1 + gR FR 2, and GT = exp(gTΔt), where
Δt = t – 1950.
GO = gO FO exp(–gHO FH – gOO FO – gZO FZ).
The parameter gO of the oil factor is positive, the other parameters are related to
negative effects. Education (FH) negatively affects the return to oil factor because
the creative activity in mining is mostly absorbed by the exploration of oil and
gas resources. Therefore the latter’s separately accountable result is relatively
smaller. In the approximate formula for a national economy, this relationship
appears in an inverse form. Among the two other negative effects, the first
(gOO FO) is connected with the fact that countries immensely rich in oil and gas
annually extract relatively less of their reserves; the second (gZO FZ) indicates
that in agrarian countries the economic importance of oil and gas production is
usually smaller. A positive feature of relation (6) is that it makes the effect of oil
and gas resources on economic growth easily measurable. However, at a national
economy level, the formula GO yields realistic results concerning the role of the
oil factor only in the case of countries having great oil and gas resource intensity.
Intensity functions:
FK = ln (1 + nK K/L) (capital intensity function);
FH = ln (1 + nH H/L) (education function);
FR = ln (1 + nR Rt–2 /L) (research intensity function);
FZ = ln (1 + nZ Z/L) (arable land intensity function);
FO = ln (1 + nO Ot–1/L) (mineral resource intensity function).
13
Economic Annals, Volume LV, No. 186 / July – September 2010
The normalising coefficients are nK = 1/385, nH = 1, nR = 1, nZ = 1, and nO = 1/1000,
where the parameter nK refers to the 2000 dollar prices. These are rounded values,
which do not differ significantly from the estimated ones.
Simon Sr. considered the rise in productivity (Y/L, Y/M) due to technical progress
embodied in physical and human capital as the main characteristic of economic
development. He denied the existence of disembodied technical progress,
depending exclusively on time. In this connection, it is noticeable that Kaldor
(1957) in his function of technical progress, like Simon Sr., counted on the rise in
the elasticity of output by fixed capital owing to an increasing intensification of
production, but in contrast to the latter author, regarded the given phenomenon
through the prism of investment. The Kaldorian growth model based on a
function of technical progress assumes a single relationship between increases in
capital and productivity, which includes the effect of both factors. It indicates at
what rate labour productivity grows in the course of rising capital accumulation
which makes possible an increasing use of inventions. Technical progress in
Kaldorian terms is realised in the wake of investment; thus the function of
technical progress is closely related to an investment function. Investment is a
function of the growth rate of production through the accelerator effect, and the
relationship between capital and production is also a function of the expected
profit rate (cf. Mátyás, 1999: 541, 543).
In Schumpeter’s theory (see Schumpeter, 1939), technical progress, or rather
innovation, is the driving force of both economic growth and structural
transformation. In the course of creative destruction, the economic position of
sectors based on old technology is driven back, whereas sectors related to new
technology begin to rise. Retrospections in economic history (e.g. Freeman
and Soete, 1997) indicate that creative destruction occurring under the impact
of technological development took place primarily in industry. According to
analysts (Verspagen, 2000), it was in the 1990s that an innovation starting a
new Kondratieff cycle, or rather the radical renewal of ICTs as a result of several
innovations, first of all exerted its effect not in manufacturing, but in the field of
services, where it brought spectacular changes.
14
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
Table 2. Parameters of the Simon model
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
Denotation
g
gI
gM
gH
gR
gT
gZ
gKM
gZM
gO
gHO
gOO
gZM
Estimated value
522
0.0781
0.319
0.273
278
0.0065
0.082
0.34
0.30
1.94
1.54
0.47
0.75
t statistics
22.46
22.45
22.42
22.29
17.44
20.28
20.95
-22.52
-19.14
16.45
-19.04
-19.34
-8.46
Source: Simon Sr. (2008: 20).
Technical progress can also be interpreted with the help of the Simon model
described above, which is first-degree homogeneous, similarly to the neoclassical
production function. As its parameters were determined on the basis of a
worldwide investigation using data on 131 countries (see Table 2), this is a world
model supposed to be applicable for any country.2
Similarly to the Solow model, the returns to factors of technical progress here can
be written down additively by a logarithmic conversion of both sides of relation
(6). The difference is that in our case the point is the returns to factors of technical
progress, except labour. For this investigation, the following form of the Simon
model was used with the parameters listed in Table 2:
Δln (Y/gM) = ΔFKGI + ΔFKGM + ΔFKGKR + ΔFKGO + Δε,
(6a)
where ε is the estimation error and Δε characterises the deviations from the world
level, reflecting changes which do not explicitly figure in the model. Thus, joint
factor efficiency can be compared to international standards.
2
See Simon Sr. (2005). Here the list of investigated countries can be found. Russia does not
figure explicitly among them, but the former Soviet Union does.
15
Economic Annals, Volume LV, No. 186 / July – September 2010
Table 3. Fit of the Simon model for Russia
(Dependent variable: Y/M)
Number of
observations
National economy*
343
Manufacturing
196
Sphere
Annual
0.9624
0.6846
R2
Cumulative
0.9994
0.9933
Standard error (%)
Annual Cumulative
3.8
0.9
10.1
2.3
* Aggregated
Note. Here R 2 is the uncorrected coefficient of determination, considering that the parameters of
the model were not estimated specially for Russia.
Source: calculated from the Appendix.
As is visible in Table 3, the high determination fits the actual productivity values
of Russia, and the standard errors are also acceptable. The cumulative results
are better than the annual ones, i.e. the estimation errors do not cumulate but
decrease in time. This is a general feature of the fit of this model, describing in
essence the process of economic development.
3. Main Growth Characteristics
What were the general conditions of long-term economic growth in Russia?
In the period under consideration, the Soviet model, designed for a speedy
shift from a relatively backward nation3 to a modern industrial society, showed
symptoms of a dysfunctional development. Though Khrushchev made an early
attempt to decentralise economic management in the late 1950s and early 1960s,
his heavy-handed approach determined the failure of this experiment. The
economic reform announced by Brezhnev and Kosygin in 1965 aimed at widening
the autonomy of enterprises and making them more profit-oriented. Economic
bureaucracy was reorganised following the branch principle of management, and
associations of industrial enterprises were created, as well as research institutes
for scientific planning.
However the events in Czechoslovakia in 1968 ushered in an era of
recentralisation in the over-industrialised Russian economy, which needed
constant adjustments, whereas central planners turned to be unable to deal with
increasing environmental and other problems. Monopolistic producers and
3
16
One should not forget that by the outbreak of World War I, Tsarist Russia had already become
the fifth most developed industrial nation in the world. Cf. Samuelson and Nordhaus (2005).
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
risk-averse managers (“red directors”) lacked the impetus to innovate, which
led to technological backwardness as the Schumpeterian creative destruction
(see e.g. Mátyás, 1999: 293–294) failed to materialise. Moreover, guaranteed full
employment favoured labour-intensive production and disguised unemployment
hidden inside enterprises, as pointed out by Kornai (1993), Balcerowicz (1995),
and others. Soft budget constraints resulted in a wasteful utilisation of resources
when the costs of non-profitable production were borne solely by the Soviet
state. Limited exposure to international trade made domestic production
uncompetitive, except for raw materials and some military goods.
Gorbachev’s perestroika (1985–1991) re-enacted the 1965 self-accounting
enterprise reform in the 1987 Enterprise Law and introduced various forms of
property ranging from cooperatives to individual proprietorships. But its negative
consequence was the fragmentation of production units as cooperatives emerged
within industrial enterprises in accordance with the 1988 Law on Cooperation.
Despite the recognition of private property perestroika was unsuccessful in
questioning state ownership and had died out completely by the early 1990s.
It was the collapse of the Soviet Union in December 1991 that gave a decisive
impetus to economic transition in Russia. However, the Russian transition
turned out to be a nomenclature revolution, as the power elites successfully
consolidated their political dominance with economic wealth. The shock therapy
carried out under Yeltsin’s presidency (1991–1999) and initially connected with
the name of Yegor Gaidar intended to put the economy on a rebound growth
track, but this was completely achieved only after the default of 1998. Although
Russia liberalised its economy, it had long been unable to maintain discipline
through hard budget constraints and to contain tunnelling.4 The state was
captured by a narrow set of vested interests, while capital flight severely undercut
investment. Privatisation has not created effective corporate governance, despite
the fact that it introduced new owners of plants and equipment. This situation
prolonged the transformational crisis. As a consequence the Russian economy,
and especially its manufacturing sector, showed the first perceptible signs of
improved performance only in the wake of an increase in oil prices at the turn of
millennium, which actually coincided with Putin’s coming to power (see Rosser
and Rosser, 2004: 272–295). As for manufacturing, the revaluation of the rouble
in the early 2000s encouraged Russian enterprises to cut their costs and raise
competitiveness by applying advanced technologies (Weiner, 2004: 5).
4
Tunnelling implies expropriation of assets and income belonging to minority shareholders,
as well as theft through either rule of law or administrative control (World Bank, 2002: xviii).
17
Economic Annals, Volume LV, No. 186 / July – September 2010
Table 4. Average annual change rates of GDP and MVA
(at comparable prices of 2000, %)
Period
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1991–1998
1999–2008
Gross domestic product
Russia
EU-15
US
2.54
2.98
3.25
3.73
3.52
3.54
0.59
2.07
2.77
5.16
4.99
4.19
3.58
3.16
3.19
2.47
2.44
3.26
-6.71
1.96
3.08
6.84
2.17
1.39
Manufacturing value added
Russia
EU-15
US
2.78
2.67
3.43
5.89
3.39
3.45
-2.20
1.46
3.39
8.62
5.90
4.39
5.86
2.57
3.04
3.25
1.75
2.93
-13.38
1.20
4.08
7.77
1.67
2.83
Calculated from: Народное хозяйство РСФСР/РФ, ЦСУ/Госкомстат, Москва; Poccийcкий
cтaтиcтичecкий ежегодник, Poccия в цифрах, Национальные счета Росcии, Госкомстат/
Poccтaт, Мocквa; National Accounts Statistics, UN, New York; Main Economic Indicators,
National Accounts, OECD, Paris; International Yearbook of Industrial Statistics, UNIDO,
Vienna; Statistical Abstract of the United States, Bureau of the Census, Washington, D.C., various
volumes; Kuboniwa (1997); Eurostat, New Cronos database; U.S. Department of Commerce,
Bureau of Economic Analysis.
The data in Table 4 show Russia’s rate of economic growth between 1961 and
2008 as compared to the European Union (EU-15) and the United States. It is
visible that Russia’s manufacturing value added (MVA) increased on average
somewhat more rapidly than gross domestic product (GDP) if one regards the
whole investigated period. In this respect Russia’s development was similar to
that of the US, but not the EU, where the situation was the reverse. The country’s
average growth rate slightly exceeded that of the EU exclusively in manufacturing,
being below that of the US macro economically. However if shorter periods are
considered the picture becomes more subtle. Thus in terms of GDP growth, the
Soviet era (1961–1990) was unequivocally more successful than the transition
(1991–2008), whereas MVA by 2008 attained only 67% of its 1990 level. Between
1961 and 1990 a deceleration of growth could be observed in both the national
economy and manufacturing, which later turned into a deep transformational
recession, whereas the recovery and consolidation after 1998 resulted in high
rates of economic growth in both spheres (but especially in manufacturing) well
above those of the European Union and the United States.
It should be noted that during the Soviet era GDP was not officially calculated,
and subsequent estimates gave different results (see the relevant discussion in
Rosefielde, 2003 and Harrison, 2003). In this paper the corresponding indicator
18
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
of Soviet Russia was calculated on the basis of Kuboniwa’s (1997) research. The
national income statistics of the Soviet Union (Material Product System – MPS)
differed from the UN methodology (System of National Accounts - SNA) in
that it comprised only the sectors of material production and did not include
depreciation, i.e. the consumption of fixed capital.
Table 5. GDP per inhabitant
Year
1960
1970
1980
1990
1998
2008
Russia
EU-15
US
in U.S. dollars of 2000, at PPP*
5 601
8 525
14 039
8 520
12 873
18 648
11 387
16 844
23 037
13 564
20 909
28 895
7 793
23 802
33 323
15 801
28 185
38 849
Russia/EU-15 Russia/US
in %
65.7
39.9
66.2
45.7
67.6
49.4
64.9
46.9
32.7
23.4
56.1
40.7
* At purchasing power parity. USD 1 = Rbl. 5.40 and EUR 0.92.
Calculated from: see Table 4, as well as OECD Factbook: Economic, Environmental and Social
Statistics, Paris, various volumes; Heston, Summers, and Aten (2006).
From the beginning, the development of the Russian economy was of a catchup nature, as illustrated by data in Table 5. However, these data indicate that
between 1960 and 2008 Russia’s living standard measured by GDP per inhabitant
somewhat declined in comparison to the average level of the EU and rose only
slightly in relation to the United States. In this respect a convergence had been
clearly observable until 1980, after which an opposite tendency prevailed.
Nevertheless between 1998 and 2008 Russia’s GDP per inhabitant almost doubled
relative to the corresponding EU and US indicators.
Catch-up development can also be measured in terms of wage convergence,
which is also an important aspect. Available data allows us to consider this
question by taking a look at long-term trends in monthly wages in Russian
manufacturing. From data in Table 6 it can be calculated that in 1961–2008,
real wages in Russia’s manufacturing increased on average by 2.05% per annum.
This figure can be contrasted to the 3.13% average increase in manufacturing
productivity in the same period (see the Appendix), which was also more rapid
than the 2.78% increase in MVA (Table 4), showing that Verdoorn’s law was
generally valid. The growth rate of manufacturing wages was thus lower than
that of productivity, which is a healthy tendency from an economic point of view.
It showed a decelerating trend in Soviet times, followed by a sharp decline during
19
Economic Annals, Volume LV, No. 186 / July – September 2010
the transitional crisis and an unprecedented acceleration thereafter. The causes
of this acceleration were mostly of political nature, as the ruling elites were busy
ensuring their continued electoral support. The relative wage level in comparison
to the United States increased 2.4 times between 1960 and 2008. Here there was
a constant convergence until 1990, followed by an abrupt divergence until 1998.
As a result of the ensuing stabilisation, Russia’s manufacturing wages by 2008
again reached about two-fifths of the American level, similar to the situation in
1990 (Table 6).
Table 6. Real wages in Russian manufacturing
2000 U.S. dollars
Average annual
Year
at PPP
Index: 1960 = 100.0
change
per month*
in %
1960
1970
1980
1990
1998
2008
397.85
567.56
802.15
1093.19
412.19
1055.54
100.0
142.7
201.6
274.8
103.6
265.3
–
3.62
3.52
3.15
-11.48
9.86
Relative
wage level in
percentage
of the United
States
17.7
22.1
30.6
43.2
16.0
42.0
* USD 1 = Rbl. 5.58.
Calculated from: Народное хозяйство РСФСР/РФ, Poccийcкий cтaтиcтичecкий ежегодник,
Poccия в цифрах; Statistical Abstract of the United States; Yearbook of Labour Statistics, ILO,
Geneva, various volumes; Heston, Summers, and Aten (2006).
Erdős (2006: 110) emphasises that catching-up is impossible without accelerating
technological development and requires an increase in R&D spending. The
difference between fast and slowly developing economies mostly arises from the
fact that the former sooner adopt or introduce new technology into production,
which is partly the result of their own R&D. As industry, primarily manufacturing,
today is still to a significant extent the main field of technological development,
it is mostly here that goods embodying modern technology must be produced.
Therefore economic policy aimed at accelerating technological development also
appears as a part of industrial policy.
20
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
Table 7. Gross expenditure on research and development (GERD)
in percentage of GDP
Year
1990
1998
2008
Russia
2.03
0.95
1.03
EU-15
1.96
1.84
1.99
United States
2.63
2.58
2.76
Sources: UNESCO Data Centre, Institute for Statistics, Montréal; Eurostat, New Cronos database.
As seen from Table 7, Russia’s R&D expenditure in relation to GDP declined
by about a half between 1990 and 2008, having become by a half and by twofifths lower than the respective indicators of the EU and US. This was a negative
consequence of the collapse of the Soviet Union, which, inter alia, resulted in a
freeze of many research programmes.
As already noted above, growth mechanism, or the mechanism of technical
progress, is an interaction of various production factors. Therefore in order
to reveal some general relations it is expedient to compare output to the main
production factors (or vice versa) one by one. In specialist literature the subjects
of such investigations are most usually investment (I), capital stock (fixed capital,
K), and labour (L). But the economic impact of technical progress cannot be
considered in isolation. Development needs investment, which supposes saving,
and it is necessary to examine efficiency and its determinant factors to see what is
a sufficient level of saving. The most important element of this system of relations
is technological development (cf. Erdős, 2006: 21), the process of which should be
examined together and in connection with two capital coefficients – the capitaloutput ratio (K/Y) and its incremental type, which relates investment share in
GDP to the rate of GDP growth, since economic growth is inseparable from
capital and investment. The capital-output ratio is a stock and the incremental
capital-output ratio (ICOR) is a flow variable. The former is the inverse of capital
productivity (Y/K), while the latter shows the rate of investment attainable with a
1% increase in the volume of GDP, thus reflecting the efficiency of investment. At
a given capital coefficient, the acceleration of technological development can lead
to faster economic growth only if the rate of investment has risen (Ibid. 13–14).
21
Economic Annals, Volume LV, No. 186 / July – September 2010
Table 8. The capital-output ratio in Russia
(K/Y, annual averages)
Period
National economy
Manufacturing
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
2.26
1.60
3.24
1.07
1.41
2.00
3.05
2.09
1.31
3.58
1.05
1.18
1.49
3.72
Manufacturing/
National economy
0.92
0.82
1.10
0.98
0.84
0.75
1.22
Calculated from: see the Appendix.
In the course of nearly five decades of economic development in Russia there
was capital deepening, as the country’s capital-output ratio (K/Y) seriously
deteriorated in the course of transition to a market economy in comparison to
the average of the Soviet era. However, even then the indicator was continuously
increasing in points if shorter periods are considered. Its value was on the whole
lower in manufacturing than at a macro level, although after 1990 the reverse
became true (see Table 8).
Table 9. The ICOR coefficient in Russia
(annual averages, based on constant price data)
Period
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
Rate of investment*
(1)
17.52
21.34
11.92
16.32
20.61
24.31
7.94
Growth rate of GDP
(2)
2.54
3.73
0.59
5.16
3.58
2.47
6.84
ICORt–1
(1:2)
6.90
5.72
20.20
3.16
5.76
9.84
1.16
* Share of gross fixed capital formation in GDP considering a one-year lag.
Calculated from: Народное хозяйство РСФСР/РФ, Poccийcкий cтaтиcтичecкий ежегодник,
Poccия в цифрах, Национальные счета Росcии, various volumes; Kuboniwa (1997).
The evaluation of the supply role of investment on the basis of the ICOR indicator
is very problematic, as the capital-replacing and labour-saving role of investment
22
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
and the time lag are not taken into consideration. Therefore the relevant indicator
for Russia was calculated considering a one-year lag. As is apparent from Table 9,
this indicator differed significantly from its average value in the individual phases
of Russia’s development, being on the whole worse during transition then under
socialism. But regarding shorter periods, investment efficiency continuously
worsened even in the socialist era. A significant improvement in this respect
occurred only after the default of 1998, although this happened primarily due to
a drastic fall in the rate of investment. However, it cannot be disregarded that the
growing capital stock absorbed an increasing part of investment for replacement
requirements, and that with rising wages the share of labour-saving investment
presumably expanded. Therefore the dynamics of investment efficiency seems to
be worse on the basis of the ICOR indicator than in reality.
Table 10. Productivity (Y/L) growth in Russia
(1960 = 1.00)
Sphere
National economy
Manufacturing
Manufacturing/
National economy
1970
1.40
1.69
1980
1.73
2.66
1990
2.15
4.00
1998
1.46
2.22
2008
2.64
4.39
1.21
1.54
1.86
1.52
1.66
Calculated from: Народное хозяйство РСФСР/РФ; Poccийcкий cтaтиcтичecкий ежегодник,
Poccия в цифрах; International Yearbook of Industrial Statistics; Yearbook of Labour Statistics,
various volumes.
Russian data on productivity change are contained in Table 10. Two main
conclusions can be drawn from them.
1. Productivity in Russia rose continuously until the end of the Soviet era, both in
the national economy and manufacturing. Between 1990 and 1998 it declined
by five-sevenths in the former sphere and by about a half in the latter. During
the post-default recovery, it roughly doubled in both spheres.
2. In the investigated period productivity was rising more rapidly in manufacturing
than in the total economy.
What was the role of productivity and staff change in Russia’s economic growth?
Using the relation ΔlnY = Δln(Y/L) + ΔlnL, the data in Table 11 were obtained.
23
Economic Annals, Volume LV, No. 186 / July – September 2010
Table 11. Contribution of productivity and staff change
to economic growth in Russia
(in %, ΔlnY/L = 100.0)
Factor
1961–2008 1961–1990 1991–2008 1961–1970 1971–1980 1981–1990 1999–2008
Δln (Y/L)
Δln L
80.6
19.4
69.8
30.2
Δln (Y/L)
Δln L
112.5
-12.5
87.6
12.4
National economy
193.9
67.2
-93.9
32.8
Manufacturing
–
63.7
–
36.3
60.4
39.6
94.2
5.8
89.8
10.2
79.1
20.9
127.5
-27.5
91.4
8.6
Calculated from: see Table 10.
The calculations show that on average over a five decade period (1961–2008),
rising productivity accounted for about four-fifths of economic growth in
Russian manufacturing and expanding employment for the remaining onefifth, The growth of output was exclusively ensured by the rise in productivity,
compensating for the contraction in employment. In the Soviet period (1961–
1990), augmentation of the workforce gave almost a third of macroeconomic
and an eighth of manufacturing growth, whereas under transition (1991–2008)
it was productivity rise that accounted for total growth in the national economy.
Considering shorter periods, staff change played a diminishing role between 1961
and 1990, and in manufacturing it even became negative after 1980. At the same
time during the post-default consolidation of 1999–2008 improving productivity
ensured about nine-tenths of the achieved rate of GDP and MVA growth.
4. Technical Progress and Its Determinants
There is no technical progress without economic growth, which is affected by
many factors, as discussed above. Of these two are of key importance: (1) physical
and human capital accumulation per inhabitant or per person employed, and (2)
changes reflecting technical progress and the related structural shifts, expressed
by the indicator of total factor productivity. All other factors affect the rate of
economic growth through these two processes. Whereas economic growth is a
quantitative change, economic development leads to qualitative improvements
in the use of production factors, accompanied by structural change. In practice,
however, quantitative growth is closely related to qualitative development, as all
countries and social systems are, in a certain sense, permanently developing.
24
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
Table 12. Total factor productivity in the Russian economy
Average annual change
Period
Y
K
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
2.54
3.73
0.59
5.16
3.58
2.47
6.84
4.82
7.05
1.20
7.96
7.50
5.70
1.42
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
2.78
5.89
-2.20
8.62
5.86
3.25
7.77
5.48
7.83
1.68
10.16
8.04
5.33
2.19
in %
L
A
National economy
0.49
0.44
1.11
0.41
-0.55
0.49
1.66
1.16
1.40
-0.09
0.28
0.17
0.67
5.89
Manufacturing
-0.34
0.61
1.11
1.89
-2.72
-1.37
3.05
2.51
1.20
1.72
-0.88
1.46
0.64
6.47
Contribution to value
added growth
K
L
A
70.5
70.2
76.3
57.4
77.9
85.8
7.7
12.2
18.8
-59.4
20.1
24.6
7.3
6.2
17.3
11.0
83.1
22.5
-2.5
6.9
86.1
84.9
57.2
–
50.7
59.0
70.5
12.1
-6.8
10.7
–
20.2
11.6
-15.4
4.6
21.9
32.1
–
29.1
29.4
44.9
83.3
Source: calculated from the Appendix.
What characterised the change of main growth factors and TFP in the Russian
economy during the investigated period?
To answer this question the TFP indicator for Russia was calculated using relation
(5) with the parameter values cited in Table 1. From the obtained results in Table
12 it is apparent that between 1961 and 2008 fixed assets in Russia increased more
rapidly than GDP and value added both at a macro level and in manufacturing. The
only exception was the Putin consolidation of 1999–2008. Thus capital intensity,
K/L, became higher, implying that this general regularity was valid for Russia
also. (This can also be interpreted as a rise in the level of capital accumulation,
to which the neoclassical approach likes to reduce economic development. Cf.
Slay, 2005: 7.) Overall fixed capital made the highest contribution to economic
growth, followed by total factor productivity and employment. However, on the
whole manufacturing employment was diminishing and thus its role in MVA
growth was negative regarding the whole study period. TFP usually showed a
slower rise in the national economy than in manufacturing, except during the
period 1991–2008 when it was falling, along with MVA (see Table 12).
25
Economic Annals, Volume LV, No. 186 / July – September 2010
Table 13. Factors of productivity growth in Russia according
to the standard neoclassical model
Period
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
Annual average in %
In percentage of Δln (Y/L)
Δln (Y/L) α∆ln (K/L) λ ∆t
∆ε α∆ln (K/L) λ ∆t
∆ε
National economy
2.023
1.569
1.781 -1.327
77.6
88.0 -65.6
2.556
2.121
1.837 -1.402
83.0
71.9 -54.9
1.136
0.648
1.599 -1.111
57.0
140.8 -97.8
3.381
2.232
1.659 -0.510
66.0
49.1 -15.1
2.122
2.171
1.763 -1.812
102.3
83.1 -85.4
2.303
1.960
1.754 -1.411
85.1
76.2 -61.3
5.943
0.276
1.575 4.092
4.6
26.5 68.9
Manufacturing
3.081
2.441
1.097 -0.457
79.2
35.6 -14.8
4.616
2.766
1.210 0.640
59.9
26.2 13.9
0.523
1.900
0.930 -2.307
363.3
177.8 -441.1
5.258
2.875
1.005 1.378
54.7
19.1 26.2
4.507
2.812
1.261 0.434
62.4
28.0
9.6
4.082
2.612
1.371 0.099
64.0
33.6
2.4
6.834
0.653
0.905 5.276
9.6
13.2 77.2
Source: calculated from the Appendix.
The data in Table 13 show that Russia’s average growth rate of productivity in
the period under consideration was higher in manufacturing than in the total
economy, with the exception of the reform period of 1991–2008 when the reverse
was true.
What was the role of different types of technical progress in Russia’s productivity
growth? To quantify this role, relation (4) was applied considering the relevant
data from the Appendix. Assuming that the value of parameter α had already been
known both for the national economy and manufacturing (see Table 1), only the
second component of the relation at issue had to be estimated here. The obtained
results are summarised in Table 13. They show that in the investigated period
embodied technical progress generally ensured the largest part of productivity
growth in Russia. The share of this factor and TFP, or neutral technical progress,
tended to rise in manufacturing over the Soviet era, while at a macro level it
decreased after 1980. Embodied technical progress managed on the whole to
preserve its leadership during the transition (1991–2008), despite the fact that it
became marginalised after 1998.
26
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
One of the most serious problems with the neoclassical model is that the concrete
causes of changes in TFP are not known. It is primarily this problem that theories
of endogenous growth have tried to solve. The most obvious explanation is that
it is not enough to consider only physical (fixed) capital, since in the modern
economy a very significant role is also played by human capital, i.e. the education
of workers and R&D. In essence it is this conception that took a concrete form in
the endogenous growth models known from specialist literature (cf. Simon Jr.,
2006).
Here we will endeavour to surmount this problem by using the Simon model
described above. For the purpose of our investigation relation (6a) was applied
considering Russia’s data from the Appendix. The results thus obtained are
shown in Tables 14 and 15.
Table 14. Returns to factors of technical progress in Russia’s economy*
Period
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
(0)
2.023
2.556
1.136
3.383
2.121
2.188
5.946
Annual average in %
(1)
(2)
(3)
(4)
1.540 0.394 0.136 0.010
2.065 0.373 0.176 0.013
0.772 0.315 0.073 0.006
2.991 0.271 0.233 0.014
1.718 0.299 0.148 0.011
1.599 0.473 0.151 0.013
3.990 1.701 0.381 0.030
(5)
-0.057
-0.071
-0.030
-0.126
-0.055
-0.048
-0.156
In percentage of Δln (Y/gM)
(1)
(2)
(3)
(4)
(5)
-2.8
0.5
6.7
76.1 19.5
-2.8
0.5
6.9
80.8 14.6
-2.6
0.5
6.4
68.0 27.7
-3.7
0.4
6.9
8.0
88.4
-2.6
0.5
7.0
81.0 14.1
-2.2
0.6
6.9
73.1 21.6
-2.6
0.5
6.4
67.1 28.6
* Calculated from aggregated data.
Notes. (0) = Δln(Y/gM), (1) = ΔFKGI, (2) = ΔFKGM, (3) = ΔFKGKR, (4) = ΔFKGO, (5) = Δε.
Source: see the Appendix.
Table 15. Returns to factors of technical progress in Russia’s manufacturing
Period
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
(0)
3.084
4.619
0.525
5.267
4.508
4.081
6.838
Annual average in %
(1)
(2)
(3)
1.036
1.758
0.444
1.986
2.310
0.577
0.094
0.360
0.092
2.992
2.165
0.553
1.893
2.263
0.568
1.232
2.400
0.588
1.080
4.807
1.238
(4)
-0.154
-0.254
-0.021
-0.443
-0.216
-0.139
-0.287
In percentage of Δln (Y/gM)
(1)
(2)
(3)
(4)
-5.0
33.6
57.0
14.4
-5.5
43.0
50.0
12.5
-4.0
17.9
68.6
17.5
-8.4
56.8
41.1
10.5
-4.8
42.0
50.2
12.6
-3.4
30.2
58.8
14.4
-4.2
15.8
70.3
18.1
Notes. (0) = Δln(Y/gM), (1) = ΔFKGI, (2) = ΔFKGM, (3) = ΔFKGKR, (4) = Δε.
Source: calculated from the Appendix.
27
Economic Annals, Volume LV, No. 186 / July – September 2010
What conclusions can be drawn from these calculations?
1. The Russian economy’s actual performance was lower than that according to
the model up to the end of the study period. Its rich oil and gas resources were
not of crucial importance from the viewpoint of technical progress.
2. The performance of manufacturing in the selected years deviated more from
that according to the model than the performance of the national economy.
3.At a national economy level, the share of immobile technical progress was
the largest with a diminishing tendency. The mobile technical progress stood
second, with a rising tendency. At the same time the share of creative technical
progress that was in third place somewhat decreased after 1990, whereas the oil
factor continued to play a marginal role.
4. In manufacturing the weight of creative technical progress was much greater
than in the national economy. Moreover between 1961 and 1970 it even had
an absolute dominance. However, because of a constant decline, the leadership
later passed over to mobile technical progress, which retained and strengthened
its leading position up to the end of the study period. The share of immobile
technical progress also increased, which allowed it to come second after 1998.
What characterised the intensity indicators of Russia, in comparison to those of
the United States as representing the advanced world level?
From Table 16 it can be ascertained that between 1960 and 2008 Russia came
nearest to the American level in terms of intensities related to mineral resources
and arable land regarding the total economy, and in terms of capital intensity
regarding manufacturing. Macro economically Russia’s mineral resource
intensity became 8.6 times, its capital intensity 4.3 times, its arable land intensity
1.7 times, and research intensity 1.4 times larger compared to the corresponding
indicators of the United States. On the other hand its education intensity fell back
by about a tenth. At the same time, in manufacturing capital intensity showed a
4.1-fold increase and research intensity a 1.2-fold increase.
The disintegration of the Soviet Union worsened the situation in many respects. As
seen from Table 16 by the end of the investigated period Russia’s capital intensity
had achieved only about a fifth of the US level in the national economy and about
a third in manufacturing, which testifies to a relatively backward technological
base (at least as far as civilian production is concerned). Considering research
intensity the situation had been much better for a long time. In this respect by
1980 Russia managed to attain four-fifths of the corresponding US indicator in
manufacturing and exceed it almost twice at a macro level. However by 2008 the
28
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
brain drain that began with the collapse of the USSR resulted in the decline of the
relative research intensity in Russia to around four-fifths in the national economy,
and to less than a third in manufacturing, as compared to the United States.
Table 16. Intensities in the Russian economy
Indicator,
unit of
measurement
K/L
USD 103
per person
H/L
years
per person
Rt–2/L
per mille
Z/L
hectares
per person
Ot–1/L
tonnes
per person
K/L
USD 103
per person
Rt–2/L
per mille
1960
1970
1980
1990
1998
2008
National economy*
10.97
(5.3)
19.99
(8.5)
35.83
(14.1)
60.68
(21.2)
77.11
(24.7)
83.04
(22.6)
8.91
(104.9)
3.07
(58.9)
10.19
(106.9)
7.54
(111.9)
10.29
(86.8)
10.49
(178.7)
11.71
(99.7)
11.67
(152.2)
11.08
(92.4)
8.81
(110.4)
11.66
(94.9)
6.81
(83.6)
2.45
(90.7)
2.10
(90.5)
1.83
(97.3)
1.76
(112.8)
2.01
(148.9)
1.81
(153.4)
211.36
(135.5)
266.77
383.30
542.89
(177.0)
(435.7)
(861.0)
Manufacturing*
746.38
(1261.6)
758.76
(1160.5)
4.33
(7.8)
3.56
(23.5)
8.45
(11.9)
10.63
(53.7)
56.76
(38.3)
21.67
(60.0)
66.07
(31.9)
15.01
(29.3)
16.25
(17.3)
16.06
(81.6)
29.83
(25.3)
20.58
(61.6)
* In parentheses, Russia in percentage of the United States.
Calculated from: see the Appendix, as well as Statistical Abstract of the United States, various
volumes; The National Science Foundation, Arlington, Virginia, USA.
How did the average elasticity of output by growth factors change over the
investigated period? Data in Table 17 allow us to draw several conclusions in this
connection.
1.The elasticity of output by growth factors has greatly changed and is also
different by sectors, mostly following certain tendencies.
29
Economic Annals, Volume LV, No. 186 / July – September 2010
2. The elasticity by fixed capital at a macro level was on the whole higher in the
Soviet era than during transition. Considering shorter periods, it showed an
increasing tendency between 1961 and 1990, and in 1999–2008 it was higher
in manufacturing than in the national economy.
3. The weight of education was usually greater in the national economy than in
manufacturing.
4. The elasticity by researchers was on the whole better in manufacturing than
in the national economy. After 1990 it deteriorated at a macro level, and after
1998 in both spheres, with a fall in the number of R&D personnel as a result of
increased brain drain and uncertainties brought by market reforms.
5. The role of the time factor increased, as the time of creative economic activity
figured in the model made it possible to produce increasingly large results.
6. The role of arable land in the Russian economy showed a diminishing trend
due to a declining share of agriculture in production and employment, which
will be discussed below.
7. The situation of workers in production is fundamentally determined by the
sum of elasticities of output by the factors L and M, the indicator L+M. If
it is positive it will pay off for the entrepreneurs to draw new workers into
production. If, on the other hand, it is negative, then reducing personnel will be
more advantageous. However the conditions of state socialism in Russia before
1991, when there were soft budget constraints in the economy, substantially
modified this picture. In the investigated period the indicator L+M in the
Russian economy was on the whole positive at a macro level, and negative in
manufacturing where employment had already begun to decline in the 1980s.
Table 17. Average elasticity of output by growth factors in Russia
Period
K
H
1961–2008
1961–1990
1991–2008
1961–1970
1971–1980
1981–1990
1999–2008
3.666
3.354
2.153
1.758
2.518
2.679
0.162
0.132
0.157
-0.038
0.220
0.023
0.499
0.056
1961–2008
1961–1990
1991–2008
4.375
1.880
-1.057
0.113
0.069
0.013
30
R
Δt
Z
National economy*
0.770 0.00647 -0.0285
2.148 0.00398 0.0004
-4.239 0.01062 -0.6043
2.896 0.00184 0.0185
1.422 0.00356 0.0089
0.523 0.00655 -0.0538
-0.185 0.01143 -0.0383
Manufacturing
0.946 0.00442
–
1.546 0.00198
–
1.682 0.00848
–
O
L
L+M
1.513
1.290
2.390
0.747
1.547
1.649
0.093
0.113
0.197
-0.846
0.274
0.355
0.102
0.074
0.135
0.225
-0.833
0.312
0.383
0.121
0.086
–
–
–
-0.056
0.086
1.183
-0.024
0.130
1.197
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
1961–1970
1971–1980
1981–1990
1999–2008
1.268
1.520
1.805
0.217
0.112
0.013
0.366
0.047
2.360
0.912
0.460
-0.235
0.00078
0.00167
0.00349
0.00976
–
–
–
–
–
–
–
–
0.273
0.164
-0.224
0.060
0.343
0.201
-0.201
0.072
* Calculated from aggregated data. Δt = gT FKGKR.
Source: see the Appendix.
Passing over to the question of returns to growth factors, it is expedient to focus
attention on the most important of them from the viewpoint of economic growth,
shown in Table 18.
Table 18. Returns to fundamental growth factors in the Russian economy
(in dollars of year 2000)
Unit of
measurement
K
USD/USD
%
H USD/schooling
year
R
USD 103/
person
National economy
Manufacturing
1960 1970 1980 1990 1998 2008 1960 1970 1980 1990 1998 2008
15.2 10.9
8.2
7.2
5.2
8.7
212
425
600
385
733
340
30.7 16.1
79
4.10 8.12 8.71 7.90 3.40 4.59 3.31
153
16.1 20.4 15.8 32.0
243
416
218
455
7.74 11.21 14.05 5.30 7.06
Source: calculated from the Appendix.
Evaluating these data it can be noticed that between 1960 and 2008 the return
to capital (K) in Russia diminished by two-fifths at a macro level, but increased
1.04 times in manufacturing. At the same time the returns to education rose
3.5 and 5.8 times respectively, although their dynamic increase was temporarily
interrupted by the transformational recession of the 1990s. The returns to research
and development, the other component of human capital, became 1.1 times larger
in the national economy and 2.1 times in manufacturing. Between 1990 and 1998
the latter indicator showed a particularly sharp decline in manufacturing, the
consequences of which had not been surmounted by the end of the study period,
similarly to the total economy.
5. Structural Change and the Role of FDI
Technological development is usually accompanied by profound changes of a
structural character as the economy takes the modernisation road in order to
31
Economic Annals, Volume LV, No. 186 / July – September 2010
raise its efficiency and competitiveness. In Russia there were several waves of
modernisation, such as after the repeal of serfdom in 1861, or Stalin’s socialist
industrialisation during the 1930s.
Available data show that in the period between 1990 and 2008 the share of
agriculture in Russia’s gross value added contracted by almost an eighth, falling
to a level below 5%. However in the total number of persons employed it decreased
by only about 2% to the level below one-tenth, which is still quite a formidable
indicator. At the same time the share of industry in the production of value added
declined from two-fifths to one-third, and in the employed workforce from a
third to a fifth. Although manufacturing managed to preserve its predominance
within Russian industry, the latter’s extractive sectors strengthened their
position, especially in production. The relative weight of services increased from
less than a half to two-thirds in production and from three-fifths to around fivesevenths in employment. Thus Russia’s economy became more service-oriented,
in accordance with global trends (see Table 19).
Table 19. Russia’s value added and employment by economic activity
(in %; national economy = 100.0)
Value added at current prices*
Year
Of which:
Agri- Industculture
ry
Mining Manu- Utilifactuties**
ring
A-B
C-E
C
D
E
1990
16.7
38.1
3.7
1991
14.3
39.0
3.5
1992
7.4
35.1
6.8
24.2
Employment
Services
F-Q
10.2
45.2
27.1
8.4
25.8
2.5
Of which:
IndustAgriry
Mining Manu- Utiliculture
factuties**
ring
C-E
C
D
E
25.4
1.4
Services
F-Q
10.9
28.4
1.6
60.7
46.7
11.1
28.5
1.7
25.4
1.4
60.4
57.5
12.0
27.8
1.7
24.5
1.6
60.2
60.1
1993
8.3
35.7
6.9
27.7
1.1
56.0
12.1
27.8
1.7
24.4
1.7
1994
6.5
34.2
5.2
21.2
7.8
59.3
12.6
25.9
1.7
22.4
1.8
61.5
1995
7.4
28.2
6.7
20.2
1.3
64.4
12.3
24.5
1.6
21.0
1.9
63.2
1996
7.3
29.8
6.6
16.4
6.8
62.9
12.0
23.5
1.7
19.7
2.1
64.5
1997
6.6
29.8
6.3
15.7
7.8
63.6
11.3
22.0
1.7
17.9
2.4
66.7
1998
5.8
30.0
5.2
14.6
10.2
64.2
10.7
21.3
1.6
17.1
2.6
68.0
62.9
1999
7.4
31.2
5.7
15.1
10.4
61.4
14.8
22.3
1.8
18.0
2.5
2000
6.6
31.7
7.1
16.0
8.6
61.7
14.6
23.5
2.0
18.9
2.6
61.9
2001
6.8
28.8
6.9
14.6
7.3
64.4
12.1
24.2
2.1
19.5
2.6
63.7
2002
6.7
28.2
6.8
17.6
3.8
65.1
11.5
24.5
1.8
19.9
2.8
64.0
2003
6.8
27.4
6.7
17.0
3.7
65.8
11.0
24.4
1.9
19.4
3.1
64.6
65.8
2004
6.1
31.5
9.6
18.1
3.8
62.4
10.3
23.9
1.8
19.1
3.0
2005
5.4
32.9
11.0
18.6
3.3
61.7
10.4
23.5
1.9
18.8
2.8
66.1
2006
5.0
32.1
10.7
18.1
3.3
62.9
10.2
23.4
1.8
18.6
3.0
66.4
2007
4.9
31.0
9.9
18.0
3.1
64.1
9.4
23.1
2.0
18.2
2.9
67.5
2008
4.8
29.5
9.2
17.4
2.9
65.7
9.0
22.2
2.0
17.1
3.1
68.8
32
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
* Gross value added including Financial Intermediation Services Indirectly Measured (FISIM).
** Electricity, gas, and water supply.
Calculated from: Poccийcкий cтaтиcтичecкий ежегодник, Poccия в цифрах, Национальные
счета Росcии; National Accounts Statistics; International Yearbook of Industrial Statistics;
Yearbook of Labour Statistics, various volumes.
It is believed that one can speak of a resource-based economy if natural resources
account for more than 10% of GDP or gross value added and 40% of exports (cf.
Kalyuzhnova, 2008: 7). Because of its significant manufacturing industry Russia
cannot be regarded as a purely resource-based economy, though its mining sector
exceeded the 10% production limit in 2005 and 2006 (Table 19). On the other
hand the share of fuels and mining products in Russian exports expanded from
57.4% in 1993 to 74.3% in 2008, whereas the share of manufactures contracted
from 37.3% to 20.1% (calculated from WTO Statistics Database). The latter facts
point to the danger of an excessive development of mining and raw material
branches irreversibly transforming Russia, already significantly dependent on
fuel and energy price fluctuations, into a resource segment of the world economy
(see Gaidar, 2006; Simon Jr., 2010).
Table 20. FDI flowed in Russia, 1990–2008
Period
1990–2008
1990–1998
1999–2008
National economy
Manufacturing
USD million, in current prices
219 147
15 533
203 614
57 565
5 461
52 104
Manufacturing
in % age of
national economy
26.3
35.2
25.6
Calculated from: UNCTAD, FDI/TNC database and national statistics.
Structural changes in the Russian economy since the early 1990s have been
facilitated by FDI inflows, becoming more important after 1998. Overall Russia
attracted USD 219.1 billion of FDI in the period up to the end of 2008, more
than a quarter of which flowed into manufacturing. The overwhelming majority
of it entered the country in the post-default period (see Table 20). Theoretically
direct capital imports can have a decisive role in economic growth, as an
important carrier of technology transfer and a domestic disseminator of modern
corporate governance, to which should be added the widespread external market
connections of affiliated companies importing capital. However, in the case of
Russia foreign capital is, as a rule, only fragmentarily present from the viewpoint
33
Economic Annals, Volume LV, No. 186 / July – September 2010
of the total economy, so that the various favourite effects attributed to it can find
only limited expression (Csaba, 2006: 312; Erdős, 2006: 367; Weiner, 2004: 18).
Table 21. Share of cumulative inward FDI in Russia’s fixed assets
(at 2000 prices, in %)
Sphere
National economy
Manufacturing
1990
0.002
0.008
1998
0.3
0.9
2008
3.4
6.7
Note. FDI data at current prices were deflated with the U.S. investment price index taken from the
U.S. Department of Commerce, Bureau of Economic Analysis.
Calculated from: see Table 20.
Table 22. Elasticity of output by foreign and domestic capital in Russia
(based on the Simon model)
Sphere
National economy
Manufacturing
K
0.800
0.573
1990
1998
2008
KD
K
KF
KD
K
KF
KD
KF
0 0.800 0.858 0.003 0.855 0.887 0.030 0.857
0
0.573 0.706 0.006 0.700 0.795 0.053 0.742
Note. Fixed assets: K = total, K F = foreign, K D = domestic.
Calculated from: see the Appendix.
Although the share of cumulative FDI in the total capital stock went through a
rapid increase between 1990 and 2008, by the end of period it had attained less
than 5% in the national economy and less than 10% in manufacturing (Table
21). As for production effect, in the post-default period the elasticity of output by
foreign capital rose 10 times at a macro and 8.8 times at a manufacturing level,
but still remained far below the elasticity of domestic capital (Table 22).
Foreign capital avoids economies with equilibrium problems and unstable
currencies. An economy with stable prices and exchange rate is capable of
successfully attracting FDI and other external investment sources and thus
accelerating growth, as was shown by the Irish “miracle”. A strict compliance
with contractual obligations is also an important condition, which unfortunately
is frequently missing in Russia. In the longer run the inflow of foreign capital is
not exclusively encouraged by providing various tax allowances, as its profits are
much more favourably affected by an educated workforce which is widely available
in Russia, and a developed infrastructure, which in this case is problematic.
Moreover in the leading economies the development of infrastructure is
increasingly handled as an important condition of improving industrial efficiency
34
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
and one of the decisive determinants of industrial competitiveness (cf. Erdős,
2006: 70-72, 284).
6. Conclusions
Technical progress is an important factor in Russia as one of the leading powers
in the world economy and the politics of the 21st century. Interpreting this
phenomenon as total factor productivity, we can state that in the analysed period,
from the early 1960s to the current global crisis, it made the second largest
average contribution to economic growth after fixed capital, both in the national
economy and manufacturing. It can also be ascertained that it was embodied
technical progress which determined productivity rise in both spheres.
Our research has also shown that the most important factor of technical progress
in Russia has been its immobile component at a macro and its mobile component
at the manufacturing level, while the creative component was third, except in
manufacturing before the early 1970s. The role of mineral wealth represented by
oil and gas resources was marginal in this context. After the collapse of the Soviet
Union the structure of the Russian economy has become more service-oriented,
in line with international trends. However, in this modernisation foreign direct
investment, a quarter of which went to manufacturing, was only an auxiliary
factor.
In order to become more competitive Russia needs to diversify its economy,
strengthening the creative aspects of long-term development. In this respect
a more widespread technology transfer brought about by FDI is necessary,
which can effectively stimulate further innovations, thus encouraging the
Schumpeterian creative destruction.
Acknowledgement
I owe a debt of gratitude to Dr. Yelena Kalyuzhnova who aroused my interest in
the subject. The content of this paper is naturally the sole responsibility of the
author.
35
Economic Annals, Volume LV, No. 186 / July – September 2010
REFERENCES
Ahrend, R. (2004). Russian Industrial Restructuring: Trends in Productivity, Competitiveness
and Comparative Advantage. OECD Economic Department Working Paper No. 408. Paris: OECD.
Ahrend, R., de Rosa, D., & Tompson W. (2007). Russian Manufacturing and the Threat of ‘Dutch
Disease’: A Comparison of Competitiveness Developments in Russian and Ukrainian Industry.
OECD Economic Department Working Paper No. 540. Paris: OECD.
Barro, R.J. & Lee, J. (2000). International Data on Educational Attainment: Updates and
Implications, CID Working Paper No. 42, Cambridge, Mass.: Center for International Development
at Harvard University.
Balcerowicz, L. (1995). Socialism, Capitalism, Transformation. Budapest: CEU Press.
Braguinsky, S. & Myerson, R. (2007). A Macroeconomic Model of Russian Transition: The Role of
Oligarchic Property Rights. Economics of Transition, 15(1), 77–107.
Csaba, L. (2006). A fölemelkedő Európa. Budapest: Akadémiai Kiadó.
Erdős, T. (2006). Növekedési potenciál és gazdaságpolitika. Budapest: Akadémiai Kiadó.
Freeman, Ch. & Soete, L. (1997). The Economics of Industrial Innovation. London and Washington,
D.C.: Pinter
Gaidar, Y. (Гайдар, Е.Т.) (2006). Гибель империи. Уроки для современной России. Мocквa:
РОССПЭН.
Harrison, M. (2003). Post-war Russian Economic Growth: Not a Riddle. Europe-Asia Studies.
55(8), 1323–1329.
Heston, A., Summers, R., & Aten, B. (2006). Penn World Table 6.2, Philadelphia: Center for
International Comparisons of Production, Income and Prices at the University of Pennsylvania
(CICUP).
Golikova, V. (Голикова, В.В.) et al. (2007). Poccийская пpoмышленность нa пepeпyтьe: чтo
мeшaeт нашим фиpмам cтать кoнкypeнтocпocoбными, Moscow: Report by State University
– High School of Economics,
Kaldor, N. (1957). A Model of Economic Growth, The Economic Journal, 47(268), 591–624.
Kalyuzhnova, Y. (2008). Economics of the Caspian Oil and Gas Wealth: Companies, Governments,
Policies, Basingstoke and New York: Palgrave Macmillan
36
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
Kalyuzhnova, Y. & Ch. Nygaard (2008). State Governance Evolution in Resource-Rich Transition
Economies: An Application to Russia and Kazakhstan, Energy Policy, 36(6), 1829–1842.
Kornai, J. (1993). A szocialista rendszer: kritikai politikai gazdaságtan, Budapest: Heti
Világgazdaság Kiadói Rt.
Kuboniwa, M. (1997). Economic Growth in Postwar Russia: Estimating GDP, Hitotsubashi
Journal of Economics, 38(1), 21–32.
Ligeti, Zs. (2002). Gazdasági növekedés és felzárkózás. Ph.D. thesis. Budapest: BKÁE.
Mátyás , A. (1999). A modern közgazdaságtan története. Budapest: Aula Kiadó.
Rosefielde, S. (2003). The Riddle of Post-war Russian Economic Growth: Statistics Lied and Were
Misconstrued. Europe-Asia Studies. 55(3), 469–481.
Rosser, Jr., J.B. & Rosser, M.V. (2004). Comparative Economics in a Transforming World Economy,
Cambridge, Mass.: MIT Press.
Samuelson, P. A. & Nordhaus, W. D. (2005). Economics. New York: McGraw-Hill.
Schumpeter, J.A. (2005). Business Cycles: A Theoretical, Historical and Statistical Analysis of the
Capitalist Process. Chevy Chase: Bartleby’s Books and Martino Publishing (1st ed. 1939)
Simon, Gy., Sr. (2005). Novekedeselmelet – vilagmodell – gazdasagfejlesztesi strategia,
Kulgazdasag. 49(3), 31–51.
Simon, Gy., Sr. (2008). Basic Questions of Economic Growth Mechanism. Economic Annals,
53(176), 7–37.
Simon, Gy., Jr. (2006). Economic Growth in the European Union. International Problems, 58(4),
387–413.
Simon, Gy., Jr., (2010). On the Customs Union of Belarus, Kazakhstan and Russia. Economic
Annals, 55(184), 7–28.
Slay, B. (2005). Development versus Transition. Development and Transition, 1(6), 7–9.
Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of
Economics, .70(1), 65–94.
Solow, R. M. (1957). Technical change and aggregate production function. Review of Economics
and Statistics, 39(3), 312–320.
Suvorov, N. (Cyвopoв, H.B.) (2002). Мaкpoэкономическoe моделиpoваниe тexнoлoгическиx
изменений. Мocквa: ГУ ВШЭ,
37
Economic Annals, Volume LV, No. 186 / July – September 2010
Trofimov, G. (Тpoфимов, Г.Ю.) (2002). Факторы и темпы экономическoго роста Poccии.
Мocквa: Инcтитyт финансовых иccледований.
Verspagen, B. (2000). Growth and Structural Change: Trends, Patterns and Policy Options, Merit
Research Memoranda No. 2000/15, Maastricht: Economic and Social Research and Training
Centre on Innovation and Technology.
Weiner, Cs. (2004). Oroszország gazdasága a XXI. század elején: Függőség, Műhelytanulmányok,
60. sz., Budapest: MTA VKI.
World Bank (2002). Transition – The First Ten Years: Analysis and Lessons for Eastern Europe and
the Former Soviet Union. Washington, D.C.: World Bank.
Data sources
Народное хозяйство РСФСР/РФ, ЦСУ/Госкомстат, Москва.
Poccийcкий cтaтиcтичecкий ежегодник, Poccия в цифрах, Национальные счета Росcии,
Госкомстат/Poccтaт, Мocквa.
National Accounts Statistics, UN, New York.
Main Economic Indicators, OECD, Paris.
Yearbook of Labour Statistics, ILO, Geneva.
International Yearbook of Industrial Statistics, UNIDO, Vienna.
FAO Production Yearbook, Energy Statistics Yearbook, Rome.
Annual Bulletin of General Energy Statistics for Europe, UN, New York.
UNESCO Statistical Yearbook, Paris.
OECD Factbook: Economic, Environmental and Social Statistics, Paris, various volumes.
Barro and Lee (2000, Appendix Data Tables).
Heston, Summers, and Aten (2006).
Kuboniwa (1997).
Eurostat, New Cronos database.
UNCTAD, FDI/TNC database. U.S. Department of Commerce, Bureau of Economic Analysis.
38
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
APPENDIX
Legend to the tables
YN = gross domestic product in billions of 2000 U.S. dollars, at purchasing power parity (PPP);
YM = manufacturing value added in billions of 2000 U.S. dollars, at PPP;
KN = average annual gross fixed capital in the national economy, including dwellings, in billions
of 2000 U.S. dollars, at PPP;
KM = average annual gross fixed capital in manufacturing in billions of 2000 U.S. dollars, at PPP;
LN = average annual number of persons employed in the national economy (in millions);
LM = average annual number of persons employed in manufacturing (in millions);
H/L = number of schooling years per capita (for population aged 15 and over);
R Nt–2 = f ull-time equivalent (FTE) number of all scientists and engineers engaged in R&D
(considering a two-year lag, in thousands);
R Mt–2 = FTE number of manufacturing scientists and engineers engaged in R&D (considering a
two-year lag, in thousands);
Z = arable land (in million hectares);
O t–1 = crude oil and natural gas resources (at the end of the year preceding the reference year, in
million tonnes of oil equivalent);
N = mid-year population (in millions);
w = monthly wages in manufacturing (in 2000 U.S. dollars, at PPP);
FDIN = a nnual flow of foreign direct investment (FDI) in the national economy in millions of
current U.S. dollars;
FDIM = annual flow of FDI in manufacturing in millions of current U.S. dollars;
FKN Σ = cumulative stock of FDI in the national economy in millions of 2000 U.S. dollars;
FKM Σ = cumulative stock of FDI in manufacturing in millions of 2000 U.S. dollars.
39
Economic Annals, Volume LV, No. 186 / July – September 2010
Russia: Main macroeconomic and manufacturing indicators
Year
YN
KN
LN
R Nt–2
H/L
Z
YM
National economy
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
671.6
701.6
736.0
742.2
796.4
832.7
891.3
947.8
1008.4
1028.3
1111.0
1161.6
1185.6
1290.5
1334.8
1381.3
1425.6
1486.1
1534.6
1548.6
1578.8
1602.9
1661.6
1726.1
1760.2
1802.6
1877.2
1915.6
1982.1
2024.5
2015.8
1915.0
1637.3
1491.6
1302.2
1248.8
1203.8
1220.7
1156.0
1230.0
1353.0
1422.0
1488.8
1597.5
1712.5
1822.1
1962.4
2121.4
2240.2
592.5
644.9
699.6
759.6
825.6
896.3
964.0
1029.5
1101.6
1182.3
1273.9
1375.7
1485.8
1604.7
1731.6
1867.5
2007.3
2148.5
2300.1
2459.7
2624.6
2799.1
2984.0
3180.8
3380.8
3575.1
3769.7
3963.7
4164.1
4374.0
4570.5
4740.4
4867.8
4938.2
4955.2
4952.9
4952.9
4940.4
4920.4
4913.2
4927.4
4962.4
5009.3
5067.1
5140.5
5230.1
5342.8
5490.0
5665.8
54.026
55.083
56.162
57.261
58.382
59.524
60.342
61.170
62.010
62.862
63.725
64.586
65.459
66.343
67.239
68.148
69.140
70.146
71.168
72,204
73.250
73.686
73.867
74.058
74.248
74.491
74.792
74.942
75.093
75.168
75.325
73.848
72.071
70.852
68.484
66.409
65.950
64.693
63.812
63.963
64.517
64.980
65.574
65.979
66.407
66.792
67.174
67.701
68.232
165.970
181.220
206.951
236.856
308.850
331.684
357.414
389.790
416.372
450.197
480.443
513.926
537.697
586.517
616.848
648.116
685.349
714.402
735.617
748.312
768.078
782.221
798.920
820.817
831.296
838.794
854.386
868.273
873.385
880.372
879.349
879.008
878.500
714.900
662.500
644.900
621.790
610.357
562.070
532.469
492.494
497.031
506.420
505.778
491.944
487.477
477.647
464.577
464.357
KM
LM
8.91
9.02
9.13
9.24
9.35
9.46
9.60
9.74
9.89
10.04
10.19
10.22
10.25
10.28
10.31
10.34
10.33
10.32
10.31
10.30
10.29
10.40
10.51
10.63
10.75
10.89
11.05
11.22
11.39
11.56
11.71
11.52
11.36
11.20
11.05
10.90
10.96
11.02
11.08
11.14
11.18
11.24
11.30
11.36
11.42
11.48
11.54
11.60
11.66
132.2
133.4
134.8
134.9
134.4
134.3
134.1
134.0
133.8
133.8
133.8
133.7
133.7
133.5
134.2
134.0
134.1
134.1
134.2
134.3
134.3
134.3
134.3
134.2
134.3
134.2
134.2
134.2
133.8
132.8
132.3
133.7
133.7
131.3
130.4
129.4
128.0
129.4
128.0
126.8
126.2
125.7
125.3
124.4
124.0
123.6
123.4
123.4
123.4
63.71
69.60
76.20
83.09
89.54
96.43
105.2
115.8
125.4
134.0
145.7
157.3
166.9
179.4
193.9
209.4
219.8
230.3
242.9
249.3
257.6
265.3
273.1
283.4
296.3
306.7
322.0
334.2
346.4
353.3
354.7
308.0
261.2
223.1
160.7
154.0
131.6
121.3
112.4
129.3
143.5
146.4
147.9
163.2
180.4
194.2
210.2
230.2
237.5
59.58
66.38
74.57
84.34
94.10
103.9
113.3
122.0
131.2
142.6
156.8
170.2
184.2
200.6
217.9
236.0
255.6
276.0
297.1
318.1
339.9
362.9
385.9
408.5
431.5
456.4
480.5
503.1
524.4
547.7
571.2
597.5
623.5
638.1
640.1
636.7
632.6
626.8
620.8
616.5
615.2
619.3
626.5
632.6
647.2
671.6
698.1
730.8
770.6
13.745
14.374
14.929
15.357
15.766
16.522
17.030
17.518
17.971
18.367
18.566
18.759
18.985
19.184
19.467
19.769
20.136
20.153
20.294
20.636
20.911
20.911
21.094
21.103
21.110
21.147
21.145
21.030
20.473
19.850
19.146
18.794
17.688
17.317
15.335
13.946
13.013
11.577
10.937
11.528
12.178
12.656
13.067
12.820
12.674
12.534
12.472
12.324
11.663
PPP conversion rates. USD 1 = Rbl. 5.40 for GDP, 7.23 for MVA, and 4.10 for fixed assets.
40
R Mt–2
Manufacturing
48.891
60.782
75.408
87.792
116.019
138.809
148.999
159.755
166.607
183.768
197.410
211.894
227.652
248.261
270.782
287.816
306.606
313.337
321.028
328.209
335.756
343.082
352.159
359.792
366.713
374.115
382.217
390.653
395.195
395.980
394.033
390.341
386.594
311.748
286.266
276.112
263.860
266.280
236.968
214.431
190.168
194.754
204.067
200.587
193.008
183.477
181.880
175.146
175.063
TECHNICAL PROGRESS AND ITS FACTORS IN RUSSIA’S ECONOMY
Russia: Supplementary data
Year
O t–1
N
w*
FDI N
FDI M
FKN Σ
FKM Σ
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
11419
11818
12230
12657
13099
13656
14029
14519
15027
15999
17000
15598
16933
18379
19564
20856
22458
24002
25035
26879
28077
29417
31758
32347
33010
33719
35002
36378
37829
39325
40893
42535
44256
46060
48039
48039
48039
48039
47628
47628
47687
45105
46670
46670
46670
46655
51104
51104
51772
119.906
121.469
122.971
124.377
125.645
126.749
127.675
128.441
129.103
129.734
130.392
131.095
131.837
132.614
133.415
134.233
135.070
135.936
136.825
137.733
138.655
139.577
140.496
141.434
142.420
143.469
144.593
145.763
146.893
147.871
148.615
149.091
149.323
149.359
149.273
149.124
148.926
148.667
148.339
147.927
147.423
146.828
146.159
145.438
144.696
143.953
143.221
142.499
141.780
397.85
406.45
409.68
418.10
426.70
439.43
456.63
482.08
520.61
546.24
567.56
588.89
610.22
631.54
674.19
704.12
729.57
742.47
759.50
776.52
802.15
800.18
810.57
822.76
843.19
871.68
872.22
880.47
937.99
1008.06
1093.19
1055.56
687.81
613.08
522.04
404.48
441.04
471.86
412.19
341.94
424.91
478.49
565.77
627.96
698.21
755.70
834.22
966.53
1055.54
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
1161
1211
690
2066
2579
4865
2761
3309
2714
2748
3461
7958
15444
12886
29701
55073
70320
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40
40
465
469
263
763
918
1609
894
1025
831
1222
731
2307
4951
8735
10965
10599
10738
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
107
212
1431
2685
3389
5469
8067
12970
15772
19123
21837
24551
27944
35627
50035
61601
87350
134558
194369
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43
85
573
1059
1327
2095
3020
4641
5548
6586
7417
8624
9341
11568
16187
24027
33533
42618
51751
* USD 1 = Rbl. 5.58.
Received: September 29, 2010
Accepted: October 27, 2010
41