and Economic Growth in Russia Ilya B Voskoboynikov Eduard F Baranov Vladimir A Bessonov Dmitry I Piontkovski Elena A Staritsyna and Azamat Ulbashev The Fifth World KLEMS Conference ID: 1027948
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1. Intermediate Inputs, Human Capital, Intangible Assets and Economic Growth in RussiaIlya B. Voskoboynikov, Eduard F. Baranov, Vladimir A. Bessonov, Dmitry I. Piontkovski, Elena A. Staritsyna and Azamat UlbashevThe Fifth World KLEMS Conference,4-5 June 2018, Harvard University
2. Productivity Slowdown in Russia and BICs (annual growth rates)a. Labor productivityb. Total Factor ProductivitySource: TED database (adjusted version), May 2017
3. Source: Russia KLEMS, March 2017; Market economyProductivity Slowdown in Russia since 1995(annual growth rates)
4. Catching-up (Gerschenkron 1962; Aghion et al 2006)1950-1995: catching up to technology leaders after WW2 (e.g. Crafts and Toniolo 2010)1995-2004: the role of ICT (e.g. Jorgenson et al 2005)2004- present: no explicit driver of total factor productivity growth (Ark et al. 2015; Demmou et al. 2015); TFP slowdown as a statistical illusionIf not (e.g. Byrne et al 2016), the rate of innovations could be the same, but technology diffusion could be lowerGlobal Context for Productivity Slowdown in Russia
5. Change in sources of long run growthIntermediate Inputs (do not change much)Intangibles: diminishing contributionLabor compositionStable in timeHigh in comparison with developed economies (Germany)Comparable with CEE’sDo we see global origins in Productivity Slowdown in Russia (before 2014)?
6. Global Productivity Slowdown and Russia in the Russia KLEMS frameworkRecent Russia KLEMS release (2017)Russia KLEMS updates (partially progress): New official SUTs in 2011-2015Backcast estimation of USE tables in 2003-2010Adaptation of methodology changes of Russian SNA since 2011This assumes taking into accountIntermediate inputsHuman capitalIntangibles
7. Stagnation of 2008-2014 is more the outcome of efficiency (aggregate TFP) slowdown TFP slowdown could start before 2008, following the global economy patternless – lack of capital or intermediate inputsPartially this could be mismeasurement, but in 1995-1998 we see capital intensity slowdownlower contribution of ICT capitallower impact of labour reallocation on labour productivity growthFindings: what we see in Russia after 2008
8. Labor productivity growth decomposition (p.p.)2002-2007Source: Russia KLEMS, March 2017
9. Labor productivity growth decomposition (p.p.)2007-2014Source: Russia KLEMS, March 2017
10. GO-based Labor productivity growth decomposition (p.p.), 2007-2014Source: Russia KLEMS, updated
11. Sources of growth in 1995-2014Source: Russia KLEMS, March 2017
12. Sectoral structure of aggregate capital intensity growthSource: Russia KLEMS, March 2017
13. Capital Services and the Role of Intangibles (ICT)Source: Russia KLEMS, March 2017
14. The role of Labor Composition Contributions (pp.) 1995-20022003-20072008-20121995-2012Aggregate Real GDP growth2,787,141,033,74 Hours worked-0,090,83-0,130,22 Aggr. Lab. Productivity2,866,311,163,52Labour reallocation1,310,720,090,76Intra-industry Lab. Productivity Growth1,555,591,082,76MFP1,633,17-1,611,16Capital Intensity-0,332,262,471,38Labour composition0,250,150,220,22Source: Russia KLEMS, March 2017; labor composition – own calculations
15. Labor Composition and Labor Productivity Growth in Russia and CEEs in 1995-2007NOTE: Total economies. Yearly averages in 1995-2007Russia KLEMS 2017, EU KLEMS 2008Gr. rates (pp)RUSCZEHUNSVNGERReal VA4,582,653,853,791,60 Hrs worked0,32-0,190,41-0,19-0,12 LP total4,252,843,453,991,71 Reallocation0,980,230,191,230,25 LP within3,282,603,262,761,46 MFP2,200,722,170,820,69 K/H0,891,700,691,490,73 Lab. Quality0,190,190,400,450,05
16. 4. Results and discussion: case of financial intermediationNOTE: Total economies. Yearly averages in 1995-2007Gr. rates (pp)RUSCZEHUNSVNGERLP within9,225,325,664,941,27 MFP8,463,583,36-1,670,45 K/H0,331,381,676,060,69 Lab. Quality0,430,350,640,550,12
17. Results and discussion: case of other machineryNOTE: Total economies. Yearly averages in 1995-2007Gr. rates (pp)RUSCZEHUNSVNGERLP within7,257,7811,218,521,80 MFP6,025,649,146,301,17 K/H1,002,042,011,790,42 Lab. Quality0,230,110,060,430,21
18. Stagnation of 2008-2014 is more the outcome of efficiency (aggregate TFP) slowdown TFP slowdown could start before 2008, following the global economy patternless – lack of capital or intermediate inputsPartially this could be the measurement issue, but in 1995-1998 my approach could catch capital intensity slowdownlower contribution of ICT capitallower impact of labour reallocation on labour productivity growthFindings: what we see in Russia after 2008
19. Thank you!
20. Structural change in aggregated sectors VA share (%)Growth rates(%)Contribu-tions (pp) 199520141995-20141995-2014Total economy100,0100,03,473,47Market economy86,180,93,603,00Agriculture7,64,21,390,08 Extended Oil and Gas sector20,124,23,590,80Manufacturing22,414,92,150,40Retail, construction, telecom, hotels & restaurants (RCT)19,218,64,070,77Finance & Business Services5,112,08,410,72Transport11,76,92,550,24Nonmarket services13,919,12,790,46Source: Russia KLEMS, March 2017
21. Sectoral structure of aggregate TFP growthSource: Russia KLEMS, March 2017
22. Thank you!
23. Stagnation of 2008-2014 ismore the outcome of efficiency (aggregate TFP) slowdown TFP slowdown could start before 2008, following the global economy patternless – lack of capitalPartially this could be the measurement issue, but in 1995-1998 my approach could catch capital intensity slowdownlower contribution of ICT capitallower impact of labour reallocation on labour productivity growthFindings: what we see in Russia after 2008
24. Data: Russia KLEMS (March 2017)Nominal value added2003-2014 – official 1995-2003 – official in the old industrial classification (OKONKh); official bridges btw OKONKh & NACE 1.0 for GO; VA/GO ratios for similar industries for both classificationsReal value added2003-2014 – official1995-2003 – official backcast estimations of gross output (Bessonov et al 2008)
25. Labour services2005-2014 – official balance of labour inputs; hours worked1995-2005 – growth rates of the yearly average number of workers from the Balance of Labour Force (BLF); breaking down with data of organizationsImputations of hours worked in non-market households in agriculture in 1995-2005Inputs shares in value addedSNA + imputations on self-employedData: Russia KLEMS (March 2017)
26. Capital servicesInitial capital stock by types of assetsBalance of Fixed Assets, net stocks by 1 January 1995 after the revaluationBreaking down by 8 types of assets with the data of SurveyF11Bridging btw NACE 1 and OKONKh: official bridge for investments in 2003 года (78 industries in OKONKh – 35 industries of NACE 1)Investment deflatorsProduction price indices in constructionInstallation and construction workMachinery and equipmentMiscellaneousData: Russia KLEMS (March 2017)
27. Productivity growth trends in major market economiesSource: TED database, release 06-2015
28. Productivity growth trends in CEEs and RussiaSource: TED database, release 06-2015
29. Source: OECD 2015. “The Future of Productivity”Limitations: what we do not observe with industry growth accounting?
30. Global Productivity Growth since 1990 (annual growth rates)a. Labor productivityb. Total Factor ProductivitySource: TED database (adjusted version), May 2017
31. Similar TFP trends in Russia and in other countries do not necesseraly say for similar determinants of these trendsConsideration of the period 2008-2014 should not be automatically extended to present. E.g. the lack of capital input can be the issue in Russia nowLabour reallocation between industries is minor in comparison with reallocation between firms within industriesLimitations