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Economic Analysis: Theory and Practice
 

Modeling the industry-specific structural changes in the economy of Russia

Vol. 14, Iss. 16, APRIL 2015

PDF  Article PDF Version

Available online: 30 April 2015

Subject Heading: ECONOMIC ADVANCEMENT

JEL Classification: 

Pages: 26-35

Druzhinin P.V. Institute of Economics, Karelian Research Center of Russian Academy of Sciences, Petrozavodsk, Republic of Karelia, Russian Federation
pdruzhinin@mail.ru

Prokop'ev E.A. Institute of Economics, Karelian Research Center of Russian Academy of Sciences, Petrozavodsk, Republic of Karelia, Russian Federation
e_prokopiev@mail.ru

Importance The paper investigates the industry-specific structure of the Russian economy and its changes over 1992-2013.
     Objectives The objective of the research is to assess the impact of structural changes on the Russian economy development and the economy efficiency.
     Methods To achieve the objectives, we collected data (Gross Domestic Product, employment, cost of fixed assets, fixed investment) on the Russian economy as a whole and its main branches (types of activity), and investigated their relationships. We aggregated the branches (types of activity) into five sectors and analyzed the impact of structural changes and certain branches on labor productivity movements of the Russian economy. We built production functions by sectors and for the economy in general. On their basis, we analyzed the impact of individual sectors and structural changes on return on investment. Using the proposed approach, we built the optimal structure of the Russian economy with certain restrictions.
     Results The research showed that in the 1990s, structural changes had a significant positive impact on the dynamics of major economic indicators of Russia, then the impact weakened, and from the end of the 2000s, they had a negative impact caused by growing share of inefficient industries, which had lower productivity and return on investment. In the 1990s, the Russian economy faced significant structural changes, a change in sectors determining the dynamics of the Russian economy's efficiency, and reduced influence of industry.
     Conclusions and Relevance The study results may be useful in the sphere of economic systems management. In contrast with the pre-reform period, the difference between the real and the optimal structures of the Russian economy has increased substantially.

Keywords: labor productivity, efficiency, production function, structural changes, elasticity, branch, economic activity

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