Import Substitution in Russian Industry: Current Situation and Prospects

Andrey Gnidchenko

Journal of the New Economic Association, 2016, vol. 32, issue 4, 154-161

Abstract: We describe the current situation in Russian economy concerning import substitution in the industry as a whole and in different economic activities. Three phases of the import substitution process are detected. Before the external shock of the mid-2014, there was a moderate import substitution accompanied by output growth. Then, the economy adapted to the shock quickly (turbulent import substitution). After the adaptation phase, import substitution stopped despite the continued weakening of the ruble (import dependence stabilization). The most intensive import substitution was observed in manufacturing of food products, transport equipment, metals and metal products. However, most industries experienced virtually no import substitution: for most cases, a significant drop in imports in physical terms was not accompanied by the corresponding drop in value terms. We provide preliminary estimations of the prospects of import substitution by industries that account for both relevance and potential of import substitution. The relevance of import substitution (relative level of import dependence) was calculated as the share of imports of a commodity in Russian GDP relative to the world share. Import substitution potential was obtained from the modified Hausmann-Klinger approach that accounts for the world trade patterns in the form of links between commodities and input coefficients for the corresponding industries from the Input-Output table. Our preliminary estimations show that both the need for import substitution and the ability to replace imports exist in agriculture and manufacturing of food products, several machinery industries, manufacturing of footwear, paints and varnishes, cleaning preparations and perfumes.

Keywords: import substitution; industry; import dependence; economic activities (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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