nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2007‒04‒09
two papers chosen by
Anna Y. Borodina
Perm State University

  1. Determinants of Finnish-Russian Economic Relations By Markku Kotilainen
  2. Energy Consumption, Dependency and Growth By erdogdu, oya

  1. By: Markku Kotilainen
    Abstract: The broad context of the study is the main determinants of Finnish-Russian economic relations during the post-Soviet era and the prospects for the future. The study explores the determination of trade as well as foreign direct investment (FDI). The main emphasis is on the structure and development of foreign trade. When measured by the Grubel-Lloyd index of intra-industry trade (SITC3, 4-digit), it is seen that less than 3 per cent of Finnish-Russian trade occurred inside the same industry in 2004. This percentage has even declined slightly during the period studied. In Finland’s trade with Germany, the corresponding figure was 31 per cent and in trade with Sweden 47 per cent in 2004. When assessing the development of Finnish imports from Russia, we notice that the dominance of changes in oil prices and of imports of big companies does not allow sensible econometric explanations. In the case of Finnish exports to Russia we find econometric evidence on volumes and values, on aggregate and sectoral, and on annual and quarterly exports. We present several kinds of classifications of FDI, and ask which factors favour exports and which FDI. We also classify the investments of Finnish firms in Russia according to these criteria – in a very illustrative and preliminary way. Exports as well as FDI have profited from the high market growth and rapid structural change of the Russian economy.
    Keywords: Finland, Russia, economic relations, foreign trade, foreign direct investment (FDI)
    JEL: F14 F21 F23
    Date: 2007–03–26
  2. By: erdogdu, oya
    Abstract: Energy being one significant factor of production, high rises of oil prices and Russia’s strategy of controlling natural gas resources and energy routes makes the policy of using domestic energy resources and developing new technologies to use these resources very popular. Today, USA, Europe and even China is taking serious actions on using their own energy resources rather than importing. Contrary to this strategy Turkey is getting more dependent on imported natural gas, rather than using own resources of energy. This study analyses the consequences of this policy. VAR methodology and Granger causality analyses performed to investigate the relations between imported energy, investment and employment. The results indicate serious negative impact of energy imports on private sector investment employment.
    Keywords: Energy consumption; Granger causality; VAR
    JEL: Q43 C32
    Date: 2007–01

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