| 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. |