Opening of the Russian Economy and Its Integration with the EU

Abstract
The EU has a central role in the integration of Russia with the international economy as over half of Russia's exports go to the enlarged EU-25 area. A closer integration of Russia with the EU may help to sustain economic growth in Russia. This is the first topic of analysis, where major stages of this integration will be analysed from the point of Russia and its convergence in terms real income and price levels towards those in the EU.

Russia's economy is largely based on the exports of oil and oil products and of other raw materials. On the other hand, the prices of these commodities inside Russia have been kept considerably below their world market prices with large subsidies, which produces a deviation from the optimal use of resources. Keeping oil prices low supports poorer citizens' real incomes and energy-intensive sectors. A closer analysis of this duality is pivotal for an analysis of the long-term growth prospects of the Russian economy.

Furthermore, we aim to study how the integration of the North-West Russia with Finland through trade and foreign direct investment will help economic growth in North-West Russia and its convergence with the EU. The emergence of the key industrial clusters in the Region will be analysed by a Russian partner in his thesis work.

The research project analyses these central themes for the development of Russia in cooperation within a network of researchers at ETLA, The Research Institute of the Finnish Economy, Turku School of Economics and Solid Invest, St. Petersburg, St. Petersburg State University and St. Petersburg State Polar Academy.

Project leader: Director Kari Alho, ETLA. The Research Institute of the Finnish Economy, Lönnrotinkatu 4 B, Helsinki, tel +358 (0)9 60990220, ka(at)etla.fi, www.etla.fi

Researcher:
Markku Kotilainen, ETLA. The Research Institute of the Finnish Economy, mk(at)etla.fi
Pekka Sulamaa, ETLA. The Research Institute of the Finnish Economy, psu(at)etla.fi
Mika Widgrén, Turku School of Economics, Mika.Widgren(at)tukkk.fi
Ville Kaitila, ETLA. The Research Institute of the Finnish Economy, vka(at)etla.fi
Paavo Suni, ETLA. The Research Institute of the Finnish Economy, ps(at)etla.fi
Pavel Filippov, Solid Invest, St. Petersburg, pavel.filippov(at)solidinvest.com, www.solidinvest.com
Sergei Sutyrin, St. Petersburg State University, sutyrin@SS1131.spb.edu
Vladimir G. Sherov-Ignatiev, St. Petersburg State University
Igor Bobrow, St. Petersburg State Polar Academy, ibobrow(at)yandex.ru

Project description