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    Bank of Finland, Rauhankatu 19 B, Helsinki

Masaaki Kuboniwa (Hitotsubashi University):Russia’s Global Value Chains with Vertical Specialization

Abstract
Summarizing recent theoretical developments in Global Value Chains (GVCs) and Vertical Specialization (VS) generated by international trade, I demonstrate outlines of empirical analysis of Russia’s GVCs with VS using Russia’s new bench-mark input-output data for 2011, its extended input-output data for 2012-2015 and WIOD or OECD ICIO. First, featuring newly released data, I reconstruct the sectoral GDP of the oil and gas sector, the key sector of Russia, using the new data. Then I report results of measurement of VS based on the national data (single country model) with 126 endogenous sectors with Japan and other countries. VS is defined as the share of intermediate imports induced by exports (an approximate of foreign value added) in the total gross export. For 2011, Russia’s average VS of 6.5% is much less than Japan’s VS of 23%. VS of Russia’s mining with the largest export share of 47% is merely 1.5%. VS of refined oil with export share of 18% is also only 1.7%. Sectors with relatively large VS are manufacturing and service sectors with small export shares and domestic oriented demand. Russian low VS may correspond to its low export share of manufacturing. Generally, on the one hand, Russia needs to raise VS for increases in manufacturing exports. Also, on another hand, it should be noted that foreign automobile factories in Russia might reduce VS in order to cut costs including transportation costs of (imported) components. In addition to single country model, I will present some results of Russia’s GVCs with VS using multi-country model (Russia-EU-ROW).

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