Analysis of Volume, Structure and Dynamics of Russian Foreign Trade Under Conditions of Globalization

Abstract

1. Introduction Development of several industrial countries during the last centuries links to rise of deficit levels in public budget, which led into a significant rise in public debt, and the following deterioration in financial situations in those countries (Mencinger et al., 2014). Before the Nineteenth century, debt accumulation in industrial countries was relatively slow mainly due to wars. French-British war between 1689-1697 led to rise of British public debt, public debt percentage raised in U.S.A as a result of American revolution, French debt also increased after 1878 as a result of the rise of public disbursement and colonial expansion (Checherita-Westphal and Rother, 2012). In the beginning of nineteenth century a big rise in public debt happened and led into a significant rise in sovereign debt crisis in the world as a consequence of several reasons such as: interest rate decrease, liquidity decrease in markets due to investor's tendency to less liquidity assets which doesn't include risks. Between 1800-2008 Spain suffered thirteen sovereign debt crisis, France suffered eight crises, Austria and Hungary suffered seven crises, Portugal suffered six crises, and Greece suffered five crises (Mireinhart and Rogoff, 2009). Economic and financial crisis contributed to public debt accumulation, when financial crisis which started in less-quality financial institution market in U.S.A led into worst economic recession since 1930 in all advanced economies. Public debt in Euro zone rose up between 2007-2009 by 20%, deficit raised by 814% for the same period (from 0.07% in 2007 to -6.4 % in 2009) while economic growth for the same period regressed by 250% from (3% in 2007 to -4.5 % in 2009). As a result of financial deficit rise, revenue decrease, launching financial stimulation packages, and strong commitment by governments to help stumbling banks in fear of inability to pay off their debt, classifications of financial solvency got worse in several Euro zone countries. That led into a quick transfer from Subprime Mortgages Crisis into sovereign debt crisis started in autumn 2009 in Greece. Soon it spread into other countries such as, Ireland, Portugal, Spain, cypress, Italy. Then, European economy entered the worst state of recession since the beginning of the twentieth century. A study conducted by Haytham Ewaida (2015) showed that economic growth in Euro zone decelerate severely between (2010-2013) when gross domestic product declined by 18% , price index decreased by 19%, and public debt increased by 11% for the same period. Policies on the level of EU were carried out to address the crisis through financial rescue plans for stumbling countries, with conditioned financing for those countries through financial austerity policies, structural reforms in order to improve competitive ability. Positive influence of these measures usually links in the long run to decrease government disbursement in order to get rid of debt burden and increase growth horizons. However, these policies will have negative impact on production, ability to adapt economically in the future, which could lead into a long period of economic recession (Dreger and Reimers, 2013). Debt crisis led to revival of academic and political concern with economic growth impact on public debt. The controversial relationship which links public debt levels and economic growth started to come back. The important question is: Does rise of public debt restrict economic growth? This question is important for policy that will be adopted, because if the answer is yes that means (expansionary fiscal policy which increases debt levels will lead into decreasing levels of economic growth on long run). Yes -answer to this question means negation of positive impact of fiscal stimulation on euro zone economies. This forces policy makers to review their policies (dominant belief became that public debt leads into decreasing economic growth on long run). …