Is Mining Fuelling Long‐Run Growth in Russia? Industry Productivity Growth Trends Since 1995

Abstract

GDP per capita growth rates in Russia have been amongst the highest in the world since the mid‐1990s. Previous growth accounting research at the macro‐level suggests that this was mainly driven by multi‐factor productivity (MFP) growth. In this paper we analyze for the first time the drivers of Russian growth at the level of industries. We derive a proper measure of capital services, instead of using stock measures as in previous research. Using this, we find that aggregate GDP growth is driven as much by capital input as MFP growth. Mining and Retailing industries are growing fast, but have poor MFP performance. In contrast, MFP growth was high in goods‐producing industries but their share in GDP declined. MFP growth was highest in those industries that were particularly underdeveloped in the Russian economy in the 1990s.