Applied General Equilibrium Analysis of Taxation and
International Trade in Russia
Yelena Tuzova
University of Minnesota
First Draft: March 3, 2007
Last Version: November 14, 2011
ABSTRACT__________________________________________________________________
In recent years, the International Monetary Fund (IMF), the World Bank and the members of
the World Trade Organization (WTO) have criticized Russia for its high border taxes. Despite
the first political attempt made in 2000-2001 to reduce import tariffs, the average tariff in Russia
in 2003 was still in the range of 13 to 14.5 per cent, a level considerably higher than the OECD
countries. Since Russia is a country heavily dependent on trade taxes, I focus on the fiscal
impact of eliminating the tariff revenues as well as analyzing its potential effect on domestic
production, price level, trade flows, and social welfare. I also analyze the effects of Russia’s
decision to impose high export taxes as an attempt to compensate for revenue loss. To conduct
the analysis, I construct a static applied general equilibrium (GE) model and perform a series of
numerical experiments, such as a partial and complete tariff elimination scenario. To calibrate
the model, I work with an input-output (IO) table of the most recent year available, 2003, and
construct a social accounting matrix (SAM) with a much higher degree of disaggregation and
precision than any such matrix in the existing literature on Russia’s economy. I find that tariff
elimination reform has a positive effect in terms of trade diversification, but a negative effect in
terms of consumer and social welfare. To compensate the budget loss, in my model the
government can choose to impose either higher taxes on consumption or higher export taxes on
foreigners. Both policies increase government welfare but decrease consumer and social welfare
which in the long run might lead to bigger economic losses.
_____________________________________________________________________________
*I am especially grateful to Timothy J. Kehoe, my thesis advisor, for his helpful suggestions, support
and encouragement; Professors Cristina Arellano and Pedro Amaral, for their comments and the seminar
participants at the Trade and Development Workshop. I would also like to thank Julian Diaz, Eren
Nevzat, Bayram Yenikaya, and Tatyana Volikova for their help.
†Department of Economics, University of Minnesota, 1035 Heller Hall, 271-19th Avenue South,
Minneapolis, MN 55455. Email: yelena@econ.umn.edu.
1. Introduction
After proclaiming independence in late 1991, Russia embarked on the difficult transition from
central planning to a market economy. The transition involved an abrupt contraction in trade with
former socialist economies as well as a considerable reduction in the offered subsidies to various
sectors. The sudden change in the economic course triggered Russia to take the step of accessing
other world economies: the markets of the World Trade Organization (WTO) member countries.
But differences over some critical issues, like Russia’s tariff structure, make uncertain the timetable
for Russia’s access to the WTO.
In this paper, I present a static applied general equilibrium (GE) tax model to evaluate the impact
in Russia of the 2000-2001 tariff reform on relative prices, domestic production, trade volume,
government revenue, and welfare. To perform a series of numerical experiments, I have used the
information contained in the social accounting matrix (SAM).
The SAM contains 20 industrial sectors, a much higher degree of disaggregation than any such
matrix in the existing literature on the Russian economy, is based on an input-output (IO) table of
2003, the most recent year available. In addition, I carry out the sensitivity analysis with respect to
different values for Armington elasticities of import substitution across sectors. As far as of import
substitution between sectors, the econometric estimates are taken from Alekseev (2003). The
computational model reported here simultaneously accommodates several taxes: indirect taxes on
production and consumption goods, income tax, tariffs and export taxes. Incorporating various tax
instruments helps me to appraise the effect of one tax change only on other taxes and provides a
fresh insight into trade policy discussions. In my model there is present both a government deficit
and trade surplus. The government deficit is modeled as a purchase of government bonds while the
trade surplus is modeled as capital outflow. The consumers consider bonds and foreign investment
to be perfect substitutes for physical capital as savings instruments.
My analysis shows that tariff elimination associated with possible access to the WTO would
cause significant changes in trade flows between Russia and the rest of the world, the overall
increase of imports into Russia in all sectors, and the diversification of Russia’s industries.
However, at the same time we can observe a drop in domestic production in almost all sectors and a
drop in exports of natural gas and crude oil. As these are the most important industries, even a slight
drop in such sectors could lead to huge economic losses. By adopting the tariff elimination policy,
the government would lose a significant part of its budget which in my model could be
compensated by imposing high export taxes on foreigners. Sensitivity analysis shows that my
2
results are robust to the changes in Armington elasticities. Overall, a free trade agreement between
Russia and the rest of the world is not an optimal form of economic integration for Russia.
My paper is related to a wider series of applied GE modeling popularized in the 1960s and
1970s. Using the Walrasian general-equilibrium structure, these models were aimed at evaluating
policy options such as the distortionary effects of taxes, tariffs and other policies, and to assess the
winners and losers of such policy changes.
The relatively recent empirical studies on applied GE models are used to quantify possible
outcomes of the European Union (EU) enlargement, the effects of the North American Free Trade
Agreement (NAFTA) and the access to the World Trade Organization (WTO) by countries in
Central and Eastern Europe and Latin America. These studies include the works of Kehoe and
Serra-Puche (1983), Kehoe, Manresa, Noyola, Polo, and Sancho (1988), Rutherford and Paltsev
(1999), Lejour, Mooji, and Nahuis (2001), Alekseev, Tourdyeva, and Yudaeva (2003), Kehoe
(2003), Jensen, Rutherford, and Tarr (2004), Cho and Diaz (2006). For instance, Kehoe et al. (1988)
analyse the economic effect of the 1986 tax reform in Spain after it entered the then European
Economic Community (EEC). Cho and Diaz (2006) give the quantitative estimates of the potential
gains and losses of two trade liberalization episodes within Ecuador and Slovenia. Rutherford and
Paltsev (1999), in the case of Russia, analyse the marginal excess burden of various tax instruments
in Russia based on an unbalanced 1995 Russian input-output table with 9 sectors. The authors
recreate an Arrow-Debreu (1954) general equilibrium model, elaborated on to Arrow and Hahn
(1971) in MPSGE (Mathematical Programming System for General Equilibrium Analysis) format,
a programming language elaborated in the 1980s to solve computable general equilibrium models.
Using the Global Trade Analysis Project (GTAP) database for the year of 1997, Lejour, Mooji, and
Nahuis (2001) focus primarily on the impact of the EU enlargement on potential candidates and on
the existing members of the EU. They model Russia as an integrated member of the Former Soviet
Union (FSU), not as a separate region. Therefore, the results must be interpreted carefully. Unlike
this work, Alekseev, Tourdyeva, and Yudaeva (2003) managed to model Russia as an autonomous
region and concentrate on the cost/benefit analysis of the abolishment of the trade barriers between
the EU and the Central and Eastern European Countries (CEECs) for the Russian economy. To
conduct simulation experiments, the authors use a comparative static (without modeling any explicit
time periods) multi-regional computable general equilibrium model with 15 production sectors for
the year 2000. They found that a change in tariffs associated with access to the WTO does not make
a significant change to the Russian economic environment. However, the creation of the Common
European Economic Space (CEES) – a free trade area between Russia and the enlarged Europe –
would make the Russian economy diversify its domestic production:
3
a drop in oil, gas and
nonferrous metallurgy production which accounts in nominal terms for almost €64 million (Euros)
(Alekseev et al. (2003), p.9) and an increase in the sectors such as ferrous metallurgy, food
processing industry, agriculture, and construction.
The rest of the paper is as follows: Section 2 describes the database to illustrate how a general
equilibrium model can be adapted for policy evaluation work; Section 3 discusses the essential
elements of the applied general equilibrium model with taxes placing emphasis on the choice of
parameter values and functional forms; Section 4 analyzes the numerical results of two policy
scenarios suggested by the trade liberalization reform. I close the paper with the lessons learned
from the results and the potential for future research. The appendix contains a number of technical
details omitted from the text.
2. Data
To provide a comprehensive and detailed description of the transactions in the Russian economy, I
use a social accounting matrix, commonly known as SAM. The use of SAM can be traced back to
Stone (1947), the primary architect of the United Nations System of National Accounts (the UN
SNA), the System of Social and Demographic Statistics (SSDS), and Quesnay’s (1759) Tableau
Economique. Despite the fact that SAM presents only a static image of the economy and clearly
cannot reveal much information on dynamics, it serves as a good statistical basis of the country’s
economic structure. For example, if policy makers are concerned with the distribution of income to
different households based upon a change in government expenditures, then the SAM can be
constructed to create multiple household sectors based on various income levels (Miayazawa,
1976). Likewise, the distribution of profits from industry sectors can be accomplished by creating
proprietorship and corporate firm categories (Fannin, 2000). The SAMs are able to directly address
similar types of questions. Therefore, it is not surprising why researchers and policy makers have
demonstrated an increasing interest in applications of SAMs to policy analyses over the past two
decades (Pyatt and Round, 1985 and Kehoe, 1996).
The SAM framework embodies the information normally included in national income accounts
and the Leontief (1941) input-output model of production. The data sources used to construct the
SAM for Russia are the official 2003 input-output table provided by Goskomstat (the Federal State
Statistics in Russia), national account statistics, and data collected from the World Bank and the
International Trade Administration of the U.S. Department of Commerce.
The SAM matrix presented here has a much higher degree of sectoral disaggregation and
precision than any such matrix in the existing literature on the Russian economy. Given the key
4
importance of oil and gas production in Russia, there is a particular interest in evaluating how oilrelated industries might respond to potential trade liberalization scenarios. Thus, unlike any
previous works on trade liberalization reforms in Russia, I will consider the crude oil extraction, oil
manufacturing, and natural gas industries separately. In total, the matrix contains 20 industries and
20 products. A list of these sectors can be found in Table 2.1.
The paper does not attempt to explain how to construct the SAM, however, a brief explanation of
how the data is organized might be useful. The SAM, by definition, is a series of accounts put in the
matrix form. The entries in the matrix represent receipts when read across rows and expenditures
when read down columns. Thus the entry in row i , column j , represents receipts by account i
from account j or, alternatively, expenditures by account j that are paid to account i . Since the
principles of double-entry bookkeeping apply, incomings into one account must balance with the
outgoings from another account.
Table 2.2 illustrates in schematic form the structure of the SAM for Russia. The rows and
columns of the matrix are grouped into blocks: production goods sectors, consumption goods
sectors, factors of production, institutions, the capital account, and the foreign sector. Let us take a
close look at some of them.
I start with the production account (1) labeled here as “production goods sectors”. It represents
production sector outputs that are used as intermediate inputs, at producers’ prices, for production
good industries, consumption good industries and for the final consumption by household,
government, investment/savings and the rest of the world. Take, for example, row 10 and column 3
of Table 8.5 (see Appendix). It notes that in 2003 the electric industry has consumed machinery in
the value of 14.79 trillions rubles. The next column shows that oil extraction industry has consumed
machinery worth 24.15 trillion rubles.
The SAM factor account (3) is split into two factors of production: labor and capital. Together
they are used in the production process and receive income from the process. Since the original
2003 use IO table does not explicitly provide the data on labor and capital income, I first calculate
the labor and capital share using the data on components of gross value added at producer’s prices
from the table. Gross value added corresponds to the income items of compensation to employees,
gross profit (or gross operating surplus), gross mixed income, other taxes on production, other
subsidies on production, and indirectly measured financial intermediation. Knowing the fractions of
capital and labor income and total value added, I am then be able to find a good approximation to
labor earnings and return on capital.
5
In terms of institutional detail, the SAM includes one account each for households, government,
investment/savings, and the rest of the world. Households supply labor and capital. Here,
households and non-commercial organizations serving households are combined under one
institutional category. Another type of institution is government which plays an important role in
the production process. It purchases exogenously fixed amounts of some production goods and
services. It also provides subsidies, levies taxes on consumer income, ad valorem taxes on
production, ad valorem taxes on consumption, and taxes on imported and exported goods.
Government spending and government revenue are normally not equal and must be balanced by
borrowing or lending. In Russia’s case, government expenditure exceeds its income resulting in a
deficit that is balanced by issuing bonds. Russia’s account for the rest of the world keeps track of
goods and services imports between Russian institutions and the rest of the world. Here I assume
that imports and exports of goods and services are not distinguished by trading partner. Since the
value of exported goods by far exceeds the number of imported goods, there is external surplus. The
resulting trade surplus is handled in a similar way as the government deficit: households buy the
investment good from the rest of the world.
Due to the lack of data on tariffs, the information on domestic tariff rates is based on the MFN
tariff rates for Russia from the World Bank. The data on foreign tariffs is calculated based on the
Global Trade Analysis Project 6 (GTAP 6) database. The data on export tax rates is taken from the
report on Russia prepared by the U.S. Department of Commerce, Bureau of Industry and Security,
and is assumed to be equal to 20% across all production sectors. 1
Table 2.1
List of Sectors in Disaggregated 2003 SAM for Russia
№№
1
2
3
4
5
6
7
8
9
10
1
SAM
Input-Output Table
Electric Energy
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemistry
Machinery
Electric Energy
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemical and Petrochemical Industry
Machinery and Equipment, Metalworking
Industry
https://www.bis.doc.gov/DefenseIndustrialBasePrograms/OSIES/ExportMarketGuides/european/russia.pdf
6
Table 2.1 (continued)
№№
SAM
11
Wood
12
Construction Materials
13
14
15
16
17
18
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
19
Finance
20
Other Services
Input-Output Table
Timber Industry, Woodworking Industry,
Pulp, and Paper Industry Products
Construction Materials (Including Glass,
Ceramic and Faience Industry)
Light Industry
Food Industry
Other Manufacturing
Construction
Agricultural Services and Forestry
Transportation and Communication
Services
Finance, Credit, Insurance, State
Administration, Public Associations and
Unions
Trade Services (Including Food Services)
Other Activities
Dwellings
Health, Physical Training and Sport
Services and Social Security, Culture and
Art
Science and Scientific Services, Geology
and Ground and Bowels Investigation,
Geodesic and Hydro-Meteorological
Services
The elasticities of substitution for exports and imports are not calibrated but taken from the
existing literature. I assume that the import elasticity of substitution,  m, j , for all j  G p , is uniform
across sectors and is equal to 0.8 in case 1. In addition, based on Alekseev (2003) I consider case 2
in which I allow the import elasticity of substitution to vary across sectors. The values of the import
elasticity of substitution are summarized in Table 2.3. Higher values of elasticities imply more
responsive behavior of economic agents when tariffs change. That is, in the case of higher import
elasticity of substitution between domestic and imported goods, consumers tend to substitute more
easily between such goods. Regarding the exports elasticity of substitution,  x , j , its value is
assumed to be fixed across all sectors with the value of 0.9 in cases 1 and 2.
7
Table 2.2
Schematic Social Accounting Matrix
Expenditures
№№
Receipts
1
2
Production Goods
Sectors
Consumption
Goods Sectors
Factors
Households
Government
Capital
Rest of
World
Row of Sums
3
4
5
6
7
8
9
10
Government
commodity
consumption
Investment
demands for
locally
procured
commodities
Commodity
exports
1
Production Goods Intermediate inputs
Sectors
2
Consumption
Goods Sectors
3
Factors
4
Households
5
Government
Intermediate
inputs
Household
commodity
consumption
Labor inputs, rent,
profits, depreciation
Total
demands for
consumption
goods
Total factor
earnings
Factor
payments
to
households
Indirect taxes, tariffs
Total
commodity
demands
Commodity
sales tax
Household
total incomes
Direct taxes
8
Government
total fiscal
receipts
Table 2.2 (continued)
1
2
3
6
Capital
7
Rest of the World
Commodity Imports
8
Column Sums
Total costs of
production of
production goods
4
5
6
Household
savings
7
8
Government
savings
(sales of
bonds if
negative)
9
Net capital
inflow
(outflow if
negative)
10
Total capital
receipts
Total
payments to
outside
regions
Total costs of
production of
consumption
goods
Total
factor
payments
Household
expenditures
9
Total
government
expenditures
Total
investment
Total
receipts
from the rest
of the world
Total
transactions
Table 2.3
Russian Federation. Import and Export Elasticities of Substitution (  x , j .
Uniform Values
Differentiated
Values
Case 1
Case 2
Sectors
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services

 x, j
 m, j
 x, j
 m , j 
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.750
0.750
0.750
0.750
0.750
0.750
0.806
0.806
0.827
0.587
0.800
0.800
0.940
0.789
0.800
0.600
0.607
0.600
0.590
0.600
 m, j )
Source: Alekseev (2003)
3. MODEL
I construct a static applied general equilibrium (GE) model in the Shoven-Whalley tradition.
This model is a representation of a small open economy with several agents: households,
producers of production and consumption goods, a domestic government, and the rest of the
world. All consumers in the model are identical.
10
3.1 Households
I assume that there is a representative household with the linear log utility function:

jGc
c
j
c
d
f
log c j  inv
log  cinv
 cinv
 cb ,
d
where c j is the consumption of good j  Gc , where Gc is the set of consumption goods; cinv
is
f
the private domestic investment; cinv
is the capital outflow compensating for the Russian trade
surplus; and cb is the purchase of government bonds. Together, the purchases of the domestic
and foreign investment account for consumer savings. Consumers can also save by
purchasing government bonds. The government bonds are regarded by consumers as perfect
substitutes for physical investment (Kehoe et al., 1994).
I assume that the consumer solves a utility-maximization problem of the form
c
d
f
max   cj log c j  inv
log  cinv
 cinv
 cb 
jGc
subject to
pc
jGc
c
j
j

d
f
 pinv  cinv
 cinv
 cb   1   d  wl  rk

d
f
c j , cinv
, cinv
0
In the budget constraint p cj is the price of consumption good j , j  1,...,20 , pinv is the
price of the investment good. Consumers have after-tax income from selling the services of
their labor and capital. Here w and r are the factor prices, l and k are the aggregate
endowments of labor and capital, and  d is the direct tax rate. The parameters  cj 
satisfy the properties  cj 
jGc
c
,inv
 0 and

jGc
c
j
jGc
c
,inv
c
 inv
1.
3.2 Production Goods Producers
I assume that there are three major types of producers: a production good producer, a
consumption good producer, and an investment good producer. In addition, the production
good producers are distinguished by the type of production good they produce. Here there are
final good producers and domestic good producers. I describe each one in detail.
11
3.2.1 Final Good Producer
In this model the final good producer combines both domestically produced and imported
goods of the same product category to produce an aggregate final good. In simple smallcountry models where goods are distinguished by country of origin we usually deal with the
Armington (1969) specification. This specification allows a different degree of substitution
between domestic and imported goods. The fluctuation of domestic goods prices causes even
the smallest country to have some market power (Kehoe et al., 1994). The general production
function of the final good is
1
m , j
m , j 
y j   j  j  y dj   1   j  y jf   m , j ,


where  m, j 
1
1   m, j
is the constant elasticity of substitution between domestic and imported
goods that varies across goods. Here, y j is the output of the final production good j  G p ,
where G p is the set of production goods; y dj is the domestic production of good j  G p ;
and y jf is imports of good j  G p .
Cost minimization further implies that y dj and y jf solve
min p dj y dj  1   j  ep jf y jf
subject to
1
m , j
m , j 
 j  j  y dj   1   j  y jf   m , j  y j


Here, p dj is the price of the domestic component of final good j , p jf is the price of the
imported component of final good j ,  j is the tariff rate that Russia imposes on imports from
the rest of the world of good j , and e is the bilateral real exchange rate; the share parameter
 j and the factor productivity  j are parameters to be calibrated. The data on tariffs is given
in Table 3.1. Note that when  m, j approaches zero, the production function takes CobbDouglas functional form
j
1 j
y j   j  y dj   y jf   .


The zero profit of the final good sector implies
p j y j  p dj y dj  e 1   j  p jf y jf  0
where p j is the producer price of the final good in sector j .
12
3.2.2 Domestic Good Producer
Suppose that n is the total number of industries. Here, n is equal to 20. I assume that the
production of the domestic component of the final good is governed by a constant-returns
production function of the form
 xd

xd
xd

 1 
y dj  min  1,d j ,..., id, j ,..., nd, j ,  j k j j l j j  .
ai , j
an , j


 a1, j

Here, xid, j is the intermediate input of good i used in the production of good j , i  1,..., n ,
j  1,..., n ; aid, j is unit intermediate input requirement in the production of good
j;
k j and l j are the capital and labor inputs; and aid, j , j ,  j are parameters to be calibrated.
Table 3.1
Tariff Rates (  j ) – The Russian Federation (in percentage terms, %)
Sectors
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-Ferrous Metals
Chemicals
Machinery
Tariff Rates
Sectors
5.00
5.00
5.00
5.00
5.00
5.00
9.60
14.70
9.10
11.00
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
Tariff Rates
13.10
13.80
22.10
25.80
10.70
0.00
16.00
0.00
0.00
0.00
Source: the World Bank
I assume that domestic good producers minimize costs and earn zero after-tax profits. Cost
minimization further implies that k j and l j solve
min wl j  rk j
subject to
 j  j
 jk j l j
 y dj
Again, w is the wage rate and r is the capital rental rate.
The zero after-tax profit condition implies
13
1  t  p
p
j
d
j
y dj   pi xij  wl j  rk j  0,
iG p
where t jp is the indirect tax rate on sales of good j in inter-industry transactions.
Since I assume that producers do not waste inputs, the production function for good j can
be written as
y 
d
j
x1,d j
d
1, j
a
 ... 
xid, j
d
i, j
a
 ... 
xnd, j
a
d
n, j

1 j
  jk j j l j
.
Hereafter, the zero after-tax profit condition becomes as follows:
1  t  p
p
j
d
j
y dj   pi aid, j y j  wl j  rk j  0.
iG p
3.3 Consumption Goods Producers
In this model, I assume that the consumption goods purchased by households are different
from the production goods traded between industries. The consumption goods a consumer
purchases have a very high component of services embodied in them. For example,
raspberries purchased by consumers are different from raspberries bought by a firm to
produce raspberry jam. Therefore, here I differentiate between consumption goods and
production goods.
The consumption goods firms combine final production goods in fixed proportion under
the production function specified below:
c

xic, j
xnc, j 
 x1, j

y  min  c ,..., c ,..., c .
ai , j
an , j 
 a1, j


c
j
Here, y cj is the output of the consumption good j  Gc , where Gc is the set of consumption
goods; xic, j is the intermediate input of final production good i used in the production of good
j  Gc ; aic, j is the amount of final good i required to produce one unit of good j  Gc .
Again, I assume that producers of consumption goods never waste inputs, and the
production function for consumption good j can then be written as
y 
c
j
x1,c j
a1,c j
 ... 
xic, j
aic, j
 ... 
xnc, j
anc, j
.
I construct the model so that I make producers of consumption goods pay taxes to the
government and not consumers. The after-tax zero profit condition implies
14
1  t  p y   p a
c
j
c
j
c
j
iGc
c
i i, j
y cj  0,
where t cj is the commodity sales tax on good j ; aic, j is to be calibrated.
3.4 Investment Good Producers
To account for the savings observed in the data, I include purchases of the investment good in
the utility function. In a dynamic setting, agents buy the investment good in one period and
augment their capital stock in the next. Unlike dynamic models, static models treat investment
as another final demand for goods like consumption goods.
The production function for the investment good is
 xd

xd
xd 

d
yinv
 min  1,dinv ,..., id,inv ,..., nd,inv .
ai ,inv
an ,inv 

 a1,inv

I consider the investment good to be produced by selling a combination of other production
goods rather than by any process that involves labor and capital.
Again, I assume that investment good producers minimize costs so that
d
yinv

x1,dinv
xid,inv
xnd,inv

...


...

a1,dinv
aid,inv
and,inv
and they earn zero profits. This assumption implies that x1,dinv ,..., xnd,inv solve
d
d
pinv yinv
  pi aid,inv yinv
0.
iG p
3.5 Government
In models that primarily focus on trade and public finance issues, the government is treated as
an independent decision maker. Like consumers, the government derives utility from
purchasing goods and services and receives income from taxes: ad valorem taxes on
production and consumption, consumer income, taxes on exported goods and tariffs. An
interesting feature of this model is that the government spends more than it receives in
revenue. Government deficits are usually modeled as sales of bonds by the government to the
other consumers (Kehoe et al., 1994). These bonds constitute a part of households’ savings. In
the computation of general equilibrium such a deficit on current expenditures appears in the
government’s budget constraint as a positive endowment of capital tomorrow (Kehoe and
Serra-Puche, 1983). The problem of the government can be written as follows:
15
max  ig log cig
iG p
subject to
 pc
iG p
g
i i

 t
  d wl  rk 
jG p
p
j
p dj y dj   t cj p cj y cj 
jGc
  ep
jG p
j
f
j
y jf  pinv wb 

jG p
e
j
p j x jf ,
where pinv and wb are the price and the endowment of capital tomorrow in the hands of
government.
3.6 Foreign Sector
A common way to model foreign trade is to introduce a foreign sector, known here as the rest
of the world. A representative consumer purchases imported goods x jf , j  G p and consumes a
locally produced good x ff . The representative consumer in the rest of the world chooses a
consumption plan x jf 
jG p
, x ff to solve


x
x
max    jf  x jf    ff  x ff   1 /  x
 jG p

subject to
 1+  p 1    x
jG p
f
j
e
j
j
f
j
 ex ff  eI f ,
where  jf is the tariff rate on imported goods j, j  G p , in the foreign country (see Table 3.2) ;
 ej is the tariff rate on exported goods j, j  G p , imposed on foreigners, e is the bilateral real
exchange rate; I f is the income of the household in the foreign country; and  x 
1
is the
1  x
constant export elasticity of substitution between domestic and imported goods that is
common across goods. The income of the rest of the world is determined exogenously.
Nevertheless, it implicitly contains the corresponding capital inflow from Russia to account
for trade surplus.
16
Table 3.2
Tariff Rates (  j ) – The Rest of the World (in percentage terms, %)
f
Sectors
Tariff Rates
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-Ferrous Metals
Chemicals
Machinery
Sectors
0.34
0.50
4.46
0.50
2.60
6.24
5.73
3.97
5.63
7.14
Tariff Rates
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
8.80
10.62
13.95
21.92
8.08
0.00
9.58
0.00
0.00
0.00
Source: By construction using Table 6.1 from the GTAP 6 Data Base, December 2006.
4. Definition of Equilibrium
All the elements described above are linked by the concept of equilibrium. An equilibrium for
this economy is specified by a set of all the endogenous variables included in the model
economy. That is, prices for final production goods  pˆ j 
goods  pˆ dj 
jG p
,
prices for consumption goods
 pˆ 
c
j
jG p
jGc
, prices for domestic production
, price for the private domestic
investment good pˆ inv , a wage rate ŵ , a capital rental rate r̂ , foreign prices
bilateral real exchange rate ê , a consumption plan for domestic consumers
consumption plan for government cˆig 
iG p
xˆ 
f
j
jG p

the consumption good producer
 yˆ , xˆ
d
j
 yˆ , xˆ
c
j
c
1, j
cˆ 
j
f
j
jGc
jG p
, a

, cˆinv , a
, a consumption plan for the rest of the world
, xˆ ff , a production plan for the final good producers
plan for the domestic good producers
 pˆ 
d
1, j
 yˆ  , yˆ , yˆ 
,..., xˆid, j ,..., xˆnd, j , kˆ j , lˆj

,..., xˆic, j ,..., xˆnc, j 
jGc
j

d
j
jG p
f
j
jG p
, a production
, a production plan for
, a production plan for the private
d
domestic investment good producer  yˆinv
, xˆ1,dinv ,..., xˆid,inv ,..., xˆnd,inv  . To be an equilibrium, a set of
prices and production and consumption plans must satisfy the following properties: given tax
rates and tariffs
17
cˆ 
• The consumption plan
j
jGc

, cˆinv solves the domestic consumer’s utility-
maximization problem.
 xˆ 
• The consumption plan
f
j
jG p
, xˆ ff

solves the problem of the representative
household in the rest of the world.
• The production plan
 yˆ  , yˆ , yˆ 
d
j
j
f
j
solves the problem of the final good producer. It
jG p
satisfies the costs minimization subject to the feasibility constraints and the zero after-tax
profit condition.
• The production plan
 yˆ , xˆ
d
j
d
1, j
,..., xˆid, j ,..., xˆnd, j , kˆ j , lˆj

jG p
solves the problem of the
domestic good producer.
• The production plan
 yˆ , xˆ
c
j
c
1, j

,..., xˆic, j ,..., xˆnc, j 
jGc
solves the problem of the consumption
good producer.
• The production plan
 yˆ
d
inv
, xˆ1,dinv ,..., xˆid,inv ,..., xˆnd,inv  solves the problem of the investment
good producer.
• Supply equals demand in the market for each produced good:
yˆi 
 xˆ
jG p
d
i, j
  xˆic, j  xˆid,inv  cˆig  xˆi f
jGc
yˆ cj  cˆ j
for all i  G p ,
for all j  Gc ,
cˆb  wˆ bg ,
f
,
yˆinv  cˆinv  cˆb  cˆinv
f
where cˆinv is private savings, cˆb is sales of government bond holdings, and cˆinv
is net capital
outflow.
• Supply equals demand in each factor market:
l
 lˆ ,
jG p
k
j
 kˆ
jG p
j
• The trade balance condition holds:


f
f
eˆ   pˆ jf yˆ jf  pˆ inv
cˆinv
 
 jG
p


18
 pˆ xˆ
jG p
j
f
j
5. Numerical Experiments
In this section I analyze the potential effects of two trade liberalization reforms on Russia: one
of partial and one of complete tariff elimination. I gradually lower tariff rates imposed on
foreigners across all sectors, and then calculate the new equilibrium. In addition, I perform a
sensitivity analysis by allowing the import elasticities of substitution to vary across sectors. In
general, the values of all of the endogenous variables change. Taking the benchmark
simulation as a primer reference, I report the implications on prices, domestic production,
trade, and welfare together with the economic intuition behind the obtained results.
Since trade liberalization is a gradual process, I start by considering a partial liberalization
scenario whereby Russia and the rest of the world bilaterally lower all import tariffs by 50%.
Table 5.1 summarizes the results on Russia’s domestic prices and domestic production for
various values of Armington specification used in the final good production in the benchmark
and partial liberalization.
Table 5.1
Effect of Partial Liberalization on Domestic Prices and Total Domestic Production (in billions of rubles)
Sectors
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
Benchmark
Prices Output
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
939.89
1454.06
1211.57
881.76
308.77
2.32
858.46
832.77
698.38
1750.36
487.71
405.17
99.95
1507.39
261.15
1829.35
1261.42
1500.60
1944.73
7517.33
19
Case 1
Prices
Output
0.9964
0.9898
0.9982
0.9919
0.9944
0.9947
0.9961
0.9957
0.9970
0.9984
0.9964
0.9964
0.9979
0.9967
0.9980
0.9954
0.9961
0.9963
0.9965
0.9921
939.37
1455.04
1205.88
880.38
307.92
2.32
836.56
811.11
653.76
1582.78
459.73
380.71
64.86
1291.59
251.38
1828.70
1233.25
1501.14
1944.47
7565.29
Case 2
Prices
Output
0.9944
0.9812
0.9947
0.9810
0.9862
0.9889
0.9925
0.9924
0.9930
0.9964
0.9923
0.9919
0.9940
0.9936
0.9963
0.9929
0.9934
0.9966
0.9934
0.9872
938.80
1455.13
1205.75
879.19
308.33
2.32
837.57
811.72
650.16
1667.95
461.26
381.97
23.19
1305.90
251.57
1824.07
1247.75
1498.23
1941.92
7498.66
The percentage change in total domestic production of each sector for case 1, with uniform
values of substitutability  m, j and  x , j for all j , is given in Figure 5.1.
5.00%
-25.00%
-30.00%
-35.00%
Figure
5.1
Changes in Russian domestic production by sectors if m, j  0.8,  x , j  0.9 for all j .
-40.00%
The Armington specification is an essential factor which determines production and trade
patterns. In case of uniform substitution between domestic and foreign goods, total domestic
production in Russia will decrease in almost all sectors except oil extraction industry,
transportation and other services but still those changes are very small. The largest decrease in
domestic production of tradable goods will take place in the light and food industries which
are the most highly protective industries followed by machinery, chemicals and other
manufacturing industries.
Figure 5.2 and Table 5.2 show the numerical values of the percentage change in Russian
domestic good production for all cases given export and import elasticities of substitution. In
both cases with imperfect substitutability we almost always observe a decline in domestic
production. The largest declines occur in the light and food industries. As the results suggest,
Russia mainly suffers on the domestic production side. The main reason is that after trade
liberalization, Russian domestic production faces higher competition from goods produced in
the rest of the world and therefore domestic production falls.
20
finance
agriculture
construction
-20.00%
transportation and communication
-15.00%
other manufactured products
food industry
light industry
construction materials
wood
machinery
chemicals
non-ferrous metals
ferrous metals
coal
shale oil and peat
-10.00%
gas
oil processing
oil extraction
-5.00%
electricity
0.00%
10,00%
0,00%
-10,00%
-20,00%
Case 1
-30,00%
-40,00%
-50,00%
-60,00%
-70,00%
Case 2
-80,00%
service
finance
transportation and communication
agriculture
construction
other manufactured products
food industry
light industry
21
construction materials
wood
machinery
chemicals
non-ferrous metals
ferrous metals
shale oil and peat
coal
gas
oil processing
oil extraction
electricity
Figure 5.2
Effect of Partial Liberalization on Russian domestic production
Table 5.2
Effect of Partial Liberalization on Domestic Production (in percentage terms, %)
Sectors
Case 1
Case 2
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
-0.06
0.07
-0.47
-0.16
-0.28
-0.06
-2.55
-2.60
-6.39
-9.57
-5.74
-6.04
-35.11
-14.32
-3.74
-0.04
-2.23
0.04
-0.01
0.64
-0.12
0.07
-0.48
-0.29
-0.14
-0.04
-2.43
-2.53
-6.90
-4.71
-5.42
-5.73
-76.80
-13.37
-3.67
-0.29
-1.08
-0.16
-0.14
-0.25
On average, the size of final good production goes up slightly by 0.14% in case 1 and
decreases by 0.21% as in case 2.
Table 5.3 gives the results of the volume of exports and imports with the rest of the world.
On average, the exports of all primary and manufactured goods with the rest of the world
increased by 12.09% and 8.61% in cases 1 and 2, respectively. The largest increase occurs in
the food and light industries. As for imports, they increase by 22.45% and 18.85% in the same
cases.
The results of this model coincide with the facts suggested in the paper by Aussilloux and
Pajot (2001), the research by Alekseev et al. (2003), and others. For instance, Alekseev et al.
(2003) argue that in case of the European Union (EU) enlargement producer prices within EU
will be lower than the prices on the same goods produced in Russia leading to higher levels of
Russian imports and lower levels of exports. As given in Table 5.3, Russian exports of natural
gas fall in the range between 21.87% and 23.88%, crude oil falls in the range between
22
Table 5.3
Effect of Partial Liberalization on Exports and Imports (in billions of rubles)
Export
Sectors
Benchmark
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
16.17
1198.33
438.99
528.93
52.86
0.47
332.51
459.51
265.66
408.14
162.85
14.66
38.26
137.99
53.50
55.81
44.29
200.94
9.91
236.09
Import
Case 1
Case 2
Data
Change
Data
Change
15.75
1082.25
503.38
413.24
56.97
0.60
408.67
513.77
327.32
534.41
231.35
22.84
68.99
334.97
74.14
53.55
66.57
196.72
9.46
243.68
-2.60
-9.69
14.67
-21.87
7.78
28.01
22.90
11.81
23.21
30.94
42.06
55.87
80.30
142.75
38.57
-4.04
50.29
-2.10
-4.55
3.21
15.81
1011.39
487.88
402.61
56.63
0.60
399.11
497.16
325.40
517.08
228.38
22.79
70.98
334.00
73.48
54.15
67.22
206.32
9.45
275.80
-2.19
-15.60
11.14
-23.88
7.13
27.33
20.03
8.19
22.49
26.69
40.24
55.53
85.49
142.04
37.34
-2.97
51.77
2.68
-4.70
16.82
23
Benchmark
Case 1
Data
5.23
14.95
34.40
5.68
6.81
0.01
92.73
56.75
241.29
818.31
90.20
63.61
490.16
372.23
35.84
127.01
63.00
46.86
33.21
555.64
5.94
16.46
39.27
6.30
7.64
0.01
113.73
77.10
283.11
970.74
115.70
85.87
519.92
552.67
44.90
127.31
88.57
47.21
33.48
551.35
Change
13.59
10.04
14.16
10.93
12.20
12.64
22.65
35.85
17.33
18.63
28.27
35.00
6.07
48.48
25.27
0.23
40.59
0.77
0.80
-0.77
Case 2
Data
5.75
15.62
37.74
5.90
7.24
0.01
112.88
76.87
285.91
886.15
114.01
84.49
553.56
536.50
44.65
126.16
74.55
47.05
33.08
544.32
Change
10.00
4.46
9.72
4.02
6.37
7.67
21.73
35.44
18.49
8.29
26.40
32.82
12.93
44.13
24.59
-0.67
18.34
0.41
-0.39
-2.04
9.69% and 15.60%. Since Russian exports are mostly concentrated in oil and gas, even a
slight drop in these sectors will result in a huge loss in nominal values. Russian imports would
increase in all sectors of the economy.
Finally, I examine the impact of partial liberalization on the national welfare. The
functional forms of the welfare function vary greatly depending on a statement of objectives it
is intended to express. Here since agents are assumed identical, what matters is how much
benefit each good with its own assigned weight adds to the aggregate consumption.
Therefore, the consumer welfare measured by the consumer real income index is given by
d
f
  c j    cinv
 cinv
 cb 
j
20
inv
j 1
, where j varies over the consumption goods j  1,...,20 and the
investment good. The government welfare measured by the government real income index is
given by   cig  , where i varies over the production goods i  1,...,20 . The social welfare
ig
20
i 1
20
measured
j
by
the
social
 c j  (c  c  cb )  c
d
inv
f
inv
g
j
real
income
and  j 
index
is
defined
as
d
f
c j   cinv
 cinv
 cb   c gj
 c  c
20
j 1
j
d
inv
 c  cb    c
j 1
j 1
j
j
,
where
. Additionally, these
20
f
inv

g
j
functional forms yield the convex welfare indifference curves. In both cases of imperfect
substitutability, due to some increase in imports and collection of export taxes as well as a
purchase of bonds, the government welfare improves but not by much as shown in Table 5.4.
The overall social welfare fell by approximately 2%.
Table 5.4
Effect of Partial Liberalization on Change in Welfare (in percentage terms, %)
Uniform Values
Differentiated Values
Case 1
Case 2
Consumer Welfare
-2.13
-2.87
Government Welfare
0.39
0.98
Social Welfare
-1.70
-2.22
Types of
Welfare
Next, I examine the impact of a hypothetical case of complete liberalization reform in
Russia. This implies that Russia and the rest of the world agree to eliminate import tariffs
24
across all sectors, holding other trade barriers fixed. As in the example above, I consider both
cases of import elasticity.
Table 5.5 summarizes the results of Russia’s domestic prices and domestic good
production for various values of Armington specification used in the final good production in
the benchmark and complete liberalization. As in the case of partial liberalization, the highest
decline occurs in the light and food industries which accounts for 42.56 % and 23.14% in case
1, and for 87.84% and 22.40% in case 2, respectively. On average, the size of final good
production increased slightly by 1.05% and by 1.07 % as in cases 1 and 2, respectively.
Table 5.5
Effect of Complete Liberalization on Domestic Prices and Total Domestic Production
(in billions of rubles)
Sectors
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
Benchmark
Prices Output
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
939.89
1454.06
1211.57
881.76
308.77
2.32
858.46
832.77
698.38
1750.36
487.71
405.17
99.95
1507.39
261.15
1829.35
1261.42
1500.60
1944.73
7517.33
Case 1
Prices
Output
Case 2
Prices
Output
0.9952
0.9917
1.0011
1.0001
1.0014
0.9978
0.9976
0.9957
0.9996
1.0005
0.9989
0.9994
1.0004
0.9982
0.9986
0.9943
0.9959
0.9916
0.9975
0.9904
0.9968
0.9958
1.0025
1.0034
1.0037
1.0001
0.9993
0.9977
1.0011
1.0013
1.0005
1.0010
1.0011
0.9994
0.9995
0.9962
0.9975
0.9931
0.9990
0.9936
939.94
1456.97
1199.22
880.48
306.03
2.32
801.58
774.98
590.47
1368.34
418.27
350.92
37.26
992.72
237.06
1830.37
1188.90
1506.09
1947.37
7733.60
940.29
1457.06
1201.83
881.20
306.45
2.32
795.76
769.41
565.37
1567.12
415.31
348.67
2.82
1013.38
235.98
1833.69
1231.31
1506.95
1948.82
7737.49
Table 5.6 shows the estimates on the volume of exports and imports with the rest of the
world. On average, the exports of all primary and manufactured goods with the rest of the
world increased by 33.94% and 29.77% in cases 1 and 2, respectively. As for imports, they
increase by 56.66% and 49.16% in the same cases. Note that the number of imported goods
25
from the rest of the world becomes higher than the number of exported commodities (see
Figure 5.3). It appears that a significant change occurs in the food and non-ferrous metallurgy
industries. Under the import elasticity of 0.8, the percentage increase in the food industry is
equal to 126.31% and in non-ferrous metallurgy 99.07%. Once we allow the import elasticity
to vary across sectors, say in the food industry, it is 0.789 and in non-ferrous metallurgy it is
0.806, the percentage increase in food industry is equal to 121.82% and in non-ferrous
metallurgy 108.35%. The fact that Russia will import more non-ferrous metals from abroad
was also supported in the literature.
156.66%
160,00%
133.94%
122.45%
140,00%
112.09%
120,00%
100.00%
100.00%
100,00%
Import
Export
80,00%
60,00%
40,00%
20,00%
0,00%
Benchmark
Partial Liberalization
Complete Liberalization
Figure 5.3
Effect of Trade Liberalization on Exports and Imports Excluding Services and Construction
Finally, I examine the impact of complete liberalization on the national welfare. The
government tariff revenue loss is reflected in the decline in the government welfare which fell
by 0.13% and 0.29% in cases 1 and 2, respectively (see Table 5.7). The consumer welfare
improves compared to the partial liberalization example, except in the case when
m, j  0.8 across all sectors.
26
Table 5.6
Effect of Complete Liberalization on Exports and Imports (data in billions of rubles, change in percentage terms, % )
Sectors
Benchmark
Export
Case 1
Data
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
16.17
1198.33
438.99
528.93
52.86
0.47
332.51
459.51
265.66
408.14
162.85
14.66
38.26
137.99
53.50
55.81
44.29
200.94
9.91
236.09
13.81
998.38
549.75
451.00
56.28
0.71
469.80
548.66
373.48
652.90
308.85
33.18
115.70
803.25
95.75
45.82
91.08
163.00
8.19
189.10
Change
-14.57
-16.69
25.23
-14.73
6.48
51.17
41.29
19.40
40.58
59.97
89.66
126.38
202.37
482.09
78.96
-17.91
105.62
-18.88
-17.35
-19.91
Case 2
Data
13.26
974.15
532.16
436.52
54.22
0.69
454.72
532.01
359.89
633.43
298.09
31.90
111.68
777.20
92.30
43.92
87.38
154.32
7.87
176.14
27
Benchmark
Change
-17.98
-18.71
21.22
-17.47
2.57
45.66
36.75
15.78
35.47
55.20
83.05
117.64
191.85
463.22
72.52
-21.31
97.28
-23.20
-20.60
-25.39
Import
Case 1
Data
5.23
14.95
34.40
5.68
6.81
0.01
92.73
56.75
241.29
818.31
90.20
63.61
490.16
372.23
35.84
127.01
63.00
46.86
33.21
555.64
7.17
20.19
48.09
7.97
9.54
0.01
148.90
112.98
346.46
1189.71
156.71
115.38
546.94
842.40
59.11
135.97
134.47
49.62
36.16
599.74
Change
37.15
35.05
39.80
40.35
40.20
38.72
60.58
99.07
43.59
45.39
73.73
81.39
11.59
126.31
64.93
7.05
113.45
5.90
8.88
7.94
Case 2
Data
6.88
19.63
45.93
7.66
9.13
0.01
154.59
118.25
371.27
1000.26
159.78
117.73
575.28
825.70
60.23
133.56
94.49
48.98
35.11
596.06
Change
31.59
31.29
33.50
34.98
34.20
33.07
66.71
108.35
53.87
22.23
77.14
85.08
17.37
121.82
68.05
5.15
49.99
4.53
5.71
7.27
Table 5.7
Effect of Complete Liberalization on Change in Welfare (in percentage terms)
Uniform Values
Differentiated Values
Case 1
Case 2
Consumer Welfare
-3.54
-2.65
Government Welfare
-0.13
-0.29
Social Welfare
-2.96
-2.25
Types of Welfare
6. Trade Effect on Government Budget
One method used to measure the degree of protectionism within an economy is the average
tariff rate. Since tariffs generally reduce imports of foreign products, the higher the tariff, the
greater the protection afforded to the country's import-competing industries. At one time,
tariffs were perhaps the most commonly applied trade policy. Many countries used tariffs as a
primary source of funds for their government budgets. However, as trade liberalization
advanced in the second half of the twentieth century, many other types of non-tariff barriers
became more prominent. Generally speaking, average tariff rates are less than 20% in most
countries, although they are often quite a bit higher in the case of agricultural commodities. In
the most developed countries, average tariffs are less than 10%, and often less than 5%. On
average, less developed countries maintain higher tariff barriers, but, for many countries that
have recently joined the WTO, tariffs have recently been reduced substantially to gain entry.
In this section I analyze how the two trade liberalization scenarios affect government
revenues in Russia. In my model, the government receives money from imposing taxes on
production, consumption, income, imports and exports, and by issuing government bonds.
Table 6.1 contains the details in percentage terms on Russia’s government revenue structure.
It reveals that an abolishment of tariffs will lower tariff revenues to zero but, on the other
hand, will increase both trade flows and in this way increase government revenue received
from taxing exports. Tax revenues from production goods reflect the fact that fewer and
fewer industries will be subsidized by the government. In my model, government bond
holdings that account for government deficit in the benchmark do not change as much. If we
consider revenues from direct taxes and consumption, we can see that the fall in tariff
revenues will result in the decline in revenues from taxes on consumption and direct taxes as
shown in cases 1 and 2.
28
To compensate for the loss in government revenue in the case of complete liberalization, I
perform two comparative static experiments that tend to show compensatory effective tax
rates on consumption (VAT) and exports. In the first, I let the VAT vary endogenously so that
it covers the loss in government revenue and the budget constraint holds with equality. In the
second, I allow the taxes on exported goods to adjust so that the government budget is
balanced. The analysis finds that given uniform values of elasticity of substitution, the
effective VAT rate jumps from 7.84% to 7.95% whereas the effective export tax rate
increases from 17.84% to 19.08%. Under the assumption of various elasticity of substitution,
the effective VAT rate rises from 7.84% to 8.04% whereas the effective export tax rate
increases from 17.84% to 19.09%. Comparing these two policy instruments, I find that the
taxes on exports tend to increase the social welfare more than the VAT.
Table 6.1
Government revenue structure (in percentage terms,%)
Partial Liberalization
Types of Tax Revenue
Benchmark
Complete
Liberalization
Case 1
Case 2
Case 1
Case 2
Tax Revenue from Production
-5.80
-3.38
-1.78
-0.88
0.32
Direct Tax Revenue
11.62
11.37
11.29
11.22
11.32
Tax Revenue from Consumption
22.49
22.01
21.84
21.71
21.91
Tariff Revenue
15.93
9.80
9.61
0.00
0.00
Total Bonds Holdings
20.15
20.15
20.15
20.15
20.15
Tax Revenue from Exports
35.61
40.04
38.90
47.81
46.30
Total
100.00
100.00
100.00
100.00
100.00
7. Concluding Remarks
This paper is an attempt to analyze the potential effects of two possible trade liberalization
scenarios: partial and complete elimination of import tariffs in Russia and the rest of the
world. Using an applied general equilibrium model as the most appropriate tool for
quantitative evaluation, I provide numerical estimates on changes in production, consumption,
trade flows, and welfare after the creation of a free trade area between Russia and the rest of
the world.
29
The analysis has shown that a free trade agreement between Russia and the rest of the
world is not an optimal form of economic integration for Russia. Despite the fact that tariff
elimination generates significant changes in the volumes of Russian imports and exports, and
by doing so has a positive impact on Russian economy, the Russian consumers do not benefit
in terms of lower domestic pricing on imports. As a result, consumers’ welfare as well as
social welfare both show sizable losses. Russian domestic production shrinks as more and
more imported goods become available. The tariff diminution causes a reduction in the
government budget and therefore subsidies to domestic producers. To compensate the budget
loss, in my model the government can choose to impose either higher taxes on consumption
or higher export taxes on foreigners. Both policies increase government welfare but decrease
consumer and social welfare which in the long run might lead to bigger economic loses.
It is important to note that this paper is not designed to provide a dynamic aspect of trade
liberalization process. It also does not cover the welfare effects on high-income versus lowincome households as well as trade effects between distinguished trading partners.
Incorporating these issues might be an interesting idea for future research.
30
8. Appendix
1. To find the expressions for consumption c j , j  1,...,20,and cinv , we solve the household’s
problem.
Consider the problem of the representative consumer who solves a utility-maximization
problem of the form
c
d
f
max   cj log c j  inv
log  cinv
 cinv
 cb 
jGc
subject to
pc
jGc
c
j
j

d
f
 pinv  cinv
 cinv
 cb   1   d  wl  rk

d
f
c j , cinv
, cinv
0
Define the Lagrangian L as follows

d
f
L    log c j   log  c  c  cb      p cj c j  pinv  cinv
 cinv
 cb   1   d  wl  rk

jGc
jGc
cinv
cinv

c
j
c
inv
d
inv

f
inv





d
f
Let cinv  cinv
 cinv
 cb . Assuming an interior solution, the first-order conditions with respect
to c j , j  Gc and cinv , and the Lagrangian multiplier  are given by:
c j :  cj
1
  p cj
cj
c
cinv : inv
:
(1.1)
1
  pinv
cinv
pc
jGc
for all j  1,...,20
c
j
j
(1.2)

d
f
 pinv  cinv
 cinv
 cb   1   d  wl  rk

(1.3)
Combining the first-order conditions we get
1c c
2c c
pc 
pc 
 cj j j  cj j j
 p cj 
c
j
c
nc c
inv
 c p j c j  c p cj c j  1   d  wl  rk
j
j

After simplifying (1.4) and using the property of  ’s which is

jGc
 c
c c 
p cj c j  1c  1   nc  invc   1   d  wl  rk
 j  j 
  j
1
p cj c j c  1   d  wl  rk

j


31

c
j

(1.4)
c
 inv
 1, we obtain
c j   cj
1   d   wl  rk 
for all j  1,...,20
p cj
(1.5)
Analogously, we can determine cinv :
c
cinv  inv
1   d   wl  rk 
(1.6)
pinv
2. To find the expressions for y dj and y jf , we consider a cost minimization problem of the
final good producer.
Cost minimization of the final good producer implies that y dj and y jf solve
min p dj y dj  1   j  ep jf y jf
subject to
1
m , j
m , j 
 j  j  y dj   1   j  y jf   m , j  y j


Assuming an interior solution, the first-order conditions with respect to y dj and y jf together
with the technological constraint imply
 y dj 

 
(1   j )ep jf 1   j   y jf 
j
p dj
 m , j 1
(2.1)
1
m , j
m , j 
 j  j  y dj   (1   j )  y jf   m , j  y j


(2.2)
From (2.1) we have
y 
d
j
 m , j 1

p dj 1   j 
1    ep 
j
f
j
( y jf )
 m , j 1
j
1
 p dj 1   j 
 m , j 1
d
f  m , j 1
 y j    1   ep f  ( y j ) 
 

j
j j
1
 p dj 1   j   m , j 1
d
 y j    1   ep f    y jf 
 
j
j j 

From (2.2) we have
32
1
m , j
m , j 
 j  j  y dj   (1   j )  y jf   m , j  y j


 

   p dj 1   j   m , j 1 f 

 j  j  
 y j 
f
   1   j  ep j  j 


 
1
m , j
 (1   j )  y jf 
m , j





1
m , j
 yj
1
m , j
1
 
 m , j

d


1
m
,
j
   p j 1   j  
m , j
m , j 

f
f

 j  j  
y

(1


)
y
 yj





j
j
j

f
1


ep





 

j
j j 


 

1
m , j
1
 
 m , j

d


1
   p j 1   j   m , j 


 j y jf  j  

(1


)
 yj
j 

f
   1   j  ep j  j 



 

1
m , j
1

 m , j

m , j 
d


1
m, j
1




p
1



j 
j
 1 

 j y jf  j m , j  

(1


)
 yj
j 

f
1


ep






j
j







1
m , j
1

 m , j

m , j 
d
 m , j 1
1






 1  p j 1   j 

 j y jf  j m , j  

(1


)
 yj

j

f
1


ep






j
j 







1
1  m , j
f 
 j y j  j


 p dj 1   j  


f
 1   j  ep j 

1
y j  1 m , j
f
y j   j
j 

m , j
 m , j 1
 p dj 1   j  


f
 1   j  ep j 
1
 m , j

 (1   j ) 
 yj


m , j
 m , j 1


 (1   j ) 



1
m , j
m , j
m , j
 1 1

d
f  m , j 1
m, j


1
m
,
j





p
1



(1


)
1


ep






y
j
j 
j 
j
j 
 j
y jf  j 

m , j
j 

f  m , j 1
1   j  ep j 





1
m , j
m , j
m , j
 1 1

f
f  m , j 1
d
f  m , j 1
m, j
 m , j 1




y j  1   j  ep j 

p
1



(1


)
1


ep
 j





j
j
j
j
j




j


yj
1
33

1
m , j
m , j
m , j
m , j
 1 1

yj
f
f  m , j 1
d  1
f  m , j 1
m, j


1
m, j
m, j


y j  1   j  ep j 
p
1



(1


)
1


ep
 j

 j   j
j 
j
j 
j


1

1
m , j
1
m , j
m , j 
m , j
1


yj

1  m , j
f
f  m , j 1
d  1
f  m , j 1 


1
1


m, j
m, j  1  

1   j  m , j  j
y j  1   j  ep j 
p

1


e
p
 j
 j   j  j j   
j


 
1
y jf 
1
1   j  ep jf  m , j 1 1   j 

j 
yj
1
1 
 1 m , j d
Let Aj    j
pj
 j  

Then
 
y  y j 1   j  ep 
f
j
f
j
 p 1   j  

y dj  
 1   j  ep jf  j 


d
j
p
d
j

1
m , j 1
 
j

1
m , j 1
1
 m , j 1
1
 m , j 1
 m , j
1 m , j
1
 m , j 1
1
 m , j

1


 1m , j d 1 mm,,jj
f 1  m , j 
1


m, j  1  

  j
p

1


ep
 j
 j   j  j   
 




 1 j
1   
j

1
1 m , j

 1   j ep jf  1 m , j 







1
m , j
(2.3)
Aj
 p 1   j  

 y jf  
 1   j  ep jf  j 


y j Aj   p

1
 m , j 1
d
j
d
j
 m , j



1
1 m , j
 
j
1
1 m , j
1
 m , j 1
1
1
y j 1   j  ep jf  m , j 1 1   j  m , j 1 Aj
y j Aj
Therefore, we get the expressions for y dj and y jf
1
1
y  y j 1   j  ep jf  m , j 1 1   j  m , j 1 Aj
f
j
y dj   p dj 

1
1 m , j
 
j
1
1 m , j
(2.4)
(2.5)
y j Aj ,
1
1 
 1 m , j d
where Aj    j
pj
 j  

 
 m , j
1 m , j

 1 j

1
1 m , j
34

 1   j ep jf  1 m , j 







 m , j

1
m , j

1
m , j
1
m , j
3. Let us find the producer price of the final good p j .
The zero- profit of the final good sector implies
1
m , j
m , j 
p j j  j  y dj   1   j  y jf   m , j  p dj y dj  e 1   j  p jf y jf


Let us now simplify the right-hand side of the zero-profit condition
p dj y dj  e 1   j  p jf y jf
p
d
j

m , j
 m , j 1
 
j

1
 m , j 1
y j Aj  e 1   j  p 
f
j
m , j
 m , j 1
1   
j

1
 m , j 1
y j Aj
m , j
1
1
 d m , j



f  m , j 1

1

1

m
,
j
m
,
j
m


  p j 
 e 1   j  p j 
 j 
1   j  , j 1  Aj y j


 m , j
 m , j
1
1


  j 1 m , j  p dj 1 m , j  1   j 1 m , j e 1   j  p jf  1 m , j  Aj y j


 m , j
 m , j
1
1


d 1 
f 1  m , j 
1  m , j
1


 Aj B j y j , where B j   j 
 p j  m, j  1   j  m, j e 1   j  p j  


(3.1)
Similarly, let us simplify the left-hand side of the zero-profit condition
1
  y d m , j  1    y f m , j  m , j
j
j
 j j

1
  y d m , j  1    y f m , j  m , j
j
j
 j j

1
m , j 
m , j
1
1
1
1
 
 m, j




d  1
f


1
  j   p j  m , j  j  m , j 1 y j Aj   1   j   1   j  ep j  m , j 1   j  m , j 1 y j Aj  
 


 
1
m , j
m , j
m , j
m , j

  m , j
m , j 
1
1
d  1
f  m , j 1

1

1 
m
,
j
m
,
j
m
,
j

   y j A j    j 

 p j   1   j 
1   j  ep j 


 

m , j
  y j A j 


 m , j
m, j

1  m , j
1
1
1  m , j
 1 m , j  p d 
 1   j 1 m , j 1   j  ep jf 
j
 j


 m , j
m, j

1  m , j
1
1
1 m , j
 y j Aj  j 1 m , j  p dj 
 1   j 1 m , j 1   j  ep jf 



35
1
 m , j



1
  m , j


 
 m , j
m, j

1  m , j
1
1
1 m , j

 1   j 1 m , j 1   j  ep jf 
 y j Aj B j m , j , where B j   j 1 m , j  p dj 


Finally, using the zero-profit condition we obtain

1

.


(3.2)
1
m , j
m , j 
p j j  j  y dj   1   j  y jf   m , j  p dj y dj  e 1   j  p jf y jf


1
m , j
p j j y j Aj B j
1
p jBj
pj 
m , j
1
j
 Aj B j y j
Bj

j
Bj
 m , j 1
m , j

1  m , j
1
1
1  m , j
1 
d
f
1  m , j
1  m , j 
pj 
   p j   1   j  1   j  ep j 
j  j

 m , j
 m , j




 m , j 1
m , j
(3.3)
4. Notice that when m  0 , the production function of the final good producer becomes
j
(1 j )

y j   j  y dj   y jf 


Cost minimization of the final good producer implies that y dj and y jf solve
min p dj y dj  (1   j )ep jf y jf
subject to
 j  y dj 
j

y 
f
j
1 j
y
j

Let  be the Lagrangian multiplier. Then the Lagrangian for this problem is given by:
j
1 j
L  p dj y dj  (1   j )ep jf y jf    j  y dj   y jf    y j 
 


d
f
The first-order conditions with respect to y j and y j are the following:
 j 1
y dj : p dj   j j ( y dj )
y 
f
j
1 j
(4.1)
j
y jf : (1   j )ep jf   j (1   j )( y dj )
 :  j  y dj 
j
y 
f
j
 j
(4.2)
y 
1 j
y
j


From (4.1) and (4.2) we get
f
j
(4.3)
 j y jf

1   j  ep jf 1   j y dj
(4.4)
 j  y dj 
(4.5)
p dj
j

y 
f
j
1 j
y
j

36
From (4.5) we get
j
 y dj 
 j  f  y jf  y j
 yj 
j
y  yf 
y  j  dj 
 j  y j 
From (4.6) we get
y jf
p dj
1 j

y dj 1   j  ep jf  j
f
j
(4.6)
(4.7)

j

 y jf 
p dj
1 j 

 d   
f
 1   j  ep j  j 
 yj 
j
Then using (4.6) we get

j
y j  y jf 
yj 
p dj
1 j 

y   d  
 j  y j 
 j  1   j  ep jf  j 


j
f
j
(4.8)
Using (4.7) and (4.8) we get
y y
d
j
f
j
1    ep
j
j
1 j
f
j
p dj
yj 
p dj
1 j 
d

yj  
 j  1   j  ep jf  j 


j
1    ep
j
p
f
j
d
j
j
1 j
 p j 1   j  

y  1   j  ep  
j
j


Then using the budget constraint we get
p dj y dj  1   j  ep jf y jf 
d
j
yj
f
j

1 j
y
d  j
1   j  ep jf 
pj

 j 


y
f  j
 1   j  ep j
 j

 j 1
1 j
 p dj 1   j  


j



p dj
1 j 


f
 1   j  ep j  j 
 j 1
j
(4.9)








37
 j 1
p 
1 j 


 j 

1   j  ep 
j 

1 j

1   j  ep 

j 
1 j
p 
1 j 


 j 

1   j  ep 
j 

1 j
p 
1 j 
1


  j  1 j

1   j  ep 
j 
1 j
p 
1
 
 j 
yj

yj
yj
yj
f
j
f
j


f
j
f
j
f
y j  1   j  ep j
 
 j  1 j


1 j



d
j
d
j
d
j
d
j
j
j
j
j
 p dj 
 
  j 
j

1   j  ep   p
j 
yj

f
j

d
j

j
j
1 j 


 j 
 j

 1

1   j 
j
j
1 j
 1 


1 j 
j
Then
j
1 j
p j y j  p j j  y dj   y jf  



1 j
 y
 p j j   j 1   j  ep jf 
   j

 p dj 1   j  


j


 j 1  j





 yj
 j


p dj
1 j 


f
 1   j  ep j  j 
 j 1 j









 j ( j 1)  j ( j 1)
d
  j  1 j

 j 1 j   j 1 j   p j 1   j  
yj
 yj

f




 p j j     1   j  ep j 

   
j


 j   j 

y 
 p j j  j   p j y j
 
 j
Using the zero-profit condition we get
f
y j  1   j  ep j
pj yj  
 j  1 j

f
1  1   j  ep j 

pj  
 j  1 j 


5. To find the demand
1 j



1 j
 p dj 
 
  j 
 p dj 
 
  j 
j
j
for capital and labor, consider the cost minimization problem of the
domestic good producer. He chooses k j and l j to solve
min wl j  rk j
subject to
 j  j
 jk j l j
38
 y dj
Let  be the Lagrangian multiplier. The Lagrangian for this problem is given by:

1 j
L  wl j  rk j  [  j k j j l j
 y dj ]
Assuming an interior solution, the first-order conditions are given by:
 1 1 j
k j : r   j  j k j j l j

(5.1)
 j
l j : w   (1   j ) j k j j l j
 j 1 j
 :  jk j l j
y
(5.2)
d
j
(5.3)
From (5.1) and (5.2) we get
a 1 1
 j jk j j l j j
 j lj
r
.


w (1   j ) j k j j l j  j 1   j k j
This can also be written as
lj
kj
1    r

j
 jw

1 j
Using (5.3)  j k j j l j

1 j
k j jl j

 y dj we get
y dj
j
j
 kj

 lj
or

y dj
l

 j
j

 lj

 kj



1 j
y dj
kj 
j
Finally, the demand for capital and labor are defined as follows:
1 j
y dj  k j 
kj 
 
 j  l j 
j
1 j
y dj   j w 



 j  (1   j )r 
(5.4)
j
yd  l 
y d  (1   j )r 
lj  j  j   j 

 j  k j 
 j   j w 
(5.5)
Using the equations above, we get
39
wl j  rk j
 y dj
 w

 j
  1   j  r 
 y dj
  r
 

   j w 
 j
j
1 j
  jw 

 
  1   j  r 
j
1 j

1   r   w 

1   j    j  y dj
  


 j   j  1 j 



j
1 j
1   r   w   d
(5.6)
   
y

 j    j   1   j   j


6. To find the domestic good price, p dj , we assume that domestic good producers earn zero


after-tax profits, that is
1  t  p
p
j
Using y 
d
j
x1,d j
d
1, j
a
 ... 
xid, j
d
i, j
a
 ... 
y dj   pi xij  wl j  rk j  0 .
iG p
j
 1  r 
and wl j  rk j    
    
 j  j 
xnd, j
a
d
j
d
n, j
1 j
 w 


1 j 
y dj ,
we can rewrite the zero after-tax profit condition as follows
p dj y dj 
px
iG p
d
i i, j
 wl j  rk j  t jp p dj y dj
Then
(1  t ) p 
p
j

p 
d
j
iG p
d
j

iG p
j
 1  r 
p a    
    
 j  j 
d
i i, j
j
 1  r 
p a    
    
 j  j 
1  t jp 
d
i i, j
1 j
 w 


1 j 
1 j
 w 


1 j 
(6.1)
7. To find the export demand, consider the problem of foreign trade partners. In each trade
partner country (in my case, it is the rest of the world), there is a representative consumer that
purchases imported goods, x jf , j  1,...,20 , and consumes the local good, x ff .
The problem of the foreign household in the rest of the world is given by:


x
x
max    jf  x jf    ff  x ff   1 /  x
 jG p

subject to
 1+ 1    p x
jG p
f
j
e
j
j
f
j
 ex ff  eI f
Let  be the Lagrangian multiplier. The Lagrangian is given by:
40




x
x
L     jf  x jf    ff  x ff   1 /  x     1+ jf 1   ej  p j x jf  ex ff  eI f 
 jG p

 jG p

The first-order conditions with respect to x jf , j  1,...,20and x ff imply the following:
 jf  x jf 
 x 1
1f  x1f 
 x 1
 ff  x ff 
 x 1

 x 1
f
1
x 
f
1
1   1    p

1   1    p

f
j
e
j
j
f
1
e
1
1
for all j  1,...,20
(7.1)
e
1   1  1e  p1
(7.2)
f
1
Let us simplify the budget constraint:
1+ 1    p x
 1+ 1    p   
f
1
e
1
f
1
f
1 1
e
1
f
1
1
1
 1+1f 1  1e  p1  1 x

0
x1f
x
1  x
 
1
 1+ 1f 1   1e  p1  1  x 1f 
 1+ 1f 1   1e  p1 
 1+
f
1

1
1  x
1
1  x
1
 1+ 2f 1   2e  p2 


f
e
 1+ 1 1   1  p1 
1
1  x

1
1  x

1
1

1  x 1  x
x1f
(7.3)
1+ 2f 1   2e  p2 


 x 1

 x 1
f
1
x 
f
1
x
1  x
1
2f 1
1
1
x
x
f
1

1
1  x
1+

f
2
1   p 
e
2
2

x
1  x

1
1  x
 
f
2
x
x2f
1
1  x
1
 1f 1  x f
x2
 f 
 2 
(7.4)
Using (7.1) we get
2f  x2f 

1f 1 1+ 2f 1   2e  p2 1 2f 
1    p   
e
1
f
1
1   1    p

1   1    p
f
2
e
2
2
f
1
e
1
1
41
1   1    p

1   1    p
1  x
 x1f 
 f 
 x2 
f
2
e
2
f
1
e
1
1f
f
1 2
2
 1   2f 1   2e  p2  f
x
1

 1   1f 1   1e  p1 2f
x

f
1
f
2
 1   1    p2 
x2f  
 1   1f 1   1e  p1 

f
2
e
2
f
1
f
2
1
1  x








1
1  x
x1f
(7.5)
Therefore,
1+ 1   p x
f
2
e
2
f
2 2
1
 1+ 1f 1   1e  p1  1  x 1f 
 1+ 2f 1   2e  p2  f
1

f
f
e
 1+ 1 1   1  p1 2
1
 1  x



1
1  x
1+ 2f 1   2e  p2 


 1   2f 1   2e  p2  f
1

 1   1f 1   1e  p1 2f

1
 1+ 1f 1   1e  p1  1  x 1f 

1
1  x






x
1  x
 
f
2
1
1  x
1
1  x
x1f
1+ 2f 1   2e  p2 



x
1  x
 
f
2
1
1  x
x1f
Analogously,
1
1+ jf 1  ej  p j x jf  1+1f 1  1e  p1 1x 1f 
e f x  1+
f
f
f
1
1
1  x
1   p   
e
1
1
f
1

1
1  x

x
1
1  x
1+ jf 1   ej  p j 



x
1  x
1
 jf 1 x1f
x
1
e1  ff 1
x
x
x1f
Therefore, we have
 1+ 1    p x
f
j
jG p
e
j
j
f
j
 ex ff
1
 1+ 1f 1   1e  p1  1  x 1f 
 1+
f
1
1
1  x
1    p   
e
1
1
f
1


1
1  x
1
1  x

1
 x




   1+ jf 1   ej  p j  1  x  jf 1 x x1f
jG p 




e
x
1  x
 
f
f
1
1  x
Furthermore,
42
x1f
(7.6)
r
ìï
- x
where qq = å í é 1+t jf 1+ t ej p j ù 1- rx q jf
ë
û
jÎG p ï
î
(
)(
)
( )
1
1- r x
üï -1-rrx
f
ý+ e x qf
þï
Finally,
1

 1  x eI f
1f
f
x1  

f
e
qq
 1+ 1 1   1  p1 
Analogously,




x jf  
f
e
 1+ j 1   j  p j 
f
2
1
1  x
eI f
qq
for all j  1,...,20
The local good level can be found using either
1
  ff 1  x eI f
f
or
xf   
qq
 e 


1
x ff   eI f    1+ jf 1   ej  p j x jf   .

e 
 jG p
 
43
( )
1
1- r x
Calibrated Parameters
Table 8.1
Preference Parameters  
Sectors
Consumer
Government
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
Investment Good
0.0102
0.0000
0.0087
0.0024
0.0006
0.0000
0.0000
0.0000
0.0184
0.0502
0.0104
0.0038
0.0762
0.1851
0.0039
0.0033
0.0555
0.0460
0.0225
0.0934
0.4095
0.0000
0.0000
0.0001
0.0000
0.0002
0.0000
0.0000
0.0000
0.0030
0.0015
0.0000
0.0000
0.0005
0.0000
0.0005
0.0000
0.0063
0.0111
0.5427
0.4339
0.0000
Table 8.2
Foreign Sector Preference Parameters  f
Sectors
Foreign Sector
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
0.0338
0.0521
0.0490
0.0480
0.0390
0.0252
0.0483
0.0490
0.0471
0.0499
Wood
0.0462
Sectors
Construction
Light
Industry
Materials
Food Industry
Other
Construction
Manufacturing
Agriculture
Transportation
Finance
Other Services
Local Good
44

Foreign Sector
0.0369
0.0419
0.0510
0.0411
0.0318
0.0409
0.0362
0.0268
0.0368
0.1690
Table 8.3
Domestic Goods Firm Parameters  ,  
Sectors


Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
0.6074
0.8567
0.8183
0.7189
0.2178
0.2859
0.6254
0.6612
0.4238
0.1770
0.4108
0.3323
0.0933
0.5798
0.3474
0.5314
0.3607
0.4783
0.2342
0.6452
5.3947
3.2122
17.6505
15.1557
12.3086
3.4784
7.2702
5.0604
9.7412
5.7270
7.6892
7.8298
2.7966
8.3713
6.6491
4.2990
3.6342
2.8133
3.0553
3.0177
Table 8.4
Armington Aggregators  , 
Sectors


1
2
3
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
1.4016
1.7025
1.7093
1.5801
1.6133
1.4340
2.0277
2.0624
2.1553
2.1122
2.1082
1.9935
0.7772
0.7494
0.6988
0.7708
0.7120
0.7852
0.5842
0.5948
0.5242
0.5522
0.5534
0.5600
45
Table 8.4 (continued)
1
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
46
2
3
2.2093
2.1796
2.0035
1.5653
1.6054
1.4209
1.3243
1.5778
0.4268
0.5164
0.5734
0.7440
0.7368
0.8001
0.8414
0.7392
Table 8.5
The Social Accounting Matrix for Russia, 2003 (in trillions of rubles)
Industry
Electricity
Crude
Petroleum
Extraction
Petroleum
Manufac
turing
Natural
Gas
3
151.94
4
34.90
5
27.06
6
7.20
3.77
9.98
460.46
81.09
172.09
65.80
0.53
3.71
6.67
5.19
14.79
0.49
36.60
-12.58
1.71
0.00
14.68
0.68
20.30
24.15
0.36
1.37
0.29
0.17
-3.14
23.06
0.22
7.05
11.80
34.88
№№
Coal
Shale
Oil
and
Peat
Ferrous
Metals
NonFerrous
Metals
Chemicals
Machinery
7
7.64
8
0.01
9
32.80
10
36.55
11
49.86
12
47.77
1.23
0.00
0.21
0.01
0.00
32.99
46.77
0.45
0.25
0.04
1.19
0.21
-7.92
3.75
0.18
-11.04
43.95
0.06
0.00
0.51
0.27
3.38
0.96
0.04
4.04
0.29
29.82
0.01
2.96
0.04
6.32
9.87
1.83
-0.21
0.09
0.02
0.07
0.02
0.00
-0.10
0.04
-0.01
25.70
32.00
62.20
0.02
243.31
34.20
3.45
9.05
2.30
16.43
6.99
2.15
0.03
8.99
318.95
5.28
15.61
0.95
1.91
-0.69
0.02
0.74
-0.01
0.93
0.54
0.33
0.57
16.62
0.13
37.02
15.13
602.87
0.02
0.10
0.96
6.69
0.17
2.69
2.40
492.28
0.08
0.00
0.89
6.94
0.01
2.00
2.09
621.91
0.62
0.15
0.61
1.05
0.00
7.62
1.46
195.50
0.00
0.00
0.00
0.03
0.00
0.09
0.03
0.89
1.55
0.39
2.18
9.87
0.35
7.44
10.03
203.72
Products
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2
Electricity
Crude
Petroleum
Extraction
Petroleum
Natural
Gas
Manufacturing
Coal
Shale Oil &
Ferrous
Metals
Peat
Non-ferrous
Chemicals
Metals
Machinery
Wood
Construction
Materials
Light Industry
Food Industry
Other
Construction
Manufacturing
Agriculture
Transportation
Finance
Other Services
47
Wood
Construction
Materials
Light
Industry
Food
Industry
13
15.20
14
19.25
15
6.90
16
20.34
-0.35
0.01
0.02
0.00
0.00
-1.08
27.24
8.21
0.01
17.24
8.47
192.86
9.12
12.82
51.93
19.54
13.76
0.10
199.61
97.16
62.52
408.55
11.55
24.50
3.66
5.37
0.07
5.51
4.12
16.36
17.47
122.19
19.49
19.64
4.22
0.06
23.23
3.76
8.77
6.57
2.91
1.61
1.34
1.30
0.01
0.67
0.11
13.91
0.89
0.13
38.27
9.08
4.81
0.02
4.48
5.78
15.96
23.12
24.98
-1.33
0.44
5.07
1.76
63.20
0.02
6.43
0.25
-0.12
-0.74
10.17
0.08
6.77
7.82
157.20
2.99
3.58
2.14
9.19
0.51
12.61
2.88
204.35
4.91
1.24
2.21
21.48
0.69
16.20
12.92
366.25
4.61
0.01
0.36
2.82
0.09
7.47
2.85
137.09
1.04
0.05
0.32
3.10
0.03
6.01
1.38
124.77
85.68
-0.78
0.27
1.45
4.47
0.96
0.56
34.71
3.50
473.55
-0.26
14.21
347.35
13.81
5.93
185.79
Table 8.5 (continued)
1
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
2
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
3
0.00
0.00
0.00
4
0.00
0.00
0.00
5
0.00
0.00
0.00
6
0.00
0.00
0.00
7
0.00
0.00
0.00
8
0.00
0.00
0.00
9
0.00
0.00
0.00
10
0.00
0.00
0.00
11
0.00
0.00
0.00
12
0.00
0.00
0.00
13
0.00
0.00
0.00
14
0.00
0.00
0.00
15
0.00
0.00
0.00
16
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
48
Table 8.5 (continued)
1
41
42
2
L
43
44
44a
44b
44c
44d
45
46
47
Households
Government
Direct Taxes
Indirect Taxes
Tariff
Export Taxes
Investment
Import
Total
K
3
133.64
4
97.86
5
20.04
6
29.62
7
33.14
8
0.87
9
85.71
10
105.78
11
81.66
12
401.17
13
73.55
14
65,25
15
44,19
16
149,41
206.80
0.00
21.16
0.00
17.67
0.26
3.23
0.00
5.23
948.61
584.89
0.00
205.83
0.00
-34.58
0.75
239.67
0.00
14.95
1 709.43
90.23
0.00
153.76
0.00
64.25
1.72
87.80
0.00
34.40
1 335.49
75.75
0.00
201.95
0.00
95.88
0.28
105.79
0.00
5.68
993.51
9.23
0.00
6.76
0.00
-4.15
0.34
10.57
0.00
6.81
326.49
0.35
0.00
0.03
0.00
-0.06
0.00
0.09
0.00
0.01
2.43
143.07
0.00
23.60
0.00
-51.81
8.90
66.50
0.00
92.73
1 026.60
206.40
0.00
28.82
0.00
-71.43
8.34
91.90
0.00
56.75
989.77
60.07
0.00
35.32
0.00
-39.77
21.96
53.13
0.00
241.29
1 014.76
86.25
0.00
91.49
0.00
-80.15
90.01
81.63
0.00
818.31
2 740.32
51.29
0.00
35.74
0.00
-8.65
11.82
32.57
0.00
90.20
622.30
32,47
0,00
11,37
0,00
-0,34
8,78
2,93
0,00
63,61
480,49
4,55
0,00
12,97
0,00
-103,01
108,32
7,65
0,00
490,16
706,08
206,15
0,00
78,32
0,00
-45,32
96,04
27,60
0,00
372,23
2 003,26
49
Table 8.5 (continued)
oduction Goods Sectors
Production Goods Sectors
Industry
№№
Consumption Goods Sectors
Other
Manufac
turing
Construc
tion
Agriculture
Transport
Finance
Other
Services
Electricity
Crude
Petroleum
Extraction
Petroleum
Manufac
turing
Natural
Gas
Coal
Shale
Oil
and
Peat
Ferrous
Metals
NonFerrous
Metals
17
4.88
18
24.10
19
17.59
20
81.79
21
48.26
22
185.38
23
113.03
24
0.00
25
0.00
26
0.00
27
0.00
28
0.00
29
0.00
30
0.00
0.00
0.06
0.00
5.54
0.00
0.90
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3.09
1.24
0.68
0.00
2.17
43.77
10.66
4.97
22.76
0.32
2.22
2.88
37.81
2.14
16.87
1.84
1.20
28.06
92.38
1.30
7.62
0.60
104.08
6.74
39.49
145.88
60.88
279.03
2.39
0.61
1.80
6.78
0.00
33.91
6.87
81.89
56.17
1.77
3.29
0.28
0.38
0.00
21.15
39.98
0.94
2.31
1.06
29.77
47.86
6.47
283.43
15.81
3.18
80.62
172.45
32.02
6.76
0.01
25.87
0.97
30.33
179.90
14.48
16.82
6.00
4.33
10.16
64.57
0.00
81.17
31.83
-353.34
63.35
18.72
9.86
0.00
0.06
0.00
11.41
83.10
8.65
0.62
18.41
48.04
15.82
39.19
23.58
119.87
74.07
264.59
154.43
74.31
41.14
0.14
26.82
4.50
170.91
196.87
79.96
51.64
41.52
216.75
60.70
85.71
49.36
427.10
253.04
583.90
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
18.31
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
57.33
0.00
8.36
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
14.48
0.00
0.00
1.55
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
4.37
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.31
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.17
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Products
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2
Electricity
Crude Petroleum
Extraction
Petroleum
Natural Gas
Coal
Shale Oil & Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
50
Table 8.5 (continued)
1
21
22
2
Electricity
17
0.00
18
0.00
19
0.00
20
0.00
21
0.00
22
0.00
23
0.00
24
0.00
25
0.00
26
0.00
27
0.00
28
0.00
29
0.00
30
0.00
Crude Petroleum Extraction
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
24
25
26
27
28
29
30
31
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
32
Construction Materials
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
33
34
35
36
37
38
39
40
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
23
51
Table 8.5 (continued)
1
41
42
L
2
17
48.89
18
397.99
19
426.68
20
556.01
21
840.06
22
1 693.39
23
0.00
24
0.00
25
0.00
26
0.00
27
0.00
28
0.00
29
0.00
30
0.00
K
26.03
451.39
240.75
509.78
256.95
3 080.07
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
43
44
44a
44b
44c
44d
45
46
47
Households
Government
Direct Taxes
Indirect Taxes
Tariff
Export Taxes
Investment
Import
Total
0.00
13.20
0.00
-1.34
3.84
10.70
0.00
35.84
311.53
0.00
83.52
0.00
83.52
0.00
0.00
0.00
127.01
1 956.36
0.00
0.87
0.00
-18.07
10.08
8.86
0.00
63.00
1 343.35
0.00
23.14
0.00
23.14
0.00
0.00
0.00
46.86
1 547.46
0.00
0.11
0.00
0.11
0.00
0.00
0.00
33.21
1 977.94
0.00
38.79
0.00
38.79
0.00
0.00
0.00
555.64
8 072.97
0.00
2.50
0.00
2.50
0.00
0.00
0.00
0.00
115.53
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
22.78
0.00
22.78
0.00
0.00
0.00
0.00
98.43
0.00
4.49
0.00
4.49
0.00
0.00
0.00
0.00
27.33
0.00
1.05
0.00
1.05
0.00
0.00
0.00
0.00
6.97
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.07
0.00
0.07
0.00
0.00
0.00
0.00
0.56
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
52
Table 8.5 (continued)
Industry
Chemicals
Machinery
Wood
31
0.00
32
0.00
33
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
93.38
0.00
0.00
№№
Construction
Materials
Light
Industry
Food
Industry
Other
Manufacturing
Construction
Agriculture
37
38
39
Transport
Finance
Other
Services
Products
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2
Electricity
Crude Petroleum
Extraction
Petroleum
Natural Gas
Manufacturing
Coal
Shale Oil and
Ferrous
Metals
Peat
Non-ferrous
Chemicals
Metals
Machinery
Wood
Construction
Materials
Light Industry
Food Industry
Other
Construction
Manufacturing
Agriculture
Transportation
Finance
Other Services
34
0.00
35
0.00
36
0.00
0.00
0.00
0.00
40
0.00
41
0.00
42
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
316.85
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
62.52
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
20.89
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
87.16
0.00
0.00
0.00
0.00
0.00
0.00
0.00
168.94
0.00
0.00
0.00
0.00
0.00
0.00
0.00
39.85
0.00
0.00
0.00
0.00
0.00
0.00
0.00
16.99
479.88
0.00
0.00
0.00
0.00
0.00
0.00
337.12
0.00
1 023.54
0.00
0.00
0.00
0.00
0.00
714.50
0.00
0.00
31.70
0.00
0.00
0.00
0.00
11.24
0.00
0.00
0.00
36.95
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
513.09
0.00
0.00
94.59
0.00
0.00
0.00
0.00
0.00
513.16
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
254.75
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1 134.89
53
Table 8.5 (continued)
1
21
22
2
Electricity
31
0.00
32
0.00
33
0.00
34
0.00
35
0.00
36
0.00
37
0.00
38
0.00
39
0.00
40
0.00
41
0.00
42
0.00
Crude Petroleum Extraction
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
24
25
26
27
28
29
30
31
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
32
Construction Materials
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
33
34
35
36
37
38
39
40
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
23
54
Table 8.5 (continued)
1
41
42
L
2
31
0.00
32
0.00
33
0.00
34
0.00
35
0.00
36
0.00
37
0.00
38
0.00
39
0.00
40
0.00
41
0.00
42
0.00
K
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
43
44
44a
44b
44c
44d
45
46
47
Households
Government
Direct Taxes
Indirect Taxes
Tariff
Export Taxes
Investment
Import
Total
0.00
27.81
0.00
27.81
0.00
0.00
0.00
0.00
208.35
0.00
82.95
0.00
82.95
0.00
0.00
0.00
0.00
568.75
0.00
15.78
0.00
15.78
0.00
0.00
0.00
0.00
118.15
0.00
5.14
0.00
5.14
0.00
0.00
0.00
0.00
43.02
0.00
46.49
0.00
46.49
0.00
0.00
0.00
0.00
863.48
0.00
360.06
0.00
360.06
0.00
0.00
0.00
0.00
2 098.11
0.00
1.68
0.00
1.68
0.00
0.00
0.00
0.00
44.61
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
36.95
0.00
21.73
0.00
21.73
0.00
0.00
0.00
0.00
629.42
0.00
7.87
0.00
7.87
0.00
0.00
0.00
0.00
521.03
0.00
0.04
0.00
0.04
0.00
0.00
0.00
0.00
254.80
0.00
-75.81
0.00
-75.81
0.00
0.00
0.00
0.00
1 059.09
55
Table 8.5 (continued)
Expenditure
№№
Labor
Capital
Households
Government
Investment
Export
Total
43
44
45
46
47
48
49
Products
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
56
0.00
0.00
0.32
0.00
0.48
0.00
0.00
0.00
6.99
3.52
0.00
0.00
1.26
0.00
1.26
0.00
14.67
25.91
1 265.81
1 012.09
0.00
-3.73
1.87
3.07
2.56
-0.06
8.28
-6.16
18.49
817.16
28.56
14.34
9.02
60.67
44.55
1 532.08
43.96
0.00
0.00
95.24
16.17
1 198.33
438.99
528.93
52.86
0.47
332.51
459.51
265.66
408.14
162.85
14.66
38.26
137.99
53.50
55.81
44.29
200.94
9.91
236.09
948.61
1 709.43
1 335.49
993.51
326.49
2.43
1 026.60
989.77
1 014.76
2 740.32
622.30
480.49
706.08
2 003.26
311.53
1 956.36
1 343.35
1 547.46
1 977.94
8 072.97
Table 8.5 (continued)
1
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
2
Electricity
Crude Petroleum Extraction
Petroleum Manufacturing
Natural Gas
Coal
Shale Oil and Peat
Ferrous Metals
Non-ferrous Metals
Chemicals
Machinery
Wood
Construction Materials
Light Industry
Food Industry
Other Manufacturing
Construction
Agriculture
Transportation
Finance
Other Services
43
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
44
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
45
115.53
0.00
98.43
27.33
6.97
0.00
0.56
0.00
208.35
568.75
118.15
43.02
863.48
2 098.11
44.61
36.95
629.42
521.03
254.80
1 059.09
57
46
47
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
48
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
49
115.53
0.00
98.43
27.33
6.97
0.00
0.56
0.00
208.35
568.75
118.15
43.02
863.48
2 098.11
44.61
36.95
629.42
521.03
254.80
1 059.09
Table 8.5 (continued)
1
41
42
2
L
43
0.00
44
0.00
45
0.00
46
0.00
47
0.00
48
0.00
49
5 284.91
K
0.00
0.00
0.00
0.00
0.00
0.00
6 322.46
43
44
44a
44b
44c
44d
45
46
47
Households
Government
Direct Taxes
Indirect Taxes
Tariff
Export Taxes
Investment
Import
Total
5 284.91
0.00
0.00
0.00
0.00
0.00
0.00
0.00
5 284.91
6 322.46
0.00
0.00
0.00
0.00
0.00
0.00
0.00
6 322.46
0.00
271.09
271.09
0.00
0.00
0.00
4 641.73
0.00
11 607.36
0.00
0.00
0.00
0.00
0.00
0.00
-469.85
0.00
1 862.47
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2 669.92
0.00
0.00
0.00
0.00
0.00
0.00
-1 501.96
0.00
3 153.92
11 607.36
1 862.47
271.09
389.31
371.44
830.63
2 669.92
3 153.92
0.00
58
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