Post-Soviet Society and Russia’s Macroeconomic Statistics

Abstract

This article investigates the causes of the distorted macroeconomic statistics in the Russian Federation. It introduces alternative methods for the estimation of gross domestic product (GDP) growth, and the growth and amount of fixed capital stock, and estimates them by drawing on alternative data. Our estimates for the period of 1992–2015 differ substantially from those reported by the Russian Federal State Statistics Service (Rosstat). According to our estimates, GDP declined by 10.2 percent, which is in sharp contrast with the official estimate reporting growth of 13.4 percent. The same is found with regard to labor productivity, for which we find a decline of 30.1 percent instead of a growth of 9.2 percent. Accordingly, the full book value of fixed capital stock shrunk by 29.2 percent instead of the officially reported 50.9 percent growth. The drop in the residual value of fixed capital is estimated at 52.6 percent. The ratio of replacement to book value of fixed capital fluctuated between 4:1 in the middle of the period and 7:1 toward the end of the period. Additionally, we estimate the amount of investment in human and physical capital necessary for producing 3 percent annual GDP growth. Financing such investment would require a decline in personal consumption by about a factor of 2, with a greater part of it falling on the better off population strata. Finally, we make suggestions regarding income redistribution.

Keywords:

• Russia’s economy
• macroeconomic statistics
• alternative estimates of macroeconomic statistics
• GDP growth
• capital stock
• growth of capital stock
• factors of economic growth
• income redistribution

Notes

^1. Average drop on two parameters (consumption of electricity and transport of goods), 32.2 percent.

^2. For 2015, because of the lack of statistics on electricity consumption, indicators for the production of electricity were used, which are close to data of electricity consumption.

^3. An exception is the beer and bakery industries, which were almost created anew by foreign capital.