About the Russia KLEMS Group

The challenges to completion of the project were formidable. Important progress had been made on convergence of Russian National Accounts to the level of advanced OECD countries. However, substantial gaps remained from the interruptions of collection and processing of basic economic data that accompanied the establishment of the Russian Federation as an independent nation.

The initial version of the Russia KLEMS data set has now been completed and posted on the World KELMS website (http://www.worldklems.net/data.htm). This achievement has been made possible by extended co-operation between economists and statisticians. As a consequence, Russia has joined more than forty countries around the world that are developing industry-level data sets for analyzing growth and productivity in the World KLEMS Initiative. These data sets are rapidly becoming indispensable for the development of longer-term economic strategies.

Having worked with productivity statistics for a wide variety of countries within the World KLEMS project, I was pleasantly surprised by the abundant availability of economic statistics for Russia. Building upon a strong tradition of data collection, the transition towards an international comparable system within the framework of the System of National Accounts and an International industrial classification has been surprisingly fast. From the perspective of building productivity accounts, the information on investments, output and employment was particularly rich. Also the importance of issues such as the size of the shadow economy and informal employment for the Russian economy is well reflected in the available collection of statistics. Based on this, it was possible to construct a first version of the Russian KLEMS dataset, providing for the first time an in-depth analysis of productivity performance of the Russian economy. And through the World KLEMS initiative, new comparisons with performance of a wide variety of other countries can be made.

The methods used in the project may be of interest for our colleagues in post-Soviet countries.Russia has become the first of the CIS countries to appear on the map of contemporary industry-level inter-country comparisons in the big World KLEMS project, which today covers all key economies of Europe, the USA, China, Japan, countries of Latin America and Southeast Asia. We would be happy to share our experience of adapting our joint heritage of Soviet statistics, with all its advantages and shortcomings, to the cutting-edge global standards.

So, what have we learned about the Russian economy thanks to the project’s data? We have analyzed the sources of Russian economic growth during the pre-crisis period, and found out that the rapid growth of the 2000s had an unfavourable structure and was related either to a capital surplus in the raw materials sector and trade, or to the expansion of the services sector, which had been falling behind in early 1990s. That’s why the slow post-crisis rehabilitation of the Russian economy is, in the first place, a consequence of its internal disproportions, which are not obvious in the stage of growth. We have also received a fuller picture of Russia’s technological lag. It turned out that the technological gap between Russia and developed countries has shrunk a little during the market economy, but is still huge. That’s why today we have lots of opportunities to improve production by adopting  cutting-edge technologies. That was how  post-war Europe decreased the production gap with the USA. We have also received many other interesting results.

It is very important not to be satisfied with what has been achieved and continue developing Russia KLEMS project. At the end of 2015 the Federal State Statistics Service will publish Supply and Use tables (SUT) which will be integrated with Russia KLEMS indicators. This will bring the tools of economic policy-making and analysis to a new level. For example, we’ll be able to analyze not only direct input by certain industries and factors of production in the total growth rate, but to consider their indirect influence, through interim production for other industries. From the research conducted by Dale Jorgenson and his colleagues we know that direct input from industries producing semiconductor computers is almost invisible in the total American economy growth. But its indirect influence shows that the role of information technology and software is the key in the growth of the last decades. I believe that similar analysis of the Russian economy will bring us many surprises, and I follow the development of this project with great interest.

The system of real added value indicators is based on the industrial production indices, which have been developed since the early 1990s by Eduard Baranov and Vladimir Bessonov. At  all stages the project has been professionally supported by Vladimir Gimpelson and Rostislav Kapelyushnikov from the HSE Centre for Labour Market Studies, leading experts in the Russian labour market and Russian labour statistics with strong international backgrounds. They helped to reveal and solve many questions on the dynamics of labour costs in industry. The project wouldn’t have been realized without organizational and methodical support from the Federal State Statistics Service on different levels – from management to ordinary staff members, responsible for calculating certain indicators. I’d like to specially mention statisticians who have worked in the National Accounts Office – I. Bezrukavaya, M. Gordonov, A. Konstantinov, L. Kochneva, and G. Romashkina. They explained the specifics of official statistics of investment and capital assets, and made a big contribution to solving the most difficult tasks of the project.

In 2008 the Groningen Growth and Development Centre joined the work on the Russia KLEMS project. The Centre is experienced in working with industry statistics, inter-industry comparisons and research in long-term trends of economic development. They also have research interests in the economic history of Russia, which go back to Angus Maddison’s work. Reitze Gouma, Robert Inklaar, Gaaitzen de Vries and, especially, Marcel Timmer have contributed to the project, sharing the experience of the Centre to solve multiple Russia-specific problems with primary data.

Publishing the first release of the Russia KLEMS data set doesn’t mean we are finishing the project. We are starting work on the next release, in which the series will be extended until 2012 and some variables will be added. The key question to be answered with the second release is about the consequences of the 2008 crisis on long-term productivity trends of the Russian economy in the comparative perspective. One more important stage is integration of the new benchmark Supply and Use tables for the Russian economy, which are expected to be published in the end of 2015, with the Russia KLEMS series.

In addition to academic purposes, Russia KLEMS will be useful for Russian statisticians to help them adapt new international statistical methodology on the Russian economy. The Russia KLEMS data should not be considered as a substitute for the official statistics, because official data is more accurate, strong, detailed and based on more comprehensive primary information. However, Russia KLEMS can work as a prototype dataset to improve the roadmap for Russian statistics development, helping to highlight the most important and questionable areas in the official statistics.

Finally, Russia KLEMS provides a unique empirical basis for policy oriented research. Strong interest in this data has already been expressed by our colleagues from the Conference Board, the Institute for Economies in Transition of the Bank of Finland (BOFIT), OECD and the Vienna Institute for International Economic Studies (WIIW).