Estimating Russia’s export potential taking into account sales, logistics and production constraints

In this paper, we develop a strand of research on estimating Russia’s export potential in the two-fold manner. First, two forms of export potential with different driving forces are formulated and estimated separately: diversification potential pushed by moving to the related areas of product specialization, and inertial potential pulled by growing traditional destination markets. Second, we account for market, logistics and production constraints on implementing export potential, as well as for competition in the local markets. Diversification export potential equals $59 billion, while the 2 /3 of this amount is blocked mainly by production and sales constraints; inertial component of export potential is $46.7 billion, and more than 1 /4 of this amount is blocked by production constraints; estimation results are also detailed by industries, partner countries and regions of Russia. We highlight the important role of economic policy in ensuring the full implementation of the export potential (specifically, by eliminating production, market and logistics constraints).