The impact of the services trade partnership with Asian countries of APEC on the economic growth in Russia, 2002-2021

Abstract

This paper explores the impact of Russia’s services trade with 12 Asian countries of APEC member states for the period Q2, 2002–Q4, 2021. The purpose of this study is to reveal whether Asian countries can replace the roles of European countries even in the advanced service industry for the economic growth of Russia. The authors found a positive and significant impact of exports on the economic growth of Russia in ordinary least squares (OLS) and robust least squares estimations and that of openness and imports on it in a robust least squares estimation. From the vector autoregressive (VAR) Granger causality test, bidirectional causality between exports and the economic growth of Russia is revealed, while a unidirectional causality between openness (imports) and the economic growth of Russia is confirmed. However, the results of impulse response functions are rather vague, as the impacts of openness, exports, and imports are moving from negative to positive depending on the time period. The results in services trade, where Russia’s dependency on European countries is large, are helpful to induce future trade policy directions for the Russian government to strengthen partnerships with Asian countries in the short term. Further barrier reduction issues should be carefully considered by the Russian government with attention to the long-term implications of this policy.