Putin has fucked up Russian exports

Spoiler: As I showed in my previous post,the Kremlin psychopath’s industries, and war machine are reliant on our supply to satisfy domestic demand. But the story doesn’t end there. Foreign intermediate goods are also used in Russian exports. And a lot of the revenues from exports are used to kill Ukrainians and bomb their schools and hospitals.

Overall, foreign value-added accounts for a bit more than eight percent of total Russian gross exports. The foreign shares are higher in Manufacturing, Construction, Publishing, Computer Services and Professional & Scientific Services. The largest foreign shares are found in Publishing. That’s where you find Kremlin’s propaganda machines RT and Sputnik. Foreign translators and mouthpieces are employed by the Kremlin helping Putin to fight his propaganda war.

Not only will Russian exports fall due to the sanctions. The goods will also be of lower quality now that high-income countries will stop feeding his industries and war machine. That will lower Russian income in two ways. Firstly, because of lower quantities of exports and secondly because of lower prices of exports. This adds to Putin’s clusterfuck.

In my previous post I showed how much foreign value-added constituted of Russian domestic final demand. In some industries, it is a lot. Much more than in other large countries. In this post I will briefly look at how much foreign intermediate goods Russia needs for its exports. This is done by another indicator from the OECD database, foreign value-added share in Russian exports.

Foreign value-added shares make up a bit more than eight percent of total Russian exports. Looking at large aggregates, foreign shares are largest in Manufacturing, Construction, Publishing, Computer Services and Professional & Scientific Services, c.f. Figure 1.  

Figure 1. Foreign value-added shares in Russian gross industries’exports 2018 (%).

Source: OECD database. Trade in value added indicators. https://www.oecd.org/sti/ind/measuring-trade-in-value-added.htm

 

Of these industries, Publishing stands out. As other databases including industry data, the aggregates are broad and contain a lot of activities. The aggregate Publishing also includes audio-visual and broadcasting activities. That includes exports of Russian newspapers, magazines, books, movies, DVDs, CDs and other stuff. And broadcasting of Russian propaganda.

I don’t think I am completely wrong in assuming that the large foreign shares in exports of that kind of services are made up by resources necessary for Putin’s propaganda war.

The two main Kremlin outlets are RT and Sputnik News. Total publishing only amounts for a tiny part of total Russian exports, it is not in this chart, so foreign shares could be large for that reason. The foreign shares would translators and prostitute mouthpieces who don’t mind taking Russian money for spewing out lies. The revenues from that kind of bullshit are probably mostly ads. And as such ads are being removed from Facebook, Twitter, YouTube and other platforms, Putin can wave bye-bye to those revenues.

Foreign value-added share are mostly below average for energy-producing industries, c.f. Figure 2.

Figure 2. Foreign value-added shares in Russian energy industries’ gross exports 2018 (%).

Source: OECD database. Trade in value added indicators. https://www.oecd.org/sti/ind/measuring-trade-in-value-added.htm

 

But, as I mentioned in my previous post, there could be parts and components that are critical for extracting, producing, transporting, and storing that are critical and important in excess of their weights in trade statistics.

Foreign value-added shares in manufacturing exports are considerably larger than the average except for Basic Metals and Coke & Refined Petroleum. The highest shares are found in Motor Vehicles. Also, other industries which produce parts and components and final goods that are part of the Russian export of weapons are reliant on foreign intermediates, c.f. Figure 3.

Figure 3. Foreign value-added shares in Russian manufacturing gross exports 2018 (%).

Source: OECD database. Trade in value added indicators. https://www.oecd.org/sti/ind/measuring-trade-in-value-added.htm

 

Yes, I am exaggerating. Russian industries probably also produce stuff that is not designed to kill. In any case. Now that sanctions slap Russia from many countries, Russian industries must find substitutes for intermediate goods to produce exports to those countries that still haven’t closed their ports for Russian goods. And this hurts more in manufacturing industries since those exports command higher prices. 

Not only will Russian exports fall due to the sanctions. The goods will also be of lower quality now that high-income countries will stop feeding his industries and war machine.

Conclusion.

Putin has fucked up the Russian economy.

Double-fucked.

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