Russia - Economic sectors

The chief sectors of the Russian economy are natural resources, industry, and agriculture. The natural resources sector includes petroleum, natural gas, timber, furs, and precious and nonferrous metals. The agriculture

sector includes grain, sugar beets, sunflower seeds, meat, and dairy products. Manufacturing and industry includes a complete range of manufactures, notably automobiles, trucks, trains, agricultural equipment, advanced aircraft, aerospace, machine and equipment products, mining and extractive industry, medical and scientific instruments, and construction equipment. Trade exports emphasize petroleum and petroleum products, natural gas, woods and wood products, metals, and chemicals. Major markets include the countries of the European Union, the other former Soviet countries, China, and Japan, as well as countries of the Middle East. Imports include machinery and equipment, chemicals, consumer goods , medicines, meat, sugar, and semi-finished metal products. The trading partners for imports are the same as those for exports.

The Soviet economy created distorting policies and reduced the interest of firms and individuals to use natural resources carefully. The costly and destructive environmental legacy of the Soviet economy is still very much evident in Russia. There is a high risk of environmental accidents and emergencies. Environmental policy at both the federal and regional levels is not always consistent or clear. Enforcement of regulations to protect the environment is often left to the discretion of the firms that create the problems. The merging of the independent environmental agency into the Ministry of Natural Resources in 1999 created a further cause for concern given the potential conflicts of interest of the institutions involved.

Russia is the most industrialized of the former Soviet Republics. However, much of its industry is antiquated and highly inefficient. Besides its resource-based industries, it has developed large manufacturing capacities, notably in machinery. Russia inherited most of the defense industrial base of the Soviet Union. Efforts have been made with little significant success over the past few years to convert defense industries to civilian use.

Most major industry sectors showed an increase in output in 1999 over 1998. However, this was not true of agribusiness and the power and fuel sectors, which showed improvements over 1998, but declines compared to 1997. The sub-sectors showing declines in output in 1999 over 1998 include heating oil, machine tools, television, and sausage production. Some sub-sectors that fared poorly in the mid-and late 1990s, such as light industry and the pulp/paper, chemical, and building materials sector, showed increased output in 1999 over 1998. Sectors that fared the worst in 1998 included light industry, metallurgy, chemicals, and agribusiness. Despite across-the-board improvements in recent years, many Russian enterprises remain uncompetitive. In addition, output through 2000 continued to decline at medium and large Russian enterprises, while small companies and joint ventures were responsible for increased output. The CIA World Factbook estimated that agriculture accounted for 7 percent of GDP, industry 34 percent, and services 59 percent in 1999.

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