Балтийский регион
Baltic Region
ISSN: 2079-8555 (Print)
ISSN: 2310-0524 (Online)
Russia and its region in the Baltic region
Pages 4-22

Analysing the dynamics of the Baltic States’s production linkages with Russia



Russia and the Baltic States have a long-standing relationship of industrial specialisation, cooperation, division of labour and trade exchange, all dating back to the Soviet Union. Today, this relationship is facing a tough test amid political and ideological challenges and risks. The last two years have seen a profound and large-­scale crisis caused by the global COVID-19 pandemic. Overall, the production linkages between Russia and the Baltic States have adapted in response to the existing problems, remaining resistant to the geopolitical and pandemic shocks. This article examines the production linkages between Russia and the Baltic countries, investigating the export-­import flows of consumer and intermediate goods in 2003—2020. A comparative study of the Baltic States’ production linkages with Russia and their main partners in the EU — Germany and Finland — is carried out. It is concluded that, before the introduction of sanctions in 2014 and the world trade crisis of 2015—2016, Russia was a more promising market than Germany and Finland for the Baltic States’ companies trading in intermediate goods.

1. Varnavskii, V. 2020, Growth factors and trends of global trade, Analysis and Forecasting. IMEMO Journal, № 1, p. 51—62. doi: 10.20542/afij-2020-1-51-62.

2. Yeats, A. J. 1998, Just How Big Is Global Production Sharing? World Bank, Policy Research Working Paper 1871, Washington, DC. 40 p. URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=597193 (accessed 22.09.2021).

3. De Backer. K., Miroudot. S. 2014, Mapping Global Value Chains, ECB. Working Paper Series, № 1677, 40 p. URL: http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1677.pdf (accessed 22.09.2021).

4. Faße, A., Grote, U., Winter, E. 2009, Value chain analysis methodologies in the context of environment and trade research, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät, Diskussionsbeitrag, № 429, 59 p. URL: https://www.econstor.eu/bitstream/10419/37104/1/609241915.pdf (accessed 22.09.2021).

5. Baldwin, R., Robert-­Nicoud, F. 2010, Trade-in-goods and trade-in-tasks: An Integrating Framework. Cambridge MA. NBER Working Paper, № 15882, 30 p. URL: http://www.nber.org/papers/w15882.pdf (accessed 22.09.2021).

6. Goldberg, P. K., Khandelwal, A. K., Pavcnik, N., Topalova, P. 2009, Imported Intermediate Inputs and Domestic Product Growth: Evidence from India, CEPS Working Paper, № 192, 41 p. URL: https://gceps.princeton.edu/wp-content/uploads/2017/01/192goldberg.pdf (accessed 22.09.2021).

7. Das, D. K., Gupta, N. 2019, Climbing up India’s Manufacturing Export Ladder: How Competitive are Intermediate Goods, ICRIER, Working Paper, № 371, 36 р. URL: https://icrier.org/pdf/Working_Paper_371.pdf (accessed 22.09.2021).

8. Gereffi, G., Humphrey, J., Sturgeon, T. 2003, The Governance of Global Value Chains, URL: http://www.soc.duke.edu/sloan_2004/Papers/governance_of_gvcs_final.pdf (accessed 22.09.2021).

9. Gereffi, G., Fernandez-­Stark, K. 2016, Global Value Chain Analysis: A Primer, 2nd Edition, URL: https://dukespace.lib.duke.edu/dspace/handle/10161/12488 (accessed 22.09.2021).

10. Hummels, D., Rapoport, D., Yi, K.-M. 1998, Vertical Specialization and the Changing Nature of World Trade, Economic Policy Review, June 1998, vol. 4, № 2, p. 79—99, URL: https://www.newyorkfed.org/medialibrary/media/research/epr/1998/EPRvol4no2.pdf (accessed 22.09.2021).

11. Beņkovskis, K., Bērziņa, S., Zorgenfreija, L. 2016, Evaluation of Latvia’s re-exports using firm-level trade data, Baltic Journal of Economics, vol. 16, № 1, p. 1—20. doi: 10.1080/1406099X.2016.1163891.

12. Ali-­Yrkkö, J., Mattila, J., Seppälä, T. 2017, Estonia in Global Value Chains, ETLA Reports, № 69, 24 p. URL: https://pub.etla.fi/ETLA-Raportit-­Reports-69.pdf (accessed 22.09.2021).

13. Smidova, Z., Yashiro, N. 2017, Getting the most out of trade in Estonia, OECD, Economics Department Working Papers, № 1436, URL: https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=ECO/WKP(2017)68&docLan... (accessed 22.09.2021).

14. Stavytskyy, A., Kharlamova, G., Giedraitis V., Sengul, E. C. (eds.) 2019, Gravity model analysis of globalization process in transition economies, Journal of International Studies, vol. 12, № 2, p. 322—341. doi: 10.14254/2071-8330.2019/12-2/21.

15. Yashiro, N., De Backer, K., Hutfilter, A., Kools, M., Smidova, Z. 2017, Moving up the global value chain in Latvia, OECD, Economics Department Working Papers, № 1438. doi: 10.1787/3a486c5e-en.

16. Benkovskis, K., Masso, J., Tkacevs, O., Vahter, P., Yashiro, N. 2017, Export and productivity in global value chains: Comparative evidence from Latvia and Estonia, OECD, Economics Department Working Papers, № 1448, doi: 10.1787/cd5710c4-en.

17. Bacchetta, M, Bekkers, E., Piermartini, R., Rubinova, S., Stolzenburg, V., Xu, A. 2021, COVID-19 and global value chains, World Trade Organisation, 34 p. URL: https://www.wto.org/english/res_e/reser_e/ersd202103_e.pdf (accessed 22.09.2021).

18. Banh, H., Wingender, P., Gueye, C. 2020, Global Value Chains and Productivity: Micro Evidence from Estonia, IMF Working Papers, WP/20/117. URL: https://www.imf.org/en/Publications/WP/Issues/2020/07/03/%20Global-­Value-­Chains-and-­Productivity-... (accessed 22.09.2021).

19. Simachev, Y. V., Fedyunina, A. A., Averyanova, Y. V. 2020, Transformation of global value chains in Russia and the Baltics amid Covid-19: prospects for regionalization and implications for economic policy, Balt. Reg., vol. 12, № 4, p. 128—146. doi: 10.5922/2079-8555-2020-4-7.

20. Linden, G., Kraemer, K. L., Dedrick, J. 2007, Who Captures Value in a Global Innovation System? The case of Apple’s iPod, Personal Computing Industry Centre (PCIC), Working Paper 92697, 06-01-2007, 10 р. URL: http://escholarship.org/uc/item/1770046n (accessed 31.10.2021).

21. De Backer, K., Miroudot, S. 2012, Mapping Global Value Chains. Groningen, The Netherlands, 19 р. URL: http://www.wiod.org/conferences/groningen/Paper_DeBacker_Miroudot.pdf (accessed 31.10.2021).

22. Varnavskii, V. G. 2018, International trade in value added terms: methodological issues, World Economy and International Relations, vol. 62, № 1, p. 5—15. doi: 10.20542/0131-2227-2018-62-1-5-15.

23. Ahmad, N., Bohn, T., Mulder, N., Vaillant, M., Zaclicever, D. 2017, Indicators on global value chains: A guide for empirical work, OECD, Statistics Working Papers 2017/08. doi: 10.1787/8502992f-en.

24.  Fortanier, F. 2016, Towards merchandise trade statistics without asymmetries, The OECD Statistics Newsletter, № 64, р. 7—11. URL: https://www.oecd.org/sdd/OECD-Statistics-­Newsletter-­March-2016.pdf (accessed 22.09.2021).

25. Timmer, M. P., Dietzenbacher, E., Los, B., Stehrer, R., de Vries, G. J. 2015, An Illustrated User Guide to the World Input–Output Database: The Case of Global Automotive Production, Review of International Economics, vol. 23, № 3, p. 575—605. doi: 10.1111/roie.12178.

26. Giammetti, R. 2019, Tariffs, Domestic Import Substitution and Trade Diversion in Input-­Output Production Networks: how to deal with Brexit, MPRA Paper, № 92835, URL: https://mpra.ub.uni-muenchen.de/92835/ (accessed 22.09.2021).

27.  Hoekman, B. 2015, Trade and growth — end of an era? In: The Global Trade Slowdown: A New Normal? CEPR, London, р. 3—19, URL: https://voxeu.org/sites/default/files/file/Global%20Trade%20Slowdown_nocover.pdf (accessed 22.09.2021).

28. Constantinescu, C., Mattoo, A., Ruta, M. 2015, The Global Trade Slowdown: Cyclical or Structural? IMF Working Paper, WP/15/6. 43 р. URL: https://www.imf.org/external/pubs/ft/wp/2015/wp1506.pdf (accessed 22.09.2021).

29. Constantinescu, C., Mattoo, A., Ruta, M. 2017, Trade Developments in 2016: Policy Uncertainty Weighs on World Trade, Washington, D. C., World Bank Group, 24 р. URL: https://documents1.worldbank.org/curated/en/228941487594148537/pdf/112930-v1-revised-PUBLIC-1706109-... (accessed 22.09.2021).

30. Aslam, A., Boz, E., Cerutti, E., Poplawski-­Ribeiro, M., Topalova, P. 2017, Global trade: Drivers behind the slowdown, VoxEU.org, URL: https://voxeu.org/article/global-­trade-drivers-­behind-slowdown (accessed 22.09.2021).

31. Al-­Haschimi, A., Gächter, M., Lodge, D., Steingress, W. 2016, The great normalisation of global trade, VoxEU.org, URL: http://voxeu.org/article/great-­normalisation-global-­trade (accessed 22.09.2021).

The article