CBAM and Russian export

The EU is expected to introduce the Carbon Border Adjustment Mechanism (CBAM) in 2026. The estimates of the resulting Russia’s economic loss, that can be found in the literature, appear to be blown up, static, and not directly related to the change in the incomes of Russian exporters. These estimates are driven by the authors’ speculations, rather than by the CBAM concept as announced by the EU. This paper aims to assess the potential implications of CBAM for the Russian raw materials exports. CBAM will launch a carbon intensity reduction race for industrial products. Those who will not be able to keep abreast of the leaders will be losing their market niches. Because Russia is freezing its current carbon intensity levels, it will see its CBAM exports shrink and, small at the beginning, export incomes reduction may gradually become substantial. At the same time, proactive GHG emission control in the industrial sector can help avoid the loss and even yield additional income.

Instead of laboratory: Analyzing data from natural experiments (Nobel Memorial Prize in Economic Sciences 2021)

The 2021 Nobel Prize in Economic Sciences was awarded to David Card, Joshua Angrist, and Guido Imbens for advancing methodology to establish casual relationships in economics. Their approach brought the notion of the natural experiment, situations in which heterogeneous reactions of different groups of people to chance shocks or policy changes allows to elicit causal effects, to the forefront of empirical analysis, and spearheaded a revolution in development of statistical methods needed to analyze the data. After the initial contributions in labor economics and economics of education, the new approach has become a new standard in economic sciences.

Analysis of approaches to assessing changes in welfare and real GDP growth during digitalization of the economy

The paper attempts to estimate, in monetary terms, the volume of free digital services in GDP while assessing the contribution of digitalization to changes in welfare and economic growth. Approaches to such an estimation are analyzed and criticized. In particular, the calculation of the added value created in the digital sector does not properly reflect the economic effect of digitalization. Alternative auxiliary methods for estimating the contribution of digitalization to GDP growth are considered: the creation of satellite accounts of the digital economy within the SNA; the categorization and calculation of “purely” digital goods. The paper analyzes the methodology of calculating GDP which takes into account consumer surpluses from the use of free digital goods. The advantages of this methodology are outlined, including the consideration of a significant part of the digital sector of the economy in the calculation of GDP, as well as the relative ease of its use. This methodology was tested by drawing on the example of the Republic of Bashkortostan.

Opportunities and risks of the climate policy in Russia

The climate agenda involves significant economic dimension and component. This is precipitated, on the one hand, by the climate change impact on the economy and its implications for economic development that necessitate costs for planning and implementing adaptation measures, and, on the other hand, by the imperatives of structural and technological modernization of the economy to strengthen its competitiveness and sustainability of socio-economic development including reduction of industrial greenhouse gases (GHG) emissions and increasing the ecosystems’ carbon sink capacity. The above implies harmonization of ecological, climatic, socio-economic, and technological characteristics to produce an effective national low GHG emissions socio-economic development strategy required by the Paris Climate Agreement. This in turn calls for comprehensive assessment of the impact produced by new low-carbon technologies on economic dynamics using the framework of macrostructural calculations and scenarios of economic development of Russia with different volumes of funding invested in decarbonization. It is argued that the most efficient is a group of so-called moderate scenarios that provide for both GHG reduction and economic growth rates above the global average. More ambitious scenarios involve risks of slowing GDP growth given weighty additional investment which constrains the dynamics of household consumption. The key role of the Russian ecosystems capacity to absorb and sequester carbon in implementation of the low GHG emissions socio-economic development strategy is substantiated and the imperative for the complex of measures to improve the efficiency of land use and forestry resources (LULUCF), primarily the quality of R&D and the national monitoring system development, is emphasized.

Impact of the Green Deal on copper imports from Russia to the EU

The article analyzes the prospects for copper imports from the Russian Federation to the EU in the context of the implementation of the plan for decarbonization of the EU economy by 2050. It is noted that green economy is more metal-intensive, but in the medium-run, the impact of the traditional drivers (population growth and rising welfare) on the global copper market will remain significant. Similar trends are shown in the EU copper market: in the current decade, the rapid relative growth of the green sectors of the economy and the demand for copper from them will not lead to fundamental changes in the dynamics and structure of the market. At the same time, the introduction of a cross-border carbon adjustment mechanism (CBAM) could disrupt the sustainability of the established business model in the European copper industry. Eight scenarios of the financial burden for copper imports from the Russian Federation to the EU after the introduction of CBAM are presented, showing that the new EU foreign trade instrument will not have a restrictive effect on copper imports from the Russian Federation. However, the increase in the supply of Russian copper to the growing EU market may be constrained by the geographic remoteness of new copper mining and refining facilities.

Institutional changes, inequality and long-run economic development: Theory and empirics

This paper reviews theoretical and empirical literature on long-run economic development, institutional dynamics, and their interplay. Special attention is given to papers that explore the reasons why pro-growth reforms and institutional changes may be blocked. Among these reasons, over the past years the literature has increasingly focused on inequality in the distribution of wealth and political power as a key factor. This review is structured around two major theoretical approaches that illuminate the reasons behind the transition from stagnation to growth and cross-country income divergence: the unified growth theory (UGT), and the theory of endogenous institutional change. Using the empirical evidence on divergence between European and Middle Eastern economies, as well as the divergence within Europe, the paper demonstrates the value of these approaches in explaining the observed patterns of cross-country long-run development. The paper concludes with outlining several promising directions for future research.

Pigouvian vs. Coasian approach: Ideas, values, perspectives

The paper reveals the characteristics of competing approaches — Pigouvian and Coasian — to identify the grounds for state regulation. We outline the connections between Pigouvian and Coasian approaches with the values and prospects for their advancement in the field of political decision-making in the context of demand for economic knowledge and the possibilities of organizing compensating transactions. These connections are considered in the light of the externalities problem as one of the manifestations of market failure, as well as different internalization options. We also clarify the provisions from the theory of externalities in terms of their definition, classification and correlation with the conditions for optimal allocation of resources. The key types of structural alternatives for correcting market flaws are considered, and the main properties of the Pigouvian and Coasian approaches in economics, as they relate to the problem of market and government flaws, are determined. This helps explain why the Coasian approach cannot be considered synonymous with liberal fundamentalism. Finally, we indicate the relationship between normative conclusions and prospects of functionalism and two types of fundamentalism in the field of political decision-making. Using the example of intertemporal externalities, the difference in the approaches of Coasianism and Pigouvianism to their internalization is demonstrated.

Regulation of investment transactions in Islamic law

The purpose of this article is to outline the basic rules of Islamic law in the matter of regulating investment transactions in order to facilitate the development of investment activity of Muslims in accordance with Islamic law. The key prohibitions in the stock market and the criteria for the selection of shares of companies that undergo Shariah analysis are formulated, and based on this, some of the joint stock companies are listed, for which the Islamic law allows to trade shares.

Changes in the labor market status during the COVID-19 pandemic and subjective well-being of Russians

This paper investigates the association between changes in the labor market status and subjective well-being of Russians during the COVID-19 pandemic. The materials of the first stage of the international project “Values in crisis” form the empirical dataset. Regression analysis shows that individuals who lost their jobs or closed their business during the initial period of the pandemic are somewhat less satisfied with their lives than those who did not. Being reduced to part-time work and working from home are not directly related to subjective well-being. At the same time, the strength of the association between subjective well-being and possible changes of the labor market status depends on such factors as the presence of children, as well as the value of self-enhancement (according to Schwartz) and conscientiousness (one of the Big Five personality traits). The job or business loss is associated with a decrease in subjective well-being among respondents without children; this association is not observed among those with children. In addition, the negative relationship between life satisfaction and job or business loss is stronger among individuals with high level of self-enhancement and weaker among those with high level of conscientiousness. Among respondents who had to switch to part-time or remote work, having children reduces the level of subjective well-being; among those without such experience, it is positively associated with subjective well-being.

What should we do about the employment of women with children in Russia? The role of preschool educational institutions

The paper examines the opportunities and obstacles to increasing the employment of women with children in Russia. There is a tight correlation between Russia’s lagging behind in the share of working women with children under the age of three and a lack of supply of preschool and childcare institutions. Using quantitative analysis of the Russian regions, we show that the expansion of the supply of preschool education services is associated with an increase in the employment of women, and the cost of introducing additional places in preschool organizations is recouped by additional tax revenues from working women with children in two years. Our cross-country analysis shows that the transition from traditional gender and social roles to more equal ones, the reduction of gender inequality, the encouragement of fathers to take parental leave, and the increased availability of part-time or flexible-schedule employment for women with children could further facilitate the employment of women with children. Our estimates show that an increase of preschool enrollment in Russia to the level of European countries would materialize a sizable economic growth potential: an increase in income per capita would be 3.5%.