World Bank2013-09-252013-09-252013-04https://hdl.handle.net/10986/15821Economic modernization and export diversification are priorities in the Russian economic policy agenda, with several measures undertaken in recent years to promote growth in the nonoil and gas sector. Russia's export base has narrowed substantially over the past decade. Lack of diversification cannot be pinned down to a single cause. Competition and innovation are examined in this study as key drivers of export diversification. After presenting our findings we identify some key trade policy measures that could help firms enter foreign markets and sustain current trade relationships. A comprehensive competition policy will help establish a level playing field, facilitate entry of more efficient firms, and encourage orderly exit of less efficient firms, thereby contributing to increased productivity and export propensity. The government's current initiatives to foster innovation could be strengthened through a number of specific measures focusing on commercialization of public research and development and adequate research funding. This study is organized as follows. Section two scrutinizes various dimensions of Russia's trade performance, including export diversification, sophistication, and survival. A detailed analysis of the role of exports, innovation, productivity, and competition on firm performance is presented in section three. Section four analyzes the competition environment in Russia, by presenting analyses of price-cost margins, state ownership, and regional and sectorial characteristics of competition, while Section five provides an overview of Russia's innovation system and measures to increase the impact of research and development on the economy. Section six concludes and presents policy options.en-USCC BY 3.0 IGOACCESS TARIFFADVERSE EFFECTSADVERSE IMPACTAGRICULTURAL OUTPUTAGRICULTUREALLOCATIVE EFFICIENCYAVERAGE PRODUCTIVITYBEST PRACTICEBINDING CONSTRAINTSBUSINESS ACTIVITIESBUSINESS ENTITIESBUSINESS ENVIRONMENTBUSINESS INVESTMENTSBUSINESSESCAPABILITIESCERTIFICATECERTIFICATESCOLLUSIONCOMMERCIALIZATIONCOMMODITIESCOMMODITYCOMMODITY PRICESCOMMUNICATION TECHNOLOGYCOMMUNICATIONS TECHNOLOGIESCOMPARATIVE ADVANTAGECOMPARATIVE ADVANTAGESCOMPETITION POLICIESCOMPETITION POLICYCOMPETITIVE PRODUCTSCOMPETITIVENESSCONNECTIVITYCORPORATE GOVERNANCECUSTOMSDEVELOPED COUNTRIESDIVISION OF LABORDOMESTIC COMPETITIONDOMESTIC MARKETDOMESTIC MARKETSECONOMETRIC ANALYSISECONOMIC CRISISECONOMIC DEVELOPMENTECONOMIC LAWECONOMIC REFORMELECTRICITYEMERGING ECONOMIESEMPIRICAL ANALYSISENDOGENOUS VARIABLESENTERPRISE SECTORENTERPRISE SURVEYENTERPRISE SURVEYSEQUIPMENTEXCHANGE RATEEXCHANGE RATESEXPENDITUREEXPENDITURESEXPORT BASEEXPORT GROWTHEXPORT MARKETSEXPORT PROMOTIONEXPORT SECTORSEXPORTSFINANCIAL INSTITUTIONSFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SECTORSFIRM GROWTHFIRM PERFORMANCEFIXED ASSETSFIXED COSTSFOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTSFOREIGN MARKETSFORESTRYGDPGDP PER CAPITAGLOBAL MARKETSGOVERNMENT INTERVENTIONSGOVERNMENT REGULATIONSGRAY MARKETGROSS DOMESTIC PRODUCTGROWTH OF TRADEGROWTH RATEGROWTH RATESHUMAN CAPITALICTINCOMEINCORPORATED COMPANIESINCORPORATED COMPANYINFORMATION TECHNOLOGYINNOVATIONINNOVATION POLICIESINNOVATION POLICYINSPECTIONINSPECTIONSINSTITUTIONINTELLECTUAL PROPERTYINTELLECTUAL PROPERTY RIGHTSINTERNATIONAL BEST PRACTICESINTERNATIONAL COMPETITIONINTERNATIONAL COMPETITIVENESSINTERNATIONAL MARKETSINTERNATIONAL TRADEINVENTORYINVESTMENT CLIMATELABOR PRODUCTIVITYLEGAL FRAMEWORKLICENSELICENSESLIMITED LIABILITY COMPANIESLIMITED LIABILITY COMPANYLINE OF CREDITMANAGERIAL SKILLSMANUFACTURINGMARGINAL PRODUCTSMARKET ACCESSMARKET ACCESS NEGOTIATIONMARKET DISTORTIONSMARKET DOMINANCEMARKET ENTRYMARKET ENTRY COSTSMARKET FRAGMENTATIONMARKET REGULATIONMARKET REGULATIONSMARKET STRUCTUREMARKETPLACEMEDIUM ENTERPRISESMENUMIDDLE-INCOME COUNTRIESMONOPOLYNATURAL RESOURCENEW MARKETSNEW PRODUCTNEW PRODUCTSNEW TECHNOLOGIESOILOUTSOURCINGOWNERSHIP RIGHTSPATENTSPAYMENT SYSTEMPOLITICAL ECONOMYPORTFOLIOPOWER OUTAGESPRICE COMPARISONSPRICE CONTROLSPRICE INCREASESPRICE LEVELSPRICE VARIATIONPRIVATE INVESTMENTSPRIVATE SECTORPROCUREMENTPRODUCERSPRODUCT INFORMATIONPRODUCT INNOVATIONPRODUCT MARKETPRODUCT MARKETSPRODUCTION FUNCTIONPRODUCTION PROCESSPRODUCTIVITY GROWTHPROPERTY RIGHTSQUOTASR&DRED TAPEREGULATORY CONDITIONSREGULATORY ENVIRONMENTREGULATORY REQUIREMENTSRENT SEEKINGRESULTRESULTSRETAILRPASALESSHARE OF ASSETSSHAREHOLDERSSKILLED WORKERSTAXTAX BREAKSTAX CODETAX LIABILITIESTAX RATESTAX REVENUESTECHNOLOGY TRANSFERTOTAL FACTOR PRODUCTIVITYTOTAL SALESTRADE OPPORTUNITIESTRADE OUTCOMESTRADE POLICYTRADING SYSTEMTRANSFER OF OWNERSHIPTRANSITION ECONOMIESVALUE ADDEDVARIABLE COSTSVENTURE CAPITALWHOLESALE MARKETSWORLD TRADEWORLD TRADE ORGANIZATIONWTOWorld Bank10.1596/15821