The Role of Trade Costs in the Russian-Paraguayan Trade Relations
Abstract
The changed geopolitical situation and deterioration of Russia-West relations has induced the expansion of trade and economic cooperation between Russia and Latin American countries. Currently, Paraguay is explicitly showing its readiness to strengthen recently built trade relations with Russia. In order to fuel their increased mutual interest, it is crucial to struggle with impediments that hinder the trade between them. The export potential assessments demonstrate that Russia and Paraguay indeed have potential to intensify bilateral trade, even though the opportunities for export diversification are quite limited. The authors conduct a survey to identify the major trade costs and their role in the development of the Russian-Paraguayan trade relations. The survey findings reveal that transportation and logistics costs significantly impede the exports of both countries as well as information-related obstacles represent the top concern for Russian export companies, while non-tariff measures, language and cultural barriers are relevant for Paraguayan firms. In order to intensify the Russian-Paraguayan commercial relations, the policy makers could deal with these barriers via a higher exchange of market information through different institutional channels.Keywords:
trade costs, non-tariff barriers, export potential, Russia, ParaguayReferences
Almeida E., Bastos F., Quijada J. A. & Acevedo, M. C. (eds.) (2018) Paraguay: rutas para el desarrollo. IDB.
Anderson, J. E., & Van Wincoop, E. (2004). Trade costs. Journal of Economic Literature, XLII, 691-751.
Arvis, J-F., Duval, Y., Shepherd, B., Utoktham, C., & Raj, A. (2016). Trade Costs in the Developing World:1996-2010. World Trade Review, 15(3), 451-474. doi:10.1017/S147474561500052X.
Baldwin, R., & Harrigan, J. (2011). Zeros, Quality and Space: Trade Theory and Trade Evidence. American Economic Journal: Microeconomics, 3(2), 60-88. doi:10.1257/mic.3.2.60.
Bernard, A. B., Jensen J. B., & Schott, P. K. (2006). Falling trade costs, heterogeneous firms, and industry dynamics. Journal of Monetary Economics, 53(5), 917-937. doi:org/10.1016/j.jmoneco.2006.05.001.
Blank, S. & Kim, Y. (2015) Russia and Latin America: The New Frontier for Geopolitics, Arms Sales and Energy. Problems of Post-Communism, Vol. 62, No. 3, 159-73. doi.org/10.1080/10758216.2015.1019817.
Cabral López, M. A. (2018). Paraguay y Rusia: algunas notas sobre su relacionamiento (1992-2016) [Paraguay and Russia: some notes on their relationship (1992-2016)]. ACADEMO (Asunción), 5(1), 43-52. doi:10.30545/academo.2018.ene-jun.5.
Cruz, J. A. (2015) Strategic Insights: from Ideology to Geopolitics: Russian Interests in Latin America. Current Politics and Economics of Russia, Eastern and Central Europe, Vol. 30 Issue 1-2, 175-185.
Davydov, V.M. (2016). Strategic Partnership in the Context of Russian–Latin American Relations, Herald of the Russian Academy of Sciences, 86 (2), 86-93.
Decreux, Y., & Spies, J. (2016). Export Potential Assessments: A methodology to identify export opportunities for developing countries. Retrieved June 23, 2018, from http://exportpotential.intracen.org/media/1089/epa-methodology_141216.pdf (accessed April 26, 2018).
Diakantoni, A., Escaith, H., Roberts, M. & Verbeet, Th. (2017) Accumulating Trade Costs and Competitiveness in Global Value Chains, WTO Working Paper ERSD-2017-02.
Eliseeva, D. S. (2014) Neproizvoditel'nye izderzhki uchastnikov vneshnejekonomicheskoj dejatel'nosti pri sovershenii tamozhennyh operacij [Non-production costs of foreign economic agents performing customs operations], Vestnik Rossijskoj tamozhennoj akademii [Bulletin of the Russian Customs Academy], 4 (29), 172-178.
Federal Customs Service of Russia. (2018). Trade flows between Russia and Paraguay from http://www.customs.ru/
Gladkih, A. (2018, April 09). Kto p'et rossiyskoe pivo za rubezhom [Who drinks Russian beer abroad].
PROVED, pp. Retrieved from http://xn--b1ae2adf4f.xn--p1ai/article/47115-kto-pet-rossiyskoe-pivo-za-rubezhom-.html.
Global Trade Alert Database. (2018). Retrieved November 28, 2018, from
https://www.globaltradealert.org/country/173/affected-jurisdictions_161/period-from_20090101/period-to_20191128
Hausmann, R., Klinger, B., & Wagner, R. (2008). Doing Growth Diagnostics in Practice: A 'Mindbook'. CID Working Papers, 177.
Hoekman, B., & Nicita, A. (2011). Trade Policy, Trade Costs, and Developing Country Trade. World Development, 39(12), 2069-2079. doi:10.1016/j.worlddev.2011.05.013.
Hummels, D. (1999). Have International Transportation Costs Declined? Chicago, IL: University of Chicago.
Hummels, D. (1999). Toward a geography of trade cost. Chicago, IL: University of Chicago Press.
ITC. (2013). Paraguay: Perspectivas Empresariales – Serie del ITC sobre Medidas No Arancelarias [Paraguay: Business Perspectives - ITC Series on Non-Tariff Measures]. Geneva, Switzerland: ITC.
Jeifets, V. (2015). Russia is coming back to Latin America: perspectives and obstacles. In Anuario de la Integración Regional de América Latina y el Caribe – América Latina y el Caribe y el nuevo sistema internacional: Miradas desde el Sur coordinado por Andrés Serbin (CRIES, Buenos Aires), Laneydi Martínez (CEHSEU, La Habana) y Haroldo Ramanzi (pp. 90-112). CRIES.
Kaukin A. S., Pavlov P. N., & Filicheva E. V. (2015). Modelirovanie prostranstvennogo raspredeleniya rossiyskikh vneshnetorgovikh potokov s uchetom realnikh izderzhek transportirovki [Modeling spatial distribution of Russian foreign trade flows taking into account the actual transportation costs]. Rossiyskoe predprinimatelstvo, 16(23), 4297-4310.
Kaukin, A. S., & Idrisov G. I. (2013). Analiz izderzhek peremescheniya tovarov pri modelirovanii vneshnetorgovikh potokov [Analysis of costs of moving goods in the modelling of foreign trade flows]. Rossiyskoe Predprinimatelstvo, 12(234), 23-31.
Korchagin, U. V. (2007). Rossiya i Paragvay narashchivayut sotrudnichestvo [Russia and Paraguay increase cooperation]. Mezhdunaridnaya zhizn, 10, 19-25.
Koval, A.G. (2017) Russian Outward Foreign Direct Investments in Latin America: Contemporary Challenges and Prospects. In: Liuhto, K., Sutyrin, S.F., Blanchard, J.F., eds. The Russian Economy and Foreign Direct Investment. London and New York: Routledge, 230-247.
Lopez Arevalo, J. A. (2018). Las relaciones comerciales (intra e interindustriales) de Rusia con América Latina y el Caribe, 2000-2015, Iberoamérica, 2, 68-97.
Martí, L. & Puertas, R. (2017) The importance of export logistics and trade costs in emerging economies. Maritime Economics & Logistics, 2(19), 315-333. doi.org/10.1057/mel.2015.31
Mashkova, T. N. (2018) Current directions for the development of cooperation with the countries of Latin America and the Caribbean, Presentation at the Conference 'Export Day: How to export and do business with the countries of Latin America', Saint Petersburg, April 18.
Medvedev, D. (2016). Social and economic development of Russia: Finding new dynamics. Russian Journal of Economics, 2(4), 327-348. doi:org/10.1016/j.ruje.2016.11.001.
Melitz, M. J. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71(6), 1695-1725.
Mistry of Industry and Trade. (2017, October 25). Rossiya planiruet sozdat' v Paragvae proizvodstvennuyu zony [Russia plans to create a production zone in Paraguay]. Retrieved from Ministry of Industry and Trade of the Russian Federation: http://minpromtorg.gov.ru/press-centre/news/#!rossiya_planiruet_sozdat_v_paragvae_proizvodstvennuyu_zonu_
Moïsé, E., & Le Bris, F. (2013). Trade Costs – What Have We Learned?: A Synthesis Report. Paris, France: OECD Publishing. doi.org/10.1787/5k47x2hjfn48-en.
Molchanov, N. N. (2018). Ankyetniy opros [Questionnaire survey]. In N. N. Molchanov (Ed.), Marketing innovatsiy (pp. 123-128). Moscow, Russia: Izdatelstvo Urait.
Muendler, M. A. (2004). Trade, technology, and productivity: A study of Brazilian manufacturers, 1986-1998. CESifo Working Paper Series, 1148.
Novy, D. (2013). Gravity redux: measuring international trade costs with panel data. Economic Inquiry, 51(1), 101-121. doi.org/10.1111/j.1465-7295.2011.00439.x.
OECD. (2017). Trade Facilitation Indicators Database, Retrieved November 28, 2018, from http://compareyourcountry.org/trade-facilitation
OECD/WTO. (2015). Why Trade Costs Matter for Inclusive, Sustainable Growth. Paris, France: OECD Publishing. doi:org/10.1787/aid_glance-2015-en.
Paniev, Y. (2013). Cooperacion Economico-Comercial Ruso-Latinoamericana: Adelantos y Deficiencias. Iberoamérica, No. 3, 111-127.
Pavlova, E. (2017). A Russian Challenge to Multipolarity? The Prospects for Political Cooperation between Russia and Latin America. Problems of Post-Communism, Vol. 64, 1-15.
REC. (n.d.). Renking perspektivnosti stran dlya eksporta [Rating of countries' prospects for exports]. Retrieved June 23, 2018, from Russian Export Centre: https://www.exportcenter.ru/international_markets/country_rating/
REDIEX. (2015, August). Análisis del Potencial de Exportación Paraguay-Federación de Rusia [Analysis of the export potential Paraguay-the Russian Federation]. Retrieved June 24, 2018, from REDIEX: http://www.rediex.gov.py/wp-content/uploads/2017/01/Rusia_Potencial_Export.pdf
RIA Novosti. (2018). Rossija i Paragvaj gotovjat soglashenie o strategicheskom al'janse [Russia and Paraguay prepare the agreement of strategic alliance]. Retrieved November 28, 2018, from https://ria.ru/politics/20180615/1522817084.html
Sopilko, N. Y., Navrotskaia, N. A., Kovaleva E. A., Orlova, A. F. & Grigoryeva, A. V. (2017). Dynamics factors and slow-response characteristics of Russian trade ties. Journal of Advanced Research in Law and Economics, 2(24), 625 – 634.
Tavdumadze, N. K. (2017). K 25-letiju vosstanovlenija dipotnoshenij mezhdu Rossiej i Paragvaem [To the 25th anniversary of the restoration of diplomatic relations between Russia and Paraguay]. Mezhdunarodnaja zhizn', 5, 67-82.
The Analytical Center for the Government of the Russian Federation, & the Russian Export Centre. (2016). Strategicheskaya sessiya: Baryeri i vozmozhnosti razvitiya mezhdunarodnoy koopyeratsii i eksporta [Strategic session: Barriers and opportunities for the development of international cooperation and export]. Retrieved from http://ac.gov.ru/files/content/10050/otchet-stratsessiya-09-09-pdf.pdf.
UNESCAP/World Bank. (n.d.). Trade Costs Database. Retrieved June 26, 2018, from
http://www.unescap.org/resources/escap-world-bank-trade-cost-database
World bank. (2018). Doing Business: Trading across Borders, Retrieved November 28, 2018, from http://www.doingbusiness.org/en/data/exploretopics/trading-across-borders
World bank. (2002). World Development Report: Building Institutions for Markets. Oxford: Oxford University Press.
WTO. (2008). World Trade Report 2008: Trade in a globalizing world. Geneva, Switzerland: WTO.
Yakovlev, P. (2017) Rossija – Latinskaja Amerika: strategija proryva na rynki nesyr'evoj produkcii [Russia-Latin America: a breakthrough strategy for non-primary products markets], Latinskaja Amerika, 12, 15-28.
Yakovlev, P. (2015). Rossiya i Latinskaya America na fone zapadnih sanktsiy [Russia and Latin America against the background of Western sanctions]. E-journal Perspectives and Prospects, 2, 82-97. Retrieved from http://journal.perspektivy.info/.
Anderson, J. E., & Van Wincoop, E. (2004). Trade costs. Journal of Economic Literature, XLII, 691-751.
Arvis, J-F., Duval, Y., Shepherd, B., Utoktham, C., & Raj, A. (2016). Trade Costs in the Developing World:1996-2010. World Trade Review, 15(3), 451-474. doi:10.1017/S147474561500052X.
Baldwin, R., & Harrigan, J. (2011). Zeros, Quality and Space: Trade Theory and Trade Evidence. American Economic Journal: Microeconomics, 3(2), 60-88. doi:10.1257/mic.3.2.60.
Bernard, A. B., Jensen J. B., & Schott, P. K. (2006). Falling trade costs, heterogeneous firms, and industry dynamics. Journal of Monetary Economics, 53(5), 917-937. doi:org/10.1016/j.jmoneco.2006.05.001.
Blank, S. & Kim, Y. (2015) Russia and Latin America: The New Frontier for Geopolitics, Arms Sales and Energy. Problems of Post-Communism, Vol. 62, No. 3, 159-73. doi.org/10.1080/10758216.2015.1019817.
Cabral López, M. A. (2018). Paraguay y Rusia: algunas notas sobre su relacionamiento (1992-2016) [Paraguay and Russia: some notes on their relationship (1992-2016)]. ACADEMO (Asunción), 5(1), 43-52. doi:10.30545/academo.2018.ene-jun.5.
Cruz, J. A. (2015) Strategic Insights: from Ideology to Geopolitics: Russian Interests in Latin America. Current Politics and Economics of Russia, Eastern and Central Europe, Vol. 30 Issue 1-2, 175-185.
Davydov, V.M. (2016). Strategic Partnership in the Context of Russian–Latin American Relations, Herald of the Russian Academy of Sciences, 86 (2), 86-93.
Decreux, Y., & Spies, J. (2016). Export Potential Assessments: A methodology to identify export opportunities for developing countries. Retrieved June 23, 2018, from http://exportpotential.intracen.org/media/1089/epa-methodology_141216.pdf (accessed April 26, 2018).
Diakantoni, A., Escaith, H., Roberts, M. & Verbeet, Th. (2017) Accumulating Trade Costs and Competitiveness in Global Value Chains, WTO Working Paper ERSD-2017-02.
Eliseeva, D. S. (2014) Neproizvoditel'nye izderzhki uchastnikov vneshnejekonomicheskoj dejatel'nosti pri sovershenii tamozhennyh operacij [Non-production costs of foreign economic agents performing customs operations], Vestnik Rossijskoj tamozhennoj akademii [Bulletin of the Russian Customs Academy], 4 (29), 172-178.
Federal Customs Service of Russia. (2018). Trade flows between Russia and Paraguay from http://www.customs.ru/
Gladkih, A. (2018, April 09). Kto p'et rossiyskoe pivo za rubezhom [Who drinks Russian beer abroad].
PROVED, pp. Retrieved from http://xn--b1ae2adf4f.xn--p1ai/article/47115-kto-pet-rossiyskoe-pivo-za-rubezhom-.html.
Global Trade Alert Database. (2018). Retrieved November 28, 2018, from
https://www.globaltradealert.org/country/173/affected-jurisdictions_161/period-from_20090101/period-to_20191128
Hausmann, R., Klinger, B., & Wagner, R. (2008). Doing Growth Diagnostics in Practice: A 'Mindbook'. CID Working Papers, 177.
Hoekman, B., & Nicita, A. (2011). Trade Policy, Trade Costs, and Developing Country Trade. World Development, 39(12), 2069-2079. doi:10.1016/j.worlddev.2011.05.013.
Hummels, D. (1999). Have International Transportation Costs Declined? Chicago, IL: University of Chicago.
Hummels, D. (1999). Toward a geography of trade cost. Chicago, IL: University of Chicago Press.
ITC. (2013). Paraguay: Perspectivas Empresariales – Serie del ITC sobre Medidas No Arancelarias [Paraguay: Business Perspectives - ITC Series on Non-Tariff Measures]. Geneva, Switzerland: ITC.
Jeifets, V. (2015). Russia is coming back to Latin America: perspectives and obstacles. In Anuario de la Integración Regional de América Latina y el Caribe – América Latina y el Caribe y el nuevo sistema internacional: Miradas desde el Sur coordinado por Andrés Serbin (CRIES, Buenos Aires), Laneydi Martínez (CEHSEU, La Habana) y Haroldo Ramanzi (pp. 90-112). CRIES.
Kaukin A. S., Pavlov P. N., & Filicheva E. V. (2015). Modelirovanie prostranstvennogo raspredeleniya rossiyskikh vneshnetorgovikh potokov s uchetom realnikh izderzhek transportirovki [Modeling spatial distribution of Russian foreign trade flows taking into account the actual transportation costs]. Rossiyskoe predprinimatelstvo, 16(23), 4297-4310.
Kaukin, A. S., & Idrisov G. I. (2013). Analiz izderzhek peremescheniya tovarov pri modelirovanii vneshnetorgovikh potokov [Analysis of costs of moving goods in the modelling of foreign trade flows]. Rossiyskoe Predprinimatelstvo, 12(234), 23-31.
Korchagin, U. V. (2007). Rossiya i Paragvay narashchivayut sotrudnichestvo [Russia and Paraguay increase cooperation]. Mezhdunaridnaya zhizn, 10, 19-25.
Koval, A.G. (2017) Russian Outward Foreign Direct Investments in Latin America: Contemporary Challenges and Prospects. In: Liuhto, K., Sutyrin, S.F., Blanchard, J.F., eds. The Russian Economy and Foreign Direct Investment. London and New York: Routledge, 230-247.
Lopez Arevalo, J. A. (2018). Las relaciones comerciales (intra e interindustriales) de Rusia con América Latina y el Caribe, 2000-2015, Iberoamérica, 2, 68-97.
Martí, L. & Puertas, R. (2017) The importance of export logistics and trade costs in emerging economies. Maritime Economics & Logistics, 2(19), 315-333. doi.org/10.1057/mel.2015.31
Mashkova, T. N. (2018) Current directions for the development of cooperation with the countries of Latin America and the Caribbean, Presentation at the Conference 'Export Day: How to export and do business with the countries of Latin America', Saint Petersburg, April 18.
Medvedev, D. (2016). Social and economic development of Russia: Finding new dynamics. Russian Journal of Economics, 2(4), 327-348. doi:org/10.1016/j.ruje.2016.11.001.
Melitz, M. J. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71(6), 1695-1725.
Mistry of Industry and Trade. (2017, October 25). Rossiya planiruet sozdat' v Paragvae proizvodstvennuyu zony [Russia plans to create a production zone in Paraguay]. Retrieved from Ministry of Industry and Trade of the Russian Federation: http://minpromtorg.gov.ru/press-centre/news/#!rossiya_planiruet_sozdat_v_paragvae_proizvodstvennuyu_zonu_
Moïsé, E., & Le Bris, F. (2013). Trade Costs – What Have We Learned?: A Synthesis Report. Paris, France: OECD Publishing. doi.org/10.1787/5k47x2hjfn48-en.
Molchanov, N. N. (2018). Ankyetniy opros [Questionnaire survey]. In N. N. Molchanov (Ed.), Marketing innovatsiy (pp. 123-128). Moscow, Russia: Izdatelstvo Urait.
Muendler, M. A. (2004). Trade, technology, and productivity: A study of Brazilian manufacturers, 1986-1998. CESifo Working Paper Series, 1148.
Novy, D. (2013). Gravity redux: measuring international trade costs with panel data. Economic Inquiry, 51(1), 101-121. doi.org/10.1111/j.1465-7295.2011.00439.x.
OECD. (2017). Trade Facilitation Indicators Database, Retrieved November 28, 2018, from http://compareyourcountry.org/trade-facilitation
OECD/WTO. (2015). Why Trade Costs Matter for Inclusive, Sustainable Growth. Paris, France: OECD Publishing. doi:org/10.1787/aid_glance-2015-en.
Paniev, Y. (2013). Cooperacion Economico-Comercial Ruso-Latinoamericana: Adelantos y Deficiencias. Iberoamérica, No. 3, 111-127.
Pavlova, E. (2017). A Russian Challenge to Multipolarity? The Prospects for Political Cooperation between Russia and Latin America. Problems of Post-Communism, Vol. 64, 1-15.
REC. (n.d.). Renking perspektivnosti stran dlya eksporta [Rating of countries' prospects for exports]. Retrieved June 23, 2018, from Russian Export Centre: https://www.exportcenter.ru/international_markets/country_rating/
REDIEX. (2015, August). Análisis del Potencial de Exportación Paraguay-Federación de Rusia [Analysis of the export potential Paraguay-the Russian Federation]. Retrieved June 24, 2018, from REDIEX: http://www.rediex.gov.py/wp-content/uploads/2017/01/Rusia_Potencial_Export.pdf
RIA Novosti. (2018). Rossija i Paragvaj gotovjat soglashenie o strategicheskom al'janse [Russia and Paraguay prepare the agreement of strategic alliance]. Retrieved November 28, 2018, from https://ria.ru/politics/20180615/1522817084.html
Sopilko, N. Y., Navrotskaia, N. A., Kovaleva E. A., Orlova, A. F. & Grigoryeva, A. V. (2017). Dynamics factors and slow-response characteristics of Russian trade ties. Journal of Advanced Research in Law and Economics, 2(24), 625 – 634.
Tavdumadze, N. K. (2017). K 25-letiju vosstanovlenija dipotnoshenij mezhdu Rossiej i Paragvaem [To the 25th anniversary of the restoration of diplomatic relations between Russia and Paraguay]. Mezhdunarodnaja zhizn', 5, 67-82.
The Analytical Center for the Government of the Russian Federation, & the Russian Export Centre. (2016). Strategicheskaya sessiya: Baryeri i vozmozhnosti razvitiya mezhdunarodnoy koopyeratsii i eksporta [Strategic session: Barriers and opportunities for the development of international cooperation and export]. Retrieved from http://ac.gov.ru/files/content/10050/otchet-stratsessiya-09-09-pdf.pdf.
UNESCAP/World Bank. (n.d.). Trade Costs Database. Retrieved June 26, 2018, from
http://www.unescap.org/resources/escap-world-bank-trade-cost-database
World bank. (2018). Doing Business: Trading across Borders, Retrieved November 28, 2018, from http://www.doingbusiness.org/en/data/exploretopics/trading-across-borders
World bank. (2002). World Development Report: Building Institutions for Markets. Oxford: Oxford University Press.
WTO. (2008). World Trade Report 2008: Trade in a globalizing world. Geneva, Switzerland: WTO.
Yakovlev, P. (2017) Rossija – Latinskaja Amerika: strategija proryva na rynki nesyr'evoj produkcii [Russia-Latin America: a breakthrough strategy for non-primary products markets], Latinskaja Amerika, 12, 15-28.
Yakovlev, P. (2015). Rossiya i Latinskaya America na fone zapadnih sanktsiy [Russia and Latin America against the background of Western sanctions]. E-journal Perspectives and Prospects, 2, 82-97. Retrieved from http://journal.perspektivy.info/.
