One common trope about the Russian economy is that it has virtually no manufacturing to speak of and lives off “oil rents” that can collapse any day.
Whiles there is a small nugget of truth to this assertion, but by and large it is simply false. It is true that a great chunk of Russian exports do accrue to hydrocarbons and metals, because that is its comparative advantage in trade. That said, there are plenty of Russian products on the domestic market. The automobile industry is a good and representative example of this because they it’s a stalwart of many national economies and there exist reliable and easily accessible statistics on it.
| Car Production | Car Sales | Autos self-sufficiency | |
| Czech Rep. | 1,178,938 | 193,795 | 608% |
| Mexico | 3,001,974 | 987,747 | 304% |
| South Korea | 4,557,738 | 1,530,585 | 298% |
| Poland | 647,803 | 328,532 | 197% |
| Japan | 9,942,711 | 5,369,721 | 185% |
| Germany | 5,649,269 | 3,394,002 | 166% |
| Turkey | 1,072,339 | 817,620 | 131% |
| China | 19,271,808 | 19,306,435 | 100% |
| Argentina | 764,495 | 832,026 | 92% |
| Brazil | 3,342,617 | 3,802,071 | 88% |
| South Africa | 539,424 | 623,921 | 86% |
| France | 1,967,765 | 2,331,731 | 84% |
| Russia | 2,231,737 | 3,141,551 | 71% |
| USA | 10,328,884 | 14,785,936 | 70% |
| UK | 1,576,945 | 2,333,763 | 68% |
| Sweden | 162,814 | 326,441 | 50% |
| Italy | 671,768 | 1,534,889 | 44% |
| Ukraine | 76,281 | 263,604 | 29% |
| Australia | 209,730 | 1,112,132 | 19% |
As such, I decided to compile a representative list of countries, with data on production and sales for 2012 drawn from OICA, in order of the ratio of their auto production to new auto sales – that is, their degree of self-sufficiency in cars.As we can see above, while Russia is perhaps rather lower than average, its domestic auto manufacturing industry nonetheless manages to satiate 71% of demand for new cars.
This is quite comparable to France, the US, and the UK, and is vastly higher than a similarly resource-dependent rich country, Australia. Quite a lot of other resource-heavy countries like Saudi Arabia, Venezuela, and Norway don’t produce cars at all. Mexico is a huge exception, but the reason for that is that it borders the US and the US has outsourced quite a lot of its auto industry south of the border to take advantage of lower labor costs – a situation analogous to the Germans’ outsourcing of car production to Spain in the 1980’s, and Central-East European countries like the Czech Republic, Slovakia, Hungary, and Poland in the 2000’s.
I agree that in the West the Russian economy is a bit too often seen as a one-trick pony. The size of the Russian domestic market, and its effects on Russian economy, is somewhat underestimated. Although Russian domestic market is not as dynamic as in some comparable resource-driven economies like Mexico, Argentina or even Botswana (because of massive corruption, rotten infrasturcture, vast size), Russia would not be Nigeria, at least not immediately, if oil rents would stop tomorrow.
However, “auto self-sufficiency” as an economic goal or as an economic indicator makes absolutely no sense whatsoever. It is like if a bank would assess its customers current financial situation by comparing the amount of body hair they cut themselves.
Agriculture and the auto industry are two relatively unsung Russian economic success stories. Even avid Russophobe Jim Brooke quotes GM’s Polish manufacturing head in its St. Petersburg plant singing the praises of the Russian business: http://www.voanews.com/content/russia-re-industrializes-as-energy-boom-fades/1626530.html . Unfortunately, though, Russia has a long way to go to truly re-industrialize. Currently it imports some $400 billion worth of goods annually. It could easily produce half of that domestically, which would foster at least 6% GDP growth for the next decade or so. For that to happen we are going to need to see some new faces managing economic policy, not the same old neo-liberals that have been at it for the past twenty years.
“As we can see above, while Russia is perhaps rather lower than average, its domestic auto manufacturing industry nonetheless manages to satiate 71% of demand for new cars.”
Is there not inherent protection and subsides from the state that protect Russia’s domestic auto-industries that give it an unfair advantage with other competing foreign companies?