El rol de los costos comerciales en las relaciones entre Rusia y Paraguay
| Autor | Valeriia S. Ryzhkova/Alexandra G. Koval |
| Cargo | Magíster en Economía, Universidad Estatal de San Petersburgo/Doctora en Economía, Profesora Asociada, Universidad Estatal de San Petersburgo |
| Páginas | 5-29 |
Latin American Journal of Trade Policy 2 (2018) – ISSN 079-9668 – Universidad de Chile
5
The Role of Trade Costs in the Russian-Paraguayan Trade Relations
Valeriia S. Ryzhkova
Alexandra G. Koval
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. Curre ntly, 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, Paraguay.
Resumen
El cambio en la situación geopolítica y el deterioro de las relaciones entre Rusia y Occidente han inducido
la expansión de la cooperación comercial y económica entre Rusia y los países latinoamericanos.
Actualmente, Paraguay está mostrando explícitamente su disposición a fortalecer las relaciones
comerciales establecidas recientemente con Rusia. Para exacerbar su creciente interés mutuo, es crucial
luchar contra los impedimentos que dificultan el comercio entre estos países. Las evaluaciones del
potencial de exportación demuestran que, de hecho, Rusia y Paraguay tienen potencial para intensificar
el comercio bilateral, aunque las oportunidades para la diversificación de las exportaciones son bastante
limitadas. Los autores realizan una encuesta para identificar los principales costos comerciales y su rol en
el desarrollo de las relaciones comerciales ruso-paraguayas. Los resultados de la encuesta revelan que los
costos de transporte y logística impiden de manera significativa las exportaciones de ambos países, como
también los obstáculos relacionados con la información que representan la principal preocupación de las
empresas exportadoras rusas, mientras que las medidas no arancelarias, las barreras lingüísticas y
culturales son relevantes para las empresas paraguayas. Para intensificar las relaciones comerciales ruso-
paraguayas, los formuladores de políticas podrían enfrentar estas barreras a través de un mayor
intercambio de información de mercado en diferentes canales institucionales.
Palabras claves: Costos comerciales, barreras no arancelarias, potencial de exportación, Rusia, Paraguay.
MA in Economics, Saint Petersburg State University. Email: valeriya.nikiforova@bk.ru. Received: September, 18th 2018;
accepted: November 14th 2018.
Ph. D. in Economics, Associate Professor, Saint Petersburg State University. Email: a.koval@spbu.ru
Valeriia S. Ryzhkova, Alexandra G. Koval
The Role of Trade Costs in the Russian-Paraguayan Trade Relations
6
Introduction
Under the recent changes in the geopolitical situation, the Russian Federation has been transforming its
economic policy and searching new trade partners. The confrontation with the Western countries has
provoked the expansion of Russia’s trade and economic cooperation with Latin America and the
Caribbean (LAC), which refused to support anti-Russian sanctions (Jeifets, 2015).
The majority of studies mainly focus on the political factor of the Russian-Latin American relations
(Blank& Kim 2015; Cruz, 2015; Pavlova, 2017) and just some of them examine the nature of economic
cooperation between Russia and LAC (Davydov, 2016; Koval, 2017). Trade remains the main channel
for the cooperation, and trade relations are explored in research about Russia’s trade policy in LAC either
in general or towards main regional trade partners in particular (Lopez Arevalo, 2018; Paniev, 2013).
However, all these studies primarily include the analysis of trade dynamics and structure. There is an
evident gap in barriers research, which prevent them from the development of Russia-LAC trade. In
other words, the question is what policy makers could do in order to intensify not only political but also
trade contacts.
The theory of trade costs could help to explain the obstacles in trade cooperation between countries and
find a number of cost-effective policies to reduce trade costs and thus enhance trade ties. However, they
all require a case-by-case approach. Mechanical replication of “best practices” does not result in effective
facilitation of trade across borders, which requires policy makers to take into account countries-specific
circumstances (Moïsé & Le Bris, 2013). This research will be the first investigation of trade costs in trade
between Russia and LAC.
The paper will focus on the case of Russian-Paraguayan trade due to the following reasons. First, Paraguay
is one of the top-10 Latin American trade partners for the Russian Federation. However, the Russian
export has grown very slowly during the past decade. Second, currently Russia and Paraguay are explicitly
showing their readiness to strengthen bilateral economic relations (Tavdumadze, 2017). The
establishment of the Paraguayan-Russian Chamber for the Development of Trade, Industrial and Cultural
relations in Asunción in December 2017; visits of Paraguayan and Russian delegations as well as extensive
dialogues at the economic forums confirm countries’ willingness to cooperate. Moreover, after the official
visit of the Paraguayan president to Russia in June 2018, it has been announced the initiation of
negotiations on the agreement of strategic alliance between two countries (RIA Novosti, 2018).
Nevertheless, bilateral trade between Russia and Paraguay remains negligible and extremely imbalanced.
Finally, despite the recent intensification of political and institutional contacts between these two
countries, there are a very few studies on their cooperation(Cabral López, 2018). Thus, the investigation
will cover this gap as well as introduce a relatively new approach in the analysis of Russian-Latin American
cooperation.
The aim of the paper is to identify the major trade costs and their role in the development of the Russian-
Paraguayan trade relations. Prior to clarify trade costs that are most likely to prevent the two countries
from trading more, the authors also prove that Russia and Paraguay indeed have the gap between what
they could export and what they actually export. It thus adds value to the current research on costs in
trade between particular countries. Furthermore, this research produces a deeper understanding of trade
relationship between Russia and Paraguay that so far have received a poor attention. In addition, this
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