Value Added Trade in Non-Primary Industries between Russia and the European Union: Is There a Growth Potential?

The article discusses the structure and dynamics of trade in value added between Russia and the European Union with the emphasis on non-primary industries. The issues of promoting the country and its enterprises to higher positions in global value chains, as well as the approaches to managing these processes are investigated. The dynamics of the demand of the European Union member states for foreign value added in various sectors is analyzed. The author uses the method of decomposition of the value added of the EU and the Russian value added imports into the sector and country of origin and finds out the sectors with the most potential demand of the EU and Russia for each other’s value added. The statistical research is supplemented by analysis of the cases of upgrading or disintegrating value chains with participation of Russian and the European Union companies. Basing on the data obtained, as well as on an analysis of the current global economic situation, the author comes to a conclusion that extractive industries, as well as manufacturing medium- and low-tech industries such as oil refining and metal products still remain the most promising areas with a potential to strengthen value added interaction between Russia and the European Union. Interaction in agriculture, chemical industry and production of computers and electronics also has positive potential, although of a lower scale. It is shown that the industry benchmarks adopted in the Russian plans for state support of exports are relevant for Russian business operating in the European direction in terms of possibilities to increase the added value. At the same time, the analysis confirms the point of view that national competitiveness depends less on the country’s industry structure and is increasingly becoming a derivative of its ability to build cluster mechanisms that effectively organize the competencies of manufacturers of various industries and promote value creation stage.