Geo-Economic Interests of Russia and Germany in the Field of Industry

By Khoroshun, Nikita Dmitrievich | Asian Social Science, March 2015 | Go to article overview

Geo-Economic Interests of Russia and Germany in the Field of Industry


Khoroshun, Nikita Dmitrievich, Asian Social Science


Abstract

The article discusses the basic mechanisms and instruments of bilateral cooperation between Russia and Germany in the field of industry. Russia is interested in cooperation on technological development of machine industry, electrical engineering, chemical industry and other manufacturing sectors. For Germany, relations with Russia are important in terms of receiving energy resources. During the years of economic partnership between the two countries impressive results have been achieved in mutual trade. Russia occupies the 16th place among the other countries in terms of application of the German capital. The total amount of accumulated German investments in the Russian economy exceeded 16 billion Euros. Germany still remains a key supplier of equipment and technology for 20 of the 33 industries. At present, there are 6167 companies with German capital operating in 81 of the 83 territorial entities of the Russian Federation. More than 40% of German companies considered development of their businesses in Russia as "good" or "very good". Most German companies are expanding or plan to expand their production in Russia. At the same time, among the companies, localized their production in the country, there are several problems, associated with regulatory changes in connection with the accession of Russia to the WTO. At the same time, the Russian government is taking measures to improve the implementation of investment projects and expand cooperation in the field of industry. The economic future of the bilateral partnership between Russia and Germany may be greatly affected by the negative effects of the EU sanctions policy towards Russia due to political conflict in Ukraine. In case of breaking partnerships, not only Russian, but also the German economy will suffer. The consequences of tougher sanctions have already begun to affect the German business in Russia: corporations, which are represented on the Russian market, are already bearing losses. According to the author, it is exactly business that may affect policy to support equitable dialogue that would lead to a peaceful solution and translate into action the possibilities of mutual cooperation in the industrial sector.

Keywords: cooperation between Russia and Germany, field of industry, the WTO, foreign economic affairs

1. Introduction

One of the defining trends of the world economy is the growing of industrial enterprises integration associations. Liberalization of Russia's foreign economic affair, which began in the 90s of the XX century, gave a powerful impetus to the development of bilateral Russian-German economy-based relations. At present, cooperation between Russia and Germany is developing in all spheres, including the field of industry.

However, as a result of the crisis in Ukraine and cleavage in regard to the annexation of Crimea, bilateral cooperation is bound to suffer not only at the political but also economic levels that can affect both Russian and German economies. Therefore maintaining dialogue between the business circles of the two countries, search for opportunities to expand mutual cooperation in the industrial field, as well as scientific and technical areas under the existing geopolitical tensions is of particular relevance.

2. Methods

Economic cooperation between the Russian Federation, the successor state, established after the collapse of the Soviet Union, and the Federal Republic of Germany, which arose as a result of the unification of West and East Germany, began to develop actively since the early 90s of the XX century.

The Russian-German cooperation rests upon a serious economic base. As mentioned Gernot Erler, the authorized representative of the Government of the Federal Republic of Germany on relations with Russia, as far back as since the Soviet times, Russia has earned a reputation of a reliable supplier of natural resources to Europe, and if sometimes it came to the problems, they were settled easily and quickly. …

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