Thread: What do we earn from selling oil?

They build already a lot of things, there are upcoming sport events, you know, maybe less of it would be better. The costs of many things pricier that anywhere else in Europe.
Actually I think the more they spend the oil money the worse it can affect the Russian economy as people would bay imported things rather than inward more often.
The best thing I think for the economy would be to stop to sell that raw materials.

Originally Posted by Romik

as people would bay imported things rather than inward more often.

Ah, now you're talking business! So, let's be practical here: say you worked hard (or not hard) and earned $10,000. You decide you want to own a car. How would you spend your money? Would you rather buy a new VAZ-produced vehicle like Kalina or a used Japanese car like Toyota or Honda? That was a rhetoric question. So, what stops VAZ from licensing say from Toyota and start mass-producing the Corolla? It would be a bit lower quality than the equivalent Japanese, for sure, but it would still be a way better than Kalina, cheaper than importing Corollas and would therefore satisfy the internal market limiting the import. Does it make sense? So, the cost of licensing and the cost of building a plant could be partially (or fully) sponsored by the Russian Government with the oil money. That was an example of a 'kind of infrastructure' I was referring to. That would also provide more local jobs spurring the GDP. So, in the end, an average Russian citizen could afford a better car for the same money. Do you think that would qualify for the definition of "richer"?

Originally Posted by Romik

They build already a lot of things, there are upcoming sport events, you know, maybe less of it would be better.

That is also some infrastructure, which is something, and they are looking for getting that money back once the Olympics is over. Which is good. However, that is a one-time action and not an infrastructure development plan that could (and should) be sponsored with the oil money.

Originally Posted by Romik

The costs of many things pricier that anywhere else in Europe.

I think Ramil had already covered that. That's mainly because of the corruption.

Originally Posted by Romik

Actually I think the more they spend the oil money the worse it can affect the Russian economy

Again, that depends what's been done with the money. If the money is calmly daydreaming in the banks, than it's worse for Russian economy, since there's no stimulus to diversify the income.

Originally Posted by Romik

The best thing I think for the economy would be to stop to sell that raw materials.

Ok, and what do you think should Russia sell?

Originally Posted by Crocodile

Ah, now you're talking business! So, let's be practical here: say you worked hard (or not hard) and earned $10,000. You decide you want to own a car. How would you spend your money? Would you rather buy a new VAZ-produced vehicle like Kalina or a used Japanese car like Toyota or Honda? That was a rhetoric question. So, what stops VAZ from licensing say from Toyota and start mass-producing the Corolla? It would be a bit lower quality than the equivalent Japanese, for sure, but it would still be a way better than Kalina, cheaper than importing Corollas and would therefore satisfy the internal market limiting the import. Does it make sense? So, the cost of licensing and the cost of building a plant could be partially (or fully) sponsored by the Russian Government with the oil money. That was an example of a 'kind of infrastructure' I was referring to. That would also provide more local jobs spurring the GDP. So, in the end, an average Russian citizen could afford a better car for the same money. Do you think that would qualify for the definition of "richer"?

Do you think who in charge of VAZ, GAZ aren't smart as you? They already have done that kind of combined infrastructure. The plants of Toyota, Volkswagen, Renault, GM and others are already present in Russia. It's difficult to be practical in Russia. Either way a choice is pricier and worse. The cheaper foreign car produced in Russia - Renault Logan is 1,5 time more expensive than the analog produced in Hungary.
To build that kind of infrastructure the oil money is not needed. If there is the demand on a product in a market, there is the possibility to return on investment producing the product locally, they take a credit, usual things, and the Russian Government has helped to implement those things like imposing blocking customs on imported cars.

Originally Posted by Crocodile

Again, that depends what's been done with the money. If the money is calmly daydreaming in the banks, than it's worse for Russian economy, since there's no stimulus to diversify the income.

Just to spent money without returning, growth of wages without growth of productivity, increase inflation, worsening competitiveness of the economy.

Originally Posted by Crocodile

Ok, and what do you think should Russia sell?

Released products.

Originally Posted by Romik

Released products.

Can you give an example? If, as you said, "it's difficult to be practical in Russia" how do you envision that happening?

Originally Posted by Crocodile

Can you give an example? If, as you said, "it's difficult to be practical in Russia" how do you envision that happening?

For example petrol instead crude oil. I don't envision what could happen, I just gave a thought that increasing spending of oil money won't help that ways as you suggested.
Now things often that it's not profitable to build an infrastructure to produce a product in Russia as anyway the same product could be imported from China 2 time cheaper and not worse in quality. And the kind of infrastructure they often build is final assembling of imported details.

Originally Posted by Romik

For example petrol instead crude oil.

Ok, so you call the petrol a "released product" and not "raw material." (I'm not arguing about definitions, I'm just accepting what you said for the time being.) So, what do you think stops Russia from exporting petrol?

Originally Posted by Crocodile

Ok, so you call the petrol a "released product" and not "raw material." (I'm not arguing about definitions, I'm just accepting what you said for the time being.) So, what do you think stops Russia from exporting petrol?

Well, I really don't know, there are a lot of things I don't understand. Now they involve BP to rig the Arctic that has just smeared the US shores.