Post on 06-Apr-2016
On the Economic Impact of the Pipeline Project between Russia and Germany
Paper presented to SCORUS conference
14 - 16 October 2008 in Shanghai / Chinaby Helmut Maier, Germany,
and Hanna Sherbich, White Russia
Nord Stream Pipeline ProjectGeographical situation
Hanna Shcherbich: On the economic impact of the pipeline project between Russia and Germany. Master’s thesis for the Degree of a Master of Arts International Economics at Berlin School of Economics. Tutor and main examiner: Helmut Maier; assistant examiner: Siegbert Preuß, Berlin 2007
Nord StreamFacts and figures
- 1200 km off-shore pipeline connects directly Russia and Germany via the Baltic Sea
- 2 parallel lines and a sea platform with total capacity of 55 billion cubic meters of natural gas per year to be built until 2012
- 2 on-shore connections will complete the project and link the Nord Stream to the existing gas supply and transmission systems
- Nord Stream AG has been established for project’s administration by OAO Gazprom, Wintershall AG, E.On Ruhrgas AG
- Nord Stream estimated off-shore pipeline construction at 5 billion Euro in 2007
QuestionWhat impact will the North European gas pipeline construction - which is focused only - have on the economies of Russia and Germany in terms of production output and employment?
ApproachLeontief’s Input-Output theory in combination with the Scenario technique of Future Research
Statistical basis1) German Input-Output table of the year 1997
- 59 commodities, harmonized- Source: German Federal Statistical Office
2) Russian Input-Output table of the year 2003- 22 commodities, not harmonized- Source: Rosstat
Problems - High degree of financial data discrepancy- Inconsistency of Russian employment data
Remarks on the NORD STREAMOne of the most discussed natural gas pipeline projects today
Platform
Greifswald
VyborgOffshore 1200 kilometreTwo parallel pipelinesTo be built until 2012One platform in betweenCapacity of 55 billion cubicmeter natural gas per yearImportance confirmed by EU
Managed by Nord Stream corporationOAO Gazprom, Russia, 51%Wintershall / BASF, Germany, 24,5%,E.ON Ruhrgas / E.ON, 24,5%
Input-output table Input der Produktionsbereiche2) Input der Produktionsbereiche2)
Erzg. v.Produkte
nder
Land-wirtschaf
tund Jagd
Erzg. v.Produkte
nder
Forst-wirtschaf
t
Erzg. v.Produkte
nder
Fischereiund
Fischzucht
Gew. v.KohleundTorf
Gew. v.Erdöl,
Erdgas,Erbring.diesbez.
DL
Gew. v.Uran-und
Thorium-erzen
Gew. v.Erzen3)
Gew. v.Steinen
und Erden,sonst.
Bergbauerz.3)
H.v.Nahrung
s-,Futter-mitteln
undGetränke
n
H.v.Tabak-waren
Verwendung
Selected from German Input-Output table 1997 Domestic Production
Aufkommen / Make
01 02 05 10 11 12 13 14 15 16
1 2 3 4 5 6 7 8 9 10
Output nach Gütergruppen (Zeile 1 bis 59):
Erzeugnisse der Landwirtschaft und Jagd 1 175 36 1 25 - - 0 - 32 947
614
Forstwirtschaftliche Erzeugnisse und DL 55 116 - 3 7 - 0 12 - -
Fische und Fischereierzeugnisse - - 31 - - - 0 - 384 -
Kohle und Torf 74 1 - 473 - - 0 42 31 1
Erdöl, Erdgas, DL für Erdöl-, Erdgasgewinnung 28 - - - 96 - 0 13 234 2
Uran- und Thoriumerze - - - - - - 0 - - -
Erze - - - - - - 0 - - -
Steine und Erden, sonstige Bergbauerzeugnisse 280 4 3 135 - - 0 85 148 -
Nahrungs- und Futtermittel, Getränke 4 057 4 - 4 - - 0 - 21 629
2
Tabakerzeugnisse - - - - - - 0 - - 177
Textilien 32 2 31 - - - 0 - 14 -
Bekleidung 3 1 - 6 - - 0 2 18 -
Leder und Lederwaren 22 2 - 3 1 - 0 5 - -
Holz; Holz-, Kork-, Flechtwaren (ohne Möbel) 79 4 1 30 1 - 0 8 121 22
Papier, Pappe und Waren daraus 34 2 1 8 1 - 0 138 2 365 316
Verlags- und Druckerz., bespielte Ton-, Bild- und Datenträger 51 10 2 26 3 - 0 19 422 42
Kokereierzeugnisse, Mineralölerzeugnisse, Spalt- und Brutstoffe 469 52 5 23 - - 0 42 289 4
Chemische Erzeugnisse 2 546 30 1 40 22 - 0 229 639 23
Absolute valuesMillion Euro
Input coefficients
Erzg. v.
Produktender
Land-wirtsch
aftundJagd
Erzg. v.
Produktender
Fischerei
undFischzu
cht
Gew. v.
KohleundTorf
Gew. v.
Erzen3)
Gew. v.Steinen
und Erden,sonst.
Bergbauerz.3)
H.v.Nahrun
gs-,Futter-mitteln
undGetränk
en
H.v.Tabak-waren
H.v.Textilie
n
H.v.Bekleid
ung
Verwendung/Use Erzg. v. Gew. v. Gew. v.
Produkte
n Erdöl, Uran-
In % der Erdgas, und
Forst- Erbring.Thoriu
m-
Aufkommen/ makewirtschaf
tdiesbez.
DL erzen
01 02 05 10 11 12 13 14 15 16 17 18
1 2 3 4 5 6 7 8 9 10 11 12
Output nach Gütergruppen (Zeile 1 bis 59):
Erzeugnisse der Landwirtschaft und Jagd ..........................................
2,48334 1,20134 0,2631
60,4710
8 0 0 0 0 20,33054
1,88159 0,36209 0,01847
Forstwirtschaftliche Erzeugnisse und DL ............................................
0,11716 2,40269 0 0,0565
3 0,20339 0 0 0,2058 0 0 0 0
Fische und Fischereierzeugnisse ......................................................... 0 0 5,2631
6 0 0 0 0 0 0,0869 0 0 0
Kohle und Torf .........................................................................................
0,14243 0,04805 0 8,8562
3 0 0 00,7109
4 0,02355 0,02509 0,0437 0
Erdöl, Erdgas, DL für Erdöl-, Erdgasgewinnung ................................
0,01838 0 0 0 1,79661 0 0
0,07484 0,05198 0,0250
9 0,09364 0,01847
Uran- und Thoriumerze .......................................................................... 0 0 0 0 0 0 0 0 0 0 0 0
Erze ........................................................................................................... 0 0 0 0 0 0 0 0 0 0 0 0
Steine und Erden, sonstige Bergbauerzeugnisse ..............................
0,43648 0,14416 0,7894
70,6029
8 0 0 01,2535
1 0,09583 0 0,00624 0
Nahrungs- und Futtermittel, Getränke ..................................................
7,92556 0,19222 0 0,0753
7 0 0 0 0 13,63437
0,02509 0,00624 0
Tabakerzeugnisse ................................................................................... 0 0 0 0 0 0 0 0 0 4,0893
1 0 0
Textilien ....................................................................................................
0,03676 0,04805 3,1578
9 0 0 0 0 0 0,00162 0 13,43488
16,49426
Bekleidung ...............................................................................................
0,00459 0,04805 0 0,0753
7 0 0 00,0374
2 0,01137 0 0,01249 1,99483
Leder und Lederwaren ............................................................................
0,02757 0,04805 0 0,0376
9 0,0339 0 00,0561
3 0 0 0 0,02771
Holz; Holz-, Kork-, Flechtwaren (ohne Möbel) ......................................
0,11257 0,14416 0,2631
60,4145
5 0,0339 0 00,1122
5 0,05766 0,32614 0,05619 0,03694
Papier, Pappe und Waren daraus .........................................................
0,04824 0,09611 0,2631
60,1130
6 0,0339 0 02,0392
9 1,58938 6,92423 0,87402 0,67418
Verlags- und Druckerz., bespielte Ton-, Bild- und Datenträger ........
0,11486 0,48054 0,5263
20,4899
2 0,10169 0 00,3554
7 0,33217 0,97842 0,64927 1,24677
Kokereierzeugnisse, Mineralölerzeugnisse, Spalt- und Brutstoffe ... 0,9258 1,58578 0,7894
70,3391
7 0 0 00,6548
2 0,16811 0,07526 0,11237 0,08312
Chemische Erzeugnisse ........................................................................ 2,6924 0,67275 0,2631
60,3014
9 0,57627 0 03,6482
7 0,27369 0,30105 8,29691 0,90506
Gummi- und Kunststoffwaren ...............................................................
0,16311 0,43248 0,2631
60,3203
3 0,0339 0 00,1122
5 0,92666 0,30105 0,48071 0,21241
Glas, Keramik, bearbeitete Steine und Erden ......................................
1,05444 0,96108 0 0,2638 0 0 0 0,2058 0,54089 0 0,68048 0,02771
Leontief Inverse Input der Produktionsbereiche2) Input der Produktionsbereiche2)
Erzg. v.Produkte
nder
Land-wirtschaft
undJagd
Erzg. v.Produkte
nder
Fischereiund
Fischzucht
Gew. v.KohleundTorf
Gew. v.Erzen3)
Gew. v.Steinen
und Erden,sonst.
Bergbauerz.3)
H.v.Nahrungs
-,Futter-mitteln
undGetränke
n
H.v.Tabak-waren
H.v.Textilien
H.v.Bekleidun
g
final demand change Erzg. v. Gew. v. Gew. v.
Produkte
n Erdöl, Uran-
der Erdgas, und
Forst- Erbring. Thorium-
total production change wirtschaftdiesbez.
DL erzen
01 02 05 10 11 12 13 14 15 16 17 18
1 2 3 4 5 6 7 8 9 10 11 12
Output nach Gütergruppen (Zeile 1 bis 59):
Erzeugnisse der Landwirtschaft und Jagd ..........................................
1,06263
0,02139
0,00901
0,00818
0,00116
0,00000
0,00000
0,00192
0,34611
0,17266
0,05170
0,02379
Forstwirtschaftliche Erzeugnisse und DL ............................................
0,00191
1,05949
0,00063
0,00192
0,00290
0,00000
0,00000
0,00345
0,00134
0,00250
0,00086
0,00083
Fische und Fischereierzeugnisse .........................................................
0,00043
0,00003
1,08888
0,00004
0,00002
0,00000
0,00000
0,00002
0,00427
0,00009
0,00006
0,00004
Kohle und Torf .........................................................................................
0,00515
0,00345
0,00337
1,10704
0,00162
0,00000
0,00000
0,01260
0,00428
0,00300
0,00635
0,00408
Erdöl, Erdgas, DL für Erdöl-, Erdgasgewinnung ................................
0,01346
0,02055
0,01588
0,01328
1,03861
0,00000
0,00000
0,01348
0,01203
0,00752
0,01705
0,01094
Uran- und Thoriumerze ..........................................................................
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
Erze ...........................................................................................................
0,00046
0,00051
0,00057
0,00314
0,00102
0,00000
0,00000
0,00071
0,00049
0,00033
0,00061
0,00048
Steine und Erden, sonstige Bergbauerzeugnisse ..............................
0,00886
0,00386
0,00970
0,03170
0,00053
0,00000
0,00000
1,01840
0,00549
0,00206
0,00249
0,00145
Nahrungs- und Futtermittel, Getränke ..................................................
0,12455
0,00735
0,00467
0,00623
0,00246
0,00000
0,00000
0,00381
1,25556
0,02307
0,01570
0,00861
Tabakerzeugnisse ...................................................................................
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
0,00000
1,04647
0,00000
0,00000
Textilien ....................................................................................................
0,00186
0,00221
0,11544
0,00219
0,00052
0,00000
0,00000
0,00113
0,00193
0,00098
1,29148
0,49058
Bekleidung ...............................................................................................
0,00021
0,00070
0,00011
0,00174
0,00009
0,00000
0,00000
0,00058
0,00036
0,00025
0,00044
1,23686
Leder und Lederwaren ............................................................................
0,00088
0,00161
0,00012
0,00122
0,00059
0,00000
0,00000
0,00152
0,00035
0,00020
0,00013
0,00210
Holz; Holz-, Kork-, Flechtwaren (ohne Möbel) ......................................
0,00514
0,00534
0,00761
0,01813
0,00420
0,00000
0,00000
0,00762
0,00526
0,01096
0,00475
0,00556
Papier, Pappe und Waren daraus .........................................................
0,01004
0,00547
0,01027
0,01160
0,00415
0,00000
0,00000
0,04109
0,03869
0,11860
0,03219
0,03158
Verlags- und Druckerz., bespielte Ton-, Bild- und Datenträger ........
0,00758
0,01068
0,01321
0,01765
0,00946
0,00000
0,00000
0,01215
0,01389
0,02469
0,01871
0,03140
Kokereierzeugnisse, Mineralölerzeugnisse, Spalt- und Brutstoffe ...
0,02029
0,03624
0,02633
0,01758
0,00755
0,00000
0,00000
0,01656
0,01401
0,00874
0,01647
0,01146
Chemische Erzeugnisse ........................................................................
0,09153
0,03184
0,03584
0,03901
0,01797
0,00000
0,00000
0,06986
0,05120
0,03939
0,26736
0,13308
Gummi- und Kunststoffwaren ...............................................................
0,01245
0,01269
0,00931
0,02463
0,00467
0,00000
0,00000
0,01214
0,02578
0,01278
0,01917
0,01898
Glas, Keramik, bearbeitete Steine und Erden ......................................
0,01900
0,01769
0,00607
0,02279
0,00351
0,00000
0,00000
0,01389
0,01736
0,00571
0,01873
0,00992
ApproachNotations within an open ended and static Leontief model
∆x change of final demand, vector, exogenous
∆X total change of total production output, vector
∆X direct change of direct fraction of intermediate production output, vector
∆X indirect change of indirect fraction of intermediate production output, vector
∆E change of people employed, vector
D reciprocal labour productivity coefficients, diagonal matrix
A input coefficients, matrix
(I-A)-1 Leontief Inverse, matrix
ApproachGraphical clarification of direct and indirect effects
Change of final demand
for goods and servicesof a special
commodity group j
Productionin commodity group j
Productionin other commodity groups
Impact on production of any other
commodity group i
Flow of goods/services
Flow of money
∆x j
∆x j
Directly tofinal demandfrom group jDirect intermediate output
from group i to group j
∆X i direct
∆X i indirect
Indirect intermediateoutput from group i
to group j
∆X i total = ∆X i indirect + ∆X i direct + ∆x i
Total production output of commodity group j
ApproachModel equations for the changes induced by
construction of the pipeline
∆x = estimated exogenous parameter
∆X total = (I-A)-1 ∆x
∆X direct = A ∆x
∆X indirect = ∆X total - ∆X direct - ∆x
∆E = D ∆X
Part of the projectConstruction costs
Billion € % Billion
€
On-shore connection on the Russian territory 4.5 28 3.36
Nord Stream (off-shore pipeline Vyborg-Greifswald) 5 31 3.72
On-shore connection on the German territory 6.6 41 4.92
Total 16.1 100 12.0
Cursive red figures: based on sourcesBlack figures of right column: included estimations in absolute values
ExecutionEstimated costs for the gas pipeline construction
Compressed commodity groups*Final demand
increaseMio. Euro
Total production output, increase
Mio. Euro
Employment increase People
Agriculture / forestry / fishery 0 10 199Mining / energy / water-supply 0 152 915Products of chemical / oil and gas industries 0 634 4,633Metals and products of metal-working industry 496 1,110 10,410Machines and equipment 1,950 2,597 21,404Products of light / timber and pulp / paper industries 0 215 1,885Products of food and beverages / tobacco industries 0 8 59Building construction 3,060 3,181 41,225Trade and intermediation services / services of transport and communication 0 645 8,656
Financial intermediation services / insurance / housing and communal services 0 1,343 9,542
Health and social services / education 0 28 182Public services / defense / social insurance /private households
0 87 1,538
Total 5,506 10,009 100,649
Scenario 1: The impact of the Nord Stream investments on German economyBasis: Input-Output Table 1997 for domestic production
* The original table contains 59 commodities
Scenario 1: Estimation of impact on German economy
Input data
The Nord Stream pipeline construction together with its on-shore connections on German territory increases the final demand for
- Building construction by 3 billion Euro
- Machines and equipment by 1.95 billion Euro
- Metals and products of metal-working industry by 0.5 billion Euro
Output data
- Total production output increases by 10 billion Euro
- Economic multiplier is equal to 1.8
- Up to 20,000 people employed per year, taking into consideration the timeframe of five years for construction, and the fact that labor productivity has apparently grown since 1997
Compressed commodity groups*Final demand
increase Mio. Euro
Total production output increase
Mio. EuroAgriculture / forestry / fishery 0 15Mining / energy / water-supply 0 291Products of chemical / oil and gas industries 0 1,026Metals and products of metal-working industry 0 647Machines and equipment 996 1,495Products of light / timber and pulp / paper- industries 0 185Products of food and beverages / tobacco industries 0 52Building construction 4,910 4,415Trade and intermediation services / services of transport and communication 0 1,263
Financial intermediation services / insurance / housing and communal services 0 110
Health and social services / education 0 57Public services / defense / social insurance / private households 0 51
Total 5,906 9,607
Scenario 2: The impact of the Nord Stream investments on Russian economyBasis: Input-Output Table 2003 for domestic production
* The original table contains 22 commodities
Scenario 2: Estimation of impact on Russian economy
Input data
The Nord Stream pipeline construction together with its on-shore connections on Russian territory increases the final demand for
- Building construction by 4.9 billion Euro
- Machines and equipment by 1 billion Euro
Output data
- Total production output increases by 9.6 billion Euro
- Economic multiplier is equal to 1.63
- Effect on the employment market shows a very positive tendency, but the received figures seem to be too high and biased