Actions and Reactions of Russian Manufacturing Companies to the Crisis Shocks from 2008-2009: Evidence from the Empirical Survey

This essay explores the nature of the 2008 crisis and the channels through which it affected the performance of firms in Russia. Based on the findings of a manufacturing industry survey, the evidence suggests that all manufacturing firms were affected by the crisis and that there is no single and dominant transmission channel. Crisis reactions were significantly related to participation in international markets, although participation in trade, in external borrowing or FDI cannot explain recession by themselves. The reversal of growth was mainly caused by demand shock and, following that, by financial constraints. Thus the hypothesis that blames overheating of internal demand in the years prior to the crisis seems to receive statistical backing. Globalised companies, though hit by external shocks, were better prepared to pay the cost and balance the consequences of the crisis.