Chapter 3__________________________________________________________

Balance of Payments from a Comparative Perspective:
China, India, and Russia under Globalization
Akira Uegaki

Introduction
The three regional powers of China, India, and Russia have been actively participating ininternational trade and international financing recently, although they have large populations, hugeterritories, and abundant natural resources,1 which would enable them to be independent and autarkic. The globalization movement especially since the ’90s has undoubtedly made their attitudes
possible, but on the other hand, the fact that the three regional powers have sailed out on the world
market itself has made today’s globalizing trend as a whole stronger and faster. The purpose of thispaper is to clarify each country’s similarities and peculiarities in their international financing in a
globalizing economic situation by using balance of payments statistics.

Weight of External Economic Transactions in Each Economy
Before analyzing balance of payments statistics, we must examine the size of the external
economic transactions of each economy. The simplest way to calculate this is to research the ratioof “openness.”2 According to Fig. 1, the ratio of China and India has been increasing rapidly inthe new century, whereas the Russian ratio has stagnated recently after reaching its highest point in
1999. However, we must not exaggerate this contrast because the ratio has always been relatively
higher in China and Russia than in India. Table 1 compares the ratio of the three countries withother developed industrial countries. Here, we can see that China and Russia are different fromanother huge country, the USA, from the viewpoint of “openness.” While the USA is a rather
autarchic county, China and Russia are as highly involved in the international economy as Germany. As for India, it is unique in the sense that it has recently been rapidly strengthening its involvement in the world economy.

1

As for natural resources, it is difficult to say whether a certain resource is abundant in a country when considering
its population and domestic demand. Abundance depends on the resource and the region.
2Here, openness means the sum of exports and imports of goods and services divided by the GDP. To calculate theratio, the author used the data of IFS of the IMF. If we use the data of each country’s SNA data, the ratio would beslightly different; this, however, would not change the general trend.

- 59 -

Akira Uegaki

Fig. 1 Openness of the Economies [(Exports + Imports) / GDP] (%)

Sources: Calculated by the author using the data of various issues of IFS.

Table 1 Comparison of Openness1 (%)
20002
43.22
27.38
68.09
66.40
20.52
26.34

2002
48.11
29.97
59.65
66.89
20.75
23.39

2005
69.80
42.61
56.67
76.24
27.30
23.95

Sources)
China: CSY (2008).
India: INNAS (2008)
Russia: NSR (2008).
Germany: OECD (2007a).
Japan: OECD (2007a).
USA: OECD (2007b).
Notes: 1 = Openness means (exports of goods and services + imports of goods and services) / GDP2= Selection of years is depends on avairability of data.
3= The year beggins in April and ends in March.

China
India3
RussiaGermany
Japan
USA

Where lies the difference between China and Russia? Another set of data concerning exports
and imports would make this problem clear. Figure 2 shows that exports (in percentage of GDP)
have increased hand in hand with imports in China, whereas Russia’s exports have always beenmuch greater than its imports. From the viewpoint of the use side of GDP, Russia’s exports haveacted as strong pulling power to raise its GDP,3 while this power has been offset by many imports
in China. From the viewpoint of the intra-industrial relations of each economy, however, the degree of economic openness in China seems to be much higher than in Russia, because China’s twolines in Fig. 2 reveal a situation where many imported raw materials and half-finished goods areprocessed by using imported high-tech machines and then exporting the finished goods. In thissense, China, as the factory of the world, is more deeply involved in the world economy. On theother hand, Russia’s involvement is superficial because most of Russia’s exports consist of oil, gas,and other natural resources, which do not necessarily have close connections with domestic production networks in Russia.

3

The growth of Russia’s exports is mainly due to high oil prices instead of volume growth. Therefore, how the“real” amount of exports is related to the “real” GDP growth in Russia is an interesting theoretical problem. See
Kuboniwa (2007).

- 60 -

Balance of Payments from a Comparative Perspective

Fig. 2 Exports and Imports per GDP (%)

Sources: Same as Fig. 1.

Table 1-a Index of Power of Dispersion and Index of Sensitivity of Dispersion: China(from IO tables of 2002)

Share of
Export(%)
Agriculture
Mining and Quarrying
Foodstuff
Textile, Sewing, Leather and Furs Products
Other Manufacturing
Production and Supply of Electric Power, Steam and Hot Water
Coking, Gas and Petroleum Refining
Chemical Industry
Building Materials and Non-metal Mineral Products
Metal Products
Machinery and Equipment
Construction
Transportation, Post and Telecommunications
Commerce and Catering Trade
Real Estate, Leasing and Business Services
Banking and Insurance
Other Services
Source: CSY, 2007, pp. 89-91.

- 61 -

1.53
1.45
2.89
17.76
6.72
0.17
0.85
7.03
1.35
4.93
33.75
0.34
4.69
9.33
3.24
0.07
3.89

Index of
Sensitivity
Dispersion

Index ofPower of
Dispersion

1.16
1.62
0.448
0.676
0.933
0.824
0.696
2.009
0.32
1.755
2.452
0.133
1.047
1.218
0.751
0.620
0.333

0.643
0.712
1.016
1.349
1.112
0.797
1.148
1.288
1.093
1.316
1.452
1.327
0.883
0.792
0.719
0.547
0.806

Akira Uegaki

Table 1-b Index of Power of Dispersion and Index of Sensitivity of Dispersion: Russia (from IO tables of 2003)
Index ofIndex of
Share ofPower of
Sensitivity
ExportDispersion
Dispersion(%)
Electric and Heat Energy
0.34
1.787
0.919
Products of Oil and Gas Industry
46.53
1.665
0.799
Coal
1.14
0.470
1.222
Oil Shale and Peat
0.01
0.028
1.346
Ferrous Metal
7.14
1.257
1.223
Precious Metal
9.87
1.437
1.112
Chemical and Oil-chemical Industry
5.71
1.276
1.388
Machines and Equipment, Metal-Processing Products
8.77
1.738
1.286
Products of Wood, Timber-Processing and Cellulose and Paper
Industry
3.50
0.796
1.169
Construction Materials
0.31
0.455
1.129
Products of Light Industry
0.82
0.778
1.387
Products of Food Industry
2.96
0.634
1.311
Other Industrial Products
1.15
0.377
1.188
Buildings
1.20
0.563
0.898
Agricultural Products, Services for Agriculture and Products ofForestry
0.95
0.888
0.737
Services of Transportation and Communication
4.32
2.624
0.773
Commerce-Intermediary Services
1.38
3.678
0.466
Products of Other Types of Activities
0.32
0.275
0.648
Services of Housing and Public Economy and Non-Productive
Type of People's Welfare
0.08
0.328
0.752
Services of Health, Sports, Social Security, Education andCulture and Art
0.14
0.041
0.627
Services of Sciences, Geology, Investigation of UndergroundResources, Surveying and Meteorological Water-Supply Work
0.20
0.538
0.906
Services of Financial Intermediary, Insurance, Administrationand Social Associations
0.21
0.367
0.671
Source: STZV, 2003, pp. 14-19; pp. 112-114.

This difference can be testified by the data of input-output tables of China and Russia. Table
1-a and 1-b show the index of power of dispersion (IPD) and the index of sensitivity of dispersion(ISD) calculated from their IO tables with data on exports. IPDj is defined as,

Bij

IPDj =

i

,




 
B
1 n 



ij 





  i jwhere Bij is an ij factor of the Leontiev inverse matrix in an n  n input-output table. ISDi is
also defined as,- 62 -

Balance of Payments from a Comparative Perspective

B

ij

ISDi =

j

.



 


B
1 n 



ij




  i j

The IPD is an index showing how much the economy as a whole would increase when industry j increases its production by one unit. The index is shown in the form of a ratio to the average of all the industries listed. Therefore, if IPDi is higher than 1, “the ripple effect” of industry ion the whole economy is stronger than average. On the other hand, the ISD is an index showing
how much industry i would increase its production when every industry listed increases its production by one unit. It is also shown as a ratio to the average. According to Table 1-a, in the case of
China, the leading exporting industry (machinery and equipment) and the second-leading exportindustry (textile, sewing, leather, and fur products) have high IPDs. It means that these industries
have a close connection with the domestic economy and that an increase in exports would lead toan increase in the whole production of the country. As for the machinery and equipment industry in
China, we must note that its ISD is also high. This means that high growth of the Chinese economy as a whole would, in turn, lead to growth of its machinery and equipment industry. We seehere a virtuous circle of the Chinese economy. On the other hand, in the case of Russia, the leading
exporting industry (oil and gas products4) has a very low IPD, much lower than the national average (Table 1-b).5 The export of oil and gas has a very small “ripple effect” in Russia and its increase would not result in strong power to raise the whole economy. It is natural that the IPD of theoil and gas products industry is small, but the problem lies in the fact that this industry is the leading exporting industry of Russia.6

Current Account in a Macro Economy
Among the many figures in balance of payments statistics, the most fundamental is the current account balance, which represents one country’s total resultant effect of international tradeand financial transactions. Figure 3 shows interesting different trends of the current accounts of thethree countries. China’s current account has been in surplus in the last fifteen years and it has
grown rapidly since 2005 reaching a historically high level, about US$ 400 billion. Russia’s current account also recorded surplus in almost all the years since 1994, but it has relatively stagnatedsince 2005 compared to the trend of China, although Russia’s absolute current account surplus isstill large enough to merit attention. Showing another trend, India’s current account balance has
been fluctuating around zero indicating a recent downward trend.
4This includes extracting of oil and gas.
We must not compare the IPD of one of Russia’s industries (for example, the oil and gas products industry) with
the IPD of another of China’s industries (the machinery and equipment industry) directly. Comparison of IPDs (andISDs) is meaningful only when it is done in the framework of one national economy.
6
Kuboniwa (1999, pp. 100-101) found this fact for the first time by using Russia’s IO tables of 1995.
5- 63 -

Akira Uegaki

Fig. 3 Current Account of China, India and Russia (millions of US$)

Sources: India 2007-2008, China 2008 = Economy Watch Website, Other = Various Issues of IFS.

In the framework of a macroeconomy, the current account balance is the increase in financial claims of the residents against the rest of the world and equals the sum of fiscal surplus andexcess of residents’ savings over investment. Therefore, we get
CA = (T – G) + (S – I) [1]
where CA = current account balance, T = tax revenue, G = government expenditure, S =private savings, I = investment including government investment.
Table 2 Structure of Macro Economy (Annual average)
CA1 / GDP (%)
2000-2003
2004-20064
2000-2003
2004-2007
2000-2003
2004-2007(T-G)2 / GDP (%)
China
2.13
-2.84
7.04
-1.66
India
0.64
-2.07
-0.99
-2.63
Russia
10.69
2.34
8.73
6.74

(S-I)3 / GDP (%)
4.97
8.69
2.71
1.64
8.36
2.00

Notes: 1 = CA = Current account surplus. The CA in national currency is calculated by using
market (or official) exchange rate in IFS.
2
= T - G = Fiscal surplus as “cash surplus” in IFS.
3
= S - 1 = Net lending = Calculated not by original data, but as a residual of CA - (S - I).
4= As for China, the fiscal data for 2007 are not available in IFS at the time of writing.
Therefore only a three-year average is shown here.
Source: Various issues of IFS.

Table 2 shows how each item of Equation [1] is recently co-related. It concisely indicatesthe differences among the macroeconomic structures of the three countries. Here, let us consider
the current account surplus (deficit) as financial outflow (inflow), which is produced by domestic- 64 -

Balance of Payments from a Comparative Perspective

surplus (deficit) of the T-G balance and S-I balance, instead of the result of excess exports ofgoods and services over imports. It is a standpoint that lays stronger emphasis on the financial aspects rather than the physical aspects of international transactions.7 According to this standpoint,
the whole picture can be depicted as follows.
In China, the surplus of the S-I balance (“net lending” according to the new SNA terminology) has been too great to cover the fiscal deficit; therefore, the remaining financial resources havebeen pushed out of the country, which has resulted in a large current account surplus. These financial outflows, which include the central bank’s reserve assets, have been growing more rapidly inthe last several years. In fact, in 2007, the current account surplus reached a level of 11.34 percentof the GDP.8
On the other hand, in India, the S-I balance slightly exceeded the fiscal deficit in the first
four years, but more recently, it is insufficient to cover the fiscal deficit and the shortage is being
covered by foreign capital. India is now showing the features of a typical capital-shortage developing industrial country, in which investment is actively conducted and fiscal spending is growing
to cover social needs in a rapidly changing society.
The most striking point of Russia’s structure is that it has been producing a large fiscal surplus in the last several years. This means too many tax payments have been made causing a reduction in private savings. In fact, in 2007 solely, the S-I balance was negative.9 As for the current
account surplus, it is still large though symptoms of decline have appeared. Russia has been a large
capital provider for the world financial market. It is true that after the financial crisis in 2008, Russia’s current account surplus decreased suddenly. The current account surplus in the third quarterof 2008 was US$ 29.5 billion and it decreased to US$ 8.6 billion in the fourth quarter. Notwithstanding, we must note that the surplus in the fourth quarter of 2008 is almost the same as in the
fourth quarter of 2003.10 It is ironic that a considerable part of the accumulated fiscal surplus,
which the government poured into the depressed economy after the crisis, has left the country.11
Russia is still a provider of capital in the world even after the financial crisis.
Figure 4 shows the situation more graphically for the years 2004-7. It reveals that the structure of China is not fundamentally different from that of Russia. In both countries, a large amountof unspent financial resources, whether in the form of private savings or governmental savings, areproduced and they are pushed out of the country as financial claims12 against the rest of the world.
7

This standpoint asserts that the USA is so attractive that foreign investors are eager to invest their capital in the
US market and that the incoming financial resources cover the deficits of the T-G balance and the S-I balance,
which results in current account deficit. Richard Cooper says that “it would be more nearly correct to say that thedesire of foreigners to invest in the U.S. economy results in the U.S. current account deficit” (Cooper, 2008, p. 96).
This does not contradict the conventional standpoint that Americans are too extravagant to be satisfied with what
they can produce domestically, which would result in current account deficit. These two standpoints are the twosides of the same coin. Of course, we need not expect that this attraction of the US market will continue forever.
8
Calculated using the data of CSY. These data are not included in the calculation of Table 2 (see Note 4 of Table 2).
9
It is not explicitly shown in Table 2.
10Website of the Central Bank of Russia.
11
See Konno (2009).
12
Including the central bank’s reserves.

- 65 -

Akira UegakiThis structure has been stable until recently. Looking back at the data of 1994-9, we can see thatthe structure, in which (S – I) + (T – G) was in surplus, had been established in Russia even before
oil prices skyrocketed (Uegaki, 2004). Of course, a decline in oil prices would lead to curtailmentof Russia’s exports, budgetary revenue, and private savings at the same time. This, however, would
reduce every item of Fig. 4 proportionally, keeping the whole structure unchanged. As for China,
the structure, which would produce a large current account surplus, seems to be stable at least until
2008.13 Therefore, we can conclude that China and Russia have had the same problem: how todeal with a large current account surplus. The structure of India is totally different from that ofChina and Russia in the sense that it needs inflows of financial resources to cover the current account deficit.
Fig. 4 Structure of Macro Economy (Annual average)(a) China (2004 - 2006)(b) India (2004 - 2007)(c) Russia (2004 - 2007)

Notes: S - I, T -G = A downward arrow means surplus of the balance; an upward arrow means deficit.
CA = A downward arrow means deficit of the balance; an upward arrow means surplus.
balances with
Source: Same as Table 2.

Foreign Direct Investment
In the following sections, we will discuss the financial aspects of the balance of payments indetail. First of all, we take the example of foreign direct investment (FDI). FDI plays an importantrole between the real and financial economy, because FDI must be fixed on a certain place of an
economy and it cannot to be uprooted easily. How has FDI functioned in the balance of paymentsof the three countries? It would be reasonable to think that much of the current account surplus of
China and Russia is “used”14 for FDI abroad. However, this is not the case. Table 3 shows that
FDI in China has been overwhelmingly inward. Since the first year of publishing of FDI data in
1982, inward FDI has always been larger than outward FDI in China. In the case of China, a large
amount in the current account has not been “used” by the outward FDI route. What is the mainroute of “using” the current account of China? This problem will be examined in the following
sections. Here, we emphasize that China has been receiving a large net inflow of FDI, though
China has accumulated current account surplus, which could have been “used” for outward FDI.

13

The last year that China recorded current account deficit was 1993.
This word does not necessarily mean a cause and effect consequence, that is, it does not mean that what was once
obtained is used afterwards. Instead, it expresses the resultant situation from the viewpoint of accountant records.
14- 66 -

Balance of Payments from a Comparative Perspective

Table 3 Flows of FDI (Foreign Direct Investment)1 (millions of US$)

China

India2

RussiaChina

India2

RussiaOutward FDI
Inward FDI
Net FDI
Outward FDI
Inward FDI
Net FDI
Outward FDI
Inward FDI
Net FDI

1994-20001
33787
13786
-83
973
890
-101
638
537

1995
-2000
35849
33849
-117
2144
2027
-357
2016
1659

1996
-2114
40180
38066
-239
2426
2187
-922
2579
1657

1997
-2563
44237
41674
-113
3577
3464
-3185
4865
1680

1998
-2634
43751
41117
-48
2635
2587
-1270
2761
1491

1999
-1775
38753
36978
-79
2169
2090
-2208
3309
1101

Outward FDI
Inward FDI
Net FDI
Outward FDI
Inward FDI
Net FDI
Outward FDI
Inward FDI
Net FDI

2001
-6884
44241
37357
-1390
6131
4741
-2533
2748
215

2002
-2518
49308
46790
-1049
4660
3611
-3533
3461
-72

2003
152
47077
47229
-1934
4322
2388
-9727
7958
-1769

2004
-1805
54936
53131
-2274
5987
3713
-13782
15444
1662

2005
-11306
79127
67821
-5867
8901
3034
-12900
15151
2251

2006
-2116078095
56935-1351221991
8479-2265730827
8170

Notes: 1 = Positive and negative signs are put according to the system of balance of payments statistics.
2= Since 2000, every recording year begins April and ends March.
Sources: Since 2000 for India:Reserve Bank of India, Annual Report, various issues, Since 2005 for Russia: Website
of Central Bank of Russia.

The structure of Russia’s FDI trend shows different features from that of China. A salient
characteristic of Russia’s FDI is that the amount of outward FDI has been relatively large from1997. Table 4 shows which Russian companies have conducted M&A in the world recently. It reveals that outward FDI from Russia has been carried out mainly by natural resource-related companies and telecom companies. Such phenomena are not observed in the case of China or otherdeveloping countries. Commonly observed phenomena are that a developing country absorbs FDIfrom abroad in the earlier stages of development after opening-up of its financial market. In particular, we must pay attention to the fact that the Russian oil and gas companies, which earned a lotof financial resources in the situation of high energy prices, have been using some of their accumulated resources to conduct FDI abroad. From the viewpoint of the national economy as a whole,
however, Russia has not “used” its current account surplus for outward FDI, because inward FDI
has also been large enough to counterbalance the outward amount. Russia’s peculiarity lies in thefact that a considerable amount of outward FDI and inward FDI occurred on the same scale fromthe early stages of financial opening of the country.

- 67 -

Akira Uegaki

Table 4 Large M &A Projects with Russian Corporates as Purchaser1 by the Data of Deutsche Bank
Purchaser

Sector

Alfa Group
LukoilSeverstal
Evraz Group
VimpelCom
Amtel

Telecom
Fuel & energy
Metallurgy
Metallurgy
Telecom
ChemicalEvraz Group
Novolipetsk Steel
Evraz Group
VimpelCom
Rusal
Norilsk Nickel
Rusal
Interros
VimpelCom

Metallurgy
Metallurgy
Metallurgy
Telecom
Metallurgy
Metallurgy
Metallurgy
Fuel & energy
Telecom

Norilsk Nickel
Mining
Rusal
Metallurgy
Gazprom
Fuel & energy
RenovaEnergyTitan Acquisition Sub
Metallurgy
Inc. (Evraz Group)
LukoilGlobal Information
Services Holding
Mirax Group

Fuel & energy

Millions of US $TargetCoutry22005
TurcellTurkey3,300
Nelson Resources
Bermuda, Kazakhstan
2,130Lucchini
Italy
511
Vitkovice Steel
Czech Republic
287
URS
Ukraine231
Vredestein Banden
New Zealand
201
2006
Oregon Steel
United States
2,300
DufercoUnited States, Brazil
806
Highvelt SteelSouth Africa
678
ArmentelArmenia498
Eurallumina SPA
Italy
420
OMG nickel assets
Austria, Finland
408
AlsconNigeria
250
Plug Power Inc.
United States
241
UnitelUzbekistan
207
20073
LionOreMining
Canada5,234
SUAL, Glencore
Switzerland
3,600
Beltransgas
Belarus2,500
Energetic Source SPA Italy
700
Claymont Steel
United States
564
Holdings Inc.
Czech Republic,
Jet Petrol Stations
560
Poland, Hungary

Machinery

Altis Semicondutor

France449

HotelsSungate Port Royal
Celtic Resources
Holdings Pic
Vanadium
Winner Steel INC

Turkey340

Ireland315

South Africa
United States

238
212

Severstal

Mining (gold)

Evraz Group
Novolipetsk Steel

Metallurgy
Metallurgy

Notes: 1 = Only stakes above 10 % and deals over US$ 200 million included.
2= Minor amendments were put on the data of the countries by Uegaki.
3= The deal between Gazprom and Sakhalin Energy over 7 billion US dollar is not recorded in the table,

As for India, the net FDI has been always positive (inward FDI > outward FDI) since
1994, and a part of the current account deficit has been covered by the net inflow of FDI since1995 except the years 2001-2004 when the current account was in surplus.16 This is a typicalstructure of a developing country. In this sense, India is different from Russia and China.
Examining the relationship between inward FDI and the domestic economy, we can see another aspect. Table 5 shows that inward FDI in the manufacturing industry in China has been much
15

15

It is the first year that the FDI data were published in IFS.
The total net inflow of FDI has been larger than the total net current account deficit since 1994 through 2007
(author’s calculation using the data of IFS and RBI Monthly Bulletin).
16- 68 -

Notes) 1 = April - March
2= The classification of sectors until 2003 is different from that after 2004. The author reconstructed the data until 2003 according to the newer classification.
Sources) China: Various issuces of China Statistical Yearbook; India: Website of Industrial Policy & Promotion, Ministry of Commerce and Industry, India;
Russia: SEP various issues and the Website of Rosstat.

Table 5 Inward FDI by Sector

Balance of Payments from a Comparative Perspective- 69 -

Akira Uegaki

larger than inward FDI in India and Russia. It reveals that the following structure has been established in China: FDI inflows into the manufacturing industry → strengthening of the manufacturing industry → development of other sectors of the economy → increase in exports as awhole – accumulation of current account surplus.
Each country’s quantitative relationship between FDI and the current account has its own
style, and the qualitative relationship between FDI and the domestic economy is also diverse. The
most impressive case is that of China, where FDI, exports, and the domestic economy are closelyinterconnected and the national economy has strong dynamism for development.

Current Account and Financial Accounts
Using the definition of the system of balance of payments statistics (IMF, 1993), we get thefollowing equation:
Current Account + Capital Account + Direct Investment + Portfolio Investment + Other Investment + Reserve Assets + Errors and Omissions = 0.
[2] 17
Table 6 shows how these items except the capital account18 have been correlated since 1994.
A remarkable feature in the table is that India has always been a net recipient of every item of foreign investment until recently. It is noteworthy that the sum of net inflows of the three kinds ofinvestment has been much larger than the current account deficit.19 The shortage of financial resources in India, which is shown in Fig. 4, has been sufficiently compensated for by foreign capital.
This is a result of the financial liberalization policies after a balance of payments crisis occurred in1991. In September 1992, foreign institutional investors were allowed unrestricted entry in termsof volume of investment in the securities market of India. In March 1993, the exchange rate transitioned from a basket-linked managed float to a market-based system via a transitional phase of thedual exchange rate regime. These were accompanied by many stabilization and liberalization
measures concerning the domestic financial market (Moore, 2007, pp. 31-36). In fact, the net inflow of portfolio investment increased by 382 percent in 1993 from the previous year and that of
direct investment, by 128 percent in 1995 (data of IFS). A consequence of this structure is a growing amount of reserve assets of the central bank.20

17

The figures on “financial derivatives” are now separately recorded in IFS.
The item “capital account” includes “capital transfers” and “acquisition/disposal of non-produced, non-financial
assets.” Capital transfers include “debt forgiveness for general government,” “migrants’ transfers,” and others (IMF,
1993, pp. 83-85, p. 134). Table 6 does not show data on capital accounts (or of financial derivatives), and the sum of
the figures in every column does not make zero.
19
Except the years 2002-2004 when the current account balance was in surplus.
20
In the balance of payments statistics, the increase in reserve assets is recorded in minus figures.
18- 70 -

Balance of Payments from a Comparative Perspective

Table 6 Current Account and Financial Accounts (Annual Average, Millions of US $1994 - 96
5256
34567
2026
603
-14384-28217

1997 - 98
China
34217
41396
1605
-35620-20489-21075Current AccountDirect Investment (Net)
Portfolio Investment (Net)
Other Investment (Net)Net Errors and Omissions
Reserve Assets

-4398
1701
3680
3686
176
-3319

India1
-3502
2972
1244
4670
-762
-4233

Current AccountDirect investment (net)
Portfolio investment (net)Other investment (net)
Net Errors and Omissions
Reserve Assets

8551
1175
662
-3435
-5604
-1883

Current AccountDirect Investment (Net)
Portfolio Investment (Net)
Other Investment (net)
Net Errors and Omissions
Reserve Assets

1999 - 01

2002 - 04

2005 - 07

19679
37272
-11543-11732346-22126

49985
49050
6925
9306
17754
-13296526083983168-17940-20132-4414-305262

-2502
3393
2522
3532
162
-7910

3462
3487
7195
8604
639
-24853-12234
9019
16272
27955
-773
-43485

35130
285
-3978
-13631
-9563
-8667

41039
-60
-321
-690
-7494
-27658

84890
6301
3833
24576
-6050
-105952

Russia
70
1587
27197
-20421-9527
1685

Notes: 1 = For India, every recording year begins April and ends March.
Sources: China: Since 1994: Website of State Administration of Foreign Exchange, and China Statistical Yearbook.
India: RBI Annual Report.
Russia: Website of Central Bank of Russia.
Supplemented by IFS.

As for China, the structure is different in the sense that portfolio investment and other investment have not been necessarily in surplus. However, even in the years 2005-7, when portfolio
investment and other investment were in deep deficit (outward investment > inward investment),
the current account surplus and FDI inflow were too large to be counterbalanced by these deficits.
Therefore, there must have been another route of “using” the surplus, which was the increase inreserve assets. Like India, one of the most striking features of Chinese international financing recently is the rapid growth of its reserve assets. In 1994, China pegged its currency to the US dollar
and since then, a large current account surplus and large capital inflows (mainly FDI) have resulted
in strong pressure to increase reserve assets under relatively strong capital account regulations, but
unrecorded capital outflows (capital flight) largely occurred at the same time, which kept the increase in reserve assets modest. Since 2001-2, unrecorded capital flows began to be reversed fromoutward to inward and reserve assets increased extraordinarily (Branstetter and Lardy, 2008, p.
665; Qi, 2006, p. 98).21
Russia began to have a large current account surplus from 1999 and in the period 2005-7,
21

This reversal occurred mainly because of increasing expectation of revaluation of the yuan (Qi, 2006, p. 98).

- 71 -

Akira Uegaki

large-scale financial inflows occurred by the route of “other investment.”22 The way to “use” thesefinancial resources changed year by year. Here, we must note that the item “errors and omissions”
has always recorded a considerable amount of negative figures. It reveals that much capital flight
has occurred since the opening of the national economy until recently.23 Capital flight has been
one important item that counterbalances the credit side of the balance of payments of Russia. We
must also pay attention to the fact that since 1999, Russia has had as many reserve assets as India
and China. After the financial crisis of 1998, Russia introduced a managed floating exchange system and since then, the currency authorities of Russia are supposed to have kept the ruble rate
against the US dollar within certain limits, which has resulted in the accumulation of reserve assets
in dollars (Konno, 2009, pp. 71-72).24
In the cases of the three countries, the credit side of the balance of payments has been madeby current account surplus (China, and Russia except the crisis years 1997-98), net inflows of FDI(China, and India to a lesser extent), portfolio investment (India), and other investment (India, andRussia in the years 2005-07). A common feature of the structure of the balance of payments of thethree countries is that the main route to counterbalancing the credit side has been to increase reserve assets except in Russia in 1994-98. This has been made possible by the exchange rate policies of the three central banks.
The increase in the reserve assets of the central banks and other currency authorities, especially in the newly emerging market,25 is a distinctive feature of recent international financing. In
February 2006, the European Central Bank published a document entitled “The Accumulation of
Foreign Reserves.” The document divides nine main emerging market countries into four types asfollows (ECB, 2006, p. 14):
a. Current account driven, in conjunction with a drop in domestic investment after the
1997-98 Asian crises: Malaysia and Singapore
b. Current account driven, in conjunction with domestic savings growing more than investment: Russia, Brazil, and Algeria
c. Driven both by the current account and the financial account, in conjunction with a drop
in domestic investment after the 1997-98 Asian crises: Korea and Taiwan
d. Driven both by the current account and the financial account in conjunction with domestic savings growing more than investment: China and India
This classification corresponds with the analyses above (Table 2, Fig. 4, and Table 6) except
the case of India since 2005, where we found some current account deficits (see Fig. 3) though the22

Mainly loans to private enterprises including banks.
Concerning capital flight from Russia, see Uegaki (2006).
24
February 2005, the reference rate of the ruble against the currency basket (consisting of the dollar and euro) began to be used for the decision to intervene in the market (Konno, 2009, p. 71).
25
Here, the emerging market includes China, Taiwan, Russia, Korea, India, Malaysia, Singapore, Algeria, Brazil,
and others. Among advanced countries, Japan, Norway, Denmark, and Australia have accumulated large reserve
assets (ECB, 2006, p. 9, p. 11).
23

- 72 -

Balance of Payments from a Comparative Perspective

document classified India as “driven both by the current account and the financial account.” Animportant point here is that the document and the author together assert that domestic savings havebeen more than investment in China, India,26 and Russia. It is important because “given the inability of their financial markets to channel private savings into investment, either domestically or
abroad, in certain countries, the public sector may have endeavored to direct residual savings
abroad, thus leading to reserve accumulation” (ECB, 2006, p. 15).
Figure 4-a indicates that this assertion of the ECB applies best to the case of Russia. Financial depth is generally recognized as the scale of modern development of the financial sector of acountry. According to this standard, the financial sector of Russia is not yet well developed, andwe can therefore surely maintain that in Russia, the excess savings of some of the national economy cannot be smoothly channeled into another part of the economy lacking in capital as investment through domestic financial networks. In this case, excess financial resources cannot find any
place to go in the domestic market, and will go abroad. The increase in reserve assets in Russia
means that the currency authorities of Russia have been functioning as one of the main intermediaries in this financial movement. Especially in the period 2005-07, the private sector in Russia wasa net receiver of foreign capital, although there was much excess savings in the domestic market(see Table 2 and Table 6). While it is true that the direct reason for this increase in reserve assets isthe central bank’s policy of buying foreign currency in order to keep the rate of the ruble low, thisfinancially inefficient structure lies behind the policy.
Fig. 4-a Ratio of Financial Depth1

Note: 1 = (Money plus Quasi-Money at the end of period) / GDP
Sources: Vaious issues of IFS.

As for China, excess savings have been “used” too much by budgetary deficits, resulting in alarge current account surplus (see Table 2), which in turn resulted in rapidly growing reserve assets.
How can we evaluate the relationship between this phenomenon and the high ratio of the financial
26

Recently, in the case of India, the excess of savings over investment could not compensate for fiscal deficits.

- 73 -

Akira Uegaki

depth of China? Why did the excess savings of China not result in outward foreign investment of
the non-central bank sector?
These problems can be resolved by understanding the characteristics of the Chinese financial system. The banking system dominates the financial system in China, though the securities
market has recently developed. The leading role of the banking system is played by state-owned
commercial banks (SCBs), which have larger branch networks than are economically justified. The
government has been pursuing intentionally a high deposit rate policy to collect excess savings
from households and enterprises and pump them into inefficient enterprises. Therefore, SCBs havemassive non-performing loans (Hope and Hu, 2006, pp. 33-34; also see Maswana, 2008, pp.
89-96). This has led to a high ratio of financial depth in China. Although a too-low ratio compared
to developed industrial countries means underdevelopment of the financial system of a country, ahigh ratio does not necessarily mean an efficient, modern financial system. As for official policies, the Chinese government and the central bank have managed to support fixed low rates of theyuan against the US dollar in order to maintain an export-led growth strategy, which has resulted
in the accumulation of reserve assets.27 Relatively stricter capital account control28 than Russia
has made it difficult for the non-central bank sector to accumulate its financial claims abroad.
Owing to these conditions, a high ratio of financial depth coexists with a large amount ofreserve assets of the central bank in China.
In India, it is noteworthy that there were excess savings in the period 2004-7, but that thecurrent account was in deficit because of budgetary deficit (see Table 2). The main source of theincrease in the reserve assets of India was the large amount of incoming foreign financial resources(see Table 6). The foreign financial resources were exchanged into rupees at exchange markets.
The currency authorities of India intervened in the market buying dollars in order to keep the rateof its currency stable.29 One of the reasons that the private sector did not accumulate credit against
foreign countries is the relatively restrictive capital account control of India (AREAER, 2008, pp.
623-645). As for financial depth, it has been said that India was among the lowest in the world, but
we can recently see signs of financial deepening. However, the level of depth is still very low
compared to other developed countries like the UK, France, and Germany (Mohan, 2006, p. 5).
One of the main characteristics of the financial system in India is dominance of non-institutional
credit sources in rural areas (Mohan, 2006, p. 4), which would have lowered the ratio of financial
depth. Therefore, an inefficient financial system in this sense is another factor in India that has
made it difficult for the private sector to accumulate assets abroad.

27

The central bank of China has been obliged to resort to a sterilization policy to prevent inflation since thelate ’90s. This policy helped to enlarge the securities market in China (Maswana, 2008, p. 94).
28
However, we must admit that “recent experience suggests that their efficiency (of capital control in China) may
be waning” (Prasad, Rumbaugh, and Wang, 2006, p. 192).
29
The real effective exchange rate of the Indian rupee had been stable since 1991 through 2004 within a range ofabout -5 percent to +5 percent (website of the RBI). The Indian currency authorities have had to resort to sterilization since the early ’90s.

- 74 -

Balance of Payments from a Comparative Perspective

From a Comparative and Historical Perspective
Geoffrey Crowther, Charles Kindleberger, and others once presented a “balance of payments
stages hypothesis” that asserted that “the current account evolves according to a cycle and that
capital flows move essentially from developed to underdeveloped countries” (Razgallah, 2004, p.
1). Therefore, according to this hypothesis, the structure of balance of payments shows a specificpattern in a specific historical stage, and the development of one pattern to another is commonly
observed in most countries in the world. Many theoretical investigations and empirical tests havefound that this hypothesis cannot be verified (Hitiris, 1988; Razgallah, 2004) as a theory of history.
That is, if we observe, for example, Stage II in one country at a point in history, we would notnecessarily see Stage III next. It is a matter of course, because violent fluctuations in natural resource prices, freely floating exchange rates, intermittently occurring technical breakthroughs,
politically decided trade policies, frequent movement of short-term capital, and other factors undermine the straightforward “development” of this pattern.
Table 7 shows Crowther’s hypothesis. The examples indicate that the verity of the hypothesis cannot be asserted. If we adapt Russia in 2007 to the table directly, it would be placed in StageIII because of its large current account surplus, much larger goods and service surplus, investment
income deficit, and capital and financial account deficit. It is not acceptable that Canada and Korea
in the late ’90s are placed in the same stage as Russia in 2007.
Table 7 Crowther's Balance of Payments Stages “Hypothesis”
Balance of payments (debt (-) or credit(+))
Capital andCurrent Goods and Investment
financialincomeaccount
services
account
mmature Debtor
Countries
Mature Debtor
Stage IICountries
Debt Repayment
Stage IIICountries
Immature Creditor
Stage IVCountries
Mature Creditor
Stage VCountries
Credit Disposing
Stage VICountries
Stage II

Examples (1996 - 2000)

-

-

-

+

Cambodia, Mongolia, India,
Brazil

-

+

--

+

Germany

+

++

-

-

Canada, China, South Korea

++

+

+

--

France, Japan, Switzerland

+

-

++

-

-

--

+

+

United Kingdom,
United States

Note: Examples are selected by Bank of Japan. The item “Capital and …” is not exactly what Crowther proposed.
Sources: Bank of Japan, 2005, pp. 20 - 22.

Notwithstanding, if we take the notion of “balance of payments stages” not as a theory ofhistory, but as a standard for reference, we will gain interesting insight into the international financing of the three countries. It means that the composition of the items of balance of payments
could be a standard for reference in comparative studies from a historical perspective. For example,- 75 -

Akira Uegaki

if we find a large amount of a certain item in the balance of payments of a country, we can tellwhether it is unique in history or not so unique from a longer historical perspective from the data
discovered by the “balance of payments stages” theorists.
First, we must investigate the volume of the current account. Let us examine Table 2 again.
In the table, we find a large current account surplus in China and Russia. In 1986, Japan recorded
the highest current account surplus in percentage of the GDP (4.24 percent) after World War II, but
this is no match for Russia’s and China’s record. The researchers who developed the “hypothesis”
have found much historical data on the balance of payments. In the case of the United Kingdom,
the current account surplus was 3.8 percent of the nominal “GNP” in 1851-1890, and 3.4 percent
in 1891-1925 when the United Kingdom is thought to have moved from Stage III to Stage IV according to the hypothesis. As for the USA, it was 0.4 percent of nominal GDP in 1851-1920 (Stage
III) and 2.4 percent in 1911-1940 (Stage IV). In Germany, it was 1.3 percent of nominal GDP in
1951-1970 (Stage III) (Uchimua, Tanaka, and Okamoto, 1998, p. 41). Considering all these data,
the current account surplus of China and Russia since 2000 is exceptionally large in modern economic history.
A recent IMF publication explores the reasons for the divergence of current account balances across emerging economies (WEO, 2008). According to this document, “less open capital
accounts” and a lack of “liberalization of the domestic financial market” “explain a substantial partof the current account surpluses” in emerging Asia (WEO, 2008, p. 228). This assertion corresponds to our analysis above concerning China and Russia.
As for India, because of deficits in the current account, deficits in the goods and services
trade, and net receipt of capital and financial accounts, it seems to be correct to put India at Stage I.
We must, however, pay attention to the fact that the deficits in the goods and services trade havebeen much larger than those in the current account as a whole since the 1980s (various issues of
IFS). It means that there must have been an item that has mitigated the deficits in the current account, that is, the net receipt of “current transfers.” The current transfers mainly include governmental subsidies (cash transfer, gift of food, clothing, other consumer goods, medical supplies, etc.,
gifts of certain military equipment, and regular contributions paid to international organizations)and workers’ remittances (IMF, 1993, paragraphs 298-302).30 According to the statistics of theReserve Bank of India, since the late ’80s, a large net receipt of “private transfers” has been recorded in the balance of payments (RBIAR, various issues). It means that the workers’ remittances
have relaxed the difficulties arising from current account deficits in India for many years. Thisphenomenon can also be observed in Turkey and new EU member states like Romania and Bulgaria. Although advocates of the balance of payments stages hypothesis overlook the item oftransfers,31 we must consider a country with many current transfer receipts as showing a new type
30
Workers’ remittances are different from “compensation for employees,” which is wages earned by workers temporarily (not longer than one year) working abroad.
31
The fifth edition of the balance of payment manual divides the old category of “unrequited transfers” (according
to the fourth edition) into two categories, current transfers and capital transfers. The former is included in the current
account and the latter is included in the capital and financial account (IMF, 1993, pp. 133-134).

- 76 -

Balance of Payments from a Comparative Perspectiveof international financing. In particular, it is worth noting that the net receipt of current transfers
was larger than the net deficits of goods and services trade in India in 2001-04, and that the overall
current account was in surplus at that time (various issues of IFS).
Lastly, we examine the trend of investment income of China, India, and Russia. Table 7 indicates that the item “investment income” plays a pivotal role in the last stages of the “hypothesis.”
As for attracting and offering of capital, the hypothesis asserts that a country at Stage V exports
capital and obtains much investment income and that it will then “develop” into the last stage,
when it again begins to import capital again though maintaining positive investment income. It isvery hard to prove the verity of this assertion because the definition of capital is ambiguous in the
hypothesis.
Strictly speaking, by today’s standard, investment income is “property income in the SNA”
and “covers income derived from a resident entity’s ownership of foreign financial assets. The
most common types of investment income are income on equity (dividends) and income on debt
(interest)” (IMF, 1993, paragraph 274). This definition leads us to the conclusion that the investment income can be considered as a scale for structural and institutional development of a country’s overall international financing. If receipt of investment income of a country is larger thanpayment, it reveals that the financial structure of the country is well developed and “productive” inthe context of the world financial market. Such a developed financial structure indicates that thecountry as a whole has reached a relatively high level of economic development.
From this standpoint, the trend of China indicates its violent structural changes in international financing under rapid economic growth. In 199432-2004, the current account recorded large
surpluses, and under the situation of excess savings, reserve assets of the Chinese Central Bank
have been accumulated year by year. It is also noteworthy that large capital flight occurred at least
until the end of the last century (Branstetter and Lardy, 2008, p. 665; Oohashi, 2003, pp. 176-182).
During this period, the Chinese economy stepped into the world economic system more deeply by
joining the IMF (1996) and the WTO (2001), which made China very active in receiving capitalfrom abroad and at the same time investing abroad. As for receiving and investing capital, until
2004, the former was larger than the latter, so interest and dividends always have been in excess of
payment. The negative balance of investment income in China reached a peak in 2001, but then it
began to decrease and finally became positive in 2005 (see Fig. 5).
On the other hand, India and Russia are characterized by rapidly growing deficits in investment income until today. India’s balance in investment income reached -6573 million US dollars in
the 2006-07 fiscal year. It is larger than the trade balance deficit in the same year (RBIAR, 2008).
As for Russia, both receipt and payment of investment income has increased rapidly since 2003
under high oil prices, but payment has increased more rapidly than receipt and the minus balancehas become larger. In 2008, the net balance of receipt and payment reached -35,094 million US
dollars,33 the absolute value of which equals 19.5 percent of the surplus of the goods trade in the
32

The first year that detailed balance of payments data were open.
The data are “on schedule.” The amount not paid by the due date is included. The largest amount of unpaid debt
was about 1.5 billion US dollars (2001).
33- 77 -

Akira Uegaki

Fig. 5 Investment Income of China (Millions of US $)Sources: CSY various isssues.

same year.34 It means that 19.5 percent of the foreign currencies and financial values, mainly
earned by oil and gas export, were used for (net) payment of interest and dividends (website of the
CBR).
Let us look at this situation from a comparative and historical perspective. Table 8 shows thetrend of investment income of selected countries. In the table, Germany and the UK show very acomplicated data trend, but it does not have the same meaning as China’s trend. Frequent fluctuations reflect the rapid movement of capital among the EU countries and also that between Europe
and the USA. Japan and the United States show a typical feature of developed financial states. It istrue that each country has its own historical background and the meaning of the formula “receipt >payment” is different according to the country. For example, Japan has created a large goods andservices trade surplus as well as much larger investment income surplus at the same time at least
until 2007. This is not the same situation as that of the “mature” financial state of the UK. The
status in the international financial market of Japan and the USA is different from that of China,
India, and Russia. Thailand is a typical developing country, which recently opened its doors to thefree international financial market. Even after the Asian financial crisis, the main features of thefinancial structure of Thailand have not changed.35
Figure 5 and Table 8 show the unique structure of China, which seems to have attained thestatus of a net capital-exporting country. Of course, considering the complicated movement of thesituation in Germany and the UK, the balance of payments stages hypothesis here again cannot be
verified from the viewpoint of investment income, and we therefore cannot necessarily assert that
China has entered “Stage IV.” However, we must not overlook the difference between China andIndia/Russia. India and Russia have been experiencing net investment income deficits like Thailand as a typical developing country. Therefore, in a sense, China can be regarded as a financially

34
35

The average figure since 1999 through 2007 is 16.1 percent.
After the Asian financial crisis, the current account of Thailand turned into surplus.

- 78 -

Balance of Payments from a Comparative Perspective

Table 8 Trend of Investment Income in Selected Countries
PeriodChina

1994-2004
2005-2007

India

1994-2008

Russia1994-2008

Germany

1972-1982
1983-1994
1995-1996
1997-2003
2004-2008Japan

1977-2006

Thailand

1976-2006

United Kingdom
United States

1948-1976
1977-1993
1994-1999
2000-2008
1960-2008

Receipt or Payment Notes
The deficit reached the peak in 2001 but then deReceipt < Payment
creased.
Receipt > Payment
The deficit gradually increased year by year
Receipt < Payment reaching the peak of 2006-07 fiscal year (- 6573
millions of US $).
The deficit increased year by year reaching theReceipt < Payment
peak in 2008 (-35,094 millions of US $).
Changing
Receipt > Payment
Changing
Receipt < Payment
Receipt > Payment
The balance was 118.5 billions of US$ in 2006,
Receipt > Payment
which was much more than the surplus of goods(except in 1981)
trade in the same year (81.3 billons of US$)The balance was -7.4 billions of US$ in 2007,
Receipt < Payment absolute value of which was a half of the current
surplus in the same year (14.0 billions of US$).
Receipt > Payment
Receipt < Payment Except 1986
Changing
Receipt > Payment
Receipt > Payment

Sources: China: CSY various isssues.
India, RBI Annual Report, various issues.
Russia: Website of Central Bank of Russia.
Germany: Website of Deutsche Bundes Bank Website (Statistics-Time series-External sector-balance of payments).
Japan: Website of Bank of Japan.
Thailand: Website of Bank of Thailand.
Unite Kingdom: Website of Office for National Statistics.
USA: Website of Bureau of Economic Analysis.

“developed country.” It is, however, not easy to say whether this setting is stable and will continue
for the foreseeable future. For example, the main factors that have made this difference are relatively strict control over capital movement by the Chinese government and its strategic activities36
in the international financial market. Therefore, a revision of the policies of the Chinese government would reshape the situation easily. Notwithstanding, we must keep our eyes on the trend ofinvestment income of China carefully in the future.

Concluding Remarks
China, India, and Russia have a common feature in their macroeconomic structure in the
new century, that is, the excess of savings over investment,37 which resulted in current account36
37

The Chinese SWF “China Investment Corporation” was set up in September 2007 (see its website).
Russia in 2007 is an exception.

- 79 -

Akira Uegaki

surpluses.38 At the same time, the three countries have actively introduced foreign financial resources through various routes.39 Consequently, their financial claims against the rest of the world
have been increasing rapidly, especially in the form of reserve assets of the central banks. Thesephenomena reflect weak financial networks in their domestic markets, which would have functioned as financial intermediaries and added to domestic investment.
Of course there are different characteristics among the three countries. India seems to be atypical developing industrial state, because of its relatively small current account surplus (sometimes, deficit), and active introduction of many kinds of foreign financial resources, which havespurred domestic economic development. On the other hand, Russia is unique because both the I-Sbalance and fiscal balance have been in large surplus, which resulted in a large amount of reserve
assets. At same time, it is noteworthy that its foreign economic transactions have been isolated
from domestic economic circulation. China’s international finances, especially in the sphere of
FDI, have close connection with its domestic economy. The net receipt of investment income isalso an important point in China’s future.

References
AREAER, Annual Report on Exchange Arrangements and Exchange Restrictions. New York, NY: AREAER,
IMF, 2008.
Aziz, Jahangir, Steven Dunaway, and Eswar Prasad, eds., China and India, Learning from Each Other,
Reforms and Policies for Sustained Growth, Washington, DC: IMF, 2006.
Japan’s Balance of Payments for 2004. Bank of Japan, International Department, 2005.
Belkin, V., and V. Storozhenko, “Zolotovaliutnye rezervy Rossii i napravleniia ratsional’nogo ispol’zovaniia,” Voprosy ekonomiki, 10, 2007.
Branstetter, Lee, and Nicholas Lardy, “China’s Embrace of Globalization,” in Loren Brandt and Thomas G.
Rawski, eds., China’s Great Economic Transformation, Cambridge, UK: Cambridge University Press,
2008.
CSY, China Statistical Yearbook, Various issues, National Bureau of Statistics of China, China Statistical
Press.
Cooper, N. Richard, “Global Imbalances: Globalization, Demography, and Sustainability,” The Journal of
Economic Perspectives, 22-3, 2008.
ECB, The Accumulation of Foreign Reserves. Occasional Paper Series, No. 43, February 2006 (Prepared byInternational Relations Committee Task Force of the Bank). European Central Bank, 2006.
Golovnin, M., “Finansovaia globalizatsiia i ogranicheniia natsional’noi denezhno-kreditnoi politiki,” Voprosy
ekonomiki, 7, 2007.
Hitiris, T., “U.S. Balance-of-payments Stages 1780 - 1985: A Statistical Investigation”, The International
Trade Journal, 2-3, 1988.
Hope, Nicholas, and Fred Hu, “Reforming China’s Banking System: How Much Can Foreign Strategic
Investment Help?” in Jahangir Aziz, Steven Dunaway, and Eswar Prasad (2006), 2006.
IFS, International Financial Statistics, Various issues, Washington, DC: IMF.
IMF, Balance of Payments Manual, Fifth edition. Washington, DC: IMF, 1993.
38

As for India in the years 2004-07, the excess was not large enough to compensate for its fiscal deficit; therefore,
the current account was in deficit.
39
Russia has also “exported” capital at the same time.

- 80 -

Balance of Payments from a Comparative Perspective

INNAS, National Accounts Statistics. New Delhi, India: National Accounts Division, Central Statistical Organization, Government of India, 2008.
Kheifets, B., “Vneshnii sector rossiiskoi ekonomiki,” Voprosy ekonomiki, 11, 2007.
Konno, Yugo “Russian Economic Situation Today,” Mizuho Europe Insight, June 15, 2007. (in Japanese).
Konno, Yugo, “Russia’s Membership in the WTO,” in Shinichro Tabata, ed., Oil and Gas and the Russian
Economy, Sapporo, Japan: Hokkaido University Press, 2008 (in Japanese).
Konno, Yugo, “Russian Economy under Financial Crisis,” Mizuho Soken Ronshu, 2, 2009 (in Japanese).
Kuboniwa, Masaaki, “Transformation of Industrial Structure”, in S. Tabata, and M. Kuboniwa, eds., Russian
Economy at the Crossroad: Transition to Market and SNA. Tokyo, Japan: Aoki Shoten, 1999 (in Japanese).
Kuboniwa, Masaaki, “Russian Economic Growth at a Turning Point: Supply Side and Income Side,” Keizai
Kenkyu, 58-3, 2007 (in Japanese).
Maswana, Jean-Claude, “China’s Financial Development and Economic Growth: Exploring the Contradictions,” International Research Journal of Finance and Economics, 19, 2008 [http://www.eurojourlnals.
com/finance.htm].
Mohan, Rakesh, “Economic Growth, Financial Deepening and Financial Inclusion,” BIS Review, 113, 2006.
Moore, Tomoe, India’s Emerging Financial Market: A Flow of Funds Model, London, UK and New York,
NY: Routledge, 2007.
Nestmann, Thorsten, and Daria Orlova, “Russia’s Outward Investment,” Deutsche Bank Research, April
29, 2008.
NSR, Natsional’nye scheta Rossii v 2000-2007 godakh, ofitsial’noe izdanie. Rosstat (Federal’naia sluzhba
gosudarstvennoi statistiki), 2008.
OECD, National Accounts of OECD Countries, volume IIa, 1994 - 2005, Detailed Tables. Paris, France:
OECD, 2007a.
OECD, National Accounts of OECD Countries, volume IIb, 1994 - 2005, Detailed Tables. Paris, France:
OECD, 2007b.
Oohashi, Hideo, Chinese Economy Today: Internationalization of Economy. Nagoya, Japan: Nagoya University Press, 2003 (in Japanese).
Prasad, Eswar, Thomas Rumbaugh, and Qing Wang, “Putting the Cart Before the Horse? Capital Account
Liberalization and Exchange Rate Flexibility in China,” in Jahangir Aziz, Steven Dunaway, and Eswar
Prasad (2006), 2006.
Qi, Zhongling, “Development of Currency and Exchange Rate System in China,” in Mitsuhiro Fukao, ed.,Macro Economic Analysis of Chinese Economy. Tokyo, Japan: Nihon Keizai Shinbunsha Press, 2006 (inJapanese).
Razgallah, Brahim, “The Balance of Payments Stages ‘Hypothesis’: A Reappraisal,” Website of l’universitéd’Orléans, 2004 [http://www.univ-orleans.fr/deg/GDRecomofi/Activ/ razgallah_nice. pdf].
RBIAR, Annual Report. Reserve Bank of India, [http://www.rbi.org.in/scripts/AnnualReport Publications.aspx].
RBIMB, Monthly Bulletin. Reserve Bank of India, May 2009.
SEP, Sotsial’no-ekonomicheskoe polozhenie Rossii. Various issues, Moscow, Russia: Rosstat.
STZV, Sistem tablits “zatraty-vypusk” Rossii za 2003. Moscow, Russia: Rosstat, 2006.
Tabata, Shinichiro, “The Influence of High Oil Prices on the Russian Economy: A Comparison with Saudi
Arabia,” Eurasian Geography and Economics, 50, 1, 2009.
Smyslov, D. V., “Inostrannyi kapital na fondovom rynke Rossii,” Den’gi i kredit, 1, 2008.
Uchimura, Hiroshi, Kazuko Tanaka, and Toshio Okamoto, How to Read and Observe Balance of Payments? Tokyo, Japan: Chuo Keizai Publisher, 1998 (in Japanese).
Uegaki, Akira, “Russia as a Newcomer to the International Financial Market, 1992 – 2002,” Acta Slavica
Iaponica, XXI, 2004.
Uegaki, Akira, “Capital Flight from Russia,” in Shinichiro Tabata, ed., Dependent on Oil and Gas: Russia’s- 81 -

Akira Uegaki

Integration into the World Economy. Sapporo, Japan: Slavic Research Center, Hokkaido University,
2006.
Uliukaev, A., and M. Kulikov, “Problemy denezhno-kreditnoi politiki v usloviiakh pritoka kapitala v Rossii,” Voprosy ekonomiki, 7, 2007.
WEO, World Economic Outlook 2008. Washington DC: IMF, October, 2008.

Websites
Bank of Thailand = [http://www2.bot.or.th/statistics/].
Bureau of Economic Analysis, US Department of Commerce = [http://www.bea.gov/ international/].
CBR [Central Bank of Russia; Bank Rossii], The balance of payments statistics = [http://www.cbr.ru/statistics/?Prtid=svs].
China Investment Corporation = [http://www.china-inv.cn/cicen/index.html].
Deutsche Bundesbank = [http://www.bundesbank.de/index.en.php].
Economy Watch = [http://www.economywatch.com/].
National Bureau of Statistics of China = [http://www.stats.gov.cn/eNgliSH/ statisticaldata/].
Office for National Statistics of the United Kingdom = [http://www.statistics. gov.uk/statbase/].
RBI [Reserve Bank of India] = [http://www.rbi.org.in/home.aspx].
Rosstat [Federal Statistics State Agency; Federal’naia sluzhba gosudarstvennoi statistiki] = [http://www.gks.
ru/].

- 82 -