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Sakhalin, in the Khabarovsky Krai, the Jewish Autonomous and Amurskaya Oblasts.

Traditionally, timber processing in the Russian Far East falls behind the scope and dynamic of logging activities and the bulk of timber is exported in round logs; in the years of economic reform it has dropped two-three times.

Major woodworking centers are Birobidzhan, Blagoveshchensk, Vladivostok, Komsomolsk-on-Amur, Khabarovsk.

The chemical and petrochemical sector includes ore mining and dressing enterprises and facilities manufacturing industrial and household chemical products, varnishes and paints, plastic goods, glass reinforced plastic, etc. It accounts for only 0.8% of the RFE’s total industrial output. Major plants are found in Primorye and the Khabarovsky Krai.

Leading machine-building branches are ship repair, manufacture of electric engineering and other equipment, machine tools, etc. The sector reduced its output 1990-97 due to declining demand, low competitiveness with imported products, high transport tariffs. Its share in the region’s production volume fell from 15.5% to 8.4%.

One of major machine-building centers is Khabarovsk. The machinebuilding sector of the Khabarovsky Krai accounts for 30% of total industrial output. In other RFE regions, its percentage in gross output is insignificant: Primorye - 6.4%, the Amurskaya Oblast - 3.4%, Sakha - 1.5%, Sakhalin - 1.4%. Machine-building plants manufacture diesel engines, overhead cranes, marine machinery, cast molding equipment, metalcutting machine tools, instrumentation, tools and other products. The proportion of ship repair has considerably grown in the past decade and reached 40% of all machine-building operations. Machinery repair facilities are available in all regions.

The light industry is represented by textile, knitting, footwear, leather making and other facilities deployed mainly in large and mid-size cities. Its percentage in total industrial output has sharply dropped in 1998 which reflects a more deeper recession in this sector in comparison with an overall dynamic of the region’s industry. This reduction is largely explained by low competitiveness of the bulk of produce and re-orientation to imported goods.

The food industry sector accounts for a modest portion of the RFE’s industrial output. The rate of reduction in the food sector exceeded an average one for the region’s industry as a whole. By 2000, this percentage was 20%, with in-kind product volume having grown by 17% in the same year. Due to the insufficiency of local food production and huge competitive pressure of imported products, the Russian Far East was importing great amounts of food stuffs from overseas.

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Construction

Construction is one of investment-attracting economic sectors having extensive inter-relationships with other branches. Its percentage in the region’s total GDP is 5%.

The important role of extractive industries requires continuous investment in new facilities which makes an objective factor for developing the construction sector. Nevertheless, the volume of construction works has considerably dropped during last 10 years; for instance, reduction in housing construction was 20-30% which had its effects on the building materials industry and the total value of performed construction works. The RFE’s total industrial output dropped from 6.5% to 1.6%.

Still, the dynamic differs from region to region: in some areas the peak of recession in the construction sector was passed in 1998 and real volume of operations is growing.

Transport

Transport plays an important role in RFE economy due to its geographic position, economic specialization and specifics of production. It accounts for over 10% of the region’s total GDP. Transport costs have become a principal factor in the disintegration of the regional economy from the central part of Russia. Specific of the transport sector is orientation at cargo transit which accounts for more than 80% of rail and sea traffic. It is mainly foreign trade flows from other Russian regions and CIS states to Asian Pacific countries.

The Russian Far East uses all existing transport modes, but the principal role belongs to railway transport, which handles up to 80% of cargo traffic. Main railroads pass across the central and southern parts of the region. They are eastern sections of the Trans-Siberian and Baikal-Amur railroads. The largest railroad is Trans-Siberian. The termini of the Baikal-Amur and Trans-Siberian lie in sea ports: Vanino, Vladivostok, Vostochny, Zarubino, Nakhodka, Posyet,

Sovetskaya Gavan. RFE railways are connected with China’s northeast provinces in several points.

The sea transport accounts for 15% of the region’s freight traffic. The total number and deadweight of ships considerably decreased in the last years. The bulk of the fleet is dry cargo carriers (container ships, reefers, timber carriers, bulk carriers, ferryboats, etc.), the rest is tankers and icebreakers. More than 50% of foreign trade cargoes are carried by foreign ships among which there are many Russian ships flying "convenient" flags.

There are more than 30 sea ports scattered along the RFE’s coast, the largest of which are ten major ports providing round-the-clock services: in Primorye - Vladivostok, Vostochny, Nakhodka, Posyet, Khasansky (Zarubino), in the Khabarovsky Krai - Vanino, on Sakhalin - Kholmsk and Korsakov, in the

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Far North - Magadan and PetropavlovskKamchatski. These ports handle over

90% of the region’s cargo turnover.

The river transport is represented by major shipping companies, river ports, ship repairing and shipbuilding yards, small agency companies. The river fleet is composed of ships of various designations, including general-purpose multi-use ships of "river-sea" type capable of navigating both along inland waterways and on the high seas.

Amur Shipping Company handles traffic in the Amur Basin area. Total length of navigable waterways is about 5,000 km. The largest river ports having railway access are Khabarovsk, Komsomolsk-on-Amur, Blagoveshchensk, Svobodny, Poyarkovo.

The air transport plays a critical role in the life of the Russian Far East, especially in outlying areas of the Far North where there are no railways and navigation period is short (Chukotka, Magadan, northern Sakha). It connects the region with the rest of Russia, handles intra-regional traffic and provides international linkages.

The airports of all RFE administrative centers are open to international flights. Since 1991, the volume of international traffic (USA, South Korea, Australia and others) have accounted for a considerable portion of passenger traffic.

The road transport plays an important role in passenger and cargo traffic and in some areas (lacking railways) is a predominant transport mode. Thus, on Kamchatka and the Magadanskaya Oblast its percentage in the total volume of traffic exceeds 70%. The road infrastructure is rather developed. Total length of paved automobile roads is about 25,000 km, of which more than 70% is found in the south of the region.

Foreign Relationships of the Russian Far East

Foreign trade is a key factor for the region’s economy. At the present time, it is one of fundamental conditions for its survival and future development, an important source of revenues for regional and local budgets.

As of 1990, the RFE’s export quota (ratio of exports to GDP) was below 5% (for reference, the national ratio was 7%), and the bulk of trade was interregional exchange with other Russian economies. During the next decade, trade flows have re-oriented themselves from ex-USSR republics and the central part of Russia to Asia Pacific nations.

By 2000, its export quota has grown to 13% and the degree of openness (ratio of foreign trade turnover to GDP) has reached 24% which is close to an "open" economy. The bulk of exports in 2000 was the produce of resourceoriented industrial branches: metals (28%), timber and wood products (17%), fish and seafood (14%), fuel-and-energy complex (15%) as well as machine-

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building products (20%). Imports were primarily food (26%) and machinebuilding (42%) products.

Since mid-1990s China has become the region’s principal trade partner and is followed by Japan and USA. Trade linkages with the Republic of Korea and West Europe also play an important role. A properly regulated inflow of foreign investments into the RFE economy might form a basis for its development and expansion of exports.

THE ECONOMY OF THE KHABAROVSKY KRAI

Ex. 1. Read and translate the text:

The Khabarovsky Krai is more industrial than agriculturally oriented. Providing farmers with the lands suitable for agriculture and with the necessary equipment is problematic now due to the lack of finances and fertile soils in this area, but few existed agricultural enterprises are rather successful and prospective. The largest vegetable and cattle farms are traditionally situated in the Lazo, Vyazemsky, Bikin, and Khabarovsky Districts.

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The Khabarovsky Krai has everything to become an important industrial centre. It is a gateway to the Pacific. The city of Khabarovsk is one of the largest railroad terminals; it is the seat of the Administration of the Russian Far Eastern Railroad. The Amur Shipping Company delivers various cargoes from Khabarovsk to the northern territories and coastal inhabited localities. Through Khabarovsk pass numerous air routes connecting it to over 40 cities and towns of Russia, the CIS countries and airports in the Asia-Pacific Region.

Nearly 40 percent of the industrial facilities of the Khabarovsky Krai are situated in Khabarovsk. Major industries are: machine-tool making, dieselengine making, ship-building, ship-repairing, chemical, civil, electrical, mechanical engineering, etc. It is almost the history when we recollect that the Amur shipbuilding yards manufactured the foundations for sea oil platforms to be used during the development of the Sakhalin oil and gas shelf. Today, the vessels, built by the yards can be seen in various ports of the Pacific Rim countries where they deliver not only timber but metal, coal, fuels and oils, and other cargoes, serving the overseas trading purposes.

The Khabarovsk Pharmaceutical Factory is also very important. Its pharmacists make good use of local medicinal herbs, preparing medications which are in demand all over this country and abroad.

The towns Komsomolsk-on-Amur, Amursk, and Solnechny form the second largest industrial centre in the Krai. The three "whales" – aircraft engineering, shuipbuilding, and oil-refining – form the backbone of the economy of Komsomolsk. The Komsomolsk-on-Amur Aircraft Industrial Association (KnAAPO) is the largest aircraft manufacturer not only in the Russian Far East but in the whole Asia-Pacific region. Since 1936 KnAAPO has manufactured thousands of machines of various classes, including such world-famous fighters as MIG-15and MIG-17, fighter-bombers SU-7, SU-17 and SU-27, and their modifications. Besides, KnAAPO manufactures civil aircraft, multipurpose amphibian aircraft, motor boats, yachts and other machinery. The Avest FarEastern Radio-electronics Factory is an affiliate of the KnAAPO. "Avest" is the largest manufacturer of TV sets, electronics and electric household appliances in the Russian Far East and Siberia.

The territory is extremely rich in mineral resources; more than 15 different minerals are being extracted in this area – coal, gold, wolfram, non-ferrous metals, chrome, ore, lime-stone, tin and others. Solnechny tin deposit near Komsomolsk-on-Amur is unique; tin there consists of some other very valuable elements: wolfram, copper, silver, zinc, lead, which are extracted from it. The Khabarovsky Krai takes 3 place in Russia's gold-mining. Gold has been extracted here for more than 100 years. At present new gold deposits are being found within the Krai by geologists. Most promising are the basins of the rivers flowing into the Sea of Okhotsk. Many gold fields of the Tuguro-Chumikansky region have the largest reserves of rich gold-bearing rocks in the whole RFE. The most famous gold-mining company in the Krai is "The Amur Gold-Mining