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Abstract
Using input-output –method, this study evaluates income and employment
effects of Russian customs programme for roundwood exports on both the
wood working and the pulp and paper industry in Eastern Finland. In 2006,
the shares of domestic and imported roundwood of the total wood use in
Eastern Finland were 58 and 42 percent, respectively. Four different
scenarios of roundwood import reduction and two different possibilities to
increase domestic roundwood procurement were analysed. Due to lack of
data, similar effects for the Republic of Karelia were calculated using two
alternative scenarios to compensate reducing exports.
The results indicate that forest industry, together with multiplier
effects on other sectors, in Eastern Finland is facing considerable structural
changes if the custom tariffs programme for roundwood exports from
Russia is fulfilled. The key issue for the development of employment and
incomes in Eastern Finland’s forest industry is how the domestic wood
procurement or roundwood imports from other countries can be increased to
compensate the Russian roundwood imports. In the worst scenario with only
limited possibilities to increase domestic wood procurement, unemployment
will increase nearly six thousand and value of production will decrease even
by two milliard euros. Even if domestic wood procurement can compensate
the reducing roundwood export amounts to some extent, the employment
will decrease by few hundreds of employees and the loss in production
value will be in the range of tens of thousands millions to over one hundred
million euros. The corresponding results for the Republic of Karelia due to
the decreasing roundwood exports indicate also considerable increasing
unemployment and decreasing value of output in regional economy, if the
domestic production capacity especially in mechanical wood working
industry is not able to increase production volumes. The unrealistic
scenario, where mechanical wood working industry is able to double its
production, results neutral effects.