26 May 2020
Russia and Its Regions in International Trade in ICT Services

Importance of international trade in ICT services

The global market of information and communication technologies (ICT) is characterized by a rapid growth, with its volume reaching USD 3.74 trillion in 2019. Moreover, the global ICT market has a great economic potential because applying newest technologies to business processes may ultimately become the key to success in digital transformation of national economies.

Foreign trade is one of the necessary conditions for the development of national ICT services markets. ICT services exports might help raise brand awareness and increase companies’ foreign market share. Imported cutting-edge ICT services can be used for the development of domestic technologies. According to the figures provided by the International Trade Center (ITC), international trade in ICT services has been steadily growing in recent years, with the share of ICT services exports already exceeding one tenth of global exports of services.

Russia’s position in ICT services trade

Russia currently accounts for as little as 0.9% of global exports and 1.6% of global imports of ICT services. The growth rate of Russia’s ICT services exports roughly equals the global average (13.1% and 13.2% respectively) but is below the average growth rate of BRICS countries (26.8%). Russia’s imports are growing at a much slower rate (1.9%). This is why, based on data for the first nine months of 2019, Russia has become a net exporter of ICT services for the first time in the last decade.

For a further development of the information and communication technologies sector and an expansion of Russian companies on foreign markets, companies require support from the state. The Strategy for the Development of Services Exports until 2025 which was approved by the Government of the Russian Federation in 2019 can serve as a foundation for state support.

Russian regions and companies in foreign trade in ICT services

Wide disparities remain among Russia’s federal districts and regions in terms of foreign trade in ICT services. According to the data for the first nine months of 2019 provided by the Central Bank of the Russian Federation, the outright winner in ICT services exports is the Central Federal District (51.4% of total Russia’s ICT services exports).

Moscow and St. Petersburg remain the leaders in external trade in this sector, though there is a considerable difference between them as well — Moscow’s exports are twice those of St. Petersburg, and Moscow’s imports are ten times greater. However, the data for the first nine months of 2019 show a drop in Moscow’s trade in ICT services and a rise in other regions.

Most major Russian IT companies registered a rise in their revenues in 2019. Russian developers and suppliers of ICT services in certain high-potential areas compete successfully with foreign companies. The largest share of Russia’s ICT exports is accounted for by software for a wide range of users. Also, Russia supplies information security systems, industrial safety and management systems, and telecommunication services.