IGOR P. FAMINSKY5 The Role of External Economic Policy in Protecting Russia's National Interests and Finding its Way Out of the Economic Crisis The role of external economic relations in the Russian economy has increased sharply against the backdrop of the market-oriented reforms and the policy of integrating Russia into the global economy. In the Soviet time the export-GDP ratio never exceeded 5 percent, whereas in 1996-1997 the exports accounted for about 26 percent of Russia's GDP. It is roughly the same ratio as is in major industrially developed European countries, such as Germany, the UK, France, Italy. However, the high level of their export quotas is the outcome of the high level of development of their economies, in the first place their manufacturing industries, and mainly machine building, which are highly competitive. As regards Russia, the steep growth of its export —GDP ratio has resulted from the shrinking domestic market and the growing export of fuel and raw materials only. The dependence of fuel and raw materials industries on the export has vastly increased. 43 percent of gas, 72 percent of mineral fertilizers, 85 percent of cellulose are being exported. It is due to the increase in the share of export in these industries' total output, with the other industries' sharp drop in output, that the export quota in Russia's economy at large has increased. The Russian economy's increased dependence on its external relations has a two-fold consequence. On the one hand, the internal market shrinkage made it possible for the fuel and raw materials industries to set it off by supplying greater share of their output onto the external market. As a result, production in these industries either remained the same or decreased on a much smaller scale than that in the other industries. These industries have become the main source * Director, All-Russia Research Institute for the Studies of External Economic Relations (ISEER) under the Ministry of Economy of Russia. Social Scientist, Vol. 29, Nos. 7- 8, July-August 2000