Economic growth of Russian regions

[The full text of this paper is in Russian language only] This paper presents an analysis of growth patterns and potentiality of the Russian economy to double GRP in ten years. The author uses statistical techniques to analyze growth in Russian regions and compare growth with other factors. Ways of maintaining a stable and high GDP growth are then suggested.

The paper finds that:

• nine regions – the cities of Moscow and St. Petersburg and Moscow, Leningrad, Tumen, Samara, Krasnoyarsk, Yamalo-Nenets and Sverdlovsk regions — produce over one half of the value added
• only eight smaller regions (Archangelsk, Astrakhan, Orlov, Rostov and Tambov regions and Kalmyk, Kabardino- Balkar and North Ossetia republics) have shown growth of seven per cent or higher (sufficient to double GRP in ten years)
• in regions with relatively low rates of growth the share of government-produced services in the GRP is higher than in faster-growing regions, a similar pattern holds for goods produced in the regions
• the regions with the higher shares of trade and financial services in the GRP on average demonstrate higher growth rates, a similar pattern is observed in the transport and construction sectors
• growth in large regions is limited by their size and the lack of demand for the end goods produced in those regions

The paper recommends that:

• government should promote growth in smaller and slower-growing regions in order to generate demand for goods produced in larger regions
• construction, transport and trade sectors should be developed in the majority of regions as the growth in these sectors, in turn, should create the economic infrastructure sufficient for the development of industry and further economic growth
• the resources needed for growth should be drawn from inefficient government-owned enterprises
• some parts of the nonmarket sector such as public utilities and natural monopolies should be restructured and privatized when possible, while other parts, such as health care, education, and the judicial system should be reformed and restructured