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Сеccия G-03. Региональная политика в рамках XV Апрельской международной научной конференции «Модернизация экономики и общества»

Председатель сессии: К. С.Леонард (зав. кафедрой управления развитием территорий и регионалистики НИУ ВШЭ). Дата и время проведения - 2 апреля, 15:00-16:30 (Аудитория 513).

В рамках секции прошла презентация результатов исследования: “Russia’s Regions: Governance and Growth 2000-2011”

By Irina N. Ilina (HSE), Carol S. Leonard (HSE, RANEPA), Alisher Akhmedjonov (Zirve University),  Zafar Nazarov (Cornell University), Elena S. Vakulenko (HSE), Evgenij E. Plisetskij (HSE)

(Project funded by a research grant ТЗ - 43 from the National Research University-Higher School of Economics)


This paper assesses the impact of the quality of governance on economic performance in Russia’s 83 regions from 2000 to 2011, a period of mostly rapid economic advancement. Defining governance broadly as how authority is exercised, and using as a proxy the investment environment, paper contributes to the literature on the economic impact of governance. Our results find a significant association between governance in Russia’s diverse regions and their economic growth, that is, we find a performance gap in government practices. Specifically, our study shows that the main components of effective governance are the ability of the government to run effective public health programs aimed at decreasing the overall mortality rate among the working-age population, to create fair labor market conditions for all individuals who are still capable of working, and to improve the investment climate in the region leading to a higher level of investment in fixed assets. Our results implicitly suggest that effective governance comprises tangible aspects of policymaking such as the adoption of effective public health, investment and labor policies and most importantly, for the regions of Russian Federation, that effective governance is not an artifact of unobserved and unmeasurable managerialattributes of the government.

The paper consists of four sections. The first is a review of governance transformation in Russia and related literature on both governance and growth in Russia using regional statistics. The second addresses the data and methods; the third presents the findings, and the last section is a conclusion.

We discuss the governance reform that has been a priority of centralizing measures undertaken in the 2000s. Outcomes included more competitive framework for budgeting, strategic plans to encourage innovation and modernization of public services, including improvement of information infrastructure, a sharper focus on small enterprise development in the regions, and more effective unemployment relief and retraining of labor (Lavrov, Litwack et al. 2001, Berkowitz and DeJong 2003, Berkowitz and DeJong 2003, Berkowitz 2005, Berkowitz and DeJong 2005, Ahrend 2012).   To be sure, non-transparent formula for federal budgetary transfers still limit the degree to which an analysis of regional governance can be more than tentative(Treisman 1999, Stewart 2000, Zhuravskaya and Handelshögskolan i Stockholm. Östekonomiska 2000, Martinez-Vazquez and Boex 2001, Martinez-Vazquez, Timofeev et al. 2006, De Silva and ebrary 2009, Freinkman, Kholodilin et al. 2011, Yakovlev, Marques et al. 2012).

Governance in terms of “funding” is a very small part of what has powered regional growth and development in the past decade or so. During the first decade of the century, the Russian economy rapidly improved, and between 2005 and 2011, GDP per capita rose annually by 4%. One/quarter of Russia’s 83 regions saw growth rates of over 5% per annum, reaching to 10 and 11%, regional wealth tending rise particularly in resource abundant regions as oil and other mineral prices went up.  This rise in per capita income was not universal. Poverty has signficantly diminished overall, but some regions--subpolar subnational units lacking in minerals, southern regions overwhelmed by civil strive, regions in the urals overwhelmed by rural poverty and severe unemployment—did not do so well.  8% of regions experienced between 0 and 1 % growth per annum.[1] The gap in performance between the less well-off regions and the leaders, described in a substantial literature (Gel'man 2000, Ahrend 2006, Solanko 2008, Berkowitz and DeJong 2011, Ahrend 2012), wide.

Our proxy for governance is an index of investment risk/potential, formally defined as in a report by the Bleyzer Foundation (Bleyzer Foundation, 2002) as composed of the following factors that attract investment: liberalization and deregulation of business activities, provision of a stable and predictable legal environment, and improved corporate and public governance. We model the effect of governance in the regions of the Russian Federation and test the effect of governance on gross regional product per capita using the following statistical model:

GRPit = X’itβ + δGit + εit

where, Git, is investment ranking for ith region at period t approximating governance and Xit represents a vector of variables characterizing different aspects of the region’s economic and social development, which, by assumption, can be correlated with Git. The correlation between Git and Xit enables us to gain a better understanding of underlying mechanisms through which effective governance affects Gross Regional Product (GRP).

Results show that the coefficient on investment risk ranking, the main variable of interest, is negative and significant in the first six models suggesting that a better governance (lower ranking) is associated with higher economic well-being of individuals in the region conditional on variables used as controls such as mortality per 1,000 individuals, the level of innovation activity, the production of electricity per 1,000 individuals, the level of depreciation of fixed assets and the length of asphalted roads in the region.  Further, after adding the regional unemployment rate in our analysis, which is used as a proxy of the region labor market situation, we are able to capture fully the observed correlation between the measure of governance used in our analysis and GRP per capita.

Again, our results support a conclusion that there is a significant association between governance in Russia’s regions and their economic growth. It is a caution, that our measure of effective governance, investment risk ranking, can be perceived as a noisy and imperfect measure for the statistical inquiry of the relationship between effective governance practices and economic growth. However, the improvement in investor protection can be viewed as an effective way to reduce inter-regional differences in individuals’ well-being (Guriev and Vakulenko, 2012).  Our study implicitly suggests that an increase in investor protection can be in the form of programs generating a more healthy labor force, stable labor market conditions and improved investment climate in the region.


Ahrend, R. (2006). "Russia's post-crisis growth: Its sources and prospects for continuation." Europe-Asia Studies 58(1): 1-24.

Ahrend, R. (2012). "Understanding Russian regions' economic performance during periods of decline and growth-An extreme bound analysis approach." Economic Systems 36(3): 426-443.

Berkowitz, D. (2005). "The new political economy of Russia." Journal of Economic Literature 43(1): 185-186.

Berkowitz, D. and D. DeJong (2003). "Policy reform and growth in post-Soviet Russia." European Economic Review 47(2): 337-352.

Berkowitz, D. and D. DeJong (2003). "Regional integration: an empirical assessment of Russia." Journal of Urban Economics 53(3): 541-559.

Berkowitz, D. and D. DeJong (2005). "Entrepreneurship and post-socialist growth." Oxford Bulletin of Economics and Statistics 67(1): 25-46.

Berkowitz, D. and D. N. DeJong (2011). "Growth in post-Soviet Russia: A tale of two transitions." Journal of Economic Behavior & Organization 79(1-2): 133-143.

De Silva, M. and I. ebrary (2009). Intergovernmental reforms in the Russian federation [electronic resource] : one step forward, two steps back? Washington DC, World Bank.

Freinkman, L., K. Kholodilin and U. Thiessen (2011). "Incentive Effects of Fiscal Equalization Has Russian Style Improved?" Eastern European Economics 49(2): 5-29.

Gel'man, V. (2000). The Politics of Russia's Regions: A Comparative Perspective. Shaping the economic space in Russia: Decision making processes, institutions and adjustment to change in the El'tsin era. Harter,-Stefanie; Easter,-Gerald, eds., Aldershot: Burlington, Vt.

Lavrov, A., J. M. Litwack and D. Sutherland (2001). Fiscal Federalist Relations in Russia: A Case for Subnational Autonomy. Paris, OECD.

Martinez-Vazquez, J. and J. Boex (2001). Russia's transition to a new federalism. Washington, D.C., World Bank.

Martinez-Vazquez, J., A. Timofeev and J. Boex (2006). Reforming regional-local finance in Russia. Washington, DC, World Bank.

Solanko, L. (2008). "Unequal fortunes: a note on income convergence across Russian regions." Post-Communist Economies 20(3): 287-301.

Stewart, K. (2000). Fiscal federalism in Russia: Intergovernmental transfers and the financing of education. Cheltenham, U.K. and Northampton, Mass., Elgar; distributed by American International Distribution Corporation.

Treisman, D. (1999). "Political decentralization and economic reform: A game-theoretic analysis." American Journal of Political Science 43(2): 488-517.

Yakovlev, A. A., I. Marques and E. Nazrullaeva (2012). From Competition to Dominance: Political Determinants of Federal Transfers in the Russian Federation. Working Papers. Moscow, Higher School of Economics.

Zhuravskaya, E. V. and i. Handelshögskolan i Stockholm. Östekonomiska (2000). Incentives to provide local public goods : fiscal federalism, Russian style. Stockholm, Stockholm School of Economics.


[1] The data in this paper are mainly official government statistics by RosSTAT, chiefly Rossiiskii Statisticheskii Ezhegodnik (2000-2013), provided by Eastview for the University of Oxford online subscription service and by the National Research University-Higher School of Economics online resources.