The Russian Regional Convergence Process

Abstract

This paper investigates the income convergence among Russian regions in the period 1998-2006. It makes two major contributions to rather extensive literature on the regional convergence in Russia. First, it identifies spatial regimes using the exploratory spatial data analysis. Second, it examines the impact of spatial effects on the convergence process. Our results show that the overall speed of regional convergence in Russia, being low by international standards, becomes even lower after controlling for spatial effects. However, when accounting for the spatial regimes, we find a strong regional convergence among high-income regions located near other high-income regions. Our results indicate that estimation of speed of convergence using aggregate data may result in misleading conclusions regarding the nature of convergence process among Russia's regions.

Economic Development and Marketing Strategies: a Comparative Lens

“…There may also be regional convergence taking place, alongside regional differences. Kholodilin, Oshchepkov, & Siliverstovs (2012) point out that within Russia, there is strong regional convergence among high-income regions located near other high-income regions, while the overall speed of regional convergence is slow, with implications for adapting marketing strategies within Russia, by regional profiles.…”

Regional Convergence in Russia: Estimating A Neoclassical Growth Model

“…Omitting spatial interdependencies between regions may distort the estimation results of the regional growth equation. Many previous studies have also emphasized the presence of spatial effects in the Russian case (e.g., Demidova and Ivanov, 2016;Kholodilin, Oshchepkov and Siliverstovs, 2012;World Bank, 2017 , where d is geographical (arc)distance between regions i and j. Following the literature, we expect that the estimate of 5 will be significant and positive, i.e., that growing regions tend to be located closer to other growing regions, either due to growth spill-overs, or because growing regions have similar economic structures pre-determined by similar geo-climatic conditions.…”

“…Subsequent studies covering the 1990s and 2000s started to find some β-convergence, typically at a rate of about 1% (e.g., Drobyshevsky et al, 2005;Kholodilin, Oshchepkov and Siliverstovs, 2012;Lugovoi et al, 2007), while studies analyzing longer data series and covering the most recent periods typically report much higher rates of β-convergence. Guriev and Vakulenko (2012) report 4.6% for 1995, Akhmedjonov et al, (2013 report 10% for 2000-2008, while Durand-Lasserve and Blöchliger (2018) report about 2.5% for 2005-2015.…”

“…Furthermore, we exclude Chechnya from our analysis. Most previous studies also excluded other regions, for instance, Ahrend (2002) excluded Ingushetia; Guriev & Vakulenko (2012) and Vakulenko (2016) excluded Chukotka and Ingushetia; Kholodilin et al (2012) excluded Chukotka and Kalmykia. These regions tend to be excluded because of implausible fluctuations in regional output per capita.…”

The drivers of regional growth in Russia

“…The paper also shows that the effects of FDI spill over to neighbouring regions. Iwasaki and Suganuma (2014 [24]) stress the role of FDI in improving regional R&D potential after 2003, creating growth-enhancing synergies.…”