Economy of Regions

Differentiation of Russia’s Regions in the Process of Reindustrialization

Vyacheslav V. Volchik — 2025-03-28

Russia’s regions are unevenly developed, which results in varying rates of reindustrialization across the country. This article investigates the regional differentiation in the process of reindustrialization, exploring its key factors and examining the unique economic and technological characteristics of different Russian regions. Reindustrialization is a crucial step in modernizing the economy; however, it faces challenges such as workforce qualification, infrastructure gaps, and institutional barriers, all of which contribute to significant regional disparities. The primary goal of this study is to identify the main causes and factors driving regional differences in reindustrialization and to highlight the key directions for this process. To analyse these dynamics, correlation and cluster analyses were employed to examine the relationships between production, scientific, and technological indicators. The correlation analysis revealed links between innovation expenditure, internal research and development costs, and the level of innovation activity in organizations. These findings demonstrate that innovation-supporting policies effectively increase funding for internal research and foster conditions conducive to innovative production, influenced by formal institutional frameworks. Clustering Russian regions according to their scientific, technological, and production potential revealed three distinct groups with varying levels and directions of reindustrialization. The first cluster (19 regions) exhibits the lowest levels of production and scientific-technological development; the second cluster (21 regions) shows relatively stronger scientific-technological factors, despite a weaker position in terms of production; and the third cluster (35 regions) demonstrates an average level of both production and technological development. In light of these findings, the study proposes that the regional differences in reindustrialization rates and directions call for tailored economic policies to effectively address these disparities and support more balanced development across Russia.

Key Economic Trends in Russian Regions Affected by Desertification

Alexander I. Belyaev — 2025-03-28

In the context of global climate change and increasing anthropogenic pressure on the environment, desertification not only leads to the deterioration of natural conditions but also causes significant shifts in the social and economic aspects of people’s lives. This article outlines the main trends in the economic development of Russian regions affected by desertification. It examines both physical and socio-economic parameters, with particular focus on indicators such as population, migration, health metrics, mortality, and fertility. Among the many Russian regions facing land desertification, regions with the largest areas of degraded land are highlighted as model cases: the Republic of Kalmykia, the Volgograd Oblast, the Republic of Dagestan, the Astrakhan Oblast, and Stavropol Krai. These regions are characterized by a relatively low share of the agricultural sector in their regional economies, which does not exceed 23 %. In Kalmykia, Dagestan, and Astrakhan, there has been a noticeable increase in the number of pasture animals over a 25-year period, by 16 %, 59 %, and 69 %, respectively. This trend places additional strain on pastures, contributing to pasture degradation. Additionally, a decline in the rural population has been observed: a 7 % decrease in Kalmykia, 3 % in Volgograd, 4 % in Dagestan, and 6 % in Stavropol. As a result of natural decline and migration, the total population has decreased by 19 % in Kalmykia and 7 % in Volgograd. Over the past 25 years, the incidence rate per 1,000 people has also risen. The consequences of land degradation are profound, negatively affecting socio-economic development, reducing the area of farmland, decreasing productivity, prompting rural migration, and exacerbating socio-demographic challenges. The findings of this study can inform decision-making in managing resettlement programs from degraded territories to restore land resources, implement phytomelioration measures for rehabilitating degraded pastures, and expand early diagnostic programs to monitor public health.

Economic risks of development of the Southern macroregion in the context of foreign economic sanctions

Inna V. Mitrofanova — 2025-03-28

The article analyzes the economic risks of the development of the Southern macroregion under the conditions of foreign economic sanctions and suggests ways to minimize them. To identify them, the existing classification (blocking, sectoral, hybrid, diplomatic) was supplemented by the author’s by highlighting direct and indirect risks. It is substantiated that indirect ones are the basis for the formation of systematic economic risks, and direct ones are the basis for their own. The methodological basis of the study was the theory of risks and their management. During the study, the authors carried out an inventory of foreign economic sanctions; the resulting economic risks for the development of the socio-economic complex of the Southern macroregion were analyzed; the specifics of the existing system for minimizing the impact of sanctions have been identified. An assessment of the economic risks of the constituent entities of the Southern macroregion is given using the methodology of content analysis of the socio-economic development of the constituent entity of the Russian Federation, official ratings of rating agencies and analytical platforms, a statistical method for assessing systematic and own risks based on indices of indicators of socio-economic development of regions is developed. Own risks, in addition to factors determined by the current level of regional development, in the conditions of foreign economic sanctions change under the influence of blocking sanctions, and due to differences in the structure of production - sectoral sanctions. The more investment-attractive a subject of the Russian Federation was before their unprecedented introduction, the less the deterioration of its socio-economic situation occurs. Regional differentiation of the sanctions impact has been identified and it has been substantiated that the dynamics of the external sanctions impact will, other things being equal, largely depend on the nature of the promising projects planned for implementation. The more they are based on the use of dual-use technologies, the greater the impact of sanctions on the region. The authors assessed the measures taken to level out the impact of sanctions; ways to minimize the economic risks of the development of regional socio-economic complexes in new geo-economic and geopolitical conditions have been proposed.

Assessment of the Ecological and Economic Sustainability of Russian Urban Agglomerations

Philipp Yu. Kaizer — 2025-03-28

Urban agglomerations in the Russian Federation are receiving increasing attention due to their role in economic growth, particularly in light of the socio-economic imbalance between cities and peripheral regions. This study aims to assess the ecological and economic sustainability of urban agglomerations in Russia by using cluster analysis to identify groups of agglomerations with similar sustainability profiles. The research relies on statistical, comparative geographic, and cluster analysis methods. The study is based on data from the Federal State Statistics Service, environmental protection reports, and materials from the Institute for Economics of the City, which cover various economic, social, and environmental aspects. Through the analysis, four distinct clusters of urban agglomerations were identified, and the key factors contributing to their sustainability were determined. The study found that factors such as population density, gross emissions, total waste production, and waste intensity are the primary contributors to lower environmental sustainability. As a result, the agglomerations in the first cluster were identified as the least environmentally and economically stable. The agglomerations in the third and fourth clusters were slightly more stable, while those in the second cluster exhibited the highest levels of stability. These findings can serve as a foundation for developing strategies and practical solutions to enhance the ecological and economic sustainability of urban agglomerations in Russia. These findings can also be used for urban planning, forecasting development, creating environmental ratings, and implementing effective environmental protection measures at both the regional and national levels.

Civilizational Fork in our Time and Development Alternatives

Sergey D. Bodrunov — 2025-03-28

The signs of a civilizational crisis are becoming increasingly evident and cannot be ignored. Humanity stands at a critical crossroads: either the crisis deepens, potentially leading to severe consequences and the collapse of civilization, or effective strategies are identified and implemented to transform these challenges into opportunities for progress. This article examines the role of technological progress in both exacerbating the crisis and creating the conditions necessary to overcome it. The modern technological revolution is reshaping knowledge-intensive material production, altering the nature of human activity and needs, and laying the groundwork for a transition to a non-economic mode of production and the fulfilment of human needs—noonomy. However, the neoliberal economic paradigm often conflicts with the socio-economic progress driven by recent technological advancements. Addressing this issue does not require dismantling the existing socio-economic system but rather its gradual and systematic transformation. The shift toward noonomy and noocommunity should be recognized as an objective historical trend, guiding the development of a strategic program. This transition will require the emergence—or nooevolution—of new value orientations, or noovalues, grounded in a noocriterial value framework. This framework, rooted in fundamental humanistic principles, will emphasize the development of individuals as bearers of knowledge and culture.

Tourism’s Impact on Economic and Human Development: Evidence from ASEAN 5

Yan-Teng Tan — 2025-03-28

Tourism can serve as a driver of economic development, but economic growth does not always lead to better human development outcomes. This is particularly evident in post-pandemic tourism when analyzed through the Human Development Index. Supporting Amartya Sen’s argument that well-being should not be measured by income alone, this paper evaluates the impact of tourism within the capability approach. The analysis extends beyond economic indicators to incorporate health, education, and living standards, offering a more comprehensive view of well-being. Focusing on ASEAN 5 countries, the study finds a significant long-term relationship between tourism and human development. Panel cointegration analysis shows that increased tourism activity enhances key human development indicators, particularly healthcare, education, and overall living standards. A well-developed tourism sector can thus contribute to broader societal well-being, aligning with Sen’s emphasis on expanding individual capabilities and improving quality of life. The study advocates for tourism strategies that prioritize human development alongside economic gains, fostering a healthier and more prosperous society. It also presents policy implications and recommendations for promoting tourism in ASEAN 5, addressing gaps in existing literature. Future research could explore whether similar relationships hold across different tourism sectors, such as eco-tourism, medical tourism, and sports tourism.

Impact of Uncertainty on Central Bank Digital Currency (CBDC) Development at Different Country Income Levels

Daffa Rizqi Prayudya — 2025-03-28

The drawbacks of cryptocurrencies have prompted central banks to explore central bank digital currencies (CBDCs) as a new means of payment. However, various uncertainties may hinder the optimal design and implementation of CBDCs. This study examines the impact of uncertainty on CBDC development across countries with different income levels. Using data from 92 countries spanning 2014 to 2021, the research employs Ordered Logit and Probit models to analyse categorized dependent variables reflecting CBDC development, followed by an Ordinary Least Squares (OLS) with fixed effects model as a robustness check. Subsample estimations are applied to assess the effects within high, middle, and low-income countries. The study finds that uncertainty significantly and negatively impacts CBDC development, with the effect being more pronounced in middle and low-income countries. This suggests that the underdeveloped interoperability of the financial system, along with insufficient infrastructure and digital literacy, are key factors delaying CBDC progress in these regions, particularly when uncertainty is high. Collaboration and information-sharing among central banks are crucial to reduce global uncertainty and share best practices. Central banks should also prioritize the development of transparent regulatory frameworks, enhance digital literacy, and implement targeted infrastructure development incentives. Future research should focus on identifying optimal CBDC designs tailored to each income level to overcome these obstacles and foster a more inclusive and resilient financial ecosystem.

Erratum

2025-03-28

Erratum: Pletnev,D.A., Lipina, E.V., & Naumova, K. A. (2024). Regional Features of Russian Gazelles During the Pandemic. Ekonomika regiona / Economy of regions, 20(3), 686-701. https://doi.org/10.17059/ekon.reg.2024-3-6
On the pages 686 and 687 there were mistakes in the affiliation of Dmitry Pletnev in Russian and in English, accordingly. The correct affiliation is:
Д. А. Плетнев а), Е. В. Липина б), К. А. Наумова в)
а) Челябинский филиал Института экономики УрО РАН, г. Челябинск, Российская Федерация
б, в) Челябинский государственный университет, г. Челябинск, Российская Федерация
Dmitri A. Pletnev a), Elena V. Kozlova b), Kseniia A. Naumova c)
a) Chelyabinsk Branch of the Institute of Economics of UB RAS, Chelyabinsk, Russian Federation
b, c) Chelyabinsk State University, Chelyabinsk, Russian Federation.

Impact of Socially Oriented Non-Profit Organizations on Regional Development

Anna S. Artamonova — 2025-03-28

To ensure balanced development across Russia’s regions, it is important to consider a variety of contributing factors. While the importance of socially oriented non-profit organizations has been recognized, their specific functions and quantifiable contributions to this process remain underexplored. This study aims to develop and test a methodological approach to assess the impact of socially oriented non-profit organizations on the economic and social subsystems of regional economies, with a focus on fostering balanced development. Unlike existing methods, our approach treats these organizations as active economic agents that perform a variety of economic, social, and institutional functions in managing regional economic balance. To assess their impact on economic growth, we construct econometric models based on the non-classical Mankiw-Romer-Weil growth model. Their effect on the social subsystem is evaluated by adapting the Human Development Index (HDI) calculation to account for their contributions to human capital. Our modelling results indicate that their influence on economic growth diminishes when accounting for spatial structure and time lag. However, socially oriented non-profit organizations contribute to a 0.3-point average increase in the HDI across the sample. Panel data analysis confirms the strong significance of human development in regional economic growth, suggesting that these organizations contribute indirectly to economic growth in Russia’s regions. Therefore, we conclude that public policy should prioritize collaboration with regional socially oriented non-profit organizations, reduce regional disparities in institutional conditions, and enhance their role in promoting more balanced regional development.

The Relationship between the Dynamics of Total Factor Productivity and the Age Structure in Russian Regions

Anton O. Belyakov — 2025-03-28

In modern society, population aging has become one of the most pressing demographic challenges. Increasing life expectancy and low fertility rates are reshaping age pyramids across many countries. This article examines how factors describing the age structure of the population influence the growth rate of total factor productivity (TFP). The study tests the hypothesis that population aging has a positive relationship with TFP growth. To calculate TFP growth, the study employs an approach based on the dual method of estimating the Solow residual, which accounts for potential distortions in the regional distribution of capital in Russia. Due to data availability, the analysis considers statistical data for Russian regions up to 2021. The calculated Solow residuals vary significantly across regions. For example, in Moscow, the Solow residual is 0.06 % (just 2.5 % of GRP growth), whereas Russia’s average annual GRP growth rate is 0.75 % (17.6 % of the average annual growth rate of real GRP per capita). The study examines several indicators of age structure, including the dependency ratio, median age, mean age, and the ratio of mean to median age. Moran’s index calculations confirm the expected significance of spatial correlation. Spatial econometric models, specifically the spatial lag model (SLM), reveal that age structure factors significantly influence TFP growth. The results show that both median and mean age positively impact TFP growth. The estimated effects of changes in age structure on TFP can be used to forecast regional economic development while considering demographic trends.

The Impact of Population Credit Behaviour on Employment in the Informal Sector in Russian Regions

Svetlana V. Doroshenko — 2025-03-28

Employment in the informal sector is a significant issue for national economies, with approximately one-fifth of Russia’s economically active population working in this sector. At the same time, household debt levels are rising in many regions, which could drive additional work, including in the informal sector. This study explores whether credit behaviour influences changes in informal sector employment across Russian regions. Using panel data from 2005 to 2021 for 83 Russian regions, the analysis draws on data from Rosstat and EMISS. The initial panel consisted of 1,411 observations. The estimation was conducted using the system GMM method. The dependent variable represents the share of people employed in the informal sector out of the total employed population aged 15-72 in each region. Key explanatory variables include total population debt and debt related to housing and mortgage loans. Control variables account for the region’s development level, economic structure, age-specific unemployment rates, family dynamics, and education institutions. The econometric analysis reveals a statistically significant negative impact of mortgage and housing debt on informal sector employment, while no effect was found for total debt. Additionally, higher levels of education and industrial production correlate with a reduction in informal sector employment. Conversely, an increase in GRP, a larger agricultural sector, higher unemployment among the elderly, and rising divorce rates contribute to higher informal sector employment. These findings can inform the development and implementation of state strategies and national projects.

The Computable General Equilibrium Models for Migration Analysis: Bibliometric Approach

Deni R. Sugaipov — 2025-03-28

Computable general equilibrium (CGE) models are widely used to analyse the effects of migration on macroeconomic indicators in both origin and destination countries. Given the often-controversial results of this modelling approach, this paper seeks to systematize the existing experience in constructing CGE models for migration analysis. The methodology includes a bibliometric analysis incorporating complex humanitarian expertise. The analysis indicates that CGE models have gained prominence in assessing migration effects, with their application in high-ranking journals and a substantial number of citations. The literature review reveals that many migration models build on trade models that incorporate realistic assumptions about technological distribution across countries. Additionally, the geographic characteristics of regions play a key role in the diffusion of migration effects. Several studies highlight the significant economic impacts of migration. While migration is often associated with improvements in regional well-being in destination countries, emigration can lead to productivity declines in origin countries due to labour outflows. Furthermore, the effects on wages depend on the skill composition of migrants, with potential disparities between high-skilled and low-skilled workers. A promising avenue for future research lies in constructing CGE models tailored for developing countries, with a particular focus on social tensions and firm heterogeneity.

The Impact of Smoothing the Economic Inequality through Personal Income Tax on the Differentiation of Tax Revenues in Russian Regions

Andrey A. Pugachev — 2025-03-28

Income taxation in Russia has significant potential to enhance the fairness of tax burden distribution. This study aims to assess the potential of tools for reducing economic inequality in Russia through personal income tax (PIT), evaluating their impact on regional tax revenue differentiation while ensuring fiscal neutrality. A scenario analysis of the budgetary consequences for regions was conducted using the current tax levels and five scenarios: three options for a tax-free allowance, an increase in the progressive PIT rate, and a tax reform in 2025. The calculations were carried out using the MS Excel Data Analysis package. Five indicators of variation, differentiation, and concentration of PIT revenues across 85 regions of Russia for 2023 were analysed, generating a dataset of 3.7 thousand indicators. The study found that implementing all proposed scenarios for reducing inequality through PIT would exacerbate the already high regional differentiation in tax revenues. The most effective and budget-neutral scenario for smoothing inequality is the introduction of a tax-free allowance for taxpayers earning less than three minimum wages, benefiting 60 % of the employed population. To compensate for the shortfall in budget revenues, a 35 % tax rate would be needed on incomes exceeding 100 million roubles annually for 25.8 thousand, or 0.035 %, of taxpayers. In this case, the Gini coefficient for citizens’ income would decrease from 0.403 to 0.38. The additional PIT receipts from the 2025 tax reform would enable the introduction of a tax-free allowance equal to the minimum wage for 30 % of taxpayers with incomes below 1.67 minimum wages, reducing the Gini coefficient to 0.388. The negative impact of these scenarios on regional tax revenue differentiation is expected to be offset by consolidating additional federal budget revenue from the increased tax rate, followed by inter-budgetary redistribution to compensate for regional income losses due to the tax-free allowance. The study’s findings are relevant for efforts to redistribute the PIT burden in a way that ensures fairness and reduces income inequality.

Institutional Factors Shaping the Financial Model for Balanced Social Development in the Regions of Russia’s Central Federal Okrug

Vladimir A. Artemov — 2025-03-28

Ensuring balanced regional social development is challenging without a clearly defined framework for social financing reform, given the complexity of the social sphere and resource constraints. This study aims to identify key factors shaping the transformation of the institutional environment within the financial model for balanced regional social development. An analysis of social development indicators and financial support in Russia’s Central Federal Okrug reveals a key issue: the institutional framework for social financing remains weak. This is reflected in the gap between government program targets and actual results, the limited use of public-private partnerships, and the low engagement of private businesses in addressing social challenges. Findings indicate that a key issue is the low share of investment financing in the social sector (approximately 8 %). Econometric analysis reveals that the most significant factors influencing the degree of balanced social development include budgetary and investment financing levels in housing and utilities, education, and healthcare. A cluster analysis, considering both the achieved social outcomes and the complexity of financial instruments employed, demonstrates variation in the effectiveness and balance of financial models across the Central Federal Okrug. The most effective and well-balanced financial mechanisms are found in Belgorod, Bryansk, Voronezh, and Ivanovo Oblasts, while the least effective and poorly balanced models are observed in Vladimir, Kaluga, Tambov, and Tula Oblasts. For each regional cluster group, tailored social development strategies should be devised, offering a practical framework for authorities to shape social policy.

Regional Financing for Sustainable Development: An Analysis of Successful Practices in Region Stockholm

Anna Yu. Rumyantseva — 2025-03-28

The implementation of the United Nations’ Sustainable Development Goals (SDGs) requires effective mechanisms to ensure progress, particularly in the face of global challenges. In this context, the successful experience of promoting sustainable development in Region Stockholm, despite budget deficits and challenges in tax collection, is of particular interest. Through an analysis of historical and legal documents, this paper traces the evolution of the concepts and principles guiding regional development in Sweden, demonstrating how the gradual adaptation of the SDGs has incorporated European Union practices. The study of official documentary sources, including budgetary and audit reports, examines key development indicators in Region Stockholm, corresponding budget allocations, and the dynamics of SDG indicators for 2022, 2023, and 2024. The findings highlight financial challenges, including high inflation, weakened budget revenues during the pandemic, and an unplanned increase in pension fund contributions due to a sharp rise in the number of retirees. This paper proposes a methodology for calculating an integral coefficient of regional development sustainability. The methodology involves assessing changes in various development indicators for 2023 relative to 2022. The results indicate that despite financing difficulties and a budget deficit of the region’s revenues amounting to 29 %, most of the planned SDGs were achieved. The overall trajectory of regional development remains positive. The insights gained from Region Stockholm’s experience in advancing the SDGs, strengthening regional budgets, and ensuring effective governance structures can be valuable for strategic management planning in other regions.

How the situation in the trading sector affects retail trade turnover in Russian regions

Valery A. Tsvetkov — 2025-03-28

Understanding the mechanisms of the trading sector’s influence on retail trade turnover in the regions is necessary to improve its regulation and reduce regional disparities in consumption. The objective of the research was to identify indicators characterizing the situation in the trading sector in Russian regions, which have the greatest impact on retail trade turnover and explain its regional disparities. Based on the analysis of regional statistics for 2018–2022, a machine learning model was created. In this model, the average per capita retail trade turnover was chosen as the dependent variable, and seven indicators of the situation in the trading sector and the average monetary income per capita were chosen as independent variables. In order to assess the impact of each factor, the constructed model is interpreted with the help of the feature_importances_ attribute and the SHAP framework. As a result, it was confirmed that trade throughout the Russian Federation is efficient enough to satisfy consumer demand. However, it is not the main factor determining regional disparities in sales: income is such a factor. It was found that the share of Internet sales in turnover was the most important indicators of the situation in the trading sector. E-commerce is the most promising form of trade. Thus, the creation of comfortable conditions for its development will reduce regional disparities in consumption. The share of commercial networks has a large but ambiguous impact on regional sales imbalances. The regulation of commercial network activities is one of the key aspects of state regulation of trade, where a balance should be provided. This balance ensures the maximum socio-economic effect of network trade, while at the same time curbing its excessive spread. The number of retail outlets was also important in terms of its impact on retail trade turnover. The results of the research create conditions for improving the tools of trade regulation in order to better satisfy the needs of the population for consumer goods throughout the Russian Federation. Further research will include the development of improved mechanisms for the regulation of e-commerce.

Interindustrial and Interregional Relations in the Economy of the Republic of Buryatia

Evgeny Y. Piskunov — 2025-03-28

Spatial connections play a crucial role in the economic development of a region. Their assessment and monitoring are vital for the success of large-scale investment projects and the formulation of effective management decisions. This article examines the interindustrial connectivity of the economy of the Republic of Buryatia with the Siberian and Far Eastern Federal Okrugs, as well as the rest of Russia. Interindustry multipliers derived from multi-regional input-output models were used as a measure of connectivity. The study draws on data on interregional supplies and the average number of employees across detailed industries for 2014, as well as national input-output tables for 2016. The study found that the economy of Buryatia, due to its scale and several institutional constraints, heavily depends on interregional supplies across most industries. The most critical dependencies are on the supply of agricultural goods and products from the extractive and petrochemical industries from the Siberian Federal Okrug, various types of technological equipment from other regions of Russia, as well as food and metallurgical products from both territories. Buryatia’s industrial enterprises supply food products, pulp and paper goods, textiles and clothing, and non-metallic mineral products. The republic’s economy is particularly connected to sales markets within the Siberian and Far Eastern Federal Okrugs. The advantages and limitations of the data sets used are discussed, and further research avenues are proposed to incorporate adjusted volumes of interregional supplies, accounting for the activities of microenterprises and individual entrepreneurs.