1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Understanding Russian Regions' Economic Performance during Periods of Decline and Growth

An Extreme-bound Analysis Approach

This article uses “extreme-bound”-type analysis to revisit the determinants behind widely differing economic growth in Russian regions. Using data of 77 regions for 1993-2004, it separately examines the growth drivers for the phase of economic decline up to 1998, and for the period of strong growth afterwards. Looking at forty variables considered to be potentially related to growth, it determines, for each of the two periods, the ones robustly associated with Russian economic performance. Among the variables considered are proxies of politico-institutional features, indicators of economic reform, and measurements of both economic and non-economic initial conditions. The main findings, based on close to one million regressions, are as follows: during the period of economic decline up to 1998, differences in Russian regional growth were almost entirely driven by initial conditions, with resource and human capital endowments, industrial structure, and geographical location playing the dominant roles. However, since the 1998 crisis, the importance of initial conditions has declined significantly, and is now basically reduced to hydrocarbon wealth and advantageous geographical location. More reform-oriented policies, as well as better regional leadership are found to have come to make a significant difference. These results point to determinants of economic performance in periods of actual economic decline being quite different from those in “normal” times of economic growth.

English

Keywords: economic reform, economic growth, political economy, Russia, transition, natural resources
JEL: R11: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics / Regional Economic Activity: Growth, Development, Environmental Issues, and Changes; P2: Economic Systems / Socialist Systems and Transitional Economies; O4: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity; O52: Economic Development, Innovation, Technological Change, and Growth / Economywide Country Studies / Economywide Country Studies: Europe
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error