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Understanding Russian regions’ economic performance during periods of decline and growth—An extreme bound analysis approach

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  • Ahrend, Rüdiger

Abstract

This article uses “extreme-bound”-type analysis to revisit the determinants behind the widely differing economic growth in Russian regions prior to the recent global financial crisis. Using data of regional growth in 1995–2006 for 77 Russian regions, it examines the growth drivers for the phase of economic decline up to 1998 and for the period of strong growth afterwards separately. 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 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, after the 1998 crisis, the importance of initial conditions declined and was basically reduced to fuel production, advantageous geographical location, and population structure. There is also some evidence that more reform-oriented policies and better regional leadership made a difference. These results could be seen as pointing to determinants of economic performance in periods of actual economic decline being different from those in normal times of economic growth.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 36 (2012)
Issue (Month): 3 ()
Pages: 426-443

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Handle: RePEc:eee:ecosys:v:36:y:2012:i:3:p:426-443

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Keywords: Russia; Transition; Regional economics; Extreme-bound analysis; Economic growth; Economic decline; Natural resources; Initial conditions; Economic reform; Political economy;

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References

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Cited by:
  1. Miriam Frey & Carmen Wieslhuber & Daniel Frey, 2013. "Do Natural Resources Define Convergence Clubs? Empirical Evidence from the Kazakh Regions," Working Papers 329, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  2. Lev Freinkman & Konstantin A. Kholodilin & Ulrich Thießen, 2009. "Incentive Effects of Fiscal Equalization: Has Russian Style Improved?," Discussion Papers of DIW Berlin 912, DIW Berlin, German Institute for Economic Research.
  3. Yakovlev, Andrei, 2011. "State-business relations in Russia in the 2000s: From the capture model to a variety of exchange models?," BOFIT Discussion Papers 10/2011, Bank of Finland, Institute for Economies in Transition.
  4. Alisher Akhmedjonov & Irina N. Il’ina & Carol S. Leonard & Zafar Nazarov & Evgenij E. Plisetskij & Elena S. Vakulenko, 2013. "Russia’s regions: governance and Well-being, 2000-2008," HSE Working papers WP BRP 42/EC/2013, National Research University Higher School of Economics.
  5. Eller, Markus & Fidrmuc, Jarko & Fungácová , Zuzana, 2013. "Fiscal policy and regional output volatility: Evidence from Russia," BOFIT Discussion Papers 13/2013, Bank of Finland, Institute for Economies in Transition.
  6. Irina N. Ilina & Carol S. Leonard & Evgenij E. Plisetskij, 2014. "Russian Regional Resilience: Finance, Cooperation And Resource Abundance (A Case Study Of Khanty-Mansiysk)," HSE Working papers WP BRP 15/PA/2014, National Research University Higher School of Economics.
  7. Alexander Plekhanov & Asel Isakova, 2011. "Region-specific constraints to doing business: evidence from Russia," Working Papers 125, European Bank for Reconstruction and Development, Office of the Chief Economist.

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