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Regional Disparities and Fiscal Federalism in Russia

Author

Listed:
  • Oksana Dynnikova
  • Ms. Annette J Kyobe
  • Mr. Slavi T Slavov

Abstract

This paper examines how regional disparities have evolved in Russia and how Russia’s system of intergovernmental fiscal relations is managing these disparities. Regional disparities have fallen over the past two decades but remain relatively high. Socioeconomic outcomes remain worse in lagging regions despite faster growth and convergence in income levels. The twin shocks of COVID-19 and lower oil prices appear to have impacted richer regions disproportionately. Compared to other large countries with federal systems of government, Russia stands out with its high reliance on direct taxes as a revenue source for its regions. Transfers from the federal budget to the regions provide some redistribution by reducing the dispersion in real per capita fiscal spending, but also tend to be associated with lower growth. The Russian fiscal system offers degrees of redistribution and risk sharing of around 26 and 18 percent, respectively—with in-kind social transfers contributing the most. Finally, federal transfers in the aggregate tend to be procyclical and are also fairly unresponsive to shocks to regions’ own revenues.

Suggested Citation

  • Oksana Dynnikova & Ms. Annette J Kyobe & Mr. Slavi T Slavov, 2021. "Regional Disparities and Fiscal Federalism in Russia," IMF Working Papers 2021/144, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/144
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    Cited by:

    1. Natalia Krasnopeeva, 2023. "Revenues and expenditures of Russian regional budgets: Granger causality analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 70, pages 5-33.
    2. Vicente German-Soto & Gregory Brock, 2023. "Before the isolation: Russian regional β-convergence 2001–2019 before the pandemic and Ukrainian war," Economic Change and Restructuring, Springer, vol. 56(4), pages 2729-2746, August.
    3. Vladimir V. Olkhovik & Roman S. Afanasev & Edvardas Juchnevicius & Tatyana N. Malofeeva, 2023. "Fiscal Mechanism for Stimulating Domestic Production in Some BRICS and European Countries," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 123-135, December.

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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