CIAO DATE: 06/2009
May 2009
Norwegian Institute of International Affairs
The paper analyzes the convergence process of industrial productivity across Russian regions during the period 1996-2004 by applying empirical methods. The industrial sector refers to, in accordance with Russian official statistics, oil & gas extraction, electricity production, mining & quarrying and manufacturing. Convergence in productivity levels is well analyzed in economic literature, but few have tested the hypothesis on Russian regions. Most previous convergence analysis of Russian regions has examined the development in income per capita. Russia’s special history and vast geographical extent have led to huge regional variations in resource endowments, market access and industrial structure, to name a few. Since the regression results are highly sensitive for regionspecific factors, these are identified and controlled for in the analysis. In addition, panel data techniques are used to check the robustness of the results to region-specific characteristics, which are not always measurable. The analysis also tests whether there is a tendency to economic agglomeration in the data. The hypothesis of absolute convergence is not supported in the analysis, but when region-specific factors are controlled for there are signs of convergence among Russian regions.Trade and investment as a share of regional industrial production appear in the analysis as the most significant explanatory variables.
Resource link: Regional Development of Russian Industry [PDF] - 1.3M