Socio-Economic Development of Russia's Regions: the results of a turbulent decade and prospects Natalia Zubarevich MSU

Economic development of Russia's regions depends on: Macroeconomic dynamics (periods of growth and crises) The objective competitive advantages: resources, agglomeration effect etc. Contradictory institutional factors

Long term dynamics of Russia's development, % to 1990 / Long term dynamics of Russia's development, % to 1990 GRP Real money incomes Real wages Real pensions

The current crisis socio-economic trends 2018 - stagnation or slow growth Dynamics to the same quarter of the previous year, %

Russian regions economic inequality GRP per capita (adjusted for prices differentiation),% to Russia average Leaders Sakhalin,Tumen, Moscow More developed Median group Outsiders

Industrial output dynamics in Russia (1990 =100%)

Regions' industrial output polarization in post-Soviet period (mainly in 1990-th) Industrial output dynamics, 2018 to 1990, % depressive regions Center North-W South N.Cauc Volga Urals Siberia Far East

Industrial growth during last 10 years was mainly due to food, military industries and new oil&gas extracting territories Industrial output dynamics, 2018 to 2008, % Center North-W South N.Cauc Volga Urals Siberia Far East

Spatial polarization of investment dynamics is higher compared to GRP dynamics Number of regions with different dynamics of investment (2018) and GRP (2016) to 2008, %

Real investment drop -5%, 2018 to 2013 Moscow and the main oil&gas extracting regions kept growing Investment dynamics, 2018 to 2013,% Center North-W South N.Cauc Volga Urals Siberia Far East

Investment leaders are nearly the same in the last 10 years Investment share in 2008 and 2013 , % of Russia total (=100%) 2008 2013

Investment concentrates in the regions with the big competitive advantages (Moscow agglomeration +oil&gas extracting) and in geopolitical priorities The share of Moscow aggl. increased to 20% by 2018 Investment spatial structure in 2018, % (2017 - the same structure)

Foreign direct investment drop seems to be a long trend FDI $ bln TNK-BP / Rosneft CNPC

The most regions are still oriented on Europe in their foreign trade (The main foreign trade direction) Europe CIS countries Asia

Labor market: Long term employment shift to informal sector Unemployment rate is extremely low (4,8% in 2018) % of labor force informal employment unemployment rate

Unemployment rate is low in the most regions exepting Nothern Caucasus and Siberian republics. Factors preventing unemployment growth are the age structure, short-time employment, informal employment growth, labor migration Unemployment rate in , % (ILO methodology) Center North-W South N.Cauc Volga Urals Siberia Far East

Informal employment share is higher in the underdeveloped or depressive regions and in the southern ones Share of informal sector employment in 2017, % Russia total =20% Center North-W South N.Cauc Volga Urals Siberia Far East

Money incomes decline: -10% (2018 to 2014) The new Rosstat metodology estimation -8% Slowdown to 2010 real incomes level is painfull for population Real money incomes dynamics, % Crimea Sevastopol Center North-W South N.Cauc Volga Urals Siberia Far East

Population incomes dependence on the state benefits/subsidies has grown from 11% to 20% Population money incomes structure, %

Poverty rate growth during the last crisis was moderate due to subsistence level (poverty line) very slow raise Poverty rate, % Center North-W South N.Cauc Volga Urals Siberia Far East

Self-assessment of poverty is much more higher - 39% Levada center poll there is not enough money for food there is enough money for food but not enough for clothes

Demography. Russian population shrinks again since 2018 Strengthening of natural decline and migration shrinkage Migration balance drop by 40% Thousand population Migration Total Growth/Decline Natural Growth

Depopulation increases Natural growth/decline 2018

Far East migration outflow goes on "Turn to the East" seems to be myth Natural growth/decline and migration balance per 1000 population Center North-W South N.Cauc Volga Urals Siberia Far East

Regional budgets Budget revenues stagnation was replaced by fast growth only in 2018 due to profit tax + transfers growth Regions' budgets dynamics to the same period of the previous year, %

More than 40% of regions are highly dependent on federal budget transfers. Chechnya - 80%, Tyva - 77% The share of transfers in the region's budget revenues, % Center North-W South N.Cauc Volga Urals Siberia Far East

Geopolitical priorities of budget transfers distribution Chechnya's share is 3-4% of the total amount of transfers compared to the less 1% of population Regions share in transfers and population, %

Budget spendings are higher only in the richest regions and geopolitical priorities (Crimea + Sevastopol) Regional budget spendings per capita (adjusted prices) after transfers redistribution, % to Russia average (=100%) Moscow Sakhalin Tyumen region & aut.districts St-Petersb. Kaliningrad Crimea Sevastopol Center North-W South N.Cauc Volga Urals Siberia Far East

Prospects Economic stagnation or slow growth Money incomes drop will be replaced by slow growth +1% Spatial development polarization: investment concentration in the Moscow agglomeration and the main oil&gas extracting regions Long term negative effect of sanctions for FDI Gap between poverty rate statistics and population perceptions Strong dependence on transfers for 40% of regions Federal authorities increased transfers to regions in 2018 trying to solve problems of public discontent but …

Public attitude to the state policy Things are going in the wrong direction – 40%(May) Levada Center opinion polls, %