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Economic Analysis: Theory and Practice

The impact of public and private investments on the economic dynamics of Russian regions

Vol. 20, Iss. 8, AUGUST 2021

Received: 19 July 2021

Received in revised form: 27 July 2021

Accepted: 10 August 2021

Available online: 30 August 2021


JEL Classification: E22, O47, R11

Pages: 1438–1461


Roman M. MEL'NIKOV Russian Presidential Academy of National Economy and Public Administration (RANEPA), Moscow, Russian Federation


Subject. The article deals with the comparative analysis of the impact of various sources of financing on the economic growth of Russian regions.
Objectives. It focuses on evaluating the impact of public and private investments on the growth rates of real GRP in Russian regions.
Methods. The study employs a regression analysis of panel data of Russian regions, using models with fixed and random effects, and a generalized method of moments, a modification of the Mankiw–Romer–Weil's model, which distinguishes investments from the Federal budget, consolidated budgets of Federal subjects of Russia, foreign, and private investments.
Results. The study reveals that the attraction of foreign investments has the greatest positive impact on the economic growth of Russian regions. Federal budget investments do not stimulate private investments or contribute to the economic growth of regions, which is related to the priority of Federal investments aimed at achieving socio-political rather than economic goals.
Conclusions. Increasing the growth rates of the economies of Russian regions requires consistent work to attract foreign investments, which is complicated by the current geopolitical situation. Measures are necessary to improve the efficiency of budget investments, including the implementation of modern approaches to quantifying the costs, benefits and risks of socially significant investment projects in the practice of public financial management, and sharing the risks of public investments with private capital through the development of public-private partnership mechanisms.

Keywords: investment, private investment, foreign investment, economic growth, regional development


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