National Interests: Priorities and Security

Diversification of the economy in Russia’s regions: Measurement and trends

Vol. 13, Iss. 12, DECEMBER 2017

PDF  Article PDF Version

Received: 12 September 2017

Received in revised form: 8 October 2017

Accepted: 2 November 2017

Available online: 22 December 2017


JEL Classification: E01, O11, O47

Pages: 2236–2255

Zaretskaya V.G. Financial University under Government of Russian Federation, Kursk Branch, Kursk, Russian Federation

Titkova I.K. Financial University under Government of Russian Federation, Kursk Branch, Kursk, Russian Federation

Importance The article explores the diversification of the economy in the Russian regions.
Objectives We demonstrate the way the diversification of the region's economy correlates with its economic development level.
Methods The research involves indices of the development evenness (specialization level), Ryabtsev index, Szalai index, Gatev index, Theil index, entropy index and Herfindahl-Hirschman index. Having analyzed strengths and weaknesses of those measurement methods and diversification, we concluded it would be reasonable to use the Herfindahl-Hirschman index. We conduct an econometric analysis of a correlation between GRP per capita and the diversification level of the region's economy.
Results Higher GRP per capita is registered in regions where one of the sectors dominates the others and diversification is lower, i.e. resource-based regions. I examine those Russian regions without a resource focus and demonstrate that the region’s economic growth depends on the production diversification.
Conclusions and Relevance If the economy of resource-based regions is diversified, it will reduce GRP per capita there. If the economy of regions without a resource focus is diversified, value added per unit of resources grows. As such regions and their economy become more diversified and more types of economic activity appear there, GRP per capita increases as well.

Keywords: diversification, specialization, gross regional product, Herfindahl-Hirschman index, economic growth


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