Regional Economics: Theory and Practice
 

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The impact of economic and political institutions on the region's investment processes

Vol. 13, Iss. 33, SEPTEMBER 2015

PDF  Article PDF Version

Received: 28 April 2015

Accepted: 20 May 2015

Available online: 18 September 2015

Subject Heading: INNOVATION AND INVESTMENT

JEL Classification: 

Pages: 28-38

Tereshchenko D.S. Petrozavodsk State University, Petrozavodsk, Republic of Karelia, Russian Federation
dter@petrsu.ru

Shcherbakov V.S. Omsk State University, Omsk, Russian Federation
chsherbakov.v@gmail.com

Importance The article investigates what impact socio-economic institutions have on economic indicators of growth in the Russian Federation. This article brings novelty as it examines the relation between the institutions and economic growth at the sub-national level, rather than at the national one.
     Objectives The research aims at a quantitative analysis of the relation between sub-national institutions and region's economic growth indicators and the extent of such relation.
     Methods We applied statistical and econometric apparatus. We examined the extent to which the institutions influence economic growth indicators and used activity indices of small entrepreneurship, institutional potential etc. Economic growth indicators at the regional level were represented with Gross Regional Product, capital investment and investment rate and Gross Regional Product per capita.
     Results As seen in the research, there is a positive relation between economic growth indicators and activity indices of small entrepreneurship, democratic nature of elections and institutional potential.
     Conclusions and Relevance We confirmed the meaningful and positive correlation between the main institutional indicators and economic growth indicators in the regions. To implement the State policy effectively, it is reasonable to consider the importance of institutional changes along with economic transformations. We find out that the institution of ownership and business activity protection, if strengthened, will generate the synergistic effect for growth in a certain region and the entire economy of Russia. The article may prove helpful in the scientific milieu and for various officials who may use it to theoretically substantiate practical activities for developing institutions at the regional level.

Keywords: institutions, economic growth, regional economy, capital investment

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