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Economic Growth and the Trade of Russian Regions

Dmitriy Aleksandrovich Izotov ()
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Dmitriy Aleksandrovich Izotov: Economic Research Institute FEB RAS

Spatial Economics=Prostranstvennaya Ekonomika, 2018, issue 4, 92-114

Abstract: The author has carried out a quantity estimation of the long-term influence of trade compared to other factors on the economic growth of Russian regions. The results of this estimation have confirmed the existence of a positive and statistically significant effect of trade on economic growth of the regions. It has been discovered that trade generates, on average, more than half of the economic growth in Russian regions. Factor decomposition has produced an unexpected result: the main source of economic growth is the trade turnover on the domestic market. Its share is more than twice bigger than the Russian regions’ trade turnover with foreign countries. Significant changes in the qualitative characteristics of consumer goods and products for industrial purposes involved in trade had a positive effect on economic growth. On the one hand, the estimates indicate that the intensification of trade on the domestic market is possible channel for implementing a rapid development policy; on the other hand, they reflect the consumer ‘boom’ in Russia, generated by the growth of income stimulated by a positive influence of Russian exports dynamics. It has been assumed that the estimates confirm the long-term trend of national economy development, connected to the centralized redistribution of income received from natural resource rent. This process has confirmed the strengthening of the role of trade with foreign countries since commodities exports allows increasing imports. In turn, the dynamics of trade turnover with foreign countries and budget expenditures have contributed the multiplication of the trade turnover on the domestic market. The author has determined the significant contribution of neutral technical progress to regional economic growth. The smallest contribution to the economic growth of regions was made by labor costs. It has been explained by the specifics of demographic and migration processes and possibly the structural characteristics of the Russian economy. The above estimates can be used for the methodological purposes of perspective modeling of the interrelation between trade and economic growth of Russian regions

Keywords: economic growth; GRP; capital; labor; neutral technical progress; foreign trade; domestic market trade; region; Russia (search for similar items in EconPapers)
JEL-codes: F41 O11 R11 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.14530/se.2018.4.092-114

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Handle: RePEc:far:spaeco:y:2018:i:4:p:92-114