Russian regional resilience under sanctions

Stepan Zemtsov and A. Voloshinskaya
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A. Voloshinskaya: Russian Presidential Academy of National Economy and Public Administration (RANEPA), Center for Economic Geography and Regional studies, Moscow, Russia

Journal of the New Economic Association, 2024, vol. 64, issue 3, 54-83

Abstract: External shocks in 2022-2023, caused by sanctions and other restrictions, had a varied impact on economic dynamics in the Russian regions. The article assesses the regional shock resilience and identifies some trends and factors determining the decline in economic activity in 2022 and its recovery in the first half of 2023. 55 of the 85 regions under consideration can be called stress-resistant in 2022-2023. The short-term ability to withstand external shocks is generally higher in regions with more diversified foreign trade, and a diverse economic structure. In general, in 2022-2023, richer resource centres were hit harder by the external shock, but larger regions were able to adapt due to the size and diversity of the domestic market. In the centres of the manufacturing industry, economic activity decreased in 2022 because of disrupted production chains, but this negative effect was not detected in 2023 due to the state policy of import substitution and increased government procurement. Similar picture was observed in resilient regions specializing in consumer services. Resilience is also higher in regions with high entrepreneurial activity, especially in 2023, as small and medium- sized businesses contributed to the adaptation of the economy by occupying market niches of companies that left the market and expanding (diversifying) foreign trade through parallel imports. Significant investment incentives from the state played major role in maintaining economic activity. At the end of the article, some generalizations and recommendations are proposed.

Keywords: external shocks; economic activity; resilience; exit of foreign companies; economic policy; import dependency; Russian regions (search for similar items in EconPapers)
JEL-codes: O11 O47 R11 R15 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2024:i:64:p:54-83

DOI: 10.31737/22212264_2024_3_54-83

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