The Effect of Oil on Regional Growth in Russia and the United States: A Comparative Analysis

Michael Alexeev and Andrey Chernyavskiy
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Andrey Chernyavskiy: Research University-Higher School of Economics, Institute Development Center, 109074, Moscow, Russia

Comparative Economic Studies, 2014, vol. 56, issue 4, 517-535

Abstract: Using comparable 2002–2011 data, we examine the effect of oil on growth of Russia’s regions and American states. Although Russia’s oil regions are richer than other regions, they did not grow faster, while US oil producers grew faster than other states. We attribute these differences to different taxation systems in Russia and the United States, with the Russian central government taxing away a larger share of incremental oil rents in the 2000s than did its US counterpart. Moreover, although oil rents attracted labor to oil-producing regions both in Russia and the United States, only in the US oil rents led to higher investment growth.

Date: 2014
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