War-induced economic convergence in Russian regions

Yuriy Gorodnichenko, Iikka Korhonen () and Elina Ribakova
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Iikka Korhonen: Bank of Finland Institute for Emerging Economies

No WP25-21, Working Paper Series from Peterson Institute for International Economics

Abstract: This paper examines the impact of Russia's 2022 full-scale invasion of Ukraine on Russia's economy at a subnational, or "regional," level. The analysis focuses on the regional disparities and convergence trends within Russia, driven by increased military spending and structural changes. The paper also explores the long-term implications of excessive reliance on military spending for regional development and economic efficiency. The findings suggest that there has been some convergence in regional wages and incomes during the war. However, the sustainability of this trend remains uncertain due to the misallocation of resources and the broader economic challenges facing Russia. The authors also find indirect evidence that regions with a strong military presence have experienced substantial income growth.

Keywords: Russia; regional development; income; war (search for similar items in EconPapers)
JEL-codes: E24 E65 F51 H72 (search for similar items in EconPapers)
Date: 2025-12
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