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Death of distance? Economic implications of infrastructure improvement in Russia

David Brown, Marianne Fay (), Somik Lall, Hyoung Gun Wang and John Felkner
Additional contact information
David Brown: Heriot-Watt University
Hyoung Gun Wang: World Bank
John Felkner: University of Chicago

No 10/2008, EIB Papers from European Investment Bank, Economics Department

Abstract: We examine the economic implications of infrastructure investment policies that try to improve economic conditions in Russia's peripheral regions. Our analysis of firm-level industrial data for 1989 and 2004 highlights a 'death of distance' in industrial location, with increasing concentration of new firms in regions with good market access. We assess the geographic determinants of growth econometrically and identify market size and proximity to Moscow and regional infrastructure as important drivers of productivity for new and for privately-owned firms. Simulations show that the benefits of infrastructure improvements are highest in the country's capital region where economic activity is already concentrated. Policies that divert public investment towards peripheral regions run the risk of slowing down national economic growth.

Keywords: Transport infrastructure; gravity; distance; travel time; market access; multi-factor productivity; Russia (search for similar items in EconPapers)
JEL-codes: D24 H54 R12 R53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis, nep-geo, nep-tra and nep-ure
Date: 2008-07-18
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Persistent link: https://EconPapers.repec.org/RePEc:ris:eibpap:2008_010

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