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Problems of Economic Grown in Modern Russia: General Characteristics and Regional Aspect

Problems of Economic Grown in Modern Russia: General Characteristics and Regional Aspect

Journal of Economic Regulation, , Vol. 7 (no. 4),

Authors analyze the problem to find the optimal policy options to stimulate economic growth in modern conditions. They point out three possible options for such policy according to the different structural priorities. This point causes the question of the extent to which the proposed policy approaches to stimulate economic growth correspond to real economic trends. The solution of this problem is possible only on the basis of the empirical study analysis results. Also it is necessary to take into account the regional dimension related to the fact that the various sectors of the economy linked to the various regions. According to this fact one may point out Russian regions with the predominance of the mining industry, manufacturing industry and services. Authors exploit panel dataset on 80 Russian regions for the period 2005-2014 to analyze the relationship between annual shares of sectors in output and employment and per capita gross regional growth. Results indicate that regions with a higher share of manufacturing and mining both in terms of output and employment grow slower during the reporting period. The impact of services on growth is somewhat paradoxical: regions with bigger shares of healthcare and education in output growth faster, but a bigger share of this sector in employment, as much as expanding of the labor share of these sectors impede growth. Possible reason for this paradox is that the high proportion of services in the regions-leaders (especially the share of total employment) reflects not the degree of their development, but the development of the public sector in relatively poor regions. The results show that neither manufacturing nor mining and services are not the engines of economic growth that can ensure sustainable development of the whole economy. Authors point out that it is necessary to conduct multivariate policies to stimulate economic growth, which is based on the various configurations of developmental actors folding in different regions of the country.

Keywords: structural changes; Russia; region; economic growth; manufacturing industry; mining industry; services; catch-up postindustrialization; reindustrialization; deindustrialization.

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