Inequality of Russian regions

newsletter 07/05/2015

Russian regions are quite unequal by the area, population, resources potential, scientific-industrial and trade resources, and social-economic development level. For their comparison various methods and rankings using the set of assessments and the specific feature for ranking were created. Therefore it is interesting to study the territorial entities of Russia in term of ratio of the expenditure regional budget to the population.

Most of the territory of the Russian Federation has the dotation status and treasuries more or less depend on inter-budget transfers from the federal center. The government policy is aimed at fiscal equalization of regional development inequality, which remains to be very high. By far, first spots of the ranking of the regions in terms of budget sufficiency belong to the High North regions rich with natural resources being our export base, as well as economic and political centers – Moscow and Saint-Petersburg. 

The Nenets Autonomous District with the population of just over 40 th. people is on top. The expenditure budget of the district is compared with the budget of the Mari El Republic with almost 700 th. people. The district has 425 th. RUB account for head per year, while it is less in the Mari El Republic with its 32 th. RUB for head per year.

Despite of such a high level of the expenditure budget per head, life is very expensive in the Nenets Autonomous District. Moreover, extremely sever climatic conditions and underdeveloped infrastructure are resulted in high migration outflow of the most mobile citizens groups and natural population reduction (except autonomous districts of the Tyumen region). For example, the population of the Magadan region (5th in the ranking) has reduced by 3,7 in the period of 1989 – 2015 (from 542,9 th. to 148,1 th. people). In spite of the quite high living standard, the living attraction of this territory remains extremely low.

Among all regions of Russia, Moscow is reasonably the most attractive place for living both by climatic and social-economic conditions. The capital of Russia with the expenditure budget of 134 th. RUB per head is the 8th in the ranking, having at the same time the largest population among all 85 regions (12,2 mln. people).

Migratory pressure in the Moscow region will remain until neighboring regions approach the city by development. As a comparison, the expenditure budget per head in the Kaluga region is less than in Moscow by 2,9 times. Leveling the imbalance have to be conducted not only by manufacturing and service sector development, but also by changing the rules of business registration - at the place of main activity carrying out. The example is that almost all major fuel and energy companies of Russia are registered in Moscow and Saint-Petersburg, but operate far beyond them. The number of legal entities in both cities is an indirect proof: according to the Information and analytical system Globas®-i of the Credinform information agency, 1102,2 th. legal entities operate in Moscow and 357,6 th. in Saint-Petersburg; that is about 31% of all active enterprises in the country.

Whereas Saint-Petersburg closes the top 10 of the ranking – 91 th. RUB per head. Despite a slight growth of the expenditure budget in 2015, the positive population changes have resulted in spending reduction per head (-0,6%).

The lowest indicators were traditionally recorded in the regions of North Caucasus: the Republics of Dagestan and North Ossetia-Alania with 28 th. RUB per head.

Budgets of the Republic of Crimea and Sevastopol have shown the most impressive growth of the expenditure part due to the federal subsidies: by 230% and 102% respectively (this can be explained by the low base of the previous period, when the treasury was formed as a part of the Ukraine). Sevastopol is 35th and the Republic of Crimea is 57th in the ranking, which is higher than the Krasnodar Territory.

Table. The expenditure budget and regional fiscal capacity, 2015
RangTerritorial entityThe expenditure budget 2015 (at the time of adoption), th. RUBThe expenditure budget for head per year, тыс. руб.Growth (reduction) of the expenditure budget indicator per head to 2014, %
1 The Nenets Autonomous District 18 438 763 425 49,8
2 The Chukotka Autonomous District 21 031 142 416 15,8
3 The Sakhalin region 129 900 383 266 13,5
4 The Yamal-Nenets Autonomous District 117 249 240 217 8,3
5 The Magadan region 27 736 321 187 -2,0
6 The Kamchatka Territory 58 231 357 184 7,9
7 The Republic of Sakha (Yakutia) 151 011 095 158 4,7
8 Moscow 1 632 990 305 134 -1,8
9 The Khanty-Mansi Autonomous District - Yugra 195 136 808 121 3,1
10 Saint-Petersburg 474 419 941 91 -0,6
11 The Tyumen region 118 207 252 83 -6,9
12 The Republic of Komi 70 815 726 82 6,1
13 The Murmansk region 53 074 446 69 3,7
14 The Krasnoyarsk Territory 184 933 505 65 7,9
15 The Republic of Tyva 19 254 054 61 3,2
16 The Khabarovsk Territory 81 683 693 61 4,8
17 The Republic of Altai 12 162 211 57 2,8
18 The Moscow region 406 999 920 56 6,5
19 The Arkhangelsk region 63 058 651 55 0,7
20 The Jewish Autonomous Region 9 285 026 55 6,0
21 The Republic of Ingushetia 24 261 319 52 20,1
22 The Chechen Republic 68 751 332 50 4,5
23 The Tomsk region 53 464 354 50 4,7
24 The Kaliningrad region 47 794 008 49 0,2
25 The Amur region 39 904 448 49 -1,5
26 The Leningrad region 83 051 065 47 7,7
27 The Republic of Karelia 29 349 555 46 2,9
28 The Kaluga region 46 853 156 46 -4,3
29 The Sverdlovsk region 200 266 585 46 5,0
30 The Yaroslavl region 58 150 419 46 -0,7
31 The Primorye Territory 88 052 356 46 10,7
32 The Irkutsk region 109 003 667 45 2,7
33 The Republic of Buryatia 43 474 979 44 -4,9
34 The Samara region 138 249 602 43 2,7
35 Sevastopol (before joining the RF, converted to the official rate of the CB RF as of 01.01.14) 16 795 315 42 102,8
36 The Zabaikalye Territory 45 683 616 42 3,9
37 The Perm Territory 109 657 203 42 -0,9
38 The Kurgan region 36 004 281 41 6,3
39 The Republic of Khakassia 22 005 329 41 7,8
40 The Novgorod region 25 213 933 41 2,2
41 The Republic of Mordovia 32 871 605 41 13,9
42 The Novosibirsk region 111 328 940 41 5,4
43 The Republic of Tatarstan 154 792 184 40 1,5
44 The Nizhniy Novgorod region 128 519 238 39 3,2
45 The Orenburg region 77 658 296 39 16,1
46 The Tula region 57 902 186 38 -5,9
47 The Astrakhan region 38 236 957 37 0,2
48 The Republic of Udmurtia 56 640 873 37 2,1
49 The Omsk region 73 602 205 37 9,9
50 The Lipetsk region 43 030 405 37 4,7
51 The Tver region 48 722 683 37 -0,7
52 The Kemerovo region 99 339 599 36 0,0
53 The Belgorod region 56 188 257 36 4,3
54 The Pskov region 23 622 717 36 -11,2
55 The Vologda region 43 005 401 36 -2,3
56 The Tambov region 37 979 960 36 18,0
57 The Republic of Crimea (before joining the RF, converted to the official rate of the CB RF as of 01.01.14) 66 526 574 35 230,1
58 The Orel region 26 826 101 35 -7,2
59 The Smolensk region 33 661 011 35 3,9
60 The Ryazan region 38 905 520 34 -1,5
61 The Krasnodar Territory 186 377 279 34 -0,9
62 The Bryansk region 42 102 571 34 38,5
63 The Voronezh region 77 398 732 33 -2,6
64 The Republic of Bashkortostan 134 823 734 33 -3,0
65 The Vladimir region 46 476 980 33 2,5
66 The Ivanovo region 34 190 083 33 3,7
67 The Kostroma region 21 427 713 33 -1,0
68 The Chelyabinsk region 113 386 802 32 1,7
69 The Republic of Mari El 22 205 981 32 0,2
70 The Kirov region 41 454 831 32 -8,6
71 The Rostov region 132 050 266 31 2,9
72 The Kursk region 34 605 515 31 -0,7
73 The Volgograd region 79 182 089 31 -0,2
74 The Kabardino-Balkarian Republic 26 378 515 31 9,0
75 The Republic of Adygea 13 373 983 30 7,0
76 The Republic of Chuvashia 36 795 035 30 3,6
77 The Penza region 40 224 160 30 -1,9
78 The Stavropol Territory 82 371 957 29 10,9
79 The Ulyanovsk region 37 104 794 29 14,7
80 The Altai Territory 69 959 611 29 2,3
81 The Karachayevo-Cherkessian Republic 13 731 547 29 -1,2
82 The Republic of Kalmykia 8 129 643 29 3,9
83 The Saratov region 72 063 925 29 1,2
84 The Republic of North Ossetia-Alania 19 928 645 28 -2,5
85 The Republic of Dagestan 84 346 884 28 4,0

Significant inequality in regional development remains in Russia: the difference of the expenditure budget per head among the territories is 15 times. The existing tax allocation system has led to the appearance of several donator regions, while the majority of territories annually obtain donations from the federal budget to flow balance; that results in the reduction of economic growth initiative.