Inequality of Russian regions

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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**
Rang	Territorial entity	The expenditure budget 2015 (at the time of adoption), th. RUB	The 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.