Russian Economic Report #14
Russian Economic Reports is a series of periodic economic reports form the Moscow office of the World Bank. Each report contains a concise description of the major economic trends and issues facing the Russian economy. In addition, the reports often includes a special focus, based on work carried out by the World Bank as part of its assistance program to the Russian Federation.
1. RECENT ECONOMIC DEVELOPMENTS
Russian economic growth and investment accelerated notably in early 2007. For the first time in years, manufacturing posted very impressive growth relative to the same period in 2006, although at least some of the factors supporting manufacturing were temporary in nature. The investment boomhas continued into the second quarter of the year, and 2007 looks to be a year of relatively rapid economic growth for Russia.
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2. Russian Regional Growth and Agglomeration Effects
Many recent studies have emphasized large and growing regional disparities in Russia as an increasing development challenge for the country. The new factors driving economic growth in Russia in recent years are more unevenly distributed among regions than were the factors supporting growth in the immediate post-1998 crisis period. Consequently, regional differentiation in growth rates has increased. Nevertheless, an examination of the data does not confirm the existence of an overall trend toward greater regional divergence. On the contrary, many poorer regions have exhibited faster growth in recent years, while a number of resource-rich regions have grownat slower rates. The most important trend appears to be a greater concentration of growth in the Center, North West, and South relative to the rest of the country. Statistical analysis supports the hypothesis that strong urban and regional agglomeration effects are contributing to growth in these areas.
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3. Developing Targeted Social Assistance in Russia
While much social assistance in the country is still not targeted specifically at the poor, Russia has been developing targeted social assistance in three areas: child allowances, housing and utility allowances, and regional programs for the poor. However, success in targeting has been limited in comparison to programs in a number of other countries. A forthcoming study investigates the reasons for this, and concludes that a joint effort at the federal, regional, and local levels Russia could significantly improve the effectiveness of targeted social assistance in Russia.
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