STRUCTURAL CHANGES IN THE ECONOMY OF RUSSIAN NORTH-WESTERN REGIONS: THE INSTITUTIONAL FACTOR

Abstract

Balancing out uneven regional development and territorial disparities is an urgent task, and its solution requires considering the geo-economic features of various parts of Russia’s spatially structured territory. This study aims to describe trends in the economic space transformation and structural changes in the economy of the North-Western Federal District. The economic space transformation is explored theoretically and methodologically, drawing on economic theory and geography, the concepts of cluster and power generation cycles, regional economics and other theories. Institutional and economic research of income capitalisation and the role of the institutional factor is carried out, along with regional gross value added (GVA) analysis by type of activity. The study also investigates the movement of capital (rent) in the economic space. There are several noticeable trends: the Arkhangelsk and Murmansk regions, the Komi and Karelia Republics have diversified their economies by developing manufacturing and mining, and the Murmansk and Pskov regions by stimulating agriculture. Regional factors generating rent at significant transaction costs are shown to be affected by institutional influences. It is concluded that structural changes in the economy of the Russian North-West regions are wavelike in nature. The index of regional GVA and industrial market development points to the existence of a transition zone between the structural phases of the wave, most of the transition taking place in 2014. The second phase of the wave was triggered, along with new structural changes, by the international sanctions and growing confrontation, which reduced capital outflow and affected further structural changes in the regional economy.