Testing Alternative Models of Regional Economic Growth: The Boundaries of the Possible (On the Book by A.G. Isaev ‘Economic Growth of Russian Regions: Exogenous and Endogenous Sources’)

Abstract

In this work we analyse the main results on the study of the factors of the regional economic growth in Russia that are presented in ‘Economic Growth of Russian Regions: exogenous and endogenous Sources’ by A.G. Isaev. The emphasis is made on the features of the instrumental base of the study. A.G. Isaev makes an attempt to test alternative macroeconomic models, adapted to varying degree to the tasks of interpreting the phenomena of regional growth, which inevitably raises questions about the possibilities of gaining synthetic knowledge based on such testing. We discuss two problems using the example of the results of conditional convergence assessment, verification of Verdoorn’s law, and determination of the potential for generating endogenous impulses in regional economies, presented in the book. The first problem of equifinality is common to all studies of economic dynamics, regardless of the objects that are considered in them, whether it is the economies of countries or regions. The second problem of determining the sources of spatial dependence and options for taking them into account is specific for studies of regional economic growth. The general conclusions are that the task of obtaining meaningful, internally consistent conclusions based on neoclassical and Keynesian models of economic growth is not trivial; the problem of equifinality for the models under consideration is imaginary, since their estimates of conditional convergence coincide at least on a qualitative level and they cannot tells us anything specific about the trends of interregional income inequality; there are issues arising from the use of neoclassical models that are still at the forefront of research on regional economic dynamics, including the issues related to the choice of the method of taking into account spatial dependence, the solution of which requires a certain reorientation of research work from the detection of particular causal effects to the analysis of universal patterns; models that are unpopular but at the same time transparent in the way they describe the channels of interregional influences can be useful in studies of the mechanisms of generation and absorption of impulses in the economy of the region