Russia a Leader in Regional Inequality, World Bank Study Says

Paul Goble

            Staunton, September 26 – Growing inequality among Russian citizens has attracted a great deal of attention in that country and elsewhere; but another form of inequality – that among the country’s region – has not been the focus of nearly as much. But now that may change, Anton Feinberg suggests.

            According to a new World Bank study, a copy of which the RBC journalist now has, “Russia today has the highest level of [regional] inequality among major countries with developing economies such as Brazil, china and India.” It has fallen somewhat in recent decades but remains extremely high (rbc.ru/economics/26/09/2018/5baa58cd9a7947f649eea8fa).

            “Households in Sakhalin Oblast which has the highest GDP per capita in the country have a standard of living analogous to that in Singapore while households in Ingushetia which has the lowest ranking on this status have a standard of living close to that which is observed in Honduras,” the World Bank says.

            In the wealthiest regions of Russia, fewer than 10 percent of the population are poor, while in the poorest regions of the North Caucasus, Siberia and the Far East, “almost 40 percent” are below the poverty line.  At the same time, personal inequality is greatest in the rich regions and lowest in the poorest ones where a far larger share consists of the poor.

            Some might think that this pattern is explained by urbanization. But World Bank experts suggest otherwise.  Rather it follows regional lines, with poor regions generally having poor cities and wealthier ones wealthier cities, Feinberg summarizes the findings of the bank’s research.

            Natalya Trunova, a specialist on regional development at the Moscow Center for Strategic Processes, says that these figures are an inheritance from the Soviet-imposed administrative-territorial division of the country which have magnified differences between rich and poor regions.

           

            “Many countries have encountered this problem,” she continues. “for example, Poland where there was practically the same problem at the start of the 1990s conducted a major administrative-territorial reform,” reducing the number of units from 49 to 16 and reducing regional imbalances as well.

            Russia has not done so, and as a result, at present, the ten wealthiest regions produce more than half (52.1 percent) of the country’s GDP, with the city of Moscow alone generating 20 percent.   At the same time, Trutneva says, “we have small regions with a small industrial base which will always have to be subsidized.”