Ivan Lyubimov (Gaidar Institute for Economic Policy): Towards higher complexity in Russian regions: networks, diversification and growth

Ivan Lyubimov (Gaidar Institute for Economic Policy): Towards higher complexity in Russian regions: networks, diversification and growth

Abstract

We use network approach to measure the level of economic complexity of Russian regions and to estimate their diversification opportunities. Following Hausmann et al. (2011), we use both Russian and international export data to develop the Atlas of economic complexity of Russian regions, which reflects the composition of regional exports, the level of complexity of regional economies and their future export possibilities. According to our findings, the complexity of Russian regional economies varies substantially. Being relatively high in the western and central regions, it is significantly lower in the south and north and almost absent in the east, reflecting historically shaped industrial developments. We also conclude that on average, Russian regions have poor diversification opportunities. The latter implies that the best approach to diversify their exports is to become a part of international added value chains. We also emphasize the importance to form inter-regional coalitions, as in most cases individual regional export capacities are insufficient to let regions exploit their export opportunities. Even though we use export data and apply network approach, our results are highly consistent with well-established rankings of Russian regional development, which instead use numerous regional indicators and linear methods. The latter implies that the network approach-based measure of complexity captures important regional features, such as the level of human capital.

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