The main result of our study is the singling out seven types of RF regions characterized by homogeneous distribution of values of economic indicators across three categories:
The comparison of the obtained typology with the results of the study of regional institutional aspects (ownership structure, rankings of investment climate) confirms the homogeneity of the types and permits better explain why regions belong to certain types.
The types of RF subjects were conditionally defined as:
“Producers – consumers”
“Oil producers – consumers”
Further we attempt to analyze the possible conclusions based on the region’s place in the typology for the settlement of a number of problems faced in the course of regional studies, for instance, in the framework of CEPRA projects. It is necessary to note that the number of types may vary depending on the concrete task. For instance, regions may be>
Interbudgetary Relations and Federal Transfers
In terms of interbudgetary relations the typology of RF subjects permits, first, to determine economic preferences of regional economic authorities, while the attribution of a region to a certain type of economic behavior points to the prospects of possible changes regarding the fiscal status of this RF subject. Second, the typologization of regions allows to single out groups of regions that may differ by the characteristics of the model of distribution of financial aid. The resulting typology may be also used in order to determine objectives and priorities in the course of elaboration of the policy of interbudgetary relations between the center and regions and determination of the mechanism regulating the support of regions from the federal budget.
For instance, 10 out of 12 regions, which did not receive transfers from the Fund of Financial Support for Regions in 1999 through 2000, 10 belong to types of “rich consumers” (oil producers) and “rich consumers,” i.e. about the half of all RF subjects included into these types. It seems that the consumer orientation of preferences of economic agents in regions (except “rich investors” – Moscow, Tyumen oblast, and Tatarstan, which are rather special cases) determines high revenues of regional budgets (via taxes on household and company incomes, indirect taxes on consumption due to the budgets of RF subjects) under reserved policy pursued by regional authorities.
At the same time, the fiscal standing of regions lacking sufficient reserves of mineral wealth (first of all, fuel resources) or a strong export-oriented industrial base (metallurgy, petro-chemistry) remains weak, what is confirmed by the lack of internal funds in the other half of regions – “consumers,” while the prospects for a change in the fiscal status of a region in the framework of fiscal relations remain vague. On the other hand, in case a region belongs to an “investor” type, it may be assumed that it is highly probable that the level of internal revenues will change in the future and this region will be given the status of “donor.”
The results of the typologization of RF subjects demonstrate that in the framework of the analysis of interbudgetary relations between the federal center and regions more attention shall be paid to two types of regions – “poor consumers” and “depressive” regions. It is apparent that exactly these two types of RF subjects, in terms of their current situation and their potential, most urgently need the support from the federal budget and the redistribution of financial flows in their favor. It permits to draw important conclusions with regard to the analysis of the model of distribution of financial aid, the system of interbudgetary relations on the whole, and fiscal stimuli arising in such a system. Thus, it may be assumed that financial aid is allocated to poor regions according to modified rules or principally different criteria – this group of regions shall be reviewed separately and analyzed in a special way. Besides, it may be noted that for these two types in order to improve their fiscal situation the economic authorities both at the federal and subfederal levels shall pay special attention to the analysis of the situation and take decisions aimed to increase the investment attractiveness of regions, or to the elaboration of special regional economic programs.
Similar methods shall be applied also to “shaky” regions; however, as it was discussed above, their inclusion into this type is primarily determined by institutional and political factors, and these regions may transit to any other type in case situation in these areas changes.
Tax Potential and Expenditure Obligations of Regions
We assume that in terms of tax potential and budget revenues the distribution of RF regions across the types may be of greater importance for the analysis of budgetary regional revenue dynamics over preceding years than for the analysis of perspectives. For instance, the investment orientation of regions’ behavior might considerably decrease the profit tax base due to investment benefits granted to investors. At present, due to the abolition of profit tax privileges, the differences of actual profit tax revenues among regions with comparable tax bases shall be less noticeable.
Besides, it may be expected that the abolition of profit tax privileges will result in an increase in profit tax-related revenues in “investor” regions in case the present preferences of economic agents (in terms of “current consumption – investment”) remain the same. Regions demonstrating high levels of investment activity shall be characterized by relatively low share of aggregate revenues allocated for wages and salaries, and the ratio between profits and labor-related payments there will shift in favor of the former.
It shall be also expected that in “consumer” regions the level of revenues from indirect taxes on consumption (VAT, sales tax, excises) will be higher than in “investor” regions with similar economic structures.
A similar analysis may be applied to amounts and structure of regional expenditure obligations. For instance, as it was mentioned above, the “shaky” and “depressive” regions more urgently need measures aimed to ensure social assistance. It also may turn feasible to increase the role of budget resources in the implementation of investment projects on the territories of these RF subjects.
Payment Arrears in the Economy of Russia and Regions
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