Publication: Monitor Volume: 6 Issue: 160

As with all official Russian economic data, care should be taken in interpretation. For one thing, it is not clear how these data treat Russia’s extensive second economy. Although the official GDP figures are bumped up by 30 percent to reflect the estimated size of the informal sector, it is not clear how this 30 percent is broken down by sectors or regions. Also, aggregations of the regional figures are sometimes difficult to square with data for the country as a whole. For example, the industrial growth reported for the seven federal districts average to well above the national industrial growth reported for 1999 and the first half of 2000. This discrepancy may be explained in part by industrial output produced by Russia’s “closed administrative territorial units” (ZATOs) These closed centers of military industrial production (the number of which is not publicly known) are treated as separate regional entities for statistical purposes. Likewise, the 8.0 national unemployment rate reported at mid-year on the basis of the regional unemployment differs sharply from the 11.4 percent unemployment rate reported for the country as a whole. And the quality and quantity of data on economic activity in the North Caucasus–particularly in Chechnya and Ingushetia–diverge dramatically from the rest of Russia.

Data problems aside, the data released in the new federal scheme suggest that Russia now consists of two large macro-regional economies (the Central and Trans-Volga districts), three medium-sized macro-regional economies (the Northwestern, Siberian, and Ural districts), and two small units (the Southern and Far Eastern districts). The Central and Trans-Volga districts (the administrative centers of which are located in Moscow and Nizhny Novgorod, respectively) between them accounted for 60 percent of Russia’s retail trade, 55 percent of new housing constructed, 40 percent of industrial output and 47 percent of its population, in 1999. By contrast, the Southern and Far Eastern districts (the administrative centers of which are located in Rostov and Khabarovsk, respectively) accounted for only 15 percent of Russia’s industrial output, 18 percent of housing constructed and 13 percent of retail trade last year.

This comparison suggests that the Central and Trans-Volga districts are Russia’s new economic powerhouses. But because of their large size, these districts include many of Russia’s poorer regions. The Central district includes Moscow City–Russia’s richest region by far, where the average monthly wage of US$112 in May 2000 was nearly double the national average of US$74. But because it also includes numerous poor regions (such as Ivanovo and Tambov, where the average monthly wage was below US$40), the average wage in the Central district in May 2000 was only US$73. Likewise, the preponderance of relatively poor regions like Mari-El and Mordovia makes the Trans-Volga district one of Russia’s less wealthy: the average wage in May was only US$59. The poverty apparent in both districts will therefore need to be offset by federal subsidies. This should help to reduce the Central and Trans-Volga districts’ bargaining power vis-a-vis the center.