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Estimating the effect of Russia’s development policy in the Far Eastern region: The synthetic control approach

Author

Listed:
  • Goryunov, Alexander

    (Eastern State Planning Center, Khabarovsk, Russia;)

  • Ageshina, Elena

    (Eastern State Planning Center, Khabarovsk, Russia;)

  • Lavrentev, Igor

    (Eastern State Planning Center, Khabarovsk, Russia;)

  • Peretyatko, Polina

    (Eastern State Planning Center, Khabarovsk, Russia;)

Abstract

In 2014 Russian government enacted an ambitious policy of the “accelerated development” of the Far East. A number of special legal provisions, tax incentives and investment programs have been introduced as part of that policy. Several studies have since attempted to estimate the impact of the policy on the region’s economy using intertemporal or interregional comparisons of outcomes, with most studies finding there to be no significant impact. We use the synthetic control method to arrive at a quantitative estimate of the policy’s effect on the real per capita GRP of the Far East in 2014–2019. Using a pool of 59 regions to construct a counterfactual baseline and controlling for the overall level of higher education, share of the raw materials industry, share of investment in GRP and the share of working age population, we estimate that the policy had resulted in the creation of around 93 billion rubles of additional GRP in the Far East during 2014–2019. We also propose a procedure for estimating the statistical significance of the result in the case when Fischer’s Exact Test, which is normally used with synthetic controls, is not applicable due to the composition of the treated object. Using our proposed procedure, we find that our estimate of the policy’s effect is statistically significant at the 5% level.

Suggested Citation

  • Goryunov, Alexander & Ageshina, Elena & Lavrentev, Igor & Peretyatko, Polina, 2023. "Estimating the effect of Russia’s development policy in the Far Eastern region: The synthetic control approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 72, pages 58-72.
    • Handle: RePEc:ris:apltrx:0485
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    References listed on IDEAS

    as
    1. Abel Gezevich Aganbegyan, 2019. "Development of the Far East: A National Program in the Context of National Projects," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 3, pages 165-181.
    2. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
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    7. Artyom Gennadyevich Isaev, 2020. "Social Efficiency Indicators of Public Investment: The Case of the Far Eastern Regions," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 4, pages 23-43.
    8. Natalia Valentinovna Lomakina, 2020. "State Incentivizing of Investment Activity in the Resource Region: Far East of Russia Variant," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 4, pages 68-90.
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    More about this item

    Keywords

    preferential regimes; economic incentives; tax breaks; regional development; synthetic controls.;
    All these keywords.

    JEL classification:

    • H39 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Other
    • H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other

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