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Productivity Paradox in Regional Dimension

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  • Viktor Dementiev

    (Central Economics and Mathematics Institute of RAS, State University of Management)

Abstract

The next industrial revolution is expected to give new impulse to productivity growth. In practice, the macroeconomic growth rate of this indicator decreases in developed countries and in Russia. However, productivity paradox, when technological innovations are accompanied by a slowdown in productivity growth, is observed only in parts of the constituent entities of the Russian Federation. The article is aimed to determine the reasons of a significant divergence of regions in the dynamics of labour productivity. For this purpose I identified two groups in the plurality of the constituent entities of the Russian Federation. The first one groups subjects with the most significant decrease in the labour productivity index. The second group covers the subjects of the Russian Federation where such decrease did not occur or it was small. The scientific contribution of the article consists in the results of a comparative analysis of the selected groups of regions. This analysis has revealed significant differences in the dynamics of expenditures on technological innovations and the share of these costs in the investments in fixed assets, in the share of investments to reconstruction and modernization, in the ratio of spending on research and development to the gross regional product. Thus, average annual costs of technological innovations during 2014-2016 in comparison with the period of2010-2013 in the group of regions with a paradox of productivity grew by 1.82 times. However, and in the second group of regions these costs only increased by 1.03 times. The research has confirmed that, at the regional level, the productivity paradox is caused by the gradual exhaustion of reserves for improving previously mastered technologies. Furthermore, another reason of the productivity paradox is the diversion of resources from current production for its reconstruction and modernization or for research and development.

Suggested Citation

  • Viktor Dementiev, 2019. "Productivity Paradox in Regional Dimension," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 43-56.
    • Handle: RePEc:ura:ecregj:v:1:y:2019:i:1:p:43-56
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