Post sourced from the Russian Science Foundation website
The economic potential of Russia's Arctic zone is impressive, as it harbors great reserves of oil, gas, and rare earth metals. However, production resources in the Arctic are extremely unevenly distributed and the transportation network is underdeveloped. These problems hinder active development of the region, and even existing government support measures, such as special tax regimes, do not always prove effective, as they often overlook the spatial features of the territories.
Scientists from the Karelian Research Center RAS have found that improving the connectivity of territories within the region will help balance economic growth in the Arctic.
The authors analyzed the operation of companies situated in 37 municipalities (okrugs and districts) in the European part of the Russian Arctic. The studied territories are part of the Murmansk Region (17 municipalities), Nenets Autonomous Okrug (2), Republic of Karelia (6), Komi Republic (4,) and Arkhangelsk Region (8).
The researchers studied the companies' revenue indicators, their asset sizes and numbers of employees in 2017-2022, which helped trace the economic trends in the region. The analysis factored in the location of the municipalities relative to each other and the real transport accessibility of the territories.
It turned out that the workforce, represented by the number of employees, has twice as strong an impact on the revenue of the organization as its capital. Furthermore, the influence of the workforce was stronger where transport connectivity between the territories was better. This suggests that the infrastructure - particularly a well-developed road network - plays an important role in the economic well-being of the municipality. Interestingly, the municipalities just being neighbors is a less significant factor for economic interactions between them than the availability of a reliable transport connection.
Map of four quantiles. Quantile distribution of municipalities in the Russian Arctic Zone by:
a) cumulative level of company revenues, b) cumulative level of company assets,
c) cumulative level of the average number of organization employees in 2022.
A possible explanation for this impact is that a well-developed transport infrastructure makes the workforce more mobile and efficient. Workers can be moved quickly between sites, it is easier for companies to recruit qualified personnel, and cooperation between companies raises productivity without significant capital investment. In the Arctic realities, where fixed assets, such as critical and expensive equipment, often cannot be used to the full because of the harsh climate and seasonal constraints, it is the flexibility of the workforce that becomes a key factor for economic growth.
“Our results convincingly demonstrate that sustainable development in the Arctic calls for an integrated approach that goes beyond mere financial incentives. The efficiency of manpower utilization here is directly dependent on the quality of the transport infrastructure. We recommend paying special attention to the organization of latitude-wise transportation corridors, which can make up for the fragmentation of the Arctic territories and enable a more even distribution of economic opportunities across the region. Also, as the potential of the preferential regime in the Russian Arctic is gradually being exhausted, stronger focus on more regionally and municipally specific economic support measures is becoming increasingly important. We plan to carry out a comprehensive economic and sociological study of the working conditions and social infrastructure in the Arctic territories, which will help us better understand the specific features and interplay of processes at different levels - from the individual (human capital) to the level of regional socio-economic systems”, — says the leader of the RSF-funded project Alexander Volkov, Senior Researcher of the KarRC RAS Department for Multidisciplinary Research.
Photo from A. Volkov’s personal archive / DMR KarRC RAS