Assessing the economy of Russian regions in value chains

One of the main factors hindering Russia’s economic development is its narrow domestic market largely due to short value chains in the economy. Per capita domestic demand (both consumer and investment) in Russia is significantly inferior to that of world’s developed countries (the US - 2.5 times, Germany - 2 times higher). This results in lack of domestic demand for many types of goods and services, as well as exports of low-tech products. This state of affairs aggravates economic development in a spiral - due to lost value added companies’, state and people’s incomes are reduced. This, in turn, reduces consumer demand and investment opportunities. In this regard, the development of state policy aimed at increasing the income of all economic actors (population, companies, state) through the formation of their own value chains that produce goods for final consumption is relevant. Implementing such policy is impossible without the analysis of existing value chains and determining the place of regions in them, which is the purpose of the present study. The article uses the Upstreamness index which characterizes the average position of industries in value chains. The novelty of the study research lies in the adaptation of this indicator to the regional level. Its values for Russian regions are calculated. The high differentiation of their territorial distribution in the Russian economy is demonstrated. A strong correlation between GRP per capita and Upstreamness index in the economy of Russian regions is explained. Comparisons of results with data on the US economy are presented.