Strengthening fiscal decentralization to reduce the heterogeneity of Russia's economic space

According to a number of strategic documents, Russia’s economic space is characterized by high heterogeneity. To reduce it, Russian and foreign researchers propose to strengthen fiscal decentralization. The study aims to find out whether using this method in Russia will allow achieving the desired result. An answer can be obtained by conducting a regression analysis of the dependence of the scale of heterogeneity of the economic space on the degree of concentration of budget revenues and expenditures at the federal level. In the course of the research, we develop a new method for quantifying the level of heterogeneity of the economic space of a territory; the method requires constructing a figure in a rectangular coordinate system and finding its area. The advantage of this method for assessing the scale of heterogeneity of Russia’s economic space is that it allows us to take into account both major indicators - the volume of GRP and the volume of GRP per capita, since so far it has not been determined which of them is a numerical indicator of a region’s economic development level. Having assessed the scale of heterogeneity of Russia’s economic space for the period from 2000 to 2021 with the help of the above method, we conclude that strengthening fiscal decentralization will reduce the heterogeneity of Russia’s economic space. In particular, a 1% decrease in the concentration of budget expenditures at the federal level may lead to a 12.6% decrease in heterogeneity. Proceeding from this conclusion, we put forward some ways to reduce the share of federal budget expenditures in the total volume of the expenditure part of the consolidated budget.