Economic development of Russia's north-western regions and migration to the St. Petersburg agglomeration

Abstract

This article aims to analyse the development of Russia’s North-Western Federal District (NWFD) regions between 1998 and 2021, based on data from Rosstat. It focuses on how the territories responded to migration to the St. Petersburg agglomeration in the early 21st century and compares their progress with the cores of the St. Petersburg, Moscow, and Helsinki agglomerations. For building the models, regions with similar development dynamics were divided into four sectors: St. Petersburg, the Leningrad region, three less advanced northern areas, and the more successful NWFD territories. Before the 2008-2009 crisis, St. Petersburg and the Leningrad region outperformed the other north-western areas. However, the crisis led to a sharp decline in economic growth rates across the federal district, with manufacturing, agriculture, and forestry replacing the service sector as the main drivers. St. Petersburg's development slowed down, and it became less efficient compared to the Leningrad region and the other five territories, which excelled in manufacturing, agriculture, and forestry. Despite migration to the St. Petersburg agglomeration and an associated increase in employment, the city did not gain a significant advantage over the other NWFD regions due to insufficient investment and hindrance in the development of new economic sectors. Migration to the St. Petersburg agglomeration primarily involved younger people but did not significantly impact traditional industries, such as manufacturing, agriculture, and forestry, which remained at the core of NWFD regions' economic success. St. Petersburg's higher economic efficiency compared to Moscow and Helsinki was a result of greater investments in manufacturing.