BOFIT Viikkokatsaus / BOFIT Weekly Review 2019/30

Russia has 16 cities with more than a million inhabitants. The five biggest cities after Moscow and St. Petersburg are Novosibirsk, Yekaterinburg, Nizhny Novgorod, Kazan and Chelyabinsk. About 34.5 million people (24 % of Russia’s total population) live in cities with at least a million people. Of that, 16.5 million live in cities other than Moscow or St. Petersburg.

The Russian consulting firm Strelka’s latest survey of cities over 1 million shows that Russia’s largest population centres contribute about a third of Russian gross domestic product. The large megalopolises of Moscow and St. Petersburg account for about 70 % of all the GDP generated by cities with populations over a million. The leading regional urban areas from an economic standpoint are Krasnodar, Yekaterinburg and Samara. Moscow’s nominal GDP per capita is about double that of the richest regional cities with populations over a million such as Krasnodar and Yekaterinburg, and over three times greater than that of the poorest cities surveyed (Omsk and Voronezh). Differences in price levels across cities suggest that actual differences in living standards are smaller. Real wages in regional cities with more than a million are about 30 % lower than in Moscow on average.

The pace of economic development in regional cities with over a million people varies considerably. For example, the GDP of Kazan, Nizhny Novgorod, Novosibirsk, Samara and Ufa grew by more than 25 % in 2010–2017, while economic growth was negligible in Perm and Chelyabinsk. In Novosibirsk and Ufa, small and medium-sized firms were the main engines of economic growth. Growth was driven by large enterprises in Kazan and Samara. 

Compared to the St. Petersburg and Moscow metropolises, Russia’s regional cities with more than a million people constitute minor economic units and are quite sensitive to business-cycle fluctuations. These cities grew faster than Moscow or St. Petersburg at the start of the decade, only to contract more violently after Russia went into recession in 2015. Fixed investment in these regional cities with a million people fell much more than in Moscow or St. Petersburg.

The differences in living standards can also be seen in the quality-of-the-urban-environment index, which is jointly produced and maintained by Russia’s Ministry of Construction, Housing and Utilities, Strelka and Dom.rf. The index captures urban quality of life generally, and is based on sub-indices that track e.g. housing quality, availability of public services and infrastructure. According to the index, the quality of life in Moscow is good (214/300) and satisfactory in St. Petersburg (181), but mediocre (135) on average for other Russian cities with populations above one million.

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