Competitive environment in Russia: rating of regions

8 april 2014

According to the rating, when it comes to level of competition development the Krasnodar region is well ahead of others, the Amur region has the toughest situation to tackle, while Moscow and St. Petersburg are ranked the 8th and the 13th respectively. The FAS Russia cited this data at the roundtable on “Intensity of competition and competitive environment in Russia: rating of regions” held at the Analytical Center today.

Under the Russian President’s order, the FAS Russia and Russia’s Ministry of Economic Development prepared methodology for competitive environment evaluation, this took them over a year, subsequently ranking the subjects of the Russian Federation by level of competition development. According to the order, such ratings are to be made public annually by the 1st of May. Today the FAS Russia presented the first results of its work at the Analytical Center.

The FAS Russia proposed using the following as the key indicators: macroeconomic indicators (number of enterprises, net migration, GRP, volume index for investment in fixed capital - all of those per capita), number of applications submitted to the regional offices of the FAS Russia, market power concentration indicator for specific product markets as well as results of surveys on competitive environment in the construction sector conducted by the Russian Federal State Statistics Service.

All of the indicators mentioned reflect the existing competitive environment to a different extent. Head of the Analytical Department of the FAS Russia Aleksey Sushkevich is certain that “evaluation should be relevant, initial data should be available and up-to-date, while methodology should be comprehensible and convincing, which is necessary with regard to the motivating effect the rating may have on regional authorities to improve competition.” Mr. Sushkevich also remarked that the so-called black and white registers for regional pro-competitive and anticompetitive practices are being compiled to complement annual ratings.

Since the region’s ranking will be used to assess its competitive environment, experts’ key proposal with regard to the FAS Russia approach consists in introducing indicators that regional authorities can influence. At least such indicators will stimulate regional and local authorities to work on previously made mistakes in specific product markets and fields.

According to the Deputy Head of the Tatarstan Regional Office of the FAS Russia Ruslan Biktimirov, “a group of industrial indicators characterizing the market structure should be made part of the rating criteria.” It is equally necessary to consider the level of state involvement in each and every region’s economy. “The more significant the state share in the region’s GDP is, the worse the opportunities for competitive environment development are,” Mr. Biktimirov said.

Deputy Head of the Department for small and medium entrepreneurship and competition within the Ministry of Economic Development Kirill Emelianov confirmed that level of state involvement is of great importance. Mr. Emelianov asked to take into account the fact that “there are strict budget restrictions when it comes to methodology development, we cannot implement excessively expensive methodology and can only use criteria and sources available to us”.

During the roundtable the FAS Russia presented its first conclusions. According to those, the Krasnodar region is one of the leaders (well ahead of others), followed by the Belgorod region, the Republic of Tatarstan, the Kaluga, the Novosibirsk, the Tyumen and the Voronezh regions. Moscow was ranked the 8th and St. Petersburg – the 13th. The Amur, the Ivanovo, the Kurgan and the Astrakhan regions are listed among the outsiders.

Construction and reconstruction markets, major highway repairs market, AI92 and AI95 vehicle petrol and diesel fuel retail markets, compulsory third party car insurance services market, compulsory civil liability insurance for companies exploiting dangerous industrial facilities and compulsory pension insurance markets were analyzed for pilot calculations. It is obvious that the selection of markets is subject to revision and the criteria for the selection are still to be developed.

In the future the rating values will be integrated with the indicators set out in the Standards of competition development in regions. At present five regions have been selected for pilot projects, namely: the Moscow, the Tula, the Ulyanovsk, the Volgograd and the Nizhniy Novgorod regions.