Ufa named advanced city, though it will need 100 years to catch up with Moscow

UFA, 28 May 2019. /Bashinform News Agency/ translated by Tatiana Aksyutina/. The average million-plus city will need 100 years to catch up with Moscow in terms of per capita gross product, RBC reports citing the study of the Strelka Design Bureau "Economy of Million-Plus Cities: the Right to Development."

There are a total of 16 cities in Russia with over 1 million inhabitants. In terms of gross urban product (GUP), Russian regional cities with a population of over a million can be divided into two groups: advanced cities with an average GUP growth rate in 2010–2017 of 1.4% and lagging ones with an average GUP growth rate from 2010 to 2017 0,2%.

Researchers attributed Yekaterinburg, St. Petersburg, Kazan, Ufa, Samara and Krasnodar to the advanced cities. The advanced cities will be able to reach the per capita level of the Moscow GUP in 2017 in ten years provided with the acceleration of their economy up to 5.9%.

The lagging cities are Voronezh, Omsk, Chelyabinsk, Novosibirsk, Volgograd, Rostov-on-Don, Perm, Krasnoyarsk, and Nizhny Novgorod. It will take an average of 20 years for these cities to reach the economy of the capital of 2017 with an annual growth of 5.4%.

“If the development growth of Russian cities, observed in 2010–2017, continues further, then the average million-plus city will need about 100 years to catch up with Moscow in terms of per capita gross product,” the authors note.

In 2017, the Russian million-plus cities provided a third (32.2%) of the country's GDP. The contribution of non-capital cities in this amount was only 30.5%. As expected, Moscow - 54.4% and St. Petersburg - 15.1% contributed most of the cities to the country's GDP.

The Ufa GUP amounted to 789.4 billion rubles in 2017, the contribution to the country's GDP - 0.9%. According to these indicators, Ufa is in fourth place among non-capital cities after Yekaterinburg, Samara, and Kazan.

It is necessary to form an investment strategy in Russian cities, taking into account their industry specialization, the authors of the research believe. Ufa, along with Kazan and Omsk, was attributed to cities with a high proportion of people employed in the manufacturing industry.

In the meantime, the level of investment in non-capital cities is 58% of the Moscow level. In 2017, Moscow attracted about 2 trillion rubles of investments, St. Petersburg - 0.67 trillion rubles, and other million-plus cities - 1.6 trillion rubles.

The volume of investments per Muscovite in 2017 amounted to 162 thousand rubles, in St. Petersburg - 127 thousand rubles, in other million-plus people - almost half as many as in Moscow - 94 thousand rubles.

Another factor that can accelerate the growth of the urban economy is the creation of motivation for local authorities to stimulate this growth. Today, the growth rate of municipal budgets is two times lower than the growth rate of GDP. For seven years, the Russian million-plus cities (except for Moscow and St. Petersburg), on average, have increased their GUP almost twice in nominal terms, but the growth in the city budgets volume was only 49% in nominal terms. The underfinancing of megacities in Russia amounted to 510 billion rubles from 2010 to 2017 (an average of 5.2 billion rubles per year for each city), the Strelka Design Bureau estimated.