Interdependence between the Welfare of Citizens and Russia’s International Economic Competitiveness

Abstract

Given the multi-vector nature of the economic policy of Russia, both improving the competitiveness of the economy and the welfare of citizens may be regarded as priority objectives of the regulatory measures. Although seemingly consistent, increased competitiveness, depending on the mechanisms used to achieve it, may exacerbate inequality problems or harm the environment, so that the resulting effect on welfare is ambiguous. This paper uses data from 32 regions of Russian and adopts a microeconomic approach to welfare assessment based on the concept of equivalent consumption variation to confirm that these objectives are compatible and that competitiveness policies can simultaneously improve the welfare of Russian citizens.