Shock robustness of single-industry regions: Assessment and governance

Abstract

The Russian economy is operating under severe strains and limitations in foreign trade. The unevenness of economic space, regions’ openness, specialization and industrial efficiency cause differences in both economic growth and the state administration system. The article pioneers and tests a theoretical-methodological approach to assessing shock robustness of single-industry regions in the context of a harsh foreign economic environment and justifies approaches to adjusting regional development policy of the state. In the paper, shock robustness of a region’s economy is viewed as the ability to recover, continue a long-term development trend, and keep the potential for adaptation and structural changes. The research methodology consists of regional economics and management theories, and the theory of shocks. The research methods include regression analysis and time series analysis (the Hurst exponent, the Hodrick–Prescott filter). The empirical base is open data for single-industry regions. The study reveals that single-industry regions differ in shock robustness; there are regions with high susceptibility to foreign trade changes and industrial production volatility (with high foreign trade intensity – Sverdlovsk, Vologda, Chelyabinsk oblasts and Krasnoyarsk Krai) and regions with limited structural adaptation reserves (with low foreign trade intensity – Lipetsk and Murmansk oblasts) that require the adoption of problem-oriented managerial decisions. We systematize strategic avenues for single-industry regions vulnerable to external shocks, namely enhancing diversification and improving the sectoral structure of the economy and exports. The study adds to the understanding of industrial regions’ problem areas and government support measures facilitating their adaptation to instability.