The Role of Centrality in Explaining Multifactor Productivity of Russian Regions

Abstract

Abstract—: The article assesses the relationship between multifactor productivity (MFP) as the most important source of sustainable economic development and the various conditions that can explain it. The method for estimating productivity in this study takes into account that income is created using not only live labor, but also capital stock. In contrast to previous articles, this study uses a multifactor productivity index that satisfies the transitivity criterion, which allows geographic comparisons. A new measure of centrality is presented to assess the benefits of a region’s location, which reflects the network nature of territorial relations and makes it possible to take into account not only point, but also area objects. With this new measure, it is shown that the place of a region in the settlement system and road network explains better than other conditions the difference between its MFP from MFP of other regions/federal subjects in 2010–2016. It follows from the estimated model that the different properties of the labor force described by the concept of human capital and the institutional environment are significantly more weakly associated with the observed MFP of regions. To demonstrate the superiority of the economic–geographic approach to explaining MFP, machine learning methods relatively new to economic geography are used.