The Economy of Million-Plus Cities: The Right to Develop

Russian cities with populations of over one million make significant contributions to the country’s economy, in spite of crises and other unfavorable conditions. However, they could achieve more: according to a study conducted by Strelka KB’s Center for Urban Economy, this would require investments, sensible distribution of existing resources, and a high-quality urban environment. In their work, the researchers analyzed the economies of 16 Russian cities with populations of 1 million people or more by 1 January 2019. The study covers the period from 2010 to 2017.

16 Russian million-plus cities provided 32% of the country’s GDP in 2017. At the same time, the general notion of a “million-plus city” covers vastly different cities, each with their own unique qualities, interests, and paths for development. The largest city, Moscow, covers 54% of the million-plus cities’ contribution to the national economy; Saint Petersburg contributes 15%, and the other regional million-plus cities make up the remaining 31%. The gross regional product per capita of Moscow exceeds the same indicator for regional cities by more than two times (1.3 million rubles versus 0.5 million rubles in 2017, in nominal prices).

Strelka KB Consultancy
Million-plus cities vary significantly among themselves, not only in economic terms, but in terms of environmental quality. In regional million-plus cities, the urban environment ranked significantly worse than in Moscow — and even worse than the Russian average. A study of the urban environment quality in 1,112 Russian cities conducted in 2017 by Strelka KB in collaboration with an integrated housing development institution DOM.RF found Moscow’s quality of life to be good (214 points out of a possible 300), while other million-plus cities earned an average score of 135 (the average score for the entire country is 137 out of 300). This is a poor showing. Even Saint Petersburg only boasts a “satisfactory” rating, at 181 out of 300.

Such a considerable difference between the contribution of million-plus cities (apart from Moscow) to the country’s economy and the resources available for their development show that these population centers do not employ the full scope of resources that they produce. As a result, they simply do not have any internal stimulus for development. If this tendency persists, it could lead to a reduction in the potential of million-plus cities over the long term and, as a result, to the reduction of their role in the country’s economy.