Drivers of Regional Economic Development: The Role of Specialization and Energy Efficiency in Russia

Victoria P. Litvinets, Natalya R. Kelchevskaya, Veronika Y. Zemzyulina

Ural Federal University named after the First President of Russia B.N. Yeltsin, Yekaterinburg, Russia

Abstract

Amidst continuing disparities in the socio-economic development of Russian regions, limited investment resources, and challenging external conditions, the need for differentiated regional policy has assumed greater importance. This study aims to assess the impact of sectoral specialization and energy efficiency on the economic development of Russian regions and formulate practical recommendations for regional investment policy. The hypothesis of the study suggests that these factors exert a significant influence on regional economic development, with effects varying systematically across regions depending on their level of socio-economic development. The analysis employs a panel dataset covering 85 Russian regions over the period 2014-2023, utilizing a hybrid regression model to decompose within-region and between-region effects. The results confirm the hypothesis about the heterogeneous impact of sectoral specialization and energy efficiency on the economic development of Russian regions. The results indicate that deepening specialization is associated with an increase in real GRP per capita within regions, but its effect weakens as regional development levels rise. The results underscore the importance of adopting the «smart specialization» concept and pursuing economic diversification strategy.  Energy efficiency also shows a significant positive within-region effect, with highest marginal returns observed in moderately developed regions. The findings suggest that energy efficiency gains should come from higher economic returns per energy unit, not just from expanding generation capacity. Moreover, results indicate that the examined variables are statistically significant in explaining intra-regional dynamics, while not accounting for inter-regional differences in levels of economic development. The practical significance of this study stems from empirical evidence supporting the necessity of differentiated regional investment policies. The findings can be used as a basis for evidence-based policy-making to reduce interregional differentiation in Russia.

Keywords

regional differentiation; regional economic development; sectoral specialization; energy efficiency; hybrid regression model; investment policy.

JEL classification

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About Authors

Victoria Pavlovna Litvinets

Master’s Degree Student, Department of Economics and Management at Metallurgical and Machine-Building Enterprises, Ural Federal University named after the first President of Russia B.N. Yeltsin, Yekaterinburg, Russia (620002, Yekaterinburg, Mira street, 19); ORCID https://orcid.org/0000-0003-4818-4665 e-mail: VikaLitv02@yandex.ru

Natalya Removna Kelchevskaya

Doctor of Economics, Professor, Head of the Department of Economics and Management of Metallurgical and Machine-Building Enterprises, Ural Federal University named after the first President of Russia B.N. Yeltsin, Yekaterinburg, Russia (620002, Yekaterinburg, Mira street, 19); ORCID https://orcid.org/0000-0001-7278-026X e-mail: n.r.kelchevskaya@urfu.ru

Veronika Yurievna Zemzyulina

Candidate of Economic Sciences, Associate Professor, Department of Economics and Management of Metallurgical and Machine-Building Enterprises, Ural Federal University named after the first President of Russia B.N. Yeltsin, Yekaterinburg, Russia (620002, Yekaterinburg, Mira street, 19); ORCID https://orcid.org/0000-0003-1699-636X e-mail: veronika.zemziulina@urfu.ru

For citation

Litvinets, V.P., Kelchevskaya, N.R., Zemzyulina, V.Yu. (2026). Drivers of Regional Economic Development: The Role of Specialization and Energy Efficiency in Russia. Journal of Applied Economic Research, Vol. 25, No. 3, 940-964. https://doi.org/10.15826/vestnik.2026.25.3.031

Article info

Received April 21, 2026; Revised May 29, 2026; Accepted June 16, 2026.

DOI: http://dx.doi.org/10.15826/vestnik.2026.25.3.031

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