Investment Portal of the Arctic Zone of the Russian Federation

Arctic sustainability

The Foundation for Civil Society Development assessed the development of the Polar region in 2022

18 january 2023

In mid-January 2023, the Foundation for Civil Society Development published a ranking of the socio-economic sustainability of the regions of the Russian Federation, highlighting the 35 most successful regions. All of the country's Arctic regions were on the list, with the first three places going exclusively to the Polar regions.

Leadership position

Yamal-Nenets Autonomous Area tops the leaderboard, followed by Nenets Autonomous Area by a narrow margin and Chukotka Autonomous Area rounds out the ranking. The Republic of Sakha (Yakutia) came 7th, the Murmansk Region was 9th, the Komi Republic was 10th and the Krasnoyarsk Territory was 11th. At the bottom of the list are the Arctic regions of the European part of Russia—Arkhangelsk Region ranks 30th and the Republic of Karelia is 35th. Being last on the list is not a defeat, as the Russian Federation has 89 regions in total, so the competition is high. In the third quarter of 2022, Moscow ranked only 5th, shared with Khanty-Mansiysk Autonomous Area, while St. Petersburg ranked 8th.

The Foundation for Civil Society Development ranking is based on three indicators—the ratio of the regional product by the end of the quarter to the total population of the region, the average monthly wage and the ratio of the average monthly wage to the cost of a fixed set of goods and services.

The Arctic regions have traditionally featured in the rankings due to their relatively low population density and high wages. 'Northern' bonuses for state employees combined with higher wages in the oil and gas sector, which constitutes a significant share of the Polar economy, have provided the regions with positive statistics. However, the prices of consumer goods and services are also traditionally higher in the Arctic, due to complicated logistics and a harsh climate that requires extraordinary expenses on heating, technology and equipment depreciation.

The authors of the ranking themselves also speak of rising prices. In the first nine months of 2022, they said, Russia faced unprecedented sanctions pressure, which translated into higher costs for goods and services at almost all levels. Nevertheless, the Arctic regions, which should have been hit very hard by these dynamics, have mostly either maintained their positions (like the YNAA, NAA, Murmansk Region) or improved their rating (Chukotka Autonomous Area, Yakutia, Komi Republic and Krasnoyarsk Territory). Only two of the nine regions lost their positions: Arkhangelsk Region moved from 24th to 30th place and the Republic of Karelia moved from 24th to 35th place.

Growth statistics

According to Konstantin Kalachev, head of the Political Expert Group, who commented for Izvestia, the reason for the Arctic regions' success lies in a combination of savvy management and a wealth of resources and opportunities. 'This includes the availability of minerals, appropriate logistics and human resources. The northern regions of Russia have all this,' said the expert. However, he pointed out that many businesses have lost relevance as a result of the sanctions, and therefore many regions have experienced a decline in economic growth. Meanwhile, it is in the Arctic regions that large-scale projects continue to be implemented for the long term.

Large-scale projects to create comprehensive transport and social infrastructure are being implemented in the territories of the AZRF entities. For example, a new nuclear-powered icebreaker of Project 2220, the Ural, was commissioned in 2022, and the second ship of the project, the Yakutia, was launched. Once the tests are completed, it will be up and running in 2024. As of 15 December 2022, the volume of cargo transported along the North Sea Route had reached the target of 32 mn tons. The objective of the federal project titled 'Development of the North Sea Route' is to achieve a transport volume of 80 mn tons by 2024 and up to 150 mn tons by 2030. The existing ports along the entire length of the NSR are being actively upgraded, and new ones are being built—the port of Indiga, for example, is due to start operating in 2025. All this should support the Arctic economy.

A significant share of transport is also provided by large mining companies. These include the Yamal-LNG project, the development of the Syradasayskoye coal field, the development of new oil wells by Vostok Oil, preparations to start developing the Kolmozerskoye lithium field, as well as other projects.

A total of 552 residents operate in the AZRF with a total declared investment of RUB 821.297 bn. The new company receives zero income tax for 10 years, a 75% subsidy on insurance premiums and 0.5% of the current MET rate for solid minerals. Residents also pay land and property taxes at a reduced rate and operate under a simplified taxation scheme. Tax reductions and administrative preferences have, in recent years, made it possible to expand the economic potential of the Arctic regions significantly, resulting in the creation of new jobs, the expansion of existing companies and the emergence of new projects.


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