Gross municipal product as indicator of the level of economic development of a region’s municipalities (case of Republic of Bashkortostan)

Regional and branch economy

The article is dedicated to the problem of estimating the gross municipal product. The relevance of the research topic is determined by the expediency of introducing a generalized indicator that characterizes the level of economic development of municipalities. Within the System of National Accounts, calculation of the indicators of economic activity at municipal level is not provided. Therefore, the «bottom-up» approach to estimating the gross municipal product based on economic indicators of municipalities is difficult because there is no official statistical data. In this case, the «top-down» approach in which the gross municipal product is defined as the share of the gross regional product or gross domestic product is preferable. Within the framework of the «top-down» approach, the method of factor evaluation and the foreign method of estimating the "city product" (method A) are used in Russian studies for estimation of the gross municipal product. A detailed analysis showed that the method of factor evaluation has significant methodological drawbacks: it does not ensure the equality of the sum of gross municipal product for all entities and the regional gross added value, it does not take into account the territorial and sectoral structure of regional economy, it does not guarantee the constancy of estimates of gross municipal product for the same time point with the change of interval for constructing the production function. Method A of estimating the "city product" does not have these drawbacks. However, Russian authors use the simplified formula of method A by ignoring the branch structure of municipal economy. This article shows using the materials of the Republic of Bashkortostan that the simplified version of method A distorts the estimates of gross municipal product, shows trends in their growth opposing the real dynamics of municipal economic development and reduces the indicators of intermunicipal differentiation. These arguments indicate that when assessing the gross municipal product it is inappropriate to ignore the territorial and sectoral structure of regional economy. Further research will be aimed at identifying the growth factors of the gross municipal product and assessing their perspective use in managing the development of municipalities in the region.