Border and internal regions: a comparative study of resilience in the crisis

. Existing gaps in research, highlighting the varying resilience of economies to crises and shocks, limit the scope for designing policies for long-and short-term growth. There is a need for new researches in the context of a large-scale Russian-Ukrainian crisis. This article studies the reactions of the border and internal Russian regions to the largest shock in recent years, associated with a special military operation and large-scale sanctions. Representative publications declared that the Russian economy is resilient to sanctions. Our research reveals regional aspects of the short-term response of the Russian economy. Systematization of the main indicators of employment, standard of living, economy allowed to cover the main characteristics of socio-economic development of the region. Scientific novelty is achieved by new data on inter-group and intra-group differences of border and internal Russian regions. The practical significance of the study lies in the possibilities of applying the obtained results to work out policies that take into account the differences between border and internal regions.


Introduction
Research into the ability of economies to recover from various crises and shocks occupies an important place in the scientific literature. Resilience is an important characteristic of economic sustainability. Sustainability can be viewed in a broad and a narrow sense. A broad definition of sustainability, along with social and economic dimension, includes the environmental one [1] (Purvis at al., 2019). However, the broad body of literature on economics sees sustainability as the ability of the regional economic system as a holistic structure, maintaining production and consumption levels in a changing external and internal environment [2] (Pendall at al., 2010). It also means resilience to potential crises, ability to adapt to new conditions, balance between different sectors of the economy [3] (Mikheeva, 2021), and reserves and availability of financial and material resources [4,5] (Bilchak and Bilchak 2018) (Capello et al. 2018).
Studies of border and internal regions from 2005 to 2021 showed that there are significant features in the dynamics of industrial cycles in both internal and border regions. However, far from always are the internal regions ahead of the border ones [6] (Khmeleva at al., 2023).
Regional features of economic growth are often determined by national conditions, industrial heritage for the formation of sustainability [7] (Webber at al. 2018). In addition to national conditions and industry specificities, border regions have other features that have an impact on resilience. In the first place, borders with other countries or regions affect economic activities in such areas. Boundaries lead to different rules and requirements that may restrict or stimulate business. Cultural differences, the influence of differences in legislation, integration processes (involvement of the country into political and economic unions), different living conditions in neighbouring countries and migration processes are also peculiar features of border regions. These features can both stimulate the economy of a border region and limit its development.
For the Russian economy with its significant differences in natural and climatic conditions, it is believed that the peripheral regions are developing more slowly than the central ones. The condition for the economic growth of a border region is the development of cooperation with neighboring regions of another country [4]. Border regions often have different legislation in various countries, which adds to the complexity of international business. There are also special provisions governing cooperation with neighbouring countries. Moreover, cultural differences can affect economic activity in border regions. This may include norms, values, traditions, languages, etc. There may also be differences in consumer preferences and marketing. Several currencies may exist in border regions, affecting pricing, taxation, international payments and other aspects of economic activity. Integration processes may exist in some border regions, such as the European Union or the Eurasian Economic Union. This affects economic activity in a region.
Living conditions may vary from country to country in border regions, affecting wages, living standards and consumption standards. This can lead to differences in the output and consumption of goods and services. In border regions, there may be migration problems, both external and internal. This can affect work and wages as well as social and cultural aspects of life.
The goal of this article is to assess the ability of border regions to recover in times of crisis.
The hypothesis is that the border regions are recovering weaker than the internal ones. This assumption is justified by the presence of a borderline, which in an open economy is an important source of exchange of resources and development of trade and economic relations. With the deteriorating geopolitical situation, domestic economic activity is beginning to taper off and respond more quickly to external shocks.

Materials and Methods
For the purpose of comparative analysis, all regions of the Russian Federation are divided into two groups: border and internal ones.
The analysis was based on publicly available statistical data from Rosstat (Federal State Statistics Service of the Russian Federation), representing the dynamics of the main socioeconomic indicators for the regions of the Russian Federation (Regions of Russia. Socioeconomic indicators 2022). This statistical database includes a monthly update, which enables an analysis into the change of indicators to the previous period or to the same period in the previous year. This approach has an important advantage and has made it possible to assess changes in key socio-economic indicators before and after the special military operation and sanctions.
To analyze the current state of socio-economic development of the border geostrategic territories, we have grouped the key operational indicators into four groups (employment, living standards, and economy) ( Table 1). Index of industrial production (IIP), as a percentage of January-November 2022 to January-November 2021

Rosstat
Index of agricultural production, as a percentage of January-September 2022 to January-September 2021 Rosstat The amount of work «Construction», as a percentage of January-November 2022 to January-November 2021 Rosstat Retail turnover at comparable prices, as a percentage of January-November 2022 to January-November 2021 Rosstat Gross fixed capital formation at comparable prices, as a percentage of January-September 2022 to January-September 2021

Rosstat
Change in the share of unprofitable enterprises without small businesses, as a percentage of January-November 2022 to January-November 2021 Rosstat Source: authors.
In conducting the study, the authors used the method of comparative analysis. For this purpose, the authors have formed tables in which key socio-economic indicators are included, taking into account current priorities. The resilience assessment of regional systems was carried out with the application of the minimum, maximum and standard deviation values common in comparative economic studies [8,9] (Scheve and Slaughter, 2001; Claeys and Vennet, 2008; Lenzen at al., 2013). It is known that the mean quadratic deviation is a measure of deviation from the average. Its convenience in comparative studies is due to the fact that this indicator is expressed in the same units of measurement as the baseline. Therefore, it is not difficult to analyze the variation of the topic under analysis.
The comparison is based on the horizontal principle, which distinguishes the regions with the worst and best indicators, which allowed the identification of risk points. A comparison of variation and standard deviation made it possible to assess the resilience of the analyzed groups of regions as a whole and the intra-group differences for the analyzed indicators.

Results
Border regions occupy a significant place in the economy of Russia, occupy 27% of the territory of the country. There live about half of the Russian population.
Statistics show that the social situation in the border regions before the crisis was worse than in the internal ones (Table 2). In 2021, the unemployment rate in the border Russian regions was 7.2 per cent higher than in the internal ones. The average monthly wages the border regions were also lower in 2021, amounting to 51,915 rubles against 56,886 rubles in the internal regions.
There are similarities in the reaction to the crisis from the border and internal regions. The unemployment rate has fallen, owing to the increase in domestic demand for the production of goods and services due to the closure of borders. Some of the population has been mobilized, most of them are young skilled workers. A number of young people fearing recruitment have also left the country. All this has led to a decrease in the unemployment rate in Russia to a historical low in the 21st century -3.7% in October-December 2022. An exception is the city with the status of a region, St. Petersburg: unemployment has increased here, albeit slightly, by 0.1%.
In the border regions, the economic performance is noticeably higher during the crisis of 2022. Thus, in January-November 2022, compared to the previous similar period, the index of industrial production was 101.5% compared to 100.9% in the internal regions. In the border regions, in comparison with the hinterland, indicators of agricultural production and investment in fixed capital were significantly higher. As for retail trade turnover, although it decreased in the whole country, but the decrease in the border regions is smaller than in the internal ones. It is noteworthy that in the border regions, contrary to the general trend, the share of unprofitable enterprises is decreasing by 0.1%.
Looking at the regions in more detail, there are significant intra-group differences between border and internal Russian regions (Table 3). The Chukotka Autonomous Okrug is currently the most socially prosperous region, although located in the Far North, has a maritime border with the United States. The unemployment rate here fell by 0.4% in 2022, currently amounting to 2.2%. The Chukotka Autonomous Okrug recorded the maximum value of nominal wages in 2022, amounting to 142,617 rubles. With just over 47,000 people living in harsh climates, the region is one of the smallest in population.
There are sharp differences in the group of social indicators between the internal and border regions. Thus, the highest unemployment rate in the internal regions in October-November 2022 was 6.5 per cent (Komi Republic), while in the border regions it was 28.7 per cent (Republic of Ingushetia). In border regions, the maximum wage is lower.
The index of industrial production in January-November 2022 showed minimum values in the Kaluga Oblast (which is an internal region) and the Kaliningrad Oblast (a border region). This situation is quite understandable, as there is a number of joint foreign enterprises in the Kaluga Oblast that have suspended their activities. Table 4 presents a standard deviation in socio-economic indicators. Index of industrial production (IIP), as a percentage of January-November 2022 to January-November 2021 6.4 9.2 Index of agricultural production, as a percentage of January-September 2022 to January-September 2021 8.0 11.1 The amount of work «Construction», as a percentage of January-November 2022 to January-November 2021 25.1 23.8 Retail turnover at comparable prices, as a percentage of January-November 2022 to January-November 2021 3. The standard deviation shows a high variation of the analyzed socio-economic indicators in both border and internal regions. It can be seen that intra-group differences are higher in the group of border regions than in the group of internal regions. This means that the border regions develop more unevenly than the internal regions. The variation in the unemployment rate between October and December 2022 in the border regions is 4.6 times higher than in the internal ones. This is higher than in 2021, when the variation was 4 times. Standard deviations in the border regions are also higher than in the internal regions by such indicators as index of industrial production, index of agricultural production, volume of construction, and investments and changes in the share of loss-making enterprises and organizations.

Discussion
The discussion of this article suggests the results obtained and the unsubstantiated hypothesis that the border regions should have suffered more and could not quickly recover in a closed economy.
The results of the study are consistent with the data that the Russian border regions in 2021 lag behind the internal regions on key parameters. Thus, here on average, unemployment is higher and wages are lower [4].
The hypothesis that the border regions are recovering weaker has not been confirmed. On the contrary, the peripheral Russian regions, by many indicators, showed higher growth rates than the Russian Federation as the whole and compared with the internal regions.
In 2022, the border regions showed greater resilience than the internal regions. This is evident in the group of economic indicators. For some indicators, the minimum and maximum values are higher, such as the growth rate of average monthly nominal gross wages, the index of industrial production, and the turnover of retail trade at comparable prices. In the border regions, investment growth is noticeably higher.
Several factors can explain this state of affairs. First, all regions, both border and internal ones, were initially shocked by the closure of borders, as the level of openness of the Russian economy has increased significantly in recent years.
Secondly, cross-border cooperation in the Russian Federation has not been established to the extent that it has a significant impact on the regional economy. An exception is the enclaved region of the Kaliningrad Oblast, the internal security of which depends largely on deliveries through the territory of Lithuania, and customs procedures are required. In the Kaliningrad Oblast, the short-term economic decline was significant and the economy did not recover at the time of the analysis.
Third, the Russian economy has started the transition to a mobilization type of economy, where the structure of the economy has a special impact on growth (Webber at al., 2018). Thus, in the border Bryansk Oblast in January-November 2022, the growth of the index of industrial production increased by 11.3% due to the growth of mining, processing industries, as well as energy and water supply. The good harvest season has influenced the growth of agriculture in the border and internal regions.
Fourth, the border regions, in our view, have a «internal code of resilience», the nature of which lies in the qualities of the population that inhabits border regions. Historically, border regions have been inhabited to maintain border security, where fortresses and fortifications have been built.
Fifthly, the results showed that border and internal regions have significant intra-group differences, but such differences are higher in the border regions than in the internal ones.

Conclusions
The article conducts a study of resilience -the ability of border regions to restore, based on the example of the Russian economy. The assessment used a set of basic indicators that characterize employment, living standards and economy. The border regions lag socially behind the internal ones, but have generally shown a better ability to recover from the 2022 geopolitical crisis. The ability of the border regions to recover depends not only on the structure of the economy, the situation on the output, but also on the «internal code of stability» of a border region. In formulating policy measures, it is important to bear in mind that, in a trade-restrictive environment for the Russian Federation, many regions are being deprived of the use of the border factor as a competitive advantage. However, because this factor was previously poorly used in the border regions of the Russian Federation [10] proved that cooperation with neighboring countries in economic terms was not particularly active), it did not have a significant impact on social and economic change. Thus, both the internal and the border regions were primarily under a common national influence. In order to reduce regional differentiation, it is advisable to propose the strengthening of measures to equalize the socio-economic development of border regions, for which this problem is currently particularly acute.
The directions of further research are seen in the continuation of comparative analysis of border and internal regions under conditions of shocks and crises. It is advisable to recommend a monitoring of border regions, taking into account their specificities.