This paper examines the historical and projected equity risk premium (ERP) for the Russian stock market in view of the narrowing investment horizons of market participants and the increasing reliance on domestic resources. The study aims to substantiate the long-term advantages of equity investments. The methodology employs a comprehensive approach, including ERP calculation based on three risk-free rate proxies, the adaptation of expected return decomposition models, and formalized benchmarking via artificial intelligence (AI) models. The findings reveal that over 10-year horizons, Russian equities maintain a resilient historical advantage over bonds. The forecast for the 2025–2032 period points to an expected risk premium of approximately 7% per annum, driven primarily by dividend yields and the potential for valuation recovery from currently distressed levels (5.5 x CAPE). AI-based analysis confirms a consensus forecast for a positive premium within the 5.9–6.7% range. The analysis concludes that current market undervaluation is largely driven by temporary cyclical factors. Extending the investment horizon to 10 years serves as a strategic tool to mitigate interest rate volatility. To foster a framework grounded in fundamentals for investment analysis and forecasting, it is essential to implement regular CAPE ratio calculations and integrate long-term macroeconomic forecasts into institutional investment strategies. These measures are intended to facilitate the transformation of domestic savings into stable sources of long-term capital and promote the capitalization growth of the Russian stock market.

This paper assesses the long-term sustainability of public finance systems in advanced economies by focusing on the relative amounts from the main sources financing government expenditure tax revenues and public debt as well as on the feasibility of achieving a balanced budget under existing expenditure commitments, economic structures, and debt levels. The aim of the study is to evaluate the capacity of advanced economies to finance public spending through current revenues and to identify a reasonable balance between fiscal and debt funding. The method employs quantitative analysis of general government budget indicators and public finance data derived from IMF and OECD statistical databases for 23 advanced economies. This empirical approach is complemented by comparative and historical analysis of the evolution of fiscal and monetary policy. The results suggest that, irrespective of the prevailing economic doctrine, government expenditures tend to grow faster than revenues, a situation that leads to persistent budget deficits and rising public debt. Conventional fiscal consolidation measures, such as expenditure cuts and tax increases, have produced only limited effects. In recent decades, fiscal sustainability has largely depended on a low interest rate policy; however, rising inflation and debt servicing costs since 2020 have significantly increased the vulnerabilities of public finance. The paper concludes that the continuation of current fiscal policies is likely to intensify risks to budget sustainability. It highlights the need for stricter expenditure control, particularly through the reduction of unproductive expenditures, in order to restore a positive primary balance. A reallocation of the tax burden from direct to indirect taxation is also considered as a viable policy option.

This article analyzes the most significant changes in Federal Law No. 44-FZ “On the Contract System for the Procurement of Goods, Works, and Services for State and Municipal Needs” over the past ten years and the risks they pose to the public procurement system. An analysis of consolidated procurement monitoring reports since 2019 reveals some unfavorable trends in public procurement including: a 40% increase in the number of unsuccessful tenders even though their total value remained steady (which indicates that tenders from small and medium-size suppliers became less competitive); 29% fewer tenders submitted on average at the same time as expenditures were cut in half and 70% more contracts were terminated even as their value increased by 40%. These trends were even worse for the construction sector. This indicates a correlation between the legislative revisions and decreasing competition in public procurement; however, demonstrating a causal relationship would require an analysis of non-legislative factors that might influence competition, which is beyond the scope of this article. Steps recommended to increase competition in tenders are: easing restrictions on participation of foreign manufacturers in procurement; reintroducing electronic auctions for construction projects; reducing the qualifications required for construction contractors under contracts worth up to 500 million rubles; prohibiting executive bodies from providing additional justifications for procurement from a single supplier or arbitrarily increasing contractual payments while the contracts are still being executed; and rejecting single contracts that cover both design and construction.

The study quantitatively assesses the impact of sanctions on the Russian economy from 2022 to 2024 by estimating the losses due to sanctions and identifying the factors that shaped GDP during this period. The assessment is based on a vector autoregressive model with exogenous variables (VARX). The model examines GDP and its key components: gross fixed capital formation, government expenditure, exports, and imports. The exogenous variables include the Brent crude oil price, quantitative indices of US and EU sanctions, and the unemployment rate. A counterfactual scenario was constructed assuming no further tightening of sanctions after 2021. This provided a comparison of the actual dynamics to the forecast trajectory and an assessment of the effects of external shocks. The main negative effect occurred in 2022, after which GDP shifted to growth. During 2023 and 2024, the key driver was the increase in gross fixed capital formation, while government expenditure provided additional but less significant support to output. At the same time, exports and imports remained below the forecast trajectory, reflecting the impact of sanctions on Russia’s foreign trade. Total losses attributable to external restrictions from 2022 to 2024 reached approximately 2.9 trillion rubles, or 0.7% of GDP per year on average. The largest negative effect occurred in 2022 and amounted to 3.4% of GDP, decreased to 0.8% in 2023, but turned positive in 2024 to reach 1.9% of GDP.

Shipments through third countries are one way to mitigate the adverse effects of sanctions on imports of machinery and equipment (HS 84–92). The hypothesis that such shipments emerged after 2022 is tested empirically in this paper by using a sample of CIS countries for which monthly trade statistics are available from 2018 through 2025. The sample includes three EAEU members Armenia, Kazakhstan, and Kyrgyzstan as well as Azerbaijan, Georgia, Moldova, and Uzbekistan. Regression estimates reveal a stable relationship between imports of machinery and equipment from third countries and their subsequent exports to Russia after February 2022 for EAEU countries. The accuracy of the regression-based approach is limited by the quality of official statistics, which are likely to underreport some shipments. In addition, the paper applies a gravity-based approach that does not require the use of data on exports to Russia. A counterfactual amount of net imports of machinery and equipment is inferred from GDP dynamics and then compared with actual net imports excluding shipments to Russia. The excess of actual net imports over the estimated level is interpreted as transshipments, whose flow via EAEU countries is estimated at USD 7.1 billion per year. Both approaches converge on two consistent conclusions. First, transshipments of machinery and equipment to Russia are evident only via EAEU countries; this indicates that transaction costs and simplified customs procedures are more important than the logistical advantages of other countries. Second, these shipments consist mostly of goods initially imported from neutral countries, a fact which suggests that transient trade is a way to reduce costs rather than circumvent sanctions. The paper’s analysis also shows probable systematic underreporting of Kyrgyzstan’s reexports, whereas the trade statistics of Armenia and Kazakhstan seem more reliable.

This article proposes a conceptual model for the impact of international transport corridors (ITCs) on world trade architecture under geoeconomic fragmentation. This model differs from previous approaches that focus on the economic determinants of transport costs in that it integrates the features of the new economic geography, global value chains theory, and an institutional approach so that geopolitical risks, institutional quality, and network connectivity effects are taken into account. Seven ways in which ITCs affect the geographical structure of trade are identified: creation of trade flows, reorientation of trade flows, production agglomeration, transformation of global value chains, institutional integration, network connectivity, and digitalization of logistics. Those factors are then included in an extended version of the gravity equation. As the world economy makes the transition to a polycentric model, the conclusion supported is that ITCs are evolving from a cost-reduction tool into an element of states’ economic security and an object of geopolitical competition between macro-regional blocs. These results may assist in devising transport system development strategies and foreign economic policy. The model’s applicability is confirmed through a pilot estimation derived from empirical data for Eurasian trade in 2024 using the Poisson PseudoMaximum Likelihood (PPML) method. The resulting estimates from among a cross-sectional sample of 28 directed trade pairs confirm the theoretically expected indications of the coefficients arrived at for transport connectivity, institutional quality, digitalization, and geopolitical risk variables. The article devotes particular attention to determinants of network connectivity and mitigation of bias caused by the endogeneity of infrastructure investments. The proposed approach establishes a methodological foundation for long-term forecasting of spatial integration effects under global market fragmentation.

This study of regional economic specialization sectors is a response to the need for effective regional policies aimed at allocating limited financial and labor resources, and at facilitating existing specialization while supporting both industries with potential as well as newly created activities. The specific purpose of this study is to identify and compare the absolute and relative degree of specialization in the Russian Federation’s regions. Determining the sectors in which these territorial entities specialize will clarify the unique competitive advantages that result from a region’s relative specialization and its way of organizing activities with respect to absolute specialization. Absolutely specialized industries were identified by comparing their share in that industrial category with the average value, while relative specialization was determined using the Hoover-Balassa specialization coefficient. This analysis indicates that the number of relatively specialized industries in each region exceeds the absolutely specialized ones by 11%, a figure which reflects the predominance of industries in the regions that make a significant contribution to the national rather than the regional economy. A comparative analysis of absolute and relative specialization permits an assessment of the importance of each activity for a region alongside its competitiveness nationally. The study proposes a typology of regions based on their level of economic specialization and the sectors which they should develop most intensively. Regions where the need for diversification is particularly acute were also identified. These findings should be valuable to regional and federal authorities in developing and implementing regional industrial policy.