Poverty Alleviation Strategies in the Russian Arctic Zone Regions

Abstract

The official approach to the definition of poverty is analyzed and its main problems are shown based on the case study of Russian Arctic regions. In order to identify a comprehensive picture of poverty in the regions, indicators that characterize this phenomenon from monetary viewpoint are compared. The paper proves the need to classify a range of strategies to reduce poverty in the Russian Arctic zone regions. The findings reveal that a sensible poverty reduction strategy should focus both on the quantity of growth (that is, on the achievement of a high growth rate) and on the quality of growth (that is, on who benefits from that growth). We calculated the growth-inequality trade-off indices under the assumption that the per capita income follows a two-parameter lognormal distribution. We used the interpolation method as an analytical tool, supposing the selection of an empirical distribution curve for the given income ranges by the OLS method and the calculation of the necessary values of the poverty based on the selected curve. The research demonstrates that the initial level of economic development and income inequality matters for the alleviation of poverty. It was proved that the poverty indicators in the relatively rich regions and regions with high inequality are more sensitive to changes in distribution than changes in average income. At the same time, the poverty level in the regions with low income and relatively low inequality stronger responsive to economic growth than to changes in an inequality.

DOI: 10.5901/mjss.2015.v6n1p32