Spatial Differentiation and Market Potential of the Regions: the Case of Russia

Abstract

This paper investigates spatial differentiation between Russian regions in the context of business location factors.First, we selected a number of variables to describe key factors of business location in the regions. They includemarket potential of the region’s retail markets, fixed asset investments, the number of economically activepopulation, and average nominal monthly wage in the region. Segmentation of Russian regions on the basis ofthese variables allows comparison and selection of the regions from investors’ standpoint. To segment Russianregions on the basis of the selected variables we use self-learning neural networks allowing assessment ofseveral variables with the lack of some input data. Second, we classified Russian regions based on their marketpotential indicators and represented the results on the map of Russia. We presented a structure of Russianregions which accounts for spatial differentiation of the market potential.