Report - UNDP Russia

is also associated with the fuel and energy sector. Highoil & gas prices enriched the federal budget, whichcould therefore afford to increase funding of the leastdeveloped regions. It is doubtful that increasingfinancial transfers have been used efficiently andapproaches to solving many social problems areclearly unsatisfactory, but growing GRP has enabledthe outsider regions to increase their HDI ratings, atleast nominally.Rating of the regions is inadequate forevaluating human development potential, becauseRussia’s regions vary tremendously in population,from 10.5 million down to 50,000 people. Populationdistribution across regions with different HDI ratingsgives a more accurate picture (Figure 2.1.2). This formof assessment shows Russia’s HDI progress even moreclearly: in 2007 one third of Russia’s population lived inhigh HDI regions, while the share just one year earlierwas below 25%. In five years the number of peopleliving in regions with low HDI (between 0.700 and0.750) has decreased by 10 times and there are nolonger any regions with ultra-low HDI (less than 0.700).Overall 2007 was a successful year forhuman development in Russia. But it should beremembered that improvements were mainly due toincreasing incomes, associated with pricemovements on international fuel and metal markets.The crisis that began in 2008 could upset this trend,due to falling prices on world markets. Lifeexpectancy indicators also grew in 2007, particularlyin the most problematic eastern regions, wherelongevity has been particularly low. More federalfunding for health care, including implementation ofthe ‘Health’ national project, helped to improve thesituation. However, from 2009 the financing systemhas been changed and responsibility forimplementation of national projects has beentransferred to regional administrations. Their fiscalcapabilities are not equal to the task, particularly inthe post-crisis environment.Forecasts in an unstable environment are notreliable, but it is very likely that the sustained growthof regional HDI ratings seen in 2007 will not continue.That growth smelt too strongly of oil.Figure 2.1.2Breakdown of Russia’s population between regions with different HDI ratings, %70605464 65582004200520062007Share of the population, %50403020291815 17 2233101 1 0637 70Less than 0.700 0.700-0.750 0.750-0.800 0.800-0.900 More than 0.900Human Development Index (HDI)45