Index of multiple deprivations as a methodological basis for combating poverty in depressed regions (foreign experience)

Ermakova Eka ORCID: 0000-0001-8464-9605 PhD in Economics Associate professor, Department of Theoretical Economics and Economic Security, National Research Ogarev Mordovia State University 430004, Russia, respublika Mordoviya, g. Saransk, ul. Mordovskaya, 35, 195, kv. 78 eka-tsulaya@yandex.ru Other publications by this author

Igonina Alina Aleksandrovna 5th year student of specialty 38.05.01 "Economic Security", Department of Theoretical Economics and Economic Security, National Research Ogarev Mordovia State University 430009, Russia, respublika Mordoviya, g. Saransk, ul. Volgogradskaya, 114, kv. 79 igonina-alina@mail.ru

Introduction

Socio-economic unevenness in the development of regions is expressed in the heterogeneity of the economic space, the concentration of factors of production in the so-called poles of growth and the exclusion of depressed territories, the latter of which are characterized not only by low production volumes, but also, as a rule, low standard of living, depopulation processes and social vices ^[1].

Thus, according to the rating of competitiveness of the regions of Russia – 2021, there are eight regions in the country – poles of growth (Moscow, St. Petersburg, Moscow Region, the Republic of Tatarstan, Sverdlovsk Region, Krasnoyarsk Krai, Krasnodar Krai, Khanty-Mansi Autonomous Okrug). These subjects of the federation (8 out of 85) create almost half of the country's GDP and concentrate 32% of the economically active population ^[2]. Natural, human, and monetary capital is concentrated in these regions. The leading regions demonstrate a strong gap in key development parameters, including the standard of living – one of the key national interests of Russia.

The development of lagging/depressive territorial systems occurs according to a certain trait or group of features (often a manifestation of the "track effect") ^[3]. The presence of such unevenness is a characteristic feature of economic development not only at the national, but also at the regional level.

Modern researchers offer different approaches to solving the current problem of imbalances in territorial development. The difference between the methods lies in the set of tools used. The first approach is based on the use of state mechanisms of influence on territorial development (radical transformations are instruments of direct influence) ^[4], the second is based mainly on a market mechanism based on competition of territories, the principle of self–realization of all levels of regional and territorial socio–economic systems (adaptation is indirect regulation) ^[5], one of the promising The directions are considered to eliminate the lag in the development of the region based on the concept of "smart specialization" ^[6]. In our opinion, the calculation of the index of multiple deprivations can be an effective tool in solving the problem of lagging behind the territory in terms of the standard of living of the population.

 The main part.

Territory analysis based on the multidimensional poverty measurement methodology is becoming more widespread in developed countries. This analysis is based on the study of not only the income deficit of the population, but also their material deprivations (deprivations), which are manifested in limited opportunities to meet basic human needs in housing, food, clothing, shoes, education, healthcare, etc. ^[7].

The method of assessing deprivation allows a deeper assessment of the situation in the sphere of the standard of living of the population, since it considers the satisfaction of an individual's needs not only from a financial point of view (assessing monetary poverty), but also the material potential available to the individual ^[8].

This methodology includes a set of those indicators that are available to the majority of the population, that is, more than 50%, the absence of which is called deprivation: the ability to cope with financial difficulties in case of unforeseen expenses; the ability to spend a week's vacation away from home at least once a year; the absence of arrears in the payment of a loan, loan, rent, utility bills; consumption of meat, chicken, fish dishes (or their vegetarian equivalent) at least every other day; normal heating in housing; washing machine; color TV; telephone; personal car. This list has been used for many years to build an index of material deprivation and poverty monitoring. A household is considered deprived if three or more items are missing from the above list ^{[9, 10]}.

The Multiple Deprivation Index (ID) is a set of relative deprivation indicators for regions based on seven different types of deprivation taken into account in the integral indicator.

The multidimensional approach to the definition of poverty takes into account not only the lack of financial resources of an individual, but also the presence of restrictions in his access to education and health care, as well as difficulties related to housing conditions, nutrition, health and other vital needs.  The subindexes forming the integral index of multidimensional deprivations represent the following system:

– the income deprivation sub-index measures the proportion of the population experiencing low-income deprivation. It covers the entire working-age population, regardless of the state of employment.

– the sub-index "employment deprivation" demonstrates the share of the working-age population in the region, involuntarily excluded from the regional labor market.

– the subindex "de-regulation of education" measures the degree of accessibility of educational services, advanced training, professional retraining of personnel in the region. It is calculated separately for two population groups: children and youth, the able-bodied population.

– the subindex "deprivation of health and disability" reflects the risk of premature death and deterioration of the quality of life due to poor physical or mental health of an individual as a result of the unavailability of high-quality qualified timely medical care.

– the criminal environment sub-index shows the risk of personal and material victimization at the local level.

– the "living environment" sub-index measures the quality of the local environment.

– the subindex of income deprivation affecting children measures the proportion of all children aged 0 to 15 years living in low-income families.

The construction of Deprivation Indices as a whole consists of the following seven stages. These stages meet the goals of Index determination, data processing, compilation of Multiple Deprivation Index and summary indicators. These steps are described in Figure 1.

 Figure 1 – Stages of building the index of multiple deprivations

 The method of calculating this indicator is somewhat specific. Initially, the data provided for its area is selected. Then the number of indicators is summed and divided by the denominator of the population to create a domain estimate for each data zone. For healthcare, education, and housing, indicators are ranked, converted to a normal distribution, and then combined using weights obtained from factor analysis to create a domain estimate (logical territorial cluster). The domain score is ranked to create a domain rank. The rank of each domain is standardized and transformed into an exponential distribution, combined using weights, ranked from the most disadvantaged to the least disadvantaged to create a final index of multidimensional deprivation.

The effectiveness of the methodology for calculating the index of multiple deprivations can be considered on the example of the regions of the UK, in which the index is calculated by local authorities to identify "pain points" of regional development. 

For the UK, steadily lagging regions from other local territories have been an urgent problem for the last decades.

The UK plunged into a technical recession for the first time in 11 years, due to a drop in GDP of more than 5% due to the crisis caused by the coronavirus pandemic, as well as the exit from the European Union, which did not completely affect the country's economy. At present, after a significant drop in the dynamics of economic growth and the need for compensation for losses due to the UK's withdrawal from the EU, the task of choosing more effective ways to increase economic activity, putting depressed regions on a new path of development is increasingly urgent.

Depressed regions are one of the key and significant problems for the UK. The term "depressed region" was first mentioned in this country to characterize the development of individual territories that most felt the effects of the Great Depression (crisis). That is why, relatively earlier than other countries, a regional policy aimed at supporting the smoothing of territorial development imbalances began to be implemented here. Among such territories, mainly old industrial regions of Northern Ireland, Wales and industrial zones of Scotland were identified, which specialized in "outgoing" industries with decreasing returns. The peripheral position of these territories also aggravated their economic situation, since remoteness from the center was accompanied by a poor investment climate (Table 1).

 Table 1 – General characteristics of the depressed territories of Great Britain in 2020

 The state, in an effort to provide targeted support to depressed regions, pursues not only social goals, i.e. leveling the income level of the population living in backward regions. Currently, depressed regions are considered as a source of economic growth due to the presence of a significant amount of unused or inefficiently used resources. In this regard, the support of depressed regions is considered not so much as an element of social policy in the region, but as an element of the policy of stimulating economic growth in the country through the social sphere.

Territorial authorities monitor the situation in the sphere of living standards from the perspective of the hardships experienced by citizens living in a certain territory (Table 2).

 Table 2 – Values of sub-indices of multiple deprivation of individual territories of the UK in 2020.

 As the table above shows, the population of Wales is experiencing deprivation in three areas of life – security, housing, habitat. Using the methodology of constructing a general index, the government of the country develops and implements programs based on the pain points of the most deprived region.

In general, the development of depressed regions is stimulated with the help of direct financial support in conjunction with regional development programs and the elimination of identified deprivations, the inclusion of deprived territories in the process of socio-economic development; special funds are created that have a purpose – the elimination of this or that deprivation.

The new paradigm of regional policy is based on market mechanisms and is aimed at stimulating endogenous growth by maximizing the use of the resources of depressed regions and synergy with the resources of other regions. For example, Regional Development Agencies have been established in the UK, which are subordinate to the central government, but function independently of line ministries ^[11]. Agencies are managed by boards of directors, which include representatives of business and regional organizations (trade unions, local authorities, educational institutions).

As noted earlier, the UK's withdrawal from the EU has negative consequences for the development of depressed territories – the latter have lost financial support from EU structural funds ^[12]. 

Territorial programs of Great Britain for 2014-2020 they cover a whole range of tasks to stimulate regional development, taking into account the identified problems, paying special attention to deprived territories. A feature of the UK's regional development programs is a focus on indirect market mechanisms for regulating development and avoiding the formation of hotbeds of exclusion from the process of socio-economic development.

 Conclusions and conclusion.

In our opinion, the attention of the regional authorities of the Russian Federation in terms of solving the problem of poverty should focus not only on monetary, but also, first of all, on multidimensional poverty in order to eliminate the problems of the regions in the sphere of living standards and ensure the inclusion of all citizens in the development processes. From this point of view, it may be advisable to calculate the index of multidimensional deprivation based on the best practices of developed countries. On its basis, pain points of specific territories can be identified (for example, residents of northern regions may experience deprivation in infrastructure, the population of central Russia and industrial zones suffers deprivation in relation to environmental living conditions, etc.). With the help of this index of multiple deprivations, programmatic measures to reduce imbalances in the territorial development of the Russian Federation can also be justified..