EXPANSION OF E-COMMERCE AMID EXTERNAL SHOCKS: REGIONAL DRIVERS AND CONSTRAINTS IN RUSSIA

Abstract

E-commerce is growing rapidly, driven by the adoption of advanced digital technologies. In the early 2020s, Russia’s online retail market was among the largest and fastest-­growing in the world, despite external shocks. However, rigorous evidence on the regional determi­nants of this growth remains limited. This study therefore aims to identify the main drivers and constraints of e-commerce expansion across Russian regions during 2019—2024. The theoretical framework is based on diffusion of innovations theory. The empirical analysis uses generalised method of moments (GMM), fixed-­effects models and principal component analysis (PCA), and incorporates a spatial weights matrix. First, the results highlight the im­portance of rising consumer demand: a 1 % increase in regional income per capita is asso­ciated with a 0.67—0.78 % increase in online retail turnover per capita. Second, e-commerce is more developed in regions with a better-­educated workforce, possibly reflecting their grea­ter use of financial and other online services. Third, the findings demonstrate the importance of large markets and favourable economic and geographical conditions, highlighting the need to reduce transport and logistics barriers, particularly through the development of warehouse networks. The study also provides new evidence of the significant role of local entrepreneurial activity, strengthening the case for improving the business environment to support e-commerce development. No direct adverse effects of recent external shocks are detected. The Moscow and St. Petersburg agglomerations, both hotspots of innovation, are identified as centres of e-commerce expansion, consistent with the theoretical framework. Mountainous areas of the North Caucasus lag substantially behind, owing to the high proportion of rural settlements where internet access is limited and trust in online payments is low. Regions of the Far East and the Arctic, meanwhile, face logistical constraints that hinder e-commerce expansion. These findings underpin the recommendations presented in this study.