The First- and Second-Nature Geographic Correlates of Federal Budget Transfers and Fiscal Dependence—Evidence from Russia and the United States.

This study analyzes fiscal federalism by examining how first-nature geographic features (such as physical distance) and second-nature factors (including economic development and infrastructure) influence intergovernmental transfers and subnational fiscal dependence in Russia and the United States from 2003 to 2015. The findings reveal that in Russia, both first- and second-nature geographic factors significantly affect the amount of federal transfers and fiscal reliance of regions, with more distant regions receiving greater transfers but also exhibiting higher dependence. In contrast, in the United States, only second-nature factors show some moderating effects, while physical distance does not systematically influence transfers or reliance. The study highlights how differences in federalism type—Russia's asymmetrical and discretionary system versus the U.S.'s symmetrical and formula-based system—shape these dynamics, and suggests that infrastructure and urbanization can attenuate the impact of geographic distance on fiscal relations.