Investment Multiplier in the Regional Economy as a Driver of Economic Development

The article examines the investment multiplier in the regional economy and its role as a driver of economic development. The analysis focuses on the regions of the Central Federal District (CFD) of Russia over the long-term period from 2000 to 2023. Theoretical foundations of the investment multiplier are discussed, and an econometric analysis is conducted to identify the relationship between fixed capital investment and gross regional product (GRP), taking into account a time lag. The investment multiplier in the Central Federal District is, on average, quite high, reflecting the strong interconnectedness of regional economies and the significant secondary effect of investments through employment, incomes, and inter-industry linkages. The nearly 2.5-fold variation among regions indicates that the «quality» of investments differs substantially. This gap confirms the existence of structural heterogeneity within the Central Federal District and points to the need for a differentiated investment policy: in industrial centers, the focus should be on supporting technological innovations; in agrarian ones – on developing processing, logistics, and infrastructure to enhance the multiplier effect. Overall, the study’s results confirm the basic hypothesis that the investment multiplier plays a significant role in regional development; however, the magnitude of this multiplier is not a universal constant – it reflects the economic reality of a specific region.