Small cities aren't the periphery—they're the foundation of economic resilience. Why betting on anchor towns should replace the agglomeration-driven growth model, according to an expert analysis.
6 min read
Share:
AI summary
Small towns and anchor settlements are becoming a key instrument of Russia's spatial policy, ensuring territorial connectivity and access to basic services for the population. Their economy is built around life-support functions and the budget sector, which requires targeted support taking into account local specifics. The development of small towns through a service economy and unique specialization can strengthen the resilience of the regional economy by 2030-2036.
Not the Periphery, but the Foundation: Small Cities as Core Economic and Social Hubs
Small cities and anchor settlements are, in essence, everyday Russia—not its "periphery." A small city is a settlement with a population of up to 50,000 people, representing what might be called a local life center where jobs, social services, the local economy, and infrastructure are concentrated, providing connectivity both with surrounding settlements and with larger centers.
The category of "anchor settlement" (hereafter referred to as ONP) officially entered the regulatory framework with the adoption of the new Spatial Development Strategy of the Russian Federation for the period up to 2030 with a forecast to 2036, according to which an ONP is a settlement whose development should contribute to achieving national goals and ensuring accessibility of social services for residents of adjacent territories. This is precisely why ONPs are becoming one of the key instruments of state spatial policy—a system of nodes that underpin settlement patterns, infrastructure, and the local economy.
This is especially important for Russia with its vast territory and dispersed settlement system. It is precisely small cities, district centers, towns, and rural centers that form the basic cells of spatial development. There are very many of them in the country (as of January 1, 2026—13,698 municipal entities), and it is through them that territorial connectivity, everyday population mobility, and access to basic services are ensured.
Why has attention to such territories increased precisely now? Because the previous model of spatial development leaned too heavily for too long on large agglomerations as the main "growth poles." As a result, large cities came to concentrate more than 40% of the population, more than 60% of enterprises, and nearly half of industrial output and investment, while the largest agglomerations account for about 29% of the country's GDP. At the same time, non-urbanized territories and small cities faced population outflow, job shortages, and infrastructure depletion.
The role of small cities today is threefold. First, they are life-support centers: through them, accessibility of social services is ensured. Second, they are connectivity centers: they "stitch together" space with roads, labor markets, and infrastructure. Third, they are points for retaining population and maintaining state presence. Where such a node is preserved, the territory itself is preserved as a space for life and economic activity.
To fulfill these functions, simply being included in the ONP list is not enough. Investment is needed, along with infrastructure modernization, employment support, and a clear system of municipal strategic planning.
The Life-Support Economy: Why Small Cities Depend on the Budget
The specificity of the economy of a significant portion of small cities and ONPs lies in the fact that their economic base is built not around large industry, but around everyday life-support functions. For most such settlements, this means schools, hospitals, social service institutions, municipal administration, trade, and consumer services—not large enterprises or a developed private sector.
As a result, the budget sector provides the main employment, while the local economic base remains limited. This is directly reflected in the level of subsidization, which for such territories is typically high.
This is precisely why small cities and ONPs are characterized by high dependence on intergovernmental transfers and federal project financing.
When One-Size-Fits-All Doesn't Work: Why Small Cities Need Targeted Policy
Overall, the direction of development programs for small towns has been chosen correctly, though their design doesn't yet fully account for territorial differentiation. Projects focused on infrastructure modernization, resource coordination, master plan development, and creating conditions for business largely address the needs of such territories.
However, the real specifics of small towns are far more diverse than universal measures assume. One town performs inter-district social functions, another depends on a single enterprise, a third operates within the logic of a border region or the Arctic, while a fourth is integrated into an agglomeration.
Under such conditions, universal mechanisms don't work with equal effectiveness. Moreover, they often require resources—a strong project team, co-financing, a ready investment package—that a significant portion of small towns simply don't have.
This is precisely why some existing support measures prove institutionally "heavy" and poorly applicable in practice.
Services as foundation, specialization as growth: a realistic development model for small towns
The most realistic approach appears to be not a single development scenario, but a differentiated one. For a significant portion of small towns, the foundation should be a service economy: education, healthcare, social services, retail, consumer services, local logistics, and cultural infrastructure. This is what creates normal living conditions and retains population.
But on top of this foundation, each town should develop its own specialization stemming from its unique characteristics. Where there's natural or cultural potential—tourism. Where there are strong ties to rural areas—agricultural processing and services for the agro-industrial sector. Where there are skilled workers or manufacturing traditions—niches in small-scale industry and crafts.
In other words, the service environment is the foundation, while unique competitive advantages are the superstructure. This is precisely what template strategies often lack.
As for instruments, targeted measures are most effective. First, federal and regional projects aimed at infrastructure development and environmental quality. Second, quality development strategies based on local specifics rather than formal templates. Third, participation from local community and business is critically important: without it, even sound decisions often fail to materialize.
A small town develops where infrastructure, specialization, and participation of local stakeholders converge.
Not drivers, but foundation: how small towns strengthen economic resilience
The prospects for small towns can be assessed as cautiously positive, but substantially varying by territory. Over the next 5–10 years, they're unlikely to become growth drivers in the same sense as major agglomerations. However, their contribution to the economy can grow—primarily as a contribution to settlement stability, population retention, employment, and territorial connectivity.
This is precisely the logic behind the new Spatial Development Strategy: the ONP system should become the framework for settlement patterns, infrastructure, and the country's economy, with environmental quality in these centers improving markedly by 2030–2036.
The economic role of small cities will strengthen not through universal industrial breakthroughs, but through stabilization of regional space. For some territories this means developing the service economy, for others—agricultural processing, logistics, tourism, or servicing investment projects.
In other words, the contribution of small cities manifests not only in output growth, but also in reducing the costs of spatial compression, maintaining economic activity in peripheral areas, and expanding access to basic services.
But this effect will only materialize under one condition: if support is targeted, non-formulaic, and aligned with local specifics. Where federal projects, quality municipal strategies, and genuine participation from business and society can be brought together, small cities will become an important factor in regional resilience and development. Where everything boils down to formal ONP status without economic substance, their contribution will remain limited. The key question for the coming years, therefore, is not about recognizing the role of small cities per se, but about the quality of practical implementation of this new spatial policy.
