Social And Economic Development Of Russia’s Northern Regions: Lessons, Trends And Decisions

V.P. Samarina ,
A.V. Samarin ,
T.P. Skufina ,
S.V. Baranov

Abstract

Some modern features of socio-economic development of Russia’s northern regions have been highlighted by the authors in the article. The relevance of the carried out research has been determined by constancy of a fundamental problem consisting in a contradiction between strengthening of geopolitical, economic importance of northern regions of the Russian Federation and simultaneous aggravation of social and economic losses of these territories which are followed. It has been caused with the determining role of the North for Russia’s national economy, growth of various kinds of socio-economic problems in recent years and progressive process of depopulation of these few populated areas. The article reveals contradictions in the development of Russia’s northern territories at present stage. The difference in approaches of studying the problems of the North in foreign and Russian research has been shown. Development trends have been revealed. A number of main indicators of socio-economic development of regions completely or partially located in the North have been assessed. The specific weight of the northern regions in the All-Russian production of some types of industrial products has been presented. According to the results of the research, the directions of management have been proposed. It is possible to learn important lessons from the analysis of modern features of development of Northern territories. Comprehension of these lessons will help to solve the fundamental problem consisting in a contradiction between strengthening of geopolitical, economic values of Northern regions of the Russian Federation and simultaneous increase of social and economic losses of these territories

Keywords: Zone of the NorthRussia’s northern regionssocio-economic indicatorstrends of developmentmanagerial decisions

Introduction

The relevance of the carried-out research has been determined by constancy of a fundamental problem consisting in a contradiction between strengthening of geopolitical, economic importance of northern regions of the Russian Federation and simultaneous aggravation of social and economic losses of these territories which are followed.

The Arctic Zone of the Russian Federation is separately isolated among northern territories which will be coped and developed with a unified macroobject now. The macroobject is a system of basic zones development formed in each Arctic region. That is, for the first time in world practice of management of the Arctic territories the development of the Russian Arctic territory will represent, in fact, the unified project of planning through an interconnection of all federal, regional and branch measures of social and economic character at the points of planning, goal-setting, financing and realization. It is significant to note that the important place at the same time has to be allocated to a fund of support of projects of in-crease in natural and migration population increase in the Arctic. At the same time money of the fund has to be turned to the actions for population attaching and new labour power industrial intake on northern territories including the Arctic.

An innovative character of the research is predetermined by modern tasks of management demanding the development of the objective scientific theory of social and economic development of Russia North. The authors are members of several commissions of experts and northern territories development economic councils such as the council for improvement in investment climate in Murmansk region. They can reasonably claim that there is a demand of management for such theory. This demand is provided with the formulation of absolutely new approach to Russia’s northern territories management.

Problem Statement

It is possible to learn important lessons from the analysis of modern features of the Northern territories’ development. The comprehension of these lessons may help to solve the fundamental problem consisting in a contradiction between strengthening of geopolitical and economic values of Russia’s Northern regions and simultaneous increase of social and economic losses of these territories.

Qualitative transformation of social and economic space of the Russian North fell to the share of the Soviet Union. The problem was solved by socialist formation potentialities and effects of closure of the USSR economy. The socialist formation of the USSR model allowed authorities to concentrate all kinds of huge resources for the solution of strategic program tasks. The closure partially leveled the problem of raised fix costs. At the same time all effects of the North development (geopolitical, economic, branch, social) belonged only to the state.

In the modern formation authorities continues to work in the reality of effect of "northern price rise" of the economy and the social sphere functioning, but without an opportunity to level rise in price by appropriation of all effects of the development. That is there is divergence of objective processes limiting the activity of social and economic space of the North and the administrative purposes which have to strengthen this activity.

At the same time actions for the purpose of strengthening of this activity are limited with the second contradiction of administrative characteristic. It consists in a contradiction of reality of the declared orientation to the determinative development, right up to domination in budget filling, an innovative sector. The reality is that in the foreseeable future mineral and raw complex will still determine Russia’s competitive advantages in global economy serving as a budget donor, a basis of modernization and the consumer of high technologies, base for the determination of the directions of urbanized and migration processes. And finally it will predetermine the population placement in the northern territories.

The third contradiction of branch level is a contradiction between the importance of a mineral and raw complex of Russia’s northern regions and exhaustion of exploring reserve created in the period of the USSR including the resource base attractive to commissioning.

The fourth contradiction of business level is that heightened business costs in northern conditions determine raised standards to the environment predict-ability and stability. It contradicts variability and small predictability of global, national conditions.

On the whole, the theory of the North development from common sense positions is inconclusive. For example, now there is no theory capable of offering an effective mechanism of social relations in the course of functioning of basic zones development in Russia’s Northern zones etc.

Research Questions

Given the gap in the existing literature, research questions for the following study are

  • Are there any differences in studying of Northern territories between Russian researchers and foreign experts?

  • What is the specific weight of Northern regions in the All-Russian manufacture of some types of industrial production?

  • What are the trends of key indicators of social and economic development of Russia’s Northern territories?

  • What new managerial decisions will promote ensuring of social and economic efficiency of Russia’s Northern regions?

Purpose of the Study

The purpose of the study is to identify the characteristics of the current socio-economic development of the regions of the Russian Federation, wholly or partly located in the North.

The hypothesis of the study is as follows:

  • Russia’s northern territories play a large role in the country's economy;

  • there are some contradictions between northern territories role in the Russian economy and the ensuring of social benefits for northern population;

  • despite the similarity of objective natural factors of the northern territories, there are differences in the theory and practice of governance in Russia and other countries;

  • the problem of Russian northern territories effective management has not been resolved yet.

Research Methods

Object of the Research

We also assume that the northern territories will differ in a small number of cities with a high degree of urban population and low population density. The objects of our study are regions of the Russian Federation, whose territories as of 2018 are completely or partially located in the Far North (beyond the Polar Circle) or equivalent areas.

The territories completely or partly attributed to the North are shown in Figure 01 . The names of the regions are shown in Table 01 .

Figure 1: Territorial subjects of the Russian Federation completely or partially referred to the zone of the North (charted by the authors)
Territorial subjects of the Russian Federation completely or partially referred to the zone of the North (charted by the authors)
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There are 13 territorial subjects of the Russian Federation located completely in the zone of the North. There are 11 territorial subjects of the Russian Federation located partly in the zone of the North.

Specific weight of the northern regions in all-Russian production of some industrial products

The specific weight of the northern areas in All-Russian production of some types of industrial products in 2016 is presented in Table 1 .

Table 1 -
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Indicators of social and economic development of the northern regions

An assessment of socio-economic development of Russia’s northern territories will be carried out by means the following indicators:

  • 1 - gross regional product per capita (thousand rubles / person);

  • 2 - volume of investments in fixed capital per capita (million rubles / person);

  • 3 - share of the employed in small enterprises in the total number of the employed in the economy (% of total employment in the economy);

  • 4 - the proportion of employees (% of the economically active population);

  • 5 - the ratio per capita incomes and per capita subsistence minimum;

  • 6 - share of the population with incomes above the subsistence level (%);

  • 7 - total retail turnover per capita (thousand rubles / person).

According to the data from table 02 , we will estimate some indicators of socio-economic development of Russian regions, fully or partially located in the North in 2016.

Table 2 -
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Findings

Social and economic problems of the North in Russian and foreign research

The problematics of social and economic development of the North accommodation includes the whole range of economic, social, legal, natural and scientific problems considered in various aspects and on various reasons. At the same time in managerial economics of the northern territories, as well as in general in economic science, there are no rules allowing allocating the "correct" direction of the development, from the "wrong" one according to simple, clear and common reasons. In our case it is the direction of the development of Russia’s northern territories. The situation is become worse with foregoing feature that is at present the course of modern researches of the North concerning management problems consists of the conglomerate of practice of the USSR, foreign experience and enumeration of the most difficult management problems of modern development of Russia’s northern zones.

At the heart of social and economic researches of scientists from some countries having northern territories (Denmark, the USA, Russia, Canada, Norway, Iceland, Sweden, Finland) there is a number of general conceptual theses. Firstly, the necessity of preservation of quantitative and qualitative economic potential of the northern zone (Bartik, 2009; Rodrik, 2008). Secondly, the protectionism and compensation in economy and social sphere (Tötzer & Gigler, 2005; Trippl & Otto, 2009). Thirdly, the priorities of "nondestructive" social and economic development. These theses are reflected in such works as Andrew (2014), Bjornland & Thorsrud (2014) and Sabathil (2010).

In Russia, there are some differences in coverage of social and economic problems, policy and practice of the northern territories governance.

Taking into account stability of conceptual theses of the development and lack of contradictions among policy and management, most of foreign modern studies concerning problematics of social and economic development of the North are directed to the solution of applied problems (Agrawal, Cockburn, & Rosell 2010; Howe, Huskey, & Berman, 2014; Spence, 2014; Torre & Wallet, 2014).

Modern Russian research differs from universal ones. According to our research it can be explained with the following objective and subjective factors. Objective factors in many respects are caused essentially with other significance of the Russian northern territories for national economy. These territories in developed countries of the world are subsidized, whereas in Russia it is a basis of modern (for example, 93% of gas are extracted in northern territories) and future national income. Another objective factor is the level of social and economic development and rates of the North development in the period of the USSR exceeded practice of foreign countries. However, now in the northern territories abroad the economy and the social sphere actively develop, having outstripped the reserve of the USSR. In the Russian Federation primary working of results of the Soviet period infrastructure arrangement and social and economic activity reduction is pointed on a whole series of positions (Samarina et al., 2016a; Silin, 2015; Skufina еt al., 2015a).

The third objective factor (major). If foreign countries, having northern territories, have resources for further systematic development of the Arctic territories, then the Russian Federation, in case of further losses of infrastructure and human capital, will have no resources for the North reconstruction (Peshkova & Savon, 2016; Samarina et al., 2016b; Silin, 2015; Skufina еt al., 2015b; Zamaraeva, 2014).

Thus, the offered hypothesis concerning the fact that, despite the similarity of objective natural factors of the northern territories, there are some differences in the theory and practice of governance in Russia and in other countries, has been completely confirmable.

Assessment of the Northern territories’ role in Russia’s economy

The economy of the northern regions is aimed primarily at the extraction and primary processing of natural resources. As can be seen from Table 01 , in 2016, 87% of Russia's total oil production, 93% of gas, and 61% of timber were produced in Russia’s northern regions. The authors monitor the presented indicators for a rather long period (Samarina еt al., 2016a; Silin, 2015; Skufina еt al., 2015a). The correlation of the observed data with the previous period shows that these relations are fairly stable.

Thus, the offered hypothesis concerning the fact that Russia’s northern territories play a large part in the country's economy has been completely confirmable.

Revelation of contradictions between the Northern territories role in Russia’s economy and providing social benefits for Northern population

On average in Russia the gross domestic product per capita was 472.2 thousand rubles per person in 2016. As can be seen from table 02 , this indicator scattering in regions completely located in the North is very high: from 164.7 thousand rubles per person in the Republic of Tuva up to 5 821.6 thousand rubles per person in the Nenets Autonomous Area. That is, a gap between the most and the least successful regions is more than 35.3 times. Except the Republic of Tuva, the gross domestic product per capita in the Republic of Karelia and in the Arkhangelsk region is lower than the national average one. Taking into account high cost of living it is an extremely negative fact. Simultaneously with these regions there are ones with very high indicates. The Yamal-Nenets Autonomous Area (3,670.3 thousand rubles per person), Chukotka Autonomous Area (1,323.2 thousand rubles per person), Sakhalin Region (1,575.6 thou-sand rubles per person), Khanty-Mansiysk Autonomous Area (1,852.3 thousand rubles / person) are the leaders among them These are regions that have developed oil and gas production and processing business.

Our research has shown that they are attractive for population migration (Skufina еt al., 2015b). Regions partially located in the zone of the North are less differentiated. The indicator varies from 202.6 thousand rubles per person in the Republic of Buryatia to 632.2 thousand rubles per person in the Tyumen region. That is, the gap between the most successful regions and the least successful ones is 3.1 times. Values of indicators approach to the average Russian value.

On average, the volume of investment in fixed capital per capita in Russia is 93,725 thousand rubles / person. Among the regions completely located in the North, only the indicators of the Republic of Tuva, the Republic of Karelia and the Arkhangelsk region are lower than national average one. These are the same regions that are backward in terms of "gross domestic product per capita". The rest of the regions successfully invest in fixed assets and it pro-vides material and technical potential for the development of the northern territories.

The employment in regions completely or partially located in the North is high. There is one more feature of the northern regions. In the most economically developed regions the employment in small enterprises not directly related to the extraction and processing of minerals varies up-to-date 3-6% in the total number of employed in the national economy. In Russia this value is on average 12.18%. Thus, the population employment of the northern regions is less diversified. In case of dismissal it is more difficult for people to find work. It "enslaves" people and gives an employer an opportunity to worsen working conditions and cut wages.

The well-being of the population of the Russia’s zone of the North is directly indicated with the ratio of average per capita incomes and cost of living. The higher it is, the greater well-being is. The leaders according to this indicator are all the same oil producing regions such as Nenets Autonomous Area (3.28 times), Yamalo-Nenets Autonomous Area (4.82 times), Khanty-Mansi Autonomous Area (4.14 times), Tyumen Region (3.48 times). Among regions – outsiders are economically undeveloped the Republic of Tuva (1.53 times), Kamchatka Territory (1.95 times), the Republic of Buryatia (1.73 times) and the Republic of Altai (1.29 times). It is natural that the share of people with upper middle-income is the lowest in these regions.

The total volume of retail turnover per capita in the Russian Federation is 192,982 rubles per person. The analysis shows that the dispersion of this indicator in regions completely located in the North is very high as well - from 67,775 rubles per person in the Republic of Tuva up to 274,476 rubles per person in Sakhalin region. That is, the gap between the most successful regions and the least successful ones is more than 4 times. Regions partially located in the zone of the North are also less differentiated according to this indicator which varies from 105,669 rubles per person in the Republic of Altai up to 227,659 rubles per person in Tyumen Region. That is, the gap between the most successful regions and the least successful ones is 2.2 times. Values of indicators approach to the average Russian value.

The extreme heterogeneity of social and economic development has been revealed. A clear link between social and economic characteristics of the regions is the regularity of northern territories development confirmed with the length of temporal series of studies and the compatibility of a large number of criteria. The regions demonstrated higher economic positions differ in high social indicators as well. Accordingly, they are the most attractive in a migration plan and the population from other northern regions is resettled in such economically and socially developed ones.

Consequently, the state should take part in the economy of the North in order to redistribute revenues from raw materials sale among inhabitants of the northern regions, thereby ensuring a high standard of living for all northerners. At present time the degree of state support for the northern territories is insufficient despite its declaring in many official documents.

Thus, the offered hypothesis concerning the fact that there are some contradictions between the role of northern territories in Russia’s economy and the ensuring of social benefits for the population of the North has been completely confirmable.

Conclusion

In conclusion, it is necessary to note that the importance of the northern territories will only grow. For example, the consulting company Rustad Energy determines that by 2020 the territories of the North will have taken 3% of the world's hydrocarbon production, and by 2035 its share will have grown to 9%. Thus, the development of the northern territories wealth is a world trend in the foreseeable future. For Russia, it is a day-to-day and strategic task for the future related to both land deposits and offshore projects of the Russia’s northern territories in the medium and long term.

The uneven natural resources distribution, the depletion of reserves, the reduction of the opportunities for discovering new deposits in favorable conditions and, at the same time, the growing need of the world economy for minerals inevitably strengthens the struggle for resources. The pressure of this reason has already led to territorial losses of Russia’s zone of the North. So, according to the agreement of 2010 concerning the delimitation of the "gray zone" in the Barents Sea with Norway, Russia lost some territories rich in hydrocarbon raw materials and bio resources forever. Territorial losses in the northern zone are Russia’s geopolitical and economic losses. Economic losses are not only visible, direct losses of stocks, indirect losses are important as well. The current situation strengthened Norway’s position for long. Norway is Russia's main competitor in the European oil and gas market. At the same time, the largest Russian Stockman project was curtailed and it made difficulties for gaining access to Western offshore mining technologies, etc.

At the same time, it is actual to disclose the forecast dynamics of the northern zone within the scope of concretizing the multifold tasks of federal government forming a new management approach – a spatial one. This approach was most extensively embodied in the idea of singling out a macro object – Arctic Zone of the Russian Federation among Russian northern territories. The authors are the members of working groups which formed and analyzed numerous versions of the draft federal law "On the Development of the Arctic Zone of the Russian Fed-eration" (hereinafter - the Draft Law). This bill was planned as a kind of "Arctic Code", which included management of a wide range of development problems in Russian northern territories. However, on January 31, 2017 the version of this bill was rejected and sent for revision in order to modify the purview content on the Arctic, focusing only on the mechanism of support zones formation. At present the bill (as of 08.11.2017) is narrow-profile revised in accordance with an instruction. It regulates only relations that evolve from forming and functioning of the supporting zones.

The social aspect of management is also determined not only with the regional and sectoral levels, but also with the global one. The regions of the Russian North have need for effective management not only at the sectoral and regional levels, but above all at the federal one in order to carry out their successful social and economic development. Thus, the authors have confirmed the last hypothesis of their study concerning the fact that the problem of Russian northern territories effective management has not been resolved yet.

Acknowledgments

The study includes research findings under the project of the Russian Foundation for Basic Research and the Ministry of Economic Development of the Murmansk Region No. 17-46-510636 “Unevenness of socio-economic development of cities and regions of the European North of Russia: trends, patterns, forecast of impact of bearing zones of development of the Arctic” (results of the situation analysis) and the results obtained in the performance of the state task of Federal Research Centre Kola Science Centre of the Russian Academy of Sciences (management issues).

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Publication Date

20 March 2019

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https://doi.org/10.15405/epsbs.2019.03.39

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Cite this article as:

Samarina, V., Samarin, A., Skufina, T., & Baranov, S. (2019). Social And Economic Development Of Russia’s Northern Regions: Lessons, Trends And Decisions. In V. Mantulenko (Ed.), Global Challenges and Prospects of the Modern Economic Development, vol 57. European Proceedings of Social and Behavioural Sciences (pp. 388-398). Future Academy. https://doi.org/10.15405/epsbs.2019.03.39

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