Support For Single-Industry Towns As A National Project

Abstract

The state’s interest in supporting and further developing single-industry towns at the federal and regional levels has necessitated the creation of new "growth points", territories of advanced social and economic development (TASED), special economic zones (SEZ), science cities, technology parks, cluster formations in the Russian Federation as well as closed administrative-territorial entities (CATE) and single-industry towns. However, in Russia, this area of the economy does not receive due attention in regards to the creation and development of these territorial entities. The article studies the special economic zones of an industrial-production type (SEZ IPT) and TASEDs as one of the main ways of supporting the development of single-industry towns which are proposed at the state level, also the article considers the need to single out support measures for single-industry towns in one specialized national project. Currently, the territories of TASED aimed at the development of industrial production and SEZ IPT are the most significant and relevant for supporting single-industry towns, therefore, the scientific significance of the given research consists in analyzing the feasibility of the proposed measures to support single-industry towns, integrating them into a complex with the characteristics of a national project. There is a demand for a change in methodological approaches to collecting municipal statistics on single-industry towns and the development of an independent national project aimed at solving the socio-economic problems of single-industry towns.

Keywords: National projectssingle-industry townspecial economic zones of industrial-production typeterritories of advanced social and economic development

Introduction

At present, the state is interested in the development of single-industry towns. It could be explained by the fact that the socio-economic situation in the country is relatively stable, there has been an increase in revenues from the sale of oil and gas, and a strategic decision has been made to switch to an innovative development path. In addition, the political situation and the imposition of sanctions in 2014 accelerated the process of formation of new institutional entities.

The main aim of research is to analyze single-industry towns, the support of which contributes to the development of regions and the country’s economy as a whole, to justify the need to make a special national project aimed at solving the socio-economic problems of single-industry towns.

At first, the position of single-industry towns depending on the level of their socio-economic development within the federal districts was studied, namely, the single-industry towns included in the List of the Government of the Russian Federation were analyzed considering the federal districts where they are located. In the process of studying these single-industry towns, it was revealed that an analysis of existing documents aimed at their support and development is necessary. Such documents include legislative acts, Government decisions, programs of ministries and departments. The analysis of these documents showed that in order to support and develop the existing single-industry towns it was decided to single out territories of advanced social and economic development (hereinafter-TASED). However, it should be noted that the created TASEDs in their focus will probably duplicate the existing special economic zones of the industrial-production type (hereinafter-SEZ IPT). In this regard, many questions appeared about the appropriateness of the created TASEDs.

A review of existing studies of the SEZ IPT and TASED showed that in the works devoted to the SEZ IPT, the main attention is paid to various aspects of the nature and content of such zones, the goals of their creation and the problems of formation, functioning and development, as well as the effectiveness of residents’ activities. These directions of research are evident in the works by Kravchuk (2015), Kovaleva (2014), Rusakovich (2015), Tupitsyna (2015). The concepts and types of special economic zones, their contribution to the economy of the regions of the Russian Federation (Dyatlova & Yusupov, 2017) are analyzed, the problems of legal and administrative regulation that have a key impact on the inefficiency of the functioning of special economic zones are examined (Efremova & Ruiga, 2016). In the research on TOSEDs, the main attention is paid to the analysis of their essence and impact on the socio-economic status and subsequent development of the region (Polozhentseva, Nekipelov, & Klevtsova, 2018; Ulitskaya, Akimova, & Kokoreva, 2017; Ivanova & Antonov, 2017; Ivanova & Daneykin, 2019; Domracheva, 2018; Maliy & Gusev, 2018; Zagoruiko & Pechkina, 2017; Kolesnik, 2018; Kashina, 2016). Legal aspects of the creation of TOSED (Ivanenko & Biryukova, 2016), analysis of the impact of TOSED on the economy of individual administrative entities, for example, closed administrative-territorial entities (CATE) are also subjects for research (Puchkin, 2017).

Problem Statement

Based on a review of existing institutional entities, it was revealed that there is no comparative analysis of the feasibility of organizing TASEDs aimed at creating and developing industrial production with the already existing SEZs IPT that perform a similar function; there is no clear idea which single-industry towns need priority support; it is necessary to create the synergy of all directions of solving the difficulties of socio-economic development of single-industry towns into one specialized national project.

Research Questions

The article analyses the main characteristics of SEZ IPT and TASED, compares these territories, dwells on support measures for the development of single-industry towns at the federal and regional levels, and substantiates the need to integrate support measures for single-industry towns within the framework of a national project.

Purpose of the Study

The main objective of the study is to analyze support measures for single-industry towns, the need to integrate them into a national project.

Research Methods

Special economic zones of industrial-industrial type and territories of advanced social and economic development

Since historically SEZs were created earlier than TASEDs, we will first analyze the SEZs. In 2005, the first SEZs appeared on the territory of the Russian Federation (Federal Law, 2005). The following types of SEZs are available: industrial-production; technical-implementation; tourist-recreational; a port. Since TOSEDs are focused on industrial production, in the work a comparative analysis is carried out with the established industrial-production SEZs.

Industrial-production SEZs are territories located in large industrial regions of the country. Proximity to the resource base for production, access to the developed infrastructure and the main transport arteries are the main characteristics of industrial-production zones that determine their advantages. Placing production on the territory of industrial-production zones makes it possible to increase the competitiveness of products on the Russian market by reducing costs. In total, there are currently nine industrial production zones. The zone is active for 49 years. These include: SEZ IPT "Alabuga" (Republic of Tatarstan, Privolzhski Federal District), SEZ IPT "Lipetsk" (Lipetsk region, Central Federal District), SEZ IPT “Tolyatti” (Samara region, Privolzhski Federal District), SEZ IPT "Titanium Valley" (Sverdlovsk Region, Ural Federal District), SEZ IPT "Moglino" (Pskov region, North-West Federal District), SEZ IPT "Kaluga" (Kaluga Region, Central Federal District), SEZ IPT "Uzlovaya" (Tula region, Central Federal District), SEZ IPT "Lotus" (Astrakhan region, Southern Federal District), SEZ IPT "Stupino Square" (Moscow region, Central Federal District).

Despite the fact that SEZs have existed since 2005, the Government of the Russian Federation has decided to establish TASEDs. In 2014, a law was passed on the establishment of TASED (About territories of the advanced social and economic development in the Russian Federation, 2014). In total, 99 TASEDs were created in single-industry towns on the territory of 48 regions of the Russian Federation (Full list of preferential territories, 2019), which is currently significantly less than the total number of single-industry towns.

However, according to Federal Law No 473-FZ, the creation of TASED is possible only on the territory of single-industry towns included in categories 1 and 2, i.e. single-industry towns in which there are risks of worsening socio-economic conditions and single-industry towns with a stable socio-economic situation ("Requirements for investment projects …", 2019), which will lead to even greater stratification of single-industry towns, as well as significant reduction of living standards and exacerbation of social stability in single-industry towns of category 3.

Thus, the current legislation is aimed at attracting small and medium-sized enterprises in the territory of TASED, which can lead to a gradual improvement of the economy of single-industry towns.

Comparative analysis of special economic zones of industrial-production type and territories of priority social and economic development

TASEDs have a wider geography than SEZ IPT. They cover such federal districts as the North Caucasus, Siberian and Far Eastern ones. The creation of TASED in the territories of the Far Eastern Federal District and the Siberian Federal District is due to the fact that in the regions of these federal districts there are certain conditions for the development of export-oriented production.

The creation of TASED on the territory of the North Caucasus Federal District can be explained as follows. Firstly, until 2010, the territory of the Russian Federation was divided into eight federal districts, and in 2010 it was decided to form a new district - the North Caucasus Federal District, separating it from the Southern Federal District. Secondly, the Astrakhan agglomeration, having production potential, represents the most promising region of the Southern Federal District.

Regarding the main activities of the SEZ IPT and TASED, they are basically similar. TASEDs have a slightly wider specialization and include, for example, such industries as agriculture, woodworking and pharmaceutics.

It should be noted that the support is mostly offered to single-industry towns in a difficult socio-economic situation.

Findings

The federal level support measures for the development of single-industry towns

Currently, the following documents have been adopted: Decree of the Government of the Russian Federation of July 29, 2014, No. 709 "On the criteria for classifying municipalities of the Russian Federation as single-profile (single-industry towns) and categories of single-profile municipalities of the Russian Federation (single-industry towns) depending on the risks of worsening their socio-economic situation" (Resolution of the Government of Russian Federation, 2014); The List of single-profile municipalities of the Russian Federation (single-industry towns) dated July 29, 2014, No. 1398-r (List of single-industry towns, 2014).

Despite the existence of these documents, the development of single-industry towns and their support remain at the same level. In addition to the adopted documents, targeted support measures are being developed - Single-Industry Town Development Fund (hereinafter - SITDF) was created in 2014, as well support at the level of ministries and departments. As for the activities of SITDF, the question arises of selecting single-industry towns that receive financial support. So, for example, out of 319 single-industry towns included in the List in 2016, assistance was provided only to 64 single-industry towns from 34 constituent entities of the Russian Federation. It could indicate a low effectiveness of SITDF activities.

In addition to SITDF, various ministries and departments provide targeted support for the development of single-industry towns: for example, the Ministry of Economic Development of Russia proposes to introduce preferential taxation and a simplified procedure for exercising control and supervision. These measures might reduce the tax burden, but will not make the products of city-forming enterprises more competitive. The support of the Ministry of Industry and Trade of Russia is directed exclusively to single-industry towns which specialize in the automotive industry, thereby depriving other single-industry towns with a different specialization of any support for development. Support measures of the Ministry of Labor of Russia are aimed at advanced vocational training and internships (also in another locality) of employees under the risk of being fired, as well as those taken for permanent work. At the same time, similar support measures are not offered for already fired and currently unemployed workers of town-forming enterprises of single-industry towns. The Ministry of Agriculture of Russia offers reimbursement of part of the cost of paying interest on short-term loans, thus reducing the possibility of long-term development of single-industry towns, whose specialization is the agricultural industry. The "Fund for Assistance to the Reform of Housing and Communal Services" Group offers measures related to the support of housing and communal services. There is hope that the improvement of infrastructure will contribute to the gradual solution of the social problems of single-industry towns. The Industrial Development Fund provides targeted loans at 5% per annum to those single-industry towns that are engaged in the implementation of innovations and R&D results. It can be assumed that this support is mainly aimed at single-industry towns focused on the military-industrial complex. JSC "Corporation MSP" and "Vnesheconombank" Group provide assistance in obtaining loans, they are the guarantors of repayment of loans to partner banks and also provide repayable financing. This, in fact, is a measure of support for affiliated banks, but it is unlikely to lead to the development of single-industry towns. The measures provided by JSC "EKSAR" and JSC "ROSEXIMBANK" are aimed at supporting the export activities of city-forming enterprises of single-industry towns.

Analysis of existing support measures allows for the following conclusions: measures of state support are not systematic; in general, there is no clear strategy for the creation and development of single-industry towns; there is no analysis of the problem of reintegration of single-industry towns into the system of economic complexes of the Russian Federation; an assessment of the real status and possibilities of the labor potential of single-industry towns has not been done; there is no clear idea of what instruments of state support are acceptable and effective and for what types of single-industry towns they could be used.

The measures proposed by the Government of Russia to support the development of single-industry towns are not targeted, the role of small business is not taken into account; all this significantly slows down the development of these entities. It is worth noting that out of 86 regions, only four adopted local laws and legislative acts which more specifically spell out the definition of the term "single-industry town", offer targeted support measures, etc.

Support measures for the development of single-industry towns at the regional level

In the Samara region, the Law on state support of single-industry urban districts (The Law on state support of single-industry urban districts of the Samara region, 2011) was adopted. It is worth noting that specific measures that can actually be implemented in single-industry towns of the Samara region are not prescribed, only generalized measures are proposed, namely: to assist citizens of the region in obtaining professional training (including additional professional education), as well as employment of underage citizens at the age of 14 to 18 years. It is not entirely clear how to increase the number of vacant jobs and to support investment activities in the territory of single-industry towns of the region. As for the single-industry towns of the Tula region, a number of legislative documents were adopted there on preferential taxation of taxpayers-residents of TASED of the Tula region (Law of Tula region, 2017), the procedure for financing (together with SITDF) the construction and reconstruction of infrastructure facilities necessary for the implementation of investment projects in the cities of the region was developed ("Regulations on the order …", 2017).

To receive funding, a single-industry town should not only be included in the relevant list, but also receive a positive decision of the working group on the modernization of single-industry towns about the appropriateness of financial support. From the above-mentioned documents it is not entirely clear by what criteria the working group issues a positive decision. In the Kemerovo region, the "Law on single-industry towns" was adopted, which sets out the criteria for classifying a municipality as a single-industry town ("Regulations on the order …", 2017). In addition, the Law proposes that as a measure of state support for single-industry towns the state programs of the Kemerovo region should include activities stated in integrated investment plans for the modernization of single-industry towns. At the same time, it is stipulated that potential investors need to fulfill the following requirements: analyze the socio-economic situation of the single-industry town, make a scenario for the development of the single-industry town (and determine appropriate measures and projects), as well as describe the expected results of the modernization of the single-industry town. The analysis of normative and legislative documents shows that the regional government places the burden of studying and assessing the socio-economic situation of the single-industry town on the investor, which accordingly leads to an increase in the costs of the investment project and serves as an impetus to abandon investment in the region.

The need to agree on support measures for single-industry towns and ongoing national projects

After two years of implementation, the comprehensive program for supporting single-industry towns ceased to exist on January 1, 2019. Currently, the development of single-industry towns is not, in fact, a program or project. In addition, this program did not take into account national priorities. For example, the task of increasing labor productivity was not set, the guidelines for the development of small and medium-sized enterprises were not considered. To a certain extent, it resulted in a mass liquidation of businesses in single-industry towns in the period of 2016-2018. An analysis of support measures for single-industry towns showed that many of the measures envisaged did not take into account the particularities of single-industry towns. Of particular difficulty for the recipient of support measures in single-industry towns was the fact that more than 20 ministries and departments were involved in the provision of special preferential conditions and subsidies. Not all single-industry towns were able to take advantage of a set of support measures. As a result, the goal of the program - diversification and development of territories with a mono-structure of production - has not been fully realized.

Since January 1, 2019, 12 national projects are being implemented in the country. Their validity period is until December 31, 2024. The total amount of allocated funds is 25.7 trillion Rub. However, so far these national projects are not related to the task of diversifying the economy of single-industry towns. In addition, the Ministry of Economic Development does not have complete information about the situation in each particular single-industry town, about the primary measures in relation to territories that are different in status. This determines not only the need to improve methodological approaches to collecting municipal statistics, but also to analyze how to coordinate effectively the implementation of national projects and the development of single-industry towns. The authorities are discussing options for allocating quotas in each national project for single-industry towns. This approach is not reasonable. A serious study of the reasons for the ineffectiveness of previously implemented measures to support single-industry towns is required, as well as the classification of the existing list of single-industry towns according to the complexity of their situation at present, the justification of the consistency of the goals and mechanisms of national projects and the aims of diversification of the single-industry towns economy. In this situation we consider it necessary to develop a separate national project aimed at solving the problems of socio-economic development of single-industry towns. In this project, all 12 areas of work stipulated by national projects should be highlighted. The set of goals and objectives of such a project should take into account national goals, problems of mono-territories, peculiarities of their situation. Particular attention should be paid to attracting private investment in depressed single-industry towns, creating infrastructure for the formation of a special investment climate, improving the quality of life of residents of such territories. In this regard, the directions related to the improvement of social infrastructure in single-industry towns are required. To stop the outflow of population from single-industry towns, a national project aimed at their development should contain indicators of the quality of education, medicine, roads and other aspects.

Conclusion

The analysis of such entities as the SEZ IPT and TASED showed that the creation of "growth points" with the potential for accelerated development contribute to the emergence of new territories, such as territories of advanced social and economic development which will highlight mechanisms for stimulating innovative development in the "lagging" regions, regions with high potential for socio-economic development, as well as increase investment attraction and create new markets. The main difference between the SEZ IPT and TASED is that the main indicators of the SEZ are transport accessibility, the availability of ready-made infrastructure and the necessary resources for production; a key point in the creation of TASED is a single-industry town with a stable socio-economic situation. This explains the fact that they are created in those regions where there are already investment projects and potential investors, and that they have a wider geography and specialization than the SEZ IPT.

The study of these two types of territories raises the following questions: What is the expedience of creating a TASED in the presence of already existing SEZs? Why some of the single-industry towns, next to which the SEZ IPTs have already been created, become the basis for the creation of TASED (for example, the city of Tolyatti)? Can a resident located in the SEZ IPT become a resident of TASED? And if the answer is positive, will this resident keep any benefits given in the SEZ?

All these questions provide the basis for further research and deeper analysis.

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31 December 2019

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Cite this article as:

Nikonova, M. A., Ivanova, O. P., & Akinfeeva*, E. V. (2019). Support For Single-Industry Towns As A National Project. In & I. O. Petrovna (Ed.), Project Management in the Regions of Russia, vol 77. European Proceedings of Social and Behavioural Sciences (pp. 31-39). Future Academy. https://doi.org/10.15405/epsbs.2019.12.05.5