Agglomeration settlement systems are the basis for the innovative development of national economies. The reasons for this are agglomeration effects, which are represented by economies of scale, localization effects, and urbanization effects. However, some of the largest agglomerations in Russia and the world are facing a slowdown in economic growth, lagging behind the growth rates of medium and small agglomerations. This situation is due to a number of disagglomeration effects. Their presence is caused by exceeding the optimal size of agglomerations, the presence of external effects, and institutional problems. Purpose of the article: identification and grouping of disagglomeration causes in the economic sphere, as well as generation of proposals for their solution, which will remove the limitations of agglomeration development. Research methodology: problems were identified when studying various sources of information (academic articles of scientists, interviews of city and regional officials, strategic and territorial documents). Three groups of agglomeration problems have been formed. The problems of the economic group are considered to indicate their causes, examples are given, the consequences of solving or ignoring the problems. A total of 30 agglomeration problems were proposed, of which a detailed analysis was carried out for 13 economic problems. The conducted research can be useful for officials involved in managing agglomeration systems and large cities.
Keywords: Agglomeration developmentagglomeration managementagglomeration problemsinter-municipal cooperationterritorial interaction
The emergence of negative effects from the concentration of population and resources in the agglomeration is the reverse side of the positive agglomeration effects that stimulate this concentration. Therefore, scientists considering ways to increase labor productivity within the framework of agglomeration settlement systems inevitably raised the issue of agglomeration problems. First of all, it should be clarified that in this article, agglomeration will mean the concentration of the population in a large settlement, or the concentration of the population in a system of interconnected nearby settlements (the terms agglomeration and metropolitan area are equivalent in the second case). This approach to understanding the term lies within the European tradition of regionalism (Christaller, 1966). The growth of a large city and the gradual folding of agglomeration around it leads to a splicing of problems from the concentration of resources in a large city and from the fragmented management of agglomeration settlements. This provides a basis for considering these issues together. Classical works in the field of studying agglomerations are the works of Marshall, Weber, Richardson, and others. With an excessive concentration of resources at one point, a disagglomeration effect occurs. According to Weber, the disagglomeration effect is a situation in which it is no longer profitable to further concentrate production, but it is profitable to disperse it (Weber, 1929). This effect manifests itself in many sectors of the economy (Weber, 1929). The reason for the disagglomeration effect is the rise in land prices, the rise in wages for workers in the center of the agglomeration. The rise in land prices in the agglomeration may be caused by the increased demand for it from commercial enterprises, with which industrial enterprises cannot compete in terms of profitability (Marshall, 1920). This pushes entrepreneurs to look for cheaper resources, which leads to city sprawl. However, urban sprawl leads to transport problems in the form of increased distances to be covered. At the same time, the continued concentration of resources leads to other transport problems, namely, to an increase in the time spent on overcoming the former short distance within the city (traffic jams are formed). Accordingly, a stalemate arises. This situation is typical not only for transport in the agglomeration, but also for many other areas of activity.
Another reason for the disagglomeration effect is poor governance (Richardson, 1977). It can manifest itself both for an agglomeration in the form of a large city and for an agglomeration in the form of a system of settlements. The presence in the agglomeration of several settlements at once with their own leadership (fragmentation of management) leads to numerous negative external effects (externalities). It is difficult for municipalities to agree with each other on the internalization of these externalities. As a result, agglomeration problems have not been solved for decades. Among modern researchers of agglomeration problems and their solutions are Combes et al. (2019), Börjesson et al. (2019), Moreno-Monroy et al. (2020), Duranton and Kerr (2015), De la Roca and Puga, (2017) and others.
Agglomeration problems are, in a sense, “market failures” that need to be managed. Typically, “market failures” within an agglomeration include externalities, the provision of public goods throughout the agglomeration. The intervention of public authorities, in particular of municipalities, should eliminate these problems. However, here, in turn, an ineffective functioning of institutions, called “state failures”, is possible. In agglomerations, they manifest themselves in the form of defending the interests of the bureaucracy, asymmetric information. Solving the problems of "market failures" and "state failures" can lead to a more optimal state within the agglomeration system. In particular, the concentration of resources in a large city will decrease due to the development of the periphery of the agglomeration, but bureaucratic barriers will not be able to destroy the resulting effect.
Research questions in this article:
1. What problems of the development of the agglomeration can be identified in the economic, political and social spheres?
2. What tools for solving specific agglomeration problems exist? What can be offered in the areas of distribution of powers, finance? Is it advisable to expand the jurisdiction of the central city to the rest of the metropolitan area?
3. How will the choice of this or that decision affect the development of the agglomeration? Will these solutions result in new problems that are worse than the previous ones?
Purpose of the Study
The aim of the study was to identify economic, social, and political problems of the development of the agglomeration. Due to the limited space of the article, the focus is on economic issues. To achieve the goal, several tasks were set. First, we need to give a description of the problems, the negative consequences of ignoring them or making the wrong decision. When solving this task, it is important to take into account the interests of not only the municipal, but also the regional levels of government, which are involved in the management of the agglomeration. Secondly, it is necessary to offer several options for solving the identified problems. Third, it is necessary to indicate the possible positive and negative consequences of these decisions. Analysis of agglomeration problems and solutions is carried out advantage for situations typical for Russia.
Various sources of information were analyzed to identify the most important agglomeration problems. Were used academic articles by scientists, strategic and territorial documents for the development of territories, interviews with officials. Further, all identified problems were grouped into three areas. As a result of mental modeling, the consequences of different solutions to each problem were evaluated. Of all the identified agglomeration problems in this article, due to the limited scope, a detailed analysis is presented only for economic problems. There is no quantitative analysis in this work. This is due to the fact that for its full-fledged implementation, it is important to first establish the logic of the formation and solution of agglomeration problems (which is done in this article).
As a result of the study, there were 30 agglomeration problems. They are grouped by spheres: 13 economic problems, 10 political, 7 social (Table
Another solution is to reform the tax system. It is logical to transfer some taxes to the municipal level. For example, in Russia the tax on property of organizations is fully credited to the regional budget, which reduces the economic incentives of municipalities to attract investment.
Territorial changes: for example, the unification of related territories.
An experiment in the tax system: citizens pay their own personal income tax at the place of registration (as in the USA). It is quite easy to track debtors, since debt can be calculated by the amount of social payments paid by the employer.
Solution through digitalization: the Federal Tax Service has data on personal income tax, as well as the place of registration of the payer. There are no technical difficulties in transferring the tax received by the Federal Tax Service at the place of registration.
Transfers: the region can collect information on personal income tax and compensate for the shortfall in income through transfers.
An example of an industry disparity is the presence of single-industry towns. The economic development of a monotown is unstable and depends on the development cycles of a particular industry. Diversification scatters resources into other industries, which reduces the competitiveness of the main industry of the monotown. The positive effect of diversification is that the sustainability of the city's development increases.
An example of a striking territorial disparity is the formation of an anthropo-desert. The population from the region is being drawn into the agglomeration, the region becomes deserted. In an agglomeration, natural growth is insignificant or negative, and the agglomeration can become the “gravedigger of the nation”. These processes can occur on the scale of an entire state, when the metropolitan agglomeration pulls all resources onto itself (for example, Moscow from the rest of Russia).
The unbalanced distribution of population and jobs in the agglomeration leads to an increase in traffic flows. The existing infrastructure is failing; there is no unified transport policy for the subjects of agglomeration management; municipalities do not always manage to agree on the joint construction of transport communications.
Inter-municipal transport lines are not always convenient for passengers: the route may end at the border of municipalities, which forces passengers to make transfers to other vehicles of the same type to continue the trip; travel rates may differ in neighboring municipalities; changes to other vehicles at the border of the municipality lead to higher travel costs, etc.
Poor-quality public transport forces people to use a private car and additionally load roads.
Transport fatigue of the population: lengthening the travel time to work more than 1 hour in one direction can negatively affect the mental health of people, their performance.
In the core of the agglomeration, due to the influx of daily migrants, there are traffic jams, a decrease in labor productivity due to time costs. 6) Highways divide the area into unconnected territories, as a result of which damage to the environment can be caused (due to the absence of eco-duct crossings, wild animals die under the wheels of cars).
There is no connection with the transport infrastructure of important parts of the metropolitan area. For example, in the Samara-Togliatti agglomeration, the problem is the spatial isolation of Syzran from Samara, the absence of bridges across the Volga. In municipal districts, which are actually an agglomeration (there is a general governing body - a district administration, a common infrastructure - a district hospital, etc.), it may be difficult for the population to get to the district center.
Alternative approaches to solving the transport problem:
Formation of points of employment on the periphery of the agglomeration to reduce traffic flows to the center; reduction of daily traffic flows through the creation of rental housing (for example, with capsule rooms, mini-apartments).
Inter-municipal cooperation in the transport sector: combining several municipal contracts for the construction or maintenance of road sections into one lot will increase the volume of purchases and receive a discount; joint construction of infrastructure with a high barrier to entry (airport, pipeline, etc.); a comprehensive plan of transport services for the population and improvement of the work of inter-municipal transport; development of alternative modes of transport.
3. Construction of high-speed highways or high-speed intercity trams will reduce the desire of people to move to the core from the periphery, enhance the diffusion of innovations, reduce the growth rate of real estate prices in the core, etc.
Agglomeration problems arise in the interaction of territories under different jurisdictions. In a broad sense, agglomeration problems also cover typical urbanization and even rural problems. Agglomeration problems are based on negative externalities, city sprawl, and diminishing marginal utility from resource concentration. At some stage, the effect of the concentration of resources in the agglomeration becomes negative. The productivity of labor, the quality of life of the population, the level of provision with infrastructure, etc. are decreasing. Sometimes such effects are characteristic only for the core of the agglomeration, and sometimes for the entire agglomeration.
Agglomeration problems can be conditionally divided into spheres: economic, political, social. All problems are interconnected, so a comprehensive solution is needed (Pavlov et al., 2019). It lies in the field of management: coordination of the interests of territories of different jurisdictions, government bodies at different levels, joint infrastructure development, strategic and territorial planning. Internalization of the problem, taxes, transfers, subsidies, licensing, reforms in the field of administrative-territorial structure, etc. act as solutions. The combination of a set of tools creates a unique metropolitan governance model. Practice shows that a voluntary metropolitan governance model is rarely able to eliminate agglomeration problems. This is due to a variety of political reasons. The decision requires an external arbiter who is able to coordinate reforms in the following areas:
1. Changing the boundaries of the municipality.
2. Change in the status of the municipality.
3. Transfer of powers and finances between municipalities, region.
4. Changing the composition and methods of forming municipal government bodies.
5. Formation of an institutional structure for the management of the agglomeration.
To select effective tools requires constant systematic jewelry work. The high complexity of agglomeration management obliges to avoid voluntaristic and hasty reforms.
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30 April 2021
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Pavlov, Y. V. (2021). Approaches To Solving Economic Problems In The Governance Of Metropolitan Area. In S. I. Ashmarina, V. V. Mantulenko, M. I. Inozemtsev, & E. L. Sidorenko (Eds.), Global Challenges and Prospects of The Modern Economic Development, vol 106. European Proceedings of Social and Behavioural Sciences (pp. 1090-1099). European Publisher. https://doi.org/10.15405/epsbs.2021.04.02.130