AntiCrisis Strategy of Russian Government: New Approaches to Russias Single Industry Towns

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OECD Conference Developing Rural Policies to
Meet the Needs of a Changing World Session II
Relaunching Devitalized Areas and Single
Industry Towns
Anti-Crisis Strategy of Russian Government New
Approaches to Russias Single Industry Towns
Mikhail Dmitriev President Center for Strategic
Research (Moscow) M.Dmitriev_at_csr.ru Tatiana
Khomiakava Leading Expert Center for Strategic
Research (Moscow) T.Khomiakova_at_csr.ru Quebec,
Canada October 14, 2009
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Single Industry Towns
Single Industry Towns Definition - enterprise
forming a company town employees share (or a
group of enterprises, forming manufacturing
supply chain) in the total employment of the
particular single industry town gt 25 -
industry share in the total output of the
particular single industry town gt 50
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Role of the Single Industry Towns in Russias
Economy

• There are 400 single industry towns in Russia,
  which accumulate 23 of the urban
  population, and created 40 of GDP in
  Russia before the crisis
• Population Size of the
  Single Industry Towns

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Specialization Structure of Single Industry Towns
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Criteria for Single Industry Towns by
Production Pattern
Yes
There is an enterprise with a share of 25 in
total employment of the town
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Criteria for Single Industry Towns by Employment
Criteria
Enterprise composition of the dominant industry
in the town
Industrial structure analysis in the town or
urban-type community The share of a single
industry is more than 50 in total industrial
output of the town or small urban settlement
Yes
No
There are several enterprises of the dominant
industry, which are not linked and with equal
employment volume
Town is not a single industry town, and not
included in the database
Yes
There is a single enterprise of the dominant
industry, or a group of inter-linked enterprises
of the dominant industry
No
Yes
Town is acknowledged as the single industry town
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• low labor productivity,
• assets are worn out - products are not
  competitive neither on the world, nor on the
  domestic market
• unsettled debts

• Economic inexpediency of further activity of an
  enterprise
• - technology is 3-40 years old
• - absence of production modernization in the last
  15 years
• - geographical remoteness from outlets, etc.

• enterprise is not seriously affected by the
  crisis
• stable situation
• (oil and gas industry, nuclear energy)

• -temporary difficulties with sales as a result of
  shrinking markets in crisis - enterprise becomes
  heavily indebted to suppliers
• (metal industry, machinery, mining equipment,
  construction materials)

PROBLEMS
Assistance in production modernization, incentive
measures
Assistance in diversification and/or production
re-orientation, re-training of personnel
Settling in a new place
Monitoring
Short-term support during crisis
SOLUTIONS
-brown-field projects database development -
projects structuring, based on the state-private
partnerships (Vnesheconombank)
enterprise modernization projects joint financing
by regional authorities and the state-owned banks

• credit financing
• support via the state-owned banks -
  government contractual work

Federal Special-Purpose Programs (FSP) housing
market in large cities
incentives for the single industry towns
strategic plans development, including
diversification scenarios
- system of grants, - kaizen contests promotion
POLICY INSTRUMENTS
- employment promotion measures (Ministry of
Health and Social Development)
Federal Special Program (FSP) activities, devoted
to agriculture, food processing industry, tourism
development
Federal intervention - nationalization,
- bankruptcy, -financial
improvement
employment and migration programs
State support of SME (benefits, tax holidays,
etc)
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Single Industry Towns of the Sustainable Companies
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Examples of Single Industry Towns
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Examples of Single Industry Towns
Nizhnevartovsk 242 thousand
Monchegorsk 49.4 thousan
Nefteyugansk 114.7 thousand
Cherepovets 307.8 thousand
Norilsk 206 thousand
Nizhniy Tagil 377.5 thousand
Voskresensk
Mirnyi 38 thousand
Nizhnya Salada 17.9 thousand
Verkhnaya Salda 48.8 thousand
Togliatti 705.3 thousand
Divnogoprsk 30.7 thousand
Oil and Energy
Non-ferrous metals
Mining
Machinery
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Ferrous metals
Chemicals
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Approaches to Single Industry Town Commission
Activities
Approach 1
Approach 2
Single Industry Town Commission
strategic challenge to Russias economic
geography hundreds of towns are under threat
of de-industrialization in the situation of
structural crisis
situational response to socio-economic crisis in
the single industry towns
crisis situation 2
crisis situation
crisis situation 1
Priorities within Commission ?
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Joint Efforts of Regional Authorities and
Corporations
Towns utility and social complex
effectiveness assessment
Monitoring of the most influential town spheres
Town potential complex assessment
Towns with the positive value-added
Towns with the positive value-added

• Economic Diversification
• reorientation
• Personnel retraining

• Short-term support measures during the crisis
• Situation monitoring, timely reaction to the
  world market situation

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Strategic Plans of the Single Industry Towns

• Strategic plans concerning specialization of
  Russias single industry towns become topical due
  to escalation of the situation in many regions
  with the limited areas of specialization
• Single industry town strategy should take into
  account the structural shifts in consequence of
  the global financial and economic crisis, and
  suggest a concrete plan of the new effective
  economy development

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Single Industry Town Commission

• Single industry town commission was created
• Chief of the commission Deputy Minister of
  Regional Development of the Russian Federation
  Mr. Y. Osintsev
• Commission is authorized to develop a special
  investment program for single industry towns with
  a budget of approximately 3.3. billion (budget,
  foreign credits, private investment)
• In accordance with the Federal Budget, single
  industry town support (new enterprise creation)
  in 2010 660 million

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Pilot Program of the Ministry of Regional
Development

• Baikalsk tourist center
• Togliatti - affiliates of the Russian Space
  Agency (Roskosmos), Rostechnologii,
  Rosoboronexport)

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Thank You for Attention
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