Increasing the Multiplier Effect of the Agro-Industrial Complex in the Northern Region: New Guidelines for Strategic Development

We proceed from the position that the multiplier effect regulation of the agro-industrial complex of the region contributes to its sustainable long-term development and eliminates random errors in the long-term strategic development of agro-industrial spheres.

Due to the spread and strengthening of the digital economy within the agro-industrial complex in the Komi Republic, the high level of competition in the regional food market, instability in the world ones and Western sanctions against the Russian Federation, investors’ uncertainty about the effectiveness of their investments increases. The relevance of their request to assess the multiplier effect of investment in the agro-industrial complex of the Komi Republic is growing.

We proceed from the assumption that investments are a basic element in the development of the agro-industrial complex of the Komi Republic, a key factor in increasing its share in meeting the needs of the population in food, improving its competitiveness and strengthening the financial stability of organizations of the regional agro-industrial complex. In this regard, the increase in the multiplier effect (multiplier coefficient) of the agro-industrial complex (AIC) of the region is one of the indicators of its investment climate.

We understand the multiplier effect as the dependence between the increase in gross product (gross income) of an economic unit and the increase in investment. Quantitatively, the multiplier effect is expressed through the investment multiplier — a coefficient reflecting the ratio between the volume of output or income received, on the one hand, and the amount of investment, on the other hand. As a rule, the multiplier is more than one.

The analysis of the multiplier effect of investments allows to determine the directions of more effective use of investments by identifying the competitive advantage of investments, improving the coordination and organizational components of economic activity, enhancing the balance of capital, land, climatic, labour and marketing resources.

Estimation of multiplier effect of investments involves generalization or detailed elaboration of consistently arising investment cycles, which allows increasing the level of regulatory activity of the state and business organizations in market processes.

In the regulation of market processes aimed at eliminating spontaneous and unforeseen violations of the proportionality of material and cash flows, the most important role is assigned to the regulation of proportionality between production potential and output. An emphasis on output leads to its decline in the long term, while an emphasis on potential leads to a slowdown in the turnover of capital and working capital of economic organizations. Ultimately, the imbalance between capacity and output leads to instability in the commodity, financial and labour markets.

We agree with O. Melyukhina and I. Khramova that regional food markets are currently facing the loss of mutually beneficial ties at the regional level between producers and buyers of food products due to territorial specialization of production, improvement of transport and supply and marketing infrastructure, enhancement of storage conditions of food resources [1, Melyukhina O., Khramova I., p. 398].

In our opinion, the strategy of investment development of the Komi Republic up to 2035 is developed in a fragmented way. In addition to geological exploration and mining, the key areas of development of the Komi Republic include the development of agriculture and farming 1. The following districts with a promising specialization in the sphere of agro-industrial complex have been identified: municipal district (MD) “Kortkerosskiy”, MD “Sysolskiy”, MD “Koigorodskiy”, MD “Syk-tyvdinskiy”. The Strategy sets the goal to form a strong economy with an attractive investment climate in the region. The task was set to increase the level of self-sufficiency of the Komi Republic in basic foodstuffs with an appropriate level of quality and safety to the following levels: milk and dairy products — 35.3%, meat and meat products — 47.7%, potatoes — 100%, vegetables — 38.7%, the preservation of the reindeer livestock in agricultural organizations is expected to be at the level of 21 thousand. However, investments in the agro-industrial complex of the region have been determined without proper detailing and coordination across regions.

An assessment of the multiplier effect from investments in the agro-industrial complex of the region will contribute to a more complete version of the Investment Development Strategy of the Komi Republic.