Metallurgical regions: key trends and socio-economic development issues

Since 2011, the Institute of Socio-Economic Development of Territories of Russian Academy of Science carries out a research into financial and production activities of the largest domestic iron and steel corporations, the basic assets of which are located in the Vologda, Lipetsk and Chelyabinsk oblasts. Prior to assessing the situation in the ferrous metallurgy corporations as of the end of 2014, we thought it necessary to analyze main trends in economic and social development of the regions specialized in metallurgy. This necessity is predetermined by the overall worsening of economic situation in Russia which was caused by the weakening of the dynamics of all macroeconomic indicators. In 2014, GDP growth was 0.6% - the lowest since 2009. Half of RF subjects experienced a decline in investments, and in external and internal demand, the economy could rely on significant dynamics of the latter in previous years. Internal problems of Russia and its regions were aggravated by external issues: the impact of the sanctions imposed by Western countries has led to devaluation, the sharp acceleration of inflation and rise in prices. In the conditions of economic instability, the risks for single-industry metallurgical regions increase. The findings of the research carried out at the Institute of Socio-Economic Development of Territories of RAS [1; 2] show that it becomes more and more difficult for regional authorities to manage the activities of major iron and steel corporations integrated in the global market; their activities serve the interests of their owners rather than the interests of regional development. Meanwhile, in the past years there were no significant breakthroughs in economic restructuring in the regions specialized in metallurgy. Centralization of power, which is the basis of regional policy, resulted in ignoring the specifics of RF subjects. In the conditions of acute shortage of regional financial resources, the RF Government has not taken any measures to expand the revenue potential of the territories; consequently, regions have to solve more and more tasks on their own. The federal center gradually withdraws from participation in the implementation of investment projects; this will prevent the regions from achieving long-term development goals. The results of the analysis show that there still exist the signs of the crisis of reproductive processes in the regions with metallurgic specialization. Despite the fact that these regions have specific structural features that unite them, the assessments for each territory are different. However, the main summarizing conclusion lies in the necessity to develop a new strategy for regional policy capable of becoming the leading factor in Russia’s economic development.