Reindustrial transfromation of the economic complex of an old industrial region

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Old industrial region: identification and classification

The typology of regions implies their isolation and grouping according to the definite criteria. The most often used definition of an old industrial region © Rodionova Е.V., 2017

is the following. It is the territory characterized by a relatively low level of the technological economic development. Its main problem is the excess of production capacities with a high degree of the tear and wear of the capital funds. In the region there are a lot of large and middle sized enterprises with obsolete equipment and technologies. The main identifying feature of old industrial regions are the following. Firstly, it is a historically established specialization of the region in the territorial and industrial division of labour which is characterized by the domination of industrial industries in it. Secondly, it is the prevalence of use of obsolete technologies and the means of production. Thirdly, it is the production of industrial commodities of a low research intensity. Fourthly, it is the localization of the markets for the produced goods. Fifthly, it is a low susceptibility of the innovations [2].

The economic progress, structural transformation have led to the situation when a number of old industrial regions have become problematic, depressive territories because of a gradual loss of technological advantages obtained in the result of a quick development during the formation and the peak of functioning. The territories can move to a depressive state when the structural reforms that were started lack financial resources or are insufficiently well planned and the reforms are being realized inefficiently.

The integrated state program for an efficient substitution of the dominating old industries by the new ones within the national structural and industrial policy is needed for the solution of the depressive situation of a number of old industrial regions. The analysis of the stages of the evolution of the old industrial regions showed that the system of the investment plays an important role. It can have as a direct consequence the conservation of the inertial scenario of the development, “anchoring” the technological backwardness of a territory and also an efficient substitution, efficient restructuring and the renovation of the sectors of an old industry.

It is especially important for the leveling of the existing practice when “...the authorities of the old industrial regions, having as a basis an obsolete industry without sufficient jobs for the people employed in it are forced to articulate and implement their own quasi public industrial policy” [4, p. 22].

K.M. Glonti suggests his own definition of an old industrial region. An old industrial region is a territory where historically there exists the concentration of industrial sectors having a potential for the increase of the science intensive production by means of the innovative transformation of their production complex during the improvement of the economic relations [2].

E.V. Martyakova is more optimistic about the definition of the old industrial regions. In the author’s opinion it is a territory where historically the main part of the industrial enterprises functions. They have a sufficient potential in the realization of international integration programs through the export and import transactions of the sale of goods and services, international investment activity, implementation of local international integration and other projects [10].

In contrast to other types of industrial regions in the territories of the old industrial regions dominate the industrial sectors of the “dying” technological modes: machine construction, metallurgy, chemical, electrical and electronic industry and others [11].

N.Yu. Sorokina defines an old industrial region as a territory whose economic “industrial nucleus” is formed by the industries of the “third” and of the “fourth” technological modes. Such regions are classified as adaptive territories generating rather than receiving innovations. The prospects of their development are connected before all with the traditional, anchored specialization and the vision of the future in many aspects is determined by a trajectory of the previous dynamics. This fact to a large extent explains the fact why many strategies of the social and economic development of old industrial regions are based on conservative scenarios [11].

On the basis of the analysis of the group of integrated indices A.G. Shestopalov, E.I. Borisov, K.K. Safronov and E.S. Kaledina classified all regions of Russia into 5 groups. The scientists used the following criteria for the classification. Firstly, it is the condition of the economy of a region (foreign trade turnover, labour productivity, share of innovative goods, works and services; share of non reimbursable payments in the receipts of the regional budget; share of the capital funds that are completely worn out; share of the service sphere in the gross regional product). Secondly, these parameters are financial stability of basic industries (profitability of sales and assets; coefficients of the financial autonomy and current liquidity; ratio of the borrowed funds to the turnover). Thirdly, these are the innovative character of basic industries (expenses of the firms on technological innovations; share of innovative goods, works and services in the total volume of the shipped goods of the own production in the industry; receipts from the technology export in the contracts with other countries).

The first and the second groups include “non industrial” and new “industrial regions”. The third group comprises the stable old industrial regions (the most advanced ones) which are characterized by an active involvement into the international relations, considerable foreign trade turnover, a higher than in other regions labour productivity, weak dependence on subsidies and interbudgetary transfers, the largest share of innovations and service sphere in the gross regional product.

The forth group consists of the old industrial regions entering the risk zone. The results of the calculation of the chosen indicator of the given regions are in an intermediate level except the labour productivity which is almost equal to the “best” group of old industrial regions. It is important that these regions have the potential for the innovations development like in the previous group. The evidence of it is a considerable number of the regions with a relatively high percentage of innovative works and services.

The fifth group is made of old industrial non competitive regions which are the least involved into the processes of the international exchange and trade. They are characterized by the lowest labour productivity, are mostly dependent in the budgetary policy as they have budget deficits. Their regional budgets are characterized by a high share of the non reimbursable receipts in their revenues [12, p. 16–17].

The cluster approach to the reindustrialization of the economic complex of a region

The clusters have a central role in the process of the reindustrialization. The cluster approach to the development of territories and innovative activity in many developing countries has a wide use. The experts assess the world level of the economic clustering at 50 %. The use of the cluster methodology to the economic development of a country gives the GDP growth from 75 to 90 %. In Russia one of the conditions of the competitivity growth of the national economy and the intensification of the state and private partnership is the development of a cluster policy.

A priority direction of the formation of the cluster policy in Russia is the type and industrial approach (according to the types of the economic activity) that determines the sectoral specificity of the cluster and the “main” anchoring cluster enterprise. According to the Russian cluster observatory the main cluster types are: pilot innovative territorial clusters; industrial clusters as a complex of economic actors in the construction industry tied by the economic relationships in different spheres at the expense of the territorial closeness; cluster supported by the centers for cluster development [6; 8]. An infrastructural industrial cluster should comprise at least one educational institution, at least two objects of the technological infrastructure indispensable for the creation of the array of objects in the industry under analysis. Today in Russia there exist 23 industrial clusters which are mainly located in the Volga federal district (9) and in the Central federal district (5).

The most considerable role in the development of the national economy play the innovative territorial clusters capable of providing a stable economic growth of the revenues of national enterprises, an increase of the degree of processing of the extracted raw materials, import replacement and competitive character of goods and services. The formation and the creation of the industrial and technological clusters is an efficient mechanism for the attraction of foreign investments and improvement of the international economic integration that will help upgrade the national technological basis, increase quality and speed of the economic growth at the expense of purchasing and introducing the technologies, newest equipment for necessary work, accessibility of modern management methods [7].

The result of the competition held in 2012 for the selection of innovative clusters that will benefit from the governmental support was the choice of 25 innovative technological clusters situated in territories with a high concentration of the scientific, technological and production activity including the science cities, territories of the location of special economic zones, closed administrative and territorial localities. Today within this contest the governmental support of the industrial and territorial cluster exists in the following ways: subsidies for the development of territorial clusters; co financing of the implementation of the steps within innovative territorial clusters policy; use of governmental institutes of development for the realization of industrial and technological clusters; involvement of large corporations.

Volgograd region is a perspective old industrial region of the South of Russia

The experts of the “Leontyeff center” (AV Group) isolate in the map of Russia 6 main growth points: Moscow, Ural, the north west, the east west, Siberian, Volga and Cama and Southern locations 1. Every “point” is a unification of the geographically close growing regions.

According to the typology used by the Ministry of regional development of the Russian federation in the Southern federal district 2 there are two “strong” regions: Volgograd, Rostov region and one depressive low priority old industrial region (Astrakhan region).

The “southern growth point” includes the Krasnodar krai (2nd rank in the AV RCI-2016), Rostov region (11th rank), Stavropol krai (15th rank) and Volgograd region (23th rank) [5]. Judging from the volume of the gross regional product, volume of the produced innovative goods, receipts of the consolidated budgets, the Southern federal district occupies the final rank among the “growth points” of Russia. And when studying the volume of investments, population it can be concluded that the South of Russia runs ahead the Ural, Siberia and NorthWest. The necessity of the promotion of the cluster policy as an instrument of the reindustrialization is acknowledged by regional authorities. This is confirmed by the priorities declared in new regional strategies till 2030. However there are no innovative clusters of the Southern federal districts that would be included into the list of the priority projects of the country.

In the Volgograd region about 40 % of the gross value added is made in the industry and this ratio is higher than in other regions of the Southern federal district. Two clusters were registered in the region. This is the innovative and technological cluster of the production of modern construction materials and high purity chemical substances in the Svetloyarskiy and Narimanovsky deposits of the magnesium chloride and the chemical and pharmaceutical cluster. They were advertised at the moment of creation and development of pilot information clusters and encouragement of the cluster policy in the regions of Russia (2012–2013). However the clusters mentioned above have not been recorded in the Ministry for Industry and Trade of Russia. This fact evidences about the absence of an active economic activity.

The strategy of the social and economic development of the Volgograd region till 2020 and the strategy of the Southern federal district till 2020 meant the creation of several more clusters in the region. For example it could be the cluster in alternative energy production (creation of complex production of the silicon polychristals and photo energy systems “Volzhsky silicon”) where the organization of the production of sun batteries and intermediate products for science intensive technologies and equipment for energy industry could take place.

The participants of the cluster can be regional enterprises of textile, sewing, light industries, small and medium sized business, professional educational organizations, logistic centers. The implementation of such a project allows creation of an innovative import replacing production on the basis of the bankrupt firms.

Another perspective direction is connected with the creation of a cluster for informative technologies. Today in the Volgograd region the process of the finishing of this concept and filling it with real innovative projects in the IT sphere is taking place, despite the fact that in the region there are no science intensive enterprises in innovative technologies. Its basis can be formed on the use of the educational and business resources of the region.

A number of the industrial enterprises of the region are at the stage of dying and closing. The production has been moved into other cities. There is the necessity of the joining forces of large enterprises and small entrepreneurs. The construction cluster has good prospects as in the region there exists a capacious mineral and resource base. In particular the construction cluster can appear as a result of the collaboration of such enterprises as Public company “Volzhsky plant of salamander wool commodities”, Public company “Volgograd plant ZhBI № 1”, Public company “Sebryakov concrete”, Public company “Firm ZhBI-6”, Public company “Concrete Sebryakov plant”, Public company “Sebryakov Plant of salamander wool production”, Limited partnership “Volma”, Public company “Volzhsky abrasive plant” [8].

The chemical industry of a region is a good resource for the development of a cluster approach and the success is obvious. The leading Russian chloralkali plant created on the mechanical base of the soviet enterprise a private chemical cluster not only for the development of own production, creation of a new investment model but also for the attraction of outside investors. The idea of the innovative approach is the use of production from a basic enterprise for the further deep processing. This fact allows increasing the efficiency of all the participants (both inside the group and for other residents). The enterprise in this case not only reduces its own operation infrastructural and logistical costs but also helps sell a part of its production and also acquires the necessary components for the further manufacturing. Today “Kaustik” conserves its share in the Russian market and the plants oriented for exports have already created the basis for growth.

The aluminum cluster has good prospects. The Volgograd aluminum plant was stopped in 2013 because of the drop of aluminum world prices (from 2,2 US dollars to 1,8 US dollars per ton) in its specialized manufacturing (electrolysis cell, alloys, aluminum powder, powders, pastes and others). In 2014 the enterprise has restarted the work of some workshops, organized the production of roll mill aluminum. The question about the restarting the production of the prebacked anodes is discussed today. In 2017 the Government of the Volgograd region and the management of the group of companies “RusAl” took the decision about the creation in the region of the industrial cluster on the basis of the Volgograd aluminum plant that was closed earlier in 2013. The “RusAl” company decided to invest into the project 13 billion rubles [3].

A “technological valley” is expected to be created on the basis of the Volgograd aluminum plant in the production of the metallurgy production of high degree of reprocessing, construction materials, auto components, structures and constructions on the basis of an aluminum profile. Under the conditions of the remoteness of the Volgograd enterprise of “RusAl” from the American and Chinese markets it is worth focusing on the production of highly processed commodities, experts say. In 2018 about 9,6 billion rubles will be invested into the production of the primary aluminum and semi processed materials in the Volgorad aluminum plant. Another 2,7 billion rubles will be invested into the high processed production in the valley.

About two or three thousand new working places are expected to appear in the cluster. The idea of the project of the Volgograd technological valley is the creation of new manufacturing plants next to the producer of the primary aluminum with the opportunity of direct deliveries of the molten metal. Due to such factors like the raw material growth, growing world demand of the car building plants there are chances to make the production of the future “technological valley” popular especially in the EU market [1; 3].

The creation of the clusters in the Volgograd region faces a number of problems. Thus there is no flexible system of the interaction of regional authorities with potential cluster participants. This fact is determined by the absence of competent specialists who would be responsible for the cluster policy and by generally inefficient government management in the region as the determinant of the cluster functioning is the availability of the efficient interaction with local authorities.

The development of clusters in the initial stage requires the financial support form the part of the regional budget. But taking into consideration the increasing budget deficit of the Volgograd region it is complicated to give the clusters any assistance.

Many enterprises of the region are merged and reorganized but without the creation of the cluster, though scientific and research institutes, higher educational institutions could be involved into this process. The main impediments to the cluster development are: a low level of the methodological support of industrial and territorial clusters, absence of the systematic cluster policy (activity period in 2012–2013 and slowdown in 2015–2016), administrative and bureaucratic barriers, absence of stimuli for small and medium sized enterprises.

Russia and its regions need a balanced cluster policy directed on the development of the created clusters, improvement of their organizational structure and innovative components. However it is inexpedient to create clusters countrywide as it is not enough to join the enterprises by order, it is indispensible to provide the conditions for a successful functioning, to provide organizational, methodological and financial support. Otherwise the enterprises will remain “solitary cells” that are joined into the cluster only formally without no synergy effect.