Strategic planning - the way toward sustainable development of the Russian economy

The Presidential Address to the Federal Assembly (March, 2018) and May Decrees (May 7th, 2018 no. 204) announced the key development objectives of the Russian economy within the new political cycle, the most important of which are – ensuring growth rates above the world average and overcoming the lagging of key participants in geopolitical competition; creating a high-performance export-oriented sector based on new technology, increasing productivity, etc. The urgency of objectives for Russia’s sustainable development is beyond doubt, as well as the fact that their solution requires a transition to a new development model based on the revival of the real sector of the economy based on advanced technological innovation. We are talking about restructuring the economy to create new growth sources.

The complexity and scale of objectives requires coordinated interaction between the state, business and society, which is possible to achieve with clear goal-setting, definition of development priorities and their resource provision, and formation of an appropriate institutional environment. We are talking about a new quality of public administration – the main system-forming factor, without which all competitive advantages of the country are unable to provide the expected result [1, p. 20].

The strengthening of public administration means, first and foremost, the strengthening of strategic and project development in the economy, of its core – strategic planning.

Strategic planning as a qualitatively new system of public and municipal administration opens up an opportunity for the country to adequately respond to the challenges of the time and strengthen its economic and political position through consistent transition to an innovation-oriented development model which ensures sustainable dynamic growth and high competitiveness of the Russian economy based on advanced formation of basic production of a new technological structure [2].

The “market or plan” discussion has already taken the second place. The global practice confirms that achieving long-term goals of socio-economic development is impossible without using strategic planning methods firmly established in the management system of leading Western countries such as the US, France, Japan, South Korea, and China both at the macro-, meso- and micro-levels [3, 4, 5, 6]. It is based on the tools of strategic planning and program management that these countries address the most important socio-economic problems, the objectives of accelerated reindustrialization and innovative development. Moreover, many researchers note that the need for state regulatory intervention in economic development is particularly acute in critical periods, in particular amid economic crises and the need for structural adjustment [7, 8] .

For example, strategic planning in the United States aims to select the main priorities for the development of the national economy at the federal level and building relations of the federal government with state administrations, business and society. At the national level, the areas of development of the society, markets and technology are determined, which should be given preference etc. [9, 10, 11].

Countries such as France and Japan are also on the path of choosing priority industries in terms of the importance of their development for the economy in general. These countries develop long-term and five-year development plans, combining methods of indicative and policy planning [3, 12] .

The unique experience of building a large-scale planning system was accumulated within the Soviet system, which ensured the transformation of the USSR into a second superpower of the 20th century. Unfortunately, in the course of market reforms this invaluable experience was almost completely destroyed. Of course, the principles of planning in market economy are fundamentally different from those of the state-planned economy [13]. However, today, in the context of new large-scale, primarily scientific and technological challenges and the complexity of the socioeconomic problems to be solved, the need to revive the fundamental scientific foundations of planning is manifested with renewed vigor. In order to do this, “the state must resolutely overcome the doubts about the awareness of the need for an active impact on economic processes by all, including administrative measures, and the fear of losing market innocence” [14, p. 95].

In this regard, it is necessary to focus once again on the main problems of returning to strategic planning in Russia, identify methodological approaches to building a system of strategic planning documents at different levels, and determine the areas of improving the organization of strategic planning processes and their legal support.

The revival of strategic planning in Russia

In post-Soviet Russia, the revived interest in strategic planning began at the end of the 2000s together with the understanding that the prospects for the development of the Russian economy are associated with the solution of a whole range of structural problems that are not addressed within the framework of market self-regulation, as evidenced by the experience of the transformation of the Russian economy over the past 25 years. First of all, it affected the structural problems arising in the militaryindustrial and technological spheres, which are, as a rule, of a long-term strategic nature and cannot be adequately solved within the framework of three-year budget planning. The established practice of development and implementation of federal target programs for the development of certain sectors of the national economy and industry did not provide a proper economic result, there was a weak correlation between them and the available resources [15, p. 8]. For many years, the Russian government, considering the progress of the Federal Target Programs (FTP), noted their unsatisfactory performance, but at the same time, it was not considered guilty as it was believed that the business community involved in their implementation is not subject to the state. However, if the business community decides to participate in FTP, it means it assumes certain obligations and is obliged to fulfill them and be both financially (fines, penalties) and administratively (revocation of licenses, bankruptcy and nationalization) liable [16, p. 46].

It has become clearer that there is a need to create a new set of management tools that would help solve the following objectives:

– to extend the temporal depth of state forecasting and planning beyond the terms of the budget cycle (more than 3 years), providing the implementation of long-term solutions (with implementation period of 6 years or more) in the framework of interrelated medium and short-term objectives subordinate to a common goal;

– to determine the sequence of development of long-term and medium-term documents of state strategic planning and their interrelation on the purposes and priorities, regulating the frequency of their development and adjustment;

– to regulate the terms of documents preparation of state strategic management and measures of the budget policy among themselves;

– to balance planned activities which require significant costs in terms of resource and organizational capabilities (energy, transport, demography and national security projects);

– to clearly focus Russia’s constituent entities on activities that meet the interests of the country as a whole according to the goals of Russia’s socio-economic development;

– to identify long-term guidelines for business (in the formation of new promising markets for goods and services, development of transport infrastructure, energy and mineral resources, labor market, social infrastructure, science and technology), helping reduce the risks in making long-term investment decisions.

The result of realizing the need for new tools of economic development management was the development and adoption of Federal law no.

172 “On strategic planning in the Russian Federation” (hereinafter – Federal law), dated 28.06.2014. Within the framework of the document, the system of strategic planning is defined as a tool for formation of long-term state priorities, implementation of global and large-scale objectives, ensuring consistency of plans of central and regional authorities, local governments, linking decisions taken in the process of state strategic management with budget constraints for the medium and long term.

It should be noted that in general, Federal law FZ-172 is of a framework nature and is intended to introduce new aspects into the system of state’s influence on economic processes in three areas: in the list of strategic planning documents, in a clear definition of the nature of these documents and their content, as well as the procedures for their development and adoption. An attempt to consolidate all these areas in one law is a fairly new pioneer business in the scale and diversity of directions of Russian legislative practice [17, p. 19].

Along with the traditionally developed documents describing the future of the socioeconomic development of the country, regions and industries in one form or another, such as Presidential Address to the Federal Assembly, the Strategy of socio-economic development of the Russian Federation, the National security strategy of the Russian Federation, sectoral and regional strategies and forecasts of socioeconomic development, the list of strategic planning documents includes a number of new documents such as the Strategy of spatial development of the Russian Federation, which, in fact, revives the schemes of productive forces, the Strategy of scientific and technological development of the Russian Federation designed to form a technological vector of development in the context of the objectives of the dynamically developing scientific, technological and industrial revolution 4.0. The list of forecasts has been seriously expanded which includes the forecast of the country’s scientific and technological development, strategic and budget forecasts for the long-term period in the whole country, in its constituent entities and even in municipal units. Thus, the emerging system of state strategic planning is of a forecast-planning nature, it should be based on long-term forecasting (with invariable scenarios) to form a long-term strategy (with specific goals, with one planned scenario), implemented through medium-term and shortterm plans [18, p. 255].

A number of scientific papers [2, 4, 14, 15, 16] currently contains a detailed analysis and evaluation of the Law on strategic planning in Russia, which focuses on the content and regulation of the procedure for preparing a package of strategic planning documents,. In this regard, of greatest interest today is the identification of problems hindering the use of strategic planning tools in the framework of the country’s economic policy. A number of methodological issues related to ensuring the interrelation of strategic planning documents in a single system, their resource support, formation of organizational and management infrastructure for strategic planning, establishment of control methods and mechanisms of responsibility of all participants in the strategic planning process remain relevant.

Issues of implementing FZ-172 “On strategic planning in Russia”

Despite the key government decisions, the adopted Federal law has not yet been implemented in economic policy and public administration. The administrative bodies of the Ministry of Finance, Ministry of Economic Development, Ministry of Industry and Trade of the Russian Federation are in no hurry to create its full legal, organizational and management infrastructure, believing that in modern conditions the forecast mechanisms do not provide accurate reliable development guidelines. Four years after the publication of the Federal law no. 172 “On strategic planning in the Russian Federation” it was not possible to form a correlated package of documents defining the prospects of the country’s development for the period up to 2030, which was originally supposed to be developed by the beginning of 2016.

Although the time frame for the development of basic strategic planning documents were adjusted, it is already quite obvious that they are being disrupted again. Thus, the Strategic forecast of the Russian Federation is not presented – a document that should reveal a system of scientifically based ideas about the strategic risks of socio-economic development and threats to Russia’s national security and form the basis for the development of National security strategy of the Russian Federation and strategic documents (strategies and doctrines) in the field of the country’s foreign and defense policy. Despite the fact that the forecast does not consider the prospects for the development of certain sectors of the national economy and industry, the assessments of global risks contained in it have an impact on the prospects for the development of the country’s militaryindustrial complex, which are implemented in the arms program.

The Strategy of long-term socio-economic development of the Russian Federation for the period up to 2030 – the most important document formulating the main objectives of country’s socio-economic development in the context of the desired future shape of Russia and the conceptual direction of addressing the objectives required to achieve the targets of development – has not yet been presented for discussion and approval. As a result, there are no guidelines for the development of strategies and programs for the most important sectors and industries of the national economy and country’s regions. The constant postponement of development of the basic document – Strategy of socio-economic development of the Russian Federation – indicates that the Ministry of economic development has lost the competencies and expertise to develop a document of this scale [15, p. 9].

Nowadays, the objective of strategic goalsetting is addressed through the approved National security strategy of the Russian Federation, the Economic security strategy of the Russian Federation and Presidential decree no. 204 “On national goals and strategic objectives of the Russian Federation up to 2024” (May 7th, 2018). However, the format of the Decree cannot replace the Strategy of longterm socio-economic development – the basic document of strategic planning, which contains a system of long-term priorities, goals and objectives of public administration, ensuring sustainable and balanced socio-economic development of the country.

The development of strategic planning documents is often contrary to the procedure and sequence of formation of strategic planning documents established in Federal law no. 172, which dilutes the essence of developed documents, making them meaningless, inconsistent with each other and inefficient. It is especially evident in the framework of strategic planning in the sphere of science and technology. It would be logical to assume that amid dynamically developing scientific and technological progress, the strategy of scientific and technological development of Russia should determine the direction of the country’s technological development, set the objectives of development of key technology of the new emerging technological mode, which would be capable of forming the core of modern industrial production and determine the ways of development of new emerging high-tech markets. Instead, the Strategy of scientific and technological development of the Russian Federation adopted in 2016 (Decree of the President of the Russian Federation no. 642, dated 01.12.2016), focuses on fairly general and extensive issues – the search for answers to big challenges facing the state, society and science today, on the institutional features of the latter. The document turned out to be quite long and declarative, it does not contain any target indicators.

Addressing the objective of developing new advanced technology and new markets has been reduced to the level of development of the National technology initiative (NTI) – a comprehensive long-term program aimed at ensuring the leadership of Russian companies in promising global markets in the next 15– 20 years. However, the practice of forming NTI raises many issues related primarily to the choice of NTI topics, which was formed behind the scenes, without proper correlation with the directions of technological modernization of the main sectors of the national economy. The main sources of NTI funding have not been identified despite the fact that the objectives of this level require significant financial costs [19].

It is paradoxical that the development of the long-term Forecast of scientific and technological development was launched only at the end of 2017, but has not yet been completed. And when discussing the draft Forecast it was revealed that its development is linked to the scenario conditions outlined in the already adopted Strategy of scientific and technological development of the Russian Federation. Although it is the Forecast of scientific and technological development that should be the basis of the system of documents of strategic planning in science and technology, which is determined by the provisions of Federal law no. 172.

The most important reason for the poor quality of strategic planning documents in science and technology is undoubtedly lack of a basic document – the long term Strategy of socio-economic development of the Russian Federation, which determines the type of economy we are building. The discourse related to the transition to an innovative development model has been observed for almost two decades but the economic policy is still aimed at maintaining “raw material” economy.

In the absence of a basic Strategy, the Strategy of spatial development, whose draft is currently being discussed in various government agencies at the federal and regional levels, would be an unusual decision. Such a Strategy should form a system of spatial priorities and identify the place of strategies and programs for the development of territories in the system of strategic planning. In fact, it should give an idea of the development and deployment of productive forces and their resettlement, further determine the regional profile, the territorial proportions of the economy, link development of the resource base with the needs of corporations and the population, and justify the placement of infrastructure systems, etc. [20, p. 485].

However, the unresolved issues within the framework of the basic Strategy of socioeconomic development such as the main areas of structural modernization of the economy, which determine its future appearance, make it difficult to solve the problem of rational allocation of production potential and definition of rational economic specialization of territories and regional development in general.

From the point of view of the logic of strategic planning, the issue of the position of Article 20 of Federal law no. 172 also raises questions, here the basis of the Strategy of spatial development includes the Foundations of the state policy of regional development (Decree of 2017). We can fully agree with the opinion of E.M. Bukhwald who focuses on a certain logical incorrectness in the preparation of Federal law no 172 as it is still considered that the policy is based on the strategy, rather than vice versa. First, the “Strategy of spatial development …” should be developed, and then, in order to detail it, the “Framework for regional development policy” containing a system of specific goals, institutions and policy instruments, as well as resources to ensure their practical implementation [17, p. 21].

However, since the above-mentioned sequence is still enshrined in the law, it should have to be implemented. In this regard, it should be expected that the Strategy of spatial development will develop and specify the key provisions of the “Framework...”, for example, they will offer specific ways and mechanisms to overcome the high level of differentiation of regional development, ensuring equal opportunities for the realization of citizens’ rights based on balanced sustainable socioeconomic development of Russia’s constituent entities and municipal units. However, this did not happen in the present version of the draft Strategy. One can only hope that this will be done in the final version of the Strategy.

Despite the absence of basic strategic planning documents, the number of strategic planning documents at the regional and even municipal level, which are not coordinated by goals, priorities, and forecast parameters, both among themselves and with higher-level strategic documents, is increasing. They have different depth of detail and do not take into account the inter-regional and inter-sectoral restrictions.

The situation is no better in the sectoral economy. More than 40 state programs for the development of various spheres and sectors of the national economy are under implementation, including the programs for the development of high-tech industries, most of which were adopted before the publication of Federal law no. 172, and the validity of which ends in 2020. The status and purpose of strategies for the development of civil sectors, which should be developed by the end of 2018 is not clear.

Today the country has a huge number of strategic planning documents that are not correlated and do not form a single system, which creates serious risks of loss of financial, labor and natural resources, of further deepening of interregional imbalances.

In our view, the situation is explained by a number of reasons.

First of all, the implementation of strategic management in the economic policy is hampered by ideological limitations of the economic mainstream formed in the country, based on the postulates of the institutional theory and the Washington consensus. As a result, there is lack of necessary understanding of the role of strategic planning documents in solving structural problems of socio-economic development. It is not surprising that the main goal of the developed documents (strategies and programs), even at the sectoral and regional levels, is to improve the mechanisms to support private business initiatives, rather than to form and justify the desired image of the future national economy as a whole, as well as its most important areas of activity, industries, and regions. Accordingly, the documents lack the investment component – the main projects whose implementation ensures the real development of the economic potential of industries and regions.

There are still serious contradictions between planning and financial structures, which are guided by different poorly aligned goals, priorities and principles of work against the background of the loss of competencies (relative to the Soviet period) by the Ministry of economic development for the development of large-scale documents of inter-sectoral and inter-regional form, the formation of which requires substantial and organizational coordination of activities of a large number of participants.

As a result, today there is a clear gap between budget planning and economic planning. In fact, the economic policy is reduced to the macro-economic stabilization and maintaining fiscal balance as a condition for foreign investment inflows. In such a model the budget policy is a priority in relation to the objectives of economic growth and structural modernization of the economy. Accordingly, strategic planning as a tool for solving structural problems of the national economy loses its prior importance.

The package of documents on the strategic planning process proposed by the Ministry of economic development, even at the methodological level, lacks the mechanisms for inter-sectoral and inter-regional coordination of strategic planning documents. It is unclear how strategic planning documents (strategies, programs, national projects) that are being developed should and can be linked to available resources and how best solutions can be selected. As a result, this selection is based on lobbying the processes by stakeholders.

The methodology of consistent development of the chain of strategic planning documents: forecast – strategy – program (plan) – project (specific objective) and their implementation has not been fully developed yet. There are no correlated target indicators of such documents. The current system of public administration also lacks effective control and responsibility for the implementation of political, economic, and management decisions, without which planning remains a forecast with consistently high risks of inaccuracies and errors. The phrase that came down from the Soviet period remains relevant: “A plan without a forecast is a bureaucratic action; a forecast without a plan is a literary work” [14, p. 81].

The structure of strategic planning lacks the framework of a full strategy for the development of fundamental and research science, scientific and technological solutions of the rather distant future, which is explained by the reduced role of the Russian Academy of Sciences in the implementation of scientific foresight and scenarios for the country’s development, taking into account the latest technological structures and the “New industrial revolution 4.0”.

It is also important that the attempt of a transition to strategic planning in the country is carried out in extremely complex geopolitical and geo-economic conditions, in a situation where the possibilities of foreseeing the situation in the future are very limited, and all kinds of risks are very high [2, p. 5]. Many factors affecting the economy are beyond the zone of internal influence, which makes it difficult to develop reliable both long-term and short-term forecasts. In such circumstances, the opinion of the state authorities is that the practice of transition to strategic planning is premature, it is more productive to adopt anti-crisis stabilization plans with a one-year (short-term) planning horizon. However, successful global experience demonstrates the opposite – strategic planning aimed at solving structural problems of economic development increases the stability of the national economy and reduces the impact of external factors on economic growth.

The main areas of improving the system of strategic planning

In order to move away from the practice of developing forecasts, strategies and programs in the form of “literature works”, which dilute the content and benefits of using strategic planning tools in the framework of the economic policy, it is necessary to identify the main directions for further improvement of the strategic planning system. Of course, it should be built on the basis of full-scale implementation of the logic and ideology of Federal law no. 172 “On strategic planning in the Russian Federation” and Government Decree no. 1050, dated 15.10.2016. “On project activity in the Government of the Russian Federation”. At the same time, in our view, the following objectives come to the fore.

First of all, it is necessary to complete the formation of the general outline of state strategic planning of the country’s socioeconomic development. The foundation and framework of such a strategic planning system should be strategic documents such as:

• •    The national security strategy;

• •    The strategy of economic security;

• •    The strategy of socio-economic development for 15 years;

• •    The strategy of scientific and technological development;

• •    The strategy of long-term spatial development;

• •    The plan of national economic development including development programs of the most important sectors of economy and macro-regions;

• •    The main areas of the unified state monetary policy and the strategy for improving the budget system;

• •    The plan of government activities;

• •    The three-year budget;

• • The medium-term public procurement plan.

The core of the main strategies can be supplemented by the strategies for the development of particularly important strategic sectors, state corporations (especially those engaged in the national security, defense, scientific and technological breakthroughs), regions and macro-regions, strategic economic and geographical zones (the Arctic zone, Siberia, the Far East), and territories of advanced development.

In the system of state strategic planning, it is necessary to clearly identify its basic elements: macro-economic planning; determination of long-term trends in the structure and proportions of economic development, return on a new basis of balance sheet methods; management of the public sector, state corporations, and state property. They should objectively determine the image and paradigm of public administration, the list of its objectives and functions, and the structure and mechanisms of functioning. This may entail .. changes in the structure (hierarchy) of federal executive authorities, bearing in mind the logic of formation, adoption and execution of political, economic and management decisions with a clearly defined system of responsibility. Planning structures, defining strategic goals and priorities and ways of their realization become prior.

It is obvious that it is necessary to restore the logical sequence of development of strategic planning documents, realizing that the Strategy of long-term socio-economic development of the Russian Federation (up to 2030 or 2035)

is the most important basic element of the entire system of strategic planning of economic development. In the course of its development the most important long-term development priorities, the expediency of formation of national projects and state programs for the development of priority economic sectors, the spheres of regions’ activity should be justified. The core document should finally be finished; only after its adoption could other strategic planning documents be developed or refined, including science, technology and spatial development strategies, sectoral and regional strategies, and national projects and programs.

The objective of increasing the level of resource balance of the adopted projects and programs can be addressed in the course of the development of a long-term national program of socio-economic development (for two presidential terms), formed on the basis of draft strategies for the development of individual sectors and industries, as well as territorial formations. The implementation of such a national program and the clarification of parameters of economic development and investment projects should be based on three-year indicative plans as a basis for the development of a three-year budget. In this regard, it seems appropriate to make specific additions regarding the formation of such a plan in Federal law no. 172.

The deployment of the system of strategic planning should ensure the systematic use of the resources available to the state for the modernization and new economic industrialization based on the new emerging technological structure. This requires a crosscutting correlation between the Strategy for technological development and the rest of strategic planning documents. Moreover, it seems appropriate to develop a five-year program of economic modernization based on the development of advanced technology of the new emerging technological structure, providing measures for advanced development of its components of production and technological complexes, creation of a favorable macro-economic environment and formation of relevant institutions and management circuits [20, p. 487].

Given that scientific and innovation activities should penetrate all spheres of the economy, it is necessary to focus on creating an effective scientific and technological progress management system. We can fully agree with the opinion of academician S.Yu. Glaz’ev who notes that the currently implemented approach to managing science as a separate branch in the format of a ministry is obviously ineffective. For cross-cutting stimulation of innovation activity in all economic spheres it is advisable to create a special supra-departmental institution responsible for the development and implementation of the state scientific, technical, and innovation policy, coordination of activities of ministries and departments for its implementation [20, p. 488].

It is equally important to improve strategic planning efficiency by incorporating a longterm financial and budgetary strategy into the process. In the current practice, the forecast of the main parameters of the budget system is based on forecasting the performance of various sectors of domestic economy and Russian regions, which forms the budget strategy, determining the amount of financial resources that can be used to achieve the goals of the state policy, i.e. the budget strategy is a passive result of the forecast. In fact, however, fiscal and financial (monetary) strategies can and should be a real tool, the results of which should be reflected in the socio-economic forecast options.

In fact, the purpose of the budget strategy and the monetary policy strategy is to determine financial resources which can be used to achieve the goals of national socio-economic development.

Long-term budget planning as part of the overall financial policy should solve a number of important objectives [22, p. 106]:

– ensure stable and sustainable program expenditures of the budget system (the budget of enlarged government) according to the set goals and priorities;

– ensure stable and sustainable program expenditures of regional budgets within the framework of inter-budget relations and budget alignment;

– provide clarification of parameters of the budget system, taking into account the changing macro-economic global trends;

– determine the comparative efficiency/ expediency of using certain elements balancing the system (the choice between reducing and increasing costs, increasing and reducing the tax burden, increasing and reducing public debt, changing the parameters of sovereign funds) in relation to a specific projected socioeconomic situation;

– set the “ceiling value” of program costs, including direct budget and tax expenditures;

– introduce new programs (aggregation of existing programs, formation of blocks of programs) in the medium and long term based on a clearly established mechanism;

– provide risk assessment of long-term socio-economic development as an independent unit in each scenario of the budget strategy (primarily external risks) and the degree of exposure of the budget system to external shocks.

The program approach to budget planning definitely provides an opportunity to increase the efficiency of expenditure, since under this approach, budget funds are allocated for specific goals and objectives. At the same time, it imposes new increased requirements to the quality of the state programs under development. First of all, we are talking about deeper and clearer elaboration of program targets and their indicators, resource and financial support up to specific investment, scientific, technological or organizational and managerial projects. According to the current practice of development and implementation of state programs, such elaboration is not carried out. This is partly because today’s programs represent a different form of presenting budget plans and budgetary reporting, rather than the implementation of the program-target method as such [22, p. 106; 107].

There is a need to clarify the institution able to carry out strategic planning functions without focusing on departmental and regional interests. It should be noted that the Council for strategic planning and projects under the President of the

Russian Federation cannot replace the authority with the relevant competencies and powers since it is largely an expert-analytical structure unable to perform power and administrative functions. Therefore, there is a need to establish a real body of power and management, which, along with the key structures of regulating domestic and foreign policy, institutions of supreme power, will be part of the ministries and federal services, reporting directly to the President of the Russian Federation. The Ministry of economic development clearly cannot cope with this function.

To sum up, it should be noted that the proposed measures to accelerate the implementation of strategic planning tools in the process of formation and implementation of the economic policy, in our opinion, are the main ones, but they do not address all the problems to be solved to turn strategic planning into a target impetus to the growth of the Russian economy and the quality of life.