Study of the investment potential of the Smolensk region and the directions of its increase

Much is said today about the need for investment in the economy of Russia and its individual regions [3]. The desire of many countries, including Russia, to attract both domestic and foreign investment underlines their decisive role in economic development. Despite numerous statements from potential investors about the unstable political environment, poorly conceived tax policy, political and economic risks, there is a steady interest in investing in certain sectors of the economy and regions of Russia [7].

Forecasting the investment potential at the regional level largely depends on how it correlates with the operation of the objective laws of the market, federal investment policy, as well as with the capabilities of a given region.

In other words, forecasting investment potential requires a variety of knowledge in the field of law, economics, banking, finance, accounting and statistics, as well as knowledge about specific investment companies, funds, banks, leasing and insurance companies, government bodies and other participants in the investment market, which is very important when writing scientific articles.

The relevance of the chosen topic of the article is mainly due to the fact that the solution of the problems of forecasting investment potential at the regional level is increasing in modern conditions and determines the need to create an effective mechanism for the formation of a promising investment policy through economic, regulatory, legal, financial, organizational, social and other influences from the authorities of regional management [3].

The purpose of the study is to develop and justify measures to increase the investment potential of the Smolensk region.

To achieve this goal, the following tasks are solved in the study:

– to identify and structure the current advantages and disadvantages of the Smolensk region in terms of attracting investment to the region

– propose measures to increase the investment potential of the Smolensk region

The degree of development of the object of study. The analysis carried out in the course of the study showed the presence of a significant number of publications on general issues of forecasting the investment potential of the subjects of the Russian Federation.

In the study of problems of forecasting investment potential at the regional level, an important place belongs to such scientists as Oreshin V.P., Cherkasov G.I., Aleksashenko S., Bogatkova L., Gavrilenkov E., Razumova T., V.V. Bocharov, V.Yu. Katasonov, F.S. Tumusov, A.M. Margolin, A.Ya. Bystryakov, V.N. Myakshini and others.

In their studies many authors do not focus on the problems of finding sources of financing for investment projects; taking into account both the general economic features of the Smolensk region and the features of its infrastructural support, and therefore these developments are especially necessary on the scale of a particular region [4].

Many theoretical, methodological and methodological issues of investment potential research in general and in relation to the Smolensk region, in particular, have not been developed or insufficiently studied and require further scientific understanding and development. All of the above determined the relevance of the study, the theoretical and practical significance of the topic of the article. The development of the investment potential of the region follows the path of creating industrial parks; electronic map of infrastructure facilities; special economic zones; development of clusters and territories of advanced social and economic development.

The main backbone category of investment attractiveness of the region is its investment potential. Analysis and assessment of the investment potential of the Smolensk region can be carried out according to the following components:

– natural resource potential

The Smolensk region in the modern sense was formed on September 27, 1937. Today it is part of the Central Federal District, including 25 municipal districts, 2 urban districts, 23 urban settlements, 183 rural settlements. The Smolensk region occupies an advantageous border position, bordering on five large developed regions of Russia (Pskov, Tver, Moscow, Kaluga, Bryansk) and the Republic of Belarus (Mogilev and Vitebsk regions). This location makes the region an important transport hub where the main exportimport flows pass through from near and far European countries and the CIS countries.

The climate in the region is temperate continental, characterized by moderate temperatures during the summer and winter months. The sustainable development of the Smolensk region implies the effective interaction of nature and the economy, the efficient and rational use of the natural capital of the territory.

Large reserves of natural resources are concentrated in the region: brown coal, clay, sand and gravel materials, carbonate rocks for lime production, peat, sapropel, etc. The reserves of sulfate-calcium-magnesium mineral waters are discovered and widely used. The main share in the production structure (except for hydromineral raw materials) is sand and gravel materials (92.3 %). In terms of production of sand and gravel material, the region is one of the top Central Federal District of the Russian Federation (25 % of the total production in the district). The potential value of recoverable reserves and natural resources of minerals is 321.9 billion rubles.

The region is located in the zone of mixed forests (41 % of the territory), among which young stands and middle-aged stands predominate. The total area of forest fund lands is 2121.6 thousand hectares. The total stock of standing timber is 308.6 million cubic meters. The Smolensk region is also rich in water resources. The main river is the Dnieper. There are a large number of lakes of glacial origin on the territory of the region (the Kasplya, the Velisto, the Sapsho, etc.). The reserves of water resources of the region exceed 14 km3/year.

Thus, the Smolensk region is rich in water and mineral resources. Favorable geographical position, rather favorable climatic conditions determine the economic zoning and investment attractiveness of the region;

– labor potential

Today, unfortunately, there has been a negative trend in the population of the Smolensk region over the past three years. Thus, the total population decreased by 11.4 %. At the same time, the urban population amounted to 71.8% at the end of 2022, and the rural population – up to 28.2 %.A negative factor affecting the investment attractiveness of the region is also the low proportion of people younger than working age. This indicates low birth rates due to the difficult demographic situation in the region.

At the same time, the bulk of the ablebodied population as the main subject of the potential development of the Smolensk region is concentrated in large cities (Smolensk, Safonovo, Vyazma, Desnogorsk, Dorogobuzh, Gagarin, etc.). An analysis of the level of migration allows us to conclude that the increase in the number of arrivals in the region slightly exceeds the number of departed citizens. A positive migration increase has a positive impact on the demographic situation in the region.

In general, despite the presence of a stable and reliable labor potential in the region and the possession of all the necessary labor opportunities, there are significant risks in the future in this area due to a decrease in the number of young people and their migration to other regions. However, the demographic situation remains contradictory, there is a decline in the population. Most districts of the region are not attractive to the young population.

When planning measures to increase the investment attractiveness of the Smolensk region, it is necessary to take into account the intensive aging of the population; a downward trend in the number of people of working age due to a decrease in the birth rate and an increase in mortality; there is an opportunity to attract the necessary labor resources through internal and international migration, which is confirmed by a steady trend of mechanical population growth;

– consumer potential

The consumer potential of the territory depends on the purchasing power of the population. It is a direct reflection of the social and economic processes taking place in society. Real disposable money incomes of the population of the Smolensk region over the past three years have tended to decrease despite the growth of the average monthly nominal wages. The population with cash incomes below the subsistence minimum tended to decrease in physical terms.The proportion of the population with incomes below the subsistence level in the entire population tends to decrease in absolute terms.

At the same time, in the Smolensk region, the problem of differentiation of the population by income level is very acute. The coefficient of funds also significantly exceeds the threshold value for all analyzed dates. This indicates the presence of a fairly strong threat to economic security in terms of this social indicator. In this case, the likelihood of social conflicts increases significantly. Therefore, in the National Security Strategy, this indicator is included in the group of the main threats to the quality of life of the population. The ratio of the average pension to the average wage has increased slightly during the period under review, but this indicator is still below the critical level. Conclusions can also be drawn about the level of well-being of citizens on the basis of an analysis of the indicator “the ratio of the average per capita cash income of the population to the subsistence minimum”. Over the past three years, this figure has been low.

The Smolensk region is characterized by average indicators of the financial well-being of the population, somewhat yielding to most of the regions bordering it. In terms of the purchasing power of the population (in relation to the per capita cash income to the subsistence minimum), the Smolensk region can also be attributed to the median group of regions.

– production potential

The investment attractiveness of the region is significantly influenced by the financial and economic indicators of its development. The GRP level of the Smolensk region tends to increase. At the same time, a significant increase in the index of industrial production was observed. The volume of shipped goods of domestic production in the mining and manufacturing industries has increased. A negative trend was observed in the sphere of agricultural production, primarily due to a decrease in crop production. Retail trade turnover has also increased over the past three years.

In comparison with the Kaluga region, in the Smolensk region in 2022 there were more advanced rates of development of industrial production. But, despite this, the volume of shipped goods of domestic production, agricultural production, retail trade turnover is significantly lower than those in the Kaluga region.

In general, the Smolensk region is given a completely insignificant share in the indicators of the development of industrial production in the Russian Federation, which reduces the investment attractiveness of the region. The main share in the formation of the GRP of the Smolensk region falls on industrial production – about 30 % of its total volume. The second place is given to wholesale and retail trade, followed by "Transport and communications", "Construction", "Agriculture". Negative trends are observed not only in the agricultural sector of the region, but also in the construction sector. In general, the production potential of the Smolensk region is characterized by a pronounced commercial type of development in recent years. The share of manufacturing products is also high.

– financial potential

The basis of the financial potential of the territory is budgetary and tax relations. Data on changes in the structure of the regional budget of the Smolensk region in 2022 indicate that the total revenue amounted to 45.9 billion rubles, expenses – 47.5 billion rubles, and the deficit – 1.6 billion rubles. In 2022 budget revenues of the Smolensk region amounted to 0.4 % of the consolidated budgets of the constituent entities of the Russian Federation. The negative trend for the period under review is that the budget of the region became deficit, while a surplus was planned. The region is experiencing an increase in tax revenues, which indicates a developed tax policy. The financial policy in the region should be aimed at strengthening, developing and increasing the tax potential. Support for investment activities contributes to the increase in the tax base. At the same time, “machinery, equipment, vehicles” prevail in the structure of investments in fixed assets by types of fixed assets. In the structure of investments in fixed assets by type of economic activity, “transportation and storage” institutional capacity prevails;

– innovative potential

Effective socio-economic development of the territory is impossible without innovation. The Smolensk region cannot be attributed to innovatively active regions, but rather to the regions of perception of the diffusion of innovations. The share of organizations engaged in innovative activities in the total number of organizations was only 4.6 % in 2022. The share of innovative goods, works, services in the total volume of shipped goods, works and services performed amounted to 2.2%. In the technological sphere, innovations accounted for 6.3 %, in marketing – 0.8%, organizational – 1.7 %. At the same time, the organizations of the Smolensk region use 1841 advanced production technologies. Thus, the largest number of innovative technologies is used in the field of communications and management.

– intellectual potential

The educational level of the region's population is an important factor in the economic and social development of society. The quality of labor resources largely depends on the level of education. The administrative center, the city of Smolensk, has the greatest intellectual potential, where the majority of secondary and higher educational institutions are concentrated.

An indicator that reflects the intellectual potential of the region is the level of enrollment of young people in educational programs of higher education. At the end of 2022 this indicator for young people aged 17–25 years was 4.22 %. A positive aspect is the stable level of staffing of educational institutions of higher education and even the improvement of its quality. In addition to the education sector, the scientific environment of the region should also be characterized. At the end of 2022, there were 24 organizations on the territory of the region engaged in scientific research and development, which employ 850 people. The volume of scientific and technical work performed in 2022 amounted to 2.5 billion rubles.

Thus, the intellectual potential of the region can be assessed as average.

– infrastructural potential

The infrastructural potential of the region is largely a consequence of its economic and geographical position. Infrastructural potential largely contributes to the unification of transport and logistics complexes; favors technological developments, improvement of communication services.

The Smolensk region has an advantageous geographical location,being a majortransportation hub. In addition, the construction of one of the largest logistics centers in the city of Yartsevo has begun. At the beginning of September 2011, in Yartsevo, Smolensk region, a grand opening of a multimodal logistics commodity and transport distribution center took place on the basis of a temporary storage warehouse (TSW) of ROSTEK-West CJSC, which is part of the system of enterprises of ROSTEK FSUE.

– institutional capacity

The institutional potential is a characteristic of the development of the leading institutions of the market economy. The most important part of it is the business sector of the region's economy. In the period from 2020 to 2022, the number of enterprises and organizations in the region decreased by 332 units. The reduction was due to a decrease in the number of small businesses and micro-enterprises. This led to a reduction in the number of employees of small enterprises, at the same time, the number of employees of microenterprises slightly increased. The turnover of small enterprises and micro-enterprises increased during the period under review. In general, there is a negative trend in the development of entrepreneurship, which may subsequently have an adverse impact on the formation of the middle class in the Smolensk region and the employment opportunities of the population.

– tourism potential

As for the tourism potential, the Smolensk region has good tourist and recreational resources. The rich historical heritage makes the region suitable and interesting for the development of tourism, although it is given little attention to. The region has a large number of natural and architectural monuments. In their totality, the conditions and opportunities of the Smolensk region can be used for entertainment, educational, recreational, sports and other purposes. At the same time, the development of tourism in the region is hampered by the following factors: insufficient development of the hotel industry; lack of investment in the industry; no branding policy.

The strategy for developing the investment attractiveness of the Smolensk region should be aimed at increasing the competitiveness of the territory, strengthening its economic security, improving the legislative framework, and forming the image of the territory. Creating a favorable investment climate in the region will help increase its investment attractiveness [7, 8].

One of the most significant trends in the context of economic activity has become the concept of the cluster approach. For the innovative development of the economy, it is necessary to be guided by the principles of the cluster approach for a number of reasons. This ensures the activation of foreign economic integration, allows cluster enterprises to significantly facilitate access to obtaining and exchanging modern technologies, special knowledge, etc [9].

Despite the increased attention of the Investment Development Department of the Smolensk Region to the issues of attracting investments into the region's economy, there are still many problems in managing this process. Thus, insufficient attention of the authorities to the problems of providing support to enterprises in the field of updating the material and technical base; there is no effective policy to attract young specialists and scientists to jobs in the region; insufficiently effective policy in the field of support for small businesses; insufficient attention to the use of all possible forms of development of the investment potential of the region.

Further development of clusters can contribute to the solution of these problems. The region has the necessary resources for the further formation of clusters, mainly in the industrial sector. The formation of clusters in the region will improve the socio-economic indicators of the territory, strengthen the investment potential of the Smolensk region and increase the competitiveness of its products at the national and international levels [8].

On the territory of the Smolensk region, mainly such industries as mining, manufacturing, electricity generation and water supply are represented.

As can be seen from Figure 1, a positive growth trend for 2022 was observed in the field of manufacturing and mining.

The dynamics of the volume of shipped goods of domestic production, work performed and services performed on its own by types of economic activity is shown in Figure 2.

As can be seen from Figure 2, the largest volume of shipped goods is observed in the manufacturing sector, where for the period under review, the increase amounted to 33,997.9 million rubles. or 20.8%.

One of the main directions of the socioeconomic development of the region is the provision of conditions for the modernization of production, state support and the development of clusters that are competitive in market conditions.

A cluster is understood as a complex of interconnected sectors of the economy, which includes state administrative structures, the main industry, supplier companies and processing industries, as well as suppliers of high-tech equipment and technologies.The main criterion for identifying the fundamental industry of the cluster is its ability to produce competitive products.

Exploring the world experience and the sectoral structure of the Smolensk region, it should be noted that one of the main directions in the development of the region's economy can be the formation of a woodworking cluster, with the integration of small businesses into it [1].

To date, in the Smolensk region, there has been an increase in production indicators, demonstrating an increase in the efficiency of woodworking, which was largely due to the formed level of state support from the resources of the federal and regional budgets, as well as the attraction of large investors to the region, Igorevsky Particle Board

■ Manufacturing industries

■ Water supply; wastewater disposal, organization of collection and disposal of waste, activities for the elimination of pollution

Provision of electricity, gas and steam: air conditioning

Mining

Figure 1 – Dynamics of industrial production indices by types of economic activity in the Smolensk region, 2019–2022 [2]

Figure 2 – Dynamics of the volume of shipped goods in the Smolensk region, million rubles, 2019–2022 [2]

Plant LLC and Egger Drevprodukt Gagarin LLC [5].

Today, the Smolensk region has high potential for the development of a cluster in the manufacturing sector, as it has a number of competitive advantages: an advantageous geographical position of the region, a developed transport network, a high supply of energy resources, and economic potential. Among the emerging clusters, one of the best options for integrating small businesses is the timber industry cluster, since in addition to the existing business, it is planned to implement 2 more large investment projects: Organization of production for wood processing and production of wood products Evrofangroup LLC (resident of Dorogobuzh TASED) (Dorogobuzh district). Project implementation period is 2019–2027. The total investment in the project will amount to 705.2 million rubles (including investor's own funds and borrowed funds) [5].

Establishment of a full-cycle wood processing plant Pladonit LLC (Ugra-LesExport) (Ugransky district). Project implementation period is 2015– 2025. The total investment in the project will amount to 270.0 million rubles [5].

The competitive advantage of this cluster is provided by a high share of domestic investment, in particular, in the woodworking industry. The adoption of a decision by regional authorities on the formation of a timber industry cluster will allow integrating all the competitive advantages of this industry into the production of a competitive product.

The expediency of developing the timber industry cluster is also proved by the significant reserves of natural resources in the region, which require rational and efficient use. The Smolensk region is located in the zone of mixed forests (aspen, birch, alder, spruce). The total area of forest fund lands in the region of the Russian Federation is 2121.5 thousand hectares, the forest covers 41 %, the total stock of standing timber is over 308 million cubic meters. The share of burnt areas in the total forest area is 0.05 %, the share of felling is 0.26 %. Significant areas are occupied by birch and wasp plantations, and therefore most of the forest area belongs to a low fire hazard class.

With rational forest management, the region can fully satisfy its needs for timber, develop woodworking, furniture and other industries. Currently, the forestry and woodworking industry of the Smolensk region includes the harvesting and export of wood, the production of lumber, plywood, fibreboard, chipboard, and furniture.

There are two large enterprises in the region: Igorevsky Wood Chipboard Plant LLC and Egger Drevprodukt Gagarin LLC, as well as more than two hundred small enterprises that only harvest wood [2].

This once again speaks of the expediency of developing the cluster, since the issue of raw materials will be an acute issue when implementing new investment projects [4]. Intensive and proportional development of timber processing enterprises in the cluster will contribute to a beneficial effect on the state of the forest fund of the Smolensk region. The forest industry cluster being formed requires the implementation of a project to create an industrial and logistics park for the procurement, storage and distribution of raw materials. The main problems of the timber

Lack of infrastructure to ensure efficient wood processing

Lack of modem technology for wood harvesting

The unwillingness of logging enterprises of the Smolensk region to engage in timber harvesting

Strategic dependence on the supply of raw materials for existing and emerging wood processing enterprises

Low growth rates cf the woodworking industry in the Smolensk region

Lack of stability of production processes, downtime

Reducing the level of competitiveness of processing enterprises of the Smolensk region

Figure 3 – The main problems of the timber industry in the Smolensk region

processing industry in the Smolensk region are shown in Figure 3.

Thus, the project "Creation of an industrial and logistics park for the procurement, storage and distribution of raw materials" is proposed as the main measure for the formation of the timber industry cluster in the Smolensk region.

The prerequisite for the implementation of this project is that for the harvesting of high-quality wood, the timing of the work on harvesting and transporting timber is of great importance. The delay in the time frame of this process leads to the impossibility of exporting raw materials in the autumn-spring period and reducing its harvesting qualities.

At the moment, the key problem of small and medium-sized timber enterprises in the Smolensk region, which do not want to engage in timber harvesting, is the need for significant investments in equipment for its harvesting and transportation, since it requires significant investments. In addition, the insolvency of a large number of loggers has led to the fact that many enterprises on their own are not able not only to purchase new equipment, but also to repair and maintain the existing equipment in a timely manner.

For this reason, as the main proposal for the creation of a timber cluster in the Smolensk region, it is to create an industrial and logistics park for the procurement, storage and distribution of raw materials.

In conditions when the authorities are not able to provide effective financial support to all sectors of the economy (especially such specific ones as timber processing), one of the main goals of stabilization and future growth is the creation and effective functioning of an industrial and logistics park for the harvesting, storage and distribution raw materials that can become a reliable partner in the procurement of wood raw materials on the territory of the Smolensk region. This direction of support from the state will cost several times cheaper than direct subsidies.

This form of support in the absence of specialized equipment from logging enterprises has already solved the problem of mechanization of the timber industry. The same situation is observed at enterprises of small and mediumsized forms of management in the territory of the

Smolensk region, engaged in logging, and there is practically no other available development option, since there is no way to provide financial allocations to all farms in need of machinery [7].

At the moment, in the market economy of the Russian Federation there are positive examples of creating an industrial and logistics park for the harvesting, storage and distribution of wood raw materials in the regions of Russia: Arkhangelsk, Leningrad, Krasnoyarsk Territory and a number of others. The name of the project is "Creation of an industrial and logistics park for the procurement, storage and distribution of raw materials." The goal of the project is the formation of a timber industry cluster in the Smolensk region and attraction of investments in the development of the region's timber industry complex. The implementation of the project to create an industrial and logistics park for the procurement, storage and distribution of raw materials in the Smolensk region will achieve the following objectives (Figure 4).

As can be seen from Figure 4, the implementation of this project will become a catalyst for the creation of a whole timber industry cluster and will bring the timber processing industry of the Smolensk region to a new level, including increasing its export potential.

The economic conditionality of this project is ensured by the fact that today the activity of investors in the timber processing industry of the Smolensk region is growing every year, so the volume of potential investments in the coming years in the processing industry is 2142 million rubles, while investments in logging are minimal, which creates an imbalance in the field of harvested raw materials and processed ones.

For the project to create an industrial and logistics park in the Smolensk region on a lease basis, it is planned to create a machine-technological station (MTS) with storage and loading sites for raw materials on the basis of an existing municipal budgetary institution.

To determine the geographic location of the industrial and logistics park planned for creation, consider the list of existing timber processing enterprises and those planned to be created.

It is advisable to create an industrial and logistics park in the "Vyazemsky district" municipality, the executor is the Department of

Figure 4 – The main objectives of the project "Creation of an industrial and logistics park for the procurement, storage and distribution of raw materials"

Housing and Communal Services, Transport and Road Facilities of the Vyazemsky District.

This department has a large territory of 20 hectares, railway lines, as well as an advantageous economic and geographical position, as it is located in close proximity to existing and planned to launch timber processing enterprises, proximity to the federal M-1highway and proximity to the main logging arrays.

The coordinating institution will be the Department of the Smolensk region for the protection, control and regulation of the use of forestry, wildlife and their habitats.

The visually created management structure of the industrial and logistics park for the procurement, storage and distribution of raw materials will look like this (Figure 5).

Thus, the industrial and logistics park for the procurement, storage and distribution of raw materials will allow serving nearby areas, and the available production facilities (mechanized workshops) and personnel (drivers, car mechanics, etc.) will allow timely repair of equipment, as well as its delivery and storage.

The expected start of the implementation of the industrial and logistics park project for the procurement, storage and distribution of raw materials is 04.01.2023. Planned project budget: 64 million rubles (₽). Project implementation period is 5 years, from 04.01.2023 to 03.30.2028. Funding source is the loan from the Smolensk Regional Fund for Entrepreneurship Support. Project initiator: Department of the Smolensk region for the protection, control and regulation of the use of forestry, wildlife and their habitats.

It is also planned to increase the number of personnel involved in the timber industry cluster by an average of 50-80 people, since the growth in logging will entail an increase in its processing, which will require the involvement of additional human resources.

Thus, the considered conditions for the created industrial and logistics park for the procurement, storage and distribution of raw materials in the

Figure 5 – The main elements of the management structure of the industrial and logistics park for the procurement, storage and distribution of raw materials

Department of the Smolensk region for the protection, control and regulation of the use of forestr.; wildlife and their habitats

Material and technical station on the basis of the "Department of housng and communal services, transport and road facilities" of the municipal formation

" Vyazemsky district" of the Smolensk region

Logistic warehouse of raw materials

_____________________________________________________________> structure of the timber cluster in the area of the timber cluster have the right to be implemented based on the positive experience of the forest industry of the USSR and the modern market economy.

The mechanism for its implementation (the use of logistics) will significantly save budgetary resources and eliminate the misuse of attracted investments, as well as provide targeted assistance to needy small and medium-sized businesses in the Smolensk region [5].