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The Ivanovo Oblast Economy: an IO Model G

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The Ivanovo Oblast Economy: an IO Model G Studies on Russian Economic Development, Vol. 13, No. 5, 2002, pp. 485–494. Original Russian Text Copyright © 2002 by Serebryakov, Uzyakov, Yantovskii. English Translation Copyright © 2002 by MAIK “Nauka /Interperiodica” (Russia). INTERINDUSTRY MODELS The Ivanovo Oblast Economy: An IO Model G. R. Serebryakov, M. N. Uzyakov, and A. A. Yantovskii Abstract—The article develops an approach to the analysis and forecasting of a regional economy that depends on the use of a system of coordinated statistics, a regional-level analogue of the national economic accounting system. The approach was tried out and consistently applied at IEF, RAS, as part of a project to draw up regional development programs for Primorskii krai, Yakutia, and Moscow. Logical rigor was imparted to it in the frame- work of an Ivanovo oblast project, when a system of interindustry balances of claims and liabilities for the region was developed, and based on it, an interindustry regional model coordinated with an IO model of the Russian economy. Problem statement. Formulating a long-term strat- —to appraise the growth potential of the oblast and egy requires a review of alternatives and a search for an the feasibility of a breakthrough scenario; optimal combination of economic growth factors and —to define long-term goals (a vision of the future); conditions. On the other hand, the main challenge of studies and comparisons of alternative futures is to take —to form a concept for development, which cognizance of a host of feed-forwards, feedbacks, and includes strategic goals; and different constraints, and to reconcile various hypothe- —to develop prognostic scenarios of development ses and initial premises. As concerns the formulation of for Ivanovo oblast coordinated with the development regional strategies, programs, and long-term forecasts, options for the Russian economy for the period up to the most important consideration is to take into account 2020.1 the relationship of the economy of the region and that of Russia as a whole. All this means that we need a spe- Regional model requirements. Proceeding from the cialized, and rather sophisticated, toolkit to conduct nature of the forecasting and analytical work for such coordinated computations and comparisons of Ivanovo oblast, we formulated a set of basic require- alternatives. ments that a regional model was expected to meet. Such a toolkit was developed at the Institute of Eco- The model must be interindustrial. Structural trans- nomic Forecasting (IEF), RAS, using a macroeco- formations are taking place in the economy of Ivanovo nomic IO model of Russia, called RIM [1, 2]. It com- oblast, as they are throughout Russia’s economy. The prises a model of the Russian economy and a linked model must therefore reflect the impact of structural model of the Ivanovo oblast economy. This toolkit per- shifts in the oblast economy upon the macroeconomic mits rather complex computations of economic policy dynamics and performance of production entities. We options to be made for the next 15–20 years. The model were thus faced with the necessity of building Ivanovo can be used both for rough-and-ready scenarios, to help oblast IO tables, to be able to make computations by the in the search for a strategic line of development, and for model. finalizing an economic program, i.e., as an instrument accumulating a rather wide spectrum of measures and Computations by the IO model of the Ivanovo oblast proposals. economy are be harmonized with computations by the model of Russia. A perfect solution is a model of the Ivanovo oblast is one of the most problem-ridden Ivanovo oblast economy as part of the general model of regions in Russia. Suffice it to say that the share of the the Russian Federation, which implements both feed- oblast’s GRP in the Russian GDP fell to 0.28% in 2000 forward and feedback relations with the main model. from 1.04% in 1990, and the share of transfers is However, given the complexity of the task and the fact upward of 40% of the extended budget. Prompted by that the impact of the Ivanovo oblast economy on the the need for radical improvement of the socioeconomic Russian economy is negligible compared with the lat- situation in the region and the tasks of harmonization of ter’s impact on the region, at this stage, we implement the policy of the regional authorities with the long-term a design scheme that models and assesses the influence strategy of the federal center, the IEF was contracted by of only one side, i.e., Russia, on Ivanovo oblast. the regional administration to work out a medium- and long-term development strategies for Ivanovo oblast. It 1 During the generation of a Russian economy development sce- was designed to accomplish a number of tasks: nario, materials prepared by a working group headed by V.I. Ishaev, a member of the presidium of the Council of State of —to analyze the current state of the oblast economy; the Russian Federation, were used. 485 486 SEREBRYAKOV et al. Key exogenous model parameters are to be both balances of Ivanovo oblast fully corresponds to the those of the federal center economic policy and of the structure of the Russian Federation balances. region’s policy. The former are input into the Ivanovo As in the Russian IO model, RIM, the real aspect of oblast economy model directly from the design banks production (the output and distribution of products in of the Russian model (prognostic computations by the constant prices) is calculated at each step of the model RF model).They describe the influence of general eco- with the help of a static IO model. On the other hand, nomic process in Russia on the region in question: the prices for Ivanovo oblast, rather than being calcu- change in the dollar rate, the growth of industrial pro- lated in the framework of the region’s price model duction in Russia as a whole, the average income of the (which, we feel, would be totally incorrect), are calcu- population, the average pension, etc. lated depending on changes in the price situation in the The latter are given as exogenous (control) parame- Russian economy as a whole. In other words, both ters of the economic policy of the region. They include industry prices and deflators for the GRP functional price regulation, incentives for export activities, tax elements are calculated based on the respective indica- policy, etc. tors of the Russian IO model. The model has the capac- The model must be able to calculate development ity to regulate prices using their exogenously fixed options for the region. By varying the control parame- dynamics. ters of the regional policy and also the development Prices, as well as bulk-line costs and the scale of scenarios for Russia as a whole, we can compare differ- operations industrywise, define in the final analysis val- ent development pathways of the region. ues added in industries and the total value of GRP. The model must recognize the region’s lack of sev- The final demand elements that form the physical eral industries and the dependence of its industry on dynamics of production are determined, industrywise, imported raw materials. Much of the raw materials as follows: consumed by the oblast industry is imported from other —household consumption, as a function of prices, regions of the Russian Federation or from abroad. official incomes of the population, and the extent of There is no possibility to employ internal primary legalization of its shadow incomes; resources to replace imported ones. Therefore, the out- put calculation procedure should take into consider- —public consumption, as a function of the dynam- ation the dependence of the volumes of regional ics of the respective expense items of the budget (in imports on the scale of operations. constant prices); Problems in building a statistical base. The statisti- —fixed capital accumulation, as a function of the cal base of analysis and forecasting has, so far, sources of finance of capital investment; remained the main stumbling block in the construction —the removal of products to the Russian Federa- of econometric models, and even more so, models of tion, as a function of the respective items of the output regional economies. Although data books today include and distribution of Russian products; a multitude of new sections and vast numbers of new —export outside Russia is given exogenously, indicators reflecting the character of ongoing reforms depending on the extent of implementation of an in Russia, there is not, to this day, an adequate data base export-oriented strategy; and for the construction of a coherent system of accounts on a regional level. Furthermore, the existing data base is —the import of products, as a function of the often inconsistent and insufficiently detailed. As a con- respective elements of intermediate and final demand. sequence, the problem of construction of accounting In addition to the exogenous parameters present in regional IO tables appears all but unsolvable. the Russian model, computations by the Ivanovo oblast In these conditions, we can only develop IO tables model depend heavily on the following exogenous of claims and liabilities that use as input current parameters: the oblast population; the number of pen- regional statistics, federal level data, and also more than sioners; the oblast’s exports outside the Russian Feder- 10-year old data of regional IO tables. ation; the quality dynamics of exported products; tax rates; the rate of tax collection; the expert appraisal of Figure 1 shows the general procedure of formation the share of shadow incomes of the population; the of IO tables of claims and liabilities for Ivanovo oblast. share of investments (with respect to intraregional The values of IO table variables, calculated both in ones) attracted from outside of the region; and the constant prices (1997) and current 1990–1999 prices, dynamics of industries’ materials-output ratio.
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