Impact of Infrastructure on Socio-Economic Development of Russian Regions: Methodology and Analysis

Online ISSN 2412-0731

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2020, 6(2) Online ISSN 2412-0731 Published quarterly Founded in 2015

r-economy.ru 2020, 6(2)

Founders Contact information Institute of Economics of the Ural Branch 19 Mira St., 620002 Ekaterinburg, Russia of the Russian Academy of Sciences phone: +7 (343) 375-95-23 The Ural Federal University named e-mail: [email protected] after the First President of Russia B. N. Yeltsin

Editor-in-Chief Irina D. Turgel, Ural Federal University named after the First President of Russia B. N. Yeltsin (Ekaterinburg, Russia) Deputy Editor-in-Chief Gavriil A. Agarkov, Ural Federal University named after the First President of Russia B. N. Yeltsin (Ekaterinburg, Russia) Editorial Board Gianni Betti, Associate Professor of Statistics, Yulia G. Lavrikova, Acting Director, Institute The University of Siena (Siena, Italy) of Economics, Ural Branch of the Russian Academy of Sciences (Ekaterinburg, Russia) Isolde Brade, Senior Researcher, Leibniz Institute for Regional Geography (Leipzig, Germany) Vitaly N. Lazhentsev, Corresponding Member of the Russian Academy of Sciences (Syktyvkar, Russia) Valery A. Chereshnev, Member of the Russian Academy of Sciences (Perm, Russia) Valery L. Makarov, Member of the Russian Academy of Sciences (Moscow, Russia) Igor M. Drapkin, Professor of Economics, Ural Federal University (Ekaterinburg, Russia) Marina Yu. Malkina, Professor of Economics, Lobachevsky University (Nizhny Novgorod, Russia) Oleg Yu. Golubchikov, Senior Lecturer in Human Geography, Cardiff University (Cardiff, Wales) Marko D. Petrović, Research Associate, Geographical institute «Jovan Cvijić», SASA (Belgrade, Serbia) Mi Jianing, Professor at Harbin Institute of Technology (Harbin, China) Dmitry E. Sorokin, Corresponding Member of the Russian Academy of Sciences (Moscow, Russia) Larisa M. Kapustina, Professor of Economics, Ural State University of Economics (Ekaterinburg, Russia) Shlomo Weber, Professor of Economics, Southern Methodist University (Dallas, USA) Vladimir L. Kvint, Foreign Member of the Russian Academy of Sciences, Doctor of Economic Science Hans Wiesmeth, Professor of Economics, Technical (Moscow, Russia) University of Dresden (Dresden, Germany)

The mission of the R-Economy journal is to provide the publication of the advanced studies in regional economics with an emphasis on the inclusion of the regions, Russian regions in particular, in the international socio-economic processes. We consider cooperation with economists from BRICS countries our major priority. The aim of the R-Economy founders is creating an open-access online journal of a new quality level, increasing the journal visibility in the international scientific community. Target audience of the journal is researchers, teachers and students interested in regional economics as well as government officials and specialists of different enterprises. R in the title of journal refers to its three basic directions – Region (regional development), Rating (comparative researches) and Regulation (state policy).

The Journal is registered by the Federal Agency for Supervision in the Sphere of Telecomunication, Information Technologies and Mass Communication, Certificate of Registration: ЭЛ № ФС77-61272 from April 3, 2015 All published articles are available for free on https://journals.urfu.ru/index.php/r-economy and elibrary.ru The journal is included into the list of journals approved by the Higher Attestation Commission (VAK) In case of reprinting, a pass-through copyright of R-Economy is required. Authors’ opinions may not correspond with the editorial standpoint. All incoming manuscripts are subject to review. Information about articles submission and formatting requirements is available at https://journals.urfu.ru/index.php/r-economy

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Учредители Контакты Институт экономики Уральского отделения Россия, 620002, г. Екатеринбург, Российской академии наук ул. Мира, д. 19, Уральский федеральный университет имени телефон: +7 (343) 375-95-23, первого Президента России Б. Н. Ельцина e-mail: [email protected]

Главный редактор Тургель Ирина Дмитриевна, д-р экон. наук, профессор, Уральский федеральный университет имени первого Президента России Б. Н. Ельцина (Екатеринбург, Россия) Заместитель главного редактора Агарков Гавриил Александрович, д-р экон. наук, профессор, Уральский федеральный университет имени первого Президента России Б. Н. Ельцина (Екатеринбург, Россия) Редакционная коллегия Бетти Джани, профессор статистики, Университет Лаврикова Юлия Георгиевна, временно исполняющая Сиены (Сиена, Италия) обязанности директора Института экономики Уральского отделения РАН (Екатеринбург, Россия) Браде Изольде, старший исследователь, Институт региональной географии им. Лейбница (Лейпциг, Лаженцев Виталий Николаевич, д-р мед. наук, член- Германия) корреспондент РАН, директор Института социально- экономических и энергетических проблем Севера Вебер Шломо, профессор экономики, Южный Коми Научного центра Уральского отделения РАН Методистский университет (Даллас, США) (Сыктывкар, Россия) Висмет Ханс, профессор экономики, Технический Макаров Валерий Леонидович, д-р физ.-мат. наук, университет Дрездена (Дрезден, Германия) академик РАН, директор Высшей школы Джанин Ми, Профессор, Харбинский политехнический государственного администрирования институт (Харбин, Китай) Московского государственного университета имени М. В. Ломоносова (Москва, Россия) Голубчиков Олег Юрьевич, PhD, старший преподаватель, Университет Кардиффа Малкина Марина Юрьевна, д-р экон. наук, профессор, (Кардифф, Уэльс) Университет Лобачевского (Нижний Новгород, Россия) Драпкин Игорь Михайлович, д-р экон. наук, профессор, Петрович Марко, исследователь, Географический Уральский федеральный университет (Екатеринбург, институт «Йован Цвиич» Сербской академии наук Россия) (Белград, Сербия) Капутина Лариса Михайловна, д-р экон. Сорокин Дмитрий Евгеньевич, д-р экон. наук, наук, профессор, Уральский государственный член-корреспондент РАН, проректор экономический университет (Екатеринбург, Россия) по научной работе Финансового университета при Правительстве РФ (Москва, Россия) Квинт Владимир Львович, д-р экон. наук, иностранный член РАН, заведующий кафедрой финансовой стратегии Черешнев Валерий Александрович, д-р мед. наук, Московской школы экономики член президиума РАН, главный научный сотрудник, Московского государственного университета Института экологии и генетики микроорганизмов имени М. В. Ломоносова (Москва, Россия) Уральского отделения РАН (Пермь, Россия)

Миссия журнала «R-Economy» — обеспечить публикацию исследований в области региональной экономики. Мы считаем сотрудничество с экономистами из стран БРИКС нашим главным приоритетом. «R» в названии журнала ссылается на три его базовых направления – Region (региональное развитие), Rating (сравнительные исследования) и Regulation (государственное регулирование).

Журнал зарегистрирован Федеральной службой по надзору в сфере связи, информационных технологий и массовых коммуникаций (Свидетельство о регистрации средства массовой информации ЭЛ № ФС77-61272 от 3 апреля 2015 г.) Все опубликованные статьи доступны бесплатно на https://journals.urfu.ru/index.php/r-economy и проиндексированы в РИНЦ https://elibrary.ru. Журнал включен в перечень рецензируемых научных изданий, в которых должны быть опубликованы основные научные результаты диссертаций на соискание ученой степени кандидата наук, на соискание ученой степени доктора наук (научные специальности 08.00.05 Экономика и управление народным хозяйством и 08.00.14 Мировая экономика).

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CONTENTS

Impact of infrastructure on socio-economic development of Russian regions: methodology and analysis...... 65 E.D. Ignatieva, O.S. Mariev, A.Ye. Serkova

Small businesses in the global market: evidence from the fashion system of Vicenza province (Italy)...... 74 D. Celetti

Strategic priorities for the development of middle regions in Russia...... 89 V.V. Akberdina, A.S. Sergeeva

Chinese and Russian transport corridors and the belt and road initiative: prospects of Sino-Russian cooperation...... 100 Q. Chen

Analytical tools for economic research of small municipalities and gaming techniques for community involvement (the case of Voronezh region in Russia)...... 111 M.I. Solosina, I.N. Shchepina

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Online ISSN 2412-0731 Online ISSN 2412-0731 Выходит 4 раза в год Основан в 2015 году

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СОДЕРЖАНИЕ

Влияние инфраструктуры на социально-экономическое развитие регионов России: методология и анализ...... 65 Е.Д. Игнатьева, О.С. Мариев, А.Е. Серкова

Малые предприятия в глобальном рынке: пример сектора моды провинции Виченца (Италия)...... 74 Д. Челетти

Стратегические приоритеты развития срединных регионов России...... 89 В.В. Акбердина, А.С. Сергеева

Китайский и российский транспортные коридоры и инициатива «Один пояс – один путь»: перспективы китайско-российского сотрудничества...... 100 Ц. Чень

Аналитические инструменты экономических исследований малых муниципалитетов и игровые техники для вовлечения общественности (пример Воронежской области в России)...... 111 М.И. Солосина, И.Н. Щепина

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Online ISSN 2412-0731 R-ECONOMY, 2020, 6(2), 65–73 doi: 10.15826/recon.2020.6.2.006 Original Paper doi 10.15826/recon.2020.6.2.006 Impact of infrastructure on socio-economic development of Russian regions: methodology and analysis E.D. Ignatieva1 , O.S. Mariev1, 2, A.Ye. Serkova1 1 Institute of Economics of the Ural Branch of the Russian Academy of Sciences, Yekaterinburg, Russia; e-mail: [email protected] 2 Ural Federal University, Yekaterinburg, Russia

ABSTRACT KEYWORDS Relevance. Regional infrastructure development directly affects econom- region, infrastructure, ic growth, social development and the quality of life. To identify the key areas infrastructure development, static of infrastructure development in Russian regions, it is necessary to develop a and dynamic indicators, economy, methodological approach to the analysis of the impact of infrastructure on so- quality of life, public-private cio-economic development, which determines the relevance of this study. Re- partnership search objective. This study aims to improve the methodology of assessment of the role infrastructure plays in the socio-economic development of Russian regions. Data and methods. The analysis relies on a system of general and integral, static and dynamic indicators used to assess the current state and dynamics of ACKNOWLEDGEMENTS infrastructure in regions. The analysis takes into account the structural and func- This research was supported by the tional features of infrastructure. The proposed methodology comprises meth- Institute of Economics of the Ural ods for obtaining comparative estimates of regional infrastructure development, Branch of the Russian Academy of which can be applied to compile regional rankings. The study also uses methods Sciences. of econometric and K-means cluster analysis. Results. A comparative analysis of the infrastructure development of Russian regions allowed us to assess the infrastructural potential of these regions, the discrepancies in infrastructure de- FOR CITATION velopment and compare the infrastructure-related characteristics of the leading Ignatieva, E.D., Mariev, O.S., & lagging regions. The results of econometric analysis as well as cluster analysis of Serkova, A.Ye. (2020) Impact of regions based on general and integral dynamic indicators are discussed. Con- infrastructure on socio-economic clusions. The methodological approach proposed by the authors has been tested development of Russian regions: by using the data on Russian regions. The analysis has revealed the most typical methodology and analysis. problems faced by Russian regions. These problems should be taken into account R-economy, 6(2), 65–73. doi: in strategic decision- and policy-making. 10.15826/recon.2020.6.2.006 Влияние инфраструктуры на социально-экономическое развитие регионов России: методология и анализ Е.Д. Игнатьева1 , О.С. Мариев1, 2, А.Е. Серкова1 1 Институт экономики Уральского отделения Российской академии наук, Екатеринбург, Россия; e-mail: [email protected] 2 Уральский федеральный университет, Екатеринбург, Россия АННОТАЦИЯ КЛЮЧЕВЫЕ СЛОВА Актуальность. Развитие региональной инфраструктуры напрямую влия- регион, инфраструктура, ет на экономический рост, социальное развитие и качество жизни. Для вы- развитие инфраструктуры, явления ключевых направлений развития инфраструктуры в российских статические и динамические регионах необходимо разработать методологию, анализирующую влияние показатели, экономика, инфраструктуры на социально-экономическое развитие регионов. Цель качество жизни, исследования. Цель данного исследования – усовершенствовать методо- государственно-частное логию оценки роли инфраструктуры в социально-экономическом разви- партнерство тии регионов России. Данные и методы. Анализ основан на системе общих и интегральных, статических и динамических показателей, используемых для оценки текущего состояния и динамики инфраструктуры в регионах. Анализ учитывает структурные и функциональные особенности инфра- структуры. Предлагаемая методология включает в себя методы получения сравнительных оценок развития региональной инфраструктуры, которые БЛАГОДАРНОСТИ можно применять для составления региональных рейтингов. В исследо- Работа выполнена при под- вании также используются эконометрические методы и кластерный ана- держке Института экономики лиз с помощью метода k-средних. Результаты. Сравнительный анализ Уральского отделения Россий- развития инфраструктуры российских регионов позволил нам оценить ской академии наук. © Ignatieva, E.D., Mariev, O.S., Serkova, A.Ye., 2020

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инфраструктурный потенциал этих регионов, различия в развитии ин- ДЛЯ ЦИТИРОВАНИЯ фраструктуры и сравнить инфраструктурные характеристики регионов. Ignatieva, E.D., Mariev, O.S., & Проинтерпретированы результаты эконометрического анализа, а также Serkova, A.Ye. (2020) Impact of кластерного анализа регионов на основе общих и интегральных динами- infrastructure on socio-economic ческих показателей. Выводы. Предложенный авторами методологиче- development of Russian regions: ский подход апробирован с использованием данных по регионам России. methodology and analysis. Анализ выявил наиболее типичные проблемы, с которыми сталкиваются R-economy, 6(2), 65–73. doi: российские регионы. Эти проблемы должны учитываться при принятии 10.15826/recon.2020.6.2.006 стратегических решений и разработке государственной политики.

Introduction of entrepreneur surveys). Kazakova & Pospelova Comprehensive modernization of productive (2017) compared the transport infrastructure in forces at the regional and macro-regional levels is Russia with that of other countries and found its impossible without infrastructure development. qualitative characteristics to be among the most In order to monitor infrastructure development significant limitations of economic growth. Wang in Russian regions and adjust it to the needs of et al. (2020) investigated the impact of transport economic growth and to improve the quality of infrastructure (railway and road) on the econo- life in these regions, it is necessary to design the mic growth in the countries of the Belt and Road appropriate methodology. Initiative in 2007–2016. The purpose of this article is to describe and Maliy & Gusev (2010) assess the impact of substantiate the methodological approach to as- energy enterprises on regional development by sessing the impact of regional infrastructure de- focusing on the case of Saratov region in Russia. velopment on the socio-economic situation in the A number of studies consider the impact of so- country. We are also going to describe the corre- cial infrastructure on the reproduction of human sponding methodological principles and tools. capital and the implementation of social proj- Infrastructure influences all socio-economic pro- ects (Tikhonovich, 2012; Roskruge, 2011; Wai et cesses in regions, creates conditions for the deve- al., 2013). Tiwari (2008) discusses the impact of lopment of the real sector, helps improve the economic infrastructure on agricultural develop- quality of life and provides opportunities for peo- ment, and Owualah (1987) on the development ple’s individual growth. of small businesses. Chen & Fang (2018) exami- Our study focuses on the infrastructure in ned the relationships between economic growth, Russian regions and their socio-economic sys- industrial electricity consumption and human tems. A comprehensive approach should be ap- capital by using a panel of 210 Chinese prefecture plied to address the problems of infrastructure cities in 2003–2012. development in Russian regions, because the de- Some studies apply instrumental methods velopment of some types of infrastructure is as- and modeling: for example, Shvetsov et al. (2018) sociated with the development of other types of analyze the impact of infrastructure on regio- infrastructure. The high level of infrastructure de- nal socio-economic development (the case of the velopment ensures the comparative advantages of Nenets Autonomous Okrug) with the help of an regions in their interactions with each other and autoregressive model with equations reflecting the on a global scale. dependence of endogenous indicators (GRP, R&D costs, per capita income and volume of polluting Literature review emissions) on exogenous variables – factors of in- There are various approaches to analyzing frastructure. Cantos et al. (2005) use the production and evaluating the impact of certain types of in- function to study the dependence of regional out- frastructure on socio-economic development. put on capital investment in transport infrastruc- Efimova (2009) identifies four main approaches ture in Spanish regions. Kiselev & Tkachev (2015) to assessing the role of transport in regional de- propose an economic and mathematical model for velopment: by focusing on the availability of assessing the impact of social infrastructure on re- the market of resources and sales; by analyzing gional development. Malafeev & Baskakova (2017) transport costs; by analyzing investment activity investigate the significance of infrastructure capital in the region; and by looking at the role of infra- for the gross output of the material production sec- structure factors in production and location de- tor by applying econometric analysis of panel data cisions (the fourth approach also implies the use using Cobb-Douglas production function.

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ration for the period until 2030’, federal program Types of infrastructure ‘Development of the Transport System of Russia and their functions (2010–2021)’, ‘Development Strategy of the Russian Our study aims to provide a comprehensive Railways until 2030’, program ‘Russian Automobile assessment of the impact that various types of Roads in the Long Term (2010–2020)’, and so on. infrastructure have on the socio-economic deve- Regional transport infrastructure, ensuring lopment of Russian regions. Such assessment can the territorial integrity of the region, is an impor- then be used for devising infrastructure deve- tant element of the system of national economy lopment policies. The methodology of this study and economic security (Lyutov, 2017). Transport relies on the structural and functional aspects of is one of the largest basic sectors of the economy infrastructure. Infrastructure has a fairly complex and an important component of infrastructure, structure, including various industries, structures, which provides conditions for economic growth facilities, and institutions. Infrastructure per- and contributes to national and regional pros- forms various economic, financial, demographic, perity. A region with developed transport infra- social, environmental, and other functions. In- structure is in a relatively better position than frastructure is a major factor that determines the its less successful counterparts. Moreover, deve- economic and social prosperity of a region. For loped transport infrastructure also facilitates the a more in-depth understanding of the impact of region’s achievement of its strategic and tactical infrastructure, we should consider how specific goals and allows it to optimize the use of all types types and element of infrastructure affect regional of resources (Kudryavtsev & Tarasenko, 2014). development (Ignatyeva et al., 2018). The fuel and energy infrastructure performs There are three main types of regional in- such functions as providing people and enterpris- frastructure depending on its functions: pro- es with electricity and fuel and ensuring the ener- ductive-economic, financial and social. Pro- gy-related and economic security of the country ductive-economic infrastructure, whose main and regions. It also serves as a source of revenue function is to provide conditions for social pro- for state and regional budgets. Moreover, its posi- duction, includes transport, communications, tive impact on regional growth is achieved due to electricity, and construction. the spatial effects that go beyond the boundaries Transport infrastructure is an enabler for of individual regions (Maliy & Gusev, 2010). economic activity, an essential part of economic The construction infrastructure participates relations at the regional, interregional and global in the creation of fixed assets and their expanded levels. According to Pchelintsev (2004), transport reproduction, implementation of housing con- and communications contribute to the intensi- struction programs, creating conditions for the fication and improvement of the quality of eco- development of the production and non-produc- nomic relations and ensure the mobility of pro- tion sphere of the region. duction factors and the availability of production The financial infrastructure, in its turn, en- results. As the world practice shows, the presence sures the consolidation of financial resources, of new infrastructural networks, including mo- their rational allocation and use, creating a favo- tor transport, is the most important competitive rable investment climate in the region. advantage of regions, a factor that is crucial for The main function of the social infrastructure regions’ general development and specialization, is to satisfy people’s needs and create conditions formation of local-scale territorial and industrial for expanded reproduction of labor and creative complexes and effective inter-regional interaction potential of the region’s population. This function (Melnikovet et al., 2019). largely depends on the quality of life in the region Transport accounts for 8% of the industry as well as the development of the real sector, since structure of GRP. According to the data of the social infrastructure is ‘the main factor in the for- Federal State Statistic Service (Rosstat), fixed as- mation of human capital that creates labor pro- sets of transport at the end of 2018 accounted for ducts’ (Tikhonovich, 2012). The social infrastruc- 22.4% of the total volume of fixed assets of Rus- ture of a region includes health care, education sia; transport accounted for 18.7% of total invest- and culture, public catering and consumer ser- ment. The main documents regulating the key vices, housing and communal services, and so on. strategic areas of transport development in Russia For optimal decision- and policy-making in a are the ‘Transport Strategy of the Russian Fede- region, it is necessary to assess the actual state of

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its infrastructure against other regions (Kudryavt- ity. The indicators also corresponded to specific sev & Tarasenko, 2014), which requires a set of types of infrastructure. appropriate indicators. Depending on the goal, Aggregated, static indicators are formed by objectives, and time interval of the study, partial, using normalized particular indicators that char- general and integral, static and dynamic indica- acterize elements of a specific type of infrastruc- tors are calculated. ture. There are particular indicators reflecting the Normalization of individual indicators is availability of individual elements of infrastruc- done by using the following formula: ture in a region, while there are also consolidat- NN− min ed indicators that characterize specific types of R = ij i Nij max min , infrastructure and integrated indicators that re- NNii− flect the state of infrastructure as a whole. Thus, R in accordance with the types of infrastructure, it where Nij is the normalized estimation of the i-th is possible to identify general indicators characte- indicator for the j-th region; rizing economic, financial, social and other types Nij is the value of the i-th particular indicator of infrastructure in a region. General indicators for the j-th region; min max are based on particular indicators that characte- NNii, are the lowest and highest values rize the availability of elements of specific types of the i-th indicator for all regions; of infrastructure in the region. Static indicators i, j are the sequential numbers of the indicator are used to assess the state of infrastructure in the and the region, respectively. current period, while dynamic indicators reflect Aggregate static indicators are calculated as its changes in time. Both static and dynamic indi- arithmetic means of normalized indicators, while cators can be partial, general or integral. aggregate dynamic indicators are calculated as geometric means of indexes of private indicators Methodology and data (Iij) for each type of infrastructure. Similarly, inte- To calculate indicators and assess their im- gral static indicators are calculated as arithmetic pact on economic growth and the quality of life means and integral dynamic indicators are calcu- in a region, we have formulated the following lated as geometric means of aggregate indicators methodological principles: for all types of infrastructure. – substantiation of hypotheses about the na- The k-means method was used to classify ture and aspects of the infrastructure’s impact on Russian regions depending on the values of ag- regional development, regarding specific types of gregate and integral indicators of specific types infrastructure and in general; of infrastructure. Cluster analysis is necessary – selection of baseline indicators, their nor- to identify problems of infrastructure develop- malization and grouping by infrastructure type, ment that are characteristic of certain groups of formation of a data base; regions, assess the development of different types – calculation of static and dynamic indicators of infrastructure in each region, and assess whe- characterizing regional infrastructure; ther the existing infrastructure meets the needs of – comparative analysis and rating of regions the real sector and the population. The use of this regarding their infrastructure in general and its method makes it possible to identify the weak- specific types; nesses and comparative advantages of regions in – econometric analysis of the impact of infra- socio-economic development regarding their in- structure-related factors on economic growth and frastructure, which is necessary for strategic deci- quality of life in a region; sion-making. – cluster analysis of the regions based on the The methodological recommendations were calculated indicators; tested by the authors in relation to Russian re- – identification of the most typical problems gions. To calculate the indicators, a data base was of infrastructure development and the corre- created drawing from the official Rosstat data. sponding priority areas of strategic development. The initial data for the econometric analysis is In our study, the choice of initial (particu- presented as a panel for Russian regions for 1999– lar) indicators was determined, as already noted 2015. To calculate static and dynamic indicators, above, by the principles of complexity, consisten- we used the data from official statistics for 5 years cy, representativeness, reliability and comparabil- (2012–2016).

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Results Astrakhan region, Dagestan, Ingushetia, the Ka- The results of the regression analysis (Igna- bardino-Balkar, Karachay-Cherkess and Chechen tyeva et al., 2018) have shown that the most sig- Republic. The relatively low level of infrastructure nificant factors that positively affect GRP per development in these regions impedes the devel- capita are fixed capital investment and the share opment of the real economy and improvement of of university graduates in the total population. the quality of life. These regions are also charac- This conclusion confirms the importance of in- terized by the lowest levels of GRP per capita. vestment and education as factors of regional so- We used the indicators of productive-eco- cio-economic development. nomic, financial and social infrastructure for The road density index had a very significant cluster analysis and grouping of Russian regions. impact on GRP per capita, in contrast to the rail- In this article, we discuss primarily the results of way density index. This can be explained by the cluster analysis based on dynamic indicators (for following features of rail transport – less flexi- more on typological groupings of Russian regions ble schedule of cargo delivery compared to road based on static indicators, see Ignatieva et al, 2019) transport, possible distance of the tracks from the As a result of cluster analysis, 6 typological points of cargo delivery, longer transportation groups (clusters) of Russian regions were identi- times, and “bottlenecks”. fied. Table 2 illustrates the comparative characteris- Intervals of values of static indicators of infra- tics of these groups based on the aggregate dynamic structure development for 2012–2016 are shown indicators for three types of infrastructure – indus- in Table 1. trial, financial and social. The table also shows in- Our calculations of statistic indicators have tegrated static indicators to show the dynamics of shown that Moscow is the leader in terms of in- infrastructure development in regions. frastructure development among Russian regions. The figure shows significant discrepancies in In all aggregate indicators, as well as in the inte- regional infrastructure development in Russia. gral indicator and the volume of GRP per capita, The first group constitutes the largest share (45%), it surpasses other Russian regions. Moscow is also the fourth group accounts for 24%, and the fifth, the absolute leader in terms of railways and roads for 15%. The shares of the second, third and sixth with solid cover, which provided a relatively high groups were 7%, 2% and 7%, respectively. level of this region in the aggregate indicator of Let’s look at some characteristics of each cluster. productive-economic infrastructure. Relatively Group 6 high levels in the indicators characterizing pro- 7% ductive-economic, economic and financial infra- Group 5 structure and in the integral indicator are typical 15% of the Khanty-Mansiysk, Yamalo-Nenets and Ne- Group 1 nets Autonomous okrugs, Kamchatka and other 45% regions rich in natural and mineral resources. The group of high achieving regions also includes Sverdlovsk region, St. Petersburg, Moscow region, Leningrad region, the Republic of Tatarstan, Ka- Group 4 liningrad region and some others. 24% The medium level in aggregate indicators of infrastructure development is characteristic of Group 3 Group 2 Belgorod, Lipetsk, Vologda, Murmansk, Perm 2% 7% and Novgorod regions. The lowest levels in all the Figure 1. Distribution of Russian regions based on indicators are found in Altai, Adygea, Kalmykia, dynamic indicators of infrastructure development

Table 1 Intervals of values of static indicators of infrastructure development in Russian regions № Value of indicators Type of infrastructure Integrated GRP per capita, Production-economic Social Financial indicator RUB 1 Maximum value 0,027 0,128 0,003 0,088 106 756,6 2 Minimal value 0,664 0,610 0,686 0,595 5 821 559,8 Source: the authors’ calculations are based on statistical data (Rosstat).

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As the Table illustrates, the highest values in characteristics. The financial infrastructure in the dynamic indicators are found in the third group regions of the second and fifth groups developed of regions (especially in financial indicators), al- relatively dynamically at relatively low starting though their infrastructure development is at the levels. The stable dynamics of productive-eco- medium level (Bashkortostan) or somewhat lower nomic and financial infrastructure development (Mari El). The negative dynamics of infrastructur- is characteristic of the regions of the first group, al development (or the lowest figures in dynamic which is also the largest, including regions whose indicators) is typical of the sixth group, which current level of development for these types of in- includes both regions with a high level of infra- frastructure is quite high (Moscow, Saint Peters- structure development (Tatarstan, Perm Krai) and burg, Khanty-Mansi Autonomous Okrug). regions with a relatively low level of infrastructure Such regions as Moscow, Tatarstan, and the development (Karachay-Cherkess Republic, As- Yamalo-Nenets Autonomous Okrug with high trakhan region). levels of static indicators have demonstrated low The relatively stable dynamics of infrastruc- levels in the dynamic indicators of social infra- ture development was observed in groups 1, 2, structure development. In a number of regions, 4, and 5, but each of these groups had its own the opposite picture was observed – social infra-

Table 2 Comparative characteristics of groups (clusters) of Russian regions based on aggregate dynamic indicators Values General dynamic indicators by type of infrastructure Integral Productive-economic Social Financial static indicator Group 1 (37): Belgorod region, Vladimir region, Voronezh region, Ivanovo region, Kaluga region, Kostroma region, Kursk region, Moscow region, Orel region, Smolensk region, Tver region, Yaroslavl region, Moscow, Nenets Autonomous Okrug, Murmansk region, Novgorod region, Saint Petersburg, Stavropol territory, Republic of Mordovia, Chuvash Republic, Kurgan oblast, Khanty-Mansi Autonomous Okrug – Yugra, Yamalo-Nenets Autonomous Okrug, Tyumen region, Chelyabinsk region, Republic of Altai, Republic of Buryatia, Republic of Tuva, Republic of Khakassia, Altai Krai, Zabaykalsky Krai, Krasnoyarsk Krai, Novosibirsk region, Tomsk region, Republic of Sakha (Yakutia), Kamchatka territory, Sakhalin region. Maximum 1,464 1,417 0,979 0,595 Minimum 0,826 1,122 0,701 0,157 Mean 1,034 1,251 0,877 0,256 Group 2 (6): Krasnodar territory, Volgograd region, Rostov region, Udmurt Republic, Kirov region, Ulyanovsk region Maximum 1,479 2,799 1,081 0,350 Minimum 1,278 2,040 0,934 0,195 Mean 1,375 2,246 1,004 0,253 Group 3 (2): Republic of Bashkortostan, Republic of Mari El Maximum 2,326 4,652 1,132 0,233 Minimum 2,071 4,101 1,106 0,182 Mean 2,199 4,377 1,119 0,207 Group 4 (20): Ryazan region, Tula region, Republic of Karelia, Komi Republic, Arkhangelsk region , Vologda region, Kaliningrad region, Leningrad region, Pskov region, Republic of Adygea, Republic of Kalmykia, Republic of Ingushetia, Republic of North Ossetia, Kabardino-Balkar Republic, Sverdlovsk region, Kemerovo region, Omsk region, Primorye Krai, Jewish Autonomous Okrug, Chukotka Autonomous Okrug Maximum 1,142 1,143 1,163 0,357 Minimum 0,782 0,913 0,816 0,088 Mean 0,976 1,062 0,944 0,217 Group 5 (12): Bryansk region, Lipetsk region, Tambov region, Republic of Dagestan, Chechen Republic, Orenburg region, Penza region, Saratov region, Irkutsk region, Khabarovsk Krai, Amur region, Magadan region. Maximum 1,189 1,832 1,083 0,367 Minimum 0,954 1,436 0,864 0,148 Mean 1,024 1,588 0,946 0,231 Group 6 (6): Astrakhan region, Karachay-Cherkess Republic, Republic of Tatarstan, Perm region, Nizhny Novgorod region, Samara region. Maximum 1,041 0,854 0,784 0,284 Minimum 0,495 0,403 0,663 0,111 Mean 0,694 0,630 0,733 0,217 Source: the authors’ calculations are based on statistical data (Rosstat).

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structure developed more dynamically in regions In Russia, infrastructure bonds worth about with low initial levels of development (Chechnya, 50 billion rubles were issued by JSC ‘Western North Ossetia, Mari El, and Tambov region). The High-Speed Diameter’, JSC ‘Main Road’, and LLC only exceptions were the Chukotka Autonomous ‘North-Western Concession Company’. The po- Okrug and Leningrad region, characterized by tential amount of funds of the Russian pension relatively high dynamic estimates with high initial system invested in infrastructure development levels of infrastructure development. may be from $ 3.5 to $7.0 billion in the short term, Thus, the calculation of static and dynam- with the possibility of an almost two-fold increase ic indicators allowed us to compare the levels in the medium term. The participation of the state and dynamics of various types of infrastructure, as an issuer of infrastructure bonds guarantees a which is necessary to identify the threats to eco- reduction in risk and an increase in the invest- nomic security associated with negative trends in ment attractiveness of regional and municipal in- infrastructure development and determining the frastructure projects (Stuart, 2017). prospects for infrastructure development in Rus- As we have noted above, the development of sian regions. some types of infrastructure leads to the develop- According to Rosstat, depreciation of fixed ment of other types of infrastructure, i.e. balanced assets in transport at the end of 2018 amount- development of infrastructure is an important ed to 39.7% and in construction, 48.9%. To condition for its effective functioning. One of the modernize and update fixed assets and introduce key factors of infrastructure development in re- new technologies, it is necessary to attract invest- gions is the efficient performance of the financial ment, which includes investment from institu- infrastructure, since an important area for imple- tional investors (banks, pension funds, insurance menting investment projects in the field of pro- companies) through public-private partnership ductive economic and social infrastructure is to (PPP) mechanisms. This opens new opportunities attract funds from institutional investors (banks, for investors, developers and consumers as PPP pension funds, insurance companies) to finance mechanisms allow to combine the potential of the the creation of new and improve the already state and business. Currently, the most promising existing facilities. PPP projects in the transport sector are implemented in Moscow and St. Petersburg, since these Conclusions regions have most advantages in terms of road Problems of infrastructure development in density, financial infrastructure development, and Russian regions should be solved comprehensive- the level of income (Ofin, 2016). ly as the development of infrastructure affects all To expand the scope and improve the efficien- social and economic processes and is necessary to cy of PPP mechanisms in Russian regions, it may create conditions for the development of the real be useful to study the foreign experience of using sector, rational use of material and labor resour- such financing schemes in infrastructure develop- ces. Infrastructure is also essential to provide opment. For example, in Australia, 10–15% of total portunities for personal growth, improvement of investment in infrastructure by the mid-2000s the demographic situation and the quality of life. was carried out at the expense of public-private The methodological principles described in this partnerships (Gilmour et al., 2010). article can be used to assess the impact of infra- The bulk of this investment was primarily in- structure on GRP per capita as a general indicator tended for the creation of economic infrastruc- of socio-economic development, assess the com- ture, although in some cases social infrastructure parative advantages of regions related to the state was also created. There is a foreign practice of at- of their infrastructure, and identify strong and tracting investment to create and develop infra- weak aspects in infrastructure development. structure facilities by issuing infrastructure bonds. The methodological principles and tools In the United States, pension funds are invested have been tested by using the data for Russian in infrastructure bonds to finance infrastructure regions, which shows the practical significance projects, with preference given to municipal loans. of this approach. As a result, we identified the The main issuers of infrastructure bonds in India most typical problems faced by Russian regions. are banks, and in Chile – concessionaires, and These problems should be taken into account in concession projects using infrastructure bonds strategic decision- and policy-making. As our enjoy the highest credit ratings (Ivanov, 2011). regression and correlation analysis has shown,

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one of the major challenges in this respect is the efficiency of investment projects through the to ensure a more balanced development of the active use of PPP mechanisms. country in terms of infrastructure. Investment is Further research prospects, in our opin- crucial for the implementation of infrastructure ion, consist in a more detailed analysis based on projects, equipment modernization, and digita- the proposed static and dynamic indicators of lization of infrastructure sectors. This will create infrastructure development and its impact on incentives for the development of the real sector, socio-economic development, with the identi- social sphere and, in the long run, will improve fication of leaders and laggards, monitoring in- the quality of life in the regions. As Russian and frastructure development in regions where large international experience has shown, special at- infrastructure projects are being implemented, tention should be paid to the enhancement of including using PPP mechanisms.

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Information about the authors Elena D. Ignatieva – Cand.Sc. (Economics), senior researcher, Institute of Economics of the Ural Branch of the Russian Academy of Sciences (29, Moskovskaya str., Yekaterinburg, 620014, Rus- sia); e-mail: [email protected] Oleg S. Mariev – Cand.Sc. (Economics), associate professor, Head of the Department of Econometrics and Statistics, Ural Federal University (19, Mira str., Yekaterinburg, 620002, Russia); senior researcher, Institute of Economics of the Ural Branch of the Russian Academy of Sciences (29, Moskovskaya str., Yekaterinburg, 620014, Russia); e-mail: [email protected] Alla Ye. Serkova – leading economist, Institute of Economics of the Ural Branch of the Russian Academy of Sciences (29, Moskovskaya str., Yekaterinburg, 620014, Russia); e-mail: [email protected]

ARTICLE INFO: received February 9, 2020; accepted May 10, 2020

Информация об авторах Игнатьева Елена Дмитриевна – кандидат экономических наук, старший научный сотрудник Института экономики Уральского отделения Российской академии наук (620014, г. Екатеринбург, ул. Московская, 29); e-mail: [email protected] Мариев Олег Святославович – кандидат экономических, доцент, заведующий кафедрой эконометрики и статистики Уральского федерального университета (620002, Россия, г. Екатеринбург, ул. Мира, 19); старший научный сотрудник Института экомоники Уральского отделения Российской академии наук (620014, г. Екатеринбург, ул. Московская, 29); e-mail: [email protected] Серкова Алла Евгеньевна – ведущий экономист Института экономики Уральского отделения Российской академии наук (620014, г. Екатеринбург, ул. Московская, 29); e-mail: [email protected]

ИНФОРМАЦИЯ О СТАТЬЕ: дата поступления 9 февраля 2020 г.; дата принятия к печати 10 мая 2020 г.

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Online ISSN 2412-0731 R-ECONOMY, 2020, 6(2), 74–88 doi: 10.15826/recon.2020.6.2.007 Original Paper doi 10.15826/recon.2020.6.2.007 Small businesses in the global market: evidence from the fashion system of Vicenza province (Italy) D. Celetti University of Padua, Padua, Italy; e-mail: [email protected]

ABSTRACT KEYWORDS Relevance. The paper seeks to explore how small and medium handicrafts can textiles, fashion, clothing, successfully compete in the globalized market. It questions, in particular, the rele- industrial districts, handicraft, vance of the territory, of industrial districts and of the use of information technol- made in Italy, economic history ogy to create innovative approaches to production and marketing, and consolidate the territory’s competitive position in global value chains. It highlights actual viable strategies for small and medium businesses operating in particularly complex sectors like those that are part of the “fashion system”. Thus, the article deals with ACKNOWLEDGEMENTS an important part of the national industry in the moment of world-wide crisis. Research Objective. The article discusses successful strategies of small firms in The research was supported by clothing and fashion industry. Its purpose is to verify if and how handicrafts op- the project “The Economy of erating in the sectors particularly exposed to international competition succeed Excellence. Italian Handicraft in competing effectively in international markets. The study tests the thesis that in the International Networks: local dimension does not necessarily represent a disadvantage in the age of glo- Traditional Knowledge, balization and that even handicrafts can play at the international level. The study Technological Innovation and Communication Strategies also verifies the role of territory in granting unique competitive advantage in the th th global market. Data and Methods. The methodological approach combines ana- (19 – 20 Centuries)”, University lysis of statistical data with four case studies. The work combines analytical and of Padua (IT), Department of empirical approaches to highlight how a single business can reach levels of excel- Historical, Geographical Sciences lence in troubled markets. Results. The study demonstrates that handicrafts can and of the Antiquity. find spaces for growth in such declining sectors as cloth production in developed countries, provided that they succeed in focusing on niche markets through process, product, and marketing innovations; in using up-to-date technology; and in exploiting territorially embedded values. In this context technology emerges as a FOR CITATION strategic tool as it lowers transaction costs and entrance barriers, offers innova- Celetti, D. (2020) Small tive opportunities for re-organizing production processes, and enlarges potential businesses in the global market: markets. Industrial districts, then, continue to represent a viable strategic advan- evidence from the fashion system tage in terms of flexibility, know-how, and cooperation. Finally, the brand “made of Vicenza province (Italy). in Italy” confirms its status as an internationally recognized synonym of quality R-economy, 6(2), 74–88. doi: and fashionable design, opening companies the way to high level, luxury niches. 10.15826/recon.2020.6.2.007 Малые предприятия в глобальном рынке: пример сектора моды провинции Виченца (Италия)

Д. Челетти Падуанский университет, Падуя, Италия; e-mail: [email protected] АННОТАЦИЯ КЛЮЧЕВЫЕ СЛОВА Актуальность. Статья посвящена изучению того, как малые и средние ре- текстиль, мода, одежда, месленные изделия могут успешно конкурировать на глобализированном кластеры, ремесленная рынке. В ней рассмотрены, в частности, роль территории, промышленных продукция, макроэкономика, районов и использования информационных технологий для создания инно- экономическая история вационных подходов к производству и сбыту, а также для укрепления конку- рентоспособности территории в глобальных цепочках создания стоимости. Освещены актуальные жизнеспособные стратегии для малого и среднего бизнеса, работающего в особенно сложных секторах, таких как те, которые являются частью «системы моды». Таким образом, статья посвящена важ- ной части итальянской промышленности в момент мирового кризиса. Цель исследования. В статье рассматриваются стратегии малых фирм в инду- стрии одежды и моды. Цель исследования состоит в том, чтобы проверить, успешно ли эти фирмы конкурируют на международных рынках. В исследо- вании проверяется тезис о том, что размер фирмы не обязательно является © Celetti, D., 2020

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недостатком в эпоху глобализации и что даже ремесленные фирмы могут БЛАГОДАРНОСТИ эффективно играть на международном уровне. Статья также подтверждает Исследование было поддержано роль территории в предоставлении уникального конкурентного преимуще- проектом «Экономика ства на мировом рынке. Данные и методы. Методологический подход объе- совершенства. Итальянское диняет теоретическое обсуждение выбранной научной литературы и стати- ремесло в международных стических данных с углублённым анализом четырёх фирм. Работа сочетает сетях: традиционные знания, в себе аналитические и эмпирические подходы, чтобы подчеркнуть, успеш- технологические инновации ные стратегии отдельных фирм. Результаты. Исследование показывает, что и коммуникационные стратегии ремесленные фирмы могут найти пространство для роста в таких сокраща- (XIX – XX века)», Университет ющихся секторах, как производство одежды в развитых странах, при усло- Падуи (ИТ), факультет вии, что им удастся сосредоточиться на нишевых рынках с помощью инно- исторических, географических ваций в процессах, продуктах и маркетинге; в использовании современных наук и античности. технологий; и в использовании территориально заложенных ценностей. В этом контексте технология становится стратегическим инструментом, поскольку она снижает операционные издержки и входные барьеры, пред- лагает инновационные возможности для реорганизации производственных ДЛЯ ЦИТИРОВАНИЯ процессов и расширяет потенциальные рынки. Таким образом, промыш- Celetti, D. (2020) Small ленные районы продолжают представлять собой жизненно важное страте- businesses in the global market: гическое преимущество с точки зрения гибкости, ноу-хау и сотрудничества. evidence from the fashion system Наконец, бренд «Сделано в Италии» подтверждает свой статус признанного of Vicenza province (Italy). во всем мире синонима качества и модного дизайна, открывая компаниям R-economy, 6(2), 74–88. doi: путь к нишам класса люкс высокого уровня. 10.15826/recon.2020.6.2.007

Introduction its historical importance; its recent critical trends The Italian fashion system, even its most in terms of turnover, number of firms, and em- dynamic clusters, suffered from the prolonged ployees. The case studies of individual firms, on decline of the early 2000s. Though traditionally the other hand, have been selected because they strong and playing for decades a leading role in represent clear examples of small family-run domestic economy, it started losing firms, em- artisanal businesses successfully operating in ployees, and turn-over. The negative trend af- complex environments. The reference period of fected both small and big companies in all the the paper is 2000–2018, which overlaps with the country’s regions, including North-Eastern ones, economic stagnation following the European where textile manufactures have been strongly monetary union, the 2008 financial crisis, and the present since Venetian time (Fontana, 2004), and following restructuring of the world economy. lived world-known success stories, such as the The study is divided into three parts. First of Rossi, Marzotto, Stefanel, or Benetton (Belussi, all, it provides a critical review of selected litera- 1992; Rovizzi, 1992; Tait, 1998; Fontana, 2005; ture on the formation of the clothing and fashion Favero, 2012). Within this broadly adverse trend, industry in Vicenza province, of its development, there is, however, evidence of single firms ha- of its strengths and weaknesses. Then we recon- ving managed to re-organize their own business struct, through statistical and empirical analysis, and develop innovative strategies within rentable the sector’s most recent trends, focusing on firms’ niches (Bettiol, 2015). The paper aims at enhanc- strategies to counteract negative economic condi- ing our understanding of the possibilities of re- tions. It concludes by explaining how SMEs can, action of small and medium enterprises (SMEs) within certain conditions, find successful strate- operating in highly competitive markets com- gies in the time of enduring crisis, when the mar- bining analysis of empirical data and case study kets are shrinking. methods. Our main goal is to verify if and through which approaches small businesses can withstand Literature review unfavorable economic trends and compete suc- The so-called ‘fashion system’ includes busi- cessfully in global markets. The paper investigates, nesses producing clothing and accessories. It train particular, how handicrafts succeed in changing ditionally represents a core sector of the national the ‘traditional rules of the game’ in their favour economy in Italy (Paris, 2006; Merlo, 2011). Even through marketing, product, and process reorga- nowadays, though significantly reduced in scope nization. The research has focused on the fashion in comparison with the 1990s, it still holds a rele- and clothing sector in Vicenza province because vant position in Italian industrial production and of its relevance in regional and national economy; international trade (Paris, 2006; Merlo, 2015).

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Researchers explain such results by stressing his- shops specialized in different parts of the produc- torical and culturally embedded entrepreneurial tion chain, built synergies with those working in skills and by pointing out the ability of Italian related sectors (e.g. machine building) and with firms to interpret and mould consumers’ prefer- larger companies controlling the strategic parts ences (Scarpellini, 2019; Belfanti, 2015; Merlo, of the value chain and promoting international 2012). Scholars also highlight Italian firms’ capa- brands (Coro’, 1999; Mistri, 2009). city to play successfully within global value chains, There is vast research literature on cluster and upgrade their position effectively, use the possi- industrial districts1 (Cainelli, 2008; Bettiol, 2019). bilities offered by collaboration with internatio- Of particular interest for our research are the nal brands and buyers, and promote collabora- studies on the role of the territory as a complex tion at the district level (Dunford, 2006; Merlo, asset for competitiveness (Lacquement, 2016) 2018; Bettiol, 2017). The latter aspect emerges es- as well as on the latest transformation of indust- pecially strong among little enterprises operating rial districts in the fast changing and globalizing within close territorial boundaries, such as the tex- economy (Brioschi, 2002; Mariotti, 2020). Studies tile districts located in Veneto (Bettinelli, 2016). highlight the financial and managerial limits of Studies on Veneto’s and Vicenza’s ‘fashion sys- the ‘small-scale’ factories (Whitford, 2001); their tem’ focused first of all on its century-long histo- resilience to crisis (Coro’, 2010; Busato, 2011); ry; on the role of industrial districts and clusters; and the effects of delocalization and offshoring and on its resilience to market transformation and practices on districts and clusters (Tattara, 2010; crisis. The sector experienced a remarkable deve- Coro’, 2013). For our research particularly in- lopment from the late Middle Ages, when home teresting are the studies on the reaction capaci- spinning and weaving where inserted in highly ties of clusters, and, generally speaking, of SMEs competitive, proto-industrial networks (Riello, operating in linked sectors. These studies stress 2013; Caracausi, 2017. From the early 19th cen- the role of territory in enhancing resilience, on tury it was deeply industrialized, and major fac- the one hand, and in building viable positions tories, often integrated into company towns in within global commodity chains, on the other the pre-alpine area, transformed economy, land- (Coro’, 2007; Volpe, 2012; Camagni, 2013; Buci- scape and social life (Fontana, 2004; Roverato, uni, 2018; Barzotto, 2018). In that context, terri- 2004, Leoni, 2017). The process, however, didn’t tory assumes a central role as a source of material substitute home-based production. Industri- and immaterial assets, including the exploitation al plants and independent spinners and weavers of the brand “Made in Italy” as a world-wide established complementary relations (Fontana, recognized insurance of upper class design, aes- 2009; Celetti, 2015). Similarly, industrial and ag- thetic and quality (Lees-Maffei, 2004; Gilm- ricultural work coexisted at family level within ore, 2007; Fontana, 2010; Balland, 2015; Celetti, pluri-activity frameworks, adding resilience to 2019b). This study draws in particular from these local societies and competitiveness to major com- studies and highlights how small handicrafts op- panies (Fontana, 2005; Celetti, 2015). In that pe- erating in the sector that is particularly exposed to riod there emerged features that still characterize global competition can reach excellence, namely the regional economy and landscape, such as the by creating unique quality and using territorial- so-called ‘diffused industrialization’, shops and ly-based competitive advantages. cultivated fields, rural and industrial areas following each other without solution of continui- Methodology ty (Ferrario, 2013; Belfanti, 2013; Celetti, 2019). Methodologically, the work unites quantita- From the 1960s, the ‘subcontracting revolution’ tive analysis of statistical data with qualitative, increased dramatically the number of little facto- empirical observations gained from interviews ries, large firms externalizing labor intensive pro- and from field research of production proces- duction phases to focus on conception, design, ses. The combination of these approaches gives marketing, and commercialization (Belussi, 1992; us insights into the strategies that small handi- Ketelhöhn, 1993; Favero, 2012). Downscaling and crafts follow for building their success stories in reorganization processes induced, as we stressed, declining and turbulent markets. the emergence of numerous small subcontractors, which, by the 1980s, contributed to the forma- 1 On differences between the two concepts cfr. Porter, tion of internationally competitive clusters, where 2009; Ortega-Colomer, 2016.

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We used statistical data to reconstruct the of the above-mentioned Association on the ba- sector’s trends of textile, clothing, and leather pro- sis of four parameters: dimension; production’s duction at the provincial level2. The data have been specialization; location; and competitive success obtained from Istat3, ICE4, and UnionCamere-In- in the global market (Tables 1 and 2). The field foCamere5 official publications. research has been realized by working with the The four case studies we discuss further have interviewees and entailed visits to the shops; re- been selected by the joint team of Padua Uni- construction of the business process; acquisition versity and Confartigianato Vicenza6 among the of the ‘grey material’, such as brochures, photo- 529 clothing and fashion firms that are members graphs, newspaper articles; and formal, recorded interviews with companies’ founders, owners, 2 These activities are classified within Istat – Ateco (eco- directors, and selected personnel. The interviews nomic activity) classification numbers 13, 14, and 15 (2007), were based on questionnaires divided into five excluding 15.11 (leather and fur preparation). 3 Italian Statistical Institute (www.istat.it). parts (the firm’s history and recent development; 4 Italian Institute for Foreign Trade (www.ice.it). business models; strengths; critical issues; and 5 Information and Statistical Service of Italian Chamber prospects) with a focus on the relevance of the of Trade (www.unioncamere.gov.it › infocamere). firms’ dimension, the value of the ‘made in Italy’ 6 “Confartigianato Vicenza” is an association of small and medium handicraft firms operating in Vicenza (https://www. brand, and the role of the territory’ in the time of confartigianatovicenza.it). globalization.

Table 1 Case Studies Main characteristics Arca di Noe’ (A) Vicenza Mode (V) La Pony Confezioni (P) Four Horses (F) Denomination, L’ARCA DI NOE’ SRL – VICENZA MODE LA PONY CONFEZI- For Horses SRL – Via J.F. Address, UNIPERSONALE SRL – Via delle Industrie, ONI SNC – via della Kennedy 59 – San Vito di Web-site Via Rambolina 31/ 78, 36050 Cartigliano Cooperazione, 19 36025 Leg. (VI – Italy) B – 36061 Bassano Del (Vicenza Itally) – https:// Noventa Vicentina (Vi- https://forhorses.it/ Grappa (Vicenza -Italy) – www.vicenzamode.com cenza – Italy) no web site https://www.lapony.it/ Branch Outwear, in particular Knitwear manufacturing Production of men’s and Production of equestrian using technical fabrics for brands working in women’s trousers outwear and accessories and heating tape technol- high quality, ready to ogies for brands working wear segments (designer/ in high quality, ready to diffusion) wear segments (designer/ diffusion) Years of 34 30 (following the trans- 39 (founded in 1980) 18 (founded in 2002) activity formation of the preced- ing family business in the same sector created in 1970) Employees 26 part-time employees 60 full-time employees 30 full-time employees 15 (20 hours a week) Production Cutting, tailoring, wash- Choice of yarn, weaving, Cutting, tailoring, wash- Cutting, tailoring, wash- process ing, ironing, testing, and cutting, tailoring, wash- ing, ironing, testing, and ing, ironing, testing, and shipping ing, ironing, testing, and shipping. The firm also shipping shipping offers projecting and testing services Markets and Final product for major Final product for major Final product for major Final product sold world- clients brands of the interna- brands of the interna- brands of the interna- wide under its own brand tional fashion system tional fashion system tional fashion system to buyers, distributors, working in high quality, working in high quality, working in high quality, shops, and private clients ready to wear segments ready to wear segments ready to wear segments (riders), also on-line (designer/diffusion) (designer/diffusion) (designer/diffusion) Source: Interviews to Roberto Sartori (Arca di Noe’ SRL), interviewed by David Celetti, September 20th, 2018 at the firm’s offices, Via Rambolina 31/B, Bassano Del Grappa (Vicenza, IT): Riccardo Garbosso (Vicenza Mode SRL), interviewed by David Celetti, September 20th, 2018 at the firm’s offices, Via delle Industrie 78, Cartigliano (Vicenza, IT); Riccardo Barbato (La Poni Confezioni SNC), interviewed by David Celetti, September 20th, 2018 at the firm’s offices, via della Cooperazione, 19, Noventa Vicentina (Vi- cenza, IT); Andrea Piovan (For Horses SRL), interviewed by David Celetti, March 14th, 2019 at the firm’s offices, Via Kennedy 59, San Vito di Leguzzano (Vicenza, IT).

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Table 2 Case studies results (A: Arca di Noe’ – V: Vicenza Mode – P: La Pony Confezioni – F: For Horses). Origins Business Model Strengths Critical Issues Prospects and Development Family business di- Subcontractor furnishes Extremely high quality, Difficulty in finding Building continu- rectly managed by the the final product and versatility and flexibili- highly qualified per- ously in knowledge, owner (A, P, V, F) operates in all the phases ty (A, P, V) sonnel at all levels (A, skills, and know-how of the production chain Technical competenc- P, V, F) as instruments for (V) or from cutting es for professional enhancing quality and downwards (A, P). riding necessities with service (A, P, V, F) The business process attention to style and includes projecting and fashion (F) prototyping (A, P, V, F) The firm operates with its own brand, selling directly to distributors or final clients (F) The owner is: Offer includes counsel- Original production Keeping the perceived Process and product A. Former manager of a ing services to current process management value of the ‘Made innovation, uniting big textile company (A) or potential clients (A, – Innovative organiza- in Italy’ brand with tradition and technol- B. Son of the founder P, V, F) tion model based on enhanced protection of ogy (A,P,V, F) with technical experi- remote team work with the brand (A,P,V, F) ence in the sector (P, V). the clients (V, P) C. A former technician – Innovative organi- in a chemical company zation model using and a former design- part-time to enhance er of classical dance flexibility (A) outwear – Coexistence of high technology, technical innovation and handicraft approaches (F) The firms have been Product specialization Highly qualified Keeping enough firms Focusing on luxury constantly moved on knitwear manufac- personnel in measur working in the terri- brands for limiting towards the upper mar- turing (V), trousers (P), to work manually and tory and building up price competition (A, ket’s segments and are technical outwear (A), exploit at the same time more effective policies P, V ) now positioned in the equestrian outwear (F) the highest technology for maintaining ‘the Enhancing its visibil- luxury fashion segment (A, P, V, F) vitality’ of the clothing ity at world level in (A, P, V) and fashion industrial the niche market also district (A, P, V, F) exploiting IT (F) The firms have been Focus on the highest Upper-class services, Keeping very close long Communicate effec- operating in the niche market levels. Clients are including innovation, -term relations with tively the tangible and segment since the very international renowned and problem-solving, fashion luxury brands, intangible (cultural) beginning (F) luxury fashion brands which helps to build which are linked not values of the “made (A, P, V) long-term relations only to the firm’s per- in Italy” brand and Clients are professional with clients (A,P,V, F) formance, but also to of the regional textile and high-level amateur the values ‘embedded’ districts (A, P, V, F) riders served directly in the territory (A, P, V) or through distributors worldwide, the domestic market remaining marginal (F) Strong links with French The production is total- luxury brands: show- ly under the ‘Made in room in Paris, and valu- Veneto’ brand, exploit- able products’ archive ing the territory as a (V) competitive advantage Strong links to the (A, P, V, F) American market: office in Miami (F) Source: Interview with Roberto Sartori (Arca di Noe’ SRL) conducted by David Celetti, September 20th, 2018 at the firm’s office, Via Rambolina 31/B, Bassano Del Grappa (Vicenza, IT): interview with Riccardo Garbosso (Vicenza Mode SRL) conducted by David Celetti, September 20th, 2018 at the firm’s office, Via delle Industrie 78, Cartigliano (Vicenza, IT); interview with Riccardo Barbato (La Poni Confezioni SNC) conducted by David Celetti, September 20th, 2018 at the firm’s office, via della Cooperazione, 19, Noventa Vicentina (Vicenza, IT); interview with Andrea Piovan (For Horses SRL) conducted by David Celetti, March 14th, 2019 at the firm’s office, Via Kennedy 59, San Vito di Leguzzano (Vicenza, IT).

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Results Vicenza’s ‘fashion system’ (textile, clothing, leather) manifests evident degrees of territorial specialization within one of the most industrialized Italian provinces (Table 3). This aspect is clearly highlighted both by ISTAT analysis of the sector’s districts7 and by that of BancaIntesa (BancaIntesa 2018, 126, 205). Firms of the fashion sector are mainly concentrated in the South-East- ern part of the territory (municipalities of Barba- rano and Noventa) and in the ‘traditional textile centers’ of the medium and northern communes, such as those of Thiene, Bassano, and Marostica. Similar results are obtained applying the ‘economic specialization index’ (Palan, 2010) to the handicraft shops operating in single municipalities. In 2017, the index showed concentration rates of 0.141–0.300 (7 municipalities) and 0.301–1.000 Figure 1. Concentration index of textile and clothing (2 municipalities), namely in the South-Eastern handicraft in Vicenza (2017 – Dark Blue 0.301-1; and Central areas of Vicenza province (Figure 1). Blue 0.141-0.3: Light Blue less than 0.140; white 0) However, no municipality has rates higher than Source: Confartigianato Vicenza – Elaborazione Flash 04/03/2020 1.000, which theoretically correspond to the presence of an industrial district. This configuration However, in contiguous territories we still is the consequence of both the 1990s transfor- notice the presence of numerous firms operating mation, marked by diffused delocalization, and in different parts of the production chain. Prox- of the crisis of the two last decades, which, in the imity represents an important competitive advan- way similar to the national trends8 (Banca Intesa, tage at provincial level. It enhances the sector’s 2018) heavily influenced the territorial economic capacity to respond positively to the demand of structure, reducing the number of active handi- flexibility, quality, and ‘customization’ of the final crafts and therefore lowering the concentration buyers, optimizing production processes through index itself (Figure 1). inter-company cooperation. It fosters innovation, 7 ISTAT 2001. 8o Censimento generale dell’industria e dei mutual learning, and knowledge spillover. It in- servizi. Distretti indusrtiali e sistemi locali del lavoro. (53–95) creases resilience to any sudden variations of de- (https://www.istat.it/it/files/2011/01/Volume_Distretti1.pdf); ISTAT 2011. 9o Censimento dell’industria e dei servizi e Censi- mand. Areas with higher concentration indexes, mento delle istituzioni non profit. I distretti industriali. (42–50) therefore, better react to crisis and faster develop 8 ISTAT 2011. 9o Censimento dell’industria e dei servizi new business approaches (Balland, 2015). This as- e Censimento delle istituzioni non profit. I distretti industriali. (25); ISTAT 2018. Rapporto Annuale 2018. La situazione del pect appears all the more as a strategic asset if we Paese (57–72) take into account that the main business model

Table 3 Gross Domestic Product (mln euro) of Vicenza Province, Veneto Region and Italy GDP/Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 VICENZA 21 971 23 590 24 018 24 219 25 470 25 113 24 464 25 125 26 157 25 883 26 302 26 603 27 125 VENETO 124 288 130 716 133 488 140 576 147 009 145 923 142 364 145 053 149 642 147 215 147 317 149 888 151 791 Perc. Vi- cenza GDP 17,68 18,05 17,99 17,23 17,33 17,21 17,18 17,32 17,48 17,58 17,85 17,75 17,87 vs Veneto’s GDP ITALIA 1 335 354 1 390 539 1 436 379 1 493 031 1 554 199 1 575 144 1 573 655 1 604 515 1 637 463 1 613 265 1 604 599 1 621 827 1 645 439 Perc. Vene- to GDP vs 9,31 9,40 9,29 9,42 9,46 9,26 9,05 9,04 9,14 9,13 9,18 9,24 9,22 Italy’s GDP Sources: Author’s own calculations by using the data from Vicenza Chamber of Trade (https://www.vi.camcom.it/it/servizi/ statistica-e-studi/tabelle-statistiche-dati-settoriali.html)

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of Vicenza’s fashion system is ‘contract manufac- 160 turer’. The option is one of the consequences of 140 the outsourcing processes of major companies in 120 100 the 1960s and 1970s. Traditionally, artisans pro- 80 duce parts of the final product according to the 60 quality standards set by the client. Their focus is 40 therefore on the production process, which only 20 rarely includes projecting and development (de- 0

sign, prototype, collection, etc.). However, in the 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 recent years, the latter is becoming a part of the Figure 2. Total production index of Italy’s clothing “upgrading” strategies of successful handicrafts. and fashion industry (2004 = 100). In any case, proximity and cooperation are essen- Source: http://seriestoriche.istat.it/ tial strategic tools for subcontracting firms (Betti- ol, 2017; Magnani, 2019). 900 800 As we have seen, the relatively low concentra- 700 tion index also mirrors the sector’s crisis and trans- 600 formations that diminished the number of active 500 firms. Since the late 1980s, when it reached its 400 heights, clothing industry has endured significant 300 200 changes under the pressure of fierce international 100 competition on the part of developing countries 0 (Figure 2). At provincial level, active handicraft 2000 2001 2002 2003 2004 2005 2006 2007 2008 firms went from 1,315 in 2009 to 1,113 in 2018, Figure 3. Number of active artisan companies in showing a reduction of more than 15 %, which the clothing (red) and textile (blue) sectors reflects regional (–16,12) and national (–15.42) Sources: the author’s own calculations based on Infocamere trends (Figures 3 and 4). Although it is difficult Data (Economic Sectors DB17: textile industries; DB18 Clothing Production including furs – https://www.info- to make comparisons throughout the whole peri- camere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/ od due to the modification in the classification of content/cerca-tabelle-movimprese?inheritRedirect=false) sectors in 2008, figures show that the reduction in the number of firms has been an ongoing tendency 800 since the beginning of the 21st century, suggesting 700 600 structural rather than conjuncture trends (Table 500 4, Figures 5, 6 and 7). Similarly, the evolution of 400 handicrafts’ labor levels underwent a negative evo- 300 lution (Figure 8) whereas the number of workers 200 per production unit remained stable (7,29 in 2012 100 0 and 7,25 in 2028). This might suggest the limits 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 of increasing productivity through the process of Figure 4. Number of active artisan companies in reorganization and/or technologic innovation in the clothing (red), leather and textile (blue) sectors the sector where labor remains a central asset. At Source: the author’s own calculations based on Infocamere national level, for example, only 11.9 per cent of data (Economic Sectors B13: textile industries; B14 Cloth- fashion firms operating in industrial districts show ing Production; B 15: Leather Goods Production – https:// www.infocamere.it/statistiche/-/most_viewed_assets/zaAt- excellent use of IT, whereas the average industry S5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedi- level reaches 16.6 (Banca Intesa, 2018, 134). rect=false)

Table 4 Clothing and fashion firms. Vicenza Province and Italy Year 2012 2013 2014 2 015 2016 2017 2018 Handicrafts firms (Vicenza Province) 905 870 839 834 831 814 786 Total Firms (Vicenza Province) 1 709 1663 1 634 1 645 1 717 1 617 1 587 Handicrafts firms (Italy) 48 431 47272 46 290 45 617 44 782 44 004 43 092 Total Firms (Italy) 93 973 91 682 89 926 89 030 87 721 86 403 85 177 Source: ISTAT (http://www.coeweb.istat.it/ April 19th 2020), and the author’s calculations

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14 12 10 8 6 4 2 0 Textile Textile Textile Textile Textile Textile Textile Textile Clothing Clothing Clothing Clothing Clothing Clothing Clothing Clothing 2001 2002 2003 2004 2005 2006 2007 2008 Figure 5. Indexes of natality (blue) and mortality (red) textile and clothing artisanal firms Source: the author’s own calculations on Infocamere data (Economic Sectors DB17: textile industries; DB18 Clothing Production including furs – https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false)

14 12 10 8 6 4 2 0 Textile Textile Textile Textile Textile Textile Textile Textile Textile Textile Leather Leather Leather Leather Leather Leather Leather Leather Leather Leather Clothing Clothing Clothing Clothing Clothing Clothing Clothing Clothing Clothing Clothing 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Figure 6. Indexes of natality (blue) and mortality (red). Province of Vicenza. Fashion System Artisanal Firms Source: the author’s own calculations on Infocamere data (Economic Sectors B13: textile industries; B14 Clothing Produc- tion; B 15: Leather Goods Production – https://www.infocamere.it/statistiche/-/most_viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movimprese?inheritRedirect=false)

9 200 8 0 7 1 2 3 4 5 6 7 8 9 10 6 –200 5 –400 4 –600 3 2 –800 1 –1000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 –1200 Figure 7. Indexes of natality (green) and mortality Figure 8. Employees (blue) and variation (red). (red). Province of Vicenza. All industrial sectors Province of Vicenza. Fashion System Artisanal Source: the author’s own calculations based on Infocamere Firms data – https://www.infocamere.it/statistiche/-/most_ Sources: the author’s own calculations based on Ufficio viewed_assets/zaAtS5lJ6QVI/content/cerca-tabelle-movi- Studi Confartigianato data mprese?inheritRedirect=false) (Elaborazione Flash 04.03.2020)

Vicenza’s ‘fashion system’ shows a strong ori- The last two countries, though still considered entation to the foreign markets, exports having a ‘emerging’, nevertheless, increasingly generate de- relevant share of turnover (Tables 5, 6 and 7)9. The mand for high quality, luxury fashion products. most important clients are European, in partic- The importance of Western countries, in particular Germany, France and the UK. Asia, howev- ular France, is also linked to the focus of Italian er, is growing much faster as a result of rampant fashion industry on upper class production large- Chinese and, to a lesser extent, Indian demand. ly controlled by French luxury brands. Converse- ly, it highlights the diminishing numbers of firms 9 Rapporto ICE 2017/2018. L’Italia nell’economia interna- zionale. Roma: Marchesi Grafiche Editoriali (22-24, 38, 45-54). working in medium and low segments, exposed

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to price competition of emerging countries. The Empirical research on case studies confirms latter suggests that upgrading towards higher seg- the evidence shown by statistical analysis, adding, ments represents the best possible option for stay- however, insights into how handicraft reached top ing in the market (Table 5 and 7). positions through innovative interpretation of Table 5 their business models10. Fashion system (including leather). Share in the International Trade of the Province of Vicenza 10 Empirical analysis in mainly based on the interview of Roberto Sartori (Arca di Noe’ SRL) conducted by David Imports Imports Celetti, September 20th, 2018 at the firm’s office, Via Rambo- (% on total imports) lina 31/B, Bassano Del Grappa (Vicenza, IT); the interview of 2013 2014 2015 2013 2014 2015 Riccardo Garbosso (Vicenza Mode SRL) conducted by David 1 886 552 2 030 996 2 143 061 22,3% 22,9% 24,0% Celetti, September 20th, 2018 at the firm’s office, Via delle In- dustrie 78, Cartigliano (Vicenza, IT); the interview of Riccar- Exports Exports do Barbato (La Poni Confezioni SNC) conducted by David (% on total imports) Celetti, September 20th, 2018 at the firm’s office, via della Co- 2013 2014 2015 2013 2014 2015 operazione, 19, Noventa Vicentina (Vicenza, IT); interview with Andrea Piovan (For Horses SRL) conducted by David 3 857 124 4 102 129 4 358 586 24,7% 25,3% 25,5% Celetti, March 14th, 2019 at the firm’s office, Via Kennedy 59, Sources: Author’s Elaboration on Data from Vicenza San Vito di Leguzzano (Vicenza, IT). The analysis also uses Chamber of Trade (https://www.vi.camcom.it/it/servizi/statis- the data from the websites: https://www.vicenzamode.com/; tica-e-studi/tabelle-statistiche-dati-settoriali.html) https://www.lapony.it/; https://forhorses.it/.

Table 6 Italian Exports Year 2019 2020 Var. % Product tons Euro tons Euro Difference Difference (1000) (1,000,000) (1000) (1,000,000) (%) (%) Pharmaceutical 2 376 26 2 429 25 2,2 –5,1 Automotive 1 400 121 1 463 114 4,5 –6,4 Oil products 866 1 944 1 081 2 403 24,9 23,6 Components and accessories for autonotive 1 071 156 1 060 143 –1,1 –7,9 Shoes 896 17 906 16 1,2 –4,5 Cloths and accessories 820 20 853 22 4,0 12,6 Clothing accessories 781 5 821 5 5,1 7,2 Ship’s and aircraft’s stores and supplies, returned 702 332 711 273 1,3 –17,8 national goods, miscellaneous goods Precious metals including semi-finished goods 388 .. 705 .. 81,5 40,1 Industrial machines 696 32 695 29 –0,1 –9,2 Others 25 742 8 980 25 829 8 694 0,3 -3,2 total 35 738 11 632 36 553 2,3 0,8 EXPORT’S COMPOSITION Pharmaceutical 6,6 0,2 6,6 0,2 Automotive 3,9 1,0 4,0 1,0 Oil products 2,4 16,7 3,0 20,5 Components and accessories for automotive 3,0 1,3 2,9 1,2 Shoes 2,5 0,1 2,5 0,1 Cloths and accessories 2,3 0,2 2,3 0,2 Clothing accessories 2,2 .. 2,2 .. Ship’s and aircraft’s stores and supplies, returned 2,0 2,9 1,9 2,3 national goods, miscellaneous goods Precious metals including semi-finished goods 1,1 .. 1,9 .. Industrial machines 1,9 0,3 1,9 0,2 Others 72,0 77,2 70,7 74,2 total 100,0 100,0 100,0 100,0 Source: ISTAT ( http://www.coeweb.istat.it/ April 19th 2020), and the author’s own calculations

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Table 7 Exports (1.000 Euro) of clothing and textile handicrafts and clothing and textile industry. Province of Vicenza (2011–17) Variation 2011–12 Variation 2016–17 Variation 2011–17 Sector/Year 2011 2012 2016 2017 (perc.) (perc.) (perc.) Clothing (including 1 078,00 1 165,00 9,10 1 239,60 1 227,30 -1,00 13,85 fur and Leather) Textiles 464,00 435,00 -6,30 528,50 541,90 2,50 16,79 Total Handicrafts 6 627,00 7 014,00 5,80 7 807,60 8 134,50 4,20 22,75 Total manufactures 14 341,00 14 807,00 3,20 16 604,20 17 536,40 5,60 22,28 Source: the author’s own calculations by using the data from Confartigianato Vicenza Elaborazione Flash 2011–2019

The four selected case studies (Tables 1 and duction phases. A was also created through com- 2) are family businesses with 15 years of history. pany restructuration. What in fact happened is Two of them (Vicenza Mode – V- and La Pony – that in the late 1980s, a manager and a group of P) have already successfully experienced gener- workers from a struggling major firm, which had ational transition, whereas Four Horses (F) and to lay off, personnel decided to start their own Arca di Noe’ (A) are still managed by founders business. Both of these stories represent, though and do not foresee, at the moment, any trans- each in its own way, a successful reaction to mar- fer of competences and duties to younger entre- ket transformations. preneurs. The origins of the business are strictly F tells the story of its own. The business star- linked to technical competences and formal per- ted in the early 2000s, when Vicenza’s fashion sys- sonal experiences in major fashion companies or tem already suffered a structural crisis. The firm in related sectors in three cases (A, P, F). Only the was established as a result of its founder’s passion founder of V had no direct experience in the sec- for professional riding and his need for technical tor and started his business on the simple assump- outwear. From the very beginning, the firm fo- tion that the booming demand of the early 1970s cused on the specific market niche where it ma- would create opportunities for new entrants. The naged to combine the technical requirements for ‘second generation’, which is currently at the head professional riders, exclusive textiles, aesthetics, of V and P, obtained higher education and prac- and functionality. The uniqueness of F’s product, tical hands-on experience before joining the busi- and the specificity of the market allowed the firm ness. This shows the relevance of personal experi- to create a new brand serving distributors (buyers ence and skills, which might be managerial as in and retailers) but also delivering directly to pro- the case of A and P, or linked to specific knowl- fessional riders. edge of product characteristics, as in the case of A, V and P entered the markets as contrac- F (Table 2). We also found that in the time of ex- tors of major brands and still hold this position. pansion, the simple feeling of market might play a V develops the whole production chain from yarn positive role in entrepreneurial decision-making. selection to ironing, testing, and shipping; A and Moreover, in all the cases, family emerges as a rel- P receive the cloths from their clients, whereas evant actor, bringing competences and work, but F buys it directly. Having very specific require- also supporting effective decision-making. This ments, F works together with producers of fabric, last aspect confirms another central characteris- mainly located in the nearby territory, to conduct tic of Vicenza’s – and Veneto’s – industrial system, research and testing. All firms deliver the final which can still be considered ‘family based’ and product, ready to be used by the consumer. This ‘family led’. last aspect is considered extremely relevant, be- Each story highlights typical stages of deve- cause it means that these firms avoid ‘hyper-spe- lopment of Vicenza’s fashion clusters. V found its cialization’ (e.g. performing only one task as is the origins in the demand boom of the 1970s in Vene- case with Benetton’s contracts) and they can ac- to’s knitwear production, largely pulled by the quire competences and know-how, which, in turn, success of the brands like Benetton, Stefanel, and represents the basis for their further progress and their subcontracting strategies. P was founded as consolidation in upper market niches. Quality, a spill-over of Marzotto, when Valdagno-based specialization on specific textiles, work proce- company started outsourcing labor intensive pro- dures, outwear as well as the capacity to provide

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additional services, such as technical counseling, The selected firms see the near future as a are also a way to attract buyers internationally and time of complexity, but also of renewed potenti- to expand potential markets. alities. Mastering complexity is considered the All firms have built over time their own most serious challenge. Complexity is interpreted unique competences, which enable them to en- by interviewees as a trend in contemporary and rich the product with particular services. Clients future markets – products are becoming increas- value the company’s providing counseling on fi- ingly personalized and they have a shorter life bers’ technical and aesthetical characteristics, in the context of stricter quality rules and global co-projecting new fabrics, and delivering final competition. Managing complexity requires con- products. These activities, on the other hand, stant mastering of new techniques, technological are not viewed as a ‘generating income direct- innovation, acquisition of skills and know-how, ly’, but as an asset for ensuring customer loyalty; effective organization. Technology and human promoting higher results through team work at capital emerge, therefore, as two pillars for serving the early stages of projecting and prototyping; for successfully the market. IT, for instance, is seen as acquiring new competences; testing new produc- a strategic tool for developing cooperation both tion methods; and for ensuring constant ‘upgrad- with clients and suppliers, shortening distances, ing’ along the value chain (A, V, P). Similarly, F limiting transaction costs, ensuring partnerships co-generates outwear and accessories in cooper- rather that competition. Production technolo- ation with professional riders, who actively test gies help to enhance quality and flexibility (Forza, them and suggest changes, and with cloth produ- 1997). Labor, however, is still viewed as a central cers, who do not simply receive specific technical competitive factor, and special attention is given to and aesthetic requirements from F, but participate selection, training, and management of the work- in developing them. All the firms consider col- force. For example, A introduced for all its em- laboration as an essential competitive advantage. ployees 20-hour part-time shifts, which brought Territory plays in this sense a relevant role as it some positive results. Quality and productivity enhances collaboration potential through perso- increased and at the same time stress and fatigue nal networks and attracts international buyers. diminished. The firm also experienced remark- Currently all the selected firms are solidly posi- able gains in flexibility as it can now rapidly re- tioned in the highest market segments delivering to set to regular time in case of higher demand. The world best brands or selling, as F, through its own workers’ loyalty was improved as it would be dif- brand to high class clients. Though all firms are ex- ficult for them to find similar conditions in other tremely open to international markets, they also firms. Major costs, determined by the increased have some specific orientations. V, for example, is number of workers and machines, have been par- oriented towards French luxury brands. It opened tially absorbed by reduced profits and increased its own showroom in Central Paris to attract first- productivity. class clients as well as to comply to what is seen as a Finally, all companies confirmed the positive ‘must’ in the luxury fashion world. The reasons why role of the territory in their success in the glob- the firm decided to go for the ‘French option’ are al market. Although these firms are not officially explained by the world fame of Parisian brands and based in recognized fashion districts, they are nev- by the stability in business relationships, financial ertheless located in areas hosting a relevant number reliability, cooperative approaches, and price policy of little shops working in the fashion system. In- of French multinationals. In this segment, quality terviewees consider that this represents a very im- matters more than price in building business re- portant competitive advantage as it adds flexibility, lations. A and P have no offices abroad, but they quality, and specialization through inter-firm co- are also tightly linked to French high-class luxury operation; creates social networks allowing circu- brands, an option that is justified by highlighting lation of ideas, and therefore innovation; attracts the same advantages as mentioned by V. F, on the major brands that can find diverse specialization other hand, is more concerned with the American within a limited space in the same production market and has opened an office in Miami to serve chain. The diminishing number of firms operating local riders and distributors. All the firms, general- in the fashion sector is perceived as a major critical ly speaking, try to choose their clients, rather than issue since it could jeopardize the ‘territorial com- to be chosen by them and to develop cooperation petitive advantage’. Another relevant challenge for all along the value chain. the nearby future is to keep enough firms active on

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the territory. A very important goals is to commu- recently, however, the factors as quality, innova- nicate more effectively the tangible and intangible tion, and flexibility have emerged as the most re- values of the ‘made in Italy’ brand and eventual- levant ones. This, in turn, opened new possibilities ly the ‘made in Vicenza’ brand as a complex set of for SMEs to upgrade towards high-level market factors assuring the product’s functional and aes- niches dominated by luxury fashion brands or to thetic characteristics. This aspect is seen of utmost create very specific production, such as high-class importance by the firms, which, even though they sport outwear. Consolidation of their positions in deliver a final product, don’t have their own com- such markets, building even tighter relations with mercial brands. In this context, the value of the demanding clients, and mastering the growing ‘made in Italy’ brand for the consumer is believed complexity of the modern world are seen as the to strongly contribute to attracting international main objectives of the time. These strategies allow corporations of the fashion sector. the firms both to keep their business afloat and to continuously upgrade along the global value Conclusions chains. In the meanwhile, the territory, industrial The research demonstrates that SMEs cluster and districts proved to be crucial in sup- operating in particularly complex sectors such as plying the firms with additional competitive ad- the “fashion system” can compete successfully in vantages. Operating within one territories allows global markets, provided that they develop strat- SMEs to cooperate with each other, enhance their egies based on quality rather than price compe- flexibility, promote products and ensure innova- tition; succeed in positioning themselves in high tion, creating and diffusing original know-how, level niches; build collaborative relationships all skills, and competences. Being located within a along the value chain; and exploit the territorial- relatively small territory such as an industrial dis- ly-based competitive advantages. trict, businesses are working in similar, comple- In the last twenty years, textile and acces- mentary, or contiguous phases of the production sories production went through a severe and chain and thus are able to attract international long-lasting crisis, mainly due to the growing in- brands. Protecting the reputation of the “made in ternational competition from emerging countries, Italy” as a world-wide known brand linked to a especially China, Eastern Europe, and Northern specific territory and maintaining the vitality of Africa. This trend deeply affected Italian produc- handicrafts at territorial levels are, therefore, es- tion even in its traditionally strong clusters, such sential challenges for the near future. The study as the one located in Vicenza. Firms initially re- therefore demonstrates that small and medium acted to this challenge through such cost-saving handicrafts of the fashion system, though exposed strategies as delocalizing or investing in labour to global concurrence, have still space and mar- saving technologies to enhance efficiency. More gins for long term development.

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Information about the author David Celetti – PhD in Economic History, Research Professor, Professor of Local Develop- ment, Chair of Economic History, at the Department of Historical, Geographical Sciences and of the Antiquity of the University of Padua (Via 8 Febbraio 1848, 2, 35122 Padova, Italy); e-mail: [email protected]

ARTICLE INFO: received March 9, 2020; accepted May 5, 2020

Информация об авторе Челетти Давид – PhD в экономической истории, профессор-исследователь, профессор департамента исторических, географических наук и древности Падуанского университета (35122, ул. 8 февраля 1848, 2, Падуя, Италия); e-mail: [email protected]

ИНФОРМАЦИЯ О СТАТЬЕ: дата поступления 9 марта 2020 г.; дата принятия к печати 5 мая 2020 г.

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Online ISSN 2412-0731 R-ECONOMY, 2020, 6(2), 89–99 doi: 10.15826/recon.2020.6.2.008 Original Paper doi 10.15826/recon.2020.6.2.008 Strategic priorities for the development of middle regions in Russia V.V. Akberdina , A.S. Sergeeva Institute of Economics of the Ural Branch of the Russian Academy of Sciences, Ekaterinburg, Russia; e-mail: [email protected]

ABSTRACT KEYWORDS Relevance. The key factor in the development of any region is its geographical po- middle regions, strategic sition in the socio-economic and geopolitical space of the country. In this respect, priorities, mission, economic and middle regions are of particular interest. Unfortunately, their unique qualities re- geographical position, resonant main largely underexplored in research literature, which is the gap this article seeks effect to address. Research objective. The purpose of the study is to provide a definition of the concept ‘middle region’, describe its key characteristics and align them with the strategic priorities in the development of such regions. Data and methods. The research methodology centres around the notion of cumulative effect of the middle region and the tools for its assessment. This effect is associated with enhanced socio-economic efficiency of a territorial capital resulting from the advantages of its middle position. Among other things, this effect manifests itself through higher ACKNOWLEDGEMENTS economic returns on investment. The empirical part of the study relies on the data The research was supported by the on 36 Russian middle regions, their missions and priorities of strategic develop- Institute of Economics of the Ural ment. Results. The article summarizes the Russian and international theoretical Branch of the Russian Academy approaches to the definition of the middle regions, their place and role in the terri- of Sciences (research plan for torial structure of a country and its socio-economic development. It is shown that 2019–2021). most authors assign middle regions the role of the country’s epicenter, highlighting their key role in economy, culture, politics and other spheres of life. The approach proposed in this study focuses on middle regions’ position in space, on the one hand, and, on the other, sees them as systems of interactions in the socio-economic space. Based on this understanding of the middle region, several groups of Russian middle regions are identified: integrators, sustainable middle regions and developing middle regions. Conclusions. The mission of middle regions is one of the FOR CITATION fundamental concepts of strategic management, comprising a hierarchy of goals. It Akberdina, V.V., & Sergeeva, A.S. is shown that although the mission of middle regions should be to become integra- (2020) Strategic priorities for the tors of the country’s socio-economic space through the network of inter-territorial development of middle regions in and global interactions, not all Russian middle regions are ready to pursue this Russia. R-economy, 6(2), 89–99. ambitious goal and prefer to focus on addressing internal goals of their own. doi: 10.15826/recon.2020.6.2.008 Стратегические приоритеты развития срединных регионов России В.В. Акбердина , А.С. Сергеева Институт экономики Уральского отделения Российской академии наук, г. Екатеринбург, Россия; e-mail: [email protected] АННОТАЦИЯ КЛЮЧЕВЫЕ СЛОВА Актуальность. Ключевым фактором развития любого региона является срединные регионы; его географическое положение в социально-экономическом и геополити- стратегические приоритеты; ческом пространстве страны. Среди различных типов пространственных миссия; экономико- позиций региона по отношению к его стране значимо выделяются средин- географическое положение, ные регионы. Цель исследования. Целью исследования является форму- резонансный эффект лировка подхода к идентификации срединных регионов и обоснованию стратегических приоритетов их развития. Данные и методы. Методология исследования сосредоточена вокруг понятия «кумулятивного срединного эффекта» и предлагают методический инструментарий его оценки. Дан- ный эффект представляет собой превышение ключевых социально-эконо- мических показателей срединного региона над среднероссийскими пока- зателями. Помимо прочего, этот эффект проявляется через более высокую экономическую отдачу от инвестиций. Для проведения эмпирического исследования были отобраны 36 регионов Российской Федерации. Все они © Akberdina, V.V., Sergeeva, A.S., 2020

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классифицируются по географическому положению как средние регионы. БЛАГОДАРНОСТИ Результаты. В статье обобщены теоретические подходы российских и за- Работа выполнена при рубежных ученых к определению срединных регионов, их месту и роли поддержке Института в территориальном устройстве страны и ее социально-экономическом экономики Уральского развитии. Показано, что большинство авторов отводят срединным реги- отделения Российской академии онам роль главного эпицентра страны, выделяют его решающее участие наук (план исследований на в делах государства, сохраняющуюся за ним ключевую роль в экономике, 2019–2021 гг.). культуре, политике и других сферах жизни. Подход, предложенный в этом исследовании, фокусируется на положении срединных регионов в про- странстве, с одной стороны, и, с другой стороны, рассматривает их через систему взаимодействий в социально-экономическом пространстве. Про- веденное исследование позволило авторам выделить такие типы средних регионов, как «интегратор экономического пространства», «устойчивый средний регион» и «развивающийся средний регион». Выводы. Миссия срединных регионов – одна из фундаментальных концепций стратегиче- ского управления, и она включает в себя иерархию целей. Показано, что, ДЛЯ ЦИТИРОВАНИЯ хотя миссия средних регионов должна состоять в том, чтобы стать инте- Akberdina, V.V., & Sergeeva, A.S. граторами социально-экономического пространства страны через сеть (2020) Strategic priorities for the межтерриториальных и глобальных взаимодействий, не все средние рос- development of middle regions in сийские регионы готовы преследовать эту амбициозную цель и предпочи- Russia. R-economy, 6(2), 89–99. тают сосредоточиться на решение внутренних задач самостоятельно. doi: 10.15826/recon.2020.6.2.008

Introduction The concept of economic-geographical posi- The location of a region in socio-economic tion is inextricably linked to the concept of eco- and geopolitical space is a crucial factor of its de- nomic space, which, on the one hand, is a com- velopment. Rodoman (2012) defines spatial posi- bination of the territory where economic entities tion as ‘a set of spatial aspects characterizing the are located and their interactions and, on the relationship of an object to other objects that are other hand, the socio-economic environment essential for the object in question’ and proves that where these interactions take place, formed by the properties of objects depend on their position mechanisms of economic regulation in the giv- in space. He refers to this set of spatial aspects as en territory. It should be noted that economic the ‘pressure of the place’ or ‘positional pressure’. space usually comprises such elements as econo- The position of an object in space is not only mic entities; relations and interactions between its ‘absolute’ position in the geographical system them; regulatory mechanisms determined by of coordinates but also its position in relation the institutional conditions within the territory to other objects. In addition, the position of an (norms and rules for regulating relations) (Bald- object in space must be considered and deter- win et al., 2003; Bathelt & Glückler, 2003; Тота mined within the system of time coordinates. et al., 2014). Although one can speak of an object’s posi- A region can occupy various spatial positions tion in space from different perspectives, such within the country, for example, it can be located as physical-geographical, political-geographical, in the middle and in this case, it can be referred cultural-geographical, geopolitical, and so on, to as a middle region. The middle region, due to the economic-geographical position (EGP) is by its location, accumulates many functions: produc- far the most significant. According to Gritsay et tion, social, political, and other. The purpose of the al. (2002), the EGP can be considered not only as study is to describe an approach that can be used a factor, but also as ‘an important territorial re- to identify middle regions and determine strate- source that mediates the role of external resources gic priorities of their development. Our study will for this object and affects its development along consider the topological features of middle re- with its own natural and labor resources, as well as gions, the effects their position within the country scientific and technical potential’. Pilyasov (2011) has on their development and their mission in the analyzes the EGP as a ‘special kind of asset’. Some overall development of the country. studies place a special emphasis on innovation, Our research contributes to the theory of re- i.e. the position of an object in relation to the ways gional economics by clarifying the concept ‘mid- of spreading new knowledge and processes (inno- dle region’, describing its topological features, and vation) of different significance and scale (Bulaev highlighting its mission. The proposed methodo- & Novikov, 2011; Leizerovich, 2006). logy can be of use to regional and federal authori-

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ties when developing, adjusting and updating spa- cide) because the former are not necessarily lo- tial development strategies. cated in the historical center of the country and are not always endowed with all the high capital Conceptual framework functions, including administrative and manage- To understand what distinguishes the middle rial ones. region as a separate type of regions, it is neces- The middle region is a region that is located sary to look at other types or classes of regions. in the middle of a higher-order territory (coun- According to Gladkiy & Chistobaev (2011), more try, part of the world, continent, or other larger than 50 categories of regions are identified in re- space). The most important distinctive quality search literature. We are going to focus only on of such a region is that ‘the average distance of the most relevant typologies of regions, for exam- movement from this region to any point of the ple, the distinctions between central and periph- “mother” territory, of which it is a part, will be eral regions or such types as coastal regions, bor- less than the same average distance to any point der regions and remote regions (Golubev, 2011). of this territory in other regions’ (Tatarkin, 2005). The concept of middle region is closely con- The middle region is more accessible to other re- nected to that of a ‘central’ region. It should be gions, and other regions are easier accessed from noted that ‘center’ and ‘middle’ are not synony- the middle. mous from the perspective of regional economy The contemporary research literature devoted and economic geography. In the classical sense, to spatial organization of production and regions these two words have a very close meaning: the of different types highlights the unique economic center is the middle and main part of something; features and geographical location of all middle the core, the place of concentration of something. (and central) regions, in particular the pheno- Both notions have been established in regional menon of the middle, which acts as a catalyst for economics and geography. The term ‘central’ is regional development. The concept of the me- closer in its meaning to the concept of ‘capital’ dian can be considered at different spatial scales – than to ‘middle’. In the concept ‘middle region’, a single country or group of counties, a larger- one can more clearly trace its main distinctive scale region, city, i.e. a middle region can be seen feature – territorial location in the middle of a not only as a part of the country but can also be a country, continent, part of the world or another country itself. We will be more interested in mid- larger spatial unit. dle regions located within one country. In this The term ‘center’ as well as other related respect, the studies of the Ural scientific school structural taxonomic elements is defined by Alaev (A.Tatarkin, E. Animitsa, E. Dvoryadkina, N. No- (2010) in socio-economic dictionary the following vikova, Yu. Lavrikova, A. Glumov and others) are way: the ‘center’ is a point (a geographical object of particular interest (Animitsa et al., 2008). or section) whose connections with the surroun- The middle region has many functions that ding area are functional. The center that distri- are connected to its location. What is important butes flows of matter, energy, and information to is not only a certain number of roads or highways, the surrounding landscape and generally trans- but also the benefits that the region receives due mits its characteristics to the landscape should to its position at the intersection of the most im- be called the focus (or center of diffusion, distri- portant transport routes, which, in its turn, has an bution); the center towards which there is a con- impact on its economic development. traction, concentration of matter and energy – the First of all, the development of transport and focus (or center of attraction). According to Alaev logistics and tax revenues from companies oper- (2010), the concepts ‘center’, ‘focus’, and ‘core’ sug- ating in the transport services market guarantee gest the presence of an opposing, complementary new jobs and, of course, investment in the deve- taxon territory, which in this case is called the pe- lopment of transport and logistics infrastructure riphery. and other spheres. Such economic and geographi- The concepts of centrality and middle play an cal location also favours the development of trade important role in many theories of production or- and business infrastructure (restaurants, hotels, ganization (Losch, 1944; Weber, 1909; Christaller, warehouses, shopping and business centers, offi- 1933; Isard, 1960; Krugman, 1991; Lukermann, ces of global companies, etc.), since it is conve- 1960). However, middle regions differ from cen- nient to hold exhibitions and meetings and to tral ones (although theoretically they may coin- open branches and offices in middle regions.

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Another advantage of such location is the de- of ‘entrances’ and ‘exits’ to passenger and cargo velopment of production functions since it allows flows, a high level of concentration of production enterprises to save on transportation of raw mate- and population, scientific and technical, intel- rials and products across the region or to its bor- lectual and human potential, historically formed ders. The concentration of production depends infrastructure, industrial and technological and on how actively and effectively the region uses socio-cultural connectivity, and regional identity. local natural resources and technological achieve- Moreover, such regions have a powerful core (or ments. Position in the middle makes such regions several cores), that is, the largest cities that have better protected against ‘unfriendly’ penetration. the official status of administrative, political, eco- Therefore, these regions often host strategically nomic, organizational centers of their respective important facilities for the country – defense en- territories. A. Glumov’s approach is similar to that terprises, nuclear power plants, etc. of E. Animitsa, but it focuses on the concentra- The development and expansion of man- tion of the country’s population, production, cap- agerial and organizing functions in the middle ital and resources in middle regions (Animitsa & region (industrial, social, political, and other) is Glumov, 2007). an important sign of the middle region. Various Tatarkin (2005) interprets the middle region organizational and managerial entities operating as being located in the middle of the territory of in the region contribute to the increasing unifor- a country, continent, part of the world or other, mity and integration of the regional economic larger units. In our opinion, these definitions fail space; implement their own regional strategic to emphasize the role of the middle region as an projects; initiate interactions between economic integrator of space, its special geopolitical, so- entities; accelerate decision-making in the eco- cio-economic, cultural and spiritual mission. The nomic sphere, thereby helping economic entities functional features of any middle region can be to save on transaction costs. determined by forecasting the economic effect of One of the key features of the middle region its development. is its participation in state affairs and its role in Taking into account the conceptual char- the economy, culture, politics and other spheres acteristics discussed above (central location, of life. developed transport and business infrastruc- Middle regions are often characterized by ture, concentration of population, industry and their own, unique processes of formation and other sectors), it is also necessary to highlight development in different countries. These char- a number of topological qualities (properties) acteristics are rooted in these regions’ individual that distinguish this type of regions. These are history and create a specific socio-economic envi- objectivity, multi-dimensionality, scale, which ronment, certain demographic commonality, nec- determines their role in the development of the essary for the regions’ development through the country, openness, contacts with other regions, effective use of natural, economic, social, demo- transit potential, attractiveness for capital and graphic, and other innovative capabilities and en- people. In addition, it should be noted that mid- gagement of all internal forces. Since the unique dle regions play an important creative and inte- characteristics of a middle region to a great extent grative role in the sphere of production, finan- originate in its history, it is necessary to empha- cial, social and business spheres, in maintaining size the role of the time factor, i.e. implementation the interconnectedness of regions, in the forma- and maintenance of the middle region’s functions tion of a single economic and political space of over a long historical period. The region for many the country. decades and even centuries (the latter is especial- Thus, the middle region can be defined ly typical of Russian regions) accumulates tradi- through its territorial position, on the one hand, tions, forms a multi-layered economy, developed and through its connection to the system of in- infrastructure, while remaining in the thick of na- teractions in the socio-economic space of the tional events. state, on the other. The middle region is under- E. Animitsa defines the middle region as a stood here as a complex hierarchical system in special, state-forming type of a large region which the multi-level territorial structure of the country, is located in the central, strategically important whose unique features are determined both by its part of the country and has a set of specific to- central geographical position and the set of rela- pological features such as a significant number tionships and dependencies arising as a result of

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the region’s strategically important role in nation- As Table 1 illustrates, we supplemented the al socio-economic development and security. topological features that are traditionally empha- It should be emphasized that the distinctive sized in the definitions of the middle region such features of such understanding of the middle re- as spatial location, administrative component, so- gion is, firstly, the rejection of the idea of equidis- cio-economic component, and interactions with tance from the geographical borders of the state, some new ones. and secondly, the disclosure of the median factor not only through geographical location, but also Methodology and Data through the totality of relations between econo- The methodological framework of our study mic entities, integrated structures and authorities centres around the concept of cumulative effect at various levels. Our understanding of the middle and comprise tools for its assessment. The cu- is directly related to the etymology of this word, mulative effect of the middle region, in our view, namely, being in the middle of something or be- is created by its unique topological features, ad- tween two objects. This is what distinguishes this vantages and disadvantages of its geographical concept from the concept of geographical center, position. The cumulative effect of the middle re- which is equidistant from the borders. Thus, our gion is understood here as the socio-economic approach relies on the definition of the middle re- efficiency of a territorial capital resulting from the gion is a set of features, connections and relations advantages of its middle position. The cumulative and the more general notion of region as a rela- effect leads to the region’s enhanced socio-eco- tively stable part of the socio-economic and poli- nomic performance in comparison with the na- tical space of the country. tional average, in particular a high economic re- There can be several middle regions in a turn on investment (Hanson, 2005; Oerlemans, country. The middle region as an integral system 2001; Head, 2010). In this regard, to estimate the of interactions and interdependencies that, on the cumulative effect, we need to look at the indica- one hand, provide connectivity within the region tors corresponding to such spheres as economy, and, on the other, make it to the outside world. regional budget, innovation, industry, trade, con- From the morphological point of view, one of struction, transport, and social sphere (education the key characteristics of the middle region is its and health). ‘polystructuredness’, which is a specific feature of The methodology for calculating the cumula- the Russian space, where administrative and po- tive effect of the middle region comprises a system litical centers appear to be superior in status to of indicators and a procedure for their integration. their territories. The most successful way to assess the cumulative

Table 1 Topological features of middle regions Classification Traditional features Additional features group of features Territory Spatial Scale Resources Location in the ‘middle’ Gravity Transitivity Historical infrastructure Cargo and passenger traffic Administrative Openness Polystructuredness Population concentration Role in ensuring national security One core or multiple cores Territorial ‘frame’ (P. George’s term) Regional identity Financial self-sufficiency Multiple pilot projects Relationships Socio-economic Multidimensionality Low risk of doing business component Play a defining role in the national economy High investment and innovation Concentration of industries, trade and services potential Concentration of intellectual and human potential Investment climate Interactions Multiple contacts with neighboring territories Space integration Attractiveness for capital and people Interrelated regional development Connectedness Resonance effect Network interactions Clustering

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effect is to determine the value of the integral in- It is very important at this stage to check the dex. In doing so, we can, for example, rank the tightness of the regression relationship between regions under consideration based on individual the selected indicators: if any indicators related indicators and integrated assessment; such rank- to the same area closely correlate with each other, ing can be easily updated by using the current val- it is necessary to exclude one (or more) of them ues of indicators for calculations. In addition, the from the set of indicators used in the analysis. methodology has significant potential for scal- To calculate the cumulative effect, we are going – it can be applied to an increasing number of ing to use the power function from the product research objects (for example, countries) without of partial indicators of the effects of the middle extra adjustment. position of the regions (Table 2): It is important to identify the indicators that n characterize the metrics of the region’s middle RRMP = n ∏ i , position. The choice of the indicators that should i =1 be taken into account in the calculation process largely depends on the researchers’ goals, their RMP is the cumulative effect of the region’s middle expertise, and the availability of information that position and Ri signifies the effects that occur in can be used in the calculations. Special attention, certain areas (Table 2). as it was noted earlier, should be paid to the re- To conduct an empirical study, we selected liability of the proposed indicators as well as the 36 Russian regions classified as middle regions. access to the necessary data. The data about the These regions are homes to 43.7% of the country’s development of territories and industries can be population. They also account for 38.9% of Rus- obtained from official government statistics; cor- sia’s GDP; 64.2% of the volume of mineral pro- porate reports; surveys and research conducted by duction; 41.5% of investment in fixed assets; and private companies. 44.7% of the volume of innovative production. Table 2 Indicators for calculating the cumulative effect of the region’s middle position N Effects by Key indicator Formula for calculating the effect location

R1 Economy Value added per 1 unit GRP Investment in the region of investment ⋅100% GDP Investment in the country

R2 Budget Regional budget per 1 Consolidated budget Investment in the region unit of investment ⋅100% Country budget Investment in the country

R3 Innovation Volume of innovative Innovative products of the region Investment in the region products per 1 unit of ⋅100% investment Innovative products in the country Investment in the country

R4 Industry Added value in industry Added value in Industry of the region Investment in the region per 1 unit of investment ⋅100% Added value in Industry in the country Investment in the country

R5 Trade Added value of trade per Added value in Trade of the region Investment in the region 1 unit of investment ⋅100% Added value in Trade in the country Investment in the country

R6 Construction Added value in con- Added value in Construction of the region Investment in the region struction per 1 unit of ⋅100% investment Added value in Construction in the country Investment in the country

R7 Transport Added value in transport Added value in Transport of the region Investment in the region per 1 investment unit ⋅100% Added value in Transport in the country Investment in the country

R8 Health care Added value in health- Added value in Healthcare of the region Investment in the region care per 1 unit of invest- ⋅100% ment Added value in Healthcare in the country Investment in the country

R9 Education Added value in edu- Added value in Education of the region Investment in the region cation per 1 unit of ⋅100% investment Added value in Education in the country Investment in the country

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Results and discussion group of regions includes Moscow, Novgorod, Li- Our study has showed that the cumulative petsk, Irkutsk, Vologda, Nizhny Novgorod, Kalu- effect differs significantly across Russian middle ga, Ryazan, Samara and Yaroslavl regions, Perm regions. Therefore, it seems reasonable to distin- region, Khanty-Mansiysk Autonomous District guish between such types of middle regions as an and the Udmurt Republic. The value of the cumu- ‘integrator of economic space’, ‘sustainable middle lative median effect is between 101.6 and 148.2%. region’ and ‘developing middle region’. The second type – developing middle re- Middle regions of the first type – integrators – gion – is characterized by low values of the cumu- have the following quantitative characteristics: a lative effect of the middle; lower levels of invest- high value of the cumulative effect of the middle ment, innovation and budget capacity; and high position; high turnover; high value of gravity on risks of doing business. These regions in the short interregional trade; a high proportion of neigh- term can potentially move into the category of boring territories in the balance of interregional ‘sustainable middle regions’, and in the long-term, trade; and a high coefficient of clustering. Based ‘integrators’. This group includes the following re- on the above-described methodology, the follo- gions: Vladimir, Kostroma, Tula, Oryol, Tambov, wing territories of Russia can be described as ‘in- Tver, Kemerovo, Penza, Ulyanovsk, Kirov and tegrator regions’: Moscow, Tatarstan, Bashkorto- Ivanovo regions, Khakassia, Mari El, Mordovia, stan and Komi republics, Sverdlovsk and Tomsk Chuvashia, Adygea republics, and Stavropol re- regions. These regions have a cumulative effect gion. The value of the cumulative middle effect is value of more than 150%. between 62.1 and 98.9%. A stable middle region is characterized by a The assessment of the effect of the middle po- high value of the cumulative effect of the middle; sition allowed the authors to test their hypothesis a significant role in the country’s overall econo- about the special mission of the middle regions. mic performance; considerable potential for in- In the context of globalization and global vestment and innovation; substantial budget ca- competition (Wang, 2020), regions become more pacity; low risks for doing business; and a large oriented towards strategic management, which number of national ‘pilot projects’ operating in includes the mission of the region, scenarios and their areas. Based on the authors’ calculations, this concepts of development (Barnes, 2003; Combes

250 221,3 201,8 198,6 186,4

200 179,6 174,5 148,2 136,9 136,4 136,1 135,9 134,9 134,8 134,3 130,6 130,3 150 128,7 117,1 101,6 98,9 98,7 98,2 97,2 96,4 95,7 89,2 87,6 87,1 86,1 85,3 84,3 82,1 81,3 100 79,9 75,3 62,1

0 HMAO Moscow Tula region Tula Orel region Orel Tver region Tver Perm region Perm Kirov region Kirov Penza region Penza Tomsk region Tomsk Kaluga region Kaluga Irkutsk region Irkutsk Samara region Samara Lipetsk region Lipetsk Ryazan region Ryazan Ivanovo region Ivanovo Tambov region Tambov Vologda region Vologda Moscow region Moscow Yaroslavl region Yaroslavl Vladimir region Vladimir Kostroma region Kostroma Novgorod region Novgorod Udmurt Republic Udmurt Kemerovo region Kemerovo Ulyanovsk region Ulyanovsk Sverdlovsk region Sverdlovsk Republic Of Komi Republic Chuvash Republic Chuvash Stavropol territory Stavropol Republic Of Adygea Republic Republic Of Mari El Of Mari Republic Republic of Tatarstan of Republic Republic of Mordovia of Republic Republic Of Khakassia Republic Nizhny Novgorod region Novgorod Nizhny Republic Of Bashkortostan Republic Figure 1. Value of the cumulative middle position effect of Russian regions Source: the authors’ calculations based on data from the statistical yearbook ‘Regions of Russia published by the Federal State Statistics Service (Rosstat) https://www.gks.ru/folder/210/document/13204 (Accessed data: March 25th, 2020)

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et al., 2008; Cairncross, 2001), socio-economic of global economy, focusing on a new quality of forecasting (Zhao & Fan, 2019; Chen, 2020), tar- life and new industrialization. The goals of the geted integrated programs, and mechanisms social and economic policy of Sverdlovsk region for implementing the goals of regional strategic for 2016-2030 are enhance its competitiveness in management (Wiberg, 2019; Chen, 2019; Qiu et global economy and to improve the quality of life al, 2020). The mission of the region is one of the as the region is envisioned to become an attrac- fundamental concepts of strategic management; tive territory for human life and development. it should be unique in each case and formulated The strategy highlights three key priorities: 1) in by taking into account the region’s specific char- the social sphere, to provide a new quality of life, acteristics. The scenario of socio-economic de- that is, creation of optimal conditions for accu- velopment of a region should be aligned with the mulation and preservation of human potential; mission and include the strategic goal and tools 2) in the economic sphere, to promote new in- for achieving it. The tools for implementing the dustrialization, that is, creation of conditions for regional strategy rely on organizational, legal, fi- increasing the region’s industrial, innovative and nancial and monitoring mechanisms (Zemtsov & entrepreneurial potential; and 3) territory for life Baburin, 2016). The organizational mechanism in- and business – to ensure balanced development of cludes a set of strategic development and planning the region. documents; the legal mechanism corresponds to The Republic of Tatarstan positions itself as the socio-economic sphere, business activities, the growth pole of a large region. Its strategy puts strategic planning system, etc.; the financial mech- forward the main strategic goal: by 2030, to turn anism includes budget strategies, financial plans, Tatarstan into a globally competitive and sustain- etc. The control mechanism is of vital importance; able region, a driver of the so-called Volga-Kama it comprises assessment and expertise, moni- growth pole. Tatarstan is a leader in terms of the toring, etc. Monitoring results help to adjust the quality of interconnected development of human short-, medium- and long-term forecasts. capital, institutions, infrastructure, economy, ex- The mission of a region should capitalize on ternal integration (‘axial’ Eurasian region of Rus- its competitive advantages and helps it survive sia) and internal space. It is a rapidly developing through the periods of recession by prioritizing region with high involvement in the internatio- certain areas of development. By and large, it nal division of labor. The strategy centres around could be expected that any middle region should three interrelated strategic priorities: 1) formation strive to integrate the country’s socio-economic and accumulation of human capital; 2) creation of space through the network of inter-territorial and a comfortable space for the development of hu- global interactions based on the strategic poly- man capital; and 3) creation of economic relations structure of the territory and to ensure the so- and public institutions for the development of hu- cio-economic growth and security of the country. man capital. We analyzed the strategies of 36 middle re- Samara region, with its powerful poten- gions in Russia, paying special attention to their tial, can become a significant point of economic missions, goals and strategic priorities of develop- growth in the Volga Federal District. This region ment. The study showed that not all regions today holds significant potential for the development of position themselves as integrators of the country’s science, education and industry, especially in the space. Out of 36 middle regions, only 6 regions, in aerospace sector and petrochemicals; it is also one view of their unique position, connect their mis- of the largest transport and logistics hubs. Its stra- sions with spatial development of Russia. In the tegic goals of socio-economic development for the modern globalized world, success is achieved by period up to 2030 are to ensure economic growth those regions that find the right balance between and increase the competitiveness of the regional globality and identity, skillfully fitting into the na- economy; improve the quality of life; and improve tional and world economy, capitalizing on their the efficiency of regional management. unique qualities to succeed in interregional com- The mission of Tomsk region emphasizes a petition. Such middle regions include Sverdlovsk, better quality of life in Siberia, which is planned Samara and Tomsk regions, Tatarstan, Komi and to be achieved by implementing an intensive de- Udmurt republics. velopment model. Priorities of socio-economic Sverdlovsk region defines its mission not only development of Tomsk region are the new tech- in the national context, but also in the context nologies; human capital; conditions for invest-

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ment and business development; effective terri- governmental, organizational and managerial torial policy; and effective management. structures. The middle region, due to its location, The mission of the Republic of Komi empha- accumulates many industrial, social, political and sizes the region’s role in the country’s prosperity other functions. and prioritizes comfortable conditions for res- The review of international and Russian idents and their families, which includes a good research literature on this topic has revealed living environment, education and health care, a certain knowledge gap regarding the theory opportunities for personal growth and social se- of development of large middle regions. It was curity. The high quality of life in the region should this gap that this article sought to address: we be based on sustainable economic growth and at- strove to clarify the theoretical and methodolog- traction of investors. ical aspects of the concept ‘middle region’ based The mission of the Udmurt Republic is to on the gravitational theory, cluster theory, and become a developed industrial region supplying methodology for evaluating innovation poten- high-tech products to national and world mar- tial. In particular, we substantiated the approach kets. The main goal of social and economic de- that reveals the unique nature of middle regions: velopment of the Udmurt Republic in the long focusing on their location and at the same time term is to increase the efficiency and stability of describing them as systems of interactions in the economy and improve the quality of life. the socio-economic space of the state. We have Unfortunately, the missions of the other mid- added some important topological features of dle regions in this group are not so ambitious. the middle region to the already established un- Most of the missions largely focus on the regions’ derstanding of this type of region. Our analysis internal development, building a sustainable of Russian regions’ missions has demonstrated economy, improving the quality of life and ad- that middle regions can play an important role dressing the problem of population decline. in ensuring the country’s long-term growth and security as integrators of the country’s social Conclusions and economic space through the network of in- Russia occupies a vast territory with regions ter-territorial and international connections on as the main structural elements. Among the re- the basis of strategic polystructural areas. gions, the middle regions play a significant role – The quantitative assessment of the cumula- they serve as integrators and enhance interactions tive effect of middle regions can be used in policy between the territories through various business, making on regional and national levels.

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Chen, J. (2020) The Impact of Cluster Diversity on Economic Performance in US Metropolitan Statistical Areas. Economic development quarterly, 34(1), 46–63. Christaller, W. (1933) Die zentralen Orte in Suddentschland. Jena, 244. Combes, P.P., Mayer, Т., & Thisse, J.T. (2008). Economic geography: the Integration of regions and nations. Princeton: Princeton University Press, 427. Gladkiy, Yu.N., & Chistobaev, A.I. (2011) Regional studies. Moscow, 254. (In Russ.) Golubev, V. (2011) On the question of the economic typology of Russian regions. Science and industry of Russia, 9, 67–74. (In Russ.) Gritsay, O.V., Ioffe, G.V., & Treyvish A.I. (2002). The centre and the periphery in regional development. Moscow: Nauka. (In Russ.) Hanson, G.H. (2005). Market potential, increasing returns and geographic concentration. Jour- nal of international economics, 67(1), 1–24. Head, K., & Mayer, T. (2010). Gravity, market potential and economic development. Journal of Economic Geography, 2, 29–37. Isard, W. (1960) Methods of Regional Analysis; an Introduction to Regional Science. Cambridge: Published jointly by the Technology Press of the Massachusetts Institute of Technology and Wiley, New York, 263. Keller, W. (2002) Geographic Localization of International Technology Diffusion. The American Economic Review, 92(1), 120–142. Krugman, P.R. (1991). Geography and Trade. Massachusetts Institute of Technology, Cam- bridge, 247. Leizerovich, E.E. Basic components of the economic and geographical position of countries and regions. Izvestiya RAS. Ser. Geography, 1, 25–31. (In Russ.) Losch, A. (1944) Die raumliche Ordnung der Wirtschaft. Jena, 185. Lukermann, F., & Porter, P. (1960) Gravity and potential models in economic geography. Annals of the Association of American Geographers, 50(4), 493–504. Oerlemans, L., Meeus, M., & Boekema, F. (2001) On the spatial embeddedness of innovation networks: an exploration of the proximity effect. Tijdschrift voor economische en sociale geografie, 92(1), 60–75. Pilyasov, A.N. (2011) New economic geography and its potential for studying the location of Russia’s productive forces. Regional studies, 1, 3–31. (In Russ.) Qiu, J., Liu, W., & Ning, N. (2020) Evolution of Regional Innovation with Spatial Knowledge Spillovers: Convergence or Divergence? Networks & spatial economics, 20(1), 179–208. Rodoman, B.B. (2012) Territorial areas and networks. Smolensk, 277. (In Russ.) Tatarkin, A.I. (2005) Socio-economic status of the middle region of Russia. Regional economy, 2, 5–22. (In Russ.) Wang, H., Pan, C., Wang, Q., & Zhou, P. (2020) Assessing sustainability performance of global supply chains: An input-output modeling approach. European journal of operational research, 285(1), 393-404. Weber, A. (1909) Uberden Standortder Industrien. Tubingen, 124. Wiberg, M. (2019) Capital controls and the location of industry. World economy, 43(4), 871–891. Zemtsov, S.P., & Baburin, V.L. (2016) Does economic-geographical position affect innovation processes in Russian regions? Geography, environment, sustainability, 9(4), 14–32. Zhao, X., & Fan, L. (2019) Spatial distribution characteristics and convergence of China’s regional energy intensity: An industrial transfer perspective. Journal of cleaner production, 233, 903–917. Тота, G., Kincses, А., & Nagy, Z. (2014). The European spatial structure. LAP LAMBERT Aca- demic Publishing, 285.

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Information about the authors Victoria V. Akberdina – Dr. Sc. (Econ.), corresponding member of the RAS, Deputy Director Institute of Economics of the Ural Branch of the Russian Academy of Sciences, Head of Regional Industrial Policy and Economic Security Dept. (29 Moskovskaya St., Yekaterinburg, 620014, Russia); e-mail: [email protected] Alena S. Sergeeva – postgraduate student, Institute of Economics of the Ural Branch of the Russian Academy of Sciences (29 Moskovskaya str., Yekaterinburg, 620014, Russia); e-mail: [email protected]

ARTICLE INFO: received December 15, 2019; accepted February 12, 2020

Информация об авторах Акбердина Виктория Викторовна – доктор экономических наук, член-корреспондент РАН, врио заместителя директора Института экономики Уральского отделения РАН, заведующий отделом региональной промышленной политики и экономической безопасности, профессор Уральского федерального университета (620014, Россия, г. Екатеринбург, ул. Московская, 29); e-mail: [email protected] Сергеева Алёна Сергеевна – аспирант Института экономики Уральского отделения РАН (620014, Россия, г. Екатеринбург, ул. Московская, 29

ИНФОРМАЦИЯ О СТАТЬЕ: дата поступления 15 декабря 2019 г.; дата принятия к печати 12 февраля 2020 г.

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Online ISSN 2412-0731 R-ECONOMY, 2020, 6(2), 100–110 doi: 10.15826/recon.2020.6.2.009 Original Paper doi 10.15826/recon.2020.6.2.009 Chinese and Russian transport corridors and the belt and road initiative: prospects of Sino-Russian cooperation Q. Chen Institute of Russia, Harbin Academy of Social Sciences of Heilongjiang Province, China; e-mail: [email protected] ABSTRACT KEYWORDS Relevance. The article discusses mutually beneficial cooperation between Rus- sia and China within the framework of the Belt and Road Initiative and the crossborder infrastructure, Belt role of Russia as a key link between China and the Eurasian Economic Union. and Road Initiative, container The relevance of the study is determined by the need for a comprehensive ana- trains, Economic Corridor lysis of the current state of transport cooperation between the countries with China-Mongolia-Russia, transport shared borders (Russia and China) and on a more global level. It is especially corridor, transport infrastructure, important to identify the priority areas of intergovernmental cooperation in Eurasian Economic Union the transportation sphere. Research objective. The study is aimed at evaluating the prospects of Sino-Russian transport cooperation in connection with the Belt and Road Initiative. Data and methods. For comparative analysis, we use qualitative and quantitative indicators to consider the current state of Si- no-Russian cooperation. Our research draws from the official statistical data of Russia and China and from the findings of the previous studies. Results. The research has shown that there is a steady trend for integration of Russian and Chinese crossborder infrastructure. In particular, the Economic Corridor China-Mongolia-Russia relies on the expansion and modernization of the railway and highway infrastructure. Conclusions. The connection of the Belt and FOR CITATION Road Initiative with the Eurasian Economic Union will contribute to transport Chen, Q. (2020) Chinese and cooperation between China and Russia. Sino-Russian transport cooperation Russian transport corridors will develop not only on the state level but also on regional and local levels. and the belt and road initiative: The Belt and Road Initiative will enable Russia and China unite their transport prospects of Sino-Russian infrastructure into a single network. Apart from the transport infrastructure, cooperation. R-economy, Sino-Russian cooperation also encompasses other aspects, such as training of 6(2), 100–110. doi: 10.15826/ specialists in logistics and transportation technologies. recon.2020.6.2.009 Китайский и российский транспортные коридоры и инициатива «Один пояс – один путь»: перспективы китайско-российского сотрудничества Ц. Чень Институт России Академии общественных наук провинции Хэйлунцзян, Харбин, Китай; e-mail: [email protected]

АННОТАЦИЯ КЛЮЧЕВЫЕ СЛОВА Актуальность. В статье рассматривается взаимовыгодное сотрудничество трансграничная инфраструктура, между Россией и Китаем в рамках инициативы «Один пояс – один путь» инициатива «Один пояс – один и роль России как ключевого звена между Китаем и Евразийским эконо- путь», контейнерные поезда, мическим союзом. Актуальность исследования определяется необходимо- экономический коридор стью всестороннего анализа текущего состояния транспортного сотрудни- Китай-Монголия-Россия, чества между странами с общими границами (Россия и Китай) и прочими транспортный коридор, задействованными странами. Особенно важно определить приоритетные транспортная инфраструктура, направления межгосударственного сотрудничества в транспортной сфе- Евразийский экономический ре. Цель исследования. Цель исследования – оценить перспективы китай- союз ско-российского транспортного сотрудничества в связи с инициативой «Один пояс – один путь» Данные и методы. Для сравнительного анализа мы используем качественные и количественные показатели, чтобы рас- смотреть текущее состояние китайско-российского сотрудничества. Наши исследования основаны на официальных статистических данных России и Китая, а также на результатах предыдущих исследований. Результаты. Ис- следование показало, что существует устойчивая тенденция к интеграции российской и китайской трансграничной инфраструктуры. В частности, © Chen, Q., 2020

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экономический коридор Китай-Монголия-Россия опирается на расшире- ние и модернизацию железнодорожной и автодорожной инфраструктуры. Выводы. Связь инициативы «Один пояс – один путь» с Евразийским эко- ДЛЯ ЦИТИРОВАНИЯ номическим союзом будет способствовать транспортному сотрудничеству Chen, Q. (2020) Chinese and между Китаем и Россией. Российско-китайское транспортное сотрудниче- Russian transport corridors ство будет развиваться не только на государственном, но и на региональ- and the belt and road initiative: ном и местном уровнях. Инициатива «Один пояс – один путь» позволит prospects of Sino-Russian России и Китаю объединить свою транспортную инфраструктуру в еди- cooperation. R-economy, ную сеть. Помимо транспортной инфраструктуры, китайско-российское 6(2), 100–110. doi: 10.15826/ сотрудничество охватывает и другие аспекты, такие как подготовка специ- recon.2020.6.2.009 алистов в области логистики и транспортных технологий.

Introduction the Economic Corridor China-Mongolia-Russia. The Belt and Road Initiative (BRI) is a new Finally, we are going to draw conclusions about strategy of China implemented within the coun- the current state and prospects of Sino-Russian try’s more general ‘opening-up’ policy (Kong, cooperation in the light of global integration pro- Swallow, & Thomson, 2020). The Eurasian Eco- cesses. nomic Union (EAEU) is an international organization comprising post-Soviet countries such as Theoretical framework and methodology Russia, Kazakhstan, Belarus, Armenia and Kyr- This study relies on the method of compara- gyzstan. Russia is the driving force behind the tive analysis. To analyze the similarities and dif- EAEU, especially the organization’s strategic de- ferences in Russian and Chinese approaches to cision-making. The priority goal of the EAEU is transport cooperation, we use quantitative and to lift the tariff barriers for the member states and qualitative indicators. create a single economic space, thus increasing There is vast research literature on this ques- the trade turnover between the members (Lukin, tion. Li (2019) discusses the creation of a railway 2020). It is planned to connect the space created transport corridor between north-eastern prov- within the EAEU borders with the space covered inces of China and Russia’s Far East. Sazonov & by the BRI, which is what makes the EAEU so at- Xiao (2018) point out that the integration of the tractive for China. The BRI in fact is a mechanism Chinese-Russian crossborder freight transpor- of mutually beneficial international cooperation. tation network is crucial for integration of the In May 2015, China and Russia signed the Asia-Pacific region and conclude that develop- Joint Declaration on Cooperation in Coordinat- ment of the transport system will have a multipli- ing the Development of the Eurasian Econom- er effect for all the stakeholders. ic Union and the Silk Road Economic Belt. In May Problems of transport corridors between Rus- 2018, China and the EAEU signed the agreement sia and China are discussed by Nan et al. (2017) on trade and economic cooperation, emphasizing and Yunhao (2015), who raise the question of the connection of the BRI with the EAEU as one uneven distribution of crossborder corridors for of its priority areas. Connection of the BRI with freight traffic. Moreover, they consider the prob- the EAEU means that the countries involved in lems arising from the fact that Russia is lagging both of these projects will be working together to behind China in terms of logistics infrastructure. ensure the economic development, prosperity and Yunhao (2015) discusses the role of the Trans-Si- stability in Eurasia (Mekhdiev, et al., 2019). berian Railway in creating the international This study is aimed at evaluating the pros- transport corridor and points out that the main pects of Sino-Russian transport cooperation in challenge in this process is the state of the infra- its connection with the BRI. This aim determined structure at the railway border crossings, especial- more specific objectives of our research. First, we ly the Russian ones connected with the Trans-Si- are going to consider the results of Sino-Russian berian Railway. Careful planning of the routes cooperation in the sphere of transportation. Sec- could enhance the capacity of the trade corridors. ond, we are going to describe priority areas of Diayu (2017), Balakin (2012) and Labyuk their cooperation in connection to the plans to in- (2016) consider China’s participation in interna- tegrate the BRI with that the EAEU. Third, we are tional Arctic projects, including the Northern Sea going to consider the results and prospects of Si- Route. These authors agree that China seeks to no-Russian cooperation within the framework of gain a more solid footing in the Arctic even though

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it is not an Arctic state. No satisfactory solution, tion of China-Russia transport corridors need to however, has so far been found to the problem of be addressed: first, construct the transport infra- the conflict of interests between China and other structure; second, develop the already existing countries. Mei (2019), for example, contends that cargo routes and open new ones; and, finally, ex- China should take a part in the administration of pansion of the two-way transport corridors, turn- the Northern Sea Route by ensuring environmen- ing them into three-way and multi-way transport tal protection in the area, which is in the interests corridors. of Russia and China and is in compliance with the Let us consider each of these tasks in more Law of the Sea Convention. Xin (2018) focuses on detail. waterborne freight transportation between Russia The first task is the construction of the transport and China and analyzes the real cases of conflicts infrastructure. China and Russia share a long land arising between the two countries, which leads border. The success of their plans largely depends him to suggest that specific rules of freight trans- on whether both countries will be able to elabo- portation should be agreed upon. rate concerted approaches and effective solutions. Much attention is given to the problems as- By connecting the BRI with the EAEU, Russia and sociated with infrastructure construction and China will be able to ensure a stable progress in economic development of crossborder points the construction of their crossborder infrastruc- in Russia and China. Shuan et al. (2017) discuss ture. the economic and social aspects and problems of Geographically, China-Russia transport cor- Chinese and Russian border regions. Pin (2015) ridors can be divided into the transport corridors considers the current state and prospects of de- across the Amur river and the transport corridors velopment of crossborder points in Heilongjiang connecting China with Russia’s Far East.The for- province and shows that intensification of inte- mer include bridges and a cross border cableway. gration processes will have a positive effect on the The idea to build a bridge across the Amur development of border regions both in China and between Blagoveshchensk and Heihe started to in Russia. Yi (2017) suggested creating a cluster of be discussed as early as in 1995 but officially its crossborder points to take a full advantage of the construction was launched only in December strengths of different points and stimulate eco- 2016. Thus, it can be said that the BRI was a ma- nomic development in Russian and Chinese bor- jor driving force behind this project. This is the der regions. Studies of Sino-Russian crossborder first cable-stayed bridge built in a cold, high-alti- cooperation describe different alternatives of its tude region of China; it is also the first Sino-Rus- further development. sian crossborder highway bridge across the Although the above-discussed studies pro- Amur. Russia and China connected their sides of vide significant evidence, they mostly highlight the bridge in May 2019. It was expected that by separate aspects without giving the full picture 2020, the passenger traffic between the two ci- of Sino-Russian cooperation. This study applies ties would reach 1.4 mln people while the cargo a more comprehensive approach by taking into traffic would be up to 3 mln tons1. In 2019, the account various factors to evaluate the prospects customs in Heihe registered the volume of cargo of Sino-Russian transport cooperation in connec- traffic at the level of 743 thousand tons, which tion with the Belt and Road Initiative. is 28.3% higher than in 20182. The number of people going through the border checkpoints Results and discussion in Heihe exceeded 1 million3. After the bridge is fully completed, it will ensure uninterrupted all- Sino-Russian cooperation in the sphere year transport connection between Blagovesh- of international transport corridors: chensk and Heihe. current stage Construction of the cableway across the In recent years, transport cooperation be- Amur between Heihe and Blagoveshchensk star- tween Russian and China has been actively de- ted in July 2019. It was the first crossborder cable- veloping. The BRI opens new opportunities for 1 https://www.sohu.com/a/319391405_120051348 (date cooperation, especially in the light of the future of access: 23.05.2020) connection of this initiative with that of the EAEU 2 https://www.thepaper.cn/newsDetail_for- (Wang, Lim, Zhang, Zhao, & Lee, 2020). At this ward_5577445 (date of access: 23.05.2020) 3 http://www.hlj.xinhuanet.com/kl- stage, the following tasks related to the construc- j/2019-12/21/c_138648134.htm (date of access: 23.05.2020)

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way between Russia and China. It is planned that and enables the exchange of specialists and goods the total length of the cableway will be 972 meters (Ryzhova & Ioffe, 2009). while its estimated capacity will be 6 million peo- In the Far East, there are two major proj- ple a year. The cableway will be put in commission ects – international transport corridors ‘Pri- in the second half of 2022, which will stimulate morye-1’ and ‘Primorye-2’, which are a part of tourism between the two countries4. A trip from the BRI. They are also crucial for the cooperation Heihe to Blagoveshchensk will take no more than between the north-eastern provinces of Chi- 10 minutes. It is predicted that after the cableway na and Russia’s Far East. On 4 July 2017, China is completed, there will be a rise in the number of and Russia signed the Memorandum of Coop- tourists travelling between the twin cities but also eration for the Development of Primorye 1 and between province Heilongjiang and Amur region. Primorye 2 International Transport Corridors The operation of the cableway does not depend (Fig. 1, 2). Corridors ‘Primorye-1’ and ‘Primo- on climatic or seasonal conditions, which means rye-2’ go through the centre of the Far Eastern that it can be effective in attracting larger num- Advanced Development Zone of Russia – the bers of tourists throughout the year. It should be free port of Vladivostok, which means that there noted that currently the connection between Bla- are 24/7 single window checkpoints available goveshchensk and Heihe is provided in summer with the single window system, that is, all do- by motor ships sailing along the Amur River and cuments are submitted through a single entry in winter, by a pontoon bridge for cargo and pas- point. Traders can submit documents for ship- senger bus transportation. ping goods from China to Russia only once when Construction of transport corridors across they cross the Chinese border and there is no the Amur is a major step in crossborder infra- need to submit a similar set of documents at the structure development. The crossborder network Russian border as Russian customs authorities between Russia and China helps the partner coun- get access to these documents automatically. It is tries create a new international transport corridor also planned to introduce an electronic customs declaration system and apply the ‘green corridor’ 4 https://rg.ru/2019/11/04/rossiiu-i-kitaj-sviazhet-uni- kalnaia-kanatnaia-doroga.html (date of access: 24.05.2020) principle for smoother border processing.

Figure 1. Transport corridor ‘Primorye -1’ Source: Administration of Primorye Region

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Figure 2. Transport corridor ‘Primorye -2’ Source: Administration of Khabarovsk Region

Provinces Heilongjiang and Jilin, which play a 2020) launched in June 2015, with trains running key role in Sino-Russian cooperation, are located once a week. Currently container trains arrive more than 1,000 km inland from the sea, which from China in Małaszewicze (Poland), Hamburg increases the logistics costs. Freight routes ‘Pri- and Duisburg (Germany), Zeebrugge (Belgium), morye-1’ and ‘Primorye-2’ can connect the two and Minsk (Belarus). These are among the main provinces with the sea and thus cut the distance of international logistics routes created by Heilon- land transportation by 200-500 km, reducing the gjiang province as a part of the BRI. As of August costs by 10-40%. In the last two years, the volume 2019, on Harbin-Europe route, container trains of freight traffic along ‘Primorye-1’ corridor has had made 882 journeys and delivered 51,488 grown 1.8 times – from 2,138 to 3.934 in twen- TEUs worth 2 billion US dollars6. The route was ty-foot equivalent units (TEUs) – and along ‘Pri- largely intended for exporting Volvo automobiles, morye-2’, up to 2,145 TEUs5. high-tech products, textiles and goods of prime Second task: development of the already ex- necessity from China to Europe and for importing isting cargo routes and opening of new ones. The from Europe spare car parts, high-quality goods BRI and EAEU integration sets the bar high for of prime necessity and timber. Since the railway the crossborder logistics network. Both China connection between Harbin and Europe prima- and Russia are interested in improving the already rily stimulates the development of automotive in- existing logistics channels and creating new ones. dustry, these trains are commonly referred to as There are over 40 freight shipping routes be- ‘car trains’. tween Heilongjiang province and Russian border Apart from Harbin-Europe trains, in June regions (Bardal, 2014). Harbin is the capital of 2016, the railway between Harbin and Russia Heilongjiang province and is crucial to China’s in- was put in commission. In 2019, lines from Har- teractions with Russia. There is an international cargo route connecting Harbin with Europe (Tjia, 6 哈俄班列增开新线路（梅尔基-绥芬河-哈尔滨）顺利开通，生活报，2019-08-13 (The new railway line 'Mylki 5 https://www.primorsky.ru/news/164469/ (date of ac- -Suifenhe - Harbin' was opened for container trains running cess: 25.05.2020) between Russia and Harbin, Life Daily, 2019-08-13)

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bin to Ekaterinburg and Biklyan were opened. In much more reliable, minimizing the risk of delays the same year, a new container train line ‘Myl- in delivery. Normally, the transportation time is ki-Suifenhe-Harbin’ was launched. This line spe- measured in hours. In addition, container trains cializes on the import of lumber and woodpulp can use a modern information platform to pro- products to China. For more detailed information vide full monitoring and management of the ship- on Harbin-Russia trains, see Table 1 below. ment data, thus enabling the customers to track Table 1 cargo delivery. Harbin-Russia container trains Harbin-Europe and Harbin-Russia contain- Dis- Ter- Date of Goods Intermedi- Trans- er trains use the eastern corridors of the railway patch minal the first shipped ate ported routes between China and Europe, which were station station depar- via first stations goods ture train, in launched in the period when Sino-Russian coop- mln US eration started to develop. Harbin is located in the dollars* centre of the international corridor; it is an inter- Harbin Ekate- 12 March 10 Manzhouli, Spare national logistics centre, which performs a vari- rinburg 2016 Novosi- car ety of functions such as transportation, storage, birsk, Perm parts customs processing and distribution. The routes Harbin Biklyan 11 May 7.5 Manzhouli, Ma- 2019 Zabaikalsk, chinery Harbin-Europe and Harbin-Russia, together with Irkutsk and other routes between Europe and China starting equip- in Guangzhou, Qingdao, Nanjing, Chongqing, ment Xiamen, and Zhengzhou, form logistics corridors, Mylki Harbin 13 August 0.1 Khabarovsk, Lum- which play an important role in the Sino-Russian 2019 Suifenhe ber and wood- trade and economic cooperation. pulp Third task: expansion of the two-way trans- Source: compiled by the author based on materials http:// port corridors, turning them into three-way and hlj.people.com.cn multi-way transport corridors. The third task is to * http://hlj.people.com.cn/n2/2016/0312/c220027- involve other countries in Sino-Russian coopera- 27919303.html (date of access: 25.05.2020); https://www. tion. The international transport corridor ‘Primo- sohu.com/a/313335250_99960365 (date of access: 25.05.2020); http://hlj.people.com.cn/n2/2019/0818/c220027-33261006. rye-1’ is a part of the BRI. It is a land-sea trans- html (date of access: 25.05.2020) port corridor connecting North-Eastern Asia and Europe. The China-Mongolia-Russia Economic Harbin is an important hub for import of Corridor has two railway passages in China: one such products as lumber and woodpulp. From is the Northern Passage, going from Beijing-He- Harbin, these products are redistributed to other bei through Hohhot to Mongolia and Russia; the Chinese cities, which makes it particularly im- other is the Eastern Passage, going from Tianjin portant for Sino-Russian cooperation. After the through Dalian, Changchun, Harbin, Manzhouli launch of the railway line between China and to Russia (Dong et al., 2018). Construction of the Russia, container trains made 352 journeys de- China-Mongolia-Russia Economic Corridor re- livering 25,150 TEUs worth 400 billion US dol- quires the implementation of more than 10 plans lars7. The route between Harbin and Russia is one for integrating the infrastructure of the three of the most important railway routes connecting countries for unobstructed transborder passage, Eastern China with Europe. which includes modernization of railway corri- Railway transport provides a regular, non- dors (see Fig. 3). stop connection between China, Russia and Eu- A significant event for the China-Mongo- rope: in comparison with sea transport, railway lia-Russia Economic Corridor project happened enjoys a number of advantages, for example, it is in July 2019, when the first meeting of the Joint independent from weather conditions or seasons, Committee on the Intergovernmental Agreement it is secure and there is a low risk of cargo damage. on the Asian Highway Network was held and the Rail freight transportation is also less costly than international highway route going through the air freight. Moreover, the train schedule is also three countries was declared officially open. The Agreement outlines measures aimed at ensuring 7 哈俄班列增开新线路（梅尔基-绥芬河-哈尔滨）顺 smooth development of the corridor, such as con- 利开通，生活报，2019-08-13 (The new railway line 'Mylki struction and modernization of the highway in- -Suifenhe - Harbin' was opened for container trains running between Russia and Harbin, Life Daily, 2019-08-13) frastructure in Russia and Mongolia.

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Figure 3. The China-Mongolia-Russia Economic Corridor Source: On-line magazine ‘Zolotaya Orda’ http://zolord.ru

Priority areas of Sino-Russian cooperation 2018, two tankers with liquefied natural gas for Integration of the EAEU with the BRI is the first time travelled via the NSR and arrived in linked to Russia and China’s efforts to expand China. The voyage took 19 days, which is 16 days their transport cooperation in the three priority less in comparison with the traditional route via areas: the Suez Canal and the Malacca Straits (Zeng, Lu, 1. Development of Sino-Russian transport Lin, Yuen, & Li, 2020). In 2018, the overall cargo cooperation not only on the state level but also volume via the NSR was 18 million tons, which on regional and local levels. Russian and Chinese signifies an 80% increase in comparison with governments attach great significance to integrat- 2017 (Иньань, 2019). The Russian government ing the BRI with the Northern Sea Route (NSR) predicts that the cargo volume via the NSR will and are going to put their joint effort into using rise to 51 million tons in 2021 and to 80 million the NSR for building the ‘Ice Silk Road’. In 2013, a tons in 2024.(Lazarev & Fisenko, 2020). Thus, the state Chinese company received permission from Sino-Russian project ‘Yamal -LNG’ laid the foun- the NSR Administration for three passages, which dation for joint construction of the ‘Ice Silk Road’. effectively means the start of commercial trans- As a result of ‘Yamal-LNG’, there was an in- portation via the NSR (including container trans- crease in the imports of natural gas to China (see portation). So far, the company has been using Table 2). two ships in its operations (Бардаль, 2014). This As Table 2 illustrates, since 2018, the amount fact demonstrates that in partnership with Russia, and value of natural gas imports to China have China has real opportunities to become an Arctic been growing steadily. In 2018 China became economic power. the largest importer of natural gas in the world. As a part of the BRI, the first large-scale projet Increasing gas consumption changes the whole ‘Yamal LNG’ was launched. This project changed structure of energy consumption in China, which the traditional model of raw material imports to means that the country is gradually switching to China and created a new model of internation- cleaner, low-carbon energy materials. Potentially, al cooperation in the energy sphere. On 19 July this could have a serious impact on the global gas

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trade. Russia is the main supplier of natural gas, for establishing sea routes to Vladivostok, Zarubi- which makes energy cooperation crucial for the no and other ports. Creation of the China-Mon- relationship between the two countries. golia-Russia Economic Corridor will, in its turn, Table 2 accelerate the revival of China’s north-eastern China’s natural gas imports in 2016–2019 provinces and development of Russia’s Far East. Year Amount Compared Value of Compared It is expected that the zone of marginal economy of natural with the natural gas with the and the zone of resource supply will thus be trans- gas imports previous imports (mln previous (mln tons) year (%) US dollars year (%) formed into experimental regions for resource 2016 54.03 +22.0 16.489 -10.8 development and creation of economically devel- 2017 68.57 +26.9 23.275 +41.2 oped territories. 2018 90.39 +31.9 34.480 +65.3 2. Projects of transport cooperation and in- 2019 96.56 +6.9 41.720 +8.5 tegration of Russian and Chinese infrastructure. Source: https://d.qianzhan.com/xnews/de- The transport cooperation projects which have tail/541/200324-0fb684fd.html (date of access: 26.05.2020) been completed or are being currently implemented include construction of an oil pipeline, eastern Apart from the state-level strategic coopera- gas pipeline, railway bridge across the Amur (Hei- tion, both countries are committed to developing he – Blagoveshchensk) and a highway bridge across their cooperation on the regional level. In this case, the Amur (Tongjiang – Nizhneleninskoye). These the north-eastern part of China plays the key role projects undoubtedly contribute to the develop- in Sino-Russian cooperation: it has a large num- ment of transport infrastructure in border regions ber of crossborder passage points , it is located in and may serve as a platform for further economic close geographical proximity to Russia and has a cooperation between the two countries. long history of cooperation with Russia’s Far East Chinese investors, such as state banks, enter- in such spheres as agriculture, construction, and prises and investment funds, show a keen interest transport. The north-east of China participates in in Russian projects associated with transport in- the ‘Ice Silk Route’ project, which includes plans frastructure. It is forecast that in the nearest future

Table 3 Chinese investment in transport infrastructural projects in Russia’s Far East Investor Sector Planned and ongoing projects Shangdong Hi-Speed Motorways In September 2018, a concession agreement was signed for the construction and Group operation of the road ‘Khabarovsk Bypass 13 km-42 km’, involving Shangdong Hi- Speed Group as a contractor. The amount of potential investment in Russia in 2019-2020: 10-20 bln rbs China Railway Dong- Railway In April 2018, Far East Investment and Export Agency and China Railway Dongfang fang Group transport Group signed an agreement of intent on financing the feasibility study of the construction of a high-speed railroad between Suifenhe and Vladivostok. The cost of the project was estimated as 12 bln US dollars. In August 2018, the Chinese side confirmed the feasibility of the project for the construction of the 180 km-long high-speed railroad between Suifenhe and Vladivostok. The amount of potential investment in Russia in 2019-2020: 3–5 bln rbs China Railway Con- Railway The memorandum of intent for building the bridge across the Lena was signed in struction Corporation transport September 2018 Limited (CRCC) The project is worth 80 bln rbs. The amount of potential investment in Russia in 2019-2020: 30–40 bln rbs China Communica- Motorways, The memorandum of cooperation for the development of ‘Primorye 1’ and ‘Primorye tions Construction ports 2’ was signed in July 2017. Company (CCCC) The amount of potential investment in Russia in 2019-2020: 20–40 bln rbs China Investment Railway Construction of the railway bridge across the Amur on the border with China Corporation (CIC) transport, (400 mln US dollars) motorways The amount of potential investment in Russia in 2019–2020: 10–20 bln rbs China Development Railway The framework agreement on 8 bln US dollar investment in the Far East and Siberia Bank (CDB) transport, was signed in 2015 with Vnesheconombank. motorways The amount of potential investment in Russia in 2019–2020: 200 bln rbs China Railway Group Railway Transport corridors ‘Primorye-1’ and ‘Primorye-2’ (CREC) transport The amount of potential investment in Russia in 2019–2020: 40–60 bln rbs Source: compiled by the author based on the analytical review of the independent Russian investment company InfraOne.

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Chinese investment in such projects will amount Regular Sino-Russian forums, conferences to 315–385 billion roubles8. The projects indicated and seminars in the sphere of transport and lo- above are by no means the only ones. Table 3 shows gistics create opportunities for specialists from the data on investors ready to invest in Russian in- both countries to share their experience. The frastructure and the joint projects to be realized in annual forum of rectors of Russian and Chinese 2019-2020. The table shows only the forecast data transport universities has been held since 2014. In as companies do not specify the real amount of in- October 2019, Beijing hosted the sixth forum of vestment and the actual time of project completion. the Association of Rectors of Transport Universi- Table 3 includes the data on transport infra- ties of Russia and China, which involved rectors structural projects involving Chinese investors in from over 60 higher education institutions in both Russia’s Far East. It should be noted, however, that countries. This forum can serve as an example of these projects are in different phases. For exam- successful cooperation between the two countries ple, the construction of the railway bridge across on the state level. the Amur is nearing completion as the bridge is Joint education and traineeship programs can expected to be put in commission in 2020. China help transport engineers from both countries up- Investment Corporation (CIC) invested 400 bil- grade their professional qualifications. There is ev- lion US dollars in this project. The majority of the ery reason to believe that the hands-on approach above-described projects, however, still remain to specialist training will enable future transport ink on paper. For instance, China Railway Con- professionals to connect theoretical knowledge struction Corporation Limited (CRCC), which with practical contexts and promote transport co- was interested in constructing a bridge across the operation between the two countries in the future. Lena near Yakutsk, had to withdraw from the project due to its high costs and insufficient feasibility. Conclusion The Russian side, however, has not given up on China’s fast economic growth stimulated the this project. The draft documents on the transport development of transport infrastructure, which is and financial models have already been devised; why it now has the most advanced railway net- the technical and operational evaluation as well as work in the world. China is the first in the world the project’s organizational and legal framework in terms of metro construction, high-speed rail- are being prepared. way and bridge building. Apart from the use of 3. Specialist training and cooperation in cutting-edge technologies and the remarkable the transport sphere. An important aspect of the speed of construction, China is also known for its project to connect the BRI and EAEU is special- financial power. China’s economic and technolo- ist training, in which transport universities play a gical progress opens vast opportunities for trust- key role. Both countries need to modernize their based and mutually beneficial cooperation with higher education models. Universities have all the Russia in the sphere of transportation. necessary resources to create international intellec- This article was aimed at evaluating the pros- tual platforms for R&D and to develop high-quality pects of Sino-Russian cooperation within the BRI joint education courses and programs. Russian and framework. The main results of Sino-Russian Chinese transport universities are ready to offer partnership in the sphere of transportation are the their students dual diploma programs of the ‘2+3’ construction of the bridge and cableway across model, which means that students will be studying the Amur and the international projects ‘Primo- for two years in their home country and then 2–3 rye-1’ and ‘Primorye-2’. These projects enable years abroad. For example, Emperor Alexander I both countries to significantly expand the po- St. Petersburg State Transport University and Bei- tential of their transport infrastructure. Since the jing Transportation University have been partners connection between the two countries is going since 2014 and since 2016, have been offering a to become faster and more comfortable, the car- dual diploma program since 2016. Talented Chi- go traffic and the flow of tourists are expected to nese graduates can get jobs at the largest transport grow considerably in the nearest future. enterprises in Russia and Russian graduates, in As for the priority areas in the transport China. In 2015, the Russian-Chinese Transport In- sphere, especially in the context of the integra- stitute was established. tion of the BRI and the EAEU, it should be noted that Chinese investors are showing keen interest 8 Far East: Infrastructure Investment. Analytical review. Moscow, 2019, pp. 79. in Russian regions. This can be illustrated by the

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case of ‘Yamal LNG’ project, which made China As a result, the speed of freight transportation the leading world country in terms of natural gas and passenger traffic flow will grow significant- imports. As of today, the majority of investment ly, which will contribute to the economic deve- projects, however, are still a work in progress and lopment of the related territories. At the current require considerable revision in order to become stage of the project, there has been established a economically feasible. highway connection between Mongolia, China The China-Mongolia-Russia Economic Cor- and Russia. ridor is of particular interest as this project implies Our analysis has shown that Sino-Russian substantial modernization of the existing trans- transport cooperation is now gaining momen- port infrastructure of Mongolia ad Russia and tum. Joint projects provide a solid foundation for building new international transport corridors. the integration of the BRI with the EAEU.

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Information about the author Qiujie Chen – Researcher, Institute of Russia, Harbin Academy of Social Sciences of Heilongji- ang Province (150018, China, Harbin, Yui, 501); e-mail: [email protected]

ARTICLE INFO: received November 28, 2019; accepted April 15, 2020

Информация об авторе Чэнь Цюцзе – научный сотрудник Института России Академии общественных наук провинции Хэйлунцзян (150018, КНР, г. Харбин, ул. Юи, 501); e-mail: [email protected]

ИНФОРМАЦИЯ О СТАТЬЕ: дата поступления 28 ноября 2019 г.; дата принятия к печати 15 апреля 2020 г.

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Online ISSN 2412-0731 R-ECONOMY, 2020, 6(2), 111–124 doi: 10.15826/recon.2020.6.2.010 Original Paper doi 10.15826/recon.2020.6.2.010 Analytical tools for economic research of small municipalities and gaming techniques for community involvement (the case of Voronezh region in Russia) M.I. Solosina1 , I.N. Shchepina1, 2 1 Voronezh State University, Voronezh, Russia; e-mail: [email protected] 2 CEMIRAS, Moscow, Russia ABSTRACT KEYWORDS Relevance. The article deals with the issues of strategic territorial development in Russian regions and municipalities and the analytical tools for studying them. analytical tools, gaming While there is a diversity of tools for studying large municipalities, the choice of techniques, strategic territorial tools for smaller urban and rural settlements is quite limited. This is the research development, municipality, gap this study seeks to address. Research objective. This study focuses on the systemic approach case of municipal districts and settlements in Voronezh region. The aim is to show how the proposed methodology can be applied for such cases. Data and methods. The study relies on the methods of systemic analysis and synthesis, comparison and generalization, multidimensional statistics as well as on the use of gaming techniques. The data for the analysis were obtained from federal, regional and municipal statistics; municipal information systems of settlements of Voronezh region; municipal information system MISS ‘Volost’; and from the executive authorities of Voronezh region. Results. The analysis of the set of indicators, including the municipal product to GRP, for the period between 2006 FOR CITATION and 2015 has shown that the town of Liski is one of the leading municipalities in Voronezh district (the municipal product of Liskinsky accounts for over 5% of Solosina, M.I., Shchepina, I.N. the region’s GRP). We also applied our gaming technique to establish communi- (2020) Analytical tools for cation between the authorities and local communities in developing the project economic research of small for creation of a historical and archeological park in the settlement of Kostenki municipalities and gaming in Voronezh region. Conclusions. The proposed methodology can be quite pro- techniques for community ductive in building socio-economic profiles of small municipalities, comparing involvement (the case of them with others and revealing the interrelations between them. The gaming Voronezh region in Russia). techniques are effective for enhancing the involvement of local communities in R-economy, 6(2), 111–124. doi: municipal strategic planning. 10.15826/recon.2020.6.2.010 Аналитические инструменты экономических исследований малых муниципалитетов и игровые техники для вовлечения общественности (пример Воронежской области в России) М.И. Солосина1 , И.Н. Щепина1, 2 1 Воронежский государственный университет, Воронеж, Россия; e-mail: [email protected] 2 Центральный экономико-математический институт Российской академии наук, Москва, Россия

АННОТАЦИЯ КЛЮЧЕВЫЕ СЛОВА Актуальность. В статье рассматриваются вопросы стратегического тер- аналитический инструментарий, риториального развития российских регионов и муниципалитетов и ана- организационные механизмы, литические инструменты для их изучения. Хотя существует множество стратегическое территориальное инструментов для изучения крупных муниципалитетов, выбор инстру- развитие, муниципалитет, ментов для небольших городских и сельских поселений весьма ограничен. системный подход Это пробел в исследованиях, на устранение которого нацелено это иссле- дование. Цель исследования. Данное исследование рассматривает муни- ципальные районы и поселки в Воронежской области. Цель состоит в том, чтобы на их примерах показать применение предложенной методологии. Данные и методы. Исследование опирается на методы системного анали- за и синтеза, сравнения и обобщения, многомерного статистического ана- лиза, а также на использование игровых технологий. Данные для анализа были получены из федеральной, региональной и муниципальной стати- стики; муниципальные информационные системы населенных пунктов © Solosina, M.I., Shchepina, I.N., 2020

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Воронежской области; муниципальная информационная система МИСС «Волость»; и от органов исполнительной власти Воронежской области. Результаты. Анализ набора показателей, включая муниципальный про- дукт к ВРП, за период с 2006 по 2015 г. показал, что город Лиски является одним из ведущих муниципальных образований в Воронежской области ДЛЯ ЦИТИРОВАНИЯ (муниципальный продукт Лискинского района составляет более 5% ВРП Solosina, M.I., Shchepina, I.N. региона). Мы также применили организационный игровой механизм для (2020) Analytical tools for установления связи между властями и местными сообществами при раз- economic research of small работке проекта создания историко-археологического парка в поселке municipalities and gaming Костенки Воронежской области. Выводы. Предложенная методология мо- techniques for community жет быть весьма продуктивной для построения социально-экономических involvement (the case of профилей малых муниципальных образований, сравнения их с другими Voronezh region in Russia). и выявления взаимосвязей между ними. Игровые технологии эффектив- R-economy, 6(2), 111–124. doi: ны для повышения вовлеченности местных сообществ в муниципальное 10.15826/recon.2020.6.2.010 стратегическое планирование.

Introduction tive resources, such as the municipal information Strategic planning has now become essential system MISS ‘Volost’ and the data provided by the for settlements, towns, cities and other territorial executive authorities of Voronezh region (Depart- entities as they get involved into the global com- ment of Economic Development, Department of petition for development resources (investment, communications, Department for the Develop- human capital, technologies, etc.). Strategic ment of Municipalities of Voronezh region). As plans and similar documents should incorporate a result, we were able to create our own research the vision and aspirations of local communi- database. ties. These documents should also be based on Since there are more than 22,000 municipa- comprehensive analysis of the current situation lities in Russia, and only in 15 of them the popu- and development prospects of the territorial lation exceeds one million, the available tools for unit, including its strengths and weaknesses and studying urban and rural settlements often prove development priorities. ineffective in the Russian context. For example, In Russia, the system of strategic territorial more than a half of inhabitants of Voronezh re- planning has been developing intensively over gion live in the municipalities (446 urban and the past 15 years. One of the significant stages rural settlements of Voronezh region) selected was Federal Law No. 172 ‘On Strategic Planning for our empirical analysis. To measure the so- in the Russian Federation’ adopted in 2014. The cio-economic parameters in these municipalities, law requires methodological uniformity of such we need appropriate tools that would also help us documents on the regional and municipal levels, make adequate comparisons. as well as their consistency with the state strat- An important factor and the main resource egy for economic and social development. To for the development of settlements is human devise such strategies, it is necessary to conduct capital. The strategic nature of the social system preliminary quantitative analysis of the statistics (settlement, city, country) determines its read- characterizing the socio-economic situation and iness for dynamic changes and development development trends of the territory. National, re- (Arshinov, 2007). Some territories may turn out gional and municipal-level documents are usu- to be more attractive to people than others due to ally drawn based on federal and regional statis- the opportunities they offer, which inevitably af- tics, while for smaller municipalities (urban and fects migration trends (Tiebout, 1956). rural settlements), this can be a problem due to The article describes a set of analytical tools the lack of statistical data. This problem can be that could be used for building socio-economic addressed through the expansion of the database profile of small municipalities (urban and rural and development of tools of regional and muni- settlements) and gaming techniques for creating cipal statistics. projects of strategic territorial development in- The lack of data in the official statistics da- volving local communities. tabase (Russian Federal State Statistic Service – Questions of territorial strategic develop- Rosstat) causes a shortage of available tools for ment are discussed by Glazyrin (2016), Glazychev analyzing the socio-economic situation in small (2005), Zubarevich (2010), Makarov (2010), and municipalities. For our research, we used alterna- Pilyasov (2016). Ayvazyan, Afanasyev, Kudrov

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(2016, 2018) give particular attention to these Development, Department of Communications, questions on the regional level. Most studies, Department for the Development of Municipal- however, focus on territorial strategic develop- ities of Voronezh region) (Bystryantseva et al., ment on the national and regional levels, some 2016). also consider the level of municipal districts, but The first part of the study uses multidimen- little is said about smaller settlements. The 2009 sional statistics and relies on the methods of sys- World Bank Report ‘A New Look at Economic temic analysis and synthesis, comparison and Geography’ (2009) discusses the growth points of generalization. The second part of the article de- a territory in regional and global economies and scribes a specific case when gaming techniques ways of determining them. were applied to stimulate community engage- Socio-economic development of territo- ment. ries was analyzed by Lee (2000), Florida (2010), The methodological approach includes the Shachar (1971), Efrat (1994), Portnov (2004), following stages. At the first stage, the data are col- Malizia (1986), Bontje (2004), Grimm (1995), lected from various sources: Rosstat, regional and Shapero (1981). The issues related to territorial municipal statistics, municipal information sys- development projects involving local communi- tems, reports on the performance of local author- ties are investigated by V. E. Lepsky (2009), Vagin ities, passports of municipalities, and so on. At the (2016), Kutuzov, Koveshnikova (2007), Myas- second stage, we select and cross-validate indica- nikova (2015), and Tyurin (2007). tors and identify the typological data blocks. Fi- The second part of our study discusses the use nally, the socio-economic status of municipalities of gaming techniques for involvement of commu- is assessed through the following procedure: nities in municipal strategic planning and is thus 1. Evaluation and comparison of the indica- based on the concept of the game. Conceptually, tors of the gross municipal product (GMP) (Pet- this part relies on the works by Huizinga (2014) rykina et al., 2016). and Shchedrovitsky (1981). To assess the GMP, we used the values of the A significant contribution to the discussion of average number of employees and the average the theoretical and practical studies of municipal monthly wage: strategic management in Russia is made by such GRP ASi organizations as the Institute for Urban Econo- G,MPii= ⋅⋅ AE mics Foundation, Leontief Center, Center for AErr AS Strategic Research, and the network of Centers for where GMPi is the gross municipal product esti- Applied Urban Studies. mate for the i-th municipal district; GRP, gross It should be noted, however, that most of the regional product; AEr, the average number of em- above-described economic studies dealing with ployees in the region; AEi, the average number of the methodological problems of studying muni- employees of the i-th municipal district; ASr, the cipalities in Russia are of theoretical or descriptive average monthly wage in organizations of the re- character. There is a perceived need for applied gion; ASi, the average monthly wage in organiza- research in this sphere, which is the gap that our tions in the i-th municipal district. paper seeks to address. GMPi ASj G,MPjj= ⋅⋅ AE Methodology and Data AEii AS

This study focuses on the case of Voronezh where GMPj is the gross municipal product esti- region, which comprises 446 urban and rural set- mate for the j-th settlement; GMPi is the assess- tlements and 32 municipal districts, excluding the ment of the GMP of the i-th district; AEi, the av- city of Voronezh. The study relies on the analysis erage number of employees of the i-th municipal

of the legal acts, including those regulating the district; AEj, the average number of employees of development of municipalities; federal, regional the j-th settlement; ASi, the the average monthly and municipal statistics; data from municipal in- wage in organizations of the i-th municipal dis-

formation systems of settlements of Voronezh re- trict; ASj, the average monthly wage in organiza- gion or RIAS (regional information and analytical tions of the j-th settlement. system); data from municipal information system To compare the GMP at the level of urban MISS ‘Volost’; data from the executive authorities settlements, we introduced an adjusted coefficient of Voronezh region (Department of Economic for calculating the GMP of urban settlements

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(Petrykina et al., 2017), due to the differences in Third, the average value is taken as the com- databases: the GMP of settlements was calculated parison base, equal to 100% or 1, in relation to according to the data of the settlement passports which the levels for each indicator are calculated while the GMP of municipal districts was calcu- for each urban settlement. lated according to the Rosstat data. xij 2. Allocation of clusters of municipalities by zij ==, i 1, mj , = 1, n; using the methods of multivariate statistical anal- x j ysis according to the following criteria: by eco- max x j nomic specialization (in accordance with OKVED zmax ==, jn1, ; (All-Russian Classifier of Economic Activities), j x j by the level of socio-economic development, and by the number of workers employed in various min min x j types of economic activity (Petrykina et al., 2017). zj ==, jn1, ; A comparative analysis of the results obtained x j through cluster analysis (Solosina, 2019). == 3. Construction and comparison of economic zj 1, jn1, . profiles of settlements (Solosina, 2019). The minimum and maximum values are cal- The methodology for constructing an eco- culated for the levels relative to the average for nomic profile proposed in this study includes each indicator. several stages. First, a database is formed and Finally, for each urban settlement, a diagram indicators are selected for urban settlements of the scatter of values for each indicator is built. of Voronezh region. Second, the maximum, At the same time, two graphs are plotted on the minimum and average value for each indicator chart: average values and indicator values for are calculated: the given settlement. The resulting diagram rep- max resents the economic profile of the given settle- xj ==max xjij , 1, n; i ment (Fig. 1). min Another key aspect of our research method- xj ==min xjij , 1, n; ology is the focus on the organizational mecha- i nism – system-social design methodology (SSD) m xij (Solosina, 2019), which has been proven effective x = , j ∑ m for engaging members of local communities in i = 1 strategic territorial development. This is a com- where j is the number of the indicator, i is the municational method aimed at involving people

number of the city settlement, xij is the value of in the process of strategic planning and imple- the indicator. mentation of strategic documents.

zij Value of zi1–zin for i-th municipality

max

zj = 1

min

1 2 n j x 1 Figure 1. Economic profile of a settlement

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There are two approaches to the process of methodology, game participants go through all strategic development at the municipal level: ‘ad- SSD stages such as research, situation analysis, ministrative-expert’ and ‘partner’ (Solosina & forecasting, development of scenarios, creation Schepina, 2016). A distinctive feature of the lat- of a project line, and start-up projects. Following ter approach is the involvement of residents in the that, the participants are transferred from the process of strategic decision-making and develop- game into the real project space. At this stage, ment of appropriate tools for doing so. Members the participants discuss the future prospects of of local communities are involved into the stra- the project developed during the game. Based on tegic planning process with the help of gaming the results of the game, the game report is pre- techniques. pared, which contains all the material that was The basis of the SSD methodology is the collected and analyzed. ‘game square’ method proposed by M.A. Kutu- There are three types of game project out- zova, which includes a series of game seminars comes: the game product; development of the (problem seminar / project seminar / strategic participants’ soft skills; and the network. The game / operational game) and developed on game product is a system-social model of the the basis of military operational-tactical games project which includes: concepts, values, project and organizational-activity games (the for- characteristics, activities, system of management mat was initially developed by G.P. Shchedro- and leadership, roadmap, and potential risks. vitsky (1981)). The main stages of the game and Soft skills are the skills and competencies of the its preparation within the SSD framework are participants that are developed through their ex- shown in Figure 2 below. perience of team work. A network is here under- First, the technical task for the game is agreed stood as an action group that creates and signs upon with the customer. The customer may be, the project declaration, thereby indicating their for example, the municipal administration, a re- interest in further participation. gional executive authority, a self-governing terri- The uniqueness of SSD lies in the gaming torial body, an action group, or a business. After component, since it is the game tools that help agreeing on the technical specifications, the game create a common strategy for a system-social master and the game support team develop the project, motivate people to join such projects scenario by conducting preliminary research and and become part of project teams. The SSD analysis. methodology is focused on the creation of a sys- Second, the list of participants is drawn: it is tem-social project and the formation of the insti- necessary to involve all the participants interested tutional environment for creating other projects in solving the problem posed by the customer. To within the framework of the SSD project. Expert participate in the game, one must know the rules support at all stages allows project participants of the game and the terminology, which is why to maintain the strategic focus of the project. the preparatory materials should be sent to participants in advance. Results When the game starts, the first stage is to We applied the above-described methodolog- discuss and revise the rules and terminology, ical approach to assess the socio-economic status which is necessary to stimulate creative thinking of municipalities in Russia by focusing on the case of the participants. Then, in accordance with the of the town of Liski in Voronezh region.

research, 1 Technical task for the game problematization, creation game analysis, forecast, scenario 2 List of participants scenario Distribution of materials to prepare 3 for the game 4 Game

5 Game report

Figure 2. Stages of the game and its preparation

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In accordance with the regional plan for the activities as “Production and distribution of elec- development of Voronezh region, Liski is the ad- tricity, gas and water” and “Manufacturing”. Thus, ministrative center of Liskinsky district, which the municipalities in this cluster can be character- in total includes 23 urban and rural settlements. ized as “agricultural leaders”, although they also Since 2013, Liskinsky district has been one of have a fairly well developed sphere of industrial the leading municipal districts in Voronezh reproduction (Table 3). gion, according to the results of the comprehen- In each column of Table 2, the leading mu- sive assessment of the regin’s socio-economic nicipalities are highlighted in orange. Those mu- development. nicipalities that rank second after the leaders are We used the Rosstat data and settlement pass- highlighted in yellow. These two groups include ports to obtain GMP estimates for Liskinsky mu- municipalities with the following characteristics: nicipal district for 2006, 2010 and 2015, and then – clustering: a combination of clusters A – 1 for the town of Liski itself. and A – 2 (for both groups); Let us compare the GMP values of Liskin- – gross municipal product (GMP): more than sky municipal district for 2006, 2010 and 2015 2% of GRP (orange group) and 1–2% of GRP (yel- (see Table 1), given that the average monthly low group); wage in Voronezh region in 2015 amounted to – population: over 70,000 (orange group) and 27,772.7 rubles, GRP was 823,133.6 million rubles, 40,000–70,000 (yellow group); the average number of employees was 500,356. – wages: more than 25,000 rubles (for both The GMP was just over 5% of the region’s GRP. groups). Since 2006, Liskinsky municipal district, along Other colors highlight the groups of munic- with Rossoshansky municipal district and Bor- ipalities that have the same types in two clusters. isoglebsky city district, has been among the three Next, we turn to the adjusted estimate of the leading municipalities in terms of GMP (Table 1). GMP obtained for some urban settlements of Vo- Table 1 ronezh region in 2015, including Liski (Table 3). The GMP of Liskinsky municipal district in 2006, Liski is the leader in terms of the GMP (22,241.72 2010 and 2015 million rubles), followed by Rossosh (18,425.98 Average num- Average GMP million rubles). GMP, mln Year ber of employ- monthly in % to rub As for the number of employees and type of ees, people wage, rub GRP activity (Table 3), Liski, along with Rossosh, be- 2006 29,870 7,773.7 8,908.05 5.36 longs to cluster 1 with a high number of employ- 2010 27,651 15,181.3 17,933.96 5.17 ees in “Manufacturing industries” and with fairly 2015 26,247 26,571.0 41,310.52 5.02 high rates of employees in “Agriculture, hunting Source: compiled by the authors. and forestry”, “Production and distribution of electricity, gas and water.” Thus, according to the After evaluating the general indicator of so- selected indicators of economic specialization, cio-economic development – the GMP at the the employment structure of Liski does not fully district and settlement levels, we identifed the ty- correspond to the specialization of Liskinsky mu- pological group of this municipality. To do this, nicipal district. It is more industrial than in the we used cluster analysis (Tables 2, 3). In 2015, district as a whole. The city has large enterprises according to the results of clustering in terms of manufacturing metal structures and building ma- socio-economic development, Liskinsky munic- terials and processing agricultural products. ipal district belonged to cluster A together with At the following stage, we are going to turn to Rossoshansky, Pavlovsky, Novousmansky munic- the economic profile of the town of Liski and con- ipal areas and Borisoglebsky municipal districts. sider the town’s progress during the given period In terms of economic specialization, the areas (Figures 2–4). like Pavlovsky, Novousmansky, Bobrovsky, Ka- In 2006–2015, Liski maintained the leading lacheevsky, Ostrogozhsky, and Talovsky munic- position in the following indicators: total number ipal districts belong to cluster 2 (Table 2) – the of employees; the number of employees in ‘Man- leading cluster in terms of crop and livestock pro- ufacturing’; ‘Transport and communications’ (the duction. At the same time, the town of Liski ranks town has a large railway junction and a river port); second in terms of the volume of production ‘Agriculture, hunting and forestry’; ‘Wholesale and (works and services) in such types of economic retail trade, repair of motor vehicles, motorcycles,

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Table 2 Municipal districts in Voronezh region in 2015 Clusters by the level of socio-eco- Clusters by economic GMP Population, Municipal districts Wages, rub. nomic development (A-F) specialization (1–4) in % GRP people Rossoshansky A 1 3.74 93,368 25,571.3 Borisoglebsky A 1 2.01 63,678 21,046.8 Liskinsky A 2 5.02 101,764 26,571.0 Pavlovsky A 2 1.70 55,990 21,476.4 Novoysmansky A 2 1.52 79,183 25,594.6 Semiluksky A 3 1.27 67,558 22,340.7 Anninsky B 2 1.05 41,195 19,513.8 Ramonsky B 3 1.72 32,440 25,361.3 Bobrovsky C 2 1.23 49,148 21,004.6 Kalacheevsky C 2 1.08 53,670 19,732.4 Buturlinovsky C 3 0.88 47,918 18,846.2 Ertilsky C 3 0.51 23,839 18,430.2 Novohopersky C 4 0.71 38,787 20,119.0 Bogucharsky C 4 0.62 35,732 19,069.6 Khokholsky C 4 0.61 29,702 22,213.6 Verhnemamonsky C 4 0.38 19,890 19,526.9 Petropavlovsky C 4 0.23 18,103 20,542.5 Repyevsky C 4 0.23 15,742 21,055.7 Talovsky D 2 0.86 39,785 20,320.7 Verkhnekhavsky D 3 0.65 24,665 23,856.3 Kashirsky D 3 0.49 24,343 23,979.1 Ternovsky D 3 0.36 19,824 18,791.5 Vorobyevsky D 3 0.33 17,071 19,239.2 Podgorensky D 4 0.54 25,338 20,726.4 Nizhnedevitsky E 4 0.40 18,989 24,963.0 Ostrogozhsky F 2 1.51 58,950 23,236.9 Gribanovsky F 2 0.74 31,100 21,096.1 Kantemirovsky F 3 0.85 34,923 21,898.2 Paninsky F 3 0.54 26,531 19,435.3 Povorinsky F 4 0.60 32,755 21,014.2 Olkhovatsky F 4 0.54 23,356 20,585.7 Kamensky F 4 0.48 18,921 22,470.7 Source: compiled by the authors.

Table 3 Urban settlements in Voronezh region in 2015 Clusters in GMP adjusted terms of so- Economy: Cluster spe- Clusters of mu- for settle- Popula- Wage, rub cio-economics cialization (1–4) nicipalities ments’ GMP, tion development million rub. Rossosh A 1 industrial 1 industrial 18,425.98 62,688 22,776 Liski A 2 agricultural leaders + 1 industrial 22,241.72 54,788 26,572 electroenergy Pavlovsk A 2 agricultural leaders + 4 with low rates 6,426.22 25,081 22,063 electroenergy Davydovskoe A 2 agricultural leaders + 4 with low rates 1,343.52 5,258 16,725 electroenergy Latnensky A 3 agricultural 4 with low rates 1,050.44 7,359 20,626 Anninsky B 2 agricultural leaders + 4 with low rates 3,441.91 16,729 19,221.8 electroenergy Ramon B 3 agricultural 4 with low rates 2,856.75 8,381 19,800 Kalach C 2 agricultural leaders + 2 agricultural 1,956.36 19,248 12,065 electroenergy

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End Table 3 Clusters in GMP adjusted terms of so- Economy: Cluster spe- Clusters of mu- for settle- Popula- Wage, rub cio-economics cialization (1–4) nicipalities ments’ GMP, tion development million rub. Bobrov C 2 agricultural leaders + 4 with low rates 3,290.01 19,956 16,780 electroenergy Buturlinovka C 3 agricultural 2 agricultural 3,772.99 25,230 18,600 Ertil C 3 agricultural 2 agricultural 1,904.31 10,740 18,530 Kantemirovskoe C 3 agricultural 4 with low rates 1,888.86 11,113 22,600 Novokhopersk C 4 with low rates 2 agricultural 2,022.34 13,845 19,500 Boguchar C 4 with low rates 4 with low rates 1,446.83 11,162 17,322 Khokholskoe C 4 with low rates 4 with low rates 855.34 7,549 14,916 Yelan-Kolenovskoe C 4 with low rates 4 with low rates 560.92 3,635 20,600 Nizhnekislyayskoye C 4 with low rates 4 with low rates 465.77 3,576 16,200 Talovskoe D 2 agricultural leaders + 4 with low rates 1,643.26 11,736 15,937 electroenergy Podgorensky D 4 with low rates 4 with low rates 1,026.02 5,750 21,004 Gribanovskoe F 2 agricultural leaders + 2 agricultural 3,193.01 15,255 22,400 electroenergy Ostrogozhsk F 2 agricultural leaders + 3 electrical 5,027.35 32,944 16,772 electroenergy energy Pereleshinskoe F 3 agricultural 4 with low rates 437.31 2,797 18,100 Source: the authors’ calculations based on the original dataset

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m r o r a r a ’ , a n

t t e e s n e r k d r i s s m h g ’ ,

s n i n l p t u e t t o e n r o g a e r y g r i e

o c i

e n c i ‘ T g e r o t i n a

i o o o t ‘ E e

s l n f e o t g r o c e f i

o i t o h

s r , w i s

‘ P h r i u i e y h i r i i ‘ A w a s s t o i r a

t o t

l d t e c t n d c t v i o s c u e u e a , t r e a c t n s i l e r v r t y u n l ‘ m e e o n v y p e a e

o r i i n

w ‘ W c e y e c a i c r a i p t r u l e o

p y

u f c t s i

e t t i e s l g t h

a A t o b e n e s

y l r e a o d o e t p l

y f s x g e n a l m

p l d a e n f

, o e e l g e m t p o e p o a e u r n m l u f e

p n n

l e y o y g r a a a r a . p u l m e

P f o n i o u y p t a c i i s p e d o m o

e m d m m

c i a r l o n l

o n n o e v l r a l g

s f m e ‘ C e

M p r e n s o p r a m p l r

g e m q u f o i

i e p t n o n A f

a h e s a

‘ M t a e i n

o t d

s f l t t m r c e m o t o e t i r f n b e i c o i m s o i e a e q u e g r

n o o e n n t n

r a e e b u e l a f

f y n t P n d m o a b e r T u ‘ F e

‘ M r f i a

b e r i

o z o o f n g b e y s t h l i t r s o s r e s r c e m a o b e r s n o o e u b e e

m e e p n N u r i i l m t e e o p s T P m d p

b e m m y n

y N u f u b e H e N u e r g a o o d N u

o m o m l l

f o N u m e n c i N u p

p n o H a f o N u r m o m i N u e e e r

o r t b e f f o C o o b e m p r r m r o N u b e b e P N u m m N u N u Figure 3. Economic profile of Liski for 2006 Source: the authors’ calculations based on the original dataset

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household products and personal items’; ‘Educa- We believe that the proposed methodological tion’ (the town has several professional colleges approach and its visualization can help be used for and branches of universities); ‘Healthcare and so- managerial decision-making and strategic plan- cial services’. It should be noted that we don’t have ning of municipalities. the data for 2006 on such indicators as the share of industrial land and the share of agricultural land. Engaging and Involving Local Moreover, in 2010 and 2015, the share of industri- Communities in Municipal Strategic al land reached its maximum, and the share of ag- Planning: Gaming Techniques ricultural land, its minimum, which characterizes Involving people into the process of strategic the city as an industrial center. planning is a key to successful implementation of In comparison with other settlements, Lis- municipal strategies. The proposed SSD meth- ki was losing its position in terms of the number odology was tested in the settlement of Kostenki of employees in ‘Construction’ (even though the in 2017. Kostenki is a comparatively small settle- town is producing building materials) and ‘Fi- ment, located 47 km from the city of Voronezh. nancial activity’. The indicators of natural and mi- The population is 1485 people, according to the gration growth showed negative dynamics since settlement’s passport, aged 0-6 (45 people); 7–17 2010, the population of the city decreased by 2%. (96 people); 18–45 (560 people); 46–59 (295 peo- In the other indicators, the city retained its posi- ple); and 60 or older (479 people). On the terri- tion (Fig. 3–5). tory of the settlement, there are two agricultural

10 9 8 7 6 5 4 3 2 1 Average Liski . ’ , r 0 s e e e e e d h s y e d e e d y y g r t l y l l e l t l l d l l t l n n r s … … e t r y … g e n n r e n o l n p l i p p p h p p n o e p p p e m o a a i a d w a a r a t s i u a a i l p o

o o o a

l s o p y o o p p o t t t l

n s o

a e g e n p n l e e e e

e e l n

u h o u l a u n s a l ’ , e l n f p t n o

p a s p s c a p p p o z a c i g r o o

i s

i d c u i p o y s c . , u ’ , r a s w

r i r t ’ , c o h ’ , ’ , l r a r s ’ ’ , t e

n n n t s s e r k e c e d s u l n n g ’ , e n m h g a n s

t o

t u

g a g r i r y n t ‘ T e o u p o e o i o l , o

n e

g e t a i o u

c e

‘ E i i g r o t i o r , n i t s

d i f s

y h r g a t h h w m i i s d i r i d ‘ A a t s w

e t t o i t r a c u

a l o o c t

n a

c t i v u n

l e e n r e e r v r o e s t n v i c i i t u t o p r i r e n a ‘ W m e

y e u c a h v o a i w r a n

c r u p i

g f s t y ‘ P t r i t c t

l e r o o s p

t h

t r e a g e A a l b e o l n a

a g e x o t y f d s s e

p o ,

g e d c t l n d

a f p e a l p e u m m e e o u n r e

e c i

e m t P n l g r a p e a l l o . e y y r a p e i c i o n

d o a m u s n i p m e b u r o y e o o m s

d c i a o m

e f l r a l

n l f

g v o

M s r a , ‘ C

e g e p r e ‘ m n m e n l

f p

p t l

i o q u o i n d y a

r c e f e

A u s

s n p ‘ M o d i a l t

e t t e

s i s i t t i e m o c o f m e n n n r l s c e

n a q u i e g e a n e P m e e o i n o o r a

t e d n e t n F

i y e l o y n f ‘ M u

e T

r t b e " i a

y n a u f o h f

g o o r c e r e b e y h s s l t r s l t a s n o o e o l n m l e o b e r e

u p o e b u p i l m a t e P r p s e p o T e p

r i m y n m b e m y f u t N u m e H e o b e e s o

N u m o o l

i e ‘ H l m

f f

c i e N u p m

f d p s n H o o f o e o r m r o N u m i e e r e N u e

r y o

r t b e f b e f o b e o C l o b e o m m p p r m r m r o m b e N u N u b e e P N u

N u f m m o r N u N u b e m N u Figure 4. Economic profile of Liski for 2010 Source: the authors’ calculations based on the original dataset

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4 Liski 2 Average ’ ’ . ’ 0 , s r e s e e e e e e e e e s . y y y y g d d d h h n l r t l . l l l l l l l l t t t e e r y t t g . n r s … … n r e i a n n n l o

o p p p p p p p e p p a m i n h a e s i ’ , s o a a a l w a r a u e

t s y i p o t o o o o o o

l p p

l s o r ’ , t t e p n a e

t g s

r a l l e e e e e a e e o u o e e l l u n h a u s n e r o a l t

’ , c n t t n o c u u p s p s p p p p p f a o . o r o i g

d i a ‘ H p s y r a i c a u

o c h e r s c l w r i ’ , ’ , ’ , ’ , ’ , ’ , t t e

r a "

t s u

d t w n n e e a s s r i r k s r v s p m c h

l e n t g n

e n e t s t e e e l o r y

g g r o o e o ‘ T n a u e ‘ W g e

d i o o ‘ E a i n i t o

u s r e c

n i u i t ‘ O i t f

t r , o

i s y d s

h w h n s

t i t l s i i d r i ‘ A c s w r e

r a o a t

a t o e d

t o i e o a c c

n v l a e l a i s e n

l u t r e r v s n i e r r i a e v r n e i h u o t u n s e u m n p t v e

e a p y t w n i

g r a i c y e a r y c e

a c f o i

s i p o t p

e t ‘ P e t e e a h

r o t A

o b r e o y a g s l l m s t d o y g x o l

n f a l

g s l w f d p r s , n r a , l o a e e e a m p

o n p e p r u e P m p u l i

e o e e t

n l g a y y t e l f

r a e p . e i i c t u p n a p d i n m p e s e m i o o m o

y m c m d o a l n e e r a u l e c g v e g

‘ C o o s M d m r a r n p m e

r e p l

‘ l m f a o q i f t ‘ H f e

n r i e a n A

r c s e

a u n e i d ‘ M p o o t s l o

u s o t f a e e

b i t m t n f i n c

c s e n i s r q e

g e a l o r n o r P a e m n o e e e

a e e m e y t l e M a l d e o n e n

r e T ‘ F u y i r e " i

e b u r c o a b

b n e g f f y c e l s o r e h y t s r s e s f

l a b o o o n N e o m b e u p o o m e

m l i o P d p l s e t

r e p o u

s u T u m p , m p n m y e n y n f u m u y e a N H u o N e N b o o m e t o o l m i l i f

i e N f e t l N c p m p o i n H f o f u t u o r m o m o b i r u e e e e N r e r r i r t b f e f t b e o o s C o b o b m i p m r r u d m e m u e r o u N b u b N P N N m m u u N N Figure 5. Economic profile of Liski for 2015 Source: the authors’ calculations based on the original dataset

enterprises and 639 private farms. According to are the cultural layers in the area that store samples the statistics, the average monthly wage in the of primitive art (Paleolithic Venus). district in 2015 was 22,213.6 rubles, and the aver- The modern village of Kostenki is the heir to age wage of workers in peasant farms, 10,644 ru- the city of Kostyensk, an outpost of the 17th centu- bles. The average number of workers in peasant ry on the southern outskirts of Russia. Kostyensk farms was 8 people. In total, the average number constituted a part of the Belgorod system of de- of workers (external part-timers excluded) in the fensive fortifications protecting the local commu- district in 2015 was 3809. Kostenski rural settle- nities from Tatar raids from the south. Then, with ment (Kostenki) is located in Khokholsky district, the decline of its functionality as a fortress, the which has the MP of 5011.91 million rubles or city lost its status and became a rural settlement. 0.61% of GRP (Tables 2 and 3). The customer of the game was the entrepre- The settlement of Kostenki has a unique tour- neur who planned to create an archeological park ist potential. Kostenki is world-famous for its rich on the territory of Kostenki. The game was aimed historical and cultural heritage and natural beauty. at developing a SSD model for creation of such a The first people settled in these places 50,000 years park, devising possible scenarios for this project ago, the first dwellings date back 25,000 years, there and a roadmap for its implementation. There were

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20 participants in the game: students, entrepre- one hand, makes the system more stable, on the neurs, historians, journalists and economists. The other hand, it requires appropriate management key participants were the Director of the Kosten- at all stages of the project development; ki Open-Air Museum and the customer (initiator 1.2.2. Networking. The project, among other of the project). The participants of the game be- things, stimulates participants to build relations longed to various age and professional groups. within the project team and interact with external Residents of the settlement participated in stakeholders; a number of regional programs: for example, in 1.2.3. Brand development. The archeological 2016 the municipality received 96,000 rubles for park as a heritage project capitalizes on the site’s the improvement of a children’s playground and unique location and history; in 2017, the residents of the settlement decided to 1.2.4. Rules of cooperation. The game relies participate in the budgeting program and submit- on a system of rules devised by the participants ted their road repair project for the 2018 compe- themselves; participants should meet a set of re- tition. quirements such as willingness to invest resour- Below are the outcomes of the game, which ces; motivation; sharing the project’s values; fall within three categories: the game product, the 1.2.5. Megaproject. In order to manage sev- participants’ soft skills, and the network. eral projects at once, efficient leadership and an 1. Game product organizational structure are necessary. Participants of the game pointed out that The management should include an expert there recently Russian people has started to take council responsible for the development and im- more interest in the history of their country, re- plementation of the project strategy, the search gion, community and family, which means that for strategic partners, analysis of the project’s the project of Kostenki may benefit from this trajectory and so on. There should also be mana- trend. The result of the game was the partici- gers responsible for specific areas and issues. In pants’ common vision of the future development order to create such a management structure, it of archeological park ‘Kostenki’ and the sur- is necessary to distinguish between operational rounding area. and strategic aspects of the project. For example, 1.1. System-social model of the project. to realize a subproject aimed at organizing a series The historical and archaeological park is the of lectures on Kostenki, it is necessary to devise result of a joint effort of the community, entrepre- a strategy, select topics, prepare materials, choose neurs and local authorities. the time and place, coordinate the work of orga- Participants of the game pointed out that nizers, and so on. All this requires the organiza- free time is now becoming a key development re- tional structure to be horizontal and flexible, able source for people and that archaeological park in to quickly adapt to the changing situation. Kostenki could follow the concept of life history, 1.3. Project risks. Certain risks, primarily of which corresponds to this trend. organizational nature, should be considered: for The creation of an archaeological park in- example, the loss of strategy or uniqueness of the cludes the study of the types of activities that could project or disagreements between the parties in- be offered to its visitors such as educational on- volved in project realization. line and off-line events involving representatives 2. Development of Participants’ Soft Skills of the academia and members of local communi- and the Network ties; amateur archeology course; expositions with For the project team, it is essential that all its augmented reality experiences; experience-based participants should enhance their teamwork and programs for tourists (e.g. experience life in the other basic skills. Paleolithic Age) and volunteering programs. At the first stage of the project, a project dec- All types of project activities fall within the laration is devised and signed. The declaration is concept of leisure as time for personal develop- necessary to indicate the participants’ commit- ment and education. ment to the values and goals of the project. One of 1.2. The main characteristics of the project in- the significant outcomes of the game is to create clude the following. an action group that would be responsible for im- 1.2.1. Collective decision-making mecha- plementation of the project in real life. nism and creation of an appropriate management According to the SSD methodology, the par- structure. The proposed range of activities, on the ticipants of the game go through the following

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stages: research – analysis – forecasting – de- example, the town of Liski) play in the region’s so- vising development scenarios – developing cio-economic system (Solosina, Shchepina, 2016). subprojects – start-up stage. In the game, these To make the proposed approach more effec- stages take less time than in real life, so the game tive, it could be combined with other analytical prepares participants for future realization of the tools, for example, SWOT analysis. We could also project and helps them develop the necessary build socio-economic profiles of municipalities skills. to reveal their strengths and weaknesses and de- The SSD methodology is aimed at developing velopment trends and describe their relationships a strategic territorial development project and can with other municipalities. be used at the stages of strategy development and As for the SSD methodology, in general, implementation. it is aimed at developing large-scale strategic projects and at developing participants’ manage- Conclusions ment competencies. It is applicable both in busi- The article proposes methodological tools ness and in territorial development; it can also for investigating socio-economic development of be used for educational purposes. As our exper- small municipalities and gaming techniques for iment in the settlement of Kostenki has shown, involving local communities in municipal strate- the development and implementation of projects gic planning. using SSD techniques can stimulate cooperation The methodological approach is based on the between businesses, authorities and local com- integrated use of our original databases (Bystry- munities. antseva et al., 2016) and enables us to conduct The results of this study can serve as a meth- analysis of individual municipal districts and com- odological and instrumental foundation for compare them with other municipalities. We tested prehensive regional diagnostics and improvement these tools by using the data on Voronezh region of the system of strategic planning and manage- and showed the role specific municipalities (for ment at the municipal level.

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Information about the authors Maria I. Solosina – Phd. in Economics, Leading Engineer of Interfaculty Research Laboratory of Economics and Management (Khusulnova st. 40, 394068, Voronezh, Russia); e-mail: maria.solo- [email protected] Irina N. Shchepina – Doctor of Economic Sciences, Professor of Informational Technology and Mathematical Methods in Economy Department (Khusulnova st. 40, 394068, Voronezh, Rus- sia); chief researcher, Central Economics and mathematics Institute Russian Academy of Sciences (117418, Moscow, Nakhimovsky pr. 47); e-mail: [email protected]

ARTICLE INFO: received January 24, 2020; accepted May 6, 2020

Информация об авторах Солосина Мария Игоревна – кандидат экономических наук, ведущий инженер межфакультетской научно-исследовательской лаборатории экономики и управления Воронежского государственного университета (394068, Россия, Воронеж, ул. Хользунова, 40); e-mail: [email protected] Щепина Ирина Наумовна – доктор экономических наук, профессор кафедры информационных технологий и математических методов в экономике Воронежского государственного университета (394068, Россия, Воронеж, Воронежская обл., ул. Хользунова, 40); главный научный сотрудник ЦЭМИ РАН (117418, Россия, Москва, Нахимовский пр., 47); e-mail: [email protected]

ИНФОРМАЦИЯ О СТАТЬЕ: дата поступления 24 января 2020 г.; дата принятия к печати 6 мая 2020 г.

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