3.2. Prognosis and Strategy
Basic
Scenarios
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The decisions and steps taken by the oblast
leadership may be categorized as follows:
- operative measures, oriented toward the
temporary elimination of negative consequences of macro-economic
processes on the regional level;
- tactical measures, envisaging the permanent
"immunization" of the oblast's economy against
the influence of existing negative factors;
- strategic measures, which will lay the
foundation for the oblast's long-term, reliable, crisis-free
socio-economic development, even within an unstable general
economic environment.
The present state of affairs is so new and
changes so quickly that the regional authorities (as in
all other regions) has focussed on operative measures, acting
like a "fire brigade". It will develop a strategic
concept based on a forecast of overall developments in the
country. If no steps are undertaken and political will is
not exercised, general forecasts are extremely alarming:
runaway inflation, a production slump, high unemployment,
de- industrialization, a sharp deterioration in the operation
of transport systems, and the appearance of large numbers
of refugees.
The development of the oblast as a socio-economic
system at any point in time may be characterized by a certain
functional condition. Four such basic states may be distinguished:
crisis, unstable, stable, and dynamic. Each of these states
may be described by a system of indicators for processes,
which have definite "turning points", denoting
the system's transition from one state to the next. The
following were chosen as indices: rates of growth (or decline)
in production, unemployment level (or its growth rates),
inflation rates, and the ratio between the growth rates
in the population's incomes and the consumer price index
(i.e. real incomes).
An analysis of these indices reveals that
the economy of the Nizhni Novgorod oblast is in in the midst
of a transition from a stable to an unstable state. The
production decline continues, unemployment and inflation
are rising steadily, and the price growth rate for consumer
goods and services is outstripping population's incomes
by one and a half times. Such a course of events must be
contrasted by an effective strategy which anticipates a
response to changes in the situation: to take preventative
measures upon the appearance of trends indicating its aggravation,
while at the same time laying the foundation for developments
of the situation in a positive direction.
On the basis of the oblast's initial economic
condition and its trends, and the absence of significant
external disturbances (a coup d'etat, popular uprising,
civil war, etc.), a positive strategy of the oblast administration
would have the following positive consequences (in chronological
order):
1. Stabilization (after the aggravation
of the crisis, when the system switches to an unstable state):
principal emphasis on a social net, the maintenance of at
least a production minimum, the fragmentation of enterprises
into smaller units, the liquidation of defence output, maximum
(forced) conservation of energy resources, and development
of agriculture and the handicraft industry. Unemployment,
buttressed by a social net. Reliance on
local resources and potential. Barter economy. Consensus
politics. The creation of a favourable entrepreneurial climate.
The establishment of an effective system for ecological
monitoring and the gathering of information on the environment.
The development of bilateral ties with other regions of
Russia and CIS countries.
2. Stimulation (a strategy to return the
system to a stable state): orientation of industry toward
domestic markets, without major capital investments in modernization;
gradual restructuring (including the conversion of defense
enterprises) and the creation of a production base to serve
the agro-industrial complex; attraction of internal investments
(from regions of Russia and the CIS); stabilization of unemployment;
the gradual creation of an attractive investment climate,
revival of commerce, attainment of a reliable reputation,
reduction in crime levels, and the conversion of Nizhni
Novgorod into a recognised commercial centre. A "Free
Trade Zone" (with unrestricted entrepreneurship). A
regulated market economy. The formation of elements of a
civil society. Elaboration and the implementation of regional
and intra-regional ecological programmes. Promotion of the
oblast as a "nucleus for crystallization" of the
Volga regions.
3. Forced Development: rapid restructuring
on the basis of a large-scale attraction of Russian and
foreign investments, to be guaranteed by the local administration;
the creation of an exclusively favourable investment climate
and a special foreign economic policy; the development of
new technologies; the output of products competitive on
the external market; the creation of an international standard
of infrastructure. Progressive improvement of the ecological
environment. A market economy. A civil society. Nizhni Novgorod's
achievement of the reputation of national cultural centre.
The stabilization policy at regional level
is based on the creation of a reliable economic base built
on the observance of the following principles:
1. Competition between forms of ownership
in the same spheres of activity; primarily in agriculture,
commerce, and construction.
2. Reliable provision of resources to production,
as far as possible, with emphasis on local resources (agriculture,
timber, recreational resources, local construction materials,
capital assets, qualified labour resources, etc.).
3. Varied activity based on the optimal
utilization of resources (closed technological cycles and
emission-free production), their combination into finished
products, and the advantages of the region's location as
a transport hub.
4. Dynamic nature of the economic base,
and "speedy reaction" to external changes, largely
through the efforts of small business.
5. Competitive products and services. 6.
Observance of ecological requirements.
7. Management on the oblast level by creating
a single economic coordination agency, and stripping individual
economic entities of their "ex-territorial" tax
status.
In addition, one should be prepared for
an unexpected "state of emergency" (transition
from an unstable to a crisis state), when the activity of
the oblast authorities would bear an economic and political
nature, insofar as such a transition is always accompanied
by an explosion in criminal and other illegal activity.
The following "turning points" could trigger such
a situation: - disruptions in the population's food supply,
especially in the cities; - unexpected sharp (and multiple)
price hikes for staple foods (bread and milk); - a rapid
rise in unemployment rates owing to the bankruptcy of enterprises,
or lack of demand, a dearth of raw materials, fuel or electricity;
- breakdown of cities' "life support"
systems (transportation, water supply, heating, sewers);
- major catastrophes at environmentally hazardous industrial
sites.
A critical turning point can be prevented
by regional and municipal authorities by continual monitoring
of the oblast, cities and regions; collaborating with enterprises;
and constant dialogue with social organisations. The measures
to be taken must include major purchases of stabilisation
articles (grain and fuel), price restrictions for "crucial"
products, the timely preparation of compensatory jobs, constant
control over the working status of enterprises and city
life support systems, and special steps for crime prevention.
Surveillance over the "critical nature" of the
situation should be maintained for the oblast as a whole
and for each of its cities and regions, in a bid to prevent
the emergence of "crisis zones" within the oblast.
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