Expert Dmitry Zemlyansky on the importance of preserving individual development programs for poor regions

In a column for Kommersant, the director of the research center for spatial analysis and regional diagnostics, IPEI RANEPA, discusses how small expenses to support lagging subjects of the Russian Federation help to consolidate other resources and contribute to solving long-standing problems – and why the use of this tool should be extended and expanded. Dmitry Zemlyansky.

From 2020, for ten regions of Russia with low indicators of socio-economic development started to act A new tool for targeted support of territories at that time for Russian management practice was individual socio-economic development programs (IDP).

Officially, the goal of these programs is to create conditions in ten selected regions for accelerated socio-economic development and ensure real growth in investment and cash incomes of the population, reducing poverty and unemployment. Although the programs have not yet been completed (according to the plan, they will end at the end of 2024), a number of conclusions can already be drawn about the progress of their implementation and the impact on the development of the regions. Our research shows that, although the amount of financial resources allocated to each region for the implementation of the program is small (only 5 billion rubles per region for the entire five-year period of implementation of the program, subject to the provision of strictly no more than 1 billion rubles per year), individual programs play a significant role for regions in a number of areas.

Thus, IPRs really show high efficiency as a tool for overcoming specific local, including long-standing, problems of the regions, for which an optimal solution could not be found for a long time.

In most cases, this concerns small-scale infrastructural and administrative problems. However, solving such problems allows us to “expand bottlenecks” and forms the basis for obtaining significant systemic effects in the future. For example, in the Altai Republic, due to the IPR, it was possible to finance research and design and survey work to revive the territory of the never implemented SEZ “Altai Valley” as a new investment site (the infrastructure built in the zone has been idle since the early 2010s).

In five out of ten regions, as part of the programs (including as a lobbying resource), significant regional roads were transferred to federal ownership, which made it possible to repair them – as a result, transport connectivity in the regions noticeably improved, in some places the tourist flow increased, which entailed growth of investment activity of the tourism industry, development of roadside services. This is not much for large industrial territories, but for small regions these are very noticeable projects.

All regions note the important role of the IPR as a support tool that complements already existing federal instruments or makes up for the lack of them.

Most regions used program funds to introduce mechanisms that were a direct projection of federal measures that were previously unavailable to them (due to the small scale of the economy, industry specifics, or simply the lack of design estimates, design estimates). Thus, almost all regions used IPR funds to create and capitalize regional industrial development funds, and in each of them, by the end of 2023, several dozen enterprises used the funds.

For example, in the Altai Republic, IPR funds were aimed at supporting enterprises producing deer antler (namely, increasing antler productivity) – a specific regional and at the same time high-margin industry, which is not yet so actively supported at the federal level.

Due to flexible possibilities for the use and redistribution of funds allocated for programs, IPR made it possible to complete many socially significant infrastructure projects in the regions, including avoiding unfinished construction in the context of rising construction costs in recent years.

Among such objects is the Yoshkar-Ola airport, the construction of a passenger terminal of which is being implemented partly with funds from an infrastructure budget loan, and partly (including the development of design and estimate documentation) – with funds from the IPR.

Such results allow us to judge the relative success of individual programs as a targeted support tool. Although the programs, due to the small scale of funding, are unlikely to radically change the situation and make these regions developed in a few years, they have significantly supported the economies of weak regions during the period of turbulence that began in 2020, and clearly contributed to the elimination of a number of significant local restrictions.

This makes it justified to extend the IPR for the next period, but in this case it is also necessary to significantly adjust the process of managing the instrument.

In particular, the federal authorities should clearly define in advance, before the start of a new program development cycle, the procedure, conditions and criteria for the formation and filling of IPR with activities. This will allow the regions to carefully consider the targets of their programs, focus them on the most important areas, and thereby avoid an unnecessary number of subsequent adjustments to the IPR documents.

It is rational to transfer the main powers to manage the implementation of individual socio-economic development programs “into one hand,” since the institution of assigning supervisory departments to regions with IPR has complicated and lengthened the procedures for coordinating any actions within the framework of the programs.

It is advisable to transform the system of reporting indicators for regions under agreements to receive federal transfers for the implementation of programs, in particular, to move away from the indicator of creating permanent jobs per 1 million budget expenditures, since it blocks the possibility of financing promising projects through IPR that involve the creation of seasonal jobs or increasing labor productivity. Perhaps, when formulating goals, one should abandon the same set of indicators, and take into account the specifics of the problems and the set of activities of each individual subject. The selection of regions for the development of IPR for the new cycle should be made more reasonable and transparent.

Finally, if we set the goal of the IPR to achieve “accelerating socio-economic development” in the regions, then it is rational to think about increasing funding for programs.

It is equally important that when pursuing ambitious goals, clearer regulation of the rules for using federal money allocated for IPR is required. Establishing a clear acceptable ratio of economic and social activities in programs, preventing the inclusion in individual programs of socio-economic development of measures to finance design and estimate projects without including the corresponding project documentation in the IPR will presumably be able to increase the effectiveness of the IPR as a “fishing rod”, i.e. a source of funds for creating infrastructure for business and improving the investment climate, get rid of cases of using programs as a “fish”, when federal finances are spent on meeting current needs or constructing facilities that do not lay the foundation for the future build-up of investment, economic and tax potential.