the most import-dependent industrial regions of Russia have the highest integration potential in the EAEU

Experts from the Higher School of Economics (HSE) have studied the prospects for industrial cooperation at the level of the regions of the EAEU countries – this is what the Russian authorities are counting on to a greater extent as part of replacing partners and suppliers lost due to the military operation of the Russian Federation in Ukraine. In Russia, industrial regions that are more dependent on imports have a higher integration potential. Experts offer to stimulate industrial cooperation with loans and grants.

The most import-dependent industrial regions of the Russian Federation also have the highest integration potential in the EAEU, a study by the Institute for Statistical Research and Economics of Knowledge (ISSEK) HSE has shown. Experts assessed the potential of industrial cooperation in 95 EAEU territories, identifying complementary specializations for them (data from regions in the Russian Federation and Belarus were compared and aggregated data for Armenia, Kazakhstan and Kyrgyzstan).

Plans to expand industrial cooperation with partners in the EAEU are largely dictated by Russia’s interest: if in 2022 the EAEU countries became a hub for solving its most acute sanctions problems (with supplies and international settlements), then already in 2023 the Russian government indicated an interest in expanding the functions of friendly partners – they are expected to cooperate and implement joint projects (see Kommersant of July 11). Applied work to replace missing suppliers and create production facilities has been sent to the regions, it is assumed that they know the optimal points for industrial growth: the federal center does not have data on the numerous needs of various industries.

The ISSEK study demonstrates vectors of possible integration. Experts associate the potential for cooperation with the degree of diversification: Moscow (15), Kazakhstan (11), St. Petersburg, Minsk and Moscow regions (4 each), Minsk, Tatarstan and Samara region (3 each) have a more diverse composition of industrial specializations. Among the regions of the Russian Federation, Moscow (92) and the region (26), Tatarstan and Samara region (24 each) can also have the most international inter-industry relations – they have at least three industrial types of activity, including two high-tech ones. The monoregions — Ivanovo region (textiles), Ryazan region and Udmurtia (computers and electronics), Arkhangelsk region (pulp and paper industry) — have lower potential. An advantage, according to experts, may be specialization in industries involved in a large number of production and technological chains (for example, metallurgy is associated with nine industries, including the production of transport, computers, electronics, and equipment). According to ISSEK estimates, the regions of the Russian Federation can now find the most contractors in Kazakhstan (24), Minsk region (22) and Minsk (18). The highest number of pair connections can be maintained by Moscow and Kazakhstan (50 each), Minsk region (19) and Minsk (16), as well as Moscow region (14), Tatarstan (12), Samara region (12), St. Petersburg ( 9) and Bashkiria (9).

In priority sectors for the Russian Federation (defined by the Concept of Technological Development until 2030; see Kommersant of May 26), regions with a chemical industry (for example, the Minsk region and Kazakhstan) can work with the pharmaceutical industry (St. rubber and plastic products (Moscow and the region). There is also potential for cooperation in the production of transport (Samara, Kaluga, Ulyanovsk regions), electrical equipment (Minsk, Kazakhstan) and computer, electronic and optical equipment (Nizhny Novgorod and Ryazan regions).

Soft loans, grants, cascading financing at the EAEU level can become a driver of industrial cooperation. “In the EU in 2021-2027, more than €570 million will be directed to direct financing of innovative companies, mainly SMEs, which are located in different regions, are connected by production chains and have ready-made technological solutions,” a leading expert of the Russian Cluster Observatory gives an example ISSEK Tatiana Ostashchenko. The EAEU is also already preparing a mechanism for preferential lending for cooperative projects – up to $1 billion over a five-year horizon (see Kommersant of July 25).

Diana Galieva