The Strategic Dilemma of Regional Innovative Development

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The Strategic Dilemma of Regional Innovative
Development
Nikolay A. Potorochenko
Head of Innovative Activity Department Siberian
Branch of Russian Academy of Sciences Irkutsk
Scientific Center mob. ph. 7 914 87 444
22 e-mail potor_at_baikal.ru
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From the point of view of economic geography
Irkutsk region is a vast territory having the
same surface area as France and Germanys ones
taken together and including areas with extremely
uneven degree of development.
Population density in Irkutsk region is currently
about 3 per km2 while France and Germany have a
population density of over 200 per km2.
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The natural resources potential
Gold
Oil
Coal
Industrial forestry areas
Tin
Magnesites
Natural gas
Iron ore
Potassium salts
Niobium
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Rapid social and economic transformations that
have taken place in Russia during last 1520
years have led to the significant changes in the
structure of economic activity centers
distribution. At the same time, the population
settlement pattern that has been shaped in 20th
century during the Soviet period in the process
of industrial development practically doesnt
change.
Companies owners raise efficiency to the
detriment of the territory development interests.
Sometimes because of production closures or
cutbacks even rather large settlements loose all
socio-economic perspectives.
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Irkutsk regions unquestionable competitive
advantages
- Advantageous geographical position and
geopolitical significance of the region that is
located at the crossroads of Asia and Europe -
Region is rich in raw materials including energy
resources such as hydrocarbons etc., metals,
lumber or materials used in construction
materials production - Considerable amount of
low-cost energy resources - Developed processing
industries - Relatively developed transport
infrastructure and high transit potential - Lake
Baikal that is a unique natural object of
world-wide significance, it contains roughly 20
of the world's surface fresh water and about a
half of all potable water on Earth - Rich
cultural and recreational potential - A wide
network of research and educational institutions.
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Irkutsk regions key problems
- Extractive economy and low technological level
of enterprises cause the lack of motivation in
innovations - Key enterprises of the region are
owned by the largest Russian and international
financial-industrial holdings, that causes the
lack of enterprises independency and makes it
possible that owners withdraw considerable part
of income and are not concerned about
socio-economic development of the territory -
Uneven socio-economic development of the
territory - Serious environmental problems -
Infrastructure underdevelopment and the lack of
legal and financial instruments for the support
of innovative activities and of small business
- Low income level and living conditions which
are not always acceptable - Negative demographic
and migration processes (i.e. high death rate and
considerable population and especially young
people outflow).
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Irkutsk region development can follow two
different (alternative) scenarios
the inertia scenario continuation of
extractive economy development the
innovations scenario refusal of development
based exclusively on natural resources extraction
2011
2015
2020
2025
Stereotypes of existing planning practices make
these two scenarios mutually exclusive ones.
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The inertia scenario continuation of
extractive economy development In the middle term
- new mineral deposits would be developed, new
jobs would be created in underdeveloped areas of
the region, transport infrastructure would
develop and social security programs would be
supported by regional administration but only on
the basis of the residual view of social
welfare. In the long term - Any hope that over
time resource-intensive big business will become
mature enough to adopt innovations or to take
part in socio-cultural or infrastructural
development of the area is illusory.
Consequently, in case that region chooses this
inertia strategy it runs the risk of
progressive problems aggravation and of benefits
loss, i.e. the risk of turning into outsider of
innovative development in the following 810
years.
2011
2015
2020
2025
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The innovations scenario refusal of
development based exclusively on natural
resources extraction and concentration of all
regional resources aimed at the development of
the new regional economy along these directions
could become a strategic breakthrough into the
innovative future. During the whole planning
period this scenario presupposes significant
economic structure changes, fold increase of
long-term investments in infrastructure and
research-intensive production development. In
addition it is necessary to change priorities of
budget expenditures increasing support for
programs and projects, and sometimes this
necessity are not obvious for the majority of
regional population. Strengthening of the
regions position in the competition for the
attraction of federal resources should be
accompanied by the protection of regional
interests in relationship with big business.
Even being risky this approach to the highest
extent conforms to Russias development
conceptual vision. Its implementation could bring
considerable strategic bonuses.
2011
2015
2020
2025
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Irkutsk region development can follow two
different (alternative) scenarios
the inertia scenario continuation of
extractive economy development the
innovations scenario refusal of development
based exclusively on natural resources extraction
2011
2015
2020
2025
Stereotypes of existing planning practices make
these two scenarios mutually exclusive ones.
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Irkutsk region has found itself in a situation
similar to the mathematical game theory
Prisoners Dilemma. The choice of the first
scenario could ensure 510 subsequent relatively
stable years but it would run counter to the
progressive regional elites interests as well as
it couldnt ensure that federal domestic policy
programs would be implemented. The second
scenario, despite high risks, closely corresponds
with federal priorities but faces the resistance
of big business and of the old regional elite
that defends big business interests. The pursuit
of relative stability can result in choice of the
inertia scenario in spite of the fact that
innovative scenario can give potentially much
more significant results.
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• A rational solution to this dilemma is balanced
  development scenario.
• This scenario presupposes
• Refusal of the usual administrative stereotypes
• Cooperative behavior strategy
• Symbiosis of the most positive aspects of two
  approaches to the strategic development of the
  region mentioned above
• Formation of regional territorial structure on
  the basis of concentration of resources along
  three key planning axes and within three key
  development centers
• Elements of regional territorial structure
  should have different economic and social
  specialization
• Projects that are to be implemented in
  compliance both with inertia scenario and with
  alternative innovative approach should be
  distributed logically during the whole planning
  period.

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In the middle term the priority could be given to
the projects aimed at new raw materials
development. At the same time, benefits gained
from these projects shouldnt be spent on
reproduction of extracting economy. Rather, they
should be accumulated and spent on infrastructure
development and on the preparation of
innovative scenario launch. In the long term
accumulated resources would allow to launch
innovative projects aimed at new knowledge-based
economy development.
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the inertia scenario continuation of
extractive economy development the innovations
scenario the refusal of development based
exclusively on natural resources
extraction balanced development scenario
2011
2015
2020
2025
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Regional territorial structure
Yakutsk
First planning axis
Along this axis both in middle and in long terms
transport and logistics nodes of federal or of
regional importance could be created. Existing
industrial sites could be used for the placement
of enterprises engaged in mineral resources deep
processing or in research-intensive production.
Ust-Ilimsk
Krasnoyarsk
Bratsk
Ust-Kut
Tayshet
Trans-Siberian Railway
Irkutsk agglomeration
Trans-Siberian Railway
Ulan-Ude
Chita
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Regional territorial structure
This area is the most promising one for the
implementation of natural resources development
projects in the nearest 1012 years. New
hydrocarbons, iron ore, and potassium salts
deposits development in the long term should be
accompanied by the deep processing of mineral
resources and lumber. Taking into account the
perspective of North Siberian Mainline
construction, one could expect that this axis
would be able to play a role of Trans-Siberian
Railway latitudinal alternate. To make it
possible, multimodal logistics, transport and
distribution centers of regional (in the cities
of Bratsk and Ust-Ilimsk) and of interregional
(in Ust-Kut) importance should be created.
Yakutsk
First planning axis
Second planning axis
North-Siberian Mainline
Ust-Ilimsk
Ust-Kut
Krasnoyarsk
Bratsk
Tayshet
Baikal-Amur Mainline
Trans-Siberian Railway
Irkutsk agglomeration
Trans-Siberian Railway
Ulan-Ude
Chita
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Regional territorial structure
Yakutsk
First planning axis
Second planning axis
Third planning axis
Lena-Nepa-Lensk Mainline
North-Siberian Mainline
Along this planning axis in the long term the
inertia scenario projects aimed at Irkutsk
region natural-resource potential realization and
at provision with the resources for the
development of new industries such as gas energy,
gas chemistry and petrochemistry along the first
planning axis in the years 2020-2025 are to be
implemented.
Ust-Ilimsk
Krasnoyarsk
Baikal-Amur Mainline
Bratsk
Ust-Kut
Tayshet
Trans-Siberian Railway
Irkutsk agglomeration
Trans-Siberian Railway
Ulan-Ude
Chita
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Regional territorial structure
Yakutsk
First planning axis
Second planning axis
Third planning axis
Lena-Nepa-Lensk Mainline
North-Siberian Mainline
Ust-Ilimsk
Krasnoyarsk
Baikal-Amur Mainline
Bratsk
Ust-Kut
Tayshet
Trans-Siberian Railway
Irkutsk agglomeration
Trans-Siberian Railway
Ulan-Ude
Chita
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The South development centre 1. Lake Baikal
capitalization increase, that means that the lake
should be regarded not only as a unique
recreation resource but also as a strategic stock
of fresh water, tourism services development and
establishment of centers for education and
innovation are the priorities for the territories
located near Lake Baikal. On the basis of this
special economic zone a large tourism industry
cluster oriented both to Russian and to the world
markets should be created. 2. The agglomeration
of the cities of Irkutsk, Angarsk and Shelekhov
is one of the key elements in the regional
development strategy. To attract and to retain
skilled professionals by sustaining of high
living standards is the strategic goal of this
project. Human capital concentration will create
the necessary prerequisites for innovative
activity which is supposed to be based on unique
developments of Irkutsk agglomeration research
and education centers. Irkutsk agglomeration can
become a centre for large-scale economic projects
management, an international financial centre, a
centre of engineering education, and of tourist
flows distribution. 3. Agglomerations
neighboring territories in conformity with their
traditional specialization will be used for the
effective agro-industrial complex development.
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The North-West development centre includes
industrial cities of Taishet, Bratsk, Ust-Ilimsk
and Zheleznogorsk-Ilimscky. This territory in
the middle term will be the ground for the
projects of mineral resources development. In the
long term its potential is supposed to be used
for establishment of high-tech enterprises
dealing with raw materials complex processing and
with high value added goods production.
Creation of forest industry cluster that would
combine all the chain of lumber production
process from logging to woodworking and wood
processing should be a foundation for the North
territories competitiveness.
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The North-East development centre on the basis of
Ust-Kut city in the long term is expected to play
a role of interregional transport, logistics and
industrial node where extraction, processing and
transportation of raw materials (oil, natural
gas, lumber) are concentrated. The city of
Ust-Kut is located at the railway, aviation,
highways and Lena river navigation crossroads.
The Eastern Siberia Pacific Ocean oil pipeline
runs here. After construction of Vilyuy
highway and of LenaNepaLensk railway mainline
strategic significance of this transport node
will increase.
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Regional territorial structure
Yakutsk
First planning axis
Second planning axis
Third planning axis
Lena-Nepa-Lensk Mainline
North-Siberian Mainline
Ust-Ilimsk
Krasnoyarsk
Baikal-Amur Mainline
Bratsk
Ust-Kut
Tayshet
Trans-Siberian Railway
Irkutsk agglomeration
Trans-Siberian Railway
Ulan-Ude
Chita
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If the strategic approach to Irkutsk region
economic geographic zoning described above is
accepted, it is evident that concentration of
economic activity within these marked zones will
make it necessary to search for the most adequate
way of social infrastructure development. Along
planning axes and in the development centers it
is necessary to create zones of socio-cultural
priority development with high living standards
which would concentrate regional resources to
stimulate influx of creative population groups
including professionals from other regions.
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The Strategic Dilemma of Regional Innovative
Development
Nikolay A. Potorochenko
Head of Innovative Activity Department Siberian
Branch of Russian Academy of Sciences Irkutsk
Scientific Center mob. ph. 7 914 87 444
22 e-mail potor_at_baikal.ru
Thank you for your attention!