New Forms of Government Support Being Launched for Development of Monotowns

13 december 2016

“Nowadays, there is much talk about cities and towns which economy is dominated by a single industry or company,” said Mikhail Pryadilnikov, Deputy Head of the Analytical Center, when opening the Round-Table entitled “Monotowns: shift from survival tactics to a development strategy.” “There are 319 monotowns in 61 constituent entities of Russia, where situation has remained virtually the same for many years. On November 30, the Government approved the certificate of the Integrated Development of Monotowns top-priority project, its key goal is to reduce the dependence of monotowns on the functioning of their backbone enterprises. Development programs are going to be prepared for all monotowns, including measures aimed at diversifying the economy, improving the urban environment, developing human capital. These issues are seriously addressed by the expert community, too.”

According to Anton Steshenko, Deputy Head of Department for Regional Policy and Far East Development of the Analytical Center, the lack of concerted action for fostering monotowns is the key issue. Currently, subsidies to regions for the development of various branches of economy are very insignificant, funds from other sources are irregular as well. “Government support and intergovernmental fiscal relations in this field need to be restructured,” the expert believes. Another objective is to create a mid-term development plan for monotowns, which entails the raising of investment, development of transport networks, budgetary funds accounting and control system and other areas.

Mr Steshenko also reminded of the “Proyektniy Olimp” (Project Olympus) annual competition organized by the Analytical Center. From 2017 onwards, the competition will include the category of project management in monotowns, also contributing to higher development management quality for these territorial entities.

Currently, the shaping and training of project teams is handled by the Monotown Development Foundation, which acts as a project office in this area. 27 teams were shaped and trained in 2015 and 2016; 66 teams are being trained at present. All round table participants find this work of the Foundation to be extremely important as only highly qualified heads are able to create and manage a quality project, leveraging all investment raising opportunities. “Our objective is to train teams for all 319 monotowns,” Yevgeny Podshivalov, Department Head of Monotown Development Foundation, shares. “I must admit that we shape a team of decision-makers. It necessarily includes head of town, a representative of the enterprise, regional authority and investor. No project can really work without these people.”

Deputy Governor of the Chelyabinsk Oblast Ruslan Gattarov talked on how government support works in the domestic regions and what further help is needed. “The development of monotowns necessitates using agglomeration processes,” Mr Gattarov emphasizes. “We unite several towns into clusters, highlight their strengths, and suggest that businesses invest in the projects they consider to be profitable.” He exemplified his point with waste management, which used to be a costly segment for each individual town, whereas agglomeration has made this type of activity attractive to investors.

The development of monotowns necessitates using agglomeration processes. We unite several towns into clusters, highlight their strengths, and suggest that businesses invest in the projects they consider to be profitable.

Ruslan Gattarov

Deputy Governor of the Chelyabinsk Oblast

“Industrial clusters are a legislatively approved and really effective new instrument aimed at supporting the release of industrial products, the launch of this mechanism will affect private businesses, too, allowing them to join the production chain,” says Andrei Shkilenko, Director of the Association of Clusters and Industrial Parks. According to the expert, this unique mechanism has already been launched or is being launched in many constituent entities, giving the opportunity of offsetting costs: “It is not the constituent entity that money goes to but the enterprises assigned the legal status of industrial cluster.” Mr Shkilenko also pointed out that government support institutions should be leveraged systemically rather than selectively.

Industrial clusters are a legislatively approved and really effective new instrument aimed at supporting the release of industrial products

Andrei Shkilenko

Director of the Association of Clusters and Industrial Parks

“When analyzing the condition of single-industry towns, we observe a tremendous weakness of local governance,” notes Galina Kuznetsova, Head of Territories and Large Companies Development Regulation Laboratory, FBNU IMEI. “It is local governance that helped those few towns that managed to recover.” According to the expert, regions should be given more independence, taxes should stay there, and the latter, in turn, should act likewise with respect to municipalities.

Under the direction of the President the Accounts Chamber conducted large-scale research with the aim of creating recommendations for the analysis of socio-economic development of monotowns and the effectiveness of the government action taken in this field. “Our proposals have primarily to do with the improvement of management quality, which is now handled by the Monotown Development Foundation,” said Galina Anisimova, Unit Head of Federal Research Institute of System Analysis, Accounts Chamber of the Russian Federation. The expert does not rule out the possibility of abandonment of zero development potential towns and emphasizes the typical infrastructural constraints faced by all monotowns, mostly in the transport segment. “By solving this problem we will solve the problems of monotowns, too,” Ms Anisimova notes.

The proposals of the Accounts Chamber are also related to the harmonization of laws and the enhancement of mutual liability of backbone enterprises and executive authorities.