Specializing in specific industries guarantees competitiveness for the provinces

3 october 2017

Should there be a single standardized approach to developing territories or should different development tools and methods be used depending on regional specifics? The problem of the effective use and applications of regional support and developed tools was discussed at a round table on the practices of the use of territorial development tools organized by the Analytical Center.

"We've got an abundance of tools today and often they have a rather controversial effect on territorial development and if used ineffectively they can even lead to negative consequences," noted Deputy Head of the Analytical Center Mikhail Pryadilnikov. The expert reminded those present that by May 2018 the Ministry for Economic Development must have drafted a federal bill to regulate the contents and use of territorial development mechanisms.

Since there is no guarantee of funding of municipal projects project implementation often gets delayed and that in turn reduces the effectiveness of territorial development tools that are being used, according to Analytical Center expert Evgeniy Plisetskiy. "The success of specific measures implemented in the provinces often depends on how well they manage to present them to federal executive bodies rather than on whether they are actually warranted in the given contexts and are being implemented effectively," the expert noted. The problem can be solved by attracting foreign investments, improving the quality of the infrastructure, using state support mechanisms and creating a single point of entry for accepting and reviewing applications in digital form.

For example, there is the problem of the high cost of loans for construction projects in the provinces. There is a lot of potential in refunding the taxes charged on funding, according to Leonid Danilov, deputy head for project analytics of the Association of Clusters and Technology Parks. "Investors that are flush with cash are willing to invest in long term projects that don't get any funding from the state but they need some kind of incentives in the form of tax exemptions or tax refunds on investments," the expert said.

On the whole the existing system of measures to support territorial development qualifies as universal, however, it should be taken into account that provinces can only remain competitive by specializing in the development of one or two specific industries.