Municipalities create economic potential in the regions

5 april 2018

"It is about municipalities where the economic potential is created. And yet as a topic of discussion, the municipalities are often overlooked; we need to bring them up more often. Today, the Analytical Center has created an opportunity for regional representatives to talk about the best practices for the development of municipalities," Head of the Analytical Center Konstantin Noskov said as he opened a round table on System for Encouraging Municipalities to Grow Their Own Economic Potential.

"We have been working with the Analytical Center for several years now on a number of issues such as how to transition to digital economy, how to introduce project management, how to promote competition," said the Ulyanovsk Region Governor Sergey Morozov. Speaking of the performance achieved by his region, the governor noted that while Ulyanovsk Region is a middling Russian region in terms of population and territory, it is currently one of the fasted growing regions in the Volga Federal District. The main development indicator is the sharp increase in the gross regional product. In the past 14 years, the region's GRP has increased almost 6-fold, the average per capita spending has gone up 7-fold, trade has gone up 6-foldб and company sales have increased 7-fold. "We are keeping our unemployment at a record low of 0.4%. Every year about 20 thousand new jobs are created in the region. For several years now, we have been breaking records on new residential housing construction. Hundreds of major private investment projects have been implemented with several dozen of them having foreign partners from the USA, Germany and France. In the National Investment Climate Rating, Ulyanovsk Region is in the top ten; for several years now, we have led the national rating for the quality of regulatory impacts and we are also in the top ten innovative regions of Russia," Mr. Morozov said.

The governor noted that in Russia, there is a lot of variability in how developed the different regions of the country are. Just 10 federal subjects produce 55% of the country's combined gross regional product. The situation is similar if you compare the performance of the different municipalities in Ulyanovsk Region and it negatively impacts the quality of life for the population. In the Volga Federal District, only one of 14 federal subjects has an average household income on a par with the national average, it's Tatarstan. And that's the kind of situation that exists in many federal districts. "Our goal is to get municipalities to more actively engage with investors and to make sure they are interested in expanding their own tax base," Mr. Morozov believes.

Another important factor contributing to economic stability is the competitive environment, the governor noted. "In 2014, our region joined the other pilot regions introducing the new competition development standard. Two years ago, we were the first in Russia to completely revamp our Ministry of Economic Affairs. Now, our municipalities are also reforming their agencies that are in charge of the economy, reorganizing them as ministries for the development of competition," Mr. Morozov said. "We have completely reorganized the way our Ministry of Economic Affairs operates, having identified socially significant markets to promote competition in, approving a regional action plan to promote competition and setting up a council for introduction of the new competition standard which has been created for all the municipalities. It's now one of the main agencies in municipal governments." When assessing the performance of the municipal governments, it's the promotion of competition and adherence to the standard that are considered first, the governor noted.

The Director General of the Center of Strategic Research of Ulyanovsk Region, Oleg Asmus, talked about the system the region uses to stimulate and coordinate the municipal governments as part of the implementation of the Strategy 2030 program and about how municipalities are rated based on the level of their socio-economic development. "We have built a fairly effective system for cooperating with municipal governments to make sure that every specialist understands the strategic goals and tasks of his or her region. Now, every municipal government knows its KPI," the expert stressed.

Mr. Asmus talked at length about the rating system created in the region. "Our rating system exists not for its own sake, its goal is to help the team in every municipality achieve their goals," the expert explained. The socio-economic development rating of the region's municipalities is the foundation of the entire rating system of Ulyanovsk Region. For 10 years now, all municipality heads have been signing annual agreements with the governor pledging to hit specific targets set for each municipality individually based on its specific features. The rating comprises 4 main blocks: financial and economic development, agriculture, household income and social performance. "We have also got ratings for the implementation of Order No. 607 of the President of Russia and ratings for the implementation of the May Decrees. Last year, we introduced a quality of life rating. There is also a separate investment rating that assesses economic security by looking at the environmental, financial and food stuffs security," Mr. Asmus said.

The round table also featured a presentation by representatives of Vologda Region on how they have been trying to legalize their black market sector of the economy at the regional and local levels, a presentation by the Republic of Kalmykia on their efforts to improve the mechanism for inter-budget interaction to boost the local economic potential.