Interrelation of the Region's Foreign Economic Activity and Its

Economic Sustainability

Irina Aleksandrovna Artamonova

, Irina Nikolaevna Baturina

Tatiana Ivanovna Bukhtiyarova

, Nina Nikolaevna Zotova

and Valentina Mikhailovna Flakina

Department of Accounting and Foreign Economic Activity, Institute of Economics and Law, Federal State Budgetary

Educational Institution of Higher Education "Kurgan State University", Kurgan city, Russia

Department of Finance and Economic Security, Institute of Economics and Law, Federal State Budgetary Educational

Institution of Higher Education "Kurgan State University", Kurgan city, Russia

Department of Economics, Finance and Accounting, Chelyabinsk branch of the Federal State Budgetary Educational

Institution of Higher Education "Russian Academy of National Economy and Public Administration under the President of

the Russian Federation", Chelyabinsk city, Russia

Keywords: Economic security, foreign economic activity, sustainability, regional economy, threats, development,

integration.

Abstract: The goal of this article is a theoretical and methodological substantiation of the interrelation between foreign

economic activity and the sustainability of the regional economy. The problems of organizing foreign trade

activities at the level of the constituent entities of the Russian Federation, while ensuring their economic

security and increasing the sustainability of regional development, are constantly raised in the works of

domestic economists. In addition, the issues of sustainable economic development are one of the most urgent

problems facing many states. When ensuring the sustainability of the economy, the priority is to ensure

economic recovery in parallel with the protection of resource reserves in the interests of modern and future

generations. Until recently, the majority of domestic researchers and economists noted that foreign economic

activity is under the exclusive jurisdiction of the Russian Federation and, therefore, its constituent entities

occupy an insignificant place in this process. Therefore, foreign economic activity was given a small role or

was paid no attention at all in the strategies of regional development. The relevance of the topic of this study

is the need for theoretical understanding and improvement of the research methodology, planning,

organization, and management of foreign economic activity at the regional level. The latter involves the

development of a strategy or standard for foreign economic activity of the constituent entity of the Russian

Federation. Based on this, the regions determined the directions of their foreign economic activity, set

practical tasks and strategic goals. All this should be based on an objective analysis of foreign economic

relations at the regional level. All of the above confirms the thesis that the sustainability of the regional

economy is determined by the impact of such a significant factor as foreign economic security.

1 INTRODUCTION

At present, the tendency to the globalization of almost

all economic problems is clearly marked all over the

world. The most important issue for the development

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of an individual and society as a whole is the issue of

maintaining balance and finding a rational

relationship between the functioning of the economy

and ensuring the safe life of a person and future

generations. All this leads to the understanding and

Artamonova, I., Baturina, I., Bukhtiyarova, T., Zotova, N. and Flakina, V.

Interrelation of the Region’s Foreign Economic Activity and Its Economic Sustainability.

DOI: 10.5220/0010695500003169

In Proceedings of the International Scientiﬁc-Practical Conference "Ensuring the Stability and Security of Socio-Economic Systems: Overcoming the Threats of the Crisis Space" (SES 2021),

pages 155-160

ISBN: 978-989-758-546-3

155

formulation of theories of sustainable economic

development at the meso-, macro-, and micro-levels.

Most economists agree that the national security

of a state is largely determined by the security of its

individual constituent entities (if we are talking about

a federal structure). In this case, it is the sustainable

development of the constituent entity of the Russian

Federation that will be the determining factor in

ensuring the economic security of the region and the

country as a whole.

In the last few years, there has been a tendency to

the development of the foreign economic activity of

the constituent entities of the Russian Federation,

which has led to the emergence of threats to foreign

economic security as an element of economic

security. This problem is closely interrelated with the

issue of sustainable development of the region since

it is the latter that is provided by "...the balance of

economic and social factors...", and the irrationally

organized foreign economic policy of a constituent

entity of the Russian Federation can lead to negative

consequences in the economic sphere (Loginova,

Galiulina, 2017).

Assessing the close relationship between the

sustainability of the economy of constituent entities

of the Russian Federation and the effectiveness of

their foreign economic activity, it is necessary to take

into account the fact that regional foreign trade policy

is a fairly new area of economic activity for them,

although it is quite common in foreign practice. This

is since some researchers define foreign economic

activity as the exclusive prerogative of federal state

authorities and management. Others (I. V.

Shevchenko, O. G. Semyannikova et al.) write that

the strategy of foreign economic activity at the level

of constituent entities of the Russian Federation is

"...a set of scenarios for the possible development of

foreign trade...". However, it is necessary to take into

account the possible conflict of interests of the federal

center and constituent entities of the Russian

Federation, which is manifested in the redistribution

of regional export items that can give the greatest

foreign exchange income between the domestic and

foreign markets.

Even though there are many scientific

publications in the field of research of foreign

economic activity of the region, the latter is

considered mainly as one of the factors of sustainable

development of the economy of the region or other

economic entity. We can note the works of the

following authors: L. M. Babak, O.A. Veretennikova,

Yu. G. Lavrikova, V. E. Manevich, M.I.

Maslennikova, T. V. Mirolyubova, E. D. Oborina,

O.V. Podshuveit, S.N. Rastvortseva, E. A. Stepanova,

S.I. Ultan et al. (Dokholyan, 2011; Veselova, 2016)

The need for the organization and development of

foreign economic activity in the region in the

domestic scientific literature was initially justified in

the 1990s when the effectiveness of foreign trade was

evaluated based on a comparison of indicators of the

volume of foreign trade transactions, foreign

exchange earnings, and costs associated with the

implementation of these transactions.

The relevance of the research topic is determined

by the fact that leading economists establish a certain

relationship between the state of foreign economic

activity in the region and the development of the

regional economy. The novelty of the author's

approach lies in the theoretical justification of the

influence of the organization of foreign economic

activity of the constituent entity of the Russian

Federation on the sustainability of the regional

economy.

2 MATERIALS AND METHODS

Before determining the relationship between the

foreign economic security of the region and the

sustainability of its economic condition, it is

necessary to consider the essence of these categories.

It should be noted that the topic of sustainable

economic development is in the focus of attention of

many domestic and foreign researchers. Thus, a

significant contribution to the study of the

sustainability of the economic development of

individual territories was made by I. M. Busygina, V.

G. Vvedensky, P.M. Ivanov, A. A. Kuklin, D.S.

Lvov, V. P. Pakhomov, A. I. Tatarkin, S.G. Tyaglov,

A. V. Loktev, A. S. Dokholyan, M.V. Loginova, E.

B. Golovanov et al. Despite a large number of

scientific publications on the sustainability of the

regional economy, no unified requirements,

principles, and approaches to the transition of the

Russian Federation's constituent entities to the path of

sustainable development have been developed so far.

Based on this, there are several approaches to

determining the sustainability of the socio-economic

state of the region (Table 1) (Dokholyan, 2011;

Loginova, Galiulina, 2017; Gichiev, Surakatov,

2014).

Thus, the sustainability of the regional economy is

interpreted in most sources as the state of the

economy, which ensures the constancy of final

indicators of the functioning of the socio-economic

development in regions. As noted by A. S.

Dokholyan,

the interpretation of the sustainable

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Table 1: Approaches to determining the sustainable development of the regional economy.

Approach authors

Conditions for the sustainable

economy formation

Approach essence

Abalkin L. I., Livshits A.,

Konoplyanik T. M.,

Gordienko D.V.

Safety, sustainability,

reliability, integrity, and

strength of the system.

Sustainable development is determined based

on the criteria of its security, sustainability,

ability to constantly update and improve.

Reimers N.F., Blauga M.,

Shelomentsev A. G.,

Kalashnikov V. D.

Sustainability of indicators

for a certain period of time

Sustainability is the ability of a system to

remain in a relatively constant state despite

internal and external disturbances.

Kretinin V. A.,

Bodryashov E. S.

Ability to maintain dynamic

balance.

Sustainability is a general property of the

system to maintain a dynamic balance when

the indicators of the external and internal

environment change within the permissible

limits.

development

of the economy can be approached from

two positions:

 ensuring the sustainability of a given level of

output economic indicators;

 ensuring the consistency of incremental limit

indicators of economic growth

(Gushchenskaya, Paliy, Sumarokova,

Yesembekova, Anfalova, Pavlutskikh, 2020;

Dokholyan, 2011).

Since the balance in the socio-economic system is

not achieved immediately, but at a certain point in

time, being under the influence of various factors,

when defining the term "sustainable economic

development", it is necessary to pay special attention

to these factors and conditions.

The sustainable development of the state's

economy, including our country, is directly

dependent on the state of the economic and social

sphere of its regions. As has already been mentioned

above, one of the trends in the economic development

of the sub-federal economy is the activation of

foreign economic activity of the Russian regions. The

foreign economic activity of a constituent entity of

the Russian Federation is the unity of foreign trade,

investment, currency, financial and other relations of

regional authorities and economic entities with

economic entities (regions, individual companies,

etc.) from foreign countries. The role of the state in

the development of the foreign economic activity of

the regions is to create favorable conditions for its

functioning and ensuring foreign economic security

at the regional and state levels.

The state authorities of constituent entities of the

Russian Federation perform certain functions for the

organization of foreign trade, which is an important

factor in the sustainability of the regional economy.

By implementing the strategy for the development of

foreign economic activity in practice, constituent

entities of the Russian Federation get the opportunity

to receive additional income, including foreign

currency, which can be directed to their socio-

economic development to contribute to the

sustainable development of the territories. Based on

this, the state authorities and management bodies of

constituent entities of the Russian Federation should

be interested in creating favorable conditions for the

organization of foreign trade.

The powers, principles, and directions of the

organization of foreign economic activity of

constituent entities of the Russian Federation are

presented in Table 2 (Gichiev, Surakatov, 2014;

Degtyarev, Veselova, 2021).

Therefore, to ensure the sustainable development

of the regional economy, the organization of foreign

economic activity of constituent entities of the

Russian Federation should promote:

 development of social orientation of the

regional economy;

 coordination of the interests of various

economic entities and public authorities in the

organization of foreign economic activity in the

region;

 division of powers and functions of foreign

trade participants and state authorities and

management bodies of the region;

 ensuring economic and, in particular, foreign

economic security, development of non-

resource exports, etc.

Based on the above, it can be noted that to

optimize the foreign economic activity of constituent

entities of the Russian Federation and increase their

economic sustainability, it is necessary to conduct a

regular objective assessment of its current state,

identify development trends and problems in the

foreign economic sphere.

Interrelation of the Region’s Foreign Economic Activity and Its Economic Sustainability

157

Table 2: Fundamentals of the organization of foreign economic activity in the region

Indicato

Content

Issues of joint

jurisdiction of the

Russian

Federation and the

constituent entity

of the Russian

Federation

 coordination of foreign economic activity of constituent entities of the Russian Federation;

 formation and implementation of regional and interregional foreign trade programs;

 implementation of international agreements of the Russian Federation in the field of foreign trade

directly affecting the interests of relevant constituent entities of the Russian Federation;

 coordination of the activities of constituent entities of the Russian Federation on the creation and

functioning of free economic zones, regulation of cross-border trade.

Principles of

regional foreign

trade organization

 implementation of a competent structural economic policy, taking into account the level of

development of economic entities in the region;

 implementation of a consistent policy on the formation of the profile of the region's foreign

economic specialization;

 optimal combination of economic interests of state authorities and management bodies at the

federal and sub-federal levels, as well as economic entities, in order to meet the needs of the region;

 stren

thenin

the re

ion's

osition in the s

stem of forei

n economic com

etitive relations.

Main directions of

foreign economic

activity in the

region

 export;

 import;

 foreign investments;

 investments in foreign businesses;

 ensurin

forei

n economic securit

3 RESULTS AND DISCUSSION

The formation of an optimal foreign trade strategy

requires the regions to create a favorable investment

climate, stimulate export activities, and maintain an

effective business infrastructure. Therefore, the field

of foreign economic security requires the

implementation of comprehensive and systematic

approaches in coordinating the activities of state

authorities and management bodies at both the federal

and regional levels (Loginova, Galiulina, 2017;

Gichiev, Surakatov, 2014).

The study of the sustainability of the regional

economy, connected by commodity and financial

flows with other constituent entities of the Russian

Federation and foreign countries (economic entities),

determines the direction of the analysis of the

organization of its foreign economic activity. In this

case, the foreign economic activity of the region can

be considered as one of the bases for the development

of the country's economy as a whole, which is

recognized at all levels of economic management

(Degtyarev, Veselova, 2021).

The sustainability of the existing economic

relations is the basis for the sustainability of the

economic system of the region, and their

improvement will enable to formulate trends for their

long-term development. In such a system,

mechanisms contributing to the leveling of the

negative consequences of crisis phenomena in the

economy of both constituent entities of the Russian

Federation and the entire country come first.

Therefore, the greatest attention should be paid to the

organization of new areas of economic activity of the

regions, namely, foreign economic activity. The latter

can give both a positive and negative financial result,

which can either strengthen or "shake" the

sustainability of the state of the socio-economic

system of the region. This confirms the thesis that the

stable state of the socio-economic sphere of the

constituent entity of the Russian Federation with

equal external and internal influences will deviate less

from its optimal level (Osipov G., Karepova S.,

Chizhevskaya E., Gnatyuk M., Semin A., Mikhayluk

O. 2018; Veselova, 2016).

Based on the above, the most urgent problem

related to the functioning of the region's foreign

economic sphere and its sustainability will be the

issue of taking preventive measures to prevent

possible threats generated by foreign trade relations.

It is necessary to remember that building relations

with foreign partners should trigger the development

of the economy of the constituent entity of the

Russian Federation. Import substitution and increased

export of high-tech products should be the priority

areas of the region's foreign trade.

The foreign economic activity of the region may

be associated with a number of negative factors that

hinder it. They include the high level of international

competition, as well as the instability of the situation

in the foreign exchange market, the emergence of new

power centers in the world and regional economy

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(Degtyarev, Veselova, 2021; Mamon, Zavyalova,

2015).

The economic sustainability of the region in the

foreign economic sphere is determined by a number

of evaluation criteria generated by foreign trade and

state support for foreign economic activity. It is

advisable to include the following in the group of

such indicators:

 share of exports in GRP;

 export volume of industrial products;

 staffing of exporting organizations;

 volume and dynamics of regional budget

revenues from exports;

 amount of VAT refund to exporters;

 volume of state support for export-oriented

business entities at the expense of the federal

and regional budgets;

 available financial resources of exporters, etc.

Thus, foreign economic activity has every chance

to become an effective way to accelerate the

economic growth of constituent entities of the

Russian Federation, since it:

 creates new jobs and often requires an increase

in the level of personnel qualification;

 creates conditions for the production of

competitive products;

 contributes to the growth of production

volumes and, as a result, the tax base

 enabling to get additional revenue, provides an

investment resource for the development of

production (Gichiev, Surakatov, 2014;

Bukhtiyarova, Demyanov, Tenetko,

Nemykina, 2020).

Factors influencing the efficiency of the region's

foreign economic activity are shown in Figure 1.

Figure 1: Determinants of the region's foreign economic

activity.

The strategy of organizing foreign economic

activity at the sub-federal level should take into

account: the availability of appropriate infrastructure

or provide for its formation, the implementation of

import substitution policy, investment policy, etc.

Any result of foreign economic activity that

contributes to the sustainability of the region's

development can be considered positive. At the same

time, the effect can be used as a basis for assessing

the economic efficiency of foreign economic activity

of a constituent entity of the Russian Federation, and

its maximum value can be considered as an indicator

of the economic efficiency of foreign economic

activity.

The assessment of economic efficiency is carried

out to compare alternative options for interaction with

foreign counterparties and optimize the structure of

exports and imports, as well as to provide additional

revenues to the sub-federal budget on this basis,

which will have a positive impact on the state of the

regional economy as a whole (Larionova, 2012)

4 CONCLUSIONS

The above information enables to conclude that the

foreign economic activity of the constituent entity of

the Russian Federation is both an external and

internal factor in the formation of a stable economy

in the region. At the same time, it is necessary to take

into account the factors that have a direct impact on

the sustainability of foreign economic activity itself.

One of these factors is the state support for regional

exports and the system of state regulation of foreign

trade.

The sustainability of the regional economy may

be disrupted due to the emergence of conditions of

uncertainty in the domestic market when producers

will focus on the evolution of economic relations with

their foreign counterparts, which are in a more stable

state. In addition, it is important to take into account

that the functioning of economic entities is impossible

in some areas of the economy without the purchase of

foreign equipment, technologies, raw materials, etc.

The optimized foreign economic activity will

contribute to the successful involvement of the

constituent entity of the Russian Federation in the

system of world economic relations, increase the

profit received by constituent entities of foreign

economic activity, which will allow sub-federal

budgets to receive additional income and strengthen

its economic stability (Veselova, 2016).

Determinants of foreign economic activity of the

constituent entity of the Russian Federation

 geographical location of the region;

 foreign economic potential of the region;

 regulatory framework;

 market conditions for export goods;

 market conditions for import goods;

 commodity structure of exports;

 commodity structure of imports;

 country export structure;

 country import structure;

 state support for exports, etc.

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