Innovative Development of Regions under the Modern Conditions

I. U. Shahgiraev

, A. K. Dikinov

and R. B. Khapsaeva

Chechen State University, Grozny, Russia

Kabardino-Balkarian State University named after H.M. Berbekov, Nalchik, Russia

North Ossetian State University named after Kosta Levanovich Khetagurov Vladikavkaz, Russia

Keywords: Region, Sustainable Development, Innovative Potential, Economic Growth, Modern Society.

Abstract: The problem of sustainable growth of the country is one of the major tasks under modern conditions. Studying

the results and trends in the socio-economic development of Russia and its regions allows tracing the

efficiency of the state management programs, planning the measures for putting the economy on a growth

path, and developing further solutions for effective management. Identification of patterns and trends in

development encourages the increase of the probability of further development prediction and allows making

timely adjustments to the strategic plans of the state and regions. This, in turn, contributes to more accurate

resources planning, the organization of clear institutional interaction in the economic space of the country.

1 INTRODUCTION

In the modern economy, the role of regions as

subjects of economic activity is increasing, since the

problems, the solution of which will allow the

transition to the sustainable development of the entire

country, are solved exactly at the regional level.

The ability of regions to withstand external threats

depends directly on the achieved level of socio-

economic development of the territory. The key

problem is that the development of the regions of

Russia today is characterized by a rather strong

differentiation of the territories in terms of economic

development, which forms the presence of additional

threats to stability.

To ensure the sustainable development of modern

society, a transition to an innovative model of

economic growth is necessary. This will require an

annual increase in investment in the innovation

sphere, significant costs for fundamental and applied

research and the development of new technologies.

All this causes the creation of an effective mechanism

for financial support of innovative activities based on

the attraction of public and private financial

resources.

https://orcid.org/0000-0002-6644-9519

https://orcid.org/0000-0001-7560-0340

https://orcid.org/0000-0002-0245-4992

2 METHODOLOGY

For many decades, the problem of sustainable

development has remained relevant for the world

community. The most important factor ensuring the

sustainable development of the world economy is

innovation. In the developed countries of the world

the results of innovative activities make up a

significant part of the gross domestic product (GDP)

growth, and the volume of investments in the

innovation sphere is increasing annually. Innovation

is one of the main national priorities for the leading

economies of the modern world.

The development of the innovative activity, both

in Russia and in any other country, is determined by

the forms of its organization and depends directly on

the level of funding. The transition of the domestic

economy to an innovative model of economic

development is impossible without an increase of

investment in the innovation sector, costs for research

and development, as well as making an effective

national system for new technologies financing,

which ensures large private capital raising to this

sector.

This problem is especially relevant for Russian

regions with a scarce natural resource base, limited

186

Shahgiraev, I., Dikinov, A. and Khapsaeva, R.

Innovative Development of Regions under the Modern Conditions.

DOI: 10.5220/0010665900003223

In Proceedings of the 1st International Scientiﬁc Forum on Sustainable Development of Socio-economic Systems (WFSDS 2021), pages 186-190

ISBN: 978-989-758-597-5

export potential and relatively low investment

attractiveness. One of the options for solving the

problem of transition to a new quality of economic

growth for the regions can be scientific knowledge,

an increase in fundamental and applied research, the

efficiency of practical implementation of innovations

in production and the social sphere. This requires the

creation of an effective mechanism for financial

support of innovative activities, which would allow

accumulating the requisite capital for the

implementation of regional programs of scientific and

innovative development based on cooperation of the

potential of territorial authorities, research

organizations, business and financial structures under

the conditions of limited financial resources in the

region.

The development of innovative infrastructure

ensures the growth of innovative activity of economic

entities of the regional economy.

Most of the country's technological, innovative,

intellectual and production potential is concentrated

in the regions. Therefore, it is extremely important to

pursue a policy aimed at ensuring national

modernization and sustainable development of the

regions for the effective functioning of the economic

activity of the country.

The increase in the rates of economic

development will facilitate the increase in the

innovation activity of the region, an improvement in

the situation with its financial support, since it is the

gross regional product growth that will expand the

potential for attracting additional budgetary and

extra-budgetary sources to the innovation process.

In recent years, innovations have had a great

influence on the development of the socio-economic

sphere of the region. Their introduction into all

spheres of human activity provides the regions with

the formation of sustainable development, which is

based on innovative technologies and the innovative

potential of the territory. Innovation is, first of all, a

factor of economic development, since the

development of innovative technologies, their

introduction into production, the release of previously

unknown types of products determine the prospects

for long-term economic growth, and are also a

solution to many socio-economic problems. The

factors of innovative development are the structural

elements of the regional economy.

The innovative potential of the region is a

combination of financial, material, scientific and

technical resources that are used in the realization of

activities in economic development. To implement

competently the innovation policy and form the

sustainable development of the region, the country

needs to assess the effectiveness of the use of

innovative potential. It consists of the following

elements: infrastructure, financial, labor, information,

technological resources, and their practical

application. The Kaluga Region is characterized by

the implementation of innovative potential through

the production of high-tech goods and services,

improving the quality of education, up-grading the

qualifications of researchers and creating new jobs for

them, increasing the share of innovative investment

and financing in the region not only from investors

but also from the country.

Realization of the concept of sustainable

development, in particular, at the regional level, is an

important condition for the progress of territories,

countries and all of humanity, which is confirmed by

the serious attention of authoritative international

organizations, subjects of public authorities and

administration, scientists and practitioners.

Under modern conditions, the development of

industry and the national economy as a whole largely

depends on the inflow of foreign capital. Therefore, it

is necessary to create favorable conditions for foreign

investments, but at the same time, of course, to ensure

constant government control over their quality and

reliability.

To solve the mentioned strategic tasks, the top-

priority tactical goals are as follows: reducing the tax

burden imposed on innovative enterprises,

implementing a policy of protectionism in the field of

new technologies, developing innovative

infrastructure, supporting venture capital funding of

innovative projects, supporting the export of high-

tech products abroad, defining the list and

implementation mechanism of the main innovative

state projects for the next few years, the formation of

favorable conditions for the development of small

innovative business activity, comprehensive support

for innovation-oriented enterprises, facilitation of the

procedure for official registration of enterprises and

organizations engaged in scientific and technical

innovation. The implementation of these and other

measures should sharply increase the stability and

competitiveness of the regional economy as a whole

and ensure the dynamic social development of the

region and the economic security of the country.

The development of a regional strategy is largely

based on the analysis of factors of the external and

internal environment, in particular, resource

potential, territorial geographic, geopolitical,

economic and socio-cultural features, competitive

advantages, risks, bottlenecks and restrictions. The

restrictions that need to be considered in its formation

and assessment can be very diverse and include, in

Innovative Development of Regions under the Modern Conditions

187

particular, limiting factors of a natural-geographical

and geopolitical nature as well as resource,

infrastructural, institutional, financial-economic,

demographic nature. They affect the potential and

opportunities for the development of the territory

mainly negatively, although in some cases, there is a

reverse effect due to the compensatory policy when

the limitations of some factors stimulate additional

opportunities for return from other ones.

3 RESULTS

According to the forecast of the Ministry of

Economic Development of the Russian Federation for

2019-2020, economic growth was predicted only

from 2021 up to 3.1-3.3% (Shardan et al., 2020),

considering the implementation of economic

digitalization programs, improving the business

climate in the country, reducing administrative

business barriers, etc. According to the Concept, real

GDP growth was planned in 2020 by 64-66%

compared to 2012. In reality, this did not happen: for

the period from 2013 to 2019 it grew only by 5.8%.

The same situation has arisen in actual revenues:

according to the forecast an increase of 64-72% was

expected; actually, starting from 2014 to the 3rd

quarter of 2019, household incomes began to decline

and the overall decrease was 5%. At the same time,

according to other economic indicators, the dynamics

was negative. In 2019, GDP growth amounted to

1.3% with positive dynamics in the industrial sector,

construction, and retail trading. The volume of

investments in fixed assets has also grown. But in

2019, the growth rate of the economy in these sectors

was below the level of 2018. At the end of 2019, the

Ministry of Economic Development of the Russian

Federation predicted the growth of the domestic

economy in 2020 by 1.7%; in fact, it decreased by

3.1% ($ 226 billion).

The reasons for the drop in the GDP in 2020 are

not only a pandemic, the introduction of quarantine

restrictions, a decrease in employment, business

economic and consumer activity, a decrease in the

labor force and demand for labor, but also a

significant decline in demand for oil, a reduction was

3.1% at the end of the year. The nominal volume of

GDP in this year amounted to 106.6 trillion rubles.

The government took large-scale and targeted

measures to adapt the business to the new working

conditions, anti-crisis management, employment

restoration, increase of unemployment payment

(from 4.5 to 12.1 thousand rubles), incomes of the

population, and direct targeted payments to the

population, the creation of a social treasury for social

support for the population, which made it possible in

a certain way to soften the “blows” to the economy.

Economic growth in the future is planned to be

ensured through accelerated technological

development, growth in labor productivity and

digitalization.

Failure of the strategic goals outlined in the

Concept is not the result of adopting an optimistic

forecast but is caused by the influence of the world

economic and internal problems of the country. At the

same time, some goals were retained for a longer

period, but adjusted to consider new scientific and

statistical studies, real events. So, a sustainable

increase of the income of the population and the

reduction of unemployment (no more than 5%) is

planned already for 2021.

Medium-term trends in the socio-economic

development of Russia are forecasted on the

assumption that a decrease in the rate of world

economic growth, the persistence of international

trade contradictions, a slowdown in aggregate

demand, a decrease in business activity, and a

deterioration of the global investment climate are

expected.

It is predicted that the measures of a unified plan

to achieve the national development goals of Russia

until 2024, which was approved by the Chairman of

the Government of the Russian Federation dated

07.05.2019 No. 4043p-P13, should ensure the growth

of the production potential of the domestic economy,

its orientation towards the investment model of

development, sustainable balanced growth, which, in

turn, will lead to an increase in investment in fixed

assets, an increase in the competitiveness of the

domestic economy, the efficiency of the public sector,

the development of science and research activities, an

increase in labor productivity, an increase in real cash

earnings and a decline in unemployment. The growth

of industrial production, construction, agro-industrial

complex and manufacturing industry is forecasted for

this period.

Prospective tasks of the country's socio-economic

development in the medium-term are to ensure the

sustainable balanced economic growth, transition to

an innovative development model and in the

formation of an appropriate infrastructure and a new

social policy.

In the context of the geopolitical situation of the

recent years, an increasingly prominent place among

the restrictions is taken by international restrictive

measures, associated, in particular, with political

confrontations, trade wars, global competition and

attempts to redistribute markets and create a

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multipolar economic world order. Table 1 gives a

classification of limiting factors.

Table 1: Classification of limiting factors of the regional

development.

Criterion of

classification

Type of limiting factors

Origin

External

Internal

Character

Natural (geographic,

demographic, environmental)

Sociocultural

Political

Economic (resource,

infrastructural, innovation and

technological, structural and

industrial, production and

technical, foreign economic)

Institutional

Exposure time

Temporary

Permanent

Nature of origin

Immanent

Historically established

Situationall

ehavioural

The degree of

strategizing

measures influence

Controlled

Uncontrolled

The ability of

negative impact

compensation due to

othe

factors

Compensable

Non-recompensable

Level of influence

on development

opportunities

High level of influence

Mean level of influence

Low level of influence

Level of potential

risk

High level of risk

Mean level

Low level

The presence of

analogues in the

worl

ractice

Having analogues

Not having analogues

Economic sanctions include restrictive measures

of the influence of an economic nature introduced by

one state or a group of states concerning a certain

country/territory to force it to change its political

course (Dzobelova and Olisaeva, 2018). Such

sanctions have a long history and can have various

nature, although trade and financial measures are

most often mentioned in the literature. The main

difference between sanctions and trade restrictions of

a protectionist nature is the presence of a political

component as a cause of economic pressure on the

country - the object of influence - for the purpose of

“punishment”, forcing to terminate or prevent certain

actions, including military ones, demonstrations of

resolve and strength, attempts to undermine the

internal political regime, enforcement to change

course. There are many examples of economic

sanctions starting from the ancient world to modern

history; we can mention, for example, such well-

known cases as the United States embargo against

Cuba, the US, EU and G7 sanctions against Iran due

to the Iran-Iraq war and Iran`s nuclear program,

sanctions against the Soviet Union due to restrictions

on the emigration of Soviet citizens imposed since

1974 under the Jackson-Vanik amendment to the US

Trade Law, sanctions against the regimes of Fidel

Castro, Salvador Allende, Saddam Hussein, Josip

Broz (“Tito”) and other politically high-profile

situations of using economic measures of pressure. In

addition to economic sanctions, there are instruments

of political influence that imply non-recognition or

incomplete recognition of countries and territories, as

a result of which they exist as subjects with an

uncertain political status and do not have full rights in

the foreign political arena and the global economic

world order. The examples are the Turkish Republic

of Northern Cyprus, which has existed since 1975 and

has not yet been recognized by any country in the

world, except Turkey, the partially recognized

Republic of Kosovo, the Donetsk People's Republic

and others. In such cases, political isolation brings on

economic measures that impede the full functioning

of the country or region.

Having originally an economic nature of the

influence, sanctions have not only economic but also

social consequences, which affects the quality of life

of the population and significantly hinders the

achievement of those goals of sustainable

development that underlie modern regional

strategizing.

4 CONCLUSIONS

The Russian economy is currently ranked 6

in the

world. In terms of GDP, the country takes 11

place

in the world ranking, and 50

in terms of GDP per

capita. Over the last decade, there have been changes

in the country, but in general, this period is

characterized by the development of the country's

economy. The exception is 2015, the negative results

of which are not only a consequence of the imposition

of sanctions against Russia in connection with the

confrontation with Ukraine but also the consequence

Innovative Development of Regions under the Modern Conditions

189

of the global economic crisis. Today, the most

problematic indicators are inflation, growth in public

debt, demographic development and unemployment.

Differentiation and uneven development are

observed across the regions of the country. Among

the positive results of 2019, one can name a gradual

reduction in the gap in the level of socio-economic

development of the leading regions and outsider

regions of the rating.

Fundamental transformations are taking place in

the world economy, global politics, social life,

technology development, which will subsequently

influence the socio-economic situation of the country

and its regions. Constant waves of crises in recent

decades have made it possible to develop certain anti-

crisis management measures. Given that the

government has recently switched to operational

monitoring and management and a quick response to

emerging problems, the undertaken measures are

impossible to be planned precisely. At the same time,

existing and potential threats, positive trends make it

possible to predict the socio-economic situation.

Many trends in the socio-economic development of

the country and regions that have emerged in recent

years have been broken by quarantine restrictions due

to the coronavirus pandemic and economic recession.

The pandemic has intensified the existing problems in

the regions. The old instruments of economic policy

often do not work in the current realities. The way out

for development and economic growth is the growth

of development and implementation of innovative

technologies, digitalization, and the solution of

international problems.

Important components of the strategic

management system for the sustainable development

of the region in the context of sanctions and

restrictions are the following: definition of the

mission and vision of the region in the national and

world system, taking into account geographical,

natural, historical, cultural, ethnic, economic and

socio-humanitarian characteristics, appropriate

positioning and definition of key goals of the

sustainable development of the region; carrying out

of strategic analysis taking into account

environmental factors, including limiting factors and

sanctions, assessment of the degree of their influence,

risk, compensatory measures and corresponding

development drivers; flexible adjustment of goals;

formation of goals and tasks for sustainable

development of the region, considering the restrictive

factors based on a scenario approach and a proactive

management model, selection and coordination of a

system of criteria and indicators that allow

monitoring their achievement; determination of the

target image of the region based on an assessment of

its vision by different groups of stakeholders in the

context of the restrictive measures (the world

community, geopolitical allies, economic partners,

adjacent territories, participants of markets,

population, business, government institutions, civil

society institutions and others); formation of a system

for monitoring indicators of sustainable socio-

economic development, operational research and

control of deviations in order to adjust activities based

on taking into account the responsibility of the

relevant institutions and structures for ensuring the

achievement of target indicators; the formation of an

informational and analytical environment that

ensures the management of the region and the

information transparency of society for all

stakeholders, which is a resource that maintains

reputation capital and “advertises” the territory

through its presence in the global information space

and the formation of trust on the part of society,

business and the political establishment, both outside

and within the region.

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