Sustainable Development of Industrial Regions: Economic Aspect

(the Case of the Kemerovo Region)

Olga Zonova

, Oksana Sheveleva

and Ekaterina Slesarenko

Department of Finance and Credit, T.F. Gorbachev Kuzbass State Technical University, Kemerovo, Russian Federation

Keywords: Sustainable Development, Industrial Region.

Abstract: Sustainable development of the Russian Federation, including its individual territorial entities, is a strategic

area of socio-economic development. The Kemerovo Region is an old-industry region with a traditional

techno-economic paradigm, where degradation of natural landscapes, environmental pollution, and morbidity

of the population act as “sore” points of sustainable development and generate an outflow of a significant part

of the population. Structural analysis of the gross regional product of the Kemerovo region - Kuzbass revealed

imbalances in favor of mining during the post-Soviet period. It is also a regrettable fact that the share of

investments aimed at environmental protection and rational use of natural resources in the total investments

is extremely small, which has a disturbing effect in the further implementation of the concept of sustainable

development. We believe that it is the quality of structural changes that determines the sustainability of

economic development and the stabilization of its growth in the long term. The presented indicators

characterizing the sectoral makeup of the economy of the Kemerovo region - Kuzbass demonstrate the

transition of the economy from the late industrial type with a predominance in its structure of industries

producing goods with high added value to the early industrial type, specializing in the extraction of natural

resources. Increasing production potential is limited by the growth of the extractive industries, which poses a

threat to environmental safety and, in general, limits the potential for sustainable development.

1 INTRODUCTION

The concept of sustainable development appeared

almost 30 years ago and has received worldwide

recognition in connection with the need for a

coordinated and joint solution of global problems.

The problem for humanity is that economic growth

destroys and depletes the natural environment, leads

to environmental degradation, and this, in turn,

undermines the very process of economic growth.

Currently, humanity is facing the risk of irreversible

destruction of the environment, which can lead to the

destruction of the mainstays of civilization and the

extinction of living nature (Safonov et al, 2013). It

concerns not particular crises - energy, economic,

social, etc., but the global world crisis of the "man-

environment" relationship.

Sustainable development involves finding a

compromise between the exploitation of the natural

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environment and the ability to meet the needs of

current and future generations. The very definition of

sustainable development raises questions: What

environmental impact can be considered acceptable?

How to quantify the limit of anthropogenic impact on

the environment? We believe that the rate of

destruction of the environment by humans exceeds

the capabilities of modern science in understanding

them and does not allow fully assessing what is

happening (Barkhatov and Benz, 2020). In this

connection, the way out of the crisis is seen, first of

all, in a change in techno-economic paradigm by

modernizing primary industries, the formation and

development of processing industries that create a

product with high added value, as well as in the

development of the service sector.

Environmental, social and economic factors have

become drivers of growth on the path to sustainable

development in accordance with the Decree of the

President of the Russian Federation of 04.02.1994

Zonova, O., Sheveleva, O. and Slesarenko, E.

Sustainable Development of Industrial Regions: Economic Aspect (the Case of the Kemerovo Region).

DOI: 10.5220/0010668400003223

In Proceedings of the 1st International Scientiﬁc Forum on Sustainable Development of Socio-economic Systems (WFSDS 2021), pages 355-359

ISBN: 978-989-758-597-5

355

No. 236 "On the Concept of the Russian Federation's

Transition to Sustainable Development". Currently,

within the framework of the concept of sustainable

development, 12 national projects are being

implemented, including "Environment",

"Demography", "Digital Economy of the Russian

Federation". It should be noted that the institutional

environment in the Russian Federation is being

formed, and the global trend of further development

has been identified (Barkhatov and Benz, 2020). It is

possible that the strengthening and reforming of the

institutional framework for sustainable development

should be more stringent, since for almost 30 years

the current situation has not been resolved, but is

somewhat aggravated.

2 METHODS

The study is based on the use of a dialectical system

method, which allows describing both the current

state of an object and the process of its development.

Consideration of the current state of an object

involves the study of structural and functional

elements that internally interact with each other.

Whereas the characteristic of the development

process consists in describing the level of functioning

and changes in the object of research (Mingaleva and

Oborin, 2017).

Also, we consider it important to apply a systems

approach to the analysis of sustainable development of

the region. It involves taking into account the

historically established specialization of the region, in

connection with which, when planning the prospects

for further sustainable development of the region, it is

necessary to identify precisely the problems of

modernization and structural transformation of its

economy. In the process of analysis, it is necessary to

identify the main driving forces (resources) for further

socio-economic development and conditions that have

a disturbing effect (Mingaleva and Oborin, 2017).

We consider it expedient to apply the

anthropocentric approach, which prevails in the

works of most researchers of sustainable

development of territories. The use of this approach

is explained by several circumstances:

 improving the quality of life is the goal of the

strategic development of the state, as well as

the goal of sustainable development;

 human activity is aimed at meeting her/his

needs, which is also closely related to

sustainable development issues.

3 RESULTS AND DISCUSSION

The object of the research is the concept of

sustainable development of an industrial region. The

subject of the research is economic limitations on the

implementation of the concept of sustainable

development.

The Kemerovo Region is a typical industrial

region with a conventional sectoral makeup that

requires serious restructuring and modernization of

the economy to implement the principles of

sustainable development, which is currently

happening at a fairly low rate (Table 1).

Table 1: Pattern of investments in fixed assets, investment accumulation rate and depreciation of fixed assets.

Indicato

2015 2016 2017 2018 2019

Fixed capital investments, million rubles 170470 165666 215237 248665 297946

including by types of fixed assets:

non-residential buildings, structures

share of buildings and structures in the fixed assets,%

machinery, equipment, vehicles

share of machinery, equipment, vehicles in the fixed assets, %

intellectual property objects

share of intellectual property objects in the fixed assets, %

63122

29.3

123453

57.4

524.6

0.2

73217

29.4

143136

57.6

1733

0.7

101513

34.1

160879

54.0

1973

0.6

including by type of economic activity:

mining

share of share of mining in the total volume, %

processing industries

share of processing industries in the total volume, %

80577

53.9

14570

9.8

94600

51.7

19148

10.5

123134

55.1

25377

11.3

Including investments in fixed assets aimed at environmental

protection and rational use of natural resources, million rubles

2058

1669

3150

2954

5110

Investment accumulation rate, %

20.2 18.3 19.6 19.6 26.8

Depreciation of fixed assets (in mining),%

- - 53.4 52.2 50.7

WFSDS 2021 - INTERNATIONAL SCIENTIFIC FORUM ON SUSTAINABLE DEVELOPMENT OF SOCIO-ECONOMIC SYSTEMS

356

The economy of the Kemerovo region, as before,

is natural capital intensive and the transition to a new

qualitative level of economic growth is becoming

very problematic.

The economy of the Kemerovo region, as before,

is natural capital intensive and the transition to a new

qualitative level of economic growth is becoming

very problematic. This type of economic

development follows an extensive path and in

conditions of increasing technological potential of

developed and developing countries, it is determined

by an extremely unstable macroeconomic trend.

In modern conditions of the development of

convergent technologies, the sixth wave of

innovations, the sustainability of economic growth

and the development of old-industry regions is

determined by the direction of shifts occurring in the

structure of the economy, and, first of all, in the

structure of reproduction. Thus, structural shifts in

investment in fixed assets by type of economic

activity (Table 1) reveal clear distortions in favor of

the extraction of minerals throughout the entire post-

Soviet period. It is also a regrettable fact that the share

of investments aimed at environmental protection and

rational use of natural resources in the investments

pattern is extremely small and amounts to no more

than 2%, and investments in intellectual property

objects - less than 1%.

Thus, it is the quality of structural changes that

determines the sustainability of economic

development and the stabilization of its growth in the

long term (Uskova, 2020). The presented indicators

characterizing the sectoral makeup of the economy of

the Kemerovo region - Kuzbass demonstrate the

transition of the economy from the late industrial type

with a predominance in its structure of industries

producing goods with high added value to the early

industrial type, specializing in the extraction of

natural resources. The increase in the production

potential of Kuzbass is limited by the growth of the

mining sector, which poses a threat to environmental

safety and, in general, hinders the potential for

sustainable development.

On the other hand, the strengthening of the

industrial orientation of economic growth does not

have a negative environmental effect if high-tech

industries take the lion's share in the structure of

industrial production (Stupen and Taratula, 2019).

But in the Kemerovo region, the situation is

somewhat different.

The rate of accumulation of investments in fixed

assets in GRP in 2015-2018 is almost stable and

amounts to about 20%. In 2019, the accumulation rate

was 26%. Intensive growth and a high rate of gross

fixed capital formation provide only at first high rates

of economic growth and are mandatory, but

insufficient conditions for the implementation of the

concept of sustainable development. The value of this

indicator for the Kemerovo region is low.

Undoubtedly, when a certain level of economic

development is reached, a relatively lower rate of

capital investments will be required to ensure a given

growth as a result of more efficient use of

investments.

The unsatisfactory dynamics of investments in

fixed assets is currently one of the main conditions

that have a disturbing effect on the transition of the

economy to the trajectory of sustainable

development. At the same time, the possibilities of

production growth due to the better use of fixed assets

are extremely limited due to the high level of their

depreciation (over 50%).

According to the chosen logic of the study, let us

turn to the analysis of the ongoing structural changes

in the regional economy (Table 2).

Structural changes in the economy are the drivers

of economic growth. Of course, over time, structural

changes are inevitable due to the differentiated

influence of technological innovations in a number of

industries, different elasticities of demand for goods,

works and services.

Structural changes in output by sectors of the

Kemerovo region's economy in dynamics over 15

years show a decrease in the share of agriculture and

processing in GRP, an increase during the analyzed

period and a slight decrease by the end of 2019 in the

share of mining.

The share of agriculture in the GRP is declining

despite the fact that agricultural products can be an

export commodity. In the context of forced import

substitution due to the imposition of sanctions,

consumer preferences shifted towards the support of

the domestic producer.

We believe that one of the priority measures for a

coal-mining region should be the diversification of

exports (as an option, agricultural products, in

particular, raw materials or certain types of their

primary processing) in order to reduce the

dependence on fluctuations in hydrocarbon prices.

An interesting fact is that, despite the volatility of

energy prices, the transition of a number of countries

to low-carbon development strategies, reduced

demand for coal, the use of renewable energy sources,

the share of production in the GRP structure of the

Kemerovo region is stable. In our opinion, an

alarming trend is the reduction in the share of

processing industries in the GRP of the Kemerovo

Sustainable Development of Industrial Regions: Economic Aspect (the Case of the Kemerovo Region)

357

Region, despite the fact that processing industries are

recognized as a powerful driver of economic growth.

At the same time, the focus on the development of

processing industries can also limit the possibilities of

transition to sustainable development.

Structural change must be multidimensional. We

believe that the service sector, including high-tech,

also has significant growth potential. However, in the

Kemerovo region - Kuzbass, the share of activity in

the field of information is stable, being at a rather low

level during 2016-2019, and accordingly, there are

also opportunities for economic growth.

A positive trend in the implementation of the

sustainable development strategy is the increase in the

share of education and healthcare in the GRP for the

period under study. We believe that investments in

human capital are fundamental factors for sustainable

growth (Lazareva et al, 2020; Dematteis, 2009;

Sheveleva et al, 2019).

As part of the implementation of the concept of

sustainable development, it is necessary to take into

account not only the needs of the economy, but also

the needs of a person (Ostanina, 2020).

Table 2: The structure of the Kemerovo region economy.

Indicato

2005 2010 2015 2016 2017 2018 2019

Share of a

riculture and forestr

in GRP,% 3.3 3.4 4 3.0 2.2 1.9 22

Share of mining in GRP,% 27.1 31.4 25.8 29.7 36.5 35.9 26.3

Share of processing industries in GRP¸% 16.9 18.9 17.9 15.4 13.9 14.6 14.0

Share of construction in GRP,% 5.3 4.6 3.9 3.8 3.3 3.6 5.4

Share of trans

ort and communications in GRP,% 9.4 8.9 9.2 - - - -

Share of trans

ortation and stora

e in GRP,% - - - 6.0 6.1 6.2 7.1

Share of activities in the field of information and

communication in GRP,%

- - - 1.3 1.2 1.1 1.4

Share of education in GRP,% 3.0 2.7 3.6 3.3 3.0 3.0 3.6

Share of healthcare in GRP,% 3.8 4.1 5.0 4.6 4.1 4.4 5.4

Share of wholesale and retail trade in GRP,%

13.8 9.4 9.9 9.3 8.7 8.6 10.0

Share of financial services in GRP,%

0.4 0.4 0.2 0.3 0.2 0.2 0.2

The interrelation of economic and social

components of sustainable development is extremely

close, therefore, further limitations of economic

growth can be such social problems as an aging

population, a decrease in the number of able-bodied

citizens, an increase in morbidity, disability,

mortality, a decrease in the birth rate, and migration

outflow.

These issues cannot be ignored when

implementing the concept of sustainable

development, since taking these factors into account

can provide an increase in labor productivity, an

increase in GRP, and a reduction in financial costs to

support the dependent population or persons with

disabilities.

Also, a promising direction, in our opinion, is the

formation and development of closed-cycle

production (Azzahidi et al, 2020; Zonova et al, 2016),

which will reduce the burden on the environment

through the processing of industrial and household

waste. And this, in turn, involves sorting waste,

organizing its reception and transportation to the

place of direct processing, i.e. development of

processing industries.

Thus, it is obvious that the currently implemented

regional economic policy does not contain a vector

for sustainable economic development, since it is not

aimed at stimulating positive structural changes

(Zonova et al, 2016; Bereznev et al, 2017; Sheveleva

et al, 2020). We consider structural changes positive

if they result in an increase in entrepreneurial activity

(especially in the sector of high-tech and information-

intensive services), the emergence of new market

entities, the development of reproductive relations

(the emergence of new forms of investment in high-

tech business, modification of connections between

entities, the emergence of new sources of capital

accumulation, etc.).

4 CONCLUSIONS

The industrial region continues to increase its

production potential, structural changes in investment

demonstrate the strengthening of extractive

industries. Depressing is the fact that there are almost

no significant changes in the investment pattern,

which testifies to the consolidation of the raw

material orientation of the economy.

In industrial regions, the issues of quality of life

are most urgent. Degradation of natural landscapes,

environmental pollution, morbidity of the population

act as "sore points" for further socio-economic

WFSDS 2021 - INTERNATIONAL SCIENTIFIC FORUM ON SUSTAINABLE DEVELOPMENT OF SOCIO-ECONOMIC SYSTEMS

358

development and generate an outflow of the able-

bodied population, in particular the component that

has a high innovative potential (scientists,

researchers, engineers).

In order to achieve the goals of sustainable

development of the Kemerovo Region and

typologically homogeneous regions with a

predominant mining-type economic activity we

consider it necessary to give the regional economic

policy a vector aimed at stimulating positive

structural changes that ensure the formation of a

highly competitive innovation environment.

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