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What is a good Project?

What is a good Project?. Regional Development. Professor Carol Scott Leonard PRANEPA, Co-Director, Center for Russian Studies Fellow St Antony’s College, Oxford University. OUtline. Multi-level Governance: Age of Experimentation Challenges for regions

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What is a good Project?

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  1. What is a good Project? Regional Development Professor Carol Scott Leonard PRANEPA, Co-Director, Center for Russian Studies Fellow St Antony’s College, Oxford University Летний кампус Академии при Президенте РФ -2012

  2. OUtline • Multi-level Governance: Age of Experimentation • Challenges for regions • Experimentation as a Way of Governing • The example of Kaluga • What is a Successful Project? Летний кампус Академии при Президенте РФ -2012

  3. Multi-level governance Age of experimentation Летний кампус Академии при Президенте РФ -2012

  4. Multi-Level governance • Evolving Patterns • Regions, previously ignored, now central to • theorizing • Historical industries and new sectors • Traditions of governance evolving, Taylorism • declining • Globalization of Trade and Information • Current Era: one of Experimentation Летний кампус Академии при Президенте РФ -2012

  5. decentralization • US and Germany: • Regions acquiring greater authority over programs • Coordination between Federal and Regional levels for cross-border issues • Sustainability policies: they work better at the regional level • At all levels: Integrative policy approaches Летний кампус Академии при Президенте РФ -2012

  6. Issues for Regions: the environment in the us • Environmental issues previously resolved at the Federal level now allocated to regions • State spending grew far faster than Federal Spending • From 40% in 1980s to 60% of programs now at state level; states spend twice the amount Летний кампус Академии при Президенте РФ -2012

  7. Equalization or Growth:the trade-off in regional policy • Federal and Regional programs • Some fiscal transfers for welfare • Some sectoral policies • Some competitive pressures • Multi-level planning is critical • Make up for regional differences incapacity for solving problems, capacity for learning new routines, economic advantages Летний кампус Академии при Президенте РФ -2012

  8. Both goals important • Choices require flexibility • The answer tomorrow may be different from the answer today • Is the answer going to help govern better? • I.E.: • Does the answer promote learning, is it incentive compatible with growth, is it incentive compatible with multi-level cooperation Летний кампус Академии при Президенте РФ -2012

  9. Regional/Federal programs must be coordinated • Canada, Austria and Switzerland, among federations, have the greatest difficulty coordinating regional and national planning • US and Germany are more successful, there is more devolution at planning stage and more federal support for local plans • New: Multi-level regulation, combining positive hierarchical coordination with innovative and competitive regional policies Летний кампус Академии при Президенте РФ -2012

  10. Many Federated States are relatively centralized • Tax collection almost entirely centralized for efficiency (mobility of the tax base and tax composition within the country) • In Russia—lack of trust in fairness and organizational capacity of the regions; an effort to increase tax discipline • Legal and administrative affairs are centralized • Spending (via transfers) is largely targeted funds • Who decides what to target? Летний кампус Академии при Президенте РФ -2012

  11. Centralization tendencies Летний кампус Академии при Президенте РФ -2012

  12. Летний кампус Академии при Президенте РФ -2012

  13. Different countries diverge • Canada allocates decision-making downward (except not to municipalities) • The principle is adaptivity • Profit tax is federal, but provinces can add to it • The chart below shows how this has evolved: Летний кампус Академии при Президенте РФ -2012

  14. Russian Federalism: experimentation • Centralized Soviet command economy • Decentralization in the early 1990s • Recentralization in late 1990s, vertical imposed • Post 2012 re-decentralization • The 83 Regions: Летний кампус Академии при Президенте РФ -2012

  15. Russia’s Fast Advancing Regions: Most = Next = Летний кампус Академии при Президенте РФ -2012

  16. Why many countries still follow Centralized model • Regions can be greatly influenced by interest groups, and devolution can lead to extreme inequality • Regional interests can dominate over classic views of efficiency (example—regions in Canada resist the VAT) • Also, provincial voters can be unsure about trade-offs (education vs health care—young/old voters) • Also, this system is expensive: Russia is still moving toward an improved administration • But regions may eventually acquire the profit tax revenue Летний кампус Академии при Президенте РФ -2012

  17. Distributed Governance Trends Boulding Triangle • State (polity=C) has shrunk • Society (society=A) has expanded • New actors link all three • Policies are shared • Technologies “co-evolve” Летний кампус Академии при Президенте РФ -2012

  18. Experimental Governance • Supple public and private organizations • Capable of regularly redistributing responsibility according to the nature of the task rather than on the basis of a rigid authority structure. • Spontaneous determination of the most appropriate level for wielding power and taking responsibility • Weakening the attribute of most prevailing governance systems--hierarchical or top-down methods for determining goals and means Летний кампус Академии при Президенте РФ -2012

  19. Challenges for Russia’s Regions Key Issues Летний кампус Академии при Президенте РФ -2012

  20. regional General Issues • Water • Electricity • Sewage • Police • Roads • Education • Care: disabled, elderly, unemployed • Emergencies: floods Летний кампус Академии при Президенте РФ -2012

  21. Special Issues • Diversification in energy abundatnt regions • Ecology-Exploration Trade-off in Arctic • Agricultural infrastructure • Drought and Flood • Transportation • One-industry Towns • Corruption and Trust Летний кампус Академии при Президенте РФ -2012

  22. Each Sphere has bundle of Tasks • For example, Human Resources Летний кампус Академии при Президенте РФ -2012

  23. Human Resources • Must be approached by: • Multi-level government • New technology (digitalization of records) • Training for E-government • Youth programs (Tatarstan!) Летний кампус Академии при Президенте РФ -2012

  24. Drought in Russia’s South What is the answer? Летний кампус Академии при Президенте РФ -2012

  25. Drought Management will differ • In Rostov, Volgograd, Stavropol and KalmykiaRepublic (South) • Saratov, Orenburg (Volga federal district) • Kurgan, Chelyabinsk (Urals) • Kemerovo (Siberian federal district) Летний кампус Академии при Президенте РФ -2012

  26. Drought management • Caused by combinations of meteorological, hydrological and storage water deficiencies: long-term response • Surface water storage: on and off-stream storages. • Groundwater • Re-use: treated sewage and grey water. • Storm water: for treatment and supply by water authorities. • Networking systems: transfers of water within and between basins which were previously independent harvesting and supply systems. • Rainwater tanks • Dead storage pumping: water contained below conventional offtake levels. • Cloud seeding: a potential long-term measure, previously undertaken by the CSIRO to stimulate rainfall from suitable cloud formations. Летний кампус Академии при Президенте РФ -2012

  27. Flooding Federal , Local and Regional Interaction Летний кампус Академии при Президенте РФ -2012

  28. Regional Projects for Flood management Stormwater Flood Management Grants to manage stormwater runoff to reduce flooding Groundwater recharge, water quality improvements, ecosystem restoration benefits, and reduction of in-stream erosion and sedimentation. Летний кампус Академии при Президенте РФ -2012

  29. Flood Management: Regional and local Летний кампус Академии при Президенте РФ -2012

  30. Experimentation As a way of governing Летний кампус Академии при Президенте РФ -2012

  31. What seems to work • Ideas from other transition countries • Ideas from the EU • Ideas from Russia’s own experience Летний кампус Академии при Президенте РФ -2012

  32. Answers Emerging • Regions as “Investment Machines” • Coordinated policies toward inward investment • Combined efforts by Regions, State, Localities • Good government • Predictability • Trustworthiness Летний кампус Академии при Президенте РФ -2012

  33. Answers from Russia: Leadership • In the 1990s, right resources seemed to be the answer (no military industries) • Now it is clear that the right leaders is the answer Летний кампус Академии при Президенте РФ -2012

  34. The Kaluga Joint Success Spilling over with success Летний кампус Академии при Президенте РФ -2012

  35. Federal and Subnational Effort • Pro-Investment Strategy • Begins 2006 • Results staggering: Летний кампус Академии при Президенте РФ -2012

  36. Starting point: 1998 • Location: • Along Moscow–Kiev motorway, backbone of the spatial economic organization • Proximitiy to Moscow (170 km) • Regional economy • Military-oriented (one/half employees in 1980s) • Machine-building • Production of transportation and related equipment (mainly for railroads), • Science, nuclear physics research Russia’s First Nuclear Reactor: • in Obninsk (106,000 population) • Few natural resources (some ag, timber, logging) • Wood-working and paper industries Летний кампус Академии при Президенте РФ -2012

  37. Then Decline, then growth • In 1990s, output shrank by almost 60% • After 2006, it began to grow far faster than Russian average • As next figure shows* • *Dmitry Zimin, “Promoting Investment in Russia’s Regions,” Eurasian Geography and Economics, 2010, 51, No. 5, pp. 653–668. Летний кампус Академии при Президенте РФ -2012

  38. Летний кампус Академии при Президенте РФ -2012

  39. What happened? • “Investment Promotion Machine” as in Central European States • Foreign involvement does not always produce wealth (financial gap, no spillovers) • Require consensus among political and economic elites at national/regional/local level • No single project can do it • Requires stable, predictable and honest government • Greenfield investments work best Летний кампус Академии при Президенте РФ -2012

  40. Kaluga Projects (2005-8)with Federal Support • Public funds invested in industrial parks (techno-parks) • Public funds invested in transportation infrastructure (Federal investment in Moscow-Kiev motorway connecting Kaluga/Obninsk with Moscow • Investment financed by borrowing (new corporation) • The Russian Detroit Летний кампус Академии при Президенте РФ -2012

  41. Public and Private PartnershipTechnopark“Volvo-Vostok” Летний кампус Академии при Президенте РФ -2012

  42. Industrial Zones • Created four industrial zones (linking Kaluga, Obninsk with businesses) Public funds reconstructed them, then carefully sold to private investors • Created One-stop shop for investors (Kaluga Regional Development Agency) Helped investors with permissions (environmental, safety), services, meetings with public officials Летний кампус Академии при Президенте РФ -2012

  43. Started with 4 major investors • Volkswagen, PSA joint venture, Samsung Electronics and Volvo Trucks • A stream of others followed • Only Greenfield projects: property rights still insufficiently protected Летний кампус Академии при Президенте РФ -2012

  44. Spillovers • Real estate investors (housing construction boom) • Residence and Entertainment Parks • Entry of investors from many countries • South Korea, Russia, French, Swedish • Foreign retail chains Летний кампус Академии при Президенте РФ -2012

  45. Results • Regional Industrial Output • Grew by 63% from 2006-2008 • Particular in automotive industry • Foreign investment skyrocketed • Retail sector grew • Public sector funded a new Development Corporation to look for more funds Летний кампус Академии при Президенте РФ -2012

  46. Partnerships • Federal level industrial policy: • High duties on imported cars • Allows foreign automotive investors to bring in parts duty free • Local production required for 30% of total cost Летний кампус Академии при Президенте РФ -2012

  47. Exploiting proximity to Moscow • Transportation infrastructure allows close communication • As Moscow grows more expensive, Kaluga is attractive alternative for investors Летний кампус Академии при Президенте РФ -2012

  48. Problems • Corruption continues • There are high costs—construction • Financial crisis struck Kaluga • Debt rises (result of borrowing) • Budget income fell by 4% (nominal) • However, federal transfers rose by 14% Летний кампус Академии при Президенте РФ -2012

  49. Successful Regional PRoject Летний кампус Академии при Президенте РФ -2012

  50. What Is a successful project? Conclusion Летний кампус Академии при Президенте РФ -2012

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