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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 - PowerPoint PPT Presentation
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WHAT IS A GOOD
PROJECT?
R E G I ON A L D
E V E L O P ME N T
July 24, 2
012 ЛЕТНИЙ КАМПУС АКАДЕМИИ ПРИ
ПРЕЗИДЕНТЕ РФ -20121
PROFESSOR CAROL SCOTT LEONARD PRANEPA, CO-DIRECTOR, CENTER FOR
RUSSIAN STUDIESFELLOW ST ANTONY’S
COLLEGE, OXFORD UNIVERSITY
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
OUTLINEMulti-level Governance: Age of
ExperimentationChallenges for regionsExperimentation as a Way of Governing
The example of KalugaWhat is a Successful Project?
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2
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
MULTI-LE
VEL
GOVERNANCE
A G E OF E
X P E R I ME N T A T I O
N
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
MULTI-LEVEL GOVERNANCEEvolving Patterns
Regions, previously ignored, now central totheorizingHistorical industries and new sectors Traditions of governance evolving, TaylorismdecliningGlobalization of Trade and Information
Current Era: one of Experimentation
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4
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
DECENTRALIZATIONUS and Germany:Regions acquiring greater authority over
programsCoordination between Federal and
Regional levels for cross-border issuesSustainability policies: they work better at
the regional levelAt all levels: Integrative policy approaches
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5
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
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
July 24, 2
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6
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
EQUALIZATION OR GROWTH:THE TRADE-OFF IN REGIONAL POLICYFederal and Regional programs
Some fiscal transfers for welfareSome sectoral policies Some competitive pressures
Multi-level planning is criticalMake up for regional differences in capacity for solving problems, capacity for learning new routines, economic advantages
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
BOTH GOALS IMPORTANTChoices require flexibilityThe answer tomorrow may be different from
the answer todayIs 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
July 24, 2
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
REGIONAL/FEDERAL PROGRAMS MUST BE COORDINATEDCanada, 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
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
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 centralizedSpending (via transfers) is largely targeted funds
Who decides what to target?
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
CENTRALIZATION TENDENCIES
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
DIFFERENT COUNTRIES DIVERGECanada allocates decision-making
downward (except not to municipalities)The principle is adaptivityProfit tax is federal, but provinces can add to it
The chart below shows how this has evolved:
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
RUSSIAN FEDERALISM: EXPERIMENTATION
Centralized Soviet command economyDecentralization in the early 1990sRecentralization in late 1990s, vertical imposedPost 2012 re-decentralization
The 83 Regions:
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2July
24, 2012
15
RUSSIA’S FAST ADVANCING REGIONS:
MOST = NEXT =
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
WHY MANY COUNTRIES STILL FOLLOW CENTRALIZED MODELRegions can be greatly influenced by interest groups,
and devolution can lead to extreme inequalityRegional 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
July 24, 2
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16
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
DISTRIBUTED GOVERNANCET R E N D S
State (polity=C) has shrunk
Society (society=A) has expanded
New actors link all three
Policies are shared Technologies “co-
evolve”
B O U L D I N G T R I A N G L E
July 24, 2
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17
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
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
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
CHALLENGES FO
R
RUSSIA’S REGIONS
K E Y I SS U E S
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
REGIONAL GENERAL ISSUESWaterElectricitySewagePoliceRoadsEducationCare: disabled, elderly, unemployedEmergencies: floods
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
SPECIAL ISSUES
Diversification in energy abundatnt regions Ecology-Exploration Trade-off in ArcticAgricultural infrastructureDrought and FloodTransportationOne-industry TownsCorruption and Trust
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
EACH SPHERE HAS BUNDLE OF TASKS
For example, Human Resources
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
HUMAN RESOURCESMust be approached by:
Multi-level governmentNew technology (digitalization of records)Training for E-governmentYouth programs (Tatarstan!)
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
DROUGHT IN RUSSIA
’S
SOUTH
What is
the answ
er?
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
DROUGHT MANAGEMENT WILL DIFFER
In Rostov, Volgograd, Stavropol and Kalmykia Republic (South)
Saratov, Orenburg (Volga federal district)
Kurgan, Chelyabinsk (Urals) Kemerovo (Siberian federal district)
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
DROUGHT MANAGEMENTCaused 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.
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
FLOODING
Federa
l , Lo
cal a
nd Region
al Inter
actio
n
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012
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2July
24, 2012
28
REGIONAL PROJECTS FOR FLOOD MANAGEMENT
Stormwater Flood Management Grants to manage stormwater runoff to reduce floodingGroundwater recharge, water quality improvements, ecosystem restoration benefits, and reduction of in-stream erosion and sedimentation.
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
FLOOD MANAGEMENT: REGIONAL AND LOCAL
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
EXPERIMENTAT
ION
A S A W
A Y OF G
O V E R N I NG
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
WHAT SEEMS TO WORKIdeas from other transition
countriesIdeas from the EUIdeas from Russia’s own experience
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
ANSWERS EMERGINGRegions as “Investment Machines”• Coordinated policies toward inward
investment• Combined efforts by Regions, State,
Localities• Good government • Predictability• Trustworthiness
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
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
July 24, 2
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
THE KALUGA JO
INT SUCCESS
Spilling ov
er with
succe
ss
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
FEDERAL AND SUBNATIONAL EFFORTPro-Investment Strategy
Begins 2006Results staggering:
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
STARTING POINT: 1998Location: • 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
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
THEN DECLINE, THEN GROWTHIn 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.
July 24, 2
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
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
July 24, 2
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
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
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2July
24, 2012
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PUBLIC AND PRIVATE PARTNERSHIPTECHNOPARK “VOLVO-VOSTOK”
Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
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
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
STARTED WITH 4 MAJOR INVESTORSVolkswagen, PSA joint venture,
Samsung Electronics and Volvo Trucks
A stream of others followedOnly Greenfield projects: property
rights still insufficiently protected
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
SPILLOVERSReal estate investors (housing
construction boom)Residence and Entertainment ParksEntry of investors from many
countriesSouth Korea, Russia, French, Swedish
Foreign retail chains
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
RESULTSRegional Industrial Output
Grew by 63% from 2006-2008Particular in automotive industry
Foreign investment skyrocketedRetail sector grewPublic sector funded a new Development
Corporation to look for more funds
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PARTNERSHIPSFederal level industrial policy:
High duties on imported carsAllows foreign automotive investors to bring in parts duty freeLocal production required for 30% of total cost
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
EXPLOITING PROXIMITY TO MOSCOWTransportation infrastructure allows
close communicationAs Moscow grows more expensive,
Kaluga is attractive alternative for investors
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PROBLEMSCorruption continuesThere are high costs—constructionFinancial crisis struck Kaluga
Debt rises (result of borrowing)Budget income fell by 4% (nominal)
However, federal transfers rose by 14%
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
SUCCESSFUL REGIONAL PROJECT
Weak Regional
Leadership Investment “Machine”
Federal Support
Greenfield Investment
One-Stop Shop
Transportation improvement
Federal Support
Brownfield Investment
Tax Incentives
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
WHAT IS A SUCCESSFU
L
PROJECT?
C O N C L U S I ON
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TECHNOLOGICAL AND INVESTMENT ORIENTATIONTechnologies that foster economic,
social and technological dynamism, participation
Outcomes must include learning, changing
Reconciliation of winners and losers
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
DIFFUSION OF GOVERNANCE CAPACITY
Foundation is the law at the Federal level
But there are intangibles to be produced by regional policy-making: By delegating: find creative solutionsBy localizing stimulate learning and participation
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ADAPTABLE TASK-ORIENTED PROJECTS
Federal level can resolve what would create conflict at the regional level
Regions can learn to work through these conflicts
Find a balance between loose and controlled governance that suits the situation
Flexible supply networks for newly identified needs
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
LOOSE AND CONTROLLED GOVERNANCE
Contracts should be transactional or relationalDepending on whether the task calls for loose or controlled governance
Relational tend to be more effective
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Л Е Т Н И Й К А М П У С А К А Д Е М И И П Р И П Р Е З И Д Е Н Т Е Р Ф -2 0 1 2
INDICATORS FOR CONTROLLED PROJECTS
Results or process orientedOutcomes are important
Demographic, social, economicResponsibility for projects is
localized and clearMilestones and targets well defined
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INDICATORS FOR LOOSE GOVERNANCE
Improved skills and processesImproved trust between levels of governmentAmicable agreements
Implemented by “soft laws” rather than commands and strict regimes
Milestones: Innovation, adaptability, and learning capacity
Development of networks of independent actors.
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