Potential of the real sector of the economy in the region

The real sector of the economy of a country or region includes such elements as industry, agro-industrial complex (AIC) and construction. Objects of management of these industries, as a rule, have not only territorial, but also national significance, since many of them are in republican ownership. However, located on the territory of the regions, these facilities interact and use the natural resource, social and economic potential of the regions, which necessitates the interaction of the management of such enterprises with local governments. First of all, this applies to business entities that are municipal, collective or private property.

The current state of development and location of industries, the industrial potential of the region is characterized on the basis of the study of statistical materials, analysis of negative phenomena in the development and location of industrial production, assessment of the technical level and economic efficiency.

When analyzing the development of specific industries, it is customary to consider the following indicators:

dynamics of production in value terms (in comparable prices) and in physical terms; financial condition of enterprises of the industry in the region; use of labor potential; capital investments (including construction and installation works (CMP)) with the division of costs for technical re-equipment, reconstruction and expansion of existing enterprises, for new construction according to the sources of their formation (centralized, regional, own and attracted funds, etc.); provision of production with material and raw material resources; indicators characterizing the impact of the development of the industry on the environment, the effectiveness of environmental measures; industry-specific characteristics; the ratio of the achieved volumes of production in physical terms with the needs of the economy, meeting the demand of the local population; the age structure of production fixed assets and their active part (degree of wear, shelf life coefficient, etc.), as well as the efficiency of their use (shift coefficient, equipment load, etc.); levels of concentration (average size of the enterprise in the industry of the region; the share of large enterprises in the share of output of the region; the average annual cost of fixed assets; the average number of employees, etc.), specialization (the share of the main (profile) products in the total production volume; the share of specialized equipment in its total fleet; the nomenclature and range of products, etc.), cooperation (share in the cost price of manufactured by enterprises region of production of components and semi-finished products obtained by cooperation (coefficient of cooperation); the share of semi-finished products manufactured by enterprises of the region for supply to the side, in their total production and in the release of all products, etc.) and combination (the share of marketable products obtained at the combines in its total industrial output of the region; the share of combines in the volume of production, the number of industrial and production personnel, the cost of fixed assets; the coefficient of combination (the share of by-products in the total output), etc.) of production; availability of production capabilities (areas, equipment) for the procurement and processing of secondary resources (production waste, consumption, etc.) generated in industries or subject to processing at their enterprises; development of transport and economic ties and infrastructure.

The Republic of Belarus is a modern industrially developed state. In 2000, industry accounted for 29.6% of GDP, and the share of those employed in it was more than 29% of all workers. Industry also has a leading place in the export of products – 96% of the value of exports. The industrial complex includes 16 industries: electric power, fuel, ferrous and non-ferrous metallurgy, chemical and petrochemical, mechanical engineering and metalworking, forestry, pulp and paper, woodworking, building materials industry, glass and porcelain-faience, light, food, feed and flour-cereal, medical, printing, microbiological, and most of these industries are represented in each region of the republic.

The management of the country’s industrial potential is carried out by a large number of departmental and territorial management bodies, including: the Ministry of Industry of the Republic of Belarus, the Ministry of Energy of the Republic of Belarus, the Ministry of Architecture and Construction of the Republic of Belarus (construction materials industry), the Ministry of Agriculture and Food of the Republic of Belarus (agricultural industry), as well as such large concerns as Belenergo, Beltopgaz, Belneftekhim, Bellesbumprom, Bellegprom, Belmesprom, Belkhudozhpromysly, Belresursy, etc.

State management of the country’s industrial complex is carried out by the Ministry of Industry of the Republic of Belarus, which pursues an economic, scientific and technical policy aimed at restructuring industry, reorienting its most important branches to meet the needs of the national economy of the republic.

The Ministry of Industry of the Republic of Belarus performs the following functions related to the management of the industry of the country and regions:

development of measures to accelerate scientific and technological progress, develop and implement programs for the economic and social development of industries, carry out the conversion of defense industries in order to create progressive types of machinery and equipment in the republic, including for agriculture, develop advanced technology, increase the production of consumer goods; participation in solving issues on demonopolization of production, development of competition, denationalization and privatization of property, expansion of entrepreneurship; implementation of investment, scientific and technical policy aimed at improving the quality and competitiveness of products, expanding the range of consumer goods, reducing the material and energy intensity of production; organization of research and development (R&D) for the development of industries, including with the participation on a contractual basis of leading scientific and design organizations, scientists and specialists; forecasting and planning the development of industries, taking measures to ensure their dynamic functioning; participation in the formation of the state order for the supply of industrial and technical products and consumer goods, its placement at enterprises, as well as the adoption of measures to fulfill this order.

In performing the above functions, the Ministry of Industry of the Republic of Belarus is guided not only by national interests, but also by the condition of balanced, uniform development of individual regions.

Another sectoral body of state administration that implements industrial policy at the state level is the Ministry of Energy of the Republic of Belarus. It deals with the development of the energy complex of the country and its regions, their provision with gas, electricity, oil products and solid fuels. Optimization of regional development of fuel supply systems is carried out taking into account the resources available in the regions, their interchangeability, transport costs and consumer effect.

Industrial policy in Belarus and its regions in the coming years will be aimed at implementing a system of measures and tasks of the Program for the Development of the Industrial Complex of the Republic of Belarus for 1998-2015, which provides for the reconstruction of industry, increasing the efficiency and competitiveness of domestic products in the foreign and domestic markets. The solution of the tasks set by the Program is possible only if the following conditions are taken into account:

the need for early adaptation of industry to world economic processes; due to the relatively high degree of saturation of the domestic market, the development of the domestic industry is possible only by increasing its share in foreign markets and import substitution; technical and technological re-equipment of industries on the basis of advanced achievements of world science and technology, active innovation and attraction of foreign direct investment.

Since most industrial enterprises are under republican management, regional authorities can exert very limited influence on their development. Regional authorities at the level of regional, city and district executive committees are mainly responsible for the activities of communal property enterprises.

It is very important to point out that the developed countries of the world with market economies also resort to large-scale planning for the development of the industrial potential of individual regions and the country as a whole. According to a number of modern Russian scientists (A. Amosov, S. Gubanov, etc.), the most prescriptive planning of industrial production is developed in the United States, which at one time was ahead of the USSR in terms of the scale and quality of central planning, which ensured their victory in the economic competition.

At the same time, central planning in the United States starts from two sources: planning at the federal, municipal and regional levels, as well as planning at the level of large firms. The main planning document at the federal level was targeted programs. The peak of the evolution of program-targeted planning in the United States falls on the 1960s and 1970s. At the same time, the largest state intersectoral programs were aviation, space, metallurgy, energy and food. Currently, in the United States at the state level, so-called macro technologies are planned, combining hundreds of technologies for the production of high-tech and high-tech products.

In parallel with the program-target in the United States, territorial planning is also very developed. The evolution of territorial planning at the federal level has led to the creation of a system of various targeted programs for the deployment of productive forces and infrastructure in the regions, the equalization of their development, as well as those designed to solve regional environmental and social problems.

Along with the American one, there are other models of planning the development of industry – French, Japanese, South Korean, in which, unlike the United States, planning bodies developed unified national economic plans.

A special role is given to planning the development of productive forces in the UK, where the “Government Industrial Strategy of the United Kingdom” has been put into effect since mid-2002. This country, traditionally considered a bulwark in the confrontation between market liberalism and state regulation, in accordance with this official document, is taking very vigorous measures to totally deepen the state management of its economy. In particular, the program states that the government is responsible not only for ensuring a stable macroeconomic system and creating structures that can guarantee long-term stability and confidence, but also to make large-scale massive investments in capital equipment, advanced technologies, infrastructure, research and development base. For example, the British government, contrary to liberal market principles, resorts to direct equity investment in innovative projects of private companies (for example, in Airbus UK).

In addition, the government has proposed a 10-year plan to modernise the UK transport system, with the state accounting for £124 billion of the total public-corporate spending of £181 billion for these purposes. In general, thanks to this, the UK is perceived today as one of the most effectively regulated economies in the OECD, where the state actively acts as both a leading regulatory institution and a global entrepreneur.

It was the rejection of the principles of forecasting and planning the development of industrial potential in a number of post-Soviet countries and the naïve reliance on the omnipotence of liberal markets that became the most important reasons for deindustrialization and deep socio-economic crises that turned individual, in the recent past, industrial development of the state into “technological backwaters” focused on the export of raw materials and energy resources.

The agro-industrial complex (AIC) of the Republic of Belarus unites 10 branches of the national economy (agricultural engineering, flour and cereals, feed industry, primary processing of raw materials for light industry, trade in food products, etc.) and includes three areas:

1) production of means of production for other parts of the agro-industrial complex (production of agricultural machinery, fertilizers, etc.);

(2) agriculture;

3) processing and bringing agricultural products to the consumer.

The share of the agro-industrial complex in 2000 accounted for 37% of the country’s GDP, and the share of agriculture in the structure of the complex’s products was 53.4%, the food industry – 22.7%. The number of people employed in the agro-industrial complex is about 1.5 million people, or 30% of all those working in the national economy.

In the management system of the agro-industrial complex at the national level, the leading role belongs to the Ministry of Agriculture and Food of the Republic of Belarus, whose main tasks are:

implementation of a unified state policy in the field of agricultural production and coordination of the activities of other government bodies in this sector; improvement of economic policy and methods of management in the field of production and processing of agricultural products; creation of conditions for the integrated development of agro-industrial production, the development of all forms of ownership; ensuring the introduction of scientific and technical achievements into production; implementation of measures to increase the economic impact on the efficiency of agricultural production and industries engaged in the processing of agricultural raw materials; creating conditions for increasing the resources of food and agricultural raw materials, ensuring the country’s food security and improving the food supply of its population.

The Ministry of Agriculture and Food of the Republic of Belarus, implementing national tasks, continuously interacts with local executive and administrative authorities, ensuring balanced, coordinated development of the country’s regions. In particular, this sectoral body of public administration performs the following management functions:

participates in the development of draft state programs and areas of economic development, including taking into account the specifics of the regional development of the agro-industrial complex; ensures the study of markets (national and regional) for agricultural products and, taking into account regional specifics, takes measures to develop agricultural production and processing industries; determines the main directions of scientific and technical development of agriculture and industries related to the processing of its products; coordinates the conduct of fundamental and applied scientific research of the agrarian profile, work on the development and production of agricultural machinery and equipment; ensures the implementation of financial, credit and pricing policy; manages the activities of legal entities (creates, liquidates and reorganizes legal entities) and licenses certain types of activities; develops the main directions of development (including by regions) of electrification, gasification, heat supply and transport services for agricultural production and related industries.

The natural resource potential of the regions provides unequal prerequisites for the development of agricultural sectors. In addition, their territorial differentiation is significantly influenced by the historically formed levels of development of the productive forces of the regions. As a result, under the influence of soil-climatic and socio-economic factors, the specialization of the regions of the republic has developed, which is determined on the basis of the indicator “the cost of marketable products”. Based on this indicator, agriculture, for example, of the Brest region specializes in dairy and beef cattle breeding, potato growing and sugar beet cultivation; Vitebsk – on dairy and beef cattle breeding, pig breeding and flax growing; Grodno – in dairy and beef cattle breeding, pig breeding, potato growing, in the northern regions – flax growing, and in the western and southern – on the cultivation of sugar beet; Gomel – on meat and dairy cattle breeding, potato growing, poultry farming, in the south-western regions – on the cultivation of sugar beet, and in the northern – flax growing; Mogilev – on dairy and beef cattle breeding, potato growing and flax growing. In the suburban areas of all regional centers, vegetable growing occupies a large weight in marketable products.

When managing the potential of the agro-industrial complex of the region, such an indicator as the Alexandrov index can be used to assess the effectiveness of the placement of certain industries in the region. It is calculated by comparing the yield of any crop, the weight gain of livestock or the milk yield of a dairy herd (the main final result of agricultural activity) and the cost of production:

,                                (1)

where IA is the Alexandrov index; IP – yield index (weight gain, milk yield); Ic – cost index.

If for any region IA>1, then the production of this type of agricultural product in this region is effective.

Contrary to the opinion imposed on the transitional countries (or rather, the myth) about the self-sufficiency and self-regulation of free markets (including in the agricultural sector), the analysis of the experience of state regulation of the sphere of activity in question in countries with developed market economies unequivocally indicates active forecasting, planning and direct management of the states of their agro-industrial complex. So, in 1993, scientific studies of a group of American scientists on more than 100 programs and mechanisms of state regulation of the country’s farm over the past 70 years were published. In some difficult periods for American agriculture, the average annual volume of direct financial assistance from the state of the agro-industrial complex reached 29-35 billion USD, including subsidies, maintaining favorable prices, assistance in the sale of products, etc. In 2003, the United States adopted a new law on state support for the agro-industrial complex, providing for a significant increase in assistance to farms, taking into account the regional factor. At the same time, the total expenditures of the state budget on assistance to the agro-industrial complex until 2011 will amount to 182.8 billion USD, which is 80.1 billion USD (78%) more than under the previous law of 1996.

Agricultural production in the EU countries also mainly functions with colossal state support, which is an obligatory and unconditional element of the state (including regional) policy of the economically leading powers. Agricultural production in these countries is subsidized by 40-50%, and the level of subsidies is fixed by law and corresponds to a value of about 116 euros per hectare of arable land. Nevertheless, it should be noted that this level of subsidies is not a record, since in the United States their value reaches 440 USD per hectare of arable land. Proceeding from this, it follows that the economic course taken by the leadership of the Republic of Belarus to support and develop the agro-industrial complex generally corresponds to global trends, although the degree of such regulation is incomparably less deep (liberal) than in the USA and the EU, since in Belarus the subsidization of the agro-industrial complex is carried out at the rate of only about 40 USD per hectare of arable land.

Along with industry and the agro-industrial complex, the real sector of the economy is also represented by the construction complex. In 1999 it accounted for 6.2% of GDP and 7.4% of the employment. It belongs to a group of industries that produce goods. The production basis of the construction complex is the construction industry, which is a set of construction and installation organizations that perform a variety of works on the construction of industrial facilities, buildings and structures, road, reclamation, construction and installation operations, etc.

The products of the construction industry, despite its diversity, have specific features: immobility, fixation at the place of creation, high capital intensity, material intensity, labor intensity and duration of the production process. All enterprises of the construction industry can be grouped by their importance in providing the regions with building materials and services in the field of construction into two groups:

1. Construction organizations of regional importance (production of bricks, wall blocks, floors, etc.), using mainly local raw materials;

2. Construction organizations of interregional importance (production of cement, glass, etc.), using the raw materials of several large deposits and satisfying several regions with their products. For example, in Belarus, cement is produced only in the Grodno and Mogilev regions, construction glass – mainly in the Gomel region.

The state policy of management of the construction complex of the country is implemented by the Ministry of Architecture and Construction of the Republic of Belarus, which sets and solves the following tasks:

development and implementation of state policy in the field of architecture and construction, construction materials industry, investment activities in construction, technical regulation and standardization, product certification; development, approval and implementation of state construction norms, state standards; management of the activities of subordinate enterprises, associations and organizations, control over their functioning.

The solution of the above tasks is associated with the performance by the Ministry of Architecture and Construction of the Republic of Belarus of a number of functions, the regional differentiation of which allows to ensure a purposeful change in the level of development of productive forces in the regions. These features include:

implementation of state construction supervision; licensing of construction activities; implementation of state expertise of projects; technical regulation, standardization and certification in the field of construction; legislative initiative in the field of urban planning, architecture, construction activities, construction materials industry, investment activities in construction and building materials industry, housing policy.

In addition, the state technical policy in the field of construction is implemented through the Ministry of Housing and Communal Services of the Republic of Belarus, whose subordinate organizations conduct regional contract repair and installation work and produce building materials. The Ministry of Emergency Situations of the Republic of Belarus is also engaged in the construction of housing, socio-cultural, household and industrial facilities to ensure the livelihood of citizens in the regions.

At the regional level, the development of the potential of the construction complex is carried out by the regional capital construction departments under the executive committees, in the structure of the Minsk City Executive Committee, similar functions are performed by the construction department.