SOURCE. Alexei Izyumov,
Leonid Kosals, Rosalina Ryvkina and Yurii Semagin, "Market Reforms and
Regional Differentiation of Russian Defence Industry Enterprises," Europe-Asia
Studies, Vol. 54 No. 6, September 2002, pp. 959-974.
This is the first published study of the Russian defense industry that
focuses on the regional dimension. Each year from 1997 to 2000, Alexei
Izyumov (University of Louisville, Kentucky) and his colleagues from the
Russian Academy of Sciences sent survey questionnaires to the directors
of about 1,500 defense enterprises located in all the 50 regions that have
significant defense industry. Respondents were asked 70-100 questions about
the social and economic situation of their enterprises. The response rate
was in the range of 10-15 percent, which is quite high for such a demanding
questionnaire, but it entails a serious risk of sample bias that the authors
fail to address.
The trajectory of Russian defense industry as a whole over recent years
is marked by precipitous decline in the early and mid-1990s bottoming out
in 1997 and succeeded from 1998 by rapid recovery (37 percent rise in output
in 1999, then 25 percent in 2000). However, the extent and nature of this
recovery show a strong regional differentiation.
The authors distinguish in this regard four types of region:
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Nine regions that make up the "territorial nucleus" of Russia's defense
industry: Moscow city and Moscow region; St. Petersburg; Nizhny Novgorod,
Novosibirsk, Omsk, Sverdlovsk, and Perm regions; and the Udmurt Republic.
Here are the leading defense manufacturers, research institutions, and
design bureaus. Most remain state-owned; many are engaged in aerospace.
Their favorable economic and social situation rests on priority allocation
of state orders and (in many cases) on income from military exports.
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A further eight regions in which the economic and social situation of defense
enterprises is fairly good thanks to their successful use of capacity to
produce civilian goods for the home market and (in some cases) for export:
Smolensk, Kaluga, Ryazan, and Kemerovo regions; the Altai territory; and
Arkhangelsk, Astrakhan, and Kaliningrad regions, where the main focus is
on shipbuilding.
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Fourteen regions in various parts of Russia in which the economic and social
situation of defense enterprises is average.
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Nineteen regions in which the economic and social situation of defense
enterprises is poor. Most of these regions are situated in the "red belt"
of southern European Russia; the group also includes Pskov and Vladimir
regions, the Marii El Republic, and the Primorsky territory. Most defense
enterprises in these regions are small and have obsolete equipment. Being
privatized, they do not receive major state orders, and both their military
and their civilian output is non-competitive, even on the home market.
The authors see the main contrast as being between the "center" --
defined as Moscow city and region and St. Petersburg -- and the "periphery"
(everywhere else). Defense enterprises in the "center" were better equipped
to withstand the trial of the lean years, to preserve at least in part
their technological base, and so to benefit from the less unfavorable conditions
of recent years. However, the figures presented by the authors indicate
(contrary to their claim) that the technological gap between center and
periphery is much narrower than it was even a few years ago. Thus in 1997
26 percent of respondents in charge of central enterprises said that their
technology was obsolete, as against 38 percent of respondents in charge
of peripheral enterprises. By 2000 the corresponding proportions were 51
and 54 percent respectively.
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