Selective approaches to the definition of mechanisms for the implementation of import substitution policy at the regional level

Elshin Leonid Alekseevich Doctor of Economics Senior researcher at Center for Strategic Assessment and Forecasts of the Institute of Management, Economics and Finance; Kazan Federal University. Professor of the Department of Economics, University of Management "TISBI" 420139, Russia, Republic of Tatarstan, Kazan, Ostrovsky str., 23/1 Leonid.Elshin@tatar.ru Other publications by this author     Mingazova Yuliya Georgievna PhD in Economics Researcher, Kazan (Volga Region) Federal University 23/6 Karl Marx str., Kazan, 420008, Russia, Republic of Tatarstan C.p@tatar.ru Savushkin Maksim Vladimirovich PhD in Economics Associate Professor, Department of Economics, University of Management "TISBI" 420111, Russia, Republic of Tatarstan, Kazan, Mushtari str., 13 savushkinmv@mail.ru

Mingulov Almaz Minvazykhovich Vice-Rector for Economic Activities, Kazan (Volga Region) Federal University 420008, Russia, Republic of Tatarstan, Kazan, Kremlevskaya str., 18 C.p@tatar.ru

Introduction.

The increased sanctions pressure on the Russian economy in 2022 has re-actualized the issue of finding optimal solutions aimed at localizing the risks of economic development in conditions of limited transnational supply chains. In this regard, today, in the space of scientific research, work in this field has increasingly begun to appear. At the same time, it should be noted that they are not limited to the Russian "contour", this area is actively being worked out abroad. They became particularly relevant, mainly, as mentioned above, as part of the sanctions attacks on the national economic system of the 2022 model, as well as in the context of the coronavirus pandemic that unfolded in 2019-2020, which entailed serious restrictions in the field of foreign economic relations.

Among modern Russian researchers actively exploring this issue, it is necessary to highlight the works of Shavtikova L.M., Geriev M.M., Seitova A.B., Levchenko A.V., Botasheva T.A. ^[1], Poltoradneva N. L., V. I. Razumov ^[2], Lyavina M. Yu. ^[3], Vorotnikova I. L., Muravyov M. V. ^[4], Stroeva V. V., Chueva S. V., Tikhonova A. I. ^[5], Izutova O. V. ^[6], Ivanova L. V., Samoilova A.V. ^[7], Parfinenko T. V., Suvorova L. A. ^[8] and others.

Modern foreign scientists also take an equally active position in the search for optimal solutions to ensure the sustainable development of economic systems in the context of systemic transformations, expressed, in particular, in limiting foreign trade relations. These include Kwon J. ^[9], Mukherjee S. ^[10], de la Poza E., Barykin S.E. ^{[11, 12]}, He L., Cheng Y., Su X. ^[13], 14. Lassala C., Apetrei A., Sapena J. ^[14] and others.

Research material and methods

It should be noted that the vast majority of studies devoted to the issues of import substitution and ensuring the technological sovereignty of national economic systems in the context of localization of transnational trade relations focus on the macro level. Meanwhile, the regional level of research is no less important from the point of view of finding optimal solutions in the field of "setting up" an adaptive, effective policy for replacing supplies of goods and services from abroad. Given the rather differentiated structural framework of the regions' foreign trade relations, the peculiarities of their adaptation to the perturbations in the field of import localization at the macro level will have a somewhat unique character. In this regard, it seems extremely important to focus on the meso-research level in the system of building a methodology for the study of sustainable development of economic systems in conditions of limited supplies of imports of goods and services. This research "focus" will allow not only to identify the most vulnerable positions of the subjects of the Russian Federation in the context of imported commodity groups, but also to identify possible threats to their regional development, taking into account the emerging foreign policy environment. Guided by this research doctrine, further, on the example of the subjects of the Volga Federal District, an assessment and analysis of trends in the field of foreign trade relations of the regions are presented, which forms the basis for the development of public administration mechanisms aimed at reducing the risks of their sustainable development in a new reality.

Results and their discussion

Before focusing on the issues of dependence of the studied subjects of the Russian Federation on imports of final and intermediate consumption goods, it is advisable to conduct a general analysis of foreign economic relations at the macro level. According to customs statistics, the foreign trade turnover of the Russian Federation in 2021 amounted to 785 billion US dollars and increased by 38.2% compared to 2020. At the same time, exports increased by 46.1% and amounted to 491 billion 580 million US dollars, imports increased by 26.8% to 293 billion. 420 million US dollars (Figure 1).

Figure 1. Dynamics of exports and imports of the Russian Federation (billion dollars) Source: according to ^[21]

The trade balance of the Russian Federation for 2021, as in previous years, was positive and amounted to 198 billion rubles. 160 million US dollars. Thus, for the period from 2017 to 2021, exports grew at a faster pace than imports – 172% versus 161% (Table 1).

Table 1 - Trade Turnover of the Russian Federation (billion US dollars)

Source: according to ^[21]

The main trading partners of the Russian Federation were non–CIS countries, their share in trade turnover in 2021 amounted to 87.8%, including 86.9% in exports and 89.3% in imports. For comparison, similar values in 2017 were 87.6%, 86.6% and 89.2%, respectively

The largest trading partners of the regions of the Russian Federation in 2021 were: China (13.8%); the Netherlands (8.6%); Germany (6.0%); Turkey (5.4%); Belarus (4.6%); the United Kingdom (4.5%); Italy (3.9%); Kazakhstan (3.8%); the United States (3.6%); the Republic of Korea, Poland (3.4%, respectively); Japan (2.2%); France and Finland (2.0%, respectively); India (1.9%); Belgium (1.8%); Ukraine (1.7%); Brazil and Uzbekistan (by 1.1%, respectively); Slovakia (1.0%).

For imports - China (24.8%); Germany (9.3%); United States (5.8%); Belarus (5.3%); Republic of Korea (4.4%); France (4.2%); Italy (4.1%); Japan (3.1%); Kazakhstan (2.4%); Turkey (2.2%); Poland (2.0%); Vietnam (1.7%); United Kingdom, India and the Netherlands (1.5% each, respectively); Ukraine (1.4%); Czech Republic, Finland and Spain (1.2% each, respectively); Switzerland (1.1%). Unfriendly countries accounted for slightly more than half of the district's imports in 2021 – 51.3% (Table 2).

Table 2 - Trade of the Russian Federation with unfriendly countries in 2021

Source: according to ^[21]

About half of the imported products supplied to the Russian Federation are machinery, equipment and vehicles (HS groups 84-90; from 46 to 49% in 2017-2021), about 18% are chemical industry products, rubber (HS groups 28-40; from 17 to 19% in 2017-2021), food products and agricultural raw materials (HS 01-24 groups) occupied from 11.6 to 12.8% in the period under review, metals and products made from them (HS 72-83 groups) – from 6.8 to 7.3%; textiles, textiles and footwear (HS 50-67 groups) – from 5.8 to 6.3% (Figure 2).

Figure 2 - Structure of imports of the Russian Federation (in % of total)

Source: according to ^[21]

The implemented express analysis allows us to conclude that the high heterogeneity of the dependence of the national economy of the Russian Federation on imports of certain commodity groups requires appropriate attention from government authorities and creates the need to develop adaptive and selective mechanisms to stimulate import substitution. At the same time, an extremely important issue is the identification of commodity import dependence at the regional level, given the degree of their integration into the system of foreign trade relations and the criticality of supplies from abroad of a particular product. As previously noted, the implementation of universal solutions typical for all import-dependent subjects of the Russian Federation is obviously vulnerable and limited. A "fine-tuning" of government support measures is needed, taking into account the most vulnerable positions, characterized by the dependence of the region's economy on commodity groups of imports with the largest share in supplies to the region. At the same time, the priorities of state support should be commodity groups supplied from so-called unfriendly countries, which, as the analysis shows, accounted for about 50% in the Russian Federation by the end of 2021.

Given this conclusion, it seems advisable to concentrate the research "focus" at the regional level, where the subjects of the Volga Federal District will act as the object of research. And as a key subject of research – the peculiarities of the formation of foreign economic relations of the regions of the Volga Federal District with the so-called unfriendly countries.

According to customs statistics, the foreign trade turnover of the Volga Federal District in 2021 amounted to 61 billion 499 million US dollars and increased by 37% compared to 2020. At the same time, exports increased by 42.4% and amounted to 44 billion 245 million US dollars, imports increased by 24.7% to 17 billion. 254 million US dollars (Figure 3).

Figure 3 - Dynamics of exports and imports of the Volga Federal District (USD million)

Source: according to ^[21]

The trade balance of the Volga Federal District for 2021, as in previous years, was positive and amounted to 26 billion 991 million US dollars. At the same time, it should be noted that over the period from 2017 to 2021, imports grew at a faster pace than exports – 167% versus 140%.

About a third of the total turnover of the Volga Federal District falls on the Republic of Tatarstan - 28.5% by the end of 2021. The second, third and fourth places are occupied by the Nizhny Novgorod Region, Perm Krai and Samara Region with values ranging from 13 to 16%. Thus, more than 70% of the district's turnover is formed by 4 regions out of 14 (Figure 4).

Figure 4 - The share of the subject in the turnover of the Volga Federal District in 2021

Source: according to ^[21]

In 2021, 195 countries were trading partners of the Volga Federal District, including 117 countries for exports and 166 countries for imports

The main trading partners were non–CIS countries, their share in trade turnover was 81%, including 78% in exports and 89% in imports (Figure 5, Table 3). For comparison, similar values in 2017 were 79%, 76% and 86%, respectively.

Figure 5 - Structure of foreign trade of the Volga Federal District by country (in % of total)

Source: according to ^[21]

The most dependent on imports in 2021 were the Ulyanovsk region, in which 55% of foreign trade turnover was accounted for by imports, the Chuvash Republic – 52% and the Penza Region – 50%. The lowest share of imports in foreign trade turnover was observed in the Perm Territory – 9.6%, the Orenburg Region – 10.1% and the Republic of Bashkortostan – 19.5% (Figure 6).

Figure 6 - The share of the subject in the turnover of the Volga Federal District in 2021.

Source: according to ^[21]

Table 3- Trade turnover of the Volga Federal District (USD million)

Source: according to ^[21]

At the same time, if we consider the trade turnover with non-CIS countries, imports grew faster than exports. So for the period from 2017 to 2021, exports from non–CIS countries increased by 40%, while imports increased by 74%. At the same time, the trade balance remains positive

According to the results of 2021, the bulk of imports of the Volga Federal District from non–CIS countries accounted for three regions – the Republic of Tatarstan, Nizhny Novgorod and Samara regions - only about 70% (Table 4).

In the volume of imports of the district from the CIS countries, the majority were the same regions plus the Republic of Bashkortostan – only about 65%.

Table 4 - Import structure of the Volga Federal District by region in 2021

Source: according to ^[21]

It is important to note that the level of import dependence in the regions of the Volga Federal District has had a steady upward trend over the past five analyzed years (Table 5).

Table 5 - The structure of trade turnover of the Volga Federal District

Source: according to ^[21]

The Republic of Tatarstan accounted for 36% of the total volume of imports and 42% of the volume of exports of the district with unfriendly countries. Unfriendly countries occupied the vast majority of the trade turnover of the Republic of Tatarstan – 65% in the volume of imports and 76% in the volume of exports of the region. The Orenburg Region was the least dependent on imports from unfriendly countries – 23.9% of the region's imports (Figure 7).

Figure 7 - The share of unfriendly countries in the volume of imports of the Volga Federal District regions in 2021, %

Source: according to ^[21]

In a more detailed format, information revealing the specifics of the distribution of imports from unfriendly countries by region of the Volga Federal District is presented in Table 6.

Table 6 - Trade of the Volga Federal District regions with unfriendly countries in 2021

Source: according to ^[21]

More than half of the imported products supplied to the regions of the Volga Federal District are machinery, equipment and vehicles (HS groups 84-90; from 53 to 55% in 2017-2021), about 22% are chemical industry products, rubber (HS groups 28-40; from 20 to 22% in 2017-2021), metals and products from them (HS 72-83 groups) occupied from 9.3 to 11% in 2017-2021, food products and agricultural raw materials (HS 01-24 groups) – from 5.1 to 7.4% in 2017-2021. (Figure 8)

Figure 8 - Import structure of the Volga Federal District (in % of total)

Source: according to ^[21]

If we consider the share of imports of key groups of foreign economic activity in the context of regions, then machinery, equipment and vehicles (groups of foreign economic activity 84-90) make up the vast majority of imports in such regions of the Volga Federal District as the Republic of Tatarstan (more than 70% of total imports by the end of 2021) and the Udmurt Republic. Regions such as the Chuvash Republic and the Kirov Region depend least on this commodity nomenclature (29 and 28 percent, respectively, of the total volume of products imported into the region) (Figure 9).

Figure 9 - The share of HS groups 84-90 "Machinery, equipment and vehicles" in the volume of imports of the region in 2021

Source: according to ^[21]

In terms of import dependence on supplies from abroad of chemical industry products in 2021, the leading positions were held by such subjects of the Volga Federal District as the Kirov and Chuvash regions (more than 50% of the total imports supplied to the region) (Figure 16).

Figure 10 - The share of HS groups 28-40 "Chemical industry products" in the volume of imports of the region in 2021

Source: according to ^[21]

If we consider the groups of HS 72-83 "Metals and products made from them", then the regions of the district are divided into two blocks: 6 regions with a share of 13 to 18% in the volume of imports of these groups and 8 regions with a share of 5 to 8.5% (Figure 11).

Figure 11 - The share of HS groups 72-83 "Metals and products made from them" in the volume of imports of the region in 2021

Source: according to ^[21]

Conclusions.

The results of the analysis demonstrate the regionally very heterogeneous dependence of the Volga Federal District regions on imports from unfriendly countries, which determines the same differentiated risks of their sustainable development in the context of the sanctioned localization of transnational supply chains. This differentiation determines the need to implement adaptive and unique, selective strategies and mechanisms for adapting regions to the risks of reducing foreign trade relations. A unified system of decision-making approaches aimed at smoothing out possible risks of reducing imports from unfriendly countries to the Russian Federation poses a threat of ineffective adaptation of regions to ongoing systemic transformations.

At first glance, based on the data of the analysis, it may seem that the most important, if not the key problem in the system of organizing foreign trade relations of the Russian economy and its regions until 2022 is the high dependence on supplies of machinery and equipment, chemical industry products. It would seem quite logical to concentrate the main efforts on localizing this type of import dependence and form an appropriate set of software solutions, which, in fact, is being implemented today as part of the socio-economic policy in Russia. However, the frontal orientation of the policy towards a single trend and benchmark in the field of import substitution can lead to ineffective, regionally, adaptation of the subjects of the Russian Federation to the changes taking place. In other words, it is necessary to take into account the regional profile of import dependence and form an appropriate pool of regional mechanisms for adapting to threats of localization of transnational supplies. Otherwise, there will be threats of weakening the effectiveness of government regulation measures in the area under consideration. The use of standard, universal solutions for regional systems will obviously predetermine the risks of increasing imbalances in their socio-economic development.

The assessments of structural import dependence presented, using the example of the regions of the Volga Federal District, form the fundamental foundations for the choice of selective measures for the implementation of import substitution policy at the state level and determine the key directions of its implementation.

Gratitude. The research was carried out at the expense of a grant from the Russian Science Foundation and with the financial support of the Cabinet of Ministers of the Republic of Tatarstan within the framework of scientific project No. 23-28-10123, https://rscf.ru/project/23-28-10123 /")