SPATIAL DEVELOPMENT AND GROWTH MOMENTUM: THE CASE OF FAR EASTERN SEAPORTS

Elena A. Zaostrovskikh

Economic Research Institute
Far Eastern Branch of the Russian Academy of Sciences, Khabarovsk

Abstract: The study examines the issue of generating a growth impulse based on the ports of the Far Eastern region. The theoretical platform used to assess the impact of the port on the regional economy is shown. An assessment of the relationship between indicators describing the economy of the region and functioning of ports has been carried out. The author’s position is that an important condition for the functioning of ports is the creation of effects that extend to interconnected elements of the economy located in the port region. The indicators of this are: growth in cargo transshipment volumes, the volume of port income from cargo transshipment and an increase in taxes to the regional budget. At the same time, the localization of these effects is carried out at two levels: the port region and other regions. The obtained result indicates that the economic effects for the port region generated by ports will be little noticeable. Since, with the rapid growth of exports of coal cargo, the growth rate of port income from cargo transshipment and the volume of the regional part of the income tax will decrease, and the negative consequences (deterioration of the ecology of adjacent territories, an increase in the number of risks associated with the supply of coastal cargo, a decrease in the attractiveness of the region) will increase. Leveling transport costs through tax incentives for coal in the Free Port of Vladivostok will only create competitive advantages for Russian coal on the international market. Thus, transshipment of raw materials and primitive cargo in seaports does not contribute to the creation of a synergistic effect in the port region.

Keywords: growth pole, seaports, port region, socio-economic effects

Introduction

In 2021, the Transport Strategy of the Russian Federation until 2030 was approved. According to this strategy, the activities of the transport complex are aimed at achieving state goals, that is, the state must be provided with realizing the potential for economic growth and achieving the planned economic growth rates, as well as ensuring long- term and sustainable development of economic and social ties. One of the components of the entire transport complex is sea transport, in particular, seaports.

Modern seaports are links connecting various transport complexes, thereby contributing to the development of both the regional economy and the state as a whole. Currently, the development of ports is envisioned through the formation of growth poles for the regional economy on the basis of ports, that is, the transformation of the port into a transport and industrial hub with the simultaneous transformation of the region into an industrial complex. Related industries are being developed, investments are being attracted, infrastructure is being improved, which creates an impetus for economic development.

As for the relevance of the study of the port sector of the Far East, it is determined by the implementation of reforms that involve attracting private investment in this sector of the economy. Thanks to the development of infrastructure and an increase in the export of raw materials and consumer goods, it is planned to create favorable conditions for comfortable living of the population in the region. However, the implementation of projects aimed at improving ports encounters enormous resistance due to macroeconomic as well as institutional problems in Russia. That is why, the purpose of the study is to identify the role and importance of ports as a growth pole for the Far East, as well as to determine the existence of the influence of port indicators on its economy.

Research methods

The methodological basis consists of methods of statistical analysis, system analysis, methods of analogies and statistical methods of data analysis. The information base for the study was data from state and departmental statistics, regulatory and analytical documents of federal authorities, as well as official reports of stevedoring companies and ports of the region.

Theoretical aspects

Economic growth is an indicator characterizing the results of the functioning of the economy and is an important task of sustainable development. That is, economic growth is an increase in the volume of output of the total social product in a given period, growth of potential and real GDP, and building up the economic power of the state. Economic growth shows the level of development of the state’s economy, the standard of living and the degree of satisfaction of consumer preferences, determines the country’s place in the world market, its competitiveness, and the likely influence on global economic and political processes [1].

There are many theories of economic development, however, in modern studies, when describing the effects of transport infrastructure, the growth pole theory is considered [2]. This theory can be applied in strategies for the socio-economic development of the region, since it can ensure the concentration of limited resources in selected areas, which in turn can provoke mechanisms of self-development.

Ports can theoretically be formed as growth poles in certain regions, interacting with territories that, economically and in transport terms, gravitate toward ports. In a theoretical sense, there are three approaches to assessing the port as a growth pole for the region and its economy [3].

The first approach is optimistic, which defines the port as a growth pole and a factor contributing to economic development through the scale of production and trade, and therefore providing a comparative advantage for the port region [4]. There are several possible conditions under which this effect could occur. Firstly, the port helps reduce transport costs and improve transport accessibility in the port region [5, 6]. Secondly, the development of a port structure reduces production costs, increases private investment and stimulates trade [7, 8]. Thirdly, developed infrastructure has a positive impact on productivity and education, as well as increasing employment, improving logistics services and attracting other port-related activities [9-11].

The second approach is pessimistic, casting doubt on the possibility of obtaining benefits for the port region from investments in the port, as well as the expected structuring effects of transport infrastructure [12, 13]. This is especially true when the port is located away from the main economic centers of the country. In this case, the developed transport infrastructure in the port region and the efficiency of its operation can enhance the “tunnel” effect, determined by lower benefits for the port region and higher benefits intended for other (non-port) regions [14]. In addition, due to transport tension, traffic congestion may occur and a decrease in the level of attractiveness of the region [15]. This can also be expressed in a reduction in the number of employees who serve the port due to the fact that the spatial connections of the transport hub for its production activities are weakening, and the structure of the location of the service economies of the port region is changing [16].

The third approach is moderate and interprets port and regional development as two separate processes with episodic and indirect interactions [17]. This approach is based on the concept of a port cluster, with no clear separation between port activities and industrial development. It depends on institutional mechanisms and the presence of leading firms in certain types of economic activity [18].

In domestic science, the question of the influence of a port on the economic development of its territory, as well as the possibility of determining positive effects, has been repeatedly raised [19-24]. At the same time, the obtained results are variable. This is primarily explained by the fact that cargo flows are largely individual due to the characteristics of each port. Important factors influencing the nature of transport links include: the structure of cargo traffic, port infrastructure, labor organization in the port, structure of maritime transport, competitiveness of the port, service area. Depending on the type of cargo, the territorial division of labor, the economic specialization of the seaport, as well as the comprehensive development of the port region are determined. Secondly, the statistics of interregional exchange in their entirety are significantly inferior to the statistics of foreign trade. As a result, it is very difficult to calculate port cargo turnover indicators.

Problem statement

The Far East is, first of all, a region facing the waters of two oceans – the Arctic and the Pacific. Seven of the eleven subjects of the region have access to the sea: Primorsky, Khabarovsk and Kamchatka territories, Sakhalin and Magadan regions, the Republic of Sakha (Yakutia), as well as the Chukotka Autonomous District. Features of the development of maritime transport in the Far Eastern region are formed in the context of its territorial specificity. This are: the long sea coastline – 17.7 thousand km (or 48% of the country’s coastline); the presence of hard-to-reach and island territories that require regular transport links; underdeveloped ground transport infrastructure; and the region’s territorial proximity to the capacious markets of China, the Republic of Korea and Japan, which determine trade orientation towards these countries. All these conditions contribute to the active development of seaports in the region, (Figure 1).

For quite a long time, seaports were in a state of stagnation, and their cargo turnover graph was more similar to the cardiogram of a deceased patient. This situation was caused by a string of events: the outflow of population from the region, the dismantling of large facilities, as well as changes in the central planning system [25; 26]. In general, the changes that have occurred in the operation of ports in the Far Eastern region, caused by the transition to market forms of management, coincide with the all-Russian trend. However, its territorial peculiarity had an even more “painful” impact on the work of the ports. Therefore, until 2006, the sea ports of the Far Eastern region constantly lagged behind the western ports of the country in terms of cargo turnover growth [27; 28].

Since 2006, within the framework of the “new Eastern policy” and then the “new model of development of the Far East”, projects in the mineral resources sector began to actively develop, including preferential measures for intensively increasing exports through seaports to Asian countries [29; 30]. An exceptional role in this issue was played by successively adopted federal laws: “On the Sea Ports of the Russian Federation” and “On the Free Port of Vladivostok”. That is why the previous tasks of the development of maritime transport (comprehensive development of transport infrastructure facilities for the development of international transport connections) were supplemented by strengthening Russia’s position in the Pacific Ocean and the formation of competitive advantages of maritime transport [30]. As a result of such transformations, large-scale investments came into the region’s transport infrastructure, and seaports received a “second life.”
Within the framework of the “new Eastern policy”, only for the period from 2008-2018, the volume of investments in modernization and construction amounted to about 1.3 billion rubles. The most actively developed ports are those focused on the export of coal cargo: Vanino, Vostochny, Nakhodka, Shakhtersk, Beringovsky. At the same time, over the past 20 years, the total cargo turnover of the ports of the Far Eastern region increased 4.5 times and amounted to 213.5 million tons in 2019. The same indicator for the ports of other basins of the country had different results: for the ports of the Northwestern basin the increase was 6.4 times, and in the Southern basin – 3.4 times, (Figure 2)

On the one hand, it is believed that the increase in port cargo turnover due to coal exports has revived their production activities. On the other hand, there is an ambiguous influence of ports on the economy of the region, which consists in insufficient use and implementation of existing potential, uneven transport infrastructure, technical deterioration of basic equipment in ports and poor organization of cooperation within international transport corridors. And in turn, the low level of innovation, the shortage of fleet in ports and the low speed of cargo processing are the main reasons for holding back economic development in the transport aspect. It can be noted that a chain of consecutive negative events has formed: the shortage of railway transport capacity affected the reduction of the competitive advantages of ports, which, in turn, had an impact on the decrease in the relationship between ports and the economy, then affected the environment and, as a result, contributed to the increased outflow of population. Some ports (Vladivostok, Nakhodka, Vostochny, Vanino) faced infrastructural, economic, social and environmental problems. In general, one characteristic trend was noted – negative effects exceeded positive ones, both in the ports themselves and beyond. This undermines their competitiveness and impacts economic growth [33-36].

At the same time, according to the country’s government programs, the leading ports (Vostochny, Vanino, Nakhodka, Vladivostok) are positioned as transport and logistics hubs of the Far Eastern region and as the end point of the East-West transport corridor. That is why their development was considered from the position of an international container hub. At one time, within the framework of this direction, a series of large transport and logistics projects were developed, which implied the comprehensive development of all infrastructure elements, both in the transport hub and beyond [32].

Further prospects for the development of ports in the Far Eastern region are enshrined in strategic documents and are focused on strengthening Russia’s position in the Pacific Ocean and creating competitive advantages of maritime transport [29]. Solving such problems implies: increasing the economic efficiency of port operation due to the growth of cargo with high added value produced in the port region. The created impulse for the growth of ports will spread to the interconnected elements of the economy of the port region, which cause a chain reaction of growth in industrial production.

However, port development plans are more focused on the transshipment of raw materials, (Table 1), which will further hinder the development of transport and logistics services.

Table 1 The main promising projects to increase port capacity in the Far Eastern region

In this case, a situation may persist in which ports will continue to lose their importance in the regional economy, because the economic effects will gradually decrease, and the negative effects will increase. In addition, when implementing FPV projects, the question of the distribution of income between all participants in the production process may arise. The problem is that the current preferential FPV regime will contribute to the “flow” of income to other regions. In turn, the port region will receive a lot of logistics “burdens”. This situation is a potential source of socio-economic conflict. Therefore, a completely fair question arises: can seaports in the future, given these trends, create a growth impulse for the economy of the Far Eastern region?

(End of introductory fragment)