PROCEEDINGS
OF THE TOMSK ORDER OF THE RED BANNER OF LABOR POLYTECHNIC
INSTITUTE named after S. M. KIROV

Volume 173 1970

METHODOLOGY FOR DETERMINING THE LEVEL OF DEVELOPMENT OF AN INDUSTRIAL SECTOR IN THE NATIONAL-ECONOMIC COMPLEX OF AN ECONOMIC REGION

V. B. BURAN

(Recommended by the scientific-methodological seminar of the Department of Industrial Economics and Enterprise Organization)

The decisions of the XXIII Congress of the CPSU emphasize the importance of scientific methods of management. As applied to location, this requirement means taking into account the regularities of the territorial division of labor. It is necessary that the placement of the branches of the national economy across the territory promote an economically effective territorial organization of production and ensure “...the saving of social labor, the comprehensive development of regions and the specialization of their economies,” eliminate “...the excessive concentration of the population in large cities,” and assist “...in overcoming substantial differences between town and countryside, and in the further leveling of the economic development of the regions of the country” (From the Program of the CPSU).

In an economic region, the composition of branches may be extremely varied. Thus, the production complex may include branches that are almost unrelated to one another, since they use completely different natural resources (iron-ore, coke-chemical, petrochemical, pulp-and-paper, etc.). Such branches have connections through the use of common labor resources, power engineering, and a common sphere of services. The majority of branches, however, have closer production-technological links, since:

a) they either use the same raw material
\[ \left( \text{coke} \begin{matrix} \nearrow \ \text{ferrous metallurgy}\\ \searrow \ \text{coal chemistry} \end{matrix} \right); \]

b) or are connected by the successive processing of raw material (mining of phosphorites \(\rightarrow\) production of phosphate fertilizers); c) or have links through the comprehensive use of raw material
\[ \left( \text{coke chemistry} \begin{matrix} \nearrow (\text{coke}) \rightarrow \text{ferrous metallurgy}\\ \searrow (\text{coke gas}) \rightarrow \text{nitrogen industry} \end{matrix} \right). \]

If branches are isolated, then each of them forms a sectoral complex with a complete system of servicing branches (petrochemical, wood-chemical, etc.). Branches that are in close production links form intersectoral production complexes (chemical-metallurgical; a complex for fuel extraction and its energy-technological utilization, etc.). At the same time, sectoral and intersectoral complexes are dispersed over the territory of the region for the purpose of optimal use of local resources, development of the territory, and they form intraregional production-territorial complexes. For example, in Western Siberia the chemical industry has developed in the form of territorial sectoral and intersectoral-

complexes: the Omsk petrochemical complex, the Kuzbass coal-chemical complex, the Barnaul chemical complex based on by-products of the Omsk petrochemical and Kuzbass coal-chemical complexes, with partial importation from other economic regions. In addition, the Asino forest-chemical complex is being created.

The choice of a rational range of sectors within the national-economic complex of an economic region must be substantiated on the basis of prospective nationwide economic tasks and must be the result of an economic analysis of the structure of the region’s economy.

In analyzing the comprehensiveness of sectors by region, quantitative regularities are identified, which are evaluated by qualitative indicators from the standpoint of the criterion of economic efficiency. Reporting statistical data may be used as source materials: the characteristics of the raw-material and fuel-and-energy base, transport-geographical conditions, availability of labor resources, production links among sectors, and techno-economic indicators of sectors, adjusted for the future.

Since the location of social production depends on a number of factors, the quantitative measurement of the state and prospects of location can be carried out by quantitatively assessing the specialization and comprehensive development of an economic region according to these factors.

The level of development of individual sectors in an economic region depends on the availability of raw-material, energy, and labor resources. At the same time, raw-material resources create conditions for production, while favorable raw-material resources create conditions for production with a saving of social labor. K. Marx pointed to the latter: “If we abstract from the greater or lesser development of social production, then the productivity of labor will prove to be connected with natural conditions”¹). It is therefore important to locate production with due regard for proximity to areas with favorable sources of raw materials, rationally combining areas of production and consumption. This factor is the basis of the production-territorial specialization of economic regions, since the “differentiation” of natural conditions “constitutes the natural basis of the social division of labor”²).

In studying questions of the comprehensive development of regions on the basis of production-territorial specialization, of great interest is the characterization of a region’s resources, their potential possibilities for the development of particular sectors, as well as the determination of techno-economic indicators for establishing the sequence in which these resources should be developed.

The provision of sectors with resources may be determined by the index of provision \(I_{\text{o.r}}\), as the ratio of the region’s share in the country for a specific type of resource \((P)\) to the region’s share in the production of output using this type of resource in the country \((\Pi)\):

\[ I_{\text{o.r}}=\frac{P}{\Pi}. \tag{1} \]

The greater the value of the indicator of resource provision, the greater the prospects for expanding production on the basis of these resources in the region.

The level of production-territorial specialization of individual sectors and of the region as a whole is measured by a number of indicators as a uni-

¹) K. Marx and F. Engels. Works, vol. 23, p. 521.
²) Ibid., p. 522.

process of concentrating production on rational scales in individual industrial centers or regions, on the one hand, and the strengthening of interregional links in the production of all-Union specialization, on the other. Accordingly, two groups of indicators may be distinguished. The first group of indicators gives a volumetric characterization of the process of concentration of the production of a specific product in individual regions in comparison with the all-Union average value of this production by branches: the region’s share in the all-Union production of the product; coefficients of specialization by gross output, number of employed persons, and value of fixed assets; production of the product per capita. The second group combines indicators of the quantitative measurement of the region’s participation in interregional exchange in the products of branches of specialization: the marketability of branches; the share of the product exported from the region in its total production in the country; the share of the product exported from the region in its total export in the country.

The indicator of the production of a region’s branch output in relation to the total production of this product in the country indicates the concentration of this production in the economic region.

The coefficients of specialization of a region by individual branches show not only the concentration of production in a particular region, but also the place of the branch of production-territorial specialization in the regional complex in terms of gross output, the number of workers, and fixed assets.

The coefficient of specialization by gross output \(K_c^1\) is calculated as the ratio of the share of the branch’s gross output in the region’s gross output \(B_p\) to the share of the branch’s gross output in the country \(B_c\), i.e.,

\[ K_c^1 = \frac{B_p}{B_c}. \tag{2} \]

Analogously, the coefficient of specialization by the number of workers \((K_c^2)\) is calculated:

\[ K_c^2 = \frac{H_p}{H_c} \tag{3} \]

and by the value of fixed assets \((K_c^3)\)

\[ K_c^3 = \frac{\Phi_p}{\Phi_c}, \tag{4} \]

where \(H_p\) is the share of the branch by number of workers in the region;
\(H_c\) is the share of the branch by number of workers in the country;
\(\Phi_p\) is the share of the branch by value of fixed assets in the region;
\(\Phi_c\) is the share of the branch by value of fixed assets in the country.

The higher the coefficients of specialization, the higher the level of development of the branch in this region.

In determining the specialization of regions for many branches of heavy industry, the indicator “production per capita” may also be used, since it combines both the production of output and the presence of population and can emphasize the technical equipment of labor. Thus, calculation of output per capita in the production of electric power indicates the power equipment of labor by regions, and in compari-

with its Union-wide average value—about the level of power availability; for the chemical industry—about the chemization of the national economy.

The indicators considered in the first group give a clear idea of the role of a region in the production of output. However, the second aspect of the territorial division of labor is not revealed—interregional exchange. The level of development of a sector must be measured not only from the standpoint of production, although production plays a primary role in relation to exchange when determining the specialization of the national-economic complex of an economic region, but also with allowance for interregional links in the consumption of output.

An essential characteristic of interregional links for the output of sectors is given by the sector’s marketability coefficient \(K_{\mathrm{t}}\), which is calculated as the ratio of output shipped out of the region \(T_{\mathrm{r.v}}\) to output produced in the region \(T_{\mathrm{r.p}}\), by sectors,

\[ K_{\mathrm{t}} = \frac{T_{\mathrm{r.v}}}{T_{\mathrm{r.p}}}. \tag{5} \]

The marketability coefficient indicates whether the sectors of a region are oriented toward satisfying internal needs or those of other regions. Thus, in the West Siberian economic region, the mineral-fertilizer industry is characterized by high marketability. In 1960 the marketability coefficient of this sector was 0.56, i.e., 56% of the mineral fertilizers produced in the region were shipped to other economic regions.

The calculation of the indicator “the region’s share in shipments of output in its total production in the country,” \(I_{\mathrm{v.p}}\), makes it possible to generalize the quantitative characteristic of the region’s participation in Union-wide production and the role of the region in interregional exchange of this output. This indicator is integral and is established as the product of the sector’s marketability coefficient \((K_{\mathrm{t}})\) and the region’s share in the country in the production of the sector’s output \((P_{\mathrm{r}})\):

\[ I_{\mathrm{v.p}} = K_{\mathrm{t}} \cdot P_{\mathrm{r}}. \tag{6} \]

The participation of a region’s sector in interregional exchange is measured by calculating “the share of regional shipments of output in its all-Union shipments,” \(I_{\mathrm{v.v}}\), as the ratio of regional shipments \(T_{\mathrm{r.v}}\) to all-Union shipments \(T_{\mathrm{s.v}}\):

\[ I_{\mathrm{v.v}} = \frac{T_{\mathrm{r.v}}}{T_{\mathrm{s.v}}}. \tag{7} \]

The use of the indicated indicators makes it possible to determine the level of development of a sector in a region and, consequently, to identify the sectors of regional specialization.

The level of development of each sector in a region must correspond to the optimal structure of the sectors of the national-economic complex of the economic region. For this it is also necessary to study intraregional links and to provide an economic assessment of both intraregional and interregional links.

An important indicator measuring intraregional links is the share of material costs reimbursed by intraregional production in all material costs, \(I_{\mathrm{m}}\), which is calculated as the ratio of material costs for the production of the sector associated with the consumption of raw materials, materials, fuel, and energy of intraregional production \(M_{\mathrm{r}}\) to total material costs for the production of the sector’s output \(M\):

\[ I_{\mathrm{m}} = \frac{M_{\mathrm{p}}}{M}. \tag{8} \]

This indicator characterizes the degree of connectedness among the branches of the complex in the sequential processing of the product and makes it possible to identify the branches that have attained a high level of development in connection with the specialization of the economic region in the final product of the regional intersectoral complex.

Thus, the process of the territorial division of labor, accompanied by specialization and the integrated development of the economy of economic regions, can be considered on the basis of the above system of indicators. At the same time, the development of each branch must be examined within the system of interrelations with other branches by developing material balances with an economic justification of the proportions between industries.

The specialization and integrated development of a region are effective and justified to the extent that they contribute to increasing the productivity of social labor in the country as a whole.