Mr. D.F. Larichkin, doctor of economic sciences,
Director of Institute of Economic Problems
at Kola Scientific Centre of Russian Academy of Sciences

The potential of natural resources in the Murmansk Region is large in volume and unique in the quality of raw materials.

The variety of natural resources, cross border location, well-developed industrial complex and transportation network with large sea ports in Barents and White seas determine the important strategic and geopolitical significance of the region not only in Russia, but also on the world-wide level.

The economics of the region is largely based on utilization of the potential of natural resources, the basic role in which is taken by mineral, raw material and biological (fish) resources, which defined its industrial specialization, presented by export-oriented mining, metallurgic and fishery complexes. The region produces significant volume of all-Russian production of nonferrous metals (nickel, copper, cobalt, platinoids, and aluminum), iron ore, apatite and nepheline concentrates, the major part of which is exported, which positively effects the economics of the region.

At the same time in the years 2000—2001 there appeared a clear tendency of the decrease of the pace of economical development of the region, which is largely explained by the deterioration of the source of raw materials.

In the structure of the industrial production in this time the predominant position is still taken by nonferrous metallurgy, though its share in sale structures has significantly decreased almost by 10 per cent by the year 2000. Approximately the same decrease of sale share has been recorded in the fish industry, which has lost the second place in the structure of regional industrial production, which it had in the year 1991.

The most significant growth (more than in 3 times) of share in sale structure has been recorded with power industry, mainly due to increase of tariffs, which are still lower in the region that in other North-Western regions. The chemical industry and ferrous metallurgy have been gradually developing in the region as well.

Traditionally high black ink of regional foreign trade is increasing due to the growth of export supplies while the import is relatively stable. The coefficient of import currency coverage, which in the year 1995 was 2.8 and in the year 2000 — 5.6 has reached 7.5 in the year 2005. The tendency of the source potential of production complex of the region. The slowing down of industrial production, low level of income and social security of the population stipulates for the decrease of the number of regional population at the expense of natural decrease and especially, migration outflow which affects the future trends of economic development.

Summarizing the above said, one can formulate the main problems and tendencies of the development of economics in the Murmansk region.

In contemporary conditions the main factor, determining the opportunities of development and economical growth of the regional economics, is the competitive ability of separate fields or economy complexes and the creation of conditions contributing to the implementation of the advantages available in the region.

One of the factors, which forms the sustainable competitive advantages of the region and its enterprises is the creation of clusters with high competitive ability, that is groups of interrelated firms and institutes, which allow to use the region as a unique agglomeration environment, improving both the effectiveness of every participant and its sustain ability in the framework of modern contemporary network economic multilevel structure.

Previous lack of own fuel sources on the territory of the Murmansk region, especially of such high performance as oil and natural gas significantly limits the development of many productions and economics on the whole. This is why the decision on the creation of non-profit organization "Association of Suppliers of Oil and Gas Industry "Murmanshelf for the implementation of the projects on developing of Stockman gas-condensate field and other fields of the Arctic shelf can be seen as a very significant event and initial phase of forming of industrial cluster, able to improve the competitive advantages of the region, give a new powerful impulse to the development of economy in the region.

The main effects which occur when forming clusters;

—decrease of transactional expenses;

—opportunity to provide competitive advantages;

Potential consequences of project implementation in the field of shelf oil and gas resources for the Murmansk region

Positive

— Creation of new workplaces in the period of investment and exploitation project stages

— Growth of load (income) of local contractors, suppliers and services for the project needs

— Growth of intakes into regional budget, which increases the opportunities for expenditure of the funds for social needs

Risks

— Increase of the environment load and risk of emergency pollution with economic and social damage

— Increase of load on the existing network of the industrial and social infrastructure, which can limit the access of local customers

— Growth of prices for services and landed estate

— Intensification of differentiation of population by income and related growth of social tension

— potential of mutually profitable business long-term relations;

— profit based on the theory of industrial and financial management.

It is necessary to take into consideration both positive consequences of development of oil and gas resources of Arctic shelf for the economics of Murmansk region and possible risks and negative effects. The utilization of the Norwegian experiences in solution of similar problems taking into consideration Russian specific character at maximum extent possible is seen as quite valuable at this. The complexity and multiple character of problems and solutions stipulates for the necessity of scientific assistance and well-coordinated work of all the participants of the association.

With the successful implementation of the projects the Murmansk Region can become the growth locomotive, contributing to the development of competitive territorial industrial clusters based on the utilization of fuel and energetic resources of the Barents sea shelf.

The Industrial NORTH #1