Industrial growth and specialisation: The impact of the government support tools

Abstract

In the past decade, the concept of smart specialisation has become the basis for incorporating the principle of selectivity while using the tools of industrial policy. The paper studies the impact of the selective government support on industrial growth and assesses its qualitative correspondence with the industrial specialisation of Russian regions. Against this backdrop, considering the activity of the Industrial Development Fund (IDF) is at the center of the study. Modern concepts of industrial growth and the policy of new priorities constitute the methodological basis of the research. The methods include correlation analysis and ARIMA modelling. The research uses the information about 924 projects implemented with the funding from the IDF, panel data on the industrial production index (IPI) for 2015–2021, expert opinions on industrial specialisation of the Russian regions to identify three groups of Russian regions depending on the support provided by the IDF. The first group is characterised by the highest amount of support and displays an inverse relationship between IPI and the share of allocated funding, whereas other groups demonstrate a direct relationship. Presumably, high degree of interconnectedness of industries in the regions belonging to the first group leads to the network effects: these territories are self-developing and therefore, the government support does not much influence their industrial growth. On the contrary, other regions feature narrow specialisation and a small degree of interconnectedness of industries. The paper concludes that the IDF should prioritise loans for projects aimed at developing new production in the regions of the second and third groups based on the model of smart specialisation.

Keywords

• industrial growth
• industrial production index
• industrial development fund
• industrial specialisation
• policy tools
• regions
• industrial development projects