Investor Presentaiton

26 Leonid B. Vardomskiy merce and Industry to study in foreign countries. The city of Ryazan, which is practically the only focus of international contacts in the oblast, lags significantly behind Moscow in the use of the Internet. More than 76 out of 1000 Moscow res- idents used the Internet in the beginning of 2001; in St Petersburg, only 2.5% of the population had Web access, and in Ryazan, the number was approximately 0.9%. Despite intensifying foreign contacts in the recent years, the Ryazan Oblast, in general, is still among the more introvert regions of Russia. 16 Among its neighbors, the Ryazan Oblast is close to the Vladimir and Tambov oblasts in terms of international contacts; it is ahead of the Penza Oblast and Mordovia, but noticeably behind the Moscow, Lipetsk, Nizhnii Novgorod and Tula oblasts. The oblast is engaged in the processes of globalization of the economy with a very small number of enterprises From the perspective of regional security, the effect of foreign contacts can be seen in quite contradictory terms in the Ryazan Oblast. On the one hand, the preservation of the closed character of the oblast economy prevented it from attracting substantial investments or human capital since the beginning of the reforms. For all practical purposes, the modernization of the economy has not even begun. The threat of incidents in industry due to outdated equipment and the loss of economic competitiveness have increased. But on the other hand, the unfavorable conditions of the credit agreement with the World Bank, the devaluation of the ruble as a result of the August 1998 crisis, and the ineffective use of the appropriated resources have worsened the budget situation of Ryazan. Deputies of the Ryazan City Council initiated the withdrawal of the city from this project. The active foreign economic policy of the TPC leads to social polarization and does not contribute significantly to the regional budget. Today's level and structure of foreign contacts is more likely to aggravate the threats than to ame- liorate them.that are concentrated in Ryazan. Among the barriers to the integration of the oblast in the processes of glob- alization, in my view, the most important role is played by the heritage of the "closed" city status, which is rooted in the mentality of the majority of managers, causing a feeling of inferiority, and also in the low technological level of the economy that makes it less competitive on the international markets. These fac- tors are decisive, because both crime and the established bureaucracy corre- spond to the national average. The situation is aggravated by the outflow of the most active and innovative labor resources from the region. 16 For more details see the article by Leonid B. Vardomskii "Vneshneekonomicheskie sviazi regionov Rossii v kontekste problem federalizatsii" (Foreign Economic Relations of Russia's Regions in the Context of Problems of Federalization), in: Klimanova, V. and N. Zubarevich, eds. Politika i ekonomika v regional'nom izmerenii (Regional Dimensions of Politics and Econom- ics). Moscow and St Petersburg: Mezhdunarodnyi institut gumanitarno-politicheskikh issle- dovanii, 2000, pp. 136-155. Actors in the context of international contacts Looking at the actors in the oblast and their influence on international contacts, they can be categorized into active, moderately active, neutral, and opposing players. Among the opposing group are agricultural enterprises suffering from com- petition from imported food products as well as industrial enterprises that pro- duce non-competitive goods, are incapable of introducing them to foreign markets and are also experiencing problems on the internal markets. These groups exert serious influence on the development of international ties. The inter- ests of the numerous groups of enterprises that feel marginalized by globalization are expressed by the parties of the left, primarily by the CPRF and the agrarian parties. In their perception, the engagement of foreign financial resources in the oblast and the exports are practically coterminous to a "sellout of the motherland and the oblast." All imports represent a threat to the national producer. Among the active proponents of expanding foreign contacts are the TPC and the Ryazan Petroleum Processing Plant, which has been a member of the above-mentioned company since 1995, and which is one of the biggest enter- prises of the oblast. Today, the TPC is one of the most dynamic Russian compa- nies and in 2000 occupied 11th place among the country's largest companies in terms of the volume of sales. "Alpha Group" (one of Russia's top financial indus- trial groups), the "Renova" investment company and the American company "Access Industries" are the main stockholders in the TPC, which is more than a Russian trans-regional company today as it moves increasingly beyond the Russ- ian borders and develops characteristics of a transnational company. It should be noted that foreign transnational companies so far have not shown any interest in chapter 5

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