Second strategic objective: Integration into the world economy

St. Petersburg owes its special position in Russia to the high potential of certain of the city's groups of industries for integration into the world economy. This explains why, besides identifying measures required by the first strategic objective - which is intended to promote development of all kinds of economic activity in general - the Strategic Plan pays great attention to certain key clusters of industries possessing the greatest potential for development. If this potential is fulfilled, it will lead to a breakthrough of the city's leading industries into the post-industrial economy of the developed European countries; at the same time, St. Petersburg will become a link connecting the biggest world markets - a springboard from which Russia's inner regions may launch themselves into those same markets.

The globalization of the world economy and the consequent intensification of competition on international markets have resulted in a situation where sustained development is possible for a city only if its economy can compete according to world standards. St. Petersburg needs a clear international specialization which will allow it to export products and services and manufacture products to substitute those that it currently imports. Oriented towards an open economy, the city has several groups of industries which define its position in the Russian and international division of labor. The development of these industries is a strategic objective of the Strategic Plan.

Currently, key industrial sectors are: a) industries serving transport and trade (the port, the airport, railways, river and motor transport, warehouses, cargo handling, customs, repair services, wholesale trade); b) certain manufacturing industries; c) sectors serving the cultural and tourism industries (culture, hotels, services); d) science, education, innovational activities; e) the telecommunications and information industries.

The Baltic Sea ports handle a huge volume of export cargo going from Russia to Western Europe, the USA, Canada and South America; they also process transit cargo from Japan and South-Eastern Asia. At the present time the larger part of this cargo goes through ports in the Baltic states and Finland (74% of Russian container cargo, for instance, goes this way). A strategic objective of the plan is growth of foreign trade and transport. This involves: the switching of cargo flows to St. Petersburg and the development of functions related to foreign trade, industry and transport in order to service these cargo flows. The latter objective can be achieved only in keen competition with other transport hubs in the region. Moreover, the objective is not merely to increase cargo-handling volumes, but to provide improved services for the cargo flow; herein lie far better prospects in terms of incomes and employment. For instance, setting up bond and consignment warehouses for storing bulk export commodities pre-sale would allow St. Petersburg to become the site of foreign-trade deals and to receive stable revenue from storage, processing and loading of cargo, as well as from the financial servicing of these transactions by banks and insurance companies.

Factors standing in the way of St. Petersburg's hopes of competing successfully in this market are: shortcomings in taxation and customs legislation; the lack of a developed infrastructure; the low standard of cargo handling and storage; slow document turn-around and customs examination procedures. Many problems arise when more than one kind of transportation is involved. In the city there are more than 15 transport administration bodies at federal and local level; coordination between them is poor.

In order to strengthen St. Petersburg's role in foreign trade and transport, the Strategic Plan proposes that the city lobby to get decisions made at the federal level on a number of issues. These relate to: provisions for regulation of transport activities; taxes on the port of St. Petersburg, stevedore companies and services provided by sea carriers; reduction of customs duties; acceleration of document-processing; expansion of the independence of maritime administrations. Creation of a system of logistical centers (logistics zone) and of a Coordination Council for the Transport Hub would make it easier to solve problems arising at intersections of interests between different industries. Quality of service provided by the maritime port could be enhanced by rationalizing procedures for storage and dispatch of cargo, implementation of modern technologies for transport-documentation exchange, and simplification of cargo registration. Such reorganization measures could in themselves significantly increase the cargo turnover of the seaport, river port and airport.

More capital-intensive are the plan's proposals for reconstruction of the port and creation of new port regions, for measures to increase the flow rates on access roads to the port area and to other cargo-processing centers, for reconstruction of the river port and rail network, and for construction and enlargement of a cargo center at Pulkovo Airport.

Implementation of measures of this kind will permit: an increase in the port's cargo turnover to 80% of its projected maximum capacity (i.e. from 16 to 35 million tons per year), including an increase in container trans-shipment from 80,000 to 270,000 units; expansion of multimodal container transportation of cargo for foreign trade using rail to 200,000-250,000 tons per year; an increase in Russia's share of the road carriage market.

Within the objective of consolidating competitive manufacturing industries there are three tasks: to promote the expansion of demand for products of the city's enterprises; to promote cooperation within the region as a means of cost reduction; to improve technical and technological levels in manufacturing.

As many of St. Petersburg's industrial enterprises are orientated towards federal contracts, one of the strategic measures to be adopted must be representation of the interests of such enterprises at the federal level. This does not mean crude lobbying on behalf of individual factories. Rather, implementation and observation of rules of fair competition with respect to distribution of federal contracts will allow St. Petersburg's enterprises to prove their superiority. The same applies to allocation of contracts and purchase orders in the disposal of St. Petersburg itself.

Joint action by the city and its enterprises is needed in order to secure new regional and export markets for St. Petersburg's industry. To this end work will continue on reaching agreements with other regions, organizing exhibitions and setting up business centers and trade-houses. It is planned to establish representative offices in cities abroad on behalf of St. Petersburg's businesses, organize trade missions and create service centers for products of St. Petersburg companies in other cities and countries.
A program for promotion of exports should be developed and implemented.

Shipbuilding, traditionally well-developed in St. Petersburg, is in need of radical modernization. This might be done by constructing a new dockyard on a reduced scale, thus freeing valuable land in the center of the city for future development. However, such a large project needs serious examination and justification.

During recent years financial industrial groups have showed their effectiveness. Support of the establishment of such groups in St. Petersburg will assist the revival of industry. Also strategically important are other forms of cooperation and strengthening of economic links between enterprises, financial structures and administrative bodies in the city.

The reason for the poor competitiveness of many industrial enterprises remains weak management and technological backwardness. It is necessary, therefore, to take steps to replace or retrain management personnel at industrial enterprises and to sell federal shareholdings with a view to obtaining strategic investors and well-qualified managers for enterprises. The Strategic Plan envisages support for management-retraining programs with special emphasis on training in composition of business plans.

All the measures here proposed will help to integrate the city's leading industries into the world economy in terms both of conformity to international standards and direct participation in international and Russian trade.

Almost beyond reproach, so to speak, is St. Petersburg's world reputation as a city of culture. The rich cultural potential of St. Petersburg can play a unique role in the city's revival and prosperity, becoming not only an independent product but also a catalyst for the growth of business activity in all industries, especially those related to tourism services.

Its possession of a vast cultural potential can be exploited by St. Petersburg to promote the city on world cultural and tourism markets. What stands in the way of the latter goal is the lack of a developed tourism infrastructure, combined with a lack of funding for active marketing and advertising campaigns. The main objectives in this area are to: increase sales of tourism products; transform cultural events into tourism and cultural products; create a consistent image reinforcing the uniqueness of St. Petersburg. Projects for celebration of St. Petersburg's 300th anniversary and for declaring the city a cultural capital (under the program entitled "Cultural capitals of Russia", on the lines of the EU's "Cultural capitals of Europe") can be used as powerful marketing instruments.

Although the city has unique attractions, development of tourism in St. Petersburg is held back by the lack of an appropriate infrastructure, i.e. a comfortable and safe environment, variety in choice of hotels, a proper information system. The first objective in this area is to improve conditions for visits to the city. The second objective is to support tourism and cultural organizations by the creation of a favorable normative and regulatory environment and by eliminating constraints whilst preserving quality control. The third objective is to promote the city and particular tourism products whilst focusing on areas of the market which offer the most potential.

To meet the above objectives the Strategic Plan puts forward measures to: set up information centers for tourists; develop St. Petersburg's hotels network; promote the city through marketing campaigns; train managers; reform the resorts sector. Implementation of these measures will reinforce St. Petersburg's position as a world cultural and tourism center.

St. Petersburg's possession of a population with a traditionally high standard of education and its well-established research resources open up large vistas for the development of such spheres as science, education and innovational activities. The latter spheres are taken together primarily due to the similarity in their problem areas, but also because of the importance of collaboration in finding solutions to these problems. It is precisely cooperation between, and integration of, research and higher educational institutions with a view to the development of innovational projects and to the training of specialists required both now and in the future, that will consolidate this sector and enhance its position in Russia and across the world. The Strategic Plan offers solutions to the specific problems faced by each of the industries; such solutions are aimed at increasing these industries' competitiveness. It also outlines general approaches intended to improve the innovational environment in the city. A favorable innovational climate implies: accessibility of training and retraining systems; the existence of organizational structures and technology centers capable of assisting the spread of new technologies; cooperation between science and manufacturers.

Federal funding and management policies have a decisive influence on the state of affairs in education, science and innovations. Purposeful lobbying of the federal legislature should be one of the most important objectives for St. Petersburg's administration and public organizations. It is imperative to expand the existing links with federal executive bodies by entering into agreements with various ministries and departments.

Selective support for individual elements in the education and research industries should be based on the need to restructure this sector. For St. Petersburg top priorities are: preservation and expansion of the scientific information infrastructure (including the city's unique scientific collections, archives and libraries); biology and medical science, medical instrumentation and technology, resource- and energy-saving ecologically sound technology; fundamental scientific research projects in areas where the city has world-class research schools; research and training in humanities and the social sciences.

Particularly important are applied scientific research projects in fields with close connections with the city's research-intensive industries, and projects which are capable of contributing to the creation of a base for innovational manufacturing industry and for restructuring of the economy (e.g. shipbuilding, radio-electronics, telecommunications, energy-plant manufacturing).

The Strategic Plan proposes that the city continue with work already under way to establish a system of innovational centers, technology parks, financial institutions and investment agencies; and that it direct its scientific and educational potential towards meeting current and future market requirements, as well as integrate its educational institutions into the Russian and international education system. Research and education services may be funded not only from local and federal budgets, but also by other regions and countries (for instance, CIS countries) and by enterprises. It is necessary to make fuller use of opportunities for students to receive grants and scholarships from various alternative sources.

As in other spheres, the Strategic Plan emphasizes the importance of marketing - in this case as a tool to be used to uphold St. Petersburg's image as a major innovational, research and education center.

Telecommunications have become one of the most dynamic sectors in the world economy. The industry is growing fast in St. Petersburg too and is the basis for integration of the city into the global information society. St. Petersburg has all the prerequisites for construction of a state-of-the-art information environment capable of meeting all the information needs of its citizens, servicing international business and scientific communication, and enhancing the city's attractiveness as an investment prospect.
St. Petersburg is currently undergoing its second phase of information-technology development; this is characterized by the creation and use of sophisticated public and commercial information systems and data bases, and by the formation of an integrated information environment using the city's telecommunications network.

The Strategic Plan accordingly contains measures aimed at establishing a modern information infrastructure, propagating an information culture amongst the population and improving access to the city's public information resources.

It is planned to set up an integrated city-wide digital network providing high-quality telephone links,
e-mail services, radio-mobile communication, radio emergency calls, burglar and fire-alarm systems, multi-channel television, as well access to regional, federal and world information systems and multimedia services.

In the light of the importance of information culture - which is instilled in people during the educational process - the plan puts forward a project for creation of an information environment through continuous education. The latter project envisages that all elements in the city's educational system, including libraries, should provide access to, and training in the use of, modern information technology.

Accessibility of information for citizens will be improved by establishing an information system using
so-called "electronic kiosks".

The creation of regional and state departmental cadasters, of registers and data banks will provide St. Petersburg with a unified system of information resources. The elements in this system will share a cartographic and linguistic basis, a common communications environment, security system and procedures providing for maximum accessibility of information combined with balanced protection of the rights and interests of government bodies, society and the individual.

Implementation of the plans outlined above will expand the city's information resources, enhance access to such resources and integrate the city into the international information environment. Integration in the sphere of information is a sine qua non; without it, it will be difficult, if not impossible, for all the other sectors of business here reviewed to achieve integration into the world economy.

2. Integration into the world economy

GOAL

OBJECTIVES

2.1. Strengthening of foreign-trade and transport functions

2.1.1. Ensure adoption of federal legislative and regulatory documents to make St. Petersburg competitive as a transport hub
2.1.2. Increase coordination of transport activities in the St. Petersburg region
2.1.3. Improve the competitiveness of businesses in foreign trade, of The Sea Port of St. Petersburg (limited company) and of other stevedore companies in St. Petersburg
2.1.4. Reconstruct and modernize the infrastructure of the transport hub

2.2. Consolidation of competitive manufacturing industries

2.2.1. Expand domestic and foreign markets for the city’s manufacturing companies
2.2.2. Encourage regional cooperation and integration in the manufacturing industries (including through financial industrial groups)
2.2.3. Improve management skills; raise the level of technology and engineering at manufacturing companies

2.3. Promotion of St. Petersburg on the cultural and tourism markets

2.3.1. Take advantage of St. Petersburg’s 300th anniversary in order to accelerate development of culture, tourism and the city as a whole
2.3.2. Enhance the importance of St. Petersburg as a cultural capital and venue for international public events
2.3.3. Facilitate inflow of grants and charity contributions for the support and development of St. Petersburg’s cultural institutions
2.3.4. Accelerate promotion of St. Petersburg on the Russian and international markets of cultural and tourism services
2.3.5. Consolidate the importance of St. Petersburg as an international sports center
2.3.6. Create a modern and efficient hotels infrastructure that meets international standards
2.3.7. Stimulate and maintain in the mass media permanent interest in St. Petersburg as a unique center of international tourism
2.3.8. Modernize resort facilities

2.4. Development of science, education and innovational activities

2.4.1. Develop a favorable administrative and regulatory environment for research, education and innovational activities
2.4.2. Develop a system of integrated innovational centers, technological parks, financial institutions and investment agencies
2.4.3. Focus the city’s scientific, technological and educational potential on meeting market requirements and improving quality of life for citizens
2.4.4. Incorporate St. Petersburg’s training institutions into the Russian and international education system
2.4.5. Consolidate the city’s specialization as an international center for certification and quality management
2.4.6. Foster St. Petersburg’s image as a major innovational, research and education center

2.5. Integration into the global information environment

2.5.1. Create a modern information infrastructure
2.5.2. Develop an information culture amongst the population
2.5.3. Facilitate access to the city’s information resources