Strategic Plan for Saint-Petersburg

THE STRATEGIC PLAN FOR ST. PETERSBURG
Address by the Governor of St. Petersburg
Declaration of the General Council
The Strategic Plan for St. Petersburg (CONTENTS)
The Main Goal and Principal Strategic Objectives
The Strategic Plan for St. Petersburg: Main Bearings

STRATEGIC PLAN
FOR SAINT-PETERSBURG

THE COMPETITIVE POTENTIAL OF ST. PETERSBURG

In an open-market environment cities and regions, like businesses, compete among themselves. Yet, whereas businesses compete for product markets, cities fight for investments and new jobs, i.e. in the last analysis, for improved standards of living and for development prospects. The latter can be achieved through improvement of the general business environment and by making the city an attractive place to live in and visit.

A city's potential and development prospects depend upon external and internal factors. External factors are: the city's geographic and geopolitical location, its climate, the macro-economic situation in Russia, prevailing trends in the domestic and world economy. Internal factors are: the availability of resources (including human resources, labor skills, equipment and technology, real estate), financial resources, conditions for economic activity ("business climate"), and the state of the city's urban environment, infrastructure and community facilities.

Analysis of external and internal factors makes it possible to identify industries and activities which possess significant development potential for the city, and likewise to formulate specific objectives and measures to be implemented in order for this potential to be realized. In addition, such analysis reveals the city's competitive advantages and weaknesses relative to other cities and shows what needs to be changed to enhance the city's competitiveness. It is precisely this approach that constitutes one of the fundamentals of strategic planning.

For preparation of the Strategic Plan for St. Petersburg careful analysis was made of internal and external factors influencing the development of the city. This made it possible to identify major problem areas and barriers standing in the way of investment in St. Petersburg and of consolidation of the city in those sectors where it has competitive potential in domestic and international markets. Analysis was made of St. Petersburg's international role and its position in the national economy. Evaluation was undertaken of the city's human resources, economy, business climate, urban environment and public utilities.

The main conclusions on the competitive potential of St. Petersburg, integrated in accordance with the principles of a SWOT analysis, are given below (Tables 1 and 2). Table 1 shows St. Petersburg's strengths and weaknesses as a participant in international and domestic competition between cities and regions. Table 2 lists trends in St. Petersburg's external environment which are capable of exerting an influence - positive or negative - on the city's development and which should be taken into account when selecting development strategies. The principal positive and negative factors influencing St. Petersburg's development potential, as shown in the tables, have been arrived at as the result of painstaking analysis and synthesis of data and approaches by various specialists.

The principal advantages of St. Petersburg such as may help it to consolidate its position in the division of labor on the Russian and world markets relate to:

- the high professional, educational and cultural standards evinced by a large part of its population;
- its geopolitical position;
- its international reputation;
- its unique architecture;
- its rich cultural life;
- the competitive potential of certain of its industries;
- its relatively well-developed legal, institutional and economic environment (a European type of environment);
- its attractiveness as a center of education, culture and tourism.

The opportunity to exploit the above advantages to the full depends upon the obtaining of certain favorable external conditions. The most important of these are:

- the preservation of an open-market economy in Russia;
- the beginning of economic growth in Russia, supported by an increase in the country's volume of imports and exports;
- the establishment of market mechanisms and improvement of Russia's normative, legal and regulatory environment;
- development of the city's partnership with Leningrad Region and other regions of Russia.

The city's development is impeded by the following drawbacks, which must be eliminated in the course of implementation of the Strategic Plan:

- the social stratification of the city's population into different income levels; the large number of people with a low income; considerable hidden unemployment;
- the backward sectoral structure of the economy; an oversize defense industry;
- shortage of funds in the city exchequer; inefficient expenditure of such funds;
- the crisis in the city's transport system;
- the poor condition of the city's historical center;
- an inefficient and resource-intensive infrastructure;
- a shortage of quality housing.

In part, the above-mentioned drawbacks may be converted into advantages and used as stimuli to development and the attraction of external funding. Examples of how this may be done are provided by the loan recently granted the city by the World Bank, and by the federal program for reconstruction of the historical center of St. Petersburg.

The following external conditions might seriously impede the development of the city, and should be closely monitored and, where possible, controlled:

- changes in Russia's foreign-trade policy; toughening of Russia's customs and border procedures;
- competition from other Baltic seaports;
- decline in demand for the products of St. Petersburg's main industries;
- continued outflow of financial resources to Moscow and the raw-material-producing regions;
- political destabilization.

Table 1
Strengths and weaknesses of St. Petersburg in competition with other cities and regions

Factor	Strengths	Weaknesses
Geopolitical position	location near the Russian border, in zone of contact with the EU maritime location important transit hub for sea, river, air, road and railway routes as well as for pipelines location at key point on European priority transport corridor No.9	northern peripheral location, far from important Russian, European and world centers unfavorable climate and hydrogeological conditions
Population	high professional, educational and cultural standards relatively low level of social conflict between citizens	high level of stratification into different income classes high level of hidden unemployment
Land use, city-planning regulations	availability for development of land plots in the city center, residential districts and suburbs unused development capacity within the city limits large land resources owned by the municipality existence of a system of land register and registration of legal title	poor condition of the city's historical center; aging engineering and transport infrastructure in the center high proportion of industrial development, especially in the city center incoherent development of residential districts inadequate road-network capacity (lack of free-flowing highways and ring roads; poor road layout around train stations; shortage of bridges) complicated procedures for construction-permit applications
Natural environment	existence of suburban recreational zones	insufficient capacity of facilities for treatment of domestic and industrial waste, sewage and water
Housing	availability of different types of housing established system of real-estate companies; active housing market relatively advanced system of registration of real-estate transactions experience in use of municipal housing certificates	large numbers of citizens in urgent need of improved housing poor quality of much housing large proportion of old and collapsing buildings lack of a mortgage system technological backwardness of construction techniques and materials
Engineering infrastructure, transport and communications	relatively developed system of communications and telecommunications existence of a variety of different kinds of public transport	poor condition of road surface shortage of rolling stock for public transport; overloaded metro resource-intensive public utilities using obsolete technology; high level of energy losses from supply networks; high level of wear of supply networks
Social infrastructure	well-developed personnel-training system; high standards of intermediate and higher education advanced requirements in cultural and leisure; capacity to satisfy latter requirements	underfunding of health care, pre-school institutions and schools inefficient organization of social-security system poor system of public safety "brain drain" problem
Economic potential	diversified structure of economy high level of diversification of enterprises in the defense industry large consumer market predominance of private and mixed-ownership property over state property developed system of transport links with other cities and regions relatively well-developed European-type regulated business environment possession of credit rating; reputation for setting tough and realistic city budgets competitive advantages of some industries high tourism potential (based on architecture, cultural events, world- famous museums and theaters) city has an international reputation	relatively high proportion of intermediate products (components) imported from other regions; low level of vertical integration in mechanical engineering lack of developed business infrastructure low level of development of small business backward sectoral economic structure oversize defense industry slow restructuring of manufacturing companies weak management deficit of new highly paid jobs relatively high levels of risk for businessmen

Table 2
Trends generating opportunities for, or potential threats to, the city

*Sector*	*Opportunities*	*Threats*
*General Russian policy; relations with federal on imports authorities*	improvement of the legal and institutional environment in Russia; favorable conditions for domestic and foreign investment political stability	reorientation of Russian foreign policy toward a closed-type economic model; restrictions formation of a market pattern characterized by the merger of government and large corporate interests; monopolization
*Demographic and social processes*	growth in mobility of population improvement in educational standard of population temporary increase in share of population made up of people of employment age	intensification of social conflict reduction in population size
*Economy*	beginning of economic growth in Russia growth of Russian foreign trade development and improvement of regulatory and legal framework loans granted for public projects by the World Bank and the EBRD simplification of immigration and customs formalities (ratification of the Agreement on Partnership and Cooperation with the EU; membership of the WTO) reduction in proportion of state property and enterprises with state participation	competition from other Russian (Leningrad Region, Moscow, the North West) and foreign economic centers; development of competitive seaport facilities in the Baltic region decline in demand for products and services of the city's key industries due to global changes in demand or to technological backwardness of Russian manufacturers toughening of customs procedures growth in economic crime growth of black-market economy
*Regional and international contacts*	economic cooperation with Leningrad Region and major companies in large-scale investment projects expansion of cooperation with the Baltic states and regions in the North West and North of Russia	political conflicts with Leningrad Region(i.e. between executive offices) competition from other regions cooperation between Finland and the Baltic states in order to capture Russian transit traffic
*Tourism and communications*	increase in demand for tourism services construction of transport corridor #9 implementation of "Baltic Bridge" project implementation of TEDIM(European logistics program) development of ferry services expansion of use of the Internet	tougher competition, including unfair competition, in the international tourism and transport markets
*Large-scale public projects*	reconstruction of the city center 300th anniversary of St. Petersburg	unreliable financing of federal programs