Economy of the White Sea watershed area 2 page

7.2.2 Changes in population

Over the period in question, the tendency in the population dynamics has reversed (Table 7.9). The population growth was replaced by a decline, which is expected to continue for some years to come. The population of the White Sea region was at a maximum in the late 1980s. Since then, the population has begun declining signifi- cantly. As shown in Table 7.9, the largest absolute and relative decline occurred in the Murmansk Oblast, where the population dropped by 193,000 persons or 16.7% between 1991 and 2002. On the other hand, the situation in the Republic of Karelia has been relatively stable, as the population there fell by only 5.9% between 1991 and 2002. Nor has the demographic decline in the Arkhangelsk Oblast been as serious as in Murmansk, constituting 162,000 persons or 10.3% between 1991- 2002. In total, the population of the White Sea region has decreased by 560,000 persons or 11.7% since 1991 (Economic geography .. ., 1999; Regions of Russia .. ., 2003). A further decline in the population of the White Sea region is expected (Figure 7.3). It is believed that the number of residents in the four administrative units under consideration may decrease by another 490,000 persons or by 11.6% during 2003-2010 (Table 7.10 shows the forecast changes over ten years since 2000 based on the 2002 census data). The decline will be particularly severe in the Murmansk Oblast, where the population may decrease by 835,000 persons (13.6%) by 2010.

7.2.3 Natural population change

Two major factors are responsible for the downward tendency in population. The first important factor is the significant and constant excess of deaths over births. The

Figure 7.3. Change in the population during the period 1991-2000 and the anticipated demographic development up to 2010 in the White Sea region (the 2002 census data were not taken into account).

Economic Geography .. . (1999).

Table 7.10. Forecast population in the White Sea region in 2000-2010.

From the Institute of Economic Studies, KRC of RAS (based on 2002 Census data).

Forecasted population Forecasted change

(1,000 people) during 2000-2010

difference is particularly noticeable in the Arkhangelsk Oblast and Republic of Karelia (Table 7.11). The data displayed in Table 7.11 are generally in good agreement with the average indices for the Russian Federation. The phenomenon of reduced rates of natural population growth in the country occurred in the past as well. In the 1990s, however, the death rate (child death rate included) was growing far more rapidly. The main causes were deterioration of the environmental situation, increasing stress, poor nutrition, degradation of health care (unaffordable medicines, outdated equipment and lack of modern equipment, and a cut in funding), the growing number of epidemic diseases, alcohol addiction, high number of accidents

Table 7.11. Growth of the population in the White Sea region during 1997-2002.

From Socio-economical Development ... (2003)

Per 1,000 people

Births Deaths Population growth

Figure 7.4. Rate of child mortality (children under 1 year old, per 1,000 births) in the White Sea region during the period 1998-2002.

From Socio-economical Development ... (2003).

at work and at home, etc. The principal reasons for the reduction in the birth rate are a significant decrease in income levels of most people and economic uncertainty. Since 2000, the birth rate is increasing, but not as rapidly as the death rate, which had exhibited some decline between 1995 and 1997, but then started mounting after the default crisis in Russia. A slight attenuation of the natural population loss, observed during 1995-1998, was then superseded by its rise. Despite the overall degradation of the health care system, the child death rate decreased, probably because the conditions for delivery improved owing to fewer births (Figure 7.4).

The second important reason for the observed decrease in the population in north-western Russia is emigration, which contributed by more than 50% to the population decrease. The process is the most intensive in the Murmansk Oblast,

Table 7.12. Net migration of the populace in the White Sea region during 1993-2002.

From Socio-economical Development ... (2003).

Net migration (1,000 people)

Cumulative

Arkhangelsk Oblast -5.3 -4.8 -7.6 -6.7 -8.4 -6.1 -4.8 -4.8 -58

whereas the greatest stability is demonstrated by the Republic of Karelia, where the inflow of migrants sometimes even exceeds the outflow of the indigenous population (Table 7.12). As mentioned above, the 2002 census data indicate that the outflow of people from the north of the Russian Federation was apparently greater than indicated in the current statistical reports. According to these data, the population decrease in the Murmansk Oblast over 12 years of economic reforms was 22.9%, while in Komi, the Arkhangelsk Oblast, and Karelia, it constituted 19.4%, 15.3%, and 10.3%, respectively.

7.2.4 Life expectancy

Another consequence of the circumstances listed above (firstly, the drastically reduced economic activity, deterioration of the environmental situation, poor nutrition, growing traumatism, and alcohol addiction) was a decrease in the life expectancy both in the White Sea region and in Russia as a whole (Table 7.13). It is especially low for men. Some forecasts suggest that the deterioration of the demographic situation in the Russian Federation is going to continue.

Male life expectancy in Russia reached 70 years in 1971-1972, and then began to rapidly decline. This should be considered as a rather unprecedented tendency in such an industrialized country as Russia in peacetime. Preliminary estimates released by Goskomstat in early 1999 suggested that the demographic crisis in Russia was still worsening: the male life expectancy was estimated at 58 years (71 years for females). For comparison, the average life expectancy in nearby western countries is much higher (e.g., in Sweden it is 75 years for males, and 81 for females) (Regions of Russia .. ., 2003).

By the mid-1990s, the population had adapted to the new living conditions and the life expectancy slowly started to grow. However, the drop in income levels following the 1998 default crisis reverted the situation, causing an increase in the death rate and a significant drop in life expectancy. Average life expectancy in the White Sea region is below the Russian average, although the Murmansk Oblast

Table 7.13. Life expectancy in the White Sea region during 1990-2002.

From Socio-economical Development ... (2003).

Life expectancy (years)

Region 1990 1991 1992 1993 1994 1995 1996 1997 1998 2001 2002

showed some better figures than Russia as a whole in 2002. The situation has been most difficult in the Republic of Karelia.

7.3 ECONOMIC INDICATORS

The bulk of the economy of the aforementioned oblasts and republics, completely or partially encompassed by the White Sea catchment, is constituted by the recovery of, and processing of, mineral and timber resources. The principal sectors of the economy for individual administrative units are: for the Murmansk Oblast - mining and processing of mineral resources (apatite-nepheline, copper-nickel, etc.); for the Arkhangelsk Oblast - forestry, fuel and energy industries, and engineer- ing industries; for the Vologda Oblast - forestry and the metallurgic and chemical industries; for the Republic of Karelia - forestry and metallurgic industries; for the Komi Republic - forestry and the fuel and energy industries.

The leading economic sector in the region as a whole is industry, which accounts for about one-half of the gross regional product (GRP). One should note that employment in industry has dropped significantly over the period of reforms, but the decline in new construction enterprises was even more drastic. Agricultural activities are minor and mainly practised in the southernmost part of the White Sea area. Several sectors have been steadily developing since the early 1990s (e.g., trade, finance, and communication). Trade advanced to second place in rank for the number of employees, moving ahead of transport (Table 7.14). More than 50% of the adult population are employed in small trade businesses (Krom .. ., 2000).

The number of enterprises in the oblasts and republics is roughly proportionate to the population size, being greater, however, in the Vologda Oblast. The highest numbers of enterprises are related to trade, with second position being occupied by industrial enterprises. In the Komi Republic, construction enterprises prevail (Table 7.15).

Regional governments actively promoted the privatization of public enterprises.

This process was particularly active during 1992-1994, when more than one-half of public enterprises were privatized (Table 7.16). The privatization of industrial enter- prises in these regions is virtually completed. However, the restructuring of priva- tized enterprises has not yet advanced very far.

Privatization has not enhanced the region s economic efficiency, but promoted a development of small businesses (Table 7.17). The number of small enterprises in the north is lower than in the central or southern parts. Small business in the northern- most Murmansk Oblast is poorly developed, whereas the number of small enter- prises per 1,000 residents in the Vologda Oblast is 2-2.5 times greater than it is in other regions.

7.3.1 Gross Regional Product

The dynamics of the GRP in the area under consideration was generally close to that of the gross domestic product (GDP). Its steady decline in the early 1990s was superseded by some growth both in the country as a whole and in many individual regions. The 1998 default crisis and the national currency devaluation triggered rapid economic growth in the area. Further on, this growth exhibited, however, some indications of a slow down. It is worthwhile mentioning that the basic indices expressed in US$ decreased because of the devaluation, which made Russian industry more competitive (Tables 7.18 and 7.19). The GRP of the White Sea region now accounts for about 3% of the GDP of the Russian Federation.

As shown in Table 7.18, the GRP for the White Sea region grew steadily during 1994-1996. The GRPs expressed in the national currency were converted into US$ using the mean annual exchange rates shown in Table 7.19. The 1994-1995 period was characterized by a faster decline of the Murmansk Oblast GRP than the GDP of the country as a whole. This can be explained by an unfavorable state of the market for the main goods produced and consumed in the oblast. As a result, in 1996, for instance, the overall financial outcome of the activity of the regional enterprises (difference between total revenues and losses) was negative. The amount of losses that year was 33.2 billion rubles (US$ 6 million). By the end of the period, the dynamics of the GRP improved so that the proportion of the GRP in the GDP returned to, and even exceeded, the 1994 level.

Data on the structure of the GRP and its changes display the direction of structural shifts in the regional economy since the mid-1990s. The proportion of services in the GRP tended to grow in the Murmansk Oblast. However, the tendency is not so profound as in some more advanced economies. The structure of the GRP is explicitly indicative of the predominance of enterprises in the indus- trial sector over any other sectors, and this tendency had even strengthened by the end of the period in question. On the contrary, a relatively small share of construc- tion and agricultural sectors tended to decline even more rapidly (Economic Geography .. ., 1999, p. 152).

As shown in Table 7.18, the GRPs of the regions involved ranged within US$ 1.7-4.4 billion in 1997. Thus, the GRPs of the regions amounted to about 1/10-1/15 of the GDPs of Finland and other Nordic countries in 1997. However, in 1998, the

Table 7.14. Distribution of the population in north-western Russia among various sectors of the economy (x1,000).

From Socio-economical Development ... (2003).

Industry Agriculture Construction

1990 1995 1999 2001 2002 1990 1995 1999 2001 2002 1990 1995 1999 2001 2002

Table 7.15. Enterprises in different sectors of the economy as of 1 January, 2003.

From Socio-economical development ... (2003).

Distribution among different sectors of the economy (% of total)

No. of Material and

enterprises Trade, technical

total public supply and

Region (1,000) Industry Agriculture Construction catering sales

Table 7.16. Indicators of the privatisation process.

1992 1993 1994 1995 1996 1997 1998 1999

GRPs of the regions became less than US$ 2 billion (preliminary figures), though in 1999 this decline was halted. Although the unofficial, statistically unobserved economy in Russia possibly account for a significant part of the difference in the GRP/GDP ratios relevant to north-western Russia and its western neighbors, there is undoubtedly a major gap in the living standards between Russia and the Nordic countries.

In studying the development of the GRP of the regions in the 1990s, the appro- priate data should be analyzed taking into consideration the inflation rate and the current value of the rouble. Judging by real life GRP figures (in constant prices), the economies of the regions were declining drastically in the 1990s. A prolonged period of GRP decline was then followed by growth after the 1999 ruble devaluation (except in the Komi Republic). However, the effect of the national currency devaluation gradually began reducing to zero, and the growth slowed down (Figure 7.5).

As a whole, the region s GRP accounts for about 3% of the GDP of the Russian Federation. However, the economic significance of the regions of north-western Russia resides in the fact that they are the major producers of raw materials and

Table 7.17. Small enterprises in different sectors of the regional economy as of 1 January, 2003.

From Socio-economical Development ... (2003).

Distribution among different sectors of the economy (% of total)

No. of Material and

enterprises Trade, technical

total public supply and

Region (1,000) Industry Agriculture Construction catering sales

White Sea catchment

Murmansk Oblast 2.6 19.1 0.5 12.5 47.9 1.2

Republic of Karelia 3.6 16.0 3.5 10.7 51.8 2.2

Arkhangelsk Oblast 4.6 18.6 2.9 12.5 43.7 12.6

Regions producing with little impact on the White Sea catchment

Date: 2016-03-03; view: 663