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Public policy in support of mobility and the case of Russia Northern Restructuring Project

Public policy in support of mobility and the case of Russia Northern Restructuring Project. Government of Hungary – World Bank Conference on Social Inclusion in Eastern Europe and Central Asia Budapest, September 2007 Andrei R. Markov The World Bank amarkov@worldbank.org.

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Public policy in support of mobility and the case of Russia Northern Restructuring Project

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  1. Public policy in support of mobility and the case of Russia Northern Restructuring Project Government of Hungary – World Bank Conference on Social Inclusion in Eastern Europe and Central Asia Budapest, September 2007 Andrei R. Markov The World Bank amarkov@worldbank.org

  2. This presentation • The rationale of public policy for mobility in ECA: • Economic reform related considerations; • Extreme case of the Russia North. • Main features of the Northern Restructuring project • NRP results and outcomes • Lessons for mobility/migration support policy

  3. Public policy for increased mobility in ECA – Why? • Correct the legacy of inefficient spatial distribution of settlements and population generated by command economy • Permit labor inflow to primary urban aglomerations associated with increased economic growth • Reduce high barriers to mobility: • Information (on jobs, housing) is scarce and costly; • Housing and rental markets underdeveloped; • Private sector mobility support rare (while movement is cash intensive process). • Address social dislocation and exclusion associated with increased mobility (take care of immobile groups)

  4. Russia Northern economic development – a case for inefficient spatial allocation • Massive case of Northern subsidization (up to 4,7% of annual Soviet GDP) • Growth of Russia Northern Population, particularly in urban fully fledged settlements • Increase of the “Cost of Cold” - Temperature per capita went down leading to increased costs of GDP production • Russia became “colder” from min 11.6 to 12.6 C in 1930-1990 • Canada became “warmer” from min10 to min 9 C in 1930-1990 • Economically “excessive” population in Siberia • 10-15.7 mlns by econometric calculations (up to 1/3)

  5. Economic shock of the 1990-s and the Russian North • Market liberalization of 1992, elimination of unaffordable subsidization and industrial contraction of 20 to 55% ; • Spontaneous contraction of the Northern population • Most resourceful, skilled and mobile left. • Sharp increase of pensioners’ share in the population • Imbalance of municipal budgets, increased pressure on social and municipal infrastructure; • Reduced access to services and interruptions in supplies because of budget and capacity constraints; • Major increase in number of Northern population seeking public support for out-migration from the North (up to 800000).

  6. Net Migration in the Russian Far North, 1979-2005

  7. Northern Restructuring project($80 mln, effective 2002) • Dual Mission: • Improve sustainability of municipal budgets • Facilitate out-migration of socially vulnerable groups • Main principles: • Subsidize voluntary out-migration from three Northern municipalities, • reduce barriers for mobility, • generate savings out of reduced population. • Main project components: • Migration allowances issued through certificates; • Information system on housing in the “Mainland”; • Information and PR campaign; • TA for infrastructure consolidation and HCS management reform.

  8. NRP - Geographic dimension

  9. NRP – Vorkuta case

  10. NRP- outputs • 4527 households (10028 people) migrated from the North • Housing information system in place/ push to real estate market development • 600000 sq. M of consolidated housing • Complete reorganization of Susuman district (from large permanent population to seasonal+core sceleton population) • Isolated Settlements closure in Vorkuta (Promishlennij, Maldijak, etc).

  11. NRP- economic results • Consolidated budget savings: • $9.5 mln from out-migration; • $12.6 mln from infrastructure consolidation; • Project full cost recovery – less than 5 years. • Reduced federal budget obligations for out-migration support • Improved efficiency of service delivery in the North (HCS unit costs reduced by 14.5%) • Improved quality and access to social and HCS services in the North • Improved coverage of population by targeted social assistance from 4 to 15 % of households

  12. NRP – lessons for public policy • Understand the linkage of mobility and economic development; • Identify “natural” migration directions • Be aware of “push” and “pull” factors • Reduce barriers to migration • Prevent clustering of migrants in recipient localities • Voluntary participation in migration programs • Be aware of immobile groups – address their needs through other means • Social monitoring, program redesign and operational feedback are KEY to success

  13. Thank you

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