Regional Economics: Theory and Practice
 

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The analysis of life cycle and processes of spontaneous restructuring of machine-building industry in the region

Vol. 12, Iss. 38, OCTOBER 2014

Available online: 12 October 2014

Subject Heading: Economy and management

JEL Classification: 

Pages: 10-21

Rychikhina N.S. Ivanovo State University of Chemistry and Technology, Ivanovo, Russian Federation
richihina@mail.ru

Objectives The objectives of the paper are the study of the origin, formation and development of the machine-building industry in the Ivanovo region; identification of the factors that influenced the success of the development in the region; study of structural changes in the industry during the recession; allocation of unplanned restructuring in the manufacturing and analysis of the impact of the negative effects of this process on the socio-economic situation in the region.
     Results Analysis of the life cycle of businesses showed that the stages of growth and maturity in the machine-building industry in the region had been accompanied by active introduction of progressive technologies, development of new products, production automation and modernization of equipment. For the development and enhancement of its competitiveness in line with the world levels of machine-building enterprises, the industry required huge investment to the introduction of innovation processes in production. While analyzing the processes of spontaneous restructuring of engineering, I have identified three stages of reduction of the industry in the region: the reorganization of the major machine-building plants in a small company with limited liability; the bankruptcy of large enterprises of the region; and the diversification of engineering companies with the transition to new economic activities. In addition, I have studied the negative effects of spontaneous restructuring of machine-building industry in the region: rising unemployment, the emergence of enterprise debt payments to the budget and off-budget funds, creating social tensions in the small towns where businesses were town-forming.
     Conclusions The study of unmanageable restructuring in the region proves that the social and economic significant industry during the crisis should be under the supervision of the regional authorities, to be subjected to a controlled restructuring and ensure the inflow of investment capital in the economy.

Keywords: crisis, restructuring, region, strategy

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