Assessment of the Amount of Economic Development of Rural Areas

At the meeting of the National Projects and Demographic Policy Council the President of the Russian Federation emphasized that “Rural areas have a robust economic, demographic, natural, historical and cultural potential. Our goal is by using it effectively for the main benefit of the whole country, to be able to achieve a fresh standard of living for an incredible number of our citizens.”

Currently, your choice of problems of the development of rural regions of the Russian Federation is carried out in the framework of the idea of long-term socio-economic development, the food security doctrine and the federal program “Sustainable development of rural areas.”

The effectiveness of the development of territories is characterized by comparing the consequence obtained with the value of the resources or costs used. Determination of the potency of the development of territories is founded on a contrast of its results with the cost of labour and with the value of productive resources. Development is associated with the idea of economic potential.

The word “potential” means possibilities, sources, tools, supplies, which can be actuated and used for achievement of certain goals. Accessibility to property potential as a result of economic stability and environmental conditions is understood being an economic potential. The economic interpretation of “potential” regards it as the power of the economic entity to ensure its long-term performance and achievement of strategic goals utilizing the system of available resources.

In this regard, we propose methodology for evaluation of the economic potential of rural areas, which allows considering the outcomes of the sustainable management of certain areas. We genuinely believe that the economic potential of rural areas is visible whilst the qualitative characteristics and quantitative measurement parameter. To do this it is necessary to define some indicators, the composition which depends upon the purposes of evaluation and needs of the assessment subject. Since it is difficult to provide the priority to any specific criteria, we propose to hold out a thorough assessment of the economic potential of rural areas, which allows calculating the integral index, which characterizes the municipality and the region as a whole. Economics of Development 7th edition PDF

The methodology includes an evaluation of the economic potential of areas as a status and as a status construction regarding the influence of the areas development factors. A substantial advantage is that the evaluation may be performed on the basis of the official statistics.

Analysis of the literature revealed that currently there are numerous ways of rating, however, within our opinion, these methodologies differ in the original pair of indicators, algorithm for calculating comparable indicators and rating construction. In this connection, it was decided to consider the last experience, improve and generalize existing strengths and develop this methodology.

Methodology of the evaluation of the economic potential of rural areas contains the following stages: justification of the parameters and indicators system characterizing the given parameter; calculation of comparable indicators; calculation of parameters with different methods (additive convolution method; the strategy of calculating the distance from the benchmark); rating construction; analysis of the outcomes obtained, the look for reserves of increase of the economic potential use efficiency. The qualitative characteristic of the economic potential of the location could be the extent of its sustainable development. Comparative evaluation makes it possible to consider most of the important parameters of economic development which are essential.

We identified the following elements in the structure of the economic potential: production potential, employment potential, financial potential, investment potential and consumption potential. Inside our opinion, this structure will allow to gauge the economic potential of rural areas objectively. Since rural areas are areas, which main activity could be the production of agricultural products, the structure of the production potential of the territories includes indicators of the agricultural sector development. At the same time frame, the agricultural production has got the necessity for manpower, financial, investment and other resources which currently are now being used or can be used in the industry.

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