Potentials for innovative restructuring of industry in Northwestern Russia

Abstract

This paper examines the innovative restructuring of industry in Northwestern Russia, an area that includes St. Petersburg and its hinterlands and extends to the Barents Sea and the Ural Mountains. Profound restructuring of resource-based industries is taking place there although at a slow rate. The paper elaborates upon the reasons for the slow recovery of industry and searches for ways to explain the innovative restructuring of the Northwestern Russian economy. This research explicates that restructuring is partly regulated by inherited institutional and organizational structures and restricted by the flaws of the service sector. The importance of political choices in development is also discussed. The region's role in the division of labor within Europe is considered and viewed as an incentive for restructuring. In concluding, the elements of theories of innovative restructuring of industry and selective spatial modernization are presented.