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									Barents2010draftSWOTmilestone1.doc                           2004-02-14
Ulf Wiberg
Ulf.Wiberg@geography.umu.se
Telephone: +46 90 786 55 37, 070 - 548 64 66.




                                BARENTS 2010
                                Work package 1
                          General SWOT analysis and
          suggested spatial perspective for the strategy and action plan


Introduction
A major task within work package 1 during milestone 1 is to launch a draft version
of a general SWOT analysis for the Nordic and Russian part of the Barents Region.
This report is presenting the procedure and result of this effort.

The work on a SWOT analysis started already during the preparatory work on the
application, which has resulted in the project Barents 2010. On mission by a
reference/steering group appointed by the Barents Region Committee (Eilert
Carlson, chair, Kjell Lindgren and Birgitta Nilsson) four researchers with a regional
science profile produced a first version of a SWOT analysis.

The research group activated for this work consisted of the following four persons:
Ulf Wiberg, Professor of economic geography at Umeå University (coordinator),
Aage Mariussen, Senior researcher at Nordregio in Stockholm,
Pentti Malinen, Senior researcher, Kajaani Research and Development Centre.
Svetlana Gorlanova, Senior researcher, vice-governor, Archangelsk.

At the kick off meeting for Barents 2010 in November 2003 was decided that the
SWOT analysis produced by this group during 2002 should be updated and
anchored among the representatives from the different parts of the Barents Region
taking part in the Barents 2010 work package 1. Below this revised version is
presented.

The SWOT analysis
The basic idea of a SWOT analysis is to analyse the internal conditions and driving
forces as either positive or negative, together with the external environment’s
restraining structures and forces in terms of either opportunities or threats. The
particular Strengths, Weaknesses, Opportunities and Threats (SWOT) are outlined
in broad socio-economic terms. When interpreting a SWOT analysis it may be of
importance to pay regard to the role of time in each addressed perspective. Some


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structures or conditions are very stable over time while others may change very
fast. Some are possible to change through policy and planning measures while
others are immobile or dependent on attitudes and preferences among different
groups of people.

The general SWOT analysis presented below, which is divided into a Russian and a
Nordic version, is suggested to be further elaborated along two lines. The first line
is to consider the internal differences across regions both in Russia and among the
Nordic countries. The second line is to clarify differences in institutional and
professional competence at the regional and trans-regional levels to intervene in
ongoing processes, which are regarded as not desirable. The role of Barents
Region institutions in strategy-making for socio-economic development in the
Region is related and dependent not only on national and EU rules and policy-
making, but also on policy-making capacity on local and regional level in all 13
subregions. Of special importance is to pay attention to future arrangements of the
continuation of Structural Funds and strategies related to EUs Northern
Dimension.
A socio-economic SWOT analysis for the Russian part of the Barents Region
Strengths
     Availability of raw materials: abundant volumes of minerals, forests, oil, gas,
        coal, bauxites and fish.
     Low cost of raw material supply for manufacturing.
     Low labour costs.
     Nature with great potentials for tourism.
     Arkhangelsk is the largest transport node and seaport for the handling of
        export-import freight from Siberia and Far East to Europe and other parts
        of the world. Murmansk is also an important seaport. Building of the railway
        Carpogory-Vendenga will provide possibilities for direct deliveries of goods
        from regions in the Asian part of Russia to the seaport of Arkhangelsk.
     Several strategic gateway positions for East-West contacts.
     Historically shaped and well developed international contacts of Arkhangelsk
        region; positive experience due to the participation in numerous common
        projects with European and Asian countries but also with USA.

Weaknesses
   Remoteness to central parts of Russia.
   Dependency among manufacturing industries on export deliveries.
   Drastic decline in output of the main commodities in all sectors of the
     economy after the fall of the Soviet Union.




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    Export of staple resources and products is vulnerable due to the volatility of
     the world prices related to the timber and oil-gas industrial complex
     products.
    High energy costs within the region.
    Environmental problems related to the urban location of the big industrial
     plants.
    Ecological problems caused by smelt works and pulp and paper manufacture
     (water and air pollution).
    Overstaffed enterprises relative to corresponding industrial activities in
     western countries.
    Middle unemployment figures.
    Lack of technically skilled labour.
    Insufficient skills in foreign languages.
    Institutions for higher education and research in the region are not used
     actively as instruments for renewal of trade and industry.
    Weak guarantees for the legal and economic security of business.
    Legal/bureaucratic obstacles.
    Customs procedures and regulations do not meet the adopted European
     standards.
    High rate of failure among enterprises in the raw material production sector..
    Regional and local authorities lack the budgetary resources necessary to
     maintain welfare services and other basic services.
    Big gap between the benefits from raw material production and the rapidly
     increased costs of much-needed investments in machinery and infrastructure
     for transports and communication.
    Lack of global market knowledge and international experience among
     producers.
    Lack of flexibility in following production quality requirements.
    Lack of co-ordination among producers to minimise freight costs.
    Significant differences between the regions in terms of supply of energy
     resources and a need to reconstruct existing energy producing plants.


Opportunities
   International co-operation within the Barents Region, the European Union
      and at a global level.
   Expanding services and entering new markets in Europe and America..
   Development and gathering of market intelligence at all levels in the product
      chain.
   Development of more competitive service industry.



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    Elaboration of new schemes and mechanisms in international financing of
     projects within various spheres of common activity.
    Scope for innovations in the future extraction of mineral resources, and in
     the exploitation of gas/oil deposits and other natural resources.
    Implementing regional guarantees for the establishment of joint-venture
     firms and businesses.
    Improving the infrastructure for transport and communication.

Threats
    Demographic losses, the mortality rate exceeds the birth rate.
    Ageing population, net out-migration of young and working-age people.
    High dependency of the resource-based industries on the political stability of
        Russia in general.
    Potential losses of capital due to the national macroeconomic situation.
    Regional dependence on the central government of Russia.
    Fall in world prices for the main export commodities.
    Raise of customs duties in western countries on main export commodities.

A socio-economic SWOT analysis for the Nordic part of the Barents Region

Strengths
     Availability of raw materials: minerals, forests, fish, oil and gas.
     Accessible wilderness and unique cultural milieus.
     Skilled labour, low labour turnover.
     Industrial tradition, capital intensive enterprises with high refinement and
        export values.
     Well developed public sector services.
     Universities with a great variety of study programmes and research fields.
        Long tradition of distance education.
     Strategic gateway location between Russia and the EU.

Weaknesses
   Peripheral location, sparsely populated, depopulation, outmigration of young
     people, ageing.
   Sensitive natural environment.
   Production focused on low-value products.
   Export of staple products is highly vulnerable to price volatility due to the
     region’s dependency on a limited variety of commodities.
   High internal transport costs due to monopoly-pricing.
   Limited transport options.



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    Lack of high level expertise and co-operation among key actors and
     stakeholders.
    Small local labour markets
    Scarcity of entrepreneurs and good prototypes.
    Low attractivity, especially in interior areas, on females.
    Diffuse identity - combination of conflicting interests and strong male
     culture
    Geographical, infrastructural, economic and institutional barriers to co-
     operation across nation state borders.
    Very limited regional markets.

Opportunities
   International co-operation within the Barents Region, the European Union
      and at a global level.
   Expanding services and entering new markets in Asia.
   Development and gathering of market intelligence at all levels in the product
      chain.
   Development of more competitive service industry.
   Internationally funded projects in services, culture, education and health
      care.
   Scope for innovations in the future extraction of mineral resources, fish
      resources, and in the exploitation of gas and oil deposits.
   Improving the infrastructure for transport and communication.
   Further refinement of raw materials.
   Unique tourism concepts.
   Increased partnerships between the business sector and R&D.

Threats
    Demographic losses, the mortality rate exceeds the birth rate.
    Ageing population, net out-migration of young and working-age people.
    Lack of qualified labour, especially in sparsely populated interior
        municipalities.
    Insufficient infrastructure for communications and transports.
    Low visibility at international markets.
    Lack of adjustment strategies to global market shifts.
    Lack of entrepreneurs and other key persons.
    Low presence of firms within growing branches.
    High dependency on state activities and transfers.




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