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by Acad. Valery KULESHOV, director; Sergei KAZANTSEV, Dr. Sc. (Econ.), deputy director; Zemphira KALUGINA, Dr. Sc. (Sociol.), department head; Lyudmila SERGEYEVA, Cand. Sc. (Econ.), academic secretary; Institute of Economics and Industrial Management Siberian Branch, Russian Academy of Sciences (SB RAS)

The Institute of Economics and Industrial Management (SB RAS) is well-known in this country and abroad for its breakthrough ideas, unique research techniques, nontrivial results and topnotch personnel. All that is a real feather in its cap. How did it all happen? Outlooks for the future?


The very idea was incubated by Acad. Vassily Nemchinov who proposed to set up an Institute of Economics and Statistics at the Siberian Branch of the USSR Academy of Sciences. Although he wished to head the new-founded research center in person, he could not move from Moscow to the city of Novosibirsk in Siberia, the SB RAS seat, for reasons of poor health. Therefore Dr. Hermann Prudensky (elected to the national Academy of Sciences as corresponding member) was appointed the Institute's first director. And he suggested the name for it-Institute of Economics and Industrial Management.

But why in Siberia? As Acad. Abel Aganbegian (elected to the Science Academy in 1974) explained much later, Hermann Prudensky had invited him as deputy. "The point is that the Academy's humanities division was headed by a political economist, Acad. Konstantin Ostrovityanov [Vice-President of the USSR Academy of Sciences then. - Ed.], a man with a revolutionary past and consistent Marxist views, who, as it was said, had a keen nose for all that was new. Any new trend rubbed him the wrong way as undermining Marxism, a teaching as much as a hundred years old then."

Upon Prudensky's death (1967) Abel Aganbegian stepped into his shoes as director, at that time corresponding member of the Academy of Sciences. Little by little he molded the Institute to its present shape.

We were a standout among the Soviet Union's economic institutes affiliated with the Science Academy. First, we built our theoretical constructions proceeding from in-depth research into economic realities of this country's regions. For this purpose we sent fact-finding expeditions, and cooperated actively with territorial administrations and enterprise managers.

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Second, in our work we adhered to interdisciplinary research (on the boundaries of such disciplines as economics, geography, sociology, mathematics, planning and prognostication, and production management).

Third, we were making a broad use of mathematical methods, and computer hard- and software. You can see that our Computing Center equipped with most efficient hardware. In those days only one academic institute-the Moscow-based Central Institute of Economics and Mathematics-had that. We made the best of the potential of our Computing Center for sociological surveys data management, interindustry balance computations, and the like.

Fourth, we were bringing our theoretical research data to the state-of-the-art stage. In implementing this principle we worked on assignments of the head bodies of the Soviet Union and constituent Soviet republics, we had forged many economic contracts with ministries, territorial bodies of government, enterprises and organizations.


Certain happenings preceded the birth of our Institute. The works by Acads. Leonid Kantarovich, Valentin Novozhilov and Vassily Nemchinov had laid a solid theoretical groundwork for innovational methods of socioeconomic research. Some works published abroad on linear programming, mathematical statistics and economics, and on econometrics*, too, had been translated into Russian. Early in the 1960s the stage was set for economic-mathematical studies; scientists involved with the hard and natural disciplines, and scholars in the humanities-mathematicians, physicists and economists among them-joined hands. In 1960 the Mathematics Institute (later named after S.L. Sobolev) of the Siberian Branch of the USSR Academy of Sciences opened a Department of Mathematics and Economics that came to be headed by Leonid Kantarovich (Nobel Prize, 1975). In 1963 the Computing Center of the Siberian Branch, equipped with the best technology of the day, had moved into full power. An excellent school of experts on the theory of calculations had taken body and form. Abel Aganbegian enlisted young and go-ahead research scientists open to innovations. And the captains of the Siberian Branch-Acads. Mikhail Lavrentyev, Andrei Trofimuk, Guri Marchuk and other brilliant minds-were lending active support to our line of research.

To begin with, a Laboratory of Economic-Mathematical Studies was set up at Novosibirsk State University on the basis of self-supporting (a system whereby an industrial undertaking, etc., in the USSR financed itself without the aid of central state funds). Acad. Aganbegian invited 29 degree-holding scientists from Moscow to take a job there. All told the Laboratory employed a staff of 120, who brought economic-mathematical models and methods to the stage of practical use. Subsequently the Laboratory was upgraded into a Research Institute of Automated Control Systems employing as many as 1,000 (in 1965 it was incorporated within the USSR Ministry of Instrument-Making, Means of Automation and Control Systems).

* Econometrics-a discipline studying concrete quantitative interdependences of economic objects and processes. - Ed.

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A further impetus came from the All-Union (national) Conference held at Novosibirsk in October 1962 on the use of mathematical methods in planning. Its delegates hosted a plenary meeting of the Scientific Council of the USSR Academy of Sciences on the use of mathematics and computer technology in economic research and planning. Department heads and instructors of this country's universities and economic colleges also met to discuss adequate personnel training. In subsequent years we arranged regular seminars, conferences and symposia (international ones, too) of this kind. Special mention should be made of the International Conference on National Economy Modeling (1970): the first one to be held in our country, with leading economists-mathematicians of the United States, Europe and Asia taking part-among them three future Nobel prizewinners in economics - L. Kantarovich (USSR), T. Koopmans and L. Klein (USA).

Attacking economic-mathematical modeling problems, our economists made an important step forward in theory and methodology: they would not confine themselves to separate, individual models alone, but developed modular systems at different levels-at the level of the entire national economy, particular industries, regions and districts, down to concrete enterprises. This approach injected a new element into national economic planning. Our Economic-Mathematical Laboratory, working in close touch with the Economic-Mathematical Department of the Mathematics Institute (operating under the umbrella of the Siberian Branch of the national Academy of Sciences), pioneered in this field.

In those times only the Central Economic-Mathematical Institute of Moscow was on this track.

Developing a hierarchical, upstream system of models was a multitasking job calling for a proper choice and mathematical description of target-oriented functions, and a knowledge of interaction among models of different levels. Drs. Abel Aganbegian and Kirill Bagrinovsky, working with us at the time, formulated and validated conditions for task equivalence relative to different criteria of optimality, while Dr. Konstantin Waltuch (now RAS corresponding member) put forward and then substantiated theoretically a new formula of social usefulness which he later verified experimentally on statistical material collected in nearly 30 countries.

We at our Institute have always tried to gear economic models to higher efficiency of all branches of the national economy and higher competitiveness of our country on world markets and in finances. At this point we might just as well name some of our models now best known in many countries.

One is the dynamic interindustry balance model developed in 1965 by Dr. Nikolai Shatilov for preplanning calculations. It covered 29 branches of the Soviet national economy and became a foundation for many other models worked out at our Institute. Several years later losif Itskovich, Cand. Sc. (Math.), optimized it for 36 branches of the national economy. These models were used for calculating economic growth rates and balances within a short- and medium-term framework.

Thereupon Konstantin Waltuch and his pupils, Boris Lavrovsky and Vyacheslav Maksakov, came up with a

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An overview of the main prospective transportation corridors in Russia for the first quarter of the 21st century (by modular calculations of the Institute).

unique model (so far, the world's only one) for an interindustry balance of production capacities. It comprised statistical, dynamic and probabilistic variants and, together with physical indicators, was applied on the basis of real information provided by the Chief Computing Center of the USSR Gosplan (State Planning Committee).

In 1976 the system of models already at work in this country was supplemented with a macroeconomic system of national economic indicators suggested by Sergei Kazantsev. Gosplan and the State Committee on Science and Technology used it, among other things, for assessing the effectiveness of state programs for scientific and technological progress in the course of several five-year development plans.

Remarkably, proceeding from prognostication data obtained by Konstantin Waltuch's department on the basis of national economic models, we were able to predict negative development rates for the country's economy as of 1990. The error margin happened to be one year only. But many experts would not believe in that the downslide would occur as soon as that, and in their notes and materials sent to directive bodies forecast the downturn for the year 2000.

Simultaneously we were looking into the economic efficiency of ties among constituent republics and regions. The task was to specify them both for the nation as a whole and for each individual region. Accordingly, appropriate models were being elaborated to become a component part of our system of national economic planning.

At the close of the 1960s our Institute turned to ajob of work-interindustry balances for Siberia, with Dr. Robert Schniper in charge, assisted by Dr. Boris Orlov. Many economists regarded it as a tall order unfeasible for lack of information support. Nonetheless our people coped fine.

In 1967 our Institute got down to another important job at hand-calculations for the development and placement of the country's productive forces. Dr. Alexander Granberg was responsible for this project (in 1990 he was elected to the national Academy of Sciences as full member). Initially the model covered 16 industries (branches) and 11 economic zones. This work was kept up till 1990. The model made it possible to evaluate the role of different regions (Siberia including) in the economic development of the USSR as a whole-to do that in quantitative terms and, with facts and figures in hand, demonstrate the role and validity of interterritorial ties. The first forecasts made on this model covered a period of up to 1975. They became a start-out point for an economic-mathematical inquiry into the territorial aspect of economic systems.

Even at that stage, in keeping with our modular estimates predicated on hard information, we could confirm the expediency of faster, surpassing growth rates for Siberia. However, the Communist Party's Central Committee took a negative view of this and other breakthrough ideas born at our Institute. Yet our research staff persevered in its work against such heavy odds.

With the breakup of the Soviet Union our interregional models (in particular, in their interactive aspect) came to be used for assessing the aftereffects of the rupture of economic ties.

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This optimized system became part of an interregional model of the world economy. Development fore-casts-also for such countries as the United States, Japan, Germany and Britain-were made on the basis of econometric approaches. This work was masterminded and realized at the initial stage by Dr. Stanislav Menshikov. In the 1970s his research collective predicted a 1980 recession in the United States.

In 1964 Dr. Mark Bandman headed a research team that got down to models of territorial-production complexes (TPC). Their structure was to conform to the best scenarios of economic goal-reaching, i.e. to an optimal variant of the country's development territorially. Accordingly, a complex of interdependent industries placed within a particular territory was to be geared to multitasking at the national, industrial and regional levels. It took a rather short time to substantiate a subsystem of regional planning models that provided for optimization of the production structure and of TPC industrial centers. This arrangement allowed to tie in the requirements of particular industries with the potential of individual territories and of the nation, and world with the situation on markets.

The above models were implemented in practice for a sequential territorial restructuring of the economy of the Angara-Yenisei TPC, and for the Kursk Magnetic Anomaly, the Kemerovo, Vladimir and Voronezh Regions, and for Novosibirsk Akademgorodok (Science Town, the seat of the Siberian Branch of the national Academy of Sciences, and other research and educational institutions).

The interregional economic model was augmented by a model for economic interaction of regions interconnected by an equilibrated demand and supply on the national market. Equations of trade (or payments) balances were deduced for every regional block, while balance equations applied to interregional flows. Dr. Alexander Rubinstein (now resident in the United States) was charged with these matters under Dr. Alexander Granberg.

Dr. Viktor Suslov (elected to the Russian Academy of Sciences as corresponding member in 1997) and Vyacheslav Seliverstov, Cand. Sc. (Econ.), carried on the studies on the modeling of interindustry and interregional ties. They came up with many hands-on estimates.

Two alternative options were suggested in the 1960s to the original conception of models for territorial-production planning. Those were SIRENA (Russian acronym for Synthesis of Regional and National Economic Decisions) and SONAR (Coordination of Industrial and National Economic Decisions), both developed at our Institute. SIRENA provided for models at the national and interregional levels, while SONAR complemented the first package with target-oriented models confined to particular territories and also offered models of industrial systems. In the 1980s the expanding SIRENA network encompassed Siberia, the Far East, the Urals, Kazakhstan and Ukraine. The SONAR project was hooked to the fuel-energy, chemical, machine-engineering and lumber industry complexes.

The interest in the system of territorial models is still alive today under new economic realities. State-run and private companies have seen the need of this know-how in their strategic planning for balance streamlining and expert evaluation of investment programs and projects. We have worked out a scenario for the further development of the transportation infrastructure of the fuel-energy complex. Dr. Sergei Suspitsin is overseeing work on the model-methodic complex SIRENA-2 comprising databases, prognostic-analytical models and data collection and management procedures for federal districts of the Russian Federation, and 25 members and regions of the RF

The economic-mathematical models for the territorial structure of the economies of particular regions and countries, and of the global economy have been examined and adopted by research centers of many countries. Hundreds of scientific publications drawn on their basis have appeared here in Russia and abroad.

In addition our economists have come up with a wide range of standard optimized models for the development and location of enterprises within industries and interindustry complexes. These works were initiated by Drs. Leonard Kozlov, Alexei Alexeyev and Valery Kuleshov (the latter elected to the Russian Academy of Sciences in 1997 as full member). They elaborated a major trend in economic-mathematical modeling, namely optimal industrial planning, and prepared and published several methodological handbooks. In keeping with the ideology of systems modeling adopted in our Institute, Dr. Alexeyev and coworkers turned to a hierarchical system of industrial models and extended it down to the level of subindustries and enterprises. At every level linear programming was applied for an industry (branch) as a whole, network programming-for subindustries, and economic-statistical one-for particular production objects. This approach improved significantly the precision of calculation and the reliability of forecasts.

Subsequently industrial and interindustrial models came to be incorporated in the form of specific industri-

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Strategic investment projects of West Siberia and southern districts of Krasnoyarsk Territory.

al blocks into optimized and balance models of the country's interregional balance.

In our work on industrial and interindustrial models, and on models of subindustries and industrial complexes we were in close cooperation with the Siberian Energy Institute (Irkutsk), the All-Union R&D Institute supervising production management and data collection in the timber, wood-and-pulp, and wood-processing industries, the State Institute for Building Industry and Road-Construction Engineering (Moscow), and with many other bodies, ministeries and departments of this country.

At first models for industrial objects were developed and tested in our department involved with industrial models; this work was overseen by Dr. Benzian Rozin, Cands. Sc. (Econ.) Lyudmila Sergeyeva, Miron Yagolnitser and Mary Lukatskaya. Seeking to bring our ideas and practical recommendations within reach of the country's scientific community, its political leaders, regions and enterprises, we started two journals - Region: Economics and Sociology, and ECO, both in Russian.

The latter journal launched in 1970 is particularly much in demand. Its first editor-in-chief was Abel Aganbegian. Thanks to a happy combination of theory and practice, objective and straightforward analysis of statistical material and updates on progressive economic management, the journal has found broad readership in this country and elsewhere. Today it is circulated in 200 Russian cities-all the way from Kaliningrad in the west to Vladivostok in the Far East, in Plesetsk and Baikonur in the southeast. It has readers in the former Soviet republics and abroad. Economists all over the world-from the United States to Japan, from Iceland to South Africa-browse through its Internet website.


From the very beginning our Institute took up societal problems in their economic connotations-in particular, sociology, social skills, social time* (Hermann Prudensky), the labor pool of Siberia-its reproduction, distribution and employment (Lev Starodubsky); labor intensity and productivity, working and free time (Vassily Patrushev); labor supply, migrations and living standards in Siberia (Viktor Perevedentsev and Zhanna Zayonchkovskaya, Cand. Sc. (Geogr.)). A laboratory on the use of statistical and mathematical methods set up at Novosibirsk State University reared a research collective that prepared the ground for the contemporary economic-mathematical and economic-sociological schools. Prof. Tatyana Zaslavskaya (elected to the national Academy of Sciences in 1981) stood at their cradle and promoted their further development. As a university major and a graduate in physics and mathematics, she was quite at home where the exact sciences were concerned.

* Social time - the time of existence, functioning and development of society, its subsystems, communities and social groups. - Ed.

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A good deal of attention was given to labor pool formation (above all, its effectiveness in the USSR's newly developed regions - Tyumen and Yakutia). One of the hot social problems in Siberia-high labor turnover-received priority attention from Yevgeny Antosenkov, Zoya Kuprianova and Valentina Kalmyk. Vocational orientation of school graduates was likewise studied closely - in particular, by a team of Vladimir Shubkin. Concrete tendencies were studied on a solid foundation of mathematics and statistics with the use of correlation models, taxonomy*, image identification and factorial analysis.

The early 1980s were a turning point for the Novosibirsk economic and sociological school. In April 1983 our economists made a conceptual study of socialist production relations and outlined targets of economic sociology. The authors examined the causes of the declining efficiency of the Soviet economy and its development trends, and demonstrated the limitations of the traditional political economic approach; they stressed the need for a new paradigm relative to social processes. Published in the West as a "Novosibirsk Manifesto", this study was hailed as the first harbinger of the approaching "spring" in the USSR. In after years, despite the odds of the perestroika period, our sociological collective persisted as an independent research school attracting young talented economists. In the 1990s and 2000s they devised an institutional theory of Russia's economic development (Dr. Olga Bessonova), a theory of matrices (Dr. Svetlana Kirdina) as well as a sociological-economic concept of freedom transformation (Dr. Marina Shabanova). Social skills and adaptations are another research area (Dr. Lyudmila Korel).

Today the Novosibirsk economic-sociological school has come to grips with problems related to Russia's social institutions and their ever greater role at the time of radical social changes. The institutional methodology makes it possible to achieve an organic fusion between the macro- and microlevels of research, it has expanded the time limits of analysis and opened up new outlooks for economists.

Our Institute is keeping abreast with current trends in economic sociology and theories explaining social development laws from the standpoint of the activity of social objects. Our collective is working on several projects in this field (this work is coordinated by Zemfira Kalugina, Dr. Sc. (Sociology), one of the authors of the present article) dealing with the development of the human potential vis-a-vis social and economic innovations. The mechanisms, strategy and resources implicated in the adaptation of different social groups in a changing society fall within this category, too.

Illustrations supplied by the authors

* Taxonomy - method of mathematical clustering (classification) of objects. - Ed.


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