This publication has been produced with the assistance of the European Union. The contents of this publication is the sole responsibility of the authors and can in no way be taken to reflect the views of the European Union.
Main results of activities on the component "Survey of the Suojarvi District enterprises, their growth potential and experience in national and international trade and co-operation"
Experts: E. Nemkovich, Yu. Saveliev
Socio-economic situation in the Suojärvi District
Industry in the district is represented by the forest sector (contributing 87% to the total industrial product), as well as by the food industry, mining and extraction enterprises. Industrial production volumes are shown in the figure.
Fig.1 Suojärvi District industrial production volumes
Industrial production volume - total, incl.
Logging and wood processingая
Pulp & paper industry
The output of major industrial products in the Suojarvi District is shown in the table.
Output of major industrial products
Timber haulage, 1000 cub.m
Round timber, 1000 cub.m
Merchantable timber, 1000 cub.m
Lumber, 1000 cub.m
Bread and bakery products, ton
Industrial production traditional for the district (timber haulage, round timber and lumber) has been decreasing. This fact suggests that processing industries start developing actively in the district. Hence, the district retains more and more added value.
The trade turnover in the district has been growing notably. Thus, a 2.2-fold increase was recorded between 1999 and 2002 (fig.2).
Fig.2 Dynamics of total and retail trade turnover, RUR 1000
Trade turnover - total
Retail - total
The tendency for a decrease in the proportion of foods in total sales indicates a stabilization of the people's monetary income and, as a consequence, a rise in effective demand for non-foods.
One of the new priority sectors of the district economy is tourism. The main parameters of tourism development in the Suojarvi District and revenues from tourism are shown in the table.
Parameters of tourism development in the Suojärvi District
No of tourist firms
No of accommodation facilities
No of employees in tourism, ind.
No of tourists, ind.
Amount of services provided ("Tolvajarvi" municipal enterprise), 1000 RUR
The main factors hindering tourism development in the Suojarvi District are the extremely underdeveloped tourist infrastructure, lack of accommodation facilities and low quality of hotel services, poor condition of the roads (particularly those leading to the "Tolvajarvi" reserve), insecurity and limited scope of bank operations.
Factors for the economic development of enterprises in the district
The factors influencing the economic development of enterprises in the Suojarvi District can be divided into positive and negative (calling for a solution) ones. Among the positive factors one can name the following:
introduction of advanced technologies in timber harvesting, non-metallic mineral extraction and up-to-date machines and mechanisms;
growing proportion of deep processing of timber, which will help retain jobs, strengthen and expand the enterprises' position in the market;
progressing construction volumes in Russia, creating the background for the development of mining and extraction focusing on the production of non-metallic building materials in the district;
growing quality of the timber products owing to modernization and reconstruction of operating enterprises;
introduction of new products meeting global standards.
Some of the negative factors that are going to hold back the development of enterprises in the district in the near future are:
deficit of current assets and own financial resources for developing the processes;
faults and instability of legislation;
growing proportion of low-grade wood and decreasing output of merchantable timber;
forest resources difficult to access and remote (high costs of road construction and maintenance of the transport infrastructure);
poor transport infrastructure;
insufficient professional qualifications of the staff;
Findings of the SWOT analysis of the district economy
The key factors to rely upon in the Suojarvi District economic development are:
employment of the district's tourism and recreation potential;
making use of the advantages offered by the vicinity to the EU border, facilitation of the borderline infrastructure;
promotion of deep processing of timber and utilization of the mineral and building material resources;
promotion of transboundary trade and economic contacts, and foundation of joint ventures.
Assessment of the Suojarvi District attractiveness to investments
Studies have been carried out permitting a potential investor to choose this or that district of the republic for investing. The choice may be hinted by the overall socio-economic situation in the district, or by individual parameters used in the assessment.
The Suojärvi district is the republic's leader in the "timber stocks" parameter of the investment attractiveness assessment.
The district is medium-ranked on most other parameters.
There are no parameters in which the Suojarvi District is among the worst.
The District holds an overall fifth position among Republic of Karelia districts as regards attractiveness to investments.
Assessment of the competitiveness of the Suojarvi District industries
Attractiveness of individual sectors of the district economy to investments was assessed using Porter's competitive advantage analysis method ("Porter's diamond model"). Experts scored the competitive advantage of the sectors that will represent the district's international specialization (10 points set as the top score):
Forest sector (5.75 points)
Mining and extraction (3.25 points)
International nature tourism (3.5 points)
The sector most competitive in external markets today is the Suojarvi District forest sector owing to high rating in factors such as local rivalry, factor conditions and related and supporting industries.
The competitiveness of mining & extraction and tourism is now rather low because of the lack of infrastructure and insufficient factor conditions.
The leaders as regards the market potential (how favourable the external market demand conditions are) are mining & extraction and nature tourism.
The market potential for the forest sector is rather low because of the high competition in the forest product market.
The main way to raise the competitiveness of the district's forest sector is to bring firm interests and strategies in agreement with the district development strategy.
Positioning and investment prioritisation
Drawing upon the results of the assessment of the district economy attractiveness to investments as well as the analysis of the sectors' competitiveness, the district's main products were positioned in external markets and investment priorities were determined. A model of the "market growth - market share" matrix (Boston Consulting Group Inc. - BCG) and the McKinsey model (market attractiveness/competitive advantage) were used for positioning the district products.
Deep processing of timber, including expansion of building material manufacturing, organization of furniture making, woodhouse building, pulp-&-paper production.
Exploitation of non-metallic mineral deposits and development of building material manufacturing (crushed stone for construction, quarrystone, facing slabs, etc.).
Development of tourism and tourist infrastructure (including ecological, water and host tourism development by stimulating various forms of self-employment).