Interregional Economic Relations

the exchange of products and services among regions of the country on the basis of the territorial social division of labor. The mutual exchange of production activity is an objectively necessary phase of social reproduction, linking production and distribution on the one hand with consumption on the other.

At the foundation of interregional economic relations is the territorial division of labor, which “confines special branches of production to special districts” (K. Marx and F. Engels, Soch., 2nd ed, vol. 23, p. 366). Developing this point, V, I. Lenin wrote: “Directly connected with the division of labor in general is . territorial division of labor—the specialization of certain districts in the production of some one product, of one sort of product, and even of a certain part of a product” (Poln. sobr. soch., 5th ed., vol. 3, p. 431).

Natural, historical, socioeconomic, and political factors influence the level of development of interregional economic relations; the roles of each factor vary from region to region. On a national economic scale each region acts both as a supplier and as a consumer of certain products. It is expedient that each region specialize, within optimal limits, in the production of particular products on the basis of its favorable natural and economic conditions. The role and degree of participation of individual regions is measured by the percentage of output that they produce for other regions.

The production that is the specialization of a particular region ordinarily requires smaller national economic expenditures than the same production in an unspecialized region. This is one of the chief factors stimulating the development and deepening of interregional economic relations. The rational specialization of regions in the production of particular types of output promotes reduction in the costs of social production.

Transportation and communications are essential conditions for growth in interregional economic relations; without them the exchange of products and the operational management of the exchange are impossible.

Balance methods constitute the basis for planning the amounts of specialized production by regions. The material balances of the production and consumption of different types of output are used to establish social need and identify surplus output in some regions and scarcities in others. This method of keeping track of social needs makes it possible to select the most efficient methods of production and shape rational marketing zones.

In a socialist society, interregional economic relations are on a planned basis; this means that the territorial division of labor can be consciously utilized. Planning also creates the prerequi-sites for comprehensive development of a region, for the optimal combinations of interregional economic relations with intra-regional product flows, and for the evening out of the levels of economic development of different regions. In the final analysis the development and deepening of interregional economic relations creates the objective prerequisites for growth in the social productivity of labor and in production efficiency.

In the capitalist countries the formation of interregional economic relations is dictated by the spontaneous (unplanned) needs of the market and the competitive struggle of the monopolies for new markets in order to receive maximum profit.