• Editorial Board +
• For Contributors +
• Journal Search +
Journal Search Engine
ISSN : 1598-7248 (Print)
ISSN : 2234-6473 (Online)
Industrial Engineering & Management Systems Vol.19 No.1 pp.26-34
DOI : https://doi.org/10.7232/iems.2020.19.1.026

# Sustainable Economic Development and Resource-Saving: Interrelation and Mutual Influence

Olga V. Antipova*, Oleg M. Suprun, Vera A. Gnevasheva, Sergeys Ignatyevs, Nazygul Batyrova
Department of Economics and Enterprise Management, Almetyevsk State Oil Institute, Almetyevsk, Russian Federation
Department of Economics and Accounting, Kharkiv Institute of Trade and Economics of Kyiv National University of Trade and Economics, Kharkiv, Ukraine
Department of Demographic and Migration Policy, Moscow State Institute of International Relations (MGIMO University), Moscow, Russian Federation
Faculty of Economics and Management, Baltic International Academy, Riga, Latvia
Department of Public Administration and Regional Development, Khoja Akhmet Yassawi International Kazakh-Turkish University, Turkestan, Republic of Kazakhstan
*Corresponding Author, E-mail: olga.v.ant@national-univesity.info
November 6, 2019 January 14, 2020 January 20, 2020

## ABSTRACT

The issues of resource-saving are the central problem in the national economy in general and in the economy of the enterprise. The assessment of production efficiency and resource-saving programs is one of the most important conditions that determine the validity of management decisions. This study focuses on the complexities of the transition from a consumption economy to the development based on a reasonable balance between consumption and environmental conservation. The main purpose is to illustrate the relationship between the factors of resource-saving and sustainable development of the economy. The methods of communication modeling based on reducing the dimension of the factor space through Hotelling transformations are used. Displaying such a logical connection determines the need for a stimulating effect on the joint activities of production units of enterprises and scientific institutions. As a result, the economy obtains the following benefits: a new understanding of efficiency based on the consideration of the cost of natural goods and the damage from anti-environmental decisions; the benefits of improving technologies of lean production, recovery, the organization of production and labor.

## 1. INTRODUCTION

The processes of environmental degradation, including the reduction of water, air, soil quality, depletion of natural resources, the greenhouse effect are consequences of the consumer model of the economy. Successive changes in degradation processes are accelerated by catastrophic population growth in the developing countries of Latin America, as well as in some ‘newly industrialized countries’. By the 70th of the last century, the world economy has reached the limit of subsoil use and wildlife resources. Today, their use exceeds all the possibilities of the planet to resume.

Under the circumstances, an emergency transition has been initiated from a consumption economy (involving a large-scale increase in production) to the development based on a reasonable balance between consumption and the state of the environment, including the preservation of opportunities for the renewal of natural resources (declared in 1987 by the UN Commission on Environment and Development). The impact on the links between resource conservation and sustainable economic development is important to accelerate this transition (Galustyan, 2016). The need for active influence on these relations is due to the peculiarities of the mutual influence of categories on each other, as a result of which the specific consumption of raw materials, energy and other resources in the process of their consumption is minimized.

The dependence between resource-saving and sustainable development manifests itself in the developed countries of the world (such as Japan, Germany, Great Britain, France, etc.). The experience of countries that are poor in natural resources is most illustrative. This is because in addition to the focus on the production of environmentally friendly products, minimization, processing and destruction of waste – the efficiency of scarce resources is transformed into one of the determining factors of the competitive products’ manufacturing, economic and political independence (Mishchenko and Mishchenko, 2016;Okhotnikov and Sharifullin, 2018;Atanelishvili and Silagadze, 2018). So, since the 1990s, the increase in the demand for fuel, energy, raw materials and materials of developed countries, which depend on their imports by 75-80%, is met exclusively through rational use and savings. The process is based on the following facts:

• 1) the integrated use of natural and physical re-sources (based on the identification, consideration, elimination of waste and wasteful expenditure);

• 2) involvement, as a full-fledged raw material, in the sphere of the interaction of secondary material resources’ producers (formed in the process of their primary consumption) and associated products (Shakirov and Kwon, 2017).

At the same time, in developing countries (as Brazil, Venezuela, Mexico, Russia, and Ukraine), savings in fuel, energy, raw materials and materials are considered from the standpoint of savings in resource-intensive areas of production, due to the policy of limiting consumption (for example, the establishment of limit industrial consumption of electric power) (Gryzunova, 2015). This slows down the processes of environmental degradation but leads to ignoring the social and economic effects and reducing the quality of products (Schukina, 2015). The root of the problem is the lack of attention to the basic elements that form the link between resource-saving and sustainable economic development, namely: methods of reducing the material intensity of production; measures that optimize the consumer properties of products, technical, economic and organizational level of its production and consumption; technologies that ensure maximum use of all useful components of resources. The main purpose of the study is to illustrate the relationship between the factors of resource-saving and sustainable development of the economy, causing the reorientation of economic activity of the company to minimize the specific consumption of raw materials and energy in the process of consumption.

## 2. MATERIALS AND METHODS

Concerning the impossibility of summing all re-sources of production, the existing approaches to identifying basic elements (which provide linkages between conservation and sustainable economic development) are based on the study of the trends in energy and metal consumption of the gross domestic product (approach characteristic for Shliphake (2017), Resource Saving and Circulating Economy), Kordyukov and Proskurin (2015). To our mind, such a decision is not always justified. Production can be classified into energy, metal, fuel, water, wood and tare-capacious (Platko and Sting, 2017). At the same time, the result of resource-saving is a simulated indicator due to a significant number of factors. The alternative is the approach of Khansevyarov (2011), Shakirov and Kwon (2017), Porter (2010). In this case, the relations in the studied community are measured by the efficiency equation formed based on the total number of factors that have a significant impact on the result (the simulated indicator). The problem of studying the relationship between resource-saving and sustainable economic development is the following risks (Gryzunova, 2015;Okhotnikov and Sharifullin, 2018;Galustyan, 2016;Chovin, 2013):

• • occurrence of multicollinearity, with similarity of explanatory variables; wrong selec-tion of variables. The resource-saving

• • process synthesizes a long list of potentially useful explanatory variables, such as greenhouse gas emissions (million tons), associated petroleum gas utilization (%), utilization and disposal of in-dustrial waste (thousand tons), waste generation (thousand tons), contaminated land area (ha), etc.;

• • wrong choice of model due to potential mismatches between the objectives of resource-saving and the classical model of economic efficiency.

The Russian Federation, according to the system of national eco-indicators of the Organization for Economic Cooperation and Development (OECD), occupies one of the last places on sustainable economic development (being in the same group with India, Venezuela and Brazil (Pott, 2018). For example, in 2016-2017, the increase in national needs for fuel, energy, raw materials and materials was met through rational use and savings by 10-11.8 %. Also, out of 130 countries participating in the OECD rating, Russia occupies the 89th one in terms of reuse of biological waste, 101st – in terms of reuse of organic and non-organic substances and 110th in the secondary use of complex products that are subject to separation or disassembly into simpler components (Pott, 2018). Secondary energy resources are poorly used (115th place in the rating (Pott, 2018). In particular, the priority is given to the use of energy-containing wastes, considering the possibility of their use as fuel for engines without any recycling. At the same time, pyrolysis and gasification are practically not developed. On their basis, 1.08% of the solid residue of energy-containing waste is processed (Pott, 2018). Thus, it is necessary to determine the ways to strengthen Russia’s position in this area.

One of the measures to enhance sustainable development is a point impact on its links with resource conservation. Namely, the main driving forces are necessary to start the process of economic and social changes (Porter, 2010;Pott, 2018). Critical analysis of approaches to the study of numerous factors of resource-saving, complex relationships between them and sustainable development of the economy determines the need for data reduction (with the loss of the least amount of relevant information), as well as the use of mathematical models, with the following potential (Kordyukov and Bakrunov, 2015;Gryzunova, 2015):

• 1) to identify the tasks and deliverables of the rational use of resources (expressed in terms of efficiency). The model should be formed considering the possible space and similarity of explanatory variables (factors);

• 2) to describe the patterns of relationships that objectively exist between resource conservation and sustainable development.

Given this specificity, the simplest method of studying such relationships is to use a model based on the main components or the Hotelling transformation. Con-cerning the economy of the Russian Federation, the logic is to illustrate these connections not through the original space of hyperplanes (of dimension given a lengthy list of factors determining the efficiency of the resource according to different companies), and through reducing the hyperplane (T). The reduction process is carried out according to the results of the sample. It is assumed that the hyperplane is chosen, the error of the data illustration is minimal, based on the sum of the squared deviations (Shliphake, 2017). Characteristic properties of the Hotelling transformation can be considered an illustration of the relationship, taking into account the specific essence of efficiency. It is based on considering the cost of natural goods and damage from wrong (anti-ecological) decisions, including damage from the deterioration of natural conditions of some areas (for public health), from the ‘overconsumption’ of resources, etc. Thus, if in the transition to sustainable development in the economy, to designate the effect (Е) in the simplest form, an extended equation of efficiency is formed, considering the economic (Ве) and socio-environmental (Ве) benefits, the corresponding costs and damages (Се, Се) (Proskurin, 2015):

(1)

The extended efficiency equation is significant, provided that environmental benefits are formed as the difference between

Naturally, depending on the direction of re-source-saving, the benefits (B) can be considered as socio-ecological and economic, including the benefits of reducing pollution caused by this factor, improving public health, saving resources, etc. In the case of ‘anti-ecological’ orientation, there are damages to the environment and health etc. (Cе). The formation of the hyperplane in discrete (the set of values of which is even, changes between multiple stable states (Kordyukov and Bakrunov, 2015) and the non-discrete factors (the range of which is identified as an uncountable, continuous quantity, mapping a separate side of rationalization process, however, does not detect their common essence (Shliphake, 2017). The driving forces most conducive to resource-saving are considered in the framework of the total data integrated by sample (composed of production units of enterprises of the Russian Federation). Hotelling transformation means checking the hypothesis as follows (Shliphake, 2017;Galustyan, 2016;Chovin, 2013):

• 1) the basic countable set of factors of resource-saving is based on the following effects: the scale of production (it is assumed that in single and small-scale production the loss of material resources is 50%, and mass production is 5%); production diversity (it is assumed that highly specialized production consumes an average by 25-25% more material resources than multi-profile and combined one); diffusion of innovation (it is assumed that diffusion of innovation is synthesized by the cooperation of the production unit with scientific (profile) institutions);

• 2) the basic non-countable set of resource-saving factors is based on the effectiveness of specific activities. On a global scale, it is a set of actions aimed at the use of organizational and technical activities and technologies that ensure as follows: minimizing the loss of materials; secondary use of resources (spent fuel, waste, by-products and others); saving electricity, materials, raw materials (SDG Index and Dashboards Report, 2017).

## 3. RESULTS AND DISCUSSION

Given the low % of Russian enterprises focused on resource-saving (≈4% (Pott, 2018), the allocation of significant and natural features of the logical relationship between resource-saving and sustainable development of the Russian economy can be identified by the example of insulating abstraction, the input data for the formation of which are presented in the original matrix (or the original hyperplane space) (Table 1). The purpose of abstraction is to produce the results of the isolation of some elements of a particular micro set on the economic activity of the company as a whole (i.e. the economy of the Russian Federation).

As a result of transformations focused on the formation of TScores ((function SIMCA ScoresPCA (Xraw; 12; 3) and P Loadings (function SIMCA LoadingsPCA (Xraw; 12; 3))), the projections of the initial samples (J–dimensional vectors x1, ..., xI) on the A-dimensional subspace of the principal components are obtained. The coordinates of the samples in a new reducing hyperplane should be marked based on the projection of the measures of orthogonality for each of the components (a function of SIMCA AMNOG (TRANSP (Tscores); Tscores)). The projection of the measures of orthogonality for each of the components is highlighted in Table 2. At the same time, the process of reduction of the initial hyperplane space (Table 1) is carried out based on a graphical model of pyritization of the factors most im-portant in ensuring the links between resource-saving and sustainable development of the objects of analysis (Figure 1).

Based on the values, the prioritization of the factors most important in ensuring the links between resource-saving and sustainable development of the Russian economy is implemented. The trigger of the prioritization process is the measure of the orthogonality of the factors (λ). Thus, the reduction of the orthogonality measure determines the admissibility of removing the factor from the hyperplane, without compromising the stability of the links (Valiev and Kosolapov, 2015;Kubarev and Ignatieva, 2018;Malysheva and Shinkevich, 2018). From the perspective of the current values of the residual matrix (the elements of which are formed based on the matrix function SIMCA Xauto-MUMNOZH (TScores4; TRANSP (Pload4)), the priority is to keep the first 4 projections as the main ones. Namely: technologies of minimization of production losses of raw materials, production, materials; secondary use of resources (recuperation); improvement of the organization of production and work (for the purpose of economy of the electric power); cooperation with scientific (specialized) institutions. The results refute the assumptions about the expediency of assigning high priorities for other factors that are part of the original hyperplane space (they constitute an orthonormal system in which each element is unique, but dependent on the principal components) (Petrina and Savkina, 2017;Silova, 2017;Sotnik, 2015).

An important feature of any of the selected main components is their relationship. This defines such a commonality as an orthogonal system, having mas-tered the intricacies of the construction of which it is possible to build effective relations at the local level (the level of a separate production unit) and to organize a balance between consumption and the state of the envi-ronment in all spheres of the economy. The orthogonali-ty of the system is evidenced by the fact that the removal of any PC1, PC2, PC3, PC4 leads to the extent of the violation of the relations’ stability, in which it is impossible to establish the specifics of achieving the sustainability of the economy by rationalizing the use of resources and meeting the increase in demand for them through savings (Schukina, 2015). Further illustration of the nature of the logical relationship between resource conservation and sustainable economic development means performed based on the error matrix (SUMMre-siduals. 4 PCs or matrix E), according to which it is pos-sible to understand how the data are arranged and whether they are well described by the PCA model. It namely means as follows:

• • total variance (ERV), which charac-terizes the deviation of the points of the correlation field from its center. In this case, the value is determined by PC1, PC2, PC3, PC4 as components that simulate 96.1% of the data on the relationship of the community ERV (=0.961). The algorithm of the calculation of ERV is standard:

$E R V = 1 − TRV ( A ) TRV ( 0 )$
(2)

where: TRV (A) – explaining variance for principal components (PC = 4); TRV (A) explaining variance for all variables of the original hyperplane space (Table 1).

• • explanatory variance (TRV), which characterizes the squared variation of the calculated values relative to the residual variation volume divided by the number of observations. The variation in the residual variation volume explains only 3.9% of the dependencies (TRV=0.39). The algorithm of the calculation of TRV is standard:

$T R V = ​ 1 I J ( λ 0 − ∑ a = 1 A ( λ a ) )$
(3)

where : JI is the sum of the line Residuals. 4 PCs (or matrix E); λ0 is a measure of orthogonality, considering the variables for which (according to the values of the measure of orthogonality on the line Residuals. 4 PCs) can be removed from the hyperplane (Table 1), without compromising the stability of the links; λa is the measure of the orthogonality of the principal components (PC = 4).

An illustration of the nature of the logical rela-tionship between resource conservation and sustainable development of the Russian economy through TRV and ERV is shown in Figure 2.

The quality of the coupling equation (y = -0.0127x2 +0.2073x+0.2366) is high (R2=0.8653). Ac-cording to the modeling data, it is possible to form con-ceptual recommendations for maximizing the pace of economic development in resource-saving conditions. Thus, despite the active development of technological clusters in our country (as specialized compact territories), the low level of cooperation of its residents in the field of resource-saving remains. This is even though such territories are created at universities, major research centers, and scientific cities. In the developed countries of the world, more than 50% of technological clusters act as a scientific, technological and technical basis for the implementation of innovative projects in the field of resource-saving. For example, since the early 2000s, this specialization is characteristic for 84% of technological clusters of France, 66% of technological clusters in the UK and Germany. The measure of cooperation intensification between the enterprises and scientific institutions is particularly timely, considering the direct correlation of the factor with the other main components PC1, PC2, PC4 (Figure 3).

It means that for 84% of cases, the values of the main components of those production units that cooperate with scientific institutions are higher than in those not marked by the influence of the component.

## 4. CONCLUSION

Thus, in order to maximize the rate of resource-saving in the Russian economy, it is necessary to develop technological clusters, the main priority of which will be the activation of cooperation between resident enterprises and scientific (specialized) institutions. The priority areas of joint activities should be identified as follows:

• 1) improvement or development of lean production technologies aimed at preventing losses of raw materials, products, materials: from excessive con¬sumption, movement and accumulation (in the form of stocks); from manufacturing defects, excessive processing (considered as the accumulation of processing operations that do not bring value or add functionality not demanded by the buyer) or excessive movements of personnel in the production process;

• 2) improvement of methods of recy-cling and pro¬cessing of waste (including biologi-cal waste, organic and non-organic substances, complex products);

• 3) improving the organization of pro-duction and labor in the direction of achieving economic and social efficiency.

Thus, resource-saving is the main driving force necessary to launch a global process of economic and social changes that ensure sustainable development of the Russian economy.

The mapping of such a logical connection (based on a multifactor model of dependence) determines the need to influence the cooperation, i.e. joint activities of production units of enterprises and scientific (specialized) institutions. In impacting the connection of production units of enterprises and research (specialized) institutions, the economy gets as follows:

• • understanding of effectiveness based on consideration of the cost of natural goods and damages from wrong (anti-ecological) decisions;

• • benefits, such as improvement of technologies of lean production, recovery, and the organization of production and work.

The formation of conceptual recommendations to enhance the pace of economic development in resource-saving conditions contributes to the following benefits:

• • the contradictions of evolutionary transformation in the economy of the Russian Federation, in particular, the problem of economic growth (while maintaining environmental quality);

• • improvement of the main provisions of the national strategy for sustainable develop-ment and the strategy of environmental safety of the Russian Federation.

## Figure

Illustration of Nature of Logical Communication between Resource-Saving and Sustainable Development of Economy of the Russian Federation Means of TRV and ERV, Ratio.

Graphical Representation of Correlation Communication of PC1, PC2, PC4 Values depending on PC3.

## Table

Initial Space of a Hyperplane for an Illustration of Logical Communication between Resource-Saving and Sustainable Development of Economy of the Russian Federation in 2017

Projection of Measures of Orthogonality for Each Component, %

## REFERENCES

1. Atanelishvili, T. and Silagadze, A. (2018), Xenophon: Economy finds the name, Bulletin of the Georgian National Academy of Sciences, 12(4), 163-166.
2. Chovin, V. A. (2013), The PCA program for constructing factors of models using the principal component method, International Journal of Applied and Fundamental Research, 5, 111-113.
3. Galustyan, M. Z. H. (2016), Using the method of principal components in the selection of factors for predicting the stock market, News of Tula State University. Economic and Legal Sciences, 2(1), 176-183.
4. Gryzunova, N. V. (2015), Creating resource-saving structures based on NGOs in the energy complex of Russia, Modern Science, 3, 10-18.
5. Khansevyarov, R. I. (2011), Resource conservation as a factor in improving production efficiency, Economics and Management, 6(79), 50-53.
6. Kordyukov, L. S. and Bakrunov, T. S. (2015), Energy saving as the basis of an efficient economy of the country, Energy and resource saving. Power supply. Non-traditional and E65 renewable energy sources: Materials of the All-Russian Scientific and Practical Conference of Students, Postgraduates and Young Scientists with International Participation, UrFU, Yekaterinburg, 145-148.
7. Kubarev, M. S. and Ignatieva, M. N. (2018), Ecologically sustainable use of natural resources is one of the main conditions for sustainable development, News of the Ural State Mining University. Economic Sciences, 1(49), 94-100.
8. Malysheva, T. V. and Shinkevich, A. I. (2018), Economic aspects of the greening of industrial production, Herald of NGIEI, 8(87), 129-141.
9. Mishchenko, S. V. and Mishchenko, V. I. (2016), Combining the functions of strategic development and crisis management in central banking, Actual Problems of Economics, 176(2), 266-272.
10. Okhotnikov, I. V. and Sharifullin, A. R. (2018), Energy saving and energy efficiency increase as a priority and a factor of economic growth and development of Russia, Economics and Practice: Materials of the VI Intern. Scientific conference, Chita, Young Scientist Publishing House, 10-13, cited 2018 August 25, Available from: https://moluch.ru/conf/econ/archive/265/14088/.
11. Petrina, O. A. and Savkina, E. V. (2017), On the issue of sustainable development of socio-economic systems, University Bulletin, 2, 37-41.
12. Platko, A. Y. and Sting, D. A. (2017), The relationship of sustainable economic development and international environmental safety, Electronic Scientific Journal, 2(31), 9-16.
13. Porter, M. E. (2010), The massachusetts higher education and knowledge cluster, cited 2018 August 25, Available from: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.570.1788&rep=rep1&type=pdf.
14. Pott К., (2018), Sustainable development ranking of states, Ernst & Young Global Limited, 11, 1024.
15. Proskurin, Z. V. (2015), Classification of areas of resource- saving organizations, State and Municipal Management. Scientific Notes of SKAGS, 2, 129-135.
16. Schukina, L. V. (2015), Theoretical aspects of sustainable development of regional socio-economic systems, Pskov Regional Journal, 21, 38–50.
17. SDG Index and Dashboards Report (2017), cited 2018 August 25, Available from: https://smartnet.niua.org/content/761945aa-0c25-4fab-8e3c-5c5dfe654175.
18. Shakirov, E. D. and Kwon, G. M. (2017), Regional aspects of quality management in lean manufacturing, Kazan Herald of Young Scientists, 5(31), 212-124.
19. Shliphake, X. (2017), Resource saving and circulating economy, Ferrous Metals, 3, 58-64.
20. Silova, E. S. (2017), To the problem of sustainable development of the region, Bulletin of the Chelyabinsk State University. Economics, 57(5), 7-14.
21. Sotnik, I. N. (2015), Formation of the mechanism of resource saving management as a factor in the transition to an efficient economy, Bulletin of Chelyabinsk State University. Economic Sciences, 8(363), 71-78.
22. Valiev, V. N. and Kosolapov, O. V. (2015), Resource saving aspect of resource saving, News of the Ural State Mining University. Economic Sciences, 2(38), 42-46.