Tourism Leadership in Russia: Regional Capacity Estimation

  • Taira Murtuzalieva
  • Anatoly Shishkin
  • Boris Pogorilyak
Conference paper
Part of the Springer Proceedings in Business and Economics book series (SPBE)


This paper contains the analysis and discussions of the latest trends of the tourism development in Russian Federation. The country with an enormous tourism potential and vast natural and man-made wonders and beauties, Russia, still struggles with pathways how to attract the incoming tourism and make the country attractive for foreign visitors. Our research findings identified the main reasons for low or weak tourist attractiveness of selected regions in Russian Federation. Moreover, we proposed the methodology for estimating regional capacity and test it in practice. Furthermore, we come up with a number of useful recommendations about how to develop the region’s potential for enhancing its tourist and investment attractiveness while marketing tools. In addition, we design and define a comprehensive set of indicators that reflect the effectiveness of regional capacity management.

1 Introduction

During the recent decades of scientific researches, there was accumulated experience of the economic development of territories. The main result is applying the marketing potential in order to enhance the tourist and commercial attractiveness of Russian regions.

International tourism, as one of the forms of international economic relations, has acquired enormous dimensions in modern conditions and began to influence significantly on the political, economic, and cultural ties between states (Niño-Amézquita et al. 2017). It has become an important source of foreign exchange earnings for many developed and developing countries. Moreover, it embraces many novel trends, such as digitalization and the use of IT (Chiabai et al. 2014; Herget et al. 2015; Strielkowski 2016; Mitsche and Strielkowski 2016; Abrhám and Wang 2017).

Service sector for Russia is one of the important reserves for improving the international specialization of the country and increasing foreign exchange earnings. The scale and intensity of Russia’s participation in the international exchange of services, as in trade in goods, is determined to a decisive degree by the state and development trends of the national economy.

In the context of the weakening of the ruble’s position in the world foreign exchange market, the expenditures of outgoing tourists in dollar terms significantly decreased. Outbound tourism, which is the basis of import of services and is based on current incomes and savings of citizens, is less elastic in relation to fluctuations in the economic conjuncture. Price increasing in this segment has become an incentive for a more active domestic interest in national recreational wealth and its development issues (Vasylchak and Halachenko 2016).

Moreover, until nowadays, Russia has used its export potential in this area extremely poorly. As world-scale events took place in recent years in Russia (the Winter Olympic Games in Sochi, 2014; the Cup of the Confederation, 2017; the World Cup, 2018; etc.), it helps to attract foreign tourists. In addition, due to currency fluctuations, the average cost of stay of foreign citizens in Russia is rather low in relation to most countries that export tourism services. This fact also stimulates demand.

At the same time, Russia faces ever more intense competition on the world market of tourism services from a wide range of countries, including former socialist states, China, and countries of Southeast Asia (Zlyvko et al. 2014; Strielkowski and Tarkhanova 2016).

According to the data, presented in the UNWTO World Tourism Barometer, in 2015, the number of international tourist arrivals increased by 4.4% to a total number of 1184 million. This means that, in comparison to 2014, about 50 million more tourists traveled to international tourist destinations around the world.

In 2015, starting from the post-crisis 2010, the growth rates of international arrivals exceeded the average level, and each year this indicator grew by 4 or more percent. By region, in 2015, growth rates in Europe, the Americas, and Asia-Pacific regions were about 5%. The number of arrivals to the Middle East has increased by 3%, while in Africa, according to limited available data, this figure is estimated to have decreased by 3%, mainly due to the weak results of North Africa, which hosts more than one third of arrivals in the region (UNWTO World Tourism Barometer 2015). This situation shows the necessity of usage of the tourist potential on the regional level and on the country level as well.

It is necessary to note the deep structural problems of the domestic tourism industry, which in many cases are not capable to provide a full range of modern services. There is an objective shortage of infrastructure and investment in its development. Measures, which can increase the proportion of more expensive active pastime for foreign citizens, including the development of adventure, environmental, extreme, sports, rural, health, and other popular tourism in addition to passive, hotel regime of stay in the country, are not sufficiently active and do not give tangible results despite the implemented federal target program “Domestic Tourism Development in the Russian Federation (2011–2018 years).”

2 Methodology

Different aspects of regional economy and territorial development were investigated by national and foreign scientists. Moreover, one can mention that methodological aspects of marketing research of attractiveness of the regions are still not well investigated. Marketing potential of the Russian regions is not fully estimated.

This study was carried out within the framework of the implementation of an internal grant commissioned by the Plekhanov Russian University of Economics. The purpose of this study is to have a systematic assessment of the marketing potential of the region and to justify its impact on the socioeconomic development of the territory. The main objectives of the study are the following:
  • To clarify the notion of “marketing potential of the region” and justify its role in the regional marketing system

  • To investigate and classify existing marketing tools in accordance with the priority tasks of strategic management of the regional marketing potential

  • To develop a methodology for assessing the marketing potential of the region as a system of interrelated, interdependent elements

  • To identify key indicators which are used to analyze and ensure the sustainable development of the region

  • To develop a set of indicators that determine the management effectiveness of the regional marketing potential

  • To formulate proposals, which help to develop marketing potential of the region and are focused on the implementation of strategic tasks of improving the competitiveness of the territory

3 Results and Outcomes

Tourist attractiveness is one of the important components in the socioeconomic development of any region (Murtuzalieva 2012). The tourist attractiveness of the region in Russian is used in two meanings: a comprehensive assessment of the recreational resources of the region; and, the other meaning, potential is exploited in such a way which provides an optimal tourist and recreational load and the tourist resources are fully preserved and developed, including such intangible assets of the region as the image and brands and the possibility of obtaining an appropriate social and economic effect (Shishkin and Pogorilyak 2012).

In the recent years, the tourist market in Russia has seriously changed: an objective decrease in the number of outbound tourist trips is accompanied by increase in domestic and inbound tourism.

While analyzing the statistics on the entry of foreign citizens into Russia during 2015, the inbound tourist flow to Russia, compared with 2014, increased by 13.7% – up to 2 million 937 thousand people. The list of the countries that report the increasing numbers of incoming tourists includes China (+ 65.3% in comparison with 2015), Germany (+ 2.5%), the USA (+ 2%), Turkey (+3.4%), and Israel (+ 17.7%).

By the end of 2016, Russia was visited by more than 22 million tourists, which is 10% more than in 2015. The number of domestic tourists in 2016 in Russia has grown to 55 million. The number of outbound tourist trips from Russia in 2016 was 32 million. Krasnodar region, Moscow region, and Crimea became the leaders of domestic tourism in 2016 among the regions of Russia.

The Republic of Tatarstan, Kaliningrad region, Kabardino-Balkaria, and Irkutsk and Bryansk regions showed high growth rates of domestic tourism in 2016. The Kaliningrad region was visited by 1.4 million tourists in 2016, which is 30% more than in 2015. Kabardino-Balkaria was visited by 400 thousand tourists in 2016, which is 40% more than a year earlier, and Bryansk region was visited by 55 thousand tourists, which is 51% more than in 2015, and Irkutsk region was visited by more than 1 million tourists, that is, a third more than in 2016 (Fig. 1).
Fig. 1

Dynamics of the tourist destination growth in the regions of Russia (Source: Federal Agency for Tourism 2017)

According to the Federal Agency for Tourism, in 2016, Russia was among the ten most frequently visited countries by tourists. Foreign tourists from neighborhood and distant countries increased their visits to the Russian Federation (Table 1).
Table 1

Number of tourist trips made by foreign citizens in the Russian Federation




% change

















Republic of Korea




































Slovak Republic
















New Zealand








































Costa Rica








Sri Lanka












Kyrgyz Republic








Source: Federal Agency for Tourism (2017)

Such positive dynamics has an objective justification. But, unfortunately, many regions of the Russian Federation did not show tourist attractiveness. The main reason is the nonuniform economic development; geographical, climatic, social, and cultural reasons; and peculiarities of regional policy. Regarding this, a different level of investment attractiveness, political stability, quality of life, security, and tourist attractiveness has been formed in the regions.

The tourist attractiveness of the region is based on its potential, which should be understood as the totality of all the economic, social, and natural resources available in the region and determining or limiting the development of this region. State support measures are necessary for its development and maintenance. Strategies and programs for the tourism development through forecasting and assessment of tourism potential at the regional level are the main state instruments of tourism activities regulation (Klimenko and Klimenko 2015).

4 Discussion of Results

Region’s potential development is based, first of all, on the structural approach, which means identification of priorities among the elements of the potential for establishing their rational correlation and increasing the validity of the resources distribution among them. In this regard, marketing is an important tool for regional capacity development.

Marketing potential of the region as an object of strategic management and the factor of socialization is one of the most ambiguously interpreted topics in economic science. There is no single position, a common methodology of developing and functioning of the marketing potential system, both among foreign and national scientists and specialists (Butko 2017).

The development of marketing activities of territories, government bodies, and regional and federal structures in general is a necessary condition for improving the economic life of society. It influences the structure of demand, the volume of supply, the process of making consumer preferences, the market conditions, as well as the quality of life of the population of the region, investment attractiveness of potential investment objects, and efficiency of the reproductive process of specific territorial entities.

The marketing potential of the region to our mind is the totality of all the resources of the territory and its market opportunities, allowing to create and meet the needs of goods and services in socioeconomic relations of the population for:
  • Achieving indicators exceeding the national average

  • Creating better competitive advantages in comparison with other territories

  • Improving the territory image, its prestige, business, and social competitiveness

  • Improving the participation of the territory and its subjects in the implementation of international, federal, and regional programs

  • Attracting state orders and orders from other territories

  • Increasing the attractiveness of investment

Regional potential is the basis for the development of the marketing potential of the territory. The current state of the regional potential can influence both positively and negatively on the attractiveness of the territory for different groups of consumers. For example, unique natural conditions and historical sites can attract tourists, but the unstable social and economic situation in the region can make efforts to develop a tourist inflow useless (Murtuzalieva 2013). Effective functioning of available resources requires effective management of the region’s potential. Regional capacity assessment will identify hidden reserves of territory. It is recommended to conduct such an assessment with the help of the system of indicators:
  1. 1.

    Economic indicators (volume and efficiency of manufacturing, state of regional markets, investment activity, energy and food security, financial sustainability of the region, tax burden and an independent tax base for making local budgets, indicators of territorial structure, concentration of economic activity, diversification level, property structure in the region)

  2. 2.

    Social indicators (the level of unemployment and employment in the region, the dynamics of nominal and real incomes, the structure of income and expenditure, the ratio of the average monthly income and the subsistence minimum, the consumption of goods and services, the level of infrastructure development, etc.)

  3. 3.

    Environmental indicators (the level of pollutant emissions, the state of surface water bodies and sewage stocks, etc.)

  4. 4.

    Demographic indicators (the number of urban and rural population, sex and age structure, working-age population, educational level, population density, migration balance, etc.)

  5. 5.

    Indicators of the availability and use of resources in the region (labor potential, natural resource potential, productive capacity, infrastructure potential) (Danko 2016)


Analyzing the potential of the regions, we can distinguish medium-developed, problem regions and leading regions. At the first stage, the region’s potential is studied, and regions that need state support are identified (due to objective circumstances, they are in a crisis situation and do not have sufficient opportunities for self-development at the moment).

At the next stage, marketing strategies are developed for all groups of regions, which are aimed to solve important social and economic problems, support the competitive advantages of the region, and reduce factors that have a negative impact on the development of the region.
  1. 1.

    Calculation of the integral indicator of the potential usage:

  2. 2.
    $$ {y}_i^{\hbox{---} }=\sum {\mathrm{y}}_{\mathrm{ij}} $$

\( {\overline{\boldsymbol{y}}}_{\boldsymbol{i}} \) – relative value of the integral indicator

y ij – value of the i-index in the j-region
  1. 3.
    Determination of the average:
    $$ {Y}_{i\ average}=\left(\sum {y}_{ij1}+{y}_{ij2}+{y}_{ij n}\right)/n $$
n – number of regions
  1. 4.
    Calculation of the integral indicator (I):
    $$ I={y}_i^{--}/{y}_{i\ average} $$
After calculating the integral indicator, the regions are distributed according to the level of capacity development (medium-developed, problematic, developing potential, or region leader), using the following method of calculating the interval series:
$$ \Delta = Xmax- Xmin/1+3.322\ lgn $$

хmin – minimum value of the integral indicator

хmax – maximum value of the integral indicator

n – number of regions

The boundaries of the intervals (аj; aj+1) are calculated by the rule а1 = хmin − D/2, а2 = а1 + D, а3 = а2 + D, etc.; the interval development ends as soon as for the end aj+1 the next condition satisfies aj+1 > хmax. The calculation of D is made with the number of decimal places, one more than in the original data. At the next stage, regions are distributed according to the calculated interval boundaries. The distribution of regions in accordance with the calculated range gives an integral picture of the potential development, both in the region and in the country on the whole. Based on the results of the regional capacity assessment, we are invited to assess the level of regional potential usage (LRPU) by the following formula:
$$ \mathrm{LRPU}\frac{\sum \limits_{i-1}^n{W}_p}{\sum \limits_{i-1}^n{p}_i} $$

р – regional potential

\( \sum \limits_{i-1}^n{p}_i \) – number of evaluated potentials

W p – scoring of the potential of the region (3 points, a highly developed region (lead region); 2 points, developed region; 1 point, underdeveloped region)

Let us examine the level of the regional potential usage in the North Caucasus Federal District (NCFD). In our opinion, this region could satisfy bigger tourist demand than today as it has a tremendous recreational potential, especially geographical. In North Ossetia, Kabardino-Balkaria, and Karachay-Cherkessia, hundreds of mountaineering routes have been developed: Mizhergi, Dzhangitau, Shkhara, Pushkin peak, Elbrus, Dykhtau, and Koshtan-Tau. In addition to the skiing segment, the resorts of the North Caucasus could propose beach and balneological recreation. The latter allows the use of unique resources of the region – the richest sources of mineral water, almost 30% of all Russian reserves.

Despite the fact that the NCFD has favorable conditions for the development of tourism, so far natural benefits remain unused. Possessing an impressive recreational potential and a rapidly aging material and technical base in the absence of the necessary attention from investors, subjects within the NCFD should seek additional own opportunities and means to promote services and products, as well as popularize them for tourists. In such conditions, the use of marketing tools (based on studying and satisfying the needs of potential consumers) in the strategy of strengthening the competitive advantages of the region as a resort can become a crucial factor in increasing the competitiveness of this territory and increasing its share of the tourist market on a countrywide scale and the world as a whole. This should activate the inflow of both users and business operators and increase the investment attractiveness of the region, giving impetus to its further intensive economic development. The level of use of the regional potential of the NCFD regions is presented in Table 2.
Table 2

Level of the regional potential usage of the NCFD in 2017


Republic of Dagestan


Kabardino-Balkaria Republic

Karachay-Cherkessia Republic

Chechen Republic

North Ossetia-Alania

Stavropol region

















Natural resource

































2 (1.8)

1 (1.5)

1 (1.3)

1 (1.3)

2 (1.8)

1 (1.3)

2 (2)

Source: Own results. Bold: From 1 being the lowest to 3 being the highest

Overall, one can see that there is no highly developed territory in the NCFD: no region of the district has received a 3-point rating. The Republic of Dagestan, the Chechen Republic, and the Stavropol region belong to the category of the developed potential of the region because of labor, natural resources, and investment potentials. The remaining regions of the district are classified as underdeveloped regional potential.

5 Conclusions

This approach to assessing the regional potential is universal and can be applied in assessing the potential of any territorial formation. Unlike existing methods, the proposed approach makes it possible to assess in a complex way the potential available for a particular region. Approbation of the proposed algorithm for assessing the regional potential using the example of NCFD allowed not only to confirm the calculations of statistical data but also to obtain more detailed information about the development of the regions in the district.

Further research will be dedicated to the development of marketing strategies of the North Caucasus Federal District (a strategically important region of the Russian Federation), based on the revealed potential.

Natural resources in the region are rich, but labor potential has a weak socioeconomic, investment, innovative, and export potential. All these factors make impossible to create highly developed tourism sector in the region. At the same time, tourism in the North Caucasus Federal District should become in the future one of the main branches of the economy, which makes its budget. At the same time, the development of tourism should contribute to solving the problems of reducing the conflict potential of this region of the Russian Federation. Among the main reasons of the inefficient development of the regional potential in NCFD, we can point out the following.

Budgetary funds are used in inefficient way: State long-term targeted programs determine development of tourism infrastructure as a priority. At the same time, a well-developed integrated mechanism for the implementation of the goals and objectives of these programs is absent both at the country and regional levels. Thus, the allocated state budget funds are spent haphazardly. So this is ineffective while tourism is low profitable, capital intensive, and highly sensitive to the risks of business. All these facts as a whole minimize the economic and social impact of the growing budget injections into the regions.

At the same time, the key to the successful implementation of programs dedicated to the development of the tourism sector is the integrated approach to their implementation of all related economic entities (it also includes reduced tariffs for air transportation, providing a sufficient number of carriers, and marketing campaigns promoting domestic tourism).

The positive effect of state financial support to the tourism industry cannot be achieved without a comprehensive study of the base (capacity) and stages of infrastructure development, the definition of tourism development targets and the scope of related goods and services, the calculation of aggregate performance indicators (the efficiency of regional residents and management bodies, profitability of public investment in the creation of engineering, transport, social infrastructure in the region), and officials, who should be responsible for these indicators.

Lack of stable amounts of public funding and responsibility of investment recipients for their effective use: It was assumed that in 2017 the North Caucasus Federal District (NCFD) will receive 31.8 billion rubles from the budget. However, financing of the state program for the development of the North Caucasus Federal District has been proposed to be reduced to 13.7 billion rubles, including the cost of completing the started social facilities (3 billion rubles) and the additional capitalization of the North Caucasus Development Corporation and the North Caucasus resorts (about 6 billion rubles). In this context, the deteriorating prospects for obtaining investment will have extremely negative consequences against the backdrop of inefficient investment of available resources (misuse and support of unprofitable industries). In order to avoid such situations, it is necessary to provide investment mainly to those industries, enterprises, and municipal entities that have already proved their effectiveness and ability to work with benefits in a competitive and market environment.

Lack of private investment practices and the infrastructure needed for private investment: The economy of the North Caucasus is currently experiencing a sharp decline in investment associated with the budget crisis, and the expected reduction in government spending will inevitably lead to a further drop in private investment. “Unhook” the North Caucasus from budgetary investments, this is only a good intention, which has little to do with the actual state of affairs. It is private investment (and not the state budget) that should become the main source of the region’s growth in the future. Investment in the economy should be bigger and use of resources much more effective. In this regard, the focus on attracting private investors for the development of the real sector of the economy – the agro-industrial complex, light industry, tourism – is a priority direction for the management of the regions of the North Caucasus Federal District. The inadequacy and inefficiency of the work on attracting private investors are related to mistakes in investment policy. It is necessary to develop a strategy for informational support of the regions’ activities and the course that it conducts, which will allow to overcome the negative information background and achieve an increase in the investment attractiveness of the subsidized regions. An effective marketing tool in this case can be:
  1. 1.

    The development of brand book (presentations with a detailed description of the regional brand), containing information about all the resorts, sights, features of the area, and ways of getting in, which should be distributed among both large and small Russian and international tour operators and agencies

  2. 2.

    Creation of an information Internet portal containing comprehensive information about all participants of the umbrella brand

  3. 3.

    Monitoring of the perception of the tourist industry of the North Caucasus in Russia and abroad in order to identify key factors in the development and positioning of the North Caucasus resorts

  4. 4.
    Promotion of existing national cultural brands of the North Caucasus using the following communication channels:
    • Direct advertising (including websites and printed publications)

    • Development of public relations; participation in forums, conferences, exhibitions, fairs, seminars, events in the field of culture, and Internet communications; the establishment of state news agencies; and the involvement of foreign broadcasting organizations

    • Creating and conducting a series of television programs devoted to tourism, nature, and attractions of the North Caucasus on Russian and international television channels (Russia Today, Discovery, BBC World News, etc.)

    • To organize a large-scale international promotion, which proposes free distribution of tourist packages to the resorts of the North Caucasus, accompanied by a massive advertising campaign (with the predominant use of social networks and other free tools for mass communication). Funding for the creation and implementation of branding policies should be made within the limits provided by the federal executive bodies concerned to the federal budget, as well as funds provided for in budgets of interested subjects of the Russian Federation and municipal entities, at the expense of interested enterprises and organizations (Skorobogatykh 2012)


Weak support for small- and medium-sized businesses: Small business has a huge social significance as a deterrent to poverty and unemployment. In previous years, despite the pretentious statements of responsible officials, very little has been done for small businesses. Financial assistance was received only by a few “selected” small enterprises and, even then, often by corrupt schemes or affiliated with responsible employees. Small- and medium-sized businesses in most regions of Russia today are in dire need of getting out of the shadows to gain access to financing and lending. Enterprises that showed their ability to survive and successfully compete in the market in the current crisis conditions need to provide assistance in moving to the markets of other regions of the Russian Federation. And in this regard, the development of an appropriate program at the regional level is required.

Violation of the market: Violation of the conditions of competition, price collusion, and the division of the market are almost universal and worsen both the conditions for the economic development of the regions and the social price that society and the individual consumer are forced to pay. A prerequisite for the successful development of crisis subsidized territories is the promotion of competition and the fight against regional monopoly.

The development of the tourist and resort sector of the North Caucasus Federal District requires the solution of complex tasks – from the security problems that remain relevant until the construction of a single water infrastructure in the main recreational area of the district – on the Caspian coast. It is necessary to create a special program for the creation of a competitive integrated tourism, recreation, and resort complex of the North Caucasus, integrated with the resorts of the Krasnodar Territory. The core of the concept for the development of an integrated tourism industry in the NCFD should be the creation of a single tourist transport system, based on an airborne junction in the city of Mineralnye Vody. It is assumed that the main stream of Russian tourists to the cities and settlements of the North Caucasus Federal District will pass through the airport of Mineralnye Vody and then be distributed through a specially developed high-speed rail system between the areas included in the unified system of North Caucasian resorts. It is required to reconstruct the railway communication of the resorts with each other, as well as the supply areas. This will allow tourists to rest alternately at different health resorts. A prerequisite is the development of intermodal communication between the hub airport and key interchange nodes, as well as the introduction of programs providing for the acquisition by the tourist of a single document allowing to travel using various modes of transport. No less important is the implementation of a high-speed rail line to the tourist districts of the Krasnodar Territory in order to ensure the integration of the entire South of Russia on the basis of a recreational complex.

The presence of high territorial connectivity is the key to solving the problem of creating a single tourist brand of the North Caucasus Federal District. It will help consumers to understand the differences between the competing regions of the world for tourist flows, which are understood as the reputation, set of expectations, and associations that consumers associate with the brand of the product or its manufacturer. The positioning of a single resort zone as a health region is proposed, which will make it possible to make the most of the existing recreational potential (sea resorts of the Caspian, mineral water, ski slopes, etc.). Such positioning is possible because of creating and promoting the brand of the North Caucasian resorts. At the heart of the brand should be the idea of an eco-friendly holiday aimed at improving health and releasing the latent potential of a person of any nationality and citizenship, by creating a single resort area in the district. The integrated North Caucasian resort will allow the effective unified positioning and promotion of the NCFD both in Russia and abroad.


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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Taira Murtuzalieva
    • 1
  • Anatoly Shishkin
    • 1
  • Boris Pogorilyak
    • 1
  1. 1.Plekhanov Russian University of EconomicsMoscowRussian Federation

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