Role of modernization in maintenance of a sustainable development of economy of region

This paper deals with the need to modernize the economy and society. The authors reveal meaningful context of the term "modernization" in relation to the Russian economy. Five priority areas of economic modernization, as initiated by the President, are considered. Species, types and sources of funding for modernization of the economy (optimization of budget expenditures, state monopolies, taxation, domestic and foreign investment and business research areas) are investigated. Based on the investigation of the essence and importance of the modernization process, a mechanism of modernization, which components are described in the paper (the process, purpose, types, objects, sources of financing, the results & process control and system upgrade) was developed. Based on the results of the conducted study, the potential for sustainable economic development of the region in the XXI century is presented. A fundamentally new set of its components (educational, human, scientific, innovation, natural resource, industrial, construction, agriculture and infrastructure & tourism potentials) is presented.