Kaliningrad's economic growth problem

Russia and the European Union: Prospects for a New Relationship

Volumn , Issue , 2009, Pages 263-281

  Smorodinskaya, Natalia ^a  

^a INSTITUTE OF ECONOMICS   (Russian Federation)

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EID: 84905945166     PISSN: None     EISSN: None     Source Type: Book    
DOI: 10.4324/9780203006931     Document Type: Chapter

References (20)

1. This chapter is an updated and abridged version of Smorodinskaya, N., 'Analysing the Kaliningrad Situation: The Economic Growth Dimension', in Birkenbach, H.M. and Wellmann, C. (eds), The Kaliningrad Challenge: Options and Recommendations (Munster: LitVerlag, 2003), pp. 169-205. It is published here with the permission of the publishers and the editors.
2. Smorodinskaya, N. and Zhukov, S., The Kaliningrad Enclave in Europe: Swimming Against the Tide. Diagnostics of the State and Potential of Economic Development (Moscow: East-West Institute, 2003); Stockholm Chamber of Commerce, Recommendations for the Expansion of Trade and Investment in the Kaliningrad Region: Position of the Business Advisory Council of the Council of Baltic Sea States, submitted to the Conference of Ministers of Foreign Affairs of the Council of Baltic Sea States (CBSS), Svetlogorsk, Russia, 6 March 2002.
3. The SEZ regime has been in force since 1993 when the region was granted the status of Free Economic Zone. The latter was legally transformed into a Special Economic Zone as a result of the 1996 federal law 'On the SEZ in Kaliningrad Region'. See Smorodinskaya, N., Kapoustin, A. and Malyguin, V., 'Kaliningradskaia Oblast kak svobodnaia ekonomicheskaia zona (otsenka uslovii i rezul'tatov razvitiya v 1994-1998 godakh)' [The Kaliningrad Region as a Free Economic Zone (Assessment of Conditions and Results of Development in 1994-1998)], Voprosy ekonomiki, No. 9,1999, pp. 90-107.
4. With regard to electrical power, local households pay half of the tariff charged in Lithuania, while enterprises pay around 40% of the equivalent charge in Poland. Data for 1999 are from Kaliningrad Oblkomstat, European Bank for Reconstruction and Development, Transition Report, 2001. The Kaliningrad SEZ regime can be considered to be the most evident regional case of politically created rents in post-Soviet Russia. See Smorodinskaya, N., 'Rentseeking in the Regions: The Politics of Economic Privilege in Kaliningrad', in Segbers, K. (ed.), Explaining Post-Soviet Patchworks, Volume 3: The Political Economy of Regions, Regimes and Republics (Aldershot: Ashgate, 2001), pp. 56-82.
5. According to the 1996 federal law 'On the SEZ in Kaliningrad Region', any imports can be deemed goods 'produced in the SEZ' and delivered to mainland Russia tax-free if at least 15-30% of their value is added in Kaliningrad during processing. In practice, this entails very little added value.
6. It is noticeable that flows of food products, which dominate both the structure of Kaliningrad imports from abroad and its deliveries to mainland Russia, are virtually identical in value: in 2000, imports amounted to $356.3 million, while shipments to Russia amounted to $340.8m. Vinokurov, E., 'Development of Trade with Mainland Russia in Trade Balance of Kaliningrad Region', in Russia-European Union On the Eve of EU Enlargement, special issue of Les Cahiers de VEspace Europe, Autumn 2002.
7. Samson, I., Lamande, V., Eliseeva, I., Burova, N. and Fedorov, G., A New Look at Kaliningrad Region, UPMFFINEC Working Paper, Universite Pierre Mendes France (UPMF), Grenoble, France, October 2002;
8. Samson, I. and Eliseeva, I., 'Novyi obraz Kaliningradskoy oblasty' [A New Image of the Kaliningrad Region], in Voprosy ekonomiki, No. 2, 2003, pp. 40-52.
9. Eliseeva, I. and Burova, N., 'The Measurement of the Shadow Economy in St Petersburg and Kaliningrad', paper presented at the Russian-European Centre for Economic Policy (RECEP) conference 'Russia's Opening to the World Economy and the Building of a Common European Economic Space', Moscow, 20-21 September 2002;
10. Samson, I. and Eliseeva, I., 'Novyi obraz Kaliningradskoy oblasty' [A New Image of the Kaliningrad Region], op. cit. Ekspert North-west, No. 9 (70), 4 March 2002.
11. The figure of $4,300 for Kaliningrad's GRP is calculated at relative 2001 prices and at purchasing power parity based on the 2001 Eurostat method for comparing purchasing power parities. Although it differs from our previous estimation based on the 1999 Eurostat version ($6,900-see Smorodinskaya, N. and Zhukov, S., The Kaliningrad Enclave in Europe: Swimming Against the Tide. Diagnostics of the State and Potential of Economic Development, op. cit.), this does not alter the revealed scale of Kaliningrad's development gap.
12. Usanov, Kaliningradskaia Oblast v godu. Analiticheskii obzor sotsial'no-ekonomicheskogo razvitiya [The Kaliningrad Region in 2003: Analytical Review of Social and Economic Development], op. cit.
13. The document was prepared by a working group headed by Igor Shuvalov, the assistant to the president of the Russian Federation. The revised bill is expected to pass through the Duma in 2004 and to enter into force in January 2005.
14. Large investors are exempt from corporate property tax for a period of seven years, while the rate of profit tax that they have to pay is set at zero for the first six years and at 12% for the following six years. See Prihodko, S., 'Kaliningrad as a Pilot Region for Russia-EU Cooperation' paper presented at the Turku School of Economics and Business Administration, Finland, 1 April 2004.
15. 'Strategy of the Social and Economic Development of Kaliningrad Oblast as a Region of Cooperation up to 2010', adopted in March 2003, and
16. 'Programme for the Social and Economic Development of Kaliningrad Oblast for 2004-2007', adopted in September 2003.
17. See Smorodinskaya, N., Kaliningrad Exclave: Prospects for Transformation into a Pilot Region (Moscow: Institute of Economics, Russian Academy of Sciences, 2001);
18. Smorodinskaya, N., 'Kaliningrad v usloviyah ob'edineniya Evropy: vyzov i otvet' [Kaliningrad Under the Unification of Europe: Challenge and Response], in Voprosy ekonomiki, No. 11, 2001, pp. 106-127;
19. Kiel International Adhoc Group of Experts on Kaliningrad, Kaliningrad in Focus: Policy Recommendations in the Perspective of Problem-solving, Kiel, SHIFF-texte, No. 67, October 2002
20. The main theme at the fifth annual Baltic Development Forum summit (in Riga, Latvia, in October 2003) was how to turn the Baltic Sea region into a global front-runner, exploring the mixture of old and new democracies, and mature and emerging markets.