Does Russia need its own version of China's Shenzhen boomtown?
Russia Blog contributor Vladimir Kuznetsov, director of equity finance at the Finam Investment Company in Moscow, sends us his comments on the news that the Russian government is proposing special economic zones for stimulating growth in the regions.
Today the Russian Ministry of Regional Development completed a draft program that envisions establishing eight so called "agglomerate centers" in the country. In essence these would be megalopolis-type clusters. This concept has been in development since 2005 and would strive to expand these cities to make them as attractive for new businesses and population growth as Moscow and St. Petersburg. One of the first priorities for such national projects is the development of transportation infrastructure.
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A hotel in Sochi, Russia's Black Sea Riveria - a popular destination for Russian capital and tourism
The first and the most detailed development is the "Big Rostov" project that will unite the cities of Rostov-on-Don, Novocherkassk, Taganrog, Aksai, Bataysk and Azov. The Regional Development Ministry hopes that this mega-cluster will become a major economic and industrial center for the southern part of Russia. The other development zones are planned around the cities of Irkutsk, Vladivostok and Sochi. At this stage no detailed cost estimates have been released, but according to the Regional Development Ministry the financial burden will be shared through partnerships between government and private investors.
If this program succeeds, my guess is that it will open vast new horizons for investment communities from all over the world. According to some experts, each cluster will require hundreds of millions of dollars to build the critical infrastructure. It is expected that the Regional Development Ministry will present this program to the government for approval within the next several days.
The views expressed in this post and on his blog are the personal opinions of Vladimir Kuznetsov, and do not necessarily reflect the views of the Finam Investment Company.