E.Vinokurov Economic Development of Kaliningrad Oblast Economic Development of Economic Development...

E.Vinokurov Economic Development of Kaliningrad Oblast

Economic Development ofEconomic Development of

Kaliningrad Kaliningrad OblastOblast

presentation by presentation by

Evgeny Vinokurov

IMEMO RAS, Moscow, UPMF, Grenoble

Slide 1 of 24


Slide 3 of 24

Kaliningrad: general information

• territory – 15 100 sq. km (0,1% of the Russian Federation)

• population – 943 500 (0,6% of the Russian Federation)

• Exclave of Russia / semi-enclave of the EU

• part of North West Federal District (total 11 regions in it)

• nominal GRP in 2002 – appr. USD 1100 mln.


Slide 4 of 24

Kaliningrad: general information

• History (the 750th anniversary of Königsberg in 2005)

• Special Economic Zone (SEZ) regime

• Federal Task Programme for Kaliningrad Oblast development up to 2010


Slide 5 of 24

SEZ regulations

• Free custom zone – no import taxes

• no taxes for outflows into Russia, if:

- for electronics and household appliances - 15% VA + changing TN code’s 5th digit;

- for other goods - 30% VA + changing TN code’s 4th digit (+ extra criteria for automobiles, tractors, etc.)

• import quotes in 35 groups - meat imports most sensible. Attempt to defend local producer.


Slide 6 of 24

Shadow economy

• Input-output matrix (Tatarinov) – 55% from the official economy

• Household income survey (Fedorov) – real incomes 47% in excess of officials ones

• Delphi method (Samson, Elisseeva) – 60-95% from the official economy

• 70% of SE are non-illegal activities


Slide 7 of 24

Main economic sectors

• fuel industry

• machine building

• food industry

• agriculture

• trade and catering


Slide 8 of 24

Kaliningrad GRP

-20

-15

-10

-5

0

5

10

15

1995 1996 1997 1998 1999 2000 2001

GRP/GDP growth (% to previous year)

Russian Federation

Kaliningrad region


Slide 9 of 24

Most dynamic sectors

• food industry (Russian markets)

• trade and catering

• communication

• transport (European-Russian trade)

• light industry

• furniture (SEZ success story)

• machine building


Slide 10 of 24

GRP (PPP)

• PPP comparison Lithuania-Kaliningrad made by I.Samson group (based on 2001 data)

• PP 95% from Lithuania (not taking into account investments and state budgets)

• Final estimation – 90% from Lithuania, close to Warminsko-Mazurskie Voevodsvo, 75% from Poland

• further research needed


Slide 11 of 24

GRP by sector in 2000

Agriculture8%

Transport9%

Trade and catering14%

Industry39%

Construction7%

Education3%

Communications3%

Public administration3%

Other sectors9%

Real estate2%

Health, physical culture and social security

3%

GRP by sector in 2000GRP by sector in 2000


Slide 12 of 24

Employment structure in 2000

Housing and communal services

5%

Other sectors5%

Transport and communications

7%

Construction7%

Health, physical culture and social

security8%

Administration8%

Trade and catering21%

Industry20%

Education10%Agriculture

9%

Employment structure in 2000Employment structure in 2000


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-15

-10

-5

0

5

10

15

20

25

30

35

1995 1996 1997 1998 1999 2000 2001

Industrial production growth (% to previous year)

Russian Federation

Kaliningrad region

Industrial production growthIndustrial production growth


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0

20

40

60

80

100

120

1998 1999 2000 2001

Consumer price indices (% to previous year)

Russian Federation

Kaliningrad region

Consumer price indicesConsumer price indices


Slide 15 of 24

-15

-10

-5

0

5

10

15

20

25

30

35

1995 1996 1997 1998 1999 2000 2001

Fixed capital investments (% to previous year)

Russian Federation

Kaliningrad region

Investment dynamicsInvestment dynamics


Slide 16 of 24

Foreign investments, tnd. USD

1996 1997 1998 1999 2000 2001Foreign investmentsTotal 23548 11292 39371 18266 19143 24563

Direct investments 21505 10630 9211 4089 6618 3248

Portfolio investments 580 18 56 - - -

Other investments(trade and other loans) 1463 644 30104 14177 12525 21315

•Investment boom in Kaliningrad in 1999-2001 was generated by investments from mainland Russia (estimations 5-10 times more than FI).

•FDI comparisons with neighboring countries are thus incorrect.


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Trade flows, 2000, mln.USD

R u ssiaC E E С

E U (15 )

R e st o f th e w o rld

E U + C E E С

Kaliningrad Oblast

432.20

97.60

201.20

153.70

354.90

468.90

245.80

249.70

392.30

642.00

Im port

Export

343.40 670.15 996.90


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Foreign Trade, USD mln

0

200

400

600

800

1000

1200

1400

Exports

Imports

Foreign exports and importsForeign exports and imports


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Exports and imports per sectorExports and imports per sector

1. Return to highest levels reached in 1995-97,1. Return to highest levels reached in 1995-97, 2. E 2. Exports of raw and semi-finished goods. 3. Imports of food products (consumption and xports of raw and semi-finished goods. 3. Imports of food products (consumption and food processing) as well as machinery for modernizing industries.food processing) as well as machinery for modernizing industries.

1. Return to highest levels reached in 1995-97,1. Return to highest levels reached in 1995-97, 2. E 2. Exports of raw and semi-finished goods. 3. Imports of food products (consumption and xports of raw and semi-finished goods. 3. Imports of food products (consumption and food processing) as well as machinery for modernizing industries.food processing) as well as machinery for modernizing industries.

TN VED Codes

Sectors

1999 2000 2001

2001 in % to 1999 1999 2000 2001

2001 in % to 1999

01 – 24 Food products 30,5 36,1 46,9 153,6 265,5 356,3 348,3 131,2

27 Fuel industry 91,7 159,1 133,0 145,0 22,6 12,7 5,9 26,1

28-35, 37-40Petrochemical industry 26 ,8 33,7 44,4 165,6 47,5 64,0 77,7 163,6

41-43 Raw leather and furs 3,7 5,2 7,3 197,3 5,7 6,3 7,5 131,6

Wood and its products,incl. printing production 27,4 33,1

61-64 Clothes and footwear 20,3 19,7 21,2 104,4 16,5 20,3 26,6 161,2

72-81 Metallurgy 31,0 35,8 21,3 68,7 24,3 40,5 49,4 203,3

84-90 Machine building 47,2 86,8 58,7 124,4 359,8 270,6 343,6 95,5

Other goods 7,9 17,2 13,6 172,0 105,9 83,4 108,7 102,6

OVERALL: 287,7 452,2 403,1 140,2 875, 2 888,0 1010,5 115,5

44,47, 48 28,4 59,0 56,8 42,9 156,6

Export, mln.$ Import, mln.$

200,0


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Main trade partnersMain trade partners

• Export: led by Poland – 27,5% (mainly raw oil), then Germany and Lithuania

• Import: led by Germany – 25%, then Poland and Lithuania

• 70-75% of foreign trade is realized the EU and accession countries.

• 5,8% fall on CIS countries except Russia.


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Trade with mainland RussiaTrade with mainland RussiaInflows, Outflows,

mln.USD mln. USD

01 – 24 Food products and raw materials 89,1 340,827 Fuel and energy industry 185,2 13,228-35,37-40 Petrochemical industry 72 1,541-43 Raw leather and furs 0,1 144,47, 48 Wood and products 34,4 18,672-81 Metals and products 24,3 1,5

Other sectors 63,8 55,6Whole: 468,9 432,2

TN VED The data for 2000

• In 2001 outflows grew up to 619 mln. USD (min. estimation) and outweighed exports.

• Trade flows with mainland Russia grew rapidly and constantly since 1999.


Slide 23 of 24

EU enlargement and Kaliningrad economyEU enlargement and Kaliningrad economy

• “EU and Kaliningrad” Communication of the Commission (2001): Enlargement will be favourable for Kaliningrad because accession countries will apply Common external tariff

• Lower import tariffs of new EU members (most important Poland and Lithuania) – present export structure does not let use this advantage; non-tariff barriers remain/increase

• Little changes on local markets

• Lower Russian import tariffs may lead to lower price competitiveness of Kaliningrad goods on the Russian markets ( due to lower barriers for CEEC goods and lower costs of production for Russian enterprises) + СAP for accession countries

• Visa problem

• Energy problem

• Cargo transit problem

• Lower volumes of shuttle trade – especially important for small border towns


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WTO accession and Kaliningrad economyWTO accession and Kaliningrad economy

Specifics:

• Compatibility of Kaliningrad SEZ regime and WTO regulations in question

• May lead to abolition of regional quotes on imports

• No anti-dumping measures against Kaliningrad producers yet – less relevant than for other Russian regions

• Possible increase in European-Russian trade would render positive effects on the region


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People’s perceptions and desires for the futurePeople’s perceptions and desires for the future

What option suits you the best?

• 21% - Oblast will have with equal rights with other Russian regions

• 38% - Oblast will remain Russian region, but it will have a special status

• 19% - Oblast will remain Russian region, but it will act under its own laws (China – Hongkong model)

• 5% - Oblast will become independent state

• 3% - Oblast will be returned to Germany

• 14% - found it difficult to choose

1.1. Practically no separatismPractically no separatism

2.2. Wide support for special Wide support for special rights and statusrights and status

1.1. Practically no separatismPractically no separatism

2.2. Wide support for special Wide support for special rights and statusrights and status

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