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Contents

     When the Soviet Union broke up, Kaliningrad suddenly found itself separated from mainland
Russia by new frontiers. Hardly any other Russian region has been hit as hard by the economic
disruption as Kaliningrad. The geographical situation of the region meant that it was more
highly exposed to the destabilising effects of post-communist economic transformation. Since
then, a dramatic trade opening has occurred, and regional trade and production have undergone
profound changes. Kaliningrad has experienced a major shift in its economic orientation
towards the tertiary sector and a new industrial orientation based on its position as an
intermediary in EU–Russian trade. In short, that is what this report is about: the present and
future economic development of this Russian enclave during its integration into the world
economy, its place in the international division of labour and in the Russian–EU economic
interface.
     The major phenomenon relative to the economic development of the region is its enclave status.
The report explores the specific features of enclave economies and specifically those of
Kaliningrad. It argues that economic openness is a prerequisite for an enclave’s prosperity and
the enclave should develop a multi-vectored orientation towards both the Russian market and
the EU market, complementing industrial specialisation targeting the mainland with new
features. Moreover, as economic integration – with the surrounding state or on a nondiscriminatory
basis with the rest of the world – has significant positive effects on enclaves, the
future of Kaliningrad’s regional economy and its specialisation is profoundly connected to
Russian–EU relations and the prospects for their economic cooperation.

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Contents

Introduction: Kaliningrad in the conditions of enclavity ........................................................1
Chapter 1. The limitations and opportunities for an enclave’s economy...............................7
1.1 The conceptual framework for a theory of enclaves: Definitions, typology and the
mainland–enclave–surrounding state triangle...............................................................7
1.2 Economic features of enclaves......................................................................................9
1.3 Openness as a condition of an enclave’s economic development...............................14
1.4 East Prussia as a German exclave (1920-39) and as a predecessor of Kaliningrad ....22
1.5 The theory of enclaves and Kaliningrad .....................................................................25
1.6 Kaliningrad’s society today ........................................................................................29
Chapter 2. Structural characteristics of economic transition ...............................................31
2.1 Structural shifts in the distribution of GRP.................................................................31
2.2 Shifts in employment ..................................................................................................33
2.3 Transformation of industry .........................................................................................34
2.4 Common misunderstandings about investment dynamics ..........................................37
2.5 The 1998 monetary crisis and Kaliningrad’s dependence on Russian economic
trends..........................................................................................................................41
2.6 The high share of the shadow economy......................................................................44
2.7 Kaliningrad in comparison..........................................................................................47
Chapter 3. Foreign trade and trade with mainland Russia: An intermediate position
between Russia and the EU...................................................................................50
3.1 Commodities and the geographical structure of foreign trade ....................................50
3.2 Strong ties to the Russian mainland............................................................................56
3.3 An undeveloped trade in services ...............................................................................58
3.4 Trade forecasts............................................................................................................59
3.5 A high degree of trade openness as a consequence of trade intermediation ...............61
Chapter 4. Factors of regional competitiveness......................................................................64
4.1 Introduction.................................................................................................................64
4.2 Measurement of comparative advantages, international specialisation and intraindustry
trade ..............................................................................................................65
4.3 Kaliningrad’s factors of production ............................................................................72
4.4 Domestic policy: The SEZ of Kaliningrad as a springboard to the Russian market...79
4.5 Exclave costs...............................................................................................................83
4.6 Cargo transit, passenger transit and border trading.....................................................85
4.7 A typology of the competitive factors of regions: From generic resources to specific
assets ...........................................................................................................................87
4.8 Conclusions.................................................................................................................92

Монография "Экономическая специализация Калининградской области" посвящена актуальным проблемам экономической специализации Калининградской области в контексте специфики анклавной экономики, экономических связей России и ЕС и интеграции России в мировую экономику и международное разделение труда.

Исходной точкой служит обобщенный автором опыт экономического развития анклавов. Монография включает в себя анализ структурных характеристик экономической трансформации калининградской экономики. Анализируются вопросы структуры ВРП и промышленного производства, торговые потоки региона, включая торговлю с основной территорией России, а также сравнительные и конкурентные преимущества региона. Рассматривается ряд экономических процессов, играющих важную роль в формировании экономической специализации Калининградской области, включая расширение ЕС и вступление России в ВТО. Вносятся предложения по федеральной и региональной экономической политике по отношению к региону.

Монография представляет интерес для специалистов по региональной экономике и европейско-российским отношениям, для студентов и аспирантов, а также для деловых и широких читательских кругов в Калининградской области и за ее пределами.

A l’éclatement de l’Union Soviétique, la région de Kaliningrad s’est brusquement trouvée séparée de la Russie par plusieurs frontières. L’ouverture économique brutale a eu des conséquences dramatiques, tandis que le commerce régional et la spécialisation de la production subissaient de profonds changements. Les particularités géographiques et légales d’alors rendaient ce territoire sensible aux expositions et turbulences résultant de son intégration dans l’économie mondiale. Ce dont il est question, en résumé, dans la thèse, c’est du problème de l’actuelle et de la future spécialisation économique de l’enclave russe au regard de son intégration internationale, de la division internationale du travail et des rélations UE-Russie.

Les facteurs exogènes acquièrent une importance exceptionnelle.  Le commerce extérieur, tout comme les échanges avec les régions russes du continent, joue aussi un rôle extrêmement important dans l’économie de Kaliningrad : il est intégré, quoique de façon spécifique, dans l’économie européenne. Néanmoins, en tant que partie intégrante de la Fédération russe, l'Oblast entretien des liens rapprochés avec l’économie du continent russe.  Les événements extérieurs, tels l’élargissement de l’UE ou l’accession négociée de la Russie à l’OMC, peuvent constituer des chocs économiques, et avoir un impact assez grand sur les flux du commerce régional.

Kaliningrad Transit and Visa Issues Revisited

PDF, July 2006. CEPS Commentary.

Kaliningrad's enclave-specific vulnerability. Published as:(2005) The Enclave-Specific Vulnerability of Kaliningrad, Liuhto K. (ed.) Kaliningrad 2020: its future competitiveness and role in the Baltic Sea economic region, Pan-European Institute, Turku, 56-74.

Economic Prospects for Kaliningrad: Between EU Enlargement and Russia’s Integration into the World Economy

PDF, June 2004. The paper examines the state of Kaliningrad’s economy and trade. The economic crisis that took place in Russia in the 1990s had severe consequences for Kaliningrad, as old patterns of production and trade were disrupted. Since 1999, however, the regional economy has grown with impressive speed. Kaliningrad’s Special Economic Zone (SEZ) status has played a crucial role in determining its new patterns of production and trade specialization. The paper argues that the SEZ regime has made the region’s economic growth both faster but also vulnerable. The paper also looks at the potential impact of EU enlargement and Russia’s WTO accession. Here, Kaliningrad may be vulnerable to twin shocks. However, the impact is likely to be mixed, representing dangers to Kaliningrad in the short-run but providing it with new opportunities for economic development in the medium- and long-term. Various scenarios are reviewed that include factors such as the existence/abolition of the SEZ regime, Russia’s WTO accession, and an EU-Russian Common economic space. The paper concludes with an argument for an increased appreciation of Kaliningrad’s position by both Russia and the EU and for a careful approach to drafting a new SEZ regime that provides for a long transition period.

What Can Replace the SEZ Kaliningrad? In English. A commentary written for the Kaliningrad Region Experts Development Association. June 2004. Primary address: http://www.kaliningradexpert.org/?doc=690&lng=eng. The SEZ idea should not be abandoned altogether. On the contrary, it is possible to create a "normal" export-oriented SEZ in Kaliningrad, providing for a prolonged transition period. This SEZ should be supplemented by, first, a package of tax and investment-related privileges, and, second, by the measures within the EU-Russian Common Economic Space. This economic policy on Kaliningrad might present itself as realistic and acceptable for Moscow, Kaliningrad economy, and Brussels. Russian version of the same commentary. June 2004. Primary address: http://www.kaliningradexpert.org/?doc=690&lng=rus

Kaliningrad in the Framework of EU-Russian Relations: Moving Toward Common Spaces. in English. Working paper published by K.U. Leuven

Kaliningrad Regional Development Agency. Bulletin No.1. Prospects for Kaliningrad Region's trade regime.

In English. First Bulletin of the Kaliningrad RDA co-authored by E.Vinokurov, A.Kharin, A.Ershov, A.Usanov.

The Common European Economic Space and Kaliningrad

In Russian. Paper published in Mirovaya Ekonomika i Mezhdunarodnye Otnosheniya, 2003, No.11, pp.66-71.

Vinokurov E., Kuzin V. Analysis of regional quotas in SEZ Kaliningrad 1998-2003

Word document. 2004. In Russian.

Formation of Trade Specialization of the Kaliningrad Region.pdf

        This paper was written together with the French economist Vincent Lamande who spent several years working for the projects on Kaliningrad. It was published in Voprosy Ekonomiki 2/2003. The above hyperlink will lead you to the English translation of the article. For original Russian text click VE Lamande Vinokurov.pdf.

Presentation on Kaliningrad (spring 2003).ppt

        This Power Point presentation was made in CEPS in the beginning of 2003. Have a look at the figures of public opinion polls at the last slide showing clearly the lack of public support for separatism in the Kaliningrad region.

You can also go to Enclaves to download papers on theoretical aspects of enclaves' development in their application to Kaliningrad.

Kaliningrad Region's maps: