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Usanov, Artur:
Special Economic Zone in Kaliningrad as a Tool of Industrial Development: The Case of the Consumer Electronics Manufacturing
Electronic Publications of Pan-European Institute 6/2008

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The tariff incentives (under the special economic zone regime) have been able to create in Kaliningrad a significant consumer electronic sector. Within few years Kaliningrad’s share in TV production in Russia rose from zero to almost 90%. While growth of the consumer electronics sector in Kaliningrad is impressive but the economic rationale for the significant consumer electronics sector in Kaliningrad is unclear – the region is located quite far the main consumption centers in mainland Russia and is separated by Lithuania and Belarus. The existing consumer electronics enterprises carry out mainly simple assembly operations and their value add and spillover effects for other sectors of the regional economy are limited. Foreign direct investment in the sector is essentially absent. The recent changes in the Russian import tariff policy and expiration of the old SEZ transition period in 2016 can easily kill the sector.

Nevertheless such a concentration of consumer electronics manufacturers provides important preconditions and potential for the future development of the sector. It encourages location in the region suppliers of components for consumer electronics products, development of a qualified labour force, flow of best business practices and know-how.

To realize this potential it is hugely important for Kaliningrad to attract foreign investors with technological know-how. So far consumer electronics multinationals avoided investment in Kaliningrad. The Kaliningrad Regional Government should make this as priority if it wants to ensure long-term future for the consumer electronics sector in Kaliningrad even in a reduced form.

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