Special Administrative Districts: A New Institute of Development or an Anti-Sanction Tool?

Abstract

The paper studies the opportunities that can be offered by creating a system of special economic districts to accelerate the socio-economic development of certain regions and compensate for limitations of international sanctions imposed on the Russian economy. The author analyses the interdependence of political imperatives of acceleration of economic growth and market economy laws. There is a mismatch between the goal indicators of socio-economic development and the tools used to achieve them. There is a possible substitution of market economy with directive state regulation, there is a growth of bureaucratic monopoly and oligopoly that rely on ineffective institutes. Presently, it can be expected that special administrative districts and institutions created for its maintenance won’t be able to use their potential. It is unlikely that two special districts can ensure Russia’s entrance into 5 largest economies of the world. Considering that all previous institutes of growth that relied on tax breaks and investment preferences had weak effect on the socio-economic development of the country, it is obvious that the creation of a new institute will not significantly change the matters. The activity of said growth institutes doesn’t compare to the scale and nature of negative effect of international economic sanctions. If previous institutes mostly show the inadequate usage of potential, then the new special administrative districts will most likely continue the trend. At best they will become ‘safe’ financial harbor for the brave ones but won’t become the generators of new investments

Keywords

• stimulating investments
• international sanctions
• concessions
• free economic zones
• territories of advanced development
• special administrative districts
• Russia