Russia’s Ekaterinburg – model for growth?

May 4, 2012

–Denis Manturov is Acting Minister of Industry and Trade of the Russian Federation. The opinions expressed are his own.–

President Putin recently noted that Russia has emerged from the global financial crisis in a stronger position than before, and that average wages will increase by 60% by the year 2020. Traditionally, many people think of Russia as a provider of natural resources, and increasingly as a safe pair of hands for mega-events, such as the upcoming Sochi 2014 Winter Olympic Games, the Formula 1 Grand Prix from 2014, and the 2018 FIFA World Cup. Today the Russian economy is the sixth largest in the world, with an output which may potentially exceed US$ 2 trillion in 2012. Russia’s gross domestic product (GDP) expanded by 4.2 per cent in 2011, making the country the third fastest growing economy after China and India.

I take a keen interest in how policy-makers and businesses are finding economic solutions to meet societal challenges, and I hope global business leaders and policymakers will look to the city of Ekaterinburg as a model for growth.

Ekaterinburg has moved from traditional industrial production to a specialisation in science and technology. This shift has led to a rise in GDP of the surrounding region from 20.7 billion Roubles in 2009 to a forecasted 34.3 billion Roubles in 2012. Capitalising on existing industrial expertise taught in the 16 universities around Ekaterinburg, the priority is to turn innovative research into ready-for-market products and services. Business initiatives such as the Titanium Valley Special Economic Zone have been set up close to Ekaterinburg, at a government cost of more than 50 billion Roubles, to attract foreign investment and expertise. Global technology leaders such as Boeing, Rolls Royce and Goodrich have recently set-up shop in the SEZ, and the wider region now hosts 400 joint ventures, involving cross-border capital from 64 countries and input from 300 representative offices of foreign companies.

Freshly adopted laws greatly incentivise foreign investment in the region, such as income tax reduction for newly established enterprises for 5 years (from 18% down to 13.5%) and a guaranteed investment in the region by the Russian government of 8 billion Roubles each year. There is also an immediate appetite in the region for Western equipment in the fields of telecommunications, food processing, safety and security systems, and construction materials. In light of the expertise Ekaterinburg and its surrounding region has amassed in scientific innovation, it will come as no surprise that they are bidding to host the World Expo in 2020, with the theme “The Global Mind”.

Investing in ‘skills for growth’ – the theme of this year’s European Business Summit in Brussels – isn’t just about Roubles, Euros and Dollars; it’s about boosting peoples’ living conditions, finding solutions to common global challenges and improving the future of our young people. Times are tough, but smart, strategic investments in skills and technology will greatly contribute to a sustainable, knowledge-based economy that everyone gains from.


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