Pandemic Exacerbating Pressures on Business to Decentralize Even in Russia, Experts Say

Paul Goble

            Staunton, Sept. 7 – Given the enormous role of the state in the Russian economy and the centralized nature of the government, most businesses want to be located in Moscow so as to be near the center of decision making. That is likely to be true for some time, but the pandemic and distance work are adding to the pressures businesses already face to decentralize.

            Working with officials from the Tinkoff company which has 19 offices outside of Moscow, the Meduza news agency notes that rising prices for rent or purchase of business property and increasing population density which makes commutes longer are leading more firms in Russia as elsewhere to think about relocating beyond the ring road.

            In a commentary entitled “Not by Moscow Alone, the news agency says that these pressures have already led many companies to decentralize operations in Russia in exactly the same way they have in other countries. And it adds that the pandemic has added to those pressures (meduza.io/feature/2021/09/06/ne-moskvoy-edinoy).

            Meduza suggests and Tinkoff confirms that the pandemic has only added to those pressures to decentralize. On the one hand and most immediately, it has led ever more companies to allow employees to work at home, a practice that many Russians like, aren’t going to give up easily, and that allows for decentralization.

            And on the other hand, the coronavirus itself has had an impact. Densely populated cities like Moscow are more likely to see the spread of such diseases; and more people there are likely to shift from public transportation to private cars, a trend already in evidence and that will only make the commutes Moscow workers suffer even longer.

            None of this means that Russian industry is going to decentralize at anything like the rate in the US. The role of the central government in Russia is simply too large and problems with infrastructure both physical and electronic will continue to be serious obstacles to any firm thinking about moving away from Moscow.

            But there is no question that the very same pressures that led to the decentralization of industry in the US have been compounded by the pandemic as far as Russian firms are concerned and that sets the stage for changes in their location and possibly even their relationship with the government as a result.