Kremlin Driving Russia toward Disaster by Not Decentralizing Location of Major Firms, Dvinsky Says

Paul Goble

            Staunton, April 17 – The Putin regime is driving Russia toward disaster by promoting untrammeled urbanization, an approach that worked for economic development in the 20^th century but doesn’t anymore and that can be corrected quickly only by decentralizing the location physical and for tax purposes of major firms, Konstantin Dvinsky says.

            The Russian nationalist economist and blogger says that the Russian government policy in place now means that ever more young specialists are fleeing the countryside and the smaller cities not only to the megalopolises but to larger cities in the regions, a flow that helped in the last century but doesn’t now (iarex.ru/articles/94012.html).

            When the country’s task for massive industrialization, the concentration of human resources made a positive contribution to development; but now the task is different and the promotion of innovation requires decentralization and the competition that makes possible as the economies of the West show.

            The Kremlin could take the lead in making this change by forcing major government enterprises to move their headquarters and tax addresses to regional centers, although except for Gazprom’s relocation to the northern capital, there is little evidence that anyone in the center has much stomach for doing more.

             As a result, overcoming the current pattern, Dvinsky says, will likely take two decades or even more if the Kremlin commits to this change now. But if it doesn’t, then Russia will be fated to have the best 20^th century economy at a time when the rest of the world is fated to have the economy of the 21^st century.