Issues in Development of Special Economic Zones in Russia: the Case of Titanium Valley

Abstract

In Russia, industrial development has significantly slowed down for the past 20 years and the federal government strives to seek new methods to attract foreign direct investments (FDIs) and stimulate economic growth. Special Economic Zones (SEZs) are utilised by governments to develop and diversify export activities, increase employment, attract investments and launch technology exchange. SEZs have been established since 2006 in Russia, but the majority of them struggle in development for some reasons. This paper investigates the issues in the implementation of SEZs in Russian regions with Titanium Valley Zone, as the case of analysis.  The carried out study in the form of interviews revealed that the core obstacle in developing these initiatives is high state interference and participation in business activities that imply time-consuming bureaucratic procedures, managerial and organisational incompetence among policy-makers and lack of in-time funding. As a result, SEZ policies fail to achieve initial objectives and do not contribute to the sustainable economic development to an expected degree of the regions, in which they have been implemented.