MDRC

Habarovsk Institute of Economic Research

The first meeting at the Institute of Economic Research (IER), Russian Academy of Sciences (RAS), Far Eastern Branch with the participation of Dr. Pavel A. MINAKIR, President of the Institute, Dr. Andrey ADMIDIN, Senior Researcher, Specialist on Foreign Investment, IER, and Ms. Valentina G. BULDAKOVA, Head of International Department, IER consisted of three parts.

1) At the beginning of the meeting Professor Minakir introduced his institute. IER was setup in 1976 and over a short period of time it has taken leading positions in the field of research and forecasting economic development of the Russian Far East region. Major research areas of the IER with more than fifty researchers are:
• Working out programs for economic and social development
• Research into branch problems
• The Russian Far East economic cooperation with countries in Northeast Asia and the Asia Pacific region
• Working out integration projects
• Analyzing and forecasting foreign trade and foreign investment
• Studying conditions of foreign markets
• Providing cartographic support for research projects.

2) Then he briefed us about the latest economic situation of the Russian Far Eastern region including Khabarovskii krai. As professor Minakir's briefing described both achievements and failures of the region, it was extremely interesting for us.
We found out that the economic regress of this region is caused not only by its isolated location from the center but also by inadequate foreign trade and investment policy of the State. He thinks Russian laws regulating economic cooperation are too general offering very minor opportunities for the business world.

The Russian Far East lost some of its traditional trade partners to China. An example is wood trade. Previously, Russia had a big import to Japan, but now China became a leading customer and is re-selling processed construction materials to Japan. So Russians want to take back their advantage back, process trees at home and sell to China and Japan.

Some of their problems seemed extremely similar to ours. For example, Professor Minakir said that in Russia a great amount of money was at the disposition of private companies and people but they were not investing back their profits and savings into production and manufacturing. He listed reasons for it including inability to find a niche, corrupted public service etc. An unusual for us reason was Russian mafia collecting unofficial taxes from businessmen and traders.

3) Then Professors Minakir and Admidin talked us about free economic zones in Russia and China. According to them, in Russia there is no successful story yet of building a free economic zone in Russia (except the one in Kaliningrad) and informed us about failures of Nahodka in Vladivostok. According to Professor Minakir, Russia has few competitive advantages than China in terms of attracting foreign investment. The main advantages of China are cheap labor, big market, and relationship with potential investors such as Hongkong, Taiwan and Macau. However, professors think in the future Russia can advance China because it has an educated and qualified workforce.

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