Sergei Sobyanin: Moscow is building a new economy

Sergei Sobyanin: Moscow is building a new economy
Photo: Press Service of the Mayor and the Moscow Government. Denis Grishkin
Sergei Sobyanin and Alexei Kudrin addressed issues facing modern metropolitan areas during a discussion at the Fifth National Civic Forum.

Moscow is posting the highest labour productivity levels in Russia, 2.5 times higher than the national average, Moscow Mayor Sergei Sobyanin said during the discussion with Alexei Kudrin, Chairman of the Council of the Centre for Strategic Research and the Committee of Civil Initiatives. The theme of the talk was the future of the Russian economy and the role of metropolitan areas.

“We have always overlooked the development of cities. According to the agglomeration index, the highest labour productivity levels are posted near central urban areas, and they tend to decrease in far-away districts. Moscow’s labour productivity levels are 2.5 times higher than the national average, and five, six and seven times higher than in rural areas,” Mayor Sobyanin said.

He also remarked on the role of the capital, which is surging ahead in many respects. “We are trying to tell everyone about our experience and to convince people that Moscow is not a black hole that sucks in Russian talent and financial resources. Moscow is a driving force of the national economy and serves as Russia’s locomotive in many respects,” the Mayor said.

Many documents dealing with Russia’s long-term strategic development have been compiled recently, he noted.

“The overarching goal in all of these strategies was to quadruple nationwide labour productivity, triple the number of high-tech jobs, boost exports and investment, increase other parameters and reach international levels. Unfortunately, most of these strategies were never implemented. But Russia is posting positive development trends. We have experienced two serious crises, but nothing terrible has happened to the country,” Mayor Sobyanin added.

The country experienced a similar crisis in the late 1980s when oil prices plunged, precipitating the collapse of the Soviet Union. “We are now experiencing a similar crisis, but nothing terrible has happened even under tough sanctions. This proves that the Russian economy has become much more resilient,” he noted.

The Moscow metropolitan area now has a population of about 30-35 million.

“Moscow and the Moscow Region alone have a population of 20 million. It is common knowledge that many city residents relocate to other regions bordering on the Moscow Region each summer. And the population of these regions increases by 50-100 percent. These regions sell most of their goods in the Moscow metropolitan area, with 25 percent of their economically active population working in Moscow or the Moscow Region. Therefore it is possible to talk about a large metropolitan area with a population of 30-35 million, rather than 20 million,” he said.

Moscow has no oil, gas, coal or iron, but a new economic environment is being created here, Mayor Sobyanin noted: “As Mr Kudrin has just said, instead of producing natural resources, our economy processes them, and we are creating a new economy.”

Mr Kudrin noted the need to approve a programme for the development of metropolitan areas in Russia.

“We need legislation and even a programme supporting the development of such large metropolitan areas in Russia. I would say this issue is vitally important for economic growth and for the social situation,” he noted and called for ceding some of the federal government’s powers in the area of construction and budget policies to Russian regions.

Mr Sobyanin and Mr Kudrin also touched on transportation issues. Seventy-five percent of Moscow residents use public transit during peak hours. Public transit has become faster and more convenient in the past few years, and vehicle speeds have increased by 13 percent on 2013. Quite recently, the city started building central diameters on a par with the Russian Government.

“It is impossible to solve the transportation problem without developing public transit. It is impossible to build metro lines in the city’s suburbs. This is why we consider the development of commuter train routes to be our key task. Quite recently, the President of Russia and I coordinated a project to build central diameters that would supplement existing radial railways. This will boost passenger traffic volumes 100-200 percent,” the Mayor noted.

The central diameters project will reduce the load on the Moscow Central Circle (MCC), the Third Ring Road and radial routes.

This is the first high-priority federal project aiming to create a people-friendly urban environment, Sergei Sobyanin added.

Mr Kudrin and Mr Sobyanin also discussed the social sector, with Mr Sobyanin noting that the pensions of ten percent of Russian senior citizens are financed out of Moscow residents’ tax contributions.

“Contributions to various funds under the current policy aim to redistribute financial flows. This policy makes it possible to finance the pensions of ten percent of Russian senior citizens out of Moscow residents’ tax contributions. Ten percent of patients being treated under the compulsory medical insurance programme receive funding from Moscow residents.”

In addition, the city’s economy accounts for two-thirds of federal allocations transferred to regional budgets. Moscow accounts for 21 percent of the country’s GDP, with all other regions receiving only 15 percent of that amount in federal allocations combined.

“First, that means we produce more than we keep. Second, all Russian regions combined receive federal budget transfers worth 1.5 trillion roubles. Moscow contributes one trillion roubles in tax revenues to the federal budget. This figure was 600 million roubles not so long ago. Our growing economy allows us to contribute more in taxes. Moscow now accounts for two-thirds of federal budget transfers to all regions,” Mayor Sobyanin commented.

Replying to a question about incentivising the development of metropolitan areas and the need for legislation to regulate their development, he suggested issuing grants for these purposes.

The Mayor of Moscow cited the experience of European countries as an example of such support for cities.