Kaliningrad on Its Crooked Way to Economic Modernization

Abstract

The problem of Kaliningrad, 2 in the form it has emerged after the 2004 enlargement of the European Union, stems from the region's ambivalent economic position of being simultaneously inside and outside the EU territory, with no international regulations existing to reconcile this conflict. However, this situation looks puzzling only regarding historical retrospective. In the context of postmodern realities, Kaliningrad just fits into the new type of regionalization based on transborder cooperation and networking with the advancing EU neighbours. At the moment, the new Federal Law on the Kaliningrad SEZ, in force from April 2006, rather impedes than promotes the prospect of the region's Europeanization and its structural turn to European export markets. Meanwhile, the global competition and the expected Russia's entry into the WTO will objectively make the local economy enter the stage of radical restructuring. In this regard, Kaliningrad is in sharp need of more constructive federal policies which could realize its potential comparative advantages and provide its sound involvement into the post-industrial clusters emerging in the Baltic Rim. 1. Kaliningrad's Import-Led Economic Growth and its Guinness-Record Pathologies Exports proper**, US$ m 250 250 270 280 557 822 • as share of total exports,% 48 49 49 50 47 45 • as share of GRP, % 29 23 21 17 27 29 Imports proper**, US$ m 826 1,034 1,656 2,135 3,133 4,077 • as share of Russia's imports, %