Russia hopes to copy China’s success in boosting growth by introducing special economic zones (SEZs) this year, to meet President Vladimir Putin’s challenge of doubling the economy by the end of the decade. However, economists are sceptical that this can be achieved.
This will be the second time the Russian government has attempted to boost investment into laggard regions by granting them tax exemptions. Under former president Boris Yeltsin, basket-case regions like that of Chechnya’s neighbour Ingushetia were made into SEZs but the result was massive corruption and hundreds of millions of dollars of lost tax revenues without any improvements being made to the regional economy.
