Russia will have fewer new special economic zones

Subject

Special economic zones in Russia.

Significance

Special economic zones (SEZs) have been established across Russia to attract private investment through preferential bureaucratic, tax and customs regulations, and the provision of purpose-built infrastructure, but many have failed to thrive or provide a boost to their host regions. Their utility has been diluted by the emergence of similar but different 'special status' initiatives.

Impacts

• The overall impact of SEZs on regional economies and employment will remain limited.
• Poor connectivity and lack of human resources will dampen interest in SEZs in economically weaker regions.
• New investors must weigh persistent economic and geopolitical uncertainty against SEZ tax benefits.