FBK Economic Club Experts Discuss Moscow Economy

At the FBK Economic Club meeting well-known economists, leading urban experts and sociologists have discussed sources of Moscow’s prosperity, the structure of the capital’s unique economy, its pressure points and weak spots.

Igor Nikolaev, Director of FBK Strategic Analysis Institute, compared development of Moscow and other Russian regions in 2011-2017. According to statistics, macroeconomic growth was lower in the capital than in other regions. For example, industrial production dropped by about 2% in Moscow during these years and only by up to 1.2% on average in Russia. Retail trade in the capital decreased by 1% and increased by the same 1% in Russia. Even dynamics of paid services is lower in Moscow than in other regions. But according to Igor Nikolaev, in construction and cargo turnover Moscow is “ahead of the curve” and experienced a growth by 3.6% and 14%, respectively. On the whole, cargo turnover in Russia increased by only 2% and construction index decreased by 1%.

Natalia Zubarevich, Professor of the Economic and Social Geography Department of the Geography Faculty of the Moscow State University, does not agree with him. In her opinion, the decrease in industrial production in Moscow is rather natural as it is being transferred to other regions and the capital will never be an industrial city again. However, Moscow received a lot of investments during all these years. “In 2017 30% of all investments in the Russian economy were made in the capital. So Moscow is doing rather well. It is getting richer and further away from the rest of the country both in terms of the budget and the size of the economy,” Natalia Zubarevich said.

According to Mikhail Blinkin, Director of the Institute for Transport Economics and Transport Policy Studies of the Higher School of Economics and a member of the Skolkovo Foundation Urban Council, Moscow has the lowest user payment to road cost ratio in the world. Moscow car users are liable for only 18% of the cost. In Germany this figure exceeds 100% and in the USA – at least 80%. At the same time the road cost in Moscow is 40 times higher than overall in Russia. And it is still not sufficient, the city suffocates because of cars, there is no space for them to drive or park. “We have 25 square meters of asphalt per one car, and in Moscow there are 4 million cars, while in the USA there are 250 square meters per one car, in Europe there are 80-150 square meters per one car. The city is poorly adapted for so many cars, which we can observe every day while standing in traffic jams. It is physically impossible to change the situation only by road building, that is why in the end it will be necessary to solve the problem by unpopular decisions, and there are ready-made solutions already,” Mikhail Blinkin said. He cited Singapore as an example where the number of cars in the city is strictly limited. In order to become a car owner it is necessary to buy a special voucher at the auction. Their number is limited and the price may be several times higher than the price of a car. And those who manage to buy a car in Singapore face toll roads.    

In his assessment of the Muscovites’ perceptions and attitudes towards current problems Levada Center Expert Denis Volkov pointed out several groups of issues affecting public opinion on the city authorities. Such groups include public transport, traffic jams, parking, prices, pensions and benefits. Each issue has different dynamics, for example, people are satisfied with public transport but not satisfied with traffic jams and parking. However, on the whole Sergey Sobyanin has become significantly more popular during his years in the office. “At the beginning of the mayor’s work only 29% of the Muscovites were satisfied with the mayor, now this figure has increased to 50%, while the number of unsatisfied residents has not changed and remained at about 10%. At the same time 35% of the capital residents see Sergey Sobyanin as the next head of the city administration,” Denis Volkov said.

FBK Economic Club is unique discussion platform where journalists can meet well-known economists, politicians and public officials in order to discuss a wide variety of economic issues.