russia ukp workshop summary june 2011

UKP in Moscow, Russia, June 9, 2011 Organizers: Center for Strategic Research

& the World Bank

1

Summary of Moscow, Russia Urbanization Knowledge Platform

June 9th, 2011


& the World Bank

2

Background The Urbanization Knowledge Platform (UKP) is designed as a global platform for urban knowledge exchange, supported by the Knowledge Council of the World Bank. It is intended to enable the World Bank and a group of global partners (think tanks, research institutions and networks) to engage in a sustained and in-depth knowledge exchange with client countries across the globe on the challenges and opportunities of urbanization. The UKP recognizes that urbanization is a very powerful force and one that needs to be better understood and planned for across a number of countries. The platform is designed to help late urbanizing countries learn from advanced urbanized countries – as well as to enable countries in economic transition to benefit from lessons learned in relevant comparator countries. It is also a platform designed to understand what spatial policies should be adopted to promote economic growth and improved productivity. Objectives The workshop agenda was designed to allow Russian policy makers, academicians, city officials and thought leaders to present their views on key urban and spatial challenges in Russia and their responses and to engage in a debate and discussion with visiting speakers on global experience that may be of relevance to Russia. Three major objectives were at the core of the UKP: to learn about the needs of policy makers, researchers, and thought leaders in Russia; to identify knowledge and resource gaps that could be addressed through global experience; and to determine ways in which exchanges can be facilitated between Russian cities and national level agencies and their peers in other countries.


& the World Bank

3

AGENDA: Urbanization Knowledge Platform – UKP – MOSCOW, June 9, 2011

Center for Strategic Research, 119180 Moscow Bolshaya Yakimanka, Building 1 “Alexander House” First Floor Conference Hall

OBJECTIVE: Making UKP the world’s “go to” hub for urban knowledge exchange. Creating, sharing, and trading knowledge in an open-source environment.

SESSION 1: Opening & Introduction to the Urbanization Knowledge Platform

9:00 AM General Introductions – Mr. Mikhail Dimitriev, President, Center for Strategic

Research (Session 1 Chair & Moderator)

9:15 AM Mr. Pedro Alba, World Bank Country Director, Russia

Opening Statement - 15 minutes

9:30 AM The Urbanization Knowledge Platform (UKP) – Ms. Abha-Joshi Ghani, Urban Sector

Manager, World Bank

15 minutes General Concept Opening “What is the UKP?” 15 minutes Q&A

10:00 AM Coffee Break (15 minutes)

SESSION 2: Economic Geography & Spatial/Urban Development

10:15 AM Reshaping Economic Geography in Russia – Mr. Uwe Deichmann, Sr. Economist,

World Bank (30 minute presentation)

Session 2 Chair and Moderator: Mr. Leonid Limonov, General Director, Leontief

Center, 30 minutes moderated discussion

11:15 AM Presentations of Papers by Russian Experts on Urban Development & Open

Discussion with Participants and Stakeholders

Presentation: “PPP Mechanisms Application in Urban Development Project Implementation” (15 minutes)

Mr. Vladimir Sidorov, Vice-Head, PPP Center, Vnesheconombank (VEB)

Presentation: “Land Markets and City Development in Russia” (15 minutes)

Mr. Leonid Limonov, General Director, Leontief Center (Saint-Petersburg)

Open Discussion with participants and stakeholders around position papers (15 minutes)

Session 5 Chair & Moderator: Mr. Valdimir A. Sidorov, Vice-Head, PPP Center,


& the World Bank

4

Vnesheconombank (VEB)

12:00 PM Lunch Break

SESSION 3: Monotown Policies and Strategies: Government & International Perspectives

1:15 PM Keynote Address:

Mr. Yuri V. Osintsev, Vice Minister, Ministry for Regional Development of the

Russian Federation

1:35 PM Lessons for Monotowns

Mr. Stephen Karam, Lead Urban Economist & ECA Urban Sector Leader (30 minute

presentation)

2:05 PM Briefing: Government Program for Monocities Development (10 minutes)

Ms. Irina V. Makieva, Vice-President, Vnesheconombank and Chief, Working Group

on Monocities Modernization Under Government Commission on Economic

Development and Integration

2:15 PM Session 3 Chair & Moderator: Mr. Andrei Y. Nikolaev, Independent Expert, (15 minute discussion)

SESSION 4: Russian Expert Perspectives on Monocity Policies & Strategies

2:30 PM Presentation by Russian Experts of Position Papers on Monocities & Open

Discussion with Participants and Stakeholders

Presentation: “Towards Effective and Responsible Government Policy for Support of Monocities in Russia” (15 minutes)

Mr. Sergei V. Lamanov, Expert, Center for Strategic Research, Moscow

Co-author: Mr. Dmitry Y. Zemlyanskiy, Research Fellow, Moscow State University

Presentation: “Russia’s Monocities Social and Economic Development: Specifics, Problems and Priorities” (15 minutes)

Mr. Alexander S. Puzanov, General Direcor, Institute for Urban Studies, Moscow

Presentation: “Yaroslavl Agglomeration Development” (15 minutes)

Mr. Alexander V. Shutov, Vice-Head, Department for Economic Development, Yaroslavl Oblast Adminstration (Yaroslavl)

Session 4 Chair & Moderator: Mr. Igor V. Pilipenko, Research Fellow, Faculty of

Geography, Moscow State University and Consultant, Europe and Central Asia

Region, World Bank (15 minute moderated discussion)


& the World Bank

5

3:30 PM Coffee Break (15 minutes)

3:45 PM The Urbanization Knowledge Platform – How Can We Help? Mr. Austin Kilroy,

Urban Economist, WB (15 minute discussion and exchange)

4:00 – 4:15 PM Conclusions/Wrap-up – Mr. Jeff Gutman, Urban Advisor, ECA, World Bank

Workshop Proceedings Russia’s cities face challenges not uncommon to other cities. But, as the workshop discussions revealed, there are a number of challenges that are quite particular to the country and the region. Owing to over 70 years of centralized planning, Russian cities have developed in a fairly idiosyncratic way. On the one hand, they are known to have relatively dense neighborhoods and a well developed public transport infrastructure, features that benefitted from planning efforts to achieve efficiency. On the other hand, they are also known to have relatively rigid land and housing markets. The transition years brought a host of different challenges with them, as one of the presentations indicated. If in the past cities were planned in a top-down fashion, after the shift from the centrally planned system, urban planning was largely ineffectual or absent altogether. With no tradition of locally driven planning, local authorities faced the challenge of having to learn how to manage cities virtually overnight, often on the basis of trial and error. A representative from the Rostov Region at the workshop pointed out that urban managers today have to deal with the distortions of the centrally planned past, the lack of planning in the transition years, and the common day-to-day challenges of running a city. The Moscow UKP workshop looked at two major issues: the economic geography of Russia (e.g. the system of cities) and monotowns. Both of these issues are large in scope, and they are deeply inter-related. The workshop’s presentations and revolved around these two central issue.


& the World Bank

6

In terms of its economic geography, Russia can be described as being over-stretched. One workshop participant commented that Soviet planners seem to “have wanted to do something with every square kilometer of the country”. As can be seen in the graphs below, the Soviet Union urbanized at a very fast pace (much faster than countries that had a similar development level), and much of the urban growth happened in the vast Russian hinterland. Urbanization Rates in the Soviet Union

In fact, if one looks at the cities that have grown the fastest in the Soviet years (see map below), it becomes obvious that there has been an aggressive drive to urbanize the Siberian expanse, pushing cities closer and closer to the permafrost line (in blue in the map). Many of the cities in Russia today, were basically “created” in the Soviet years. Most of these followed central planning development guidelines and were developed around a major industry (e.g. mining, oil, machine processing). Quite frequently, these industrial enterprises formed the heart of the city, providing not only jobs for people, but also a host of services (health, education, heat, sewage, electricity). The cities were in effect built to serve the industrial enterprises. These are known today as Russia’s monotowns. Many of the policy makers and thought leaders present at the workshop are directly or indirectly involved in urban development issues pertaining to monotowns and Russia’s spatial development. Consequently, the presentations and discussions held during the UKP focused heavily on these two issues, and four sub-themes emerged. In terms of the system of cities, migration and concentration where considered to be of particular importance. Diversification


& the World Bank

7

and connectivity were two issues that were mentioned repeatedly in connection with monotowns. Urban Growth in the Soviet Union

All of these four issues were intensely debated during the workshop proceedings and several themes and proposed solutions emerged. One participant commented, for example, that concentration for the sake of concentration is not necessarily a wise policy option. Even if geographically expansive countries that have developed more organically (like Canada and Australia) display higher concentration patterns (see images below), it does not necessarily mean that Russia will register higher growth rates if it concentrates more of its resources (human capital and businesses) in growth centers like Moscow, St. Petersburg, or Nizhny Novgorod. It was pointed out that cities like Frankfurt (Germany) are relatively small in size, but still quite developed. The counterpoint made to this argument indicated that concentration is not an objective in itself. The causality is the other way around: as places improve economically, they tend to attract more and more people and businesses. The performance of Russian cities shows that productivity is higher when you have higher concentration – a 20%-25% difference based on population size.

The Economic Geography of Russia, Canada, and Australia


& the World Bank

8

One of the speakers from the World Bank also pointed out that given Russia’s huge expanse, it is somewhat misplaced to compare its cities with those in Western Europe. For example, a city like Frankfurt should not be viewed in isolation. It is part of a metropolitan area, and it is a mere one hour away from other growth centers like Cologne and Stuttgart. Another debate emerged around the issue of diversification. Given the highly specialized nature of monotowns’ economic base, several speakers indicated that higher diversification rates could not only make cities more resilient to economic swings, but also make them more competitive. Discussants rebutted by asserting that diversification for the sake of diversification should not be a driving policy, especially when many of the Russian monotowns face challenges that are common to all other urban areas (unemployment, decreasing quality of life, crumbling infrastructure). On the issues of migration and connectivity, there seemed to be a consensus among speakers, discussants, and other participants. It was considered good policy to have better connected cities in Russia, and it was deemed good practice to create an environment that allowed people to more easily move within the country. One of the World Bank speakers pointed to the Western experience to highlight that people are, over time, in a continuous process of movement – migrating towards growing regions, and away from lagging regions. In the UK for example, migration patterns have varied widely over the past 200 years, and the leading regions of the 1800s are the lagging regions of today (see image below). Put simply, people move to jobs. Population Change in the UK


& the World Bank

9

The easier it is for people to move, the easier the Russian landscape can adapt to the new economic realities. However, decreasing barriers to mobility is often not enough. As several discussants and participants have noted, moving might be quite difficult for some people, because of cultural, social, economic, or personal reasons. Several solutions were offered to the migration challenge. In fact, whenever a topic of importance was discussed, the conversation also touched on potential solutions to the challenges at hand. Some of the proposed solutions were of a general nature, some were tailored to particular types of urban areas. Two of the presenters argued that solutions to challenges posed by monotowns should be structured according to a well defined city typology (e.g. based on distance to other cities, based on the dynamism of forming enterprises, or based on the dynamism of the cities themselves). One of the discussant also mentioned that people living in monotowns see their cities as uniquely their own, so solutions should incorporate that uniqueness. It was also noted that monotowns should not be viewed as a threat. Addressing the challenges posed by monotowns should not come out of a need to prevent an emerging crisis, but out of a need to improve the livelihood of the people living there. At the same token, a healthy dose of realism should drive development efforts. It has to be accepted that some monotowns will inevitably die out (e.g. isolated mining towns where extraction has ended), and of those that will prove more resilient, many will not be able to restore the population levels they had at their peak. The Vice Minister of Regional Development pointed to a number of mining towns


& the World Bank

10

where all of the population has left. Some of these towns (the example of a gold mining town in Sakha Yakutia was given) died out although resources were not depleted. People simply worked there in shifts, commuting in from other cities, or doing seasonal work. Addressing the issues that Russian cities are facing requires a focus on three major issues: land, housing, and public services. Functional land markets are critical for the development of every city. Flexible housing markets allow people to move around and chose cities based on their own needs. Good public services infrastructure is a key determinant of the quality of life in a city, pulling people and businesses in or pushing them out. All of these issues were addressed, directly or indirectly, during the workshop proceedings. One of the presenters pointed out that, in terms of land, the major problem in Russia is the fact that there are no functioning land markets. Only 8% of all land in Russia is privately owned, and only 0.01% is in municipal ownership. 17% represents federally owned land, and the large majority (75%) is non-demarcated, government owned land. In the 1993 overhaul of the Constitution of the Russian Federation, private ownership of land was proclaimed. There were however no mechanisms in place to push this policy decision forward. The costs of parceling and re-registration of titles is too high for people, and procedures are time consuming and cumbersome.

Investment risk ranking in the Russian Federation

Constituent entity of the Russian Federation

Percentage of privately owned lands, %

Regions with the lowest investment risk:

1 Lipetsk Region 63.0

2 Krasnodar Krai 47.1

3 Rostov Region 64.6

4 St.Petersburg 16.9

5 Penza Region 46.6

6 Moscow 2.0

7 Voronezh Region 58.0

Regions with the highest investment risk:

75 Nenets Autonomous District 0.001

76 Dagestan Republic 0.04

77 Kalmyk Republic 13.5

78 Kamchatka Region 0.11

79 Magadan Region 0.007

80 Chukot Autonomous District 0

81 Tyva Republic 0.29

82 Ingush Republic 0.19

83 Chechen Republic 0.05

Through 2011, only around 20% of the state and municipal lands were demarcated. As can be seen in the table above, private land ownership in a large majority of Russian regions is very low. Even in growth centers like Moscow and St. Petersburg, private land ownership is extremely limited and land markets are consequently highly rigid – which could help explain why these cities are so expensive.


& the World Bank

11

In terms of housing markets, it was mentioned Russia has very high ownership rates. A large majority of people own the places they live in and rental markets are very weak. These two factors, combined, hamper migration and relocation based on people’s skills, needs, and desires. A financial analyst that wants to move from Norilsk to Moscow faces significant barriers to entry, as the cost of housing and living are several orders of magnitude higher in Moscow. As far as public services are concerned, several workshop participants noted that this is a major area for intervention, as quality services directly impact people’s lives and their livelihood. Far too often, when trying to address problems in monocities, policy makers are “looking for atypical ways to solve atypical problems”. In this process, many “typical” problems remain un-addressed. The typical problems include basic services like health, education, water and sewage, and public transportation. All of these are key to making a city more livable. Several other important issues were raised during the workshop. Some of these include:

- Most cities in Russia face brownfields redevelopment challenges and adequate solutions have to be found.

- It is important to make the distinction between municipal development and metropolitan development.

- While the economic base of the country and the mentality of people have changed, the system of cities hasn’t. One has to learn how to work around that.

- Russians are less and less mobile regionally, as some regions become more and more expensive.

- You can’t easily compare Russia to coastal countries like Australia, Canada, and the US. - Knowledge is located in big cities. - Monotowns that happen to be on global transportation corridors have more

opportunities for action. - It is important to also consider remittances as a source for city investments and

resilience. - In many cities, the systems have regressed to feudal type arrangements, with plant

owners holding power over the people… and with the people being unable or unwilling to move.

- There is a push to decrease dependence on monoenterprises from 60% to 40%. - Many cities have invested in industrial parks with 2-3 anchor investors, with unclear

results. - It is also important to think about how to revive cities within the cities. - The major problem of monotowns has to do with urban planning and territorial

development. - Inter-jurisdictional cooperation can help monotowns draw strength from numbers –

i.e. by achieving economies of scale. - Investments in human capital are critical, but you also need good infrastructure and

amenities. - Cities should be classified based on the challenges they face, and solutions should be

differentiated.


& the World Bank

12

- Social capital is critical in the re-development of monotowns. - Monotowns don’t have enough subsidies for the improvement of housing and

communal services.

russia ukp workshop summary june 2011

Documents