Transcript Darrell Stanaford`s presentation Microsoft

Urban & Regional Infrastructure:
Its Effect on the Development of Local Economies
Moscow, 23 April 2008
Darrell Stanaford, Managing Director, Russia & Ukraine
Infrastructure: Foundation of Economic Development
Electricity & Natural Gas that power & heat the workplace,
research & production facilities & the home
Road, rail & air transport that gets people, raw materials &
goods to the places they are in demand
Built infrastructure: schools, medical facilities, factories, offices,
warehouses, retail & cultural complexes
“Build it and they – businesses and people – will come”
Post-Soviet infrastructure development
From State Planning to no planning
or
“Let’s get the investor to pay for it”
Electricity – heavily subsidized rates for consumers + no state
control & no state spending resulted in no speculative
development & prohibitive costs for investors
Urban & Regional Planning – lacking, not market oriented
Consequences of Infrastructure Lagging
• Investment is slowed or goes elsewhere
• Growth of employment, consumption is constrained
• Supply of facilities & goods is constrained, prices increase
• Imbalances are reinforced, not alleviated
Moscow Races Ahead: Bad for Moscow, Bad for Russia
 Businesses choose Moscow because:
• Access to customers & decision-makers
• Air connections internationally & to major Russian cities
• Labor
 Workers choose Moscow because:
• Availability of jobs & career growth potential
• Quality of life: culture, retail, leisure, education
Bad for Moscow: Extreme imbalance in supply & demand
 Bad for business:
• Rapid increase in cost of facilities, services
• Dramatic increase in cost of labor + high turnover &
shortage of qualified specialists
• Shortages constrain growth
 Bad for workers:
• Dramatic increase in cost of living, especially housing
• Declining quality of life: congestion, pollution
Bad for Russia & the Regions
 Lack of new businesses = lack of investment, new
tax revenue, jobs
 The young and talented leave to make their careers,
start their families
 Lack of qualified labor prompts businesses to look
elsewhere…..
…….a downward economic spiral
Leading with Infrastructure
Creating the Foundation
for a Modern, Diversified National Economy
•Large scale, pro-active urban and regional planning based upon
commercially sound market principles
•Federal & regional legislation that creates clear rules for transparent
public-private partnership
•Market-oriented utility authorities: profit seeking, subsidies fading, full
range of financing tools available = incentive to speculatively invest in
commercially sound projects promoted by local government