Kaliningrad May Reach Lithuanian Standard of Living Sooner Than Expected

The Kaliningrad Region is one of Russia's most open regions and by no means poor. Ivan Samson, the head of the Economic Policy Centre in Moscow and a professor at Grenoble University in France, began his deconstruction of several myths relating to Kaliningrad with this statement.

Samson has spent the last five years pursuing independent economic research in the Kaliningrad Region. Using modern European statistical methods, Samson and his assistants established that Kaliningrad's shadow economy accounts for 60-90% of the region's economy. However, illegal business forms only 20% of this sector. The rest is made up of legal business activity. If this shadow sector is taken into account, the region looks far from poor.

The research also shows that residents of the Kaliningrad Region lag behind their Lithuanian counterparts by only 5% in terms of consumption and spending. This suggests that their standards of living may even out much faster than has been expected. The legal part of the shadow economy forms a reserve for the development of small and medium-sized business.

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