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Issue № 76. October 2019

Company Towns in Russia: Some Thoughts on Development Alternatives

Andrey E. Shastitko, Adelia F. Fatikhova

Andrey E. Shastitko — DSc (Econ.), Professor, Head of the Competition and industrial policy department, Faculty of Economics, Lomonosov Moscow State University; Head of the Centre for competition and economic regulation studies, RANEPA, Moscow Russian Federation. 

Adelia F. Fatikhova — Junior Researcher, Centre for competition and economic regulation studies, RANEPA; Junior Researcher, Competition and industrial policy department, Faculty of Economics, Lomonosov Moscow State University, Moscow Russian Federation.


The financial crisis of 2008–2009 had led to the so-called problem of the company towns, which remains relevant even ten years later. A number of both Russian and non-Russian researchers had been examining numerous aspects of the “company towns” phenomena, including labor economics, political loyalty, profits and losses of subsidizing some of the industries which are dominant in the vast majority of company towns. Obviously, the effectiveness of the several attempts made by the State to diversify the economy of the company towns depends heavily on the financial means. At the same time, even though there is an expanding variety of state policy measures, directed towards company towns’ development, the overall number of the company towns does not seem to grow short. The question arises whether there are any alternative solutions to the company towns’ problem. Some basic descriptive statistical analysis shows that there are regions dominated by a high number of company towns which tend to have migration in-flow and high level of GDP, and vice versa. This paper suggests four alternatives, revealing company towns’ development prospects — town closure, towns’ own development, artificial maintenance of the company towns and creating grounds for diversification. The suggested alternatives vary in terms of combination of two key determinants: workforce migration and location quotient. At the same time, none of the above proposed can be sustainable without incorporating certain measures of economic policy. 


Company towns, state aid, structural alternatives, workforce migration, location quotient. 

DOI: 10.24411/2070-1381-2019-10006

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