The border as a barrier and an incentive for the structural economic transformation of the Kaliningrad exclave

Abstract

This paper aims to study how geopolitical shifts affect regional economies and their structures. Border functions and regimes act as tools for the economy and society to adapt to the redistribution of political influence, movements of people, goods, capital and information between integration associations, individual countries and their cores. A changed environment may slow down the development of some industries (and even cause them to decline) and give a boost to others, with these two processes constituting economic restructuring. In the exclave of Kaliningrad, heavily dependent on international trade and transit trade with mainland Russia, geopolitical changes have naturally had an exceptionally strong effect. The relationship between border functions and economic restructuring was investigated over four periods. The study utilised data from Rosstat and the Federal Customs Service, departmental statistics and findings from expert interviews conducted by the authors. The extent and direction of changes are assessed by examining the ratios between major economic sectors, the structure of foreign trade relations, and the volume and sectoral distribution of investments. Four main ways are identified in which the sharp increase in the barrier nature of the borders between the Kaliningrad region and neighbouring countries since 2014 and especially February 2022 has influenced the region's economy. The significance and effectiveness of the agro-industrial complex have risen, with an increased focus on domestic tourism, and the adoption of advanced public administration practices in collaboration with businesses. This includes implementing mechanisms such as Free Economic Zones and industrial parks, along with a shift towards proactive measures to adapt to the changing environment.