11 - Regional Development and Labor-Intensive Sectors

Summary

This chapter demonstrates that the lower degree of and narrower scope of the perceived strategic value of labor-intensive, non-value-added sectors, represented by textiles, for national security and resource management, has shaped their decentralization beginning under Gorbachev’s perestroika. Mass privatization after Soviet breakdown further reenforced the private governance pattern dominant in apparel and clothing. The cross-time sector and company case studies disclose the interacting strategic value and sectoral logics and show apparel and clothing factories have shut down or privatized to former managers only to languish with antiquated equipment. Today, Russian textile and garment manufacturers are outcompeted by illegal imports from China and the Commonwealth of Independent States. Industrial and technical textile sectors, which incorporate oil and petrochemicals and higher technological intensity, in contrast, experience the state intervention from central and regional governments of decentralized governance in response to political and economic pressures, such as oil boom and bust cycles and Western sanctions in post-Crimea annexation. The central government has designated petrochemicals a critical input for chemical fiber processing and provides fiscal incentives to develop technical textiles. Local governments have worked with local and national oligarchs to revive factories and production lines, and courted foreign direct investment.