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Banks and business in the new environment

The Austrian-Russian Friendship Society held its jour fixe in the Palais Kaiserhaus in the Austrian capital. Chairman of the Board of Directors of Center-invest Bank, Dr Vasily Vysokov, was an honoured guest. He delivered a presentation entitled “Austria and Southern Russia: Banks and Business in the New Environment”.

In terms of its size, population, geographic location and climate, Austria is very similar to the regions of southern Russia. Southern Russia’s economic structure is closer to that of Austria than to that of the Russian economy as a whole. Southern Russia’s transport infrastructure is more developed, and in terms of car and mobile phone ownership, southern Russia is steadily catching up with, and in some cases surpassing, European standards.

At the same time there are also differences, which indicate the economic development priorities for southern Russia, and an awareness of these differences is stimulating positive change. For example, in terms of productivity, southern Russia lags three to four times behind Austria. While this is undoubtedly significant, just seven years ago, the gap was approximately double today’s level.

Austria is a notable player in international trade. Southern Russia's regions, meanwhile, are still establishing their foothold in trade with the external world. Southern Russia's per capita imports and exports are more than ten times lower than Austria’s. Yet, it should be noted that while Austria has seen its imports double since the beginning of the 21st century, southern Russia has seen a six- to sevenfold increase.

Although the percentage of spending on scientific research in southern Russia is half that of Austria, in individual regions, particularly in the Rostov region, the number of patents issued is comparable with the figures for Austria.

The most perceptible lag is in the practical implementation of innovations. Companies in southern Russia lag six times (five years ago, eight times) behind their Austrian counterparts, where every second company is bringing in innovations. Only a third of southern Russia's companies use a website, 2.5 times fewer than in Austria.

The structure of production in southern Russia is closer to that of Austria than that of Russia as whole. Industry’s contribution to added value production in southern Russia is 10% lower than the average indicator for Russia, and it is roughly the same as for the Austrian economy. Agriculture plays a key role in southern Russia's economy, accounting for 11% of gross regional product. However, the main crop yields and livestock productivity are 30-50% lower, and the level of processing of agricultural produce for sale outside southern Russia is low.

Railway and road density in southern Russia is higher than the Russian average. However, road density in southern Russia is 75% lower than in Austria, and the number of cars per capita is 50% lower. Yet, in terms of the number of mobile phones per capita, both Russia and southern Russia are overtaking Austria. This characterises the “backward advantage”, whereby the country or region lagging behind does not incur the same risks and costs as the forerunners, and it also has immediate access to more modern solutions.

The structural changes underway in southern Russia’s economy are bringing it closer to the Austrian structure. However, the process is not happening so quickly as to jeopardise its chances of success.

Center-invest Bank offers its customers a wide range of services based on international standards. Its sustainable banking business model helps customers to introduce best international practice, including that of Austrian companies, in order to produce globally competitive goods and services.