It is quite obvious that globalization as the very term shows should be seen almost everywhere: not only in world cities, but also beyond them. Nevertheless this theoretical premise needs a further empirical investigation and verification. An encouraging example of such study is best represented by the work of Ed Brown, Gilda Catalano and Peter J. Taylor (2002) concerning Central America. Now it seems worthy to look at another region, namely Russia east of Moscow. That is a vast territory with a certain economic potential and some considerable cities; each of them could be interesting for its emerging inter-city connections.
The present paper is an attempt to make some initial steps. The city chosen as an example is Chelyabinsk. Although being quite comparable in many numerical indicators with Birmingham, Pittsburgh or Dortmund, Chelyabinsk is not well-known for the outside world. That is not surprising if we bear in mind a certain self-isolationism of recent Soviet economy. The same could be said about other cities of the former USSR. Now in post-Soviet Russia the situation is changing rapidly. Chelyabinsk, the fourth or fifth largest industrial centre in the country (a city with 1,15 million of inhabitants or more than 1,6 million in the whole of agglomeration) is searching for its proper place and a new role in national and transnational economy. There are some important geographical peculiarities: as situated on the boundary between Europe and Asia Chelyabinsk is much closer to Moscow than Siberian cities are; on the other hand it is a convenient transport gateway to Central Asia and Far East. The city at the very heart of Russia's Lake District, among pine forests and birch groves on Eastern Urals mountainside, is getting more open and integrated into the inter-city network. So there is an object for investigation.
The data basis includes many kinds of information that are available on companies' web sites, in offices and in periodical (corporative statistics and rating lists in leading business magazines and newspapers like Expert, Expert-Ural, Kommersant, Economica Rossii: XXI Vek and Delovoy Ural are especially valuable).
Certainly, this project is outstandingly indebted to GaWC's methodological publications and Research Bulletins series in a much wider range that could be shown in the following references. We'd like to mention especially 'A Roster of World Cities' by J.V. Beaverstock, R.G.Smith and P.J. Taylor (1999) and 'Measurement of the World City Network' by P.J.Taylor, G.Catalano and D.R.F.Walker (2002) in this line of many items. Besides, there is domestic tradition of urban studies in Russia that dates back to at least the 1920ies (Velikhov, 1928); this book was followed by other prominent publications (e.g. Timchuk, 1980; Ilyin, 1982; Bogolyubov, 1997). A lot of important commentaries concerning Chelyabinsk and some further generalizations are represented by the work of Evgeny Eliseyev (Eliseyev, 1999). Characteristically, Soviet and even post-Soviet researches were concentrated mainly on inner-city, but not on inter-city developments. (Recent works by Olga Gritsai should be noted as making an innovatory trend in investigation of postindustrial developments and Moscow's role in inter-city connections (e.g. Gritsai, 1996, 1997a, 1997b)). It seems worth-while to combine GaWC methodology and predominant domestic tradition. In this way there is a possibility to explore linkages and investigate (as quoting from the work by E.Brown, G.Catalano and P.J.Taylor (2002)) "how, by whom and for what are the links operated and in what ways do they relate to other sectors of the regional economy".
In this paper the authors attempt to survey a maximal range of sectors (mainly commodity and financial ones) for a detection of outer signals in the city's economy as well as city's own influence on the outside world. We must try to investigate economic past and present and forecast future as far as possible.
Although prehistory of Chelyabinsk could be traced to the 17th century, its official date of foundation is September 1736. For decades it was local administrative and trade centre. According to Fernand Braudel, Russia was a rather isolated "economie-monde" in itself; nevertheless its trade expansion grew slowly on eastern and southern directions (Braudel, 1979). There existed some commodity flows that came from Europe, and then crossed the Urals and the Grand Kazakh Steppe aiming to Central Asia, Persia, India and China. So Chelyabinsk gained its earliest economic function as one of many points in this Euro-Asian trade. Since then a camel (which of course is not typical for this northern fauna) became city's heraldic symbol stressing its role as a gateway between Europe and Asia.
A new turning point came in 1892 when Moscow - Samara - Zlatoust - Chelyabinsk railroad was completed. Very soon Chelyabinsk turned into an important railway junction. Starting from here four steel rays aimed to Central Russia and Europe, Central Asia, the White Sea and the Pacific. Commercial advantages of such situation were strengthened by governmental tariff policy and became quite obvious. Chelyabinsk started to control a considerable part of regional financial flows and commodity markets, especially agricultural ones. Its Mercantile Exchange was active in transporting wheat from Siberia to Baltic ports. The city attracted many banks as well as insurance, trade and manufacturing companies from Central Russia and abroad (Louis Dreyfus, Miller & Co., McCormick, Wissotsky and others). It became the second largest tea trade centre in the whole of the Russian Empire (after Moscow). Chelyabinsk bought and resold cattle, butter, wood, agricultural machinery, etc. Some contemporaries marked its American-style urban growth (Vesnovsky, 1909). Indeed, the trading city on boundary between the Ural Mountains and Grand Steppe with developed transport and financial linkages could resemble Minneapolis, Omaha or Saint Louis.
The epoch of great historic troubles (the First World War, the Bolshevik Revolution of 1917 and the Civil War) brought a dramatic economic regression and decline. In the mid-1920ies trade and industry revived, but now it was under quite different conditions of more and more totalitarian state control. Since the early 1930ies the Soviet industrialization began. Chelyabinsk was chosen as one of dozen or so main places for this Communist experiment. The most preferable branches included manufacturing of ferrous and non-ferrous metals as well as agricultural machinery. The city was surrounded by gigantic plants. The largest of them was the ChTZ (a tractor plant) that used advanced American technologies of Caterpillar's.
During the Second World War Chelyabinsk acted as a host for many evacuated factories. Rapidly adopted and reconstructed plants including famous Tankograd ("Tank City") played an outstanding role in industrial efforts of the Anti-Nazi Coalition. Like in the USA, Great Britain, Canada and some other countries the War was a great impulse to a new stage of industrial development in the Urals.
In the post-war decades heavy industry in Chelyabinsk got even more developed and diversified. It was effectively accompanied by additional power capacities, exporting achievements, engineering institutes, some progress in consumer sectors, modernization of transport services, etc. In the 1970ies city's population grew to more than 1 000 000 (or 1 500 000 in the whole of agglomeration) (Figure 1). Traditional Soviet economy has reached its zenith.
Nevertheless the situation was very contradictory. It was not a market demand, but the Communist Government that took a final decision in this state-controlled economy. As a result, resources were used not effectively, technological gap between Western countries and the USSR widened, and citizens' incomes remained comparatively low. As any territory with rather militarized manufacturing Chelyabinsk faced some additional problems. By the mid-1980ies a reform of Soviet economy get absolutely urgent. Although it was started as a timid attempt to improve old system, the reform turned into real economic and political liberalization.
In the 1990ies post-Soviet Russia went through structural transformation turning into a free society based on market economy. Despite all the transitional difficulties and controversies now we can see economic growth on principally new basis alongside with much more deep integration into world markets. Such historic transformation could be observed both on national and urban levels. Chelyabinsk, a trading city in the epoch of Tsars and a heavy industrial giant during the Soviet period, is seeking to attain its proper place in post-industrial and globalized world economy. The following is a survey of the city's economic sectors as influenced by the outside world and by other cities. It is also a survey of city's own influence on the outside world.
Manufacturing of ferrous metals. Being the city's leading industrial sector (Figure 2) for at least 50 years, the steelworking faced a very deep crisis in the early 1990ies. Demand reduced dramatically under the conditions of structural reforms, post-Cold War conversion and crisis in mechanical engineering. Steelworks management sought for new markets and investments to modernize plants. Now there are some achievements in this way. Since 1999 the sector is growing. It is orientated towards home markets alongside with foreign ones. The largest steel company in Chelyabinsk is OJSC Mechel that is known for its specialization in high-grade stainless metals (approximately 3 million tons in 2001; No.55 in the world rating according to International Iron and Steel Institute (IISI) that reckons crude steel output). Its main consumers are machinery and metallurgical companies in Russia, USA, Great Britain, Germany, France, Spain, Romania and in other countries. Mechel's recent achievements and market strategy were closely connected with the Glencore International AG (Switzerland's company with many subsidiaries. London-based Glencore UK Limited is an Associate Clearing Member of the London Metal Exchange (LME)). At present Mechel is seen as a supposed centre of forming steel holding with smaller plants in other regions of Russia. Mechel's associated Mechel Bank is partly controlled by the Fimko Overseas Limited (Cyprus).
Mechel is closely tied in many technological and commercial ways with other major enterprises in the region: the ChEMK (a manufacturer of ferroalloys in Chelyabinsk), the ChTPZ (Chelyabinsk pipe-rolling plant which in its turn is active in transnational commodity markets and in Russia's stock market), the MMK (gigantic steel company in Magnitogorsk, Chelyabinsk Region, with 9,9 million tons of output in 2001; No.15 in the IISI world rating), etc.
Nevertheless there are long-term negative trends in steel manufacturing worldwide. Chelyabinsk faces such trends like many other cities from Pittsburgh to Osaka and Kitakyushu. Main shareholders and local managers in Chelyabinsk intend to go on with modernization and solve these problems in line with the OECD.
Manufacturing of non-ferrous metals. Since its foundation in the early 1930ies the ChEZP (the Chelyabinsk Electrolytic Zinc Plant) was in the shadow of local steel manufacturers. The plant progressed, but its development was rather slow and uneven. In the late 1980ies and in the 1990ies the openness of national economy made a breakthrough possible. Since 1995 the plant is controlled mainly by Euromin S.A. (Switzerland's company also represented in London; an Associate Trade Member of the LME). The ChEZP itself is a member of the International Zinc Association. In 2000 the ChEZP got a loan from the EBRD (London-located European Bank for Reconstruction and Development) that enabled to carry out a technical modernization plan in collaboration with some foreign companies including Snamprogetti SpA (Italy). As a result the ChEZP can effectively produce SHG (Special High Grade) Zinc (a standard commodity on the LME) alongside with cadmium, indium and zinc alloys.
Generally speaking, that is one of the spheres where London's influence on Chelyabinsk could be seen quite obviously and evidently. There is a rather exact correlation between LME's trends and fluctuations and ChEZP's output as well as commodity and stock prices. The same could be said about London's influence on nickel and cooper manufacturers in Chelyabinsk Region. In its turn the ChEZP as a producer of approximately 1,9% of the world's zinc can influence London traders. Certainly such mutual influence will get stronger as Russian companies will go on with involvement into international markets of commodities, shares and especially derivatives.
Mechanical engineering. Development of this industrial branch in Chelyabinsk started in the 19th century with collaborative Belgian and Russian participation. According to 2001 data the sector embraced 19 % of city's industry (Figure 2). This share is assembled by more than 50 enterprises that are greatly varied in their scales, specializations and commercial results. Chelyabinsk produces equipment for oil and gas companies, agricultural machinery (a traditional specialization of the city), graders, automatic loaders, engines, units for lorries, measuring instruments, radiolocation systems, watches and many other goods for national and foreign markets. Some enterprises are still in deep crisis; some others are effective and successful.
Now we can see a certain evidence of investment activity in the sector. Many analysts believe that RusPromAvto Company is the strongest investor in this sphere. This company (a Russian producer of buses, lorries and other vehicles) has turned closely tied Chelyabinsk and Miass, Chelyabinsk Region, into one of its strategic territories. In its turn RusPromAvto together with other companies is controlled mainly by Millhouse Capital (a London-based financial holding). It is well known that Millhouses' assets are mostly of Russian origin. Indeed, many businessmen from post-Soviet countries chose the British capital for its outstanding role in transnational finances. Such example shows quite obviously London's alpha-city influence on many industrial companies and cities in Russia, including Chelyabinsk.
Power engineering. 100-years history of electricity generation in Chelyabinsk saw many ups and downs. For decades local power stations used brown coal of Chelyabinsk Region; then pipelines were constructed and gas came from Central Asia and Tyumen Region. Now there is a strong intention to diversify fuel supplies and make them more flexible. Despite their considerable capacities and 17%-share in the whole of city's industry (Figure 2), local power stations can't produce enough of electricity for such highly industrialized agglomeration. Analysts mention E.ON AG (Germany), Eletricite de France, Italenergia SpA and AES Corporation as companies that could be interested in enlargement and modernization of this sector in Chelyabinsk. Investors' interest has become more obvious since the plans of reorganization and privatization of Russian electricity sector were officially announced. In a wider context such plans could be in line with more ambitious project of electrical transmission from Russia to the EU countries.
Other industries. With their aggregated share of 14,3% in city's present industry (Figure 2) these sectors (manufacturing of dye-stuffs, building materials, furniture, drugs, food, clothes, etc.) were for Soviet administrations much less interesting than metallurgical giants. Some positive trends emerged since 1960ies; but it was only in the 1990ies that open economy changed this situation completely. Now market could especially demand any of these goods, so there are many enterprises that could be leading ones.
According to the latest data (early 2002) manufacturing of building materials is the most dynamically growing sector in Chelyabinsk. Here we can see a strong combination of some factors: unique stone resources of the Ural Mountains, mildly protecting policy of local authorities, stable interest among rich building developers in oil-producing Tyumen Region, building boom in Chelyabinsk itself and, finally, participation of external investors, including Gebr Knauf Verwaltungsgesellschaft (Germany).
Another foreign investor, ICN Pharmaceuticals (USA), has modernized local drug manufacturing, formed chemist's shops network and made this business more effective.
At the same time Russian investors are active reconstructing food industry. Reviving its 18th and 19th centuries traditions, Chelyabinsk has gravitated strong flows of grain trade from many regions. At present the city controls a very considerable share of Russia's flour-milling and bread-making. The largest company in this industrial branch, OJSC Makfa, is well-known for its goods in many cities of Russia and even in some neighbouring countries.
Certainly, a market situation could be very volatile for any business, but a common trend is obvious. These and some other enterprises are getting increasingly important in diversification of city's economy.
The 'steel giant' is acquiring new features and a new role in inter-city networks. Some more specific aspects of such process will be considered in the following section of this paper.
FINANCIAL SERVICES, TRANSPORT AND TELECOMMUNICATIONS
Banks. While investigating the most typical trends in financial sector, we must take into consideration that Russia until now did not join the World Trade Organization (WTO) and the General Agreement on Trade in Services (GATS). The majority of analysts and officials believe that it's a question of just two or three years to come; now there are very intensive negotiations conducting both in Moscow and Geneva. Certainly, in a process of joining the GATS Russia should abolish its present restrictions and make its inner market more open for foreign financial companies. At present we can see many signs of preliminary activities on corporative level. Some global firms seem to be very interested in this capacious and growing market in major Russian cities. Taking preliminary strategic positions such firms could gain an advantage over their competitors.
Although a direct foreign presence in this sector is not formed yet, now we can see already a situation that radically differs from the absolute state monopoly that existed just 15 years ago. According to 2001 and early 2002 data there are 29 Russian banks officially registered in Chelyabinsk. Their headquarters are situated in Chelyabinsk itself (10), Moscow (14), St Petersburg (1), Ekaterinburg (1), Tyumen (1), Magnitogorsk (1) and Tver (1). A more intent research enables to trace three main ways of direct and indirect integration into transnational inter-city networks:
(i) Correspondence links of Chelyabinsk-located banks. Such connections are very important for territories "beyond world cities"; so local financial institutions can service extra-regional business and get integrated into global network (Brown, Catalano and Taylor, 2002). The latest data show that Chelyabinsk has direct connections with correspondent banks in approximately 20 cities; sometimes a bilateral linkage is formed by several banks in Chelyabinsk and in another city. The most developed linkage is evidently with Moscow (more then 50% of the total correspondence linkage), well ahead of St Petersburg, Ekaterinburg and Tyumen. Foreign connections are provided by nostro accounts in such global institutions as Barclays Bank Plc, Dresdner Bank AG, Credit Suisse First Boston and others (Appendix A). Available information from banking sources in Chelyabinsk (as taking into consideration both directions and intensity of flows) shows the most strong and active connections with Frankfurt and Zurich, followed by London, Vienna, Brussels, Tel Aviv and New York. Other cities are Alma-Ata, Amsterdam, Helsinki, Milan, Nicosia, San Francisco, Stockholm, and Tokyo.
It also should be marked that major local banks are members of Western Union, Europay International and Visa International. The technical basis for their transnational integration is a participation in SWIFT and Reuters Dealing (that makes another kind of linkage between Chelyabinsk and chief nodes in world cities, especially in Brussels, Amsterdam and London).
Although an involvement of Chelyabinsk-located banks into global network started just few years ago, now there are some connections with 7 of 10 prime banking service centres according to GaWC (Frankfurt, London, Milan, New York, San Francisco, Tokyo, Zurich), 1 of 30 major centres (Moscow) and 3 of 28 minor centres (Amsterdam, Brussels, Vienna). (Beaverstock, Smith and Taylor (1999) Table 5).
(ii) Direct office linkages of non-Chelyabinsk banks that are represented in Chelyabinsk. The most evident example is Moscow-located Alfa Bank (the 3rd largest in Russia). Alfa's managers report that its Chelyabinsk office is one of the main regional strongholds in their location strategy. At the same time Alfa's branches or subsidiaries are situated in London, Amsterdam, New York and in some major cites of the CIS (Kiev, Astana, Alma-Ata). Another example of such kind is VneshtorgBank (VTB), the 2nd largest in the country. VTB's headquarter in Moscow enables linkage between Chelyabinsk and subsidiaries of different kinds in Frankfurt, Zurich, Vienna, Paris, Milan, Luxembourg, Limassol and Beijing. KMB Bank (No.75) as controlled mainly by the EBRD forms an especial type of connection with London. Svyaz Bank (No.111) is represented in Stockholm; Menatep SPB (the 14th largest; headquarter in St Petersburg) makes a bridge to Geneva, etc.
(iii) Correspondence links of non-Chelyabinsk (mainly Moscow-located) banks that are represented in Chelyabinsk. Certainly, such kind of connections seems to be very indirect. On the other hand Alfa Bank, Avto Bank, Lefco Bank, Uralvneshtorg Bank (Ekaterinburg) and some other institutions report that Chelyabinsk-located offices are of first rank in their transregional strategy. So the intensity of these financial flows is rather high; many local clients prefer to use this way for their transnational payments. (A newly established link between Bank of New York and Avto Bank' office in Chelyabinsk is an example.) Correspondence connections of these banks are numbered in hundreds. Geographical distribution of cities shows that predominant regions are foreign Europe (London, Frankfurt, Zurich, Brussels, Amsterdam, Stockholm, Vienna, Paris, Prague) and the CIS (Kiev, Dnepropetrovsk, Minsk, Alma-Ata, Bishkek), while North America (New York, Toronto) and especially Pacific regions (Tokyo, Hong Kong) are less represented.
So we can make some preliminary conclusions. Moscow (a beta world city) obviously predominates over vast territory and operates as a gateway for great many cities and minor towns. According to early 2002 data there are 132 Moscow-located banks among the national Top-200 with 85,8%-share in aggregated assets (this share is a summarized result of Moscow headquarters and regional branches). The second largest St Petersburg has 14 banks and 4,9% of Top-200's assets. As for smaller regional institutions the situation is very volatile. Recent analysis shows that Chelyabinsk Region as a whole is between the 3rd and 10th positions among 89 federal territories of Russia (Economica Rosii: XXI Vek (2002)). There are 8 - 10 major cities (e.g. Nizhny Novgorod, Samara, Novosibirsk, Ekaterinburg, Chelyabinsk; 1 000 000 - 1 500 000 inhabitants in each) with approximately equal importance for Moscow and St Petersburg bankers in their location decisions (Table 1). Each of these cities operates like a kind of 'little Moscow' for a considerable territory.
We can conclude that a space of Chelyabinsk's powerful influence embraces dozens of smaller industrial towns (50 000 - 250 000 of population in each) alongside with Kurgan and especially Magnitogorsk (400 000 - 500 000 inhabitants). (Table 1). This influence is provided by Chelyabinsk-located banks and Chelyabinsk branches of other financial institutions. Gravitated by Chelyabinsk local finances then flow to Moscow and further to foreign world cities. Also there is an emerging trend to go round Moscow and to link Chelyabinsk directly with world cities abroad, especially with prime banking centres (see above).
It is necessary to note again that all these developments are in progress although Russia is not in the GATS yet. A further liberalization of domestic financial markets should mean a qualitative leap for this sector. Citibank, ABN Amro, Credit Suisse First Boston, Dresdner Bank, Deutsche Bank, Credit Lyonnaise, Reiffeisen Bank and other global companies (which are represented now in Moscow and St Petersburg) could form their corporative networks in the most advanced cities directly or through Russian banking brands.
Insurance. The insurance market in Chelyabinsk and in Russia as a whole has developed from monopolized structure of Soviet insurance system where the only one company, Gosstrakh, was presented, to the market oriented poly-centered one. Several foreign companies became the shareholders of Russian insurance companies or established affiliated companies. E.g. Allianz AG (Germany) is one of the major shareholders of ROSNO; AIG Rossiya is a company affiliated to AIG (USA).
According to the latest data there are almost 35 insurance companies that provide their services in Chelyabinsk. Almost 40% of them are local companies; the others are subsidiaries of the major Moscow-located Russian insurance companies. The most of the Russian top-insurers are presented in Chelyabinsk (Table 2); it reveals an importance of Chelyabinsk as a regional centre for business activity of advanced producer service providers.
But analysis shows that only four or five of Chelyabinsk-located offices control the major share of the market; the share of other 85% of companies is quite small. The situation is the same on national level: the Top-10 of the insurers collects 58% of all insurance premiums, the Top-130 collects almost 85%. This centralized structure of the market is accompanied by permanent increase of its profitability. Total level of collected insurance premiums in 2001 was 60,9% higher then 2000 data.
Until now there are some legal restrictions for foreign insurers (as in a case of banking service the problem should be solved in parallel with joining the WTO and GATS); so linkages with world cities are represented generally in reinsurance. The most presented re-insurers are Lloyd's Syndicates, Munich Re, General & Cologne Re, Swiss Re, American Re, brokers - Marsh & McLennan, Willis Faber & Dumas. E.g. the most advanced regional insurance company - YuzhUral-ASKO (53 in Russian Top-100) uses Marsh & McLennan's and Goerlings & Goethaer's services. We can conclude that in reinsurance, especially in broker's services, Chelyabinsk has a strong linkage with London, New York, Zurich, etc; certainly, the main node of connections to the world city network for Chelyabinsk is Moscow, one of the beta world cities. It should be noted that according to GaWC's research Moscow is ranking the 8th in percentage probabilities of sharing firms (of all kinds) with London, being almost equal to Frankfurt (Taylor, Walker and Beaverstock, 2001, Table 2). So, either through offices of Moscow-located companies or directly, the world cities' influence makes Chelyabinsk although not strongly connected into the world city network but at least connected.
The reinsurance market is the clearest indicator of international influences on and powerful means of signals transmitting to Russia's market as a whole, including Chelyabinsk. E.g. the increase of reinsurance tariffs in international companies after September 11, 2001 was reflected in increase of tariffs in domestic market; YuzhUral-ASKO increased its tariffs in automobile liability insurance on 30%.
Recently adopted federal law that obligates car owners to insure their automobile liability will surely accelerate development of the insurance market. Growing presence of foreign insurance companies will also increase the competitiveness and maturity of the market.
Summing up the data on insurance sector, we can ascertain a fact of emerging linkage between foreign world cities (including London) and Chelyabinsk as well as much developed indirect linkage via Moscow. Additionally, geographical strategy of Moscow-located firms shows that Chelyabinsk is not less important for national top-insurers then other largest cities and regional centres (Nizhny Novgorod, Samara, Ekaterinburg, Novosibirsk). (Table 2). In Southern Urals and some neighbouring territories Chelyabinsk evidently possesses the highest Moscow's presence. So we can see a typical example of Chelyabinsk's function in inter-city networks. This city retranslates economic signals from world cities to corporative and individual clients in a considerable territory that includes not only smaller Ural towns but also rather notable places like Kurgan, Orenburg and especially Magnitogorsk.
Accountancy and management consulting. As analysis shows the situation in this sector is rather complex. Global accounting firms of the 'Big Five' are in many ways more represented in Russia then prime banks or insurers. On the other hand, the national market as a whole is fragmentary: there are hundreds and hundreds of small accounting agencies without a wide range of connections. Inter-city corporative office networks are less developed then in banking and insurance sectors (Table 3). Major Russian banks and industrial enterprises are usually clients of the largest Moscow-located accounting firms. Medium-sized and minor enterprises are a niche for smaller accounting agencies.
The situation in Chelyabinsk is quite typical. Major corporations are often clients of Moscow-located firms including Moscow branches of the 'Big Five'. Besides, some leading Russian firms of accounting sector are represented in Chelyabinsk not less then in other major cities (e.g. Moscow-located Top-Audit that is a member RSM International. So we can see a way in which this firm from the 'GaWC 100' is represented in Chelyabinsk). There are approximately 40 Chelyabinsk-located accounting agencies of a minor size and accordingly minor inter-city connections. Nevertheless there are some latest trends of another kind. Analysts distinguish at least 6 Chelyabinsk-located firms (Audit Classic, Trust Consult, Stratum Consult, GRU, YuzhUralBA and YuzhUralCC) for their progress in national and regional rating lists of different types. These firms are increasingly successful in a competition for clients in Chelyabinsk itself and in other cities and towns in the Urals and even in the Volga region. Besides, Audit Classic is regional leader in employment of information technologies (IT). These and other developments has turned Chelyabinsk into one of 8 major centres of accounting business in Russia alongside with Novosibirsk, Ekaterinburg, Nizhny Novgorod, Kazan, Ufa, Tyumen and Veliky Novgorod. Certainly, Moscow and St Petersburg are the prime centres.
As in many other cases Moscow functions as outstandingly important node in inter-city networks. A further integration of other major cities like Chelyabinsk can develop via Moscow in parallel with more direct ways:
Transport. The early 1890ies was a turning point in Chelyabinsk's development into an important transportation node. In 1892 the Volga - Trans-Siberian railway reached Chelyabinsk in its eastward development thus having made the city one of the most considerable centres of commodity transition.
Since that period Chelyabinsk has greatly developed its role of a railway junction for trans-regional commodity flows at the same time effectively influencing them by the city's own production. Being the headquarter for the South-Ural Railway, Chelyabinsk controls a very considerable share of national and some transnational commodity transitions. E.g. in 2001 South-Ural Railway transported almost 70 million tons of cargo of different types.
Post-Soviet transformation has got a great impact on Chelyabinsk's transport potential; according to the latest plan of strategic development, the city is supposed to be an important part of the Russian-Korean-Japanese railway which will connect Russia on the whole and Chelyabinsk in particular to the fast growing markets of Asia-Pacific region. Many analysts believe that this direct railway connection between Europe and Japan as well as some other East Asian countries will become an effective alternative to much longer sea route across Pacific and Indian Oceans.
Another important sign of Chelyabinsk's growing international economic activity is air transportation. The main city's Balandino Airport currently services international routes to Hannover and Frankfurt and major cities of CIS countries (Baku, Yerevan, Tashkent). The most intensive air traffic is surely in Moscow direction (23% of all traffic). We can assume that air transportation, especially taking into account still continuing process of Chelyabinsk's involvement into international markets, often follows financial flows and therefore is of research importance.
The role of Chelyabinsk in the neighboring regions is in the best way presented by bus transportation. Buses link Chelyabinsk with other important cities' agglomerations - Ekaterinburg, Ufa, Perm (more than 1 000 000 of population in each). Besides, Chelyabinsk services international bus routes to Germany and Kazakhstan. For Astana, the growing new capital of the latter country, Chelyabinsk is the nearest westward regional centre connected by railway.
In the near future, in accordance with a further liberalization of Russian market after joining the WTO, we shall await correlative growth and diversification of transportation linkage that is surely among the best representations of the city direct and indirect economic importance and attractiveness.
Telecommunications. In this sector the city has started to exploit its geographical advantages already, but there is a lot of work to do. Now Chelyabinsk is an important junction of optical fibre lines that belong to major national operators (RosTelecom and TransTelecom). The leading regional operator, OJSC Chelyabinsk SvyazInform, is active in expansion and modernization of its own networks, especially digital ones. For example, Chelyabinsk takes leading positions among other Russian cities in development of Ethernet Gigabit systems. This project is due to the collaboration with the Russian branch of Reiffeisen Bank (Austria) and Cisco Systems. It is quite obvious that development of digital communications is very useful for industrial and financial companies (an innovating project of Electronic Metal Exchange in Chelyabinsk should be mentioned as one of many combined projects in this line). Such communications enable to integrate Chelyabinsk more completely into the inter-city global network.
Moreover, OJSC Chelyabinsk SvyazInform is listed on Stock Exchanges both in Russia (the RTS, Moscow) and abroad (Berlin Stock Exchange and American Stock Exchange, in a form of ADRs).
As for retail market there's almost exponential growth of Internet users number and more slow growth in mobile telephony. Leading companies operate in CDMA, GSM and 3G standards; GSM is preferable now for possibilities of trans-European roaming.
So a technological and commercial progress in this sector is obvious. On the other hand, Chelyabinsk's advantages in inter-city telecommunications networks could be exploited much more effectively in line with such advantages in transport networks.
The current development of labour market in Chelyabinsk can be described in terms of growing flexibility. Such situation corresponds to some world-wide tendencies (E.g. Gasteen, Houston and Asenova, 1999; Vesser, 2000). Being a city with more than one million of population, Chelyabinsk represents a clear model of modern post-industrial and quasi-industrial transformations. According to 1996 data the city's labour force embraced of 59,7% of the total population. The share of people under the labour age was 21,2%. By 2002 city's labour market has come through the basic structural changes bound with the shift of the command economy to the market one.
The number of workers in the service sector has grown from 22,2% in 1992 to 27,4% in 1997. This share has 1% per year growth tendency. The positive trend of the service growth combines with the trend of decreasing of the wage share in the people's income (47,3% in 1997). The other tendency is the growth of the hidden unemployment and its gap with the registered data (2% and 9-10% of the work force respectfully) and hence the "unofficial" labour (mostly in service, that increases its total share).
Another powerful factor, which influences the labour market, is the increase of low-paid labour immigration, mainly from the southern CIS countries. It shows strong economic gravitation that Chelyabinsk possesses in neighbouring regions of Russia and in northern regions of Kazakhstan. Some evidence of such gravitation could be seen in much more remote countries such as Armenia, Tajikistan, Uzbekistan and even in China. So we can see an ambivalent situation: salaries in Russia are much lower than in the EU, but they are considerably higher than in some other countries. While gravitating low-paid foreign labour Chelyabinsk and other major cities in Russia face in principle the same trends as leading cities in Western Europe, although on a completely different level.
Traditionally salaries in Chelyabinsk are slightly above the national averaged level. But researches reveal the steady and pervasive growth of the insecure, flexible work places characterised by unregistered relations between employees and employers, part-time schedule and almost full lack of social security benefits and guaranties. In addition we can point the growing rate of S80/S20 ratio, which is followed by growth of social injustice.
Another important characteristic of the city's social structure is social maturity of citizens presented through activity of various non-governmental organizations (NGOs) and other forms of public voluntary organisations. Some of their projects are launched in organisational and financial partnership with British public associations and foundations, for example the Charity Aid Foundation and the Westminster Foundation for Democracy. One of the most advanced initiatives in this area is the Twinning City project between Chelyabinsk and Nottinghamshire County Council funded by the European Union.
Besides this, Chelyabinsk takes part in different types of co-operative projects with the EU. Many of them are the TACIS programs held on the basis of the Business Development Agency and in co-operation with state authorities. Some of these programs are MERIT (program aimed to adaptation of dismissed coal-miners), SMERUS and SIORA (program of informational and technical assistance for small business), program for technical professionals exchanges and other projects. A combination of strong educational traditions in Russia and international programs brings some results. Now there are certain strata of skilled labour involved into modernising sectors and enterprises.
HUMANITARIAN AND SCIENTIFIC CONTACTS
Though not reflected in economic statistics, humanitarian contacts are among the best indicators of city's maturity, openness and attractiveness to external influence. Being the city with restricted visiting rules for foreign citizens in Soviet period, at present Chelyabinsk is one of the most dynamic centres of international humanitarian contacts in Russia. These contacts have formed now a very diverse agenda ranking from culture and education to medicine and NGOs partnerships.
We can present just several examples of such connections: cultural project of the British Council and "Baby" Theatre; above-mentioned TACIS Twin cities project between Chelyabinsk and Nottinghamshire County Council (UK); ecological and right-defense projects of Chelyabinsk's Non-Governmental Organizations supported by Open Society Institute, Charity Aid Foundation, National Endowment for Democracy, etc. (Here we have to say about typical misapplying of bad-famed ecological situation in some local zones of the region to the region as a whole, including Chelyabinsk. For example, it is necessary to distinguish between so-called Chelyabinsk-40, now Ozyorsk (a place of nuclear plant disaster in 1957), and Chelyabinsk itself, which is situated great many miles from that territory. Like many other industrial agglomerations Chelyabinsk faces various ecological problems, but not of such dramatic kind).
In previous decades industrial development of Chelyabinsk was accompanied by concentration of engineer and research personnel. Now it is an additional advantage to the city. Universities, engineer institutes and designers' offices collaborate with enterprises in the city and far outside it. The Chelyabinsk-located Centre of Scientific and Technical Information (CSTI) is a trans-regional institution that provides valuable data of different types for its clients in many towns and cities, including Ekaterinburg. Being a member and representative of the STN International, the Chelyabinsk CSTI is directly connected with information centres in Karlsruhe and Hannover.
Educational linkages are even more diverse both in international and inner-national directions. E.g. it is a partnership project "Distance Learning Initiative" of Stanford University (USA) and SouthUral State University. Educational collaboration between University of North London (UK) and Chelyabinsk State University is another encouraging example. Inner-nationally Chelyabinsk has a certain position of a quite attractive regional centre for branches of universities from such prominent scientific centres as Moscow, St Petersburg, etc. Also the most advanced Chelyabinsk's universities have educational networks of their offices in neighboring regions of Russia and Kazakhstan. To a certain extent such networks are analogous to banking and insurance ones. The system of educational linkages works well connecting Chelyabinsk with international knowledge "highways" and making the city more attractive for humanitarian capital investment.
Certainly such developments make their special contribution into post-Soviet transformations. Alongside with rather hidden financial flows there are some quite visible changes. Old and new universities, department stores in former plants and mechanical shops, restored historical centre, office buildings, parks, art galleries, cinema and music festivals and many other features form a post-industrial image of the 'steel giant'.
A generalization is not an easy work to do as we consider such rapidly changing national and urban economy. After three successive years of a considerable GDP growth and macroeconomic stability we can quite evidently suppose that the most difficult phase of a market-style transition in Russia is well behind us. Rapid integration (or reintegration in a certain sense) of Moscow and other cities into the global network is among the most prominent developments in post-Soviet Russia.
A case of Chelyabinsk shows many important aspects of this process. We can see a large city with many traditional industries that successfully carries out its municipal and corporative plans of modernization and diversification (although there is a lot of work that lies ahead). In great many ways this city is connected with other ones, especially with Moscow. The capital of Russian Federation is a city of outstanding financial and administrative importance. Moscow's influence is evident in banking, insurance, accounting and other sectors; its powerful gravitation can be detected in very distant regions up to the Russian Pacific coast, not to mention relatively close territories like the Urals. In many sectors the data show that even two major neighbours, Chelyabinsk and Ekaterinburg, are not so much connected between themselves as each of them is connected with Moscow. For many cities and minor towns Moscow is the prime gateway to the outside world.
So Moscow's predominance is very strong and obvious, but the situation has changed since 1990 - 1991 when at the dawn of market-style reforms such predominance was absolute. Now we can ascertain a new stage of integrating developments. At present major Russian cities have transnational linkages of their own, thus going round Moscow (Figure 4). For Chelyabinsk the most evident connections (of various types) are with Frankfurt, Hannover, Zurich, London, Vienna, Brussels, Tel Aviv and New York; some other cities (but certainly not all of them) were mentioned in previous sections of this paper. It is not surprising that we can see two German cities as well as Zurich at the head of this list. Germany is the second largest export market for Chelyabinsk Region (while Kazakhstan is the first). Germany and Switzerland are very important sources of investments into the local economy, including manufacturing of metals and building materials, hotel services, etc. Besides, there is a large German community in Chelyabinsk. London's influence has some other special features: although correspondence banking connections are not so much developed as in Frankfurt - Chelyabinsk line, the British capital is very important for Chelyabinsk-located business as outstanding global centre of reinsurance and Exchanges' activity. So, this initial integration (via Moscow or increasingly in more direct ways) is an accomplished fact. Now it seems rather ordinary that a financial institution, as Alfa Bank in this example, has offices in London's Basinghall Street, Amsterdam's Herengracht, Madison Avenue in New York and Kirov (Ufimskaya) Street in Chelyabinsk.
These and many other developments have made a necessary basis for more considerable changes. We can reasonably suppose a further diversification of the city's economy and an increase of postindustrial structural trends; in particular the city could exploit its geographical advantages more completely. If present dynamism of changes will be retained, then the city will establish more intense connections with other cities in Europe (London is probably the most important direction), Central Asia and Pacific regions. It's not just a point of quantity and geographical range. We can also expect that the present gap between city's inner economic potential and its relatively inadequate connections will be overcome.
Moreover, there is another reserve for integration tendencies. At present Russia is the largest national economy outside the WTO and GATS. After eight years of negotiations the aim now seems to be much closer than ever. A forthcoming joining will enable more strong and direct presence of the 'GaWC 100' global firms in major Russian cities like Chelyabinsk.
Therefore it looks worth-wile to spread a future investigation on other Russian cities and territories. Such investigation will probably enable an accurate measurement of inter-city connectivity (Taylor, 2001; Taylor, Catalano and Walker, 2002): initially it could show numeric indicators based on Russian corporative networks and then a kind of global cross-indicators as calculated via Moscow. In prospect it can enable to draw a comparison between indicators before and after a joining the GATS.
Finally, it should be noted that in this paper we have considered Chelyabinsk mainly as an object, but not a source of external influence. Nevertheless there is a certain territory of the city's own economic gravitation (Figure 5). This area is getting narrower or wider depending on a sector to consider: industry, banking, insurance, accounting, education services, etc. Sometimes it extends far eastwards and southwards, so running across the state frontier. Sometimes it partly coincides with the similar zone where the neighbouring competitor, Ekaterinburg, functions as another centre of gravitation. Now such centres could be regarded as (hypothetically speaking) delta or epsilon world cities at the best. On the other hand, that is an initial basis for further advances. A forthcoming joining the GATS and other above-mentioned developments could promote some major cities of Russia to the gamma rank (while Moscow is a beta city already). It could be supposed that these cities are among the most suitable reserves for an intensification of inter-city connections in the early decades of the 21st century. Chelyabinsk is taken as just an example in this research.
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APPENDIX A: Foreign Correspondence Linkage of Chelyabinsk-located Banks, 1992 - 2002 (in alphabetical order)
Banca Commerciale Italiana, Milan
Table 1: Major Banking Networks
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Table 2: Major Insurance Networks
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Table 3: Major Accounting Networks
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Figure 1: Chelyabinsk: Population Growth
Figure 2: Chelyabinsk: Structure of Industries (in 2001)
Figure 3: Chelyabinsk Region: Foreign Investments of All Types
Figure 4: Chelyabinsk: Main Inter-city Connections
(Width and density of the arrows correlate to intensity of linkages)
Figure 5: Chelyabinsk: An Area of Its Strong Economic Gravitation
Edited and posted on the web on 24th June 2002