Industrial Districts: are They Possible on the Northern Caucasus?

Daniil A. Sitkevich – Researcher of the Gaidar Institute; PhD student of the Faculty of Economics, Lomonosov Moscow State University. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Despite all the efforts, North Caucasian Federal District is still the most underdeveloped region of Russia. In this article, we try to draw attention on the experience of the Southern European countries to stimulate economic development of backward regions by supporting the genesis of “industrial districts”, which are a form of cooperation between neighboring small and medium firms, united by the shared infrastructure and set of rules and which are working in the same industry.

This policy can be effective only if there are enough prerequisites for the development of industrial districts inside the community. So, in order to understand if such a policy is possible in the Northern Caucasus, we made a quality research in 3 villages at the republic of Dagestan – Kubachi, Tsyyshi and Balkhar, which have some similarities with the Italian industrial districts. The results show that economic structure close to industrial districts can be observed only in Kubachi, and the development of industrial districts in other villages is slowed down by the lack of social capital, by the “lifestyle entrepreneurship” culture, which is widely common in Dagestan and restrains cooperation.

Key words: economic development, regional development, Northern Caucasus, industrial districts, cooperation.