Local border traffic and the development of retail trade in the Kaliningrad region and Polish borderlands

Abstract

Signing the agreement on local border traffic (LBT) between the Republic of Poland and the Russian Federation was welcomed by experts as an important step towards the future visa-free regime between the European Union and the Russian Federation often discussed in the international dialogue. The three years of LBT mechanism have shown its practical significance for the development of research and cultural contacts, cooperation between municipalities and NGOs of the Kaliningrad region and the borderland (Pomeranian and Warmian-Masurian) voivodeships of Poland. When considering retail trade as a structural element of economy, it is important to address the differences in the effect LBT has had on the development of this sector in the Kaliningrad region and the neighbouring Polish voivodeships. According to Russian experts, LBT results in 7-20% losses in the Kaliningrad region's retail sales, whereas in Poland LBT stimulates retail trade (accounting for 12% of sales in the border voivodeships). This article analyses the role of LBT in the development of retail trade in the Kaliningrad region and the Polish border voivodeships as well as prospects of its development in view of the changing geopolitical situation and adjustment of the currency exchange rates at the end of 2014. Based on statistics and analytical data, the authors arrive at the conclusion that the positive effect of LBT outdoes its negative impact on various sectors of the border regions' economies, including retail trade.