China used the 2008 Summer Olympics as a catalyst for infrastructure development that would benefit the country in the long term. Now Russia is giving itself a makeover before it plays host to the 2014 Winter Olympic Games.
The host city of Sochi and its surrounding areas are busy building what’s needed to accommodate the thousands of visitors expected for the Games. A new $200 million airport opened for business in the fall of 2010, and officials say more than 200 sports and support facilities will eventually be constructed. This doesn’t include the road, railway, port, electrical and telecom infrastructure projects in the works.
And Sochi is just a part of the broader infrastructure effort under way in Russia as it strives to modernize itself out of the Soviet era. Along with the transportation, communication and power investments, Russia is also building schools, hospitals, housing and other social infrastructure.
Given Russia’s geographic size, its infrastructure ambitions are huge both in scale and in price. A new railway across Siberia, for example, is estimated at $13 billion and new airports can run close to $1 billion each.
The Russian Far East city of Vladivostok is preparing to host the 2012 Asia-Pacific Economic Cooperation summit – the infrastructure cost is estimated at close to $5 billion. And Russian President Dmitri Medvedev plans to spend as much as $7 billion in 2010 and 2011 on housing for the nation’s senior military officials.
On top of that, the improving relations between Russia and China stand to spread into the infrastructure realm. The Beijing government is expected to invest heavily in Russia – estimates are $12 billion over the next five to 10 years for a dozen construction projects. These projects include about $250 million to rebuild a rail link between the countries.
Infrastructure creation on this scale requires vast quantities of natural resources – energy, steel, copper, cement and more. As we have seen in China, Brazil and elsewhere, such investment typically pays off in terms of economic growth.