Russia, officially known as the Russian Federation, is the largest country in the world and is located in Eastern Europe extending all the way to Northern Asia. In addition to being the largest country in the world Russia spans 9 time zones and is the 9th most populous country in the world with an approximate population of 142 million. The capital city is Moscow and the official language is Russian.
Russia is a vast and diverse country. Since the collapse of communism Russia has emerged as a political and economic powerhouse moving from a globally-isolated centrally-planned economy to a market-based, globally-integrated one. The country has vast reserves of oil, natural gas, coal and precious metals. In 2009 Russia was the world’s largest exporter of natural gas, the second largest exporter of oil and the third largest exporter of steel and aluminum. These vast natural reserves and an increase in agricultural exports have contributed to ensuring Russia currently has the twelfth largest economy in the world.
Russia is a member of the UN Security Council, G8 and G20, the Council of Europe and the Organization for Security and Cooperation in Europe and is the leading member of the Commonwealth of Independent States.
Russia has many resources and huge potential which in recent years has led to a significant increase in foreign investment. This has led to local authorities in many of the regions attempting to stimulate the investment environment and form a culture of investment.
There have been several initiatives in order to enhance the investment environment, some of which are outlined below:
- The Development of Regional Investment Legislation – The Republics of Tatarstan and Komi are particularly active along with the Yaroslavskaya Oblast Region.
- Development of Benefits by Local Authorities – Investment is being supported by local authorities through the provision of benefits
- Creating an Advantageous Investment Environment – Increasing the transparency and attractiveness for investment opportunities.
- Actively Increasing Foreign Investment Opportunities – There are certain regions within Russia that are leaders in attracting foreign investment and providing the right climate for foreign investors. The main regions which provide this are Nizhny Novgorod and Nizhny Novgorod Oblast, Orenburg Oblast and the Komi Republic. The regions of Central Chernozem and the Volga are also active in this respect as government support has increased leading to these regions becoming more attractive for foreign capital and investment.
- Formation of Investment Infrastructure – Five regions have established mortgage funds which have increased the regions attractiveness to foreign investors. Mortgage funds are an opportunity to provide state guarantees on the part of the Federation. An example of this is the Reinsurance Company which operates in the Komi Republic. In addition to initiatives such as the mortgage fund other projects are being created such as the development of business centers and the improvement and upgrading of communication systems. There has also been additional emphasis on the improvement of economical justification for investment projects. To strengthen these ongoing programs, it is important to engage banks in this activity and in order to do this the implementation of regional passports has been proposed. These will contain the information necessary for potential investors as Russia’s regions differ strongly regarding investment potential and also risk investment.
The greatest investment potential is located in Moscow and St. Petersburg and in the donor regions due to the vast potential resources and raw materials available.