Economic Development in Russia

Up to about three years ago Moscow was a must when entering the market for business. However, other regions developed very quickly as well. First of all, besides Moscow, St. Petersburg with its 5 million people is making a visible economic upturn. In addition to the fact that President Medvedev and Prime Minister Putin come from the "Northern Capital," St. Petersburg also benefits from its closest location to the sea and its proximity to the Finnish border. Other cities with significant economic development include: Nizhni Novgorod (400 kilometers east of Moscow), Kazan (800 kilometers east of Moscow), Yekaterinburg (1,400 kilometers east of Moscow), Krasnodar (1,300 kilometers south of Moscow) and in Siberia Novosibirsk (2,800 kilometers east of Moscow) and Vladivostok on the Pacific coast.

Putting aside the financial and economic crisis for a moment, Russia had a long lasting boom in the construction business, retail, financial services and the automotive industry. Many Western companies set up production facilities in Russia. Most prominent is the automotive industry. Original equipment manufacturers like Ford, Toyota, BMW and Volkswagen produce locally in Russia (actually more assembling than real production). Regarding the automotive industry two clusters developed, one in the St. Petersburg region and another one in Kaluga, about 200 kilometers south of Moscow.

To read the full version of this article, please download the inaugural issue of Russia Briefing, which can be found in the Asia Briefing Bookstore. Companies requiring assistance may contact Dezan Shira & Associates at russia@dezshira.com for advice or visit www.dezshira.com.