РОССИЯ ЗОВЕТ ! – RUSSIA CALLING !October, 08 2012
Investment is a key priority for Russian economic growth
As a destination for direct foreign investment, Russia is unmatched. The great majority of foreign companies doing business in Russia are performing extremely well, and most are increasing their investments as Russia continues to outperform its neighborhood.
And you can see full reports on our blog
- Macroeconomic management has been excellent. Russia has extremely low debt, declining inflation, and improving social welfare; the politics are quiet, the banking system a net foreign creditor, with confidence in the banks supported by their performance during the Global Crisis.
- While there are several poles of technological excellence ripe of development – software, aeronautics, weaponry, etc. other obvious areas for economic growth are agriculture, services, domestic infrastructure and transformation of natural resources. Agriculture should someday outweigh oil.
- The impact of corruption is real but grossly overstated.
- Russia is now a world-class grain exporter, and, more impressive still, is set to become a net exporter of poultry. Given the deep Chinese market at Russia’s doorstep, this is an obvious pole for development.
- Turning to the financial markets, while we have seen vast improvements in the management of the banking system, of public and private debt, and of the currency, we remain deeply frustrated by the equity market. There are virtually no truly public companies; most firms are controlled by a majority shareholder or group of shareholders, whose interests are frequently not aligned with those of the minorities, about whom they care very little.
- The fundamental weakness of Russian financial markets is the absence of deep pools of long-term domestic liquidity. The pensions reforms have been botched, repeatedly, and we see little or no effort at creation of the sort of domestic, long-term investment capital that could begin to render the Russian market independent of global risk-capital flows.
Will Russia’s trade balance shift towards the Asia-Pacific region?
Once a barren land marked only by political tensions, the endless, sparsely populated frontier between China and Russia is now crossed by goods and trade. Today it’s not shocking to see that Siberia is becoming one of the leaders in Russia because the true innovation economy is a bottom-up driven economy. The regions that have allowed their young innovative entrepreneurs to thrive and to grow, and to develop themselves, are naturally going to become the leaders in any emerging innovation economy in Russia.