The investment climate has not gotten any warmer after a crisis. Growth points are still there, with no real improvement in them

Changes in the investment climate of Russian regions in the post-crisis period followed the Kazakhstan pattern (see Expert, 2001, no.37). Kazakhstan is characterized by a direct correlation between potential and risk, a growth in potential being accompanied by a growth in risk, and vice versa. This is confirmed by analysts, who refer to a continuing process of  resources reorientation of the Russian economy. This process runs contrary to the interests of most of would-be investors and their expectations of Russia as primarily a source of skilled labor.

The number of regions that have clearly improved their investment climate is a symbolic “baker’s dozen” (Chart 4, Chart 5 and Map 2). This group comprises very disparate regions, which are not very large, with the exception of Krasnodar krai). These are Tambov, Arkhangelsk, Kaliningrad, Leningrad, Novgorod, Amurskaya, and Sakhalinskaya oblasts, the Republic of Adygeia, the Kabardino-Balkar Republic, the Republic of North Ossetia-Alania, the Republic of Altai, Krasnodar krai, and the Evenki autonomous district.

Risk index increased in 59 regions in the post-crisis period, decreasing only in 30. In the same period, 48 regions decreased their potential and 41 increased it; another proof of the conservatism of this indicator.

In sum, contrary to expectations investment climate did not warm up, despite economic revival.

This conclusion is borne out by trends in climatic change in federal districts in the post-crisis period (Chart 6). In the Central, Northwestern, and Southern districts, as potential grew so did risk, and in the Far Eastern, Volga, and Siberian districts, the reverse was true. Investment climate trends proved to be the worst in the most resource-rich Ural district, where there was a parallel decline in potential and a rise in risk. This fact makes one brood on the outlook for improvement of the investment climate in Russian regions (and nationwide as well) after they finally reorient their economies to the primary sector.

The distribution of regions by type of change in investment climate from the angle of federal districts (Table 22) showed that there remains some hope of good developments. It turned out that most of the regions with positive trends are situated in federal districts that are Russia’s gateways to the global economy: the Northwestern, Southern, and Far Eastern. The worst off in terms of investment climate trends are regions belonging to the traditional economic core, viz., the Center, Urals, and Volga region.