THE FAR EAST AND SIBERIA: DIAMONDS AND RUST.

The Siberian and Far Eastern districts are similar to most of the other districts in that they consist of a single or handful of large economic units combined with many smaller regions. Four oblasts–Krasnoyarsk, Kemerovo, Novosibirsk and Irkutsk–account for two-thirds of the Siberian district’s retail sales and three-quarters of its industrial output. An even starker concentration of economic activity is apparent in the Far Eastern district, where three regions–Sakha, Primorsky Krai and Khabarovsk–account for two-thirds of the district’s retail sales and 85 percent of its industrial output. Sakha, with its near-monopoly on diamond mining within Russia, by itself accounted for 60 percent of the Far East’s industrial output during the first half of 2000. The other fourteen regions in these two districts consist of sparsely populated areas which rely heavily on mining, non-ferrous metallurgy and electric power generation.

The Goskomstat data indicate that both of these districts have underperformed the rest of Russia this year. Growth in industrial output and retail sales have lagged the national averages, while the 9.5 percent unemployment rate recorded in both districts in mid-year was above the national average. Until 2000, at least, foreign investors steered clear of these areas: the Siberian district in 1999 attracted only 14 percent of Russia’s foreign investment, while the Far East received only 13 percent. Despite the ongoing development of the Sakhalin offshore oil and gas deposits, the Far East’s share of foreign investment in Russia dropped further to only 4 percent during the first six months of 2000. But the Siberian district has managed to increase its share to 23 percent of Russia’s foreign investment this year, thanks to nearly US$500 million in foreign capital invested in Tomsk oblast.

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