RISKS AND REWARDS IN RUSSIA’S REGIONS.

Moscow’s Ekspert-Region consulting group has ranked Russia’s 89 regions by their attractiveness to investors. (Ekspert, No. 47, 1996) The authors claim to have analyzed over 100 statistical indicators and a welter of federal and regional legislation affecting investment in each region. The weights attached to the various indicators are based on assessments by both Russian and foreign experts. Though the results mostly fit the conventional wisdom among Western investors, there are some surprises.

Russian regions are ranked on both investment potential and investment risk (including political polarization in local voting, crimes rates, and pollution levels). High-potential regions tend also to be low in risk, though there are some exceptions. The bottom line is a list of 17 regions that combine high potential with low risk. They are, in descending order of attractiveness: Sverdlovsk, Moscow city, Moscow oblast, St. Petersburg, Samara, Belgorod, Krasnodar, Novosibirsk, Tatarstan, Vladimir, Voronezh, Nizhny Novgorod, Perm, Bashkortostan, Tver, Kaliningrad and Yaroslavl. This list is dominated by regions with large urban populations and with infrastructures superior to the Russian average. Conspicuous by their absence are the oil- and gas-rich regions of western Siberia. The main reason for this is the high infrastructural costs needed to support investment there. The Ekspert-Region group rates these regions — the Khanty-Mansi and Yamal-Nenets Autonomous Okrugs — as "over-invested" by foreigners.

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