EY’s attractiveness survey: Russia 2013 – Shaping Russia’s future

Russia continues to draw investors from all over the world, who rank it the sixth-most attractive country in the world for FDI and the most attractive in the Commonwealth of Independent States (CIS)

Factors that attract investors include Russia’s:

  • Large consumer market
  • Rising disposable income
  • Expanding middle class
  • Cheap, yet highly skilled, workforce
  • Vast resource reserves

In 2012, Russia received 128 FDI projects for the second year in a row. Jobs created by these FDI projects increased by 60%. This gave Russia the second position in job creation in Europe last year, up from sixth place in 2011.

Russia’s accession to the World Trade Organization, the formation of the Common Economic Space with Belarus and Kazakhstan, and a possible Eurasian Economic Union by 2015, are likely to have a positive impact on its attractiveness.

Acceleration in privatization efforts and an improvement in demographic profile are also expected to improve the investment climate further. Of existing investors, 68% plan to scale up their presence in Russia.

However, challenges remain:

  • Limited awareness among investors who are not yet established in the country
  • Political, legislative and administrative issues
  • High levels of corruption
  • Inter-regional disparities
  • Overreliance on oil exports

Russia should target diversifying its economy, providing sustainable growth and encouraging the wider use of new technology.

Reducing administrative barriers, amplifying its innovation capacity, enhancing regional attractiveness and improving business education are the steps that investor propose for future investment and growth.

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