Growing Russian over-regulation may deter investors
Subject The business climate in Russia. Significance Russia's hydrocarbon resources and large consumer market have to date attracted the bulk of foreign direct investment (FDI). The government actively promotes foreign investment to fund production and bring in advanced technology. Low economic growth and Western sanctions -- current and possible -- discourage both foreign and domestic investment. A legal battle around the Baring Vostok investment company and the arrest of founder Michael Calvey further dented investor confidence this year. Impacts Russia's geography makes inclusion in global production value chains a challenge, except in locations near East Asian markets. Plans for government spending on transport infrastructure could reduce logistics costs and stimulate FDI inflows into Russia's far east. More stringent data handling and protection rules will discourage foreign investment in the IT sector.