The destiny of foreign firms in Russia’s strategic sectors?

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Author: Kari LIUHTO
Published in: Vol:8 No.1 / 2007

      Experiences of foreign firms operating in the Russian market differ to a great extent depending on the industry in question. The majority of the foreign firms, for instance, in retail trade, have been very satisfied with the skyrocketing revenues generated by the domestic consumption boom.
      On the other hand, several foreign corporations operating in a natural resource sector, particularly in the oil and natural gas business, have expressed their growing concern over the strengthening grip of the state. The growing direct involvement of the state in the natural resource sector has raised several questions, such as what is the future role of foreign firms operating in the sensitive industries?
      This question puzzles many foreign companies operating or investing in Russia, and hence, the main objective of this article is to position Russia’s key industries in the strategic governance matrix, i.e. to analyze the growing risks created by the expanding political economy in Russia for a foreign investor.