Unlocking the Russian potential

Abstract

What does it entail for a nation as a whole to be an economic power to reckon with, to ensure that it comes of an age where it was just perceived as the back end supplier to be an investor’s destination, to be competing with the giants of the world. Well, that is what Russia should be aiming for given the resources it is endowed with. We have, in this study tried to understand Russia, its economy, its transformation over a period, its industries, and its aspirations and tried to engage with certain questions and develop a perspective. We tried to explore how an Indian investor or policymaker can benefit from Russia’s potential. We did an extensive literature survey to understand the Russian economy, its transition from the advent of the 19th century when it was a stronghold of Socialist ideology and what made it to change so as to align with the world order. We also, tried to answer what has been driving the fast paced growth of Russia post 1998 crisis. More recently, the pressure for inclusion in the WTO has been a catalyst for the Russian industries to shape up to face the music of global trade. Being an oil & gas major, how the heavy dependence on oil and gas played on the economy and how Russia has been trying to diversify its offerings – we tried to map this as well, as this holds the key for a sustainable growth going forward for Russia. We studied Russian business economy in terms of 5 industries (based on the top 100 Russian companies by revenue) – Oil & Gas, Steel & Metals, Utilities, Telecom & Retail. The choice of these was also from the perspective that we wanted to talk about commanding heights as well as the emerging sectors which hold potential for Russia. The broad framework applied for analyzing the industries involved doing a strategic analysis of the industry, identifying key players, their dominant strategy, globalization and precedence of global firms investing in Russian assets, future potential based on financial performance and identifying opportunities where an outside investor can put in his money.