Business Blog: Hoover’s Business Insight Zone

Since I first posted about this the other day, I’ve been doing some homework. (A little knowledge is a dangerous thing . . .) These three items provide some useful context on what’s happening in the Russian business realm:

• The Economist: Russia’s booming economy
• Daniel Yergin on CNBC: Russia Attracting More Western Companies
• Bloomberg News: Putin Says West Must Recognize Economy’s ‘New Balance of Power’

The main lesson I’m taking away from this is that Russia looks quite different from political and commercial perspectives. Politically, there’s a lot to take issue with: the country seems to be going the wrong direction in terms of political transparency and the overall extension of democracy. Plus Putin has been making (not-so-)diplomatic noises that Western leaders like George Bush and Tony Blair can’t like.

And then you have the business/economic front. Russia’s economy has been growing at better than 6.5% year by year; the economy has quintupled in size since 2000. And many Western-based corporations now see Russia as a key market for reaping high profits. What’s more, this profitability and growth applies not just in the oil and gas sector — which represents just 20% of Russia’s GDP even though the country is not the top oil producer in the world — but also in construction, consumer goods, and so on.

So: huge upside from a commercial standpoint, albeit with risks, weighted against big questions from a political or diplomatic standpoint.