Obstacles to Foreign Trade and Investment in Russia

Author

Nataliya Gorokhovsky, Fontbonne College

Year of Award

1993

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Business Administration

Department

Business Administration

Keywords

Soviet Union, government, industry, commerce, American

Abstract

Russia is the biggest republic of the former Soviet Union. It possesses such assets as vast raw material wealth, total population literacy and a potential market for American goods. Petroleum and gas resources, the taiga forest in Siberia, and gold and uranium deposits make this republic an extremely attractive market for U. S. companies.

Soon after the August, 1991 coup, Russia became an independent republic. The republic is now on the way to a market-oriented economy. This formative period is painful not only for the people but for the economy as well. It is reflected in enormous currency devaluation, constantly changing commercial laws, and the chaotic business climate of the country. Frequently the people who were in control during the Communist regime still maintain the same status, power, and mentality in the developing new republic. Those bureaucrats still exercise great power in the republic's operations, and corruption continues rampant in .governmental departments. Lack of understanding the intellectual property rights, and the shortage of commercial and legal information are just some of the obstacles to doing business with Russia. No reliable data regarding existing businesses, consumption and distribution patterns are available. Internal travel is nearly impossible because of the constant fuel shortages and inadequate road infrastructure. Difficulties in the telecommunication infrastructure impede contacts with Western offices. Furthermore, the government's lack of confidence and inability to rule under the new conditions cause political and economic instability.

Many of these obstacles originate from the history of Russian economic, cultural and political development. Therefore, it is important to review the country's development in all of these aspects.

Some obstacles to trade and investment in Russia exist in the United States as well. The U.S. economic foreign policy has major differences with those of Western Europe and Japan. This is the reason for low U.S. - Russian trade. In addition to legal barriers, the U.S. government doesn't support American companies in their struggle to do business with Russia, a fact which is especially important to small and medium - sized firms. Companies are seeking informational support, like opening an information center in Washington which will provide them with current data about the marketing situation in Russia. The companies also need commercial support from the U.S. government which may be able to solve some business problems with the Russian government since it still controls business there.

Document Type

Restricted Thesis

Recommended Citation

Gorokhovsky, Nataliya, "Obstacles to Foreign Trade and Investment in Russia" (1993). All Theses, Dissertations, and Capstone Projects. 274.
https://griffinshare.fontbonne.edu/all-etds/274