Invest in Russia — invest in Russian regions!
All analytics

The InfraONE experts believe that infrastructure development in Russia has lacked consistency for the last few decades: there is no definite plan for systematic spatial development, nor uniform statistics, nor a uniform assessment system. When regional and federal authorities invest in transportation, energy, housing and utilities, schools, and hospitals, the planning horizon rarely exceeds two or three years; besides, the approved development strategies aren’t always followed.

The report shows that by the level of infrastructure development and the volumes of investments in infrastructure, the leading regions are Moscow, Saint Petersburg, and Khanty-Mansi Autonomous Okrug. Moscow is leading by a considerable margin, being far ahead of the average country index (by almost 36.5%). According to InfraONE, this gap can hardly be narrowed in the next 7 to 10 years. Still, none of the regions has attained the maximum development index of 10 — neither composite, nor on an industry scale, which indicates a lack of funding in all spheres and in all the regions.

The leading regions have managed to take their positions mainly due to a developed transportation infrastructure which is traditionally the most capital-intensive; social infrastructure in these federal subjects is lagging behind because the load on it exceeds its capacity. Nominally, the level of infrastructure development is nearly the same in most federal subjects; in practice, however, this means that they are below the average country figures in two or more sectors of the five selected for analysis. The lowest results are shown by Chechnya, Tuva, and Dagestan, where infrastructure is poorly developed due to these regions’ low accessibility (mountainous territories) and low share of urban population.

Transportation infrastructure is developed the least: average country index for this sector is only 3.24 out of 10; the best developed sectors are housing and utilities (6.89) and telecommunications (6.48). The gap between transportation and other sectors will hardly be closed soon because transportation is much more expensive and much harder to develop. In telecommunications and in the housing and utilities sector, conversely, the number of private investors is greater while the cost of projects is lower. Besides, the dependence on the share of urban population is much higher here because the infrastructure is concentrated on a much smaller territory compared to, for example, highways or railroads.

As estimated by InfraONE, Russia’s minimum requirements for additional investment in infrastructure will equal 2.6 trillion rubles in 2019. The greatest share (52.6%) of these funds, however, will cover the needs of as few as 27 regions where infrastructure is already developed, which indicates a low level of economic development and a necessity for large-scale investment in both infrastructure and industry. According to calculations done by InfraONE experts, Russia’s minimum requirements for extra investment in infrastructure can be met as soon as in 2021, provided that investments following the May Decrees are made in accordance with the current plan of the Ministry of Finance. Still, there is a high risk that investments will again be channeled mostly in extra-large and megaprojects on a federal scale arranged via public contracts, while the current shortage of high-quality projects based on public private partnership will continue.

Anlytics on the topic

All analytics
24 September 2018
Infrastructure and Markets: Far East

This analytical review by InfraONE, prepared exclusively for the 4th Eastern Economic Forum, analyzes the Far East market of investments in infrastructure and its current state and presents a development forecast for the period of 2019–2021.

27 November 2019
Competitive Environment Assessment in Russia 2019

The report published by the Analytical Center for the Government of the Russian Federation assesses the competitive environment on the Russian market based on the results of an online survey of representatives of Russian businesses.

3 June 2019
China’s Economic Reserves Evoke Optimism

In 2018, Chinese leader Xi Jinping accepted Vladimir Putin’s invitation to attend the Eastern Economic Forum and, in 2019, — SPIEF. To boost ties between Russia and China is particularly important given the size of their economies and their geopolitical weight. Over the past three decades, China’s economic growth has been a priority. Experts tend to react dramatically to any slowdowns. But the Chinese realities are quite unique and require a unique approach. It is impossible to standardize estimates for a country with a population of 1.4 billion, living in another historical dimension, that has, in the past 30 years, broken through to become an industrial and technological leader.