Two decades ago, Belarus, Moldova and Ukraine were peripheral places in the eyes of
foreign firms, and even investment opportunities provided by Russia were limited to
opening a joint venture with a Russian factory. Foreign investment inflow remained
practically non-existent until the collapse of the USSR.
Twenty years have passed but these countries pop into the headlines more often due
to their political turbulence rather than to the business opportunities they offer. It is not
generally acknowledged that 200 million consumers inhabit Belarus, Moldova, Russia,
and Ukraine. In addition to their large population, these markets are rather conveniently
located; the distance from Minsk to Berlin is almost the same as the journey from Berlin
to London. Nevertheless, foreign firms have invested less than USD 400 billion in these
countries (most of that to Russia), which is clearly below their potential. Political
turbulence, along with market imperfections and peculiar business risks has kept many
foreign corporations outside these markets.
The main goal of this report is to analyse the political risk of these four markets from a
foreign firms’ point of view. A special emphasis is placed on the analysis of the risks
faced by Finnish firms. The report consists of four independent articles, which use a
common conceptual approach in analysing the political risk of a foreign firm. Some
economic background information on all these four countries has been gathered at the
end of the report.