Prospects for the northwestern Russian forest raw material harvesting during the transition to a market economy

This paper analyzes the long-term prospects of profitably harvesting the fo rests in northwestern Russia in a sustainable manner, indicating the potent ial short- to medium-term competitiveness of the Russian forestry in both d omestic and international markets. We have chosen a systemic approach (a mo dification of Porter' s Diamond) to investigate the threats to and possibil ities of the Russian forestry. This means that we consider not only factor conditions, but also demand conditions, the presence and status of related and supporting industries, firm strategy, structure, and rivalry, and the r ole of government in creating a competitive Russian forestry. Our analysis of the factor conditions prevailing in the mid to late 1990s indicates that the prospects for the Russian forestry could be very good. However, this p otential will be realized only if substantial problems can be solved with r egard to revising government policy, clarifying property rights, developing and maintaining the infrastructure, and achieving a stable and not too rap id increase in costs. Furthermore, we think that domestic demand is a weak link and that a revitalization of this demand is necessary.