Introduction 1. Historical Prelude 2. Investment and Physical Capital 3. The Economics of Location 4. Market-Impeding Federalism 5. Human Capital 6. Conclusion

If sustainable growth is a key goal for the economy of every nation, its desirability is perhaps even more acute in Russia. Even President Medvedev argues that the country's heavy reliance on natural resources makes it primitive and uncompetitive, calling for innovation and diversification. Having analyzed the particular tenets of the economy that restrict sustainable growth, the authors argue that Russia should take advantage of its resources but move non-resource industries into regions that are closer to the market.

Clifford G. Gaddy is Senior Fellow, Foreign Policy, Global Economy and Development in the Center on the United States and Europe at the Brookings Institution, USA.

Barry Ickes is Professor in the Department of Economics at Pennsylvania State University, USA.