This means, of course, that transaction costs for most business endeavors in Russia today are very high and will not soon decline. Investing in extant Russian enterprises or in building new firms will remain extremely risky. One sector, however, is an exception - extractive industries, especially minerals, and among them oil and gas top the list. They are far from risk free, but careful business deals with Russian firms in these areas offer profits. It is not greatly different from investing in weak states in Africa, Latin America, or in Asia.
Oil companies make money in Angola and Nigeria although both countries are extremely unstable.
Western businessmen in most other sectors, however, rarely invest in such places. The underlying point for business prospects in Russia is the same as the one for assessing Russian foreign and military policy. In both cases, the problem is a very weak state that cannot penetrate and control many social, political, economic, and regional enclaves. The most reliable index of a strong state is its capacity to collect direct taxes equitably. To do that, Russia would need effectiveness in all the institutions of central and local government - that is, courts, law enforcement, financial and business regulatory institutions, and many others.