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. Last Updated: 07/27/2016

Cross Investments Are a Strong Agent of Change

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At the St. Petersburg International Economic Forum, oligarchs stood up one by one and talked about their billion-dollar investments in the United States. Alexei Mordashov (WCI Steel), Dmitry Pumpyansky (IPSCO and NS Group) and Igor Zyuzin (Bluestone Coal) described how they found the United States to be a transparent and profitable place to do business. Each said they are taking home the processes and lessons in productivity of their U.S. businesses and applying them in their domestic operations. Russian multinationals are applying international best practices to transform Russian business while simultaneously revitalizing old U.S. industries.

The constant drumbeat at the forum was innovation, Russia's accession to the World Trade Organization and getting through the crisis via cooperation and without protectionism. Discussion was frank, including President Dmitry Medvedev's confession that Russia has not seen enough progress on making the economy more innovation-based. There was also exchange between Medvedev and Alcoa CEO Klaus Kleinfeld about how 46,000 pages of documents required by the Russian bureaucracy have slowed down the company's investments.

Ten years ago, Russia was in the midst of its first postcommunist crisis, largely going it alone. A decade later, it now finds itself participating in the worldwide crisis as a full member of the global economy.

A year ago, the Russian reaction to the international crisis was anger at the West for spoiling the country's eight-year oil boom. Now it seems that Russia's businessmen and leaders are trying to use the crisis to make changes to its ineffective political and economic institutions.

This view of the crisis is shared by U.S. President Barack Obama's administration as it faces its own domestic challenges. Russia struggles with centuries of bureaucracy and corruption, while the United States deals with decades of dysfunction in the automobile and other industries.

The stories told by participants at the St. Petersburg forum demonstrated that investments by Russian and U.S. businesses in each other's countries can be powerful agents for change. These changes are needed to come out of the crisis with more modern, competitive and diversified industries. Now is the time for both governments to facilitate such investments by avoiding protectionist measures and breaking down barriers to investment.

Darrell Stanaford leads the Russian operations of a U.S.-based S&P 500 company. The views expressed are his own.