For 20 years now Russia has been developing under conditions of political freedom and economic liberalization. Without question, the most important outcome of these changes has been the emergence of a new generation of Russian leaders who possess global thinking, strategic vision, and progressive priorities. This new generation has enabled both Russia and its regions to achieve their potential.

One outstanding member of this new generation is Mikhail Yurevich, Governor of Chelyabinsk oblast in the Ural region.

Though in office only a short time, Governor Yurevich has changed the region’s business climate and, hence, its investment attractiveness. As a result, Chelyabinsk oblast has taken the lead in important aspects of Russia’s economic development.

To ensure that the Chelyabinsk success story gets the international attention it deserves, from October 3 to October 5, 2011, Governor Yurevich brought an official delegation to Chicago, Illinois, to participate in the annual meeting of the U.S.-Russia Business Council. In advance of that visit, I posed a few questions to Governor Yurevich, and his answers below illustrate his thinking about the region and his vision of the future.

– What is your strategic vision for Chelyabinsk oblast in today’s global economy?

– Chelyabinsk oblast has become integrated into both the national and the global economies. So, one finds in Chelyabinsk all the stages of development seen elsewhere in the world. Fortunately, we have successfully overcome the crisis conditions that recently occurred in the global economy, and today we have positive business indicators in several sectors. For example, Chelyabinsk oblast now ranks first in the Urals Federal District in the amount of foreign investment. This speaks to the high level of trust our foreign partners have in us, and this trust helps us modernize the region’s economy.

Today, the most important issue is the impending entry of Russia into the World Trade Organization (WTO). As a region with a high concentration of export-oriented industrial production, Chelyabinsk oblast is certain to become a preferred place of business when Russia joins the WTO. In preparation for that, we are pursuing two priorities. First, working with national legislators to reduce the regulations that restrict national and regional business development. And, second, strengthening links with foreign partners – especially those in the United States.

– Which special regional features give Chelyabinsk oblast a competitive advantage in the global economy?

– The oblast gradually has evolved from a one-dimensional heavy industrial economy into a diversified one that includes agriculture, precision tool manufacturing, power engineering, and tourism. The oblast is one of Russia’s leaders in industrial modernization; regional companies report that 70 to 80% of their technical base has been modernized. You can see regional production changes even in a traditional industry like metallurgy. Similarly, the growing demand of agri-business for new machine-building and instrument-making means that companies in this sector are experiencing steady profitability, and investors are getting a high return on capital. In fact, one third of regional investment projects today are in agriculture.

Another advantage is the oblast government’s cooperation: it promotes regional brands in the world market and encourages local defense related firms to transition to civilian production. The increasing number of Russian and foreign firms that order innovative energy-saving and ecologically-safe technologies from Chelyabinsk companies demonstrates the success of this business-government cooperation.

Chelyabinsk oblast has two other important advantages: transportation and knowledge. Because of its geographical location, several transnational transportation arteries cross the oblast, creating a situation that has led to a 10 to 12% growth in the earnings of regional logistics firms. When you add to this the region’s scientific potential (more than 90 institutions of higher learning and large-scale scientific centers), the competitive advantages of Chelyabinsk oblast become apparent.

– With which countries and regions of the world does Chelyabinsk oblast already have long-term economic relations?

– Several regional enterprises have been participating in the global market for more than 20 years. To grow this external market – and to encourage more companies to work in Chelyabinsk – the oblast government recently has forged trade links with the U.S., Italy, Germany, Japan, and China. Presently, investors from 30 countries work in Chelyabinsk; our goal is to establish trade relations with more than 120 countries from the Americas, Western and Eastern Europe, as well as East Asia. Because we have been promoting the region’s competitive advantages in the past two years, more than 50 foreign delegations and diplomatic corps representatives have visited Chelyabinsk.

– When you speak to potential investors, which advantages persuade them to build their businesses in Chelyabinsk?

– We have both tangible and intangible incentives to offer. The oblast has an enviable geo-economic location in the heart of Russia, a favorable climate and a unique natural resource base. In fact, in this relatively small region there are deposits of more than 300 minerals, many of which are found nowhere else in Russia. Besides the tangible advantages, investors are becoming increasingly aware that we are committed to making Chelyabinsk oblast a leader in attracting investment. We provide investors all the detailed information and business assistance they need to put their operations here. Investors tell us they like three factors in particular: the region’s stable social conditions, absence of labor conflicts, and the government’s commitment to resolve problems that do arise. Analyses by financial industry professionals confirm that we are making Chelyabinsk oblast more investment-friendly. The region has a long-term credit rating of BB+, a national rating of ruAA+, and a prognosis of “stable”.

Let me give you some examples of Chelyabinsk oblast’s commitment to investors. For starters, regional laws provide government guarantees and tax advantages. Also, investors will find that business sites are large, close to distribution networks, and equipped with the necessary infrastructure and utilities. We are significantly improving the region’s energy network so that, by 2015, all companies will be able to reduce their electricity and fuel expenses. Investors also benefit from the region’s extensive professional education programs that produce highly-qualified employees. The continuing education opportunities for the staff companies hire here will improve the skills and knowledge needed to compete successfully in Russia and beyond. We believe this combination of incentives is the way to succeed: U.S. companies like Emerson and Carbo Ceramics have located large-scale operations in Chelyabinsk and are enjoying very good returns on their investments.

– When you look at the U.S. economy, what features seem most suitable for building your strategic partnerships?

– Despite its well-known challenges, the U.S. economy was – and remains – a leading world market. I consider the government-finance and the science-business relationships to be features of the U.S. system most attractive for us to follow as we pursue the strategic partnerships I envision creating. On finance, thanks to the U.S. system of risk insurance, investment markets operate with minimal government interference. When crises do occur, the U.S. has effective ways to handle them, and this knowledge and experience also will be useful for us to learn. With regard to science and business, of course we wish to import high technology for our enterprises, in general, and create joint projects in the area of municipal and industrial energy-generation, in particular. However, it is just as important to understand how the U.S. achieved its leadership in the world economy in the first place: I believe the unique system of interaction between science and business which gives both sectors incentives to innovate was instrumental in achieving leadership status. Learning how to adopt this innovative style of management is one of the topics we discussed with our American colleagues at the USRBC annual meeting in Chicago.

– In the “knowledge economy” heads of companies and countries both must consider human capital. What is Chelyabinsk oblast doing to unlock the intellectual potential of people in the South Urals?

– The region has a strong tradition in technical universities. A leading institution – South Urals State University – has been awarded the status of a national research university. Because of this achievement, SUSU has signed an agreement to become a research partner of Emerson. In fact, because Emerson created a global engineering center based on SUSU’s intellectual resources, this is a good example of the way that engineering talent in the Urals and the U.S. management culture can work together and produce excellent results. Chelyabinsk State University also is very strong in scientific expertise. Its physics researchers presently collaborate with the Ames Research Center in California, and several of its information technology graduates now work in the Silicon Valley.

U.S. business executives choose Chelyabinsk because they know we already have the employees they need. The region has an abundance of English-speaking specialists with a wide range of world class qualifications. In addition to instruction in primary science, the technical universities are preparing students for careers in agri-business, construction, infrastructure development, and power-engineering. The quality of this instruction is evidenced by the fact that each year businesses provide over 400 grants and scholarships to students and young scientists. Outside the technical universities, many others are receiving training in the service sector, which every dynamic environment needs.

– What lessons have the Governor’s team and the region’s business elite been able to extract from the global economic crisis?

– The main conclusion – the stability of the economy largely depends on its degree of diversification, the ability to accommodate rapidly to changes in the global and the national markets. Companies must be prepared to change the system of sales quickly, expand its customer base, and act on the new situation. It is difficult to do in cities with a single-industry economy, so, in this situation, government support is required. We have our own “mini-Detroit’s,” where tens of thousands of people are directly or indirectly tied to a single plant. In some cases, companies have benefited from the increased demand for cheaper domestic products and have replaced imported components in the marketplace. Almost everywhere companies optimized their human resources. Companies also greatly changed the cost basis of many products based on substitution of domestically produced components. We were able to use the global economic crisis as an opportunity for a number of our companies.

– When you look to the future, what factors could threaten your vision for regional economic development?

 – In similar circumstances, U.S. President Franklin Roosevelt said, “the fear of loss gives birth to suspicion.” We prefer to see today’s world as offering immense possibilities for regional development. The main point of which I am certain: regional business has learned to create its own “security blanket” by arranging packages of long-term orders, strategic investment agreements, “extended” credit, and the like. Today, Chelyabinsk has a highly-developed small business sector, which creates one-third of the region’s wealth and employs one-third of its workers. In fact, the oblast is one of the nation’s top five regional leaders in small enterprises, and Chelyabinsk city has been recognized as a leader amongst Russian metropolitan areas for creating the conditions needed to encourage small business start-ups.

Of course, government has a role to play. By monitoring the macro-economic situation continuously, the oblast can recognize “warning signals” immediately and take appropriate preventive measures. So, with the environment we have created and the oversight procedures we have put in place, we feel certain the region will continue to enjoy stable economic growth.

– In the future, what kind of image would you like the world to see when they think of Chelyabinsk region?

– Actually, the new image already has been created, and it is very far removed from previous stereotypes. In the past, the heavily-industrialized Urals was considered a closed “defense” territory run by a semi-military political regime with no regard for the environment. Today, the world recognizes that Arkhayim is the contemporary Troy. Here in Chelyabinsk oblast one finds 5 000 years of development, a proven record of successful industrialization – including the legendary centers of Magnitka and Tankograd – where people from the Urals applied their intellectual gifts to everyday challenges and spawned unique creativity of the Urals master crafters. Together, all this is the South Urals – a modern center of industry and learning ready to accelerate economic and cultural development for the benefit of its citizens by integrating itself with “the global village.”

However, it also is important to note that South Urals residents strive for balance in their lives – on the one hand, adapting to the changing world, and, on the other hand, retaining our own unique multi-national culture, warm friendship and a common life representing 140 nationalities. Personally, I would like the world to perceive the South Urals as a region where three and one half million industrious people not only live comfortably and safely, but stand ready to welcome guests from any country with a type of hospitality and kindness one can find only here.