Although improving the business environment in Russia has been a major priority of public policy in recent years, numerous indicators suggest that it remains poor in international comparison, with no clear overall trend. Russia’s poor business climate is hindering the modernisation and diversification of the economy through several channels including weaker competition, slower financial development and lower foreign investment and trade than otherwise. Achieving a decisive improvement in the business climate will require a range of actions to combat corruption, strengthen the rule of law, reduce the role of the state in the economy, lighten administrative burdens on firms, enforce competition law and liberalise the regimes for trade and investment.