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Joint Ventures between Russian and American Companies

Prior to the end of 1988, when restrictions on the percentage on foreign ownership were removed, the Soviet partner had to own at least fifty one percent of the joint venture and the Chairman of the Board of Directors and the Director General or chief operating officer had to be a Soviet citizen (Rosten, 1991, Winter, p. 94).

Despite privileges not enjoyed by other Russian entities, such as a two year tax holiday, foreign joint ventures were not very popular prior to the collapse of the Soviet Union. By the end of 1989, 1200 had been formed, 140 involving American investors, and by the end 1990 2500; however, most of these companies were inactive, only about 40 being in operation (Rosten, 1991, Winter, p. 95). According to McCarthy et al, the expectations associated with this first wave of American investment in the new Russia were not met: "unfortunately, the benefits expected by the partners were not as great as had been hoped, and the difficulties were far greater than anticipated" (1993, Fall, p. 101).

These included such elementary problems as a lack of office space, communications facilities and living arrangements for foreigners and acute shortages of materials as well as other problems which continue to plague foreign investors to the present day including an indifferent and often hostile bureaucracy, corruption, criminality, scarcity of hard currency and the lack of a compr


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