ABSTRACT
This chapter shows that distance between two regions is a significant factor of businesses, which companies have to analyse thoroughly when they make decisions about regional expansion. Distance may have different dimensions and they each create asymmetries, which is a key element for arbitrage as a strategy. Geographically, Russia has highly uneven economic development. This unevenness is determined largely by the availability of natural resources, infrastructure, climate, mentality of the population and other factors. Much in the current regional development has been determined by historical aspects such as the creation of industrial towns in the 1930s and 1950s, and geographically. The Constitution of 1993 declared that the subjects of the Russian Federation are equal but there are asymmetries between subjects. The Federal Constitution provides that only the republics have the Constitution of the Republic, the regions have a regional Charter. The constitution of the republic declares that the republics have their citizenship, which is not typical for other subjects.
