DOI: 10.13189/sa.2014.020304 Northern Investment Risks in Human Capital Formation: Russian Experience

have been an object of a special socio-economic policy, united by extreme climate conditions, geographical isolation and rich natural resources reserves. Northern investment risks in human capital formation are proposed in the paper, as an indicator of investment conditions, which can be employed to improve policy of human development in the northern regions of Russia. Northern investment risks encompass uncertainties associated with extreme northern climate conditions, historically determined allocation of resources in the Russian northern regions and restrictions on labour mobility caused by geographic isolation and administrative rules. Investment risks in human capital, its measurement, methods of estimation are considered. Empirical estimation illustrates higher investment risks in the northern regions. Method of estimation can be employed widely to compare investment conditions in imperfect economies. Policy of insurance of private investment risks and current restrictions on it’s implementation in the northern regions of Russia are discussed