How does Siberia’s geography affect the economy?

Question by MistressAlice: How does Siberia’s geography affect the development of the economy?
Wtf?

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Answer by Mike C
It’s very simple. Siberia has three distinct geographic features – first, it’s extremely far away from any round-the-year available shipping lane or transport hub, second, it’s extremely cold, including large portions of permafrost, and third, it’s extremely rich in resources.
Mix the three, and you will obtain the following – the area has huge potential and attractiveness, but is plagued by huge transportation costs, that are very hard to mitigate. To exploit a resource in Siberia, huge infrastructure cost has to be factored in, as well as significant heating and food-transportation costs. This makes exploration and exploitation costs far higher than otherwise.
The Russian/Soviet/Russian again governments have had a strategy which was quite efficient to mitigate such costs – first, focusing on a single method of transportation for the entire area (rail through the Transsib and BAM, coupled with river-to-rail solutions for northern cities for freight and air transport for passengers), leaving the area devoid of roads of any kind, and second, building primary processing plants next to the exploitation areas, to minimize transport costs.
Overall, however, Siberia’s economy will remain a resource based economy, as manufacturing will remain prohibitively expensive. There are chances for knowledge-base economies to develop in the area, but such chances are slim, for both psychological reasons (Siberia is perceived as the place in the middle of nowhere) as well as for lack of knowledge infrastructure in the area (Yakutsk is the only notable university in the area).

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