The more than 1000 years old town was once the cultural capital of Russia and one of the biggest trading centres in Europe.

But these days the town is struggling to lift itself from provincial obscurity - and with some success.

Novgorod businessman Vadim Shevnin: "The money is in Moscow"

By Russian standards the region is a hotbed of capitalism. It has one of the highest rates of credit in the country and does its best to win foreign investment.

Attractive tax breaks and a sympathetic local administration persuaded the big Danish chewing gum company Stimorol to come to Novgorod two years ago. Business is going so well that it plans to expand next year.

Victor Shevnin: "Regions need money urgently"

But local Russian companies can only look on in envy. Even before the latest financial crash, banks were reluctant to give loans.

A local businessman, Vadim Shevnin, said that most of the money is concentrated in Moscow and does not reach Novgorod.

A home turned workshop for Novgorod lecturer Victor Tatinov

A local lecturer, Victor Tatinov, earns so little from his salary that he can only feed his five children by doing half a dozen other jobs, turning his home into a virtual workshop.

"Optimism has fallen" says Victor Tatinov

To make ends meet, he and his eldest son Kostia have set up a small business, making and selling beehives.

He said that this May has been the toughest month since the reforms. Optimism has fallen, he said.

Novgorod is one of Russia's best performing regions. Business is beginning to grow and investment is coming in.