Progress and Prospects

The Russian Federation, the world’s largest country, with a land area of 17 million square kilometres and a population of 144 million, has attracted relatively little foreign direct investment (FDI). This modest performance of Russia in attracting FDI is particularly evident in comparison with other transition economies in Europe, which have received far more FDI, adjusted for population, and have also exhibited a positive correlation between FDI inputs and GDP growth rates. By the end of 2003 Russia had recorded a cumulative inflow of USD 26.1 billion, less than half China’s annual inflow for 2003 alone, and far below comparable absolute figures for the Czech Republic and Poland. Divided by population, the resulting...