Presentation by Andrey Zverev at the Russia Breakfast of the by tyndale


									Presentation by Andrey Zverev at the ‘Russia Breakfast’ of the DGAP, Basic
Element, Deutsche Bank and Eastern Committee of German Economy

May, 4-5th, 2008, Hotel Adlon

Economic Innovation Policy of the Russian Federation
(Summary Statement)

Ladies and Gentlemen!

I would like to express my gratitude to the German Council on Foreign Relations,
East Committee of the German Economy, Deutsche Bank, and also to Mr. Alexander
Rahr personally, for the invitation make this presentation at the political and
economic breakfast. Conferences, seminars and other events held by the mentioned
structures, are well-known outside Germany, have a high reputation due to the careful
selection of subjects discussed here, and to the status and professionalism of persons
engaged in the events.

I consider the fact of the invitation as the acknowledgement of the importance of that
role which the organization headed by me, the Analytical Center under Government
of the Russian Federation, is qualified to perform, and of the importance of tasks
which our activity should be focused on. Undoubtedly, one of those tasks is the
participation in working out of solutions aimed at building up new innovation
economy foundations.

The topic declared for discussion assumes inwardly directing our eyes towards the
future and realization of attempts to outline strategic contours of the Russian
economy. However one should not forget that the future originates in the past. Scale
and depth of the transformations occurring in the world around us have no power to
break the continuity of links in the chain of past and future events, which we call

The modern history of economic and social transformations in Russia counts rather
less than 20 years. Radical reforms in Russia started in 1991, with forming and
beginning of work of the government led by Mr. B. Yeltsin and Mr. E. Gaydar.
Giving its due to their personal contribution to the reforms, I believe pertinent to note
that, gingerly and inconsistently, but for the first time conditions for pluralism of
economic views on economy, for running businesses and using private initiatives in
the economic practice had arisen rather earlier: at the end of the eighties when the
country was headed by Mr. M. Gorbachev.

The nineties of the 20th century were an extremely complicated period for political
and economic life of Russia. Hyperinflation, deep collapse of production volumes,
sharp increase of external debt, dramatic decrease of living standards of the
population, regionalization of the country‟s economic space – this is just an
incomplete list of problems the Russian Federation had to face. I know about it not by
hearsay as I had been chief of the Economic Department at the RF Government Staff
for several years.

Prior to that time the world practice had not known and hence had not been able to
prompt answers to questions, such as within what terms and through what kinds of
tools one could reform a state based on the absolute power of a single party and on
public ownership of means of production, into a state aimed at pluralism of political
views and prevalence of private type of ownership. In my opinion, precisely the lack
of reliable "navigating" equipment for the reforms was the prime cause of a plenty of
errors made in the realm of economic management. At the same time one must
certainly not ignore a serious influence of subjective, personal factors on the
decisions taken at that period.

As means of correcting of the scale social and economic disproportions accumulated
by the middle of 1998, the history had chosen a temporary default of government
obligations, acute, a though rather short-lived, crisis of the Russian financial system.

This highly painful event which damaged the prestige of the country, aggravated
functioning problems in the real production sector, uncovered faults in development
of the banking area, and demolished living standards of a greater part of the
population, nevertheless, had a very important positive consequence. Essentially it is
the reconsideration of the attitude to the implementation of reforms, to their
organizational, professional, administrative support.

In 1999, at the beginning of a stage of regenerative growth, an understanding came
that radical reforms is a long period of the country‟s life, sometimes lasting for
decades; that the human factor is the main driving force of reforms; that economic
processes require a reasonable state regulation which should supplement the
influence of particular market regulators.

The crisis events of the nineties appeared to be so deep that even the surprisingly
favorable external economic environment of a series of following years did not allow
us to judge about regenerative stage being basically over prior to the borderline
between 2007 and 2008.

The values of macroeconomic parameters fixed according to the results of the year
2007 testify the same. I shall give you their approximate values in rubles and euros in

Thus, the gross domestic product which has increased 8,1 % against the level of
2006, has almost reached 33 trillion rubles, i.e. exceeded the 930 billion euro level. In
the current year there are preconditions to reaching a psychologically important point
of 1 trillion euro.
The volume of investments in the fixed assets in 2007 has increased by 21,1 %
against 2006 and has totals 6,6 trillion rubles or about 190 billion euro. Nevertheless,
despite impressive growth, the general level and structure of investment activity
remain a problem for the Russian Federation.

Against the background of the intact favorable external economic environment, the
foreign trade turnover of the country has been continuously growing and totals more
than 410 billion euro. It is necessary to mention, and I am doing it with a feeling of
satisfaction, that Germany is the largest trading partner of Russia. Its share in the total
turnover is almost 10 %.

An inflow of significant volumes of the export proceeds to the Russian Federation
encouraged the increase in gold and exchange currency reserves which have reached
a record volume above 340 billion euro by the end of 2007.

The rate of foreign investments in the non-financial sector of the Russian economy
have more than doubled during the last year against the respective figure of 2006,
having exceeded the level of 85 billion euro.

It is fair to say that Russian economy is not conflictless. A special anxiety and hence
attention are caused by of the inflation growth which has increased up to the level of
12% in 2007.

Having earlier passed a severe test of hyperinflation, Russia is certainly anxious
about finding means which would cool down the price dynamics, affecting both
manufacturers‟ prices and the consumer market.

The group of fundamental causes generating inflation in Russia includes insufficient
development of the competitive environment, slow rates of upgrading technical
resources and high materials-consuming production, low productivity of direct
labour. Apparently the elimination of those is a key to a reliable solution of the
inflationary problem.

Now, the regenerative stage is close to its end. In this respect, the question „what
comes next?‟ arises quite naturally. And what follows, is a continuation of work.
After having solved the mentioned problem of restoration, we came to another, more
challenging one: defining the direction and maintaining the further movement: the
movement in a longer term.

For establishing a strategic line of the development of Russia, the major issue is the
choice of the type of the economy which would be comprehensible from the point of
view of competitiveness and social stability and will allow a rational use of the
various resource potential and diversify of the economy.
Abstracting from particulars, the world experience testifies a wide circulation of two
types of economies: agricultural and raw-material producing and hi-tech, ones.

Agricultural and raw-material producing economies are based on extraction,
manufacturing and processing the stocks of natural resources, which are quite often
non-reproducible and difficult to extract.

Hi-tech economies which are brightly represented by Germany, are based on
applying the constantly increasing human intelligence, strengthening of the role of
modern manufacturing activities and information technologies.

Whatever has been told does not mean that countries with agricultural and raw-
material producing type of economy do not apply modern machines, equipment and
technological processes. All that is taking place, but countries of this group are
obviously neither top-generators of innovations, nor leaders of innovation
commertionalization. Their destiny is to be conducted; their main task is to avoid
lagging too far behind the leading states, for example, on a level of public labour
productivity where the gap might reach many dozens of times!

Typical for the raw-material producing countries are deep economic disproportions
and chronic financial difficulties, while for the hi-tech it is the product line
diversification and, even if not always the fast, onward movement on the path of
scientific and technical progress under stable financial conditions.

Carrying out a choice of development strategy, one should not abstract from the
analysis of its social consequences.

Insufficiently high educational level and mostly low productivity of direct labour in
the majority of the agricultural and raw-material producing countries result in
forming of an unpractical social structure and polarization of the society as a
consequence of lack of a consolidating middle class. The stratum between the
multitude of the poor and a small number of the rich is thin; it is not able to reliably
fulfill the mission of a social stabilizer.

A totally different pattern is observed in hi-tech states, where the middle class is the
basis of bases, a group capable to support, both politically and economically, a steady
movement towards the strategic goal of the state development, the goal generated by
this group itself. The support is maintained, among other things, by means of active
participation in the activity of state and municipal bodies, various public institutions.

The given argumentation is the unequivocal evidence of Russia, as a full and equal
member of the Big Eight, having no other alternative to entering the club of advanced
industrial states.
The long-term task formulated by the leaders of the Russian Federation assumes the
realization of transition from the mainly raw-material and energy-based model of the
economy to the economy which intensively transforms effects of scientific and
technical researches and pilot developments into leading edge products with a high
added value and advanced technological processes. While following the designated
route, one should ensure competitiveness of domestic commodity producers, stable
rates of development, multiple increase of labour productivity, and essential increase
of living standards of the population.

In February of the current year, when presenting at the enlarged session of the State
Council of the Russian Federation the report called „Concerning the Strategy of
Russia‟s Development until 2020‟, Mr. V. Putin specified the most important
directions of the further work:

- forming national innovative system;
- developing of new sectors of global competitiveness;
- establishing of one of the world financial centers in Russia, as well as developing
market institutes, „competitive environment‟;
- improving of the public administration system;
- developing of the tax system focused on building of an innovation model of the

Lately the rate of growth of innovation activity in the Russian Federation is known to
have slightly increased, but still remains insufficient. For example, within the
industry innovative product ratio has increased in 2001-2006 in the total production
volume from 4,2 % up to 5,5 %, in the volume of exports from 6,9 % up to 7,7 %.
The share of innovation-active enterprises, i.e. those providing development and
implementation of new or improved goods, technological processes or modes of
production, is less than 10 %.

For reference, according to the available data, the specific weight of new or
significantly improved products in Germany is more than 40 %, where at least 50 %
of industrial enterprises are innovation-active.

One should pay attention to another important difference between Russia and
industrialized Western countries, which is an unpractical structure of innovation
expenses in connection with a high degree deterioration of production basis which
demands capital investments, first of all in upgrading of the key assets.

Within the total sum of innovation expenses the share spent to purchase new
machinery and equipment has been about 55 %. While only modest 18,6 % has been
spent on scientific researches and development, 0,5 % on training the personnel, and
0,3 % of the general expenses assigned for technological innovations has been spent
on marketing researches. Frankly speaking, such a structure of expenses is absolutely
unacceptable. It is necessary to amend the conditions of innovation and investment
activity seriously.

The data of inspections made among agents of management show first of all that the
time has come to make changes in some issues of financial, institutional and
personnel maintenance.

Proceeding to the perfection of corresponding mechanisms, creation of new
organizational and educational structures, it is expedient to consider the main
qualitative attributes of innovative economy, including:

- the availability of a wide social stratum of highly skilled experts, competitive in the
new economy;
- constant aspiration of management agents to update the production basis through
the use of modern technologies and equipment;
- functioning of a developed financial institution system supporting active innovation
and investment activities.

The first of the listed attributes denotes the necessity of mass training the experts
(scientists, technical officers, production workers) in a broad spectrum of work
directions within the next decades. In order to solve this problem we may require the
use of program&target tools in the form of long-term federal and regional target

The second of the above-mentioned attributes of an innovation economy is a
concernment of the organizations in innovations, which assumes creation of a
favourable "climate" for implementation and investment activity. The major factor in
forming of comfortable "climatic" conditions is, of course, taxes.

It is necessary to admit that the Russian taxation system has some drawbacks
constraining the modernization of manufacturing industry: rather high level of certain
tax rates; complexity and plurality of taxation; irregularity of distributing actual load
in relation to various kinds of economic activities; illegibility of principles of
granting tax remissions.

Hence, what should be brought on the forefront is the work on forming a taxation
system which would comply with the task of building an innovation economy. Within
the limits of forthcoming work it is required to determine precisely the contents and
purposes of the tax policy at the stage of transition from the energy and raw-material
based economy to the innovation economy.

Most probably, one of the consequences of expected tax reforms will be the increase
of resources remaining at the disposal of the organizations. However they will
certainly preserve the need of attracting outside funds.
The necessary funds can be given to participants of investment and innovation
activity by state corporations, new financial institutions aimed at giving the economy
an innovation direction, as well as by business and investment banks.

The activation of state corporations and banks participation in the investment and
innovation activity is capable of rendering appreciable positive influence on other
participants of the financial market (investment funds, venture and insurance
companies), serving as a call for them to join the process more doughtily.

Certainly, banks and other participants of innovative and investment activity have a
right to count on serious stimulating measures from the state, including softened
normative and reserve requirements, special incentive refinancing rates, tax credits,
discounts and other measures.

Giving its due to the importance of financial and institutional mechanisms and tools,
one should not leave organizational and administrative problematic outside the
attention zone. First of all, I mean anticorruption measures and reduction of
bureaucratic obstacles, which may occur in the process of creating and conducting of

Both of the mentioned problems have been discussed for years, but unfortunately,
despite some success, their system solution has not been found yet.

It is necessary to note that corruption and bureaucratic barriers are closely
interconnected. Barriers are frequently created in order to set up a market of specific
"auxiliary" services, which is a convenient action field for shifty and "quick-witted"
people. While those who do not wish to serve as a nutrient medium for corruption,
are subject to "educational" measures such as queues, long delays in considerating of
applications and references, endless collecting and amending documents which
should be given for confirmation or inspection.

The leaders of the Russian Federation do understand all danger and inadmissibility of
maintaining of the arisen situation. It evidently follows from statements of Mr. V.
Putin and Mr. D. Medvedev. Working out the measures required for a serious change
of the situation is coming to the end, and I dare to express my confidence that after
some time, which is not so remote, our German partners will have no reasons to
complain about any subjective difficulties in the organization and realization of
business activities in Russia.

Among the most significant limiting factors of the economic growth we have already
pointed out depreciation and obsolescence of capital assets, their unsatisfactory age
structure. In this connection for accelerating the upgrading of technical and
technological production base Russia is interested in attraction of investments from
abroad, including direct investments.
Despite more than doubling of direct investments into the economy of Russia in 2007
against 2006, their volume remains rather unassuming and has not exceeded 20
billion euro. For such a forward-looking object of capital investment as Russia the
mentioned level is obviously low. Therefore I urge our German partners to be more
active and brave in directing the capital flow to us in the East.

German businessmen traditionally have the highest reputation in Russia. Their
compulsion, accuracy and punctuality in signing and executing of contracts cause a
feeling of genuine respect. The „Made in Germany‟ trade mark is perceived by
industrial customers and the population as a guarantee of the highest quality.

Now Germany is Russia‟s largest trading partner. Prevailing in the structure of import
from Germany, which in 2007 came to about 19 billion euro, are machinery and
technical products, including various kinds of equipment, ground transport facilities,
electric machines.

At the same time, the range of opportunities involved for the development of
mutually advantageous economic attitudes is far from being complete. It does not
only relate to branches of the manufacturing industry, but also to branches of fuel-
and-energy complexes.

It is absolutely incorrect to consider the transition to an innovation mode of the
development should move aside the matters of the fuel-and-energy sector
development. Here are some reasons.

First, any economy, even the most perfect one from the point of view of fuel and
energy consumption efficiency requires reliable and sufficient power supply. And it
is not certain that as countries, which are basic consumers of power resources assume
the innovation model of the development, it will exclude the tendency of the absolute
growth of need for oil, natural gas or coal production. The innovation economy, quite
probably, involves a further increase of the power availability per production worker
and power inputs of private households.

Second, branches of the fuel-and-energy complex are a remarkable object for
implementation of the most advanced techniques and technologies. For example, this
becomes more and more noticeable as the easily accessible natural deposits become
exhausted and the need to develop arduous deposits increases. It is difficult for me to
imagine that our partners from Germany will miss such an excellent occasion for
negotiating large, favorable, time contracts with the Russian party.

At the same time, during the period of the expediency research and direct preparation
of contracts the German party has the right to count on receiving necessary and
objective information about the situation in the Russian economy, as a whole and on
separate kinds of activity, from the angle of Russia‟s regions, as well as on results of
inspections and surveys in management agents and private households.

You may consider the Analytical Center under the Government of the Russian
Federation as one of the sources of required information and expert judgments.

According to current Russian legislation the Center is an institution founded by the
Government of the Russian Federation for informational and analytical support of
realization of the government functions.

Among the primary goals of the Analytical Center there are: working out
recommendations and suggestions on priority issues of the economic policy and
economic reforms; the maintenance of development and examination of concepts,
social and economic programs; the analysis and forecast of social and economic
development of the Russian Federation; the participation in development and
examination of normative legal certificates related to issues of the strategy and tactics
of economic reforms.

To fulfill of the above tasks the Center accumulates and processes the information on
the development of the Russian economy, its separate branches and kinds of
activities, analyzes investment activities and their influence on structural changes of
the economy, as well as results of the foreign trade.

The Center maintains monitoring of antimonopoly regulation measures, estimates
their impact on competition encouragement and on the commodity markets condition,
as well as on the development of small business.

In order to gain an overview on the condition of the financial system and results of
realization of the monetary and credit policy of the Government and the Bank of
Russia, the Center organizes and maintains the analysis of corresponding information
and materials.

Important work directions are the analysis and forecast of main indices of the
population‟s living standard and labour-market, the monitoring of social and
economic development of regions, as well as preparation of corresponding
suggestions on this basis.

In order to get a versatile and objective idea about contents and tendencies in the
economy, the Center provides market studies of economic activities of management
agents in the industry, construction, agriculture, transport, trade, and financial

Ladies and Gentlemen!

I hope I have managed to accentuate the overall objective of a long-term development
of the Russian Federation and show the logic of reasoning‟s underlining this choice.

Besides I aspired to present a number of most significant challenges: the quality of
their solution determines our success in achieving the goals. In turn, completeness
and terms of the solutions depend on the level of design and selection of financial and
economic, institutional and administrative tools used in the practice of regulation of
economic processes.

The volume of the launched works on reforming the Russian economy is great.
Russia aspires to invite reliable and skilled partners to take part in this work,
certainly, on the basis of building mutually advantageous cooperation. Germany is,
undoubtedly, the first class partner.

The Russian-German cooperation does not require verification as it has been
repeatedly and successfully confirmed by the practice of our relations. While
developing and improving them, let's more often recollect the words written a long
time ago by Johann Wolfgang von Goethe,

„Wer nicht die Welt in
      Seihem Freunden sieht,
Verdient nicht, dass die
      Welt von ihm erfahre‟…

Thank you for your attention.

Russia and Germany

                                2004       In % by 2003        2005       In % by 2004         2006       In % by 2005

GDP (bln US dollars)           2714,42        113,1           2781,90        102,5            2906,68        104,49

Export (bln US dollars)        914,84         122,2           970,69         106,1            1112,32        114,59

Import (bln US dollars)        717,49         145,3           774,07         107,9            910,16         117,58
Source: World Bank.

                                2004       In % by 2003        2005       In % by 2004         2006       In % by 2005

The share of Germany in
world GDP (%)                    6,5          100,6             6,2             95,1            6,0            97,0
The share of export in
GDP (%)of Germany               38,0          106,4            40,1          105,5              …                 …
The share of Germany in
world export (%)                10,0          100,2             9,3             93,1            9,2            98,7
The share of Germany in
world import (%)                 7,7          118,7             7,3             94,6            7,4           102,0
Source: World Bank.

                                         Russian trade with Germany
                                                                                                          (mln US dollars)
                               In % by             In % by              In % by               In % by            In % by
                       2003               2004                 2005                    2006              2007
                                2002                2003                 2004                  2005               2006
Turnover            18521,1     126,4    23871,4      128,9   33008,3   138,3      42962,2    130,2     52167,2       121,4
Export              10419,2     129,3    13300,5      127,7   19735,9   148,4      24498,2    124,1     25598,4       104,5
Import              8101,9      122,8    10571,0      130,5   13272,4   125,6      18464,0    139,1     26568,8       143,9
Balance             2317,3      158,6     2729,5      117,8    6463,5   236,8       6034,2     93,4      -970,4       -16,1
             Russian export to Germany                             Russian import from Germany
                                       (mln US dollars)                                                (mln US dollars)
                                  2006       2007                                            2006            2007
Total                            24498,23   25598,47       Total                            18463,97       26568,88
including:                                                 including:

Mineral fuel, oil and products
of their distillation
                                 20108,23   20658,70                                        1180,46         1323,84
Products of inorganic                                      Plastic materials and plastic
chemistry                         237,08     413,30        products                          892,47         1176,97

Wood and wood products;
                                                           Products of ferrous metals
                                  256,04     320,34                                          488,04         834,35
                                                           Electrical machinery and
Ferrous metals
                                  821,39     1080,99       equipment                        1981,92         2254,07
Copper and copper products                                 Nuclear reactors, boilers,
                                  796,18     746,93        equipment                        4888,03         6942,93

Aluminium and aluminium                                    Ground means of
products                                                   transportation, except railway
                                  474,85     421,66                                         3150,30         5617,61
Electrical machinery and
equipment                         259,54      218,85                                         862,94         1402,28
Other goods                      1544,93     1737,69       Other goods                      5019,81         7016,82
               Main economic and social
         indicators of the Russian Federation
           according to the results of 2007
                                                                     For reference only
                                           2007        In % by       2006
                                                         2006        in % by 2005
Gross domestic product,
bln roubles 1)                            32987,4           108,1                   107,4
Index of industrial production
2), 3)                                                      106,3                   106,3
Agricultural production,
bln roubles                                2017,2           103,3                   103,6
Freight turnover, bln-t-km                 4909,7           102,3                   102,7
including railway
transportation                             2087,7           107,0                   105,0
Volume of communication
services, bln roubles                      1036,3           120,1                   124,0
Retail trade turnover,
bln roubles                               10757,8           115,2                   113,9
Volumes of paid services
rendered to the population,
bln roubles                                3407,0           107,1                   107,9
Foreign trade turnover,
bln US dollars 4)                            578,2          123,4                   126,9
export of goods                              355,2          116,9                   124,7
import of goods                              223,1          135,4                   131,3
Fixed asset formation,
bln roubles (estimation)                   6626,8           121,1                   116,7
Consumer price index 5)                                     111,9                   109,0
Industrial articles producer
price index 2)                                              125,1                   110,4
Real disposed cash income 6)                                110,4                   113,3
Average gross monthly wage
of an employee 6):
nominal, roubles                            13527           126,7                   124,3
real                                                        116,2                   113,3
Total unemployment,
mln people 7)                                   4,6          86,2                    94,9
Legally registered
mln people 7)                                   1,6          88,3                    95,6

1) The data for 2007 (the first estimation, revised in April 2008).
2) By activity category “Mining operations”, “Manufacturing activities”, “Energy, gas and
   water production and distribution”.
3) Including of adjustment for informal activity
4) The data for January-December 2007 calculated by Bank of Russia in accordance with the
   methodology of balance of payments at free on board values (FOB) of the exporting country.
5) December by December
6) Preliminary estimates
7) On average per month
                     The volume of cumulative foreign investments
                          into the Russian economy by types

                     Accumulated by     Accumulated by      Growth          Structure (in %)
                     the beginning of    the end of 2007    (in %)   By the beginning By the end
                           2007         (mln US dollars)                 of 2007           of 2007
                     (mln US dollars)

Investment – total             148356            220595      148,7              100,0       100,0
  Direct                        72210            103060      142,7               48,7        46,7
  Portfolio                      4973              6728      135,3                3,4         3,0
  Other                         71173            110807      155,7               48,0        50,2
    among them
  trade credits                  3671                4919    134,0                2,5          2,2

            The volume of cumulative foreign investments from Germany
                         into the Russian economy by types

                       Accumulated by        Accumulated by           Rate of            Structure (in %)
                       the beginning of       the end of 2007         growth      By the beginning By the end
                             2007            (mln US dollars)         (in %)          of 2007           of 2007
                       (mln US dollars)

Investment – total               12665,6                11786,2          93,1                100,0       100,0
  Direct                            3460                 4494,3         129,9                 27,3        38,1
  Portfolio                        1872,2                  98,3           5,3                 14,8         0,8
  Other                            7333,4                7193,7          98,1                 57,9        61,0
    among them
  trade credits                     100,8                    190,5      189,0                  0,8          2,2

                 The share of cumulative investments from Germany
         in total volume of cumulative foreign investments of Russia (in %)
                                            By the beginning         By the end
                                                of 2007               of 2007

                     Investment – total           8,5                   5,3
                       Direct                    4,8                    4,4
                       Portfolio                 37,6                   1,5
                       Other                     10,3                   6,5
                         among them
                       trade credits              2,7                   3,9

                            Объем поступивших в 2007 году иностранных
                            инвестиций в экономику России по типам
                            The volume of foreign investments
                                 В Россию economy    В Россию из Германии
                        into the Russian в целом in 2007 by types
                            млн. долларов США в % к итогу млн. долларов США в % к итогу
                                  To Russia at large             To Russia from Germany
       Инвестиции - всего                120941         100,0                  5055       100,0
            в том числе:mln US dollars     in % to the total      mln US dollars     in % to the total
         Прямые                           27797           23,0                 1123,1            22,2
Investment – total               120941    4194            3,5
                                                        100,0                 50550,8             0,0 100,0
    including:                            88950           73,5                 3931,1            77,8
  Direct из них                    27797                  23,0               1123,1                     22,2
         торговые кредиты
  Portfolio                         4194 14011            11,6
                                                           3,5                 1407,5
                                                                                0,8              27,8    0,0
 Other                             88950                 73,5                3931,1                     77,8
   among them
 trade credits                     14011                 11,6                1407,5                     27,8

                        В Россию large
                    To Russia at в целом                          В Россию из Германии
                                                                  To Russia from

                                     23,0                                           22,2



                        Портфельные Other
               Прямые Portfolio
            Direct                     Прочие                        Портфельные Other
                                                            Прямые Portfolio
                                                         Direct                     Прочие

                            Cumulative foreign investments in the Russian economy
                                  in the rating of basic countries-investors
                                                                                                                mln US dollars
                        Accumulated by the               Including                                                   Arrived
                            end of 2007                                                                              in 2007
                        total    in % to the   direct    in % to     portfolio    in % to    other    in % to the
                                     total              the total                the total               total

Total investments       220595          100    103060        100         6728         100    110807          100      120941
  among them in the
  rating of basic
  countries-investors   190069          86,2   89466         86,8        5777         85,9   94826           85,6     104494
   1.Cyprus             49593           22,5   35426         34,4        1700         25,3   12467           11,3      20654
   2.The Netherlands    39068           17,7   35254         34,2          52          0,8    3762            3,4      18751
   3.The United
     Kingdom (Great
     Britain)           29235           13,3    3438          3,3        2314         34,4   23483           21,2      28328
   4.Luxembourg         29161           13,2     735          0,7         219          3,3   28207           25,5      11516
   5.Germany            11786            5,3    4494          4,4           98         1,5    7194            6,5       5055
   6.USA                 8579            3,9    3635          3,5        1207         17,9    3737            3,4       2839
   7.Ireland             7131            3,2     428          0,4          0,4         0,0    6703            6,0       5175
   8.France              5919            2,7    1554          1,5           31         0,5    4334            3,9       6696
   9.Virgin Islands
     (Britain)           4800            2,2    2882          2,8          99          1,5     1819           1,6        2140
   10. Switzerland       4797            2,2    1620          1,6          57          0,8     3120           2,8        5340

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