About Russia

GDP GROWTH

Over the past five years, Russia has been an economic success story largely unrecognized in the U.S. with over GDP growth rates of 8.3% in 2000, 4.9% in 2001, 4.0% in 2002, 7.3% in 2003, and 7.2% 2004. The planned average annual rate 2006 is 5.5%

BALANCE OF TRADE

Trade surpluses of $67.0 billion in 2000, $54.7 billion in 2001, $55.0 billion in 2002, $68.9 billion in 2003, $94.4 billion in 2004, $118.26 billion in 2005. In Q1 2006 trade surpluses reached $48.8 billion.

REAL DISPOSABLE INCOME

Rose 9.1% in 2000, 7.2% in 2001 and 8.8% in 2002, 14.9% in 2003, 7.8% in 2004, and 8.9% in 2005.

FOREIGN INVESTMENTS

FDI remained around 1% of GDP between 1997 and 2002 and reached 5% in 2002. Capital inflows in 2003 increased up to $9.9 billion (50% increase from 2002)–6.7% of GDP; in 2004 rose up to $10.8 billion (36% from 2003)–7.2% of GDP; in 2005–$13.1 billion (32% from 2004)–7.5% of GDP. In Q1 2006 the foreign investments increased 46% in comparison to the same period in 2005 year.

INDEPENDENT ANALYTICAL EVALUATIONS

• Moody's Ratings 2005: “Russia's liquidity and debt ratios have improved dramatically in a relatively short time period. The outlook for the rating is now “stable”.
• Fitch rated Russia with investor’s rate in November 2004, Standard & Poor’s—in January 2005.
• AT Kearney moved Russia from the 11th to 6th place in its annual foreign direct investment rating of most attractive country for investment.
• According to Ernst & Young, Russia is the second favorite behind Germany among possible investment locations in Europe

GOVERNMENT SUPPORT

• November 2004: Concept for the Information Technology Advancement in the Russian Federation till the Year 2010 approved
• December 2004: President Putin visits Bangalore, India
• January 2005: President Putin announces IT technology park initiative
• February 16, 2006: State Council Presidium Meeting on Information and Communication Technology in the Russian Federation, Nizhniy Novgorod
• March 10, 2006: Technology park projects started: parks to be built in St. Petersburg, Tatarstan, Moscow, Tiumen, N. Novgorod, Novosibirsk regions, $3.6B total, 20% state investments
• 2006: IT investment fund announced: $100M, 75% state investments
• 2006: Approved: VAT refund, special economic zones law; software exports simplified

LABOR POOL

• Russia has one of the highest adult literacy rates in the world (98.7%)
• As a result of great emphasis on science and technology in education, Russian mathematical and scientific research is generally of a high order. Russia is widely known for its world-class R&D traditions, supported by the large number of scientists, mathematicians, engineers, and other IT-related specialists available in the labor pool.
• The number of university graduates in IT-related fields amounted to over 244,000 people in 2005-2006 academic year
• Low-cost labor resources with engineering and software talent
• Russian university teams annually take part in ACM International Collegiate Programming Contest and win first places. In ACM ICPC 2006 final 5 teams from RF placed in the top-ten, along with teams from US, China and Poland, Saratov State University won Gold medals.