The ill-equipped Russian economy was hit hard as it tried to cope with the global crisis of 1998. During this period the Russian inflation skyrocketed, the GDP crashed, unemployment escalated and the living standards further dropped creating a major crisis in the country. However the somber financial situation ricocheted the following year and since then the economy has made substantial progress. This improvement has been reflected in a steady rise in the GDP, decline in inflation, drop in unemployment figures and increase in local and foreign investment. The main factors that contributed to the recovery after the 1998 crisis have been the competitive boost from the weak ruble and the trade surplus caused by the rise in world oil prices. Besides there have been encouraging initiatives taken by the current government under the leadership

These factors besides the Russian government’s inconsistency with their trade policies over the years have had an impact on overall investment. The Russian government would have to embark on a long-term plan, be more consistent with its policies and create an environment conducive to investment to instill a positive image in the minds of the investor and win their confidence.

The Russian economy made fairly good progress in the year 2001 and 2002. In 2001 Russia’s GDP increased by 5% and in 2002 it increased by 4.1%. Even though the percentage increase in the GDP in 2002 was less than that of the year 2001, the advancement was fairly satisfactory. Comparatively, the average percentage increase in GDP in developed countries was 1.5% and in the United States was 2.3 %. 2002 was the fourth year in a row that Russia observed a steady improvement in its economy after its dismal performance in the year 1998 thus bringing in a sense of stability and building investor confidence.

International trade and foreign investment

Although there has been an upsurge in the economic situation in Russia, decades of communist rule has plagued the country with various problems that have to be dealt with effectively in order to maintain the positive trend in economic growth. Even though there are many industries in Russia, these industries are in poor condition and have to be replaced or modernized, there are issues over land ownership rights that have discouraged investment and restructuring, there is a serious problem of tax evasion and there is the huge issue of organized crime that has infiltrated the fabric of the Russian society. Until, appropriate measures are taken to combat these impending problem

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