Russia is a country rich in natural gas oil, coal, and precious metals with a strong agricultural base. It is the world's eleventh largest economy. Since the fall of the Soviet Union, Russian economic policy aims to stabilize the economy and transition smoothly from a command economy to a market based one. The government has worked to open Russian markets to foreign investors.
During the Putin administration, GDP doubled, with an average growth of 7% a year. Industry during this time grew by 75%, investments increased by 125%, with the middle class growing from 8 million to 55 million people and poverty rates falling to 14% in 2008. Both foreign and domestic investments are growing; Russia recently signed a joint venture with Toshiba to develop nuclear power plants in the country.
The fastest growing industry in Russia is the IT industry. Russia currently ranks third behind India and China as a destination for outsourcing software development. Software exports reached $1.5 billion in 2006 and the industry has seen growth rates of 30-40% per year. Many global firms including Intel, Motorola, Sun Microsystems, Boeing and Nortel have increased their activities in the country and have opened R&D centers.
Despite the major advances and growth in the Russian economy, the recent global financial crisis has hurt long term growth. Due to the dramatic drops in oil prices, a reversal of $80 billion in in-flows to $130 billion in out-flows occurred, hampering Russia's ability to continue investing. However, the Russian economy is making a recovery, with a reported increase of 0.6% in GDP, marking three consecutive quarters of real growth. Prime Minister Vladimir Putin has promised to cut the deficit by 2012, with many financial institutions predicting 5% GDP growth in the future.
One of the more prominent investment projects planned for Russia is South Stream, which is a proposed gas pipeline to transport 63 billion cubic meters of Russian natural gas annually to Bulgaria, Italy and Austria, set to be finished in 2015. The project was announced in 2007, with Italian energy company Eni and Gazprom, (the largest extractor of natural gas in the world and Russia's largest company) agreeing to begin construction. The two firms have formed a joined venture called South Stream AG. French energy company EDF has also acquired a 20% stake in the company. The project is expected to cost roughly $22 billion.
Another large development in the world of Russian business is the opening of 20 Dunkin' Donuts stores in Moscow. After leaving Russia in 1999, American donut company Dunkin' Donuts will be returning due to increased demand in the country. Restaurant sales of coffee in Russia have increased from $13 million in 1999 to $575 million in 2009 and total revenue has increased 362% from 2003 to 2008. CEO of Dunkin' Brands states that the main reason for expanding in Russia is due to the “growing middle class in Russia, a strong movement toward American brands and a relative lack of competition".
John Deere has also decided to open a new manufacturing and parts distribution plant in the city of Domodedovo. The plant will be its largest investment in Russia to date. This project is seen as a valuable project for Russia which hopes to boost the output of grains and other renewable resources and to grow the farm and forestry sectors. The new Domodedovo facility will help John Deere serve customers in both Russia and nearby Eastern European countries.
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