country Analysis Assignment PDF

Running head: COUNTRY ANALYSIS
COUNTRY ANALYSIS
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1COUNTRY ANALYSIS
Executive Summery
The report aims to discuss the value of the Russia as a country for investment. The report has
analysed its factors like political, economic, socio cultural a technological influence that has
affected the country currently. Russia has huge amount of natural resources which has helped
it to have high competitive advantage and lucrative for the investors. The currency of the
country is less valuable than that of the US and gets greatly affected by the foreign currency.
The trade policies of the country are stricter that ensure no company can operate without
being monitored by the government. The foreign direct investment has fluctuating nature but
has increasing nature. The report concludes with recommendation for becoming a better
environment for the investors.

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Table of Contents
Introduction:...............................................................................................................................1
General overview of Russia:......................................................................................................2
Factors for competitive advantage:............................................................................................2
National resources:.....................................................................................................................5
Foreign currency influence:.......................................................................................................5
Trade policies and barriers:........................................................................................................6
Existing level of foreign direct investments...............................................................................7
Recommendation:......................................................................................................................8
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11

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Introduction:
This report discusses the current situation of the country Russia. It is one of the most
important country in the Eurasia. It is the largest market if Europe with more than 140 million
people. Over the next five years, GDP growth of this country is expected to be on 4 percent if
the price of oil remains above $96 per barrel. The country has great amount of natural
resources which is the main source of raw material in the industries of this region. Despite the
fact that the country has great potential for foreign investment due to its fast economic
growth the government policies need to be loosened a lot. The country has satisfactory
amount of resources for expert but as the value of ruble is much lower than dollar, the
government has to emphasis on the import. However, the country has great prospect for the
foreign investors, need to bring changes in the internal judicial systems to reduce corruption.
The essay provides a general overview of the country, discusses its external factors, trade
policies and barriers, impact of foreign currency in the country’s economy and concludes
with some recommendation.
General overview of Russia:
Russian Confederation is a sovereign country in Eurasia. It is the largest country in
the world in terms of area and ninth most populous country. Moscow is the capital of the
country and is one of the largest cities of the world. The country borders the important
European as well as Asian countries hence have great business opportunities. It landscapes
borders from Tundra to it subtropical beaches. The coastline of the country 12 seas of the
three major ocean basins. The climate of the country varies from place to place within the
country. This is because the country has a vast territory hence has natural contrasts. The
norther part is located in the arctic zone and the southern part has subtropical climate. The
country has huge natural resources starting with oil, gas, coal, minerals and timber. The

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natural resources which the Russian economy uses, accounts for almost 95 percent of national
wealth. The people of the country has extreme cultural diversity. This country is a home to
highly ethnic people like Tatars, Ukrainian, Chuvash, Bashkirs and Belarusians. The
government of the country realizes education as national priority. Therefore, the Russian
graduates have a great demand in the world Labor market.
Factors for competitive advantage:
The country has potential features that can easily attract the foreign investors in the
country. petroleum, steel and iron are the achieve industries and Russia export many of its
products to the other countries of the world.
Political factors: Russia faced bad political and economic impact after the defeat in the war
with Afghanistan and had it economy completely shattered after it. However, it worked hard
to gain the financial stability and the government had to take wiser and tougher decisions to
retain the political stability. The repents political situation of the country is however stable
and the political system is running according to the convention. Russia is a federation but the
national government has great connection with the local governments. The judicial system is
strong and human rights update report of the condition regularly. The government of the
country has maintained a healthy relationship strategy with all the important countries. Russia
has maintained nuclear strategy and committed to mainatain global peace.
Economic factors: the country is gaining economic strength and expected to reach $3 trillion
in the next year. Problems of corruption has negative impact on the economy of the country.
The internal security of the country is quite weak but it has highly skilled workforce which
adept with the relevant works.the country has sufficient resources that contribute to build the
country strong. The country is in top ten position in terms of GDP, it has ample natural gas
and oil reserves in the country. As the country has huge land area, the agricultural sector is

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also very developed. The agricultural crops are exported to the countries of Europe and
America. This economy of this country cannot be compared with the other neighboring
countries as this economy largely depends on the price of natural gas and oil in the
international market. The governed therefore make conventional budget to survive in the
global market. The country has an effective tax system as well as monitory policies which
help it to become a stable economy.
Social factors: after the recession in 1990s the society had a great division among the rich and
poor. The aristocratic culture increased the amount of expenditure in the lavish clothing,
expensive cars and other luxurious items. This increased the wealth gap in the society. the
outlook regarding family system had changed. Due to this, birth rate had reduced and death
rate as mentioned before, the increased owing to excesses alcohol consumption and HIV. the
wealth gap in the society is wide and there is a huge inequality present in the country.
However, the soak activities have recorded a major change in last two decades. The living
tided of the people has been associated with the major elements of entertainment like art,
music and literature.
Legal factors: the judicial state of the country is very strong and the people are confident to
get judgement in any types of crime. There has been a new legal reforms introduced by the
government which has brought improvement in the national judicial system. The government
has introduced various types of legal assistance programs together with the neighbouring
countries in order to solve the international as well as domestic legal issues. As the corruption
rate is high in the country, the government has made new laws for controlling the issue of
corruption. This new changes in the legal system has increased the condition of the country
which successfully attracted the foreign customers.

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Technological factors: Russia is a technologically advanced country which had sent foist man
in space.the country pays more attention to the technological advancements in the sector of
nanotechnology. In addition to this the county also has expertise in the fields of information
technology and used them to fulfil the expectation of the people as well as improving their
lifestyle (Rudenko et al. 2015). The country has significant advancement in the fields of
chemistry, geography, aerospace engineering and mathematics. The country has also
advanced in the military materials as well as war weapons but committed to maintain world
peace.
Environmental factors: the government of the country has introduced effective security
system for reducing the pollution and controlling environmental disasters. The basic policies
to control the environment and decisions pertaining to save the environment safety has
effected the ecological system of Russia. The governed of Russia has taken initiatives to
make polices to control the carbon emission though industries as it has huge economic
contribution by the iron and steel factories (Shlychkov, Khasanova and Vedin 2015). The
people of Russia are quite aware about the protection of the environment hence adheres and
abide by all the protective policies introduced by the government. These policies also focus
on the water and noise pollution despite the fact that the country has huge oil and natural gas
reserve.
National resources:
As mentioned before, Russia is extremely rich in minerals, oil and natural gas. The
country has huge reserve for various types of natural resources. Russia uses more than 90%
of its natural resources in the industries (Shlychkov, Khasanova and Vedin 2015). This is the
reason why the industries have flourished to its high in this region and strict investors from
different part of the world. In addition to natural oil and gas, the country possess huge coal
resave which has helped Russia to arrange all the factors for industry building. In the

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production of iron, gold, copper, zinc, manganese and other non-metallic ores that are heavily
used in the heavy industries. In addition to this the country has huge forests which is the
source of income of the government. The country’s high population has created a huge
market for the foreign investors. The country has the third expensive market in the world and
as mentioned before, the people prefer to buy expensive products. The automobile companies
therefore, feel attracted to this country and it is the second largest automotive market in all
over Europe. The internal economy of the country is in good position (Bozhechkova and
Polbin 2018). The annual household income of the citizen is developed as the issue of
inequality has been reduced. Therefore, the middle class families have become the chief
target of the foreign investors. This country is one of the lowest rankers in the household debt
index. The educated and skilled labor is another chief attraction of the investors therefore
unemployment rate is low. The resources Rae properly used by the government in order to
serve the citizens.
Foreign currency influence:
Despite the fact that Russia possesses third largest hard currency reserves in world,
the currency of the country has lower value than dollar (Fischer 2016). It is still a developing
country; the external economy is not very high. Hence it needs to be increasing its expert but
as the value of ruble is lower than their foreign currency, the country has to put emphasis on
imports than export. However, Russia has ranked fifth in the foreign currency reserves which
means the country will be soon in the position of high economic growth. The fiscal monetary
policy will be favorable for the Russian economy.
Trade policies and barriers:
The foreign companies feel different kinds of tariff as well as non-tariff trade barriers
in exporting to this country. The complicated system of standardisation has be a barrier for

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the foreign exporters. The country lacks transparency and clarity. This overall redundancy
has created barriers for the companies and they are encouraged to get proper assistance to
enter the market. As the country has a federal power, the issue of federation against the
foreign investors is present. Following this, the abuse of power, sub-national regulations as
well as practices often violate the Russian law making the situation more critical for the
foreign investors. In case of competition to get favor, the local or domestic companies get
them via giving bribes but the foreign companies need to pay a range of fees to get the work
done. These foreign exporters need to pay customs duties, value-added taxes and excise taxes
in advance otherwise banned from entering the market. For different of industries there are
different types of rules to be followed by the Russian government (Kolupaev et al. 2015).
There is product approval process for some specific types of products therefore, scope for test
and certification executed by the foreign competent idea are limited. In the case of IT
industries, the Russian government regulations have made more difficult to provide any types
of goods and services in the country’s market. Under this regulation the Russian software is
given priority to the foreign software. Despite all these, Russian government provides tax
benefits of 16.5% to the investors. Russia often supports free trade and has become a member
of World Trade Organization.

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Existing level of foreign direct investments
Trend of FDI in Russia
Source: (Tradingeconomics.com 2018)
According to the reports, the trend of foreign direct investments in Russia is
fluctuating in nature. This is due to the reason that the above figure shows that first half of
2017 shows the maximum growth, which later reduced in the second half. However, the early
trend of 2018 is showing positive growth that denotes that Russia is being able to portray
themselves as one of the most popular destinations for the foreign investments. The existing
level of foreign direct investments in Russia is also denoting that return of investments in
Russia is also favorable. These factors are also contributing in enhancing the opportunities in
investing in Russia.

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Cumulative statistics of FDI inflow
Source: (Reuters 2018)
Compared to some other major economies, the existing trend of foreign direct
investments is positive and in the leading position. According to the above figure, Russia is
just behind China in terms of inflow of foreign direct investments in last ten years (Kuzmina,
Volchkova and Zueva 2014). This is portraying that Russia is one of the most popular
destinations for the foreign investors along with the strategic location of Russia, more foreign
investors are coming. Geographical location of Russia is also contributing in attracting the
foreign direct investments due to the reason that entering in the Russian market will enable
the business organizations to cater both to the Asian and European market. Thus, the market
potentiality of the organizations will get further increased.
Recommendation:
Many long term investors from forming countries have distrust against Russia but this
has to be overcome. Therefore, the government has to improve this investment climate as

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well as the quality of life. despite the fact that getting the results exactly as expected is
impossible but some of these reformation is really simple. The government must take actions
based on modernization but it is impossible without truly independent judiciary system as
well as mass media, freedom of movement, political competition and respect for the civil
rights. For making the investment climate improved to be operated, the government should-
 Recognize as well as execute some of the international decisions when they do not
conflict with the Russian legislation
 Make promotion of the government officials who have experience in working with
other country’s government
 Sanctions for the interference in the operations of judicial authority must be
introduced.
 Promoting and encouraging the whistle blowers instead of punishing them
 Making corruption a serious crime
 Setting clear goals along with fixed dates so that the effort can have an implicit
objective
 Straightening media so that the investors and citizens get reliable free press
 Incensing awareness and leaning of foreign languages especially English
 Reducing strictness of the foreign policies, taxes and regulations against foreign
investments
 Increasing values of ruble
By following these measure, the ambience of the country will become more favorable for the
investors. The situation which has affected the country’s economy, especially bribery and
corruption in the bureaucracy, will be reduced hence the investors will be attracted more.

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Conclusion:
Therefore, it can be concluded that the economic situation of the country has become
more developed than it was two decades ago. The country has improved a lot both from the
political as well as economic aspects. The country has hug natural resources and great
facilities from location. Russia has skilled and educated labor force which has great
reputation in the foreign market. Despite the fact that the country’s rules and regulations
associated with the foreign exportation and investment are much stricter, the internal law
system need to be stranded to get more focus on the development. Analyzing all the aspects
of the country it can be stated that Russia has potential market for investment but will take to
synchronize all facts of economy thus will be the best place for investment.

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References:
Akhmadeev, R.G., Bykanova, O.A. and Tretyakova, D.A., 2016. The ways to overcome the
negative phenomena in the Russian economy. Ekonomicke trendy, (3), p.44.
Bayev, I.A. and Solovyova, I.A., 2014. Empirical analysis of the relationship of investment
and innovative activity of regions of Russia. Economy of Region/Ekonomika Regiona, 37(1).
Bozhechkova, A.V. and Polbin, A.V., 2018. Evidence for the Interest Rate Channel in the IS
Curve for the Russian Economy. Economic Policy, 1, pp.70-91.
Fischer, P., 2016. Foreign direct investment in Russia: A strategy for industrial recovery.
Springer.
Gurvich, E. and Prilepskiy, I., 2015. The impact of financial sanctions on the Russian
economy. Russian Journal of Economics, 1(4), pp.359-385.
Kolupaev, R.V., Rogacheva, L.I., Moskalenko, A.V., Ulrikh, I.V. and Mikhailova, T.A.,
2015. Special considerations of the financial investment in Russia. Asian Social
Science, 11(7), p.297.
Kuzmina, O., Volchkova, N. and Zueva, T., 2014. Foreign direct investment and governance
quality in Russia. Journal of Comparative Economics, 42(4), pp.874-891.
Maksim, T., Irina, T. and Olga, C., 2015. Transaction Costs under Globalization: The
Example of Russian Economy. European Research Studies, 18(2), p.107.
Reuters. (2018). reuters.com. [online] Available at:
http://blogs.reuters.com/globalinvesting/2012/04/27/where-will-the-fdi-flow/ [Accessed 28
Apr. 2018].

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Rudenko, L., Zaitseva, N., Larionova, A., Chudnovskiy, A. and Vinogradova, M., 2015.
Socio-Economic role of service-Sector small business in sustainable development of the
Russian economy. European Research Studies, 18(3), p.223.
Shlychkov, V.V., Khasanova, A.S. and Vedin, N.V., 2015. A Quarter Century of Reform of
the Russian Economy: is it Wandering in a Maze or Jogging in Place?. Indian Journal of
Science and Technology, 8(s (10)).
Tradingeconomics.com. (2018). Tradingeconomics.com. [online] Available at:
https://tradingeconomics.com/russia/foreign-direct-investment [Accessed 28 Apr. 2018].