year and a half after the crash of the ruble, the economy is growing, wages are paid, debts are serviced and a whiff of calm is in the air. But while stability has its charms, it is not enough to bring in the big bucks from abroad. The Institute for International Management Development, a Swiss business school, ranks Russia last in competitiveness among forty-seven countries analyzed. Investors agree.

Foreigners put less direct investment into Russia last year than into Poland, or tiny Hungary. The Central Bank reported gross inflows of $2.9 billion in direct investment in 1999, an amount that could be called trivial. The total stock of foreign direct investment (FDI) in Russia is now about $21.6 billion. That is $148 per capita, about a third of the level in Kazakhstan, a tenth of the level in Estonia. We would call that figure trivial too, if the language did not give us classy words like nugatory, or exiguous.

Direct investment means money sent in for the long term, put into bricks and mortar or substantial ownership positions in business entities. Most of the foreign direct investment in Russia goes into mining, and particularly into oil and gas. Two oil projects on the island of Sakhalin accounted for a very large portion–perhaps close to a third–of last year’s inflow. Food processing (especially brewing) has attracted some European money.

The United States is the source of 36 percent of the FDI in Russia, more than any other country. In second place is Cyprus, which for tax and secrecy reasons is still the favorite therewithal for Russians with wherewithal. Germany is third, followed by France.

The figures cited above are gross, not net. The Central Bank also reported gross outflows of direct investment–that is, money going from Russia into direct investments in other countries–of $2.1 billion in 1999 and $7.1 billion over 1992-1999. These are very squishy numbers. Nearly all of these investments are Gazprom money going into pipeline and other projects in Belarus, the Netherlands, Ukraine and Moldova. While vendors in the Netherlands presumably get real money for their goods, services, and equity, Russian payments to the former Soviet states may be simply canceled debt. The Central Bank assigns dollar values to these transactions, but the calculations are arbitrary and politicized–not what economists want to see in the national-income accounts.