It's not true that Russia is not investing much -- investment has gone up: "Over the period of 2000-2006 the investments in fixed assets increased by 2.16 times, GDP growing by 1.68 times. In 2006 the amount of the investments in fixed assets increased by 13.5% against 10.7% in the previous year" (S. Javoronkov, et al., March 2007, <http://www.iet.ru/files/text/trends/03-07eng.pdf>). It's that much of investment still goes to minerals and fossil fuels extraction industries and sectors related to them.
See "Fig. 1. The GDP and Investments in the Fixed Assets Growth Rates in 1991–2006, as Percentage to the Preceding Year" on p. 22 and "Table 2. Structure of Investments in the Fixed Assets by Types of Economic Activities" on p. 24 of "Russian Economy: Trends and Perspectives" (S. Javoronkov, et al., March 2007, <http://www.iet.ru/files/text/trends/03-07eng.pdf>). See also the World Bank's "Russian Economic Report" (December 2006, <http://ns.worldbank.org.ru/files/rer/RER_13_eng.pdf>).
> You can't sustain 7% growth rates on that forever.
You can't sustain 7% growth rates on anything. Even Japan slowed down, and so will China and India in the end.
On 5/9/07, James Heartfield <Heartfield at blueyonder.co.uk> wrote:
> But then Russia is a developed economy, in a way that China was not.
Russia's labor costs are too high to allow it to compete with China. -- Yoshie