We analyse the determinants of the regional disparity in attracting FDI in Russia using additions to fixed capital investment by foreign firms as the measure of FDI. The spatial distribution of FDI is attributed to regional and/or trans-regional factors. Region specific characteristics such as wage, education level, transportation as well as gross regional product, which accounts for market size, in host and alternative regions are considered to analyze the spatial interaction between regions employing spatial econometrics. We find that shocks to FDI levels in proximate regions have no effect on FDI inflows to hosts. However, FDI in a region depends on spatial market size and endowment of natural resources. JEL classifications: F21, C31, R12