The paper is based on the findings of a major project by the Higher School of Economics Institute for
Industrial and Market Studies (IIMS) to monitor competitiveness of manufacturing enterprises. The study focuses on the drivers and dynamics of business competitiveness, including changes in firms'behavior during the period before the crisis (2005)(2006)(2007)(2008)
This article conducts a plant-level study of the factors affecting foreign direct investment (FDI) inflow to a large opening economy endowed with specific factor advantages. We conclude that the distribution of FDI in Russian regions depends on market access and can be most notably described by the knowledge-capital framework. Factor endowments built by natural resources are more successful in explaining the location decisions of export-platform affiliates. The impact of natural resources depends on how the availability of these resources is measured. The results reject the crowding out effects of resource FDI and prove co-location mode, when service investments are attracted to resource-rich regions. Labour cost advantages better explain the preferences of non-trading service affiliates. . We are very grateful to Olga Uvarova for helping us with the Ruslana dataset and regional statistics. We thank the Editors and the two anonymous referees for their insightful comments.
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