The regional distribution of foreign investment in Russia

Abstract

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.

Foreign Direct Investment, Natural Resources, Economic Freedom, and Sea-Access: Evidence from the Commonwealth of Independent States

“…Some empirical studies relate the adverse impact of natural resources on FDI to the crowding-out effects of resource FDI [11,12]. However, Gonchar and Marek [36] emphasize that resource FDI does not crowd out non-resource FDI and suggest that the difference between positive and negative outcomes depends on the measurement criteria chosen for available resources. Alternatively, Kang [10] and Kolstad and Wiig [37] suggest that inconsistent empirical results are contingent on the institutions of both home and host countries.…”

Innovation in Russia: The Territorial Dimension

“…Great heterogeneity characterizes Russian regions' levels of embedment in international business networks (Gonchar and Marek, 2014;Ledyaeva et al, 2015). Foreign With FDI scattered across the country in a mosaic pattern, opportunities to benefit from this source of extra-local knowledge are distributed unevenly across Russian regions.…”

Location choice of German multinationals in the Czech Republic

“…8 As in previous studies on location choice (see, among others, Cie slik, 2005; Gonchar and Marek, 2014), it is assumed that the decision where the Czech affiliate is founded is taken one year before the actual foundation of the subsidiary. Due to data availability reasons, only investments that were made between 1994 and 2008 are included in the analysis (3,130 FDI projects).…”

“…Due to data availability reasons, only investments that were made between 1994 and 2008 are included in the analysis (3,130 FDI projects). 8 As in previous studies on location choice (see, among others, Cie slik, 2005; Gonchar and Marek, 2014), it is assumed that the decision where the Czech affiliate is founded is taken one year before the actual foundation of the subsidiary. Consequently, the explanatory variables are lagged one year.…”