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An analysis of EU FDI inflow into Russia

Marta Domínguez-Jiménez (marta.dominguez@bruegel.org) and Niclas Frederic Poitiers (niclas.poitiers@bruegel.org)
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Marta Domínguez-Jiménez: Bruegel, Brussels, Belgium
Niclas Frederic Poitiers: Bruegel, Brussels, Belgium

Russian Journal of Economics, 2020, vol. 6, issue 2, 144-161

Abstract: This paper analyzes the trends and drivers of inward foreign direct investment in Russia between 2009 and 2019. The EU is the premier provider of FDI into Russia, even though we find that reported values overstate its role given the use of Special Purpose Entities (SPEs). Key drivers of Russian FDI flows are the price of oil and natural resource markets, macroeconomic volatility, monetary policy, sanctions and trade impediments. As FDI is highly concentrated in natural resource rich regions, we argue that a sectoral decomposition understates the importance of fossil fuel extraction. Based on this analysis as well as the literature on growth effects of FDI, we argue that Russia needs more investment into higher-value added activities.

Keywords: foreign; direct; investment; economic; growth; Russian; economic; development. (search for similar items in EconPapers)
JEL-codes: E65 F21 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:arh:jrujec:v:6:y:2020:i:2:p:144-161

DOI: 10.32609/j.ruje.6.55880

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