FOREIGN DIRECT INVESTMENT DYNAMICS IN THE RUSSIAN FEDERATION AMID THE WAR IN UKRAINE

Andreea-Emanuela Drăgoi ()
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Andreea-Emanuela Drăgoi: Institute for World Economy, Romanian Academy 13 September Street, No. 13th, Bucharest, ROMANIA

Global Economic Observer, 2025, vol. 13, issue 2, 65-72

Abstract: The war in Ukraine has brought about a major geopolitical shift in international relations. While most states sided with the attacked country, the Russian Federation—perceived as the aggressor—faced unprecedented backlash from the West and the broader international community. Its main Western partners, notably the United States and the European Union (EU), imposed economic sanctions at an unprecedented scale, targeting not only the energy trade but also other sectors, in an effort to cut off the financing of the Russian war. Given this strained economic environment, most foreign investors froze or even closed their operations in the Russian market, triggering a massive foreign direct investment (FDI) exodus. This paper investigates the impact of the war on FDI flows and stocks in the Russian Federation through a comparative analysis of pre- and post sanctions periods, using data from UNCTAD. The findings show that disinvestment in the Russian Federation amid sanctions has deprived the economy not only of technology transfer and know-how but also led to its growing isolation in the international arena.

Keywords: Russian Federation; Foreign Direct Investment (FDI); Ukrainian War; Economic Sanctions; Global Capital Flows (search for similar items in EconPapers)
JEL-codes: F00 F01 F20 F21 F23 F29 (search for similar items in EconPapers)
Date: 2025-12
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