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An analysis of EU FDI inflow into Russia

Author

Listed:
  • Marta Domínguez-Jiménez

    (Bruegel, Brussels, Belgium)

  • Niclas Frederic Poitiers

    (Bruegel, Brussels, Belgium)

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.

Suggested Citation

  • Marta Domínguez-Jiménez & Niclas Frederic Poitiers, 2020. "An analysis of EU FDI inflow into Russia," Russian Journal of Economics, ARPHA Platform, vol. 6(2), pages 144-161, June.
    • Handle: RePEc:arh:jrujec:v:6:y:2020:i:2:p:144-161
    DOI: 10.32609/j.ruje.6.55880
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    References listed on IDEAS

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    1. Marek Dabrowski, 2019. "Can emerging markets be a source of global troubles again?," Russian Journal of Economics, ARPHA Platform, vol. 5(1), pages 67-87, April.
    2. Marek Dabrowski, 2015. "The systemic roots of Russia’s recession," Policy Contributions 10234, Bruegel.
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    Cited by:

    1. Deseatnicov, Ivan & Klochko, Olga, 2023. "Currency risk and the dynamics of German investors entry and exit in Russia," Emerging Markets Review, Elsevier, vol. 55(C).
    2. Maiya RAKHIMOVA & Galina KAKENOVA & Almagul KUSHPAYEVA, 2023. "Cooperation Between The Eu And Post-Soviet Countries: Western Authors’ Approaches To Analysing The Issue," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 23(2), pages 97-112.

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    More about this item

    Keywords

    foreign direct investment economic growth Russian economic development.;

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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