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Spatial Econometric Analysis of Foreign Direct Investment Determinants in Russian Regions

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  • Svetlana Ledyaeva

Abstract

Abstract Using a spatial autoregressive model of cross-sectional and panel data, we study the determinants and dominant strategies of foreign direct investment (FDI) inflows into Russia before and after the 1998 financial crisis. The important determinants of FDI inflows into Russian regions since the start of transition appear to be market size, the presence of large cities and sea ports, oil and gas availability, proximity to European market, and political and legislative risks. Since 1998, it appears the importance of big cities, the Sakhalin region, oil and gas resources, proximity to European markets, and legislation and political risks has increased. Our results also reveal a shift from horizontal FDI strategy to vertical FDI strategy in the post-crisis period. Using a multiple spatial lags approach, we show that neighbouring port-endowed regions tend to have emerged in the post-crisis era as competitors for FDI. Copyright 2009 The Author. Journal compilation 2009 Blackwell Publishing Ltd.

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  • Svetlana Ledyaeva, 2009. "Spatial Econometric Analysis of Foreign Direct Investment Determinants in Russian Regions," The World Economy, Wiley Blackwell, vol. 32(4), pages 643-666, April.
  • Handle: RePEc:bla:worlde:v:32:y:2009:i:4:p:643-666
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    5. Blonigen, Bruce A. & Davies, Ronald B. & Waddell, Glen R. & Naughton, Helen T., 2007. "FDI in space: Spatial autoregressive relationships in foreign direct investment," European Economic Review, Elsevier, vol. 51(5), pages 1303-1325, July.
    6. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2007. "Estimating models of complex FDI: Are there third-country effects?," Journal of Econometrics, Elsevier, vol. 140(1), pages 260-281, September.
    7. Ichiro Iwasaki & Keiko Suganuma, 2005. "Regional Distribution of Foreign Direct Investment in Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 17(2), pages 153-172.
    8. Gregory J. Brock, 1998. "Foreign direct investment in Russia's regions 1993-95. Why so little and where has it gone?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(2), pages 349-360, November.
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