IDEAS home Printed from https://ideas.repec.org/a/eee/poleco/v73y2022ics017626802100104x.html
   My bibliography  Save this article

Russian power and the state-owned enterprise

Author

Listed:
  • Libman, Alexander
  • Stone, Randall W.
  • Vinokurov, Evgeny

Abstract

Russian firms are important political actors in the former Soviet Union, and we use data on their choices of locations for foreign investment to draw inferences about their strategies and degree of autonomy from the Russian state. We find evidence that a substantial share of Russian firms prefer risky investment climates, which we interpret as evidence of rent-seeking strategies. This pattern is most pronounced for large state-owned firms. State-owned firms are responsive to the Russian foreign policy agenda, while privately-owned firms appear to be more autonomous. The evidence suggests that Russia deploys state-owned firms to extend its influence and exerts influence to make their investments profitable.

Suggested Citation

  • Libman, Alexander & Stone, Randall W. & Vinokurov, Evgeny, 2022. "Russian power and the state-owned enterprise," European Journal of Political Economy, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:poleco:v:73:y:2022:i:c:s017626802100104x
    DOI: 10.1016/j.ejpoleco.2021.102122
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S017626802100104X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejpoleco.2021.102122?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
    2. Karla Hoff & Joseph E. Stiglitz, 2004. "After the Big Bang? Obstacles to the Emergence of the Rule of Law in Post-Communist Societies," American Economic Review, American Economic Association, vol. 94(3), pages 753-763, June.
    3. Massimo Guidolin & Eliana La Ferrara, 2007. "Diamonds Are Forever, Wars Are Not: Is Conflict Bad for Private Firms?," American Economic Review, American Economic Association, vol. 97(5), pages 1978-1993, December.
    4. Sosa Andrés, Maximiliano & Nunnenkamp, Peter & Busse, Matthias, 2013. "What drives FDI from non-traditional sources? A comparative analysis of the determinants of bilateral FDI flows," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-53.
    5. Sonin, Konstantin, 2003. "Why the rich may favor poor protection of property rights," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 715-731, December.
    6. Witold J. Henisz, 2002. "The institutional environment for infrastructure investment," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(2), pages 355-389.
    7. Guy L. F. Holburn & Bennet A. Zelner, 2010. "Political capabilities, policy risk, and international investment strategy: evidence from the global electric power generation industry," Strategic Management Journal, Wiley Blackwell, vol. 31(12), pages 1290-1315, December.
    8. De Beule, Filip & Duanmu, Jing-Lin, 2012. "Locational determinants of internationalization: A firm-level analysis of Chinese and Indian acquisitions," European Management Journal, Elsevier, vol. 30(3), pages 264-277.
    9. Selen Guerin & Stefano Manzocchi, 2009. "Political regime and FDI from advanced to emerging countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(1), pages 75-91, April.
    10. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Cursed by Resources or Institutions?," The World Economy, Wiley Blackwell, vol. 29(8), pages 1117-1131, August.
    11. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    12. Dylan Sutherland & John Anderson & Nicholas Bailey & Ilan Alon, 2020. "Policy, institutional fragility, and Chinese outward foreign direct investment: An empirical examination of the Belt and Road Initiative," Journal of International Business Policy, Palgrave Macmillan, vol. 3(3), pages 249-272, September.
    13. Du, Julan & Zhang, Yifei, 2018. "Does One Belt One Road initiative promote Chinese overseas direct investment?," China Economic Review, Elsevier, vol. 47(C), pages 189-205.
    14. Alexander Libman & Anastassia Obydenkova, 2013. "Informal governance and participation in non-democratic international organizations," The Review of International Organizations, Springer, vol. 8(2), pages 221-243, June.
    15. Chengchun Li & Yun Luo & Glauco Vita, 2020. "Institutional difference and outward FDI: evidence from China," Empirical Economics, Springer, vol. 58(4), pages 1837-1862, April.
    16. Tim Büthe & Helen V. Milner, 2008. "The Politics of Foreign Direct Investment into Developing Countries: Increasing FDI through International Trade Agreements?," American Journal of Political Science, John Wiley & Sons, vol. 52(4), pages 741-762, October.
    17. Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
    18. Jo Jakobsen & Indra De Soysa, 2006. "Do Foreign Investors Punish Democracy? Theory and Empirics, 1984–2001," Kyklos, Wiley Blackwell, vol. 59(3), pages 383-410, August.
    19. David Roodman & James G. MacKinnon & Morten Ørregaard Nielsen & Matthew D. Webb, 2019. "Fast and wild: Bootstrap inference in Stata using boottest," Stata Journal, StataCorp LP, vol. 19(1), pages 4-60, March.
    20. Knutsen Carl Henrik & Rygh Asmund & Hveem Helge, 2011. "Does State Ownership Matter? Institutions' Effect on Foreign Direct Investment Revisited," Business and Politics, De Gruyter, vol. 13(1), pages 1-33, April.
    21. Lin Cui & Fuming Jiang, 2012. "State ownership effect on firms' FDI ownership decisions under institutional pressure: a study of Chinese outward-investing firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(3), pages 264-284, April.
    22. Xingwang Qian & Jesus Sandoval-Hernandez, 2016. "Corruption Distance and Foreign Direct Investment," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(2), pages 400-419, February.
    23. Sebastian G. Kessing & Kai A. Konrad & Christos Kotsogiannis, 2007. "Foreign direct investment and the dark side of decentralization [‘Capture and governance at local and national levels’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 22(49), pages 6-70.
    24. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 499-518, July.
    25. Peter J Buckley & Liang Chen & L Jeremy Clegg & Hinrich Voss, 2018. "Risk propensity in the foreign direct investment location decision of emerging multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 153-171, February.
    26. Aidt, Toke S. & Albornoz, Facundo, 2011. "Political regimes and foreign intervention," Journal of Development Economics, Elsevier, vol. 94(2), pages 192-201, March.
    27. Diego Quer & Enrique Claver & Laura Rienda, 2012. "Political risk, cultural distance, and outward foreign direct investment: Empirical evidence from large Chinese firms," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 1089-1104, December.
    28. Gertz, Geoffrey & Jandhyala, Srividya & Poulsen, Lauge N. Skovgaard, 2018. "Legalization, diplomacy, and development: Do investment treaties de-politicize investment disputes?," World Development, Elsevier, vol. 107(C), pages 239-252.
    29. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    30. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    31. Alvaro Cuervo-Cazurra & Mehmet Genc, 2008. "Transforming disadvantages into advantages: developing-country MNEs in the least developed countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(6), pages 957-979, September.
    32. Hainmueller, Jens & Mummolo, Jonathan & Xu, Yiqing, 2019. "How Much Should We Trust Estimates from Multiplicative Interaction Models? Simple Tools to Improve Empirical Practice," Political Analysis, Cambridge University Press, vol. 27(2), pages 163-192, April.
    33. Ledyaeva, Svetlana & Karhunen, Päivi & Kosonen, Riitta, 2013. "Birds of a feather: Evidence on commonality of corruption and democracy in the origin and location of foreign investment in Russian regions," European Journal of Political Economy, Elsevier, vol. 32(C), pages 1-25.
    34. A Delios & W J Henisz, 2003. "Policy uncertainty and the sequence of entry by Japanese firms, 1980–1998," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(3), pages 227-241, May.
    35. Chernykh, Lucy, 2011. "Profit or politics? Understanding renationalizations in Russia," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1237-1253.
    36. Alvaro Cuervo-Cazurra, 2006. "Who cares about corruption?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 807-822, November.
    37. Leonid Polishchuk & Alexei Savvateev, 2004. "Spontaneous (non)emergence of property rights," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(1), pages 103-127, March.
    38. Brada, Josef C. & Drabek, Zdenek & Mendez, Jose A. & Perez, M. Fabricio, 2019. "National levels of corruption and foreign direct investment," Journal of Comparative Economics, Elsevier, vol. 47(1), pages 31-49.
    39. Clegg, L. Jeremy & Voss, Hinrich & Tardios, Janja A., 2018. "The autocratic advantage: Internationalization of state-owned multinationals," Journal of World Business, Elsevier, vol. 53(5), pages 668-681.
    40. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2021. "Foreign Influence and Domestic Policy," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 426-487, June.
    41. Eaton, Jonathan & Gersovitz, Mark, 1984. "A Theory of Expropriation and Deviations from Perfect Capital Mobility," Economic Journal, Royal Economic Society, vol. 94(373), pages 16-40, March.
    42. Knutsen, Carl Henrik & Rygh, Asmund & Hveem, Helge, 2011. "Does State Ownership Matter? Institutions' Effect on Foreign Direct Investment Revisited," Business and Politics, Cambridge University Press, vol. 13(1), pages 1-31, April.
    43. Tyson Roberts, 2018. "Economic Policy, Political Constraints, and Foreign Direct Investment in Developing Countries," International Interactions, Taylor & Francis Journals, vol. 44(3), pages 582-602, May.
    44. Chengqi Wang & Junjie Hong & Mario Kafouros & Mike Wright, 2012. "Exploring the role of government involvement in outward FDI from emerging economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(7), pages 655-676, September.
    45. Jensen, Nathan M., 2003. "Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment," International Organization, Cambridge University Press, vol. 57(3), pages 587-616, July.
    46. Bailey, Nicholas, 2018. "Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review," International Business Review, Elsevier, vol. 27(1), pages 139-148.
    47. Li, Quan & Resnick, Adam, 2003. "Reversal of Fortunes: Democratic Institutions and Foreign Direct Investment Inflows to Developing Countries," International Organization, Cambridge University Press, vol. 57(1), pages 175-211, January.
    48. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    49. Kalotay, Kalman & Sulstarova, Astrit, 2010. "Modelling Russian outward FDI," Journal of International Management, Elsevier, vol. 16(2), pages 131-142, June.
    50. Henisz, Witold J, 2000. "The Institutional Environment for Multinational Investment," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(2), pages 334-364, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Libman Alexander, 2023. "The Rise and Fall of the Eurasian Regionalism," The Economists' Voice, De Gruyter, vol. 20(2), pages 267-274, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Munjal, Surender & Varma, Sumati & Bhatnagar, Ankur, 2022. "A comparative analysis of Indian and Chinese FDI into Africa: The role of governance and alliances," Journal of Business Research, Elsevier, vol. 149(C), pages 1018-1033.
    2. Zhao, Yanping & Chen, Qing & de Haan, Jakob, 2023. "Does central bank independence matter for the location choices of Chinese firms’ foreign investments?," International Business Review, Elsevier, vol. 32(4).
    3. Federico Carril-Caccia & Juliette Milgram-Baleix & Jordi Paniagua, 2019. "Foreign Direct Investment in oil-abundant countries: The role of institutions," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-23, April.
    4. Amar Anwar & Ichiro Iwasaki, 2022. "Institutions and FDI from BRICS countries: a meta-analytic review," Empirical Economics, Springer, vol. 63(1), pages 417-468, July.
    5. Filip Beule & Haiyan Zhang, 2022. "The impact of government policy on Chinese investment locations: An analysis of the Belt and Road policy announcement, host-country agreement, and sentiment," Journal of International Business Policy, Palgrave Macmillan, vol. 5(2), pages 194-217, June.
    6. Liu, Xiaohui & Gao, Lan & Lu, Jiangyong & Lioliou, Eleni, 2016. "Environmental risks, localization and the overseas subsidiary performance of MNEs from an emerging economy," Journal of World Business, Elsevier, vol. 51(3), pages 356-368.
    7. Cuervo-Cazurra, Alvaro & Li, Cheng, 2021. "State ownership and internationalization: The advantage and disadvantage of stateness," Journal of World Business, Elsevier, vol. 56(1).
    8. Gamso, Jonas & Nelson, Roy C., 2019. "Does partnering with the World Bank shield investors from political risks in less developed countries?," Journal of World Business, Elsevier, vol. 54(5), pages 1-1.
    9. Jean Lacroix & Pierre-Guillaume Méon & Khalid Sekkat, 2017. "Do democratic transitions attract foreign investors and how fast?," Working Papers CEB 17-006, ULB -- Universite Libre de Bruxelles.
    10. Federico Carril-Caccia & Juliette Milgram Baleix & Jordi Paniagua, 2019. "The foreign direct investment-institution nexus in oil-abundant countries," Working Papers 1903, Department of Applied Economics II, Universidad de Valencia.
    11. Uddin, Moshfique & Chowdhury, Anup & Zafar, Sheeba & Shafique, Sujana & Liu, Jia, 2019. "Institutional determinants of inward FDI: Evidence from Pakistan," International Business Review, Elsevier, vol. 28(2), pages 344-358.
    12. Andrei Panibratov & Daria Klishevich, 2023. "Emerging market state-owned multinationals: a review and implications for the state capitalism debate," Asian Business & Management, Palgrave Macmillan, vol. 22(1), pages 84-117, February.
    13. Fon, Roger & Alon, Ilan, 2022. "Governance, foreign aid, and Chinese foreign direct investment," LSE Research Online Documents on Economics 113678, London School of Economics and Political Science, LSE Library.
    14. Rodion Skovoroda & Shaun Goldfinch & Karl DeRouen & Trevor Buck, 2019. "The Attraction of FDI to Conflicted States: The Counter-Intuitive Case of US Oil and Gas," Management International Review, Springer, vol. 59(2), pages 229-251, April.
    15. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    16. Jing Li & Klaus E Meyer & Hua Zhang & Yuan Ding, 2018. "Diplomatic and corporate networks: Bridges to foreign locations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(6), pages 659-683, August.
    17. Buckley, Peter J & Cui, Lin & Chen, Liang & Li, Yi & Choi, Yoona, 2023. "Following their predecessors’ journey? A review of EMNE studies and avenues for interdisciplinary inquiry," Journal of World Business, Elsevier, vol. 58(2).
    18. Wisniewski, Tomasz P. & Pathan, Saima K., 2014. "Political environment and foreign direct investment: Evidence from OECD countries," European Journal of Political Economy, Elsevier, vol. 36(C), pages 13-23.
    19. Yang, Jie, 2018. "Subnational Institutions and Location Choice of Emerging Market Firms," Journal of International Management, Elsevier, vol. 24(4), pages 317-332.
    20. Tim Büthe & Helen V. Milner, 2008. "The Politics of Foreign Direct Investment into Developing Countries: Increasing FDI through International Trade Agreements?," American Journal of Political Science, John Wiley & Sons, vol. 52(4), pages 741-762, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:73:y:2022:i:c:s017626802100104x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505544 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.