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Trade Liberalization, Foreign Direct Investment, and Productivity of Russian Firms


  • Evguenia Bessonova
  • Konstantin Kozlov
  • Ksenia Yudaeva


The paper studies the effect of liberalization of imports and foreign direct investment on Russian firms. Using the firm-level data from 1993-2000, the paper finds that competition with imports and with FDI exerts positive effect on domestic firms. Prior to the 1998 crisis, this effect is weaker in the case of firms located in complex industries. Increased availability of imported inputs or inputs produced by foreignowned firms helped to improve productivity of domestic firms in the mid-1990s, although the devaluation of the ruble in 1998 temporarily made firms relying on foreign-produced inputs less competitive. Finally, entry of foreign-owned firms in some cases leads to improvements in TFP of the firms that produce inputs for foreignowned firms. This effect also weakened after 1998, possibly because of the negative effect of devaluation on foreign-owned firms.

Suggested Citation

  • Evguenia Bessonova & Konstantin Kozlov & Ksenia Yudaeva, 2003. "Trade Liberalization, Foreign Direct Investment, and Productivity of Russian Firms," DEGIT Conference Papers c008_009, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c008_009

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    References listed on IDEAS

    1. Carlo Altomonte & Laura Resmini, 2001. "Multinational Corporations as Catalyst for Industrial Development. The Case of Poland," LICOS Discussion Papers 9701, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    2. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 245-276.
    3. Gérard Roland & Thierry Verdier, 1999. "Transition and the output fall," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 1-28, March.
    4. Krueger, Anne O, 1997. "Trade Policy and Economic Development: How We Learn," American Economic Review, American Economic Association, vol. 87(1), pages 1-22, March.
    5. Robert Z. Lawrence & David E. Weinstein, 1999. "Trade and Growth: Import-Led or Export-Led? Evidence From Japan and Korea," NBER Working Papers 7264, National Bureau of Economic Research, Inc.
    6. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    7. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
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    Cited by:

    1. Julia Shvets, 2005. "Courts, firms and allocation of credit," Development and Comp Systems 0509026, EconWPA.
    2. Delia Baghdasaryan & Lisbeth Cour & Cédric Schneider, 2016. "Which Companies Benefit from Liberalization? a Study of the Influence of Initial Productivity," Journal of Industry, Competition and Trade, Springer, vol. 16(1), pages 101-125, March.
    3. Pyle, William & Solanko, Laura, 2010. "The composition and interests of Russia's business lobbies : A test of Olson's "encompassing organization" hypothesis," BOFIT Discussion Papers 5/2010, Bank of Finland, Institute for Economies in Transition.
    4. N. Krasnopeeva & E. Nazrullaeva & A. Peresetsky & E. Shchetinin., 2016. "To export or not to export? The link between the exporter status of a firm and its technical efficiency in Russia’s manufacturing sector," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.

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