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Natural-resource or market-seeking FDI in Russia? An empirical study of locational factors affecting the regional distribution of FDI entries

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  • Ksenia Gonchar

    (National Research University Higher School of Economics)

  • Philipp Marek

    (Institute for Economic Studies – Halle)

Abstract

This paper conducts an empirical study of the factors that affect the spatial distribution of foreign direct investment (FDI) across regions in Russia; in particular, this paper is concerned with those regions that are endowed with natural resources and market-related benefits. Our analysis employs data on Russian firms with a foreign investor during the 2000-2009 period and linked regional statistics in the conditional logit model. The main findings are threefold. First, we conclude that one theory alone is not able to explain the geographical pattern of foreign investments in Russia. A combination of determinants is at work; market-related factors and the availability of natural resources are important factors in attracting FDI. The relative importance of natural resources seems to grow over time, despite shocks associated with events such as the Yukos trial. Second, existing agglomeration economies encourage foreign investors by means of forces generated simultaneously by sector-specific and inter-sectoral externalities. Third, the findings imply that service-oriented FDI co-locates with extraction industries in resource-endowed regions. The results are robust when Moscow is excluded and for subsamples including only Greenfield investments or both Greenfield investments and mergers and acquisitions (M&A)

Suggested Citation

  • Ksenia Gonchar & Philipp Marek, 2013. "Natural-resource or market-seeking FDI in Russia? An empirical study of locational factors affecting the regional distribution of FDI entries," HSE Working papers WP BRP 26/EC/2013, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:26/ec/2013
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    Cited by:

    1. Riccardo Crescenzi & Alexander Jaax, 2017. "Innovation in Russia: The Territorial Dimension," Economic Geography, Taylor & Francis Journals, vol. 93(1), pages 66-88, January.
    2. Mariev Oleg Svyatoslavovich & Drapkin Igor Mikhailovich & Chukavina Kristina Vladimirovna & Rachinger Heiko, 2016. "Determinants of FDI inflows: the case of Russian regions," Экономика региона, CyberLeninka;Федеральное государственное бюджетное учреждение науки «Институт экономики Уральского отделения Российской академии наук», vol. 12(4), pages 1244-1252.
    3. Han-Sol Lee & Sergey U. Chernikov & Szabolcs Nagy, 2022. "Motivations and locational factors of FDI in CIS countries: Empirical evidence from South Korean FDI in Kazakhstan, Russia, and Uzbekistan," Papers 2212.13841, arXiv.org.
    4. Olga V. Kuznetsova, 2018. "The Role of State Policy in Attracting of Foreign Direct Investment to the Far East of Russia," Outlines of global transformations: politics, economics, law, Center for Crisis Society Studies, vol. 11(1).

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    More about this item

    Keywords

    foreign direct investment; location; regional development;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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