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Foreign Direct Investment and Regional Economic Development in Russia: An Econometric Assessment

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  • Iwasaki, Ichiro
  • Suganuma, Keiko

Abstract

In this paper, we estimate the effect of foreign direct investment (FDI) on total factor productivity (TFP) in Russian regions, paying special attention to the country’s investment boom and the remarkable regional gaps in terms of cumulative direct investments in and after 2003. We also examine possible synergistic effects between FDI and local R&D potential to test the absorptive capacity hypothesis. Our estimation results strongly suggest the remarkable role of FDI in the regional economic development in Russia. In addition, we found that the positive effect of FDI on TFP may increase in the regions that received larger amounts of foreign capital. Furthermore, we detected a surprisingly robust and positive synergistic effect between FDI and local R&D potential, indicating that the absorptive capability is essential for linking FDI and regional economic development in Russia.

Suggested Citation

  • Iwasaki, Ichiro & Suganuma, Keiko, 2015. "Foreign Direct Investment and Regional Economic Development in Russia: An Econometric Assessment," RRC Working Paper Series 44, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:rrcwps:44
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    Cited by:

    1. repec:eee:rujoec:v:2:y:2016:i:2:p:162-191 is not listed on IDEAS
    2. repec:kap:ecopln:v:51:y:2018:i:2:d:10.1007_s10644-016-9196-8 is not listed on IDEAS
    3. Ichiro Iwasaki & Mathilde Maurel, 2017. "The Impact of Crisis on Firm Creation and Regeneration in Russia: Regional Panel Data Analysis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01505659, HAL.
    4. Iwasaki, Ichiro & Maurel, Mathilde & Meunier, Bogdan, 2016. "Firm entry and exit during a crisis period: Evidence from Russian regions," Russian Journal of Economics, Elsevier, vol. 2(2), pages 162-191.
    5. repec:kap:ecopln:v:50:y:2017:i:4:d:10.1007_s10644-016-9191-0 is not listed on IDEAS
    6. repec:eee:rujoec:v:2:y:2016:i:4:p:349-374 is not listed on IDEAS
    7. repec:kap:ecopln:v:51:y:2018:i:2:d:10.1007_s10644-016-9197-7 is not listed on IDEAS
    8. repec:kap:ecopln:v:50:y:2017:i:2:d:10.1007_s10644-016-9184-z is not listed on IDEAS

    More about this item

    Keywords

    foreign direct investment (FDI); regional economic development; total factor productivity; R&D potential; absorptive capacity hypothesis; Russia;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • P25 - Economic Systems - - Socialist Systems and Transition Economies - - - Urban, Rural, and Regional Economics
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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