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Economic Analysis: Theory and Practice
 

Diagnostics of foreign direct investment inflows into the Russian Federation: from theory to practice

Vol. 14, Iss. 19, MAY 2015

PDF  Article PDF Version

Available online: 31 May 2015

Subject Heading: EVALUATION OF INVESTMENT PROJECTS

JEL Classification: 

Pages: 16-27

Zaitsev Yu.K. Russian Presidential Academy of National Economy and Public Administration, Moscow, Russian Federation
yuriy.zaitsev@gmail.com

Subject The article analyzes the factors that have influenced the dynamics of foreign direct investment in the Russian economy in 2014 and over the last decade. I consider the State influence measures and institutional conditions that formed the basis for the support to foreign investors as a key factor, which had an impact on the unprecedented influx of foreign direct investment in Russia. Special focus is on the distribution of different types of foreign investments by the Russian economy industries.
     Objectives The study aims at analyzing the impact of factors on the dynamics of FDI inflows into different sectors of the Russian economy. The objectives include identifying the theoretical background and the economic effects of foreign capital inflow into the Russian economy, analyzing the investment climate factors and the mechanisms of governmental support to FDI inflows, showing the dynamics of FDI inflows in the key sectors of Russian economy.
     Methods In the study, I apply general scientific methods of logical and comparative analysis, methods of statistical analysis, and the qualitative methodology for the analysis of investment climate factors offered by the OECD.
     Results The analysis enabled to identify the main factors influencing the incoming foreign investment into the Russian economy. Based on the performed analysis, I explain the paradox in the Russian economy during the second half of the 2000s, when annual FDI inflow increased every year despite the unstable investment climate. The study evaluates the impact of the FDI decline on various sectors of the Russian economy.
     Conclusions and Relevance The paper gives an insight into the dynamics of the FDI inflow during the recent ten years. The information on the incoming FDI in some sectors of the Russian economy may form a basis for investment decisions by Russian and foreign stakeholders

Keywords: foreign direct investment, FDI, investment climate, horizontal, vertical, investment, venture capital, import substitution

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