Direct Investment In Russia Research Articles

Direct Investment of China in the Russian Automotive Sector as Part of the Global Strategy of Chinese Automakers

This article reveals the main trends of direct investments by China in the Russian automotive industry within the context of the global strategy pursued by Chinese auto manufacturers. Through an examination of the motivations behind Chinese automakers entering into foreign markets, using the eclectic paradigm of J. Dunning, the authors draw conclusions about the prospects of Russian-Chinese cooperation in the automotive sector. It is posited that the success of Chinese automotive corporations in the global arena is primarily linked to their ongoing exploitation of advantages generated in the domestic market, which are also extended outward through foreign investments. The main investment motivations identified for Chinese automakers include market access, technology transfer, cost reduction and global expansion. The authors highlight market access and global expansion as the principal drivers of Chinese direct investments in Russia. The challenges that Russian automotive industry faced recently will not allow fully leverage the benefits of cooperation with Chinese automakers in the short term. However, substantial impact of the cooperation with Chinese partners is expected to be the deeper localization of production in Russia.

СОСТОЯНИЕ, АНАЛИЗ И РЕКОМЕНДАЦИИ ПО ПРЯМЫМ ИНВЕСТИЦИЯМ КИТАЯ В РОССИЮ

This paper analyzes the current state and development of China’s direct investments in Russia amidst complex geopolitical situations, the COVID-19 pandemic, and the Sino-American trade war. It examines the challenges in Sino-Russian investment cooperation and offers strategic suggestions for enhancing bilateral economic collaboration in the new economic environment. The conclusion emphasizes that despite short-term difficulties due to Western sanctions, Russia’s import substitution strategy is apt for reducing import dependence. Given the high economic and resource complementarity between China and Russia, significant growth in Chinese direct investments in Russia is anticipated in the coming years.

Russian-Chinese financial cooperation: Development trends and prospects

Subject. The article discusses the importance of Russian-Chinese financial cooperation and its impact on the economic development of Russia. Objectives. The purpose is to identify aspects of Russian-Chinese financial cooperation that have a substantial influence on the Russian economy, to develop a scientific and methodological approach to quantifying the impact of Russian-Chinese financial cooperation on the Russian economy. Methods. We employ methods of economic, mathematical and statistical analysis, and practical developments of Russian and foreign scientists. Results. Three aspects of Russian-Chinese financial cooperation are important factors that directly affect the economic growth of Russia, namely, China's direct investment in Russia, bilateral trade, and currency swaps. Russian-Chinese financial cooperation will play a positive role in promoting the economic development of Russia. Conclusions. To ensure stable socio-economic development of Russia, it is important to develop financial cooperation with China. Russia should further expand bilateral trade, make efforts to attract Chinese investment, and continue monetary cooperation with China.

Prospects for investment development in Russia and the Muslim world

Ensuring investment attractiveness is one of the most important aspects of a country's economic activity in modern international relations. Foreign investments make it possible not only to ensure expanded social reproduction in the country, but also expand the possibilities of technological and economic development of the state.The purpose of the work is to analyze foreign direct investment in the Russian Federation in general and the Republic of Tatarstan in particular. The analysis and evaluation of statistical data revealed a reduction in the number of projects involving foreign direct investment in Russia in 2017-2020. In modern conditions, it is necessary to recognize the decline in the investment attractiveness of Russia from investors in the United States and Europe, which may lead to an even greater compression of foreign investment flows. An alternative to foreign investments from the United States of America and Europe can be foreign investments from the countries of the Muslim world. Already today, Russia has friendly relations with the countries of the Muslim world, in addition, there are entire regions with a high density of Muslim population living on the territory of the Russian Federation. Thus, the Republic of Tatarstan, which is already one of the most investment-attractive regions of the Russian Federation and occupies the 3rd place in the list of regions of the Russian Federation most in demand among foreign investors, could play an important role in increasing the number of foreign direct investment.

ПРИВЛЕЧЕНИЕ ПРЯМЫХ ИНОСТРАННЫХ ИНВЕСТИЦИЙ: ПРОБЛЕМЫ И ПЕРСПЕКТИВЫ

In modern conditions, attracting foreign direct investment in the Russian Federation plays an important role due to the fact that the right direction of investment policy will automatically allow the country to increase the volume of public production, reduce the number of unemployed, develop production, construction and services. The decline in investment negatively affects both the quality of life of the population and the competitiveness of Russian manufacturers. Nowadays, there is a significant reduction in the number of foreign investors. Given the sanctions imposed by the West and the outflow of capital from the country, the Russian government is called upon to strengthen ties with friendly countries. The article presents the main results of the study, which have a certain scientific value. The directions and vectors of investment flows of foreign direct investment in Russia are substantiated. The updated architectonics of the investment attractiveness of the economy is presented. The factors limiting the inflow of foreign direct investment to Russia are highlighted. The directions of eliminating the main causes of the weak competitiveness of the Russian economy are proposed.

Extended-Reach Drilling Hits Mainstream To Squeeze Difficult Reservoirs

Though expensive and complex, extended-reach drilling (ERD) is moving more into the mainstream as the industry is driven to develop frontier reserves in fragile environments like the Arctic where drilling from shore to off-shore targets reduces a project’s infrastructure costs and environmental footprint. A form of directional drilling, ERD is also being used increasingly to tap into hard-to-produce reservoirs, making viable projects that might otherwise be written off as noncommercial. This article highlights how the Russian Far East became the ERD epicenter in the past decade, given ExxonMobil and Rosneft’s extensive use of ERD in developing Arctic resources offshore Sakhalin Island, and how ERD is becoming more widely used in regions as diverse as the Gulf of Thailand, off-shore Brazil, and the Arab Gulf. By definition, an extended-reach well (ERW) is one in which the ratio of the measured depth (MD) vs. the true vertical depth (TVD) is at least 2:1 (PetroWiki). An ERW differs from a horizontal well in that the ERW is a high-angle directional well drilled to intersect a target point, a feat requiring specialized planning to execute well construction. ExxonMobil subsidiary Exxon Neftegas Limited (ENL), which operates the Sakhalin-1 license area offshore Russia’s Sakhalin Island (Fig. 1), has been pushing the limits of ERD for nearly 2 decades with innovative technologies and sophisticated well planning, making the Sea of Okhotsk a place where any ERD drilling record set today may easily be broken tomorrow. Russia’s state-owned Rosneft (which has a 20% stake in Sakhalin-1) owns bragging rights for having drilled the longest ERW well on record to date. Rosneft announced in November 2017 it had drilled a 15000-m horizontal ERW from the offshore Orlan gravity-base platform at Chayvo field situated in 14 m water depth in the Sea of Okhotsk, topping four previous records set between 2013 and 2015 that had reached between 12450 m and 13500 m (Fig. 2). In a news release at the time, Rosneft called the well “super complex with a DDI [directional drilling index] of 8.0 and a 14129-m stepout.” The release went on to say that the Sakhalin-1 Consortium could (as of the 2017 announcement) claim to have drilled nine out of the world’s 10 longest ERD wells. According to Rosneft, the project had set five world records for measured depth of wells between 2013 and 2017. In April 2015, development well O-14 was drilled with a length of 13500 m. That broke a 2014 record when the 13000-m Z-40 well was completed. In 2013, records were announced for wells Z-43 and Z-42 which were drilled, respectively, in April and in June 2013 with lengths of 12450 m and 12700 m. Rosneft credited ExxonMobil’s patented “Fast Drill” drilling optimization process that can increase rates of penetration (ROP) by up to 400% as a significant innovation contributing to the ERD success story at Sakhalin-1. One of the largest foreign direct investments in Russia, Sakhalin-1 operates under a production sharing agreement (PSA) with its license area off the northeastern coast of Sakhalin Island, comprising the Chayvo, Odoptu, and Arkutun Dagi fields.

Analysis of foreign direct investments: regional aspect

The article analyses the dynamics of foreign direct investments in Russia and the world. Developed countries act as net lenders. Developing countries are borrowers in the investment capital market. The paper reveals the trend of reducing the balance of foreign direct investments in Russia, especially after the introduction of sanctions in 2014. Assessment of the structure of foreign direct investments by Federal Districts shows the presence of territorial imbalances in the distribution of foreign capital. The largest volume of foreign direct investments is in the Central Federal District. In the Krasnodar Territory, the balance of foreign direct investments is positive, but has an uneven dynamics. The authors make conclusions about the need to stimulate the inflow of foreign direct investments both at the level of Russia and in the Krasnodar Territory.

Contemporary Foreign Economic Relations of Russia with the Countries of Northern Europe

Recently new problems have arisen that have complicated Russia’s foreign economic relations with foreign countries. The countries of Northern Europe were no exception. The economic situation in many countries was far from optimal. Problems with economy took place in the euro area. A significant drop in oil prices led to a slowdown in economic growth in the Russian Federation and a sharp decline of ruble exchange rate. Since 2014, various Western sanctions have emerged, followed by retaliatory sanctions from Russia. Against this background, the analysis of the dynamics of Russian economic relations with the Nordic countries is of particular interest. A sharp decline in foreign economic indicators occurred in 2015–2016. Subsequent development has shown different dynamics. On the one hand, by the end of the 2010s foreign trade with Finland and Sweden did not reach the level of 2013–2014 (primarily due to the decline in oil prices), but on the other, foreign trade indicators with Denmark and Norway were exceeded (due to Russian exports). Year 2020 brought new problems – the coronavirus pandemic and the associated restrictions on the movement of goods, services and people, as well as the rupture of production chains, which had an impact on foreign economic relations – and exacerbated the old ones: a new sharp drop in oil prices and a new depreciation of ruble. The article reveals the features of the general dynamics and commodity structure of foreign trade with each of the observed countries. The significant dependence of Russian exports, primarily on energy supplies, is considered in detail. Special attention is given to the general dynamics of foreign direct investment in Russia. The problems of modern development of Russian export and import were analyzed.

Социально-экономические последствия пандемии COVID-19 в России и странах мира: анализ антикризисных программ, влияние на позицию в международных рейтингах и перспективы восстановления

The article examines the socio-economic consequences of the COIVD-19 pandemic, such as the increase in poverty and social differentiation. Goal. To identify and analyze the socio-economic consequences of the COIVD-19 pandemic in Russia and other countries of the world, the measures taken by national governments to combat these consequences, as well as the dynamics of Russia's position in international economic rankings and the presence or absence of a connection between this dynamics and the dynamics of investment in the national economy. Objectives. Analysis of indicators of poverty and social stratification in Russia and the world in the context of the COIVD-19 pandemic; comparison of anti-crisis economic programs in the largest countries and Russia by GDP; study of the methodology of the most credible international economic rankings; comparative analysis of the dynamics of Russia's position in international economic rankings and the dynamics of capital investment and foreign direct investment in Russia. Methodology. The methods of system analysis, classification and comparison, evolutionary-institutional theory and historical approach were applied. Statistical and other data of the Federal State Statistics Service of the Russian Federation, federal executive authorities of the Russian Federation, the Eurasian Economic Commission were used, and their own calculations were carried out on the basis of these data. Results. It was revealed that in order to combat the socio-economic consequences of the COVID-19 pandemic, governments in different countries implemented comprehensive packages of measures including such as increasing health care costs, direct support for the population, maintaining employment, promoting small and medium-sized businesses, and the most affected sectors of the economy. The total volume of the anti-crisis program in Russia, calculated as a percentage of GDP, is about 2-3 times less than in the largest world economies. Conclusions. At the same time, our country is distinguished by a significantly higher level of concentration of wealth in the hands of a group of so-called «super-rich» citizens, compared to the global average and the level of Eastern European countries, even in the context of the COVID-19 pandemic. At the same time, the dynamics of the volume of capital investment and foreign direct investment, as possible sources of recovery of economic growth, significantly lags behind the dynamics of Russia's position in some international ratings.

Foreign Direct Investment in Russia (Late 1980s - Late 2010s)

Foreign direct investment in Russia in a historical aspect are discussed in the article. It is noted that theoretical studies on this issue have led to a better understanding of the economic mechanism and the behavior of various participants in the economic sphere at both the micro and macro levels, which has opened up new areas of research in the field of economics. It is stated that an understanding of why a company initiates foreign direct investment in a particular country or increases their volume, allows us to present the main motives of the management of firms to invest, rather than to export or outsource production to national firms. The purpose of this study is to identify the main trends in foreign direct investment in the Russian Federation in various historical periods. A review of economic indicators on attracted investments, reflected in the relevant economic reports of the Central Bank of the Russian Federation, as well as other documents, a periodization of direct foreign investment in the Russian Federation was made. Based on the analysis, the authors propose to consider five periods: from the late 1980s to 1999, from 2000 to 2007, from 2008 to 2013, from 2014 to 2019 and from 2020 to the present, which have their own characteristics. Attention is paid to the fact that foreign direct investment in the Russian Federation during these periods was uneven, due to serious political contradictions in the international arena.

An analysis of EU FDI inflow into Russia

This paper analyzes the trends and drivers of inward foreign direct investment in Russia between 2009 and 2019. The EU is the premier provider of FDI into Russia, even though we find that reported values overstate its role given the use of Special Purpose Entities (SPEs). Key drivers of Russian FDI flows are the price of oil and natural resource markets, macroeconomic volatility, monetary policy, sanctions and trade impediments. As FDI is highly concentrated in natural resource rich regions, we argue that a sectoral decomposition understates the importance of fossil fuel extraction. Based on this analysis as well as the literature on growth effects of FDI, we argue that Russia needs more investment into higher-value added activities.

ПРЯМЫЕ ИНВЕСТИЦИИ НА ПРИМЕРЕ РОССИИ

The topic of investment is quite relevant both in Russia and in the modern world, it is an integral part of today's economy. In the article the analysis of direct investments in Russia: which countries are actively investing in the Russian economy, how much investment is present, what are the goals of foreign investors, the most popular investment sectors in the country are considered.

Econometric Study of the Dynamics of Foreign Direct Investment in Russia

Foreign investment is of high importance for economic growth in Russia. The problem of enhancing investment flows makes it increasingly relevant to search for effective tools for stimulating investment activity. We attempt to identify the factors affecting the dynamics of foreign direct investment (FDI). The paper analyses the current state of foreign direct investment in the Russian economy. Using empirical data for 2001–2018, we construct an econometric model for Russia which considers such factors as inflation (the Consumer Price Index), the exchange rate and imports. The results of the model’s testing do not confirm the initial assumptions that inflation exerts a more profound effect on FDI than the exchange rate and that there is a correlation between these indicators. For Russia, the dependence of FDI on the exchange rate remains insignificant; in addition, we find a direct relationship between the indicators. According to the model, the impact of inflation (direct relationship) and the volume of imports (inverse relationship) are of greater significance. It is noteworthy that the dynamics of foreign direct investment is partially due to its fluctuations with a time lag. The model forecasts that from 2019 to 2024 Russia is expected to experience a rise in FDI net outflows. The findings indicate that in order to attract foreign direct investment, it is necessary to implement economic transformations that will improve the business environment and lead to the development of healthy competition.

Japan’s foreign direct investment in Russia: a big return from a small opportunity

ABSTRACTIn this paper, we demonstrate the trends and prospects of Japanese foreign direct investment (FDI) in European Emerging Markets (EEMs) against the background of the recent development of emerging markets in the world FDI flows and explore the specificities of the Russian market, the biggest EEM in terms of market size and inward FDI received. More specifically, we overview foreign capital flows from Japan to Russia and describe the achievements and problems of Japanese investors as related to business with Russia. We find that the Russian market seems to be a lucrative option for Japanese firms, despite limited institutional freedom afforded to outsiders and unfavorable investment conditions, including the language barrier due to the wide usage of Russian in the business field – factors that have been reflected in higher transaction costs.

External and Internal Factors of Cross-Border Capital Flows in Russia

The literature on the assessment of factors affecting cross-border capital flows is usually characterised by distinguishing of external and internal factors. The former as a rule include international indices of the global economic growth rate, interest rates and other indicators of profitability (for certain types of financial assets). The latter include domestic indices of the growth rate of the national economy, interest rates and the profitability of financial instruments, sovereign credit ratings. Since the beginning of the 21st century, cross-border capital flows in Russia have followed the same trends as capital flows in other emerging markets. A distinguishing feature of Russia was the negative impact of sanctions on the level of its financial openness. We estimated regressions, designed to evaluate the factors affecting the individual components of cross-border capital flows in Russia. Regressions for the three types of flows (liabilities of direct investment and portfolio investment liabilities, and assets) demonstrate good results. Among external factors, the dynamics of oil prices turned out to be significant, as well as the global stock index (for portfolio investment assets). Among internal factors, an increase in aggregate demand helps to attract foreign direct investment, and an increase in the yield of Russian financial assets (stocks and bonds) — to attract portfolio investments. The difference in interest rates is the determinant of all analysed capital flows. Our estimations confirmed the significance of the “round-tripping” movement of foreign direct investment in Russia.

Determinants of Foreign Direct Investment in Russia: Empirical Study

In the present paper the determinants of the inward FDI stock in the Russian economy have been estimated via panel data analysis. The results of the study have confirmed the relevance of basic gravity determinants: the GDP of Russia and the investing countries, and the distances between them. The level of per capita income in the investing country, as well as the mutual trade, has a robust positive effect on the inward FDI stock. This allows one to assert that an increase in trade in goods with countries with growing levels of wealth leads to an increase in stocks of foreign investment in the Russian economy. Changes in the exchange rate, relations with offshore financial centers, restrictions and sanctions imposed on Russia since 2014, and bilateral investment treaties do not have a significant impact on FDI accumulated in the country. The provision that trade in goods has a positive effect on the FDI stock can contribute to further study of FDI round-tripping and Russia’s involvement. The steady dependence revealed at the macroeconomic level shows that, despite the high estimates of the scale of intermediary financial investments, the FDI accumulated in the Russian economy retains the link with real economic activities. At the microeconomic level, it is provided by activities of TNCs and their long-term interest in the economy of invested enterprises, in the growth of their efficiency and competitiveness.

Modeling the process of attracting foreign investment in the Russian economy

In the paper, on the basis of an assessment of the development of the Russian economy, the sectors most in need of an investment are identified, taking into account the depreciation rate of basic production assets. Depreciation of fixed assets reflects the demand for investment in order to modernize and reconstruct production. Based on the data of the Federal State Statistics Service of Russia, a rating of economic sectors in terms of the degree of depreciation of fixed assets at the end of the year by type of economic activity for 2013-2018 is built. In addition, the paper presents a model for predicting the inflow of foreign direct investment in Russia, developed using the classical approach to estimating linear regression criteria, which is based on the least squares method (OLS). In compiling this regression model, the applied software package for econometric modeling GRETL (GNU Regression, Econometrics and Time-series Library) was used to predict the inflow of foreign investment. Forecasting the inflow of foreign investment in the Russian Federation is aimed at solving the following tasks: to determine the most competent direction of investment policy and activity using forecast estimates, as well as to assess the country’s investment attractiveness. However, a significant role in predicting this indicator is played by the determination of factors that have an impact on the future volume of foreign investment. In addition, the analysis of foreign investments, depending on the influence of various factors, can tell about those or other motives that guide foreign investors when investing their own capital.

What determines foreign direct investment in Russia?

Abstract This article focuses on the determinants of inward foreign direct investment (FDI) in Russia. The article briefly describes the historical context of foreign investment policymaking in Russia since the beginning of the economic transition to an open market economy after the dissolution of the Soviet Union. When compared to other developing countries, Russia's FDI stocks continue to lag despite a set of proactive measures undertaken by the national government. Following the literature review, the most commonly cited determinants explaining inward FDI in Russia include market size, labour productivity, trade and investment barriers, domestic exchange rate, rule of law and institutional framework. This article aims to contribute empirically to the study of determinants of inward FDI in Russia. This article uses the Pseudo-Poisson Maximum Likelihood (PPML) estimation technique, the robustness of the PPML estimation is then verified using a standard autoregressive integrated moving average (ARIMA) model with the Durbin–Watson autocorrelation test. Our benchmark results suggest the efficiency-seeking motive of FDI over a market seeking and horizontal motive as a main reason for inward FDI in Russia. The ARIMA regression indicates the absence of statistical significance of economic openness and variables of labour productivity. Overall, the market size and tax rate variables have the most positive effects on the inward FDI, while barriers to trade and sanctions have the most negative effects. The results confirm that for transitional economies, integration into the world economy, proactive local development and tax cuts for outside investors remain to be critical when it comes to attracting FDI.

ПРЯМЫЕ ИНОСТРАННЫЕ ИНВЕСТИЦИИ В РОССИЙСКОЙ ЭКОНОМИКЕ: КРИВЫЕ ЗЕРКАЛА СТАТИСТИКИ

With the latest statistics of the Bank of Russia (BR) and the Eurostat according to the directional principle, the article presents an appraisal of real (not formal) direct investment stocks between Russia and the rest of the world. It is shown that many large Russian corporations have subsidiaries abroad (mainly in the form of special purpose entities (SPE)), invest in them and then partially return the funds disguised as FDI, but under foreign jurisdiction. It is established that at least half of FDI in the Russian economy are in fact the returned funds of Russian corporations. In this manner, the last-mentioned can minimize the taxes, withdraw capital from the jurisdiction of Russia and furtively carry out dubious financial schemes (many countries treat SPEs activities as confidential). According to the BR, about 80% of direct investments in Russia belong to small or even tiny countries (the Bahamas, Bermuda, Cyprus, Luxembourg, etc.) that act in deed as intermediaries. The statistics of the BR contain thus little information on real direct investors in the Russian economy.

Поступление прямых иностранных инвестиций в российские регионы: факторы потенциала и риска

Поступление прямых иностранных инвестиций в российские регионы: факторы потенциала и риска