Journal Article

Foreign direct investment and regional economic development in Russia: an econometric assessment

Suganuma, Keiko, Iwasaki, Ichiro

2015

Overview

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.

• Publisher: Springer US,Springer Nature B.V
• Subject: Absorptive capacity / Analysis / Cooperation / Development Economics / Econometrics / Economic development / Economic Growth / Economic Policy / Economics / Economics and Finance / Foreign capital / Foreign investment / GDP / Gross Domestic Product / Growth rate / Human capital / Hypotheses / International Economics / Investments / Macroeconomics/Monetary Economics//Financial Economics / Political Economy/Economic Systems / Productivity / R&D / Regional economic development / Regions / Research & development / Studies / Synergistic effect / Transition economies