Since its transition to a market economy began, Russia has not attracted much foreign direct investment (FDI). Inflows of FDI into Russia are much lower than those into other transition countries in the region, adjusted for population size and similar measures. Clearly, if Russia is to grow it must increase the level of FDI inflows, which is why a good deal of policy attention has focused on the problem. Equally important for achieving sustainable growth in such a large, heterogeneous economy is learning how to make the spatial distribution of FDI within Russia more even. Inflows are strikingly skewed. Close to 60 percent of FDI goes to four regions in te western part of the country--Moscow City, Moscow oblast, St. Petersburg, and Leningrad oblast--which account for only 22 percent of Russia's gross national product and only 13 percent of Russia's population. Only two of the other 85 regions account for more than 2.5 percent of the country's FDI and most account for much less. Surprisingly, neither policymakers nor observers and analysts have paid much attention to diagnosing the reason for this imbalance in FDI's distribution. The authors try to empirically unbundle the determinants of FDI's regional distribution within Russia. They find that faactors associated with market size, infrastructure development, and the policy environment seem to explain much of the observed variation in FDI flows to regions in Russia. Moreover, the explanatory power of the model that best explains cross-regional variation in FDI flows from 1995 to 1998 changes significantly after the 1998 default and ruble devaluation--suggesting the possibility of a "structural change" in the determination of FDI after the 1998 crisis.

Not only does Russia have a poor record of attracting foreign direct investment (FDI) since the advent of reform in the early 1990s, but well over half of the investment it does attract goes to four regions in the western part of the country. Overcoming this skewed distribution of FDI - undoubtedly a factor in the country's uneven regional economic development - is essential for furthering Russia's growth and transition to a market economy. Factors associated with market size, infrastructure development, and the policy environment seem to explain much of the observed variation in FDI flows to regions in Russia. Since its transition to a market economy began, Russia has not attracted much foreign direct investment (FDI). Inflows of FDI into Russia are much lower than those into other transition countries in the region, adjusted for population size and similar measures. Clearly, if Russia is to grow it must increase the level of FDI inflows, which is why a good deal of policy attention has focused on the problem. Equally important for achieving sustainable growth in such a large, heterogeneous economy is learning how to make the spatial distribution of FDI within Russia more even. Inflows are strikingly skewed. Close to 60 percent of FDI goes to four regions in the western part of the country - Moscow City, Moscow oblast, St. Petersburg, and Leningrad oblast - which account for only 22 percent of Russia's gross national product and only 13 percent of Russia's population. Only two of the other 85 regions account for more than 2.5 percent of the country's FDI and most account for much less. Surprisingly, neither policymakers nor observers and analysts have paid much attention to diagnosing the reason for this imbalance in FDI's distribution. Broadman and Recanatini try to empirically unbundle the determinants of FDI's regional distribution within Russia. They find that factors associated with market size, infrastructure development, and the policy environment seem to explain much of the observed variation in FDI flows to regions in Russia. Moreover, the explanatory power of the model that best explains cross-regional variation in FDI flows from 1995 to 1998 changes significantly after the 1998 default and ruble devaluation - suggesting the possibility of a "structural change" in the determinants of FDI after the 1998 crisis. This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region - is part of a larger effort in the region to study structural reforms in the Russian Federation.

This volume identifies and analyses the extent to which Russia and the other Soviet successor states are likely to attract inward foreign direct investment (FDI) to the turn of the century and beyond. Although these countries have been growing recipients of FDI, Western multinationals remain cautious, and have to date been slow to commit large investment sums. The book binds together the current theoretical knowledge of foreign capital and technology transfers to Eastern Europe with a close examination of the investment strategy of multinationals in six successor states, namely the Russian Federation, Ukraine, Kazakhstan, Estonia, Latvia and Lithuania. The book assembles a group of internationally respected contributors, who have made a distinct contribution to our understanding of multinationals operating in the area.

Russia's post-reform crisis can be alleviated. The country has the market, the abundant natural resources and the human skills that foreign investors seek. What it needs is policies that enhance FDI inflows. Policy-makers can learn from the other large emerging markets like China, India, and Mexico, where FDI has revitalized the economy.

Before the recent Ukrainian crisis, Russia was one of the main sources of foreign direct investment (FDI) outflow and one of the main targets of FDI inflow in the world. However, the events in the Ukraine, the formation of the Eurasian Economic Union, and China’s growing interest in the Russian market and its natural resources have changed the picture completely. This new book brings together an international group of contributors to present a timely and comprehensive analysis of FDI to and from Russia. The book assesses the impact of the changed international political situation on foreign firms operating in Russia, and explores how the new world context has affected Russian investments abroad. The book also considers the future relationship between Russian corporations and the EU and the USA in light of recent events. This book answers an array of key questions including: how have investments from and to Russia developed in the last 100 years; how are Russian businesses spreading to foreign countries through their indirect investments; and how is the Russian Government influencing the investments of Russian businesses abroad? This volume is of great interest to those who study international economics, modern world economy, and FDI, as well as those interested in international investment movements and the changing role of Russia in international business and the global economy.