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

Ichiro Iwasaki and Keiko Suganuma

No 44, RRC Working Paper Series from Russian Research Center, Institute of Economic Research, Hitotsubashi University

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.

Keywords: foreign direct investment (FDI); regional economic development; total factor productivity; R&D potential; absorptive capacity hypothesis; Russia (search for similar items in EconPapers)
JEL-codes: F21 O11 P25 P33 R11 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2015-04
New Economics Papers: this item is included in nep-cis, nep-cse, nep-geo, nep-ino, nep-sbm and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

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Journal Article: Foreign direct investment and regional economic development in Russia: an econometric assessment (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:rrcwps:44

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