BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Foreign direct investment and economic growth: Empirical evidence from Russian regions
() and Mikael Linden
Abstract: Barro and Sala-I-Martin empirical framework of
neoclassical Solow-Swan model is specified to determine the FDI impact on
per capita growth in 74 Russian regions during period of 1996-2003. The
Arellano-Bond GMM-DIFF methodology, developed for dynamic panel data
models, is used in estimations. Results imply that in general FDI (or
related investment components) do not contribute significantly to economic
growth in Russia in the analyzed period. Regional growth in 1996-2003 is
explained by the initial level of region’s economic development, the 1998
financial crisis, domestic investments, and exports. However some evidence
of positive aggregate FDI effects in higher-income regions is relevant.
Another interesting result is that natural resource availability seems to
be growth-inducing in rich regions, while in poor regions it is not
significant. We also found convergence between poor and rich regions in
Russia. However FDI seems not to play any significant role in the recent
growth convergence process among Russian regions.
Keywords: foreign direct investment (FDI); Russian regional economy; and economic growth; (follow links to similar papers)
JEL-Codes: E22; F21; P27; (follow links to similar papers)
38 pages, December 14, 2006
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