BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 15/2007:
Spatial econometric analysis of determinants and strategies of FDI in Russian regions in pre- and post-1998 financial crisis periods
Svetlana Ledyaeva ()
Abstract: Using a spatial autoregressive model of cross-sectional
and panel data, we study the determinants and dominant strategies of FDI
inflows into Russia before and after the 1998 financial crisis. The
important determinants of FDI inflows into Russian regions since transition
began appear to be market size, the presence of large cities and sea ports,
oil and gas availability, and political and legislative risks. Since 1998,
it appears the importance of big cities, the Sakhalin region, oil and gas
resources and legislation risk has increased, while the importance of
political risk and port availability has decreased. Our results also reveal
a shift from horizontal FDI strategy to a regional trade-platform FDI
strategy. While theory anticipates combined vertical and horizontal motives
for regional trade-platform strategies, the lack of evidence of a vertical
motive in the Russian case suggests import substitution presently plays a
significant role in regional trade-platform FDI. Using a multiple spatial
lags approach, we show that neighbouring regions with ports have emerged
post-crisis as competitors for FDI and identify agglomeration effects in
FDI between adjacent regions with and without ports during the period
1999-2002.
Keywords: Foreign Direct Investment; Russian regions; FDI strategy; spatial autoregressive model; (follow links to similar papers)
JEL-Codes: C21; E22; F21; (follow links to similar papers)
61 pages, July 24, 2007
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