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Economic Change and Restructuring

, Volume 48, Issue 3–4, pp 209–255 | Cite as

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

  • Ichiro IwasakiEmail author
  • Keiko Suganuma
Article

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 

JEL Classification

F21 O11 P25 P33 R11 

Notes

Acknowledgments

This research was financially supported by Grant-in-Aids for scientific research from the Ministry of Education and Sciences of Japan (Nos. 23243032; 26245034) and the College of Bioresource Sciences of Nihon University. We thank George Hondroyiannis (the editor), Masahiro Tokunaga, and two anonymous referees of the journal, as well as participants in the 54th National Congress of the Japanese Association for Comparative Economic Studies at Yamaguchi University, Yamaguchi, June 7–8, 2014, and the 13th EACES (European Association of Comparative Economic Studies) biennial conference at Corvinus University of Budapest, September 4–6, 2014, for their helpful comments and suggestions. We also would like to thank Tammy Bicket and Shigeo Yamazaki for their editorial assistance. Needless to say, all remaining errors are solely our responsibility.

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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.Institute of Economic ResearchHitotsubashi UniversityKunitachi CityJapan
  2. 2.College of Bioresource SciencesNihon UniversityFujisawaJapan

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