Foreign Direct Investments in Russian Provinces Under Economic Sanctions

Abstract

The article examines the impact of economic sanctions limiting the access of foreign enterprises to the Russian economy (introduced both by other states and Moscow itself) on the performance of foreign direct investment in Russia, including changes in their structure. While most of the previous studies on this matter focus on national level, the current article is devoted to the changes across different regions of the country. In the foreign direct investment structure by country the reduction in the share of "pure" offshore is identified, in the territorial structure – the increasing role of regions in the South of European Russia and the Far East. Meanwhile, some traditional recipients of FDI witness a decrease in new investments from abroad. Although, much of the foreign direct investments are still concentrated in the national capital, there is an ongoing trend towards allocating investments to neighboring regions to offset high production costs in Moscow and St. Petersburg. Such changes are positive and are strengthened by the effects of other factors, including the federal regional policy measures. Special attention is paid to the analysis of Turkish investments in Russian regions, patterns and factors of their allocation. It is shown that there is a low volume of Turkish investments and a small number of well­known enterprises of the real sector of the economy. The problems of Russian statistics of foreign direct investment and the importance of studying the geography of raw materials and components suppliers to enterprises with foreign capital participation are raised.