2010 Reports

Inward FDI in Russia and its policy context

Kuznetsov, Alexey

In the 2000s, Russia became a significant host for inward foreign direct investment (IFDI). But its investment climate problems, especially corruption, do not allow Russia to exploit its locational advantages to the full. Russia attracts mainly European investors in a rather narrow range of industries (although the share of mining is decreasing) and regions (mainly in Moscow, St. Petersburg and oil-rich Sakhalin). However, even during the crisis, a new industrial cluster has developed near Kaluga and some large mergers and acquisitions (M&As) and greenfield projects have been realized outside the Central and North-West federal districts. Russia is trying to diversify the structure and geography of IFDI using incentives (e.g. in special economic zones).