How to Explain the Foreign Expansion of Russian Firms

Abstract

This article explores the main features of outward foreign direct investment by Russian corporations and some of the implications of their recent rise to global prominence for the theories of international investment. Surprisingly, lower middle-income Russia is a net capital exporter, and some of its firms, such as Gazprom, Lukoil, Norilsk Nickel, and Severstal, have already leapfrogged to a global status. This article also aims to identify issues for further analysis, such as the growing role of the state in controlling natural resource-based firms and its implications for the future of the Russian multinationals. It suggests that different investment theories fare divergently in trying to explain Russian outward foreign direct investment. For example, the eclectic paradigm could be applied to Russian multinationals with its extension to home-country factors. Other theories, however, would require more radical rethinking in future research.

Keywords: Russia, multinational, outward foreign direct investment, natural resources

JEL Classification: F23, F21, L71, O52, Q34