Outward FDI from Russia and its Policy Context, Update 2011

Abstract

Russian outward foreign direct investment (OFDI) increased rapidly in the 2000s. The global economic crisis caused some structural shifts in Russian companies’ expansion abroad: for example, several Russian multinational enterprises (MNEs) lost a major part of their foreign assets. However, Russia remained among the top 15 countries ranked by OFDI stock. Leading Russian MNEs, especially LUKOIL and Gazprom, continued their extensive OFDI activities in 2008–2010. The main features of Russian OFDI have not changed. Roundtripping investments and OFDI in real estate are still extremely high as a proportion of the total. Large private MNEs with low transparency combine classic OFDI motives with the Russian oligarchs’ desire for “capital flight” and the creation of “safety nests” abroad. Mergers and acquisitions (M&As) are more popular than greenfield OFDI among Russian MNEs, although they rarely strengthen Russian firms’ competitiveness. State-controlled MNEs are assumed to have ties to Russian foreign policy. At the same time, Russian state support is weak for small and medium-sized investors who need information services and insurance schemes.

Keywords: Russian transnational corporations, foreign direct investment, Russian investment projects abroad, ranking of Russian multinationals

JEL Classification: F23, F21