Japanese Investment in Russia: Far Eastern and Western Russian Regions Compared

Abstract

The investment relationship between Japan and Russia has been rapidly expanding over the recent couple of decades. The intensive expansion began with the Sakhalin projects, and then was followed by the subsequent establishment of production facilities by Japanese companies in manufacturing industries in Russia, Today, investment cooperation has reached a new developmental stage, which reveals not only quantitative, but also qualitative changes in the pattern of FDI flows, especially in terms of structure and technology.

This paper addresses the aspect of regional differences in the approach of Japanese investors toward projects in Russia. A comparison of the major macro-regions which attract Japanese investment (Far-Eastern and Western regions, including Central and North-Western Federal Districts) allows us to reveal critical differences in industrial distribution that reflect the specifics of the economic development and investment climate of these territories. However, the Western and Eastern parts of Russia complement each other in terms of their investment attraction, and contribute to the development of a multifaceted and diversified framework for investment cooperation between Russia and Japan.

Keywords: Russia-Japan investment relations, investment projects, regions, Russian Far East

JEL Classification: F21