Russian FDI in Central and Eastern European Countries: Opportunities and Threats

IWE Working Paper No. 168

44 Pages Posted: 13 Sep 2016

See all articles by Csaba Weiner

Csaba Weiner

Hungarian Academy of Sciences (HAS) - Institute of World Economics

Date Written: April 2006


Russian outward foreign direct investment (OFDI) has been showing a very promising performance in recent years. The Central and Eastern European (CEE) countries have become a key destination, but this is often viewed with suspicion by host countries.

The paper begins with the quantity and geographical distribution of Russian capital investment, pointing to differences between estimates and official OFDI data reported on a balance-of-payments basis by the Central Bank of Russia, which are frequently revised. In some years, OFDI has exceeded the FDI inflows into Russia, which is very unusual for an ex-communist transformation country. It is also paradoxical that FDI from relatively poor and less developed Russia should be supporting the economies of relatively more developed countries. When the destinations are examined, it emerges that some of the FDI is round-tripping and trans-shipping, as a significant proportion of the investment is conducted indirectly, through third economies.

The paper investigates the companies behind the transactions and their various motives for expanding abroad. The bulk of the OFDI has been coming from natural resource-based companies, Russia’s largest exporters, earning well from high world market prices for energy sources and raw materials. Having presented the Russian FDI position in the CEE region through the statistics of the host countries, the paper sets out to describe the main Russian-origin investments and trends in selected CEE countries. Special attention is paid to the strategic investments in the gas and oil industries and the alarming dependence on Russian natural gas and crude oil. It is stressed that Russian FDI is managed by mature strategies.

The paper also looks at the usually negative attitude taken in ex-socialist CEE countries to companies with Russian capital. The reasons for resistance include memories of earlier Soviet policies, fear of losing control over the commanding heights of the economy, and so-called oil and gas diplomacy, as well as cultural, productivity and efficiency issues. Five case studies are cited to shed light on the probable acquisition methods.

Finally, attention is turned to the prospects for Russian FDI in the CEE countries and to some actual privatization opportunities.

Keywords: Foreign Direct Investment, Multinational Enterprises, Transnational Corporations, Central and Eastern Europe, Russia

JEL Classification: D22, F23, M16, O52

Suggested Citation

Weiner, Csaba, Russian FDI in Central and Eastern European Countries: Opportunities and Threats (April 2006). IWE Working Paper No. 168, Available at SSRN: or

Csaba Weiner (Contact Author)

Hungarian Academy of Sciences (HAS) - Institute of World Economics ( email )

Tóth Kálmán utca 4
Budapest, 1097

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
PlumX Metrics