Does Russia Overcome the Processes of Capital Flight Economy?

International Journal of Management, 11 (5), 2020, pp. 160-169

10 Pages Posted: 10 Jul 2020

See all articles by Viacheslav A. Andreev

Viacheslav A. Andreev

Associate Professor, Department of Economics and Management, Vladivostok State University of Economic and Service, Vladivostok, Gogolya, 41, the Russian Federation.

Tat’ayna V. Varkulevich

PhD in Economic Sciences, Head of the Department of Economics and Management, Vladivostok State University of Economic and Service, Vladivostok, Gogolya, 41, the Russian Federation.

Ekaterina V. Sultanova

PhD in Social Sciences, Associate Professor at the Department of Economics and Management, Vladivostok State University of Economic and Service, Vladivostok, Gogolya, 41, the Russian Federation.

Date Written: 2020

Abstract

The purpose of study is to assess an impact of the capital flight on the Russian economy and to identify the factors, which stipulate returning the capital to the Russian Federation. Analysis shows, in 2019 the share of public external debt denominated in the national currency was continuing to increase. External debt of the private sector has changed slightly, that is probably due to a pressure of sanctions against Russian companies, which impose a restriction of access to affordable sources of capital. Presumably that if the sanctions’ pressure continues, this may stipulate a precondition for repatriation of capital. Made a prognosis that by 2025, capital flows from the offshore zone in Cyprus may reach 165.55 billion USD. Therefore, it might assist Russia’s attempts to overcome the ongoing process of “flight of capital” and turning it to an economic model based on effect of “capital repatriation”. However, in the current situation, when evidently there is a stagnation in the economy, along the risks, it is quite difficult to find appropriate sectors for large-scale investments. Low consuming due to the low personal incomes remains a constraint factor. Therefore, we should not expect a mass influx of investments from the foreign off-shores. Moreover, there is a redistribution of the Russian capital among other off-shores, so a huge outflow from the Cyprus offshore will not have a serious impact on the Russian economy and financial market in a long-term view.

Keywords: capital flight, economic development, capital repatriation, sanctions

Suggested Citation

A. Andreev, Viacheslav and V. Varkulevich, Tat’ayna and V. Sultanova, Ekaterina, Does Russia Overcome the Processes of Capital Flight Economy? (2020). International Journal of Management, 11 (5), 2020, pp. 160-169, Available at SSRN: https://ssrn.com/abstract=3629012

Viacheslav A. Andreev (Contact Author)

Associate Professor, Department of Economics and Management, Vladivostok State University of Economic and Service, Vladivostok, Gogolya, 41, the Russian Federation. ( email )

41 Gogolya str
Vladivostok, Primorsky Krai 690014
Russia

Tat’ayna V. Varkulevich

PhD in Economic Sciences, Head of the Department of Economics and Management, Vladivostok State University of Economic and Service, Vladivostok, Gogolya, 41, the Russian Federation. ( email )

41 Gogolya str
Vladivostok, Primorsky Krai 690014
Russia

Ekaterina V. Sultanova

PhD in Social Sciences, Associate Professor at the Department of Economics and Management, Vladivostok State University of Economic and Service, Vladivostok, Gogolya, 41, the Russian Federation. ( email )

41 Gogolya str
Vladivostok, Primorsky Krai 690014
Russia

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