Analysing Transition Process of Russia: Foreign Direct Investment Distribution across Regions

• Název v anglickém jazyce: Analysing Transition Process of Russia: ; Foreign Direct Investment Distribution across Regions
• Klíčová slova anglicky: Foreign Direct Investments, FDI distribution, regional development, investment climate, transition economy
• Akademický rok vypsání: 2013/2014
• Typ práce: bakalářská práce
• Jazyk práce: angličtina
• Ústav: Institut ekonomických studií (23-IES)
• Vedoucí / školitel: Mgr. Nargiza Alimukhamedova, Ph.D.
• Řešitel: skrytý - zadáno vedoucím/školitelem
• Datum přihlášení: 12.03.2014
• Datum zadání: 12.03.2014
• Datum a čas obhajoby: 15.06.2016 08:00
• Místo konání obhajoby: IES, m 206
• Datum odevzdání elektronické podoby: 11.05.2016
• Datum proběhlé obhajoby: 15.06.2016
• Oponenti: doc. PhDr. Julie Chytilová, Ph.D.

Seznam odborné literatury

Bibliography:
1. 2013 KPMG Advisory N.V, «Investing in Russia. An overview of the current investment climate in Russia»
2. Paul Fischer (2000), «Foreign Direct Investment in Russia: A Strategy for Industrial Recovery»
3. Svetlana Ledyaeva, Mikael Linden (2006), «Testing for Foreign Direct Investment. Gravity Model for Russian Regions»
4. Joel Bergsman, Harry G. Broadman, Vladimir Drebentsov (1999) «Improving Russia’s Policy on Foreign Direct Investment»
5. Roland Doehrn, Natalja v. Westernhagen (2003), «Real and Financial Economic Dynamics in Russia and Eastern Europe», Springer Berlin Heidelberg, pp 251-276

Předběžná náplň práce v anglickém jazyce

Outline:
1. Introduction
2. Role and Importance of FDI in economy
2.1Basic information about FDI (definition, types, methods)
3. FDI in Russia:
3.1. Structure of FDI in economy in Russia (types, methods, volume)
3.2. Main investors (countries, purposes, reasons)
3.2. Socio-Economic impact of FDI in Russia: Positive and Negative effects
4. Primary and secondary data on FDI in Russia
5. Methodology
6. Results on economic impact of FDI in Russia
7. Implications of results, policy relevance
8. Conclusions

Background Information and Motivation:
The role of inward Foreign Direct Investment (FDI) in the development of the country is very crucial. FDI has innumerable effects on the host country’s economy. It influences the income, production, prices, employment, economic growth, development and general welfare of the recipient country. FDI are the most significant channels for the dissemination of modern technology. Therefore FDI plays a key role in development of emerging economy because the very essence of economic development is the rapid and efficient transfer. In last two-three decades world has experienced a massive change in terms of geopolitics, economics and in organization and distribution of production. For several reasons, emerging economy of Russia have acquired important role in the world economy as the source of natural resources, technology, a large skilled workforce, and a huge consumer market.
Following the collapse of the Soviet Union, Russia opened its doors to FDI.
During the 1990s the amount of FDI flowing into Russia remained fairly flat due to poorly orchestrated privatizations and the lack of secure property rights.
After 2005, FDI inflows grew exponentially, due to investments in newly liberalized sectors such as the power generative industries, the automotive and real estate sectors.
Since the sharp drop in 2009 due to the financial crisis, FDI has recovered partially. Foreign investors remain motivated by the continued strong growth of the consumer market and affordable labor costs, coupled with productivity gains. They also continue to be attracted by high returns in energy and other natural-resource related projects.
Nowadays Russia seems attractive for investors. There are several key advantages of investing in Russia, such as:
1. Large consumer market;
With a population of over 140 million people and constantly increasing income per capita, Russia provides a large and booming internal market offering attractive growth potential. Strong internal demand for all kinds of goods and services and insufficient supply from local sources create a gap that is largely covered by imports.
2. Highly skilled and well-educated human capital;
Russia has one of the most highly skilled workforces in the world. Excellent educational background, extensive R&D and engineering practice allows Russian professionals to take up leading positions in high technology areas.
3. Vast natural resources;
Russia takes 1st place in the world in per capita resources. It is well placed amongst the richest countries in terms of natural gas, oil, coal, minerals, metals and energy. With its forest resources being the largest in the world, Russia also has tremendous reserves of drinking and fresh water.
4. Unique geographic position;
Russia links Europe with Asia and also borders the North American continent. It offers worldwide sea and air transportation as well as the developed networks of rail and road transit routes. Russia’s geography facilitates building effective international and domestic supply-production-market chains.
5. Fast growing and technologically advanced economy;
Russia’s economy is one of the most dynamically developing and attractive in the world. Strong Russian scientific knowledge provides excellent opportunities for research and development partnerships with Russian research institutes and universities. Critical technological areas eligible for government co-financing on a competitive basis are Aerospace, Aviation, Shipbuilding, Automotive, Machinery, Metallurgy, Construction, Chemistry and pharmaceuticals, Nuclear physics and many more.
6. Attractive taxation system;
The Russian Tax system is becoming increasingly oriented toward the investor. Comprehensible tax rates and the policy of resolving contradictions and ambiguities in tax legislation in favor of the taxpayer testify in favor of this fact.
7. Extensive government support;
Investment in the Russian economy is strongly supported by federal and regional authorities. Such federal initiatives as the Investment Fund, Foreign Investment Advisory Council and Special Economic Zones as well as public-private partnership opportunities and large investment and development programs serve to accelerate the investment inflow and to further enhance the Russian investment climate.
8. Stable social and political system.
Russia is a member of G8, the United Nations, APEC, SCO, and the CIS. It has built a politically stable system with respectful and fair foreign relations policy. The Russian government aims to steadily improve the citizen’s quality of life.
Moreover, one of the most attractive reasons is low level of FDI, which makes weak competition.
Russia is the world's largest country in terms of territory, with a consumer market of over 140 million people, vast natural resources, a highly educated workforce, and technologically advanced research and production capabilities. Russia has tremendous growth potential. Investment opportunities exist in every region and in every sector of Russia's economy, with a wide array of government institutions, instruments and investment programs, as well as strong support for investors at all levels — federal, regional and municipal.

Hypotheses:
1. FDI inflows to Russia have increased substantially in the past decade.
2. FDI remains concentrated in resource rich regions and in cities that provide access to the consumer market.
3. Russia’s accession to the WTO has a positive impact on the investment climate. Also the business climate will improve by making it more competitive.

Methodology:
The study will have a qualitative research method which consists of an investigation that collects evidence; provides insights into the setting of a problem, generating ideas and hypotheses for later research; uncovers prevalent trends in thought and opinion.
The first part will consist of a descriptive research. We will analyze the evolution of increasing FDI inflows to Russia. This period will start from the breakdown of Soviet block and cover the transition process in the country.
The second part will be focused on studying the final role of inward Foreign Direct Investment in the development of the country using secondary data.