FDI and Long-Term Economic Growth in Russia
30 Pages Posted: 24 Apr 2014
Date Written: April 23, 2014
Abstract
In this paper we consider relationship between foreign direct investment (as one of the mechanisms of technological development) and long-term economic growth. In the beginning we discuss the role of FDI in the increase of total factor productivity from the viewpoint of endogenous growth theory. We then turn to the comparative analysis of FDI inflow to Russia and other countries broken down by economic industries. We find that Russian industries capable of increasing TFP and positively impacting the long-term economic growth are significantly underinvested relative to other countries. Since, in our opinion, pre-existing sources of Russia’s economic growth are almost completely exhausted, we suggest several economic policy measures aimed at attracting FDI in Russia and improve the absorptive capacity of the country.
Keywords: FDI, TFP, economic growth, human capital, economic policy
JEL Classification: E66, F21, O15, O43
Suggested Citation: Suggested Citation