Foreign Direct Investment into Russia - Pain Without Gain? A Survey of Foreign Direct Investors

11 Pages Posted: 2 Dec 2004

See all articles by Rudiger Ahrend

Rudiger Ahrend

Centre for Entrepreneurship, SMEs, Regions and Cities

Date Written: May 2000

Abstract

Foreign Direct Investment into Russia has been low in comparison to other transition economies. We surveyed almost 50 European enterprises that conduct business in Russia and asked about the reasons behind their presence here and about the main problems they have encountered.

Our survey shows that the most pressing problem foreign direct investors in Russia face is connected neither with criminality, nor corruption, but simply an inadequate and ever changing tax law. Next in line come problems with property and creditor rights, customs, the risk of political change, macroeconomic instability, a weak banking sector, the Russian accounting system, and only then corruption. The risk of expropriation, harassment from federal and local government, and payment arrears from clients are considered to be of only medium-level importance. Finally, problems with the Russian workforce or management, Russian suppliers, crime, racket and barter are seen as being of moderate significance.

Keywords: Russia, transition, FDI, foreign direct investment

JEL Classification: F21, P2

Suggested Citation

Ahrend, Rudiger, Foreign Direct Investment into Russia - Pain Without Gain? A Survey of Foreign Direct Investors (May 2000). Available at SSRN: https://ssrn.com/abstract=620122 or http://dx.doi.org/10.2139/ssrn.620122

Rudiger Ahrend (Contact Author)

Centre for Entrepreneurship, SMEs, Regions and Cities ( email )

2 rue Andre Pascal
Paris, 75016
France
75016 (Fax)

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