Abstract:
During the last decade foreign companies consider Russia to be attractive country for direct investment allocation. This research aims to find out factors that influence foreign companies’ activity in Russian regions. We use the age of the company as the instrumental variable to solve endogeneity problem. Using database for companies with FDI in Russia over the period from 1999 to 2008, we find out, firstly, the market size and infrastructure are major factors for FDI allocation; secondly, wages in the region are positively correlated with foreign companies’ revenues; thirdly, the presence of specialization industry in the region leads to increase of foreign companies’ revenue in this region. International trade quota has turned out to be insignificant for companies with FDI in Russia.
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