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Front Matter |
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Abstract
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Introduction: Background and Rationale of the Study |
Paul Fischer |
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Abstract
The 1990s will be remembered as crucial years in the history of Russia and the world. They mark the first decade of peaceful coexistence between East and West after being separated by the Iron Curtain for almost one century. Following the events of 1990–91 which brought about German reunification, the opening of central European economies and, almost concomitantly, the demise of the Soviet Union and its communist regime, Russia has emerged as the central player of the newly formed Commonwealth of Independent States (CIS).
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Overview of Main FDI Theories |
Paul Fischer |
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In the nineteenth century, classical economic theories (e.g. those of Adam Smith, David Ricardo) regarded international trade as a motor of economic internationalization and integration. Internationalization through trade was considered an essential catalyst for generating domestic wealth, especially when a country sought specialization in those economic activities where it had comparative advantages. Private companies had become the principal economic agents of the capitalist system in place, and leading scholars in countries with open economies like England favoured deregulation and liberalization in all possible spheres of economic life so that trade relations could be expanded with other countries. Unlike the ‘interventionists’ in France, the liberal ‘free traders’ in England and the United States emphasized the importance of a ‘natural order of things’ pushing for a lean State that would interfere as little as possible in the ‘invisible’ hand of the market, which would always find its own equilibrium.
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Determinants of Global FDI |
Paul Fischer |
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Foreign investment is conditioned by the global context of economic and technological change and overall industrial competitiveness of countries and their industries. The prevailing macroeconomic (e.g. per capita income, growth rates, inflation, currency exchange rate, industrial output, trade surplus, balance of payments situation) and microeconomic conditions (e.g. competitive position and financial strength of local enterprises, sectoral conditions and concentration rates, corporate strategies) that determine volume and pattern of FDI flows can in turn be transformed by these flows.
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Global FDI Trends |
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TNCs as Global Investors |
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FDI Policies and Prospects in China |
Paul Fischer |
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China provides one of the most striking examples of economic recovery through targeted FDI. It illustrates how a large emerging economy can be steered to a high-growth course by sound macroeconomic management coupled with a long-term FDI policy. A closer analysis of Chinese FDI patterns and policies over the past 15 years shows a strong correlation between the country’s high economic performance and appropriate instruments and incentives to systematically attract TNCs. FDI-induced industrial modernization and enterprise competitiveness were achieved through farsighted policy measures which helped increase locational advantages and the effective use of available resources.
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FDI Policies and Prospects in India |
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FDI Policies and Prospects in Mexico |
Paul Fischer |
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Mexico, whose population will reach 100 million by the year 2000, is by far the most populated Spanish-speaking country in the world. In the Americas, it ranks third after the United States (270 million) and Brazil (160 million). Its total land area (almost 2 million sq. km) is the fourth largest after the United States, Brazil and Argentina. Mexico shares a common border of about 3100 km with the United States, its largest trading and investment partner, and its geographic proximity to the United States, the world’s leading economy, is Mexico’s most important location-specific asset for attracting inward FDI.
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Russia’s Economic and Industrial Performance during Transition |
Paul Fischer |
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Breaking away from communism, Russia has opted for a new economic system based on private enterprise, entrepreneurship and free trade. After decades of isolation, ideological barriers have been removed so that the country now has a unique opportunity to raise living standards and to improve employment conditions by linking up domestic industrial capacity to developments in international markets.
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Salient Features of FDI in Russia |
Paul Fischer |
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The foundation of Russia’s industry was laid by Peter the Great, who invited western partners to transfer the required technology for setting up the first manufacturing units in Petersburg, Novgorod and Yaroslavl. The Romanov tsars who succeeded him continued these efforts, convinced that cultural, financial and know-how exchange with the other European nations could only benefit Russia. During 1895–1914, inflows of foreign capital into Russia were as high as 55–60 per cent of domestic investment,’ whereas today FDI equals only 1–2 per cent of domestic investment.’ The main investing nations were Germany (28 per cent of FDI in 1913), France (19 per cent), the United Kingdom (17 per cent) and Belgium (11 per cent) (Figure 9.1). In those days companies from western Europe predominated;.for the United States, Russia was toofar away as a destination country (1 per cent of FDI).
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Strategic State Guidance for FDI |
Paul Fischer |
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An advanced economy is characterized by rising productivity at home and relocation of specific production processes to countries with better factor conditions through FDI and global sourcing. Burdened by the total collapse of domestic production and the replacement of domestic products by imports, the Russian economy is still very far from this stage.
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Russia and its Competitor LEMs |
Paul Fischer |
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As an emerging market, Russia faces direct competition from a number of neighbouring countries that offer higher levels of economic and political stability (transition economies of Central and Eastern Europe) or from those representing an equally significant market potential (other LEMs). This chapter will compare FDI patterns in Russia and major LEM competitor economies.
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The Competitiveness of Russian Industry at the Threshold of the Twenty-first Century |
Paul Fischer |
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This chapter attempts to provide conceptual guidelines for studying and monitoring sector developments in Russia. The conceptual framework is based on statistical indicators and trend analyses of the main industries described earlier;. it will need to be expanded and constantly updated to take into account the dynamic changes in Russia’s industrial sector.
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FDI Sourcing Potential in the World’s Leading Economies |
Paul Fischer |
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To rebuild its industries, Russia will have to increase foreign investments from the current level and it will need to source FDI from the EU, North America and the leading Asian economies.. A good understanding of the industry structure in these countries will enable it to identify suitable cornpanies and to approach them systematically. Together with continuous benchrnarking with the major competitor LEM economies. and monitoring of Russia’s own industrial assets,. the observation of macroeconomic and industrial developments in the world’s most advanced nations is essential for formulating and implementing an effective FDI strategy. Gradually, the overall technology sourcing potential will thus become more transparent enabling Russia’s FDI authorities to attract appropriate players.
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