Investment and Cross-Border Cooperation in the East of Russia
I.P. Glazyrina1,2, L.M. Faleychik1, A.A. Faleychik2
1Institute of Natural Resources, Ecology and Cryology, Siberian Branch of the Russian Academy of Sciences, Chita, Russia
2Transbaikal State University, Chita, Russia
Keywords: institutional transformation, cross-border cooperation, foreign direct investment, economic diversification
Abstract
This article may be viewed as another chapter in an ongoing discussion among researchers about the role of the Far Eastern institutional transformation after 2013 in Eastern Russia’s development against the background of cross-border economic relationships. We consider the dynamics off oreign direct investment (FDI), including that for the major industries. Our calculations show no correlation between FDI volumes and economic growth rates in the eastern regions of Russia. During the period under review, FDI-based cross-border cooperation had little effect on economic diversification in the eastern regions. In most, the majority of investment was allocated to the mineral resources sector. Since 2015, the FDI share in manufacturing, agriculture, construction, trade, hotels and restaurants, and the entertainment industry has generally been no more than 1% of the national total in the relevant sectors. There is no reason to believe that by now, FDI, stimulated by the creation of new institutions in the Far East, has contributed significantly to a modern high-tech economy in Eastern Russia. The “Far Eastern ” institutional transformation has not changed the “extractive ” nature of economic (and political) institutions. Economic preferences for the Russian East help attract investment, to some extent, but mainly if supported by the federal budget and state guarantees. We believe that the gradual transformation of institutions toward their “inclusiveness” is becoming a primary task. Institutional design in the eastern regions requires, besides political will, active involvement of the scientific community.
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