EPRS Admin By / February 17, 2022

Foreign direct investment in Russia

Foreign direct investment in Russia
(FDI stocks, US$ million)

Foreign direct investment in Russia (FDI stocks, US$ million)

In November 2019, Vladimir Putin claimed that sanctions had made Russia more self-reliant. In addition, import substitution benefits Russian manufacturers by shielding them from foreign competition. However, according to former European trade commissioner and WTO head Pascal Lamy, Russia’s protectionist measures risk driving up consumer prices and reducing the efficiency of the economy. So far, the results have been mixed; while agrifood producers have benefited, other sectors still struggle to produce goods of adequate quality that can compete on domestic or international markets. Inflation is relatively high (8 % in 2021, up from 3.4 % the previous year) but this has more to do with factors such as rouble devaluation and rising global prices.
Since 2014, increased protectionism and restricted access to Western finance, both of which result from sanctions, have partially reversed the previous trend towards integration into the global economy. While greater self-sufficiency may boost resilience to external threats such as sanctions, it also makes it harder for Russia to benefit from positive global trends. Cumulative GDP growth for the global economy during the six years period from 2014 to 2019 was nearly 20 %, whereas Russia’s economy only expanded by 6 % during the same period.

Related Articles

Be the first to write a comment.

Leave a Reply