The Effect of Foreign Direct Investment on Economic Growth in Emerging Markets: Econometric Evidence from Russia

This paper focuses on econometric modelling of a particular class of assets since it examines the influence of Foreign Direct Investment (FDI) on the economic growth of emerging markets, with a specific focus on Russia. Covering the period from 2000 to 2020 and utilizing quarterly time series data, the study provides an empirical analysis of the role played by FDI inflows in the Russian economy. Contrary to the general belief that FDI contributes to technological advancement and development in the host country, the findings of this research suggest a unique scenario in Russia. The paper reveals that FDI inflow in Russia possesses an endogenous component, which, contrary to expectations, does not exert a significant impact on the country’s economic growth. This insight challenges conventional views on the role of FDI in transition economies and specifically highlights the nuances of the Russian economic landscape. This multivariate econometric model contributes to the broader understanding of FDI effects in transitional economies, particularly in the context of post-Soviet economic dynamics.