Cross-Border Cooperation in the East of Russia: Foreign Direct Investment

Abstract: The article studies the dynamics and structure of foreign direct investment (FDI) to Russia’s Eastern regions, taking into account the COVID-related economic shocks of 2020–2021. The problem is posed to understand what the FDI dynamics were since 2014–2015 and their spatial and sectoral distribution, whether anything changed during the COVID period, and also what FDI “baggage” the eastern territories were carrying going into 2022. Accumulated FDI in the form of equity participation over the reviewed period increased throughout the country as a whole, and in the Far East, at a faster rate. In Siberia, their share decreased, mainly due to as capital was withdrawn from resource projects. The sectoral structure of FDI in Russia changed after 2014: the share of FDI increased by more than 1.5 times in the raw materials sectors and decreased almost threefold in the manufacturing industry. The decline in FDI in the manufacturing industry in the East during and immediately after the pandemic was significantly less, and by 2022 its volume increased by 70% compared to 2015. The pandemic shock to FDI did not reach a critical level in Russia as a whole, but the eastern regions experienced it to a much lesser extent. By 2022, FDI volumes had recovered in almost all sectors compared to 2015, and in some sectors, they had significantly exceeded this level. Comparison of the trade turnover dynamics with Asia-Pacific countries led to the conclusion that the high demand for goods and resources that generates export–import flows between Russia and these countries is poorly “converted” into productive cooperation in the form of FDI. It is advisable to take this into account when developing an international economic cooperation policy following the 2022 sanctions. © Pleiades Publishing, Ltd. 2023. ISSN 2079-9705, Regional Research of Russia, 2023, Vol. 13, Suppl. 1, pp. S98–S106. Pleiades Publishing, Ltd., 2023. Russian Text The Author(s), 2023, published in Region: Ekonomika i Sotsiologiya, 2023, No. 2 (118), pp. 243–263.