The paper is devoted to the empirical estimation of the effects of foreign direct investment (FDI) on domestic investment in the Russian economy. The results suggest that there are crowding-out effects of FDI on the Russian economy. Using the firm-level database for 2008—2017, we analyze the presence of foreign companies in the Russian economy on the region, industry and industry in region levels. On the regional level the statistically significant effects of crowding out domestic investment are identified for state-owned, large as well as less effective companies. On the industry level the negative effects of crowding out are observed in case when FDI share in the industry exceeds 25. Estimating the effect of FDI presence on the industry in the region level, we reveal crowding out effects mainly for private and more effective national companies. Analyzing the effects in case of different levels of FDI in the economy, we do not find support for the hypothesis of adaptation of national companies for foreign companies’ presence in the economy. The paper suggests that the government policy in FDI regulation should focus on mitigation of the effects of pushing national companies off the market, and also creating conditions for cooperation of foreign and domestic companies.
This article discusses the results of a continuous study of Russian domestic air carriers conducted in 2006-2016 and analyzes the main barriers to entry into the passenger air travel market and their impact on competition in this field. There are significant structural barriers that prevent companies from entering this market. This situation challenges the existing concept and the idea of the domestic air transportation market as a quasi-competitive one. To describe the structure of the Russian passenger air transport market, we introduce the notion of "discrete competition, " reflecting shifted density of market concentration towards small regional airlines. The latter are usually united by ownership mechanisms or affiliation with an airport. They possess considerable market power, but at the same time have an insignificant market share in the overall Russian passenger air market. Administrative barriers also play a crucial role in restraining competition. Furthermore, current institutional conditions are favourable for vertical 'airport -airline' integration which results in a fundamental transformation, as described by Williamson, and can be detrimental to competition. As our research findings have shown, there is a trade-off between existing vertically integrated structures in the air passenger market and public welfare.
The article critically analyses the phenomenon of global digital platforms, which have become key actors in the international movement of factors of production and studies the approaches to their management. The methodological basis of the research includes the main provisions of the emerging theory of ecosystems and digital platforms, questioning the postulates of theories of international business and strategic management. The article uses the methods of comparative, structural and system-based analysis in the context of their application for assessing digital transformation and managing global digital platforms. The study shows that universal determinants and competitive advantages of global digital platforms are the following: the ability to overcome trade barriers; providing liquidity through transactions; low marginal cost; more efficient use of assets and attraction of investments; and the ability to significantly enhance international specialization. The authors propose an approach for differentiating traditional business models and platform business models based on avoiding linear optimization of internal processes and centralized exchange of value. We establish the conceptual aspects of the expansion of global digital platforms’ business activities. This is due to the emergence of new components of the digital infrastructure that modifies the principles of international business and the administration methods of transnational corporations, which are no longer focused on location. The paper identifies the management problems and risks experienced by traditional companies when creating platforms: dependence on key platforms, increasing costs incurred in market entry, and difficulties when functioning within the lightweight asset model. The formation and development of global platforms not only affect the system of economic relations, but also stimulate changes in corporate governance models and technologies.
The current crisis, as well as complicated economic relations between countries, sustainable development risks of global value chains (GVCs), and international trade protectionism cause changes in the modern system of global foreign direct investment (FDI). Due to the complexity of these risks and the vulnerability of the world economy to future global recessions, it is necessary to develop a new concept of cross-border capital flows in the form of FDI. The research aims to identify structural changes in global FDI in the context of international trade and capital market challenges. Structural and dynamic analysis and a descriptive assessment were conducted to examine global foreign direct investment in the system of international capital movement, taking into account the unstable economic environment. A test of the impact of the current coronavirus crisis revealed that the retrospective transformation of global FDI occurred due to changes in the internationalisation of companies, cross-border mergers and acquisitions, and regional structure of FDI. Corporate disinvestment and the growing importance of intangible assets also played an important role. As a result, the slowdown in global FDI led to a decline in reinvested earnings in many economic sectors. As the long-term recovery of the world economy will be largely determined by the dynamics of global FDI, transnational companies (TNCs) should consider local crises and strive to geographically distribute capital investment. The research revealed that the differentiation of national GVC strategies and new approaches to foreign outsourcing of TNCs are the main risks of regionalisation or nationalisation of global value chains and a corresponding decrease in FDI. The findings can be used to modify well-known FDI concepts, taking into account their impact on modern international economic relations.
This study focuses on the influence of institution quality on foreign direct investment (FDI) outflows. For empirical estimation, we use a dataset covering 102 home and 67 host countries from 2001 to 2016. We use the gravity approach and apply the Poisson pseudo maximum likelihood method to derive unbiased estimates. A set of institutional variables in a country is integrated into a single institutional index using principal component analysis. Our main findings are the following. First, we only identify a positive influence of the level of institutional development on FDI outflows for the institutionally developed countries. Second, we have not found evidence for crowding out national investment in the countries with weak institutions. Third, increases in the level of institutions stimulate horizontal rather than vertical outward FDI in an economy. Finally, institutional distance negatively affects the level of outward FDI only when the institutional distance between the two countries is large. The policy implications of this research are strongly in favour of further developing institutions.
examined firms in two markets: Russian and German ones. The analysis is based on the data from 7 Russian regions, and 6 German federal states. We have found that the quality of managerial practices -estimated by using a new survey instrument -is strongly linked with commercial ratios such as a rate of fail to deliver and a rate of consumer satisfaction. A high level of competitiveness is demonstrated by a greater number of companies in the same region. We have found that this is positively correlated
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