Using a spatial autoregressive model of cross-sectional and panel data, we study the determinants and dominant strategies of foreign direct investment (FDI) inflows into Russia before and after the 1998 financial crisis. The important determinants of FDI inflows into Russian regions since the start of transition appear to be market size, the presence of large cities and sea ports, oil and gas availability, proximity to European market, and political and legislative risks. Since 1998, it appears the importance of big cities, the Sakhalin region, oil and gas resources, proximity to European markets, and legislation and political risks has increased. Our results also reveal a shift from horizontal FDI strategy to vertical FDI strategy in the post-crisis period. Using a multiple spatial lags approach, we show that neighbouring port-endowed regions tend to have emerged in the post-crisis era as competitors for FDI. Copyright 2009 The Author. Journal compilation 2009 Blackwell Publishing Ltd.

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In this paper we assess the impact of oil price shocks on oil-producer and oil-consumer economies. VAR models for different countries are linked together via a trade matrix, as in Abeysinghe (2001). As expected, we find that oil producers (Russia and Canada here) benefit from oil price shocks. For example, a large oil shock, leading to a price increase of 50%, boosts Russian GDP by some 12%. However, oil producers are hurt by indirect effects of oil shocks, as economic activity in their export countries suffers. For oil consumers, the effects are more diverse. In some countries, output drops in response to an oil price shock, while other countries seem to be relatively immune to oil price changes. Finally, indirect effects are also detected for oil-consumer countries. Those countries trading more with oil producers receive indirect benefits via higher demand from the oil producing countries. In general the largest negative total effects from positive oil price shocks are found in China, USA and Japan while European countries seem to fare quite well during recent positive oil-price shocks.

Recent economic geography research has identified the round‐tripping of capital from emerging economies to offshore financial centers (OFCs) and back as foreign direct investment (FDI) as a central element of the global offshore FDI network. However, the factors behind this phenomenon are not yet fully understood. Our study develops a general framework that conceptualizes the phenomenon of round‐trip investment. In particular, we argue that secrecy arbitrage, defined as interplay of onshore corruption and offshore secrecy, largely explains round‐trip investment between onshore jurisdictions and OFCs. First, we argue that part of the round‐trip FDI consists of proceeds from corruption, which is laundered in OFCs and reinvested back to the location of origin. Second, we maintain that the secrecy dimension of the OFC also motivates the round‐tripping of licit capital, as businesses use the secrecy provided by OFCs to hide their true identities from corrupt authorities in the home location. To test the validity of our argument about onshore corruption as a driver for round‐trip investment, we empirically analyze firm‐level data on the distribution of offshore FDI (which, we argue, is largely round‐trip) across Russian regions. Our empirical findings confirm that FDI from OFCs is positively associated with host region corruption, and this relationship is stronger for OFCs with a higher secrecy score. Hence, we conclude that round‐trip FDI is strongly motivated by the interplay between onshore corruption and offshore secrecy.

In this paper we assess the impact of oil price shocks on oil-producer and oil-consumer economies. VAR models for different countries are linked together via a trade matrix, as in Abeysinghe (2001). As expected, we find that oil producers (Russia and Canada here) benefit from oil price shocks. For example, a large oil shock, leading to a price increase of 50%, boosts Russian GDP by some 12%. However, oil producers are hurt by indirect effects of oil shocks, as economic activity in their export countries suffers. For oil consumers, the effects are more diverse. In some countries, output drops in response to an oil price shock, while other countries seem to be relatively immune to oil price changes. Finally, indirect effects are also detected for oil-consumer countries. Those countries trading more with oil producers receive indirect benefits via higher demand from the oil producing countries. In general the largest negative total effects from positive oil price shocks are found in China, USA and Japan while European countries seem to fare quite well during recent positive oil-price shocks.