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Abstract

Nearly 80 years ago, the Russians aimed at expanding to the West with soldiers and tanks - now, with enterprises and banks. Is this saying valid or just anti-Russian Russophobia? The presentation offers a statistical view to the development of the Russian investments abroad.
Outward FDI from Russia
Foreign Direct Investment (FDI) flows record the value of cross-border transactions related to direct investment during a given period of time,
usually a quarter or a year. Financial flows consist of equity transactions, reinvestment of earnings, and intercompany debt transactions.
Outward flows represent transactions that increase the investment that investors in the reporting economy have in enterprises in a foreign
economy, such as through purchases of equity or reinvestment of earnings, less any transactions that decrease the investment that investors in
the reporting economy have in enterprises in a foreign economy, such as sales of equity or borrowing by the resident investor from the foreign
enterprise. Inward flows represent transactions that increase the investment that foreign investors have in enterprises resident in the
reporting economy less transactions that decrease the investment of foreign investors in resident enterprises.
(OECD, https://data.oecd.org/fdi/fdi-flows.htm).
The author wishes to express his gratitude to the Foundation for Economic Education (Liikesivistysrahasto) for its financial support (Grant 8-4699).
Contents
1) Russia’s outward and inward FDI stock
2) Russia’s share in the global outward FDI
3) FDI outflow from Russia by quartal since 2008
4) Russia’s state-owned multinationals
5) Russia’s principal non-financial companies abroad
6) 10 main targets of Russian investors overseas
7) ‘The Islandisation’ of Russia’s FDI movements
8) Russian FDI stock in the Baltic Sea area at the end of March 2018
9) Russian FDI in Finland
10) The largest Russian-owned firms in Finland in 2017
11) Share of Russian FDI in the recipient countries’ inward FDI stock at the end
of 2016
12) Further information
©Kari Liuhto
Professor, Director
Pan-European Institute,
University of Turku, Finland
Turku, 15.9.2018,
Email: Kari.Liuhto@utu.fi
1) Russia’s outward and inward FDI stock
(USD million end of year)
Russia’s outward FDI stock skyrocketed between 2000 and 2007. Thereafter, the country’s outward FDI
stock has fluctuated a lot. Despite these fluctuations, the 2017 stock was at the same level as it was a
decade earlier. The development of Russia’s outward FDI stock and Russia’s inward FDI stock follows
each other due to capital round-tripping to and from Russia. Russia’s outward FDI stock-GDP ratio was
25% in 2017. The respective ratio in the USA was 40%.
Sources:
UNCTAD;
CIA
19211
363481 385322 382278
488280 446595
0
100000
200000
300000
400000
500000
600000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20052006 2007 20082009 2010 2011 2012 2013 2014 2015 2016 2017
Russia's outward FDI stock Russia's inward FDI stock
2) Russia’s share in the global outward FDI (%)
Russia’s share in the world’s outward FDI stock has remained close to 1.2% since 2008. Due to some mega-
deals, Russia’s share in the world’s annual FDI outflow has fluctuated a lot. During this millennium,
Russia’s average share in the world’s annual FDI outflow has been 2.3%.
Source:
UNCTAD
1,23 1,24
2,52
0,00
1,00
2,00
3,00
4,00
5,00
6,00
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia's share in the world's outward FDI stock Russia's share in the world's annual FDI outflow
3) FDI outflow from Russia by quartal since 2008
($ million)
During 2008-2013, Russia’s average FDI outflow by quartal was nearly $ 15,000 million. If the extraordinary
quartals (Q1/2013 and Q2/2013) are excluded, the aforementioned figure drops to $ 13,000 million. In 2014-2017,
the respective figure was less than $ 9,000 million. An upward trend can be recognised after Q3/2016.
Source:
Central
Bank of
Russia
-10 000
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
Q1/2008
Q2/2008
Q3/2008
Q4/2008
Q1/2009
Q2/2009
Q3/2009
Q4/2009
Q1/2010
Q2/2010
Q3/2010
Q4/2010
Q1/2011
Q2/2011
Q3/2011
Q4/2011
Q1/2012
Q2/2012
Q3/2012
Q4/2012
Q1/2013
Q2/2013
Q3/2013
Q4/2013
Q1/2014
Q2/2014
Q3/2014
Q4/2014
Q1/2015
Q2/2015
Q3/2015
Q4/2015
Q1/2016
Q2/2016
Q3/2016
Q4/2016
Q1/2017
Q2/2017
Q3/2017
Q4/2017
Q1/2018
4) Russia’s state-owned multinationals
At least 51 Russian state-owned multinationals operated in 2017.
Source:
Kalman
Kalotay
5) Russia’s principal non-financial corporations abroad
Source:
Alexey
Kuznetsov
Raw material-based companies dominate the expansion of Russian firms abroad.
6) 10 main targets of Russian investors overseas
(directional principle)
2013
Value
Share
2015
Value
Share
2017
Value Share
1. EU (Cyprus 40%
of grand total)
$ 225 billion 58% 1. EU (Cyprus 37%
of grand total)
$ 184 billion 65%
1. EU (Cyprus 46%
of grand total)
$ 261 billion 69%
2. British Virgin
Islands
$ 74 billion 19% 2. British Virgin
Islands
$ 34 billion 12% 2. British Virgin
Islands
$ 42 billion 11%
3. USA $ 21 billion 5% 3. Switzerland $ 16 billion 6% 3. Switzerland $ 20 billion 5%
4. Switzerland $ 12 billion 3% 4. Turkey $ 7 billion 3% 4. Turkey $ 9 billion 2%
5. Bahamas $ 6 billion 2% 5. USA $ 6 billion 2% 5. USA $ 7 billion 2%
6. Ukraine $ 6 billion 2% 6. Bahamas $ 4 billion 1% 6. Bahamas $ 5 billion 1%
7. Turkey $ 5 billion 1% 7. Belarus $ 4 billion 1% 7. Belarus $ 4 billion 1%
8. Jersey $ 4 billion 1% 8. Kazakhstan $ 3 billion 1% 8. Ukraine $ 4 billion 1%
9. Belarus $ 4 billion 1% 9. Cayman Islands $ 2 billion 1% 9. Kazakhstan $ 3 billion 1%
10. Bermuda $ 3 billion 1% 10. Vietnam $ 2 billion 1% 10. Singapore $ 3 billion 1%
Grand total $ 385 billion 100% Grand total $ 283 billion 100% Grand total $ 380 billion 100%
EU is the main external target of Russian investors due to the Cyp-Rus phenomenon, i.e. due to capital round-tripping.
Value of Russian investments in the USA has dropped notably since 2013. Some former Soviet republics, namely Belarus,
Kazakhstan and Ukraine, appear among 10 main external targets of Russian investors.
(Directional principle: see https://www.oecd.org/daf/inv/FDI-statistics-asset-liability-vs-directional-presentation.pdf).
Source:
Central Bank
of Russia
7) ‘The Islandisation’ of Russia’s FDI movements
(directional principle)
The Islandisation, i.e. the large share of tax haves, of Russia’s FDI movements
indicates extensive capital round-tripping to and from Russia. In 2017, Singapore and Switzerland
covered together 6% of Russia’s outward FDI stock and 7% of Russia’s inward FDI stock.
Source:
Central
Bank of Russia
56 52
0
10
20
30
40
50
60
70
80
90
100
2013 2014 2015 2016 2017
Share of the Bahamas, Bermuda, the British
Virgin Islands and Cyprus in
Russia’s inward FDI stock (%)
61 59
0
10
20
30
40
50
60
70
80
90
100
2013 2014 2015 2016 2017
Share of the Bahamas, Bermuda, the British
Virgin Islands and Cyprus in
Russia’s outward FDI stock (%)
8) Russian FDI stock in the Baltic Sea area at the end of
March 2018 ($ million directional principle)
Germany’s dominant position as a target for Russian investments abroad is not a surprise.
On the other hand, the large presence of Russian capital in Latvia is worth taking into a consideration
due to a small size of the Latvian economy (population: 1.9 million in 2017).
Source:
Central
Bank of Russia
2963
350
1548
318
587
8060
486
1212
170
9) Russian FDI in Finland
1995 2000 2005 2010 2013 2015 2016
Russian FDI stock in
Finland (€ million)
241 240 378 793 913 830 986
Russian share in
Finland’s inward
FDI stock (%)
3,88 0,92 0,81 1,21 1,42 1,11 1,29
After Finland’s EU accession in 1995, the Russian share has dropped even if the total amount of
Russian direct investment in Finland has grown. Rosatom has pledged to invest approximately € 2-2.5
billion in a nuclear power plant in Northern Finland.
Sources: Statistics
Finland; Bank of
Finland
10) The largest Russian-owned firms in Finland in 2017
Rank among
Finland’s
largest
firms
Russian
ownership
begins
(year)
Industry
Turnover,
€ million
Turnover
change
(2016 vs
2017)
Net profit,
€ million
Personel
37.
1948
Oil business
1,897 +7% No data 210
82.
2007
Metal business
722 +9% No data 292
332.
2002
Electrical
electricity trade
169 -1% 411
496.
-
1997
Wholesales of
chemicals
102 +2% 2 8
Source:
Talouselämä
Gazprom sold its stake in Finnish gas company Gasum in 2015.
The ownership of United Shipbuilding Corporation in the Arctech shipyard is in jeopardy.
11) Share of Russian FDI in the recipient countries’
inward FDI stock at the end of 2016 (%)
History, geography and political connections seem to a large extent explain
the presence of the Russian investors.
Source:
Eurasian
Development
Bank
12) Further information
https://www.routledge.com/The-Russian-Economy-and-Foreign-Direct-Investment/Liuhto-Sutyrin-Blanchard/p/book/9781138121263
http://www.centrumbalticum.org/files/3852/BSR_Policy_Briefing_7_2018.pdf
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