Impact of Foreign Direct Investment on the Russian Regions Disparitites in the Level of Production and Dynamics of Interregional Inequality

Abstract

The article examines the contribution of foreign direct investment to the production of Russian regions and to the interregional inequality in GRP per capita in real terms for the period of 2005–2015. The methods used embrace calculation of the inequality indices, construction of the Cobb – Douglas type five-factor production functions including FDI, the Shorrocks technique of inequality decomposition modified by J. Morduch and T. Sicularfor regression-type models, and the proportional method of factor analysis. We found the negative dynamics of interregional inequality in FDI per capita up to 2012; lowalbeit growing up to 2011 the GRP elasticity with respect to FDI; small contribution of FDI to the reduction of interregional inequality in Russian economy in the period under review. The results obtained are applicable for assessment of the FDI efficiency in a country and its regions

Keywords

• foreign direct investment
• region
• unevenness
• development
• production function
• decomposition of inequality