The influence of foreign direct investment (FDI) on the host country economies (on the example of the Russian economy)
E.V. Davydenko,
канд. экон. наук, доцент, доцент кафедры мировой экономики и менеджмента, Международный банковский институт, докторант, Санкт-Петербургский государственный университет (191023, Россия, г. Санкт-Петербург Невский пр., д. 60; e-mail: davvas@mail.ru)
Аннотация. В статье исследуются макроэкономические эффекты прямых иностранных инвестиций (ПИИ) на принимающую страну. Автор оценивает эффективность использования ПИИ для стран-реципиентов, анализируя данный процесс как трехступенчатую процедуру, включающую оценку инвестиционного климата, оценку эффектов ПИИ и, наконец, сравнение первых двух оценок и экономическую интерпретацию полученных результатов. В качестве примера в статье рассмотрено влияние ПИИ на экономику России. Используя работы М. Портера, Дж. Даннинга, Е. Балацкого и других экономистов, автор предлагает комплексный подход для оценки роли ПИИ на экономику принимающих стран.
Abstract. This article investigates the macroeconomic effects of FDI on the host country. The author suggests her approach for the evaluation of the efficiency of FDI on the host country economies considering this process as the three step procedure: the evaluation of investment climate, the estimation of effects of FDI, the comparison of the first two estimations and the economic interpretation of the results of the comparison. The article uses as an example the influence of FDI on the Russian economy. Using the works of M. Porter, J. Dunning, E. Balazkii etc. the author suggests the complex approach for evaluating the role of FDI on the host country economies.
Ключевые слова: прямые иностранные инвестиции (ПИИ), эффективность, инвестиционный климат, Россия.
Keywords: foreign direct investment (FDI), efficiency, investment climate, Russia.
1. INTRODUCTION
Foreign Direct Investment (FDI) plays an important role in the development of many countries. Being the catalyst of the economic growth FDI promote to progressive structural shifts, creation the new industries, improving the positions of national producers on the world markets. Besides the companies involved in FDI activities have a growing role for the countries and societies they operate in through bringing across borders different values, knowledge and business culture. Thus the impact of FDI on host countries is important phenomenon that should be well understood and realized by the policy makers in the host countries that are willing to create a policy framework that maximizes the FDI presence in their national economy landscape.
Till recently it was rather difficult to estimate impact of FDI on the Russian economy that was connected with lack of methodological approaches and the short period of attraction of FDI in economy of modern Russia. Scales of participation of Russia in world investment process testify that Russia doesn't use the opportunities for attraction and use of FDI completely. The analysis and assessment of results of use of FDI in the Russian economy will promote development of strategy for effective use of FDI in the country.
The analysis of the main theoretical concepts allows to define role of FDI in national economy, and also to estimate effects of their activity on national economy. A lot of theories devoted to FDI started to appear from the end of the 60s of the XX century. One of the first works in this sphere is MacDougall's research about advantages and shortcomings of foreign private investments. Eventually the theories of FDI paid attention to different aspects of investment. So, in the 1960s the researches from positions of the neoclassical theory dominated, and the emphasis was placed on com-
parison of FDI with export. In the 1970s the analysis of Multinational Corporation was put in a basis. The 1980s began to pay more attention to mergers and acquisitions. At the same time there was an interest to joint ventures that, in turn, drew attention to cooperation agreements. It led to extension of theories of "the international business". Recently much attention is paid to outer effects from FDI and to influence of the foreign companies on the general productivity of factors.
This article investigates the macroeconomic effects of FDI on the host country economies. As an example the article analyses the role of FDI in the Russian economy. The article consists of two parts. The first part is devoted to the theoretical aspects of efficiency and role of FDI in economy of host countries. In the second section the investment climate and the role of FDI in the Russian economy are analyzed.
Works of the following economists Dunning J. [5], Blomstrem M., Syokholm F. [4] etc. who are taking up the role of FDI in economy of host countries were put in a basis of article. The special attention was paid to researches of Kadochnikov S. [12], Konings J. [14], Okamoto Y. [17], Fisher P. [8] and Balatskii E. [2, 3]. Using the indicators offered by these authors for an assessment of effects of FDI, the author estimates influence of FDI on modern economy of Russia. We also used researches of the foreign authors analyzing investment climate in transitional economies and determinants of attraction of FDI (Sun H., Estrin S., Bevan A., Carsten K., F. Toubal, Grogan L. etc.), and also results of influence of FDI on the countries with a transitional economy (Campos N., Kinoshita I., Krkoska L. etc.).
Lack of accurate state reference points in definition of the directions of an investment of the capitals (branch and regional) and insufficient experience of participation of Russia in investment pro-
cess explain insufficient illumination of a subject in scientific literature. Numerous publications generally mention the general perspective of a question, without concerning detection of intrinsic characteristics of this problem. In works of domestic economists questions of attraction and use of FDI in the Russian economy at the present stage of its development are considered, possibilities of effective use of FDI in a national economy of the country in the long term are estimated, coherence of tasks of attraction of FDI with national interests and the external economic safety of the state is analyzed. At the same time these works don't contain the complex analysis and an assessment of efficiency of fDi in Russia, effects from their mobilization within the country, with identification of the most perspective for the Russian reality directions especially taking into account transition of the Russian Federation to innovative model of development.
2. MACROECONOMIC EFFECTS OF FDI ON THE HOST COUNTRY ECONOMIES
One of the factors of the development of the national economy is high investment activity. In the conditions of the deficit of inward investments it's very important to attract and use FDI effectively in the economy of the host country. During the economic crises the importance of fDi is increasing. An active and complex use of foreign capitals played an important role in the post-war reconstruction of economies of the West Europe and Japan, and new industrial countries.
There are a lot of theories concerning the analysis of FDI and their influence on the economy of the host countries. But we would like to note two main contrary conceptions concerning the influence of FDI on the host countries: the theory of interde-pendency of nations (FDI are considered as the factor of the development of the national economy -Ellworth P. [6], Rosenstein-Rodan P. [21], Fishlow A. [9] etc.) and the theory of the periphery economy (FDI hamper the development of the host countries in particular the development of developing countries - Prebish P. [19], Furtado S. [10], Amin S. [1] etc.).
According to the goals of FDI (expansion and increasing the efficiency of production, the activity of innovation process, the decision of the problems of the social sphere etc.) we can choose the following directions of the influence of FDI on the development of the host countries: internal economic, foreign economic, innovation, social (including cultural), budget. It's very difficult to indicate the macroe-conomic consequences of FDI. The effects of FDI are not simple. So it's very important to evaluate the consequences of FDI on the economy of the host country.
One of the criteria of the evaluation of the national economic efficiency is the criteria of the efficiency of FDI on different levels (macroeconomic, regional and industry, microeconomic). We can consider the efficiency of FDI from the following points of view:
s of the interests of the host country; s of the interests of the investor; s of the maximum coordination and balance of interests of the home and host countries [13].
The third approach is the best to our mind. The efficiency of FDI is a complex phenomenon. Many factors e.g. factors of investment climate, the
efficiency of management of the investment process, the government policy, and the forms of FDI influence on the efficiency of FDI. These factors influence and form the integral effect. The effect of the FDI has a lot of aspects. Depending on the direction of influence on the economy of the host country we can indicate internal, foreign economic, budget, social (including cultural) and innovative effects. In its turn each factor influences the efficiency of FDI. Thus the efficiency of FDI as the function of many factors and the hierarchical system of interrelated parameters should be considered as the complex system. We can say that the efficiency of FDI is not only the estimation of the results but the evaluation of the investment climate. So we can produce the evaluation of efficiency of FDI as the three step procedure:
^the evaluation of investment climate (of country, region, and industry);
^the estimation of effects of FDI (for country, region, and industry);
^the comparison of the first two estimations and the economic interpret
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