A Comparison Of FDI Determinants Between Russia And China

The main concern of this paper is to answer two questions:firstly,why Russia is less successful in attracting Foreign Direct Investment than the People's Republic of China?Secondly,what are the factors that determine FDI inflows into the two countries?In this work,some factors that determine FDI in Russia(such as market size,trade openness,exchange rates,labor cost,inflation,infrastructure,legal system)will be investigated and compared with FDI determinants in China.The regression analysis,OLS,is used in the paper.The chosen data set is from 1992-2015 because the required data set for Russia are available after USSR collapse.Therefore,this paper also offers qualitative analysis of legal system of two counties for detecting the factors that hamper the inward FDI flows into their economies.The value of this paper is,firstly,to fulfill the gap in the literature due to the absence of studies on that problem.Secondly,the analysis of different aspects will give a hand to Russian policy makers in order to improve an investment climate.The result of this comparison revealed that the main determinant attracting inward FDI in Russia and China is market size,while the rest of the determinants impact the inward FDI in a different way.