Russian Companies Expand Foreign Investments

While all agree that Russia has become a significant source of foreign direct investment (FDI), there is no consensus on the size of these investments. According to the author's calculations, Russian outward FDI stock exceeds $70 billion. This estimate is based on a tabulation of foreign fixed assets (property, plant and equipment, and investments in associated undertakings and jointly controlled entities) held by Russian companies outside the financial sphere and the trans-border acquisition prices of banks. The largest investors are typically Russian integrated business groups with subsidiaries mainly in oil and gas, ferrous and nonferrous metals, telecommunications, and machinery. Nevertheless, big businesses are not the only Russian companies expanding their presence abroad. Many other companies, both in and outside the resource sector, are establishing themselves in foreign markets. The main destinations for Russian investment expansion are the CIS (30 percent of Russian FDI stock) and the European Union (almost 40 percent of FDI stock). While the role of North America is growing gradually, most Russian TNCs prefer to work in their immediate neighborhood.