Geography Reference
In-Depth Information
urbanization patterns do operate as expected, the changes in the overall
economic geography of inward FDI are likely to be rather less dramatic
than the expected changes foreseen in the cases of China and India (MGI
2011b).
In the case of Russia, regional transformation has been extremely rapid.
Apart from the major natural resource extraction regions, economic
growth has been increasingly localized in a small number of regions,
dominated by the major cities of Moscow and St Petersburg (Hanson and
Bradshaw 2000), both of which are now listed just within the top 70 finan-
cial centres in the world (COL 2009; Long Finance 2011). FDI inflows to
the Russian federation doubled between 2005 and 2006 to $28.7bn, and
are dominated by natural resource-based activities (UNCTAD 2007).
However, the Russian government has moved to restrict foreign owner-
ship in the strategic sectors of the defence and extraction industries, only
permitting minority levels of foreign ownership for firms in these indus-
tries (UNCTAD 2007). Meanwhile FDI outflows from Russia have con-
tinued to increase between 2005 and 2006 by 41 per cent, reaching $18bn.
This was particularly in resource-based firms attempting to globalize, as
well as in banking FDI outflows into other former Commonwealth of
Independent States (CIS) countries (UNCTAD 2007).
Recent empirical evidence, however, indicates some peculiar trends
in the economic geography of Russia. Firstly, and most predictably, the
dramatic increase, particularly during the late 1990s, in the weight of the
capital city, Moscow: the GDP per capita in Moscow in 1995 was 75 per
cent above the country average, while in 2000 it was more than 250 per
cent (Benini and Czyzewski 2007). Secondly, there has been a strengthen-
ing of the natural resources and energy endowed regions, in line with the
emphasis put by the government on a development strategy labelled as
“natural resources led growth economy” (Benini and Czyzewski 2007,
p. 131). Thus, on the one hand, the dominant trend toward agglomeration
in the Western cities with relatively high quality infrastructures and serv-
ices point to “new polarization effects, away from the old type of spatial
concentrations, irrespective of distance and costs considerations” (Benini
and Czyzewski 2007, p. 132). However, on the other hand, the economic
and demographic decline experienced by peripheral regions rich in natural
resources, such as Siberia and the Far East, appears to be somewhat at
odds with the main economic natural resources-based strategy of the
government. In particular, such peripheral regions are in fact those most
penalized by the constraints imposed on MNE investment which, at least
as far as the large and most remote periphery is concerned, offer the great-
est development opportunities. The FDI restrictions therefore appear to
clearly prevent a more balanced regional development in the country.
