Productivity Spillovers in the Russian Federation: The Case of the Chemical Market (A.Kuzyaeva, A.Didenko)

Foreign direct investment (FDI) and international trade are suggested to be major conduits of international technology transfer. The present paper aims to extend the current empirical literature by determining the effect and the source of productivity spillover in Russia in case of chemical industry. In order to find out the existence of FDI and trade productivity spillover we applied Ericson and Pakes (1995) and Olley and Pakes (1996) methodology. We estimated the model model for companies from chemical industry for the period 2007-2012. Our results confirm FDI and trade productivity spillovers in Russian chemical industry. The size of FDI spillovers is more important than imports-related spillovers. Based on the empirical results, we may predict that Russia’s accession to the World Trade Organization in 2012 should result in productivity growth. However, further research on this topic will be possible when the statistical data becomes available for several years after accession.

(Published in Review of Business and Economic Sciences, 2(3), September 2014)


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