Innovations as factor of absorptive capacity of FDI spillovers across regions of Russian Federation (A.Didenko, T.Egorova)

We study how innovations affect increase of regional TFP as a result of productivity spillovers from FDI, and confirm the presence of phenomenon in Russian data. We model TFP using DEA with the human capital, energy and and capital as inputs and the gross regional product as output. We develop innovations index for the regions of the RF, which proxies for regional absorptive capacity, based on 17 variables, characterizing economic, social and infrastructural aspects of regional development. FDI is measured as the the sum of ratios of sales of firms with FDI to the total sales in the region times squared distance to neighboring regions.

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

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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)