@TechReport{CEPII:2013-05,
author={Svetlana Ledyaeva and Päivi Karhunen and John Whalley},
title={If Foreign Investment Is not Foreign: Round-Trip Versus Genuine Foreign Investment in Russia},
year=2013,
month=February,
institution={CEPII},
type={Working Papers},
url={https://www.cepii.fr/CEPII/fr/publications/wp/abstract.asp?NoDoc=5149},
number={2013-05},
abstract={In this paper we study the phenomenon of round-trip investment between Russia and key offshore financial centers (OFCs), namely, Cyprus and British Virgin Islands, which is now a significant part of foreign investment into Russia. Using firm-level data we study differences in location strategies between round-trip and genuine foreign investors into Russia and the factors which determine the fraction of round-trip investment in total foreign investment into Russian regions. In empirical analysis we also distinguish between different firm size and industries. We conclude that round-trip investors tend to invest more in corrupt and resource abundant Russian regions compared to genuine foreign investors. Furthermore, the share of round-trip investment in total foreign investment is significantly higher in corrupt Russian regions. In general, these results point to the corruption component of round-trip investment. Second, we find that genuine foreign investors tend to invest more in regions with higher level of skilled labour and use sea ports more compared to round-trip investors, indicating that genuine foreign investment is more technologically advanced and more oriented towards international markets than round trip.},
keywords={Russia ; round-trip investment ; capital flight ; foreign investment}
}