Title: Currency exchange rate as a business climate factor for foreign investors in the Russian Federation

Authors: Yuriy K. Zaytsev; Anna N. Loshchenkova

Addresses: Russian Academy of National Economy of Public Administration, 89-Vernadskogo Avenue, Moscow, Russia ' Gaidar Institute of Economic Policy, 89-Vernadskogo Avenue, Moscow, Russia

Abstract: The economic crisis in Russia between 2014 and 2017 revealed several patterns associated with changes in the exchange rate of the Russian currency and the dynamics of incoming foreign direct investment (FDI). Based on macroeconomic modelling, the authors assess the impact of the exchange rate on FDI flows into different countries as well as into Russia at the regional and sectoral levels. They conclude that strengthening the ruble's real exchange rate increases the potential of the domestic market of region and industries within Russia, and of the country as a whole, and leads to an influx of FDI into the Russian economy. The article was written on the basis of the RANEPA state assignment research program.

Keywords: foreign direct investment; FDI; exchange rate; Russian ruble; horizontal investments; vertical investments; business climate; economic sanctions; Russia.

DOI: 10.1504/IJPP.2022.124779

International Journal of Public Policy, 2022 Vol.16 No.2/3/4, pp.174 - 186

Accepted: 15 Dec 2021
Published online: 08 Aug 2022 *