Economic And Political Determinants Of FDI: Case Of Chinese FDI To Russia

This paper studies FDI economic and political determinants in the national level framework of China-Russia investment and economic cooperation issues.Opposite to the major belief,this research found that in China-Russia case political determinants provide stronger guidance for the economic cooperation between two countries than the economic determinants.This paper verified economic and political variables and developed a comprehensive statistical model for Chinese FDI to Russia.Our empirical results suggest that among economic variables the significant effect have: refinancing rate;inflation,GDP deflator;GDP per capita,PPP;GDP;global competitiveness index.Among political variables the significant influence have: government efficiency estimate;regulatory quality index;fragile state index;rule of law index;democracy index.Variables analysis shows that Chinese FDI to Russia is motivated by political stability and effective governance factors first while some economic background factors also taken into account.The outcome of the research can have important applications for Russian economy in recovering from economic crisis by providing determinants predicting China FDI to Russia.