M PRA
Munich Personal RePEc Archive
Innovations as factor of absorptive
capacity of FDI spillovers across regions
of Russian Federation
Alexander Didenko and Tatiana Egorova
Financial University under the Government of the Russian
Federation
September 2014
Online at https://mpra.ub.uni-muenchen.de/59346/
MPRA Paper No. 59346, posted 21 October 2014 07:33 UTC
Review of Business and Economics Studies
Volume 2, Number 3, 2014
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Alexander DiDenkO, Ph.D.
Deputy Dean, International Finance Faculty, Financial University, Moscow
alexander.didenko@gmail.com
tatiana eGOROvA
International Finance Faculty, Financial University, Moscow
taniaegorova@gmail�com
. We study how innovations affect increase of regional total factor productivity (TFP) as a result of
data. TFP is modeled using data envelopment analysis (DEA) with the human capital, energy and capital as inputs,
and the gross regional product as output. We develop innovations index for the regions of the RF, proxying for
regional absorptive capacity, based on 17 variables, characterising economic, social and infrastructural aspects of
trade.
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fects on the host countries, especially in respect of
mulated, the evidence from Russia is rather scarce.
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discusses these issues in more detail and provides
- Russia.
The present paper proposes research of the effects
Electronic copy available at: http://ssrn.com/abstract=2498830
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Review of Business and Economics Studies
Volume 2, Number 3, 2014
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searches in recent years have paid much attention
- to the effect, which FDI has on the productivity of
productivity spillovers.
The rest of the paper is structured in the followture review and evidence on the FDI spillovers from
Russian Federation. Section 4 provides the descrip-
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fects referred to as spillovers are treated as positive
In recent years a lot of research was undertaken on the issue of spillover effects in innovation
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economics have focused on this addition to the cap-
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ter than portfolio investment, and direct investors and approaches and summarizes the results. The
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-
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of profit remittance or interest payments, which
payments. In recent years, scholarly attention has
moved to the impact of international trade and FDI
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productivity effects.
FDI spillover is an increase of total factor pro-
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ity spillovers.
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rence. The first mechanism refers to the demon-
Electronic copy available at: http://ssrn.com/abstract=2498830
Review of Business and Economics Studies
’
Volume 2, Number 3, 2014
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mentary industries are more likely. The data from
FDI information from Central Bank transaction records to perform econometric analysis. The research
spillovers can result from employee turnover. When
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spillovers and widespread inter-industry spillovers,
fourth option is associated with increases in compeincreases force domestic firms to increase pro-
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to stay competitive in new circumstances (Blom- product, machinery and transport equipments. The
that the fourth mechanism, on contrary, may lead to
’ productivity in case of
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TFP associated with FDI in two countries, namely,
per se do not increase productivconsidered.
likelihood of intra-industry and inter-industry spill-
vers in Tunisia. The DEA method was used to as-
more likely to occur than the intra-industry ones,
-
77
Electronic copy available at: http://ssrn.com/abstract=2498830
Review of Business and Economics Studies
Volume 2, Number 3, 2014
-
no evidence of horizontal spillovers.
term productivity.
analyzes and compares performance of domestic
- spillovers in China due to multiple factors. First,
-
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sion analysis. In addition, the research identifies
competitive pressure as the spillover transmission
mechanism; however, their results did not support conclusions of several studies and then focuses
transfer.
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of multiple studies in other economies. The study
four factors namely the level of human capital, the
the form of human capital employment and devel- domestic R&D input, the perfection level of institutions and the level of economic development on
spillovers was found. The results of this study also
show that FDI per se
sults prove the importance of those factors in fos-
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from different countries on productivity of domestic
mented the data from the Annual Industrial Survey
and FDI share and total factor productivity of do-
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Review of Business and Economics Studies
Volume 2, Number 3, 2014
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derived from
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intensity decisions. The spillover effects are affect’
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- direct investment on productivity. The authors used
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- the research shows that the FDI effect on domestic
search supports evidence that FDI lead to spatial
’
of domestic firm: small enterprises located in the
One of the most recent studies was undertaken
decrease outputs; however, middle-size enterprises
authors used panel data on the coastal provinces of
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et al�
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than twice as efficient as the local ones. Moreover,
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other Asian countries did not provide evidence of
out a research on Indonesian data and found evi-
local ones.
Review of Business and Economics Studies
Volume 2, Number 3, 2014
population;
- to the population;
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to the population;
-
-
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scaled to the population.
tions is of crucial importance for the innovation
more detail.
Electricity production: the amount of electric-
citizens;
Electricity consumption: the amount of elec-
Capital investments: The volume of capital in-
Railway roads density: the density of railway
el of entrepreneurship activity is low, then there
is practically no one to implement the innovation Electricity consumption is traditionally used as an
indirect measure of economic activity. The density
of roads plays a crucial role particularly in Russia,
- where there are numerous territories that are dif-
measure efforts put into the process of innovation.
The indicators include:
tion activity of enterprises measured as the percent-
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Review of Business and Economics Studies
Volume 2, Number 3, 2014
The Index of Innovations Absorptive Capacity of the regions
of the Russian Federation
The Business
Activity Sub-Index
The Innovation
Activity Sub-Index
FDIData sources
Science
Capital
Investments
Technology Usage
Small Business
Investments
Small Business
Turnover
Business activity
The Regional
Industrialization SubIndex
Electricity
production
The Social Welfare
Sub-Index
Average salary
Corruption
Electricity
consumption
Technology
Production
Patents
Automobile roads’
density
Innovation
Activity of
Organizations
Density of railway
roads
ity. Consequently, corruption also arises in those
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-
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own return instead of firm’s profits. This fact im- relevant indicators and far from ideal representaowners.
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erly scaled.
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Review of Business and Economics Studies
Volume 2, Number 3, 2014
2
1
2
2
1
Nizhegorodskaya Oblast
1
2
1
1
2
Magadanskaya Oblast
4
14
15
4
3
Novosibirskaya Oblast
8
4
8
8
4
Tomskaya Oblast
7
6
4
7
5
Tatarstan Republic
3
7
5
3
6
13
5
12
13
7
11
9
6
11
8
27
38
34
27
9
Moskovskaya Oblast
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that Russia’s case is closer to that of Europe, namely
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view the Europe’s current state of corruption is the
count the overall level of data preciseness. The cor-
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one applicant was accepted;
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lates the order of the Ministry of Economic Devel-
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Review of Business and Economics Studies
Volume 2, Number 3, 2014
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electricity consumption and capital investment into
man capital, electricity and capital investments.
citizens’
of Soviet period, as well as rather developed infra- policies and the practical implementation of those
ond section of the current paper.
assets in the present reality. Consequently, the FDI
presence forces the development and transformawas used:
tion processes.
T
TFPit
+ itT
+
+
u
,
plications
for
the
policymakers.
Firstly,
the
policy
it
it
it
it
where TFP stands for total factor productivity,
namely, those in which the innovations level is low.
i det denotes the period,
u it,
-
-
ed in the model.
Estimate
(InterINNOV
0.0011148
5.1032
5.189e–07 ***
–7.0126
1.013e–11 ***
4.7464
2.895e–06 ***
moreover the R-Squared, the coefficient of deter-
value for this type of models. In addition, it is worth
In the course of the present paper the research on
Federation was undertaken. Previous studies provided limited evidence on this issue. The conducted
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Review of Business and Economics Studies
Volume 2, Number 3, 2014
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assessments and comparisons.
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vestments and respective spillover effects.
nesota, mimeo.
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