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TRENDS IN RUSSIAN CAPITAL FLOWS: LESSONS OF THE LAST DECADE

V.M. Matyushok, S.A. Balashova, I.A. Petrenko

Abstract

The present paper is an applied contribution to the analysis of international capital flows. International capital flows play a central role in the global economy; they are closely tied to countries' economic and financial conditions, can influence macroeconomic policy, and bring a range of benefits and risks to beneficiaries. This paper describes the patterns of international capital flows in Russia (a sample of a big emerging market (BEM) economy) in the period 2000?2016, focusing on the last decade. The paper reveals key determinants of the three different types of capital flows (FDI, portfolio and other investments) toward Russia and identifies general trends and patterns by simulation of the capital inflow/outflow during the survey period. Also, It is shown that in the last decade the significance of global factors has increased versus domestic factors. It is concluded that institutional reforms and В«a reset buttonВ» with the West are critical policies to stimulate both the national economy and the required inflow of foreign capital. Understanding the capital flows drivers thus is necessary for macroeconomic policymaking, which is reflected in the significant scholarly interest in the topic.

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