Among emerging economies, the Russian Federation is the second
largest outward investor, surpassed only by Hong Kong (China)
but ahead of Brazil, China and India. This article analyses the
main patterns of Russian outward foreign direct investment
(OFDI), including its dynamics and geographical destinations. It
also highlights the changing strategies of outward investing
Russian firms: in the early 1990s, they were mostly privately-
owned transnational corporations (TNCs), seeking ‘safety nests’
abroad to protect themselves from domestic uncertainty; these
days, state-owned or -influenced TNCs dominate Russian capital
exports, motivated by a desire to control the value chain of
their products. There are, however, characteristics common to
both periods, such as the predominance of natural resource-based
firms among the largest Russian TNCs. Using those
characteristics as a basis, the paper attempts to model formally
Russian outward FDI. It tests the extent to which the mainstream
theory (ownership and locational advantages) is applicable to
the Russian context, as well as the role played by specific
factors such as state ownership. Home-country factors seem to
play a particularly important role in shaping Russian outward
FDI. As for the motivations of FDI, in the CIS and developing
countries, Russian TNCs seem to aim at controlling upstream
natural resources, while in high-income countries they aim at
controlling downstream markets.
