TY - BOOK ID - 133699693 TI - Improving Russia's Policy on Foreign Direct Investment AU - Drebentsov, Vladimir AU - Bergsman, Joel AU - Broadman, G. Harry PY - 1999 PB - Washington, D.C., The World Bank, DB - UniCat KW - Barriers KW - Corporate Governance KW - Debt Markets KW - Developing Countries KW - Domestic Market KW - Economic Theory and Research KW - Emerging Economies KW - Emerging Markets KW - Enforcement KW - Finance and Financial Sector Development KW - Financial Literacy KW - Foreign Direct Investment KW - Foreign Investment KW - Foreign Investor KW - Foreign Investors KW - Global Market KW - International Economics & Trade KW - Investment and Investment Climate KW - Investor KW - Labor Policies KW - Law and Development KW - Macroeconomics and Economic Growth KW - Natural Resources KW - Outputs KW - Price KW - Private Sector Development KW - Property Rights KW - Public Sector Corruption and Anticorruption Measures KW - Social Protections and Labor KW - Tax KW - Technology Transfers KW - Trade KW - Trade and Regional Integration KW - Trade Law KW - Transition Countries UR - https://www.unicat.be/uniCat?func=search&query=sysid:133699693 AB - May 2000 : Russia gets relatively little foreign direct investment and almost none of the newer, more efficient kind, involving state-of-the-art technology and world-class competitive production linked to dynamic global or regional markets. Why? And what should be done about it? Foreign direct investment brings host countries capital, productive facilities, and technology transfers as well as employment, new job skills, and management expertise. It is important to the Russian Federation, where incentives for competition are limited and incentives to becoming efficient are blunted by interregional barriers to trade, weak creditor rights, and administrative barriers to new entrants. Bergsman, Broadman, and Drebentsov argue that the old policy paradigm of foreign direct investment (established before World War II and prevalent in the 1950s and 1960s) still governs Russia. In this paradigm there are only two reasons for foreign direct investment: access to inputs for production and access to markets for outputs. Such kinds of foreign direct investment, although beneficial, are often based on generating exports that exploit cheap labor or natural resources or are aimed at penetrating protected local markets, not necessarily at world standards for price and quality. They contend that Russia should phase out high tariffs and nontariff protection for the domestic market, most tax preferences for foreign investors (which don't increase foreign direct investment but do reduce fiscal revenues), and many restrictions on foreign direct investment. They recommend that Russia switch to a modern approach to foreign direct investment by: Amending the newly enacted foreign direct investment law so that it will grant nondiscriminatory national treatment to foreign investors for both right of establishment and post-establishment operations, abolish conditions (such as local content restrictions) inconsistent with the World Trade Organization agreement on trade-related investment measures (TRIMs), and make investor-state dispute resolution mechanisms more efficient (giving foreign investors the chance to seek neutral binding international arbitration, for example); Strengthening enforcement of property rights; Simplifying registration procedures for foreign investors, to make them transparent and rules-based; Extending guarantee schemes covering basic noncommercial risks. This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Regional Office - is part of a larger effort in the region to assist the Russian authorities in preparing for accession to the World Trade Organization. The authors may be contacted at hbroadman@worldbank.org or vdrebentsov@worldbank.org. ER -