regions in the North Caucasus are lagging; none are in the Far East.

Our main findings were that (i) regional export performance has been uneven, and (ii) there is a close positive association between per capita income in a region and its ability to attract FDI, and (iii) the types of FDI a region attracts tend to be consistent with the comparative advantage of that region in goods markets, and may drive transformation of that comparative advantage in the future.

The data in this analysis come from a variety of sources, which have been triangulated and harmonized to form a fuller picture of Russia’s trade performance both within the world and as it varies across regions. Not all of these sources are readily available. The data for regional trade by sector, which is at the heart of the analysis, was made available by special arrangement with GTIS, a private provider. The Ruslana data, for firm-level FDI, originates from a different private provider (Bureau van Dijk) and requires a subscription to access. The analysis also makes use of official data on the economies of the Russian federal subjects from Rosstat, FDI data from the Russian central bank, and detailed trade data at more aggregate levels from the United Nations’ COMTRADE system via the WITS portal. The result yields a picture of both Russia’s external economic linkages and the manifestation of those linkages at the regional level, which could not have been obtained through a single source.

The rest of this paper proceeds as follows. Section 2 discusses Russia’s export performance and ability to attract FDI in recent years, analyzing outcomes in detail through indicators that provide insight into regional and sectoral differences, comparisons with other BRICS, and references to future prospects. Section 3 goes into greater depth in terms of the regional disparities and categorizes Russian federal areas as leading, middle-range, or lagging status. This categorization is used as the basis for quantitative and qualitative analysis of export performance and FDI inflows. Specifically, Russian outward orientation is categorized across the country’s wide geography in terms of dominant and secondary economic activities and main export destinations and FDI sources, and the analysis then distinguishes between leading, middle-range, and lagging regions. The final section draws conclusions and discusses the policy implications.

# 2. Russian Exports and Incoming FDI

The Russian Federation economy is reasonably well-integrated into global markets, in terms of both trade and attracting FDI, in spite of the regional disparities within Russia. In terms of trade openness, Russia’s actual trade-to-GDP ratio is slightly lower than that of most of its BRICS comparators (Table 1, column 2). Column 3 shows the potential trade (ratio of predicted to actual trade) based on a bare-bones regression of trade/GDP against real GDP per capita. In a regression of the actual trade-to-GDP ratio on per capita income and population (column 4), Russia’s actual trade is less than predicted, which suggests that Russia is under-trading. However, when arable land area is added to the regression as a variable (column 5), Russia’s actual trade is then significantly greater than its predicted trade.

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