Subnational Institutional Differences, R&D-Performance, Relationship, and FDI Spillovers in Russia Sergey Lebedev and Mike W. Peng
Coles Working Paper Series, SPRING23-02, March 2023
OVERVIEW
This paper analyzes the influence of institutional development in different regions. Specifically, we look at firms in 39 regions in Russia. First, we find that in regions with more developed market institutions—for example, with more transparent regulation and less corruption—firms can reap more benefits from investing in research and development (R&D). Second, we find that in regions where more developed market institutions are combined with more foreign direct investment (FDI) inflows, R&D benefits become even more pronounced, while in regions with underdeveloped institutions, FDI may crowd out local firms. This finding may have important implications for foreign firms considering entry location as well as local firms analyzing positive and negative effects of foreign competition.
56 | Working Papers
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