Capital-Export?

[Blanquist]

why-are-some-countries-so-interested-in-foreign-investment-but-others-don't-seem-to-care?


what-is-the-significance-of-this?-for-example-china-for-20-years-has-been-very-favorable-to-foreign-capital-but-US-investment-in-a-place-like-Russia-is-microscopic.

[jookyle]

Well, the US has around 4 billion invested into Russia, which is about as much as the US has invested into Puerto Rico. A big part of the lack of investment has to do with Russia resisting membership to the World Trade Organization. Basically, Russia does not have a whole of natural resources. During the USSR, Russia it did have direct access to other minerals as the mines is places like the Ukraine or Uzbekistan were directly accessible. So oil is really the only natural resource that could be used(exploited). And with out Russia being in the WTO, it makes it extremely difficult for US and Transnational Corporations to penetrate the Russian market and production of resources. And of course, using military force, or the threat of it, won't do any good considering Russia has nukes and are also permanent members of the UN Security Council.

On the whole, investments go to where exploitation is possible. Especially when raw materials are can be gathered. You could look at the gold and diamond mines in Africa, the rubber is south east Asia, copper in Chile. Dependency theory, I would argue, plays a big role into this. Basically, the large economic strong holds of the world(such as the US) depend on the investment into exploitation of these areas to maintain the production of these materials while making a profit. The big time investors invest where profit can be easily made.

[ComradeOm]

The simple truth is that economic growth costs money and is largely a product of capital investment. At the most basic/physical level, factories and offices have to be built and equipment purchased. You need money for this. In advanced economies companies can typically finance this expansion through capital accumulation (both domestic and imperialist). But when a country's economic base is weak and the priorities are rapid growth (the typical industrial 'take off' scenario) earnings from domestic industry do not suffice. Foreign capital is thus an obvious source of the finance that sources within the country simply can't provide


Basically, Russia does not have a whole of natural resourcesIt's quite the opposite actually: Russia has an abundance of natural resources. What separates it from, say, an Angola is that Russia has the industrial base already in place of extract and exploit these resources. Foreign investment is relatively unneeded in Russia because high oil/gas prices, amongst other commodities, are keeping the economy afloat. It would be very different is US dollars were needed to extract and sell the oil

That and, I suspect, Russia probably has surplus capacity in its industrial base from the Soviet days. I've not seen the figures but I wouldn't be surprised if industrial production remains below the 1990 level. Which would mean that there is still slack in the system before new capital investment is needed on a large scale