Eurasian Integration Yearbook 2012

Alexey Kuznetsov. “Monitoring Mutual Investmentsin CIS Countries”The Economics of the Post-Sovietand Eurasian Integration$13 million in the Netherlands. Some countries, particularly Germany, increasethe minimum size of “eligible” FDI on a regular basis (Kuznetsov, 2008). Theintroduction of alternative forms of monitoring implicitly limits opportunities,since they do not always include companies that have a high response rateto their inquiries. Therefore, for example, the Russian magazine Mergers andAcquisitions set a minimum threshold of $5 million for its database of Russiancompany transactions (including cross-border ones).When launching the MMI CIS exercise, we set an initial minimum interval of$1-$10 million. We then found empirically that changes in the reliability ofcollected data occur at a level of about $3 million, and this figure was selectedas the minimum threshold. It should be stressed that in many cases FDI estimatescan be accurate to within $10 million.However, one-third of projects in our database are smaller in scale. At laterphases of MMI CIS, such projects will assist us in addressing the following threetasks:• following up promising projects which were initially included in thedatabase in their early stages. For example, Zarubezhneft and Itera intend toinvest up to $6 billion in fossil fuel production in Block-21 in Turkmenistan,but so far only relatively low-cost geological exploration has been carriedout;• monitoring industries which are important to post-Soviet integration but inwhich large-scale investment is extremely rare. The sector which perhapsbest illustrates this is higher education: there are 37 branches of Russianuniversities throughout the CIS, but the largest investment ever made inthis industry was the $5 million received by the Sevastopol Branch of theLomonosov Moscow State University; and• collecting information on small projects, including those implemented bysmaller investor countries or in border regions, to assess whether there isa need to lower the selected threshold in the future (at least for individualproject categories).The database on investment projects in CIS countries and Georgia built by theIMEMO research team principally contains information on accumulated FDIas at the end of 2011 or indirect statistical indicators which may indicate FDIvolumes. It contains a total of 602 transactions or greenfield projects, but twotransactions do not formally qualify as direct investments (large productionprojects with a stake of less than 10%). Six of these transactions were made inunrecognised or partially recognised republics (Abkhazia, South Ossetia andNagorno-Karabakh); these autonomous republics are economically isolatedfrom the respective countries (i.e. Georgia and Azerbaijan). In addition, thedatabase contains information on 56 relatively significant transactions orprojects which had been terminated by 2012 (the companies were sold toEurasian Development Bank137