Eurasian Integration Yearbook 2012

The Economics of the Post-Sovietand Eurasian IntegrationMore interesting, in our opinion, is the data on the larger investor countries– Kazakhstan, Ukraine and Belarus. In all cases, MMI CIS’ total FDI figuresare much higher than those of the Russian Central Bank (four times higher inthe case of Ukraine) (see Table 8.5). This confirms our hypothesis that, justas Russian companies invest in Ukraine via offshore jurisdictions, Ukrainiancompanies also invest in Russia via third countries. A similar situation isobserved in Kazakhstan. In the case of Belarus, however, the main reason for thediscrepancy is inadequate recording of investment projects by official bodies.Investor countryAccumulated FDI in early 2011,according to the Russian CentralBankAccumulated FDI in 2011,according to MMI CIS$ billion % $ billion %Azerbaijan 0.32 15.3 0.04 0.9Armenia 0.18 8.6 0 0Belarus 0.08 3.8 0.16 3.7Georgia 0.01 0.5 0.33 7.7Table 8.5.Accumulated FDIin Russia, by countrySource: DirectInvestment in theRussian Federationas at January 1, 2010and January 1, 2011(http://www.cbr.ru);MMI CISKazakhstan 1.12 53.6 2.84 66Kyrgyzstan 0.08 3.8 0 0Moldova 0.01 0.5 0 0Tajikistan 0.01 0.5 0 0Turkmenistan 0 0 0 0Uzbekistan 0.03 1.4 0.01 0.2Ukraine 0.25 12 0.92 21.4Total 2.09 100 4.3 100Generally, since investment by other CIS countries in Russia is no match forRussian investments in those countries, mutual direct investment is less significantfor Russia than for other countries. Russia is the key investor in all CIS countriesexcept Georgia, where Azerbaijan and Kazakhstan clearly dominate (see Figure8.2). However, many experts maintain that the successful development of anyintegration group is determined principally by economic interaction betweensmaller member countries circumventing the leader (we would draw an analogyhere with the NAFTA, in which Mexican-Canadian contacts traditionally act asbenchmarks).In some cases the largest investor pairs without Russian participation illustratethe neighbourhood or territorial closeness effect in a wider context (see Table8.6). There are, however, other pairings which are not so geographicallyproximate, e.g., Kazakhstan – Ukraine or Georgia – Belarus. Importantly,there are no politically motivated alliances (as with the GUAM initiative). Forexample, PrivatBank of Ukraine made considerable investment in Georgia140 EDB Eurasian Integration Yearbook 2012