Innovations across Borders: FDI and Innovative Capacity of Russian Companies

This paper studies the role of foreign direct investment (FDI) in the development of innovative capacity of Russian companies. The study is based on innovation survey of R and D oriented companies in St. Petersburg and Moscow. The results show that the labour productivity of foreign companies is 10% higher than domestic companies. As a whole, domestic companies have higher R and D expenditure of sales, 6.5% against 6.2% for foreign companies. There are very small differences between foreign and domestic companies in the innovative capacity measured by new product development or patent activity. On the other hand, according to international statistics the productivity of Russian R and D is very low. Thus the results indicate that FDI has quite limited effect on the development of innovative capacity of Russian companies.