Investing in emerging markets

Master's Thesis from the year 2007 in the subject Business economics - General, grade: 1,6, RSM Erasmus University, language: English, abstract: Since the break up of the Soviet Union, Russia's economy has undergone an enormous transition. However, the majority of people around the world see Russia as far less successful in its transformation as for example China or most of the countries from Central and Eastern Europe. There is no doubt that for most developing countries, including Russia, achieving macroeconomic stability and developing market institutions is not an easy task. Factors such as the lack of an adequate legal framework, corruption and/or political uncertainties are frequently used when there is a need to explain why some countries achieved better results than others. With this research we aim to uncover whether or not political risks have had any direct influence on the inflow of FDI in Russia. Why have we cho-sen to study this particular issue? The fact of the matter is that many experts regard FDI to be one of the most powerful instruments in moving away from a central-planned system and achieving a deeper and faster integration into the modern global economy (Bandelj, 2002). We also share this view and therefore consider it extremely important and exciting to learn more about the subject. As a person who knows both Russia and the Western world very well through my studies, my previous work, traveling and parentage, it seems almost like a personal duty to use this knowledge and these experiences in order to shed more light onto the question of why in the last two decades Russia has remained very much behind the expectations of many experts in terms of FDI attraction. The lack of previous research on this particular question makes our objective particularly exciting and challenging. We also understand that this subject interests not only many prospective investors or the Russian government but also any manager or academic around the world who deals with the topics of international invest-ment and risk management.