Question

Russia is largely dependent on oil exports to drive its economy forward. Given the sharp fall in global oil prices that occurred in 2014 and 2015, and the fall in value of the Ruble what impact do you think this will have on Volkswagen’s income? How will this decline in oil prices and currency depreciation impact FDI into Russia? Explain.

Answer 1

FDI will have a huge positive impact on Russia. Because Since 1990s the production and output has actually dipped by as high as 40% and hence there is a dire need for Russia to attract foreign investors and make sure that investment keeps coming in to ensure a stable Oil business. The current technology and resources are not there that can actually drive this business and hence it is very necessary for Foreign Direct Investment to play a role in stabilizing the situation. FDI is seen as a positive for countries that are investing because they have realized that Russia has good amount of oil reserved, the labor that is available in Russia is relatively cheaper and a bright future can be seen by the global investors as well and hence FDI would ensure retained jobs, new job opportunities, increased GDP and a more stabilized business for Russia.

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