Companies Closing up Shop in Russia has cost the country 45% of the country's GDP
In 2020, the FDI accounted for a measly 0.63% of Russia’s GDP which is less than the global average...
A new study done at Yale’s School of Management has found that nearly 1,000 companies have ended operations in Russia. Those companies ending operations make up approximately 45% of Russia’s GDP.
“This is an approximation, so note that some companies, such as Pepsi, are continuing some sales in Russia but have pulled back on others, so it is impossible to say that every dollar from that 45% is now lost. Nonetheless, the sum is staggering and really emphasizes the magnitude of this business withdrawal.”
Steven Tian, research director at the Yale Chief Executive Leadership Institute, explains.
There has been a go-to list of companies withdrawing or staying in Russia which is being updated day-to-day. Yale’s findings may come as a surprise considering foreign direct investments don’t matter to the Russian market. In 2020, the FDI accounted for a measly 0.63% of Russia’s GDP which is less than the global average.
“Yes, FDI is not a primary driver of the Russian economy, but it relates to more than just fixed assets and capital expenditure. Russians buy more goods and services from Western companies than one would think at first glance, as our analyses are showing, and the Russian economy is not the oil-exporting monolith that outsiders commonly perceive it to be.”
Steven Tian said as he explains just how much taxable money foreign industries were making in Russia. He also explains how much of the domestic market in Russia uses their services.
12% of Russia’s GDP is made up of oil products (including the exporting of oil). Gas exports are just 3% which is a dwindling number. Agricultural exports include nearly 8% of the country’s GDP. 20% of the Russian GDP is made up of imports.
“In short, the revenue drawn by our list of nearly 1,000 companies, equivalent to approximtely 45% of Russian GDP, is of significantly greater magnitude than the much-ballyhooed oil exports, which are being sold at a discount right now anyway.”
Steven Tian concluded.
Read more of Tian and Yale’s findings HERE