70
Economic Commission for Latin America and the Caribbean (ECLAC)
Figure III.9 Selected Eurasian Economic Union member States: positive (left) and negative (right) inflows of FDI by sector, 2018 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Armenia Kazakhstan Kyrgyzstan Russian Federation
Positive inflow
Agriculture Wholesale and retail trade Finance and insurance
Armenia Kazakhstan Kyrgyzstan Russian Federation
Extraction Transport Research and development
Negative inflow
Manufacturing Inf. and comm. technology Other
Source: Eurasian Economic Commission (EEC), “Direct investments in the Eurasian Economic Union 2018”, Statistical Bulletin, Moscow, 2019c.
The divestments seen in certain technologically advanced sectors (R&D, ICT) in EAEU countries, seem to primarily be the result of the economic sanctions imposed against the Russian Federation restricting foreign capital participation in its economic activities. This may have had knock-on effects for other EAEU enterprises due to the important role of investors from the Russian Federation. For example, in 2016 in Belarus, Russian investment in the Ritzio International gambling club network was cancelled and the Russian participation in the Osipovichi automotive plant was sold. In Armenia, the Russian Federation’s Gazprombank had to sell its assets in Areximbank.37 Growing uncertainty in the world economy and international relations were present prior to the global COVID-19 pandemic that has since aggravated the problem, thereby tending to divert investors from some developing countries’ comparatively riskier markets and provoking further divestment in EAEU economies.
D.
Investment relations between EAEU and the LAC region
Before analysing FDI flows between the two regions, it is important to acknowledge substantial data challenges. Box III.1 explores three of the main challenges and explains how they are dealt with in this document.
37
It is interesting to note that the asset’s buyer, Armenian Ardshinbank is also owned by a Russian citizen, but due to its corporate structure, it is now considered to be domestically owned rather than an intra-EAEU investment.
