Reply to recent documents by cdes. Dorn (20 March) & Decker (27 March)
—Riley, 8 April 2014
In her 20 March ”Reply to Roxie on Russian Investment” Barbara took up Roxie’s earlier challenge that “if a parallel could be proven today – that Russia is pumping value out of neo colonies – I would be convinced to re-evaluate my position.” In my opinion this represented an important step forward in our discussion and brings us to the nub of the issue. Barbara pointed to a 2011 document on Russian foreign investment published by the Vale Columbia Center as a source of evidence of Russia’s role in the global economy today is that of an imperialist power:
“The document above, including the appendices, provides a lot of empirical data about Russia’s outward investments, based on the large transnational corporations (TNCs) (Lukoil and Gazprom being the largest and best known) and shows that their investments are significant, widespread, and not just about selling oil and gas but involvement in other areas of the energy sector.”
Unfortunately Barbara did not explain to what she found particularly significant in the document (which I will refer to as “Vale 2011”). In reading through it I could not see much evidence to support the notion of Russia operating as an imperialist in the modern Marxist sense, although it did indeed show that Russian investments “are significant, widespread, and not just about selling oil and gas.”
It is worth noting that the authors of the Vale 2011 study, like all other financial analysts, bracket Russia with other large “emerging markets,” rather than “industrialized” or “advanced” (i.e., imperialist) countries. The report estimates that Russian MNEs have a total of $107B invested abroad, more than all “emerging” non-imperialists except Mexico and China :
“Despite the global crisis of the last few years, Russia has remained one of the leading outward investors in the world. The foreign assets of Russian MNEs have grown rapidly and only China and Mexico are further ahead among emerging markets. As the results of our survey show, several nonfinancial Russian MNEs are significant actors in the world economy.”
—http://www.vcc.columbia.edu/files/vale/documents/EMGP-Russia-Report-2011a-Final_for_publication-21_Jun_11.pdf [Vale 2011] p1]
In describing “the motives of Russian investment abroad” (a category that presumably refers to actual productive assets and excludes money laundering etc. ) the Vale 2011 authors cite a desire to gain access to markets, resources and foreign capital markets as well as to avoid protectionism abroad and political pressure at home. What seems particularly significant for our discussion is the comment that Russian MNE investments are “rarely” aimed at “efficiency seeking” (i.e., seeking superprofits through lower paid foreign labor).
“The motives of Russian FDI abroad are varied. The typical outward FDI motives of Russian MNEs,especially in M&A deals, are the searches for markets and resources (see annex table 4). Their FDI can also be strategic-assets-seeking but it is rarely efficiency-seeking (this latter motive is to be found in Russian FDI only in the CIS and a few other countries, where labor costs are lower than in Russia). It can also be driven by image-building motives and by the need to insure against political risk. Russian owners of the largest companies are still under suspicion of developing new methods of ‘capital flight’. In some cases, through their FDI abroad, Russian MNEs have received access to cheap financial resources from international stock exchanges for the development of their business in Russia. The strengthening of negotiating power is another specific FDI motive of Russian oligarchs. Such power is useful both in dialogue with the Kremlin on anti-monopoly investigations and in the struggle against protectionism abroad.”
—Vale 2011, p4 (emphasis added)
Apart from seeking access to broader markets and resources, the other priorities of Russian capitalists are not shared by those from the “developed” countries who generally have little difficulty exercising control over state policy and accessing global capital markets. Unlike Russian MNEs, investments by G-7 imperialists are typically driven by “efficiency seeking,” i.e., increasing profit margins by accessing cheaper labor power. This is an important distinction.
Barbara asserts that the rising value of the foreign assets of Russian investors indicates that profits are being made:
“Where the tables show value gained or increases in the value of foreign asset holdings you can see that these investments are overall profitable right now, not just investment for the realisation of future profit. “
I imagine that by “value gained” Barbara is referring to “Value realized by the end of 2009,” the title of the last column in Annex table 5,”outward greenfield investments” (Vale 2011, p 18). “Value realized” does not refer to profits extracted, but rather the actual (as opposed to originally projected) value of the investment. This is clear from the footnotes. Footnote “b” refers to a plan to invest as much as $10B in Indian telecommunications that was trimmed to a “more realistic” $1B (the figure that appears in the “value realized” column). Footnote “d” reports that only 10-15% of a $3B project in Libya was completed before it was abandoned due to NATO bombing—so the estimated “value realized” is $200m.
Barbara suggests that the increase in the value of Russia’s foreign investments from one year to the next indicates that they have been profitable. This is a reasonable presumption, unless they have grown in value simply because new assets have been acquired. But profitable investment does not necessarily mean extracting value from less developed economies. If, for example, a Russian oligarch buys U.S. Treasury bills, real estate in London and a position in a Wall Street hedge fund it does not any more qualify him as an “imperialist” than a Ukrainian, or Nigerian billionaire with a similar portfolio. Conversely, any Russian (or other) corporations seeking to open up operations in more backward countries—whether to take advantage of cheaper labor or obtain a monopoly position in a given market—are engaging in activities typical of imperialism. So that is what we need to pay attention to.
Josh opened his 30 March verbal presentation at our preconference meeting in TBT by proposing that “capital export [FDI] by implication represents surplus extraction.” His 27 March contribution (“Russia’s Emergence as an Imperialist Power”) largely rests on this premise. But the Vale 2011 report suggests that this formula does not accurately describe the reality of contemporary Russia.
Most foreign investments by Russian capitalists are directed to more “developed” countries. The 2011 Vale report notes that the reasons for this are to gain access to more advanced technology and foreign capital markets, as well as a hedge against “political risks” closer to home.
“The leading Russian investors are large exporters and their outward FDI supports their sales. In some cases, it reduces transport costs for finished goods (hence the refineries of LUKOIL in European countries) or secures their exports against the political instability of transit countries (hence the participation of Gazprom in pipelines). Other motives are connected with getting around trade protectionism in the United States or the EU, especially in the metal industry. However, asset-seeking motives are more popular among Russian MNEs in developed countries.” [p9]
Brazilian investment parallels the Russian pattern–most of it is also directed at more “developed” countries (see Table 4 “Distribution of outward FDI stock 2001-2010” Vale Columbia Center 2012 study on Brazil (http://www.vcc.columbia.edu/files/vale/documents/Profile-_Brazil_OFDI_10_May_2012_-_FINAL.pdf).
The 2011 Vale study describes recent difficulties experienced by Russian firms attempting to set up new “greenfield” foreign operations—i.e., enterprises constructed from scratch. Greenfield operations established by both Russian and Brazilian MNEs have tended to been undertaken in more backward regions, whereas the acquisition of existing companies has tended to characterize their investments in the EU and North America.
“Several Russian companies lost their foreign subsidiaries during the recent crisis. There were examples in machinery, construction, insurance and some other industries. The situation in iron and steel was the worst. The largest non-ferrous metal companies survived but went down in the top 20 ranking. The crisis was even more severe for Russian greenfield FDI. Many projects were either abandoned or postponed. However, some companies (mainly oil & gas MNEs) continued to make large new deals in 2009 (see annex table 4).”
—Vale 2011, p10, emphasis added
Annex Table 4 in the 2011 Vale report, “The top 10 M&A [merger and acquisition] transactions [by Russian companies] 2007-2009,” shows roughly three quarters involving companies based in imperialist countries. The figures in table 6 in the 2012 Brazilian study (which I will refer to as “Vale 2012”) are roughly comparable.
Russian and Brazilian greenfield (neocolonial) investment in the recent past certainly does not suggest that they are playing in different leagues. The Brazilian ventures have also encountered some difficulties, but seem on the whole to be more robust. (Attachment No. 1 reproduces some of the key tables—including those on greenfield ventures–from both Vale studies.)
Comparing the tables on greenfield operations reveals that investment in the top ten Brazilian ventures is roughly six times larger than the top ten Russian ones (roughly$18B compared to $3B). This ratio is the hardly what would be expected of a comparison of investments in backward countries by a supposed imperialist country on the one hand and a non-imperialist country on the other.
In her 20 March document Barbara wrote:
“It has been suggested that this increase in outward investment is related to the rise in oil and natural gas prices (since similar increases were seen in some other oil-exporting counties). This is undoubtedly true, but I’m not sure I see the significance of that if Russia’s ruling class has leveraged the massive profits from its natural resource oligopolies to extend and significantly deepen its foreign investments, cementing its status as an independent exploiter of weaker countries.”
The growth in Russian FDI in recent years has been paralleled (and in some cases exceeded) by other major oil producers, particularly from the Middle East, as I pointed out in my 15 July 2013 rejoinder to Decker-Dorn in which I cited data from the Financial Times, showing that between 2003-07 and 2008-12:
“The second highest increase in FDI outflows [after China] was recorded by the United Arab Emirates. It was the 14th largest outbound investor in 2008 to 2012, moving up nine places compared with the 2003 to 2007 period. It now ranks above larger countries such as South Korea and Australia.
“Elsewhere in the Middle East, investments from Kuwait, Bahrain and Qatar have also increased significantly between the two five-year periods, although they are still far behind UAE levels. Comparing the two periods, the number of outward FDI projects from Kuwait doubled, the number from Qatar increased threefold and the number from Bahrain increased fivefold.”
—FDI Intelligence, 10 April 2013 [see Appendix A below]
A sharp spike in oil prices in the early 1970s resulted in a similar dramatic upturn in “petrodollars,” but no one interpreted the massive outflow of FDI from OPEC countries (most of which was recycled through imperialist financial centers) as signaling the emergence of Kuwaiti or Saudi Arabian “finance capital.”
In his 27 March document “Russia’s Emergence as an Imperialist Power” Josh attempted to deal with this argument with three graphs (which he labeled 2A, 2B and 2C) that showed Russia “exceeding” or “greatly exceeding” a “selected group of so-called ‘petro states’” in terms of outward FDI, net outward FDI and FDI as a percentage of GDP. The “petro states” he selected did not, however, include any of the four I had cited last July as having doubled, tripled or quintupled their FDI. In order to get the results he wanted Josh chose a different quartet: Iraq and Nigeria (which were both undergoing major civil conflicts), Venezuela (where the Bolivarian government was directing much of its oil revenues to various redistributive projects, including supplying Cuba with oil in exchange for medical personnel) and Iran (which has been under increasingly tight imperialist sanctions.) While Josh’s graphs largely show what he wanted them to they failed to prove his point. As I remarked in my 15 July 2013 response to he and Barbara: “If we are to have a serious discussion it necessary for both sides to address the substantial arguments put forward by the other, not to ignore or sidestep them.“
As comrades on both sides of this debate have observed, FDI stats can be misleading and in any case are not a particularly useful measure of determining whether or not a given country should be considered to be imperialist. Certainly no Marxist would conclude that the Financial Times report that the UAE has passed imperialist Australia in the global FDI table, signaled that the this Gulf sheikdom was “cementing its status as an independent exploiter of weaker countries” to use Barbara’s phrase
Russia is by far the biggest country and the biggest investor among the nine members of the CIS. It also has the largest gas and oil deposits. But Kazakhstan, which sits atop oil and gas deposits of the Caspian basin, has in the last decade emerged as a major energy exporter, and, like Russia, has also been generating considerable revenues, much of which has been invested abroad. As I noted in my 15 July 2013 reply to Dorn-Decker in 2011, the “World Investment Report 2012” states that, in 2011 in the CIS, “The takeover of Polyus Gold (Russian Federation) for $6.3 billion by the KazakhGold Group (Kazakhstan) was the largest.”
According to Wikipedia’s entry on “Energy Policy of Kazakhstan:
“In 2000s, the oil production has increased rapidly due to foreign investment and improvements in production efficiencies. In 2006, Kazakhstan produced 54 million tons of crude oil and 10.5 million tons of gas condensate 565,000,000 bbl (89,800,000 m3), which makes Kazakhstan eighteenth-largest oil producer in the world.”
The oil revenues flowing to the Kazak ruling class need to be invested and there are not enough profitable opportunities at home. So, like Russia, much of this money apparently goes abroad. An article in Eurasian Development Bank’s “Eurasian Integration Yearbook 2011” pointed to parallels between Russian and Kazakh investment in the CIS:
“The emerging Russian transnational companies (TNCs) started a massive invasion into post-Soviet [CIS] markets, and were joined by TNCs from Kazakhstan in the mid-2000s. The preconditions for this boom were the high rates of economic growth in both TNCs’ home countries which allowed the TNCs to gather momentum for entering regional markets….”
—“Trends in Investment Cooperation between CIS countries and the Global Economic Crisis,” p 34
However large Kazakh FDI flows in and out may be, I am sure we can all agree that they hardly qualify Kazakhstan as a center of imperialist “finance capital.” The same is true of Russia. On page 10 of the 2011 Vale study there is a box on Russia’s financial sector which notes:
“Our report does not cover financial services but an internationalization process can be seen in the Russian financial sector as well. However, no Russian financial MNE can be compared with the largest Russian non-financial MNEs in internationalization. The global competitiveness of the Russian financial sector is low. After the collapse of the Soviet Union, none of the banks or insurance companies took the opportunity to become real multinationals. On the contrary, many foreign financial multinationals secured a footing in the Russian market.”
The significance of this seems fairly obvious. Perhaps we can agree that Russia capitalism cannot be characterized as a powerful and vigorous “finance capital” player in the world economy. The imp comrades have yet to comment on what they make of the fact that, despite active attempts by the Kremlin to attract foreign and regional investment, it is Warsaw, not Moscow, which has emerged as the financial center of Eastern Europe. This signifies that Russia is far from being the dominant “finance capital” power even among the countries of the former Soviet bloc.
The big players in Russia’s banking system (as indicated by Table 7 of the 2011 Vale study) are either state owned or controlled. According to David Collins, whose 2013 book Josh cited in his 27 March document, only one Russian financial institution, Sberbank, appears on the Fortune 500 list [p 52]. On this score, and several others, Brazil seems somewhat more advanced than Russia:
“Brazil has four financial services firms in the Fortune 500 list of the world’s largest corporations: Itausa-Investimentos Itau, Banco Bradesco, Banco de Brasil, and Ultrapar Holdings. However none is in the top 100. Companies related to construction, such as Norberto Oderbrecht and Adrade Gutierrez maintain a large international portfolio. Several high-tech firms, such as Datasul, Natura, and Lupatech are globally active. As a developing country Brazil is ahead of France, Spain, and Canada in software and IT services. In 2010, almost 20 per cent of Brazilian merger and acquisition based FDI was in the services sectors, with finance being the most significant.”
—The BRIC States and Outward Foreign Direct Investment, p 30, emphasis added
The following observation in the IEC approved document “On Imperialism” provides a useful framework for determining which countries are imperialist:
“The fact that, over the long term, semi-colonies suffer a net outflow of value to more ‘developed’ imperialist countries lies at the core of what Marxists designate as ‘imperialism.’ The mechanisms for the extraction of value can take various forms—loans, direct investment, portfolio investment, land rent, patent and licensing fees, transfer pricing—but they all systematically tend to favor the interests of the capitalists of the advanced countries over those of more backward ones.”
To assess Russia today we must seek to determine its relation to more backward countries, particularly those in its “sphere of influence,” i.e., the CIS. The 2011 Vale study points to other factors that help shape foreign investment decisions by Russian corporations:
“The second or Uppsala theory of the internationalization of the firm emphasizes the role of close psychological distance and low language and cultural barriers. These factors are important for Russian investment in Slavic countries, as are the strong economic and political ties inherited from the Soviet period. Many Russian companies with outward FDI do not have much experience in investing abroad and thus tend to prefer buying companies or establishing affiliates in the familiar environment of post-communist countries, especially those with a positive attitude towards Russians.
A recent study by Ariel Cohen produced for a January 2012 workshop sponsored by the U.S. Council on Foreign Relations notes that in 2010 roughly 10 percent of Russian crude oil exports went to CIS countries:
“The average price of crude oil exported by Russia has consistently been considerably lower for the former Soviet states than for the rest of the world. In 2010 CIS states bought the Russian crude at a 35 percent discount, paying an average of $56.20 per barrel, while the rest of the world paid $76.24. This figure does include the prices charged to Belarus and Kazakhstan, members of the Customs Union. In the past, the discount was even deeper. The largest discount – 44 percent – was extended in 2008. In the year when oil prices spiked to over $100 a barrel for a time, CIS countries paid $66.11 per barrel of crude from Russia while the rest of the world paid $95.27 on average. This is the cost of doing business, or more accurately, of keeping the sphere of influence – excuse the pun – oiled.”
—“Politicized Oil Trade: Russia and its Neighbors,” [p2 ]
This is not how the oil corporations of the advanced capitalist countries generally do business:
“Russia is able to ignore the economics in its oil sales to CIS countries because it can make up the difference elsewhere. However, its budget, dependent for the 86 percent of the revenue on hydrocarbons, it precariously balanced at around $100/bl. If the world oil price were to drop, Russia would no longer be able to override the economic illogic based on the geopolitical rationale.” [p5]
Cohen notes that Russia’s parvenu bourgeoisie is far more dependent on the state than its opposite numbers in the imperialist West:
“Russian energy policy in the region is based on geopolitics rather than economic considerations. Political clout created by energy dependence is supplemented by Moscow’s involvement in support of leaders who otherwise may lose public legitimacy. The price at which Russia sells oil to former Soviet republics is based on geopolitics rather than production costs or market prices.” [p4]
The discounts naturally come with a price and the Kremlin is quite capable of slapping around its weaker CIS partners. Cohen gives the following example from a decade ago:
“Armenia is another country that sacrificed its sovereignty significantly through heavy dependence on Russian energy and security blankets. In 2003 Armenia owed to Russia $93 million, and in 2003 Russia demanded repayment of this debt. Instead, the Amenian government, under heavy pressure from the Kremlin, handed over five major Armenian assets including key energy, research and development, and manufacturing facilities.” [p5]
In other cases, for example Syria, Russia has written off vastly greater debts. The “geopolitical interest of Russia” largely involve the Kremlin’s attempts to prevent further expansion of NATO and the EU into the former Soviet bloc. To this end it supplies friendly regimes with financial and political support (often in the form of discounted energy prices.) And vice versa. When Ukraine went “orange” a decade ago, energy prices went up. This happened again this year when Moscow’s preferred regime in Kiev was deposed. Russia can be accused of acting as a regional bully, but that does not make it imperialist in the Marxist sense.
Dorn concludes her document with a few tables comparing recent FDI trends in Russia and Brazil:
“By way of comparison, here are some graphs comparing Russia and Brazil, showing that despite some (not unexpected) numeric similarities between a weak imperialist economy and arguably the strongest non-imperialist, when it comes to foreign investment they are in different leagues.”
One area in which Russian and Brazilian FDI are similar is the prominence of tax havens as destinations for outward FDI flow. This is evident by comparing Table 6 in the 2011 Vale study (showing many of the top destinations for FDI are tax havens) to Table 4 in the 2012 study of Brazil which shows a similar tendency. On the other hand Table 3 of the Brazilian study shows about a third of Brazilian FDI stock is in the financial sector. Comparable data is not presented for Russia—perhaps because its financial sector is relatively less developed.
Collins provides the following sketch of Brazil’s economic development and global status:
“As of 2011, seven of the Fortune 500 lists of the world’s largest corporations are Brazilian. Only one was in the top 100: the oil company Petrobras (occupying 34th spot). Brazil has 13 companies on the highly influential Boston Consulting Group’s (‘BCG’) list of Global Challengers for 2011, a phrase used to describe firms that are globally expansive and accordingly challenge traditional MNEs from the developed world. Outward FDI from Brazil had been primarily composed of greenfield investment in the form of commercial offices abroad which focused largely on supporting export activities. In recent years mergers and acquisitions involving Brazilian firms have grown in size and importance. One of the chief strategies for this form of investment on the part of Brazilian MNEs has been to diversify operations, although mergers and acquisitions have also enabled Brazil’s MNEs to add value to their chains of production. Outward FDI from Brazil is still largely focused on Latin America, in part due to uncertainties faced by foreign entrants in these markets that are believed to be less acute than those in Africa and Asia. Brazilian MNEs’ regional concentration has enabled these firms to become dominant suppliers in Latin America in a manner that would have been impossible were the companies more geographically and culturally dispersed. This allowed Brazil’s companies to exercise greater bargaining power as well as respond to localized needs of customers more efficiently.
“Brazilian MNEs do have a noteworthy presence in the African countries of Mozambique and Angola, both of which have Portuguese heritage and language, which has helped entry into these markets. South Africa has also attracted Brazilian investors because of the expertise of Brazilian firms in the mining industry. It is expected that the geographical dispersal of outward FDI from Brazil will diversify in the near future in favour of Africa, Eastern Europe, and Asia. This is due both to the large market and resource availability in these regions, as well as the relative increase in political risks in Brazil’s traditional investment locale of South America.
“Natural resource companies are the major source of growth of Brazilian MNEs, accounting for about two-thirds of the foreign assets of Brazil’s largest twenty MNEs. The high concentration of primary sector industries—including oil and gas, minerals, and agribusiness—reflects the challenge faced by Brazilian MNEs in adding value within the domestic market. Brazilian MNEs’ focus on the extractive sector may be the consequence of inward FDI from countries such as China that capitalized on the natural resources and low-cost labour available in many Latin American countries. Despite this orientation, Brazil’s large MNEs have not demonstrated an internationalization strategy related to natural resource acquisition, but have instead prioritized technology acquisition, as noted above.”
—Ibid., pp 27-28
Collins’ sketch of Russia’s current economic status underlines its qualitative similarity to Brazil:
“Russia has two firms in the top 100 of the 2011 Fortune 500 list of the world’s largest corporations: Gazprom (35th) and Lukoil (69th), both of which are in the extractive sector. The Boston Consulting Group 2011 list of Global Challengers includes six Russian companies: the Evraz Group, Gazprom, Lukoil, Norilsk Nickel, Severstal, and United Company Rusal. Russian MNEs are dominated by those in the extractive sector and are motivated by market-seeking rather than cost-savings strategies, in large part because of the ready availability of resources at home. Russian MNEs tend to share important attributes in terms of their ownership structures, motivations, and business strategies. First, in contrast to firms from the developed world, Russian MNEs internationalized rapidly, often through the leveraging of their natural resources base. Novolipesk Iron & Steel and Severstal are good examples of this ‘born global’ strategy that is also seen in other BRIC MNEs. The second most common characteristic of Russian MNEs is their relatively large absolute size. Gazprom, Lukoil and Norilsk Nickel have particularly sizable capitalizations and asset holdings. One of the comparative strengths of Russian firms is their large size at home, termed ‘ownership advantage’, which has enabled them to resist foreign competition as Russia’s borders have opened to inward FDI. The large domestic size of Russian firms is the result of the rushed privatization process in the 1990s in which foreign investors were almost totally excluded from ownership. During this period outward FDI was insignificant, taking the form of offshore tax havens rather than genuine internationalization. These large oligopolies consolidated their respective industries through mergers. Modern Russian MNEs now display a high degree of horizontal and vertical integration of production capacities which also include distribution networks and banking, linking services to non-services outward FDI. Most Russian companies operating abroad retain strong ties with domestic natural resources. Until recently, most Russian MNEs were in the oil and gas, metallurgy, and electricity generation and distribution industries. Russian firms have exploited the ties to their natural resource base as collateral to raise loans for FDI, particularly during periods where the prices for these commodities were highest.
“Despite market reforms, the Russian government maintains a significant and indeed growing degree of control over its largest companies….
“Russian MNEs have traditionally invested in firms from the developed world, especially in North America and Europe, despite the fact that many Russian MNEs began their expansion in other countries of the CIS, particularly where this involved assets inherited from the dismantling of the former Soviet Union. Targeting developed country firms is rooted in Russian MNE’s desire to gain access to advanced technologies that are presumed to be possessed by developed country firms….
“Apart from rapid economic growth in the area, the reasons for Russia’s internationalization towards the CIS mainly include the geographical proximity and cultural and linguistic ties, which have led to close political relations as well as similar business practices. The UK is the largest single target country, followed by Canada and the US. Investment through mergers and acquisitions in the CIS by Russian firms has grown again recently. Outward FDI from Russia in the developing world is a relatively recent phenomenon, with a focus primarily on Asia and Africa, but again focused on new markets rather than cost-savings. This pattern reflects a preference for regional expansion followed by true globalization. So far Russian firms have not managed to purchase major companies in the US or Western Europe, yet some Russian firms, such as Severstal, have used a successful strategy of acquiring troubled enterprises at favourable prices. The primary motivation for the globalization of Russian firms is thought to be one of technological advancement, such as more efficient oil production methods.”
—Ibid., pp 50-52, emphasis added
In our discussion I think that too much significance has been attributed to FDI figures. While they are certainly worth factoring in, the decisive criterion or determining which countries qualify as imperialist is their role in extracting value from neo-colonies. Having said that, there are a few things related to FDI I want to address. Barbara presents several graphs in her 20 March document, two of which show Brazilian FDI (both FDI flows and net outward FDI ) dropping steeply after 2006 (when it was briefly above that of Russia’s).
In my 15 July 2013 response to Dorn/Decker’s critique of “Is Russia Imperialist?” I pointed out that Russia’s surging outward FDI was closely paralleled by those of several Mid East petrostates and therefore should not be viewed as a classic case of the imperialist export of capital. I also addressed the significance of the growing divergence of Russian and Brazilian FDI stats since 2006. Barbara’s recent contribution reiterates the assertion that this divergence shows “that Russia has become an imperialist power.” I have attached my July 2013 response to Dorn/Decker on the significance of recent fluctuations in relative FDI between Russia and Brazil as “Appendix A.” It summarizes some discussion by academics of possible causes and the significance of this phenomenon and points to various factors that tend to refute the proposition that Russia has entered a “different league” than Brazil.
It is unfortunate that Barbara’s recent document simply recycles her earlier (mistaken) argument without even attempting to comment on the evidence I presented to challenge this conclusion.  I know that the passage of time and the numerous documents sent back and forth on this subject make it easy to lose track of threads in the discussion. So in response to her reiteration of the June 2013 suggestion that the recent divergence of Russian and Brazilian FDI means that “when it comes to foreign investment they [Russia and Brazil] are in different leagues,” I can only recycle my July 2013 response.
⇑  Two partial exceptions to this are: 1) graph 1B “Net Outward FDI” that shows Greece, Portugal and South Africa with higher values than Russia between late 2005 and early 2009 (and all four countries essentially converging in 2012);, and 2) graph 2B “Net Outward FDI” that shows Nigeria, Iran, Iraq and Venezuela exceeding Russia between late 2005 and early 2009. In 2012 the five countries are shown as very close to converging.
⇑  : David Collins provides the following succinct definitions of FDI “flow” and “stock”:
“The stock of inward FDI is the cumulative US dollar value of all investments in the home country made directly by residents—primarily companies—of other countries. The stock of outward FDI is the cumulative US dollar value of all investments in foreign countries made directly by residents—primarily companies—of the home country. Direct investment excludes investment through purchase of shares. [aka portfolio investment-TR] FDI stock captures the value of MNEs at a given moment in time. FDI flows depict the extent to which capital has moved across borders over a given period (usually one calendar year).”
⇑  In his chapter on Brazil, David Collins raises parallel suggestions in speculating on why Brazil’s outward FDI, while exhibiting “a general trend of sustained increases,” is currently the lowest among the BRICs. The fact that Russian outward FDI has been greater than Brazilian since 2006 has not led Collins to conclude that the two belong in different categories. In fact he suggests that negative FDI flows resulting from the repatriation of capital from foreign affiliates by Brazilian MNEs “should not be seen as an indication of decline”:
“Although its level of outward FDI is the lowest among the BRICs, Brazilian firms have internationalized significantly in recent years relative to other developing countries. Still, Brazil has shown a relatively low level of outward FDI compared to the overall size of its economy. This could indicate that Brazilian firms have found a sufficient market for their goods and services among domestic consumers, obviating one of the traditional primary motivations for internationalization among MNEs. Alternatively, the relatively low level of internationalization might suggest that Brazilian firms have encountered regulatory barriers that have impeded their outward expansion. Brazil’s annual outflow of FDI in 2010 was USD 11.5 billion, considerably less than the peak of USD 28 billion in 2006 before the global financial crisis which began in late 2008. In 2011 Brazil experienced a net withdrawal of FDI from Brazil of over USD 1 billion, the only BRIC state with negative FDI outflows in the past decade, however, negative values for FDI outflows represent the repayment of loans (intra-company transfers) from foreign affiliates to their parent company in Brazil and as such should not be viewed as an indication of decline of Brazilian MNEs. Prior to 2006, Brazil’s highest annual outward FDI flow was only USD 9.8 billion in 2004.3 This illustrates a general trend of sustained increases in outward FDI flows.” [p 25 , emphasis added]