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What factors underlay the decision by Volkswagen to invest directly in automobile production
in Russia? Why was FDI preferable to exporting from existing factories in Germany?
Which theory (or theories) of FDI best explain Volkswagen’s FDI in Russia?
How do you think FDI by foreign automobile companies might benefit the Russian economy?
Is there any potential downside to Russia from this inflow of FDI?


A.No
Type
Marks
Assignment-1
Case Study
5
Total
5
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, what impact do you think this will have
on FDI into Russia?
Volkswagen has signaled that it is going to stay the course in Russia, despite current political
and economic headwinds. Why do you think it made this decision? What are the pros and
cons of this decision? In your opinion, is it the correct decision?

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