What About the Weather? Climate as a Determinant of Investments and Revenues of Foreign Manufacturing Companies in Russian Regions

34 Pages Posted: 25 Feb 2014 Last revised: 10 Mar 2014

See all articles by Svetlana Ledyaeva

Svetlana Ledyaeva

Aalto University - Department of Economics

Simo Leppänen

Aalto University - School of Business

Riitta Kosonen

Aalto University - School of Business

Date Written: February 24, 2014

Abstract

Globalization and climate change have been among the hottest academic topics during the past couple of decades. However, in academic research the links between the two is virtually untouched. In this paper, we study the impacts of climatic factors on foreign manufacturing companies in Russia. In particular, we analyze how short-term weather affects their revenues and how average climate impacts the manufacturing foreign direct investment (FDI) distribution across Russian regions. We find quite strong evidence that higher precipitation and temperature during summer is positively associated with annual fluctuations of foreign companies' revenues. We also find that manufacturing FDI in Russia tend to accumulate to regions with milder and stable climate, i.e. to regions with warmer winter and cooler summer and less weather volatility.

Keywords: FDI, Russian regions, foreign companies, manufacturing, climate, weather

JEL Classification: F21, F23, Q54, R10

Suggested Citation

Ledyaeva, Svetlana and Leppänen, Simo and Kosonen, Riitta, What About the Weather? Climate as a Determinant of Investments and Revenues of Foreign Manufacturing Companies in Russian Regions (February 24, 2014). Available at SSRN: https://ssrn.com/abstract=2400434 or http://dx.doi.org/10.2139/ssrn.2400434

Svetlana Ledyaeva (Contact Author)

Aalto University - Department of Economics ( email )

PO Box 1210
FI-00101 Helsinki
Finland

Simo Leppänen

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

Riitta Kosonen

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

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