The Importance of Geopolitical Factors in International Location Decisions: The Russian Federation Case

The Importance of Geopolitical Factors in International Location Decisions: The Russian Federation Case

Mariana Gonçalves Dias (Finance XXI Consulting, Portugal) and Aurora Amélia Castro Teixeira (Universidade do Porto, Portugal)
DOI: 10.4018/978-1-5225-3264-4.ch003

Abstract

Despite connections and common traits between geopolitics and international business based on geography and location, literature on this matter is somewhat scarce. This chapter aims to contribute to this literature gap. Using the Russian Federation as a case study and by framing its geopolitical situation, it seeks to answer the following question: What is the importance of geopolitical factors in international location decisions? Applying a hybrid methodology which combines qualitative and quantitative analyses, the chapter concludes though Russia has an innately favorable geopolitical situation, its full potential is not being exploited, remaining latent and underutilized. Additionally, the pragmatic standing of Russia's foreign policy, the permanence of some structures recalling the USSR and the persistence of corruption, and an unsteady business environment place constraints on improving the open market and raises obstacles to FDI.
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Relationship Between Geopolitics And International Economics: A Theoretical Overview

Geopolitics arose at the beginning of the 20th century as a multidisciplinary approach that brought together political, strategic, geographical, historical and economic studies. Its conceptual field has been surrounded by a haze of ambiguity that has generally led to misinterpretations and unclear views about its definition (Tuathail & Toal, 1994; Correia, 2004; Drulák, 2006), vacillating between an historical and reconstructive science and a predictive science (Retaillé, 2000). The most accepted definition of geopolitics is that of Kjellen (apudCorreia, 2004), who defines it as “the theory of the state as a geographical organism or phenomenon of space”. In other words, geopolitics studies the influence of space and location on human action and, consequently, on political action, supporting the argument of Defarges (2003) that geographical backgrounds frame and distinguish Mankind’s intrinsic ways of life.

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