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

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