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Economics and management <' Austrian Journal of Humanities and Social Sciences 3-4 (2017)
3 < BAiTWEST >
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- ISSN 2310-5593 (Print) / ISSN 2519-1209 (Online) -
UDC 330.32 DOI: http://dx.doi.org/10.20534/AJH-17-3.4-187-195
A.Sh. Khasanova 1 Z. N. Mirzagalyamova 1 V. V. Shlychkov 1 L. B. Gabbasova 1 L. I. Fatykhova 1
1 Kazan National Technical University named after A. N. Tupolev - KAI (Kazan Aviation Institute), Kazan City
ABOUT CERTAIN TRENDS OF INVESTMENT ACTIVITIES AND MEASURES FOR STRENGTHENING OF INVESTMENT ACTIVITY IN RUSSIA
Abstract
The objective of the study : the problem of intensification of investment activities for solution of the problems related to the economic restructuring and modernization of its production capacity becomes relevant; the degree of influence of investments on modernization processes in the Russian economy is determined.
Research methods: the methodological framework of the conducted research was based on provision of the unity of logic and historical approaches. The authors used the methods that are widespread in research activity — descriptive ones, analysis and synthesis, deduction and induction, generalization, observation, scientific abstraction, statistical analysis, system analysis, as well as the methods of grouping and classification, the methods of comparative, historical and interdisciplinary analysis, expert judgments. The combination of these methods allowed the authors to ensure accuracy of the conducted research and validity of its conclusions.
Russian and foreign works on the issues of investment activities, materials of scientific conferences and seminars served as the information base of this study.
Results: in this work we provided the comparative analysis of gross investment growth rates, the structure of investments into fixed assets, sources of financial investments in different groups of countries, as well as detected the relationship between the intensity of investment processes and the rates of economic restructuring in modern Russia.
Scientific novelty: the trends of investment activities and the reasons of their low attraction to the processing industries have been revealed; the measures for activization of investment activity in certain economic sectors have been suggested; the dependence between investment activity and the paces of economic restructuring has been identified.
Practical relevance: the approaches to solution of the issue on the investment resource shortage have been presented; the authors have suggested the mechanisms and some specific measures for revival of the investment process in individual sectors of the Russian economy.
Keywords: investments, investment climate, gross investments, fixed assets, structure of investments, sources of financial investments, direct foreign investments, commercialization of investments, monetization of the economy, growth of implementable industrial investments.
introduction
Investments represent one of the most important objective and necessary conditions for economic development. Intensification of investment processes is a basic factor in solving the problems of economic restructuring, modernization of its production capacity. The Russian society faces the challenge of achieving the economy's technological leadership, provision of a sustainable economic growth [1]. The important feature
of a new economy is the ability to transform knowledge into creation of new products, processes and services. There is also the challenge of creating qualitative models for production of competitive industrial products [2].
It is impossible to improve the social position in society through redistributive processes in the budget relations without a focus on investments and active expansion of the economic base.
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As a rule, the level of investment activity is linked to such a capacious concept as the investment climate.
In the most general terms, the investment climate combines political, social, legal organizational, economic, geographic and other factors, which collectively can develop on evolutionary basis, as, actually, the notion of "climate". And here the crucial role is assigned to the implementation of infrastructure projects on creation of favorable investment climate based on interaction between the state and private business [3; 4].
Indeed, the complex of natural conditions remains practically unchanged; the mentality of the population is characterized by inactivity, changing throughout the life of generations; a political situation is inextricably connected with elections and therefore has cyclicity. The investment climate under modern conditions has a greater resemblance to the cliché ofjournalistic character, rather than economic category, which as applied to the investments concerning the content should be within such
limits as economic attractiveness of financial or material investments, absence of public-political risks, the perfection and stability of the regulatory framework. In our opinion, investments represent a fairly specific and very dynamic economic category — investments aimed at obtaining of real income or social effect [5].
And if we compare the concept "investment climate — investments", then we must obtain a rigid economic structure with functionally unambiguous dependence. It does not occur in real life. The economic sectors with a large investment capacity are quite clearly marked under the same investment climate, while other sectors with a large potential of investment economic returns remain voids both for domestic and foreign investments.
The main feature of Russian economy is that the investments for it turned into a kind of biological need, rather than the source of growth [6]. The figure 1 demonstrates the trends of gross capital formations in Russia, China and highly developed countries.
Figure 1. Gross capital formations in Russia, China and highly developed countries, billion dollars, current prices [7]
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As can be seen from the figure 1, the gross investment growth rates in Russia for the period from 2000 to 2013 are lower by 11,3 times than in China and by 7,4 times than in the USA. It should be noted that the given time lag is a favorable period of Russian reforms —
the period of high prices for oil, gas and other natural resources.
The indicator, which characterizes investment activity, is the share of gross capital formations in GDP of the country (Figure 2).
Figure 2. Gross capital formations as a percentage of GDP [7]
As can be seen from the figure 2, the highest rate of savings is observed in China, followed by the newly industrialized countries such as India, Republic of Korea and Brazil. The industrialized countries such as the USA, Germany and Japan demonstrate the trends for reduction of gross investment growth rate in relation to their GDP volumes. In Russia the maximum values of gross investments in relation to GDP volumes fall on the early 90's of XX century. The minimum values
of this indicator were recorded in the late 90's. Then the situation improved a little, but the relative indicator has a downward tendency again since the beginning of economic sanctions.
Fixed assets act as important investment goods. On the whole, for the period from 1980 to 2015 the value of fixed assets has an upward tendency. However, in the course of reforms it not only did not increase, but even decreased (figure 3).
240
220
200
100
£
t
A
The cost of fixed assets in the country during tbe period of reforms not ouly did uot increase, but eveu decreased.
380 19 85 19 90 19 95 20 00 20 05 20 10 201
Figure 3. Fixed assets in comparable prices according to full accounting value at the beginning of the year, in% by 1981, 1981 year — 100% [8]
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The figure 4 demonstrates the dynamics of the fixed asset retirement rate.
Figure 4. Retirement rate (liquidation of fixed assets as a percentage of total cost of fixed assets at the beginning of year) [8]
If the retirement rate in 1990 amounted to 2,4, then assets in Russia is considerably below the required level. the same indicator in 2015 decreased up to 0,8. This The figure 5 demonstrates the structure of invest-
shows that there are negative trends of accumulation ments into fixed assets in 2014 according to the types of
and obsolescence of fixed assets. Replacement of fixed economic activity in Russia, China and USA.
Figure 5. The structure of investments into fixed assets according to the types of economic activity in Russia, China and USA,% [9]
The comparative analysis of the represented data shows that the share of investments into industrial buildings and facilities amounts to 40,9% in the Russian Federation, to 68,3% - in China, to 18,3% - in USA. The Chinese investments result in the building of thousands of large industrial enterprises. If according to the data of NBS 165,1 thousands of enterprises with proceeds more
than 5 million Yuan per year were involved in the Chinese industry in 1998, then in 2014 - already 361,3 thousands with proceeds more than 20 million Yuan per year. Average annual number of people engaged in the Chinese economy in 2013 increased by 147 millions in comparison with 1990.
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The share of investments into cars, equipment and and implements is an important constituent of produc-
transport facilities amounts to 35,9% in Russia, 19,7% - tion modernization.
in China, 36,7% - in USA. The figure 6 demonstrates the sources of invest-
The increase of investments into equipment, tools ments into fixed assets in China and Russia.
China
Russia
Figure 6. The investments into fixed assets of China and Russia according to the funding sources,% [9]
The main source of financial investments is the accumulation funds (in China - 69,9%, in Russia - 45,8%), raised funds/domestic borrowings (in China - 12%, in Russia - 36,4%), public funds (in China - 4,9%, in Russia - 17%), foreign investments (in China - 0,7%, in Russia - 0,8%). Unfortunately, the financial flow in Russian realities tends not to the production, but beyond its limits. Capital outflow occurs, rather than its inflow. The
rates of diversion of enterprises' funds on the financial market remain high; and under the conditions of accumulation shortage in the economy it is inextricably associated with a sharp attenuation of the material production sphere, which does not allow to provide fast and large-scale technological modernization of production capacities, which prevents from achieving a sustainable economic growth.
Figure 7. The volume of direct foreign investments in the Russian Federation from foreign investors, billion dollars [10]
The share of direct foreign investments into Russia in 2002-2013 amounted to 10-26% from the general volume of foreign investments received by the country.
The trend of direct foreign investments presented in the figure 8 is unfortunately not favorable to Russia and
the development of production forces. Practically more often foreign investments reduce to foreign borrowings mainly of Russian origin, while techno-engineering constituent of direct investments, as the basis for progress, come practically to naught.
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Figure 8. The share (%) of direct investments in the general volume of foreign investments received by the country [11]
The figure 9 demonstrates international comparisons of direct foreign investments.
Figure 9. Direct foreign investments into Russia and developed countries, billion dollars [12]
Unfortunately, international comparisons often turn into the subject of analytical interest, rather than adjustment of investment policy. The efficiency of direct foreign investments in the Russian economy is low in all aspects — qualitative, structural and share.
Two negative trends with similar orientation became outlined in the investment activity. The first one consists in the decrease of total volume of foreign investments into the Russian economy. The second trend consists in the activization of outflow of Russian en-
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terprises' investments abroad. This trend is extremely undesirable for the development of national economic potential [13; 14].
Branch orientation of foreign investments is not less interesting. Under the same investment climate the foreign investors prefer oil extraction, ferrous and nonfer-rous metallurgy, food industry, trade and public catering.
Figure 10. Distribution of foreign investments in the Russian Federation,% [8]
The focus of attraction for foreign investments involves one thing — that is the proximity to ensured effective demand, the ability to get a quick and guaranteed return on investments. So for example, food industry and trade are directly connected with the population's effective demand; until recently, oil and metals were in great demand on the global market.
Commercialization of investments is what determines the basic condition for their attraction [15, P. 282]. In relation to machine building and metal working, chemical industry, production of building materials and any other industries, no matter how they are classified from the perspective of strategic importance, proximity to high science-intensive technologies or involvement in unique natural resources, — the investment flow will not change its direction towards them. The main reason is the lack of effective demand.
The level of the economy's monetization is a significant problem, which is 3-4 times lower than the international economic standards. Actually, paradoxical situation develops. On the one hand, the level of investment activity is restricted by the presence of disparity between the turnover of material means and financial turnover, on the other hand — the resources diverted to the financial sector do not increase the monetization of the economy. The share of loans to the real sector of Russian economy
as of 01.01.2014 amounts to 39,2%. This means that under current conditions the most important redistributive function of loans in our economy is not fully implemented [16, P. 291]. Russia's banking system is one of the most effective and fastest-growing segments of the national economy. Along with that, the banking market of Russia is not homogeneous. The banks are characterized by low capitalization, which complicates solution ofthe problems concerning the restructuring ofthe Russian economy [17]. New tools for the banking sector development are required [18]. The unit investment trusts act as one of these tools for the financial market development [19].
In our view, the preferred approach is not the focus on foreign investments, especially because they have mainly loan orientation, but the creation of active (investment) component of the budget. This can be achieved through expanding the amount of monetary aggregates, using domestic loans. In other words, we are talking about the budget deficit for the sake of effective savings and temporary benefit from the ongoing technological modernization. The target function lies in the growth of the implemented industrial investments with the necessary balance between the money stock and the final demand goods, including investment goods. The proposed measures allow to revive the investment process in the country.
Austrian Journal of Humanities and Social Sciences 3-4(2017)"^^« Economics and management
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- ISSN 2310-5593 (Print) / ISSN 2519-1209 (Online) -
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Information about the author
Khasanova Asiya Shamilevna, doctor of economic sciences, professor, head of the Department of economic theory
of Kazan National Research Technical University named after A. N. Tupolev - KA.I (Kazan Aviation Institute), Kazan
City
Address: 420111 Kazan City, K. Marx Street, 10
Tel.: +7 (843) 231-01-09
E-mail: khasanovaas@mail.ru
Economics and management <' Austrian Journal of Humanities and Social Sciences 3-4 (2017)
3 < BAiTWEST >
SdB*ELMTÍS
- ISSN 2310-5593 (Print) / ISSN 2519-1209 (Online) -
Mirzagalyamova Zulfiya Nurullovna, candidate of economic sciences, professor of the Department of economic theory of Kazan National Research Technical University named after A. N. Tupolev - KA.I (Kazan Aviation Institute), Kazan City
Address: 420111 Kazan City, K. Marx Street, 10 Tel.: +7 (843) 231-01-09 E-mail: zmirzagalyamova@mail.ru
Shlychkov Valery Vladimirovich, doctor of economic sciences, professor of the Department of economic theory of Kazan National Research Technical University named after A. N. Tupolev - KA.I (Kazan Aviation Institute), Kazan City
Address: 420111 Kazan City, K. Marx Street, 10 Tel.: +7 (843) 231-01-09 E-mail: Shlichkov-valery@mail.ru ORCID: 0000-0002-3307-2153
Gabbasova Lyaysan Bilgusovna, candidate of economic sciences, Associate Professor of the Department of economic theory of Kazan National Research Technical University named after A. N. Tupolev - KA.I (Kazan Aviation Institute), Kazan City Address: 420111 Kazan City, K. Marx Street, 10 Tel.: +7 (843) 231-01-09 E-mail: gabbalb@rambler.ru
Fatykhova Liliya Ilgizovna, candidate of economic sciences, Associate Professor of the Department of economic theory of Kazan National Research Technical University named after A. N. Tupolev - KAKAI (Kazan Aviation Institute), Kazan City
Address: 420111 Kazan City, K. Marx Street, 10 Tel.: +7 (843) 231-01-09 E-mail: flid@mail.ru
