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Regional economy: problems of stimulation of foreign investments
Sautieva Tamara Batrbekovna, Branch of the FSBEIHPE «Plekhanov Russian University of Economics» in Pyatigorsk, Stavropol region, Professor at the Department of Theory and history of state and law
E-mail: STB-ALANIA@mail.ru
Regional economy: problems of stimulation of foreign investments
Abstract: Modern Russia takes a quite humble place in the world in respect of import of capital. It is primarily associated with the fact of absence of a favorable investment climate, which is determined by political stability, legal guarantees for foreign investors, developed institutional and market infrastructure, tax benefits for foreign investors etc.
Keywords: region, investments, subjects of the Russian Federation.
The total volume of accumulated foreign investments in the economy of Russia accounted for 29.3 billion dollars at the beginning of 2000 [1, 122]. Upon this indicator, Russia took approximately the 25th place in the world giving place to leading industrially developed countries and separate new industrial states. Less than 1 % of total volume of direct foreign investments in the world accounted for Russia.
During the period of economic reforms, industrial structure of foreign capital investments that reflects priority spheres of application of foreign capital in Russia changed significantly. The spheres included: currency and financial sphere, fuel and energy complex, food industry, which over a half of all investments accounted for at the beginning of2000.
From the beginning of 90s, the center of influence of management of socio-economic processes was consistently shifting from federal to regional level. The tendency of regions’ authority expansion also covered the sphere of cooperation with foreign investors.
The volume of attraction of foreign investment in different regions of Russia depends on the condition of investment climate, consistency in market reform performance, level of development of economic potential, dynamics of reformation of production and financial infrastructure, efficiency of use of natural and labor resources.
The conditions of entrepreneurship and investment are in a certain correlation with socio-economic condition of the regions. However, these correlations are of interest, primarily, from the methodical point of view. In the conditions of the quick change of internal and external conjuncture, they cannot be stable. It refers to the ones whose indicators are close to mean (approximately 30-40 regions of the Russian Federation).
The indicators of investment climate in the regions and contradiction of their interests enable to define that the worst investment climate (and extremely unfavorable conditions) are observed in 30-35 subjects of the Russian Federation. Several types of regions can be distinguished upon the combination of socio-economic conditions:
- North Caucasus republics with a high density of population, which leg behind significantly in respect of development level;
- remote underdeveloped and underpopulated regions with economic monoculture in the North, Siberia and Far East (Magadan, Sakhalin, the Republic of Altay, Tyva etc.);
- agricultural regions of the European center and Volga region with a high share of Military Industrial Complex in the industry (Pskov and Tambov regions, the Republics of Chuvashia, Mordovia etc.). Given economic difference of these regions, they are united by inability to produce sufficient volumes of competitive goods. Weak participation in external economic relations, low income of the population, considerable unemployment (4-10 % according to official data) are typical for them [2, 71].
Another belt of entrepreneurial and investment activity is formed by approximately 20-25 subjects of the Russian Federation with relatively and limitedly favorable conditions. Three types of regions can be distinguished among them:
- with a large export potential, but relatively small population — up to 1.5 million people (Khanty-Mansiisk autonomous district, Murmansk and Lipetsk regions, the Republics of Sakha, Khakassia etc.);
- with a large export potential, diverse farm business (Samara, Sverdlovsk and Omsk regions, the Republics of Tatarstan and Bashkortostan, Krasnoyarsk region etc.);
- the largest cities of Russia — Moscow and Saint-Petersburg. Apart from relatively favorable social indicators, the revival of investment sphere at the expense of own and external capital investments is typical for them.
Unlike Russian investors, foreign investors find Moscow, Ryazan, Vladimir, Volgograd, Voronezh, Saratov and Kemerovo regions more attractive. In the east, the potential centers of investment activity can primarily be Novosibirsk, Altay, Krasnoyarsk and Khabarovsk regions. Finally, Leningrad and Kaliningrad regions and Saint-Petersburg have a more favorable investment climate in the north-west.
General economic stability in the country manifested in the changes of investment activity in different federal districts showed a necessity for a more detailed and concrete research of economic situation in every region where the investments are planned. Federal differences in the adherence to the federal legislation and roles of administration of the subjects of the
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Section 8. Regional studies and socio-economic geography
federation in the formation of regional investment environment are known. Thus, the alliance of differently regulated regions in one federal district, mechanical summing of their volume economic indicators exclude natural characteristics of regional development and cause structural statistical distortions.
Such distortions can be explained by the peculiarities of the national statistics. However, the investor unburdened with the “compulsory nature” of choice should evaluate the general environment that his property will function in. This circumstance forces them to use a certain procedure of choice of a place for capital investment. It starts with an evaluation of the level of risk of the country and a sector of economy, and ends with a concrete territory, local business subject and a separate project. Herewith, investment attractiveness of a federal district can be useful, which should be completed with an analysis of investment history of the region, city or district. Investment history of the given territory reveals the main tendencies of its attractiveness for the capital. Considered indicators characterize the combined action of many factors, i. e. it accumulates a system effect, because, as a rule, the investment process presupposes not a one-time but extended in time investment of financial resources [3, 58].
Russia is a country of extreme inter-regional economic, social and political contrasts that every potential investor, given the sufficient information, can find a region with satisfactory or, at least, bearable investment conditions. Division of regions upon the rating of investment potential shows that the most contribution to its formation is made by the factors accumulated in the process of a long-standing economic activity: infrastructure-wise development of the territory, innovation potential and intellectual potential of the population. It’s no coincidence that apart from generally accepted economic leaders like Sverdlovsk, Samara, Moscow, Kemerovo, Nizhniy Novgorod regions, the Republic of Tatarstan, Moscow and Saint-Petersburg etc., the first twenty regions include not so economically powerful, but quite “developed” regions of Central Russia such as Belgorod, Vladimir, Voronezh, Ryazan and Tula regions.
What factors play a positive role in the attraction of foreign investments?
Particularly, they are:
1) rich and comparatively inexpensive natural resources (oil, gas, coal, diamonds, poly-metals, forests etc.);
2) immense internal market;
3) personnel with high level of education, capable of quick understanding of new technologies in production and management;
4) relative cheapness of qualified labor;
5) absence of serious competition from the side of Russian producers;
6) performed process of privatization and an opportunity for foreign investors to participate in it [4, 36-42].
One of the most important factors of attraction of foreign capital is a favorable legal environment, stable legislation base ensuring the conditions of maximum effective protection of investors’ interests.
Modern legal base for foreign investments in Russia is composed of laws, Decrees of the President of the Russian Federation. There is also a range of Government decrees and concrete departmental instructions. According to their nature, these documents can be divided into two groups.
The first group is basis laws of Russia (Constitution of the Russian Federation; Civil Code; Customs Code etc.) ensuring the transition of the country from communist regime with a command economy to democracy and market economy. Some of them were passed in 1990-1991.
The second group is documents directly related to foreign investments. The main document is the Law about foreign investments in the RSFSR as ofJuly 4, 1991.
General stabilizing base for investment climate in Russia is the fact that for several years Russia has had positive position of the external trade balance. Russia’s joining the article VIII of the Charter of the International Monetary fund contributes to a civilized conduct of international settlements, which increases the attractiveness of investments.
A significant change of the situation in the next years is problematic. Herewith, the creation of a favorable climate will have a favorable effect on both the inflow of foreign investments and the volume of national investments.
References:
1. Socio-economic condition of Russia. - M., 2000.
2. Maksimov P. A. Regulation of external economic activity of the region. - M., 1997.
3. Bernshtam E. Comparative analysis of investment benefits of federal districts.//Economist. - 2002. - № 10.
4. Sautieva T. B. Stimulation of foreign investments to the economy of the region.//Scientific works of RSUTE. - M., 2004. - № 4/8.
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