Russian Federation

Attraction of foreign capital refers to the strategic tasks of the development of the Russian economy. Foreign investment plays a special role in this process, providing access to financial resources, modern technologies, management skills, innovative goods and services. And also directly contribute to increasing the competitiveness of the domestic economy, its sustainable growth and improving the living standards of Russian citizens. The question of the need for foreign investment in the Russian Federation is relevant today, ensuring a favorable investment climate and creating the conditions for investment is discussed at the level of the government and foreign heads of state. The Russian Federation is interested in foreign investments.

Recently, the investment climate in Russia has deteriorated significantly, and the reasons are both economic and political. First, there was a weakening of the ruble, which already affects inflation. In general, the inflation rate went out in 2015 beyond 12%. Annual inflation rates in relation to 2014 at the moment exceed 13%. Moreover, the Russian stock market sank almost 15%, largely due to sanctions.

However, at the present time there is not an absolutely favorable situation for investment activity from the perspective of financing. The policy of the Central Bank of the Russian Federation with respect to banks and monetary policy do not contribute to the development of a loan financing market, that is, it is harder to get a loan, and without it it is practically impossible to develop, especially to small businesses.

All of the above is exacerbated by the deteriorating economic environment in Russia – GDP slowdown, rising prices, declining consumer demand, etc.

In 2014, foreign direct investment in Russia fell by 70%, to $ 19 billion. As a reason for such a sharp decline in investors’ interest in the country are sanctions against Russia, as well as negative prospects for economic growth. Another reason for the sharp drop in foreign direct investment was the significant amount of investment Russia achieved in 2013. Then the country was on this indicator in the third place in the world, losing only the US and China. The distribution of foreign direct investment by regions of our country is extremely uneven. There are three main levels of regional attracting foreign investment.

Most of the incoming foreign investment falls on the Central Federal District – 62.22%. It has the most developed market relations and infrastructure: the development of the financial and credit system, transport and information services, in which foreign investments are successfully attracted, joint ventures are established with foreign partners. A multi-sectoral economic complex was formed in the district, in which the leading industries are the manufacturing and agricultural industries. A significant part is in the North-West Federal District – 10.61%. The least investment was received in the North Caucasus Federal District – 0.03. The Southern Federal District accounts for 1.45% of foreign investment, most of which is directed to agriculture.

The presented data testify to the uneven distribution of foreign investment in the regions of the country. The main reason for this uneven distribution of foreign investment in Russia is that in regions attractive to foreign investors, there is a large resource potential, higher effective demand, better developed infrastructure. Despite the fact that the Russian economy is going through hard times, the country’s investment potential is huge. Thus, our country faces a complicated and rather delicate task: to attract foreign capital to the country, without depriving it of its own incentives and directing its economic regulation measures to achieve the national goals of our country. A purposeful process of attracting foreign investments can contribute to the development of Russia’s economic potential.

Investors are optimistic about the successful implementation of the import substitution program and the draft budget for 2016-2017, which provides for significant structural reforms necessary for a sustained recovery of the economy in 2016.

© 2017 International Investment Committee