Strategy and ways to attract foreign investment to the regions

Modern foreign experience shows that in any sufficiently developed state there is a strict system of protection of its national markets from excessive penetration of foreign capital, and the attraction of financial and other resources from abroad is always based on a carefully developed state concept of attracting foreign investment.

To develop a regional policy to attract foreign investment, it is necessary to structure the sectors of the region’s economy from the position of the expediency of using external capital in them. At the same time, it is necessary to distinguish at least three groups of industries in which:

(a) Access of foreign capital is prohibited;

b) access of foreign capital is limited and possible only after obtaining a license;

c) unhindered access of foreign capital is possible.

The selection of investment projects with the participation of foreign partners should be made on the basis of priority state interests, providing for the solution of the following tasks:

1) restriction of access of foreign capital in industries of strategic importance (military-industrial complex, electric power industry, etc.), as well as in areas where it is necessary to carry out protectionist measures in order to maintain and develop their own producers;

2) development of backward regions and territories (agriculture, traditional crafts, Arctic zone);

3) implementation of large investment projects, where without the help of foreign investors with their technologies, business administration and financial resources now can not do;

4) introduction of new high-tech, environmentally friendly industries, which could qualitatively raise the level of production efficiency and restructure the industry of the region as a whole.

At the same time, limiting the inflow of foreign investment in strategically important industries or enterprises that are natural monopolies is absolutely necessary to preserve the economic security of the country and the region.

The next stage in the development of regional policy in the field of attracting foreign investment is to determine the maximum share of foreign capital investments in the region’s economy for a specific period of time. It is possible to determine and fix a specific limit on the volume of foreign investment in the economy of the region, depending on the size of the domestic regional product or the volume of gross investment.

The priority areas for attracting foreign investment in the economy of most regions are:

implementation of major investment projects; development and modernization of the traditional industrial base; organization of new industries that are based on non-traditional technologies for the region, contribute to the resolution of structural problems of the economy (development of economically or socially backward territories, contribute to increasing employment, improving the environmental situation, etc.) or saturate the market with qualitatively new goods or services.

The implementation of each of the areas of use of foreign investment needs to delineate the degree of state intervention. The implementation of major investment projects requires both efforts on the part of regional authorities and strict state control. Control by the government should be mediated by the financial interests of the state. The third direction only needs the creation of an effective impersonal system of state support and the development of peculiar rules of the game, perhaps more loyal to foreign investment than generally accepted norms. In addition, it is necessary to move to the use of differentiated approaches, i.e. original, adequate ways of investing or their combination, depending on the current situation that determines the conditions for the implementation of a particular project.

The positive consequences of foreign investment include the influx of achievements of world scientific and technological progress into the national economy. However, there are also negative consequences. These include, for example, an increase in structural unemployment, an aggravation of disproportions in the development of the extractive and productive sectors of the economy, the deterioration of the environmental situation, an increase in social inequality, etc.