Foreign investments in Russian economy

Strategy of foreign capital regulation in Russia. Russian position in the world market of investments. Problems of foreign investments attraction. Types of measures for attraction of investments. Main aspects of foreign investments attraction policy.
Краткое сожержание материала:

Размещено на

STATE UNIVERSITY HIGHER SCHOOL OF ECONOMICS

School of World Economy and International Affairs

Foreign Languages Department

Foreign investments in Russian economy

Syrtsov Dmitry Nikolaevich

group 462

MOSCOW 2010

Introduction

1. Strategy of foreign capital regulation in Russia

2. Russia and foreign capital

2.1 Russian position in the world market of investments

2.2 Foreign capital in modern Russia

3. Problems of foreign investments attraction in Russia

Conclusion

References

Introduction

During last two decades we can observe increasing growth of foreign direct investment activity.

Every country tries to attract foreign capital and obtain direct and indirect advantages from foreign investment. Nowadays foreign investments play one of the main roles in the direction of global development. That is why the subject of this paper is the international capital flows.

General Purpose: to explore some theoretical basis of foreign investments and to analyze problems of Russian market development. To reach this objective it is required to cover certain points:

- тo give a general characteristic of management strategy of the foreign investments in Russia;

- тo point out Russia's position in the world market of investments;

- тo explore the problems of attraction of foreign investments into the Russian Federation.

The topic of this research can be identified as foreign capital in Russia.

1. Management strategy of the foreign investments in Russia

All developed countries are pursuing management of the foreign investments, for example restrictions for countries to access to strategic branches of public sector of economy, military-industrial establishment, and other important branches. First of all, restrictions are based on necessity to defense national producer and employment preservation. But also it is necessary to attract foreign investments in economically important directions.

Historical experience of the developed countries shows that foreign loans in adverse conditions can become the lever of political pressure and the reason of concessions in home market protection. Unlimited attraction of the foreign capital in the form of direct investments can have almost the same consequences for national economy.

In transitive economy, foreign capital can weaken some branches which earlier were perceived as quite healthy, when economy was in autarchy form. That's why globalization process looks as sovereignty loss in the opinion of considerable part of Russians.

That's why it is necessary to manage foreign investments especially in sphere of the state's strategic interests and priorities. However first of all it is necessary to specify: what is "strategic sphere" and "strategic regions» and by what criteria they are defined. And do we have standard-legal basis for restrictive regulation of the investments in our country?

For example aspect of relations with investments was not observed in recently accepted doctrine of the Russian Federation power safety; thought power resources import restrictions are included in the similar document in EU.

In the USSR concepts like "the strategic branch", "strategic region" were based on the military doctrine: it is that branch which backlog reduces military potential, and that region, easing of the control for which increases military threat. Threat was expected on all azimuths; and civil industries and regions social and economic level didn't enter into strategic parameters.

There is no such simple criterion for strategically importance in economy. Accordingly, there are no rules of equivocal foreign investment management.

This problem is actively discussed. From wide spectrum of opinions it is necessary to allocate polar positions.

The first position is based on thesis, that any formal restrictions shouldn't be brought in. It is proved that the Russian economy will get healthy only when it will become completely accessible to the foreign investments. According to scientists of liberal sense, it is recognized that our state has tools for protection of the interests, without any management of investments.

The second position was showed recently. Its supporters consider that during the reorganization Russia's economy was excessively opened for foreign investments, and urge to develop model of the state protectionism. They suggest to forbid the private foreign and national investments in sphere of state competence like defense, the law and order; to involve only domestic state (51 %) and private capitals in the major objects of transport infrastructure - railway and pipeline highways, federal highways; not to suppose foreigners in social branches - pension funds, education, medicine, the major objects of culture; to limit the foreign capital in branches in which owing to historical factors our world positions while are weak, for example: civil aircraft, communication, bank system. Also they say that due to poor development of land sales and inadequately low prices in the majority of regions it is necessary to enter interdiction for land purchase by foreigners.

2. Russia and foreign investments

2.1 Russian position in the world market of investments

By generalizing criteria the investment legislation of Russia and the EU countries are almost similar. At the same time legislative fastening of conditions for foreign investments doesn't mean that the foreign capital operations in our country are not bound free. The main distinction here is that liberal economy of E.U. is in the mature phase, and Russia is at stage of its formation. World experience can be expressed in axiom: at stage of development state should play great role in economy. Focused on result approach to foreign investments that is better, than policy of non-interference that is proclaimed by liberal economists.

Apparently, requirements of the Russian investments restriction supporters correspond to economic behavior of developing country at "stage of accumulation of the capital" (K.Marx). However, the position of the liberals who proclaim desirability of the state non-interference is quite explainable: there is obviously expressed doubt that the state machinery is capable to regulate adequately something on microeconomic level and foreign investments especially.

It is known that the discontent of foreign investors with activity conditions in Russia is connected not with absence or laws rigidity but with randomness of their application. On the contrary foreign firms demand literal application of already available laws and this causes the offence of officials. Foreign partners and managers are involved in some corporations only because it strengthens protection against the unfair officials. It is indicative that representatives of all levels of the power also agree with this regrettable fact.

Modern developed countries experience shows the necessity to pursue consistent and partner policy of protection of the domestic private capital from absorption by the foreign capital.

The Russian specificity consists in fact that this business layer is not politically issued and its interests are consequently reflected in state policy only in form of declarations.

On the other hand, nostalgic dreams of foreign trade activities nationalization are quite explainable: in the country there were serious difficulties caused by avalanche expansion of business by people which are involved in the international business. This problem was raised from level of foreign business regulation to level of the state ideology.

Russia faces similar choice not for the first time. In genesis of the modern approach to foreign investments historical experience of the Russian empire of the end XIX the XX century is put.

S.U. Vitte is the sign person for modern economists-statesmen. He widely used exclusive economic force of the imperial power in the liberal purposes. In the end of 1890th years it has supported unlimited attraction of the foreign capital in Russian industry and railway business. It was named “medicine against poverty”.

Vitte's system promoted economy development: by 1900 Russia went on 1 place in the world on oil extraction, the network of railways grew North American speed.

However Vitte began to assert that the commercial policy problem in Russia is reduced to persevering and consecutive protective mode... Until this mode will prepare a strongly developed industry it would be possible able to sustain... Internal, and then external competition"

capital investment market policy

2.2 Foreign capital in modern Russia

Foreign corporations operating in Russia pref...