Recent years have brought sufficient changes in the attitude toward perspectives, objectives and mechanisms of foreign investment usage. Adoption of legislative and normative deeds as well as the establishment of governmental and non-governmental organizations bring the work of attraction of foreign investments in Russia to the level of State Policy.
The Russian Agency for International Development & Cooperation was founded to carry out state policy in the field of international financial and investment cooperation at the federal level. The main tasks and functions of the Agency, among others, are:
• participation in the formation and implementation of state policy in the field of attraction of foreign investments, including loans and credits;
• expertise of international projects, Federal and regional investment programs with foreign participation;
• working out the system of financial, investment and insurance establishments in the field of international cooperation;
• participation in the work on creation of free economic zones in the territory of Russia, etc.
In St. Petersburg, it is, first of all, investments in development of infrastructural complexes in specialized branches: power machine-building (actively working are General Electric, ABB, Mardima), consulting (Coopers & Lybrand, Baker & McKenzie, etc.), telecommunications and transport, banking, stock market, tourism, etc.
State policy in the field of foreign investments should be based on the estimation of existing capital in the country and the demands of the capital market. It also should take into account the positive and negative sides of increasing investment activity from foreign firms.
New investment influx, in general, has the favorable influence upon investment activity and processes of technical re-equipping of branches, industrial rise, creation of new jobs or increase of wages for employees of established companies. Foreign investments are sometimes the only method of "revival" for enterprises which, in the conditions of liberalization of the foreign market and in import-substituting branches are useful for the country-recipient, since they increase the State export potential (that of regions and separate enterprises), increase the influx or save currency.
Nevertheless, when working out the policy for the Russian market, foreign investors are least of all worried with the formation of effective commodity markets structure in Russia and its regions and increasing the international competitiveness of Russian enterprises. At present, investment activity is largely oriented toward the purchase and export of prepared raw materials. Investments are mostly made in quick-return projects ensuring the return of investment within two to three years, with a profit margin of 30 to 40 percent.
In many cases, creation of joint productions based on existing enterprises or foreign purchase of a share of stocks results in a reduction in the number of employees, change of production profile, re-orientation to other partners, or an increase in products' prices. Within the frame of joint productions, Russian enterprises often are specialized in assembling operations that, firstly, positions the manufacturers in strict dependence on foreign component suppliers, and secondly, does not ensure full access to foreign technologies. At the same time, the foreign capital obtains access to advanced Russian technologies, not necessarily increasing the competitiveness and profitability of enterprises on the world market.
Approach to the State regulation of foreign investments should take into account the above-mentioned realities of investment activities as well as true objectives of foreign investors. It also should be based on understanding the main role of internal investment resources. It is also important for the country-recipient to choose the right priorities of investing and to protect separate branches from foreign competitors who have financial and market advantages.
The general conclusion can be made that, provided a developed system of state regulation of investment activity, the power influx of foreign capital will promote the labor productivity and development of competitiveness of the export potential. In the absence of such a system, it can potentially result in negative consequences.
Full text of the article is available upon request at ARCCI.