Investment Attractiveness Rating of Russian Regions, 2000-2001

The Expert RA Rating Agency has completed its most recent annual survey of the Russian investment climate

• Despite spectacular industrial growth, the long-expected "investment boom" has not occurred yet
• The volume of investment is clearly inadequate for restructuring the economy and replacing completely depreciated equipment. This may mean that the economic potential of Russian regions will never be realized
• The post-1998 period saw investment climate markedly to improve only in 13 regions and get worse in 31. Negative trends are typical of the traditional core economic regions - the Center, the Urals, and the Volga region
• When investments are scarce, the investment climate of an area is more important. Foreign investors are especially sensitive even to minute alterations in rating
• Regional election returns were convincing proof of a correlation between the stability of a regional authority, the region's investment climate, and its trend

Investor preferences
Contrary to the prevailing opinion, the primary concern of investors is labor not natural resources

Rating figures
In recent years, investment climate was dominated by centripetal trends; there was considerable growth in numbers of "middling" entities characterized by low potential and moderate risk

Components of investment risk
Lowering regional risks is the most realistic way to win over the investor

Climatic shifts
Investment climate has not gotten any warmer after a crisis. Growth points are still there, with no real improvement in them

Real-life investment activity
In 2000 once again, the expectation of a boom in foreign investment did not come true. However, investors were quick to respond to change in investment climate

Political aspects of investment climate
As they attract investors heads of administrations prolong their political life

Time is ripe for system-forming investments
From a speech of Iosif Ordzhonikidze, deputy mayor of Moscow and vice-president of the Moscow International Business Association, at the IV International Forum Moscow-Invest

Information and methods

Rating tables:

Table 1. Rating: Distribution of Russian regions by investment climate pattern in 2000-2001
Table 2. Investment risk in Russian regions 2000-2001
Table 3. Most dynamic regions in terms of change of their investment risk rating
Table 4. Least investment risk regions
Table 5. Political risk
Table 6. Social risk
Table 7. Economic risk
Table 8. Financial risk
Table 9. Criminal risk
Table 10. Environmental risk
Table 11. Investment potential of Russian regions 2000-2001
Table 12. Most dynamic Russian regions in terms of investment potential
Table 13. Highest investment potential regions
Table 14. Labor potential
Table 15. Consumption potential
Table 16. Production potential
Table 17. Infrastructure potential
Table 18. Financial potential
Table 19. Innovation potential
Table 20. Institutional potential
Table 21. Natural resources potential
Table 22. Change in regional investment climate by federal district, 1997/1998-2000/2001
Table 23. 20 top regions in terms of direct foreign investment
Table 24. 20 top regions in terms of capital investment
Table 25. 20 top regions in terms of capital investment dynamics (in comparable prices)
Table 26. Investment climate and regional leaders' political success

Maps:

Map 1. Investment risk and potential of Russian regions 2000-2001
Map 2. Change in potential and risk values during 1997/1998-2000/2001

Graphs:

Graph 1. Expert weights of potential and risk factors
Graph 2. Rating of the investment climate of Russian regions 2000-2001
Graph 3. Distribution of Russian regions by investment potential and risk
Graph 4. Change in regions investment climate 1997/1998-2000/2001
Graph 5. Climatic shifts in Russian regions 1997-2001
Graph 6. Change of the investment climate of federal districts 1997/1998-2001/2001
Graph 7. Per capita investment in regions 1996-2000
Graph 8. Distribution of per capita investment by type of region 1996-2000
Graph 9. Relationship of investment, risk, and potential in Russian regions