Risk differentiation

The growth of an average region risk also stopped the lowering of the country risk of Russia and the level of the region various risk differentiation remains extremely high

The effect of the “transfer” of investment risks to the regional level, which we first observed two years ago, finally turned to be disappointing. The constantly rising average region risk could not but affect international experts' general opinion on the investment appeal of the country: from the end of 2005 after the long-term improvement period the rating of Russia according to “Euromoney” was stabilized at rather a modest level of the beginning of 70 countries (diagram 2).

The leaders. St.-Petersburg became the least risk region of Russia for the third time (table 2), having repeated the achievements of Moscow and the Novgorod Region (table 3). The Belgorod Region and the Republic of Tatarstan still remain among 10 risk leaders and their position was kept during all 11 years of rating. The Novgorod Region (10 times in the first ten leaders), St.-Petersburg (9 times) and the Moscow Region (7 times) are also “long-livers” among the leaders. The Krasnodar Territory was among the risk leaders 5 times, the Republic of Bashkortostan - 4 times, the Lipetsk Region - 3 times. The Rostov Region, which entered the first ten regions last year, seems to have secured a footing among the leaders. The only “newcomer” among the least risk regions is the Republic of Mordovia . Together with it the Republic of Bashkortostan , the Moscow Region and the Krasnodar Territory again returned to the first ten leaders. On the contrary, the Yaroslavl, Nizhny Novgorod, Vologda Regions and Moscow, which were in the bottom of the “top 10” list last year lost this rating.

The progress. Kristalina Georgieva, director and the constant representative of the World Bank in Russia, stated at the discussion of the present rating results that frequently investors are not so much interested in the region current positions, as in its tendency. And in this relation the Republic of Komi achieved the greatest success, having risen from the 66-th to the 39-th place by the level of the integrated investment risk and, accordingly, having moved from the 3C1 category (“the lowered potential-high risk”) to the 3B1 category (“the lowered potential-moderate risk”). Political, social, financial and criminal risks were reduced to the utmost in the republic. Besides, the republic took the fifth place by the management risk level. The Tambov Region promoted its risk rank for 24 places due to the reduced social, ecological and legislative risks. The Omsk Region (the risk rank upgrade for 19 places) maximally mitigated legislative and political risks, as well as financial and criminal risks. The Republic of North Ossetia-Alania and the Smolensk Region have raised the integrated investment risk rank for 16 places. North Ossetia managed to radically lower criminal, political and legislative risks and the Smolensk Region succeeded in minimizing political, legislative, social and economic risks.

The Chechen Republic left the last risk place for the first time, being replaced by the Koryak Autonomous District due to tragic earthquakes and social strain (this type of the district risk is 24 times higher than the average regionlevel, so more attention should be still paid at least to wage arrears).

The average regionrisk growth is accompanied with high region risk differentiation. In this regard the social risk level is most differentiated: its index in Moscow is 76 times less, than in the Koryak AD (diagram 3). On the contrary, the management risk represents a model of the region “unity” in the “power vertical” system: the management risk index in St.-Petersburg is only 2.9 times less, than in the same Koryak district.

The region differentiation by the integrated investment risk index is significantly lower (diagram 4) inside the federal districts. In the FEFD this parameter is maximal and equals 4.1 and in the UFD - is minimal and makes 1.3.

The risk differentiation is primarily caused by the increasing investment potential concentration in several regions of the country.