Legal regime of foreign investment International legal regime of foreign direct investment
Due to the prevailing international practice, one of the following legal regimes can be granted to foreign investment: a national regime, a most favored nation treatment, a regime of justice, and transparency.
When granting a national regime to foreign investment, national and foreign entrepreneurs appear on the market, with some exceptions, as equal entities, which does not infringe on the interests of foreign investors. It follows that "national treatment" means a regime in which the rights of foreigners in the territory of the host state are determined mainly by local (national) laws, and not the laws of the country of origin of capital. Moreover, the regime of foreign investment cannot be less favorable than the regime provided to national legal entities (national capital). The principle of national treatment may include some exceptions and exceptions. This is, for example, the requirements of a country of reciprocity, that is, the issuance of permits for foreign investments only if the same activity of investors of the first country is allowed in the country of origin of these investments. Restrictions on the activities of foreign investors are made to establish state control over the development of individual industries in order to prevent the weakening of the competitiveness of national legal entities. In different countries, the range of these industries is different, but, as a rule, it is the mining and military industries, as well as services industry sectors (banking and insurance). Some of these industries are completely closed to foreign investment, and individual access is allowed only after obtaining special permission.
For many decades, the most favored nation treatment has been regarded as one of the most important legal instruments for the normal implementation of international trade and economic relations. States interested in equal and mutually beneficial economic cooperation strive to build it on the basis of reciprocity.
The National Regime can be established both by bilateral and multilateral international treaties. This is, first of all, the Paris Convention for the Protection of Industrial Property of 1883, the Berne Convention for the Protection of Literary and Artistic Works of 1886, the World (Geneva) Convention for the Protection of Copyright of 1952, the essence of which is largely ensured by the enshrined principle of the National Regime.
The principle of the national treatment of foreign trade in services is enshrined in Art. XVII General Agreement on Trade in Services. Thus, in accordance with this article, in certain sectors, on agreed conditions and requirements, each WTO member provides the services and service providers of any other WTO member with respect to all measures affecting the supply of services, a regime no less favorable than that which it provides similar domestic services or service providers.
This requirement is met by providing the services and service providers of any other WTO member either formally the same regime or formally different regime with respect to what it provides with its own similar services or service providers. .
The most favored nation principle means that one contracting state provides the other contracting state (its legal entities and individuals) in one or another agreed area of \u200b\u200btheir relationship with the same favorable regime as that which it grants or will provide in the future to any third state, its legal and individuals.
The most favored nation, the contractual regime and the determination of its volume are the business of the contracting parties themselves. The parties may extend the effect of this regime to the field of economic relations, may limit its effect only to issues of trade and navigation, and may agree to apply it only to certain areas of regulation of their economic relations (for example, to customs taxation).
By concluding an agreement with the condition of the national favored nation treatment, the state can be sure that the conclusion by its counterparty of a preferential agreement with a third state will entail the application of the same benefits in relation to itself. To create the most profitable regime of international trade, it is not enough to conclude a bilateral agreement on a national favored nation regime; a multilateral treaty or a system of bilateral treaties that would link a whole group of countries may be required. Thus, a single trade regime would work for a whole region (an example is a trade regime between EU member states or a regime established by the WTO). In fact, in this case, a peculiar community of states appears that trade among themselves according to the same rules.
In international practice, the features of the most-favored-nation regime find their textual fixation in Art. II GATS. Within the framework of this document, the principle under consideration is formulated as follows: "Each WTO member immediately and, of course, provides the services and service providers of any other member with a regime no less favorable than that which he provides for similar services or service providers in any other country." At the same time, exceptions are possible from this rule, that is, a WTO member can introduce any measure that does not meet the principle of most favored nation only if that measure is included in the list of exemptions and meets the conditions of the appendix to the GATS for exemptions from Article II of the General service trade agreements. .
As the analysis of bilateral agreements shows, the establishment of a national or most favored nation treatment is “mixed.” In one agreement, most favored nation or national treatment may apply to investments. Other agreements guarantee most favored nation treatment and national treatment of investment and income. In this regard, an example of GATT is adequate.
A fair and equitable regime is one of a number of common standard regimes enshrined in international agreements on the promotion and protection of foreign investment. The predecessors of this standard were the provisions of the Havana Charter of the International Trade Organization of 1948. A fair and equitable regime provides for the full and permanent protection and security of foreign investment and non-application of discriminatory measures in this area. Due to the fact that within the WTO, the problem of foreign investment is indirectly present in the definition of the third method of delivery of services (Commercial presence), as well as due to the fact that the Trade and Investment Committee works in the WTO, the question of the possible application of this regime periodically arises in the course of formal and informal discussions on the trade and investment problem.
These several investment regimes used in state and interstate practice to regulate capital flows stimulate the investment process in the world. These regimes, enshrined in law, contribute to attracting investment. Against this background, the most favorable examples are investment climates of the United States, as well as the EU, where these regimes are fully represented. When considering the EU, the main centers of attraction of foreign investment here are Britain (almost 1/3), followed by France (20%) and Belgium (14%). According to their technological structure, foreign investments of EU companies are not classified as high-tech (office equipment, radio equipment - 1.1% of the total). The main share of foreign direct investment falls on the service sector (54.2%), where the bulk is concentrated in the credit sector and trade. That is, we see that legal regimes enshrined in law or through agreements and not having contradictions in national legislation are also one of the attractive aspects that affect the activities of foreign investors and the entire investment process. So, without such an additional leverage, EU countries would not have achieved such positive results.
The cross-border movement of capital occurs mainly in two forms: the movement of capital and the investment of capital (investment).
The movement of capital includes: short-term loan and commodity loans; clearing and other financial transactions.
Investing abroad (foreign investment) is carried out either in the form of direct foreign investment, or in the form of "portfolio" investments.
Special forms of capital investment include:
- ? long-term loans;
- ? financial leasing operations;
- ? economic assistance, i.e. provision of material or intellectual resources at no cost or preferential basis.
Foreign direct investment is understood to mean the participation of a foreign legal entity and individual, through its property or intellectual values, in the authorized (joint-stock) capital of an economic entity in order to profit, with full or partial control over these values.
Placement of capital through the purchase of securities on the stock market of a foreign state or on the national stock market of securities of a foreign company is a “portfolio” of foreign investments.
The initial public offering of capital by purchasing an issue or an additional issue of the issuer's securities at open bidding on the stock market of a foreign state or on the national stock market of securities by a foreign person is a kind of “portfolio” foreign investment, called the initial public offering, or 1RO (Initial Public Offering). In certain circumstances, such an initial offer can be considered as a direct foreign investment, especially if the share of the initial acquisition of a foreign person is such a volume that will allow the acquirer, by virtue of relevant national legislation, to establish full or partial control over the issuer.
With portfolio investment, the control and management of a company is separated from the shared ownership of that company. A foreign investor is not so much interested in directly participating in the management of the investee through the rights owned by him, expressed in shares - the investor is mainly interested in shaping his investment portfolio so that it brings him greater profitability and less risk.
With "portfolio" foreign investments, the investor has to take on all the political risks associated with investing. When a “portfolio” investor feels the risk for his investments, he can quickly withdraw them and transfer them to other shares more attractive to him.
Foreign direct investment, in contrast to “portfolio” investment, is quite difficult to withdraw, since they are usually designed for the medium or long term. Such investments are practically inconceivable without the constant “economic” presence of a foreign investor (its managerial component) in the country that receives the investment. Therefore, the protection of management personnel, as well as the production facilities and equipment of the investor, is vital for the functioning of foreign capital.
Foreign direct investment also differs from capital flows expressed in other forms. Such movement is carried out, for example, in the form of payments on export-import transactions, when the seller receives the price of the transaction on export-import, and the buyer pays it. The legal support of the export transaction is being worked out in such a way as to free it as much as possible from possible risks. Some progress has already been made in creating international norms governing relations associated with such transactions. The successful signing of the 1980 United Nations Convention on Contracts for the International Sale of Goods of 1980 was made possible largely due to the search for such approaches where the interests of the trading parties would be balanced.
In the field of regulation of foreign direct investment, it is taken into account that there are many contradictions between the investor and the host. Also, investments objectively imply closer cooperation between the foreign investor and the host state. The direct managerial “business” presence of a foreign investor in the host country and the important role that he plays in the economy of this country attach more importance to such investments than just a trade deal. Foreign investment, as it were, "flows" into the national economy of the country, thereby contributing to its development, playing an important economic, and sometimes political role.
Lawyers also highlight international financial transactions that do not involve the movement of capital across borders. For example, in the case when the sovereign borrowing state does not transfer the received credit funds to its territory, but carries out with their help financial transactions on the territory of the creditor state. As a rule, in such cases, transactions are governed by the law of the creditor state.
Transfers of funds on deposit to foreign banks are also considered most often as investments. Relations related to bank deposits are generally governed by national gain, unless otherwise agreed by the respective states.
The theory states that foreign direct investment needs more detailed regulation under international law. As already noted, the investment process determines the movement of individuals and capital involved from one state to another. The “incorporation” of a large foreign investor into the national economy of the host state makes investor participation in domestic economic, even political affairs inevitably significant, which may lead to conflicts with the local economic elite. Accordingly, international law, developing in the direction of investor protection, provided for such an institution as diplomatic protection, known from the course of general international law.
6. Legal regime of foreign investment
Foreign investment - these are tangible and intangible assets belonging to legal entities and individuals of one state and located on the territory of another state with the goal of profit.
One of the reasons for classifying investments is property ornon-property their character. Under non-property investments you should understand the rights to inventions, industrial prototypes, topologies of integrated circuits; as well as specific technological information (know-how), production secrets, confidential commercial information, trademarks, service marks, company names, i.e. everything that is included in the concept of intellectual property . All other investment categories relate to property investments. Their characteristic feature is material expression: finance, material values.
Another basis for the classification of investments can be considered participation or non-participation of the investor in the management of the investee. For this reason, investments can be divided on thedirect andindirect (portfolio) investments. Direct investments are carried out in the form of joint ventures and enterprises, with this form of investment, foreign investors “directly and directly” participate in the management of the enterprise (company). Indirect investments do not provide for direct participation in the management of an enterprise (company), but imply receipt by foreign investors of dividends on shares and securities, i.e. on capital invested in these enterprises in cash.
Depending on the source of funding foreign investment can be divided into state which are in the form of loans provided by states and international organizations (IBRD, IMF, EBRD, etc.), and private , carried out by foreign legal entities and individuals. The object of legal regulation of private international law are legal relations, arising in connection with private foreign investment.
In the structure of legal regulation investment relations can be distinguished two levels: 1) international legal formed by the conclusion of international treaties and 2) domesticwhich is based on the national legislation of the host state.
International treaties on foreign investment can be divided into three groups: multilateral treatieswhose main purpose is the protection of foreign investment at the interstate level (for example, the Convention on the Procedure for the Settlement of Investment Disputes between States and Foreign Persons of 1965; the Convention on the Establishment of the Multilateral Investment Guarantee Agency 1985); regional international treaties (e.g. agreements of the CIS countries) and bilateral agreements (here you can talk about agreements between states on the protection of foreign investment, elimination of double taxation, and agreements between states and international organizations - IBRD, EBRD, EU).
To date, the most effective mechanism for protecting foreign investment is insurance. In September 1985, Seoul was signed Convention Establishing the Multilateral Investment Guarantee Agency (hereinafter referred to as the Agency) (entered into force on April 12, 1988). Main idea of \u200b\u200ba convention - provide foreign investors financial guarantees against non-commercial risks through investment insurance.
Depending on what non-commercial risks are covered by the Agency, the following types of insurance mentioned in the Convention can be distinguished.
1. Currency transfer. This type of insurance protects the investor from losses associated with the inability of the investor to convert funds in local currency (income, paid debt, interest on capital and other payments) for exporting them from the country. However, it should be borne in mind that this type of insurance does not cover the devaluation of local currency.
2. Expropriation or similar measures. This type of insurance protects the investor from “any legislative or administrative actions or omissions coming from the host government, as a result of which the holder of the guarantee loses the ownership of his investments, control over them or substantial income from such investments”. These actions do not include decisions of the judiciary, as well as general non-discriminatory bodies (measures related to taxation, compliance with environmental and labor laws, measures to maintain public order, etc.).
3. War and civil unrest. This type of insurance protects the investor from damage, destruction or disappearance of fixed assets as a result of war or civil unrest. The above provision, as a general rule, should not concern terrorist acts directed directly against the holder of guarantees.
4. Breach of contract (contract). This type of insurance guarantees the investor protection against losses associated with a violation of the conditions or the termination of the contract by the government of the host state. Compensation is provided only in cases when: 1) there is no body to which the investor could file a claim under an agreement (contract) against the government of the host state; 2) an unreasonable delay, as defined in the guarantee agreement, prevents the appeal to such an authority; 3) after the final decision is made in his favor, the foreign investor cannot achieve its implementation. In the presence of any of the three conditions, the Agency pays compensation.
An example of a regional agreement in the field of foreign investment is Agreement of the CIS countries “On cooperation in the field of investment activity” dated December 24, 1993. In accordance with this agreement, the parties assume obligations to collaborate in the development and implementation of investment policies; take action to approximation of its legislation on investment activitiesand other measures. The agreement applies not only to private foreign investment, but also to state.
To foreign investors Agreement guarantees payment adequate, quick and effective compensation in case of nationalization (Article 7); unobstructed transfer to participating states arrivedreceived from investment activities (Article 8); exemption from customs duties on property taxesimported from other states as a contribution to the authorized capital of an enterprise and intended for own material production (Article 15); the right to use land, including its lease, and other natural resources (Article 20).
In development of the Agreement on cooperation in the field of investment activity on March 28 1997, the CIS adopted the Convention on the Protection of Investor Rights, which determined the legal basis for the implementation of various types of investments and guarantee the rights of investors to make investments and the income received from them.
Currently on the territory of the Russian Federation, agreements are in force with foreign states both concluded by the USSR and Russia.
The agreements draw attention to the following points: adoption of a regime for foreign investment; providing guarantees to protect the interests of foreign investors; resolution of investment disputes.
In accordance with the agreements the investment or income of investors of each of the parties is always provided with a fair and equal treatment in accordance with the principles of international law - most favored nation treatment. The safeguards system as a whole is similar to those provided for in multilateral conventions.
Current international treaties create a single mechanism aimed at protecting foreign investment, and proceed from some common principles for the legal regulation of investment relations.
A feature of national investment legislation is that it does not apply a conflict control method and its norms directly regulate the relationship between a foreign private investor and the state.
In host countries, foreign investment may be granted national treatment, most favored nation or privileged mode.Under national treatment foreign investors operate on the same terms as national investors, with some exceptions. Most favored nation foreign investors are provided with equal conditions for investment activities without providing any advantages to some of them. Privileged mode (preferential treatment) is to provide some benefits for the import of raw materials and equipment, exemption from customs duties and taxes, etc.
Host countries can take measures to limit foreign investment, which are as follows: 1) a ban on the activities of a foreign investor in certain sectors of the economy; 2) the establishment of special state control over the admission of a foreign investor to the development of mineral resources and natural wealth; 3) mandatory state participation in enterprises created by a foreign investor; 4) the establishment of a special fiscal regime; 5) definition of concession policy.
The legal framework for foreign investment in the Russian Federation is primarily represented by special laws: “On investment activity in the RSFSR” 1991, “On Production Sharing Agreements” 1995 g. “On Foreign Investments” 1999In addition, there are separate industry laws, as well as presidential decrees and government decrees,
The Foreign Investment Act of July 14, 1999 understands under foreign investment investment of foreign capital in an object of entrepreneurial activity on the territory of the Russian Federation in the form of objects of civil rights belonging to a foreign investor, if such objects of civil rights are not withdrawn from circulation or are not limited in circulation in the Russian Federation in accordance with federal laws, including money, securities ( in foreign currency and the currency of the Russian Federation), other property, property rights having a monetary value of exclusive rights to the results of intellectual activity (intellectual property), as well as services and information (Article 2).
The legal regime of foreign investments, as well as the activities of foreign investors in their implementation, in accordance with Art. 4 Laws could not be less favorablethan the regime for property, property rights and investment activities of legal entities and citizens of the Russian Federation, with only a few exceptions. Restrictive exemptions for foreign investors, they can be established by federal laws only to the extent necessary to protect the foundations of the constitutional order, morality, health, rights and legitimate interests of others, to ensure national defense and state security. Incentive exemptions in the form of benefits for foreign investors can be established in the interests of the socio-economic development of the Russian Federation. Moreover, the types of benefits and the procedure for their provision are established by the legislation of the Russian Federation.
The law provides for a whole range of measures, which are guarantees for the investment of foreign investors. The list of these measures has expanded significantly compared to 1991 when the first Russian law on foreign investment was adopted. Among them are guarantees: legal protection the activities of foreign investors in the territory of the Russian Federation; the use by a foreign investor of various forms of investment in the territory of the Russian Federation; transfer of rights and obligations of a foreign investor to another person; compensation for nationalization and requisition of property foreign investor or commercial organization with foreign investment; protection against adverse changes in legislation RF; ensuring proper resolution of a dispute arising in connection with investment activities; use in the territory of the Russian Federation and transfer outside the Russian Federation of income, profits and other legitimately received money the right to unimpeded export of property and information outside the Russian Federation in documentary form or in the form of records on electronic media that were originally imported into the Russian Federation as a foreign investment; rights to purchase securities; participation in privatization; granting rights to land plots, other natural resources, buildings, structures and other real estate (Articles 5-15).
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GOU VPO “RUSSIAN LEGAL ACADEMY OF THE MINISTRY OF JUSTICE OF THE RUSSIAN FEDERATION”
POVOLZHSKY (Saratov) LEGAL INSTITUTE (branch)
DEPARTMENT OF CIVIL LEGAL DISCIPLINES
LEGAL REGIME OF FOREIGN INVESTMENTS
Course work
Rozhko Svetlana Aleksandrovna
5 year student
SARATOV 2010
WORK PLAN
Introduction
1.2 Importance of foreign investment
2. Terms of foreign investment
3. The main forms of foreign investment in the modern world economy
Conclusion
Bibliography
INTRODUCTION
In the scientific literature there are many definitions of investment. The following definition is generally recognized in the scientific literature: investments are investments in any economic objects and processes: capital goods, stocks, reserves, information resources, securities (bank deposits, shares, stocks), cash, movable and immovable property, property rights , experience arising from copyright know-how, the right to use land and other natural resources, technology, machinery, equipment, licenses, including for trademarks, loans, intellectual property, invest which are objects of entrepreneurial and other types of activity, “human capital”.
When determining foreign investments, the majority of authors agree that they are the property of foreign investors, acting in various forms and forms, exported from one state and invested in any business in the territory of another state, and investments are considered in the broadest sense. This is not only funds invested in capital construction, in securities of enterprises and governments, but also loans in various forms and even gratuitous transfers of funds aimed at achieving a positive social effect.
The subjects of foreign investment can be: investors, customers, contractors, users of investment activities, suppliers, foreign states, international organizations, foreign legal (banking, insurance and intermediary organizations, investment exchanges) and individuals; Citizens of investment receiving countries with a permanent residence abroad.
As objects of foreign investment, the Investment Code in article 4 calls: real estate, including the enterprise as a property complex; securities; intellectual property.
Legislative acts of the state usually define objects that are only in state ownership, which does not exclude investment activity in relation to these objects: stocks, bonds, bank deposits, insurance policies and other securities; enterprises and organizations of the host country; buildings, structures, property of local legal entities and individuals; scientific and technical products; intellectual property rights; rights to use land, natural resources and the land itself; other property, as well as property and non-property rights.
Investment (from the Latin investire - region) - all types of property and intellectual values \u200b\u200binvested in objects of entrepreneurial and other types of activity, as a result of which profit (income) is generated or a social effect is achieved.
Issues of foreign investment in the economic literature are mixed. So in most Soviet economic literature, foreign investment was presented as the export of capital by the monopoly of one country to other countries with the aim of its most profitable application. Now, such ideas have changed significantly, since any entrepreneurial activity is associated with a certain profit.
The problem of investments in our country is so urgent that talk about them does not cease. This problem is relevant, first of all, by the fact that investments in Russia can make a huge fortune, but at the same time, the fear of losing investment stops investors. The Russian market is one of the most attractive for foreign investors, however, it is also one of the most unpredictable, and foreign investors rush about from side to side, trying not to miss their piece of the Russian market and, at the same time, not to lose their money. At the same time, foreign investors focus primarily on the investment climate in Russia, which is determined by independent experts and serves to indicate the effectiveness of investments in a particular country and which is very unfavorable in our country. Potential Russian investors have long distrusted the government, this distrust is caused, first of all, by the prevailing stereotype of Russians' attitude to power - “the government works only for itself”. However, the state investment policy is now aimed precisely at providing investors with all the necessary conditions for working in the Russian market, and therefore in the future we can expect a better situation in the Russian economy.
Therefore, our state faces a difficult and rather delicate task: to attract foreign capital into the country, and, without depriving it of its own incentives, to direct it by economic regulation measures to achieve social goals.
The relevance of the issue under study follows from the fact that the modern world economy cannot successfully develop without foreign investment. Many countries of the world actively invest their funds in the economies of other countries, receiving a certain income and developing certain sectors of the national economy of these countries. The role of foreign investment is very important for many countries: they are designed to raise and develop production, increase its capacities, and technological level; favorable conditions are also created, on the basis of loans received, to update and develop all the necessary sectors of the national economy, increase production efficiency and produce competitive goods . And that's not all.
The purpose of my course work is to determine the significance of foreign investment and to disclose their legal regime.
The objectives of this work are: 1. Disclosure of the essence of foreign investment, namely: ● give the concept of foreign investment; and
● determine their importance in the global economy.
2. Identify the conditions for foreign investment.
3. To characterize the main forms of foreign investment.
4. To approve the role of foreign capital in shaping the global market economy and the Russian economy.
The practical significance of the work lies in the possibility of its use in the educational process when studying this topic.
Methods of research coursework. In the process of doing the work, I applied systemic, logical and dogmatic methods.
1. The essence of foreign investment in the global economy
1.1 the Concept of foreign investment
Foreign economic relations include the import and export of not only goods, but also capital. The export of capital is the deliberate movement of funds from one country to another to invest them in a profitable business. Foreign investment is mainly carried out by the largest, primarily multinational companies. Export is carried out in the form of entrepreneurial and loan capital. The export of entrepreneurial capital is a long-term foreign investment in industrial, commercial and other enterprises.
Foreign investment serves as a source of cash, and sometimes property investments in the development or development of new production of goods and services, improving technology, mining, and the use of natural resources.
Foreign investment is a long-term capital investment by foreign investors (- investment entities investing their own, borrowed or attracted funds in the form of investments and ensuring their targeted use), as well as by foreign owners in business and other types of activities (industry, agriculture, transport and other industries). The export of entrepreneurial capital is carried out mainly by creating monopolies of branches or subsidiaries abroad, including in the form of joint ventures with the participation of national capital. That is, foreign investment is the export of domestic capital to other countries.
The most famous classification distinguishes two main forms of foreign private investment: direct and portfolio. Direct investments (both in freely convertible and in national currency) are:
Investments in the authorized capital of a business entity in order to generate income and obtain rights to participate in the management of this business entity.
Loans received from foreign co-owners of enterprises.
- the acquisition of long-term interest by a resident of one country (direct investor) in an enterprise resident in another country (an enterprise with direct investment).
They also provide a way to increase the productivity and technical level of Russian enterprises.
Direct investments are most often attributed to investments of such a volume in which a foreign investor controls at least 20-25% of the capital of the company in which he invested. This value is different in different countries.
Under portfolio investment is understood:
Portfolio formation through the acquisition of securities and other assets. A portfolio is a combination of various investment values \u200b\u200bgathered together, which serve as a tool to achieve the investor's specific investment goal. A portfolio may include securities of the same type (stocks) or various investment values \u200b\u200b(stocks, bonds, savings and deposit certificates, mortgage certificates, insurance policies, etc.).
Investments in shares of foreign enterprises, in bonds and other securities of a foreign state and international monetary and financial organizations, based on high profits and not giving the right to control the investee, that is, in which the investor does not have a goal (as opposed to direct investor) - direct participation in the management of an enterprise or impact on the country's economy (in most cases, such investments are made on the market of freely traded securities).
It should be noted that portfolio investments are usually made in cash, while direct investments are also made in the form of delivery of goods, raw materials, equipment, technologies, in the form of managerial experience, etc.
There are real investments. These are capital investments in land, real estate, machinery and equipment, spare parts, etc. Real investments include working capital costs.
Other investments include deposits in banks, commodity loans, loans from foreign governments, etc. Their exclusion from the analysis is caused, first of all, by the heterogeneity of the group, as well as by the difficulty of obtaining reliable statistical information about many of them. The allocation of other investments is related to the specifics of the investment (not in the authorized capital).
The border between the first two types of investments is rather arbitrary (it is usually assumed that investments at the level of 10-20 and higher percent of the company's equity (charter) capital are direct, less than 10-20 percent are portfolio), however, since the goals pursued by direct and portfolio investors are somewhat different, such a division seems quite appropriate.
In world practice, there are three main forms of investment:
1. Direct or real investments (the placement of capital in industry, trade, and the service sector - directly in enterprises).
2. Portfolio, or financial investments (investments in foreign stocks, bonds and other securities).
3. Medium and long-term international loans and borrowed capital loans to industrial and commercial corporations, banks and other financial institutions.
Investments of international organizations and foreign governments are usually carried out in the form of loans and credits (both related and unrelated).
The German professor Weinrich classifies investments according to the object of application and the nature of use.
Regarding the application object:
1) Investments in property (material investments). Material investments mean investments that are directly involved in the production process (for example, investments in equipment, buildings, stocks of materials).
2) Financial investments - investments in financial property, acquisition of rights to participate in the affairs of other companies and business rights (for example, the acquisition of shares, other securities).
3) Intangible investments - investments in intangible assets (eg, investments in training, research and development, advertising, etc.).
By the nature of use:
Initial investments, or net investments made at the foundation or upon purchase of an enterprise;
Expansion investments (extensive investments) aimed at expanding production potential;
Reinvestment, that is, the use of free income received as a result of the implementation of the investment project, by channeling them to the acquisition or procurement of new means of production in order to maintain the composition of fixed assets of the enterprise;
Replacement investments, as a result of which the existing equipment is replaced with new ones;
Rationalization investments aimed at the modernization of technological equipment or technological processes;
Investments to change the program of production;
Diversification investments related to the change in the product range, the creation of new types of products and the organization of new sales markets;
Investments to ensure the survival of the enterprise in the future, aimed at R&D, training, advertising, environmental protection;
Gross investment consisting of net investment and reinvestment.
Investments in property and intangible investments should be combined into one group, since both are investments in production, or so-called direct investments.
Within the framework of the classification proposed by the author, the allocation of extensive investments and reinvestments is not justified. They pursue the same goals, but the sources of capital are different. Consequently, the grounds for classification are used here different.
One of the representatives of the French School of Economics - Henri Kulman - considers the problem of classifying investments in a completely different aspect. He considers indirect investment (using cash) and direct (without using cash).
Attracting foreign investment, any state should try to harmoniously include them in the overall investment process so that they work effectively together with domestic investment, the country's domestic production potential. The investment policy of the state serves this purpose. It is based on optimizing production to meet human needs and minimizing the use of natural resources and has both internal and external sources.
1.2 the value of foreign investment
The results of basic research by foreign scientists clearly indicate that the processes of economic renewal and growth are determined by the size and structure of investments, the quality and speed of their implementation. Moreover, the researchers record that without investment savings and the corresponding material resources in investing in general, no positive shifts occur.
Without investment, modern capital creation and the competitiveness of commodity producers in foreign and domestic markets are impossible. The processes of structural and qualitative renewal of global commodity production and market infrastructure occur exclusively through and through investment. The more intensive it is, the faster the reproduction process takes place, the more actively effective market transformations occur.
At present, more than ever, many countries of the world are faced with the objective need to intensify investment activities to create competitive economic systems, modernize and reconstruct existing structures, and ensure diversification of capital in the direction of socially oriented structural transformations.
Foreign investment is becoming one of the decisive factors in the entire economic policy of many states. Without them, it is not possible to quickly overcome economic crises and go to the frontiers of economic growth, to ensure an increase in the social effect, a balanced macrostructure, and an increase in wages to the level of stimulation of its high productivity and market solvency, which acts as a powerful catalyst for overall economic growth and progressive changes.
In the investment strategy, an important role is played by a reasonable choice of investment areas - how much it will meet the future national interests of a particular state. The implementation of long-term investment projects, as is known, forms the perspective macroeconomic structure of the country, changes in the internal (regional and sectoral) and external division of labor, and the determination of the corresponding niche of the country in the global market structure. The future economic development of the countries of the world should be considered in the context of the development trend of the world economy. The era of the entry of peoples into the new century is characterized by tectonic shifts in the socio-economic and technological structure with a corresponding transformation of the institutional foundations of the entire modern economy. The local economies of individual countries are gradually losing the potential of self-development, integrating into a planetary economic organism with a universal regulatory system. Already now, transnational corporations (TNCs) and other powerful economic structures play a decisive role in world development. According to foreign researchers, a total of 37 thousand transnational corporations with 200 thousand of their branches covered almost the entire planet.
This is a kind of economically stable and dynamic economic system of a planetary type, which concentrates a third of all the production assets of the planet, produces about 40% of the planetary product, carries out more than half of the foreign trade turnover, over 80% of trade in the latest technologies and controls more than 90% of capital outflows.
If we add to this the national forms of big business of each economically developed country, then it becomes quite clear what is holding on to and what is driving the modern world economy at a fast pace. This is not a small or even medium-sized business that occupy its market niches, but are neither significant investors, nor founders of big capital.
It should also be noted that now global closed-world markets are actively forming, covering groups of countries in vast regions of the world. Among them - a single EU market, the markets of the Americas, led by the United States and the Pacific, led by Japan and China.
At the same time, technological leadership is a determining factor in progress. According to this evaluation criterion, the countries were divided into groups:
a) rapidly progressing, in which labor productivity is the highest;
b) countries with an average level of technological development and labor productivity;
c) countries technologically backward with low scientific and technical development and labor productivity;
In most cases, they act as raw materials appendages of economically developed countries, falling out of leadership prospects, and sometimes from regional world markets of final products of consumption due to lack of competitiveness.
Thus, capital is mainly concentrated in economically developed countries with high labor productivity. It is here that a significant part of the financial capital of economically backward countries, their natural resources and talents comes.
foreign investment economy
2. Conditions for foreign investment
Foreign investment occurs when there are two main factors: incentives and regulation. Each investment process is carried out and developed in specific and largely unique internal and external socio-economic and political conditions. Its impulses and stimulants are determined by the gamut of factors that, depending on the combination, determine the methods of capital application.
The complexity of the action of the most important motives of modern foreign investment requires a multifactorial approach to its study. This is due to the fact that, firstly, several main factors simultaneously affect the dynamics of external funds: political, economic (currency, inflation, value, market), social, technological, etc. Secondly, the effect of various factors does not manifest itself in isolation, but in interaction.
The practical unlimitedness and significant variability of the circle of their actions objectively determine the use of a selective approach to identifying the most important of them when analyzing the incentives for foreign investment. The qualifications of the latter and the presence of a clear interdependence with basic economic parameters (political and macroeconomic stability, economic growth, scientific and technological progress, portfolio investment, the structure of the economy, employment, export, balance of payments, exchange rate, interest rates, inflation, etc.) require them accounting when implementing foreign economic policy.
Foreign investment is accompanied by an increase in the openness of the economies of countries to foreign investors. At the present stage of internationalization of economic processes, the regulation of foreign investment is being liberalized everywhere: in 1991, 35 countries introduced liberal plan changes in their investment regimes, in 1992 already 43, in 1993 57, in 1994 49 and in 64 64 countries. The number of changes related to the liberalization of foreign investment in these years, respectively: 80, 79, 101, 108, 106. In their structure in 1995, 32% of the changes were related to the provision of incentives, 30% - conditions for productive functioning, 15% - terms of participation in the property, 9% - an increase in guarantees and 4% - weakening of control.
A logical factor in the implementation of external investment is economic stability. There is a clear relationship between economic growth and foreign direct investment; Some researchers consider the growth in the economy of the host countries as a decisive factor for the positive dynamics of their flows. In particular, an increase of 1% in the gross national product of developing countries stimulates an increase in FDI flows by approximately $ 10 billion.
The evolution of foreign investment has led to the creation of international production. Under him, there is a tendency toward the concentration of national enterprises within the territories of their regions, i.e. to grouping foreign investment around the home country. In particular, the United States invests in Central and South America, European firms - in other European countries, including Eastern Europe, Japanese investors are deployed in several Asian countries. In addition to reducing transportation costs, this is determined by certain advantages, such as linguistic and cultural ties, similarities of mentality, as well as the possibility of closer contacts by saving travel time.
When investing, especially in high-tech industries, one of the most important factors is the use of internalization. The latter, first of all, practices in the context of intercompany international production of transnational corporations and to some extent can serve as an update to their creation and the principle of organization and growth of any company. Within its framework, foreign economic operations are carried out on an internal basis - without changing the owner of the transferred resources. Internalization is the best option in the face of rapidly changing technology. Advantages in the latter and marketing determine the range of industries and firms that will conduct investment activities.
In fact, no company could incur additional costs in operations if there were no advantages related to ownership over its competitors. The increase in FDI in this aspect is determined by the existence of a number of intangible benefits, which can be transferred abroad at low cost; this ensures the profitability of such investments. Thanks to such intangible assets, some firms increase their activity and create concentrated industrial structures.
Along with objective factors, the development of foreign investment is also significantly affected by subjective factors, including the activities of people, social groups, political forces, and links in the state apparatus. They also include current legislation in the field of entrepreneurial activity, state means of regulating the economy and general political stability. The level of the latter directly determines the increase or decrease in foreign investment. First of all, this applies to developing countries and countries with economies in transition. It is considered possible to ascertain the existence of a long-term relationship between the political stability of the host country and the rate of inflow (outflow) of foreign investment. A real example in this context is the Republic of South Africa, which at one time achieved significant success in attracting FDI, but because of the long-term practice of apartheid and, as a result, social instability, it lost foreign capital, the outflow of which continued until 1994.
The choice of investment location in the host country is determined on the basis of parameters such as market size, availability of production factors, expenses, infrastructure development level, trade policy, competition, entry and exit regimes, property, employment, etc. The investor chooses the place of investment also taking into account the nature of the respective technology, the strategy of the company and its representatives about the degree of risk and possible profits.
Attempts by national firms to transfer activities beyond national borders can be explained by aggressive or defensive reasons: increase or protection of profits, retention of the market or penetration into it.
One of the main driving forces of foreign investment is the cost factor. Its skillful use determines the significant profitability of investing funds for the country of capital application.
It should be noted that the availability of cheap unskilled labor and the possibility of reducing paid taxes are important for choosing the place of application of foreign investment.
The basis of investing is primarily pragmatic motives. Therefore, it is also taken into account that investment income in developing countries at this stage is much higher (in general by 10 - 12%) than in developed countries.
Another feature of the modern period is that one of the driving forces determining the levels and proportions of foreign investment has become the currency factor. Its value in each product market is purely individual. However, empirical observations indicate that markets characterized by relatively uniform and stable nomenclature are particularly affected by the currency factor.
Thus, it is possible to formulate a condition according to which the strengthening of the national currency of the home country determines the increase in its foreign investment. Overvalued currency investors seek to channel their money into undervalued countries.
Of considerable importance in the implementation of foreign investment is the availability of a stable monetary and financial system in the country importing capital.
The dynamics of foreign investment largely depends on the relations of the recipient country with non-governmental international organizations. A study of world practice allows us to deduce an informal relationship, according to which investments in a particular state begin to flow after the signing of an agreement with the International Monetary Fund and insurance. The presence of external debt plays an important role in this context: a significant amount of it causes a lower level of external funds.
You can also highlight the factors in which foreign investment is not carried out. Backwardness of infrastructure, underdeveloped resource base, external debt, low credit rating, depreciation of the national currency, low consumer income, problems with repatriation of profits, political instability, etc. reduce the activity of foreign investors. At the same time, this is determined by the specifics of the country's economic policy.
Of great importance for the implementation of foreign investment, as well as systemic transformation and movement towards a market economy, is privatization. It is held against the background of the simultaneous recognition of the need for further deregulation of economic activity and liberalization of the private sector.
FDI investment through purchase or privatization occurs more often than the creation of new enterprises, and is one of the most common and effective forms of foreign investment. The vast majority of national firms become more competitive after absorbing FDI; the sale of assets to foreigners determines the immediate flow of funds and, ultimately, leads to further investment, reinvestment of profits, etc.
In modern conditions, privatization processes are carried out mainly in countries with economies in transition and developing countries.
One more point can be noted, according to which the increase in privatization volumes (and, accordingly, the openness of the economy) is accompanied by an expansion of participation and an increase in the share of foreign direct and portfolio investors in it.
Recently, in the process of foreign investment, the emergence of the circumstances of a subjective plan - the international increase in corruption - should be highlighted. This point was especially emphasized during the work of the Global Investment Risk Management Section at the World Economic Congress in the USA in September 1996. Bribing foreign officials who decide the fate of loans, international tenders and assistance programs tends to spread in international economic relations.
There are a number of negative circumstances that significantly deter foreign investors from investing. These include the weak convertibility of the national currency; low solvency of enterprises and their practice of barter, which in many cases is not needed by a foreign partner; slow pace of privatization, as well as the presence of a significant number of objects prohibited for privatization; underdevelopment of the stock market; the growth of corruption and crime in the economy; low purchasing power of the population; the policy of national entrepreneurs trying, for fear of losing their money, to place them in foreign banks; lack of domestic real production investment (which is an important indicator for foreign investors); outflow of national capital abroad; lack of private ownership of land and the impossibility of buying the latter.
When exporting public funds, the task of obtaining high profits is not always set. First of all, the placement of state capital abroad pursues political goals - the creation of a favorable climate for the subsequent export of private capital and its goods, the formation of a sales market. When exporting state capital, governments that provide subsidies and loans often dictate to the countries to which exported capital is sent certain conditions: providing guarantees that enterprises and other property belonging to companies in the country exporting capital will not be nationalized, creating preferences for investing firms etc.
In turn, the host country as requirements for foreign investment puts forward such requirements as the participation of local entrepreneurs in the activities of enterprises, training of local personnel, the implementation of research and development, as well as ensuring the export of manufactured products by the investing party.
In order to encourage each other's investments, to give them additional benefits and guarantees, states enter into appropriate agreements between themselves that affect foreign investment:
Trade agreements;
Tax agreement;
Treaties and agreements on foreign investment.
Trade agreements today play a major role in the regulation of international trade, and are also largely used as a form of regulation of relations related to export-import of capital. The agreements aim to develop and strengthen friendly relations between nations, to promote mutually beneficial trade and investment. But due to the weakness of sources of investment in developing countries, the principle of reciprocity, mutual benefit is respected only in relations between developed countries, and mainly developed countries derive benefits from agreements between developed and developing countries.
Trade agreements define principles and norms for regulating issues regarding capital investment. They establish the general legal regime provided by the parties to each other when investing, the admission of foreign individuals and legal entities to the country, give them freedom of movement across each other’s territory, mutual recognition of foreign legal entities, the right of foreign legal and physical persons to appeal to court for protection, the regime and guarantees of foreign private property in each other's territory, taxation issues, the transfer of profits and capital abroad, the acquisition of movable and immovable property. These agreements often provide the basis for regulating relations related to foreign investment.
Disputes between the contracting parties should be resolved through diplomatic channels, but if this does not succeed, then the dispute may be referred to the International Court of Justice.
Taxation agreements are concluded between states in order to regulate taxation issues in the export-import of capital between them. States that have signed such an agreement commit themselves to fully or partially exempt enterprises controlled by foreign capital from taxation.
Many developing countries interested in the inflow of foreign capital provide them with tax incentives by virtue of the provisions of the national legislation on foreign investment, i.e. there seems to be no need to conclude taxation agreements. But, despite this, such agreements are concluded in order to avoid double taxation of investors.
The main objective of bilateral investment agreements is to ensure relative stability of reproduction and freedom of capital movement in a socio-economic and political crisis, to ensure the flow of foreign private capital into the country, providing it with guarantees against political or non-commercial risks.
The concept of "guarantee against non-commercial risks" includes:
A. guarantees against the nationalization and expropriation of enterprises with foreign capital;
B. from currency non-convertibility in the transfer of capital and profits;
B. from damage to investments in the event of wars, revolutions, other social upheavals.
As for investment agreements (they are also called agreements on facilitating the implementation and mutual protection of investments "), they are concluded for the development of economic cooperation, creation of favorable conditions for increasing investment in the territories of the contracting states.
The agreements contain definitions of such concepts as “investments”, investor, “territories”, etc. It is further stipulated that each side creates favorable conditions for investments of the other side, provides them with protection and guarantees.
Regarding investments and incomes, a regime is established no less favorable than for national investments or investments of third parties, i.e. most favored nation treatment and national treatment. But exceptions may be provided for from the most favored nation treatment: it does not necessarily extend to the investments of the other side the benefits arising from any international treaties and domestic laws, the customs union, etc. Next, the general procedure for compensation for losses to foreign investors is determined (in what cases and how). Foreign investments are not subject to nationalization and expropriation except in the interests of the state associated with emergency needs and with the provision of timely and adequate compensation. Further, the agreement determines the procedure for repatriation of investments and income.
3. The main forms of international investment in the modern world economy
A promising direction for the integration of countries into the world economy and the development of international investment activity is the creation of special (special) economic zones (SEZs). This is one of the most attractive forms of interest of foreign investors, which makes it possible to intensify entrepreneurship, increase export potential, form a market infrastructure, and accelerate the development of individual regions and sectors of the economy.
The motives for creating SEZs in different countries are very different. They can be created either in the pure form of a free trade zone, or as special zones where not all aspects of economic activity are regulated. In countries whose policies are oriented to the domestic market, SEZs are tightly regulated, have little freedom in the investment sphere and are developing less actively; if the country's economic policy is oriented toward the foreign economy and attempts are made to intervene as little as possible in the management of the SEZ, favorable conditions are created for the influx of foreign investment.
The experience of China is very relevant for us, where the introduction of market elements in the economy and openness to foreign partners have become the most important goals of the PRC government. By the beginning of the 80s, 4 SEZs were created - Shenzhen, Juhai, Shanzhou and Xianmen, in the mid-80s, 14 coastal cities and the island of Haimin became economically open. Subsequently, the areas in the Yangtze and Jujiang Valley, the Fujam Peninsula, the Shandong and Laodun Peninsulas became open economic areas, and by the end of the 80s, decisions were made to make Haimin Island a province and turn it into the largest in China SEZ, Guangdong, Fujian, Jiangsu provinces were combined into one of the largest experimental economic zones, while the development strategy of coastal areas was re-formulated in order to further expand openness Conomy. Thus, an experimental economic region was created with a population of more than 100 million people, which in China is figuratively called an “open window”. The goal is the use of foreign capital and modern foreign technology, the creation on this basis of a large export sector of the economy. According to experts, the experience in creating SEZs in China can be considered very successful, because In the 10 years since the decision to create them (1979), foreign investment in the SEZ amounted to $ 2.5 billion. Which corresponds to ¼ of all foreign investment in China for the specified period.
Recently, such a form of foreign investment as the creation and operation of joint ventures (JVs), especially in the CIS countries, has gained considerable popularity. A joint venture is a form of cooperation between partners from several countries combining their capital to carry out joint production and economic activities, manage and distribute profits in proportion to the capital invested. The creation of the joint venture is aimed at the production of goods in order to replenish the consumer market, introduce advanced achievements of science and technology, advanced technology, managerial experience, attract additional material and financial resources, accelerate the development of domestic science and technology, expand the export base and optimize import supplies. Today's joint ventures are created for future investments. In order for the latter to take place and be effectively implemented, it is necessary to deepen and intensify economic reform, to conduct thoroughly justified and consistent state domestic policy.
In world practice, other diverse forms of investment are known: ♦ leasing; ♦ licensing (selling know-how to a foreign partner); ♦ franchising; ♦ joint production; ♦ subcontracting; ♦ construction of factories, turnkey facilities.
Foreign partners have advantages in the amount of profit when using non-equity forms of investment compared with the creation of a joint venture due to the collection of various payments for the provision of services. The range of these services is very wide: marketing, procurement, transportation, insurance, instructions and manuals on the use of equipment, advertising, maintenance, etc.
4. The role and specifics of foreign investment in the development of the world economy and in particular Russia
Among the important factors in the development of market relations in Russia, a significant place is attracted by foreign capital. In the conditions of the command economy, the country was completely separated from capital flows. Meanwhile, in Western countries, the international migration of capital has led to the deepening internationalization of economic life. This was most clearly manifested in the mutual movement of capital between industrialized countries.
Investment is a relatively new term for our economy. In the framework of the centralized planning system, the concept of gross capital investments was used, which was understood as all the costs of reproduction of fixed assets, including the cost of their repair. Investment is a broader concept. It covers both the so-called real investments, which are close in content to our term “capital investments”, and “financial” (portfolio) investments. Financial investments can become both an additional source of capital investments and the subject of an exchange game on the securities market. But part of portfolio investments - investments in shares of enterprises of various branches of material production - by their nature do not differ from direct investments in production. The journal Economist defines the main directions of investment policy. The following main objectives of the investment policy were identified: the creation of an enabling environment conducive to increasing the investment activity of the private sector, the attraction of private domestic and foreign investments for the reconstruction of enterprises, as well as state support for the most important life-supporting industries and the social sphere while increasing the efficiency of capital investments.
Our country acts on the world economic scene as an exporter of raw materials and products of the first redistribution and as an importer of foreign high-tech products and services designed for consumer demand.
The investment policy pursued by the state has a huge impact on the development of investment in the country, both private and public. It is she who forms the so-called investment climate of the country (a set of political, socio-economic, financial, sociocultural, organizational, legal and geographical factors inherent in a particular country, attracting or repelling investors), therefore, the Russian government gives it great attention.
Until recently, insufficient attention was paid to the investment policy in our state, but already now the state has begun to understand the importance of the right investment policy and, most importantly, has begun to take steps in the right direction.
The growth in the export of capital from some industrialized countries to others reflects the deepening international division of labor and the internationalization of production. Modern production under the pressure of the scientific and technological revolution is becoming increasingly complex.
The need for the export of investment capital by a specific donor country is associated with the following factors: the relative over-accumulation of capital, the growing needs of the monopoly in expanding the general scale of accumulation, the strengthening of industry monopolization in the national economy, and the development of internationalization of production.
Consider the reasons pushing a foreign entrepreneur to invest. Such a decision is determined by a wide range of motivations, such as:
1. The policy of the host government in relation to foreign investment.
2. Geographic conditions of the host country.
3. The desire to get a higher rate of profit, thanks to the use of differences in national levels of production costs.
4. Distribution and redistribution of production of goods between foreign branches, depending on the economic situation of individual countries.
5. Transfer from country to country of production and marketing of goods in the process of their general development in order to preserve the “youth” of products for as long as possible.
6. Bringing the financial base to the diversity of the international specialization and cooperation schemes, providing a comprehensive solution to the problems of placing and complementing industries.
7. Access to technical, technological, managerial innovations, trademarks, signs and more.
8. Maneuvering the costs of research and knowledge-intensive work by placing them in the most advanced research centers and laboratories abroad.
9. Savings on transportation costs and on avoiding customs barriers.
10. Access to the capital markets of many countries, which allows for minimal capital expenditures to make investments abroad.
11. Stability of profit due to the game on the differences in the economic conditions of individual industries and countries; in scientific and technical policies of governments, trade and political regimes, in currency and tax legislation.
12. Consideration of the social climate in the host countries, the stability of their economies and political regimes.
The number of types and subspecies of production is growing, and their development is not economically feasible within individual countries. The development of international specialization and cooperation of industries is intensifying. The production of the final product is divided into separate sections of production, which are in different countries.
Following the development of production, capital is also internationalized. The overflow of capital from one country to another reflects the desire of companies to concentrate in their hands the individual stages of product production that find themselves in different countries. Companies of industrialized countries, especially large ones, are becoming increasingly transnational, transcending national borders. The formation of large multinational companies that have enterprises located in different countries leads to an acceleration of international specialization and cooperation, as one owner of the enterprise has the opportunity to more sustainably develop production relations. Thus, the mutual movement of capital, its formation on the basis of multinational companies are the most important factor in deepening the economic interdependence of countries in the world economy.
For Russia, which has embarked on the path of integration into the world economy and the transition to an open economy, in the strategic plan it is extremely necessary to participate in the processes of capital migration both as an importer and as an exporter of capital. And then she will be more actively involved in the internationalization of production. In terms of capital imports, Russia occupies a very modest place in the world.
The appeal to foreign sources of capital for Russia is largely due to the need to address both strategic and current tasks. In the current economic situation, the question of attracting foreign investment is very acute: the economic crisis, a sharp reduction in investment resources make it inevitable to turn to foreign sources of financing. However, the need to attract foreign investment resources is determined not only by purely financial aspects. The sharp lag in domestic engineering, which in recent decades has been largely focused on the production of military products, has led to a situation where equipment is purchased from many countries for foreign exchange for foreign currency.
To improve production efficiency in some industries, the use of foreign technologies is essential. This applies, for example, to the main export industry - oil production and oil refining.
Attracting foreign investment can help increase the output of certain types of products (and especially consumer goods), expand exports with the help of foreign partners, etc. All this is of no small importance, and if foreign investments can be made to solve these problems, it will be significant contribution to the creation of a modern economy. And to attract them, “free economic zones” (SEZs) are created in Russia - these are territories with a special legal and political status, creating favorable conditions for this attraction with the help of a number of benefits. For example, the largest free economic zones are: Nakhodka (Primorsky Territory), Yantar (Kaliningrad Oblast), Eva (Jewish Autonomous Oblast). There are other ways to attract.
The legal regime and conditions of economic activity in the territory of SEZ should be determined by the law on SEZ.
Cooperation with foreign partners can have a positive effect in terms of mastering foreign experience in management, marketing, training, etc.
Attracting on a large scale national and foreign investments in the Russian economy pursues long-term strategic goals of creating a civilized, socially oriented society in Russia characterized by a high quality of life, based on a mixed economy that assumes not only the joint effective functioning of various forms of ownership, but also internationalization commodity market, labor and capital.
Foreign capital can bring to Russia the achievements of scientific and technological progress and advanced managerial experience. Therefore, the inclusion of Russia in the world economy and the attraction of foreign capital is a necessary condition for building a modern civil society in the country. Attracting foreign capital to material production is much more profitable than obtaining loans to buy the necessary goods, which are still wasted unsystematically and only increase government debts. The influx of investments, both foreign and national, is vital for achieving medium-term goals - overcoming the current socio-economic crisis, overcoming the decline in production and worsening the quality of life of Russians. It should be borne in mind that the interests of Russian society, on the one hand, and foreign investors, on the other, do not directly coincide. Russia is interested in restoring, updating its production potential, saturating the consumer market with high-quality and low-cost goods, in developing and restructuring its export potential, pursuing an anti-import policy, and introducing a Western management culture into our society. Foreign investors are naturally interested in a new springboard for profit from the vast domestic market of Russia, its natural wealth, skilled and cheap labor, the achievements of domestic science and technology and ... even its ecological carelessness.
When attracting foreign capital, discrimination against national investors should not be allowed. Enterprises with foreign investments should not be granted tax incentives that are not available to Russians employed in the same field of activity. As experience has shown, such a measure has practically no effect on the investment activity of foreign capital, but leads to the emergence of enterprises with formal foreign participation on the site of former domestic enterprises, claiming preferential taxation.
It is important to note that the Russian state has legislatively created guarantees for the protection of foreign investment. Foreign investment in Russia enjoys full and unconditional legal protection, which is provided by the Federal Law “On Foreign Investment in the Russian Federation”, decrees of the President of the Russian Federation and other legislative acts and international treaties.
The legal regime of foreign investments, as well as the activities of foreign investors in their implementation cannot be less favorable than the legal regime of investment activities of legal entities and citizens of the Russian Federation, with the exceptions provided for by federal laws.
CONCLUSION
Summarizing the foregoing, we can conclude that foreign investment plays an important role in the successful development of the global economy. FDI is most actively used in such promising sectors of the economy as energy, telecommunications, pharmaceuticals, and financial services.
The development of foreign investment is significantly influenced by the conditions of organizational and economic activity in the host countries. Very relevant is the analysis of the various types of foreign investors present today in the investment market, in accordance with their economic and political interests, forms and methods of organizing a business.
Foreign investment is of great importance for the development of the national economy of countries with economies in transition. The volume of foreign investment flowing into these countries does not satisfy their needs, and measures are being taken to attract additional funds.
Most foreign investment is private investment. As a rule, these are profitable companies for which the national market has become too crowded and, seeking to expand, are being introduced into the markets of other countries. Naturally, the lack of profit or loss discourages such companies.
A significant part of foreign investment comes in the form of various loans, as well as through the creation of special and free economic zones and joint ventures.
Foreign investors seek to get as much profit as possible from their activities.
The largest foreign investors are the USA, Great Britain, Germany, Japan, France, where the economic result from their activities is the highest. The capitalist system does not provide for free investment. The main objective of the investor is profit. There are a number of reasons because of which it is much more profitable to export capital than to work in the domestic market. These are mainly tax incentives and the domestic market of the country into which capital is imported. If a country needs investment, it needs to create as many attractive conditions for investment as possible.
The main conditions for attracting foreign capital for Russia are: the creation of a stable and developed regulatory framework for investors in Russia; tax system reform; strengthening institutions of ownership; the formation of an insurance system and collateral forms for foreign investment; creation of information and advisory systems providing investment decision-making; development of investment cooperation with international banks and financial organizations.
At the moment, Russia needs investments, and it would be good if funds were invested in those industries that are experiencing the greatest crisis. In practice, investors are attracted by the raw material base of our country and some not-so-significant industries. The most important thing is to extract as much benefit as possible for the country, and lose as little economic independence as possible.
Foreign investments entering Russia, of course, do not solve the main problem of restoring the investment process. Without significant domestic investment, it is impossible to move on to economic growth. But the Russian economy needs foreign investments, as they bring in new technologies, marketing and management experience, and create the necessary competitive environment.
At the beginning of the XXI century, the predominant number of countries involved in international investment processes as importers and exporters of capital, sharing the latest technology, increasing labor productivity and their level of development.
The possibility of attracting foreign investment is a question on which many conflicting opinions are expressed: some believe that foreign investors are afraid of Russia, others - “if you allow it”, all Russian enterprises will be bought up by foreigners. The truth is in the middle.
One of the main reasons for the low activity of foreign investors is the government’s policy that is not conducive to foreign investment, the absence of the most favored nation treatment for them, which has been created in many developing countries and has a high effect. Foreign investors are frightened by the inconsistency of the state’s economic policy and the constant change in the “rules of the game”.
One feature of frightening foreign investors from Russia is the Russian way of thinking. It is very difficult to reorient people to a market economy that is unusual for Soviet Russia (albeit in the past).
We can say that, in my opinion, the main problem that impedes the active attraction of foreign investment in the Russian economy is the lack of a clear and effective state investment policy in practice.
The opinion of Russell Mead, who believes that Russia is not able to control its territory, is interesting. "" Each time, returning from Russia, I become more and more convinced that no billions invested by the West in the Russian economy will be of use to it. It's like spitting in a fire. "" The most crushing and hopeless trait in Russia is just as obvious in Vladivostok as it is in Tyumen and in Moscow, it is the lack of work ethic. "" They steal everything here. Workers steal. Therefore, they are not interested in production efficiency and saving of raw materials. Waiters steal, so they are not interested in customers. Army officials steal, so they are not interested in improving military discipline and establishing order in the army. Under the Russian system, no free economy will work. ""
Thus, the restoration of investment activity in the country and the transition to economic growth is a complex, multifaceted problem requiring the joint efforts of all participants in this process, headed by the state.
As for other countries, international experience shows that attracting foreign investment has a positive effect on their economy. The rational use of foreign investment contributes to the development of production, the transfer of advanced technologies, the creation of new jobs, the growth of labor productivity, increased competitiveness of products on the world market, and the development of backward regions.
In addition, the attraction of foreign capital and the creation of joint ventures expand the tax base and can become an important additional source of generating revenue for the state budget.
It should also be noted that foreign investment is by no means a panacea for all the ills of the global economy. The use of foreign capital is a process that is ambiguous in its consequences for the recipient country, manifested through the complex interaction of a set of positive and negative trends at the macro, meso and micro levels.
The introduction discusses the relevance of the research topic. Chapter I identifies the concept and determines the value of investment activity in the modern world economy. Chapter II indicates the conditions for making investments, with examples of practice. Chapter III is devoted to two forms of foreign investment in the global economy. And finally, Chapter IV characterizes the specificity and role of investments in the development of the world economy. In conclusion, conclusions are drawn on the study.
The main legislative documents, the Constitution of the Russian Federation, as well as other sources giving a detailed discussion of this topic were used in the work. When writing the work, current legislation, literature on international law and special literary sources were used.
BIBLIOGRAPHY
Regulatory Sources
1. The Federal Law "On investment activity in the Russian Federation carried out in the form of capital investments" dated July 25, 1999 No. 39-ФЗ.
2. Federal Law of July 9, 1999 No. 160-ФЗ “On Foreign Investments in the Russian Federation” (as amended on March 21, July 25, 2002, December 8, 2003) // Meeting of the legislation of the Russian Federation. 1999. No. 28. St. 3493.
3. Federal Law of July 22, 2005 No. 116-ФЗ “On Special Economic Zones in the Russian Federation”.
4. Decree of the President of the Russian Federation of July 26, 1995 No. 765 "On additional measures to improve the efficiency of investment policy in the Russian Federation."
5. Decree of the President of the Russian Federation of January 25, 1995 “On additional measures to attract foreign investment in the material production of the Russian Federation”.
6. Decree of the President of the Russian Federation of June 4, 1992 N548 "On some measures for the development of free economic zones (SEZ) in the Russian Federation."
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9. Decree of the Council of the Federation of July 3, 1997 No. 259 - SF “On Free Economic Zones”.
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The legal regime of foreign investment in our country is determined by the Federal Law "On Foreign Investment in the Russian Federation". The constituent entities of the Russian Federation are also entitled to adopt laws and other normative acts on the regulation of foreign investment in the relevant part.
The legal regime for the activities of foreign investors and the use of profits derived from investments cannot be less favorable than the legal regime for the activities and use of profits derived from investments provided to Russian investors. Restrictions for foreign investors may be established by federal laws to the extent necessary to protect the foundations of the constitutional order, morality, health, rights and legitimate interests of others, to ensure national defense and state security.
A foreign investor has the right: to make investments on the territory of the Russian Federation in any form not prohibited by law; transfer your rights and obligations to another person; to freely use revenues and profits on the territory of the Russian Federation for reinvestment and freely transfer income, profits and other legitimate amounts of money in foreign currency outside Russia; to freely export property and information previously imported as foreign investment; acquire stocks and other securities of Russian commercial organizations and government securities; participate in the privatization of state and municipal property by acquiring property rights to state and municipal property.
A foreign investor has the right to compensation for losses incurred as a result of illegal actions of state bodies, local authorities or officials of these bodies. The investor is obliged to comply with the antitrust laws of the Russian Federation, not to allow unfair competition and restrictive business practices.
The property of a foreign investor is not subject to compulsory seizure, including nationalization, requisition (with the exceptions provided by law). Normative acts adopted during the implementation of the investment project, which worsen the legal regime for foreign investment in Russia, do not apply to a foreign investor during the payback period of the investment project, but no more than seven years from the start of the project.
Disputes of a foreign investor arising in connection with investments and entrepreneurial activities in Russia are settled in accordance with international treaties and federal laws in a court or arbitration court or in international arbitration (arbitration court).
In the implementation of priority investment projects, foreign investors and commercial organizations with foreign investments may be granted privileges for customs payments. Subjects of the Russian Federation, local authorities within their competence can provide foreign investors with additional benefits and guarantees.
For investments in form of capital investment The Federal Law On Investment Activities in the Russian Federation in the Form of Capital Investments is in force. The subjects of these legal relations are investors, customers, contractors, users of capital investment objects and other persons. Relations between them are regulated on the basis of an agreement and (or) a state contract. All investment projects, regardless of financing sources and ownership of capital investment objects, are subject to examination in accordance with the legislation of the Russian Federation.
Direct participation of the state in investment activities carried out in the form of capital investments is provided for in the following forms: development and financing of investment projects; forming a list of objects for state needs; expert examination of investment projects; development of rules; issue of bonded loans, guaranteed targeted loans; granting concessions to investors based on the results of tenders.
The circulation of securities is regulated in Russia by the Federal Law "On the Securities Market". The organizers of trading in this market are stock exchanges in the form of a non-profit partnership or joint-stock company. The procedure for admission to participation in tenders and exclusions from the number of participants are determined by the rules established by the stock exchange. The stock exchange constantly monitors transactions carried out on the stock exchange. Bidders are required to provide the stock exchange, upon request, with the information necessary to exercise such control. State registration of issues of equity securities is carried out by the federal executive body for the securities market at the request of the issuer.
Russian issuers are entitled to place securities outside of Russia only with the permission of the federal executive body for the securities market.