MIL OSI Translation. Region: Russian Federation –
Business growth and development of cities and countries are impossible without additional finance. We tell you how important investments are for the economy as a whole and for each of us.
Attracting investment is important both for business and for the economy of cities and even entire states. Additional finance allows you to develop more actively without postponing growth for the future. For example, modernize production, create new jobs, build roads and housing, develop transport, and improve city squares and streets. All this gives more opportunities and, as a result, improves the quality of life. We continue the series of publications “Moscow Economy in Simple Language”. This time we will tell you what investments are and how the capital attracts capital.
What is investment
Investment is the investment of resources in various projects. They can be divided into financial (buying securities, investing money in a business for a long or short term) and investments in real assets. They can be tangible (for example, buying equipment) and intangible (patents, scientific developments, etc.). Not only a company can become an investor, but also any person, even with a small free capital.
Peter Smirnov worked hard and accumulated a substantial amount. He is afraid of losing it due to currency fluctuations, inflation and other reasons. Investing his money in buying real estate seems to him the best solution. This investment method is traditionally considered one of the most reliable. You can buy an apartment at the stage of signing the project documentation at a low price, realizing that over time, the value of this asset will only grow, and the property is inherited.
Any purchase made in order to receive income in the future can be called an investment instrument. This is the purchase of real estate, equipment for the production of goods, or even the cost of additional education, which will provide new knowledge and improve skills. Financial instruments of investment are considered to be the purchase of currency, metals, stocks, bonds, real estate, as well as a traditional bank deposit.
Buying shares, an investor allocates his money for the development of the company in the hope that it will increase its financial performance. Shares give their owner the right to receive dividends. When buying bonds, an investor lends money at a certain percentage and waits for the borrower to return the money to him, taking into account the income received.
By investing his capital in a business, the investor expects to get a return – profit. Therefore, he evaluates the activities of the company before financially supporting a particular project. In turn, entrepreneurs who plan to attract investment write detailed business plans. They not only predict how the business will grow thanks to the invested funds, but also try to calculate how much the investor’s profit will increase.
The contribution of a cup of coffee to the country’s economy
With the money of investors, the owner of a small coffee shop can buy an additional coffee machine. He will be able to brew and sell more coffee. This will increase the overall sales for the business. In combination with the activities of many other organizations, an increase in production can lead to an increase in the gross domestic product of both the region (GRP) and the entire country (GDP). Using this indicator, they assess the situation in the economy and learn about the standard of living of a country or region.
Chasing an investor
To attract investments of a completely different scale, for example, to launch large production facilities, at the level of cities and states, they develop investment strategies and create attractive conditions: they reduce taxes, simplify bureaucratic procedures, develop infrastructure, and stimulate demand for products.
We can say that regions and cities compete with each other, creating an attractive investment climate in order to attract more promising investors and attract large capital to their region.
Investments in the economy are very profitable for residents. In cities that attract more investment, the number of jobs increases, the standard of living rises, and the social sphere develops.
Become a resident
For investors who want to develop business in Russia, they create special economic zones (SEZ) – infrastructure sites with their own internal ecosystem. A striking example is SEZ “Technopolis” Moscow “”… Russian and foreign high-tech enterprises operate on its territory, and the city provides residents with tax preferences, trains personnel, and builds engineering and production infrastructure.
Technopolis “Moscow” has already given the capital almost 11 thousand jobs, and the budget – tax revenues. For nine months of 2020, residents of the special economic zone have invested 7.4 billion rubles in the development of the capital’s economy. Now the total volume of all investments of residents over the entire existence of the SEZ has already exceeded 36 billion rubles.
Investment climate of Moscow
The high investment potential of the capital is confirmed international ratings… At the end of 2020, Moscow entered the top 25 global cities of the future that are attractive to foreign investors. In addition, the capital is headed by a national investment climate ratingin the regions of Russia.
For foreign investors, Moscow has a number of competitive advantages… First of all, the capital is a point of entry to the market of all of Russia and the CIS countries. Also, investors who need favorable conditions for locating a new business or expanding an existing one can find attractive rental rates for production areas, developed infrastructure and qualified personnel in Moscow.
Companies registered in the capital account for about half of all foreign direct investment in Russia. Their accumulated volume, as of July 1, 2020, amounted to 259.4 billion US dollars.
In 2020 alone, the volume of investments in the Moscow economy amounted to 3.6 trillion rubles, which 1.7 percent moreindicator a year earlier. In total, Moscow today accounts for almost 18 percent of the total Russian investment in fixed assets.
During the pandemic, a system of support measures helped to maintain investment activity in the capital. It began to form five years ago and is regularly improved. The city offers investors sites for locating production facilities on preferential terms, provides various subsidies and preferential loans, and reduces the tax burden.
In 2020, two new measures were introduced to support investors – an investment tax deduction and a job creation incentive program. In 2021, another form of interaction between investors and the city will come into force – the conclusion of agreements on the protection and encouragement of investment.
EDITOR’S NOTE: This article is a translation. Apologies should the grammar and or sentence structure not be perfect.