DEVELOPMENT OF THE MAIN DIRECTIONS FOR INCREASING THE INVESTMENT ATTRACTIVENESS OF THE REPUBLIC OF SAKHA (YAKUTIA)

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1 International Journal of Civil Engineering and Technology (IJCIET) Volume 9, Issue 11, November 2018, pp. 1 22, Article ID: IJCIET_09_11_001 Available online at ISSN Print: and ISSN Online: IAEME Publication Scopus Indexed DEVELOPMENT OF THE MAIN DIRECTIONS FOR INCREASING THE INVESTMENT ATTRACTIVENESS OF THE REPUBLIC OF SAKHA (YAKUTIA) V.S. Markova Department of Economics and Finance, Institute of Finances and Economics, M. K. Ammosov North-Eastern Federal University , Yakutsk, Republic of Sakha (Yakutia), Russia Izabella D. Elyakova Department of Economics and Finance, Master of Finance and Economics Institute of the M. K. Ammosov North-Eastern Federal University , Yakutsk, Republic of Sakha (Yakutia), Russia K. Yu. Postnikova Department of Labor Economics and Social Relations, Institute of Finances and Economics, M. K. Ammosov North-Eastern Federal University , Yakutsk, Republic of Sakha (Yakutia), Russia I. I. Poiseev Expertise, Management and Cadastre of Real Estate Department, Institute of Engineering & Technology, M. K. Ammosov North-Eastern Federal University , Yakutsk,, Russia A. A. Pakhomov, V. R. Darbasov Federal Publicly Funded Institution of Science Yakut Science Center of the Siberian Branch of the Russian Academy of Science , Yakutsk,, Russia M. N. Okhlopkov Department of Regional Economic and Social Research, Yakut Science Center of the Siberian Branch of the Russian Academy of Science , Yakutsk, Republic of Sakha (Yakutia), Russia V. S. Dadykin Department of Economics, Industrial Engineering and Management, FSBEI HPE Bryansk State Technical University , Bryansk, Russia 1 editor@iaeme.com

2 Development of the Main Directions for Increasing the Investment Attractiveness of the ABSTRACT The research objective: In modern conditions, one of the priorities of encouraging investment is to increase the investment attractiveness of the regions and the country as a whole. This, in turn, necessitates the identification of challenges and prospects for investing in regions, as well as analyzing investment activities and, accordingly, assessing the entities investment attractiveness. The purpose of the study is to determine the level of investment attractiveness of the (RS (Ya)) and identify the main directions for its improvement. Research method: Statistical and econometric methods for assessing investment attractiveness based on the calculation of the integral index of investment attractiveness. Key findings: In the course of the study, strengths (resource potential) and weaknesses (poor infrastructure), opportunities (development of other components of the potential) and threats (economic mono-specialization) of investment attractiveness of the RS (Ya) were identified based on the SWOT analysis to determine the main directions for increasing the level of region s investment attractiveness. The level of the RS (Ya) investment attractiveness was also identified using the investment attractiveness index calculated by the authors: the RS (Ya) occupies the second position in terms of investment attractiveness among the subjects of the Far Eastern Federal District (FEFD). Keywords Investment attractiveness of the regions,, Resource potential, Infrastructure, Components of the potential, Economic monospecialization, Investment attractiveness index Cite this Article: V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin, Development of the Main Directions for Increasing the Investment Attractiveness of the, International Journal of Civil Engineering and Technology, 9(11), 2018, pp INTRODUCTION The Far East of Russia is a region with a vast territory and a powerful resource potential, but at the same time, with extreme natural and climatic and socio-economic conditions. Due to objective and subjective reasons, the resource potential is not used to the best advantage. In a region with a population density of only 1 person per km. sq., with vast undeveloped territories and resources, additional funds are required for development. To ensure stable regional development, it is necessary to advance and implement a strategic investment policy, i.e. evidenced-based and longstanding policy [21, 23]. In the Socio- Economic Development Strategy of the Far East and the Baikal Region for the Period up to 2025, investments are one of the main instruments for achieving the strategic goal of the document, which reads as follows the implementation of the geopolitical task of entrenching the population in the Far East and the Baikal region due to the creation of a developed economy and comfortable human environment in the constituent entities of the Russian Federation located in this territory, as well as the achievement of the average Russian level of socioeconomic development [1]. 2 editor@iaeme.com

3 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin At present, the importance of investment has increased not only at the country level, but also at the level of regions and economic entities. Owing to investments, there is an opportunity to increase production, develop infrastructure, create new jobs and, thereby, improve the level and quality of life of the population. In modern conditions, one of the priorities of encouraging investment is to increase the investment attractiveness of the regions and the country as a whole. This, in turn, necessitates the identification of challenges and prospects for investing in the regions, as well as an analysis of investment activity and, accordingly, an assessment of the subjects investment attractiveness. 2. RESEARCH METHOD The existence of various interpretations of investment attractiveness determines the existence of a variety of methods for its evaluation. The most common form of assessment is the calculation of the indicator on the basis of certain quantitative and qualitative characteristics of the region under study. There are two methods for calculating the indicator: 1. calculation of the integral index one integral indicator calculated on the basis of indicator-factors of investment attractiveness; 2. calculation of two independent values investment potential and investment risk. The level of investment attractiveness is determined by the ratio of the two previously mentioned independent values. It is worth noting that with this method it is impossible to make a ranking list with regions [5]. Ratings of investment attractiveness today are the most popular form of presenting the results of assessing the RF regions investment attractiveness. This study considered the most commonly used domestic techniques (Figure 1): RAEX (Expert RA) methodology; Methodology of the Agency for Strategic Initiatives (АSI); National Rating Agency methodology (NRA). Figure 1 Methods for assessing the investment attractiveness of regions in the Russian Federation [12, 13, 15] 3 editor@iaeme.com

4 Development of the Main Directions for Increasing the Investment Attractiveness of the As a result of analyzing the methods of the three organizations (Expert-RA, NRA, ASI), by certain comparative characteristics, the Expert-RA Rating Agency methodology was chosen as the most suitable for assessing the region s investment attractiveness analyzing the level of investment attractiveness by its components. In the course of the study, only Expert-RA ratings are used as a benchmark rating for calculating the region s investment attractiveness. The methods of statistical and econometric analysis were used to analyze the main indicators of investment activity. 3. RESULTS AND DISCUSSION 3.1. Analysis of the key indicators of investment activity in the Republic of Sakha (Yakutia) The socio-economic development of the region is impossible without efficient investment activity. Conducting an effective policy to induce investment in the region s economy, it is necessary to perform continuous monitoring of investment activities, to identify its main trends, challenges and promising ways of development of this economic sector. The authorized executive body of the government in the in the area of investment is the Ministry of Investment Development and Entrepreneurship of the. It carries out the functions of state regulation of investment activities, the implementation of state innovation policy, state policy in the field of publicprivate partnership, cluster policy, state policy in the field of small and medium-sized businesses, the tourism industry, image policy in terms of promotion and implementation of investment, innovation and tourism potential of. The Ministry was established in January 2017 [14]. To identify the major parameters of the investment activity of the region under study, an analysis of indicators reflecting its effectiveness was carried out on the basis of statistical data for including: amount of investment in fixed assets; amount of investment in fixed assets per capita; generic structure of investment in fixed assets; investments in fixed assets by directions; structure of investments in fixed assets by funding sources; structure of investments in fixed assets by types of economic activities (TEA); Distribution of investments in fixed capital by particular forms of ownership. The first indicator in the analysis is the volume of investments in fixed capital, which includes the cost of construction, reconstruction (comprising expansion and modernization) of facilities, which leads to a growth in their initial cost and increases the helpful effect of use (hereinafter construction), the acquisition of machinery, equipment, vehicles, industrial and household equipment, accounting of which is carried out in the way prescribed for the accounting of investments in long-term assets, the creation of a working, productive and pedigree herd, planting and growing perennial crops, etc., investments in intellectual property: software and databases, genuine works of entertaining genre, those related to literature and art, research and development, creation and acquisition of inventions, utility models and industrial designs, exploration of the subsoil and estimation of mineral reserves, including incurred intangible exploration costs [19, 22, 24]. 4 editor@iaeme.com

5 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin Figure 2 shows the dynamics of investments in fixed capital in monetary terms and the share of investments in RS (Ya) in the total volume of investments in the FEFD. Figure 2 Dynamics of amount and growth rate of fixed asset investment in the Sakha (Yakutia) Republic in [16, 17] For the period under analysis, from 2005 to 2017, the dynamics of the volume of investments in fixed assets represents a positive trend. There is a growth in the amount of investments in fixed assets by RUB 335,875 mln. These changes are a positive factor, and indicate the development of the investment market in the RS (Ya) for a given period of time, which was largely facilitated by the investment policy pursued by the Government of the RS (Ya). The decrease in the volume of investments was recorded in 2010, 2013 and 2014, and in 2010 there was a sharp decline in the indicator (by 62,155 million rubles, that is, by 32.26%). The reasons for the decline in investment are related to the economic crisis in Consider investment growth and growth rates (Table 1). Table 1 Indicators of the dynamics of investment in fixed capital of RS (Ya) for [16, 17] Absolute growth, mln No. Year Amount of fixed asset investment, mln RUB RUB Growth rate, % chain basic chain basic , ,619 7,641 7, ,824 63,205 63, ,954 37, , ,648 35, , ,493-62,155 73, ,409 59, , ,206 14, , ,947-11, , ,172-12, , ,032 16, , ,273 77, , , , , editor@iaeme.com

6 Development of the Main Directions for Increasing the Investment Attractiveness of the Source: Calculated by the authors based on statistical data [16, 17] Over twelve years, the volume of investment has increased almost by eight times. Compared with the previous year under analysis by 1.4 times. The average growth rate was 118%. Below is the dynamics of the volume of investments in fixed capital per capita in the RS (Ya) in Figure 3 Dynamics of the amount of fixed asset investments per capita in the RS (Y) in , RUB [16, 17] The population of the RS (Ya) during the analyzed period was in the range of thousand people; there were no drastic changes. Therefore, the dynamics of investments per capita is similar to the dynamics of investments of the entire region. In 2017, the volume of investments per capita increased sharply and amounted to 399,088.8 rubles, which is 7.8 times more than that in As compared to the previous year, the value increased by 39.4%, which is also associated with the growth in the total investment. Further, the position of the republic in the FEFD is considered. The volume of investments by subjects of the FEFD is presented in Appendix A. The share of investments in RS (Ya) in the total volume of investments in the economy of the Far East is calculated (Table 2). Table 2 The share of RS (Ya) investments in the volume of investments in RS (Ya) fixed assets [16, 17] Year Amount of fixed asset investment in FEFD, mln RUB RS (Y) share in the amount of fixed asset investment in RS (Y), % , , , , , , ,060, , , , , ,000, ,217, Source: Calculated by the author on the basis of statistical data [16, 17] 6 editor@iaeme.com

7 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin The dynamics of investment in the subjects of the FEFD has been growing since As of 2017, the volume of investment in fixed assets amounted to 1,217 billion rubles, which is 7.6% in the total volume in RF. The share of investments in RS (Ya) in the FEFD total volume by 2017 reached a maximum value for the analyzed period 31.61%, i.e. among 9 subjects of FEFD, one third of all funds are invested in the economy of RS (Ya). In the share continued to grow, then a slight decrease was observed. The value of the indicator is in the range from 16 to 32%. The minimum share was observed in 2010, which coincided with a sharp decline in investment. As a result, there is a positive upward trend in the share of RS (Ya). Of particular importance in stimulating investment activity are the volumes of real investment, which can be characterized by such an indicator as the share of investments in fixed assets in the gross regional product (GRP). This indicator is an indicator reflecting the economic efficiency. The calculated shares are presented in Table 3. This indicator is shown for the period , due to the lack of data on GRP for Table 3 Dynamics of the share of investments in fixed assets to GRP in RS (Y) in , % Year Share Source: Calculated by the authors on the basis of statistical data [16, 17] For the analyzed period, the maximum value was reached in 2007 the share was about a half in the RS (Ya) GRP. In 2015, the share was one fifth in GRP 26.5%. Investments in fixed assets in 2016 account for about a third of the share in GRP. Within the FEFD, RS (Ya) has the second result after the Amur Region, the share of which was 45.1% in The value for this indicator in the RS (Ya) is more than the average for Russia (investment in Russia s GDP accounts for only one-fifth, 20.8%). Thus, it can be argued that according to this indicator, the economy of the republic is regarded as quite effective. The next indicator for analyzing the investment activity in the RS (Ya) is the generic structure of fixed asset investments (Figure 4). Data for 2017 are not available. Figure 4 Generic structure of fixed asset investments in RS (Ya), % [16, 17] 7 editor@iaeme.com

8 Development of the Main Directions for Increasing the Investment Attractiveness of the As Figure 4 shows, half and more of the investment is directed to buildings and facilities, then about a third to machinery, equipment and vehicles. Compared to 2005, the structure of 2016 has noticeably changed: the share of investments in buildings and facilities increased from 46.7% to 66.2%, while the share in machinery and equipment decreased from 40.6 to 21.3%. The share of investments in dwellings also decreased and amounted to 7.6%, the share of other investments in fixed assets doubled by 2016 during the last 12 years 8.9%. The structure of investments in three areas is further considered: construction, modernization and reconstruction, the acquisition of new fixed assets. The data are presented in Table 4 for the period Year Table 4 Activity-specific composition of investment in RS (Ya) in , % Buildings and facilities Construction Machinery, equipment, vehicles Modernization and reconstruction Buildings and facilities Machinery, equipment, vehicles Acquisition of new fixed assets Machinery, Buildings equipment, and facilities vehicles Source: Calculated by the authors on the basis of statistical data [16, 17] Each area is divided into buildings and facilities, machinery, equipment and vehicles. Over five years, the structure has undergone changes, especially the differences are noticeable in the area of modernization and reconstruction : if in 2012, machines and equipment accounted for about a third of investments in modernization and reconstruction, then in 2016 the share decreased to 17.3%, respectively, the share of investment in buildings and facilities increased (76.1%). As of 2016, a larger percentage of construction accounted for buildings and facilities (75.9%). In the area of modernization and reconstruction a large share of investments is also related to buildings and facilities. Consequently, the share of machinery and equipment prevails in the area of the acquisition of new fixed assets 64.1%. The following analyzed structure of investments is by funding sources. Sources of investment are divided into internal and external (including budget funds of the federal budget and the regional budget). The structure in the form of a graph is shown in Figure 5. Figure 5 Composition of investment by funding sources in RS (Ya) in , % [16, 17] 8 editor@iaeme.com

9 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin The above structure of investments shows an increase in the share of investments from internal funds until , then an increase in external investments due to the growth in the share of others (excluding budget funds). According to the data of 2016, the structure of investments is as follows: for 44% of investments in RS (Ya), the source is legal entities own funds, the remaining 56% are external investments. The share of funds raised from the budget was 13% (this figure continues to decline over 5 years). In Figures 6 and 7, we consider the structure of investments in fixed assets by types of economic activity (TEA) in 2012 and For the convenience of displaying data, parts of the TEA in which the share is a small percentage are included in one miscellaneous group (agriculture, fishing, manufacturing, trade, and others). Figure 6 The structure of investment in fixed assets by TEA in RS (Ya) in 2012 [16, 17] In 2012, the largest share of investments in fixed assets in the structure accounted for the mining operations (33%), further electricity, gas and water production and distribution takes a quarter of investments, the share of TEA transport and communications is 22%, then real estate activities account for 7% of investment. The group miscellaneous amounts to 11%. Figure 7 The structure of investment in fixed assets by TEA in RS (Ya) in 2016 [16, 17] 9 editor@iaeme.com

10 Development of the Main Directions for Increasing the Investment Attractiveness of the As presented in the figures above, the structure has undergone some changes over 5 years. The share of mining significantly increased. Thus, the share of investments in the production and distribution of electricity, gas and water has decreased. In 2016, in the total amount of investment in fixed assets of the RS (Ya), the largest share is mining (51%), followed by transport and communication with a share of about a quarter of investments (24%), electricity, gas and water production and distribution (8%), real estate activities (6%). Further, in Table 5, the distribution of investments in fixed capital by particular forms of ownership is considered: Russian, foreign, joint Russian and foreign. The structure of Russian investments, in turn, is divided into state, municipal, private and mixed Russian investments. Таble 5 The structure of investment in fixed assets by particular forms of ownership in 2012 and 2016, % [16, 17] Year Russian including governmental municipal private Joint venture Russian Foreign Joint Russian and foreign Most of the investments during two years are of Russian origin: 94% in 2012 and 88.4% in Foreign investments make up only about 2% of the total investment in the RS (Ya). Over 5 years, the share of joint investment increased: in 2012, joint Russian and foreign investments amounted to 9.7%. In terms of Russian investments, private investments prevail (62.9% in 2016). The share of investments of mixed ownership decreased from 30.4% to 12.6%. Minor shares are of state and municipal forms 7.7% and 5%, respectively. Thus, the analysis of investment activity of RS (Ya) is carried out on the basis of statistical data related to seven indicators. The dynamics of investments in fixed assets has a positive trend; by the end of 2016, the volume of investments amounted to billion rubles. RS (Ya) takes about a third 28% in the structure of investments in FEFD. Most of the funds are invested in the construction, modernization and reconstruction of buildings and facilities, as well as the purchase of vehicles and equipment. According to the financing sources, first of all, the external funds in the amount of 56% are invested (a small share is connected with budget funds). The analysis of the structure of investment in TEA over five years indicates a low investment diversification. The share of investments in mining increased, in 2016 this share was more than a half (51%). In the meantime, the share of investments in TEA electricity, gas and water production and distribution is decreasing. Thus, it can be assumed about the investment activity of the RS (Ya) at the level above the average based on statistical data analysis. Besides, within this part of the work, factors limiting the investment activities of RS (Ya) organizations are highlighted. For the subjects of the FEFD, investments can be one of the most important factors in regional development. In turn, organizations operating in the core economic activities in the region provide the basis for attracting and operating investments. The enterprises investment activity determines the growth rate of production and competitiveness in the long term [2]. It is necessary to consider not only the factors contributing 10 editor@iaeme.com

11 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin to the growth of investment attractiveness (i.e., factors of investment potential), but also factors constraining investment activity. The total volume of investments in fixed capital in the FEFD entities by the end of 2016 amounted to billion rubles (11% increase compared to the previous year). More than a half of the volume of investments accounted for buildings and facilities (58.6%), then 24.8% of investments in machinery, equipment and vehicles, 8.2% dwellings, 8.4% other types of fixed assets [4]. In 2016, in 85 RF subjects, the Federal State Statistics Service of the Russian Federation (RF FSSS) conducted a sample survey of investment activity of organizations operating in the following areas: mining, manufacturing, electricity, gas and water production and distribution. The sample size equals to 23.7 thousand organizations. In the sectoral structure of the GRP in the FEFD regions, the above-mentioned types of economic activity accounted for 57.2% of all GRP in 2016, and in the structure of investments in fixed assets more than a half (59.1%) [4]. Table 6 presents the results of the survey conducted by the RF FSSS. Table 6 Distribution of organizations by the assessment of factors limiting investment activity in 2016, % of the total number of organizations Subjects Insufficient demand for products Lack of own financial resources Imperfect regulatory framework A complex mechanism for obtaining loans for investment projects implementation High interest rate of commercial loan Investment risks Existing investment tax regime Uncertainty of the country's economic situation Far Eastern Federal District The Sakha (Yakutia) Republic Kamchatka Krai Primorsky Krai Khabarovsk Krai Amur Region Magadan Region Sakhalin Region The Jewish Autonomous Region Chukotka Autonomous Okrug Source: Calculated by the authors on the basis of statistical data [18] As part of a sample survey, factors were identified that limit the organizations investment activities. The main factors constraining the growth of investment activity among the FEFD 11 editor@iaeme.com

12 Development of the Main Directions for Increasing the Investment Attractiveness of the entities are the lack of own financial resources and the uncertainty of the economic situation in the country; these reasons were chosen by 61% of the heads of organizations. Besides, investment activity is limited by a high percentage of commercial loans (57%). The results of the survey in the RS (Ya) are as follows: 87% of the heads of organizations state that the limiting factor is the uncertainty of the economic situation, 80% the lack of their own funds, 78% a complicated mechanism for obtaining loans, 72% a high percentage of commercial loans. Next, we consider the structure of investment volumes in FEFD subjects in Figure 8 by sources of financing internal (organization profit, reserve funds, contributions to the equity capital, aimed at investing, etc.) and external funds (bank loans, funds from the federal, regional and local budgets, foreign investment, etc.). Figure 8 Distribution of investments in fixed capital by sources of funding in the FEFD, 2016, % [17] Throughout FEFD, the structure of investments is as follows: 44.2% account for own funds, the remaining 55.8% are external. In all the regions under consideration, the share of funds raised is about a half and more. The minimum share of funds raised is observed in the Kamchatka Krai 44.1%. In the Magadan Region, the Jewish Autonomous Region, the Chukotka Autonomous Region, the share of non-own funds makes up more than 70% of the total investment. In RS (Ya), the source of financing 55.8% of investments in fixed assets are external funds. The ratio of internal and external funds in the volume of investments reflects a significant predominance of external funds. The results of a sample survey of the Russian Federation conducted by the FSSS and the structure of investments in fixed capital by sources of financing indicate the importance of the impact of the lack of own financial resources in organizations as a limiting factor. In addition to the factors identified by the FSSS sample survey, the limiting factor can also be attributed to the staff composition not always complying to organization s requirements (quantitative characteristics and personnel s professional level), the absence or lack of government support, and the lack of information in organizations [25]. These factors require more in-depth analysis and other assessment methods. The level of industrial organizations investment activity reflects the level of development of the region to a certain extent. Organizations should follow an investment strategy related to financial resources planning [3]. Thus, the assessment of investment activity should be based not only on the investment potential, but also on the analysis of limiting factors. Knowledge of 12 editor@iaeme.com

13 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin the barriers to investment activity is significant for taking appropriate measures and developing a sound investment policy for the organization, the region and the country as a whole Analysis of investment attractiveness of the Investment attractiveness is analyzed through different approaches. The analysis can be carried out as a statistical analysis of the main indicators, and investment attractiveness index calculated by the authors on their own, etc. In this paper, the analysis is conducted on the basis of the assessment of investment attractiveness, as well as the index of investment attractiveness calculated by the authors. The analysis of the investment attractiveness of RS (Ya) according to the results of the research of the Rating Agency Expert-RA for has been carried out. The results of the evaluation of the investment attractiveness of the RF regions are annually presented in the federal media and on the agency s official website. As was considered in the first part of this work, according to the agency s methodology, each subject of the Russian Federation is given a quantitative characteristic (how great the potential is and to what extent the risk is high), on the basis of which each region is related to a specific group (category) of investment attractiveness. For the analyzed period, from 2012 to 2017, according to the results of the RS (Ya) rating, it belongs to the category 3B1 the group of reduced potential-moderate risk. The other subjects of FEFD also belong to this category according to the Expert-RA rating. For a detailed analysis the regions investment attractiveness according to Expert-RA data for are reviewed. Table 7 presents the results of the RS (Ya) ratings over the analyzed period. Table 7 RS (Ya) positions based on potential and risk in the ratings of the regional investment attractiveness in the RF in Component of investment attractiveness Position Potential Value, % Position Risk Value Source: Calculated by the authors on the basis of statistical data [6, 7, 8, 9, 10, 11] Over the six years under analysis, RS (Ya) takes positions By 2017, it shifted from position 19 to 20. The value of the potential (the share in the nationwide potential) increased significantly in 2017, there is a growth trend since According to the risk rating, the RS (Ya) shifted to the 54th place, however, the value of the weighted average risk index is decreasing. Expert-RA reports also provide rankings for individual risk and potential components. Further we consider their specification in order to find out exactly which potentials and risks ensure an increase in the level of attractiveness, which, on the contrary, reduce. The ranks of the investment potential components are presented in Table editor@iaeme.com

14 Development of the Main Directions for Increasing the Investment Attractiveness of the Table 8 The ranks of the investment potential components RS (Ya) in Potential Year labor consumeroriented manufacturing financial institutional innovative infrastructural natural-resource tourist Source: Calculated by the authors on the basis of statistical data [6, 7, 8, 9, 10, 11] As for the natural resource potential, over all analyzed years the RS (Ya) occupies the second position after the Krasnoyarsk Krai. As for the other potential components, it occupies positions no higher than the 20s: according to the labor component it is the 55th position out of 85 possible ones, as for the consumer component, it is 42 (the upward shift is observed), according to the institutional one 54. According to the financial potential as of 2017, the RS (Ya) has risen from the 34th place to the 25th place. The opposite picture is observed as for the innovative component of the potential: the 53rd place in 2017 against the 35th position in By the level of infrastructure potential, the RS (Ya) rating remains low: the 83rd rank among 85 RF subjects. Thus, the RS (Ya) 20th rank in terms of investment potential is supported by a high level of natural resource potential. In terms of investment risk, the republic belongs to the moderate risk group. In 2017, RS (Ya) was assigned the 54th rank. Below in Table 9 the investment risk components are considered. Table 9 Ranks of Investment Risk Components in RS (Y) in Risk Year social economic financial criminal ecological managerial Source: Calculated by the authors on the basis of statistical data [6, 7, 8, 9, 10, 11] The decrease in the risk ranking in 2017 is due to the advance in the performance of other regions, since the value of investment risk is improving. Reducing the risks of economic (the 14 editor@iaeme.com

15 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin 24th position against the 27th in 2016) and criminal (advance by one position) components could contribute to the improvement. However, there is a significant deterioration in the position by the management risk component (shift by 14 positions). As for the social and financial risk, there are no improvements. Almost the last position is taken by RS (Ya) according to the environmental risk the 82nd one out of 85. Thus, the region activities related to investment attractiveness is to reduce social, financial, environmental and managerial risks. As for the investment potential, the level of potential (the 20th rank) is ensured to the greatest extent by the only capacity the provision of the republic with natural resources. To increase investment attractiveness, it is necessary to focus on carrying out a range of activities and measures to improve positions related to the other components of the potential, especially institutional, tourism and infrastructure ones SWOT-analysis of the investment attractiveness To develop measures for increasing the level of regional investment attractiveness, it is necessary to conduct a preliminary analysis and assessment, where the current state of affairs in the region will be considered, and for this reason, identify possible directions for its development. The geographical position of the RS (Ya) is considered, the main statistical indicators of the investment attractiveness components are analyzed. The RS (Ya), a RF subject, is located in the eastern part of the country, occupies 3,083,523 square km, which is 18% of the total Russian area. The structure of land area by type of land is as follows: agricultural land 0.5%, forest area 53.5%, surface water and swamps 10.7%. The position of the republic also determines the presence of minerals. By the diversity and volume of mineral deposits, the RS (Ya) territory is unique not only in Russia, but also worldwide. Here are deposits of oil, gas, coal, ferrous and non-ferrous ores, precious metals and diamonds. It is necessary to take into account, in comparison with other RF regions, in Yakutia, the degree of exploration maturity is low, which indicates a significant potential for identifying new mineral deposits. The demographic situation in the republic is shown in Table 10. Table 10 Demographic Situation in RS (Ya) in , persons. Population size on Changes over the year Year January 31 of the Positive migration current year Total growth Natural change balance ,803 2,093 8,801-6, ,896 2,793 8,180-5, ,689 3,146 7,299-4, ,835 1,495 6,144-4, , Source: Calculated by the author on the basis of statistical data [16, 17] In the region since 2014, a trend of population growth has been observed. In analyzing the two components of the population change, it was found: the mortality rate is below the birth rate in the republic, there is a natural increase in the population; 15 editor@iaeme.com

16 Development of the Main Directions for Increasing the Investment Attractiveness of the more people leave RS (Ya) rather than arrive here it means the migration loss. The value of the natural increase (despite the decline in the birth rate) in the population determines the population growth in the RS (Ya). Besides, a positive trend in the population size among FEFD subjects is observed only in the RS (Ya). Further, the republic s geographical position determines severe climatic conditions: there is the Arctic belt climate in the north, in the center the climate is subarctic (continental), there is the temperate zone (continental) climate in the south. The temperature amplitude is more than 100 degrees Celsius: the maximum recorded temperature is degrees, the minimum is degrees. But at the same time, the RS (Ya) is at the other end of the capital of Russia, a low population density, huge area, low proportion of road equipment this clearly shows the economic disadvantage of Yakutia. As for the government efforts in the field of investment: the well-coordinated work of the Ministry of Investment Development and Entrepreneurship of the RS (Ya) and its subordinate organizations ensured the achievement of indicators of target business facilitation models and increasing investment attractiveness 94% (the average value in Russia is 92%). Based on the analysis of the main indicators of investment activity in the republic and the investment attractiveness components, a SWOT analysis of the RS (Ya) investment attractiveness was conducted, highlighting the strengths and weaknesses of the region, as well as opportunities and threats (Table 11). Table 11 Matrix of SWOT-analysis of the RS (Ya) investment attractiveness Strengths High availability of natural resources High growth rates of investments in fixed assets Effectively functioning executive body (RS (Ya) Ministry of Investment Development and Entrepreneurship) The existence of subordinate non-diversified organizations Favorable demographic situation in RS (Ya) Opportunities Asian World Economic Centers Economic diversification in RS (Ya) The implementation of goal-oriented models Creating conditions favorable to fostering entrepreneurship Making a positive business image of the region Potential to develop the tourist complex and encourage tourism Source: Calculated by the authors Weaknesses Extreme climatic conditions Economically disadvantageous situation of the region and the capital of the republic Underdeveloped engineering and municipal infrastructure The complicated situation with transport infrastructure (low density of highway routes, isolation from the unified transport network of the Russian Federation, seasonal functioning of roads, high transport costs) High dependence of the republican budget on federal transfers Lack of regional investment legislation Underdeveloped tourist complex Threats Mono-specialization of the RS (Ya) economy (extractive industry) Decrease in the share of the working-age population of the RS (Ya) caused by the outmigration High risks in terms of investment risk components (environmental, social, managerial) 16 editor@iaeme.com

17 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin The use of SWOT-analysis to study the weaknesses and strengths of the RS (Ya) investment sphere has made it possible to identify factors that positively and negatively affect the investment activity in the republic, as well as to identify the strengths and weaknesses of the region, the opportunities for prospective activities and threats to their implementation. The key competitive advantage of the RS (Ya) is high availability of natural resources. Natural potential occupies the greatest weight in the regional investment potential. Besides, the natural potential is the source of other strengths of the region, most of the funds are invested in the regional resource sector. The strengths of the region also include the functioning of the executive body of state power the Ministry of Investment Development and Entrepreneurship, as well as other institutions under its jurisdiction. Well-coordinated work of state bodies allowed improving the position of the RS (Ya) in the ASI rating according to 2017 year results. In the strengths of the republic, a favorable demographic situation is highlighted. Among the FEFD subjects, only in RS (Ya) there is a positive trend in the population change in the region, which is ensured by natural population growth. The main weakness of the RS (Ya) is the transport infrastructure. Low density of roads, isolation from the unified transport network of the RF, seasonal functioning of roads all this results in high transportation costs, which reduces the region s investment potential and increases risks. The situation with the transport infrastructure is complicated by the area of the republic and the climatic conditions; significantly more resources are needed compared to other regions for the construction and development of transport infrastructure facilities. At the current stage, the following features can be identified: promising overseas Asian markets; huge potential for developing a tourist complex in the republic; diversification of the republic s economy through the development of other economic sectors. Along with the possibilities there exist threats. Among the threats, it is not only the monoindustry economy in the RS (Ya) that stands out, the bulk of the GRP belongs to the extractive industry. There are also other potential threats. Despite the increase in the population number in RS (Ya), the share of the working-age population is decreasing due to the migration (interregional and international) population outflow. Further, an analysis of investment attractiveness based on the results of the Expert RA Agency rating showed that investment risk is greatly enhanced due to environmental, social, and managerial components, which indicates the presence of non-economic threats. In this article the main trends in investment activity in the RS (Ya) are singled out. In the context of FEFD, a third of the funds are invested in the economy of the republic. Regarding the results of 2017, the volume of investments in fixed assets exceeded 380 billion rubles, which is 39% more than the value of Half of the investments in fixed assets are directed to work in the TEA mining. Further, the components of the RS (Ya) investment attractiveness according to the methodology of the Agency Expert-RA are considered. It has been revealed that the reserve for increasing investment attractiveness consists in reducing social, financial, environmental and managerial risks. As for the investment potential, the level of potential (the 20th rank) is ensured to the greatest extent by the only capacity the provision of the republic with natural resources editor@iaeme.com

18 Development of the Main Directions for Increasing the Investment Attractiveness of the In the study to identify negative and positive factors affecting the formation of the regional investment potential, the authors used the SWOT-analysis method. The conducted SWOTanalysis reflects the situation that has been created at the present stage of RS (Ya) development. This analysis will highlight areas in which it will be possible to increase the level of investment attractiveness of the republic The main directions of increasing the level of investment attractiveness of the With low and medium indicators of investment attractiveness of the region, upon the availability of potential, it is necessary to take actions and measures that should be aimed at creating a positive image of the region in the market and identifying internal and external opportunities. Besides, the region activities related to increasing investment attractiveness is to reduce social, financial, environmental and managerial risks that are inherent in all regions without exception. In the complex of works performed to increase the investment attractiveness of the region, it is recommended to highlight areas that are the most promising and realistic, taking into account the features of a particular region. Therefore, the process of attracting funds to the regional economy requires a preliminary, reasonable, detailed analysis of objects related to investment attractiveness. On the basis of the conducted research in the present work, namely: consideration of methods for rating the investment attractiveness of RF constituent entities, analysis of the main indicators of investment activity in RS (Ya), analysis of the components of the region s investment attractiveness and SWOT analysis, the areas in which it is necessary and possible to raise the level of investment attractiveness of the republic have been singled out. First, the diversification of the RS (Ya) economy. The natural resource potential makes the greatest contribution to the investment potential. About half of the investment is the mining industry. However, it should be noted that resources are limited, and in the long term, the focus on the republic s raw materials cannot be a positive trend. Therefore, it is necessary to create and develop other economic sectors for investment, to find a balance between the use of natural resources and other economic activities. Secondly, the development of infrastructure, in particular the transport one the construction and creation of transport infrastructure facilities to minimize transport costs, to level road constraints and challenges. Problems of transport infrastructure explain the need to build a bridge across the Lena River, which will eliminate the isolation of the administrative center of the RS (Ya) the city of Yakutsk in the offseason period, will reduce transportation costs, contribute to the regional socio-economic development. Thirdly, the development of the tourist complex, which will contribute to the creation of the republic s investment image. There is a potential and base for the development of this complex (unique natural objects). But climatic conditions complicate the development of this facility. Fourth, cooperation with foreign investors in Asia. The location of the RS (Ya) in the Far East makes it possible to build cooperation with Asian countries: China, Japan and South Korea. The previous experience (positive and negative) of work with foreign investors demonstrates that economic cooperation between the RS (Ya) and representatives of foreign Asian countries is feasible. In view of this study, it should be concluded that possible ways to increase the RS (Ya) investment attractiveness should be based on an analysis of the attractiveness components: 18 editor@iaeme.com

19 V. S. Markova,Izabella.D, Elyakova,K.Yu. Postnikova,I. I. Poiseev,A, A. Pakhomov, V. R. Darbasov,M. N. Okhlopkov And V. S. Dadykin which components of the potential should be taken into account, which risks should be reduced. The SWOT-analysis allowed identifying the strengths and weaknesses, opportunities and threats to the RS (Ya) investment attractiveness. Thus, the formation of investment attractiveness requires the performance of a complex of works not only by the authorized executive body of the republic, but also by all other authorities. 4. CONCLUSION The concept of investment attractiveness of the region appeared in the last century, but through present it does not lose its relevance, on the contrary, new issues appear in this area of research, which requires analysis and evaluation. The most pressing issues are those of investment attractiveness of regions that need a leap in socio-economic development. The subject of this study is the investment attractiveness of the RS (Ya). The RS (Ya) is a subject of the FEFD, characterized primarily by the presence of a variety of diverse natural resources. However, the republic is also characterized by a difficult economic situation, due to climatic conditions, a huge undeveloped area, and underdeveloped infrastructure. When considering the theoretical aspects of investment attractiveness, an interrelation with other identical concepts such as investment climate, investment potential, and investment risks was revealed. Most authors define the investment attractiveness of the region as an economic category, which includes the potential and risks, as well as reflecting the level of development of the regional economy. Methods for assessing the investment attractiveness by Russian agencies are considered. Thus, the investment attractiveness of the region is a combination of investment opportunities and investment risks of the regional economy, reflecting a complex of material and non-material resources of the region, conditions affecting the amount of invested funds, the effective use of which contributes to the regional socio-economic development. The main trends of investment activity in the RS (Ya) are identified. One third of all funds invested in the FEFD of the RF are directed to the economy of the republic. As of 2017, the volume of investments in fixed assets exceeded 380 billion rubles, which is 39% more than the value of Half of the investments in fixed assets are directed to TEA mining. The conducted SWOT-analysis reflects the situation existing at the present stage of RS (Ya) development. This analysis lets identify areas in which it will be possible to increase the level of investment attractiveness of the republic. On the basis of the undertaken analysis, the main directions of increasing the RS (Ya) investment attractiveness were identified: development of infrastructure, including transport; establishing cooperation with representatives of overseas Asian markets; development of the tourist complex that will contribute to the creation of the republic s investment image; economic diversification of the RS (Ya) the development of other economic sectors in the republic editor@iaeme.com