Page 15 - Theoretical and Practical Interpretation of Investment Attractiveness

payment obligations), solvency, bank loans, access to loan capital, force majeure situations.
The significance of these indicators is determined by an expert or by calculation and analysis.
They are calculated on a 10-point scale and then weighted by a particular indicator and its
contribution to the final grade.
Proponents of the following approach (G.Marchenko, A.Kaminsky, O.Machulskaya,
E.Anankina, etc.) interpreted investment attractiveness through a multifactor regression
model. It is noted that the investment attractiveness of a region is taken into account a s a
general indicator and is determined by two characteristics: investment potential and
investment risk. In their opinion, the overall potential of the region includes: resource and raw
material, production and consumer, infrastructure, innovation, labor, institutional and
financial indicators. The general risk of the territory is determined taking into account
political, economic, social, criminal, environmental, financial, and legal risks.
The main strengths of the approach under consideration are: objectivity; the
importance of factors determining investment potential and investment risk; a globally
accepted monitoring and evaluation system; ability of foreign investors to use the final results
and level of education.
However, this style also has a number of disadvantages: lack of connection between
investment attractiveness and investment activity; subjectivity of expert opinions and
uncertainty of the method for assessing investment opportunities and risks in the integrated
index.
Most of the methods considered have a network scope and often do not consider
networks. Therefore, investors are forced to make decisions based on their subjective
perceptions, since they do not have analytical tools to assess the attractiveness of investments.
The main disadvantages of most existing assessment methods are as follows:
1) different interpretations of the concept of “investment attractiveness”;
2) a variety of indicators characterizing the level of investment attractiveness;
3) lack of a scientific basis for predicting stylistic situations and their investment
attractiveness based on regional analysis ;
4) sorting dozens of indicators for assessment is not sufficiently justified;
5) criteria used to justify the methods used.
It can be added that the assessment is carried out irregularly. Thus, there is a need to
develop a systematic approach to assessing the investment attractiveness of regions from the
point of view of industry specialization and to continue research in this direction .
In many scientific publications, concepts close to “investment attractiveness”:
“investment activity”, “investment image (reputation)” are used as synonyms. In our opinion,
“investment activity” is an independent category that characterizes the stable financial
condition of business entities and means the mobilization of real resources for a certain period.
It can also be interpreted as the process of satisfying investment demand.
Investment is any object of civil rights, expressed in money, contributed by investors
to relevant activities to achieve their goals.
Investment climate is the general economic, political and financial conditions that
affect the flow of domestic and foreign investment.
12