Page 16 - Theoretical and Practical Interpretation of Investment Attractiveness

Investment image is a comprehensive reflection of the investment climate in the
minds of investors in various aspects. This definition complements the concept of investment
climate.
To assess investment attractiveness, you need to pay attention to two important aspects.
Firstly, this is the investment attractiveness of investing in a particular object. At the same
time, the economic state of industries, sectors and clusters existing in a specific territorial
system is analyzed. When conducting economic analysis, key indicators for determining the
effectiveness of investment projects and programs are assessed (net present value, payback
period, rate of return, internal rate of return).
The second is the investment attractiveness of the regional economic system. To do
this, it is expected to analyze the following situations: the existing regulatory framework, the
political situation, investment extremes, social and economic conditions, the level of
protection of investor interests, the level of taxation, strategic and administrative resources.

Figure. 1.1.1. The mechanism of interdependence of the concepts “investment
attractiveness”, “investment climate”, “investment activity” and “investment image”
As we noted above, investment attractiveness is an economic category that is
manifested by the influence of objective and subjective information on investment activity.
The image shown shows a schematic representation of the concepts we have highlighted.
In our opinion, investment risk is assessed and determined in the context of a
comprehensive and in-depth analysis of the investment environment. The investment climate
and the level of risk are inversely related. The more favorable the investment environment,
the lower the entrepreneurial risk of the investor, which will intensify the arrival of investors.
Conversely, if the investment environment is unfavorable, the level of risk is high. This results
in increased costs for the recipient of the investment. The state of the investment environment
is important not only for the investor, but also for the recipient of the investment.
Economist T. M. Smaglyukova, from all the indicators that determine investment
attractiveness, identifies the indicators that best meet the requirements of a comprehensive
assessment. In his opinion, these indicators are among the factors of investment attractiveness
that reflect all aspects of the investment process. The created set of indicators covers external
and internal factors of the regions’ activity as an economic system and investment objects.
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