Page 31 - Theoretical and Practical Interpretation of Investment Attractiveness

The investment environment includes:
Investment potential is determined by the country's openness to investment, the
availability of reserves of economic resources and their size.
Investment risk is the probability that investors will receive income and/or lose it
based on the conditions created for them.
Investment potential can be divided into 9 groups ( Fig . 1.2.2 ):
natural resource potential (mineral reserves);
production (material goods created by the population through economic
activity);
innovativeness (the level of development of science and the state of application
of scientific and technical achievements);
labor (number, age, education and qualifications of labor resources);
financial (size of the tax base, profits of regional enterprises, income of the
population);
institutional (level of development of leading market institutions);
infrastructure (economic and geographical location of the territory and its
infrastructure support);
consumption (total purchasing power of the population, i.e. consumer
demand);
tourist (places accessible to tourists, objects worthy of attention).
Investment potential creates investment attractiveness and serves to increase it (Table
1.2.3). Investment risk has a negative (negative) impact on investment attractiveness.
Continuing the ideas outlined above, investment risk and its comprehensive assessment
can be divided into the following groups:
financial (balanced state/local budget and enterprise budget);
economic (trend of economic development of the territory);
social (social state of the region);
crime (criminal situation in the area, frequent serious crimes, economic crimes and
state of invasion);
environmental (environmental pollution);
management (availability of targeted programs, level of development of
management activities, budget and its rational management).
It is important to have a different investment environment for all types of investments.
Consequently, he or the investor and the persons receiving the investment never have the
same goal.
The party receiving the investment seeks to comprehensively implement socio-
economic objectives by attracting minimal resources, while the other party seeks to obtain
maximum profit in the long term. Therefore, processes take place in the investment market
related to the implementation of the laws of supply and demand (harmonization of interests)
and ensuring balance.

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