Foreign investments are understood as investments of foreign capital in entrepreneurial activity in Russia in the form of cash, securities, non-property and property rights, other property, as well as information and services.
By source of origin, foreign investment is divided into private and public.
1) State investment - funds allocated abroad from the state budget, by decision of the government or intergovernmental organizations.
2) Private investment - funds provided by private companies, firms or citizens of one state to the corresponding entity of another state.
In terms of investment, foreign investment is divided into medium-term, short-term and long-term (more than fifteen years).
By the nature of use - loan and business.
In case of loan investments, funds are provided on loan in order to obtain profit in the form of interest.
In entrepreneurial investments, funds are invested in production in order to obtain a certain amount of rights that allow you to make a profit in the form of dividends.
Entrepreneurial investments are divided into direct and portfolio foreign investments.
Foreign direct investment in Russia is one of the forms of export of private capital, which provides effective control and the right to dispose of a foreign company. Direct investments are made for long-term interests.
Direct investments are divided into:
Transcontinental investment due to better market conditions, that is, the existence of the ability to supply new goods to the market of this continent (country). The main thing at the same time is being on the market, costs play a minor role. The costs of production will be decisive in determining the country in which it is planned to create a new production.
Transnational investments are direct investments, often in a neighboring country, the purpose of which is to reduce costs relative to the parent company.
The main features of direct investment:
- the lack of abrupt exit from the markets;
- large amounts of investment and great risk;
- high term capital investments;
Portfolio investments - investments whose share in the organization’s capital is below the limit set for direct investments. They do not provide control over foreign organizations, the investor, while receiving a share of the profit (dividends).
Currently, portfolio investments are playing an increasingly important role. First of all, this is due to the opportunity to carry out various speculative operations, the growth of which was facilitated by a number of factors: the removal of restrictions on admission of foreign organizations on most stock exchanges, the internationalization of the stock exchange, the expansion of banks' operations with various securities of various savings institutions.
There are various types of foreign investment. However, the success of an investment depends on the correct choice of one form or another of investments. For this, a foreign investor should study the investment climate of the country into which it is planned to introduce funds, which is determined by the level of economic and political stability, the stability of monetary units and other factors.
The level at which foreign investment is located in the economy of a country is an important indicator of its financial stability and prosperity. According to economic laws, the higher it is, the better and more successful the state is, and the usually higher, in the end, the standard of living of ordinary citizens.