The Assessment of Regional Investment Potential with Subject to Non-Observed Economy

The article outlines the author's method of assessing the investment potential of a region's economy by institutional sector: financial corporations, non-financial corporations, households, and the government, as illustrated by the case of the regions constituting the Far Eastern Federal District of Russia (hereinafter FEFD). The author attempts to extract the nonobserved (shadow) economy component from the institutional sectors. An algorithm has been designed for determining the forms of funding investment needs at a regional level.

The research methodology employed by the author is based on the economic and statistical method, computational and constructive method, and comparative analysis.

The proposed method has made it possible to present the investment potential of the FEDF in the context of institutional sectors with an emphasis on the shadow economy; to assess the amount of unutilized investment resources in the district; to calculate the level of realization of the district's investment potential; and to determine that the investment opportunities available in the region are not taken full advantage of. Using the proposed algorithm, the author has identified the constituent regions of the FEFD that are capable of funding their development with their own investment resources, and the regions that require government support that may extend as far as co-financing investment.

The methods and tools presented in the research can be applied by government bodies for the sake of a more consistent and rational approach to developing regional economic policy as regards investment strategies and development programs for regions, administrative decision making that matches the present-day conditions, and more effective spending of public investment resources.