Budget Support for Investment Activity

Practical Significance and Limitations of Budget Support Analysis

The study of budget support instruments for investment activity holds not only theoretical but also practical value. Research findings can be used by government authorities to shape regional strategies, by the business community to assess risks and opportunities, and by the academic community for further development of investment incentive models in a changing economic paradigm.

To assess the impact of budget support on investment activity in Russian practice, data on the size of this support across various funding areas was examined. It should be noted immediately that identifying budget allocations directly for investment support is somewhat conditional. Investment support is provided not only through direct mechanisms—there is also a wide range of indirect mechanisms, particularly subsidies for product discounts, which allow invested capital to be recouped. This too constitutes investment support, as it increases profitability and guarantees demand. Therefore, we should clarify that what was analyzed was not the entire contribution of the federal budget to development, but only direct mechanisms for subsidizing investment expenditures.

Assessment of Budget Support for Investment Activity in the Business Sector Using System-Wide Instruments

At the first stage, data on budget support for investment activity in the business sector using system-wide instruments was examined. By system-wide instruments, we mean those not tied to a specific industry. These include:

• recapitalization of the "Russian Foundation for Technological Development" (FRP)—for subsequent issuance of loans at preferential rates for implementing investment projects;
• subsidies to Russian organizations to reimburse part of the costs of coupon payments on bonds issued as part of investment projects for implementing best available technologies;
• subsidies to Russian credit institutions and the state development corporation "VEB.RF" to compensate for lost income on loans provided to Russian industrial organizations for implementing investment projects;
• subsidies to Russian credit institutions to compensate for lost income on loans issued to Russian organizations and/or individual entrepreneurs for the acquisition, construction, modernization, or reconstruction of real estate properties for conducting activities in the industrial sector;