THE CONCEPT OF FACTORS DETERMINING THE INVESTMENT ATTRACTIVENESS OF THE REGION

Abstract

It is argued that investors' decisions are influenced by a number of subjective factors that are difficult to measure, and they express an individual system of preferences, partly determined by the investor's knowledge, including the image of the region. It is proposed to determine the real investment attractiveness when analyzing the investment attractiveness of the region, which should be interpreted from the standpoint of "popularity" of investing in a particular area. Since the region's ability to absorb financial and physical capital in the form of investment, determining by analyzing the value of investment in enterprises or foreign direct investment, identified the shortcoming of this approach as the ability to analyze the attractiveness of investment in ex post terms, as opposed to ex ante . It also found that real investment attractiveness can be accessed on the basis of past investment and thus select the region that attracted the most, and relatively can indicate symptomatic variables, the increase of which will indicate increasing attractiveness. It is proposed to divide location factors into "hard" and "soft" by the nature of the impact, which will allow the former to identify directly with the cost of doing business and income and the latter - the subjective feelings of investors and their internal value system. The former are identified directly by the cost of doing business and the achievable income. They are objective and relatively easy to measure, although they can be determined by the type of activity carried out. On the other hand, "soft" factors represent the subjective feelings of investors and their internal value system. Unlike objective factors, they are difficult to measure because they reflect sociological and psychological factors. In the process of finding investment, "hard" factors are considered more important because of their direct impact on the company's performance, although the role of "soft" factors (such as the quality of social infrastructure) is significantly re-evaluated and their importance in decision-making.