Analysis of the investment activity of the region and its impact on the economic security of the region (using the example of the Kursk region)

Kretov Danila Ivanovich ORCID: 0009-0002-5585-0371 Student; Department of Finance and Credit; Southwestern State University 94 50 let Oktyabrya str., Kursk, Kursk region, 305021, Russia danya6877@gmail.com

Introduction

In modern realities, attracting investments is becoming a key factor in ensuring economic security and competitiveness in global markets. The intensification of investment activity contributes to the growth and development of the regional economy, stimulates innovation processes and creates favorable conditions for entrepreneurial activity.

The Kursk Region, like other regions of Russia, needs to attract investments to modernize production facilities, develop infrastructure and introduce digital technologies. Investment activity plays a key role in ensuring the economic security of the region. It helps to create new jobs, increase tax revenues and develop infrastructure, which ultimately improves the standard of living of the population and reduces socio-economic risks. The creation of a favorable investment climate and the formation of effective mechanisms to stimulate investment activity are becoming priorities for ensuring sustainable economic growth and increasing the competitiveness of the region.

Analysis of the investment potential of the Kursk region through the prism of the gross regional product

Ensuring the economic security of a region is largely determined by the effectiveness of managing its investment activity. The activity indicators of the Kursk region, as one of the key regions of the Central Federal District from an economic point of view, need constant monitoring and analysis of data characterizing the state and dynamics of investment processes. This makes it possible to identify problems in a timely manner and develop adequate measures to stimulate investment activity, which in turn contributes to strengthening the economic security of the region.

In the context of the analysis of investment activity, it is important to consider various economic indicators to identify potential opportunities and risks. Figure 1 shows the indicators characterizing the investment activity of the region.

Source: compiled by the author

Figure 1 – Monitoring of investment activity management indicators in the region

One of the key indicators that attracts the attention of investors and analysts is the gross regional product (GRP). GRP not only reflects the economic condition of the region, but also serves as an important indicator of its potential for investment. Understanding the dynamics of GRP over a certain time period allows us to identify trends in the development of the economy, identify factors influencing its growth or decline, and evaluate the effectiveness of implemented economic strategies ^[1].

Consideration of this indicator makes it possible to conduct an in-depth analysis of the current economic situation and assess development prospects, which is a necessary step in making investment decisions (Table 1). The presented table, reflecting the dynamics of GRP, is a reliable tool for further in-depth analysis and assessment of investment potential. These data make it possible to identify key growth or decline trends in the region's economy, as well as identify the factors that have the greatest impact on these dynamics.

Table 1 – Gross regional product of the Kursk region

Source: compiled and calculated by the author based on the data provided in the source ^[2]

As we can see from the table, there is a stable positive trend in GRP growth, which indicates the development of the region's economy. However, it should be noted that the growth rate of GRP slowed down in 2022 due to the negative effects of global and regional economic factors.

It is important to take into account that the composition and dynamics of the gross regional product strongly depend on the main sectors of the region's economy. For example, in the case of the Kursk region, the main industries are agriculture and industry. Figure 2 shows the three main components of the gross regional product in this region.

Source: compiled by the author based on the data provided in the source ^[2]

Figure 2 – The structure of the gross regional product of the Kursk region

The predominance of industrial production in the structure of the gross regional product is explained by two key factors in the context of the Kursk region. The first factor is the significant volume of mining, especially iron ore. Approximately one sixth of the total volume of iron ore concentrate produced in the Russian Federation is mined in the Kursk region, and this is the basis of the region's commodity exports. One of the largest enterprises in the extractive industry of the region is JSC Mikhailovsky GOK named after A. V. Varichev (LLC Metalloinvest Management Company) ^[3]. Mikhailovsky GOK plays an important role in the Russian metallurgical industry, providing raw materials to the country's leading metallurgical enterprises and making a significant contribution to the economy of the Kursk Region and Russia as a whole.

Investment dynamics and structure of financing sources in the Kursk region

The second factor that determines the dominance of industrial production in the structure of the gross regional product of the Kursk region is associated with a significant volume of electricity production. The Kursk Nuclear Power Plant with a capacity of 4 GW, which is a branch of Rosenergoatom Concern JSC, is located in the region. Regarding agriculture, about 60% of its structure consists of crop production, with the main crop in the form of cereals, and 40% of animal husbandry ^[4].

The share of investments in fixed assets in the gross regional product (GRP) is an important economic indicator that reflects the volume of investments made in fixed assets relative to the total volume of production in the region. This indicator indicates the degree of development of the region's economy and its ability for long-term growth ^[5].

A high share of investments in fixed assets in GRP may indicate an active investment climate that stimulates the development of production, modernization and improvement of technological equipment ^[6]. At the same time, a low share of investments may indicate limited opportunities for economic growth and the need to strengthen investment activity in the region (Figure 3).

Source: compiled by the author based on the data provided in the source ^[2]

Figure 3 - Share of investments in fixed assets in the gross regional product of the Kursk region

The analysis of the share of investments in fixed assets in the gross regional product of the Kursk region for the period from 2018 to 2022 allows us to identify several significant trends. In general, there is a moderate but steady increase in this indicator, which indicates a gradual increase in the volume of investments being introduced into the main production assets of the region. It is important to note that in 2022, the share of investments in fixed assets in GRP reached its highest value during the analyzed period, amounting to 30.5%. This indicates a growing interest in investing in the region's main production assets and its potential for economic development and modernization. Despite some fluctuations in the indicator during the observation period, in general, its dynamics remains positive, which indicates the stability and prospects of the investment environment in the Kursk region. This creates favorable conditions for the further development of production, economic growth and improvement of the living standards of the region's population.

Let's consider the structure of sources of investment in fixed assets for 2020-2023 in Figure 4.

Source: compiled by the author based on the data provided in the source ^[2]

Figure 4 – The structure of sources of investment in fixed assets of the Kursk region

The predominance of using own financial sources instead of borrowed funds indicates the financial stability of the region and the competent allocation of financial resources, taking into account the need to invest in its own infrastructure. Figure 4 shows the change in the share of own and attracted investments in fixed assets over time. In 2020, the shares were almost equal, with a slight advantage of own investments (50.72% compared to 49.11% attracted). Since 2020, the gap between them has been widening: in 2021, the share of own investments was 56.6%, and the share of attracted investments was 43.4%, and in 2023 the ratio was 65.23% to 34.76%. This reflects the autonomy and efficient use of budgetary resources and private investment to develop the region's infrastructure.

Dynamics and priority areas of investment by type of economic activity in the Kursk region

Let's study the dynamics in Table 2 to determine the priority direction among all types of economic activity in the Kursk region and the volume of investments directed into them.

Table 2 – Dynamics of investments in fixed assets by type of economic activity in the Kursk region, in millions of rubles

Source: compiled and calculated by the author based on the data provided in the source ^[7]

The distribution of investments by type of economic activity demonstrates the continued focus on traditional industries. The largest volume of investments is directed to providing electric energy, gas and steam, as well as to the extractive industry, which is determined by the specifics of the region. Significant investments have also been made in manufacturing, agriculture and transportation. These industries form the basis of the Kursk Region's economy.

Provision of electric energy, gas and steam remains one of the most financed sectors of the economy. In 2023, the volume of investments in this area reached 91,107.4 million rubles, exceeding the previous year by 43.40%. The constant demand for energy and the expansion of the region require additional investments. Agriculture ranks third in terms of investments in the region's fixed assets. Due to the fertile soil and advantageous geographical location, this sector continued to develop actively in 2023. The volume of investments in agriculture amounted to 18336.8 million rubles in 2023. Manufacturing also remains one of the three most attractive sectors for investors. Due to the rich natural resources and the active activity of the largest enterprises, this sector attracts significant funds. In 2023, the volume of investments in manufacturing amounted to 22212.1, a decrease of 20.58% compared to 2022.

Employment of the population also plays an important role among the indicators of investment activity in the region. The distribution and number of labor force in various sectors of the economy (Table 3) allows analyzing structural changes in the economy, assessing the sustainability and attractiveness of sectors for investment, which is critically important for making managerial decisions in the field of economic security ^[8]. In this regard, the analysis of the share of employed in various sectors and their changes over time is an integral part of the assessment of the economic situation and investment opportunities.

Table 3 - The average annual number of people employed in the economy of the Kursk region by type of economic activity for the period from 2018 to 2022, in thousands of people

Source: compiled by the author based on data from ^[9]

The data in Table 3 shows that the total number of people employed in the Kursk Region's economy increased by 0.29% from 2018 to 2022, indicating a small but steady increase in the workforce, which is a positive signal for the region's economic security. Stability in total employment indicates the sustainable development of the economy and the region's ability to attract investment.

The reduction of employment in agriculture by 5.29% raises certain concerns, since this sector has traditionally been the basis for many regional economies and is important for food security. This decrease is due to increased labor efficiency and job cuts due to the introduction of technological innovations related to the digitalization of the economy and production.

In the context of the rapid development of the digital economy, the issue of attracting investments is of particular importance for ensuring the economic security of the regions. Increasing investment activity is becoming not only a key factor for growth and development, but also a necessary condition for maintaining competitiveness in the global market and ensuring economic security ^[10].

Investment activity in the regions of the Central Federal District: analysis and strategic decisions in the context of sanctions

It is also important to analyze the investment activity of the Russian regions. Achieving the goals of modernizing the economy of the regions and ensuring their sustainable socio-economic development directly depends on the intensification of investment activity and the creation of favorable conditions for entrepreneurial activity both at the level of the entire region and in its municipalities. Nowadays, in the context of the digitalization of the economy, the importance of the problem of implementing existing and finding new tools for developing a favorable investment climate in the regions is becoming even more urgent ^[11].

We will analyze the investment activity of the regions of the Central Federal District (CFD) such as the Kursk region, Belgorod, Bryansk, Orel and Lipetsk regions, using the assessment method based on a comparative analysis of the results of investment activity, given in the work of Kolmakova I.D. and Kolmakova E.M., to further develop proposals for improving the mechanism and tools for increasing investment activity. in order to ensure the economic security of the region ^[12].

The method of assessing the effectiveness of regional investment activity is as follows:

1. selection of indicators for calculating efficiency;
2. assigning places to regions by indicators: high – 1 (first), low – 5 (fifth);
3. assessment of places;
4. comparison and determination of the efficiency rating of investment activity in the subjects of the Central Federal District.

The following indicators were selected to characterize investment activity:

• P1 – investments in fixed assets per capita in 2022, RUB.;
• P2 is the index of the physical volume of investments in fixed assets in 2022., %;
• P3 – commissioning of buildings in 2022, number;
• P4 is the ratio of the volume of investments in fixed assets to the gross regional product., %;
• P5 is the share of investments aimed at reconstruction and modernization in the total volume of investments in fixed assets in the constituent entities of the Russian Federation., %;
• P6 – change in the dynamics of the industrial production index at the end of 2022, in %;
• P7 is the gross regional product of the region, million rubles.

Table 4 shows the rating of the effectiveness of investment activity in the regions of the Central Federal District based on a comparative analysis of indicators.

Table 4 - Rating of the effectiveness of investment activity in the regions of the Central Federal District

Source: compiled and calculated by the author based on data provided in sources ^[13],[14]

An analysis of the data presented in Table 4 shows that the Belgorod Region took the 1st place in terms of investment activity, the Kursk Region shared the 2nd place with the Lipetsk Region, and the Orel Region was at the end of the rating. The comparison of regions ("leader" having the highest rank; "outsider" having the lowest) (Fig. 5) is presented graphically, which allows us to identify limitations when comparing regional positions.

Source: compiled by the author

Figure 5 - Comparison of the Central Federal District regions by the level of investment activity

Last year and now, international sanctions are forcing authorities at all levels to develop new strategies. In the context of the transformation of the socio-economic development of the regions, it is especially important to preserve and strengthen the investment attractiveness. Import substitution problems require urgent measures to redirect investments, which makes the western border regions less attractive for investments due to the deterioration of logistics chains due to restrictions in air traffic ^[15]. However, thanks to anti-crisis support measures taken at both the federal and regional levels, most regions were able to maintain their positions ^[16].

Conclusions:

The analysis shows that the Kursk region has significant investment potential, the realization of which is a key factor in ensuring the economic security of the region. The dynamics of the main economic indicators indicates a gradual increase in investment activity in the Kursk region.

The gross regional product is showing steady growth, which indicates the development of the region's economy, despite a short-term slowdown in growth in 2022 under the influence of negative external factors. The share of fixed capital investments in GRP remains positive, reaching 30.5% in 2022, which indicates the high investment attractiveness of the region and creates prerequisites for its further development. The structure of investment sources is characterized by the predominance of own funds, which ensures the financial stability of the region and the efficient use of resources for infrastructure development.

The analysis of the distribution of investments by type of economic activity revealed priority areas, among which the provision of electric energy, gas and steam is leading, as well as manufacturing and agriculture, which are traditional growth points of the regional economy. Despite a slight decrease in employment in certain sectors, the overall employment dynamics in the Kursk Region's economy remained stable, which creates prerequisites for attracting investment and ensuring economic security.

The analysis allows us to conclude that the Kursk region has significant investment potential, the implementation of which contributes to strengthening the economic security of the region. The stability of the main macroeconomic indicators, the efficient allocation of investment resources and the balanced regional economy create favorable conditions for the further development and modernization of the production potential of the Kursk region.