EDB establishes monitoring controls in the CIS for mutual investments

Analysts from the Eurasian Development Bank Centre for Integration Studies and the Russian Academy of Sciences’ Institute of World Economy and International Relations maintain that the monitoring of mutual investments will enable companies to get their bearings in the region’s business space and its member states to promote mutually beneficial cooperation between the various sectors.

9 October 2012, Moscow — The Eurasian Development Bank today presented the findings of its research programme The monitoring of mutual investments in the CIS, conducted in partnership with the EDB Centre for Integration Studies and the Russian Academy of Sciences’ Institute of World Economy and International Relations. A monitoring framework was developed on the basis of this joint research programme; a comprehensive database of 600 investment transactions was compiled and analysed.

«The monitoring of mutual investments is crucial for the region’s companies, to ensure the development of effective investment strategies,» said Igor Finogenov, Chairman of EDB’s Management Board. «The success of integration, both in political and macroeconomic terms, should be reinforced by integration at corporate level. Company cross-border investment is an important factor for „integration from below“. This explains why the continuous monitoring of investment flows, including those via third countries, is so important for CIS countries.»

An analysis of mutual investments trends in the CIS indicates that the region has experienced a real boom in cross-border capital investment since 2000. However, substantial investor activity has continued within the CIS, despite the current global crisis. «About 20% of the transactions database which was put together covers the period from 2009—2011,» said Vladimir Yasinsky, EDB’s Head of Research. «The research confirms that Russia, as the largest economy in the region, is the leader in this sector amongst CIS countries. Russia’s market share of mutual investments across the region amounts to approximately 80% in total. In addition, cross-border investment activity not involving Russia was also recorded». Several significant investment pairs stand out, namely: Kazakhstan-Kyrgyzstan, Azerbaijan-Georgia, Kazakhstan-Georgia, Georgia-Ukraine and Ukraine-Moldova. Geographical proximity and economic logic both determined the volume and scale of mutual investments across the CIS region. It was also apparent that companies also endeavoured to enter the market of those countries, where major investors and companies from the West and Russia maintained only a minor presence.

The CIS mutual investments involved in the monitoring process were mainly oil and gas production and export (21.7%), telecommunications (19.5%), the mining and processing of non-ferrous metal ores, uranium and gold, (8.8%), the ferrous metal sector (7.6%), the banking sector (7.4%), the petrochemicals industry (5.9%) and the power sector (5.7%). «Growth areas in the future for cross-border investment could include engineering, real estate and the hotel business, the food industry, retail and rail transport,» suggested Evgeny Vinokurov, the Director of the EDB’s Centre for Integration Studies. Moreover, cross-border investment in mid-and high-tech areas of business activity will enhance the CIS region’s global competitiveness and improve its export structure.

This report represents the first research programme in this area. The EDB Centre for Integration Studies plans to continue the programme The monitoring of mutual investments in the CIS on a permanent basis. A complete version of the report can be obtained here at:

https://eabr.org/analytics/projects/invest_monitoring/

Information

The Eurasian Development Bank is an international financial organisation, established by Russia and Kazakhstan in January 2006 to promote the development of a market economy amongst its member states, their sustainable economic growth and the expansion of mutual trade and economic relations. EDB’s charter capital exceeds 1.5 billion $USD. The Bank’s member states include the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation and the Republic of Tajikistan. Further information about the EDB can be found at https://www.eabr.org. The Centre for Integration Studies is a specialist research centre, set up by the EDB in 2011. The Centre carries out research, drafts reports and prepares recommendations on the difficulties and problematic issues of regional economic integration. Further information about the Centre’s current projects and publications are available online: www.eabr.org/r/research/analytics/centre/

The Institute of World Economy and International Relations (IMEMO) was set up in 1956 and is part of the Russian Academy of Sciences. The IMEMO of RAS conducts research into the principal development trends of current international politics and international economics. Research is focused on the study of current global problems, the forecasting and analysis of world economy dynamics and socio-political developments, the theory of international relations, an analysis of economic and social-political processes in key countries and regions of the world. The IMEMO of RAS is ranked first in the University of Pennsylvania (USA) rating Think Tanks Index, in 24th out of 5329 research institutes across the world in the category «Leading global (US and non-US) intellectual centres.» More detailed information about the IMEMO of RAS can be found on: https://www.imemo.ru