Regional investment forums of Russia: peculiarities of the new market

In Russia rather new instrument of regional policy appeared – regional investment forums. What are the characteristics of the new market, its evolution and its special features? About what does the success rate of Russian regional forums, which was created by the on-line magazine “The Capital of the Country” and the Chamber of Commerce and Industry of the Russian Federation, speak?

        1. Institute of regional investment forums: developed and emerging countries. Economic world is organized in such a way that there are always those whose capital is in excess and there are those who are really in need of it. This leads to formation of various market mechanisms, through which investment demand and supply could freely “meet”.  In developed countries this mission is accomplished by stock-exchange mechanisms and various financial institutions such as banks, investment funds and etc. Emerging countries and countries with transition economies have two main features: first of all, the capital deficit problem is quite burning; secondly, traditional channels of capital redistribution don’t work or work very bad. Due to this fact economic agents in these countries search for another variants of investment market organization, using not so traditional methods. One of these methods is the Institute of regional investment forums. But we also have to say that such forums exist even in the West, however in Russia they got higher popularity, turning into the main instrument of investment attraction to the regions.

        So how does Russia fit into international trends of development of regional investment forums’ institute?

        Abroad the institute of forums has rather limited scope of application. Usually, these are web forums, where various questions are discussed and consultations are given. This could be subtlety of investment planning, strategies of where and how is better to invest. The example of such a forum is a North-West Managers Forum in USA. This forum represents the organization, which unites 501 participants represented by non-profit organizations. Its goal is to turn the North-West of the country into the place suitable for good life, work and suitable for doing business. This forum gained popularity due to its investment speakers, which were cooperating with the management of regional support funds and private banking society. Let’s note that this forum, its website and bulletin serve to inform investors, and not to arrange particular deals [13].

        Web forums, which inform the readers about new investment instruments and opportunities, received wide distribution. Overseas Property Investment Forum [14], which posts real estate information, and Investment Banking Forum are great examples.

Picture 1. Recognition of regional forums (points).

        Developed countries also have experience in holding regional investment forums, which try to show all opportunities of the region in order to attract investments. Typical example of such forums could be Tourism Investment Forum held in Canadian province Alberta [18]. However, such events in these developed countries, usually, are purely industrial and have the form of special fairs. For example, on the forum in Alberta some hotels, land, types of tourism industry are offered.

        Institute of regional investment forums, which attract investments into the regions, are more popular in emerging countries. For example, on Indonesian Regional Investment Forum in 2008 approximately 200 contracts were signed on the sum of almost 19 billion dollars. Forum sponsors say that they play the role of “marriage-brokers”, who promote business-segments of the country to foreign investors [15].

        Investment forum COMESA (Common Market of Eastern and Southern Africa's) in Dubai, which gather politics, business leaders and top-managers of the most successful African companies in order to show new projects and to determine business potential of 19 countries of the Common Market for Eastern and Southern Africa [16], is of great interest. Dubai, being the transit window to the world trade, acts as an operator, which redistributes direct foreign investments of Africa.

        In the same way acts Regional Investment Forum “Investments and Development” in Moldova, where presentations of investments projects, farmers’ tradeshows are held and where agreements are made. The main goal of this forum is to attract European investments into the country [17].   

        Regional Investment Forum “Silk Road” held in 2006 in China is also very interesting example. The main initiative of this forum is directed to the development of this highway by China and the countries of Central Asia, also at the expense of more active investments into various projects, realized along this historic rout [19].

        Among all regional forums the closest to Russia in its content is Malopolska investment forum, where representatives of self-administrations, of institutes for development support, of central administration and entrepreneurships [20]. Various ways to attract new investments and the questions of creation of Lesser Poland’s business brand are being discussed on this forum; also the questions of preparing good investment proposals and creation of integrated system of investment services, which could unite marketing, planning and administrative actions, are being raised.

        Russia not only started to create the institute of regional investment forums, but also became of its active operators.                                                           

Picture 2. Prestigiousness of regional forums (points).

2. Regional investment forums in Russia: nature and specificity. Each forum is a public meeting and open discussion of specific questions, so forum represents the place for dialogue. It is not surprising that one day this idea was transformed into creation of investment platforms, where market participants could meet to discuss and solve various problems. At the same time purely informative component of forums was accompanied with the financial one, and this led to forums’ transformation into the local stock exchanges. Later forums got the form of administrative and bureaucratic events, where important meetings and negotiations were held and different agreements were signed. Besides this regional forums started to perform the function of creation of the positive image of the region in front of Russian and global society. So regional investment forums evolved into rather difficult instrument of regional investment policy.

        It is necessary to pay attention to the fact that forums are directed to attraction of direct, including foreign, investments, and not portfolio investments. This fact automatically assumes that authorities should contact with investors, who plan to base their production on the territory of the region.

        Initially the main reason for creation of regional forums was capital deficit which led to insufficient economic development of regions and independence of regional authorities in forming development policy of territories. The history of this process is more than 15 years. During this period a lot of investment and economic regional forums appeared in the country, in some regions even several forums appeared (for example, in St. Petersburg there are 4 big forums). At the same time created earlier forums ceased to exist. Some of these forums didn’t justify expectations; some of them changed business orientation. For example, Kaluga economic (industrial) forum transformed into Obninsk innovation forum. In some cases such changes have opportunistic nature; sometimes these changes have real reasons. For example, Kaluga region, after improving economic position of its industry, started to activate innovation market, and this became the reason of changes. In the same way in 2002 I International Economic Forum “Kuban 2002” was held, which had this name for 5 years, and then it changed its brand to International Investment Forum “Soci-2007”.

        Today investment forums are informal institute, which doesn’t have well-defined functions and powers. For example, one of the obvious tasks of these forums is attraction of investments. Due to this traditionally all forums are evaluated by summarizing all signed contracts and agreements. For example, on  IX forum «Sochi–2010» 179 agreements were signed on the sum of 295 billion rubles (almost 10 billion dollars). This sum was divided between all levels of authorities: 42 agreements (180 billion rubles) were signed by administration of Krasnodar region and 137 agreements (115 billion rubles) – by municipalities [1]. However, not only the number of investment agreements speaks about economic performance of the forum, but also its dynamic does it. For example, the number of agreements of the forum “Sochi” in 2007 increased 3 times (455 against 140 billion rubles) in comparison with the year 2006 [2]. 

        However such method of forums’ performance evaluation is too rough and could serve only for preliminary financial accounting. The deal is that agreements signed on these forums represent memorandums of intent. It means that afterwards these agreements and memorandums should transform into contracts and business deals, which represent investment business liabilities. However these contracts also request realization and are coupled with time lags in disbursement of specified sums. Sometimes these contracts are terminated, frozen and are not brought to total realization.  That is why the real effect of regional forums is lower than official numbers of signed contracts. 

        Meanwhile, according to available data, the share of agreements signed on the Forum “Sochi” and transformed into contracts today is approximately 50%. And this share is constantly growing. This is partially connected with rather tough actions of the administration, which aims for the final result in terms of contracts – without interim agreements and memorandums. So the level of rationality and constructiveness in various contracts between business and authorities is growing.  

        It is necessary to note that forums are costly events. However, availability of booths, exhibitions, various presentations and promotions generate great income for forums’ organizers. In genera, according to experts, forum is a non-profit event with zero net income. Tangible deficit and surplus are not typical for regional forums. «Alignment» of financial flows occurs at the expense of sponsors.  

Picture 3. Bureaucratization of regional forums (points).

        But still regional forums were and remain, first of all, informational platforms for forming various messages to investment society and federal center, which by these or that reasons could keep from solving regional problems. Typical example of this could be Kaluga Industrial Forum, opened in 2010 with significant speech of the governor A.D. Artamonov, who blamed federal authorities in the fact that they demanded from his region a «kickback» for permission of opening international airport.  Apparently, this speech received adequate response in higher spheres of authorities and this speeded up the receipt of this permission. So, sometimes forums act as informal instruments for «pushing» regional interests into federal structures.  

        Such forums lead to regional redefining. Only on this base regions could offer some sensible projects for investors. For example, forum in Khakassia is directed to discussion of the use of unique regional resource as the presence of the great number of archeological monuments (more than 30 thousand). Khakassia administration managed to «pull» this topic out on federal, and then on international level. If the region manages to launch cultural tourism, this will lead to the salary growth of cultural workers and to the development of various museums, and this will change the whole image of the territory.

        Today almost for every region it is a matter of honor to create its own regional forum. In order to learn about regional interest toward this initiative our on-line magazine conducted a survey of representatives of regional experts[1], who were asked the following question: please estimate from a 10-point scale how useful, from your point of view, is the Institute of Investment Forums in Russia?  Average score of responses was 8,3, it means that almost all regional specialists agree with each other on high benefits of forums. For reference: only for 10,8% of respondents it was difficult to answer this question, and all this tells us about their disorientation in regard to the mission of regional forums.

        We have to note that among managers there is a weighted relation toward the forums. The opinion of the vice-governor of Kaluga region, M.L. Shereykin, is typical in this case. He thinks that forums themselves can’t give anything to the region, but being the element of the general system of work with producers and investors these forums justify themselves and are more effective [3]. Such an idea means that these forums are perceived by regional authorities as promotion channels of created in the region products. And, we have to say that the demand for such channels in course of time is becoming clearer.

        Humanitarian component of these investment forums should also be noted. These forums usually are held by young volunteers. Observations show that a lot of them sincerely help the forums’ organizers, with enthusiasm and also they take their responsibilities informally. Carrying on an active dialogue between authorities and young people of the region is a positive phenomenon, which contributes to forming of full-grown civil society.

        3. Evolution of regional forums. For the last years some regional forums have managed to grow. For example: on  IX forum «Sochi–2010» 32 states took part, 53 Russian subjects were presented for delegation, the heads of the subjects from 32 regions were also present, and approximately 1000 Mass Media representatives from 18 countries were covering the work of the forum. The larger in its scale is an International Economic Forum in St. Petersburg, which in 2010 gathered together 4200 participants from 87 countries, including 207 representatives of the federal authorities of Russia, 83 heads of the subjects of the Russian Federation (43 of them – governors), 1134 Mass Media representatives from 24 countries; the work of the forum was executed by 10 thousand technical services officers and temporary employees [4]. 

Picture 4. Financial affordability of regional forums (points).

        The growing scale of these events and accumulated experience lead to some important consequences, which form some trends in the development of regional forums.

        First of all, occurs the diversification of forums’ goals. Besides economic tasks, forums have political and diplomatic functions. For example, on IX forum «Sochi–2010» 4 major government agreements with the participation of the Russian Vice-President V.V. Putin were signed, and also was signed one agreement between Russia and Abkhazia about checkpoints on the Russian and Abkhazian border. On the forum “Sochi-2011” one joint agreement on gas pipeline “South Stream” was signed. We’ll recall that shortly before this forum there was one more gas conflict between Russian “Gazprom” and Ukraine with the involvement of the EU. Settlement of this conflict in the form of signed agreement was confined to the forum in Sochi. Although, such “peacekeeping” mission of the forum, at first glance, looks quite reasonable, a lot of questions, on which there are no answers, still arise. For example, what is the mission of the Ministry of Home Affairs of the Russian Federation, which serves as a platform for settlement of such conflicts? What do Russian diplomats do, if Russian big business by itself is solving its own problems not only with neighboring countries, but also with the EU?

        We can note that practically international regional forums partially replace some departments of the Russian Ministry of Home Affairs, and this introduces the element of disorganization into international relationships of the country.

        Secondly, forums turn into significant cultural events. A lot of festivals, competitions, fairs and concerts are timed to the forums. Moreover, many celebrities are invited to these forums. So, on IX forum «Sochi–2010» some cultural and sport events were held there too. For forum’s participants, its guests and citizens of the city Tom Johns gave the concert, Russian bands and celebrities also gave their concerts; festivals “Kuban kitchen” and “Kuban Wines” were also organized. Even on I  International Forum in Khakassia 2011 Jose Carreras was invited, who gave 2 concerts, one of which was for forum’s participants. This way regional forums reborn into some sort of days of the region. It is difficult to give simple evaluation of this tendency.

        Thirdly, bureaucratization of forums takes place. This results in a lot of things: higher, and sometimes unprecedented security measures; blocking the roads to the places where forums are held; a lot of closed meeting, where Mass Media is not allowed; differentiation of the participants, of their status and their “admission” level (for example, on forums in Sochi  and in St. Petersburg three types of badges are used – for Mass Media representatives, business and authorities); appearance of  a VIP status, which few can get; introduction of tough selection of participants (for example, for many Mass Media it was very difficult to get accreditation for St. Petersburg International Economic Forum).

Picture 5. Desirability of participation in regional forums (points).

        Fourthly, differentiation of forums takes place. The thing is that today various vocabularies are used in regard to forums, which could be today economic, social, investment, industrial, innovation and business. One logical question arises: in what do they differ? However, there are no principal differences, because all of them are investment, existing for attraction of capital into the region. That is why on all forums investment agreements and contracts are signed, the sum of which is the main result of the event.

        In the fifth, personification of forums is taking place. Forums’ transformation into nomenclatorial and pathetic events has led to the appearance of syndrome «forum with known face». Today the most significant forums of the country are associated with quite specific people from the world of politics. For example, Forum in Sochi is connected with the Prime-Minister V.V. Putin, St. Petersburg International Economic Forum – with the President Dmitry Medvedev, Krasnoyarsk Forum – with the governor A.G. Khloponin,  Tver Forum- with the governor D.V. Zelenin. All these people personalize these forums and sometimes it is difficult to imagine them without each other. In this connection, sharp decline in popularity of Krasnoyarsk forum after A.G. Khloponin moved to Caucasus federal region is very characteristic. A lot of analysts believe that the same fate awaits Tver forum after dismissal of the governor D.V. Zelenin.  Although the role of a person on forums could not be secondary, however the use of “people - brands” as a bait has become too obvious and obtrusive.

        In six, informational redundancy of forums takes shape. The thing is that a lot of investment forums don’t represent any more business events with the aim to discuss mutual business-interests of the regional authorities and investors, and as a result real investment projects are run. Now forums turn more into discussion clubs of VIP-participants in the presence of Mass Media. For example, agenda of the forum «Sochi-2011» was truly immense. Among round tables and sessional meetings, for example, there was quite blank meeting of the leading economists, who discussed the future of the country. There were also meetings, which had a fashion character and were interesting only for participants of these meetings. Such congestion of the agenda doesn’t allow identifying the problem trend.

        Popularity of forums leads also to the fact that traditional regional investment platforms transform into international projects. For example, in September 2011 First Investment Forum “Russia-Israel. The Way to Cooperation” took place [5]. There are more examples like this. Survey conducted by our on-line magazine allowed us to “feel” the need in such international platforms. Experts were asked about interests of various regions in participation in these forums and their readiness to participate in the forums, taking place outside the home country. Answers were given in 10-point scale in regard to four platforms. Data processing allowed us to develop two indices, values of which are in Table 1.

        From Table 1 you can clearly see that Russian regions already have stable interest in participating in large investment forums of the world known business centers. Index of interest which is higher than 5 could be the evidence of all this. What is more, priority is given to Chinese platforms, serving one more time as evidence that Russian regions start to systematically focus on connections with Asian economic giant. Index of readiness is lower than index of interest, and that is logical. At the same time hierarchy of the cities of the world stays the same, but in regard to Dubai and Delhi there is more unwillingness in participation rather than readiness (index of readiness is less than 5).

Table 1. The need of the Russian regions in foreign forums.

        So, Russian regions while searching for investments are ready to hold forums not only in the home country and also to participate in the same forums of other regions but also to participate in foreign forums. In this connection it is typical that among all respondents only 2,8% could not answer the question.  This number could act as some sort of an index of uncertainty in regard to participation in forums. In general we can state that regional forums accomplished the mission of «emancipation» of regions and their openness for wide within the framework of the world investment market.                                         

        While speaking about bureaucratization of forums, we shouldn’t forget about one more tendency, which some experts note. While forums are “maturing”, the interest from federal authorities is also growing. And in one specific moment, when forum turns into big event of nationwide importance, federal center “activates” and tries to take it under control. This already happened with forum “Sochi”, which is controlled by the Ministry of Economic Development of the Russian Federation. In this connection a lot of offers on how to hold a forum are rejected, because the final word has the Ministry.  The same position this department has in regard to St. Petersburg International Economic Forum; at least, its opportunities with respect to selection and accreditation of Mass Media are practically unlimited[2]. Baikal forum, which in 2011 is going under control of the Federal Council, is found in the same position. This «merger» will lead to the increase of the importance of this forum, and it will be held not once in two years, but every year. Other examples: Krasnoyarsk forum is taken under control of the Ministry of Finance of the Russian Federation; Murmansk forum, the main sponsor of which is the Russian Ministry of Foreign Affairs.

        We’ll note that among organizers of regional forums there are a lot of federal departments, and this could be misleading. At the same time among these departments there is one department – curator, who «calls the tune». For the last years this tendency has become clearer.

        Today the effect of «adjustment» of regional forums to various federal structures is difficult to evaluate. From the one side, initial democratic market platform of investment attraction is destroying and is turning into bureaucratic event; from another side, regions often win from such a connection with the center, by attracting more attention of the society and by using the support of the federal authorities as a cover.

Picture 6. Attendance of regional forums (the number of attendances).

        4. The market of regional forums and their rating. For the last decade and a half a lot of regional forums appeared. According to our estimates, today there are more than 30 of them. At the same time these forums are totally unequal. Some have rather long history, as, for example, St. Petersburg International Economic Forum, which celebrated its 15 birthday, and forum “Sochi”, which celebrated its 10^th birthday; some of them exist only for several years; some are held for the first time. Some forums are held annually, some – once in two or three years. Some forums have huge budgets and take advantage of the image of their region; some almost don’t have enough money and have to overcome unfavorable opinion about their territory.

        Besides this inequality, all forums have the same goal – to attract investors’ attention with the following capital inflow into the region. We have to say that this resource is quite limited, and that is why there is always secret competition among various forums. Thereby we can talk about appearance of a specific market of regional forums, where “hauling” of local and foreign investments from various regional projects takes place.

        The presence of the market of regional forums leads also to necessity of forums’ ranking by degree of attractiveness in the eyes of investors and potential participants. This task is up-to-date not only for the participants of the market, but also for its «surroundings».

        Disposition of market participants is identified by standard method – by developing special rating. From our point of view, this task is up-to-date because till now Russian regional forums have not been gathered into one block so that these forums could be seen within the framework of a single system.

        If we talk about ideology of this rating, from our point of view, it should be based on qualitative measurements. It means that only experts can evaluate forums by asking simple questions about various sides of forums’ activities. Quantitative indicators could and should be used; however, today real databases containing the information about activities of existing forums are absent. So it is better to use as a base for your first investigation qualitative approach, based on expert surveys.

        At the first step of our study regional forums, which have already proved themselves on the market, were chosen.

        The development of the rating of forums was initiated by the federal on-line magazine “The Capital of the Country” and Russian Chamber of Commerce and Industry, who created and sent special survey questionnaire to regional administrations with the request to answer it. 37 regions of the whole 83 (it is 44,6% of all federal subjects) sent their responses[3]. This sample is quite representative and we can say that its results reflect the real state of affairs. Various specialists of regional ministries of economy and regional administrations, who deals with problems of investments, organize investment forums and participate in them, acted as experts.

        5. Method of constructing regional forums’ ranking. The base of the rating consisted of 7 factors of attractiveness of each forum: recognition, prestigiousness, level of bureaucracy, financial affordability, desirability to participate, attendance, effectiveness of participation. Simple qualitative evaluation served only for factors of attendance; other factors were evaluated by experts using a scale of 1 to 10. At the same time factors of recognition, prestigiousness, desirability of participation and effectiveness were evaluated by “direct” grid: the higher the point, the better; factors of the level of bureaucracy and financial affordability were evaluated by «reverse» grid: the higher the point, worse.

        These specifications predetermined 4-step algorithm for rating construction.

        Step1. Calculation of the average score. Primary information of the rating is an indicator x_ijk – evaluation of expert  j of forum I by the criterion k; i=1,…,29; j=1,…,37; k=1,…,7. Then the averaging of the score on each criterion, it means compression of all experts in order to obtain an aggregate value of x_ik, is done by using the formula:

where n – the number of experts (in our case 37).

        Step 2. Reduction to a single system of scaling and standardization. Because among 7 indicators 5 are evaluated by “direct” grid, and 2 – by “reverse”, we have to reduce it to a single – “direct” – grid, so that it is possible to add it and average without logical collisions. Moreover, all indicators differ in absolute value and have different dispersion. All this leads to recalculation of indicators of recognition, prestigiousness, desirability of participation, effectiveness and attendance by using the formula:

and indicators of the level of bureaucracy and financial affordability by the following formula:

where

        Because the scale of various factors could differ, it is necessary to numerate them in units of the same type – from 0 to 100%. This could be reached automatically by using the formulas (2)-(5).

        Step 3. Compression of all factors into one integral indicator. In order to identify the resultant force of all factors, it is necessary to weigh them. In a simpler way, when there is no objective base for weighted indicators, you can take their arithmetical mean number:

where m – the number of factors (in our case 7).

        Step 4. Standardization of integral indicator (secondary standardization).  When averaging of factors is done, the process of standardization does astray, and it is necessary to repeat this process again by using the formula:

        Obtaining the required indicator (7) allows us to range regional forums on the basis of their attractiveness.

        6. Empirical results. Realization of the described algorithm allowed us to create rating-2011 for the most significant Russian forums (Table 2).

Table 2. Rating of regional investment forums of Russia, 2011.

        These calculations confirmed the result in regard to forums – leaders: SPIEF, Sochi and Krasnoyarsk forums. At the same time St. Petersburg forum still is an untouchable leader even for its closest competitor – Sochi. The gap between them is 11percentage points, which is quite a big number, so for Sochi forum in the near future it will be quite difficult to bridge this gap. At the same time Krasnoyarsk forum has even less chances to Sochi forum, because the gap is almost 15 percentage points. So we can state that these top three leaders will remain for the next several years, and the competition will intensify among other participants of the market.

        From analytical point of view the most interesting fact is to which extent experts were taking into consideration the survey scale from 0 to 10 points. Was this scale “blank”, when the greater part of it was idle?

        The answer to this question is in Table 3, where maximum and minimum values of average forum evaluation are given.  

        As it turns out our scale was used not too active with respect to only one criterion (bureaucratization); in regard to other factors 10-point scale was used quite fully (pictures 1-7). The data of Table 3 allows us to understand to what factors the differences between forums were applied. These factors are recognition, prestigiousness and desirability of participation; the differences in other factors were less visible.

Table 3. Dispersion of factor estimates of regional forums.

        Moreover, we can note that the level of bureaucratization, first of all, slightly varied between forums, and secondly, it was concentrated in the bottom of the scale. It means that the factor of bureaucratization is not deterrent for regional participants. From here comes another preliminary but very important conclusion: regional investment forums represent truly democratic institute, as it was planned in the beginning. And this factor is quite encouraging.

        Another pattern is also clearly visible. The most recognized, prestigious and desired forums usually are the most bureaucratized and expensive. For example, SPIEF and Sochi forum, being the leaders in five factors, are at the end of the tournament table in the factors of bureaucratization and financial affordability.  Here we can see traditional market logic: forums that managed to become really popular and also become popular brands take the road of their own capitalization, turning their regional platform into very profitable event. This is a side effect, but also it is not right to write it off.

        7. Directions of use of forums’ rating. Ideally creation and publication of regional forums’ rating should include some feedback, it is the response of forums’ participants to the results of the survey. For example, regional representatives should get in touch with the rating developer and should make their own proposals concerning adding to the list of forums another young or not so popular forum, which didn’t manage to enter the previous round of the rating. This will allow forming constantly expanding base of all forums with their rating scores.

        The main idea of the rating is that market participants can analyze the systems of ranging of forums on each criterion of evaluation. These data allows forums’ organizers to find weak points and to take measures of its strengthening. As an example we can pay attention to the fact that Sochi forum, yielding to SPIEF on five factors, lost also on such factors as bureaucratization and financial affordability (pictures 1-7), and breaking by that the general principle. For forum’s organizers in Sochi this fact should be the signal for revision of the model of this event.

        It is interesting that this example is based on the surveys conducted before X forum «Sochi-2011» [12]. Meanwhile, one month and a half later after publication of the rating anniversary forum proved the validity of the rating’s results. In this connection we can remind three interesting incidents that happened on the forum. Hypertrophied security measures led to the following: first of all, when the Prime-Minister V.Putin  was examining the booths, forum was totally closed; secondly, Russian Deputy Prime Minister I.Sechin, Minister of Energy S.Shmatko and the head of  “Rosneft” E.Hudaynatov came late on plenary session; delegation with various officials was detained by security guards and was let in only after long negotiations and calls; thirdly, security guards didn’t let in the CEO of “Norilsk Nickel” V.Strgalkovskogo, who left the territory of the forum saying that he doesn’t plan to sponsor the forum any more [6]. So, the low rating of Sochi forum on the criterion of bureaucratization could be quite objective.

        Some facts allow doing additional testing of the rating’s results. For example, on Sochi forum every journalist with video-camera was inspected 4 times in the zone of line of sight; on St. Petersburg forum nothing similar is happening, and this proves the accuracy of rating’s disposition on the factor of bureaucratization.

        “Bureaucratic” work experience of Sochi forum with the Mass Media is also very interesting. For example, after the forum «Sochi-2011» its organizers analyzed all publications about the forum, by that studying the feedback.  However, they went too far in this, by dividing all publications in «good» (with positive comments about the forum) and «bad» (with negative comments). Then “the black list” was created, where the Mass Media with “bad” publications was. It is not surprising that such scheme has led to one curious incident when some Mass Media was in “the black list” despite the fact that its publication was prepared on the request of the press center of the forum and passed prior censorship. Also the Mass Media, which is in “the black list” should be “punished”, in future it will not get accreditation to the forum. This fact one more time proves that the institute of forums in some cases has undergone serious bureaucratization.

        From our point of view, systematic analysis of rating’s disposition will facilitate “grilling” of regional investment forums, doing them more effective institute of regional investment policy.

Picture 7. Effectiveness of participation in regional forums (points).

        8. The market of forums and its perspectives. Recently we have already noted the fact that regional forums managed to move outside Russia, generating international investment platforms in the countries, which are in the zone of strategic interest of Russia. At the same time there is a counter flow of interest from the side of foreign counterparts. For example, after the crisis of 2008 the department of Canadian investment corporation was opened in the embassy of Canada in Moscow; representatives of this new department throughout crisis years have been participating in Russian regional forums trying to find there business partners. So this way the institute of forums is perceived by foreign economic agents as quite normal channel of cooperation with the Russian partners.

        Today we can say that the market volume constitutes a small fraction of its potential value. For example, our survey was conducted in 29 forums. However, ideally   each region should have at least one own forum. In this case the number of forums should reach 83. If to take into consideration that some regions can have more than one forum, as, for example, St. Petersburg, then the number can grow to 150–200. Hence, domestic market of investment forums today is in its infancy and covers approximately 15–20% of its potential.

        However, this market is not limited only to investment forums. Now there are a lot of “industrial” forums. For example, Tula economic forum is held from 2006 and is dedicated to the development of Russian cities and improvement of the urban environment [7]. From 2008 International forum of informational technologies is held in Nizhny Novgorod, which is dedicated to IT-market and problems of electronic government [8]. From 2009 All-Russian forum “Infrastructural projects of Russia: partnership of business and government” is held [9]. In 2012 Central Russian economic forum is planned to be held in Kursk. Already functions Transbaikalia forum “Business and culture”, Economic forum “Samara initiative”, Orlov economic forum, Pacific economic congress, Far Easten economic forum in Khabarovsk, International economic in Greater Novgorod, Russian economic forum in Ekaterinburg, Dagestan economic forum. All these forums are quite specific in their problems and could not be referred to traditional investment forums. Some of them could be named institutional, some are informational. But each of the forums involves disclosure of possible innovations and projects with the following investment decisions.  Potential of such forums is lower than of investment ones, and according to our estimates, is 60-70 forums.

        We have to say that the institute of forums is a typical secondary (intermediate) institute of regional development [10]. In conditions of the current institutional vacuum in regard to effective structures of regional development and the absence of such developed forms as Regional Development Agencies, forums are the first spontaneous step toward formation of the new system. Without doubts, forums are less mature institute of development than Regional Development Agencies. However, developed market of regional forums will allow in future constructing effective Regional Development Agencies. Maybe, within some time Regional Development Agencies will substitute the institute of forums, however their mutually beneficial coexistence, which already partly exists, could last long.

        1. Results of X International economic forum «Sochi–2010»// «Бюджет.ru», 16.09.2010 (http://bujet.ru/article/90450.php).

        2. Results of participation of Krasnodar region in the forum «Sochi-2007»// VI International Investment forum Sochi-2007 (http://www.forumkuban.ru/arxiv/2007/index.php).

        3. Deficit of investment projects in the sphere of innovations // «The Capital of the Country», 25.05.2011 (http://www.kapital-rus.ru/articles/article/184934).

        4. Statistics// St. Petersburg International Economic Forum (http://www.forumspb.com/ru/programme/SPIEF_2010/Statistics.html).

        5. First Investment Forum «Russia-Israel. The way to cooperation»// Business Associations of the Republic of Bashkortostan (http://www.aop-rb.ru/actions_of_partners/82/).

        6. The head of «Norilsk Nickel» was not let in the economic forum in Sochi // «Лента.Ру», 16.09.2011 (http://lenta.ru/news/2011/09/16/noenter/).

        7. About IV Tula economic forum of 2011// Economic forum Tula-2011 (http://www.tula-forum.ru/).

        8. Kross М. In Nizhny Novgorod IV International forum of informational technologies completed its work// «Russian gazeta», 28.04.2011 (http://www.rg.ru/2011/04/28/reg-privolzhe/end-anons.html).

        9. Melnikov А.V. Megaprojects: challenge to the state or simple need?// «The Capital of the Country», 07.10.2011 (http://kapital-rus.ru/articles/article/192496/).

        10. Polterovich V.М. Regional institutes of modernization// «The Capital of the Country», 12.10.2011 (http://kapital-rus.ru/articles/article/192669/).

        11. Balatsky  Е.V. Regional investment forums in Russian economy// «The Capital of the Country», 12.09.2011 (http://kapital-rus.ru/articles/article/190927/).

        12. Rating of regional investment forums in Russia// «The Capital of the Country», 11.09.2011 (http://www.kapital-rus.ru/articles/article/190845/).

        13. Northwest Alternative Investment Managers Forum (http://www.investmentforum.org/).

        14. Overseas Property Investment Forum (http://www.propertycommunity.com/forum/).

        15. Indonesian Regional Investment Forum (http://www.setneg.go.id/index.php?option=com_content&task=view&id=2175&Itemid=26).

        16. Eleven days to the 4th COMESA Investment Forum in Dubai (http://www.comesaria.org/site/en/news_details.php?chaine=eleven-days-to-the-4th-comesa-investment-forum-in-dubai-u-a-e&id_news=8&id_article=119).

        17. The Regional Investment Forum «Investments and Development» (http://www.geneva.mfa.md/announcements/482374/).

        18. Tourism Investment Forum (http://www.tpr.alberta.ca/tourism/investment/TI-forum.aspx).

        19. Investing in silk road development (http://www.undp.org.cn/modules.php?op=modload&name=News&file=article&catid=14&topic=50&sid=269&mode=thread&order=0&thold=0).

        20. 3rd Malopolska Investment Forum (http://www.en.marr.pl/3rd-malopolska-investment-forum.html).

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