Calculation methods peculiarities of National rating of investment climate in RF subjects

16.05.2016

The National rating of investment climate in RF subjects was published for the first time in 2014. As opposed to other business environment research, it is an instrument to evaluate the current conditions for conducting business and the efforts, made by regional authorities to improve them.

The background for its creation is made up by non-availability of a unified instrument, which could allow to compare the investment attractiveness of different regions and bring out the best practices. So there are many rating systems, which evaluate social and economic data, work of regional authorities, business environment, etc. They are mainly based on analysis of macroeconomic data or aggregate expert opinion. However the results of these ratings are often incommensurable and even controversial.

Methods of the new rating calculation were developed by specialists of Agency for Strategic Initiatives (ASI), RF President Administration and international consultants with account of existing domestic and international mechanisms of investment climate evaluation. The rating of the World Bank Doing Business was taken as the basis, as it has been the only instrument, published starting from 2003, and, in practice, it is the only standard instrument, applied in various countries of the world to evaluate the influence of standard setting by the authorities on the activity of national companies.

The main feature of Doing Business found its reflection in the National rating: they estimate the comfortability of conducting business, because they take into account the period for registering a new company, speed and amount of operations, required to obtain the permits for construction, simplicity of credit arrangements and other significant for the business activities parameters. At that, the National rating was slightly altered to reflect the most important for regional business parameters: it does not include certain blocks (for example, international trade, protection of minority investors, etc.), but it is supplemented with other measurable factors (in particular, corruption events).

Methods of National rating also has its differences. For example, Doing Business evaluates specific parameters, based on the interrogation of business people in the country under research (i.e. in the largest of its cities) with the help of standard plans (or "cases"), at that only small and medium businesses are under research. The National rating provides both official statistic data and the data, obtained from interrogating the representatives of companies and experts, it represents all the companies for the region in general. Parameters for evaluation of MSE conditions are drawn into one group, as small business is the most sensitive to various legal alterations and forces, applied by the administration officers to improve the conditions of business environment.

The general peculiarity of ratings is their practical character. Based on the results of Doing Business rating, extensive substantial reports are prepared, they contain the data regarding the extant of Ease of Doing Business, location of each region and the recommended reforms to evaluation in each of the theme category. The National rating studies the best practices in the sphere of legislation, business institutes, infrastructure development and maintaining the small businesses, it is published as a collection with detailed description of implementation methods in order to spread the successful practices in RF subjects.

It is supposed that, while year after year the rating is prepared to evaluate the condition of investment climate in the regions its methods shall constantly improve, due to including the new parameters and partial excluding of existing ones. So, in the second year of project management in 2015, after pilot testing the list of researched parameters was somewhat changed. Besides, when making the rating, the information is also collected for other calculating other, not included into it parameters, which in future may be helpful for other ratings. Such parameters, for example, include Public Private Partnership mechanism development, average time and number of procedures, required to obtain the permits for putting into operation a residential or industrial object, effectiveness of access of facilities to gas pipeline, awareness about the Business Rights Commissioner, etc. It is entirely possible that the changes in the rating methods shall be introduced with remarks of scientists and experts as well.