Administrative and Tax Regimes in the Russian Far East: Cooperation between Investors and the State

Maksim Evseevich Krivelevich ()
Additional contact information
Maksim Evseevich Krivelevich: Economic Research Institute FEB RAS

Spatial Economics=Prostranstvennaya Ekonomika, 2021, issue 2, 16-33

Abstract: Administrative and tax regimes Free ‘Port of Vladivostok (SPV)’ and ‘Territories of Advanced Social and Economic Development (TOR)’ have become a key mechanism for reconciling the interests of the state and investors within the state policy to stimulate the economic development of the Russian Far East. However, significant proportion of projects remains unfulfilled. The state almost always receives less budgetary efficiency than initially planned. The article proposes a model of the coordination of the interests between the investor and the state based on preliminary financial modeling of projects. The interaction between the investor and the state was studied in terms of Game theory. For discrete modeling on the side of the investor it is proposed to use an approach based on Bayes’ theorem. For a one-time assessment of the economic benefits of the project, applied by the state, the technology for evaluation of option’s premium based on the Black-Scholes theorem can be used. For each potential resident of the TOR or SPV, the calculations must be made individually, but the proposed model allows us to draw several general conclusions, which can be applied as we aim to grow the cooperation between investors and the government while using the administrative and tax regimes in consideration. It is recommended to regulate the amount of infrastructure support for projects depending on their expected budgetary efficiency. The development of the government’s strategy of differentiated support for residents of TOR or SPV can change the balance of risks and benefits for potential investors and attract significant amount of foreign direct investment into the economy of the Pacific Russia. For potential TOR residents, the proposed methodology will be useful as a tool to substantiate their claims for state support, which will allow ‘real’ projects to avoid competition for land or electricity with ‘fictitious’ ones

Keywords: Territories of advanced development; free port Vladivostok; cost-effectiveness of tax incentives; Pacific Russia (search for similar items in EconPapers)
JEL-codes: F14 O24 R12 (search for similar items in EconPapers)
Date: 2021
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.spatial-economics.com/images/spatial-ec ... -033.Krivelevich.pdf (application/pdf)
http://spatial-economics.com/eng/arkhiv-nomerov/20 ... 1000-SE-2021-2-16-33 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:far:spaeco:y:2021:i:2:p:16-33

DOI: 10.14530/se.2021.2.016-033

Access Statistics for this article

Spatial Economics=Prostranstvennaya Ekonomika is currently edited by Pavel Minakir

More articles in Spatial Economics=Prostranstvennaya Ekonomika from Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia) Contact information at EDIRC.
Bibliographic data for series maintained by Sergey Rogov ().