Direct German investments in the Russian economy: regional cross-section

Popova Evgeniya Mikhailovna Senior Educator, the department of World Economy, Entrepreneurship and Humanities, Chita Institute (Branch) of Baikal State University 672000, Russia, Zabaikal'skii krai, g. Chita, ul. Anokhina, 56 p_e_m_2013@mail.ru Other publications by this author

Nikitina Tatyana Viktorovna Doctor of Economics Professor, Director of International Centre for Financial Markets Research, Saint Petersburg State University of Economics 191023, Russia, g. Saint Petersburg, ul. Nab. Kanala Griboedova, d. 30-32, liter A t_nikitina2004@mail.ru Other publications by this author

Introduction. The starting point of a qualitatively new stage of economic partnership between Russia and Germany can be considered the end of the 1990s, when the old model of economic relations between the two countries, based mainly on increasing mutual trade, showed the limitations of the current trajectory of development of bilateral cooperation. Then, in terms of cost and of the lack of domestic investment resources, lack of experience of doing business in a market economy gained particular importance to the task of bringing the German capital and technology in the national economy ^{[1, p. 58]}. Passed more than 20 years and today, despite all the challenges, the financial and economic crisis, Western sanctions, the pandemic COVID-19, Germany remains a key strategic partner of Russia in the field of investment cooperation.

This thesis is confirmed by the results of research conducted by Russian scientists. Belov V. B., head of Center for German studies, Institute of Europe Russian Academy of Sciences, in his work concludes that despite the deep crisis of political trust, the imposition of sanctions, pandemic measures, the German entrepreneurs were able to adapt to these negative trends, the company has ceased its investment activity ^{[2, p. 25]}. As rightly pointed out by V. B. Belov, mainly from the Russian market goes representative offices and branches of companies from Germany, which has not been active. These conclusions come Tarnowska and E. V. Shcherbinin A. D., which emphasize that German companies that have been working in the Russian market, sanctions and political problems are not a decisive factor in the collapse of its business in Russia ^{[3, p. 69]}. German investors note the improvement of the investment climate, the Russian market remains attractive because of its high capacity.

Also, the authors identify as a significant factor contributing to the inflow of direct German investments in the domestic economy, the implementation of the new instrument of state support of large investment – special investment contract (hereinafter SPIK). This tool is like never meets the requirements of the time, namely, its relevance due to the sanctions restricting foreign trade, and a growing global trend towards protectionist policy, which has also been observed in Russia. Ratner V. A., Andreeva E. L., in terms of statistics, the arguments in favor of the fact that the reduction of the inflow of direct German investments in the domestic economy took place before the imposition of sanctions ^{[4, 20]}. In addition to the sanctions, there are such factors as the impact of the global financial and economic crisis and the shift in investment priorities in developing countries. The authors indicate that in the circumstances of the German company are forced to increase the localization of its production in Russia to recover lost markets because of trade restrictions. We share this point of view, I would like to emphasize that the localization of production in Russia is expanding potential markets, due to the existence of the EAEU.

Having studied the works of domestic scientists devoted to the investment of German capital in the Russian economy in the context of global challenges, found that in the author's research focuses on Russian tendency of attracting German investment, an assessment of the significance of the largest investment projects, this is regional in scope of direct German investments. The authors ' study fills that gap. The relevance and practical significance of the study of regional peculiarities of the placement of German capital in the Russian economy is that it will allow to consider the regional structure of the German investment through the prism of achieving the strategic goals of spatial development of the national economy and to identify new opportunities for further expansion of investment cooperation.

The purpose of this study is based on complex analysis of regional structure of German investments in the Russian economy, to identify the factors that limit the capacity development of investment cooperation between Russia and Germany, and to determine the prospects of deepening the cooperation between Russian and German businesses in the investment field.

To achieve this goal it is necessary to solve the following tasks:

– to analyze the dynamics, species and geographical structure, the degree of differentiation of German direct investment in the regions and Federal districts;

– calculate sub-national investment position and to determine which regions of the Russian Federation are net creditors (net borrowers) against Germany;

– to systematize the information on the distribution of resident participation of German capital on special economic zones operating in the Russian Federation, to identify key trends;

– to find out whether the investment projects implemented by enterprises with German capital in Russian regions, the strategic priorities of the state economic policy;

– to identify bottlenecks and constraints in the implementation of investment projects with the participation of German capital in the Russian regions, including areas that offer preferential treatment to the implementation of entrepreneurial activities;

– make recommendations for the expansion of investment cooperation between Russia and Germany, focusing on the prospects for the Eastern expansion of German investments.

Methodology chronological framework and empirical base of research. Analysis of investment cooperation between Russia and Germany in the context of individual Russian regions and Federal districts were based on the statistics presented on the official website of the Bank of Russia from 01.01.2015 to 01.01.2021 G. the methodology applied by the regulator to account for the FDI (foreign) investment, is the principle of assets/liabilities. Under this method, direct investments, including equity and debt instruments as well as return of investment and investment between related parties are recorded cumulatively on a specific date. The inflow of foreign direct investment in the Russian economy (the direct investor purchasing stocks and shares in the authorized capital of an enterprise of direct investment, financial aid, loan) has the effect of an increase in liabilities. The outflow of direct investment (repurchase the company's own equity securities, selling direct investor equity securities to a third party, loan payments) leads to a decrease in liabilities. In the end, if in the reporting year there is a net inflow of direct investment (the difference between the inflow and outflow plus), the obligations of the Russian regions to non-residents increased and the volume of foreign investment is increasing. On the contrary, in the case of net outflows in direct investment (the difference between the inflow and outflow of a negative value), the obligations of the Russian entities to non-residents reduced, which is reflected in the decrease in the volume of accumulated foreign investment.

The analysis of the dynamics, species and geographical structure, the degree of differentiation of German direct investment in the regions and Federal districts. Over the past six years, the volume of German investments in the Russian economy increased by 44%, or $ 4.7 billion., on January 1, 2021 $ 15.4 billion. (see Fig. 1). While 83% of the total volume of accumulated direct investment is investment of Russian companies.

Fig. 1. Dynamics of the volume of accumulated direct German investments in the Russian Federation, billion dollars. (compiled by the author according to the Bank of Russia) ^[5]

The analysis showed that in each Federal district there are subjects that act as recipients of German direct investment. Against this backdrop stand northwestern Federal district, where more than 90% of the subjects are recipients of the German capital, and the far Eastern Federal district, where only 36% of the subjects were able to attract German investment in the regional economy (see table. 1).

Table 1. The volume of accumulated direct German investments in the context of Federal districts

Source: compiled by the author based on the data of the Bank of Russia ^[5].

According to the results of the analysis of the volume of accumulated direct investments, first in the context of individual subjects, and then federal districts, it was concluded that the zone of concentration of German capital in the domestic economy is the territory of the Central, North-Western and Volga Federal districts. Together, these three districts account for 93% of the total volume of accumulated direct investments. To obtain more objective results of the study, an additional calculation was made of the specific weight of the volume of accumulated direct investments in the total GRP of the federal districts. The data presented in Table 1 confirm that the above-mentioned federal districts are the absolute leaders in attracting German investments.

Macroeconomic analysis uses stock and flow variables. The indicator "volume of accumulated investments at a certain date" refers to stock variables, which, in turn, are influenced by flow variables. In the context of our study, such indicators as annual net inflow and net outflow of direct investments act as flow variables. Tables 2 and 3 summarize the values of the annual net inflow and outflow of direct German investments, as well as the resulting balance of investment flows separately according to the indicators "equity participation" and "debt instruments". The resulting balance is the sum of annual net inflows and net outflows of investments for 2015-2020.

Table 2. Net inflow/outflow of German direct investments in terms of "equity participation" for 2015-2020, USD million.

Source: compiled by the author based on the data of the Bank of Russia ^[5].

Table 3. Net inflow/outflow of German direct investment in terms of "debt instruments" for 2015-2020 million.

Source: compiled by the author based on the data of the Bank of Russia ^[5].

Table 2 shows that in the analyzed period of time in most Federal districts observed net inflow of German investments in the form of investments in the authorized capital of Russian companies. The most large-scale inflow of direct investment is observed in the Central, Volga and southern Federal districts. These three Federal district, the most significant share of German investments in the structure of the accumulated foreign direct investment (see table. 4). One of the key factors that forced the influx of German capital in the regional economy of the Russian constituent entities, which are included in the data of the Federal district, made the practice of concluding special investment contracts with companies from Germany ^{[6, p. 108]}. With German companies, the Ministry of industry and trade of the Russian Federation in 2016 concluded the first Spica.

Table 4. The share of German investments in the total volume of accumulated FDI, %

Source: compiled by the author based on the data of the Bank of Russia ^[5].

While in the Urals Federal district, seizures of the German capital from regional companies outpaced the respective expenses, as a result, for the past six years, the cumulative investment in terms of "equity participation" fell on 232,53 million dollars. In addition, enterprises are located in the regions of the Urals and Central Federal districts, faster repay earlier loans than were issued new loans that had resulted in a negative value, the resulting balance and decrease in the value of liabilities in terms of "debt" (see table. 3). In contrast, the regions that form part of the Volga, Siberia, the North Caucasus and North-Western Federal districts, and increasing levels of debt to German residents.

Previously it was stated that the German investments are unevenly distributed across Russia. A high degree of differentiation accumulated direct investment is observed within the individual Federal districts, which is a consequence of differences in the socio-economic situation in the regions and their investment climate. To determine the level of differentiation of accumulated direct German investments within the individual Federal districts, were calculated coefficients of variation (the sum is uniform if the value of the coefficient does not exceed 33%).

Table 5. The coefficient of variation characterizing the degree of differentiation of accumulated direct German investments in the Federal districts, %

Source: compiled by the author based on the data of the Bank of Russia ^[5].

The calculations have led to the conclusion that the most uneven German investment distributed among the entities included in the County-the leaders in the volume of attracted investments (Central and North Western). This is due to the preferential concentration of German investments in Moscow, Saint-Petersburg and the Moscow region. However, a considerable variation in the volume of German investments demonstrate the regions included in the Volga Federal district, which also includes the three flagships. This is confirmed by the lower value of the coefficient of variation (see table. 5). In the Volga Federal district the first position in terms of attracting German investment is Nizhny Novgorod oblast, Republic of Tatarstan and Samara oblast.

The conducted research allowed to make one important conclusion: over the last 20 years has reduced the proportion of German investment in Moscow, and, consequently, increased the proportion of regions in the structure of the German capital raised in the Russian economy. If in 1999-2000 to Moscow accounted for almost 70% of the total volume of German direct investment in 2020 Moscow's share decreased to 48% ^{[1, p. 61]}. The extension of the geographical location of the German capital in the domestic economy encouraged the activities of such organizations as the Union of the German economy, the Eastern Committee of German economy, the German-Russian investment Agency, as well as institutions for the development of interregional cooperation of Russia and Germany (the Association "Volga-don", "Brand pool", the Agency "Vostok-Zapad"). The main aim of these institutions was to provide German companies from the Federal state of North Rhine-Westphalia information, consulting and organizational support for the localization of production and the development of the Russian market. Currently, one of the key roles in the promotion of German companies on the Russian market and coordination of investment cooperation plays a Russian-German chamber of Commerce.

In addition, during this period, conducted business forums in Russia and Germany, in which representatives of business communities of the two countries presented specific investment projects and established direct ties. Sustainable development of interregional cooperation of Russia and Germany is confirmed by the fact that following the completion of the Russian-German year of the regional-municipal partnerships in Krasnodar open and closed in Berlin (2017/2018) that was signed more than 30 of the German-Russian partnership agreements ^[7]. Currently, about a third of Russian regions have agreements with German cities and Federal States, it is worth noting that, as it moves to the East dramatically reduced the density of interregional relations with legal registration in the form of formal contracts, which are administrative territorial units ^{[8, p. 147]}.

Assessment of regional investment positions. The subject of this article is limited to the study of trends in direct investment, which carry the German-residents in the economy of Russian regions. However, to ensure a more integrated nature of the conducted research, we consider it appropriate to compare the German direct investment localized in separate regions of foreign assets in Germany that are owned enterprises functioning in the relevant Russian actors. It is necessary to define sub-Federal net investment position: if the requirements for German residents exceed obligations to them, the region is a net creditor in relation to Germany. In the case that obligations to the German non-residents more than demand, the region is a net borrower in relation to Germany. To calculate the sub-national investment position data were used for total assets and liabilities as at 01.01.2021 From 55 regions, acting as its object of study, 27 subjects of the Russian Federation are net creditors with respect to Germany, 28 regions of the Russian Federation – net borrowers. Additional analysis is conducted in the context of Federal districts, allowed to conclude that the geographical distribution of the regions-net creditor and regions-net borrowers (see table. 6).

Table 6. The geographical distribution of regions-net creditor and regions-net borrowers in relation to Germany, %

Source: compiled by the author based on the data of the Bank of Russia ^[5].

Regions-net borrowers mainly concentrated in the Central, Volga, North-Western and southern Federal districts. In the Urals, Siberian and far Eastern Federal districts dominated regions-net creditors. However, the first line by the amount of net investment position among the regions of the creditor is Saint Petersburg, foreign assets of which exceed the corresponding liabilities for 935 million dollars. The leader among the regions of the borrowers in the amount of net investment position acts Nizhny Novgorod oblast whose commitments to Germany than the corresponding requirements on 748 million. Nizhny Novgorod oblast is a pioneer in the development of investment cooperation, cooperative relations of the Nizhny Novgorod region and the Federal state of North Rhine-Westphalia is an example of effective inter-regional cooperation between the two countries. The prevalence in the European part of Russia regions-net borrowers due to a more favorable investment climate and territorial proximity to Germany. Another factor contributing to the location of the German capital in European Russia, stands the preferential localization of special economic zones (hereinafter-SEZ) in this part of the country.

The German capital in the SEZ. According to the Association of clusters and technology parks and special economic zones of Russia, Germany is in third place in terms of accumulated foreign investment in the SEZ (on 31.12.2020 G. 23.9 billion RUB, or 10%), losing to the Netherlands and Cyprus (see Fig. 2).

Fig. 2. Structure of accumulated foreign investments resident countries as 31.12.2020 g. ^{[9, 20]}

However, studies show initiated by the IMF, the phantom "circular" investment constitutes more than 23% of the total volume of accumulated foreign investment in Russia ^[10]. Given that Cyprus and the Netherlands are quasifermi, there is reason to assume that part of the investment made in the territory of these countries are domestic in origin, and means Germany has a more significant share in the structure of foreign investment here. The results of monitoring of residents registered in the SEZ were made the following conclusions. First, the German company prefer SEZ of industrial production and technology and innovation, today 16 enterprises with German capital have the SEZ resident status (see table. 7).

Table 7. The distribution of resident participation of German capital on special economic zones operating in the constituent entities of the Russian Federation

Source: compiled by the author based on ^[11].

Secondly, the main share of resident participation of German capital accounts for the SEZ "Alabuga", the SEZ "Lipetsk" and the special economic zone "Dubna", due to their high investment attractiveness. Data SEZ occupy the first position in the National rating of investment attractiveness of the SEZ Russia ^{[9, p. 28]}.

Third, many residents of the industrial SEZ uses environmentally friendly technology and spetsializiruyutsya on recycling and waste. Here are some examples. OOO "Biblica" (the German company GK Energy GmbH) started the production processing of agricultural crops in German pyrolysis technology, which allowed to process husk charcoal and heating oil. OOO "SARIA Bio-industries Volga" (Saria Bio Industries) is engaged in the production macaroni flour, flour pen, flour blood and fat of the animal fodder, as a raw material used skins, horns, hooves, feathers, blood, meat waste (see table. 8).

Table 8. General characteristics of investment projects implemented by the residents of the SEZ with the participation of German capital

Source: compiled by the author based on ^{[12],[13],[14],[15]}.

The strategic importance of the implementation of these projects in Russia is due to the fact that the processing of organic waste is an important component of the country's food security. Fourth, innovative technologies in the field of medicine and pharmaceuticals are a priority area of activity for residents with the participation of German capital who are registered in the SEZ of a technical and innovative type. For example, the Russian-German company MOYE Ceramic-Implant LLC is engaged in the production of implants made of zircon-oxide nanoceramics. JSC "NanoBrahiTek" has established the production of micro sources and components for brachytherapy of oncological diseases.  A subsidiary of the German Fresenius Medical Care corporation, FRERUS LLC, is implementing a project to produce innovative equipment for renal replacement therapy in Russia (see Table 8).

Thus, the creation of special zones in Russia with preferential treatment of entrepreneurial activity has acted as a significant driver stimulating the influx of German capital and innovative technologies into the domestic economy. The study concluded that investment cooperation between Russia and Germany contributes to the achievement of such sustainable development goals as "Industrialization, innovation, infrastructure" (Goal No. 9) and "Responsible consumption and production" (Goal No. 12). Joint investment projects implemented by Russian and German enterprises in special economic zones correspond to such strategic priorities of the state economic policy as ensuring the country's food security, increasing the production of high-tech products, the use of innovative technologies in industry, import substitution and increasing the share of Russian goods with high added value on world markets. The conclusions formulated above are confirmed by the results of research initiated by Russian scientists, who also emphasize the strategic importance of German investments for the economic development of Russia ^{[16, p. 99]}.

Nevertheless, there are a number of factors that hinder the attraction of German investments in the SEZ. First of all, these are organizational and managerial problems, a complex procedure for obtaining resident status that requires coordination at several levels of government. It is no coincidence that the results of the annual survey conducted by the Russian-German Chamber of Commerce show that it is bureaucratic barriers that occupy the first positions in the ranking of factors that have the greatest negative impact on German businesses in Russia. In our opinion, the importance of the bureaucratic factor is reinforced by the unstable institutional environment and weak market conditions. However, there is every reason to believe that in the near future this deterrent factor will be leveled, which means that more favorable conditions will be created for the influx of German investments into the SEZ. In early February 2022 The Government of the Russian Federation has approved amendments to the federal law "On Special Economic Zones in the Russian Federation" prepared by the Ministry of Economic Development ^[17]. Now, to obtain the status of a resident, it is enough to provide a passport of an investment project instead of the previously required business plan. In addition, the candidacy of a resident will be considered only by the relevant executive authorities of the region without additional coordination with the expert council. Such a flexible mechanism will significantly speed up the decision-making process for the investor.

Discussion of results and recommendations. Despite the negative trends observed in recent years in the field of economic cooperation between Russia and Germany: decline of the foreign trade turnover, leaving companies with German capital from the domestic market – the volume of accumulated direct German investments in the analyzed period of time demonstrates the growth. As rightly noted by the head of the Russian-German chamber of Commerce Matthias Shepp, "a number of German companies is reduced, but the quality of their activities in Russia is still high". The results of a survey initiated by the Russian-German chamber of Commerce in June 2021, confirms that the investment cooperation between Russia and Germany are steadily growing. Almost half of German companies are going in the coming year to make additional investments into the Russian economy ^[18]. There are a number of good reasons:

– the priority of the economic feasibility of the investment projects on the territory of Russia, the political turmoil. The results of the aforementioned survey, 93% of German companies working in Russia, believe that the removal of anti-Russian sanctions ^[18];

– macroeconomic factors: the devaluation of the ruble and the existing non-tariff measures reduce the attractiveness of imports and updates the economic incentives for the localization of production in Russia;

– long-lasting and effective experience on the Russian market, organized system of functioning of the various institutions that contribute to the development of business contacts between Russian and German enterprises, the development of the Russian market. In December of 2020 has created a new Institute of the Russian-German economic Council, in the area of responsibility includes the facilitation of the implementation of the joint flagship projects in the field of hydrogen economy, agriculture, healthcare and digitization ^[19].

At the same time, there are a number of factors limiting the potential for investment cooperation between Russia and Germany. In addition to the previously mentioned red tape, anti-Russian sanctions and measures pandemic, there is another factor that causes suspicion among German investors and limiting the investment activity of the enterprises with the participation of German capital. This is an insufficient level of state support for the economy during coronaries. 65% of respondents are members of the Russian-German chamber of Commerce are not satisfied with the measures of state support ^{[20, p. 16]}. So the number of German companies that have received the status of the backbone enterprises, could not qualify for state support due to the fact that more than 50% of its share capital owned by a parent company that is not a resident of the Russian Federation. In an interview with Mattias shapp said that German companies have accepted this condition as discriminatory measures ^[21]. Considering recent events, namely the extension of anti-Russian sanctions, the devaluation of the ruble, it can be assumed that in the near future the government will develop new tools for stimulating economic policy. Therefore, in our opinion, it makes sense to correct such conditions, given the socio-economic importance of foreign enterprises or to create a separate set of measures for the major players of the Russian market, to prevent the outflow of the German capital from the Russian economy.

We now turn to the main conclusion obtained from the results of the study. Study of regional structure involved in the Russian economy of the German investment showed that the German capital is unevenly distributed across Russia and mainly concentrated in the European part of the country. The most "deprived" from the point of view of the volume of accumulated direct investment is the far Eastern Federal district. Thus, the current regional structure of the German investment does not contribute to one of the main objectives of the Strategy of spatial development of the Russian Federation until 2025, namely, reduction of differentiation of socio-economic development of territories. Current location of German capital in Russia is an additional factor that deepens interregional socio-economic inequality. As the strategic objectives of spatial development of Russia declared the priority development geostrategic territories, which primarily related to the far East ^[22]. Therefore we propose to consider the existing possibilities for the expansion of investment cooperation between the Russian and German business in the far East.

When analyzed the inflow and outflow of German investments in the context of Federal districts, it was concluded that the most significant tributary falls on Central, Volga and southern Federal districts. As the driver, stimulating the influx of German capital in these regions of the country, gave preferential treatment offered under the SEZ and Spiked. However, in the far East there is an alternative preferential regimes, we are talking about the territories of advanced socio-economic development (hereinafter TOSER). In an ADZ are given good tax benefits, as well as a number of important administrative preferences. One of the major drawbacks of the SEZ and Spiked are high minimum investment, which limits the attraction of investments of small and medium-sized businesses. In turn, in an ADZ minimum investment is 500 thousand rubles, which creates opportunities for small and medium businesses to establish production in an ADZ. In addition, the implementation of investment projects in the ADZ can be an interesting German investors proximity to the markets of the Asia-Pacific region. According to the IMF forecast, in 2021, the economy of the Asia-Pacific region grew by 6.5%, Asia Pacific remains the fastest growing region in the world ^[23].

Unlike the SEZ, an ADZ is a relatively new tool to stimulate investment activity. So it makes sense to benefit from the experience of the functioning of the SEZ. In 2011, a study was conducted on the subject of why a foreign investor is not in the SEZ, it was found that one of the main reasons were lack of information about the capabilities of the domestic economic zone and lowest level of direct communication. Therefore, monitored the site of the Russian-German chamber of Commerce, which showed that information about ADZ presented, however, in General, which is clearly insufficient. To attract German investment in an ADZ need to build a direct communication with potential residents through meetings, seminars and forums. In our view, the key role here belongs to the Agency Far East on attraction of investments and support of export, in the area of responsibility includes the study of investment opportunities and offer these opportunities to Russian and foreign investors. This institution is necessary to intensify cooperation with the Russian-German chamber of Commerce as a powerful economic and lobbying organization. A very promising tools for the establishment of direct contacts and discussion of specific investment opportunities in the ADZ are:

– establish working groups from among the representatives of the Agency and chamber of Commerce, carrying out analytical activities in the field of comprehensive studies of the potential markets, resource base, financial capability, and also involved in the search of Russian and German companies, which could be of interest developed by them investment proposals;

– use the services of the Russian-German chamber of Commerce at the organization's presentations: VTP has its own online platform, assists in the preparation and promotion of marketing materials and channels VTP provides simultaneous interpretation, creates VR content.

During the Eastern economic forum held in Vladivostok in September 2021, the representatives of the Russian-German chamber of Commerce and the Union of German economy in Russia paid special attention to the discussion of investment projects in the field of "green" technologies, waste management, solar and wind power ^[24]. The survey, initiated by the Russian-German chamber of Commerce, showed an increase of the interest of German companies to renewable energy. If in 2017, 20% of the members of the chamber considered renewable energy as a promising industry in 2020 for 35% of the respondents attributed to the renewable energy sectors with high growth potential ^{[20, p. 18]}. This may be due to the implementation of measures of state support and increase the capacity of solar and wind generation in Russia. It is worth noting that among the leading regions in terms of implemented projects in the framework of the existing support mechanism for renewable energy sources are represented by the regions of the far Eastern Federal district. The analysis showed that the far East lags behind other regions in the country in terms of input production capacity, especially wind power stations. Although it is in the far Eastern Federal district the need for alternative energy is highest, and most importantly, solar and wind resources allow it to develop. Estimates of JSC "RAO ES of the East", the construction of wind and solar power plants are economically justified in 178 settlements of the Far East. This will allow you to achieve annual savings of diesel fuel in the amount of 46 thousand tons., or 2 billion rubles. ^[25].

Thus, economic and geographic features of the Far East pose a serious prerequisites for the formation of long-term green energy market, as there is a high demand for renewable energy. At the same time, Germany has a lot of experience in the manufacture of equipment and the construction and operation of wind and solar power (the proportion of "green" energy is about 17% in the country). Therefore as a promising area of cooperation between Russia and Germany should be considered in the implementation of investment projects for the production of components and assemblies of wind turbines, solar panels, and construction of wind and solar power plants in the Far East.

For the German partners in the Far East can be attractive because of its high capacity, which allows you to fully work the effect of economies of scale, which ultimately manifests itself in getting a price competitive advantage. In addition, on the territory of the Far East concentrated isolated power system. In the framework of the existing measures of state support for the objects that generate renewable energy in geographically isolated power systems, benefit the sale of electric energy. That is, the formation of the scheduled hourly chart of electricity production by members of the retail market for the coming day, the subject of operational dispatch management includes the first volume of production of electrical energy in wind (and solar) power plants ^{[26, p. 135]}. It is also one of the incentives for investments in renewable energy in the far East.

The strategic importance of these projects lies in the fact that new investors will contribute to the development of competition in the Russian market of renewable energy, and thus reduce the cost of equipment and amount of the tariffs. However, it is fair to say that the probability of expanding investment cooperation between our countries in this field largely depends on the activity and initiative of the state structures, including at the regional level. A key role in attracting German investment in the economy of the regions of the Far East belongs to the Ministry of the Russian Federation for development of the Far East and the Arctic and JSC "development Corporation of the Far East and the Arctic."