(ECONOMIC ANALYSIS OF IMPORT SUBSTITUTION INVESTMENT PROJECTS UNDER FOREIGN SANCTIONS)
A group of unfriendly foreign countries has been maintaining a policy of sanction restrictions directed at the Russian Federation for a prolonged period of time. As a result of this, access to some commodities, services, and technologies in Russia becomes limited. In this situation, import substitution, i. e. replacement of foreign commodities and services with domestic ones, becomes a priority in both state and corporate policy. We note that implementation of such measures not only reduces the risks associated with dependence on foreign suppliers, but also leads to tangible economic effect.
Conventionally, the economic efficiency of an import substitution project is assessed using the cash flow method by comparing the cost of life cycle of an imported sample and a domestic equivalent intended for development. However, sometimes, when sanction regime is strengthened, a foreign commodity or technology becomes completely inaccessible. This renders the described approach inapplicable. In case of lack of access to an imported analogue for comparison and critical necessity to implement a project, it is expedient to perform the further economic analysis from the viewpoint of selecting the best method of such projects’ financing.
The classical Modigliani – Miller theory states that there is no optimal structure of financing, and the value of a company/project does not depend on the financing method. However, the elaboration of this theory in the works of modern authors shows that in some cases the best combination of own and borrowed capital may be found and may lead to maximization of a project net present value.
The article features a process flow diagram for two-stage economic analysis of import substitution investment projects, and describes its primary methods, including both approaches to the assessment of economic efficiency (of a project as such, and the method of its financing). Their use is demonstrated through theoretical examples.
M.I. Bogatyrev, PhD in Economy, PJSC Gazprom (Saint Petersburg, Russia), M.Bogatyrev@adm.gazprom.ru
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