Importance The study explores a mechanism to encourage investment, which is a capstone issue the Federal Law On Special Economic Zone in the Kaliningrad oblast and amendments to certain enactments of the Russian Federation of January 10, 2006 № 16-ФЗ. The economic statistics accumulated since the law took effect enables to analyze the mechanism's efficiency. Objectives The purpose is to uncover the investment patterns within the Special Economic Zone and assess the impact of special fiscal mechanism applied to residents of such territories on investment activities. Methods The main methods of the study include dynamic analysis, elements of modeling techniques, comparative analysis and graphical interpretation of statistical data. Results We reveal a cyclical nature of investment activities in the Special Economic Zone of the Kaliningrad oblast and identify probable reasons for it. The paper offers possible ways of building formal models that describe trends in investment within the Special Economic Zone and evaluates the efficiency of the investment and tax mechanism. The findings may be useful for professionals involved in investment management in the Kaliningrad oblast in other special economic zones and territories of Russia. Conclusions The operation of the Special Economic Zone in the Kaliningrad oblast have not yet resulted in significant social and economic effects, and short-term tax preferences do not provide strong incentives for business structures' development. The reason is the erroneous assumption that tax incentives for individual corporate investors can boost long-term social and economic development of the entire region.
Keywords: special economic zone, investment activities, tax incentives, investment performance
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