Popkova (Ed.) - The Future of the Global Financial System; Downfall or Harmony (2019)

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Lecture Notes in Networks and Systems 57

Elena G. Popkova Editor

The Future of the Global Financial System: Downfall or Harmony

Lecture Notes in Networks and Systems Volume 57

Series editor Janusz Kacprzyk, Polish Academy of Sciences, Warsaw, Poland e-mail: [email protected]

The series “Lecture Notes in Networks and Systems” publishes the latest developments in Networks and Systems—quickly, informally and with high quality. Original research reported in proceedings and post-proceedings represents the core of LNNS. Volumes published in LNNS embrace all aspects and subfields of, as well as new challenges in, Networks and Systems. The series contains proceedings and edited volumes in systems and networks, spanning the areas of Cyber-Physical Systems, Autonomous Systems, Sensor Networks, Control Systems, Energy Systems, Automotive Systems, Biological Systems, Vehicular Networking and Connected Vehicles, Aerospace Systems, Automation, Manufacturing, Smart Grids, Nonlinear Systems, Power Systems, Robotics, Social Systems, Economic Systems and other. Of particular value to both the contributors and the readership are the short publication timeframe and the world-wide distribution and exposure which enable both a wide and rapid dissemination of research output. The series covers the theory, applications, and perspectives on the state of the art and future developments relevant to systems and networks, decision making, control, complex processes and related areas, as embedded in the fields of interdisciplinary and applied sciences, engineering, computer science, physics, economics, social, and life sciences, as well as the paradigms and methodologies behind them. Advisory Board Fernando Gomide, Department of Computer Engineering and Automation—DCA, School of Electrical and Computer Engineering—FEEC, University of Campinas—UNICAMP, São Paulo, Brazil e-mail: [email protected] Okyay Kaynak, Department of Electrical and Electronic Engineering, Bogazici University, Istanbul, Turkey e-mail: [email protected] Derong Liu, Department of Electrical and Computer Engineering, University of Illinois at Chicago, Chicago, USA and Institute of Automation, Chinese Academy of Sciences, Beijing, China e-mail: [email protected] Witold Pedrycz, Department of Electrical and Computer Engineering, University of Alberta, Alberta, Canada and Systems Research Institute, Polish Academy of Sciences, Warsaw, Poland e-mail: [email protected] Marios M. Polycarpou, KIOS Research Center for Intelligent Systems and Networks, Department of Electrical and Computer Engineering, University of Cyprus, Nicosia, Cyprus e-mail: [email protected] Imre J. Rudas, Óbuda University, Budapest Hungary e-mail: [email protected] Jun Wang, Department of Computer Science, City University of Hong Kong Kowloon, Hong Kong e-mail: [email protected]

More information about this series at http://www.springer.com/series/15179

Elena G. Popkova Editor

The Future of the Global Financial System: Downfall or Harmony

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Editor Elena G. Popkova Institute of Scientific Communications Volgograd, Russia

ISSN 2367-3370 ISSN 2367-3389 (electronic) Lecture Notes in Networks and Systems ISBN 978-3-030-00101-8 ISBN 978-3-030-00102-5 (eBook) https://doi.org/10.1007/978-3-030-00102-5 Library of Congress Control Number: 2018953030 © Springer Nature Switzerland AG 2019 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

This volume contains the best works that were presented at the conference “The Future of the Global Financial System: Downfall or Harmony,” which took place on April 13–14, 2018, in Limassol, Cyprus. The conference was devoted to reconsideration of the role and meaning of the global financial system in the modern global economy in the context of the crisis, which started in 2008 and is still observed in a lot of countries, and to development of conceptual and applied recommendations for activation of development of the global financial system. All works underwent peer-review and conform to strict criteria that include high level of originality (more than 90%), elements of scientific novelty, contribution into development of economic science, and wide possibilities for practical application. The target audience of this scientific work includes postgraduates, lecturers of higher educational establishments, and researchers who study the modern global financial system. Based on the authors’ conclusions and results, representatives of the target audience will be able to build their new scientific research. The topics of the works contained in this volume cover (but are not limited to) the following issues, which are interesting for the modern economic science and practice: – Financial globalization as a foundation of modern times; – new role of finances in the global economy: from background to foreground; – transition of financial system from infrastructure to new vector of development of the global economy in the twenty-first century; – fiasco of the modern financial system and ways of overcoming it; – problems and perspectives of harmonization of the global financial system; – scenarios of development of the global financial system. Materials of the volume are divided into the following parts: development of financial systems of micro-, meso-, and macro-levels, financial infrastructure of the modern economy, legal issues of development of the modern financial system, and management of the global financial system. The conference was organized by the

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Institute of Scientific Communications (Volgograd, Russia). Almost 2,500 scholars participated in the conference as visitors and speakers, with more than 500 scientific works.

Introduction The recent global financial and economic crisis attracted attention of international society to the modern global financial system, showing its unsustainability and causing threats to its further development in the long term. Obvious, the current trajectory of its movement is not perfect for participants of international financial relations and requires correction. If these corrections are not timely, the next crisis might lead to downfall of the whole modern financial system. On the contrary, selection of right direction of its development will ensure harmonization of interests of its participants and establishment of balance at the global financial markets. Due to this, topicality of determining new outlines of the global financial system, which allow making it more sustainable against crises, grows constantly. Materials of this volume are devoted to generalizing the accumulated experience in transformation of financial system and discussing perspectives and developing recommendations for modernization of the modern financial system in view of new challenges of the modern times for increasing its sustainability. For this, efforts of various experts in the sphere of finance are united, which allowed comparing various points of view on the future of the global financial system and compiling its various forecasts and scenarios. This will allow reducing uncertainty and risk of execution of international financial operations and will increase international financial flows. This volume contains the best works that were presented at the conference “The Future of the Global Financial System: Downfall or Harmony,” which took place on April 13–14, 2018, in Limassol, Cyprus. The conference was devoted to reconsideration of the role and meaning of the global financial system in the modern global economy in the context of the crisis, which started in 2008 and is still observed in a lot of countries, and to development of conceptual and applied recommendations for activation of development of the global financial system. The conference was organized by the Institute of Scientific Communications (Volgograd, Russia). This volume contains scientific studies in the sphere of economic, management, and law—which ensured a multi-disciplinary approach to studying the modern global financial system and substantiation of the offered recommendations from the organizational and managerial and normative and legal points of view. One of the most interesting works of the volume is the article by Elena Sysoeva, Elena Budilova, Oksana Kachur, and Olga Dolgova “Financing of Russian Companies in the Conditions of Distortion of International Trade Relations and Economic Sanctions,” which contains the authors’ opinion on the problem of deficit

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of financial resources for development of the modern Russian entrepreneurship and offers the means for its complex and highly effective solution. The work of Tatiana Malova and Marina Pivovarova “The Dilemmas of Macroeconomic Management: Impact on Global Financial Stability” is very interesting for researchers, as it contains framework strategic recommendations for provision of sustainability of the global financial system on the basis of macroeconomic regulation tools. Legal aspects of future development of the global financial system are reflected in the work “Peculiarities of Protecting the Rights of Participants of Financial Markets in Court”— this article contains practical recommendations for modernizing the normative and legal and institutional provision of supporting stability of the global financial system. This work is logically continued by the work of N. V. Tskhadadze and N. V. Chernorizova “International Financial Markets in the Conditions of Transformation of the Financial System.” These and other works contain objective and various opinions on the future of the global financial system and offer perspective solutions to the problem of activation of its post-crisis growth and prevention of new crises, as well as restoration of its leading role in the global economy.

Conclusions As a result of the conference, it is possible to conclude that the future of the global financial system is not ambiguous. Joint efforts of the authors of the works of the volume allowed determining the main factors and risks of development of the global financial system, tracking transformation of its role in the global economy before, during, and after the 2008 global crisis, and determining perspectives of its sustainable development in the long term. The most important result of the series of research is actualization of the problem of development of the global financial system. We hope that these works will attract attention of the global society to this problem and will lead to implementation of complex measures (including our recommendations), aimed not only at provision of highly effective execution infrastructural role of the global financial system in economic systems of various scale but also at assigning a new role to it—accelerator of growth and development of the global economy. One of the advantages of this volume is that it contains studies not only in the sphere of macroeconomics but also meso-economic and microeconomics. Due to this, it was possible to study the issues of including regions of national economic systems into the global financial systems, development of separate financial markets and financial organizations, and the issues of overcoming of financial barriers on the path of development of entrepreneurship. We’re proud that our joint efforts were able to cover such large layer of scientific and practical issues, thus reducing uncertainty as to future development of the global financial system. At the same time, we acknowledge topicality and lack of

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solutions to such issues as provision of balance (overcoming disproportions) of the global financial system’s development, standardization and unification of functioning of national financial markets and activities of financial organizations, harmonization of the level and rate of its development with the needs of global economic subjects, etc., and call for scholars and experts to conduct research aimed at solving them.

Contents

Development of Financial Systems of the Micro-, Meso-, and Macro-Levels Influence of Integration Processes on Economy of the Agro-Industrial Complex: A View from the Positions of Various Models of Economic Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Larisa V. Popova, T. A. Dugina, A. V. Malofeev, I. S. Korabelnikov, and E. A. Likholetov Economic Analysis of Labor Resources Usage in Regional Markets . . . Tatiana N. Gogoleva, Pavel A. Kanapukhin, Margarita V. Melnik, Irina Y. Lyashenko, and Valeriya N. Yaryshina Technical Forensic Technique of Human Hair Examination: Forensic Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eduard E. Genzyuk, Lyudmila A. Spektor, Viktoria S. Kirilenko, and Aleksandr V. Sukhanov

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Project Finance for Africa’s Construction Sector: Can Stabilization Funds Work? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lubinda Haabazoka

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The Shift of the Competition Paradigm in the Banking Sector of Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Anna Kladova, Marina Alpidovskaya, and Valeriy Gordeev

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Socio-Cultural Activities in the Implementation of Educational Programs for Tourism Based on the Competence Model . . . . . . . . . . . . Irina V. Borisenko, Tatyana V. Degtyaryova, and Gulmira B. Grigoryeva

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Communicative Tolerance of Students of Higher Educational Establishments in the Context of Social and Economic Dimension of the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Snezhana V. Yavon and Tatyana N. Ivanova

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Financial Conditions for Ensuring of Self-development of Regions . . . . Zhanna A. Zakharova The Role of the Financial System in Solving Socio-economic Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Konstantin Lebedev and Yuliya Budovich

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The Current Practice of the Strategic Planning in Russian Regions: Innovative Model of Strategic Planning “Galaxy 7  7  7” of the Leontief Centre-AV Group Consortium and Experience of Its Approbation in Krasnodar Krai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Konstantin V. Getmantsev, Daria V. Lanskaya, Tatiana A. Myasnikova, and Yuri I. Treshevsky Contradictions in the Motivation of Top Managers of Corporation by the Method of Economic Added Value . . . . . . . . . . . . . . . . . . . . . . . 114 Sergey N. Yashin, Egor V. Koshelev, Victor P. Kuznetsov, Yuliya V. Zakharova, and Alexey A. Ivanov Self-regulation in Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Marina L. Davydova, Yuriy A. Bokov, Yevgeniy V. Stel, and Vladimir A. Zolotovskiy Olympic Movement in Kindergarten . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Alla A. Oshkina Labor Activity of the EAEU Migrants in Moscow . . . . . . . . . . . . . . . . . 142 Tatiana N. Yudina, Yuri N. Mazaev, Tatiana V. Fomicheva, Irina V. Dolgorukova, and Tatiana N. Bormotova Agricultural Products’ Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 Aleksei V. Bogoviz, Elena I. Semenova, and Julia V. Ragulina Traffic Safety as a Factor of Competitiveness of Economic System and a Reason for Increase of Differentiation of Developed and Developing Countries: Management on the Basis of New ICT . . . . 161 Vladimir A. Zelikov, Yuriy V. Strukov, Vera V. Razgonyeva, Ruslan A. Korablev, and Alexander Y. Artemov Digital Currency in the Development of Payment Systems on the Bitcoin Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Elena N. Egorova, Irina V. Mukhomorova, and Anton I. Mosalev Social Consequences of the Impact of Information Technologies on the Values of Modern Youth in the Conditions of the Global Financial and Economic Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 Mariana Y. Lokova, Marina N. Khanova, Gyuldzhan K. Azamatova, Albina O. Vindizheva, and Natalya N. Reshetnikova

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Factors of Socio-Economic Development of Rural Regions in the Area of Influence of City Agglomerations . . . . . . . . . . . . . . . . . . 183 Maria A. Bitarova, Konstantin V. Getmantsev, Elena V. Ilyasova, Ekaterina M. Krylova, and Yuri I. Treshchevsky Constructing Regional Social Inclusion: Foundations of Sociological Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Tatiana N. Yudina, Irina V. Dolgorukova, Egor Y. Kireev, Tatiana M. Bormotova, and Tatyana V. Fomicheva Financial Infrastructure of the Modern Economy The Model of Managing the Development of Agricultural Machinery Market Infrastructure on the Basis of Public-Private Monitoring . . . . . 205 Irina Morozova, Tatiana Litvinova, Ivan A. Mordvintsev, and Olga V. Konina Institutional Frameworks of Place Marketing in Russia: Barriers and New Possibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Yulia I. Dubova, Vyacheslav V. Golikov, Zhanna V. Gornostaeva, and Vladimir Zhidkov Directions of Perspective Development of Innovational Infrastructure of Russian Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Larisa L. Alekhina, Margarita N. Burtseva, Anna G. Savina, Svetlana A. Ilminskaya, and Irina V. Skobliakova Strategic Goals of Socio-Economic Development of Regions in the Conditions of Economic and Financial Limitations . . . . . . . . . . . 229 Elena V. Endovitskaya, Igor E. Risin, and Yuri I. Treshchevsky Global Information Space: A Non-linear Approach . . . . . . . . . . . . . . . . 236 Nelli I. Morozova, Olga S. Buryakova, Natalia Z. Aliyeva, and Elena B. Ivushkina Economic Efficiency of Using the Electric Grid Complex: Problems of Reserves of Network Power and Development of Intelligent Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 Olga Danilova and Irina Belayeva Effectiveness of Financial Support for the Resource Base of Innovative Development in Regions During Crisis . . . . . . . . . . . . . . . 251 Sergey A. Grachev, Marina A. Gundorova, Oleg A. Donichev, Denis Y. Fraymovich, and Maria I. Zakirova Contents of the Third Age University in Russia: Prospects of Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 Inna Vysotskaya, Tamara Yovanovich, Natalya Prom, Olga Toporkova, and Oxana Evtushenko

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Information Hindrances and Communication Barriers in Project Interactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 Marianna S. Santalova, Elvira P. Lesnikova, Svetlana N. Nechaeva, Alla V. Borshcheva, and Olga G. Charykova Conditions of the Internationalization of Chinese Yuan: Changes for Five Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 Inna V. Kudryashova The International Business Cooperation and Its Influence on Enterprise Financial Security Under Globalization . . . . . . . . . . . . . . 294 Natalia Reshetnikova, Magomedgabib Magomedov, Dmitry Buklanov, and Elena Zakharchenko Normal Flow of Resources as a Basis for Improving the Quality of Final Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 Alexander A. Bazhenov, Igor E. Mizikovsky, Ekaterina P. Garina, Viktor P. Kuznetsov, and Alexander I. Gavrilov Economic Security as a Factor of Formation of Modern Russian Entrepreneurial Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 Ulyana A. Pozdnyakova and Margarita T. Kozhukhova Role of the State in Financial Mechanism of Development of Industrial Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325 Vera I. Menshchikova, Marina A. Kakushkina, Evgeny V. Sukhanov, and Irina B. Shapovalova Innovational Tools of Provision of Food Security Through State Support for the AIC in the Conditions of the Digital Economy . . . . . . . 334 Aleksei V. Bogoviz, Elena I. Semenova, and Ivan S. Sandu Informatization of the Russian Society: Evaluation and Perspectives . . . 341 Julia V. Ragulina, Svetlana V. Lobova, and Alexander N. Alekseev Strategizing as a Tool of Information and Analytical Provision and a Technology of Regional Development Management . . . . . . . . . . . 348 Daria V. Lanskaya, Yuri I. Treschevsky, Konstantin V. Getmantsev, and Tatyana A. Myasnikova Financial Barriers to the National Cancer Program Implementation in Modern Russia and Means to Overcome Them . . . . . . . . . . . . . . . . . 357 Yuri V. Przhedetsky, Natalia V. Przhedetskaya, Viktoria Y. Przhedetskaya, Ksenia V. Borzenko, and Viktoria V. Pozdnyakova New ICT as a Threat to Physical Development and Health of a Modern Human or a Means of Propaganda of Healthy Living . . . . 364 Elena S. Berezhnaya, Vladimir A. Bondarev, Yevgeniya V. Zazulina, Natalya V. Koloskova, and Anna V. Strichko

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Failure of the Funded Model of the Russian Pension System: Reasons and Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371 Lyubov V. Grigorieva, Leyla A. Mytareva, and Ekaterina A. Shkarupa Metaphor in Financial and Economic Discourse . . . . . . . . . . . . . . . . . . 384 Svetlana V. Shustova and Alla F. Korlyakova Legal Issues of Development of the Global Financial System Establishment of the Institute of Tax Consulting as an Element of Market Relations and the Object of Economic and Legal Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399 Lyudmila S. Kirina and Natalia A. Nazarova The Concept of Restoration of the Leading Role of the Global Financial System in Activation of Growth and Development of the Global Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 Elena G. Popkova and Tatyana V. Alferova Possibilities of the International Cooperation and Export of Subjects of Small and Medium-Sized Business Under the Conditions of Financial Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 Tatyana Y. Anopchenko and Vladislav I. Ostrovskiy Issues Related to Foreclosure of Pledged Property in Russia: Theory and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 Olga N. Kichalyuk, Oksana A. Morozova, Lyudmila A. Spektor, and Aleksandr V. Sukhanov Fundamentals of Russian Economic Policy for Increasing Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 Alexey M. Tsikin and Marina L. Alpidovskaya Revival and Renewal of Political Economy . . . . . . . . . . . . . . . . . . . . . . 443 Sergey S. Slepakov, Natalia N. Novoselova, and Veronika V. Khubulova Structural Modeling of the Institution of Russian Entrepreneurship in the Spirit of “Old” Institutionalism . . . . . . . . . . . . . . . . . . . . . . . . . . 451 Svetlana L. Sazonova Formation of Target Programs of Innovation and Investment Development of Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461 Tatiana L. Bezrukova, Irina V. Kuksova, Nadia I. Korda, and Svetlana S. Kirillova

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Ways to Protect Personal Honor and Dignity Pursuant to Current Criminal Legislation of the Russian Federation as an Important Problem of Modern Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 Olga N. Kichalyuk, Oksana A. Morozova, Viktoria S. Kirilenko, and Anna A. Kulikova Financing of Russian Companies in the Conditions of Distortion of International Trade Relations and Economic Sanctions . . . . . . . . . . . 487 Elena Sysoeva, Elena Budilova, Oksana Kachur, and Olga Dolgova Actual Problems of International Cooperation of Russia in the Sphere of Cyber Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 Dmitry A. Lipinsky, Konstantin N. Evdokimov, and Aleksandra A. Musatkina Problems of Classification of Illegal Gambling Activities . . . . . . . . . . . . 505 Aleksandr V. Sukhanov, Eduard E. Genzyuk, Anna A. Kulikova, and Liana R. Barashyan Social Precarization in Post-Soviet Countries: Common Features and Differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516 Olga V. Mramornova, Natalia A. Ivanova, Olga Y. Sokolova, Aynulkhat Z. Musaeva, and Safia S. Abutalimova Strategic Alternatives of Regional Intellectual Capital Management . . . 528 Yuri N. Lapygin and Pavel Y. Makarov Possibilities of Import Substitution in the Russian Pharmaceutical Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537 O. S. Peskova, T. B. Boriskina, O. V. Urova, and A. V. Fetisov Peculiarities of Protecting the Rights of Participants of Financial Markets in Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 Galina E. Ageeva, Petr P. Lang, Andrei V. Loshkarev, Tatiana V. Chugurova, and Ekaterina N. Churakova On the Compliance of Civil Standards of the Russian Federation with International Standards in the Field of the Fight Against Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553 Dmitry A. Lipinsky, Victoria V. Bolgova, and Aleksandra A. Musatkina Protecting the Rights of Economic Entities in the Event of Competition Restraint by Public Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563 Marina Y. Kozlova, Igor V. Rostovshchikov, Viktor A. Rudkovsky, and Alena N. Volchanskaya

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Establishing Legal Regulation Standards of Family Relations in the RF in the USA in the Conditions of Financial and Economic Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 D. A. Kokova, Z. A. Zumakulova, Z. B. Khavzhokova, and N. N. Reshetnikova Budget Limitations in the Process of Formation of the Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578 Aleksei V. Bogoviz, Alexander N. Alekseev, and Julia V. Ragulina Circumstances Mitigating Punishment in the Russian Criminal Law . . . 586 Lyudmila A. Spektor, Anna A. Kulikova, Aleksandr V. Sukhanov, and Aleksei A. Shishkin Regarding the Issues of Implementation of International Laws on Fighting Corruption by the Russian Federation . . . . . . . . . . . . . . . . 603 Dmitry A. Lipinsky, Aleksandra A. Musatkina, and Pavel A. Rumyantsev Characteristics of Certain Crimes Against Peace and Security of Mankind as “Essential Threats” . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612 Oksana Y. Grechenkova and Yulia A. Kuzmenko Public Prosecutor’s Waiver of Prosecution as a Sub-institution of the Russian Criminal Procedure Law . . . . . . . . . . . . . . . . . . . . . . . . 622 Anna A. Kulikova, Liana Barashyan, Viktoria S. Kirilenko, and Eduard E. Genzyuk Public Prosecution in Criminal Procedure: Modern Goals and Tasks . . . 637 Aleksei A. Shishkin, Eduard E. Genzyuk, Lyudmila A. Spektor, and Viktoria S. Kirilenko Management of the Global Financial System An Individual in the Contemporary Public Administration . . . . . . . . . . 649 Aleksandr M. Starostin, Elena N. Tovanchova, and Yulia L. Shepeleva Balance-Cognitive Approach to Foresight-Development of Management Audit Efficiency Digital Economic Systems in the Context of Strategic Drift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657 Galina I. Sidunova and Anna V. Shokhnekh System Regulation of Key Directions of Modern Financial Policy in the Conditions of Financial Globalization . . . . . . . . . . . . . . . . . . . . . 666 Elizaveta O. Tappaschanova, Salikh A. Baizulayev, Ekaterina S. Kovanova, Elmira G. Shurdumova, and Saida A. Zhirova

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The Dynamic Model of Increase of Population’s Health Level in Russian Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673 Natalia A. Shchukina, Irina A. Tarasova, Tatiana E. Kozhanova, and Oksana A. Avdeyuk The Dilemmas of Macroeconomic Management: Impact on Global Financial Stability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683 Tatiana Malova and Marina Pivovarova Forming a Strategy for Development of Russian Gas Industry in Modern Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692 Alexey M. Tsikin Russia on the African Natural Gas Market . . . . . . . . . . . . . . . . . . . . . . 705 Larisa S. Shakhovskaya and V. I. Timonina Creation and Functioning of Special Economic Zones in Russia: Tendencies Problems and Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . 708 Inna V. Mitrofanova, Natalia S. Melnikova, Rustam A. Yalmaev, and Makka A. Yalmaeva Tendencies of Development of the Tools of Strategic Planning of Industrial Companies’ Activities in Post-industrial Economy . . . . . . . 718 Elena V. Popov and Mikhail V. Khachaturyan The Study of Modern Approaches to Development of Economic Systems Through Managing Their Complexity . . . . . . . . . . . . . . . . . . . 726 Anna A. Parshina, Valery V. Levchuk, Elena V. Shpilevskaya, Ekaterina P. Garina, and Alexander P. Garin The Modern Approach to Forming the Conception of Functions of Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734 Yuliya Budovich, Konstantin Lebedev, and Anna Lebedeva Exploring Alternative Strategies for Managing the Complexity of a Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741 Ekaterina P. Garina, Viktor P. Kuznetsov, Nataliya S. Andryashina, Elena V. Romanovskaya, and Svetlana N. Kuznetsova Increasing the Complexity of the Product Manufacture: Assessment of Trends and Prospects of the Process . . . . . . . . . . . . . . . . . . . . . . . . . 748 Ekaterina P. Garina, Viktor P. Kuznetsov, Alexander P. Garin, Elena V. Romanovskaya, and Nataliya S. Andryashina International Financial Markets in the Conditions of Transformation of Financial System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757 Nelli V. Tskhadadze and Nina V. Chernorizova

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The Main Tendencies and Directions of State Policy in the Sphere of Technological Development of Russia . . . . . . . . . . . . . . . . . . . . . . . . . 765 Tatiana A. Alekhina, Oksana E. Konobeeva, Elena E. Konobeeva, Evgenia V. Simonova, and Maria A. Stepanova Deformations of the Global Financial System in the Conditions of Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 774 Tatyana V. Zhukova, Olga V. Panfilova, Ilona V. Avlasenko, Lyudmila M. Avlasenko, and Anastasiya V. Belousova The Internet as a Synergetic Model Information Interaction Between Chaos and Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783 Elena B. Ivushkina, Nelli I. Morozova, Irina B. Kushnir, and Olga S. Buryakova Economic Analysis of Effectiveness of the Existing Tools of State Support for Entrepreneurship in the AIC in the Digital Economy . . . . . 789 Aleksei V. Bogoviz, Yury A. Bugai, and Aleksey V. Minenko Socio-Economic Mechanisms of Supporting the Institute of Family in the Conditions of Financial Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . 795 Elena V. Smirnova, Svetlana V. Mitrofanova, Nina I. Medvedeva, Valentina V. Gorbunova, and Lilianna Y. Grazhdankina Conceptual Approaches to Formation of Financial Strategy of a Higher Education Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 803 Oksana N. Momotova, Lyudmila V. Belokon, Sofiya G. Kilinkarova, Tatyana A. Mayboroda, and Galina V. Stroi Applying an Algorithm for Vertex Minimization of Non-deterministic Finite Automata (NFA) on the Basis of a Multi-heuristic Approach for Studying Social and Economic Performances of Region . . . . . . . . . . 813 Svetlana V. Pivneva, Tatyana N. Ivanova, Galina V. Akhmetzhanova, Anastasia A. Kurilova, and Julia A. Anisimova Financial Tools as an Alternative to Bank Deposits and Deposits of Microfinance Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 819 I. E. Shaker and N. S. Shaker Risks and Management of Sustainable Development of the Global Financial System The Forecasting Approach to Strategic Development of Economic Subjects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 Olga S. Glinskaya, Anna V. Shokhnekh, Olga V. Prokopova, and Irina S. Skorikova

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Global Crisis: Overcoming the Uncertainty of the Concept in the Philosophical Paradigm of Globalization . . . . . . . . . . . . . . . . . . . 836 Anna Guryanova, Nonna Astafeva, Natalya Filatova, Elmira Khafiyatullina, and Nikolai Guryanov The Tools of Sustainable Development of Industrial Production Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844 Lyudmila V. Strelkova, Dmitriy I. Tarasov, Julia A. Makusheva, Oleg V. Trofimov, and Viktor P. Kuznetsov Crisis of the Consumer Basket in Russia . . . . . . . . . . . . . . . . . . . . . . . . 852 Marianna S. Santalova, Elvira Lesnikova, Svetlana Nechaeva, Ksenia Sadykova, and Irina Nizovaya Problems and Perspectives of Development of the World Financial System in the Conditions of Globalization . . . . . . . . . . . . . . . 862 Galina V. Vorontsova, Ramazan M. Ligidov, Tatiana A. Nalchadzhi, Irina M. Podkolzina, and Galina V. Chepurko Increase of Effectiveness of Regulation and Development of Entrepreneurship in the Conditions of Increase of Russia’s Economic Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871 Irina A. Morozova, Olga E. Akimova, Anna A. Khryseva, and Margarita T. Kozhukhova Modeling Well-Balanced Development of Innovational and Investment Activities of Economic Systems . . . . . . . . . . . . . . . . . . . 883 Ludmila I. Malyavkina, Irina B. Ilyukhina, Liliya M. Marchenkova, Elena M. Samorodova, and Liubov I. Starikova Provision of Sustainability of Development of Entrepreneurial Structures in the Conditions of Financial Crisis . . . . . . . . . . . . . . . . . . . 896 Viktor P. Bardovskii, Maria A. Vlasova, Natalia N. Sokolova, Ivan V. Ilin, and Elena V. Troshina Imperatives of Forecasting of Socio-Economic Development of Russian Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 908 Gilyan V. Fedotova, Ruslan K. Ilyasov, Oksana A. Kovalenko, Denis D. Tkachenko, and Tatiana D. Malyutina Increase of Economic Security of Internet Systems of Credit Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 922 Gilyan V. Fedotova, Roman R. Chugumbaev, Nina N. Chugumbaeva, Alexander V. Sukhinin, and Emma V. Kuzmina Risk-Oriented Approach to Tax Control for Stabilization of Financial Systems of Developing Countries by the Example of Modern Russia . . . 932 Irina V. Gashenko and Yulia S. Zima

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Managing the Global Financial System on the Basis of Artificial Intelligence: Possibilities and Limitations . . . . . . . . . . . . . . . . . . . . . . . . 939 Elena G. Popkova and Valentina N. Parakhina Disaggregation of Industrial Enterprises as One of the Ways to Overcome the Economic Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 947 Anastasia D. Efremova, Victor P. Kuznetsov, Marina V. Artemyeva, Aleksey I. Grigoryev, and Eduard V. Sintsov Historical Experience of Development of the Tokens of Value and Scenarios of Its Modern Application . . . . . . . . . . . . . . . . . . . . . . . . 954 Aleksandr L. Kleitman, Tatiana B. Ivanova, and Elena V. Timacheva Economic Consequences of the Collapse of the Financial System . . . . . . 962 Olga Akimova, Helen Vitaleva, Irina Dneprovskay, and Natalia Ketko Sustainable Development of Entrepreneurship as the National Economic Security’s Mainframe Condition . . . . . . . . . . . . . . . . . . . . . . 972 Irina A. Morozova, Irina V. Dneprovskaya, and Margarita T. Kozhukhova Anti-crisis Cluster Innovation Strategy Risk Management with Usage of Real Put Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 987 Sergey N. Yashin, Egor V. Koshelev, Alexey A. Ivanov, Alexander P. Garin, and Elena P. Kozlova Sustainable Finance as a Way of European Companies’ Transition to Green Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002 Maria S. Shalneva and Yuliya V. Zinchenko The Modern Global Financial System: Social Risks Vs. Technological Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1013 Elena G. Popkova, Olga V. Fetisova, Tatyana A. Zabaznova, and Tatyana V. Alferova The Global Information Space as a Source of Formation of Threats and Dangers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1020 Natalia Z. Alieva, Elena B. Ivushkina, Irina B. Kushnir, and Olga S. Buryakova Implementation of Sustainable Development Goal to Reduce Inequality in the Russian Federation at Present Time . . . . . . . . . . . . . . 1027 Svetlana Zemlyanukhina, Larisa Sankova, Elena Yanchenko, Liliya Otstavnova, and Natalia Ivanova

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The Model of Managing the Risk Component of Intermodal Transportations Based on New Information and Communication Technologies Within Optimization of Transport Logistics of a Modern Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1036 Vladimir A. Zelikov, Mikhail A. Chernyshev, Alla A. Lysochenko, and Svetlana G. Chumachenko Verification of State Programs of Geographically-Distributed Economic Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1043 Mikhail A. Kovazhenkov, Gilyan V. Fedotova, Timur K. Kurbanov, Elena O. Uchurova, and Baira I. Zerenova Regulating the Risk of Forest Companies with Decisions that Are Indifferent to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1054 Nikolai G. Sinyavsky Problems and Perspectives of Innovational Development of the Global Financial System Implementing Leading Experience and Innovational Technologies into the Activities of the Penal System as a Factor of Economic Optimization of Financial and Human Resources . . . . . . . . . . . . . . . . . 1075 Elena A. Timofeeva The Concept of Industrial Enterprises’ Economic Development Amid the Global Financial and Economic Crisis . . . . . . . . . . . . . . . . . . 1085 Anastasia A. Sozinova, Tatiana A. Burtseva, Olga V. Fokina, Anna A. Grabar, and Ekaterina S. Tufyakova The Structure of the Mechanism of Strategic Management of Innovational Development of Socio-Economic System . . . . . . . . . . . . 1094 Olga V. Godina, Liudmila S. Maksimenko, Lev I. Ushvitsky, Lyudmila V. Slavnetskova, and Marina N. Denshchik Peculiarities of Digital Transformation of the System of Bank’s Economic Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1104 Gilyan V. Fedotova, Nikolai I. Lomakin, Denis D. Tkachenko, and Anastasia A. Gontar The Model of Component Evaluation of Company’s Innovational Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1113 Tatyana V. Goryacheva, Ekaterina A. Lapteva, Arkadiy P. Plotnikov, Irina N. Pchelintseva, and Lyudmila V. Slavnetskova Capabilities of Information Technologies in Introducing the Children to the World of Professions . . . . . . . . . . . . . . . . . . . . . . . . 1124 Olga V. Dybina

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The Role and Influence of Information Exchange on Creation of Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1130 Marina Katkova and Vladimir Tregubov Increase of Economic Effectiveness of Investment Projects in Industrial Parks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1138 Svetlana N. Kuznetsova, Dmitry N. Lapaev, Marina V. Artemyeva, Yaroslav S. Potashnik, and Elena P. Kozlova Analysis Methodology of Innovative Development in Regional Industrial Segment by Graph Theory . . . . . . . . . . . . . . . . . . . . . . . . . . 1145 Oleg L. Goykher, Roman V. Skuba, Olga S. Bugrova, Vladimir E. Strelkov, and Roman I. Kudryakov Improvement of Methodological Approaches to the Effectiveness Assessment of Innovation Development of Regional Economy . . . . . . . . 1155 Pavel N. Zakharov, Karina V. Nazvanova, and Artur A. Posazhennikov Hannah Arendt and Herbert Marcuse’s Critique of Modernity . . . . . . . 1169 Evgeniya Bujor, Alexey Volobuev, and Elena Kuzina Prospects of Using Virtual Technologies in Modern Corporate Business Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1181 Elena Klochko and Olga Brizhak Using Internet Services in Teaching Methodology . . . . . . . . . . . . . . . . . 1193 Marina L. Gruzdeva, Zhanna V. Smirnova, Zhanna V. Chaikina, Olga V. Golubeva, and Olga T. Cherney Influence of Innovations on Regional Socio-Economic Development . . . 1200 Aleksei V. Bogoviz, Julia V. Ragulina, and Mariana K. Barcho Perspectives of Growth of Labor Efficiency in the Conditions of the Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1208 Aleksei V. Bogoviz, Svetlana V. Lobova, and Julia V. Ragulina Shift of the Global Investment Flows in the Conditions of Formation of Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1216 Aleksei V. Bogoviz, Svetlana V. Lobova, and Julia V. Ragulina The Cost and Value of Human Capital in the Modern Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1224 Aleksei V. Bogoviz, Svetlana V. Lobova, and Julia V. Ragulina Distortions in the Theory of Costs in the Conditions of Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1231 Aleksei V. Bogoviz, Svetlana V. Lobova, and Julia V. Ragulina

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Information and Communication Technologies as a New Vector of Development of the Modern Economy . . . . . . . . . . . . . . . . . . . . . . . . 1238 Natalia Y. Kozhanchikova, Anna A. Polyakova, Marina K. Chistyakova, Maria A. Vlasova, and Irina V. Ushakova A Study of the Effects of Technological Innovations on the Performance of Commercial Banks in Developing Countries A Case of the Zambian Banking Industry . . . . . . . . . . . . . . . . . . . . . . . 1246 Lubinda Haabazoka Innovational Projects as a Basis of Progress of the Global Financial System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1261 Tatiana L. Bezrukova, Elena V. Popova, Boris A. Bezrukov, and Valery A. Spesivtsev Russian Bank Association as a Driver Force of Institutional Changes . . . 1270 I. N. Shapkin Author Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1283

Development of Financial Systems of the Micro-, Meso-, and Macro-Levels

Influence of Integration Processes on Economy of the Agro-Industrial Complex: A View from the Positions of Various Models of Economic Systems Larisa V. Popova, T. A. Dugina, A. V. Malofeev, I. S. Korabelnikov, and E. A. Likholetov(&) Volgograd State Agricultural University, Volgograd, Russia [email protected], {deisi79,malofeev_1981,korablick.ru, l.evgeni.a}@mail.ru

Abstract. The purpose of the work is to study the peculiarities of integration processes and their influence on economy of the agro-industrial complex of various models of economic systems. The authors use the method of regression analysis for determining the dominating type of integration (internal or external), calculate the values of regression indicators, and determine the type if influence of integration processes on economy of the agro-industrial complex (positive or negative influence). For determining the dominating type of integration, dynamics of the values of the corresponding indicators are studied. The indicator of internal integration is the index of intensity of competition in domestic sectorial markets according to the World Economic Forum. The indicator of external integration is the index of economic globalization according to the KOF. The level of development of economy of the AIC is evaluated on the basis of the index of food production according to the World Bank. The data are studied in dynamics of three years: from 2015 to 2017 by the example of the countries that correspond to various distinguished models of economic systems. As a result, it is concluded that various models of economic systems are influenced differently by internal and external integration. The authors substantiate the necessity for mandatory accounting of the influence of integration processes during management of development of the AIC economy. For that, the proprietary mechanism of management of integration processes in the interests of stimulating the development of the AIC economy from positions of various models of economic systems is created. Keywords: Integration processes Models of economic systems

 AIC economy

1 Introduction The modern scientific approach to studying economic systems supposes not only consideration of their spheres in close interconnection but also assigning equal value to them for supporting sustainable socio-economic development and well-balanced economic growth. At the same time, during determination of the values of spheres for © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 3–9, 2019. https://doi.org/10.1007/978-3-030-00102-5_1

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economic systems, not only their export potential but also domestic needs for manufactured products in the interests of import substitution and self-provision of economic systems are taken into account. This led to reconsideration of the role of economy of the AIC in economic systems, which was ousted to the background during domination of the post-industrial concept – it was not a part of the service sphere and did not stimulate competitiveness of the national economy; at present, it becomes most important, as it ensured production of strategic goods – food products. The global economic depression of the recent years changed the character of integration processes in the global economic systems, leading to the tendency of disintegration and the change of types of integration – from internal to external and vice versa. In the new economic conditions, countries of the world cannot create precise forecasting scenarios of development of external and internal environment – so, for supporting their sustainability they prefer the strategies of national production diversification that replaced the strategies of specialization. Due to this, topicality and scientific & practical significance of studying the essence and character of influence of integration processes on economy of the AIC of modern economic systems grew. The authors offer a hypothesis that various models of economic systems are dominated by different integration processes, and their influence on economy of the AIC is different. The purpose of the work is to verify the offered hypothesis and to study the peculiarities of integration processes and their influence on economy of the AIC of various models of economic systems.

2 Materials and Method The most popular classification is classification of models of economic systems according to the World Bank as to the criterion of the level and rate of their socioeconomic development, according to which two main categories of the countries are distinguishedн: developed and developing countries. That’s why most of modern scientific studies, devoted to integration processes in economies of different countries, are performed on the basis of these categories of economic systems. The results of studying the essence and influence of integration processes on economies of developed countries are presented in the works (Amri 2017), (Ha 2015), (Omri et al. 2015), (Park 2013), (Shahbaz et al. 2017), (Solé et al. 2015), and (Xue et al. 2014), and on economies of developing countries – in the works (Amri 2017), (Aziz and Asadullah 2017), (Bogoviz et al. 2017), (Couharde and Generoso 2017), (Darku and Yeboah 2018), (Popkova et al. 2018), (Temiz Dinç et al. 2017), and (Zahonogo 2017). The performed literature review on the selected topic showed that the existing publications shed light on the issues related to development of economic systems under the influence of integration processes. However, the aspects of their influence on economy of the AIC are poorly studied and require further consideration. The currently applied classification of economic systems does not fully consider their differences as to the criterion of economy of the AIC. That’s why we deem it necessary to supplement this classification by two well-known classifications of

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countries. The first one is based on differences in the conditions for development of economy of the AIC and supposes distinguishing the countries with favorable and unfavorable conditions, and the second is based on differences in the types of economic systems and envisages differentiation of the countries with pre-industrial (agrarian), industrial, and post-industrial (service) economy. For evaluation of the influence of integration processes on economy of the AIC of various models of economic systems, we use the method of regression analysis. This methods helps to determine the dominating type of integration (internal or external), calculate the values of indicators of regression (coefficient m in the model of paired linear regression of the type y = mx + b and coefficient of determination r2), and determine the type of influence of integration processes on economy of the AIC (positive or negative influence). For determining the dominating type of integration, dynamics of the values of the corresponding indicators are studied. The indictor of internal integration is the index of intensity of competition in domestic sectorial markets (6.01 Intensity of local competition) according to the World economic forum – the lower the indicator, the higher the level of monopolization of these markets and the more intensive the processes of internal integration. The indicator of external integration is the index of economic globalization according to the KOF. The level of development of economy of the AIC is evaluated on the basis of food production index according to the World Bank. The data are studied in dynamics of three years (2015–2017) by the example of the countries that conform to various distinguished models of economic systems. The values of these indicators are given in Table 1.

3 Results Preliminary statistical analysis of the data of Table 1 showed that all countries – except for Russia and Nepal – have positive dynamics of external integration and positive dynamics of internal integration. This is explained by the fact that growth of global competition leads to corresponding increase of competitive struggle in internal sectorial markets, including economy of the AIC. At that, participation in international integration associations limits the possibilities in regulation of integration processes, hindering support for domestic entrepreneurship through establishment of the barriers for external market players. Russia and Nepal are peculiar for negative dynamics of external integration and positive dynamics of internal integration. This is explained by the fact that due to limited influence of foreign market players and requirements for supporting the competitive environment from integration associations in internal sectorial markets, including economy of the AIC, monopolization takes place – as state anti-monopoly regulation is less effective than market self-regulation. The determined tendencies allows determining the dominating type of integration in all models of economic systems. The calculated indicators of regression and the conclusions on the type of influence of integration processes on economy of the AIC are given in Table 2.

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As is seen from Table 1, different models of economic systems are influenced by internal and external integration differently. External integration, which dominates in developed countries, performs positive influence in economic systems with favorable conditions for development of the AIC, and negative influence – in systems with unfavorable conditions.

Table 1. Dynamics of the values of indicators of integration and development of economy of the AIC in various models of economic systems by the example of the corresponding countries in 2015–2017. Type of classification

Models of economic systems

Examples Internal integration External integration of countries 2015 2016 2017 2015 2016 2017

Level and rate of socio-economic development Conditions for development of economy of the AIC Type of economic system

Developed Developing

USA Russia

Economy of the AIC 2015

2016

2017

5.8 5.3

5.9 5.2

6 5

67.04 68.91 71.58 116.2 118.45 123.8 54.96 53.74 52.06 121.6 120.3 119.7

Favorable Poland 5 Unfavorable Netherlands 5.8

5.1 5.9

5.3 5.9

72.1 74.48 77.06 116.5 119.56 123.5 90.25 91.24 93.06 116.5 115.24 113.05

Preindustrial Industrial Postindustrial

Nepal

5.1

4.9

4.8

27.78 26.61 24.72 136.8 137.4

138.5

China Japan

5.4 6

5.5 6.1

5.5 6.2

48.74 50.65 52.84 130.8 125.81 121.67 57.2 60.82 63.47 96.5 91.01 87.05

Source: compiled by the authors based on: (World Economic Forum (2018), (KOF 2018), (World Bank 2018).

Determining the model of economic system

Developed country

According to the level and rate of development

Developed country

Conditions for the AIC

Conditions for the AIC

Unfavorable

Favorable

Unfavorable Favorable Limitation of integration

Pre-industrial type?

No

Change of the type of integration

Yes Stimulation of further development of current integration processes

Fig. 1. Algorithm of management of integration processes in the interests of stimulating the development of economy of the AIC from the positions of various models of economic systems Source: compiled by the authors

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Internal integration, which dominates in developing countries, in economic systems, which correspond to the pre-industrial type, i.e., specialize in the agrarian sector of economy, stimulates further development of their economy of the AIC, i.e., performes positive influences, and in economic systems with unfavorable conditions for development of economy of the AIC or those that do not specializes in it – performs negative influence on economy of the AIC. This shows the necessity for mandatory consideration of the influence of integration processes during management of development of economy of the AIC. For that, we developed the algorithm of management of integration processes in the interests of stimulating the development of economy of the AIC from the positions of various models of economic systems (Fig. 1). The algorithm in Fig. 1 shows the logic of management of integration processes in the interests of stimulation of development of economy of the AIC from the positions of various models of economic systems. The initial point of this process is determining the model of economic system. Then, depending on the set character of the influence of integration processes on economy of the AIC, various models of economic systems (Table 2) envisage the corresponding managerial measures. In developed countries with favorable conditions for development of economy of the AIC and in developing countries that specialize in this sphere of national economy (development according to the pre-industrial type), it is recommended to stimulate further development of current integration processes, as they positively influence economy of the AIC. In developed countries with unfavorable conditions for development of economy of the AIC, which is negatively influenced by dominating external integration, it is necessary to set limitations. In developing countries with unfavorable conditions for development of economy of the AIC that do not specialize in this sphere of national economy, it is expedient to change the type of integration. Stimulation of external Table 2. Characteristics of the influence of integration processes on economy of the AIC of various models of economic systems Type of classification

Models of economic systems

Example of Dominating country type of integration

Level and rate of socio-economic development Conditions for development of economy of the AIC Type of economic system

Developed Developing

CШA Russia

Indicators of regression m r2

Type of influence of integration processes on economy of the AIC

external internal

1.69 0.98 positive 5.86 0.85 negative

Favorable Poland external Unfavorable Netherlands external

1.41 0.99 positive −1.22 0.99 negative

Preindustrial Industrial Postindustrial

Source: compiled by the authors.

Nepal

internal

−5.29 0.88 positive

China Japan

external external

−2.22 0.99 negative −1.51 0.99 negative

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integration will stimulate the growth of competition in domestic economy of the AIC, thus overcoming the tendency of its monopolization that negatively influences its development.

4 Conclusions Thus, the offered hypothesis was proved – on the basis of the official statistical information on dynamics of recent years and by the example of different countries it is proved that integration processes influence economy of the AIC of different models of economic systems differently. That’s why the factor of integration should be considered in the process of development and implementation of national strategies of management of development of economy of the AIC in the interests of maximization of its positive or limitation of negative influence. For this, the proprietary algorithm of management of integration processes in the interests of development of economy of the AIC from the positions of various models of economic systems was developed. The advantage of this algorithm is its universality which ensures its application in any model of economic systems. However, foundation on the results of analysis on the basis of limited selection (in each model only one country is considered) leads to probability of deviation of certain countries of the world from the distinguished models of economic systems. That’s why determination of these deviations and their inclusion into the developed algorithm create constitute perspectives for further scientific research.

References Amri, F.: Intercourse across economic growth, trade and renewable energy consumption in developing and developed countries. Renew. Sustain. Energy Rev. 69, 527–534 (2017) Aziz, N., Asadullah, M.N.: Military spending, armed conflict and economic growth in developing countries in the post-Cold War era. J. Econ. Stud. 44(1), 47–68 (2017) Bogoviz, A.V., Ragulina, Y.V., Komarova, A.V., Bolotin, A.V., Lobova, S.V.: Modernization of the approach to usage of region’s budget resources in the conditions of information economy development. Eur. Res. Stud. J. 20(3), 570–577 (2017) Couharde, C., Generoso, R.: Economic growth and hydro-climatic thresholds in developing countries, (Croissance économique et seuils hydro-climatiques dans les pays en développement). Mondes En Dev. 179(3), 67–84 (2017) Darku, A.B., Yeboah, R.: Economic openness and income growth in developing countries: a regional comparative analysis. Appl. Econ. 50(8), 855–869 (2018) Ha, E.: The impact of democracy, government ideology, and globalization on social spending in less developed countries. Int. J. Comp. Sociol. 56(5), 338–365 (2015) KOF. Index of Globalization (2018). http://globalization.kof.ethz.ch/query/. Accessed 17 Jan 2018 Omri, A., Ben Mabrouk, N., Sassi-Tmar, A.: Modeling the causal linkages between nuclear energy, renewable energy and economic growth in developed and developing countries. Renew. Sustain. Energy Rev. 42, 1012–1022 (2015)

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Park, S.H.: Capital openness, monetary integration, and wage-setting coordination in developed European countries. Econ. Ind. Democr. 34(4), 637–666 (2013) Popkova, E.G., Bogoviz, A.V., Pozdnyakova, U.A., Przhedetskaya, N.V.: Specifics of economic growth of developing countries. Stud. Syst. Decis. Control. 135, 139–146 (2018) Shahbaz, M., Shahzad, S.J.H., Mahalik, M.K., Sadorsky, P.: How strong is the causal relationship between globalization and energy consumption in developed economies? a country-specific time-series and panel analysis. Applied Economics, p. 1–16 (2017) Solé, T.T., Ríos, M.S., Perdiguer, M.F.: Education as a factor of economic growth in less developed countries | (La educación como factor de crecimiento económico en los países menos desarrollados). Sistema, 2015-January(237), p. 113–128 (2015) Temiz Dinç, D., Gökmen, A., Nakip, M., Azari, N.M.: The impact of foreign trade issues on economic growth in some developing countries including Iran and Turkey. J. Transnatl. Manag. 22(3), 171–202 (2017) World Bank. Food production index (2018). https://data.worldbank.org/indicator/AG.PRD. FOOD.XD?view=chart. Accessed 17 Jan 2018 World Economic Forum. The Global Competitiveness Report (2018). http://www3.weforum.org/ docs/GCR2017-2018/05FullReport/TheGlobalCompetitivenessReport2017–2018.pdf. Accessed 17 Jan 2018 Xue, B., Geng, Y., Müller, K., Lu, C., Ren, W.: Understanding the causality between carbon dioxide emission, fossil energy consumption and economic growth in developed countries: an empirical study. Sustainability (Switzerland) 6(2), 1037–1045 (2014) Zahonogo, P.: Globalization and economic growth in developing countries: evidence from subsaharan Africa. Int. Trade J., 1–20 (2017)

Economic Analysis of Labor Resources Usage in Regional Markets Tatiana N. Gogoleva1(&), Pavel A. Kanapukhin1, Margarita V. Melnik2, Irina Y. Lyashenko1, and Valeriya N. Yaryshina1 1

2

Voronezh State University, Voronezh, Russia [email protected], [email protected], [email protected], [email protected] Financial University Under the Government of the Russian Federation, Moscow, Russia [email protected]

Abstract. The purpose of the article is to substantiate the necessity for considering the territorial peculiarities of using labor resources employed at harmful and hazardous productions, determined on the basis of the economic and statistical analysis, during formation of the optimization model and the procedure of decision making for selecting the programs of the planned control of the employment sphere for labor safety quality. There are various methodologies of labor safety, oriented at characterizing this process within a specific company and without a direct connection to management of labor safety within the region. T.V. Azarnova developed the approach to evaluation of effectiveness of regional management of labor safety quality and formed the optimization stochastic model of the system of planned control of the employment sphere in the labor safety sphere which is oriented at the differentiated management of the control functions as to the groups of companies that are distinguished depending on the complexity of the structure and level of implementation of the labor safety processes. The authors offer to use – apart from studying the situation at specific companies and groups of companies – the economic and statistical analysis of regional peculiarities of the influence of the production environment and the labor process factors for statistically determined groups of companies on the labor conditions of employees. Results: using the economic and statistical analysis of regional peculiarities of the labor conditions of employees allowed determining the specifics of the influence of various factors at the level of federal districts of Russia and among the regions of the Central Federal District. The obtained results became the basis of the offers that are to be taken into account during development of the effective system of regional management of labor safety quality. Keywords: Labor market  Labor conditions Statistical analysis of labor at the regional market Regional system of management of labor safety quality GEL Classification Codes: C19 econometric and statistical methods and methodology J08 Labor economics policies © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 10–19, 2019. https://doi.org/10.1007/978-3-030-00102-5_2

 General. Others

Economic Analysis of Labor Resources Usage in Regional Markets

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1 Introduction In the modern conditions, labor quality and labor safety are the factor of effectiveness of labor resources usage – and the quantity of resources reduces in Russia. Quality of labor safety and related processes are regulated by multiple laws and bylaws. At the same time, the preventing activities are still not developed, and violations in the sphere of labor safety tend to repeat and perform huge material and moral damage to the society and the state. Thus, optimization of labor safety quality by means of optimization of state control in the sphere of labor law and labor safety becomes very topical. The system of management and control over economic subjects depends on connection between the goals of the managed object and the possibilities of the subsystems. Effectiveness of management is influenced by the measures for optimization of the whole system of management [2]. One of the directions of optimization is formation of the programs of planned control in the sphere of employment for quality of labor safety, during development of which it is necessary to take into account the peculiarities of companies and external socio-economic conditions and institutes that determine the environment of their functioning and form the regional peculiarities of the state of employees’ labor conditions. Thus, there’s a necessity to consider the internal characteristics of organization of production processes at companies and the external environment of their development.

2 Research Methods At the legislative level, the issues of labor safety in the RF are regulated by the Labor Code and the Law “On special evaluation of labor conditions”, which determine the main norms of the state of labor conditions [9]. At present, there are various analytical approaches to evaluation of the state of labor safety, which authors – O.U. Drozhchanaya, E.A. Krasnoshchekaya, M.P. Gandzyuk, R.P. Kerb, and E.V. Spatar [3–6, 8] – focus on determining the system of indicators that would help to conduct the evaluation, emphasizing on the situation in the analyzed sphere at the company level. Thus, the main and sole object of evaluation is company as an economic subject. At the same time, the problem of labor quality and labor safety should not be fixed to the company level, as it is more complex and includes diverse external conditions in which the company’s activities are conducted. These conditions, created by the external environment, should be taken into account at the public level of considering and solving the problems of labor quality and labor safety – at the regional level. Such problems are not viewed by the above authors. The works of Azarnova [1, 2] set the question of managing the quality of labor safety at the regional level and its assessment – for which the optimization stochastic model of the system of planned control of the employment sphere and the algorithm of finding the optimal intensity of control were formed – which ensure the differentiated management of the control functions as to the companies. This model is oriented at development of recommendations for the regional programs of control over labor safety quality as to the groups of companies with a certain complexity of the structure

12

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and the level of implementation of the labor safety processes. Thus, the emphasis was shifted to the level of homogeneous groups of companies of one region which are controlled by the regional authorities. However, determination and consideration of the regional peculiarities of the external environment, which form the factors that influence the state of labor conditions, are not envisaged. This aspect of the problem should be studied in detail on the basis of analysis of the official statistics data. For evaluation of the state of labor conditions at companies depending on their territorial location, it is necessary to consider several groups of factors: natural and geographic, technological (factors of the production environment factors of the labor process), and socio-economic factors. Natural and geographic factors determine the peculiarities of functioning of separate spheres that are located on various territories. These peculiarities are reflected in the corresponding territorial codes (CЗB-CTAЖ, CЗB-КOPP, CЗB-ИCX). At the same time, there are no methods of accounting of territorial peculiarities of various productions within the same group of spheres (e.g., processing productions are represented by various spheres in Belgorod and Voronezh Oblasts, so the state of labor conditions will be determined by various factors). Technological factors that determine the state of labor conditions are the object of attention of annual statistical observations. Each company fixes its indicators by determining the number of employees who are under the influence of the production environment factors (chemical, biological, influence of sprays, noise, vibration, neon and ionizing rays, micro-climate, light environment, etc.) and the factors of the labor process (work load and work tension). Labor conditions, according to the tasks of statistical observation within the official state statistics in the RF, are studied at large and medium companies of the following types of economic activities: agriculture, hunting and forestry (as well as provision of services in these spheres); mineral production; processing productions; production and distribution of electric energy, natural gas, and water; manufacture of food products; textile and sewing production; construction; transport and communications. As these indicators are unified for all companies of Russia, and the official statistics provides their generalized values in the territorial aspect, they are used in this research for comparative analysis of external environment that determines the state of labor conditions. Socio-economic factors that determine the territorial peculiarities of the state of labor conditions include the relations that emerge between employees, employers, and the society on the whole as to formal and informal execution of the normative requirements. In the official statistics this group is not determined, so this research studies its influence only in general features. In the course of the analysis a task was set of determining the types of activities and risk factors for which the studied regions have the most vulnerable positions from the point of view of the state of labor conditions. This analysis was performed on the basis of the official statistics that characterizes the situation in the federal districts of the RF and Oblasts of the Central Federal District (CFD) [7].

Economic Analysis of Labor Resources Usage in Regional Markets

13

3 Peculiarities of the State of Labor Conditions of the Employees in View of the Federal Districts of Russia (as of Year-End 2016) Comparative analysis of the general situation that characterizes the state of labor conditions in various territorial entities of the RF was conducted at the level of federal districts. The task of this stage was to determine the peculiarities in the labor conditions in various regions on the whole and as to the above sectorial groups. The general situation that characterizes the state of labor conditions in the federal districts of the RF regardless of the sectorial groups and the factors of hazardous influence is shown in Fig. 1. It should be emphasized that the regions are different as to the indicators of average Russian value (38.5% of the employees work in abusive and (or) hazardous labor conditions.

The share of employees who work in abusive and (or) hazardous labor condions, %

40.1

38.5 29.5

33.3

40.2

43.8

48.1

46.8

27.1

Fig. 1. The share of employees who work in abusive and (or) hazardous labor conditions, conduct activities in agriculture, hunting, forestry, extraction of minerals, processing productions, production and distribution of electric energy, natural gas and water, construction, and transport and communications in federal districts of the RF (as of year-end 2016).

Figure 1 brings us to the conclusion of a large scatter of the indicator that characterizes the share of the employed in the abusive and (or) hazardous labor conditions, as compared to the average Russian level (the lowest indicators – 27.1%; 29.5% of the employed against the highest indicators 46.8%; 48.1% in the corresponding federal districts). The share of regions in which the studied indicator is below the average indicator (the Central and North Caucasus Federal Districts) account for 27.0% of the average number of employees of the RF. In its turn, in the Urals, Far Eastern, and

14

T. N. Gogoleva et al.

Siberian Federal Districts, where the indicator is higher than the average Russian indicator, 31.1% of all employees of the RF are employed. Further analysis of territorial peculiarities of employment in the abusive and (or) hazardous labor conditions supposes their determination at the sectorial level. The existing statistics allows doing this for the sectorial groups (Table 1). It seems that the causes of the differences for the sectorial groups between the federal districts are related to the peculiarities of the used technologies (technological factors) and geographic conditions (natural and climatic factors). Comparative analysis of the role of various factors of the production environment and the labor process (technological factors) showed that the influence of noise, air ultrasound, infrasound, and work load are most popular in Russia. The “anti-leaders” as to the share of the employed influenced by noise, air ultrasound, and infrasound (the most popular unfavorable factor of the production process) are the Siberian (23.3% of the employed), Far Eastern (22.5%), and Ural (22.3%) federal districts. The smallest share of the employed is subject to the influence of this factor in the North Caucasus Federal District (10.1%). Analyzing the share of the workers employed in the conditions of large work load – which is the second most widespread unfavorable factor – it is possible to note that the largest share of the employed in the conditions of this factor is observed in the Siberian Federal District (24.1%), the smallest share – in the Central Federal District (12%). The peculiarities of the role of separate factors that determine abusive (hazardous) conditions of labor in the sectorial view are as follows: – of all the employed in agriculture, the largest share of the workers in the unfavorable conditions is observed in the Ural Federal District (40.8%), the smallest share – in the Central (24%) and the North Caucasus (25.7%) Federal Districts. The most widespread unfavorable factors are noise, air ultrasound, infrasound, and chemical factor, which requires special attention within the measures on management of labor safety. – mineral production is peculiar for the large share of the employed in the abusive and (or) hazardous labor conditions, which constitutes 55.6% in Russia. The average Russian indicator is exceeded in the Siberian (69.9%) and the Central (67.6%) Federal Districts. It is rather high in the North Western (59.7%), Far Eastern (58.8%), and Privolgsky Federal Districts (57.4%). This situation could be explained by the sectorial specifics and geographic location of the companies of this group of spheres. – in the sector of production and distribution of electric energy, natural gas, and water, the largest share of the workers in the abusive and hazardous conditions is observed in the Siberian (54.5%) Federal District, the smallest – in the North Caucasus Federal District (28.4%). – in processing industries, the maximum share of the workers in the hazardous conditions is observed in the Ural Federal District (52,5%). This district is also the “anti-leader” for such significant factors as influence of noise, ultrasound, and infrasound (29.9%), as well as work load (24.3%). The smallest share of workers in hazardous conditions – as to the level of noise, ultrasound, and infrasound – is observed in the North Caucasus Federal District (30.5% and 13.1%, accordingly).

Economic Analysis of Labor Resources Usage in Regional Markets

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Table 1. Share of the employed in abusive and (or) hazardous labor conditions who conduct activities for separate sectorial groups in the federal districts of the RF (2016), % Northwestern ФO

South FD

North Caucasus FD

Privolgsky FD

Ural FD

Siberian FD

Far Eastern FD

30.8 24.3

35.5

30.5

26.3

31.5

43.4

35.2

31.3

31.2 18.5 55.6 67.6

43 59.7

11 52.4

5.5 52.7

17.6 57.4

15.8 42.9

41.2 69.9

35.8 58.8

42.2 31

43.8

38.8

30.5

45.9

52.5

51.3

48.5

31.9 28.9 29 28.3

32.7 31.5

31.7 37.8

29.4 12.3

35.9 27.5

29.2 10.6

33.1 29.3

42 16.9

37.9 29.6 31.1 29.2

37.9 33.3

32.4 27.3

28.9 24.9

42.7 28.6

39.7 30.8

45.3 38.2

49.3 38

Sphere

RF

Agriculture, hunting Forestry Processing productions Processing productions Food productions Textile and sewing productions Construction Transport and communications

Central FD

The minimum share of the employed in the analyzed sector who work in the hard labor conditions is observed in the Central Federal District (11.3%). – in the construction sector, 49.33% of the workers of the Far Eastern Federal District work under the influence of hazardous conditions. This is the maximum value of this indicator for the whole country (with the average Russian value 37.94%). The best situation is observed in the North Caucasus (28.92%) and the Central Federal Districts (29.62%). The most significant unfavorable factor for whole Russia and for all federal districts in this sectorial group is work load of the labor process: 20% of all workers experience the influence of this factor. The second most widespread factor is noise, ultrasound, and infrasound. – in the transport sector, 39.29% of the employed work under the influence of abusive and (or) hazardous conditions. The largest share is observed in the Siberian and Far Eastern Federal Districts (47.99% and 45.7%, accordingly). The smallest share is observed in the Ural (36%) and South (36.6%) Federal Districts. The leaders are such unfavorable factors as work load (the largest share of the employees subject to this factor is observed in the Siberian Federal District – 22.71%, the smallest share – in the Central Federal District – 13.5%); noise, ultrasound, and infrasound (the largest share of the employees subject to this factor is observed in the Far Eastern Federal District – 21.8%, the smallest share – in the Central Federal District – 10.95%). – the communication sector is peculiar for a small share of the employees working in hazardous conditions. It varies from 2.65% in the South Federal District to 7.98% in the Urals Federal District. The main reason for that is the technological specifics of the sectorial group. The received results allow for the following conclusion: at the level of federal districts there are substantial differences of the influence of factors that determine the state of labor conditions of employees; at that, the main factors belong to the natural & climatic and technological. The smallest sectorial differences between federal districts

16

T. N. Gogoleva et al.

are observed if the sphere in the country is peculiar for a relative homogeneity of technological processes (the example with the technological group “communications”).

4 The State of Labor Conditions of Employees in the Regions of the Central Federal District (As of Year-End 2016) In order to identify the peculiarities of the influence of abusive and (or) hazardous factors that are peculiar for specific regions, as compared to the situation in the federal districts, it is necessary to conduct analysis of the results of statistical observations at the level of a separate federal district and spheres. This reduces the influence of the natural & climatic factor on the regional peculiarities of the studied influences and increases the role of the technological and socio-economic characteristics of specific regions. For this purpose, the statistical data that characterize the influence of abusive and (or) hazardous factors on employees in the Central Federal District and its oblasts were studied (Fig. 2).

The share of employees who work in abusive and (or) hazardous labor condions, % 42.4 29.5

38.7 37.4 37.3

43.1 35.9

34.3

31.2 30.9 30.9 31 23.2 24.3 24.7

26.3

29.8 29.3

24.2

Fig. 2. The share of employees who work in abusive and (or) hazardous labor conditions, conduct activities in agriculture, hunting, forestry, extraction of minerals, processing productions, production and distribution of electric energy, natural gas and water, construction, and transport and communications for the regions of the Central Federal District of the RF (as of year-end 2016).

The least “hazardous” – from the point of view of labor conditions (Fig. 2) are Moscow, Orel, and Ryazan Oblasts, and Moscow, and the most “hazardous” are Belgorod and Lipetsk Oblasts. This is due to the structural peculiarities of these regions’ economies and their geographical peculiarities (technological and natural & climatic factors in our classification).

Economic Analysis of Labor Resources Usage in Regional Markets

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Table 2 shows the general results of comparison of the oblasts of the CFD (excluding Moscow) as to the indicator “share of workers in the abusive and (or) hazardous labor conditions” in the sectorial view. It should be noted that all spheres are rather close as to the studied indicator in sectorial groups “processing productions” and “transport and communications”. Large differences and the presence of indicators that deviate from the average values are peculiar for the following sectorial groups: – agriculture and forestry, hunting: the share of workers who work in abusive and (or) hazardous conditions is much lower in Ryazan, Orel, and Bryansk Oblasts. Such main factor of the production environment as “noise” is not observed here, Table 2. Share of workers in abusive and (or) hazardous labor conditions in the oblasts of CFD for large groups of spheres, 2016. Oblasts of the CFD

Agriculture, hunting

Mineral extraction

Processing industries

Food Textile and production sewing industries

Construction Transport and communications

CFD on the whole Belgorod Oblast Bryansk Oblast Vladimir Oblast Voronezh Oblast Ivanovo Oblast Kaluga Oblast Kostroma Oblast Kursk Oblast Lipetsk Oblast Moscow Oblast Orel Oblast Ryazan Oblast Smolensk Oblast Tambov Oblast Tver Oblast Tula Oblast Yaroslavl Oblast

24

67.6

31

28.9

28.3

29.6

28.2

24.1

74.6

49.9

46.1

2.6

46

25.1

17.9

94.7

41

35.2

19.4

31.6

27.3

35

58.8

31.9

29.5

34.6

41.9

29.3

27.6

59.3

32.7

29.6

20.9

38

27

29.2

57

39.4

24.1

42.6

11.5

15.8

35.4

66.1

44.1

29.4

20.3

31.8

24.6

26.4

54.8

43.5

34.6

45.9

17.3

31.9

23.6

82.9

32.8

32.9

24.4

45.9

27.4

31.1

65.3

52

32.1

15.9

49.1

27

20.6

21.8

23.8

22.5

24.2

18.3

25.2

15.9



31.5

24.3

7.2

35.3

20.6

4.2

45.4

25.7

15.8

7.2

30.3

27.4

18

8.8

35.3

44.6

22.2

35

33.1

25.7



30.1

27.8

26.1

38

25.9

18.7



35

30.4

36.1

21.5

24.5

21.4

48.7

31.6

23.9

6.3

36.8

25.2

36.9

42.7

37.4

33.7

38.2

46.4

30.3

18

– –

– –

T. N. Gogoleva et al.

and the influence of the “work load” factor of the labor process is much lower. If the levels of development of the agricultural production technologies in the oblasts of the CFD are more or less equal, the average shares of the workers at hazardous productions are the results of influence of socio-economic factors that are not taken into account by statistics; processing productions: the oblasts of the CFD have different types of processing productions or lack companies belonging to this group of spheres (Orel, Tver, and Tambov); food productions: in this group, high indicators are peculiar for Belgorod and Smolensk Oblasts – at that, the structure of food industry of these regions is traditional for the CFD, as well as the technologies used; at the same time, the factors “noise” and “work load” in these oblasts are higher than the average indicator for the CFD; the reason of deviations lies in the socio-economic factors that are not considered by statistics; textile and sewing production: the lowest indicators are peculiar for Belgorod, Ryazan, Orel, and Tula Oblasts, which is peculiar for the factors of the production environment and labor processes; construction: in the range of oblasts (Belgorod, Kursk, Lipetsk, and Yaroslavl) there is substantial increase of indicator as compared to the average indicators for the CFD; it seems that these oblasts use obsolete technologies in this group of spheres.

5 Conclusions and Recommendations There’s a certain differentiation as to the quantity and quality of employment in abusive and hazardous labor conditions between various regions of Russia, which is caused by objective reasons (natural & climatic peculiarities and peculiarities of the sectorial structure of the studied groups of sectors as to specific districts). Processing industry is the most vulnerable one from the point of view of the state of labor conditions – on average, 55.6% of the workers are in abusive and (or) hazardous conditions. At the same time, as for homogeneous – from the point of view of the natural & climatic and technological factors that influence the labor conditions – regions, there are also substantial differences, which are explained by the influence of socio-economic factors that are to be taken into account during formation of the regional programs of control over labor safety, which will raise the effectiveness of the system of regional management labor safety. Management of control functions should be differentiated as to companies not only depending on the complexity of their structure and level of implementation of the labor safety processes but also in view of regional and sectorial peculiarities of the production processes organization. As the performed analysis showed, out of three groups of factors distinguished in this study (natural & climatic, technological, and socio-economic) that influence the state of labor conditions, the least studied and statistically uncontrolled are external socio-economic conditions and institutes that determine the environment of functioning of companies as the main economic subjects and form regional peculiarities of the state

Economic Analysis of Labor Resources Usage in Regional Markets

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of labor conditions of employees, at which the regional programs of labor quality control are oriented. Expert technologies should be used for evaluating the influence of this group of factors. Acknowledgments. The study is conducted with the financial support of the Russian Foundation for Basic Research (project No. 16-06-00535-a)

References 1. Azarnova, T.V.: The method of processing of the expert and statistical information during determining the optimal intensity of planned control over organizations in the sphere of labor safety. The theory of active systems: works of the International scientific and practical conference. IPU RAS, pp. 254–261 (2007) 2. Azarnova, T.V.: Optimization of management by the labor market and population’s employment in the region on the basis of the models of the functional and marketing effectiveness and quality: doctoral thesis: 05.13.10, Voronezh, 395 p. (2010) 3. Gandziuk, M.P., Kupchik, M.P., et al.: Foundations of labor safety, Kyiv, Osnova, 416 p., pp. 68–70 (2000) 4. Drozhchanaya, O.U.: Improvement of management over labor safety at a company. Bulletin of Kurgan SAA, No. 4, pp. 29–31 (2013) 5. Kerb, L.P.: Foundations of labor safety, Kyiv. KNUE, 215 p., pp. 18–20 (2003) 6. Krasnoshchekova, E.A.: Methodologies of evaluating the socio-economic state of labor safety at Russian companies. Bulletin of Saratov State Technical University, vol. 2, No. 1(55), pp. 279–283 (2011) 7. The state of labor conditions of employees that conduct activities in agriculture, hunting, forestry, mineral production, processing production, production and distribution of electric energy, natural gas and water, construction, and transport and communications in the RF in 2016. Federal State Statistics Service (Rosstat), Chief transregional center (CTC), vol. II, pp. 1, 2, 3 (2016) 8. Spatar, E.V.: Evaluation of labor safety with various methods. Equipment. Technologies. Engineering, No.1, pp. 5–9 (2016) 9. Federal law “On special evaluation of labor conditions” dated December 28, No. 426-FZ (2013). http://www.consultant.ru/document/cons_doc_LAW_156555/

Technical Forensic Technique of Human Hair Examination: Forensic Practice Eduard E. Genzyuk, Lyudmila A. Spektor ✉ , Viktoria S. Kirilenko, and Aleksandr V. Sukhanov (

)

Institute of Service Sphere and Entrepreneurship (Branch) of Don State Technical University, Shakhty, Russia [email protected]

Abstract. The paper presents the capabilities of comprehensive examination of human hair with the use of methods that were developed and put to practice by the Criminal Expertise Centre of the Ministry of Internal Affairs of the Russian Federation. It contains the description of examination of hair that allows identi‐ fying the most probable origin of hair belonging to a particular person, including a new method – analysis of DNA extracted from a single hair for the purpose of identification of a person who lost it. The paper describes the basics of diagnostic and identification examination of odor traces collected from the human hair. Details of the capabilities of each hair examination method and obtaining search and evidence information, which is particularly important in the operational investigative work of law enforcement agencies. The description is based on the development of a series of well-known researchers and practitioners, generalized and complemented with authors’ projects. The methods can be used in the search, investigation and forensic work of the departments of the Ministry of Internal Affairs of the Russian Federation and other government services and agencies. Keywords: Expert examination · Forensics · Diagnostic materials · Police Examinations

1

Introduction

Human hair can often be found at the scene and are often the only material evidence in criminal cases initiated on various cases of grave crimes endangering the life and health of citizens, as well as thefts, motor vehicle accidents, etc. Hair is the most common object of forensic biological examination, but it is at the same time one of the most hardto-examine objects. In addition, quantitative characteristics of the object (a single hair or a bunch of hair was submitted for examination) and its quality, presence or absence of the suspect, and, accordingly, comparative samples of his/her hair exert dominant influence on the course of examination, because evidentiary information can be obtained in the first case (for example, by means of odor or genetic examination of a single hair collected at the scene), and the search information is needed in the second case, and it can mainly be obtained by means of microscopy method, determination of the group identity and the sex identity, detection of hair diseases. © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 20–31, 2019. https://doi.org/10.1007/978-3-030-00102-5_3

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The paper presents ample description of morphological methods of human hair examination that are used to solve a number of questions of forensic biological exami‐ nation: whether the submitted objects are hair; what is the specific identity of hair; what is its regional origin; whether the hair was torn out or lost; whether the existing hair damage has occurred as a result of a mechanical injury, etc. The morphological exami‐ nation of the hair is the basic examination for a variety of objective reasons, and it is often the only method in most crime laboratories of the Ministry of Internal Affairs of the Russian Federation. However, this examination by no means can reply to the major question of forensic biological examination: does a single hair found at the scene orig‐ inate from a particular person, e.g. from the suspect or from the victim. In this case, other examination methods should also be involved for solving this problem; in partic‐ ular, three methods of determination of the group identity of hair. Sometimes using a set of the abovementioned methods for examination of hair allows more likely deter‐ mining their origin from a particular person or emphatically denying their origin from a particular person. In recent years, it has become possible to examine the human hair by means of a new method of molecular genetics – DNA analysis method which usually allows identifying a person. This method can be easily reproduced by the experts who know the basics of DNA analysis, if the bulb part of the examined single hair is present (if a single hair was torn out). However, this examination requires high qualification of the expert and special examination conditions; in particular, if only a stem of a single hair was submitted for examination, a special concentrating and filtering unit is required for Centricon-type DNA produced by Amicon, Inc. The methods for laboratory examination of odor traces were developed and are used in the Criminal Expertise Centre of the Ministry of Internal Affairs of the Russian Federation. The odor-containing substances that accumulate on the skin and hair are a complex mixture of substances – waste products of cells of a living body. The odor examination of hair is a new opportunity in the examination of human hair; it is one of few accessible methods that allow individualizing a person being by his/her traces. The authors of this research in the presented paper come forward with a speculation according to which the offered complex of methods will allow expanding the capabilities of the employees of forensic departments in the comprehensive examination of hair collected from the scenes. This paper is aimed at testing of this hypothesis and defining the role of clusters in the creation of financial innovations in social insurance which assumes fulfillment of the following tasks: The target of research consists in the methodology and the process of technical forensic examination of hair developed in the course of forensic expert practice.

2

Research Data and Methods

The theoretical foundation of research is made of the papers of various authors in the field of the study of theory and methodology of technical forensic examination of hair;

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one may single out the papers of (Pavlova, A.Z., 2012), (Bogomolov, D.V., 2011), (Larev, Z.V., 2012), (Amanmuradov, A.Kh., 2012) from the abovementioned papers. The research is based on the papers of the contemporary researchers dedicated to the role study, which includes the articles of (Gorbunova 2010), (Nesterina (2010), (Such‐ kova 2015) et al. The paper uses the materials of various researchers on the issues of application of the theory and methodology of identification and diagnostics in the course of a technical forensic examination of hair that may be used for examination. A review of literature has shown that there are a number of significant faults during a set of particular examinations by the odor samples collected from the scene in the theory of forensic practice. In this regard, we consider it necessary to carry out a comprehensive examination aimed at technical forensic methods of human hair exami‐ nation. The information analysis basis of research is made of data of previous research studies in the field of practical activity under consideration, including the obtained results of the examinations of the objects that were referred by the forensics to the biologically sourced objects. The methodological basis of research is made of both the general scientific exami‐ nation methods: analysis, synthesis, induction, deduction, formalization, and mainly the technical legal examination methods. This paper describes two formerly published methods of extraction of DNA from hair. The methods were modified and repeatedly tested by the authors on experimental and forensic samples of human hair, differing in size, color, presence of bulb cells, and shelf life.

3

Findings

3.1 Inspection of the Scene: Detection, Fixation and Collection of Hair, Its Referral to the Criminalistics Expert Examination Inspection of the scene for the purpose of detection of hair should be carried out on a case-by-case basis with due consideration of the type of a crime. In case of murders or inflictions of bodily harm, when there are traumas of the hairy part of the head or body of the victim, special attention should be paid to the instrument of crime, since the hair of the victim may still be preserved on it. In case of a sex crime it is necessary to thor‐ oughly examine the vestibule of vagina, region of the anus, oral cavity. Besides, it is expedient to comb the pubic hair of persons that are targeted in the investigation with subsequent collection of hair that was combed out, and to thoroughly examine the undergarment. In case of thefts, for example, with particular care, special care should be taken during the inspection of the protruding and confining parts and surfaces of objects in the way of invasion and departure of the offender from the scene (for example, window overpanels, manhole edges, etc.). It should be borne in mind that the hair can often be found on the walls and on other objects of the indoor environment; as a rule, they are glued to the surfaces of the room with drops of blood and can be located at a rather large distance from the scene of murder or infliction of bodily harm. If there are traces of struggle or in case of possible contact

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of the victim with the possible person who committed the attack, the hair of the latter can be found on the clothes of these people. In case of motor vehicle accidents, as well as in case of transportation of the victim or corpse in the body of the car, respectively, the hair can be detected on the protruding parts of a vehicle. In other words, inspection of the scene should be carried out with thorough fore‐ casting of the points of possible contact of the hairy parts of the criminal’s or victim’s body, with objects forming the situation at the scene in general. The hair that was found at the scene is collected by means of a pair of wide-jaw pincers or by hands protected with rubber gloves. The hair can be collected by applying it to the adhesive tape. These methods of hair collection do not cause any additional damage to the hair, nor do they affect its serological characteristics. If the hair was detected in the drops of dried blood, it is collected together with the blood or parts of its host. The hair that was collected from the human body, from different points of the same object or from different objects of the same scene should be packed in individual packages with an indication of a place where the hair was collected, a person who collected the hair, and the amount of the hair. In addition to the established procedural order, this is due to the fact that moisture can easily penetrate the hair, therefore sweat that got on the hair from the hands of the person who collected it can distort the results in the determination of the group identity of hair. Do not slabber your fingers to make it easier to remove hair from the object. For the same reason, the expert in a case must determine whether or not the hair that was sent for examination had any contact with any liquid which, in turn, could contain the antigens of a human being, an animal, or microorganisms. All experts should bear in mind that it is possible to collect and conserve the odor from the hair after having spent a set of odor examinations suitable for identification of a person by odor. With the precise fixation of the points of collection of each individual hair, the data that was obtained in forensic examination can help with reconstruction of certain moments of the event. In the case of a mismatch in the amount of hair indicated by the investigator, with the amount of hair found by the expert at the opening of the package, as well as in case of detection of additional hair on the objects that were sent to the examination, a certificate is compiled that is undersigned by the laboratory scien‐ tists. One copy of the certificate is sent to the agency from which the evidence was received, while the other one is left in the laboratory together with a copy of the expert opinion. If a question is raised about the possible origin of hair from a particular person, then it is necessary to inquire the hair samples of this person collected from the five regions of the head (10–15 single hairs from each region) and packed in individual packages. If necessary, the expert has the right to request the hair samples from the different parts of the human body. Before examination the expert should clarify whether the hair of this person was not subjected to any change – haircut, coloring, curling, etc. from the moment of the event up to the moment of collection of the sample at the scene. In addition to hair samples, the expert should obtain a blood sample of the same person. The expert opinion should contain the information about the type and the amount of hair that was prone to damage (fully or partially) during the examination.

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3.2 Determination of the Group Identity of Collected Hair. Capabilities of Determination of Sex Identity of a Person by Hair It is important to note that upon consideration of the forensic practice, cytological methods can only be used to establish genetic sex, which in certain cases may be incon‐ sistent with gonadal, hormonal, phenotypical and passport sex of a person. During the examination of hair that was found at the scene, on the clothes, on the body of a criminal or a victim, it is in many cases of great importance that the following question is cleared up: who owned the hair – a man or a woman. Establishing the sex by hair (in combination with other identified characteristics) increases the evidentiary value of the information obtained about the objects under examination. Genetic sex can be identified by a single hair provided there are vaginal tunics consisting of epithelial cells on its root part. The presence of vaginal tunics is characteristic of healthy hair that was torn-out. It is commonly known that the root part of the hair ends in thickening – a bulb, is immersed in the skin and located in the hair follicle, which consists of two epithelial and one connective-tissue coats. One can distinguish between internal and external coleorhizas of hair in the epithelial part of follicle. External epithelial vagina is the continuation of surface epithelium, from which the horny layer disappears at the point of transition to the follicle. The cells of external epithelial vagina contain light vacuo‐ lated cytoplasm and distinctively color tingible nuclei. Theoretical justification of the possible detection of the signs of sex at the cellular level is a well-known fact: female cells differ from the male cells in sex chromosomes (XX-chromosomes in female cells, XY-chromosomes in male cells). Due to peculiar property of the Y-chromosome which consists in selective staining with fluorescent dyes, a positive sign was obtained for the diagnosis of the male sex. When the chromo‐ somes are stained with fluorescent dyes, primarily with acridine derivatives (DNAbinding dyes), glowing areas appear in similar places of homologous chromosomes which enables their identification. And the brightest glow is given by the distal part of the long arms of the Y-chromosome of the male cells. When we define the polymorphism of phosphoglucomutase enzyme (PGM), human hair with bulbs (to be more precise – with follicles of torn hair) can be conveniently classified into ten groups. It is commonly known that this method is used for purposes of forensic biological examination during the examination of traces of blood, sperm, saliva, as well as tissue fragments of organs of a human being. The hair bulb is examined using the method of isoelectric focusing which was described above in methodological recommendations (Pavlova 2012; Gorbu‐ nova 2010). The hair bulb examination requires no preliminary preparation of the object; the bulb of torn hair is placed directly on the gel and is subjected to isoelectric focusing. PGM is the only enzyme from the known genetically polymorphous enzymes, the amount of which in the bulb of a single hair is sufficient for the examination. Genetic polymorphism of this enzyme that is determined using the isofocusing method (4 allels, 4 pairs of isoenzymes), allows classifying the objects of examination into 10 groups at once with a successful distribution of phenotypes among the population.

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3.3 Technical Forensic Examination of Hair Using the DNA Analysis Method A particular person can be identified by hair lost at the scene by means of a new method of molecular genetics – method of analysis of the polymorphic sections of a human genome. The principle of this method is based on extraction and decontamination of DNA preparation from the examined single hair and subsequent analysis of particular sections of the DNA molecule. When studying the polymorphism of the DNA molecule, certain loci called tandem array clusters are usually analyzed; they occupy a strictly defined position in the genome, are inherited according to the Mendel’s laws, have a large number of alleles in the population, differing in number of repeating elements. One of the methods of detection of DNA polymorphism consists in the use of polymerase chain reaction (hereinafter referred to as PCR) which allows significantly increasing the number of examined DNA fragments confined by oligonucleotide primers with a prede‐ termined sequence. This method has a certain advantage, since it is applicable to work with a small amount of genetic material, which is especially important in cases where hair remains at the crime scene that does not contain any bulbs. The hair collected at the scene can be torn out, lost or cut. Hence, it can either have or not have undamaged hair bulb, as well as individual cells (remainder) of the hair bulb. The basic amount of genetic material is contained in the hair bulb, and the examination of such single hair is much simpler than the examination of the stem of hair without the bulb part. There are no issues during the extraction of DNA from the blood stains, like during the extraction of DNA from a single hair: even with a small spot of blood, the amount of the nuclear cells (lymphocytes) is large enough; besides, hair contains a significantly smaller amount of such cells. The lowest amount of DNA is contained in the follicles of the lost hair (10–20 times lower than in the living hair), and all the more – in the stems of hair. In this regard, special methods of extraction of DNA from hair are an important problem and greatly facilitate the hair identification process. We should note that there are few foreign publications on this issue. Before you proceed with the extraction of DNA from the examined single hair, it is necessary to carry out its microscopic examination and establish the presence (or absence) of a hair bulb, and determine by the appearance of the bulb, which hair – living or dead – was submitted for examination. In addition, in some cases microscopic exami‐ nation allows you to determine the presence of certain contaminants on the single hair. The presence of blood cells, cells of sperm or other body waste is particularly essential, as it can misrepresent the result of genotype determination of DNA of the hair. Micro‐ scopic examination of hair is carried out without the use of any chemical agents, namely without fixation by means of a hair spray, without the use of antireflection liquids, etc. A single hair is placed on the object-plate, adding 1–2 water drops, covered with coverglass and microscoped with magnification power of 200x, 400x. The presence or absence of the whole bulbs is determined. If there is no whole bulb, the presence of certain epithelial cells of hair follicle is determined, and if epithelial cells are absent, it is neces‐ sary to determine the presence of the near-root part of the stem of hair. Most of the nuclear cells in the stem of hair are concentrated in the near-root part. There should clearly be no nuclear cells at the peripheral end of a single hair; hence, there is no sense

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in extracting the DNA; we recommend using this part of hair for negative test for hair dirtiness. Before the examination can be started, the samples of hair to be examined should be washed in distilled water for 1 h with a slight shaking (using the shaker, magnetic mixer, etc.). The hair contaminated with blood, sperm or saliva should be washed in 1% aqueous solution of glycine for 1 h with shaking. Glycine, being a weak detergent, increases the solubility of proteins and promotes their washing. The hair is then rinsed with distilled water. The main parameter of acceptability of a particular method of extraction of DNA from hair, as well as from other sources, is the quantitative yield of a well-purified DNA. It has been established that the concentration of DNA extracted from the bulb part of the torn out living hair may reach 200 ng per single hair. At the same time, the amount of DNA in the follicles of the lost hair with loose hair bulb decreases to 10–20 ng. The DNA content in the stem part of a single hair is virtually impossible to measure using the currently known methods, including using the method of UV spectroscopy or fluo‐ rophotometry. In this paper, the effectiveness of the method of purification of the extracted DNA and the amount of DNA was estimated by means of polymerase chain reaction. The process of optimization of such response to the examination of the DNA of the hair is beyond the scope of this paper. In order to summarize it all, it is necessary to pay attention to some features related to the setting of these methods. Since a negligibly small amount of DNA is discharged from hair containing only the remainder of hair bulb or not containing it at all, it is necessary to purify DNA thoroughly to eliminate various impurities that inhibit the PCR reaction. The main inhibitory impurities in this case can be, firstly, melanin, and, secondly, cellular proteins. In order to eliminate the inhibition of PCR by melanin, we recommend taking not more than 7 cm of hair for DNA examination, and in order to eliminate inhibition by the remaining cellular proteins, we recommend carrying out a PCR reaction in a volume of at least 60 μl. Special care should be taken when examining the hair in cases of the assumption or identification of presence of biological impurities (blood, sperm, saliva) on them. The hair should be thoroughly washed and treated in a special way: 1% glycine solution, dehydrated ethanol, freezing at a temperature of −20… −70 °C. The DNA can only be extracted from the stem part of a single hair and its subsequent analysis provided there is additional purification and concentration of the drug on a Centricon-100 concen‐ trating unit (by Amicon, Inc. for example). This method has been implemented during the expert examinations in the Criminal Expertise Centre of the Ministry of Internal Affairs of the Russian Federation. Putting it into practice in other forensic departments requires special training of the experts and the presence of the corresponding material and technical basis. 3.4 Examination of Odor Characteristics of Human Hair The diagnostic capabilities of the preliminary examination of hair have been preserved through present, but priority is still given to the forensic use of odor traces of a person. In fact, it is not the wireframe materials from which the hair is formed (washed hair loses an individualizing odor), but related odorous substances that emit a smell. The odor

Technical Forensic Technique of Human Hair Examination

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traces of a human being are odorous products of the intracellular metabolism; they are transferred from the cells by blood and are then removed to the surface of skin cover and hair. The lipid components of sweat envelop and impregnate the porous structures of the hair, which (along with traces of blood and sweat) become the source of the unique individual smell of the subject, his biological “passport”. The stability of metabolic processes of the body is dependent upon genetic factors that determine the stability of the individual odor of a human being throughout his/her virtually entire life. Despite the fact that odor traces are secondary formations on the hair; they contain unique infor‐ mation required for the detection of crimes and the identification of criminal participants. The question of the presence or absence of the odor of a particular person on the collected hair can be answered in the process of the laboratory comparison of their odor with the odor samples obtained from individuals suspected of implication in the committed crime. The odor samples collected from human hair (on the flannelette or flannel napkin) can be stored for a year or more in air-tight glass jars and be used to establish (or rule out) the fact of the subject’s involvement in the event. When the experts examine the odors from hair, specially trained laboratory dogs are used as detectors. The sets of the auxiliary odor samples, against which a particular feature of the odor trace from the hair can be identified and subsequently evaluated (species, individual (personal), sex and age, and other characteristics of the odor of a human being), serve as another examination instrument. The following tasks are solved in the determination of the origin of the hair collected from certain persons by the odor samples: establishment of origin of hair found during the inspection of the scene, examination, or during other investigative activities, from the criminal; identifying other persons involved in the event (injured persons, eyewit‐ nesses) to identify their individual odors on the collected hair; identifying the individual odor of the same person on the hair collected from various scenes (merger of several criminal cases). The following questions can be presented to the experts for solving at the present day (subject to the availability of trained dogs of appropriate specialization): 1. 2. 3. 4. 5.

Are there any odor traces of a human being on the hair submitted for examination? Is the submitted hair suitable for odor examination? Does the odor traces from the hair belong to one person or to several persons? What is the sex of a person who left the odor traces on this hair? What is the approximate age of a person (childhood, middle age, elderly age) who left the odor traces from the hair submitted for examination? 6. Is there any individual odor of this person on the collected hair sample? 7. Who exactly from several persons (whose comparative samples were submitted for examination) left the odor traces from the hair submitted for examination? The answers to the first, second, third and fourth questions allow putting up and check a particular investigative lead, to narrow down the circle of suspects in the involvement in the committed crime. The answers to other questions help to determine the origin of odor traces from the particular persons, allow to understand the distribution of roles among the persons involved in the event, and separate their odor traces from the odor traces of people who are not implicated in the event under investigation.

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The odor traces on hair that may be used for examination may be preserved for decades. However, such traces that were formed on the hair, during a momentary contact of person with them (for example, in a fight), are preserved only for several hours after their occurrence. The air temperature and humidity, wind, the degree of dirtiness of the hair and other features can slightly change the time of preservation of odor traces on hair. Separated hair can better retain the odor traces in the cold, in the shade, and indoors; the odor traces can be retained worse in the wind, on heated objects, in heated rooms with high temperature. Hair extracted from the soil, which was in contact with moldy or rotting objects, loses the individualizing odorous substances and is not suitable for odor identification. In order to perform a comparative examination, odor samples and odor-containing objects collected at the scene, as well as comparative odor samples obtained from the subjects of investigation, shall be submitted, for example, to the Criminal Expertise Center of the Ministry of Internal Affairs of the Russian Federation. If an order on the commissioning of expert examination of odor traces from the human hair was made, the findings of the examination shall be documented in the form of the expert opinion; if the examination was carried out by order of the head of internal affairs agency or criminal investigation department, the findings should be documented in the form of the expert’s certificate. Relying on the analysis of judicial practice, Public Prosecution Office of the Russian Federation supports the application of the results of the laboratory identification of hair by the odor traces in the investigative practice and judicial examination. The reliability of the results of the laboratory investigation of odors from hair is comparable to the accuracy of instrumental analysis. The following documents shall be submitted in case of commissioning of the expert examination of odor traces from the hair: (1) order on commissioning of the odor exami‐ nation of hair; (2) collected hair with the estimated odor of a human being or odor samples from it, applied to the cotton napkins; (3) comparative odor samples obtained from individuals verified for involvement in a crime (gauze swabs with dry blood samples, hair samples (a strand of “greasy” hair shaved from the head) or sample of odorous substances, applied to the cotton napkins in case of a half-hour contact with the human body); (4) samples with foreign (background) odors from the scene of investi‐ gative activities (odors of animals, oil-products, food, medicines, etc.) applied to the cotton napkins during inspection; (5) control samples of clean cotton cloth that was used for the collection of odor samples submitted for examination. The best and the purest source of the individual smell of the subject is his blood, the samples of which are collected from each subject of investigation in healthcare settings (3–4 drops of blood are dried indoors on the gauze swab, and then packed into paper). Where that is not practicable, the undergarment collected from the subject of investi‐ gation or his/her sweat samples can be submitted as sources of the individual smell. The sweat samples are usually collected by a person who wasn’t engaged in the collection of the odor samples at the scene in this case; it is necessary to prevent acci‐ dental penetration of his odor traces both in the odor samples from the scene and in the comparative odor samples. Otherwise, there may be a merge of the samples to be compared by the odor of the worker who collected them, during the examination.

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In order to obtain a comparative sample, a person from whom it is collected is invited to take two clean flannelette flaps out of the jar (or foil) and place them separately on the body in the expanded form: behind the waistband of the trousers, behind the collar or under the cuffs of clothing pressed against the body (in order to prevent contamination of samples with the products of specific cutaneous glands, one shouldn’t collect sweat from the axillary region and inguinal region of the body). The flannelette flaps can also be placed on the body of the subject of investigation by any participant of this investi‐ gative activity who nevertheless must use a pair of pincers and rubber gloves. The flaps should be removed from the body no earlier than in 30 min. When the odor samples are collected from the subjects of investigation, it is neces‐ sary to make sure that there is a good contact of the flannelette with the subject, as well as in the fact that the donor is wearing his own clothes (otherwise the odor samples may turn out to be unsuitable for the comparative examination). The flannelette flaps with the collected odor samples are arranged and packed in the same way as the odor samples from the scene: in glass containers or in foil, marking them with labels (tags) with an indication of surname, name and patronymic of the person from whom the sample was collected; his occupation, age, and part of the body from which the comparative sample was collected; the time of contact of flannelette flaps with the body; the presence of characteristic odor during the collection of comparative samples. The originator of the identification odor examination of hair must provide the most exhaustive information about the conditions of receipt of the submitted comparative samples. It must be borne in mind that the same interfering odors (if they are present simultaneously on the object collected from the scene and in comparative samples collected from the suspects) can become a unifying feature for the biodetector. Compa‐ rative odor samples are the most free from extraneous components, the presence of which in the samples collected from the odor-containing objects is quite possible, should be used in order to eliminate detrimental effect of such interference in the identification analysis. The laboratory detection dogs are currently used in the analysis of odor traces of human hair for the identification of a genus, sexual or other group identity, as well as individual identity are used within the framework of implementation of the two main stereotypes of workplace behavior that are developed in the dogs by means of special training. The stereotypes of workplace behavior differ in the form of assignment of search task for the dogs. In one instance, dogs are presented with an odor sample to be searched immediately. In this stereotype, the information about the desired odor is stored in the short term memory of detection dogs before the start of each search; the dogs smell the given sample at the start, remember its odor, and then try to smell this odor out among the dozens of objects arranged in the comparative (selective) series. The odor examination is carried out in the laboratory room in conditions that are optimal for detection dogs (temperature of +20 °C, air humidity of 60–80%), with the maximum elimination of extraneous irritants. The analyzed objects (usually one or two) and the auxiliary odor-containing objects in the comparative series are arranged on the floor in a circle that is inscribed into the perimeter of the laboratory room. It is advisable to cover the jars with the odor-containing objects with conoid-shaped tin cap holders (with an open top cut at the level of the upper edge of the used can). Such holders allow

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giving additional stability to the jars and hiding the descriptive notes on them (encryption of the objects for exclusion of unintentional prompts to the biological detectors from the expert who manages their actions). The odor samples that were not memorized by the dogs and obtained from the contact traces of a human being left on the dummy objects, or having other odor characteristics in accordance with the examination tasks, serve as auxiliary objects in the examinations. By controlling the dog through the leash and commands, the trainer, being inside the circle, encourages the dog to go ahead of himself and consistently sniff the placed objects. In order to exclude unintentional prompts to the dog from the animal trainer, the place from which the walk of biodetector starts and the direction of movement are determined by the other expert participating in the examination. Each object of the series is sniffed by the dog for a fraction of a second in an individual fashion peculiar to each animal, but without omissions and delays, in a mode determined by the trainer. When a familiar smell is detected in any of the objects, the dog distinguishes it by a signal posture learned during training, making his choice based on a memorized odor sample. The necessary functional behavior of detection dogs is supported by the positive reinforcement (praise “Good!” followed with a delicacy). It is important to remember that before identifying any feature of the examined odor trace, it must be tested for presence or absence of odor interference. The diagnostic features in the examined sample can only be determined if there are no interfering odors that spontaneously attract dogs. This examination allows avoiding misinterpretation of the meaning of signals by the trained dogs.

4

Conclusions

The examination found out that the presence of odor of a human being in the hair that is subject to examination is always random in nature. The test for suitability for exami‐ nation is directed either at possible identification of the subjects of investigation by odor, or at waiver of examination in case of absence of human odor in the samples. We must also take into account the fact that the odor samples that are clearly sniffed by the dogs at the beginning, are gradually depleting due to the volatility of the constituent compo‐ nents. The losses are also unavoidable when collecting, transporting and storing the odor-containing objects. Identification of the fact of mixing of odor traces (odor of one or several persons) present on the object is assessed in practice in consultation with the experts, judging from the circumstances of the event and version under development. The comparative series of odor traces is used in this case as a kind of probe for testing the presence or absence of a mixture of odor traces of several persons in the examined odor sample from the hair. Auxiliary objects (with the odors of people of the same sex), one examined object and one control object which has an odor of a human being of the opposite (required) sex. The procedure of identification of male and female odors on the examined object may vary and can be determined by the circumstances of a particular case of a problem that is put before the experts. The presence or absence of a female odor is determined in the comparative series consisting of eight auxiliary objects with male odors, one object

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with a female odor (reference object) and one object under examination. At least two detection dogs specially trained for detection of a female odor in the examined object are used. The examination is currently preceded by the test of the analyzed object for the presence of odor interference. After being convinced of their absence, the objects are prepared for two comparative series differing in the sex of the donors from whom these auxiliary odor-containing objects were obtained. In conclusion, attention should be paid to the fact that odor traces are secondary formations on the hair; they contain unique information required for the detection of crimes and the identification of criminal participants. The question of the presence or absence of the odor of a particular person on the collected hair can be answered in the process of the laboratory comparison of their odor with the odor samples obtained from individuals suspected of implication in the committed crime. The odor samples collected from human hair (on the flannelette or flannel napkin) can be stored for a year or more in air-tight glass jars and be used to establish (or rule out) the fact of the subject’s involvement in the event.

References Pavlova, A.Z., Bogomolov, D.V., Larev, Z.V., Amanmuradov, A.Kh.: Hair as the object of examination in case of poisoning with the salts of heavy metals. Sudebno-Meditsinskaya Ekspertiza (Forensic Medical Examination), No. 6, pp. 25–29 (2012) Gorbunova, O.L.: The use of monoclonal antibodies in forensic medical examination during examination of hair. Probl. Ekspert. v Meditsine (Probl. Exam. Med.) 10(3–4), 66–68 (2010) Suchkova, E.V.: Learning and teaching support of forensic examination of human and animal hair. Biblioteka Kriminalista (Forensics Library). Academic periodical, No. 6(23), pp. 264– 267 (2015) Nesterina, E.M.: On the organization of a special project work group under ENFSI on experimental examination of hair. Teoriya i Praktika Sudebnoy Ekspertizy (Theory and Practice of Forensic Examination), No. 3(19), 216–218 (2010) Suchkova, E.V.: Mistakes in forensic examination of human and animal hair. Sudebnaya Ekspertiza (Forensic Examination), No. 2(38), 43–50 (2014)

Project Finance for Africa’s Construction Sector: Can Stabilization Funds Work? Lubinda Haabazoka(&) School of Business, Copperbelt University, P.O. Box 21692, Kitwe, Zambia [email protected]

Abstract. The construction sector remains one of the most important economic sub sectors of any country’s economy. A well-developed construction sector is a prerequisite to enhanced infrastructure development which is cardinal to a country’s economic development. One of the factors that enhance construction sector growth is finance. Unfortunately Africa is still unable to attract large investments into its construction sector as compared to other continents because investors view the continent mostly as a source of cheap mineral resources. In this paper, it is observed that the size of Africa’s construction sector despite its rapid growth remains relatively small as compared to other continents. The paper also shows that the challenges facing the African construction sector include poorly developed capital markets, high interest rates and the resource curse among others. It is also noted that Africa needs to establish stabilization funds to channel resources from sell of commodities to fund infrastructure development. Keywords: Project finance JEL Classification: G28

 African construction sector  Stabilisation Fund

 F34  F38  N67  O160

1 Introduction It is difficult to overstate the importance of infrastructure in any economy. Any country’s economic development agenda is dependent on the availability of high quality infrastructure that facilitates transactions between participants of different economic sub sectors. How well a country’s construction economic sub sector is developed depends on the availability of cheap and stable long term project finance. Project finance as opposed to other sources of funding has the following advantages: – Non-recourse project financing that does not impose any obligation to guarantee the repayment of the project debt on the project sponsor. – Off balance sheet debt treatment which isolates project risks, taking them off balance sheet so that project failure does not damage the owner’s financial condition. – Leveraged debt meaning equity is not diluted. – Avoidance of restrictive covenants in other transactions because the project financed is separate and distinct from other operations and projects of the sponsor, existing restrictive covenants do not typically apply to the project financing. © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 32–60, 2019. https://doi.org/10.1007/978-3-030-00102-5_4

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– Favourable tax treatment giving an incentive to private sponsors to participate in infrastructure development. – Political risk diversification. – Risk sharing by spreading risks over all the project participants, including the lender. – Collateral limited to project assets. – Lenders are more likely to participate in a workout than foreclose. Given the political and economic risks associated with investing in Africa, and also low financial sector liquidity and undeveloped capital markets, project finance remains one the best routes for funding the much needed infrastructure development for the African continent. The main aim of this paper is to outline the role of project finance in enhancing construction sector growth in Africa. The paper also aims to outline the size of Africa’s construction industry, explain the major sources of project funding and also study the challenges and prospects for the sector. This paper contains 10 sections: Section one is the introduction; Section two outlines the review of existing literature on construction sector finance and economic growth and also the role of stabilization funds in enhancing infrastructure growth; Section three outlines the conceptual framework of the study; Section four illustrates the size of Africa’s construction sector; Sections five discusses construction sector project finance from a global perspective; Section six illustrates construction sector project finance from an African perspective. Section seven outlines African construction sector project finance challenges; Section eight outlines African construction sector project finance prospects; Section nine provides policy recommendations on how stabilization funds can be a source of project finance for infrastructure development and economic diversification; and Sect. 10 is the conclusion.

2 Literature Review 2.1

Overview of Project Finance

A huge body of literature is available today on the subject of structured finance in general and project finance in particular. The majority of authors agree on defining project finance as financing that does not depend on the soundness and creditworthiness of sponsors. According to Fight (2010), a project is a unique endeavour to produce a set of deliverables within clearly specified time, cost and quality constraints. Projects are different from standard business operational activities as they: • Are unique in nature. They do not involve repetitive processes. Every project undertaken is different from the last, whereas operational activities often involve undertaking repetitive (identical) processes. • Have a defined timescale. Projects have a clearly specified start and end date within which the deliverables must be produced to meet a specified customer requirement.

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• Have an approved budget. Projects are allocated a level of financial expenditure within which the deliverables are produced, to meet a specified customer requirement. • Have limited resources. At the start of a project an agreed amount of labour, equipment and materials is allocated to the project. • Achieve beneficial change. The purpose of a project is typically to improve an organization through the implementation of business change. • Involves an element of unique risk. Gatti (2012a, 2012b) defines project finance as the structured financing of a specific economic entity—the SPV, or special-purpose vehicle, also known as the project company—created by sponsors using equity or mezzanine debt and for which the lender considers cash flows as being the primary source of loan reimbursement, whereas assets represent only collateral. A typical project finance deal will have a structure as outlined in Fig. 1 below.

Fig. 1. Structure of a project finance deal Source: Author

The main difference between project and traditional project finance as seen in Fig. 1 is that for project finance, the sponsors of the project use another entity (the SPV) to source funds to build the project. In corporate finance however, the financer and borrower are the sponsors themselves. Figure 2 below highlights the main differences between traditional and project finance 2.2

Review of Similar Studies

2.2.1 Infrastructure and Economic Growth A lot of studies have been done on the role of infrastructure in enhancing economic development. Calderón and Servén (2015) provide an empirical evaluation of the impact of infrastructure development on economic growth and income distribution using a large panel data set encompassing over 100 countries and spanning the years 1960–2000. The empirical strategy involves the estimation of simple equations for GDP growth and conventional inequality measures, augmented to include, among the

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Fig. 2. Differences between traditional and project finance Source: (Gatti 2007)

regressors, infrastructure quantity and quality indicators, in addition to standard controls. To account for the potential endogeneity of infrastructure (as well as that of other regressors), the authors use a variety of generalized-method-of-moments (GMM) estimators based on both internal and external instruments and report results using both disaggregated and synthetic measures of infrastructure quantity and quality. The two robust results are: (1) growth is positively affected by the stock of infrastructure assets, and (2) income inequality declines with higher infrastructure quantity and quality. A variety of specification tests suggests that these results do capture the causal impact of the exogenous component of infrastructure quantity and quality on growth and inequality. These two results combined suggest that infrastructure development can be highly effective to combat poverty. Furthermore, illustrative simulations for Latin American countries suggest that these impacts are economically quite significant and highlight the growth acceleration and inequality reduction that would result from increased availability and quality of infrastructure. In their study “assessing the Impact of Infrastructure on Economic Growth and Global Competitiveness”, Palei (2015), aims to identify the key infrastructure factors that determine national competitiveness, which in turn influence positively on the total results of industrial policy. The results of their study showed that national competitiveness is influenced basically by the level of institutional development and other seven factors, including infrastructure, in turn infrastructure factor is determined mainly by the quality of roads, railroad infrastructure, air transport and electricity supply. These findings contribute to an understanding of the key factors that determine economic growth. A study by Ismail and Mahyideen (2015), establishes that infrastructure plays a key role in facilitating trade, especially since recent trade liberalization in Asia has resulted in significant tariff reductions. The study quantifies the impacts of both hard and soft infrastructure on trade volume for exporters and importers in the region as well as on various economic growth indicators. Results demonstrate that improvements in transport infrastructure (i.e., the road density network, air transport, railways, ports, and logistics) have resulted in increased trade flows. Information and communications technology (ICT) infrastructure has also enhanced trade, as the numbers of telephone

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lines, mobile phones, broadband access, internet users, and secure internet servers are found to have positive trade effects for both exporters and importers in Asia. Thus, although more attention has traditionally been given to hard infrastructure, the impact of soft infrastructure on trade flows must also be more thoroughly examined. Aschauer (1998) argues that public infrastructure underpins the quality of life: better roads reduce accidents and improve public safety, water systems reduce the level of diseases, and waste management improves health and aesthetics of environment. Agénor and Moreno-Dodson (2006) study the link between infrastructure availability and health as well as education of society that proves that infrastructure services are crucial for health and education quality and availability which to a big extent effects welfare. According to the world statistical analysis, households use approximately one third and one half of infrastructure services as final consumption. 2.2.2 Stabilisation Funds and Infrastructure Development Stabilisation Funds also known as Sovereign wealth funds (SWF) are investment funds owned by governments of sovereign states and funded by foreign exchange and reserve assets (Goodal et al. 2013). They are generally funded by revenues accrued from the export of non-renewable natural resources, usually oil and other hydrocarbons taxed or owned by the government, or by transfers of reserves held by countries running current account and budgetary surpluses. There are many studies done on stabilization funds and economic growth. Thouraya Triki and Issa Faye (2011), in their paper, discuss the potential role that sovereign stabilization funds could play in African economies, both as recipient countries and home countries. They first draw a landscape of African stabilization funds putting them in perspective, and describing their characteristics and investment activities in Africa. They also provide some insightful patterns about foreign SWFs activities on the continent. In their analysis, they suggest that African stabilization funds are small and mainly focus on achieving stabilization objectives. They indicate that the funds are also characterized by poor governance structures. Thus, their role as long term institutional investors in Africa is likely to be negligible if current practices are maintained. To fully benefit from their stabilization funds, there is a need for African economies to: – Clarify stabilization fund roles, objectives and responsibilities as suggested by the fiscal transparency and reserve management guidelines established by the IMF; – Carefully synchronize deposits and drawdowns from commodity-based stabilization funds with the country’s income accruing from the sale of nonrenewable natural resources in order to ensure that revenues are set aside to stabilize the country’s fundamentals, should resources be exhausted. For instance, countries need to establish limits on the contribution of commodity revenues to fiscal deficits and create “permanent endowment” that will serve long term savings objectives only. This endowment could be used to invest in relatively illiquid assets over a longer time horizon and enhance African stabilization fund participation in African financial systems; – Implement strong corporate governance structures to make sure that resources are well managed and that stabilization fund investment strategies are supporting the country’s macroeconomic policies and development plans;

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– Avoid overregulation of investable sectors/companies; – Ensure a foreign-investor friendly business environment and strong protection of investors’ rights; and – Make sure that the risk of stabilization fund controlling banks’ capital can be mitigated through the implementation of safeguards to ensure that the banks are compliant with local regulation and market practices. Seedwell (2016), analyses the potential role that sovereign wealth funds could play in infrastructure development in Africa. He also elaborates on the trends and patterns of sovereign wealth funds in Africa, and possible funding mechanisms for infrastructure development as well as risks and opportunities. In their paper, Seedwell notes that infrastructure funding needs are very large in Africa. Traditional ways of financing infrastructure, such as public finances, the banking sector and overseas development finances, are all experiencing challenges. Yet the investment potential of sovereign wealth funds (other name for stabilization fund) for financing sub-Saharan Africa’s infrastructure development has remained largely untapped. As such, sovereign wealth funds (SWF) can play an important role in financing infrastructure development in Africa. Allocating about 20% of Africa´s sovereign wealth funds could close the existing annual infrastructure financing gap, assuming no inefficiencies. Sovereign wealth funds can finance infrastructure directly through joint ventures or co-financing and public private partnerships, or indirectly through strengthening and deepening the financial systems. In terms of policy, Seedwell notes that there is a need for coordination between SWFs and government policy (both fiscal and monetary) to ensure that the role of SWFs in infrastructure financing does not lead to instabilities and volatilities. The domestic investment of the SWF needs to be considered within the overall macroeconomic framework and overall private sector and public sector investment to ensure that it promotes macroeconomic stability and development and does not displace private investors. Since SWF are often created by governments from some reserve funds, governments can make deliberate efforts to finance infrastructure. For example, they can ensure that SWFs’ mandates include infrastructure as an investment category or create a sub-entity with a specified mandate towards infrastructure investment, as exemplified by Ghana, Nigeria and Angola. It is important for SWFs to have clear objectives and ensure that investment strategies are consistent with underlying objectives or mandates. This could help them to support infrastructure development well. Implementing strong corporate governance structures could ensure that resources are well managed and that SWFs’ investment strategies are supporting the country’s macroeconomic policies and development plans. African governments can also promote infrastructure investment by demonstrating commitment to investor protection. One way of doing this is to showcase successful infrastructure projects which can be considered as reference points by investors. This is especially important in countering the blanket perceptions of Africa as a risky investment environment by foreign investors. Political stability, stable rules, good governance, zero tolerance on corruption and transparent procurement processes and upholding of legitimate projects despite changes in government are some of the good signals.

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Naveen Thomas (2016), in investigating how sovereign wealth funds are impacting infrastructure projects in emerging markets finds that in recent years, sovereign wealth funds (SWFs) have risen in number, grown substantially in total assets under management, and realigned their investments in response to the global financial crisis and other economic changes. One area of increased focus is infrastructure projects in emerging markets, a trend with the potential to impact economic development significantly in these regions. SWFs have cited various reasons for this shift toward infrastructure. First, although public equities remain SWFs’ largest single asset class overall, increased volatility in these markets and the risks inherent to investing in them has encouraged SWFs to seek alternatives. Second, due to the low interest rates that have followed the global financial crisis, SWFs have reduced their exposure to fixed income investments, which have traditionally comprised another core asset class. Third, the cost and duration of many infrastructure projects provide a good match for SWFs’ large amounts of capital, long-term investment horizons, and comparatively low need for liquidity. As a result, many industry analysts as well as SWFs themselves expect that this trend toward alternative assets such as infrastructure will only continue. Moreover, although developed countries still account for a majority of SWFs’ allocations at a portfolio level, many of these investors have significantly increased their placements in emerging markets in recent years and plan to continue doing so. This is motivated not only by the desire to diversify portfolios but also by the increase in investment opportunities that such markets have been providing. In addition, many of the largest SWFs are themselves located in the Middle East and Asia and often invest in emerging economies in those areas due to regional ties. Further increasing allocations to such markets, many developing countries are using new or existing SWFs to invest in their own domestic infrastructure. This recent growth in SWFs’ infrastructure investment comes at a time of great need. Analysts estimate that up to $67 trillion may need to be spent on infrastructure globally by 2030, and that developing countries may account for nearly half of this amount. At the same time, the financial crisis has reduced banks’ lending capacity and increased the cost of borrowing, thereby inhibiting many potential investors from contributing to this need. But SWFs, with large pools of cash precluding the need for bank financing, can help to fill this void by further devoting funds to infrastructure. To be sure, SWFs cannot by themselves support the developing world’s immense infrastructure requirements, which will have to be met by a combination of changes including productivity increases. In addition, not all infrastructure projects provide a good match for SWFs’ typical risk profiles, so these investors may not help at all in some situations. But the prospect of increased SWF investment in this area at least offers one positive sign in an otherwise daunting financial picture. As a result, emerging economies in great need of infrastructure development should avoid the protectionist impulses that many developed nations tended to exhibit toward SWFs prior to the financial crisis. Instead, such investment, made with appropriate political and legal protections in place for all parties, should be acknowledged for its urgent necessity and encouraged in its proper execution. Schubert (2011), analyses the critical topic of infrastructure investment by sovereign Wealth Funds. He argues that given the goal of maximizing citizen welfare, investment in local infrastructure is an appropriate allocation. He presents arguments for why such investments increase owner utility and some negative consequences from

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using Sovereign Wealth Fund monies in this manner. Schubert comes down decidedly on the pro-investment side. He discusses different types of infrastructure investments with the conclusion that all types merit at least some consideration. He analyses different methodologies for allocating funds for infrastructure investment. The conclusion made by Schubert is that Sovereign Welfare Funds should conduct infrastructure investment. He believes that such investment within the portfolio of the SWF is more likely to lead to maximizing citizen welfare than is a portfolio without such investment. He agrees that the issue carries more weight when other financing sources are not available or are extremely limited. Practically, Schubert suggests that, in cases where Sovereign Wealth Funds are not currently invested in local infrastructure projects, a part of the current capitalization of the Fund be transferred for the purpose, but after that one of the strategic allocation models noted above be applied. He notes that in finance we buy the future and so we favor the use of expected values in allocation over ex post values. While the actual outcomes will vary from those expected, on average expectations should be accurate and basing investment allocation on expected values should help the Fund reap better rewards for their secondary objective (greater return for risk, diversification, stabilization, or intergenerational transfer) then would ex post distributions. Finally Schubert noted that infrastructure investment performance needs to be clearly goal oriented and shortfalls need to be monitored and explained. In the end, the key goal is to maximize the utility of the Sovereign Wealth Fund’s citizen owners and managing performance is critical to that end. Gelb et al. (2014), note that though not entirely new, SWFs permitted or mandated to invest domestically are emerging on a wider scale. However, they have not been systematically assessed, therefore there is much to learn about their processes and activities. The note that more research is needed to better understand their operations and potential role for financing in developing countries. Since SWFs permitted or mandated to invest domestically combine features of traditional SWFs and development banks, they can draw on good practice examples from both types of institutions. Establishing rules on the type (for example, commercial and/or quasi-commercial investment) and modalities (for example, no controlling stakes, leveraging private investment) is one way to ensure separation between the activities of the SWF and those of other government institutions with investment mandates, such as the budget, the national development bank, the investment authority, and state-owned enterprises. The critical issue remains that of limiting the SWF’s investment scope to those appropriate for a wealth fund. If investments that generate quasi-market returns are permitted, the size of the home bias should be clearly stipulated and these investments should be reported separately. The overall objective is to create a system of checks and balances to help ensure that the SWF does not undermine macroeconomic management or become a vehicle for politically driven “investments.” The difficult environments in which some SWFs are being established suggest that these will often be major concerns. Only if the SWF is allowed to operate as a professional expert investor can it strengthen the management of the public investment program and contribute to building national wealth. Della Croce and Yermo (2013), in their study note that the disruption to long term finance patterns is due to a mix of underlying problems which are in part a consequence of recent developments following the financial crisis and in part due to some more

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structural problems and longer term trends. Institutional investors, such as pension funds, insurers and sovereign wealth funds due to the longer-term nature of their liabilities, represent potentially major source of long-term financing for illiquid assets such as infrastructure. Over the last decade, institutional investors have been looking for new sources of long term, inflation protected returns. Asset allocation trends observed over the last years show a gradual globalization of portfolios with an increased interest in EMs and diversification in new asset classes. The economic downturn is likely to have a lasting impact on the fund management industry and on long term asset allocation strategies of institutional investors. On one hand, in promoting more cautious investment strategies and a greater focus on portfolio risk management in the coming years. On the other hand, the prolonged low-yield environment has heightened the need for return-enhancing strategies, pushing some investors to invest in alternative assets. More fundamentally, the role of institutional investors in long term financing is constrained by the short-termism increasingly pervasive in capital markets as well as structural and policy barriers such as regulatory disincentives, lack of appropriate financing vehicles, limited investment and risk management expertise, transparency, viability issues and a lack of appropriate data and investment benchmarks for illiquid assets. In order to better understand the impact of these factors, more granular data at the level of individual investors is needed. It is also necessary to better understand the extent to which institutional investors such as pension funds, insurers, SWFs and PPRFs may provide alternative or complementary sources of financing for infrastructure. As highlighted in the G20/OECD Policy Note: “Pension Fund Financing for Green Infrastructure Initiatives”, investment in infrastructure by institutional investors is still limited due to, among other things: a lack of appropriate financing vehicles, investment and risk management expertise to deal with infrastructure investments, regulatory disincentives, lack of quality data on infrastructure, a clear and agreed investment benchmark and challenges particular to ‘green infrastructure’ (e.g., regulatory and policy uncertainty and inexperience with new technologies and asset classes). These challenges should be further examined with possible implications for the policy framework under which financial institutions operate. Ultimately, there is a need for further guidance promoting long-term investment by institutional investors to support policies that facilitate investments in infrastructure. Sanjay (2015) in his study proposes an independent Global Infrastructure Investment Platform to channel capital, especially from SWFs, into much-needed investments in infrastructure, and puts forward a general list of tentative steps toward the creation of the GIIP. Peters proposes a focus on SWFs as key investors because they have the deepest pockets and a long-term outlook. The GIIP would play an important role in shrinking the gap between the current global savings glut and the growing need for infrastructure investments. In principle, it would be mutually advantageous for both the investors—offering them higher returns over longer periods of time than existing assets —and the host country, where high return investment projects are currently going unfunded. Peters notes that there are, of course, a large number of institutional and policy challenges associated with the creation of the GIIP. He suggests, however, that the most of these seemingly impossible barriers are surmountable. Peters presents a detailed outline of the GIIP to discuss the various operational challenges, enormous

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commitment, expertise and goodwill from many partners that will be required to ensure success of such an initiative. The acknowledgement that something is hugely difficult should not deter one not to take on the challenge. In the case of the GIIP, the benefits appear to far exceed the costs in whatever shape or form they manifest themselves. The first step would be to identify a group of SWFs, pension funds, insurance funds, development banks, and foundations that would be interested in exploring this project further. Ideally, the founding sponsors would represent all regions of the world. A second step would be to team up with a group of development banks that would take on the role of founding guarantors. The start-up phase of the GIIP will likely combine a bottom-up and top-down process, where a private initiative is supported by a coalition of willing governments and development banks. To kick-start the process as a first step, seed funding from foundations and other supporting actors would allow a team of infrastructure experts, investment bankers and international investment lawyers to establish the legal structure of the GIIP and gather templates for investment agreements, as well as identify a first set of projects that could be funded. The initial phase of operation of the GIIP would begin with a pilot project that focuses on a particular country, region or small subset of countries. This pilot project could then be scaled up to include other countries where there is strong demand for long-term investments in infrastructure. Based on the outcome of the pilot project, other countries would be encouraged to utilize the GIIP to attract long-term investments from SWFs. Eventually the GIIP would not only promote development in a very significant way, but also provide SWFs with information about attractive investment opportunities. Peters notes that regional organizations should play a prominent role in the platform. He notes that the GIIP can clearly serve as the catalyst for coordination of these parties. Furthermore, some safeguard mechanisms, such as insurance, monitoring, and auditing, could be employed to enhance coordination: The organizations backing the platform, both as facilitators and guarantors, should be comprised of a healthy mix of cultures and nationalities to lessen the risks both of perceived and of real exclusion. The guarantees expected to be offered by multilateral organizations, as the World Bank’s MIGA (Multilateral Guarantee Investment Agency), would consist of insurance against defaults of infrastructure projects due to political unrest (Irwin 2007). Investors such as SWFs are likely to want maximum monitoring of long-term projects in the infrastructure development that they take on. Meanwhile, countries or individual companies managing the projects are likely to want minimum monitoring. Therefore, the best outcome for all parties concerned would be to have the monitoring, as well as the auditing process carried out by an independent party or organization. Both the founding guarantors and investors would agree on the contours of the appropriate governance structure of the GIIP and target return for investors. Further, they would determine whether investments are made through a closed or open-ended fund, the modality of the guarantee, and a calendar for the start of the operation and its potential evolution as the platform grows.

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3 Relationship Between Infrastructure Development and Economic Development From the review of similar studies, we conceptualize the relationship between enhanced infrastructure development and economic growth as shown in Fig. 3 below.

Fig. 3. Conceptual framework Source: Author

From Fig. 3, we can see that construction sector project finance is dependent on factors such as: favorable economic climate, developed capital market that can provide the necessary equity and debt capital, stable political climate, clear legal framework, clear government policy that promotes project finance, availability of a market for real estate products and enhanced regional integration that can provide for transnational projects such as the constructions of highways, electricity supply grid and railway line across borders. It should also be noted that in order for countries to establish sound and transparent stabilization funds the above named conditions should also be met. The importance of the construction sector for African economies is that it can enhance the much needed infrastructure development that in turn can enhance job creation, contribution to GDP, enhance energy security, provide a good transport system needed for the enhancement of trade, provide regional competitiveness that can enhance foreign direct investment inflows and enhance Africa’s social welfare in general. Such development of affairs can trigger national social economic development in African countries.

4 Size of African Construction Sector Figure 4 below illustrates the size of the construction industry in Africa. The construction industry in Africa has been steadily growing with the amount of large construction sector projects growing from $222.767bn in 2013 to $375,410bn in 2015.

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Fig. 4. Size of African construction industry Source: Delloite 2014

The Southern part of Africa continued to dominate in terms of construction sector size with $140bn in 2015 as compared to $83bn in 2013. The rest of Africa also posted construction sector growth in 2015 as compared to the years 2013 and 2014. Table 1 below shows the key infrastructure indicators for selected African countries. Table 1. Key infrastructure Indicators in selected African countries Key Infrastructure Indicators in Selected Countries Country Quality of Infrastructure (2012– Dealing with 2013), Score is 1–7 where Construction 7 = Best Permits (Days) Angola 2.0 204 Kenya 4.4 125 Namibia 5.2 123 Nigeria 3.0 116 South 4.5 78 Africa Zambia 3.8 124 Source: Author Based on KPMG, World Bank Data

Average Building Cost USD per Square M 2,388.1 716.0 – 1.124.9 1,038.8 1,560.8

From the table, we can see that Africa continues to have low quality infrastructure with only Namibia scoring 5.2 (the highest in Sub Saharan Africa) out of 7 from the

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countries sampled. The time for dealing with construction permits also remains very high with only South Africa giving an average of 78 days. Delays in the issue of construction permits remains one of the inhibiting factors for acquiring project finance. The average cost of building a square meter remains relatively low in Africa with only Angola recording high figures of $2,388.1 per square meter, way above the continent’s average.

5 Construction Sector Project Finance – The Global Perspective Project finance remains one of the main sources of construction sector finance and is responsible for the implementation of large infrastructure projects around the world. Figure 5 below looks at the growth of global project finance for the period 2003– 2013.

Fig. 5. Size of Global Project Finance Source: World Bank 2014

We can see from Fig. 5 that global project finance has grown in size from $70bn in 2003 with just 302 projects to over $200bn in 2013 with 584 major projects recorded around the world. The only decline was recorded for the period 2008 when the world experienced the global financial crisis. Figure 6 below outlines the trends of global project finance loans and global syndicated loans. Syndicate loans are a major source of debt finance for project financing. From Fig. 6, we can see that global project finance loans for the period 2007 to 2013 have remained stable at around $200bn a year. The amount of global syndicated loans has also slightly reduced from around $4.5 trillion to just above $4 trillion. Table 2 below shows the amount of global project finance by sector. From the table above, we can conclude that investors preferred investing in the power sector with investments averaging above 35% of the total funds committed

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Fig. 6. Trends in global project finance loans and global syndicated loans Source: Thomson OneBanker

Table 2. Global Project Finance by Sector 2011

2012

2013

Amount Number % of total Amount Number % of total Amount Number % ot Total amount amount amount Power Transportation Oil and Gas Petrochemicals Leisure, real estate, property Industry Water and sewerage Mining Telecommunications Waste and recycling Agriculture and Forestry Total Global Project Finance

81 534.20 44 724.00 39 391 70 4 364.80 14 494.00 12 154.90 997.20

299

38.0

110

20.8

63

18.4

11

2.0

57

6.8

17

5.7

8

0.5

10 328.60 5 314.00 724.10

27

4.8

10

2.5

8

0.3

64 014.60 40 202.40 60 681.00 4 311 10 10 413.90 7 605.40 3 285.20 4 513.60 1 529.10 842.30

479 00

3

02

128.00

214 506.50

613

100.0

197 526.60

283

32.4

94

20.4

56

30.7

11

2.2

47

5.3

12

3.9

12

1.7

15

2.3

4

0.8

6

0.4

70 077.00 40 715.20 39 862.40 10 719.00 7 771.70 16 768.30 6 511.80 5 495.70 4 332.10 1 887.40

342

34.3

75

19.9

60

19.5

9

5.3

34

3.8

15

8.2

14

3.2

17

2.7

7

2.1

8

0.9

0.1 540

100.0

0.0 204 140.60

581

100.0

Source: Thomson OneBanker

towards projects finance. The second most preferred sector was transportation followed by oil and gas. Table 3 below illustrates global project finance committed to various regions around the world.

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Central 1 America South America 11 Carribean 1 North America 23 Total Americas 38 Africa and 16 Middle East North Africa Sub Saharian 5 Africa Middle East 11 Europe 67 Eastern Europe 15 Western 52 Europe Central Asia Total EMEA 84 Australasia 23 Southeast Asia 14 North Asia 6 South Asia 45 Japan 1 Total Asia91 Pacific Total Global 214 Project Finance

2012 Number % of total amount 9

0.9

680.60 27 156.00 3 589.40 78 305.20 117 870.50 29

5.4 0.5 11.0 17.9 7.9

879.20

0.00 786.00

0 15

0.0 2.7

084.50 14 443.80 211 302.00 21 141.80 190

Amount

7 890.00

2013 Number % of total amount 20

4.0

9 379.80 27 25.00 1 22 102.70 80 39 397.50 128 20 717.50 42

4.7 0.0 11.2 19.9 10.5

4 488.80 9 403.60

3 25

2.3 4.8

5.2 31.4 7.1 24.3

6 825.10 14 46 298.40 176 9 030.50 21 37 267.90 155

3.5 23.4 4.6 18.9

570.00 2 884.30 242 382.00 52 035.90 41 449.60 21 925.70 124 524.10 16 317.30 254

0.3 39.6 10.9 6.5 3.0 21.4 0.7 42.6

2 914.00 2 69 929.90 220 42 566.50 34 13 530.30 31 8 093.30 34 21 643.60 83 2 365.50 11 88 199.20 193

1.5 35.4 21.5 6.8 4.1 11.0 1.2 44.7

506.80 613

100.0

197 526.60

541

100.0

Amount

2 406.00

Number % of total amount 9

1.2

11 198.50 32 52.50 1 37 711.10 97 51 368.10 139 29 335.10 53

5.5 0.0 18.5 25.2 14.4

0.00 11 032.30

0 35

0.0 5.4

18 52 13 39

302.80 18 715.20 189 609.70 27 105.50 162

9.0 25.8 6.7 19.2

7 90 21 13 8 14 3 62

960.00 5 010.30 247 614.10 46 709.90 53 984.00 20 916.60 48 537.80 28 762.40 195

3.9 44.1 10.6 6.7 4.4 7.3 1.7 30.7

204 140.80 581

100.0

Source: Thomson OneBanker.

The most preferred project finance destinations for the period 2011 to 2013 were Europe, America and Asia. Sub Saharan Africa unfortunately received only around 4% on average of the total global project finance.

6 Construction Sector Project Finance – The African Perspective Table 4 below outlines the main characteristics and sources of project funding in Africa. It should be noted from the table above that, Africa continues to heavily rely on external financing for its projects as local sources do not have adequate liquidity. African investors also continue to rely on export credit agencies to provide political and commercial risk coverage for their projects.

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Table 4. Characteristics of African project finance source Financing sources Multilateral Agencies International Commercial Banks Export Credit Agencies

• Key financiers of infrastructure PF in Africa • In 2012 top MLAs arranged $ 5.4 bn: $ 4.4 bn excluding South Africa; $2.5 bn excluding extractive industries. Power: $ 2.3 bn (43%) • Cover banks against country and commercial risks • MLT exposure: $42 bn export in credits, plus EXIM • $30 billion excluding South Africa • Focus mostly on extractive industries and sovereign deals • Provide local currency but constrained by B/S size, prudential ratios and liquidity cost • Support Infrastructure deals, mostly in forex • Constrained by size • Potential to be developed

Local Commercial Banks Regional Development Banks Regional/National NBFI Sources: Gatti (2012a, 2012b)

Fig. 7. Growth in African project finance Source: World Bank 2014

Figure 7 below outlines the growth in project finance in Africa for the period 2003– 2013. From Fig. 7 above, it should be noted that project finance in Africa has risen sharply from just $1.2bn in 2003 with only 5 major projects to over $10bn in 2013 with over 35 projects. Decline in construction sector project finance was only noted for the years 2008 and 2010 during the global financial crisis. Figure 8 below shows African project finance by sector. From the figure above, we can see that African project finance investors preferred the Oil and Gas sector, investing over $27bn or 46% of total project finance deals for the period 2003 to 2013. Power and mining were the second most preferred sectors with investments totaling $10bn for each of the sectors.

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Fig. 8. Africa Project finance deal by sector Source: World Bank 2014 Table 5. Top 10 SSA countries in terms of deal volume Top 10 SSA countries in terms of deal volume and no. of projects (All sectors) Country No. of Projects Deal Size ($M) Nigeria 28 17,791 Ghana 14 10,925 South Africa 45 9,928 Ango1a 8 4,460 Madagascar 1 2,100 Zimbia 7 2,047 Gabon 6 2,018 Ivory Coast 8 1.399 Kenya 9 1,357 Mozambique 4 1.327 Total 130 53,354 Source: World Bank 2014

Table 5 below shows the top 10 largest construction sectors by deal size in Sub Saharan Africa for the 2003 to 2013. From the table, we can see that Nigeria had most investments in its construction sector with over $17bn invested with more than 28 large projects administered. Ghana and South Africa came second and third with $10.9bn and $9.9bn worth of investments respectively into their construction sectors for the analyzed period. Mozambique was number 10 with 4 projects worth only $1.3bn meaning that the rest of Sub Saharan countries not included in the top ten list had investments of less than $1.3bn. The Table 6 below shows the top 10 recipients of external construction sector financing in Africa.

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Table 6. Top 10 recipients of external infrastructure funding Ranking PPI ODF 1 South Africa South Africa 2 Nigeria Kenya 3 Kenya Ethiopia 4 Tanzania Tanzania 5 Ghana Congo, D R. 6 Sudan Uganda 7 Côte d’lvoire Nigeria 8 Congo, D R. Ghana 9 Benin Senegal 10 Uganda Cameroon 10 Zambia 10 Burkina Faso Source: Gutman et al. (2015)

China Ghana Ethiopia Cameroon Zambia Nigeria Mozambique Mauritius Tanzania Sudan Eq. Guinea Uganda

Overall South Africa Nigeria Ghana Kenya Ethiopia Tanzania Cameroon Congo, D.R. Uganda Zambia

From Table 6, we note that South Africa was the most preferred destination for external infrastructure funding from Private Participation in Infrastructure (PPI), Official Development Funds (ODF) and the major foreign sponsor China. Figure 9 below shows the trend in the growth of external infrastructure investment commitments by source in Africa for the period 1990 to 2011.

Fig. 9. External infrastructure investment commitments by source in US$ million Source: (Gutman et al. 2015)

From Fig. 9, it can be seen that from 1990, Africa has heavily relied on official development funds for the implementation of its projects. The positive factor that can be noted from the above figure is the increase in private sector participation in infrastructure development from 1993 to 2012. Private sector participation now accounts for the bulk of infrastructure investment commitments to Africa. It can also be seen from Fig. 9 that, the role of Chinese investments has rapidly grown in the African construction sector from 2001.

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Figure 10 below shows the role of government funds in funding infrastructure development across Africa.

Fig. 10. African governments’ spending on infrastructure as a % to GDP (2012)

From the figure above, it can be noted that the majority of governments across Africa spend between 4.1% to 8% of their income to GDP on infrastructure development. It should however be noted that government spending on infrastructure is not the only source of infrastructure funding. In many developed market economies, the role of the private sector should always be greater than that of government. Figure 11 below shows the role of bond financing in infrastructure development. From the figure above, we can see that African governments have in the recent past resorted to sovereign bond issues for their infrastructure development ambitions. Zambia for instance has borrowed over $2.5bn in Eurobond issues to fund its infrastructure development program. Of the countries surveyed, Gabon and Ghana had the most debt. Many scholars have observed that the issue of Eurobonds by African countries in the recent past has created budget deficits as governments set aside money for foreign debt repayment. Table 7 below outlines the role of private funding in enhancing infrastructure development around the world. From Table 7, we can see that private infrastructure funders preferred mostly Latin America and the Caribbean, Europe and East Asia. Africa was the third most preferred

Project Finance for Africa’s Construction Sector: Can Stabilization Funds Work?

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Fig. 11. Sovereign bond issues by selected African Countries (2013) Source: Dealogic

Table 7. Private Participation in Infrastructure Investments by Region Regions

2013 PPI Investment US$ Billions

Latin America and 69.3 the Caribbean Europe and Central 28.5 Asia East Asia and Pacific 19.4 Sub Saharan Africa 14.9 South Asia 13.8 Middle East and 4.5 North Africa Total 150.4

Percentage of Total

2012 PPI Investment US$ Billions

Percentage of Total

Increase in 2013 over 2012

46%

87.0

48%

.20%

19%

22.5

12%

27%

13% 10% 9% 3%

17.2 12.8 35.1 6.7

9% 7% 19% 4%

13% 16% −61% −33%

100%

181.3

100%

−17%

Source: World Bank (2013b) and World Bank (2014)

destination. The Middle East and South Asia recorded a negative trend because these regions were the major exporters on infrastructure funds. Figure 12 below outlines the preferred sectors for PPIs in Africa. From the figure above, it is noted that for the period 2005 to 2013, PPIs preferred to invest in the telecom sector with 64.1% of total investments going to that sector. The second most preferred sector was electricity with 18.6% followed by seaports with 9.6%.

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Fig. 12. Private participation in african infrastructure investments by sector (2005–2013) Source: (Gutman et al. (2015))

7 Challenges of African Construction Sector Project Finance There are many challenges facing African construction sector project finance growth: Among the challenges are: – – – – – –

Less developed capital markets; Low domestic financial market liquidity Less construction sector company participation on stock markets; Corruption and hectic process of acquiring construction permits; Unavailability of credit ratings by African Construction Sector companies; and High Interest rates

The Fig. 13 below outlines the number of construction sector listed equities in selected countries.

Fig. 13. Construction-related listed equities in selected countries Source: KPMG Report (2015)

Project Finance for Africa’s Construction Sector: Can Stabilization Funds Work?

53

From Fig. 13, we can see that from the selected African countries, stock markets had only listed an average of 6 construction sector companies despite the overall number of listed companies on those respective markets exceeding 50 companies. Zambia for example only has 1 construction sector company listed out of a total of 22 companies listed on the Lusaka Stock Exchange. Table 8 below outlines interest rates in selected countries around the world. Table 8. Interest rates in selected African countries (2016) Country Cost of Capital (Interest Rate, %) United States of America 0.5 Chile 3.5 Japan 0.0 Nigeria 14 South Africa 7.0 Zambia 15.5 China 4.3 Ghana 26 Source: Author based on IMF, World Bank and Bank of Zambia data

From Table 8 below, we can see that African countries had the highest lending rates from the sampled population. This means that African companies are unable to raise funds on domestic financial markets. This is one of the reasons why Africa still depends on externally sourced finance to fund large infrastructure projects. Sourcing funding on foreign markets increases foreign exchange risks African companies because of the long term nature of projects.

8 Prospects for African Construction Sector Project Finance Despite the many challenges being faced in Africa in terms of project finance for the construction sector, the sector stills remains one of the most attractive around the world. Amongst the factors that construction sector project finance investors should look for in Africa are: – The high African infrastructure sector funding gap that gives opportunities to lenders; – High infrastructure deficit in Africa that allows for more projects to be implemented; – Cheap labour and construction costs that makes it possible for projects to be profitable; and – Fast population growth in African cities that shows high future demand for infrastructure.

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Fig. 14. Annual infrastructure funding gap Source: World Bank 2014

Figure 14 below outlines the yearly infrastructure funding Gap in Africa. From Fig. 14, it can be noted that Africa has an annual infrastructure funding deficit of $48bn that can potentially be taken up by various project financing sources given the attractive interest rates in Africa. Given the low interest rates in Europe and Japan, it is believed that Africa will be a preferred investment destination provided that the political and economic environment remains stable. Table 9 below outlines the deficit in infrastructure across Sub Saharan Africa. From the table above, we can see that the African continent remains a big market for infrastructure projects with high demand for infrastructure being recorded in the roads, telecommunications, and electricity generation sectors. The high level African infrastructure underdevelopment as compared to other low income countries around the world is the main reason governments and multilateral Export and Credit agencies should put the continent on its main infrastructure development agenda. Figure 15 below shows the cost of building across selected countries. From Fig. 15, it can be noted that only Angola amongst African countries sampled had the highest building costs. The rest of the African countries sampled had lower building costs as compared to countries from other continents making Africa a competitive destination for project funding due to cheaper construction sector costs. Table 10 below outlines the dynamics in population growth in the top 10 largest African cities. From Table 10, we can see how the population in major African cities has grown from 1985. Forecasts show increased population growth in all the major cities towards 2025. This population growth is a sign that there is an ever increasing demand for infrastructure across Africa signaling a higher future demand for project finance in the African construction sector.

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Table 9. Infrastructure deficit in sub saharan Africa Normalized units

Sub-Saharan African low-income countries

Other low-incone countries

Roads Paved-road density 31 134 Total road density 137 211 Telecommunications Main-line density 10 78 Mobile density 55 76 Internet density 2 3 Electricity Generation capacity 37 326 Electricity coverage 16 41 Water and sanitation Improved water 60 72 Improved sanitation 34 51 Source: Yepes, Pierce, and Foster (2008) and reproduced in Foster and Briceño-Garmendia (2009: 1–2). Note: Road density is measured in kilometers per 100 square kilometers of arable land; telephone density in lines per thousand population; generation capacity in megawatts per million population; electricity, water, and sanitation coverage in percentage of population with access to services.

Fig. 15. Building costs in selected countries Source: KPMG Report (2015)

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Table 10. Population Dynamics in Sub-Saharan Africa’s Top 10 most Populated Cities (Thousands) Urban 1985 1990 1995 Agglomeration Lagos 3,500 4,764 5,983 Cairo 8,328 9,061 9,707 Kinshasa 2,722 3,520 4,493 Khartoum 1,611 2,360 3,088 Abidjan 1,716 2,102 2,535 Dar-es-Salaam 1,046 1,316 1,668 Johannesburg 1,773 1,898 2,263 Nairobi 1,090 1,380 1,755 Kano 1,861 2,095 2,339 Cape Town 1,925 2,155 2,394 Source: World Urbanization Prospects: The

2000

2005

2010

2015* 2020* 2025*

7,281 8,859 10,788 13,121 15,825 18,857 10,170 10,565 11,031 11,944 13,254 14,740 5,414 6,766 8,415 10,312 12,322 14,535 3,505 3,979 4,516 5,161 6,028 7,090 3,028 3,545 4,151 4,923 5,896 6,971 2,116 2,683 3,415 4,395 5,677 7,276 2,732 3,272 3,763 4,114 4,421 4,732 2,214 2,677 3,237 3,958 4,939 6,143 2,602 2,895 3,271 3,902 4,748 5,724 2,715 3,100 3,492 3,810 4,096 4,388 2011 Revision, UNDESA, New York, 2012.

9 Recommendations From the above analysis, it is a fact that Africa is not attracting enough project finance in its construction sector as compared to other continents. This means that policy makers in African countries should effectively use income from export of mineral resources to fund infrastructure development. Many countries like Russia, Saudi Arabia, Kuwait and the United Arab Emirates have amassed a lot foreign exchange reserves that they have channeled to fight budget deficits when commodity prices are low and invest in infrastructure development and other sectors of the economy when prices are very high. Table 11 below outlines various stabilization funds that have been set up in selected countries and their main achievements. Table 11. Stabilisation funds in selected countries Country Name of Fund Russian Reserve Fund Federation Fund for Future Generations

Uses of Funds Financing budget and pension fund deficit Long term investments to save for future Generations

Kuwait

General Reserve Financing budget Fund deficits

Chile

Copper Stabilisation Fund

Facilitating fiscal stability

Major Achievements Russia has managed to balance large capital inflows and outflows in the short term, stabilise the Russian Rouble, funded the winter Olympics and insulated itself from the effects of the global economic crisis and sanctions Kuwait managed to create intergenerational equity e.g. transforming non-renewable assets into diversified financial assets for future generations Managed to provide steady income for the government budget in periods of low copper prices (continued)

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Table 11. (continued) Country Norway

Nigeria

Name of Fund State Petroleum Fund

Stabilisation Fund Future Generations Fund Nigeria Infrastructure Fund Venezuela Macroeconomic Stabilisation Fund Source: Author

Uses of Funds Economic diversification

Major Achievements Norway has managed to diversify its economy by investing in equities, real estate, agriculture sector and other fixed income securities Financing budget Nigeria has managed to develop deficits domestic capital assets, including but Long term investments not limited to transport, energy, water management and communications to save for future though the funds are still young Generations Financing infrastructure development From 1999 the funds Venezuela managed to fund its socialist agenda but low oil prices can be used as the have reversed all gains made President orders

From Table 11 above, it can be seen that most resource rich countries are increasingly creating funds to accumulate resources from the export of mineral resources when commodity prices are very high. The accumulated resources mostly are used to provide fiscal stability when commodity prices are low but countries like Norway, Nigeria and Russia have used these resources to fund strategic infrastructure development with Nigeria creating a specific infrastructure fund. In order to efficiently diversify Africa’s economy with the main aim of enhancing infrastructure development through the provision of government stimulated project finance, African governments need to take an active role by deliberately creating stabilisation funds whose main aim will be to cushion any price reduction in commodity prices and also to provide for reserves for future generations so that they can also benefit from today’s wealth even many years after the resources are depleted. The stabilisation fund should comprise of the Reserve fund whose main aim is to provide for safeguard against short term risks and the Fund for Future Generations whose main aim is to provide for future generations. The main source of funds for the stabilisation fund should be taxes on excess profits. Money from the reserve fund can be invested in short term first class government papers like USA treasury bills. Money from the Fund for future generations should only be invested in first class long terms bonds and notes and also in the proposed Economic Diversification fund whose main aim is to provide cheap long term loans to African finance providers guided to provide project finance at subsidized market rates. The formation of the Economic Diversification fund to be run by a committee comprising of members from individual country central banks and the Ministry responsible for finance will help transform tax income from excess mine profits into loans for other sectors of the economy with the construction sector being top priority. The algorithm of the organization of the Economic diversification fund is outlined in Fig. 16 below.

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Fig. 16. Algorithm of the organization of the Economic diversification fund Source: Author

The Mechanism of the fund is as follows: Step 1. The government based on forecasted excess tax collections will every year decide on how much money is pumped into the fund created specifically for economic diversification – the Economic Diversification fund. Step 2. From the Economic Diversification fund which will be overseen by the Central Bank, long term loans will be provided to commercial banks through a tender process with the banks possessing the best finance utilisation proposals getting the funds. Step 3. Banks will on agreed periodic intervals pay back the principal plus interest to the Economic Diversification Fund. Step 4. The custodians of the Economic Diversification Fund together with government will decide on the size of the tranche of money from profits that will be returned to the Fund for Future Generations. The smooth functioning of the proposed funds will need transparency, effective tax systems and the political will. The Economic Diversification Fund will help solve the challenges facing the African Banking systems by providing a stable resource base, reducing the effects of low capitalization of African financial institutions by supplying cheap long term finances. Since acquiring of funds will be on a competition basis, governments can be able to demand that a large portion of their resources are loaned to sectors it feels need them most. This should however not be confused with guided lending because acquiring such resources will be given only to banks that will ask for them.

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10 Conclusions Despite the major challenges being facing by the African continent in terms of attracting construction sector project finance, statistics presented in this paper show the following positive trends: – Increase in Private Sector Participation in funding construction sector projects; – Increase in funding for electricity generation sector that has potential to reduce energy deficits on the African continent; – High and attractive lending rates that have a potential entice investor from low and in some cases negative interest rate countries to Africa; – High population growth that guarantees demand for infrastructure; – Low construction labour costs making Africa attractive; – Acquiring of credit ratings by various African countries making it possible for them to access sovereign debt; and – The increasing role of China as a project finance provider rather than relying on western sources that provide funds with conditions attached.

References African Development Bank (AfDB). Africa Infrastructure Development Index (AIDI) 2000–2010. http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Economic_Brief_-_ The_Africa_Infrastructure_Development_Index.pdf Ahmad, E.: Public Finance Underpinnings for Infrastructure Financing in Developing Countries. Paper prepared for the G-24 (2014). http://g24.org/wp-content/uploads/2014/03/PublicFinance-and-Infrastructure_23Feb_2014.pdf Davis, J., Ossowski, R., Daniel, J., et al.: Stabilization and Savings Funds for Nonrenewable Resources: Experience and Fiscal Policy Implications. ‘Fiscal Policy Formulation and Implementation in Oil- Producing Countries’, IMF (2003) Della, C.R., Yermo, J.: Institutional Investors and Infrastructure Financing. OECD Working Papers on Finance, Insurance and Private Pensions, No. 36. OECD Publishing (2013). http:// dx.doi.org/10.1787/5k3wh99xgc33-en Delloitte: Construction on the African Continent: opportunities, risks and trends (2012) Dornel A.: Project Finance for Infrastructure in Africa. World Bank (2014) Fasano, U.: Review of the Experience with Oil Stabilization and Savings Funds in Selected Countries. IMF Working Paper, WP/00/112 (2000) Gatti, S.: Project Finance in Theory and Practice, II edn. Academic Press, San Diego (2012a) Gatti, S.: Project Finance in Theory and Practice, II edn. Academic Press, San Diego (2012) Gatti, S.: Private Financing and Government Support to Promote Long-term Investments in Infrastructure. OECD Working Papers on Finance, Insurance and Private Pensions, No. 37, OECD (2014) Gatti, S.: Fueling European Union Growth: Financing and Investing in Infrastructure. Working Paper (2012b) Gatti, S., Hellowell, M., Vecchi, V.: Does the private sector receive an excessive return from investments in health care infrastructure projects? Evidence from the UK. Health Policy 110–2, 243–270 (2013)

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Gelb, A., Tordo, S., Halland, H.: Sovereign Wealth Funds and Domestic Investment in ResourceRich Countries: Love Me, or Love Me Not? Poverty Reduction and Economic Management (PREM) Network (2014). World Bank www.worldbank.org/economicpremise Groce, R.D., Gatti, S.: Financing infrastructure – International trends. OECD J. Finan. Market Trends 2014(1) Gutman, J., Sy, A., Chattopadhyay, S.: Financing African Infrastructure – Can the world deliver? GE Foundation Publication (2015) Ismail, N., Mahyideen, M.: The Impact of Infrastructure on Trade and Economic Growth in Selected Economies in Asia, ADBI Working Paper Series (2015) KPMG Construction and Infrastructure Sector report 2015. http://www.kpmg.com/Africa/en/ IssuesAndInsights/Articles-Publications/General-Industries-Publications/Documents/ Construction%20and%20Infrastructure%20in%20Africa%202015.pdf Kudrin A.: Stabilisation Fund: Foreign and Russian Experience. Voprosi Ekonomiki, vol. 2 (2006) Levchenko, A.A.: Institutional quality and international trade. Rev. Econ. Stud. 74(3), 791–819 (2007) Mafimidiwo, B., Iyagba, R.: Comparative study of problems facing small building contractors in Nigeria and South Africa. J. Emerg. Trends Econ. Manag. Sci. (JETEMS) 6(2), 101–109 (2015) Naveen, T.: How Sovereign Wealth Funds are Impacting Infrastructure Projects in Emerging Markets. Duke University School of Law (2016). https://law.duke.edu/sites/default/files/ centers/cicl/Abstract-%20Naveen%20Thomas.pdf Reisen, H.: How to Spend it: Sovereign Wealth Funds and the Wealth of Nations. OECD Development Centre, Policy Insight. See also for a longer version “How to spend it: commodity and non commodity sovereign wealth funds”, Deutsche Bank Research, Working Paper Series, Research Notes, 28 June 2008 (2008). https://www.dws-investments.com/EN/ docs/market-insight/comm_non_comm_Q2_08.pdf Rozanov, A.: A liability based approach to sovereign wealth. Central Banking Quarterly Journal Vol. 18, no. 3 , February 2008. Ruiz-Arranz, M. and M. Zavadjil (August 2008), “Are emerging Asia’s reserves really too high?”, IMF Working Paper, 192 Sanjay, P.: Sovereign Wealth Funds and Long Term Investments in Infrastructure: Why the glaring absence? Columbia University (2015). http://www.ofce.sciences-po.fr/pdf-articles/ actu/SWFs-LTIs-and-the-Infrastructure-Platform.pdf Schubert, W.: Sovereign wealth funds and dedicated infrastructure investment. J. Appl. Business Econ. 12(6), 32–39 (2011) World Bank: Handbook on Infrastructure Statistics. Washington, DC (2011). http://www.afdb. org/fileadmin/uploads/afdb/Documents/Publications/AfDB%20Infrastructure_web.pdf World Economic Forum: Global Competitiveness Index (2014). http://www.weforum.org/reports

The Shift of the Competition Paradigm in the Banking Sector of Russia Anna Kladova1(&), Marina Alpidovskaya2, and Valeriy Gordeev3 1

Financial University Under the Government of the RF, Yaroslavl Branch, Yaroslavl, Russia [email protected] 2 Financial University Under the Government of the RF, Moscow, Russia [email protected] 3 Yaroslavl State Technical University, Yaroslavl, Russia [email protected]

Abstract. Bank competition has been renowned for its relevance to the national economies in general, especially in developing countries. The paper presents the results of an integrated research of bank competition in Russia on the basis of neoclassic non-structural methods and the political economy approach. The findings show a shift of the competition paradigm in the sector due to the activity of the state which now incorporates the roles of the regulator and of the major competitor in the national banking market. Keywords: Bank competition  Competition paradigm Measures of competition  State intervention JEL Classification Codes: E58

 Monopolization

 G21  L12

1 Introduction The competition in banking both on national and global levels has been a matter of significant scientific interest for several decades. The major findings in this sphere imply that the lack of competition in banking is detrimental to such matters as prices of financial products, access to finance for small business entities, the entire life-cycle dynamics of non-financial industries (Cetorelli 2003; Cetorelli and Strahan 2006) as well as economic growth in general (Bikker et al. 2012). However, while the level of competition in most industries is typically associated with concentration and assessed in terms of the Structure-Conduct-Performance (the S-C-P) Paradigm, numerous banking sectors’ studies have proven that contestability might be a feature of highly concentrated banking markets if the entry and exit barriers in such markets are low (Arrawatia and Misra 2012). Therefore, the market structure of a banking market is usually a starting point of a research involving more complex non-structural methods than those which are normally used in the S-C-P Paradigm. The banking sector of Russia consists of 927 registered credit organizations. Nonetheless, only 567 of them (approximately 62%) are actually considered operating at the moment while others’ licenses have been either annulled or withdrawn by the © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 61–68, 2019. https://doi.org/10.1007/978-3-030-00102-5_5

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Central Bank of the Russian Federation (the CBR). The quantity of banks operating in Russia has been systematically declining for more than a decade – from 1329 in 2004 to 572 in 2017. The significant acceleration of the decline has coincided with the change of the CBR’s top management in 2013 and the following radical shift in the CBR’s prudential policy. Naturally, this process causes scientists’ interest towards the true reasons of the changes in the Russian banking sector, the sector’s actual market structure and its level of competition as well as towards the role of the state in the evolution of bank competition in Russia. The extent of bank competition in Russia has been examined by many Russian and foreign researchers (Vernikov 2009; Mamonov 2010; Anzoategui et al. 2010; Fungáčová et al. 2010) in the past decade. This paper adds to the existing body of research by presenting a combined view of bank competition in Russia which includes the non-structural instrumental assessment of the national banking market as well as an explanation of the current competition processes in it through a political economy perspective.

2 Materials and Methods 2.1

Sample Selection

Our research is based on the bank-level panel dataset derived from the official quarterly and annual financial reports of the banks included in the sample. We have also used the aggregate data and the bank rankings provided by the banki.ru website. The sample includes 200 banks which have accounted for 91.6% of the sector’s total assets by 2013. Due to the uneven composition of the sector two characteristics have been taken into account: the ownership type and the size of the banks. The description of the final sample is presented in Table 1. Table 1. Descriptive characteristics of the final sample of banks The size of the bank

Total quantity of banks in the group

Large bank Medium bank Total

79 121

The ownership type ForeignStateowned banks controlled banks 15 20 6 16

200

21

36

Domestic private banks 44 99 143

The criteria of the size are based on the classification introduced by M. Mamonov (Mamonov 2010). According to it, the banks, total assets of which exceed 50 bln roubles, are considered large. The banks with total assets lying between 10 and 50 bln roubles are classified as medium. The small and extra-small banks with total assets under 10 bln and under 1 bln roubles respectively have not been included in the sample

The Shift of the Competition Paradigm in the Banking Sector of Russia

63

due to their statistically insignificant impact on the general body of banks in Russia. The state-controlled banks include those in which the state’s direct or indirect share exceeds 50%. The group also includes the subsidiary banks of the state-controlled banks. The foreign-owned banks include the ones in which the non-residents’ share exceeds 50%. The domestic private banks have been chosen on the basis of three conditions: the resident status of the owners, absence of any known direct or indirect links between the owners and the state as well as the share of such owners exceeding 50%. 2.2

Methodological Approach

The instrumental assessment of the level of competition in the banking sector of Russia has been performed within the non-structural approach. Two alternative non-structural measures of market power have been estimated: the Lerner index as a direct measure and the Panzar and Rosse H-statistic (Panzar and Rosse 1987) as an indirect one. The full description of the variables used in the equations for both of the measures is presented in Table 2. Table 2. Variables used for the calculation of the H-statistic and the Lerner indexes Variable TCi TAi IIi TIi AFRi PPEi PONILEi OIi/IIi EQi/TAi LNSi/TAi ONEAi/ TAi DPSi/Fi ROAi a0 ai, bi, ci, d ei

Description of the variable Total costs of a bank Total assets of a bank Interest income of a bank Total income of a bank The price of a bank’s borrowed funds The price of labor for a bank The price of a bank’s physical capital Ratio of a bank’s other income to its interest income Ratio of a bank’s equity to its total assets Ratio of a bank’s total loans to non-financial entities and individuals to its total assets Ratio of a bank’s other no-expense assets to its total assets A bank’s share in the banking sector’s total deposits of the non-financial entities and individuals A bank’s return on assets Constant variable denoting bank-level fixed effects The estimated coefficients of the cost function (the Lerner index) or the product function (the H-statistic) Error term, which is assumed to be normally distributed

The descriptive statistics of the variables in both of the models are presented in Table 3.

64

A. Kladova et al. Table 3. Descriptive statistics of the variables in the H-statistic and the Lerner indexes

Variable

lnAFR

lnPPE

lnPONILE

lnOI/II

lnEQ/TA

lnLNS/TA

lnONEA/TA

lnDPS/F

lnTA

lnII

lnTI

lnTC

Mean

−3.021

−3.978

−6.911

−3.837

−2.043

−0.753

−2.605

−0.496

17.862

15.314

17.236

17.208

Median

−2.936

−3.922

−6.900

−3.864

−2.128

−0.518

−2.476

−0.359

17.550

14.997

17.015

16.995

Maximum

0.556

−1.693

−2.236

0.051

0.584

−0.047

−0.537

0.269

23.368

20.813

22.928

22.890

Minimum

−5.962

−5.515

−10.481

−9.915

−2.767

−8.283

−5.401

−8.419

12.628

−9.908

13.828

13.732

St. dev.

0.567

0.567

1.371

1.527

0.401

0.867

0.760

0.853

1.284

1.294

1.437

1.442

2.2.1 Lerner Index The Lerner index represents the extent to which a bank exerts excessive market power. It is usually defined as the difference between a bank’s price and the marginal cost, divided by the price. The index ranges between a minimum of zero, which denotes perfect competition, and a maximum of 1. The lower numbers indicate lower market power and, therefore, higher levels of competition, and 1 indicates monopoly. The numbers between 0 and 1 are interpreted as monopolistic competition. In this research, the banks’ prices are calculated as the ratios of total revenue to total assets. The marginal cost is estimated on the basis of a translog cost function with total assets as the output price and prices of labor, physical capital and borrowed funds as the input prices (1): LnTCi ¼ aoi þ b0 lnTAi þ b1  0; 5  ðlnTAi Þ2 þ a1 lnAFRi þ a2 lnPPEi þ a3 lnPONILEi þ b2   0; 5  lnTAi  lnAFRi þ b3  0; 5  lnTAi  lnPPEi þ b4  0; 5  lnTAi  lnPONILEi þ a4 lnAFRi   lnPPEi þ þ a5 lnAFRi  lnPONILEi þ a6 lnPPEi  lnPONILEi þ a7

ð1Þ

 0; 5  ðlnAFRi Þ2 þ a8  0; 5  ðlnPPEi Þ2 þ a9  0; 5  ðlnPONILEi Þ2 þ ei The equation is estimated using Ordinary Least Squares (OLS). The marginal cost of a bank is calculated using the estimated coefficients of the cost function according to the following Eq. (2): MC ¼ ðb0 þ b1 lnTAi þ b2 lnAFRi þ b3 lnPPEi þ b4 lnPONILEi Þ 

TCi TAi

ð2Þ

After the process of estimation of the marginal cost is over, individual Lerner indexes as well as general ones both for the sector and the groups within the sample can be calculated and compared. 2.2.2 The H-statistic The H-statistic is a measure which represents the sensitivity of a bank’s revenues to its input prices. The measure’s maximum is 1, which denotes perfect competition. The numbers between 1 and 0 indicate monopolistic competition, while 0 and negative values mean that the sector operates under monopoly or a cartel.

The Shift of the Competition Paradigm in the Banking Sector of Russia

65

The H-statistic is obtained by estimating the equation of a bank’s product (3): lnIIi ¼ ai þ b1  lnAFRi þ b2  lnPPEi þ b3  lnPONILEi þ c1  ln  ln

OIi EQi þ c2  ln þ c3  IIi TAi

LNSi ONEAi DPSi þ c4  ln þ c5  ln þ ei TAi TAi Fi

ð3Þ The equation is estimated using OLS. The interest income of a bank is used as a proxy for its product. The proxies for the input prices are similar to the ones in the cost function. The H-statistic itself is calculated as a sum of the b1, b2 and b3 coefficients. In order to assess the level of competition with the help of the H-statistic, one should perform a preliminary test of the market is question. The purpose of the test is to verify that the market in question is in fact in long-run equilibrium. An indicator of that condition is a situation in which the return on assets is not related to input prices. Otherwise, the results and the interpretation of the H-statistic are not to be considered valid.

3 Results Using the panel dataset, we have calculated the Lerner indexes and the H-statistic for the banking sector of Russia in general as well as for the three types of ownership and the two types of bank sizes separately. The estimated values are presented in Table 4.

Table 4. The H-statistics and the Lerner indexes for the banking sector of Russia The sector in general/A segment of the sector The Lerner index The H-statistic The banking sector 0.46 0.70 Large banks 0.48 0.56 Medium banks 0.45 0.70 State-controlled banks 0.47 −0.45 Foreign-owned banks 0.49 0.89 Domestic private banks 0.45 0.50

The Lerner indexes estimated in our research, contrary to the earlier works (Anzoategui et al. 2010; Fungáčová et al. 2010), indicate that the level of market power in the sector in general is more than twice as high as the earlier estimated levels. Naturally, the levels of market power inside the separate groups are also much higher than the ones calculated by other researchers. We suppose that the major reason of this deviation is the difference in the time span covered by the earlier research and the fact that the span does not take into account the world financial crisis of 2008–2009 as well as its aftermath for the economy of Russia. In our opinion, the global financial shock could not pass unnoticed for the banks operating in Russia. The ones which have

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survived the turbulence have done so by employing competitive strategies ensuring that their level of market power is sufficient for staying in business. The H-statistic for the banking sector in general is in line with some of the earlier research (Mamonov 2010; Anzoategui et al. 2010). It indicates that the banks in Russia generally operate under monopolistic competition. However, our results for the two types of bank sizes and the three types of ownership differ significantly from those presented by other researchers. According to our estimations, the level of competition in the group of large banks is much lower than the one estimated by other researchers (Mamonov 2010). Although it still indicates that the group operates under monopolistic competition, the results are not as close to perfect competition as in those works. The same is true for the group of medium-sized banks. Also, while the groups of foreignowned and domestic private banks operate under monopolistic competition, our research shows that the former are much closer to being perfectly competitive than the latter. The difference between the two groups has not been as significant in the earlier research. But the most prominent difference is the one between our estimation of H-statistic for the group of state-controlled banks and the results presented in the earlier published works. Our result indicates that the state-controlled banks in Russia either operate under monopoly, or, a more plausible interpretation, form a cartel. Our speculations on the possible reasons of that are presented in the next section.

4 Discussion Considering that the major purpose of a cartel is raising the profits of its members by elimination, restriction and regulation of competition within the cartel while simultaneously suppressing the external competitors, there is no competition, from the political economy point of view, among the members of a cartel. Therefore, the state-controlled banks in Russia do not compete with each other. Instead, they represent a single competitor in the banking market of Russia – a competitor created and protected by the state as the primary stakeholder. Being united as a competitive entity, the banks personify the state as the major participant of the competitive processes in the market in question. And while normally in the market economy the state is rather a regulator, than a participant, the specific conditions of the economy of Russia and of the evolution of its banking sector, in particular, ensure that the current role of the state is completely different. Due to the fact that, unlike the Western banking sectors, the initiator of creating and developing the banking sector of Russia has historically been the state, its presence in the market has always been much more prominent and visible. And while it has, in fact, provided a more or less market framework for the sector up to the Socialist revolution in 1917, it has always aimed to keep the financial benefits of its presence in the banking sphere. The actions which the state has employed in order to reach this goal have varied throughout the centuries evolving from creating a network of state-owned banks in the 18th century and systematically providing them with paternalistic support to nonlimited “borrowing” the resources of such banks later on in order to finance the deficit of the state budget. During the Soviet era, the state has moved from total elimination of

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the banking sector to its resurrection as a state monopoly which has allowed a consistent use of the sector’s funds as the cheapest form of financial resources for almost 70 years. The post-Soviet transition period has briefly created an illusion of the state’s retreat from the banking market, with hundreds of private banks, both foreign and domestic-owned, appearing and actively competing with each other. However, at the eve of the 21st century the illusion has quickly disappeared at the first signs of the global financial turbulence, and by now the state’s presence in the banking market of Russia has been continuously expanding for more than a decade. Thus, the traditional paradigm of market competition in banking which assumes that autonomous banks compete in a competitive environment created and supported by the state, has never been fully applicable to the reality of the banking market in Russia. And while during certain periods of time the sector has been fairly close to perfect competition, its “normal” market structure is either monopolistic competition or oligopoly with a very strong presence of state as the regulator and the beneficiary at the same time. However, during the last decade the sector has witnessed a shift of the competition paradigm, according to which the state is now actually a participant of the banking competition in Russia while simultaneously acting as the regulator of the market environment. This dual position has brought to life a new set of specific competitive methods ensuring the leading position of the state as a competitor in the market. The main of such “exclusive” methods is the “cleanup” of the sector by the CBR. This involves frequent and unpredictable revocation of bank licenses, which invariably leads to the banks’ bankruptcies. The reasons of these actions are often formal and nontransparent, and the victims of such revocation are very often the banks from the top100 of the sector. Naturally, the process causes panic among the clients, both corporate and private. In this unstable situation only the state-controlled banks stay invincible to the prudential action, which obviously adds to their image as the only reliable type of banks in the country, attracts numerous clients (especially private depositors) and ensures the high level of their market power. Another “exclusive” competitive method of the state is the purchase of the large domestic private banks through the CBR’s subsidiary entity - the Banking Sector Consolidation Fund. The Fund has been formed at the expense of the CBR in order to finance the rehabilitation of banks as a means of preventing their bankruptcy. In the process of the rehabilitation the banks are transferred into the state’s property and, therefore, join the group of the state-controlled banks thus adding to the state’s competitive power in the market. Coincidentally, the banks which are now under the rehabilitation procedures are large banks with wide and well-developed networks throughout the country. Altogether, the actions of the state as a competitor in the market lead to its continuous monopolization which, in turn, may cause severe disruption of the national economy in general.

5 Conclusion The aim of the paper was to cover the current competition paradigm of the banking sector of Russia through an integrated research involving both instrumental estimations of the level of competition and market power in the sector and an explanation of the

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estimations through a political economy perspective. Our findings have shown that while the sector in general is operating under monopolistic competition, one of the leading competitors in the market is the state personified by a cartel of the statecontrolled banks. Being simultaneously a regulator and a competitor, the state uses specific competitive methods which lead to the sector’s monopolization and may be detrimental both to the banks’ clients and to the economy in general. Acknowledgments. The article is published with the support of the grant of the Russian Foundation for Basic Research (RFBR) “Problems of the configuration of the global economy of the 21st century: the idea of socio-economic progress and possible interpretations, No. 18-01000877 A”.

References Anzoategui, D., Martinez Peria, M.S., Melecky, M.: Banking Sector Competition in Russia. Policy Research Working Paper 5449 (2010) Arrawatia, R., Misra, A.: Competition in banking industry: a literature review. IRACST 1(3), 120–126 (2012) Banki.ru. http://www.banki.ru/ Bikker, J., Shaffer, S., Spierdijk, L.: Assessing competition with the Panzar-Rosse model: the role of scale, costs, and equilibrium. Rev. Econ. Stat. 94(4), 1025–1044 (2012) Central Bank of the Russian Federation. http://www.cbr.ru/ Cetorelli, N.: Life-cycle dynamics in industrial sectors: the role of banking market structure. Federal Reserve Bank of St. Louis Rev. 85, 135–147 (2003) Cetorelli, N., Strahan, P.: Finance as a barrier to entry: bank competition and industry structure in local U.S. market. J. Finan. 61, 437–461 (2006) Fungáčová, Z., Solanko, L., Weill, L.: Market power in the Russian banking industry. BOFIT Discussion Papers 3 (2010) Mamonov, M.: Non-structural approach to evaluation of the level of competition in Russian banking sector. Bankovskoye delo 11, 17–24 (2010) Panzar, J., Rosse, J.: Testing for ‘monopoly’ equilibrium. J. Ind. Econ. 35(4), 443–456 (1987) Vernikov, A.: Russian banking: A comeback of the state. BOFIT Discussion Papers 24 (2009)

Socio-Cultural Activities in the Implementation of Educational Programs for Tourism Based on the Competence Model Irina V. Borisenko ✉ , Tatyana V. Degtyaryova, and Gulmira B. Grigoryeva (

)

Institute of Service and Business (Branch) of Don State Technical University, Shakhty, Russia [email protected], {Shevchenko76,Grigoryeva62}@bk.ru

Abstract. The article discusses the prospects of realization of the competence approach in the Russian tourism education. The article contains the results of the study on the implementation of competence model of training specialists for tourism through the prism of socio-cultural activities. Keywords: Competence · Competence model of a specialist Socio-cultural activities · Socio-cultural animation and tourism

1

Introduction

The training system of professionals for tourism industry in Russia began to develop in the 1990s. At this time the first state educational standards appeared. In 2011 the Russian higher education system underwent some significant changes, it was then that Russian universities switched to a multilevel system of education, in connection with the adop‐ tion of Federal state educational standards (FSES) of a new generation, which include basic educational programs (BEPs). Those BEPs are being implemented through the competence model. First of all, we should note some differences between the term “competence” in Europe and Russia: “The concept of “competence” includes several terms: the inborn tendency (talent), ability (personalities), skills…”, and in Russia it includes: “the ability of a graduate to apply knowledges, skills and personal qualities for successful activity in a certain area”. In addition to fundamental differences of understanding of compe‐ tencies it should also be emphasized that in the Russian version (a bachelor of tourism) the professional competences dominate over the cultural ones (16 vs 14). Their analysis suggests that, in the framework of the Russian competence model the student must not only have a body of knowledges and develop a set of skills – on completion of training he/she needs to have the motivation to operate effectively outside of the classroom tasks. We can consider the motivation to acquire tourism education as an indicator of personal development and the success of adaptation as a specialist in the field of tourism - as an indicator of professional development of a person and his/her successful career. It is clear that the difference between these two results is huge. This problem is compounded by a lack of clear definitions of certain competencies in the Federal State Educational Standards (FSES), which does not allow to correlate them © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 69–76, 2019. https://doi.org/10.1007/978-3-030-00102-5_6

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with certain sets of knowledges. And, as a consequence, based on the competences proposed by FSES is quite difficult to formulate a clear “model specialist”. All this actualizes the need for search and development of new approaches and mechanisms in the preparation of a specialist in tourism. In this article, the authors have proposed a model of training of specialists in tourism through the prism of socio-cultural activities. The study was based on the hypothesis that the implementation of competence-based approach is not only the problem of the content of education, but of the learning techniques used and the creation of appropriate pedagogical conditions.

2

Theoretical Basis of the Study and Literature Review

Modern socio-cultural activities pay more and more attention to cultural values as a factor of stabilization and strengthening of spiritual and moral potential of Russia. A special attention should be paid to the modern theory of socio-cultural activities which developed the concept of having a deep relationship with socio-cultural animation. Despite the fact that the majority of domestic scientific works animation is considered in the context of entertainment and recreation, there is a tendency to give it a deeper meaning associated with the development of personality and his/her appeal to spiritual values. The socio-cultural animation is one of the most rapidly developing areas of modern socio-cultural activities, which involves implementation of creative programs of rehabilitation, recreation, socio-psychological consolidation of public groups on the basis of the cultural values. Gradually, the interpretation of socio-cultural animation as social-educational activ‐ ities to promote the spiritual and moral principles takes place. The socio-cultural anima‐ tion is a complex concept, the theoretical foundations are closely associated with social pedagogy. Jacques Friedman, who developed the Programme of education of the nation in France in the 70s of the XX century, talked about the creation of harmony of the unity of a child and his/her development. As a result of this program by the end of the 20th century the socio-cultural animation had become an independent phenomenon in the field of leisure. Up to 60s of XX century the socio-cultural animation had no scientific understanding. R. Labourie and P. Bernard write about the difficulty to distinguish the space of animation, produce a lot of areas of entertainment activities. French sociologists who studied the entertainment activity saw the fundamental role of culture. The socio-cultural animation has been actively developing in Russia for several decades as a sphere of practical activity. The bibliographical survey of books and thesis in the degree which can be called “socio-cultural animation in education” found in total 33 titles, including: 20 of disser‐ tation research; 2 of monographs; 11 of training and educational textbooks. In modern Russian science the thesis research in the socio-cultural animation were defended in the section of Pedagogical Sciences. The significant results were achieved in two academic programs: “Theory, methodology and organization of socio-cultural activities” and “Theory and methodology of professional education”. Here we can see

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the beginning of systematic study of this topic, considered as a perspective direction of development of science and practice. It is important to note that the study of the socio-cultural animation began in Russia with the thesis by E. B. Mambekov “Leisure in France: an animated model”, defended in 1992. These studies were continued in 2005 with the works which showed the trends in the decision of socio-significant problems through the implementation of the educational potential of technologically organized resources of culture and art. In the basis of these studies there are theories by A. D. Zharkov, M. A. Ariarsky, N. N. Yaroshenko, etc. Of particular importance for our study are the works of N. N. Yaroshenko which reveal the essence and importance of the socio-cultural animation as one of the most rapidly developing areas of the socio-cultural activities. The theoretical basis of the study consists of philosophical, psychological and peda‐ gogical concepts and theories of the personality development: – the requirement and motivational theory of the organization of behavior (N. V. Simonov); – youth leisure as a phenomenon, integrating personal and socio-cultural factors, recreational and educational functions and implemented on the basis of their collab‐ oration (B. C. Bibler, A. Sukalo, etc.) – regulations on self-development which is based on the internal contradictions as major factors for development (S. L. Rubinstein, V. I. Andreev); – concepts of socio-cultural activities developed in the works of M. A. Ariarsky, E. I. Grigorieva, A. D. Zharkov, Yu. D. Krasilnikov, V. I. Solodukhin, T. K. Solodukhina, V. Ya. Surtaev, H. H. Yaroshenko, etc.; – theoretical analysis of socio-cultural activities in the formation and development of personality done by T. G. Bortnikov, M. I. Dolzhenkova, G. N. Novikova, V. M., Ryabkov, E. Yu. Streltsova, B. A. Titov, V. E. Triodin, V. V. Tuev, D. V. Shamsut‐ dinova, etc. To problems of professional training of specialists of tourist industry in Russia a number of studies are devoted. These studies deal with the aspects of training specialists in the sphere of tourist animation in the educational institutions of Tourism degree (I. I. Bulygina, T. I. Galperin, O. V. Eremkina, V. D. Ermilova, L. V. Kurylo, F. N. Lavrov, P. O. Losaberidze, E. M. Priezzheva, L. A. Semenova, I. F. Sadzhai, A. A. Fedyakin, etc.). Another group consists of researchers engaged in the study of the structure of the modern education system, the development of various innovative projects in the field of socio-cultural activities, taking into account religious, national, regional and local specificity. They are works by S. P. Belovolova, V. S. Bibler, T. F. Kryaklina. Among the main characteristics of the study of methodological literature in the sociocultural animation we should notice its practical, methodical character, and its orienta‐ tion on the formation of a specialist as an organizer of leisure activities of the population in the tourism industry. Despite the significance of the results of scientific research and the presence of the pedagogical experience of using the potential of the technology of the socio-cultural animation, none of the authors have not attempted to justify the socio-pedagogical

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approaches for the use of tools of the socio-cultural animation in tourism education taking into account competencies and learning outcomes. Having studied the experience of domestic and foreign theorists and sources in the field of animation we propose the following definition: the socio-cultural animation is a special direction in an animation environment, research and transformative activities of which is aimed at community groups or individuals of society to study their social behavior, using a variety of social, pedagogical and psychological methods.

3

Methods and Subject Base of a Research

The choice of methods has been caused by the need to solve two main objectives of the research: (1) to reveal and record the requirement to the professional activity of the bachelor of tourism in the form of obvious descriptors; (2) to formulate the personal characteristics necessary for successful realization in this type of professional activity. To solve the first task we use the method of the content analysis and synthesis of the official and informal (corporate) documents containing the description of the labor func‐ tions, the abilities and knowledges necessary for their implementation, job evaluation catalogs. National standards of tourism, qualification reference books, duty regulations of the enterprises of tourism, the Project of a national frame of qualifications became empirical base for the realization of this task. During the research work we analize the psychological, professional and adaptation changes of students of the Tourism degree, including their questioning, their systematization and classification was carried out.

4

The Results of the Study (Findings and Discussion)

The view of tourism education through the prism of socio-cultural activities (and more specifically - the socio-cultural animation) allowed the authors not only to identify the problems in implementation of the competence approach the BEPs (for the FSES), but also to find their solutions. (1) The employers were interviewed and the survey showed that 75% of managers see the problem of adaptation of new employees in the absence of the skills of group work. Thus, we needed to include in the curriculum the forms of work aimed at the formation of intergroup and group relations. Interpersonal and intergroup relations as forms of socializing communication take in sociocultural animation a certain place. In the course of such relationships deep psychological levels of interaction of individuals play out. Supportive atmosphere natural to the animated programs provides an environment for effective interpersonal relationships that rebuilds the person, forms his/her new opportunities and shows potential ones. The Department organized the work of two clubs: “Heritage of the Don region” and leisure club “Centrifuge”. Event organizers of the clubs were groups of students studying at this time some special discipline “Organization and Realization of Excursions” and “Animation”, participants were students of all courses of Tourism. The “Centrifuge”

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arranges unique, singular events, workshops, trainings, thematic discussions, video presentations, quizzes, entertainment programs on various subjects. The work of the clubs is supervised by teachers and is fixed in the programs of disciplines as practical. As a result, the student organizers get managerial competence (organizational skills, responsibility, and a great reputation of the lead guide) and professional competence (higher professional education, work experience, knowledge of a foreign language). With the implementation of these teaching methods all the students, both the organ‐ izers of club events and the members of clubs formed the social competence - the ability to work in teams and motivate, influence and persuade, the ability to learn innovation, resolve conflicts, and of course a personal charm. Especially it should be noted that, despite the voluntary nature of participation in the meetings of the clubs, more than 87% of students of Tourism has taken an active part in them that undoubtedly is very high. (2) The FSES of the third generation on the direction “Tourism” comes from the phenomenon of actual knowledge, but insufficiently emphasizes the dynamism, variability of social requirements to a graduate in a market economy, the need to advance demands. A modern specialist in tourism must be able to work with different groups of consumers, it’s dictated not only by the needs of the labour market, but also the changing attitudes of the contemporary Russian society and the need for the formation of the society. The FSES divides the curriculum into the basic (compulsory) and variable (profile) part. The variable part involves the possibility of expanding or deepening of competencies defined by the content of the basic part. Here the necessity of designating additional professional (core) competencies for the variable part of the professional part appears. We attempted to train specialists with special background and using methods of active pedagogy. To implement this idea, it was decided to attract students to develop and implement differential animation programs (in the framework of independent volunteer work, but which was estimated with additional points at the final assessment), in such places as: orphanage home, nursing home, rehabilitation center for children, etc. The authors formulated the thesis that this form of socio-cultural activities is mainly aimed at the socialization of a student. Within the animation process the socialization can be viewed as socio-psychological adaptation of an individual, his/her occurrence in a specific social environment and change in accordance with it so that he/she could solve the most important not only professional tasks, but also tasks of his/her life until selfactualization. In this approach, students gain experience of social interaction and selfrealization, thereby determining their level of social services and acquiring the profes‐ sional competence. (3) The socio-cultural animation allows to solve the tasks of ensuring the conditions for comprehensive and free development of the personality, his/her creative expres‐ sion, but also creates the conditions for effective control in the sphere of culture. This is the problem of cultural competency (CC) which is to be implemented in the framework of the BEP. The development of the CC at the beginning of each academic year, the survey asks students about socio-cultural preferences. The results of the survey help to create a perspective plan for educational work on the

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basis of the actual preferences of the students. In it, such activities are included: parties of Russian poetry, Patriotic campaigns and flash mobs, competitions on sports tourism, discussion sessions, intellectual games. The monitoring of educational work is carried out in two main areas. Firstly, the operation parameters are monitored, and the participation and (or) extent of interest of the students is paid the great attention. Secondly, the monitoring is carried out, the assessment and prediction of mental and social well-being of students is given by testing in the socio-psychological service of the University. The effectiveness of these actions still can be judged by how the graduates are involved in socio-cultural activities. For example, in the capital of the Republic of Uzbekistan Tashkent a graduate of the Department created the club “Cultural layer”, members of which are creative and scientific elite of the city. The format and topics of the event are borrowed from the activities undertaken by the Department and continued in a different cultural space. (4) The professional competences (PC) of a bachelor in Tourism include: readiness for implementation of projects in the tourist industry, the ability to organize the process of customer service, willingness to use innovative technologies in tourist activity, etc. The success of the activities of a specialist of socio-cultural sphere largely depends on the degree of mastery of the technology of socio-cultural design, which is the competent analysis of a concrete situation, the development and implemen‐ tation of projects and programmes that optimise the basic components of human life. The relevance of the basics of socio-cultural design is caused by, firstly, the fact that this technology has a wide scope for all occupations in the socio-technical sphere. Secondly, the owning of the logic and technology of socio-cultural design will allow staff to carry out analytical, managerial and advisory and methodological functions in the socio-cultural sphere more effectively. Thirdly, design techniques ensure the competitiveness of a specialist on the labor market - the ability to develop social projects and to apply for financing - this is a real opportunity to create a workspace within existing institutions and organizations, and outside. In the process of preparing socio-cultural programs within the volunteer, educational and club work the students take on the ability to prepare and conduct a cultural event (or a system of events and actions), after explaining its idea, defining goals and objec‐ tives, the means proposed for their solution.

5

Results and Research Perspectives

According to the research results we can conclude that the implementation of the educa‐ tional programs of bachelors of tourism in terms of socio-cultural activities makes it possible to give the results of the education the social and personal character, to increase significantly the motivation and interest of students, to implement the competencies required for a graduate of the Tourism degree in their further effective employment.

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The authors together with the consortium of 17 universities of Europe and the CIS in the framework of the programme of the European Commission Erasmus+ (Project EurDiQ) participate in the development of a pilot program in the Tourism degree for the 7th qualification level (Master degree) on the basis of professional standards, qual‐ ifications framework of the industry (SQF) and learning outcomes. The successful expe‐ rience in the development and implementation of educational programs of bachelors of tourism in terms of socio-cultural activities opens the prospect to continue on the next qualification level - Master of Tourism.

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Communicative Tolerance of Students of Higher Educational Establishments in the Context of Social and Economic Dimension of the Region Snezhana V. Yavon1 ✉ and Tatyana N. Ivanova2 (

1

)

Volga State University of Service, Tolyatti, Russia [email protected] 2 Tolyiatti State University, Tolyatti, Russia [email protected]

Abstract. Tolerance is one of the most significant social-psychological phenomena and behavioral characteristics of individuals and social groups. The number of reasons for the manifestation of tolerance, moreover – destructive tolerance in the modern sociocultural and economic-political context is steadily increasing and therefore requires multicenter study and explanation of these phenomena. The authors of this article have studied the communicative tolerance of students of higher educational establishments in the Tolyatti city district through social and economic measurement of the level of development of quali‐ ties and characteristics which are inherent in intolerant individual in terms of interpersonal relations. The study was conducted at the premises of three higher educational establishments in the Tolyatti city district: Volga Region State University of Service, Tolyatti State University and Volzhsky University named after V.N. Tatischev – 240 respondents aged 18–25 (March-April 2017). The study of young people has demonstrated that impatience is one of the character‐ istic psychological traits for adolescence. Keywords: Tolerance · Communicative tolerance · Young people Economic measurement, region, students of higher educational establishments Intolerant behavior · Attitude development

The work was carried out within the framework of the grant project of the Russian Foundation for Basic Research No. 17-46-630560 “Conceptual innovative model of the socio-eco-economic system of the Samara region”. In the present context, the issue of the formation of tolerance in young people is one of the tasks of its sociocultural development (Sitarov 2008). The significance of the development of tolerant attitude is determined by the processes that disturb both the international community and Russian society. First of all, it is the growth of various kinds of extremism, aggressiveness, as well as the expansion of conflict zones and conflict situations. These social phenomena affect young people the most, since they are characterized by maximalism, the desire for simple and swift solutions to complex social problems due to their age peculiarities. One should pay attention to the importance of studying the causes, motivations and argumentation of intolerant attitudes and behavior,

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 77–86, 2019. https://doi.org/10.1007/978-3-030-00102-5_7

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which is very important for the study of counterarguments in the process of educational work with students of higher educational establishments. In modern science, in the context of the multifaceted nature of the manifestation of tolerance in modern society, a large number of methodological approaches to the essence of the concept under investigation have been developed, which determines the complexity of a study of concepts of tolerance. In this article, the term “tolerance” refers to the voluntary confession and respect for freedom of thought, ideas and actions, while granting others the right to live in accordance with their own view of the world. Formation of tolerant attitudes, tolerant behavior, as well as prevention of various kinds of intolerance is perceived by scientists and experts as a global problem of the modern era. It is exactly this perception that occurs today. At the same time, the historical character of the tolerance and intolerance itself is recognized; that’s why upbringing of the rising generations in the spirit of tolerance is certainly one of the most vital social tasks. Today, the tolerance issue has started to be filled with new content; it has become particularly significant. It is conditioned primarily by the globalization processes that are taking place in the world. One could argue about whether there is a single economic or cultural space, but the growing interdependence of people is obvious. No individual community can exist in isolation any longer in the face of such problems as, for example, environmental problem. Even the most diverse people, and hence, different cultures, have to come into contact with each other nowadays. The intercultural exchange has sharply intensified due to the information technology boom and is becoming virtually ubiquitous, and the tolerance to cultural differences becomes an essential prerequisite for the dialogue of various groups of people. And, despite the difficulty of implemen‐ tation of this condition, there is no feasibly significant alternative to tolerance at the moment. Tolerance should be described as a social norm which includes the following compo‐ nents: social susceptibility of interacting subjects, interest in each other’s characteristics; recognition of equality of partners; renunciation of domination and violence; willingness to accept another person as he/she is; trust, the ability to hear and listen to others; sympathy, empathy. Communicative tolerance is one of the most important and informative traits of a human. It is collective in nature, since it reflects the factors of his/her fate and attitude development, communication experience, culture, values, needs, interests, attitudes, nature, temperament, habits, thinking peculiarities, and, of course, the emotional ster‐ eotype of behavior. This characteristic of an individual refers to the core, because it largely determines its way of living and activities – the state of things in the immediate circle and at work, career advancement and the performance of professional duties. This is a systematizing characteristic, since many other qualities of an individual, in the first place moral, char‐ acterological and intellectual, show agreement with it and form a certain psychological ensemble. That is why the features of communicative tolerance may be indicative of mental health, inner harmony or disharmony, self-control and self-correction ability (Grebenets 2013).

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Everyday communication is indicative of various manifestation of communicative tolerance: some people are very tolerant towards others, others can hide their hostility towards partners fairly well, still others are capable of using the power of persuasion to force themselves to ignore the unpleasant qualities of other people. Similarly, a particular degree of reduction of communicative tolerance is manifested in a broad range: certain traits of another person can cause partial, substantial or complete disapproval, irritation or zero tolerance. Tolerance in communication is divisible into situational, typological, professional and general tolerance (Nikitina and Tolstikova 2012): – situational tolerance is the attitude of a person towards a specific conversation partner; – typological tolerance is the attitude towards a collective type or group; – professional tolerance is the attitudes in the working environment, in interaction with those people whom one has to deal with by the nature of work; – general tolerance – tolerance conditioned by personal experience, temperamental attributes, ethical principles, and predetermining other forms of communicative tolerance to a great extent. In order to study the communicative tolerance of students of higher educational establishments in the Tolyatti city district, a diagnostic technique for general commu‐ nicative tolerance by V. V. Boiko was used; it allows diagnosing tolerance through measurement of the level of development of qualities and characteristics that are inherent in intolerant individual in terms of interpersonal relations. This technique allows diag‐ nosing tolerant and intolerant attitudes of an individual which manifest during the communication process. The form of methodology of a study is subdivided into 9 scales (5 questions in each scale), which gives 45 questions in total. Each scale is designed for identification of intolerant traits of an individual: 1. zero tolerance or incomprehension of individuality of another person; 2. using oneself as a sample in case of assessment of behavior and way of thinking of others; 3. judgmental or conservative attitude in the assessments of others; 4. inability to hide or mitigate unpleasant emotions when confronted with incommu‐ nicative qualities of the partners; 5. desire to alter, re-educate the partners; 6. desire to change the partners in such a way that they met his/her requirements, make them “convenient”; 7. inability to forgive others for mistakes, awkwardness, and unintentionally caused inconveniences; 8. intolerance to the physical or mental discomfort created by others; 9. inability to adapt to the temper, habits and desires of others. As a result, the greater is the total amount of points scored, the higher is the degree of general communicative intolerance of a student of a higher educational establishment in the Tolyatti city district.

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The study was conducted at the premises of three higher educational establishments in the Tolyatti city district: Volga Region State University of Service, Tolyatti State University and Volzhsky University named after V.N. Tatischev – 240 respondents aged 18–25 (March-April 2017). Analysis of the findings has shown that overall the level of development of commu‐ nicative tolerance in students of higher educational establishments in the Tolyatti city district is satisfactory (“Table 1”). High degree of communicative tolerance was noted in 5% of students; at the same time, there are no students with zero tolerance of others. The majority of students (75% of students of all higher educational establishments in the Tolyatti city district), medium degree of tolerance can be observed. Out of all higher educational establishments, the students with high figures of tolerance (14.3% of students of VUnaT who took part in testing) were identified in VUnaT alone. As for the other figures, all presented higher educational establishments are at about the same level. Table 1. Overall level of communicative tolerance of students of higher educational establishments in the Tolyatti city district, % Location of study High degree of tolerance (0 to 45) VRSUS 0 TSU 0 VUnaT 14.3 All 3 higher 5 educational establishments

Medium degree of tolerance (46 to 85) 76.9 69.2 78.6 75

Low degree of tolerance (86 to 125) 23.1 30.8 7.1 20

Zero tolerance of others (126 to 135) 0 0 0 0

Particular attention should be paid to the behavioral blocks in which high overall points were scored. The more total points are scored on a particular feature, the less testtaker is tolerant towards people in this particular aspect of the relationship with them, and the more difficult it is for him/her to establish an effective communication process. Conversely, the fewer points are scored by the test-taker on a particular behavioral feature, the higher is the level of his/her general communicative tolerance in this partic‐ ular aspect of the relationship (“Table 2”). According to the conducted study, a sufficiently large number of students showed a low level of communicative tolerance. Particularly low figures can be observed in VRSUS in the first four blocks of questionnaire which is indicative of inability of students of VRSUS to accept the individuality of the people meeting them and assess the people based on their own self; they are fairly judgmental and conservative in their assessments of others and cannot hide or mitigate the unpleasant impressions in the event of a conflict with incommunicative qualities of people to a certain degree. Particularly low figures can be observed in the students of TSU concerning the matters related to proneness of students to re-educate and rehabilitate partners, to change their partners in such a way that they met their requirements, make them “convenient”, and the inability of students to forgive mutual offences. In matters relating to tolerance of others’ discom‐ forts and adaptability in interaction with people, all students who took part in testing

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demonstrated high figures of communicative tolerance. It is worth noting that the students of VUnaT in all blocks of questionnaire proved themselves as fairly tolerant individuals. Table 2. Analysis of communicative tolerance of students of higher educational establishments in the Tolyatti city district, % Item No. 1 2

3 4

5 6 7

8 9

Main blocks of questionnaire You cannot or do not want to understand or accept the individualities of others When you assess the behavior, way of thinking or certain characteristics of individuals, you take yourself as a reference You are judgmental or conservative in assessing people You do not know how to hide or at least mitigate the unpleasant feelings that arise when you are confronted with incommunicative qualities of your classmates (colleagues) You are willing to alter, re-educate others You want to change your partners in such a way that they met your requirements, make them “convenient” You do not know how to forgive others for mistakes, awkwardness, and inconveniences unintentionally caused to you You are intolerant of the physical or mental discomfort in which your conversation partner came to be You cannot adapt well to the tempers, habits, attitudes or sights of others

VRSUS 23.07

TSU VUnaT 30.77 14.28

23.08

38.46

21.43

15.38 30.77

38.46 38.46

21.43 7.14

30.77 46.15

23.08 23.08

14.28 14.28

30.77

15.38

21.43

7.69

7.69

7.14

15.38

15.38

14.28

There was an attempt during the study to identify the prerequisites for intolerant behavior in modern society. It has been found that the majority of students who took part in questionnaire survey (32.5% of all students of a higher educational establishment in the Tolyatti city district) feel particularly strongly about towards other people who are intolerant to someone else’s opinion, aggressive, rude, and showing intolerant behavior. This emotion is followed by such emotions as contempt and shame, which, in turn, are followed by the desire to comprehend the prerequisites for such behavior. 10% of respondents take such forms of behavior in stride. Thus, it can be concluded that more than 87% of respondents have demonstrated negative or close to negative attitude towards people who are intolerant to someone else’s opinion, aggressive, rude, who would stop at no end to achieve their goal. One should pay special attention in the study of tolerance to the response of responding students to a situation in which they were subjected to aggression and rude‐ ness. The majority of respondents prefer ignoring such behavior on the part of their conversation partner (55%). 30% of responding students prefer to reciprocate rudeness, and 12.5% of responding students tried to bring the rude person to reason.

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People have to behave intolerantly fairly often in modern society. It is especially important to understand the inner experiences of a person who has found himself/herself in such a situation. The majority of students (55%) had a hatred for life which exposes people to such circumstances. Similar in terms of percentage ratio were the feelings of shame and hatred with regard to those who provoked such behavior (12.5%). It is worth noting that there has been a positive trend – nobody of respondents never felt satisfaction due to the fact that they managed to have their own way, and only 2.5% of respondents admitted that they have already got used to the fact that they manifest intolerant behavior. According to the majority of responding students of higher educational establish‐ ments in the Tolyatti city district, the most tolerant period in the Russian history was the period before the 1917 revolution – only 2.5% of respondents believe that this period was filled with intolerance and aggression. Most respondents (30%) for some reason or other consider the current presidency of V. V. Putin as the most intolerant period of all presented periods. It is followed by the presidency of B. N. Yeltsin (10%) and M. S. Gorbachev (7.5%). The maximum number of respondents (45%) believes that intolerant relations were always dominant in Russia. The respondents have identified the areas of society where intolerance, violence, aggressiveness are pronounced the most – street, public places (20%), politics and health (17.5%), sports (10%), law-enforcement and information sectors (7.5%). Service sector, family (private) life, human services and social activities complete this list (2.5%). According to the responding students, there is no aggression, intolerance and cruelty in professional life and education. The majority of respondents believe that the main reason for an increase in the level of intolerance and aggressiveness in recent years is the fall of living standards of the population which is associated with the transition to market relations (35%). A fairly large number of students noted a low educational and cultural level of the population, as well as a massive propaganda of aggressiveness and xenophobia in the media (22.5% each). Besides, weak regime was mentioned as one of the other reasons for this. When answering the question about the reasons for the higher level of tolerance and respect for other people in certain Western countries as compared to Russia, a fairly large number of students noted that a high standard of living (32.5%) is one of the main factors of the formation of tolerance. However, 35%, which constitutes the majority, claim that manifestation of intolerant relations can be found anywhere. 60% of respond‐ ents believe that there are such processes, phenomena, facts and people towards which one cannot be tolerant. However, it is worth noting that these findings allow us to observe only the main trends which are inherent in mutual relations between the respondent and his/her part‐ ners. A personality manifests itself more bright and versatile in direct one-to-one communication. Thus: – the level of development of communicative tolerance in students of higher educa‐ tional establishments in the Tolyatti city district is satisfactory; – the majority of students who have participated in the study, towards other people who are intolerant to someone else’s opinion, aggressive, rude, and showing intolerant behavior, first of all, indignation;

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– more than 87% of respondents have demonstrated negative or close to negative atti‐ tude towards people who are intolerant to someone else’s opinion, aggressive, rude, who would stop at no end to achieve their goal; – according to the respondents, the most tolerant period in the Russian history was the period before the 1917 revolution, and the most intolerant period is the current pres‐ idency of V. V. Putin; – the main reason for an increase in the level of intolerance and aggressiveness in recent years is the fall of living standards of the population which is associated with the transition to market relations. An increase in the degree of tolerance of citizens in the domestic conditions is impossible outside the system of education and attitude development. Education has always performed the educational function; however, in the context of today’s Russian reality, it has become necessary not only to form the basic moral criteria in an individual, but also to teach them to be tolerant and flexible in a complex multifaceted world, to develop along with this world, to have the basic skills of efficient communication and to interact with other members of society while remaining for ever one. Therefore, we can safely state the obvious - the development of tolerant attitude is transformed into a strategically significant goal for the purposes of education in Russia (Obryvko 2015; Ponomarev et al. 2016). A higher educational establishment as one of the most significant institutes of social‐ ization is aimed at developing the system of knowledge of occupational skills, common cultural and general professional competences, and at directly influencing the person‐ ality of students through an increase in the level of their social-psychological compe‐ tence and psychological culture. The development of tolerance takes priority in this context, for which reason the training of students must be focused on the development of their ethnopsychological competence and axiological attitude towards intercultural exchange which is based on the principles of tolerance (Yakunin et al. 2016). At the same time, the mental space of the university environment is saturated with national priorities today: the ideas of patriotism, national identity, high spirituality, the value of work and service for the benefit of the motherland, the traditions of ethnic and religious tolerance, and openness to other cultures. The findings of sociological studies in recent years indicate that one cannot distinguish the head motif of a man of education which makes up the true spirituality of an individual in a students’ educational envi‐ ronment today: manifestation of interest to others, to processes occurring in the country, sympathy and ability to endorse an interested dialogue. Communication and interests of young people are generally confined to a simple behavioral model which is closed in by the interests of a fairly mundane pragmatism. Today, a higher educational establishment is aimed at solving the tasks of providing every citizen with the opportunity for intellectual, cultural and moral development, since it is in it that young people go through the most important stage of socialization, civic consciousness, realizing, accepting or denying socially significant values. Focused educational work is aimed at harmonizing the impact of the ethnosocial environment on people, forming their own positive experience of international interaction, weakening the possible negative impact of interethnic relations on them (Yakunin 2015).

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The issues of the attitude development of young students in the context of multi‐ confessionality and multinationality have been gaining in importance in the educational activities of higher educational establishments over the past decade. In this regard, a large number of different activities are being carried out by the three major higher educational establishments in the Tolyatti city district even as we speak. For example, an educational project “Festival of National Cohesion” is carried out every year by the VRSUS within the framework of the festival “Students’ spring”. TSU takes measures aimed at prevention of extremist manifestations, focused on the formation of a positive attitude of young students, excluding the very possibility of application of force to others to achieve any goals. The presence of such disciplines in the educational process as law, legal science, culturology, constitutional and civil law, not only forms basic legal knowledge about civil rights of an individual and their protection in the students, but also to contributes to patriotic education, inoculation of knowledge and skills in the area of settlement of international and social conflicts, restiveness and prevention of mani‐ festation of intolerant behavior to young students. Besides, in each of the three main higher educational establishments, special attention is paid to the organization and holding of public, mass participation, and recreative sporting events, since the rational use of students’ extracurricular time in the interests of the development of positive atti‐ tude in them certainly leads to a reduction in tension, aggression, and law violation. The existing structural and functional model of formation of tolerance in young students which is partially implemented in the higher educational establishments in the Tolyatti city district is currently based on the basic ideas of the humanistic approach, and is also based on the principles of positions, multicultural environment, cooperation, and co-creation; integrates the informative, target, resultative and organizational compo‐ nents; reflects the specifics of the multicultural environment of a higher educational establishment; ensures the integrity of the educational process and an increase in the level of tolerance. The basic ideas embedded in this model include the axiological equality of men with different national peculiarities, the humanization of interactions among participants in the educational process. Successful implementation of this model of formation of tolerance of young students is achieved through a complex of pedagogical conditions, which includes the unity of the educational and extracurricular activities of students; information and psychological education and training of students; person-centered interaction “student – teacher”, a program for the development of the branch, teaching practice, etc. It is these conditions that make it possible to maximally expand the range of cultural and educational contacts of the participants in the educational process, and to develop a tolerant attitude in them. In the present context, in the course of a focused effort aimed at the formation of tolerance in students, one should be guided by the structural and functional model of formation of tolerance in young students in a multicultural environment of a higher educational establishment and the model of a graduate – a tolerant individual who is ready for communication in a multicultural environment based on the specified charac‐ teristics: – understanding the need for coexistence of various cultures as the basis for preserving the life on earth;

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– holistic view of the multicultural worldbuilding, the theory and practice of interna‐ tional relations; – acceptance of various cultures as equal, equipollent and equivalent; – aiming for knowledge of various cultures, identification of their inherent peculiari‐ ties; – manifestation of goodwill and savoir vivre in mutual relations with representatives of various cultures; – availability of skills of intercultural exchange through the language of communica‐ tion, tolerance and respect of its specifics. We perceive the model of a graduate as a certain ideal which can be achieved on condition of implementation of structural and functional model of formation of toler‐ ance. That said, successful solution to this problem depends on the desire and ability of the academic staff of a higher educational establishment to bring the actual results bring into proximity with the desired results. Besides, youth students’ organizations, associations and movements, which are an important form of self-government and play a special role in the mechanisms of social activities of young people, prevention of intolerant behavior in a students’ environment, representing the interests of young people in state youth policy and implementing its subjectivity in all life spheres of society, are of particular importance in this context. In this regard, it should be noted that it is important to create a supportive environment for creative self-fulfillment of an individual and for leisure activities during extracurricular time, to elaborate various forms and means of integration of students into creative activity. To this end, on-stage performance groups, clubs, studios, interest groups, and athletic associations are organized in a higher educational establishment. Sporting and mass participation events are the most important means of educational and health promotion activities and are aimed at promotion of physical fitness and sports, healthy lifestyle, organization of interesting leisure time and involvement of students in sporting and mass participation events, which in turn is of great importance in the formation of the tolerant way of thinking in young people. Educational work and prevention of intolerant behavior in students’ groups should also be performed by curators through conversations, thematic curatorial classes and face-to-face work with students. We believe that development of tolerant attitude in the educational process of a higher educational establishment can be made possible provided that the following elements of behavior are formed: – the capacity for tolerant speaking and maintaining one’s own position as a point of view; – the willingness to tolerate the statements of others (the perception of opinions and assessments of other people as an expression of their point of view having the right to exist – regardless of the degree of cleavage in regard to their own views); – the capacity for interaction and the capacity for reaching a compromise and consensus; – tolerant behavior in stressful situations, when there are differences in points of view, collisions of opinions or assessments.

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Modern students entering an active social and professional life, are the very force that will be able to influence the formation of Russian society and the state in the near future. Thus, the formation of tolerant qualities of the modern Russian young people in our country can become a powerful instrument for subsequent social transformations. The formation of tolerance in the context of education space of a higher educational establishment is the most important task of modern society.

References Grebenets, E.S.: Certain issues of development of an attitude of communicative tolerance in the studies of domestic pedagogues and psychologists. Srednee Professionalnoe Obrazovanie (secondary vocational education), No. 11, pp. 16–17 (2013) Nikitina, N.I., Tolstikova, S.N.: A set of methodological approaches to the study of tolerance of specialists providing social services. Chelovecheskiy Kapital (Human Capital), No. 7(43), pp. 15–19 (2012) Obryvko, E.I.: Educational work aimed at formation of tolerance, culture of peace and interethnic concord in a students’ environment of a higher educational establishment. Gazette of the Altai State Pedagogical University, No. 23, pp. 89–90 (2015) Yakunin, V.N., Yamashev, V.M., Anuchin, O.I., Adaevskaya, T.I., Ovsyannikova, N.V.: Religious tourism and pilgrimage in Russia: cultural-historical analysis. Turkish Online J. Des. Art Commun. 6, 2595–2603 (2016). No. NVSPCL Yakunin, V.N.: Current trends of innovative development of a higher educational establishment. Baltiyskiy Gumanitarnyi Zhurnal (Baltic Academic Magazine), No. 3(12), pp. 78–83 (2015) Ponomarev, P.A., Letun, M.V., Ponomareva, A.P.: Formation of a tolerant individual in the context of a higher educational establishment. Molodoy Uchenyi (Young Scientist), No. 29, pp. 629–633 (2016) Sitarov, V.A.: Tolerance. Social studies of young people. Encyclopedia/Publishing editor – Zubok, Y.A., Chuprov, V.I. Academia, pp. 509–510 (2008)

Financial Conditions for Ensuring of Self-development of Regions Zhanna A. Zakharova(&) Vladimir Branch of Russian Presidential Academy of National Economy and Public Administration, Vladimir, Russia [email protected]

Abstract. The purpose of the article is to study the financial possibilities of the regions in providing their self-development. Author uses data from official statistics to examine the indicators of the region’s budget provision and analyze the financial possibilities of the regions’ budgets in question of realization of potential for self-development of these territories. Study is conducted on the example of seven regions of the Russian Federation (Vladimir, Ivanovo, Kaluga, Kostroma, Yaroslavl regions, Nizhny Novgorod and Ryazan regions) that are typical for central Russia and comparable in key parameters of social and economic development. On the basis of conducted research author concludes that there is insufficient investment of budgetary resources and limited application of financial instruments in the development of industries and types of economic activity that contribute for enhancing the potential for selfdevelopment of the studied regions. Obtained results may be interesting for government authorities at the regional level, in terms of focusing on those areas of economic development that enable the use of the internal resource capabilities of the region. Author also determined the directions for further exploratory research in terms of clarifying the list of direct and inverse indicators that reflect the parameters of the region’s self-development and the quality of life of the population. Keywords: Region  Self-development Potential of region’s self-development JEL Classification Codes: O 11

 Financial instruments

O4

1 Introduction The study of the issue of ensuring the region’s self-development is relevant for a number of reasons. First of all, self-development can be considered as a basis for ensuring sustainable growth of the region’s economy in the long term. Taking into account the subsidization of most of the budgets of constituent entities of the Russian Federation, self-development can provide a solution to the problem of leveling the state of budgetary security and narrowing the gap in socio-economic development between the leading regions and outsider regions in terms of improving the living standards of the country’s population as a whole. © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 87–96, 2019. https://doi.org/10.1007/978-3-030-00102-5_8

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Theme of self-development is quite relevant in view of the fact that this process allows to activate the internal potential, the internal resource capabilities of the region (natural, climatic, labor). It is necessary to emphasize the fact that not all the regions mentioned have fully utilized the potential of self-development. From the author’s point of view, a promising area for the development of federal economic policy in the regions is the search for the optimal set of financial and organizational instruments that ensure the most complete disclosure and activation of the potential for selfdevelopment that will ensure the stability and self-sufficiency of the region’s economy. The aim of the work is to study the financial possibilities of the regions in realizing their potential for self-development.

2 Methodology At present time there are a number of contradictions in the regional economy that hamper the sustainable development of the economy of the Russian regions. It should be noted that the stimulation of the process of regional self-development through the targeted policy of the federal center can make it possible to smooth out or achieve a partial resolution of these contradictions. We emphasize the fact that we do not consider self-development as a spontaneous process (although this took place in the early 1990’s), but we are talking about the need to use the instruments of the federal center as a kind of push for ensuring the self-development of the regions. Self-development of territories and the activation of the internal resources of the region (natural, territorial, industrial, labor and others) that can largely ensure the stable state of the regional economy and improve the quality of life of the population (Zakharova and Bogatyrev 2018). One of the main contradictory moments we can observe is the contradiction between the potential for self-development of territories and the ability, the possibility of the region in its implementation. Under the potential of self-development, we mean the existence of a certain reserve of the resources of the territory and public needs (possibly also a sustainable demand) for the use of this resource. Thus, some regions have significant natural resources, which must be used in connection with the tasks of both internal development and the possibility of interterritorial exchange, including in the scale of the world market. For example, Vladimir, Kostroma, Ivanovo and several other regions of Central Russia have significant reserves of peat deposits. At the same time, there is a need for society to use peat as soil in private plots, as well as in houses and apartments, as fertilizer in agricultural production, as a building material (peat building blocks), as fuel in municipal boiler houses. However, peat extraction is carried out at an insufficient rate (represented by a limited number of enterprises), which does not allow to use this resource to a significant extent. In addition, for example, for the use of peat briquettes as fuel it is necessary to modernize obsolete fuel oil and coal boiler houses in the regions, which requires a considerable amount of investment resources. Also in some regions, the tourist and recreational potential is not sufficiently used. At territories of the Vladimir, Ivanovo, Yaroslavl, Kaluga and Nizhny Novgorod regions, due to the high urbanization of the population (approximately 80% of the urban population), there is a significant domestic demand for recreational services

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(recovery, recreation, treatment), as well as a steady demand for visiting facilities tourist and recreational areas of these regions by residents of Moscow and the Moscow region (in view of environmental problems, high pace of life and limited territorial resources of the region). However, the use of tourist and recreational resources is also limited due to the low quality of provision of tourist services, insufficient development of tourist and providing infrastructure. And such kind of economic activity as «Hotels and restaurants» in the GDP structure of the Vladimir region for 2016 is 1.1% and Ivanovo 1.4%. In addition, Vladimir, Ivanovo, Kostroma regions have a significant potential of forest resources (51% of the territory of Vladimir and Ivanovo regions and 74.3% of Kostroma region). At the same time, large tracts of forests are idle, in view of their inaccessibility, from the point of view of the lack of infrastructure development. And such kind of economic activity as «Processing of wood and production of wood products» is underdeveloped (in the structure of manufacturing industry of the regions this type of economic activity forms 2.4% in the Vladimir region, 1.5% in the Ivanovo region, which is clearly not enough compared to Kostroma region, where this figure is 23.3%). In the regions under consideration water resource is also not sufficiently used. Such kind of economic activity as «Fish farming and fishing» has practically disappeared, although there is quite a lot of water bodies in the regions. Currently water bodies are mainly used for water supply, although during Soviet period there were entire plants that stocked ponds and water bodies, a large area of agricultural land is not used (Babaev 2013; Babaev et al. 2015). Emphasizing the attention of regional and federal authorities on the need to implement projects and programs, stimulating the investment process in these types of economic activity, would also encourage the use of significant internal resource opportunities of the regions. However, according to A. Shvetsov, in a complex of factors of territorial development the state support measures steadily retain a decisive role, which not only substantially supplement, but in many cases replace the efforts to create and use the preconditions and conditions for the self-development of the territories. Such assistance is provided by a variety of methods based on the application by federal authorities of certain instruments to solve the problems of economic growth of certain territorial entities. The range of tasks to be achieved extends from overcoming depressive states and anti-crisis support of the territories to stimulating their «advanced development» in the course of socioeconomic modernization (Shvetchov 2016). At the same time, the range of instruments for self-development offered to the regions by the federal center is rather limited. This set of instruments may include financial transfers to regions from the federal center, including federal targeted programs, budgetary credits and funds from development institutions (the Investment Fund of the Russian Federation, Vnesheconombank, etc.). Attention should be paid to important fact that special legal regimes (special economic zones, territories of advanced development) have become most widespread at the present time as a result of the implementation of the federal policy of interaction with the regions. In this context, we can draw attention to the need for expanding the right for the regions to choose the tools to ensure conditions for self-development, taking into account the specific features of the region in terms of the structure of the economy, the availability of labor resources, the level of infrastructure development, etc.

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However, an important condition for ensuring the self-development of territories is its self-sufficiency. According to T.V. Sherstyankina, economic self-sufficiency includes a wide range of factors: resource base, concentration of enterprises, external economic relations, investment attractiveness, development of the agro-industrial complex, which assumes the formation of a regional budget at the expense of internal potential. The region thus acquires the possibility of self-development (Sherstyankina 2009). Economic self-sufficiency of the region is the situation in which the region’s revenues provide the necessary budgetary costs, the ability of the region to develop independently on the basis of effective use of available resources, the ability to build economic relations within the region, without attracting resources from outside (Volodona 2014). Researchers also assign a special role to the criteria that reflect the degree of decentralization of budgetary resources as the most important condition for ensuring the region’s self-development (Tatarkin and Molchanova 2012). In this paper we focus on financial instruments for ensuring the self-development of territories, because one of the significant problems in the social and economic development of the regions is the lack of financial and investment resources for solving the problems of regions with insufficient potential for self-development. The methodological basis of the research is general scientific research methods (analysis and synthesis, deduction and induction, normative and positive methods, etc.), quantitative econometric methods (summary and grouping of statistical data, regression and regression analysis, statistical indices).

3 Results Let’s consider some financial instruments used by the federal center to increase the region’s self-sufficiency. Note that the gratuitous transfers which come to the consolidated budget of the regions (the budgets of Vladimir, Ivanovo, Kostroma and other regions are scarce), are primarily federal budget funds (Table 1). These amounts help to fulfill social obligations to the population of the region. Table 1. Share of gratuitous revenues in the region’s Gross Domestic Product (GDP). Indicator

Vladimir region Ivanovo region Kaluga region Kostroma region Nizhny Novgorod region Ryazan region Yaroslavl region

2013 million rubles

% of GDP

2014 million rubles

% of GDP

2015 million rubles

% of GDP

2016 million rubles

% of GDP

13,505.4 14,056.2 7,708.8 7,584.2 20,408.4

4.4 9.0 2.6 5.5 2.2

12,419.4 14,516.1 7,968.5 6,671.7 25,370.1

3.7 9.5 2.4 4.6 2.5

13,149.6 13,365.9 8,831.5 6,996.5 23,689.9

3.66 7.8 2.6 4.5 2.2

12,251.9 11,699.5 12,646.1 6,742.3 21,097.6

3.1 6.5 3.4 4.2 1.7

11,101.0 7,884.2

4.0 2.2

11,144.4 7,066.1

3.8 1.8

11,913.6 8,808.2

3.8 2.0

12,131.9 6,649.5

3.6 1.4

Source: compiled by author according to the data of Federal State Statistics Service «Regions of Russia. Social-economic indicators», section «Finance» 2017 year http://www.gks.ru/bgd/regl/b17_14p/IssWWW. exe/Stg/d03/23-02.doc

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According to Table 1, the level of gratuitous receipts decreases in most of regions (Vladimir, Ivanovo, Kostroma, Nizhny Novgorod, Ryazan, Yaroslavl regions), and the financial dependence on the federal Center can be reduced, but at the same time the need to carry out social tasks (implementation of «May Decrees» of the President of the Russian Federation) further increases credit for the regions (Table 2). So, according to Table 2, the volume of state domestic debt has increased over the past year in most of the regions (Vladimir, Kostroma, Nizhny Novgorod, Yaroslavl regions). At the same time, in the structure of the debt burden most part is occupied by budgetary credits from other budgets of the budgetary system of the Russian Federation (mainly the federal budget). In addition, over the past year in the structure of this burden we see a decline of the commercial debt of the studied regions (Ivanovo, Kostroma, Kaluga, Ryazan, Nizhny Novgorod, Yaroslavl regions). It is remarkable that the Vladimir region does not use commercial loans as debentures. Of course, the decline of commercial loans in the structure of public debt of regions and their replacement by budgetary credits (in all the regions studied there is an increase in budgetary credits) on the one hand reduces the risk of regional default, but on the other hand, increases dependence on the decisions of the federal center, which in turn reduces motivation for self-sufficiency and self-development. However, unlike a commercial loan, budgetary loans are used not for the development of the region, but either to partially cover the budget deficit, or to close the social obligations facing state authorities of the subject of Russia. At the same time, considering the structure of investments in fixed assets by sources of financing for the period from 2013 to 2016, the increase in the share of budget resources should be noted in most of regions (Table 3). Table 2. Volume and structure of the state domestic debt of the region for 2016 and 2017 (billion rubles). Region

Volume of the state domestic debt, billion rubles Government securities

Vladimir region Ivanovo region Kaluga region Kostroma region Nizhny Novgorod region Ryazan region Yaroslavl region

Loans from credit institutions, foreign banks and international financial organizations 2016 2017

Budgetary credits from other budgets of the budgetary system of the Russian Federation 2016 2017

2016

2017

0.0 0.00 0.00 1.65 31.60

0.0 0.0 0,0 3.786 4.162 0.0 10.661 7.563 6.053 8.763 0.0 1.3 0.0 28.94 29.71 1.05 11.22 8.46 8.45 12.48 38.3 22. 00 5.112 19. 42 31.847

0.625 0.0 10.543 12.4 19.15 8.679

Total State guarantees

2016

2017

2016

2017

0.0 0.11 0.503 0.00 0.395

0.0 0.44 0.47 0.0 0.262

3.786 16.826 30.74 21.325 73. 42

4.162 16.766 30.178 21.989 75.521

0.0 0.0

26.362 23.462 39.109 41.171

9.464 15.194 13.998 0.00 1.972 18.03 20.049 0.00

Source: compiled by author according to the data of official site of the Ministry of Finance of the Russian Federation https://www.minfin.ru/ru/perfomance/public_debt/subdbt/2018/

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Table 3. Share of budgetary funds in the structure of investments in fixed assets by sources of financing, %. Region

Budgetary funds, % 2013 Share of raised funds

2014 Federal budget

Regional budget

Share of raised funds

2015 Federal budget

Regional budget

Share of raised funds

2016 Federal budget

Regional budget

Share of raised funds

Federal budget

Regional budget

Vladimir region

12.9

6.6

3.9

14.0

8.8

2.7

12.5

6.9

3.2

19.4

10.6

6.7

Ivanovo region

28.0

16.8

7.8

22.6

11.1

7.7

36.0

22.6

7.1

21.5

12.0

4.9

Kaluga region

10.5

6.1

3.3

10.9

5.9

3.9

24.3

19.5

3.7

29.2

24.8

3.6

Kostroma region

22.6

14.8

5.2

14.3

8.3

4.4

12.5

9.2

2.1

8.9

4.8

2.4

Nizhny Novgorod region

16.3

9.8

4.5

14.2

8.1

4.2

19.1

12.5

4.8

23.5

16.6

5.4

Ryazan region

18.3

12.0

5.7

19.2

12.2

5.1

20.4

14.4

4.5

18.6

10.9

5.6

Yaroslavl region

13.3

5.9

4.8

8.2

2.8

3.2

10.4

5.8

3.3

10.6

6.8

2.0

Source: compiled by author according to the data of Federal State Statistics Service «Regions of Russia. Social-economic indicators», section «Investment» 2017 year http://www.gks.ru/bgd/regl/b17_14p/Main.htm

According to Table 3, for the period from 2013 to 2016 the share of budget funds increased in the structure of investments in fixed assets in such regions as Vladimir, Nizhny Novgorod, Kaluga and Ryazan regions. There is a significant increase in the share of budgetary investments of federal budget funds in Kaluga and Nizhny Novgorod regions, which is more related to the need to attract these funds due to the implementation in the regions of projects on image characteristics (preparation for the World Cup in Nizhny Novgorod region), or due to active investment policy pursued by the state authorities of the region (Kaluga region). For such territories as Vladimir, Ivanovo, Kostroma and Ryazan regions the increase in the share of budgetary funds was due to decrease in the share of banks’ credit resources in the structure of attracted funds. Thus, in the current situation, regions and enterprises themselves in the absence of macroeconomic stability and the high cost of credit resources tend to be more conservative in their planning of their activities, they are afraid to assume unnecessary responsibilities and are in no hurry to implement the planned scenario for capital investments. However, these moments restrain the self-development of both the branches and types of economic activity and the regions themselves. At the same time investing in fixed assets involves using not only raised funds (credit and budgetary), but also own funds of enterprises. Nevertheless, the analysis of investments in fixed assets by types of economic activity shows that the main investment resources, with the predominantly own (at the expense of the enterprises’ own funds), are accumulated in the manufacturing industries. According to Table 4, most of the funds are invested in such types of economic activity as «Manufacturing» (Kostroma region – 50%, Kaluga region – 40.7%, Vladimir, Nizhny Novgorod, Yaroslavl and Ryazan regions – more than 30%), «Transport and

region

Total

100

100

100

100

100

100

100

Agriculture, hunting and forestry

4.46

12.51

4.17

2.53

14.19

3.53

4.06

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Fishery, fish farming

[Source: compiled by author]

Yaroslavl

region

Ryazan

region

Novgorod

Nizhny

region

Kostroma

region

Kaluga

region

Ivanovo

region

Vladimir

/region

Industry

Mining

0.13

0.07

0.03

0.00

0.00

0.00

0.25

Manufacturing industries

33.65

31.50

33.29

50.40

40.73

25.41

36.44

Production and distribution of electricity, gas and water

16.62

13.35

6.76

14.52

7.11

14.95

9.17

Building

2.16

1.83

0.94

0.12

0.56

0.08

0.23

Wholesale and retail trade; repair

6.09

3.74

4.90

9.82

2.76

5.28

5.38

Hotels and restaurants

0.02

0.00

0.00

0.00

0.00

0.00

0.01

Transport and communications

19.51

19.41

23.66

6.35

22.66

21.43

17.06

Financial activities

1.90

0.67

1.06

2.94

0.72

2.06

1.26

renting and provision of services

Transactions with real estate,

6.79

8.40

15.71

7.01

8.01

12.24

15.05

4.61

4.22

4.17

3.30

2.44

9.75

8.14

Education and health and the

personal items

household products and

of motor vehicles, motorcycles,

Table 4. Structure of investments in fixed assets by types of economic activity in 2016, %.

Public administration and

2.24

4.20

4.95

2.94

0.70

4.84

2.28

Financial Conditions for Ensuring of Self-development of Regions 93

social insurance

provision of military security; provision of social services

94

Z. A. Zakharova

Communications» (Ivanovo, Nizhny Novgorod, Kaluga regions – over 20%), «Production and distribution of electricity, gas and water» (Ivanovo, Kostroma, Ryazan and Yaroslavl regions – about 15% and above), «Real estate transactions, rent and services», «Wholesale and retail personal trade, repair of motor vehicles, motorcycles, household products and personal items». And there are no significant investments in fixed assets in such economic activities as: «Agriculture, hunting and forestry» (except Ryazan region – 12.5% and Kaluga region – 14.2%), «Fishery, fish farming» (almost in all regions 0%), «Mining», «Construction», «Education, health care and provision of social services», etc., exactly the kinds of economic activity for which the regions have potential for self-development, and whose contributed investment would intensify internal resources of territories. Thus, as the study shows, financial instruments used by the federal Center (reduction of gratuitous transfers, increase in budgetary loans), and the current policy of regional authorities on investment do not promote the internal potential of selfdevelopment of these regions, which requires the development of more efficient financial and organizational instruments. In practical terms, foreign experience of state regulation of regions with insufficient potential for self-development is interesting. Thus, in China the task of ensuring the self-development of territories is a part of state policy. There is declared the need to introduce specific policies to help impoverished regions to improve their ability to selfdevelopment through the provision of financial subsidies, investments in projects of development of science, technology and education, environmental improvement (China’s Population and Development in the 21st Century 2000). In European countries, such as Germany, transfers from the federal budget (like federal budget subsidies used in Russia) can be replaced by means of the region, which are not to deduct the federal budget, in the case of successful development of the region. Such policy creates motivation for local authorities to open new enterprises, create jobs and infrastructure (Dubrovin 2008). So, to change the structure through the creation and development of new industries in the region through targeted budgetary investments (for example, in the state of Tennessee USA) to eliminate its socio-economic gap the largest energy system was created, that helped speed up the industrialization processes. Preferential tariffs for electricity attracted high-tech enterprises to the region, which helped to improve the conditions and quality of life of the population (Borodin and Erokhin 2015). From all the diversity of foreign experience in implementing state regulation of regions with insufficient potential for self-development, the states with a federal structure are the territories of specific interest.

4 Conclusions Public-private partnership can be presented as a promising avenue for engaging the potential of the region’s self-development in the system of ensuring high rates of social and economic development, especially when we implement infrastructure projects, as well as the projects that allow the use of previously underutilized resources (for example, natural, climatic and other resources). Proceeding from the above, it is

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possible to propose the following financial and organizational measures to activate mechanisms for the self-development of Russian regions. Firstly, it is necessary to solve the task of attracting investment resources (private domestic investments) in the industry, types of economic activity, the development of which contributes to the activation of the region’s internal resource capabilities (tourism, river and lake fish farming, development of peat extraction, forestry, etc.). Secondly, it is necessary to have adequate forecasts on the formation of promising economic activities for each region as a factor that must be taken into account when developing or adjusting the strategy for the social and economic development of the region. In terms of development of public-private partnership in the region the availability of this tool will reduce uncertainty from the point of view of business regarding the decision to participate in the PPP project. Thirdly, not all the regions of Russia have a «critical mass» of large business, which makes it possible to provide conditions for the development of small and medium-sized businesses in the «small around big» scheme. In this regard, a promising tool is the idea of forming macroregions and the implementation of ambitious largescale projects within macroregions, and tasks that are difficult to solve by the forces of one region. However, the existing regulatory framework is not sufficient for the development and implementation of macro-regional policy documents. Thus, in 172FZ «About Strategic Planning in the Russian Federation», the macroregion is declared as a subject of strategic planning, but actually the real set of management tools is limited. Fourthly, innovation-active enterprises have the highest competitiveness, it is necessary to expand measures to support the development and implementation of innovations in the region. As support measures, not only budgetary credits may be envisaged, but targeted budgetary allocations, tax benefits also (for example, in the US there are tax rebates that stimulate the use of alternative energy and energy saving measures, and in Japan, investment tax credits from income tax are provided for the development of the scientific base and the creation of new technologies). Fifthly, additional sources of funding for projects and programs that allow the use of internal resource capabilities of the regions are needed. For example, according to the experience of Germany, it is possible to replace subsidies from the budget with funds of the region that are not deductible to the federal budget, these funds are used for innovative development or development of new enterprises and industries that promote the activation of various resources (natural, climatic, economic) in the region.

References Babaev, B.: Actual Problems of the Regional Economy and Activation of the Territorial Factor of Social and Economic Development: Monograph, 174 p. PresSto Ivanovo (2013) Babaev, B., Zakharova, Z., Zakharov, P.: Role and place of the concession in the socio-economic development of the territory. Econ. Educ. 4, 51 (2015) Borodin, V., Erokhin, A.: Regional integration as a factor of increasing the potential of territory self-development. Reg. Econ. Theor. Pract. 4, 2–12 (2015)

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China’s Population and Development in the 21st Century: Information Office of the State Council of the People’s Republic of China, Beijing (2000). http://www.fmprc.gov.cn/ce/celt/eng/zt/ zfbps/t125259.htm Dubrovin, Y.: Modern Administrative and State Reforms in the Leading Countries of the European Union, 218 p. Mysl Publishers, Moscow (2008) Sherstyankina, T.: Innovative and cognitive tendencies in determining of self-sufficiency of Russian regions. Bull. Buryat State Univ. Series «Philosophy, Sociology, Political Science, Culturology» 14, 96–100 (2009) Shvetchov, A.: «Points of Growth» or «Black Holes» (Towards the effectiveness of the use of «zonal» instruments of state stimulation to revive the economic dynamics of territories). Russ. Econ. J. 3, 40–61 (2016) Tatarkin, A., Molchanova, M.: Conceptual approach to the self-development of territories. J. Econ. Theor. 4, 132–138 (2012) Volodona, A.: Tendencies of strengthening the orientation of Russia’s regions towards selfsufficiency and competitiveness economy. Right. Management: collection of works of young researchers of BSU 1(1) (2014). http://izdatelstvo.isea.ru/epm/archive.aspx?id=1 Zakharova, Zh., Bogatyrev, V.: Interconnection between the categories of region’s selfdevelopment and population’s living standards. In: Advances in Intelligent Systems and Computing, pp. 440–447 (2018)

The Role of the Financial System in Solving Socio-economic Problems Konstantin Lebedev ✉ and Yuliya Budovich (

)

Financial University Under the Government of the Russian Federation, Moscow, Russian Federation {KNLebedev,JBudovich}@fa.ru

Abstract. The purpose of this work is to demonstrate the real role of the Russian financial system in solving the socio-economic problems of the country’s devel‐ opment. Achieving this goal involves the study of the impact on the socioeconomic development of the country’s financial system parameters that have this effect, the ability of financial regulators to influence these parameters, as well as the financial policy of the Russian state. The study found that the role of the Russian financial system in solving the socio-economic problems of the country’s development is insignificant, that the situation in the financial system itself is under the strongest influence of events occurring in the real sector of the country’s economy, as well as in the world financial system, that the traditional levers of financial policy are more in the power of not financial, but non-financial regulators of the economy. It follows that the solution of the problems of socio-economic development of the country, including the problems of the financial system itself, depends mainly on the state policy in the field of the real sector of the economy. The tasks of the Russian state in the field of Finance are, first of all, improving the quality of financial services and improving the efficiency of financial sector organizations. Keywords: Finance · Financial regulator · Non-financial system JEL Classification Code: A12 · E50 · E52

1

Introduction

In the strategic planning documents of the Russian Federation, the financial system of the country is often given a significant role in solving the problems of socio-economic development of the country. For example, in the Conception of long-term socioeconomic development of the Russian Federation for the period up to 2020, the achieve‐ ment of economic growth rates of 6–7% and inflation rates of 3% per year were declared the goals namely of the fiscal and monetary policy of the state (RF Government, 2008-1), i.e. the impact of the state on the socio-economic development of the country through its financial system. In the Strategy for the development of the financial market of the

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 97–104, 2019. https://doi.org/10.1007/978-3-030-00102-5_9

98

K. Lebedev and Y. Budovich

Russian Federation for the period up to 2020, ensuring the accelerated economic devel‐ opment of the country was declared the purpose of this document (RF Government, 2008-2). In the Strategy for the development of the banking sector of the Russian Federation for the period up to 2015, the active participation in the modernization of the economy was named the purpose of the development of this sector (RF Government and Central bank 2011). However, in reality, the possibilities of the Russian financial system, including its regulators, to address the socio-economic problems of the country’s development (low economic growth, high inflation, poverty, etc.) are very limited.

2

Materials and Method

The proof of this situation involves the study of the impact on the socio-economic development of the country of the quality of the financial system, the traditional financial levers (loan rates, tax incentives, etc.), the ability of financial regulators to influence these levers, as well as the relationship of financial regulators to their intended goals of macroeconomic policy and financial levers of impact on socio-economic development.

3

Results

Consider the impact on economic growth of the level of country’s financial market development. The leadership of the country has made purposeful efforts to improve the financial market of the country. However, at the end of 2008 it acknowledged that Russia has actually failed to create a competitive financial market (RF Government, 2008-2)1, and in 2011 it recognized that Russia has failed to create a modern and highly competitive banking sector (RF Government and RF Central bank 2011). This means that at least until 2008 there was no developed financial market in the country. Just under the undeveloped financial market there was a fall in Russian GDP, which lasted from 1991 to 1998 inclusively. But with the same underdeveloped financial market, Russia in subsequent years actually fulfilled V.V. Putin’s plan to double GDP in 10 years, however, announced only on May 16, 2003 (Bulin 2015), when the average annual rate of economic growth for 10 consecutive years was 6.9% per year (from minus 5.35% in 1998 to 6.35, 10.05, 5.09, 4.74, 7.25, 7.15, 6.39, 8.15, 8.54, 5.25 in the next 10 years (School of investor 2015)). This suggests that the developed financial market is by all accounts not necessary for stable and rapid economic growth, i.e. economic growth does not depend on how well the financial market is developed. 1

In particular, the most important tasks remained unresolved, such as the creation of legal mechanisms aimed at preventing insider trading and manipulation in the financial market; building a system of prudential supervision of professional participants in the securities market; creating conditions for securitization of financial assets; legal regulation of compensation payments to citizens in the securities market; the formation of a mass retail investor; the devel‐ opment of derivative financial instruments.

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Note that in the same years in a country with a well-developed financial market, namely the United States, the rate of economic growth was: 4.7, 4.1, 1.0, 1.8, 2.8, 3.8, 3.3, 2.7, 1.8, minus 0.3%, respectively (Kravets 2017), i.e. 2.6% on average. Also note that during the period of quality growth of the Russian financial market in the crisis-free 2011–2013 GDP growth rates amounted to 4.3, 3.4, 1.3% respectively (School of investor 2015), or 3% on average per year, i.e. were more than 2 times lower than in the previous decade in the underdeveloped financial market. The power of influence on the economy of traditional levers of financial policy, as well as the possibility of influence of financial regulators on them, can be challenged. An important lever of influence on the real sector of the economy is the value of interest rates on loans. It is believed that the increase in rates through changes in invest‐ ment spending financed by bank loans leads to a reduction in the rate of economic growth, while the decline leads to growth (McConnell and Brue 2006). However, it appears that the dependence of economic growth on interest rates is ambiguous. It is known, for example, that a number of countries have experienced sustained and rapid economic growth at high real interest rates. For example, in Turkey in 2002–2007 there was an economic growth with an average annual rate of 6.8% at a rate of 11.1%, India in the years 1980-2013–6 at a rate of 5.4, Chile during the years 1984-2013–5.6 at a rate of 8, and Brazil in 2000–2008 economic growth, however at 3.7% per year, at all occurred at a real rate of 43.1% (Drobyshevsky et al. 2016). As far as Russia is concerned, studies have shown that before the 2008 crisis the impact of interest rates on the real sector was insignificant, and now their impact on economic growth is ambiguous (Drobyshevsky et al. 2016). The substantial independence of economic growth in Russia from interest rates explains the reluctance of the Bank of Russia to assume a “double mandate”, i.e., in addition to inflation, to be responsible for economic growth. It is known that only in the 2nd half of 2016 parliamentarians twice failed to carry out appropriate amendments to the Law on the Bank of Russia, which were first proposed by members of the Federation Council (Money 2016) and then by deputies of the Orel region (Tegin 2016). Obviously, the leaders of the Bank of Russia are well aware that economic growth in our country does not depend on its interest policy. Of course, one can try to explain the ambiguity and weakness of the impact of interest rates on economic growth through the interaction of several channels of their influence on it, in different situations having different force, defending the idea of a significant dependence of economic growth on interest rates and, accordingly, significant oppor‐ tunities of macroeconomic policy. So, according to the theory of irreversible investment created by Arrow and Bertola and Caballero, the growth of rates of loans negatively affect the production due to the rising costs of borrowing and positively due to the growth of investments in anticipation of further rise in interest rates, i.e. due to the increase in costs from postponing the investment (Arrow 1968; Bertola and Caballero 1994). However, it is logical to assume that interest rate is simply not a significant factor of economic growth. From Keynesian economic theory it is known that the percent is not the main driver for investment on which economic growth depends, and so is the expected return of investment projects. But with regard to Russia, there is more convincing evidence of the insignificant impact of interest rates on economic growth. In our country, bank loans account for no more than 10% of the sources of financing of

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investments in fixed assets (Rosstat 2018), i.e. 9/10 investments in fixed assets and, accordingly, 9/10 of economic growth do not depend on interest on loans. By the way, the instruments of the non-bank financial market, namely the funds from the issue of shares and corporate bonds in the total volume of sources of investments in fixed assets generally occupy only about 1% (Rosstat 2018). Since the rate of inflation reflects the purchasing power of money that are an element of the financial system, it can be said that the rate of inflation is also a financial lever to influence socio-economic development, including economic growth. In this regard, we draw attention to the ambiguity of the dependence of economic growth on inflation. Having the following data series on inflation in the period 1999–2014: 36.6, 20.1, 18.8, 15.06, 11.99, 11.74, 10.91, 9, 11.87, 13.28, 8.8, 8.78, 6.1, 6.58, 6.45, 11.36% respectively (inflationinrussia.com 2018), it is possible to establish that approximately the same growth rate, namely of 6.36% in 1999 and 6.39% in 2005 (School of investor 2015), was observed at more than three times differing rates of inflation – 36.6 and of 10.91%, respectively, and approximately the same rate of inflation, namely 11.99% in 2003, and 11.36% in 2014, corresponded to more than ten times differing rates of economic growth of 6.39 and 0.6% respectively (School of investor 2015). At the same time, financial regulators, including the central bank of the country, have limited opportunities to influence this parameter of the financial system. Of course, analysts close to the banking system explain the record decline in inflation rates in 2017 to 2.8% per year by the conservative policy of monetary authorities (Regnum 2017). However, a broader expert opinion is united in the fact that this phenomenon has at least several reasons, which, in addition to the interest policy of the Bank of Russia, include stabilization and depreciation of the dollar rate, the fall in consumer spending of Russians (which reached a 5-year minimum) and high yields of the last two years (Migunov 2017). At the same time, some experts consider the efforts of the Bank of Russia are not the main reasons for the decline in inflation. So economists from the Russian Academy of national economy and public administration believe that the main reasons for the slowdown in prices in 2017 are a good harvest in this year, strengthening of the ruble (due to the increase in oil prices and increased demand for Russian assets) and the slow recovery in demand (BBC 2017). Government policy in the real sector of the economy, especially the policy of public spending, not the initiatives of financial regulators, has always played a decisive role in the development of inflationary processes in the country, as many leading economists of Russia constantly pointed out. For example, the Director of the Institute of Economics, corresponding member of Russian Academy of Sciences R.S. Grinberg pointed to a fundamental misunderstanding of the nature of inflation in our country, the fact that the monetary factor in its development plays an insignificant role (Krasavina 2006). It is unlikely that the state can boast of particular successes of its effects on the economy, carried out through the financial system, such as tax incentives and subsidies to enterprises (acting as policy measures in different industries and sectors of the real sector of the economy). For example, in the framework of the state program “Economic development and innovative economy”, adopted in 2013, the Fund for the promotion of innovation was allocated 5 billion roubles for support of small innovative enterprises, and the Fund supported 619 of such enterprises, then, in the framework of the state

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program “Development of industry and increasing its competitiveness”, adopted in 2014, subsidizing of interest rates on investment credits and expenses on research and development work (Kuznetsov et al. 2016). However, there is really no transition to an innovative type of development. Thus, the share of industrial enterprises engaged in technological innovation in the total number of industrial enterprises from 2010 to 2015 in the country has not changed (9.3% in 2010, 9.5% in 2015), remaining at the level of 2009, and in 2016 even fell to 7.7% (Rosstat 2017), while the Strategy of innovative development of the Russian Federation for the period up to 2020 envisaged an increase in this indicator from 9.4% in 2009 to 20% in 2016 (and 40% in 2020). It is obvious that innovative development in our country depends much more on other reasons than the possibility of obtaining tax benefits and subsidies. Traditionally, it is believed that the weakening of the national currency leads to an increase in such a component of GDP as net exports (the difference between exports and imports), as with the depreciation of the national currency, exports, becoming more profitable, grow, and imports, becoming less profitable, fall (as the ruble equivalent of the currency value of exported or imported goods increases). The strengthening of the national currency, on the contrary, leads to a decrease in net exports for opposite reasons (McConnell and Brue 2006). From this it follows that the depreciation of the national currency leads to an increase in GDP growth rates, and its strengthening-to their fall. It is important to note, however, that exchange rate changes affect not only the value of net exports, but also other components of the corresponding GDP calculation formula (consumption, government expenditure, investment), so that the real impact of the periods of growth and decline in the exchange rate of the national monetary unit on GDP growth rates is ambiguous. As you know, the main reason for the refusal of the Bank of Russia from the strategy of currency targeting and the transition to the strategy of infla‐ tion targeting, which occurred since the beginning of 2015, was the need to form longterm benchmarks for business (Shokhina 2012). But maybe the real reason for the Bank of Russia’s refusal to influence the socio-economic development of the country through the exchange rate was the lack of a real channel of influence on this development through the exchange rate? Since the exchange rate is no longer considered by the Russian state as a financial lever of its influence on the economy, the thesis of the ambiguous depend‐ ence of economic growth on the exchange rate can not be confirmed. Despite the fact that the impact of the exchange rate on the socio-economic devel‐ opment of the country is ambiguous, financial regulators have little opportunity to influ‐ ence this parameter of the financial system. For example, one can argue that the sharp increase in the key rate by the Bank of Russia to 17% (on the night of December 16, 2014, when the ruble collapsed) led to the stabilization of the situation in the foreign exchange market. It was assumed that this measure will weaken the fall of the ruble and even strengthen it, but this did not happen and the ruble continued to depreciate (FINANSPLAY 2014). The light on the true reason for the stabilization of the situation in the Russian currency market may shed acquaintance with the Directive of the govern‐ ment of the Russian Federation of December 23, 2014 on the limit of foreign currency assets of five state-owned exporting companies, prescribing to ensure until March 1, 2015. bringing the size of their net foreign exchange assets to a level no higher than that of October 1, 2014 and the subsequent maintenance of the size of the company’s net

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foreign currency assets not higher than the specified level, in pursuance of which these state-owned exporting companies in the next two months were to sell approximately $1 billion per day! (Vesti. Economics 2014). From the weak influence of the values of the parameters of the national financial system on the socio-economic development of the country, from the fact that they depend on the situation in the real sector of the economy and the world financial system, it follows that the financial system in the economy is a passive player, adapting to the external situation, and another should not be expected from the element of the distribu‐ tion sector of the economy. Thus, R. Lucas’ opinion that Finance is not an “overstressed” determinant of economic growth (Lukas 1988) is true, at least, in relation to modern Russia. The success of the state in ensuring stable socio-economic development of the country, including the formation of parameters of the financial system, favorable for this development, depends mainly on its policy in the field of the real sector of the economy. The tasks of the state in the field of Finance are, first of all, improving the quality of financial services and improving the efficiency of financial sector organiza‐ tions. As for the use of the financial system to solve socio-economic problems, it should be of a complementary nature.

4

Conclusions/Recommendations

Successful solutions of socio-economic problems should not be relied upon if only financial instruments were applied. In this regard, the effectiveness of the “last” attempt of the Russian leadership to solve the problem of housing, and at the same time demog‐ raphy, through the development of mortgage lending by reducing the interest rate on loans to 7–8% per annum for 6 years (HOME.RF 2018) is questionable. It seems that the “key” to solving this problem lies in the real sector of the economy and is to reduce housing prices, including through their corruption component, reaching up to 50% of the cost (NEWSru.com 2013). Interesting to see, that during his tenure as Prime Minister Vladimir Putin considered the price of housing as the main factor in solving the housing problem. Thus, when solving in 2009 the problem of reduction of housing construction (by 20%) and mortgage lending (by 6 times) as a result of the 2008 crisis in order to implement the national project “Affordable housing”, Vladimir Putin demanded to reduce the cost of a square meter of housing to 30 thousand rubles (Dyatlovskaya 2009). In 2012, Vladimir Putin said that the problem of housing for Russians, which was expected to be solved by 2030, would be solved, among other things, by lowering housing prices by 20–30% (NEWSru.com 2013). Herewith, at present instead of addressing the problem of housing prices, Russian officials are exacerbating the problem, in particular by trying to ban equity construction, from which experts expect housing prices to rise (TASS 2017).

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References RF Government: Order No. 1662-r of 17 November “On the Conception of long-term socioeconomic development of the Russian Federation for the period up to 2020” (2008). http:// www.consultant.ru/document/cons_doc_LAW_82134/. Accessed 08 Apr 2018 RF Government: Order No. 2043-R of 29 December “On approval of the Strategy for the development of the financial market of the Russian Federation until 2020” (2008). http:// www.consultant.ru/document/cons_doc_LAW_83914/. Accessed 03 Apr 2018 RF Government and Central Bank: Application of 5 April №№ 1472p-P13, 01-001/1280 “On the Strategy for the development of the banking sector of the Russian Federation for the period up to 2015” (2011). http://base.garant.ru/591345/#ixzz41TVTT7hD. Accessed 03 Apr 2018 Bulin, D.: Mysteries of doubling Russia’s GDP according to Putin’s plan (2015). https:// www.bbc.com/russian/business/2015/03/150331_russia_increase_gdp_twice. Accessed 05 Apr 2018 School of Investor: Russia’s GDP over the years: 1990–2015 (2015). http://investorschool.ru/vvprossii-po-godam. Accessed 27 Mar 2018 Kravets, A.V.: Econometric model of the growth rate of U.S. GDP over the period 1965 to 2015. Internet-Journal «NAUKOVEDENIE», vol. 9, No. 2 (2017). http://naukovedenie.ru/PDF/ 21EVN217.pdf. Accessed 27 Mar 2018 McConnell, C.R., Brue, S.L.: Economics: Principles, Problems, and Policies. Irwin/McGraw-Hill, New York (2006) Drobyshevsky, S.M., Trunin, P.V., Bogachkova, A.V., Sinelnikova-Muryleva, E.V.: Effect of interest rates on economic growth. Money and Credit, No. 9. pp. 29–40 (2016) Money: Central bank asked to answer for economic growth (2016). http://www.dengi43.ru/banks/ kirov/—–00161/. Accessed 10 Jan 2017 Tegin, M.: The Central bank for economic growth and unemployment is not responsible (2016). http://www.banki.ru/news/bankpress/?id=9451316. Accessed 10 Jan 2017 Arrow, K.J.: Optimal Capital Policy with Irreversible Investment, Capital and Growth. Papers in Honour of Sir John Hicks. pp. 1–19 (1968) Bertola, G., Caballero, L.J.: Irreversibility and Aggregate Investment. Rev. Econ. Stud. 61, 223– 246 (1994) Rosstat: «Fixed capital Investment in the Russian Federation by source of financing» (2018). http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/enterprise/investment/ nonfinancial/. Accessed 08 Apr 2018 Inflationinrussia.com: «Inflation rate in the Russian Federation » (2018). http://ypoвeньинфляции.pф/%D1%82%D0%B0%D0%B1%D0%BB%D0%B8%D1%86%D0%B0_ %D0%B8%D0%BD%D1%84%D0%BB%D1%8F%D1%86%D0%B8%D0%B8.aspx. Accessed 27 Mar 2018 Regnum: Inflation will continue to decline until the end of 2017 (2017). https://regnum.ru/news/ 2350632.html. Accessed 27 Mar 2018 Migunov, D.: Stop! The slowdown in inflation threatens Russia with disaster (2017). https:// lenta.ru/articles/2017/10/18/inflation/. Accessed 27 Mar 2018 BBC: Inflation in Russia at a historic low: good or bad? (2017). https://www.bbc.com/russian/ news-42514091. Accessed 27 Mar 2018 Krasavina, L.N.: “Problems of reducing the inflation rate in Russia (based on the materials of the round table held at the Finance Academy under the Government of the Russian Federation)”, Accounting in budget and non-profit organizations, No. 16 (160), pp. 11–22 (2006) Kuznetsov, E.B., et al.: National report on innovations in Russia 2016, Ministry of economic development of the Russian Federation, Open government, RBC, M (2016)

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Rosstat: The share of organizations implementing technological innovations in the total number of surveyed organizations (2017). http://www.gks.ru/wps/wcm/connect/rosstat_main/ rosstat/ru/statistics/science_and_innovations/science/. Accessed 22 Apr 2018 RF Government: Order No. No. 2227-r of December 8 “On the approval of strategy of innovative development of the Russian Federation for the period till 2020” (2011). http://www.garant.ru/ products/ipo/prime/doc/70006124/. Accessed 05 June 2017 Shokhina, E.: A Guide to the future (2012). http://expert.ru/2012/09/27/orientir-v-buduschee/. Accessed 22 Apr 2018 FINANSPLAY: What are the reasons for the fall of the ruble in December 2014? (2014). http:// finansplay.com/article/v_chem_prichiny_padeniya_kursa_rublya_v_dekabre_2014_goda. html. Accessed 27 Mar 2018 Vesti. Economy: The government has published a Directive on currency limit (2014). http:// www.vestifinance.ru/articles/51276. Accessed 27 Mar 2018 Lukas, R.E.: On the mechanics of economic development. J. Monet. Econ. 22, 3–42 (1988) DOM.RF: Experts about Putin’s mortgage plans: to fear a bubble is not worth it (2018). https:// дoм.pф/2018/03/02/eksperty-ob-ipotechnyh-planah-putina-opasatsya-puzyrya-ne-stoit/. Accessed 01 Apr 2018 NEWSru.com: Putin was advised to reduce housing prices by 50% (2013). https:// realty.newsru.com/article/13Feb2012/putin50. Accessed 01 Apr 2018 Dyatlovskaya, E.: Putin set the bar on the price of housing (2009). https://www.infox.ru/news/32/ economy/realty/24932-putin-ustanovil-planku-po-cene-zila. Accessed 01 Apr 2018 TASS: How the ban on shared construction will affect the cost of housing (2017). http://tass.ru/ ekonomika/4710451. Accessed 08 Apr 2018

The Current Practice of the Strategic Planning in Russian Regions: Innovative Model of Strategic Planning “Galaxy 7 × 7 × 7” of the Leontief Centre-AV Group Consortium and Experience of Its Approbation in Krasnodar Krai Konstantin V. Getmantsev1 ✉ , Daria V. Lanskaya1, Tatiana A. Myasnikova1, and Yuri I. Treshevsky2 (

)

1 Kuban State University, Krasnodar, Russia [email protected], [email protected], [email protected] 2 Voronezh State University, Voronezh, Russia [email protected]

Abstract. The technology of the strategic planning undergoes changes, instead of “traditional” strategic planning concepts of the middle of the 20th century, developers are increasingly offering author’s approaches. One of these author’s methods is the strategic planning model “Galaxy”, first used to develop the Strategy of social and economic development in Krasnodar Krai until 2030. The article analyzes the principle of the model, the peculiarities and the results of its application for the development of the region strategy, the advantages and disad‐ vantages of the model are formulated, as well as the problems Keywords: Strategic planning Regional and local socio-economic development · Regional strategy JEL Codes: R58 Regional Development Planning and Policy R12 Size and Spatial Distributions of Regional Economic Activity

At the end of 2016, the Leontief Centre-AV Group Consortium [2] starts the develop‐ ment of the Strategy of socio-economic development of Krasnodar Krai. In an effort to actualize its own projects in the field of strategic planning and the “classical” requirements for the strategy development, the Leontief Center AV-Group Consortium offers the author’s method of strategic planning - the “Galaxy 7 × 7 × 7” model - Fig. 1 [12]. The methodical peculiarity of this approach is the use of a specially developed inte‐ grating scheme-the “Galaxy 7 × 7 × 7” model, which sets the logic for strategic analysis, goal-setting and building of a management system focused on increasing the competi‐ tiveness of the region and its enterprises [12]. The “Galaxy 7 × 7 × 7” model is the concretization of the more general AV Region Galaxy Model method developed by the AV Group specifically for the strategic planning of regional development. The AV Region Galaxy Model is based on the approach of

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 105–113, 2019. https://doi.org/10.1007/978-3-030-00102-5_10

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Fig. 1. Methodical approach to the development of the strategy for social and economic development of Krasnodar Krai. The model “Galaxy 7 × 7 × 7” [11, 12] Model “Galaxy 7 × 7 × 7” [11, 12]

such classics in the theory of interregional and global competition and territorial devel‐ opment as F. Perroux [8], M. Porter [10] and J. Schumpeter [13]. The model combines two levels of the region investigation: external, reflecting the competitive positions of Krasnodar Krai in relation to other regions in the context of seven dimensions of interregional competition; internal, describing the structure of six basic economic complexes (distinguishing clusters and development projects in each of them) in the context of three economic zones formed around three urban agglomerations. At the same time, according to AV-groups, seven dimensions of competition can be interpreted in relation to the region from the perspective of enterprise competition for different resources (region-enterprise fighting for competition), which makes the model a convenient tool for region competition study [12]. According to the idea of developers, the internal structure of the socio-economic complex of Krasnodar Krai, defined in the “Galaxy” model, is reflected in the corre‐ sponding set of statistical indicators, as follows: – Krasnodar Krai as a whole; – seven economic zones; – seven basic economic complexes: four production complexes (gas and petrochemical complex, power complex, machinery and another manufacturing sector complex,

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agro-industrial complex) and two supply complexes (infrastructure and service), which are divided up to 17 and further to 60 subcomplexes and industries [12]. The approach to the strategy development proposed by the authors is built similarly. It is based on the spatial approach, the principle of which is to conduct economic zoning of the region territory, to select development zones and to study the impact of seven competition dimensions within them in the context of six basic economic complexes. Accordingly, the regional strategy is, as it were, decomposed into regional development strategies and represents their sum. So, with reference to the socio-economic develop‐ ment strategy of Krasnodar Krai, the following economic zones were defined Fig. 2 [12]:

Fig. 2. Seven economic zones of Krasnodar Krai in Strategy 2030

– I Northern economic zone, including Kushchevsky, Krylovsky, Pavlovsky, Staro‐ minsky, Leningradsky, Kanevskaya, Shcherbinovsky, Yeysky; – II Central economic zone, including Krasnoarmeysky, Slavyansky, Kalininsky, Primorsko-Akhtarsky, Bryukhovetsky, Timashevsky, Korenovsky, Vyselkovsky,

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Ust-Labinsky, Krymsky, Abinsky districts. The cities of Krymsk, Slavyansk-onKuban, Timashevsk, Korenovsk, Ust-Labinsk; III Eastern economic zone, including the territories of Beloglinsky, Novopokrovsky, Tikhoretsky, Kavkazsky, Tbilissky, Gulkevichsky, Novokubansky, Kurganinsky, Uspensky districts and the city of Armavir; IV Black Sea economic zone, including the city territories of Anapa, Novorossiysk, Gelendzhik, Tuapsinsky and Temryuksky districts; V Krasnodar agglomeration; VI Piedmont economic zone, which includes the territories of Labinsky, Otrad‐ nensky, Mostovsky, Belorechensky and Apsheronsky districts; VII Sochi agglomeration.

Accordingly, among them there were selected and studied seven basic economic complexes, from the position of assessing the ability of all seven complexes to compete for resources: – – – – – – –

sanatorium and resort complex (SRC) agro-industrial complex (AIC) fuel and energy complex (FEC) a complex of social and innovative services trade, transport and logistics complex (TTLC) a complex of manufacturing sectors a complex of building industry and housing and public services [12].

Thus, the methodical approach proposed by the developers comes to identification of the region capabilities to compete for resources (primarily investments). In this case, the region itself is considered as a corporation that produces certain resources (a terri‐ torial product) and in its turn needs other resources (energy, finance, human resources, goods, etc.) This explains the close connection between the “Galaxy” model and the national and global competition level, claimed by the AV groups. In the text of the Strategy, it is always stated that Krasnodar Krai needs to compete for positions in the global distri‐ bution of investments, tourists, migrants, etc., the region is compared with the developed regions in Europe, the USA and Asia [5]. An example of this interpretation is the analysis of competitive positions of Kras‐ nodar Krai in the context of seven competition dimensions, based on AV RCI technology [4], and also developed by the Leontief Center. An example of competitive positioning of Krasnodar Krai based on AV RCI tech‐ nology is shown in Fig. 3 [9]. The presented model “Galaxy” combines two levels of region investigation: external, reflecting the competitive positions of Krasnodar Krai in relation to other regions in the context of seven dimensions of interregional competition; internal, describing the struc‐ ture of seven basic economic complexes (distinguishing clusters and development projects in each of them) in the context of five economic zones formed around two urban agglomerations. At the same time, this approach is aimed at external resources attraction and region positioning on external, global markets. However, the internal problems and internal

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Fig. 3. Competitive positions of Krasnodar Krai in the system of competition indicators. Strategy 2030 materials

capabilities of the region to solve them are in fact underestimated. The main focus of the “Galaxy 7 × 7 × 7” model is to attract external sources of development, primarily investments and human resources. And this is the first controversial methodological position. Another peculiarity of the “Galaxy 7 × 7 × 7” model is that it is based on a spatial approach to regional development planning. The investigation of economic zones follows the plan: – the selection of zones with new technological structures, preset in advance by the concept of the model “Galaxies 7 × 7 × 7” and prioritized, selection of zones with new technological structures, excluding the possible detection of local economic peculiarities; – creation of development strategies and activities for each zone, also from the concept of the task of transition to the sixth technological order (post-industrial economy); – development of strategies and a set of activities for urban agglomerations, also oriented towards the transition from industrialization to new post-industrial forms: technology cities, innovation centres, etc. Referring to Fig. 2, it becomes clear how these zones, in particular, the zones of new technological order are selected. These are urban areas where the level of telecommu‐ nication allows the implementation of new projects in the business sector - the concept of “SMART City” which Leontief Center offers in all regions. Other economic zones are selected geographically, by the nature of their location, but without regard for the degree of connection among these territories, nor peculiarities of their economy. So industrial Timashevsk refers to the agrarian regions zone and agrarian Temryuksky and Yeisky districts refer to the recreation zone. And there are many such examples.

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The study of the strategic planning model “Galaxy 7 × 7 × 7” allowed to formulate a number of its disadvantages, revealed in the course of the comparative analysis of the application results in the development of the Strategy 2030 for several regions of Russia. The first controversial issue is the fact that this approach presented as author’s is not a new one. It could be found in the model of seven competition factors by Porter [10] and Schumpeter [13], but it was originally developed for a commercial enterprise. The main result, in this case, is profit and the opportunity to expand the presence in the market for certain goods and services. The region is a more complex economic and social system. Its “product” is not always portable, in addition, the objectives of regional development are, first of all, the creation of conditions that ensure the life quality growth for the region population. Therefore, when we look at the methodology of “Galaxy 7 × 7 × 7”, the question arises: are these activities aimed at maintaining of the quality of population’s life? The focus is on the interests of large enterprises, and social development is expected to be reached if the economy develops. The second controversial issue of this approach is the practical ignoring of special factors of regional development, of the orientation toward their creation and involvement in the processes of economic activity. The model “Galaxy 7 × 7 × 7” is based on the region positioning in the external arena. At the same time, regional natural, geographic, human, technological and other capabilities are assessed only selectively in terms of searching for new models of the regional economy in order to enter foreign markets. However, the opportunities for the development of the already existing economy are ignored. The search goes precisely among the new forms, although it is possible to use the reverse approach and to combine them. With this approach, the interests and ambitions of local entrepreneurs, the regional community and even the authorities to become the part of the global economic space are ignored. Most of the local problems that are not related to competition are ignored: the state of the medical field, the number and quality of schools, opportunities for leisure, the development of retail trade and the availability of services and goods for the popu‐ lation, etc. We can say that the interests of the region are artificially “taken out” to the global economic sphere and there they are considered in connection with the region’s capability to compete for external resources. The third and significant drawback is the deterministic selection of the directions for the regional economy development, regardless of the analysis results and specifics, which is inherent in every region of Russia. Seven factors of development, taken into account in the “Galaxy” model, significantly reduce the ability to consider the diversity of the regional environment. The application of the “Galaxy” neutralizes the regional specifics. The whole analysis is limited by the stereotype of the “Galaxy”. These disadvantages indicate the need to develop the tools of the “Galaxy” model. Also this emphasizes the idea that universal analysis tools give only an average result. On the one hand, the “Galaxy” needs to be developed, and on the other, there is need for the set of methods for regional environment analysis, with different in their expres‐ sive capabilities methods.

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Apart from the “Galaxy”, there are other approaches for the regional environment factors consideration. So, in [1] the model structure of meso environment is considered: regional legisla‐ tion, regional economy specifics, regional community and human capital asset, regional resources, regional communication environment, regional market of goods and services, regional market infrastructure, small business development etc. The method MesoOT for the analysis of the regional environment is offered. Within the framework of the method there were applied the scoring of factors, expert opinions and content analysis, which together increases the analysis consistency. One more remarkable peculiarity of this method is that the measurement of factors in the metric system is carried out in information units (bits). This determines the analysis objectivity and raises the reliability of the external environment study by means of the well-known intelligent system “EidosX++” [3, 7] allowing to proceed from qualitative analysis to quantitative estimates. Model structure of the meso environment (the region environment) is presented in Fig. 4 [1].

Regional communicat ive environment

The specificity of the regional economy

Small business development

Regional community and traditions REGION Intellectual human capital asset

Regional resources

Local innovative ecosystem of the region

Peculiarities and infrastructure of the regional market

Regional legislation

Fig. 4. Model structure of the meso environment (the region environment) [1]

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The solution of the identified problems consists in the need to develop the “Galaxy 7 × 7 × 7” model in order to expand the group of strategic analysis factors that maximally take into account the specifics of this particular territorial economic system. As the direction of further research in strategic management the development of the tool base of the regional economic system studies is considered. The main directions of such studies are: – development of existing analysis methods by including and developing the cognitive component; – the use of modeling complexes based on the methodology of the ontological approach; – the use of intelligent tools based on neural ensemble networks. Acknowledgments. The study was carried out with the financial support of the Russian Foundation for Basic Research (RFBR) within the framework of the scientific project “Modelling of differentiation processes of region economic space in the conditions of regional economy transformation”.

References 1. Lanskaya, D.V., Polyakova I.A.: Method MESOOT - diagnosis of the external environment: factors, structuring and problems of automation application. The Polythematic Network Electronic Scientific Journal of the Kuban State Agrarian University (Scientific Journal of KubSAU), No. 05 (129), pp. 1268–1279. KubSUA, Krasnodar (2017). http://ej.kubagro.ru/ 2017/05/pdf/91.pdf 2. Leontief Centre: The website “Free encyclopedia”. https://ru.wikipedia.org/wiki/%D0%9B %D0%B5%D0%BE%D0%B82%D1 3. Lutsenko, E.V.: Metrization of measuring scales of various types and joint comparable quantitative processing of heterogeneous factors in system-cognitive analysis and the Eidos system. Polythematic Network Electronic Scientific Journal of the Kuban State Agrarian University (Scientific Journal of KubSAU), No. 08 (092). pp. 859–883. KubSAU, Krasnodar (2013). http://ej.kubagro.ru/2013/08/pdf/58.pdf 4. Methodology AV RCI Leontief Centre. http://av-group.ru/wp-content/uploads/2015/10/ AV_RCI_2015.pdf 5. On the work of CJSC ICSER Leontief Center: The official website of “Leontief centre”. http:// leontief-centre.ru/ 6. On strategic planning in the Russian Federation: Federal law of 28.06.2014 No. 172-FZ 7. Orlov, A.I., Lutsenko E.V.: System Fuzzy Interval Mathematics. Monograph (Scientific Publication), 600 p. KubGAU, Krasnodar (2014). http://lc.kubagro.ru/aidos/aidos14_OL/ index.htm 8. Perroux, F.: Economic space: theory and applications. Spatial Economics, No. 2 (2007) 9. The positioning of Krasnodar Krai in the national and global economic space on the basis of seven competition indicators. http://kuban.lc-av.ru/napravleniya-konkurentsii/ 10. Porter, M.E.: Competitive advantage: Creating and Sustaining Superior Performance, 720 p. Alpina Publisher, Moscow (2008) 11. Project sites of the Strategy for social and economic development of Krasnodar Krai until 2030. http://kuban.lc-av.ru/proektnye-ploshhadki/

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12. The Strategy of Social and Economic Development of Krasnodar Krai until 2030. http:// kuban.lc-av.ru/ 13. Schumpeter, J.: The Nature and Essence of Economic Theory. Progress, Moscow (1982) 14. South Pole and Smart Kuban: What is Strategy 2030 preparing for Krasnodar Krai? https:// kuban.rbc.ru/krasnodar/28/02/2018/5a955ab79a794752e323a2a4

Contradictions in the Motivation of Top Managers of Corporation by the Method of Economic Added Value Sergey N. Yashin1(&), Egor V. Koshelev1, Victor P. Kuznetsov2, Yuliya V. Zakharova1, and Alexey A. Ivanov1 1

N.I. Lobachevsky Nizhny Novgorod State University, Nizhny Novgorod, Russian Federation {jashinsn,ekoshelev,alexey.iff}@yandex.ru 2 Minin University, Nizhny Novgorod, Russian Federation [email protected]

Abstract. Subject. The subject of the study is the problem of the possibility of applying the method of economic added value for constructive motivation of the top management of corporations. With the constructive motivation of senior executives, they work in such a way that they do not distort the projected cash flows of projects and the profit indicators of the firm in order to receive appropriate remuneration for that, but solve long-term strategic issues, which allows the company to constantly increase the value of the business. Goals. The purpose of the study is to adjust the known method of economic added value in such a way that it can be used to successfully motivate top managers of the company. In this case, this method is compared with the method of net present value and the method of modified economic added value in order to bring the interests of top managers in line with the interests of the owners of the firm, for example, shareholders in the joint-stock company. Methodology. The proposed methodology consists in applying the actual indicator of the modified economic value added instead of the usual economic added value. This allows you to align priorities of top managers and owners (shareholders) with respect to which investment project from a set of available alternatives should be implemented. Results. The projected modified economic added value, like the net present value, does not in itself provide a reliable guide for the rational motivation of the top manager for the company’s long-term goals. This problem can be solved by placing top managers remuneration in dependence on the actually obtained modified economic added value by years as a result of the implementation of a specific project. In this case, the top managers of the company become constructively motivated to increase the value of the company’s business, as required by shareholders.

The article was prepared with the financial support of the Russian Foundation for Basic Research. Grant No. 15-02-00102 a. © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 114–125, 2019. https://doi.org/10.1007/978-3-030-00102-5_11

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Conclusions. The results of the research presented by the authors can be useful to both financial analysts and corporate owners. They will help to focus the work of top managers on achieving long-term strategic goals of companies. Keywords: Top managers

 Economic added value

At present, in various studies of Russian economists, many detailed useful results have been obtained with regard to optimizing the processes of motivating staff of commercial and state organizations. However, insufficient attention is paid to the rational motivation of top management in commercial firms and banks, as well as in government structures. Although the success of these structures depends primarily on the decisions of top managers with regard to business development or the activities of state organizations. Managing the motivation of hired employees - top managers - is a complex process, involving both organizational and financial methods (V.P. Kuznetsov et al. [1]). One of the most popular ways to motivate top executives today is through so-called managerial options (Y. Brigham, L. Gapenski [2], M.O. Ivanova [3], M.M. Kirillova [4], M.A. Limitovsky [5], I.V. Snimshikova [6]). In the proposed system, the option plan serves as a part of the size of the remuneration of managers, while remuneration for it is paid when the corresponding corporate goals are achieved (M.O. Ivanova [3]). One of the main corporate goals is to increase the value of the corporation’s business (Y. Brigham, L. Gapenski [2], A. Damodaran [7], M.A. Limitovsky [5]), although sometimes in the tactical purposes of developing a company from top managers, it is primarily necessary to resolve current issues. To such it is possible to carry: the desire for maximum property at the end of the investment project or the desire for maximum annual income withdrawn by the company’s owners from business (L. Kruschwitz [8]). Sometimes it is recommended to use call options for shares of the corporation as a reward for top managers. However, this is dangerous, since managers in this case become co-owners of the company. Therefore, it is better to use settlement (phantom) options that do not involve the supply of a basic asset (M.A. Limitovsky [5], A.N. Malyugin [9]). In addition, options should be European, timed to coincide with the completion of the project, in order to avoid the actions of managers aimed at a shortterm increase in the market price of shares (M.A. Limitovsky [5]). A special place in the motivation system of top managers is non-material motivation (L.N. Levanova [9], S.N. Yashin et al. [11]). At the same time, for example, by using utility functions in calculations, it is possible to measure immaterial motivation in money by analogy with material motivation, which in turn gives certain advantages of non-material motivation of top managers in comparison with material ones (S.N. Yashin et al. [11]). In addition, as shown by statistical studies, more than half of senior executives are currently not satisfied with the existing methods of their financial incentives (E.V. Pogrebnaya [12]). In some works, in order to optimize the motivation of top managers, two types of top managers of the company are primarily delineated: insiders that increase the value of the company, and insiders motivated by the growth of the company’s value (M.A. Limitovsky [13]). In this case, the second type of insider is divided by the author into: (1) partners (friends of the firm), (2) regents seeking maximum development of

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available capital by investing in any projects, and (3) saboteurs taking investment decisions to the detriment of other shareholders and the business as a whole. Proceeding from this classification, in his work M.A. Limitovsky [13] mathematically proves that a rational insider that does not bear a liability for taking inefficient projects cannot be constructively motivated. However, in this context, it is also important to assess the value of top manager for the corporation. So, for example, in the work of S.N. Yashin, Y.V. Trifonova, E.V. Kosheleva [14] assesses the motivation of top managers with the help of warrants. Obviously, this motivation, like any other, should have a certain price for the company. In this case, the price of shares on the market is adjusted, adjusted for their expected dilution, which is a consequence of the future execution of warrants. One of the methods of motivating top managers, which is used in practice, is the appointment of bonuses to company executives, depending on the results of the company’s economic added value (EVA) by years (Y.F. Brighem, J.F. Houston [15], A. Damodaran [7], M.A. Limitovsky [5], J. Roche [16]). Very often, the EVA method is opposed to the discounted cash flow (DCF) method. It is argued that the EVA method allows you to determine the value of the company in more detail by factors than the DCF method (S.V. Voronina [17], O.N. Salmanov [18]). At the same time, the evaluator has an opportunity to analyze the efficiency of the company’s work (E.V. Shilkova [19]). In addition, the EVA indicator serves as an indicator of the quality of management decisions and makes it possible to assess the effectiveness of both the company as a whole and its individual units or investment projects (S.G. Galevsky [20], I.V. Ivashkovskaya, E.B. Kukina, I.V. Penkina [21]). EVA also allows you to analyze and evaluate the degree of success in implementing the company’s financial strategy aimed at increasing the company’s value and achieving financial security (N. V. Klochkova, O.E. Ivanova [22]). In this regard, the rational management of EVA results is one of the main tasks of strategic planning for the development of corporations. So, T.I. Kozyubro [23] singles out the EVA results management factors, which include: (1) increase of profitability of the company due to increase in the volume of sales of the products; (2) management of the cost of borrowed capital by reducing the interest rate due to new loans, (3) liquidation of low-profitable and unprofitable assets, and search for new directions for capital investment. In the process of planning investment projects, top-managers of the company can receive future remuneration depending on: (1) the net profit that the project will provide, (2) the net present value of the project (NPV), and (3) the economic added value (EVA). Net profit is a poor measure of the effectiveness of a project, since accountants with the help of appropriate accounting methods can veil it. In addition, company executives can collude with accountants, so that they show in the reporting high values of net profit. In this case, the top manager will receive an undeservedly high reward for his work. The net reduced income of the project (NPV) is also a poor measure of the performance of the top manager, since it involves the planning of future cash flows. And to predict them in favor of the head is even easier. As a result, a project that actually will bring a smaller NPV firm can be adopted. Moreover, this will contradict the interests of

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the owners of the company, for example, shareholders. And if the top manager has a personal interest in a particular project to the detriment of more profitable projects for the company, then, naturally, he will strive to present this project to the owners of the corporation as the most promising for the company. Finally, the choice of the investment project takes place until the moment of implementation. In this case, the top manager’s remuneration will be tied to the NPV indicator, which is built on future projected data on the project’s cash flows, rather than the current performance indicators of the manager. In this case, it is possible to assign a future remuneration of the company’s top manager depending on the EVA indicators, which will be planned by the years for a particular investment project. This indicator is calculated by the formula EVA ¼ NOPAT  WACC  IC ¼ EBITð1  TÞ  WACC  IC, Where NOPAT - net operating profit of the corporation (rub.); EBIT - profit before interest and taxes (operating profit) (rubles); T - income tax rate (%); WACC - weighted average cost of corporation’s capital (%); IC - invested capital (rubles). The question arises: can the NPV and EVA indicators be aligned so that they give the same result with respect to the choice of the most profitable project? For an infinite lifetime of the company it is possible. We will show this. Discounting EVA for the entire period of n at the rate of WACC, we get that n X

PVWACC ðEVAÞ ¼

t¼1

n X

PVWACC ðNOPATÞ 

t¼1

n X

PVWACC ðWACC  ICÞ:

t¼1

If we go to the limit of this amount for a period n ! 1, we get the following. 1. The present value of the company’s net operating profit for an infinite period of its existence is equal to the present value of future inflows of money: n X t¼1

PVWACC ðNOPATÞ ¼

n X

PVWACC ðCIFÞ;

t¼1

Where CIF - the company’s cash inflows (rubles), calculated by the formula (A. Damodaran [7], M.A. Limitovsky [5]) CIF ¼ EBITð1  TÞ þ D þ L þ DNWC; D - depreciation charges (rub.); L - liquidation value of the project (rub.); DNWC - change in net working capital (additional working capital minus changes in accounts payable) (rubles).

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In this case, we assume that the entire accumulated depreciation D reinvested in production (business), and the values of L and DNWC returned to the company at the end of each project in the same extent that the initially invested in the project. Thus, for the entire period n only the sum of the CIFs corresponding to the NOPAT value in this case changes. 2. The present value of the minimum level of incomes on invested capital (WACC  IC) for an infinite period of n is perpetuity (eternal rent) (A. Damodaran [7], M.A. Limitovskii [5]), and, therefore, is equal to the value of IC, that is, n X

PVWACC ðWACC  ICÞ ¼

t¼1

WACC  IC ¼ IC: WACC

Therefore, for an infinite life of a corporation n X

PVWACC ðEVA) ¼

t¼1

n X

PVWACC ðCIFÞ  IC ¼ NPV,

t¼1

Which was to be proved. Thus, in an effort to maximize EVA, top managers are trying to raise the NPV of the company for an infinite period of company existence, and, consequently, cost in the market. However, often hired top managers do not associate their whole career with one or another firm or organization. After working in a management position in one company, they can move to another job. In this case, they are guided by the receipt of compensation for the period of time, while they manage a particular firm. Thus, they consider first of all those projects that will provide corporations with high EVA performance in the near future, often at the expense of long-term strategic goals of the company. How, in this case, should the premiums be assigned to top managers, so that they accept and implement exactly those projects that are more beneficial to the corporation, that is, to the owners, and not to the hired managers? To solve this problem, financiers developed an index of the modified economic added value (M.A. Limitovsky [5], J. Roche [16]), which is calculated by the formula EVAðmÞ ¼ NOPAT 

IC ; an;WACC

Where n is the lifetime of the project (years); an;WACC - discount multiplier for annuity (L. Kruschwitz [8], M.A. Limitovsky [5]) for a period of n years and a discount rate of WACC for the year that is calculated as an;WACC ¼

n X t¼1

1 1  ð1 þ WACC)n : ¼ ð1 þ WACC)t WACC

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The second term in the formula for EVA (m) is the annual equivalent annuity (Y. Brigham, L. Gapenski [2], M.A. Limitovsky [5]) for the capital invested in the project. Using EVA (m) instead of the usual EVA, it is possible to align priorities of top managers and owners (shareholders) with respect to which investment project from a set of available alternatives should be implemented. This is because EVA (m), discounted for the duration of the project, and NPV give the same result. We will show this. n X t¼1

¼

 n  X EVAðmÞt IC 1 ¼ NOPAT  t an;WACC ð1 þ WACC)t ð1 þ WACC)t t¼1

n X t¼1

n n X NOPATt IC X 1 NOPATt IC an;WACC ¼ NPV: t  t ¼ t  a ð1 þ WACC) an;WACC t¼1 ð1 þ WACC) ð1 þ WACC) n;WACC t¼1

However, this EVA (m), like the NPV, in itself does not provide a reliable guide for the rational motivation of the top manager for long-term goals of the company in the form of a stable increase in market value. This is due to the fact that the formula for EVA (m) includes the net operating profit of NOPAT, which again has to be predicted, as well as the cash flow needed to calculate NPV. This problem can be solved by placing top managers’ remuneration in dependence on actually received EVA (m) by years as a result of implementation of a specific investment project. For this purpose, top managers’ bonuses in the form of a prespecified percentage of annual EVA (m) can be deposited in a special bank account for the period until the end of the project. Thus, in case of successful implementation of an investment project that is beneficial to the owners (shareholders) of the firm, the top manager will accumulate the largest amount of money on the deposit, and, therefore, will be constructively motivated. Let us show the rationality of the presented reasoning on a specific example. Nizhny Novgorod aircraft building plant “Sokol” - a branch of JSC “RAC” MiG “plans to reconstruct the shop for recycling of secondary materials. There are three options for this reconstruction. Cash flows by years for each of the options are presented in Table 1. Table 1. Cash flows of projects by years (RUB million) Option Year 0 Light –4 750 Average –8 250 Capital –10 750 Source: Authoring

Year 1 2 000 3 500 4 500

Year 2 2 500 4 700 5 500

Year 3 2 750 2 500 4 500

Year 4 2 500 2 500 4 000

Average cost of the company’s capital is 25% per annum. Premiums of top managers are deposited in a special bank account for a period of 4 years (i.e., before the end of the project) with an accrual of income at a rate of 12% per annum. Which project is more profitable for shareholders (according to the NPV criterion), and which - to top managers (according to the criteria of EVA and EVA (m)?

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We calculate the NPV of each of the three projects:

NPVcp: ¼ 8 250 þ

3 500 4 700 2 500 2 500 þ þ þ ¼ 209; 33ðRUB millionÞ; 2 3 1; 225 1; 225 1; 225 1; 2254 4 500 5 500 4 500 4 000 þ þ þ 1; 225 1; 2252 1; 2253 1; 2254 ¼ 812; 87ðRUB millionÞ:

NPVjaP ¼ 10 750 þ

The largest NPV is planned for a lightened version of the shop’s reconstruction that is why it is the most profitable for shareholders. Now calculate the EVA values by years for each of the three projects. Light version: EVA1 ¼2 000  0; 225  4 750 ¼ 931; 25 ðRUB millionÞ; EVA2 ¼2 500  0; 225  4 750 ¼ 1 431; 25 ðRUB millionÞ; EVA3 ¼2 750  0; 225  4 750 ¼ 1 681; 25 ðRUB millionÞ; EVA4 ¼2 500  0; 225  4 750 ¼ 1 431; 25 ðRUB millionÞ: Average version: EVA1 ¼3 500  0; 225  8 250 ¼ 1 643; 75 ðRUB millionÞ; EVA2 ¼4 700  0; 225  8 250 ¼ 2843; 75 ðRUB millionÞ; EVA3 ¼2 500  0; 225  8 250 ¼ 643; 75 ðRUB millionÞ; EVA4 ¼2 500  0; 225  8 250 ¼ 643; 75 ðRUB millionÞ: The capital version: EVA1 ¼4 500  0; 225  10 750 ¼ 2 081; 25 ðRUB millionÞ; EVA2 ¼5 500  0; 225  10 750 ¼ 3 081; 25 ðRUB millionÞ; EVA3 ¼4 500  0; 225  10 750 ¼ 2 081; 25 ðRUB millionÞ; EVA4 ¼4 000  0; 225  10 750 ¼ 1581; 25 ðRUB millionÞ: The largest EVA is planned for the capital variant over the years, therefore, if the premiums of top managers are put in dependence on the results of EVA, then they will choose the capital variant of the reconstruction. Obviously, in this example, for this, you do not even need to consider the amount that will accumulate on the deposit of the top manager. It will be the largest, since the EVA of the capital variant was initially larger by year. And most importantly, they are in conflict with the interests of shareholders and top managers, since according to NPV results, shareholders benefit from a lighter version of the shop’s reconstruction (see Table 2).

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Table 2. Criteria of EVA and NPV projects (RUB million) Option

EVA Year 1 Year 2 Light 931.25 1 431,25 Average 1 643,75 2 843,75 Capital 2 081,25 3 081.25 Source: Authoring

Year 3 1 681,25 643.75 2 081,25

NPV Year 4 1 431,25 1 154,79 643.75 209.33 1 581,25 812.87

To align the interests of shareholders and top managers, we use EVA (m) in the calculations. We estimate annual values for each of the three projects, having previously calculated the discount multiplier, which is the same for all three projects: a4;22;5% ¼

1  1; 2254 ¼ 2; 470781: 0; 225

Light version: 4 750 ¼ 77; 53 ðRUB millionÞ; 2; 470781 4 750 EVAðmÞ2 ¼2 500  ¼ 577; 53 ðRUB millionÞ; 2; 470781 4 750 EVAðmÞ3 ¼2 750  ¼ 827; 53 ðRUB millionÞ; 2; 470781 4 750 EVAðmÞ4 ¼2 500  ¼ 577; 53 ðRUB millionÞ: 2; 470781

EVAðmÞ1 ¼2 000 

Average version: 8 250 ¼ 160; 97 ðRUB millionÞ; 2; 470781 8 250 EVAðmÞ2 ¼4 700  ¼ 1 360; 97 ðRUB millionÞ; 2; 470781 8 250 EVAðmÞ3 ¼2 500  ¼ 839; 03 ðRUB millionÞ; 2; 470781 8 250 EVAðmÞ4 ¼2 500  ¼ 839; 03 ðRUB millionÞ: 2; 470781 EVAðmÞ1 ¼3 500 

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The capital version: 10 750 ¼ 149; 15 ðRUB millionÞ; 2; 470781 10 750 EVAðmÞ2 ¼5 500  ¼ 1 149; 15 ðRUB millionÞ; 2; 470781 10 750 EVAðmÞ3 ¼4 500  ¼ 149; 15 ðRUB millionÞ; 2; 470781 10 750 EVAðmÞ4 ¼4 000  ¼ 350; 85 ðRUB millionÞ: 2; 470781

EVAðmÞ1 ¼4 500 

The results of calculations of EVA (m) are shown in Table 3. Table 3. Criteria of EVA (m) and NPV projects (RUB million) Option

EVA (m) Year 1 Year 2 Light 77.53 577.53 Average 160.97 1 360,97 Capital 149.15 1 149,15 Source: Authoring

Year 3 827.53 –839,03 149.15

FV12% Year 4 577.53 2 337,74 –839,03 154.61 –350,85 1 467,24

NPV 1 154,79 209.33 812.87

The accumulated amount of money by the end of the 4th year on the deposit of the top manager can be calculated based on any given percentage of bonuses from EVA (m) by years. We will estimate it as 100% of EVA (m). The essence of the conclusions does not change in the end. Therefore, for example, for the average version of the reconstruction of the shop, the accumulated amount by the end of the fourth year will be FV15% ¼ ðð160; 97  1; 12 þ 1 360; 97Þ1; 12  839; 03Þ1; 12  839; 03 ¼ 160; 97  1; 123 þ 1 360; 97  1; 122  839; 03  1; 12  839; 03 ¼ 154; 61 ðRUB millionÞ:

From Table 3 it is clear that in case of realization of the facilitated version of the reconstruction, top managers will accumulate on the deposit the largest amount of their remuneration subject to 12% per annum. Thus, the priorities of the project managers do not contradict the priorities of the shareholders, since we used EVA (m) instead of EVA in calculations. In addition, with such a system of depositing premiums of top managers on a special bank account until the end of the project with the accrual of relevant revenues, top managers’ remuneration is tied to the results actually achieved by them, and not to the planned cash flow indicators, as is done, for example, according to NPV. In conclusion, we formulate the results of the study. 1. One of the methods of motivating top managers, which is used in practice, is the appointment of bonuses to company executives, depending on the results of the company’s economic value added (EVA) by years. In this regard, the rational

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2.

3.

4.

5.

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management of EVA results is one of the main tasks of strategic planning for the development of corporations. In the general case, in the process of planning investment projects, top managers of the company can receive a future reward depending on: (1) the net profit that the project will provide, (2) the net present value of the project (NPV), and (3) the economic added value (EVA). However, net profit is not a successful measure of the effectiveness of the project, because with the help of appropriate accounting methods it can be artificially distorted by accountants. NPV is also not a good measure of the performance of the top manager, since it involves the planning of future cash flows, which is even easier to predict in favor of the manager. In this case, it is possible to assign a future remuneration of the company’s top manager depending on the EVA indicators, which will be planned by the years for a particular investment project. In an effort to maximize EVA, top managers are trying to raise NPV projects for the company for an infinite period of firm existence, and, consequently, cost in the market. However, often hired top managers do not associate their whole career with one or another firm or organization. Therefore, they consider first of all those projects that will provide corporations with high EVA performance in the near future, often at the expense of the long-term strategic goals of the company. To solve this problem, the financiers developed a modified value-added value (EVA (m)) indicator. Using EVA (m) instead of the usual EVA, it is possible to align priorities of top managers and owners (shareholders) with respect to which investment project from a set of available alternatives should be implemented. However, this EVA (m), like the NPV, in itself does not provide a reliable guide for the rational motivation of the top manager for long-term goals of the company in the form of a stable increase in market value. This is due to the fact that the formula for EVA (m) includes the net operating profit of NOPAT, which again has to be predicted, as well as the cash flow needed to calculate NPV. This problem can be solved by placing top managers’ remuneration in dependence on actually received EVA (m) by years as a result of implementation of a specific investment project. For this purpose, top managers’ bonuses in the form of a prespecified percentage of annual EVA (m) can be deposited in a special bank account for the period until the end of the project. Thus, in the case of successful implementation of an investment project that benefits the owners (shareholders) of the firm, the head will eventually receive the largest amount of money on the deposit, and, therefore, will be constructively motivated.

The results of the research presented by the authors can be useful to both financial analysts and corporate owners. They will help to focus the work of top managers on the achievement of long-term strategic goals of the companies, one of which is a constant increase in the value of the business of this firm.

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References 1. Kuznetsov, V.P., Trofimov, O.V., Frolov, V.G., Sidorenko, Y.A., Plekhova, Y.O.: Creative tools of raising the competitiveness of business on the basis of intellectual technologies of decision support. In: Communications in Computer and Information Science, vol. 754, pp. 302–316 (2017) 2. Brigham, E.F., Gapenski, L.C.: Intermediate Financial Management, 4th edn., 1122 p. The Dryden Press, Orlando (1993) 3. Ivanova, M.O.: Perfection of the compensation structure of labor of top managers of trade networks. J. Creat. Econ. 7, 100–105 (2009) 4. Kirillova, M.M., Soboleva, E.V.: Peculiarities of motivation of top managers. In: Actual Problems of Modern Science, vol. 1, pp. 75–81 (2013) 5. Limitovsky, M.A.: Investment Projects and Real Options in Emerging Markets, 527 p. Yurayt, Moscow (2004) 6. Garina, E., Kuznetsova, S., Semakhin, E., Semenov, S., Sevryukova, A.: Development of national production through integration of machine building enterprises into industrial park structures. Eur. Res. Stud. XVIII, Special Issue: 267–282 (2015) 7. Damodaran, A.: Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, 993 p. Wiley, New York (2002) 8. Kruschwitz, L.: Finanzierung und investition, 563 p. R. Oldenbourg Verlag, Munchen (1999) 9. Mizikovsky, I.E., Bazhenov, A.A., Garin, A.P., Kuznetsova, S.N., Artemeva, M.V.: Basic accounting and planning aspects of the calculation of intra-factory turnover of returnable waste. Int. J. Econ. Perspect. 10(4), 340–345 (2016) 10. Kuznetsova, S.N., Romanovskaya, E.V., Potashnik, Y.S., Grechkina, N.E., Garin, A.P.: Factors determining whether industrial parks are successful or not. In: Managing Service, Education and Knowledge Management in the Knowledge Economic Era - Proceedings of the Annual International Conference on Management and Technology in Knowledge, Service, Tourism and Hospitality, SERVE 2016 4th., pp. 53–58 (2017) 11. Yashin, S.N., Koshelev, E.V., Kuptsov, A.V., Podshabyakin, D.V.: Investment Planning of Modernization of the Equipment of the Production Company: Monograph, 201 p. OOO “Printing Workshop RADONEZH”, N. Novgorod (2015) 12. Pogrebnaya, E.V.: The system of motivation of middle managers and top managers (on the example of a construction company). Leadersh. Manag. 3(2), 113–120 (2016). https://doi. org/10.18334/lim.3.2.35377 13. Limitovsky, M.A.: Reputation, qualification and motivation as drivers of value. Russ. J. Manag. 7(2), 51–68 (2009) 14. Yashin, S.N., Trifonov, Y.V., Koshelev, E.V.: Estimation of cost of motivation of topmanagers of a corporation on the basis of warrants. Financ. Credit. 11(683), 32–42 (2016) 15. Brigham, E.F., Houston, J.F.: Fundamentals of Financial Management, 12th edn., 680 p. Gengage Learning, Mason (2009) 16. Roche, J.: The Value of Nothing: Mastering Business Valuations, 236 p. LES50NS (Publishing) Limited, London (2005) 17. Voronina, S.V.: Economic added value as a tool for managing the company’s value. In: Economics and Management, vol. 22, pp. 6–10. Vestnik SUSU (2012)

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Self-regulation in Tourism (Based on Analysis of the Status of the Association “Union of Tour Operators in the Field of Outbound Tourism ‘TURPOMOSHCH’”) Marina L. Davydova(&), Yuriy A. Bokov, Yevgeniy V. Stel, and Vladimir A. Zolotovskiy Volgograd State University, Volgograd, Russia {kmp,bokov,analitika,zolotovskiy.azi}@volsu.ru Abstract. The problem of the development of self-regulating organizations in the sphere of tourism was repeatedly raised in science, actualized in the framework of state and business practices. Self-regulation, being a means of legal regulation, primarily uses the methods, ways and means of civil law, through which subjects that implement legal capacity, independently develop a model of behavior, formalized in certain rules. In this regard, self-regulation, on the formal side, is presented as an independent and initiative activity that, on the basis of development and application of professional rules, ensures coordination and control the activities of members of organizations, as well as in the form of institutionalized organization of subjects, allows them to represent their interests in relations with authorities. At the same time, self-regulating organizations in tourism are viewed in the literature as a mechanism of lowering of the administrative pressure on entrepreneurial activity. At the same time, in regional or municipal conditions, the mechanism of self-regulation can serve as an instrument for strengthening the administrative model of tourism regulation. The purpose of the study is to determine the actual form of self-regulation in tourism on the basis of the analysis of the status of the association “Union of Tour Operators in the Field of Outbound Tourism “TURPOMOSCH” (“Tourist Help”) The authors disclosed the purpose and objectives of the association, as well as changing its status in connection with the implementation of the function to provide emergency export of tourists. During the research it was determined that the TURPOMOSHCH association completely meets essential signs of the self-regulating organization. At the same time a normative transition of “Turpomoshch” to the status of self-regulatory organization can be based on the addition of the institute of the fund of target capital with institute of a mutual insurance. At the same time, the authors came to the conclusion that in order to secure fundamentals of the social protection of population at this moment the state can’t refuse regulation of the tourist activity with transfer of these powers to self-regulating organizations. The cases of insolvency of tour operators which have become frequent in the sphere of outbound tourism confirm need of the strengthening of public requirements to implementation of tourist activity in the Russian Federation. In this regard within the “Turpomoshch” organization there was an association (convergence) of methods of the public and civil-law regulation. © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 126–134, 2019. https://doi.org/10.1007/978-3-030-00102-5_12

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Keywords: Legal regulation in tourism  Turpomoshch Self-regulation in tourism  Public law  Civil law  Law regulation JEL Code: K15

 K23  Z30  Z32  Z38

1 Introduction At the present stage of the development of society, the institution of self-regulation is one of the mechanisms of regulation of public relations by mixing public-legal and civil-law forms (Leskova 2012). The problem of the development of self-regulating organizations in the sphere of tourism was repeatedly raised in science, actualized in the framework of state and business practices. Self-regulation, being a means of legal regulation, primarily uses the methods, ways and means of civil law, through which subjects that implement legal capacity, independently develop a model of behavior, formalized in certain rules. In this regard, selfregulation, on the formal side, is presented as an independent and initiative activity that, on the basis of development and application of professional rules, ensures coordination and control the activities of members of organizations, as well as in the form of institutionalized organization of subjects, allows them to represent their interests in relations with authorities, etc. At the same time, self-regulating organizations in tourism are viewed in the literature as a mechanism of lowering of the administrative pressure on entrepreneurial activity (Ogneva and Nisht 2015: 4). At the same time, in regional or municipal conditions, the mechanism of self-regulation can serve as an instrument for strengthening the administrative model of tourism regulation (Zabaeva 2009: 171). Obviously, that is why scientists come to the conclusion that self-regulation is a complex legal phenomenon that requires a more specific differentiation of principles of civil law and public-law self-regulation (Chelyshev and Mikhaylov 2013: 53–54). Characteristic of public means used in self-regulation, can be carried out through the identification of the main features of the public law method. E.G. Doronina believes that relations with the participation of self-regulating organizations are regulated on the basis of a mixed method (Dorokhina 2010: 13). Defining the status of subjects, we note that membership in a self-regulating organization is voluntary, while the subject can choose which self-regulating organization he wishes to join (Zabaeva 2009: 171–173). Yu. S. Kharitonova thinks selfregulation is “first of all relations between business entities or professional activities, a self-regulating organization and the state which is presented by its bodies” (Kharitonova 2011: 32). The purpose of this article is to determine an actual form of the self-regulation in tourism on the basis of the analysis of the association status “Union of tour operators in the field of outbound tourism “TURPOMOSHC”.

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2 Methodology Researchers analyzed regulatory documents that determine the status and regulate selfregulatory organizations. First, normative and legal acts of a general nature were considered, on the basis of which conclusions were drawn about the qualitative characteristics and formal functions of self-regulating organizations. After that, an analysis of the TURPOMOSHC’s formation history was made, as well as the development of its legal status. As a result, factors were identified that determined the nature of the activity and the functional purpose of the association. Appraisal of the scope and conditions of participation of tour operators in the association, as well as the identification of the social and economic role of the association, made it possible to identify its essential institutional features. Based on a comparative analysis, the status of the association of tour operators in the field of outbound tourism was compared with the institute of self-regulation.

3 Results Taking into account the substantial part of the discourse that has developed in science, and also relying on Chap. 5 of the “Law on the basics of tourism in the Russian Federation” (Federal Law 1996), it can be supposed that the modern Russian legislator embodied the institution of self-regulation in tourism in an extremely undefined form of the association “Union of tour operators in the field of outbound tourism “Turpomoshch” (hereinafter referred to as “Turpomoshch”). The association of tour operators in the field of outbound tourism as a special institution for the provision of emergency assistance to tourists was introduced in the “Law on Fundamentals” by a novella dated May 3, 2012. On the 24th of August it was decided to establish the association “TURPOMOSHCH”. As founders were thirty-one subjects of tourist activity. The agreement emphasizes that the Association is a nonprofit organization that unites legal entities operating (planning to operate) in the field of outbound tourism and acting to provide emergency assistance to tourists. The purpose and character of the Association, which were defined in the memorandum of association, fully comply with Article 11.1 “the Law on Fundamentals”, which specifies the signs of the association of tour operators in the field of outbound tourism: a non-profit (corporate) organization; united all-Russian association; is based on mandatory principles for tour operators who acts in outbound tourism; purpose of establishment and the main function is providing emergency assistance to tourists. According to Part 2 of Article 11.1. “The Law on Fundamentals” the procedure of creating and acquiring the status, activities, reorganization and liquidation of the association of tour operators in the sphere of outbound tourism is established on the basis of the legislation of the Russian Federation which regulates the status of associations (unions) in the context of “tourist law”, and in accordance with the decision of the Government of the Russian Federation. The 19th of November, 2012, N 2130-r, according to decree of Government of the Russian Federation, the association “Union of tour operators in the field of outbound tourism “TURPOMOSHCH” got a status of a union of tour operators in the field of

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outbound tourism. Taking into account the goals and nature of the association of tour operators in the field of outbound tourism, we note that the recognition of the Association “TURPOMOSHCH” by such unification was based on Art. 123.8 of the Civil Code of the Russian Federation in part: an association (union) is an association of legal entities based on mandatory membership and created to represent and protect common, including professional, interests, to achieve socially useful goals, as well as other not contradicting the law and having a non-commercial nature of the objectives; the association can be represented by a self-regulatory organization aimed at coordinating the entrepreneurial activities of individuals, representing and protecting common property interests. Despite the established mandatory character of the participation of tour operators in the field of outbound tourism in the “Association”, the principle of voluntariness is fixed in determining the open character of the association (Article 11.1 of the Law on Fundamentals). The only requirement for the membership of the tour operator in the association is the payment of contributions to the reserve fund. According to the Law on Fundamentals, the reasons for terminating the membership of the tour operator in the association of tour operators in the field of outbound tourism are: a statement of the tour operator on leaving the members of the association; non-payment of contributions to the reserve fund and the fund of personal responsibility in a timely manner and the appropriate amount; liquidation of the tour operator. In such a way, it can be concluded that “TURPOMOSHCH” as an association was created on a voluntary basis. However, its status was supplemented due to the special social characteristics of the professional goals of the association. Note that the association of tour operators in the sphere of outbound tourism in its primary and altered form as a unifying essential goal is determined by the content of the institution of the target capital fund. Each of these characteristics corresponds to specific regulatory requirements. The legal basis for the formation of the association, its goals and objectives, as well as the management system, rights and duties of members are articles 123.8-123.11 of the Civil Code of the Russian Federation. Especially it should be noted art. 123.10 of the Civil Code of the Russian Federation, “the exclusive competence of the supreme body of the association (union) is also the adoption of decisions on the procedure for determining the size and method of payment of membership fees, additional property contributions of members of the association (union) in its property and the amount of their subsidiary liability for the obligations of the association (union), provided by law or charter”. Moreover, the purpose and objectives of the “TURPOMOSHCH” are defined in accordance with Articles 2-3 of the Federal Law “On the Procedure for the Formation and Use of Targeted Capital of Non-Profit Organizations” (Federal Law 2006): the target capital of a non-profit organization is part of the property of a non-profit organization which is formed and is replenished at the expense of donations made in a certain order and for the purposes, also at the expense of unused income from trust management of the said property (Part 1, Article 2); the formation of target capital and the use of income from the target capital can be carried out for certain purposes (Part 1, Article 3). It should be noted that these normative prescriptions became the basis for the position of the RF Ministry of Finance on the procedure for recording the incomes

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of the fund of personal responsibility (letter No. 03-03-05/30792 of May 19, 2017), as well as the Administration of the Federal Tax Service fund (letter No. 16-15/077982 of May 26, 2017). At the same time, these characteristics of “TURPOMOSHCH” as an association of tour operators in the sphere of outbound tourism in the content part comply with the norms of Art. 2-3 of the Federal Law of 01.12.2007 N 315-FZ “On Self-Regulating Organizations” (Federal Law 2007) and Art. 1-3 of the Federal Law of 13.07.2015 N 223-FZ “On self-regulatory organizations in the financial market” (Federal Law 2015). In particular, both laws define self-regulation as: “independent and proactive activities carried out by business or professional entities whose content is the development and establishment of standards and rules for the said activity, as well as monitoring compliance with the requirements of the said standards and rules”. Based on Part 3 of Art. 1 of the Federal Law of 01.12.2007 N 315-FZ “On SelfRegulating Organizations”, and also taking into account the financial component of the activities of “Turpomoshch”, a special meaning within the framework of our topic is Federal Law No. 223-FZ of July 13, 2015 “On Self- organizations in the financial market”. Note that according to Part 4 of Art. 3 of the Federal Law of 13.07.2015 N 223-FZ “On self-regulatory organizations in the financial market” to the significant features of self-regulatory organizations in the financial market include: the unification of a non-profit organization as its members at least 26% from the total number of financial organizations that carry out the corresponding type of activity; presence of the developed internal standards of a self-regulatory organization; presence of management bodies and specialized bodies of a self-regulatory organization1. Despite the fact that “Turpomoshch”, is not registered in the relevant registry, the association fully corresponds to the above characteristics. In particular, since membership in the association is recognized as binding for all participants in the field of outbound tourism, the minimum threshold for participation is certainly overcome. In the structure of the association are functioning the management bodies and in the person of the director, the system of working bodies, the General meeting of the members of the Association and the special body “Supervisory Board”. Issues related to the development of rules for professional activity (developed internal standards) are within the competence of the General Assembly of the members of the Association and the Supervisory Board (Article 6-8 of the Charter of the Association “Association of Tour Operators in the field of outbound tourism “Turpomoshch”). It should be emphasized that Art. 11.1 “The Law on Fundamentals” also refers to the development of rules of professional activity to the competence of the union. However, by virtue of the resolution of the Government of the Russian Federation of January 25, 2013 No. 43, the adoption of these rules, as well as the implementation of state supervision over the activities of the “Turpomoshch” falls within the competence of the Ministry of Culture of the Russian Federation (The Government of the Russian Federation Decree of January 25, 2013). At the same time, the Supervisory Board ensures coordination of

1

Note that, according to part 6 of Art. 3 of the Federal Law of 13.07.2015 N 223-FZ “On selfregulatory organizations in the financial market” an obligatory condition for the recognition of a nonprofit organization as a self-regulating organization is the registration it in a special register.

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the rules of professional activity for the Ministry of Culture of the Russian Federation (Article 8.89 of the Charter). Thus, it seems possible to agree with the opinion of O.P. Safonov that “In fact, “Turpomoshch” is a self-regulatory organization, business makes all the decisions” (An agent registry 2018). We believe that the normative transition of “Turpomoshch” to the status of a self-regulating organization can be based on the addition of the institute of the trust fund by the institution of mutual insurance. This would allow, in the presence of state will, to register the “Association of Tour Operators in the field of outbound tourism” in the register of self-regulated organizations in the financial market in accordance with paragraph 1 of Part 1 of Art. 3 FZ “On self-regulatory organizations in the financial market”. So, we have established that the initiative and voluntary membership for the “Association of Tour Operators in the field of outbound tourism” are not typical, since there are mandatory requirements for the mandatory membership of tour operators in the field of outbound tourism only in this association, the size and the term of payment of contributions to the reserve fund etc. Moreover, it is obvious that the very fact of the formation of the association “Tourist assistance” and the transformation of its status into an association is also connected with public legal regulation in the sphere of tourism. In order to provide the basis for social protection of the population, at this time the state cannot refuse the regulating of tourism activities with the transfer of these powers to self-regulating organizations. The cases of insolvency of tour operators that have become more frequent in the field of outbound tourism confirm the need to strengthen public-legal requirements for the implementation of tourist activities in the Russian Federation. In this regard within the framework of “Turpomoshch” there has been a convergence (convergence) of methods of public-law and civil-law regulation2. The special professional rules of the association related to its main purpose have been repeatedly introduced by state authorities. Particularly, a number of relevant acts were adopted by the Decision of the Government of the Russian Federation, the Directive of the Ministry of Culture and Rosturizm (The Ministry of Culture of Russia Order of September 01, 2015; The Ministry of Culture of Russia Order of June 06, 2016; The Ministry of Culture of Russia Order of November 11, 2016; The Ministry of Culture of Russia Order of December 14, 2016; The Ministry of Culture of Russia Order of April 20, 2017; The Rosturizm Order of February 01, 2017). At the same time, the special social importance of “emergency assistance” predetermined the need for a special regulatory definition of the procedure for rendering a non-profit organization that has the status of combining tour operators in the field of outbound tourism, emergency assistance to tourist, tourists, and an organized group of tourists (The Government of the Russian Federation Decree of February 27, 2013). However, a certain share of independence in the development and approval of professional rules is preserved3. 2

3

In the opinion of V.V. Vasilyev, as a result of the impact of the norms of legislation on the law, reflecting the objective processes of their convergence, the overall frequent-legal orientation of relations does not change, but their separate spheres acquire a public legal nature (Vasiliev 2014: 19). The decision of the Supervisory Board of the Association “Association of Tour Operators in the Field of Outbound Tourism” Tourist Information” (The resolution of the Supervisory Board of the Association “Turpomoshch” 2017).

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Note that as a priority means of public legal regulation of relations in the field of outbound tourism, the federal legislation provides for the institution of a reserve fund and a fund of personal responsibility (“Information” of Rosturizm 2017)4. According to Art. 11.4 The Law on Fundamentals, tour operators in the field of international (outbound) tourism to ensure financing of expenses for the provision of emergency assistance to tourists are obliged to make contributions to the reserve fund in the order determined by the number of tourists in the field of outbound tourism for the year. In addition, tour operators are required to make deductions for the formation of a fund of personal responsibility (Zobova et al. 2017: 62)5. The law defines the following procedure: “the amount of the annual contribution of the tour operator to the personal responsibility fund of the tour operator is equal to one percent of the total price of the tourist product in the field of outbound tourism for the previous year”. We emphasize that the institution of the reserve fund and the fund of personal responsibility as a means of publicly legal regulation of relations in the field of outbound tourism are imperative (Decree of the Government of the RF dated February 27, 2013, No. 162, No. 9, Article 958).

4 Conclusions Summarizing the results of the study, it should be noted that the institution of selfregulation in tourism requires a more consistent norm-setting activity. Association “Turpomoshch” certainly corresponds to the meaningful signs of self-regulating organizations. At the same time, for a number of reasons, the status of the association of tour operators in the sphere of outbound tourism contradicts the very idea of selfregulating organizations. We believe that in such capacious interdisciplinary types of entrepreneurial activity as tourism, the use of mixed forms of regulation, the unification of public and civil principles is conditioned by the special social significance of this activity and the social obligations of the state. We believe that in such priority areas of social relations, self-governed organizations are not acting as voluntary and independent of public interference in the professional activities of organizations of free subjects of relations, but in the form of an institutionalized mechanism that allows for more effective control over a specific, systematically organized segment of the market by the state. Obviously, the register of travel agents, designed on the information and legal basis of the association of tour operators in the field of outbound tourism “Turpomoshch”, is called upon to fulfill similar functions (An agent registry 2018).

4

5

Rosturizm prepared special methodological recommendations on certain issues of the formation of these funds (“Information” of Rosturizm 2017). Only during the first months of work, 188,017,845.37 rubles were transferred to the personal liability fund (Zobova et al. 2017: 62).

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References Chelyshev, M.Y., Mikhaylov, A.V.: Self-regulation in the system of methods of legal regulation of entrepreneurial activity. The Power of the Law. No. 1(13), pp. 53–61 (2013) Decision: Decision of the General Assembly of the Participants of the Association “Association of Tour Operators in the field of outbound tourism” “Tourist Information”, “Regulations on the procedure for the formation and maintenance of information on Travel Agents (Register) by the Association” Association of Tour Operators in the Field of Outbound Tourism “Tourist Information”, at Official Internet Portal of the Association “Association tour operators in the sphere of outbound tourism” “Tourist assistance” (2018). http://www.tourpom.ru/page/ dokumenty-associacii. Accessed 9 May 2018 Dorokhina, Y.G.: Management in the system of bankruptcy: civil law and public law aspects of legal regulation: the author’s abstract of the Dissertation of Doctor of law, Moscow, 46 p. (2010) Federal Law: No. 132-FZ of November 24, “On the Basics of Tourist Activities in the Russian Federation” (amended and supplemented, effective from 01.01.2018), Collection of Legislation of the Russian Federation, 02.12.1996. N 49, Art. 5491 (1996) Federal Law: No. 275-FZ of December 30, “On the Procedure for the Formation and Use of Targeted Capital of Non-Commercial Organizations” (as amended on July 23, 2013), Collection of Legislation of the Russian Federation, 01.01.2007. N 1 (1 h), Art. 38 (2006) Federal Law: No. 315-FZ of December 01, “On Self-Regulating Organizations” (amended and supplemented, effective from 01.10.2016), Collection of Legislation of the Russian Federation, 03.12.2007. No. 49, Art. 6076 (2007) Federal Law: No 223-FZ of July 13, “On Self-Regulating Organizations in the Financial Market” (Edited on December 28, 2017), Collection of legislation of the Russian Federation, 07/20/2015. N 29 (Part I), Art. 4349 (2015) Kharitonova, Y.S.: Reflection of the management function in institutes of civil law: the author’s abstract of the Dissertation of Doctor of law, Moscow, 68 p. (2011) Leskova, Y.G.: Self-regulation of entrepreneurial relations: correlation and interaction of civillaw and public-legal elements of the legal mechanism, Contemporary law, No. 1, pp. 77–81 (2012) Ogneva, S.V., Nisht, S.A.: State regulation of the tourism industry: possible ways of development. Bulletin of the Association of Tourism and Service Universities, No. 2, vol. 9, pp. 3–13 (2015) “Information” of Rosturizm: “On some issues of application of certain provisions of the Federal Law No. 132-FZ of 24.11.1996” On the Basics of Tourism Activities in the Russian Federation (as amended by force from January 1) (2017). http://www.consultant.ru/cons/cgi/ online.cgi?req=doc&base=LAW&n=210103&fld=134&dst=1000000001,0&rnd=0. 666431006898013#0. Accessed 9 May 2018 The Government of the Russian Federation Decree of February 27, No. 162: “On Approval of the Rules for the Provision of Emergency Assistance to Tourists and the Rules for Financing Expenses for the Provision of Emergency Assistance to Tourists from the Reserve Fund” (as amended on August 3, 2016), Collection of Legislation of the Russian Federation, 03/04/2013. No. 9, Art. 958 (2013) An Agent Registry: “Association of travel agencies supported the idea of creating an agent registry on the “Turpomoshch” basis” (2018). http://tourism.interfax.ru/ru/news/articles/ 29359/. Accessed 9 May 2018

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The Government of the Russian Federation Decree of January 25, No. 43: On the federal executive body authorized to exercise state supervision over the activities of tour operators and the association of tour operators in the field of outbound tourism, Collection of Legislation of the Russian Federation, 02/04/2013. N 5, Art. 387 (2013) The Ministry of Culture of Russia Order of April 20, N 594: On approval of the order by the association of tour operators in the field of outbound tourism to the Federal Agency for Tourism information on payments made for the purpose of reimbursing the real damage to the tourist and (or) other customer from the funds of the fund of personal responsibility of the tour operator in sphere of exit tourism (2017). http://www.pravo.gov.ru. Accessed 9 May 2018 The Ministry of Culture of Russia Order of December 14, N 2750: On approval of the requirements for reporting of the tour operator operating in the field of outbound tourism, its composition and form, at Official Internet portal of legal information (2016). http://www. pravo.gov.en. Accessed 9 May 2018 The Ministry of Culture of Russia Order of June 06, N 1539: On the approval of the association of tour operators in the field of outbound tourism to the Federal Tourism Agency notice in the form of an electronic document on the termination of membership of the tour operator in the said association (2016). http://www.pravo.gov.ru. Accessed 9 May 2018 The Ministry of Culture of Russia Order of November 11, N 2468: On the approval of the association by tour operators in the field of outbound tourism in agreement with the Federal Agency for Tourism decision on the release of the tour operator in the field of outbound tourism from the financial support of the responsibility of the tour operator and payment of contributions to the personal responsibility of the tour operator for the next calendar year, at Official Internet portal of legal information (2016). http://www.pravo.gov.ru. Accessed 9 May 2018 The Ministry of Culture of Russia Order of September 01, No. 2323: On approval of the Administrative Regulations for the execution by the Ministry of Culture of the Russian Federation of the state function to implement state supervision over the activities of tour operators and the association of tour operators in the field of outbound tourism (Edited on December 28, 2016) (2015). http://www.pravo.gov.ru. Accessed 9 May 2018 The Resolution of the Supervisory Board of the Association “Turpomoshch”: The Association’s Position on the Funds of Personal Responsibility of Tour Operators (2017). http://www. tourpom.ru/page/dokumenty-associacii. Accessed 9 May 2018 The Rosturizm Order of February 01, N 48-Pr-17: On the approval of the form of the decision to provide emergency assistance to tourists (tourists)” (Registered in the Ministry of Justice of Russia on April 6, 2017 No. 46275), at Official Internet portal of legal information (2017). http://www.pravo.gov.ru. Accessed 9 May 2018 Vasiliev, V.V.: Civil and public law: issues of unity and differentiation. Bulletin of the Tver State University, The series “Right”, No. 1, pp. 16–29 (2014) Zabaeva, M.N.: Management of the tourist potential of the region on the basis of self-regulation of organizational and economic relations of the subjects of the tourist industry. Economics of enterprises and organizations: Microeconomics, No. 7, pp. 171–177 (2009) Zobova, E.V., Yakovleva, L.F., Kosenkova, YuYu.: Financial maintenance of tour-operator activity in Russia. Socio Econ. Phenom. Process. 12(3), 58–66 (2017)

Olympic Movement in Kindergarten Alla A. Oshkina ✉ (

)

Tolyatti State University, Tolyatti, Russia [email protected]

Abstract. This article is dedicated to the issue of introduction of preschoolers to the Olympic Movement in a kindergarten. Expediency and efficiency of management of project activities are substantiated with a view to develop the understanding of the Olympic Movement in over-fives as an initial level of intro‐ duction to the participation in the Olympic Movement. The timeliness of the topic is directly related to the promotion of sports, beginning from the tender age. The theoretical provisions were presented which convince of the opportunity and the need to manage the introduction of preschoolers to the Olympic Movement in a kindergarten. The article gives the description of work on management of project activities with preschoolers aimed at developing the understanding of the Olympic Movement. The research is of practical importance, since it allows solving urgent issues of physical and personal development of a preschooler. Keywords: Preschoolers · Promotion of sports Physical development of a preschooler · Olympic Movement · Project activities Preschool educational establishment

1

Introduction

In accordance with the “Law on Education in the Russian Federation”, preschool educa‐ tion is the first link in the continuous education system, which determines the importance of respecting the provisions of the Concept of the state-public system of Olympic education by the preschool educational establishments. An increasingly important emphasis in the system of modern education and upbringing of children and young people is made on the teaching activities which are intended to assist in introducing them to the values of the Olympic Movement. This aspect of the work is becoming increas‐ ingly relevant in the light of sports events of global impact that have taken place in recent years in Russia. A cognitive attitude to reality is actively developed during the preschool period; in addition, the interests to the range of social phenomena beyond the personal experience of a child are formed. It is during this period that it is important to create conditions for the development of understanding of the evolution of the Olympic movement in the world in preschoolers, which will contribute to the development of enduring interest in fitness and sports in children. At the same time, according the analysis of the teaching practice, in spite of the available experience in development and implementation of the Olympic-themed

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projects in the preschool educational establishments, in general, Olympic education does not yet take a proper place in the process of socialization of an over-five. A number of investigations that reveal various aspects of solving the problem of the Olympic education of preschoolers has been carried out thus far (Varfolomeyeva, Z.S., Sochevanova, E.A., Surinov, I.A., Tupichkina, E.A.). The Olympic education of preschoolers is based on the milestones of the concept of the state-public system of Olympic education that consist in the development of not only the values of Olympism, the Olympic Games, the Olympic Movement, but also the universal ideals in the rising generation; in the development of the need for justice and honesty in children; in the intensification of the aspiration to the harmonious develop‐ ment of physical and mental capacity. The innovative search for the means leads to the recognition of the fact that effective pedagogical solutions should be used in order to build an educational process based on the interests, skills and capabilities of all its parties. In our opinion, such technology is project activities. The swallowed information usually can be easily and quickly forgotten, but if the child delivers a thought himself/herself, having mastered a new knowledge with no outside help, then this thought will become his/her property” …“a bad teacher presents the truth, while a good one teaches how to find it” (Diesterweg, F.A.) The knowledge acquired by the children in the course of project activities becomes the property of their personal experience. They were received in response to questions posed by the children themselves in the “doing” process. And the need for this knowl‐ edge is determined by the scope of activities. The children need them - hence, the chil‐ dren are interested in them. The works which analyze the essence of project activities, its problematic nature, its place in the educational process are important for this research Banasinskaya, S.K., Grashina, N.A., J. Dewey, W. Kilpatrick, Kobylianskaya, T.M., Kurmakaeva, G.Z.. Kuzina, A.Y.). However, in this research, all the potentialities of project activities and their role in the development of understanding of the Olympic Movement in over-fives are understudied. The timeliness of the topic is substantiated by the contradiction between the declared need for the development of understanding of the Olympic Movement in 6–7 year-old children in various activities and under-utilization of potential of project activities in this process. The purpose of this article is to provide a theoretical justification and experimental evidence of the possibilities of the project activities in the development of understanding of the Olympic Movement in 6–7 year-old children.

2

Description

The research was carried out at the premises of kindergartens of the Autonomous NonCommercial Organization for Preschool Education “Planeta Detstva “Lada” of the City of Tolyatti. 150 over-fives participated in the experiment.

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The experimental work was carried out in three stages and included ascertaining, formative and control experiments. The ascertaining experiment is aimed at identifying the level of understanding of the Olympic Movement in 6–7 year-old children. In connection with the target goal, criteria and indicators were defined: a cognitive criterion (the presence of a fundamental understanding of the Olympic Games, the understanding of the Olympic symbols, of the champions of the Olympic Games, of the sports of the Olympic Games), an emotional-relational criterion (the desire to talk about the Olympic Games, to share impressions of the competition), a behavior criterion (the aspirations of children to participate in the Olympic Games (at the level of a kinder‐ garten, a city, the ability to solve a practical problem situation in the course of preparation and conduct of the Small Olympic Games). The analysis of results of assessment tasks (a conversation “What do you know about the Olympic Games?” and “How to Become an Olympic Champion”, games: “Select correctly”, “Lay out in a certain order”, “Who is this?”, “Sports of the Olympic Games”, “Interview”, pedagogical situation “The Olympic Games in a kindergarten”) allowed the researchers to conventionally distinguish three levels of developed understanding of the Olympic Movement in 6–7 year-old children. High level (30%) – children can correctly determine the concept of an Olympic Game with no outside help: they know 4-7 Olympic symbols or mascots; they can name 4-5 champions of the Olympic Games with no outside help; preschoolers correctly lay out the sequence of the ceremony of the Olympic Games and tell about the ceremony of the Olympic Games with no outside help; they can confidently name the sports of the Summer and Winter Olympic Games (5 or more titles); they show interest in the Olympic Games; they developed a stable motive of physical improvement and have an aspiration to participate in the Olympic Games. Average level (40%) – children can determine what the Olympics is with the help of an adult: they can name 2-3 Olympic symbols, they know 2-3 champions of the Olympic Games; they can lay out the sequence of the ceremony of the Olympic Games, but require a little help from an adult to explain; they can name the sports of the Summer and Winter Olympic Games (2-4 sports) with the help of an adult. They do not show any initiative to participate in the Olympic Games, they do not show any interest in motor activity; there is a material, aesthetic, and communicative motive to the participation in the Olympic Games. Low level (30%) – children cannot explain what the Olympic Games are, they do not show any interest in the Olympic Games, even with the help of an adult. A child names one of the symbols of the Olympic Games, but cannot name any mascot; he/she defines 1-2 constituent activities of the ceremony of the Olympic Games, but cannot give reasons for their answer; he/she names one of the domestic champions or cannot name a single champion, makes a muddle of the names of the sports, but knows the attributes of the sports. The results which were obtained during the ascertaining experiment allowed the researchers to arrive at the conclusion that poor results are due to the specific nature of the teaching practice:

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– there is no system of work on the development of understanding of the Olympic Movement in preschoolers and the use of ineffective means of development of motivation to participate in the Olympic Games; – insufficient interaction in solving problems (selection of methods, forms of work, techniques, etc.) of teachers and parents; – personal preferences of preschoolers during their introduction to their preferred sports of the Olympic Movement were taken into account insufficiently. The analysis of theoretical provisions, the results and the data which were obtained during the ascertaining experiment of research allowed us to pass on to the formative experiment. The goal of formative experiment is to develop and test the scope and the methods of the development of understanding of the Olympic Movement in 6–7 year-old children in project activities. In our opinion, the scope of project work on the development of understanding of the Olympic Movement in 6–7 year-old children can be planned in such a way as to give children a more comprehensive understanding of the values, about the ideology of the Olympic Movement and introduction of preschoolers to the Olympic Movement in a kindergarten. The subject-matter of the Olympic Movement was initially selected for the preschoolers. Since the Olympic Movement is one of components of socialization, didactic principles distinguished by Kozlova, S.A. for defining the scope of the Olympic education project were used. These principles are as follows: scientificity principle, accessibility principle, humanity principle, and activity principle. According to the theoretical research and the results of the ascertaining experiment, project work includes several stages: – saturation of types of children’s activities (play, communication, motor, productive, music and arts, reading, work activities) with the information about the Olympic Games; – management of project activities by stages (search, analytical, practical, presentation, control), development of the subjects of projects (the history of the Olympic Games; Olympic traditions, symbols, and rules; sports of the Olympic Games; Russian cham‐ pions of the Olympic Games); – inclusion of parents into project activities through the use of a variety of forms. The parents participated in the development of mini-projects; in the preparation of exhi‐ bitions, excursions, presentations, holidays; in the selection and in the search for sources of additional information on the project topics in bookshops, libraries, and Internet resources; in the making of the pages of the “Olympic Encyclopedia”. In order to define the problem, we organized a viewing of the presentation “The Olympic Games 2014”, “The Olympics 2016”, and invited the children to participate in the project. It is critically important to interest preschoolers with the work to be done. Project implementation was made possible due to the viewing of presentations by the children in order to find out the children’s desire to participate in the project. An additional

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incentive for the forthcoming work was the motivation of preschoolers to the participation in the Small Olympic Games. The subjects of projects were defined and the following projects were implemented in cooperation with children after motivation: “The hearts of the Olympic athletes”, “The History of the Olympic Games”, “Olympic traditions, symbols, and rules”, “Sports of the Olympic Games”, “Russian champions of the Olympic Games”. Little issues were covered and addressed within each project; besides, they evolved into mini-projects of parents and children. For example, the project “The History of the Olympic Games” includes mini-projects “Olympic Games in ancient Greece”, “Myths and legends about famous ancient heroes”, “Pierre de Coubertin and the revival of the Olympic Games”. The project “Olympic traditions, symbols, and rules” included the mini-projects “Cere‐ mony of the Olympic Games”, “Olympic symbols”, “Fair Play” - sports honor code. The main methods of implementation of the scope of project “The History of the Olympic Games” were as follows: – conversations: “Olympic Games in ancient Greece”, “Heroes of the ancient Hellas”, conversations about renowned athletes: “Milo of Croton – the first strong man of Hellas”, “Heroic deed of Polydamas of Skotoussa”; – reading imaginative literature: myths “The Legend of Zeus”, “The Myth of Hercules”, “Pelops”, reading poems: “The Olympics”, “What is the Olympics”; – viewing of the artwork for the myths, a series of pictures of Ancient Olympia, the mountains of Olympia; – making creative stories: “Friendship of sportsmen”, “How the Olympic Mishka made friends”; – drawing competition on the topic “The History of the Olympic Games”. During this project, the children got acquainted with Pierre de Coubertin. Having made a story based on facts, but in a form that is intelligible for preschoolers, about how the Olympic Games were forbidden, about the merits of this man in terms of revival of the Olympic Games, about his famous phrase: “O Sport, You Are Peace!”, which became a catch phrase among the Olympic athletes. Through the explanation of the meaning of words we tried to make the children realize that sport is our constant companion in life, our sincere and loyal friend. Sport gives joy to your spirit and body. The joy of movement is the joy of life! At this stage, we included action-oriented games like: “Who’s faster?”, “Who’s higher?”, etc. It is important that children experienced the joy of movement as much as possible. And in order to make preschoolers understand the phrase: “The Olympics – you are the ambassador of peace,” it is worth explaining that people across continents and oceans reach out to each other with the words: “Hello, friend!”. Children were invited to make joint creative stories about friendship in the Olympic Games which helped preschoolers to realize the true value of friendship. The following topics of creative stories were used: “Friendship of sportsmen”, “How the Olympic Mishka made friends”. The following activities were carried out during the work over project “Olympic traditions, symbols, and rules”:

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– didactic games: “Lay out correctly” (procedure for the ceremony of the Olympic Games), “Name the mascot”, “Olympic symbols”, “Olympic navigator”, “Two symbols – spot 10 differences”; – quiz “Give a prompt answer”; – creativity competitions: “Olympian orator”, “Sports and arts compositions”, “Olympic sportswear show”, appliqué work “Olympic awards”. The implementation of the project “Sports of the Olympic Games” began with the organization of the exhibition “Our Sports Achievements”, where photographs, merit certificates, diplomas, and medals of children who were involved in sports were presented; they told about the features of various sports, about their achievements, how a diploma in a particular sport was obtained. The work on the project was done in 3 subgroups: the first subgroup collected information, artwork, newspaper clippings, and postcards about summer sports; the second group prepared pantomimic sketches: “Bobsleigh”, “Biathlon”, “Ice Hockey”, pictures about sports; the third subgroup of preschoolers collected information about winter sports included in the Olympic Games. In order to implement the project “Russian champions of the Olympic Games”, an excursion to the sports complex “Olympus” was arranged, where preschoolers visited training sessions and saw the athletic training in various sports. We selected possible topics for mini-projects and suggested them to preschoolers: “Evgenii Pliushchenko”, “Alexey Nemov”, “Lidiya Skoblikova”, “Anna Kournikova”, “Lyasan Utiasheva.” The children made a story about the Russian Champions and compiled a portfolio about each of them. The final event was a participation of children in the Small Olympic Games, organ‐ ized in a kindergarten. Based on the interest of children and their inclinations, the chil‐ dren participated in various competitions included in the winter Olympics: hockey, sledding, skiing, biathlon, etc. Findings. The control experiment was carried out after the formative experiment, which was aimed at analyzing the dynamic pattern of the level of formedness of under‐ standing of the Olympic Movement in preschoolers. Positive dynamics was an obvious result; an increased level of introduction of children to the world of sports was noted; it was established that the children were very interested in various sports and have increased pursuance of motor activities which the children give their personal preference to. The obtained results confirm the usefulness of the work and the effectiveness of the use of the project activities in the process of the development of understanding of the Olympic Movement in 6–7 year-old children.

3

Conclusions

Project activities are a special kind of intellectual and creative activity; a set of techni‐ ques and operations of mastering a certain area of practical or theoretical knowledge, of a particular activity; a method of achieving the didactic goal through the elaboration of a problem (technology), which should result in a quite real and tangible practical result,

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executed in one way or another. The project activities become an effective means of the development of understanding of the Olympic Movement in 6–7 year-old children.

References 1. Banasinskaya, S.K., Grashina, N.A.: The project activities in the set of means of the Olympic education of over-fives. Prioritetnye Napravleniya Razvitiya Nauki i Obrazovaniya (Priority Directions for the Development of Science and Education), No. 3 (6), pp. 55–57 (2015) 2. Kurmakaeva, G.Z.: Pedagogical assessment of the Olympic education of children: toolkit development experience. Sovremennye Problemy Nauki i Obrazovaniya (Contemporary Issues of Science and Education), No. 6, p. 837 (2014) 3. Kobylianskaya, T.M., Kurmakaeva, G.Z.: Project activities as a basis of the development of prerequisites for the search and exploratory activity in the preschoolers at the initial stage of education. Voprosy Doshkolnoy Pedagogiki (Preschool Pedagogics Issues), No. 2 (8), pp. 92– 95 (2017) 4. Kuzina, A.Y.: Development of the cognition interest to the history of the objective world in project activities in over-fives: synopsis of a thesis … of Candidate of pedagogic sciences: 13.00.07, Saint Petersburg (2009) 5. Sochevanova, E.A.: Olympic education of preschoolers in the context of Federal State Preschool Education Standard. Doshkolnaya Pedagogika (Preschool Pedagogics), No. 1 (106), pp. 36–42 (2015) 6. Surinov, I.A., Kurmakaeva, G.Z.: Special aspects of assessment of the Olympic education of over-fives. V Mire Nauchnykh Otkrytiy (In a World of Scientific Discoveries), No. 3.1 (51), pp. 579–588 (2014) 7. Tupichkina, E.A.: What the Olympic education of over-fives should be like? Nachalnaya Shkola Plius Do I Posle (Preschool Plus Before and After), No. 12, pp. 36–41 (2013)

Labor Activity of the EAEU Migrants in Moscow Tatiana N. Yudina(&), Yuri N. Mazaev, Tatiana V. Fomicheva, Irina V. Dolgorukova, and Tatiana N. Bormotova Russian State Social University, Moscow, Russia [email protected], [email protected], [email protected], [email protected], [email protected]

Abstract. The present article analyzes the issues that migrants from the EAEU countries deal with during their labour activity in Moscow. Principally, attention is paid to questions such as: who are labour migrants from EUEU countries, what is their social and demographic mix, specializations and employment area of labour migrants, reason for moving, labour mobility and prospectives of labour activity in Moscow. The study was carried out in October–November 2017 in Moscow by Unified center for study of social and sociopolitical processes of Eurasian integration of Institute for sociopolitical studies of Russian Academy of sciences and Sociology Department of Russian State Social University. During study we managed to find out opinion of labour migrants from the EAEU state members on conditions created by Moscow government in terms of fulfillment of regulatory documents of the Eurasian Union on provision of free movement of labour force and labour efficiency of employees, point out the issues solutions for which are dependent on Moscow authorities and the Eurasian Union. Simultaneously, we conducted an analysis of macroeconomic statistical performances (cross-border transfers of physical entities). Keywords: Labour migrants  Specializations of employment Labour and professional mobility Satisfaction from scope and labour conditions  Adaptational search JEL Classification Codes: J 110

 J 150

1 Introduction With the establishment of the Eurasian Economic Union the citizens of Armenia, Kyrgyzstan, Kazakhstan and Belarus much more easily accessed job places in Russia. The rights of citizens in these states have been considerably expanded in the course of their labor activity at the territory of Russia. Now they don’t need a labour permit in the Russian Federation. Labor migrants from EAEU are given the opportunity to work in Russia, not only in terms of employment contract, but also under a civil law one, which significantly expands the scope of their possible employment.

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The EAEU citizens working in Russia under employment contracts from January 1, 2017 can make free compulsory medical insurance policies (Order of the Russian Ministry of Health, 2016). An important step in this direction was the development of a system where work experience in any state of the EAEU will be counted when pension accounting (Rosstat demographic projection till 2035). There are other preferences. This is a mutual recognition of diplomas for almost all specialties, except several types of activities, in particular medical, legal, pedagogical and pharmaceutical, and the application of national regimes in matters of social security. It means that, for example, social insurance for labor migrants and members of their families is carried out under the same conditions and in the same manner as for citizens of states providing jobs. The problem of taxation had also been resolved. In Russia, income of the EAEU citizens working under the contract is taxed at the resident rate. If earlier they deducted 30% during the first 183 days of work, now they immediately pay only 13% (Petrov 2018). Such a loyal policy towards the citizens of the EAEU member states is already affecting a migration flow from these countries to Russia. According to the Institute of Social and Economic Problems of Population of the Russian Academy of Sciences, in January–April 2017 in Russia, a number of foreign citizens from EAEU member states registered for migration exceeded 2 million people. About a third of them (over 800 thousand people) were citizens of the Kyrgyz Republic, citizens of the Republic of Armenia - 27%, the Republic of Kazakhstan - 23% and the Republic of Belarus - 15% (Eurasian Economic Commission report 2016). The policy influences on the change in the volume of foreign money transfers, which is an important factor for maintaining stability in many countries. According to the Central Bank of Russia, in 2016 the amount of money transfers to the EAEU member countries (Kyrgyzstan and Kazakhstan) increased (Cross-border transfers of physical entities 2018). In accordance with all forecasts, migration flows to Russia from the EAEU countries are only expected to heighten (Prospects of integration in the labor market, 2018). The tension in labor markets of the EAEU countries is featured by unemployment rate for one vacant position. These performances vary significantly from country to country: in Armenia, per one vacant position at the employment agency maximum number of unemployed is 37 people (as of the end of June 2015), in Kyrgyzstan is 10 people, in Kazakhstan is 5 people, in Belarus is 2 people. In Russia, per 1385.6 vacant positions only 973.9 unemployed people are registered in the employment agency, i.e. less than one person per job position (Commonwealth of Independent States in 2015 2016). If you take all unemployed by the ILO method, the load on the labor market will be greater by several times (Topilin 2018). Migrants from the EAEU countries primarily attract developed regions, large cities with a high standard of living, but also a high population density. This causes difficulties in the labor activity of migrants, requires serious efforts of adaptation, especially those who came from a small town and village.

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2 Methodology The results of sociological survey “Free movement of labor force and labor efficiency of EAEU migrants in Moscow” was an empirical basis for analysis. The analysis touched upon 511 questionnaires of respondents from four the EAEU countries (Belarus-149 people, Armenia-123 people, Kyrgyzstan-121 people, Kazakhstan-118 people). According to a specially developed author’s methodology, data on the social portrait of labor migrants, employment specializations, conditions, intensity and payment of labor, prospects of labor activity was collected and analyzed using the procedure of descriptive statistics in the technique of individual in-person standardized interview. The respondents were selected by the snowball method from labor migrants working at Moscow enterprises. Without expressing a high level of data representativeness, nonetheless, study outcomes allow making reliable and well-founded conclusions on the scope and labour conditions of the EAEU migrants at the local level.

3 Outcomes 3.1

Social Portrait of the EAEU Labour Migrants Working in Moscow

The results of research showed that the majority (more than 60%) of labor migrants in Moscow region from all analyzed sending states at the moment of study are in active working age from 18 to 33 years and are represented mostly by men (Table 1). Table 1. Distribution of labor migrants by sex composition and age (in percent of the number of respondents by sending states, No = 511) Age of labour migrants (years completed) 18–33 34–49 50 and older 67.8 31.5 0.7 69.9 27.6 2.4 67.7 32.3 0 66.1 28.8 5.1 67.9 30.1 2.0

Sending state

Sex

Belarus Armenia Kyrgyzstan Kazakhstan In total due to sampling frame

Male 59.1 68.3 64.5 61.0 63.0

Female 40.9 31.7 34.7 39.0 36.8

An overwhelming majority (88.9%) of labour migrants arrive to Moscow region from urban settlements of resident country, and 60–70% from large cities: capitals, cities of republic and regional subordination (Table 2). A significant part of responded migrants, both men and women, have a higher education (21.8%) or a specialized secondary education (38.9%). About a quarter of respondents have a general secondary education.

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Table 2. Distribution of labor migrants by place of residence in sending state (in percent of the number of respondents by sending state, No = 511) Sending state

Belarus Armenia Kyrgyzstan Kazakhstan In total due to sampling frame

Type of settlement in sending state City of oblast, Metropolitan, republic krai, regional subordination center 47.0 32.2 36.6 37.6 39.7 20.8 35.2 33.7 39.6 31.1

City of regional subordination 12.1 10.9 24.6 25.2 18.2

Rural settlement 8.7 14.9 14.9 5.9 11.1

The data of survey showed that an individual, as a rule, seasonal migration generally prevails. Mostly, people arriving to Moscow in search of job are either nonfamily (single/unmarried) people or immigrants whose families stayed at home. Couples and full families make up an insignificant part of labor migrants (Fig. 1).

Alone

51

Wife and children stayed in home country

17.7

Arrived with wife (husband) and children

14.4

Arrived only with wife (husband). Children stayed in home country

8.6

Other

8.3 0

10

20

30

40

50

60

Fig. 1. Distribution of answers to the question “Had you arrived to Moscow in search of job alone or with family? (in percent of the total number of respondents, No = 511)

Most migrants (86%) of the EAEU member states are fluent in Russian spoken language, about a third (34%) speaks Russian very well. This is due to the fact that 32% of respondents studied Russian either at home (at school, secondary educational institution, higher educational institution) or in Russia. Professional activity of the EAEU labor migrants working in Moscow. A comparative analysis of job place of labour migrants before moving to Moscow with their job place in Moscow at the moment of study showed that, mainly migrants find job in the area of economic activity where they worked at home. Deviations are

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observed only in agriculture, where half of migrant agricultural workers are not involved in this type of production activity in Moscow region, employed in other areas of economy. Less part of migrants in Moscow, in relation to the employment at home, also is working in manufacturing industry and education. On the contrary, in trade, construction and transport industry a number of labour migrants is greater than in the employment system in their country. Obviously, these imbalances are mainly due to the peculiarities of Moscow labor market, on the one hand, and, to some extent, the peculiarities of migrant labor motivation. Trade, construction and transport industry are prevailing by Moscow employment rate. Thus, it is more likely possible to say that the personnel in trade, construction and transport industry is replenished not only by specialized migrant specialists from the relevant area of activity, but also by employees in agriculture, manufacturing industry, education (Table 3). Table 3. Distribution of answers to the question: “In what area of economic activity have you been working at home and in what area are you currently working in Moscow?” (in percent of the total number of respondents, No = 511) Job in country of origin before arrival to Moscow 9.1 15.2 9.3 5.7 21.1 6.1 4.9

Area of economic activity Present job in Moscow Manufacturing industry 7.0 Construction industry 16.7 Transport industry 11.8 Agriculture 2.8 Trade 25.8 Education 4.9 Healthcare 6.1

It is noteworthy that after moving to Moscow labor migrants specifically change their official status. If an approximately equal number of migrants keeps employer’s status before and after moving, then employees and self-employed workers are partially moved to the group of department managers and company heads. Obviously that such status “diffusion” is due to the fact that this part of migrants in the trade and construction industry individually initiatively or corporately (clannishly) heads primary labor collectives (Table 4). 3.2

Reasons for Moving of Labour Migrants from the EAEU Countries to Moscow in Search of Job

Considering the reasons that labor migrants use for explaining their moving to Moscow, it is necessary to stress that leading of them, along with many latent ones (not mentioned in this study), are the “lack of life prospects” and “low salary” at home. And this may sound strange, a miserable percentage is for migrants who motivate their moving by “lack of job places” at home (Table 5).

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Table 4. Distribution of answers to the question “What is your job position at home and after your arrival to Moscow?” (In percent of the total number of respondents No = 511) Job in the country of origin before arrival to Moscow 58.5 19.9 2.3 1.6 10.8 6.9

Job position

Present job in Moscow Worker 59.1 Office worker 17.7 Department Manager 7.5 Head of the company 3.8 Self-employed 8.1 Other 3.8

Table 5. Distribution of answers to the question “What was the main reason for your moving to Russia/Moscow in search of job?” (In percent of the total number of respondents, No = 511) Sending state of labour migrants Belarus Armenia Kyrgyzstan Kazakhstan In whole due to sampling

Reason for moving to Moscow Absence of Low Absence of job wages prospectives 3.4 22.8 33.6 2.4 28.5 30.9 5.0 24.0 30.6 2.5 24.6 39.8 3.3 25.0 33.7

Other reasons 40.2 38.2 40.4 33.1 38.0

It can be seen that this hierarchy of reasons is typical for migrants from all sending countries under study. The observed deviations in performances by countries of migrants arrival, we would likely attribute to statistical errors of observation, rather than to significant features of motivation for labor migration. 3.3

Satisfaction from the Job of the EAEU Migrants in Moscow

The survey displayed that a prevailing majority of respondents (about 90%) believes that their job in Moscow matches to their knowledge, abilities and skills, and half of them are absolutely sure of it (Fig. 2). Moreover, almost the same number of respondents (84%) says that their job at Moscow enterprises matches to their educational level (Fig. 3). As a result, 87.3% of labor migrants working in Moscow are mostly satisfied with their job, 47.5% of them are completely. Thus, it can be concluded that the process of labor adaptation of migrants is implemented successfully. The data of survey on movement of labor force in Moscow labor market over the past five years may serve an additional confirmation (Fig. 4).

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Да

50.1

В основном да

39.7

В основном нет

8.6

Нет

1.6 0

10

20

30

40

50

60

Fig. 2. Distribution of answers to the question “Do you think that your job in Moscow now matches to your knowledge, abilities and skills?” (In percent of the total number of respondents, No = 511)

Yes 44

Mainly yes 40.1

Mainly no 9.3

No 6.6 0

5

10

15

20

25

30

35

40

45

50

Fig. 3. Distribution of answers to the question “Do you think that your job in Moscow now matches to your level of education” (in percent of the total number of respondents, No = 511)

As you can see, within five years only a small number of migrants changed their job place. At the same time, the greatest intensity in changing a job place is observed over a time period of three to five years. A detailed analysis of migrant labor activity allowed revealing combined satisfactions with the scope and labour conditions (Table 6). The index of satisfaction with the scope and labour conditions (see Table 6) was calculated as the difference between the sum of positive and negative estimates of labor

Labor Activity of the EAEU Migrants in Moscow

90

149

84.3

80

74.2

70.2 70 60 50 40 30

23 18.2

20 11.2 10 0 During last year

During recent three years During recent five years Yes

No

Fig. 4. Distribution of answer to the question “Have you had to change your job place the past one, three, five years of living in Moscow?” (In percent of the total number of respondents, No = 511) Table 6. Satisfaction of migrants working in Moscow from the scope and labour conditions Features of labour activity Index of satisfaction from scope and labour conditions Labour conditions 0.83 Convenient work schedule 0.82 Labour payment 0.78 Scope of work 0.75

activity features, correlated with the total number of respondents. The index varies from “–1” to “+1”, where “–1” is an absolute dissatisfaction, “+1” is an absolute satisfaction. Most migrants said that labour conditions in Moscow are convenient. More than a third of them are unconditionally satisfied with job in all aspects. At the same time, it should be noted a certain differentiation of estimates. So, lower satisfaction rates are related to scope and labour payment. The percentage of employees who are dissatisfied with some aspects of their job is in the range of 13% - “scope of work”, up to 8–9% “labour conditions” and “work schedule”, respectively. 3.4

Adaptive Search of Job Place

It is quite obvious that in the process of labor adaptation, migrants try to find such a niche of activity where fulfilled job would bring maximum (optimal) satisfaction and would meet the realization of their situational needs.

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The results of survey clearly show that peculiar trend of horizontal mobility of migrants is the movement of labor resource from manufacturing areas of activity to the social service sector and, first of all, to trade, where a significant positive balance takes place (+15.9%) due to an essential outflow of labor from construction and manufacturing industry (Table 7). Table 7. Distribution of answers to the question: “In what area of economic activity in Moscow have you been working before moving to another place and where are you currently working?” (In percent of the number of respondents who changed jobs) Before changing job Area of economic activity 25.0 Manufacturing industry 32.8 Construction industry 14.4 Transport industry 7.2 Agriculture 8.9 Trade 1.1 Education 2.8 Healthcare 7.8 Other

After changing job Mobility balance 9.4 –15.6 20.6 –11.6 11.1 –3.3 2.2 –5.0 23.9 +15.9 5.6 +4.5 4.4 +1.6 22.8 +15.0

Interesting, but not fully understandable phenomenon is a dispersive movement (15%) of labor migrants into latent areas of labor activity. A significant number of respondents refused to specify the place of their labor migration. Probably, it is connected with illegal labor or individual (free) activity. As for vertical mobility, a significant change in official (status) structure occurs in the working environment. Their positive balance is +28.6%. This increase is reached, to a certain extent, by flowing horizontal mobility of migrants from “leaders” (7.8%) and, it seems to us, from “self-employed population” (individual entrepreneurs) (Table 8). Table 8. Distribution of answers to the question: What is your job position before changing and after?” (In percent of the number of respondents who changed their job place) Before changing job Job position After changing job Mobility balance 42.4 Worker 71.0 +28.6 11.3 Office worker 15.5 +4.2 10.8 Department Manager 3.5 –7.3 0.9 Head of the company 0.4 –0.5 19.5 Self-employed 4.8 –14.7 15.1 Other 4.8 –10.3

Simultaneous analysis of data containing trends in horizontal and vertical mobility of labor migrants in Moscow labor market enables concluding that, on the one hand, there is a growing demand for personnel, and vacant positions are opened for

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unqualified workers, primarily in trade. On the other hand, area for self-employed population is getting narrow. Along with the above noted conclusions, it is necessary to stress that the main thing for successful inclusion of migrants in labor activity is the elimination of all adaptation issues at initial stage of job.

4 Discussion Today it is already obvious that the lack of labor force, especially in Moscow, requires its replenishment by attracting labor migrants from other countries. The solution of this problem served as the basis for a lot of scientific researches for present and subsequent years (Migration and demographic crisis in Russia 2010; Zaionchkovskaya et al. 2011; Vorobyova 2011; Tyuryukanova 2011). Acquaintance with the results of similar studies suggests that our local research has sufficiently reliable data reflecting objective trends in labor migration area. This is also important because it helps to get rid of the widespread misconceptions of labor migrants in terms of “information hunger”. At the same time, it does not fully reveal the problems of their adaptation to Moscow labor market. Despite the widespread stereotype that mainly rural residents in search of job go to Russia, the study confirms earlier data that among migrants from EAEU member states there are more visitors from capitals and large cities than from rural areas. Typical migrants are young married men, half of whom are with secondary specialized or higher education. Once again, it is confirmed that a huge number of migrants find job in trade, construction industry, area of communal and social services. The number of employed in household is increasing. On the contrary, the outflow of labor force is proper to agriculture, manufacturing and construction industry. The conclusions about flowing vertical mobility of labor migrants have been cemented. The situation for employees working in attractive and competitive areas (trade, household) is practically stable. Manufacturing and construction industry is nondemanded in the Moscow labor market and, as a result, they are losing potential. Not only restricted professional knowledge and skills that migrants possessed before moving to Moscow, but also, as you can judge upon comparable data, education and qualification of the employee are not in demand today in Moscow and Russian labor market as a whole (Mukomel 2017).

5 Conclusions The results of survey repeatedly confirm that the main employment area of labor migrants from the EAEU countries in Moscow is trade, social and communal services. The arrival to Moscow in search of job is mainly due to the lack of prospects for living at home and a low salary. Social mobility of migrants in Moscow labor market is carried out both in horizontal and vertical plane. At the same time, the intensity of displacements is low and one can speak about the relative stability of the personnel structure. The overwhelming

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majority of respondents, in spite of the existing trend of flowing labor mobility, is satisfied with the scope and job conditions and believe that fulfilled job meet their knowledge, educational level, abilities and skills. The main transfers are carried out from manufacturing to non-manufacturing areas for replenishment of workers personnel. At the same time, remarked employment differentiation of migrants, vertical mobility, and the satisfaction with scope and job conditions witnesses that the process of migrants’ adaptation in the labor market is not unsuccessful.Commentary to the Article1. The EAEU was established on the basis of the Customs Union of Eurasian Economic Community (EEC) for cementing economies of countries-participants, modernization and increasing their competitive performance in international market. The contract on its establishment is signed on May 29, 2014 and became effective on January 1st, 2015. The members became Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan. Administrative bodies of EAEU are Supreme Eurasian Economic Council and Eurasian Economic Commission.2. The contract draft is revised in Eurasian Economic Commission according to innerstate agreement and prepared to be sent to EAEU members for innerstate procedures required for its signing. Report of Eurasian Economic Commission “Barriers, derogations and restrictions of Eurasian Economic Union, 2016.3. Data is provided by the Head of the Laboratory for migration researches of the Institute of social and economic issues of population by E.S. Krasinets in terms of scientific and methodological seminar of Analytical administration of the Federation Council Central Office on the topic “Processes in migration area: prospectives in terms of Eurasian integration” held on May 15, 2017.

References Vorobyova, O.D.: Labour market and migration. Migration barometer in the Russian Federation. Series of special reports (papers). “New Eurasia” fund, Moscow (2011) Rosstat demographic projection till 2035. http://www.gks.ru/wps/wcm/connect/rosstat_main/ rosstat/ru/statistics/population/demography/. Accessed 27 June 2017 Eurasian Economic Commission report: Barriers, derogations and restrictions of Eurasian Economic Union (2016) Zaionchovskaya, Z.A., Tyuryukanova, E.V., Florinskaya, Y.F.: Labour migration: how to move further. Migration barometer in the Russian Federation. Series of special papers. “New Eurasia” fund, Moscow (2011) Zaionchovskaya, Z.A., Tyuryukanova, E.V. (eds.): Migration and Demographic Crisis in Russia. MAKS, Moscow (2010) Vorob’yova, O.D., Topilin, A.V. (eds.): Migration of Population: Theory and Policy: Textbook. Economic Education, Moscow (2012) Mukomel V.I.: Migrants at the Russian labour market: employment, mobility, intensity and renumeration for labour. Federal scientific and research sociological center of Russian Academy of Sciences (FSRSC of the RAS), vol. 14, No. 6. Statistics and Economics, Moscow (2017) Petrov, A.: Migration counts (2018). https://rg.ru/2017/01/12/trudovye-migranty-iz-kirgiziipoluchat-pensii-za-rabotu-v-rossii.html. Accessed 15 May 2018

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Prospectives for integration in labour market and the EAEU plans for development of free movement till 2025. http://russiancouncil.ru/analytics-and-comments/analytics/svobodaperemeshcheniya-trudovykh-resursov-v-eaes-k-2025-godu-/. Accessed 15 May 2018 Order by Ministry for Healthcare of Russia dated 27.10.2016 г. No. 803н: On amendments to Regulations of obligatory medical insurance approved by the order of Ministry for Healthcare and social development of the Russian Federation dated 28.02.2011 No. 158н, with the purpose of implementation of provisions of Contract on the Eurasian Economic Union signed in Astana on 29 May 2014. http://www.consultant.ru/document/cons_doc_LAW_209307/. Accessed 15 May 2018 Estimated population of the Russian Federation till 2025: Statistical Bulletin. Federal Service of State Statistics, Moscow (2008) Eurasian Economic Commission: Barriers, derogations and restrictions of Eurasian Economic Union (2016). http://docplayer.ru/47204458-Barery-izyatiya-i-ogranicheniya-evraziyskogoekonomicheskogo-soyuza.html. Accessed 15 May 2018 Processes in migration area and prospectives of Eurasian integration: regional experience. To the meeting of Integration club of the Federation Council Chairman of the Russian Federation Assembly dated 20 June 2017. Analytical Vestnik No. 19 (676), Federation Council of Russian Federal Assembly (2017) Commonwealth of Independent States in 2015: Statistical collection/Interstate Statistical Committee, Moscow (2016) Topilin, A.V.: Migration and general labour market of the EAEU: challenges and integration ways (2018). https://creativeconomy.ru/lib/38076. Accessed 15 May 2018 Cross-border transfers of natural persons (residents and non-residents): Macroeconomic financial statistics. Website of the Russian Federation Central Bank (2018). http://www.cbr.ru/ analytics/print.aspx?file=rem.htm. Accessed 15 May 2018 Tyuryukanova, E.V. (ed.): Women-Migrants from the CIS Countries in Russia. MAKS Press, Moscow (2011) Tyuryukanova, E.V.: Labour migrants from the CIS countries in Russia: labour exploitation and obligatory labour. Obligatory labour in modern Russia: unregulated migration and human trafficking. International Labour Bureau, Geneva (2006) Florinskaya, Y., Mkrtchyan, N.: Migration in Russia: old trends, new issues. Monitoring of economic situation in Russia. Trends and challenges of social and economic development. No. 19 (37), December 2016. http://iep.ru/files/RePEc/gai/monreo/monreo-2016-37-786.pdf. Accessed 15 May 2018

Agricultural Products’ Quality Aleksei V. Bogoviz ✉ (

)

, Elena I. Semenova , and Julia V. Ragulina

Federal State Budgetary Scientific Institution “Federal Research Center of Agrarian Economy and Social Development of Rural Areas – All Russian Research Institute of Agricultural Economics”, Moscow, Russia [email protected], [email protected], [email protected]

Abstract. The purpose of the article is to substantiate the top-priority value of the quality of agricultural products for modern economic systems and to deter‐ mine the key problems and to develop the concept of increasing the quality of agricultural products in modern Russia. For that, the methods of regression and correlation analysis are used; the authors determine dependencies between the quality of agricultural products and quantitative and qualitative characteristics of modern economic systems. The indicator of quality of agricultural products is index of agricultural products according to the World Bank. Quantitative indica‐ tors include the share of the AIC in the total volume of export according to the International Independent Institute of Agrarian Policy and the share of added value of agriculture in the structures of GDP according to the World Bank. Qual‐ itative indicators are the index of national food security according to the Econo‐ mist Intelligence Unit and the index of health according to the World Health Organization, the United Nations Population Division, and the World Bank. The research objects are the USA, India, Brazil, China, Canada, Indonesia, and Russia. The research is performed on the basis of the 2017 data. The authors come to the conclusion that quality of agricultural products is an important factor of provision of national food security and population’s health. The Russian strategy of devel‐ opment of agriculture and regulation of markets of agricultural products, which focuses on achievement of target indicators of quantitative indicators, inevitable leads to reduction of the quality of agricultural products. In order to achieve simultaneous target values with provision of high quality of agricultural products, a concept is developed – it is aimed at usage of the possibilities of transition to the AIC 4.0. Keywords: Quality of agricultural products · Food security · Population’s health AIC 4.0 · Modern Russia

1

Introduction

In the conditions of intensive globalization and increasing global competition at all levels and in all aspects of functioning and development of modern economic systems, their attention is focused on achievement of the target level of the values of quantitative indicators, while qualitative characteristics of socio-economic phenomena and processes are moved to the background. This is caused by the fact that, firstly,

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international rankings compare countries between each other according to the values of quantitative indicators for achievement of maximum compatibility of data and objec‐ tivity of compiled rankings. Secondly, quantitative characteristics (GDP, GDP per capita, etc.) determine the level and rate of development of economic systems. Under the influence of these reasons, priorities in the agro-industrial complex (AIC) are assigned to quantitative indicators. Agriculture is viewed as a method of accelerating economic growth and increase of export. Striving to increase the values of quantitative indicators of the AIC development (volume of production, labor efficiency, etc.), the values of qualitative indicators of the AIC (good value, ecological security of products, etc.) aggravate. The working hypothesis of the research is that quality of agricultural products largely determines the level of national food security and the level of population’s health – so it should be taken into account during development and implementation of strategies of development of the AIC of modern economic systems. The purpose of the article is to substantiate the top-priority value of quality of agricultural products for modern economic systems, by determining the role of quality of agricultural products in forma‐ tion of quantitative and qualitative indicators of modern economic systems, and to determine the key problems and to develop the concept of raising the quality of agri‐ cultural products in modern Russia.

2

Materials and Method

The performed literature overview on the selected topic showed that the role and meaning of the AIC and agriculture are studied in a lot of works of such scholars as Bogoviz et al. (2018a, b, c, d, e, f), Garina et al. (2018), Lurie and Brekken (2017), Morozova and Litvinova (2014), Popkova et al. (2018a), Popkova et al. (2018b), and Troyanskaya et al. (2017). However, in the existing publications the main attention is paid to quantitative indi‐ cators, while the issues of measuring and increase of quality of agricultural products and its value for modern economic systems remain poorly studied. The offered hypothesis is verified in this work with the help of the methods of regression and correlation analysis; the authors determine dependencies between the quality of agricultural products (x) and quantitative (y) and qualitative (y) characteristics of modern economic systems. The indicator of quality of agricultural products is the index of agricultural products according to the World Bank, which includes plant breeding index, variety registration index, and seed quality control index. Quantitative indicators are the share of the AIC in the total volume of export according to the International Independent Institute of Agrarian Policy and the share of added value of agriculture in the structure of GDP according to the World Bank. Qual‐ itative indicators are the index of national food security according to the Economist Intelligence Unit and health index according to the World Health Organization, the United Nations Population Division, and the World Bank. The research objects include the USA, India, Brazil, China, Canada, Indonesia, and Russia. The research is performed on the basis of data for 2017, which are shown in Table 1.

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Table 1. Quantitative and qualitative indicators of modern economic systems and the index of agricultural entrepreneurship in 2017. Country

Index of agricultural entrepreneurship, points of 100 (position) USA 85.4 (5) India 66.60 (21) Brazil 69.5 (35) China 68.3 (41) Canada 83.9 (9) Indonesia 42.3 (73) Russia 68.41 (18)

Share of the AIC in the total volume of export, %

Added value Index of Health index, of agriculture, national food points of 100 % of GDP security, point (position) of 100 (position) 1.05 89.0 (1) 78.25 (34) 17.4 50.9 (68) 28.21 (103) 5.5 67.4 (36) 54.29 (70) 8.6 64.2 (42) 58.03 (55) 1.52 84.2 (7) 89.53 (17) 14.0 46.7 (74) 38.39 (90) 4.7 63.8 (43) 33.76 (97)

9 12 37 4 13 22 6

Source: compiled by the authors based on: World Bank (2018a), International Independent Institute of Agrarian Policy (2018), World Bank (2018b), Economist Intelligence Unit (2018), World Health Organization, United Nations Population Division, World Bank (2018).

3

Results

40 35 30 25 20 15 10 5 0

20 y = -0.2342x + 30.922 R² = 0.0847

15 y = 0.0594x + 2.7541 R² = 0.0155

10 5 0

0

50

100

0

50

100

Index of agricultural entrepreneurship (quality of agricultural products 100

100

60 40 y = 0.9933x - 2.1394 R² = 0.8134

20

)

y = 1.1686x - 26.52 R² = 0.5191

80

80

Health index

Food security

Added value of agricultural economy

Share of the AIC in export

The results of the performed analysis are proved by regression curves (Fig. 1).

60 40 20 0

0 0

20

40

60

80

100

0

20

40

60

80

100

Index of agricultural entrepreneurship (quality of agricultural products)

Fig. 1. Regression curves that reflect dependence of quantitative and qualitative indicators of modern economic systems on the index of agricultural entrepreneurship in 2017. Source: calculated by the authors.

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As is seen from Fig. 1, increase of the value of the index of agricultural entrepre‐ neurship by 1 point leads to reduction of the share of the AIC in the total volume of export of modern economic systems by 0.23% (correlation – 8.47%), growth of the share of added value of agriculture in the structure of GDP – by 0.06% (correlation 1.55%), and growth of the value of the index of national food security – by 0.99 points (corre‐ lation %), and growth of the value of the health index – by 1.17 points (correlation 81.34%). Therefore, the quality of agricultural products largely determines such qualitative characteristics of modern economic systems as the level of national food security and population’s health, but does not influence their quantitative characteristics – economic growth and volume of export. As a result, for gaining economic profits related to acceleration of the rate of economic growth and increase of export by means of agricultural products, the National program of development of agriculture regulation of markets of agricultural products, resources, and food for 2013–2020, adopted by the Decree of the Government dated July 14, 2012, No. 717, the main attention is paid to quantitative indicators of develop‐ ment of the AIC: increase of crop yield, authomatization, reduction of prices (increase of accessibility), application of resource-saving technologies, increase of the terms of storage of agricultural products, etc., and the issues of provision of a certain quality of agricultural products are not viewed and no specific practical measures are envisaged (Government of the RF 2018b). In addition to this, the performed deep logical analysis allowed determining the following problems of provision of high quality of agricultural products in modern Russia: – low level of investments into modernization of agriculture, which leads to reduction of its global competitiveness and impossibility of provision of high quality of agri‐ cultural products: the volume of investments into the fixed capital in Russia’s agri‐ culture in 2017 constituted RUB 611.2 billion (0.65% of GDP) (Federal State Statis‐ tics Service 2018b); at that, the volume of financing of the state program of devel‐ opment of agriculture of the RF in 2017 constituted RUB 243 billion (0.26% of GDP) (Government of the RF 2018a); – insufficient monitoring and control of quality of agricultural products, absence of strict standards of quality of agricultural products and the system of certification of its quality, which does not allow guaranteeing certain quality of agricultural products or forming the culture of consumption of agricultural products of high quality. Favorable conditions for solving all determined problems are created by the current modernization of the Russian agriculture, which is accompanied by the technological revolution, related to transition to Industry 4.0; thus, there open possibilities for transfer of the Russian agricultural entrepreneurship to a new technological mode - AIC 4.0. For that, we developed the following concept, which is to ensure the usage of these possi‐ bilities in the interests of increase of quality of agricultural products in modern Russia (Fig. 2).

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state investments

Formation of culture of consumption of agricultural products

online monitoring, control, and certification with the help of blockchain technologies

Domestic and foreign investors private investments

Agricultural entrepreneurship Internet of things drone 2

drone 1 sensor 1

sensor 2



drone n sensor 3 … sensor n

Consumers of agricultural products certified agricultural products of guaranteed quality

production of agricultural goods

High and strict standards of quality of agricultural products in the aspect of its food security and ecological security

Fig. 2. The concept of increase of quality of agricultural products in modern Russia in the conditions of transition to AIC 4.0. Source: compiled by the authors.

As is seen from Fig. 2, the offered concept envisages that agricultural entrepreneur‐ ship should be based on high standards of quality of agricultural products in the aspect of its food value and ecological security (absence of GMO). Organization of production of agricultural products should be automatized on the basis of the technology of Internet of things, with the help of which artificial intellect will control the production process, determining its actual characteristics with high precision with the help of the system of sensors and drones. As a result, certified agricultural products of guaranteed quality will be manufac‐ tured. The whole production and distribution process will be transparent due to online monitoring, control, and certification with the help of blockchain technologies. At that, the key tasks of the state are using state investments for modernization of agriculture, stimulation of inflow of private investments into this process, and formation of the culture of consumption of agricultural products – primarily, the value of high-quality products.

4

Conclusions

Thus, the working hypothesis of the research is correct – quality of agricultural products is an important factor of provision of national food security and population’s health. The applied Russian strategy of development of agriculture and regulation of the markets of agricultural products, which emphasizes achievement of the target values of quantitative indicators, inevitable leads to reduction of quality of agricultural products. In order to achieve simultaneous target values with provision of high quality (food value and ecological security) of agricultural products, the authors’ concept is

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developed, oriented at usage of the possibilities of transition to the AIC 4.0. Due to almost full authomatization of the distribution process in agriculture in the conditions of the AIC 4.0, transparency and control over this process are achieved – which allows guaranteeing certain quality of agricultural products and conducting its certification.

References Bogoviz, A.V., Alekseev, A.N., Chepik, D.A.: Improvement of the economic mechanism of state support for innovational development of the Russian agro-industrial complex in the conditions of import substitution. In: Advances in Intelligent Systems and Computing, vol. 622, pp. 555– 561 (2018a) Bogoviz, A.V., Bugai, Y.A., Osipov, V.S.: Import substitution in the agro-industrial complex in the interests of provision of food security: option or necessity? In: Advances in Intelligent Systems and Computing, vol. 622, pp. 37–43 (2018b) Bogoviz, A.V., Lobova, S.V., Bugai, Y.A.: Effective import substitution in the agro-industrial complex: competition or monopoly? In: Advances in Intelligent Systems and Computing, vol. 622, pp. 30–36 (2018c) Bogoviz, A.V., Lobova, S.V., Ragulina, Y.V., Alekseev, A.N.: A critical review of Russia’s energy efficiency policies in agriculture. Int. J. Energy Econ. Policy 8(3), 67–75 (2018d) Bogoviz, A.V., Taranov, P.M., Shuvaev, A.V.: Innovational tools for provision of food security through state support for the agro-industrial complex in the conditions of digital economy. In: Advances in Intelligent Systems and Computing, vol. 622, pp. 659–665 (2018e) Bogoviz, A.V., Tufetulov, A.M., Chepik, D.A.: The mechanism of activation of the process of import substitution in the agro-industrial complex for provision of food security. In: Advances in Intelligent Systems and Computing, vol. 622, pp. 71–76 (2018f) Economist Intelligence Unit: The Global Food Security Index (2018). http://foodsecurity index.eiu.com/. Accessed 09 Aug 2018 Garina, E.P., Garin, A.P., Kuznetsov, V.P., Popkova, E.G., Potashnik, Y.S.: Comparison of approaches to development of industrial production in the context of the development of a complex product. In: Advances in Intelligent Systems and Computing, vol. 622, pp. 422–431 (2018) Lurie, S., Brekken, C.A.: The role of local agriculture in the new natural resource economy (NNRE) for rural economic development. Renew. Agric. Food Syst. 2(1), 1–11 (2017) Morozova, I.A., Litvinova, T.N.: Russian market of agricultural equipment: challenges and opportunities. Asian Soc. Sci. 10(23), 68–77 (2014) Popkova, E.G., Bogoviz, A.V., Lobova, S.V., Romanova, T.F.: The essence of the processes of economic growth of socio-economic systems. Stud. Syst. Decis. Control 135, 123–130 (2018a) Popkova, E.G., Bogoviz, A.V., Ragulina, Y.V., Alekseev, A.N.: Perspective model of activation of economic growth in modern Russia. Stud. Syst. Decis. Control 135, 171–177 (2018b) Troyanskaya, M.A., Ostrovskiy, V.I., Litvinova, T.N., Matkovskaya, Y.S., Bogoviz, A.V.: Possibilities and perspectives for activation of sales in the agricultural machinery market within sectorial development of Russian and European economies. In: Contributions to Economics, pp. 473–480 (2017). ISBN 978-3-319-60695-8 World Bank: Agriculture, value added (% of GDP) (2018a). https://data.worldbank.org/indicator/ NV.AGR.TOTL.ZS?view=chart&year_high_desc=false. Accessed 09 Aug 2018 World Bank: Enabling the Business of Agriculture (2018b). http://eba.worldbank.org/data/ exploreeconomies/russian-federation/2017. Accessed 09 Aug 2018

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World Health Organization, United Nations Population Division, World Bank: The World’s Healthiest Countries (2018). https://www.kelownanow.com/news/news/National_News/ 17/03/20/2017_healthiest_country_index/. Accessed 09 Aug 2018 International Independent Institute of Agrarian Policy: Dynamics of food export in the world (2018). http://мниaп.pф/analytics/Dinamika-eksporta-prodovolstvia-v-mire/. Accessed 09 Aug 2018 Government of the RF: State program of development of agriculture and regulation of markets of agricultural products, resources, and food for 2013–2020, adopted by the Decree of the Government dated July 14, 2012, No. 717 (2018a). http://government.ru/programs/208/ events/. Accessed 09 Aug 2018 Government of the RF: Volume of financing of the state program of development of agriculture of the RF in 2017 (2018b). http://www.ng.ru/economics/2017-09-06/1_7067_farmer.html. Accessed 09 Aug 2018 Federal State Statistics Service: Russia in numbers: short statistical bulletin (2018b). http:// www.gks.ru/bgd/regl/b17_11/Main.htm. Accessed 09 Aug 2018

Traffic Safety as a Factor of Competitiveness of Economic System and a Reason for Increase of Differentiation of Developed and Developing Countries: Management on the Basis of New ICT Vladimir A. Zelikov ✉ , Yuriy V. Strukov, Vera V. Razgonyeva, Ruslan A. Korablev, and Alexander Y. Artemov (

)

Voronezh State University of Forestry and Technologies named after G.F. Morozov, Voronezh, Russia [email protected], [email protected], [email protected], [email protected], [email protected]

Abstract. The purpose of the article is to determine the influence of traffic safety on transport infrastructure and competitiveness of economic system in view of developed and developing countries of the world and to develop the concept of managing traffic safety based on the new ICT in the interests of reduction of differentiation of developed and developing countries and unification of the global transport infrastructure. The methodology of the research is based on regression analysis, which is used for determining regression dependence between traffic safety, which indicator is death rate from vehicle accidents according to the World Health Organization, (x), transport infrastructure index (y1), and index of global competitiveness of the countries (y2) according to the World Economic Forum. The research is performed in view of developed and developing countries, which have the first and the least positions in the international ranking of traffic safety. The developed countries include Malta, the Netherlands, Switzerland, Norway, and Sweden, and developing countries include Kazakhstan, Russia, Kyrgyzstan, Lithuania, and Montenegro. It is substantiated that absence of consideration of such factor as traffic safety does not allow for full and precise evaluation of development of transport infrastructure. Application of new information and communication technologies to managing traffic safety allows improving trans‐ port infrastructure and thus increasing competitiveness of the economic system. For that, the authors’ concept of managing traffic safety on the basis of new ICT in the interests of differentiation of developed and developing countries and unification of the global transport infrastructure is developed. Keywords: Traffic safety · Competitiveness of economic system Differentiation of developed and developing countries · Traffic control New information and communication technologies

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 161–166, 2019. https://doi.org/10.1007/978-3-030-00102-5_16

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Introduction

The global transport system is the most important link that unified all elements of the global economy. Heterogeneity of this system, caused by the different level of its devel‐ opment in different countries, causes their differentiation according to this criterion. When building the global business networks and selecting trade partners, entrepreneurial structures, pay attention to the level of development of transport infrastructure of alter‐ native territories of their location. In the traditional treatment, the following factors are distinguished in transport infra‐ structure: accessibility of various types of transport, determined by length of car roads and railroads and geographical peculiarities (specifics of location of water objects and air space), cost of their usage, quality of transportation, which includes the probability of product damage. According to our hypothesis, the list of these factors is not complete, and absence of such factor as traffic safety does not allow for full and precise evaluation of the level of development of transport infrastructure – as when selecting a place for tourism and residence, a person strives for safety, and accidence level is one of the main business risks, leading to damage or loss of the product. Application of new information and communication technologies to management of traffic safety allows improving transport infrastructure and thus raising competitiveness of economic system. The purpose of the article is to verify the offered hypothesis through determining the influence of traffic safety on transport infrastructure and competitiveness of economic system in view of developed and developing countries of the world and to develop the concept of managing traffic safety based on new ICT in the interests of reducing differ‐ entiation of developed and developing countries and unification of the global transport infrastructure.

2

Materials and Method

The research object is safety of car traffic. This problem and means of solving it are studied in the works (Fernandes and Neves 2018; Wang et al. 2018; Lee et al. 2018; Haj-Salem et al. 2018; Yuan et al. 2018; Gao et al. 2018; Ghadban et al. 2018). The factors of competitiveness of modern economic systems and reasons for increase of differentiation of developed and developing countries, among which the level of development of transport infrastructure is very important, are studied in Neubauer and Schauer (2018), Guijarro-Rodríguez et al. (2018), Brito et al. (2018), Popkova et al. (2015), Bogoviz et al. (2016), Parygin et al. (2015). Content analysis of these scientific works of modern scholars showed that they pay insufficient attention to the issues of managing traffic safety based on new ICT; thus, these issues should be further studied. The methodology of the research is based on the method of regression analysis – which is used for determining regression dependence between traffic safety, which indi‐ cator is death rate from vehicle accidents according to the World Health Organization

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(x), index of transport infrastructure (y1), and index of global competitiveness of coun‐ tries of the world (y2) according to the World Economic Forum. The research is performed in view of developed and developing countries, which have the first and the least positions in the international ranking of traffic safety. The developed countries include Malta, the Netherlands, Switzerland, Norway, and Sweden, and developing countries include Kazakhstan, Russia, Kyrgyzstan, Lithuania, and Montenegro. The data are given in Table 1. Table 1. Statistics of the indicators of traffic safety, development of transport infrastructure, and competitiveness of developed and developing countries in 2016. Category

Category’s countries

Developed

Malta Netherlands Switzerland Norway Sweden Kazakhstan Russia Kyrgyzstan Lithuania Montenegro

Developing

Number of Index of transport deaths from infrastructure vehicle Points (1–7) Position accidents per (1–137) 100,000 people 3.4 4.8 4.9 5.0 5.2 30.6 25.2 22.8 22.4 20.4

4.8 6.4 3.2 5.0 5.6 4.2 4.9 3.0 4.7 4.2

42 3 105 34 19 68 36 109 47 70

Index of global competitiveness Points (1–6) Position (1–137)

4.6 5.7 3.4 5.4 5.5 4.3 4.6 3.9 4.6 4.1

37 4 122 11 7 57 38 102 41 77

Source: compiled by the authors based on: World Health Organization (2016), World Economic Forum (2017).

3

Results

Based on the data from Table 1, we compiled regression curve that reflects dependence of the values of transport infrastructure index and global competitiveness index on traffic safety (Fig. 1). As is seen from Fig. 1, traffic safety is by 14.55% determined by the level of devel‐ opment of transport infrastructure and by 16.30% – the level of global competitiveness of countries. Reduction of death rate from vehicle accidents per 100,000 people (increase of the level of traffic safety) stimulates increase of the index of transport infrastructure by 0.036 points, and the index of global competitiveness – by 0.028 points. As is seen from Table 1, traffic safety in developed countries is by six times higher than in developing countries. That’s why application of this criterion for distinguishing the categories of countries is justified. This means that traffic safety is one of the factors of competitiveness of economic system and a reason for increase of differentiation of developed and developing countries. For provision of the most favorable influence of this factor on competitiveness of economic systems, reduction of differentiation of developed and developing countries

V. A. Zelikov et al. 7

Index of global competitiveness

Index of transport infrastructure

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6 5 4 3

y = -0.0365x + 5.1277 R² = 0.1455

2 1 0 0

10

20 30 Traffic safety

6 5 4 y = -0.028x + 5.0149 R² = 0.163

3 2 1 0

40

0

10

20 30 Traffic safety

40

Fig. 1. Regression curve that reflects dependence of the values of the transport infrastructure index and the global competitiveness index on traffic safety. Source: compiled by the authors.

Entrepreneurship

electronic routing

State video control and automatic fines

New ICT

automatic control of transport Transporters

Optimization of micro-level management: improvement of the process of decision making on traffic

electronic feedback

tracking electronic transport chips

Optimization of macro- and mesolevel management: expansion of possibilities in the sphere of monitoring and control

and interested parties

Fig. 2. The concept of managing traffic safety based on new ICT in the interests of reduction of differentiation of developed and developing countries and unification of the global transport infrastructure. Source: compiled by the authors.

as to the level of development of transport infrastructure, and unification in the global scale, the authors recommend using new ICT according to the offered concept (Fig. 2). Figure 1 shows that new ICT allow optimizing the management of traffic safety at all levels (italics). Optimization at the micro-level of management envisages improve‐ ment of the process of decision making on road traffic. At this level, transporters (subjects of management) conduct electronic routing, which envisages application of Internet technologies for analysis of traffic situation and automatic routing in view of traffic, road works, etc. This allows reducing the number of accidents in traffic jams. Despite the fact that these accidents lead to traumas and death, they reduce traffic safety and thus are interests in the aspect of its management. This level also includes automatic vehicle control (auto pilot). This allows managing “human factor” and preventing accidents caused by it.

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The developed concept also envisages electronic feedback between transporters and interested parties (representatives of civil society, public organizations, individuals, etc.) and public authorities. Within this feedback, public authorities are informed on the current problems with road surface. This allows supporting road surface in the proper state, according to the existing international norms and standards and preventing the accidents caused by low quality of road surface. Optimization of macro- and meso-level management is related to expansion of possibilities in the sphere of monitoring and control of traffic. Management subjects at this level are entrepreneurship and state. Entrepreneurship conducts remote control with the help of tracking online transport chips (e.g., GPS), which are equipped to the trans‐ port vehicles. This allows preventing violation of set routes and traffic rules by trans‐ porters. The state conducts automatic video control via the installed cameras and automatic fines for traffic rules violations. Thus allows – with minimum federal authorities and returned expenditures of the state budget – for highly-effective systemic control over traffic safety. Double control over activities of transporters (from entrepreneurs and from the state) allows eliminating the interest and attempts of violation of traffic rules, which are the main cause of lack of safety. As a result, due to application of new ICT, it is possible to level disproportions in the level of development of transport infrastructure and traffic in developed and developing countries and to unify the global transport infrastructure.

4

Conclusions

It could be concluded that the developed authors’ concept sets application of new ICT at the basis of managing traffic safety in the interests of reducing differentiation of developed and developing countries and unification of the global transport infrastruc‐ ture. It combines application of existing and popular managerial technologies that are based on new ICT – automatic video control, electronic chips for tracking on transport vehicles, electronic routing, and electronic feedback. However, despite the fact that in a lot of countries these technologies are already applied in practice, in developing countries they are still being approbated and require improvement, possessing perspectives for further development. Within the offered model, innovational managerial technologies are envisaged: auto pilots of transport vehicles, which exist only in test versions. These technologies reflect future perspectives of expansion of application of new ICT for managing traffic safety. Despite the seeming simplicity and perfection of the presented concept of managing traffic safety based on new ICT for reduction of differentiation of developed and devel‐ oping countries and unification of the global transport infrastructure, its practical imple‐ mentation is accompanied with serious problems, The main ones are high cost and underdevelopment of new ICT – which does not allow for full implementation of their potential in the sphere of traffic optimization. These problems should be solved in further scientific studies in this sphere.

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References World Health Organization: The European report on the state on traffic safety. For safe roads and healthy transport alternatives (2016). http://www.euro.who.int/__data/assets/pdf_file/ 0010/111151/E92789R.pdf. Accessed 21 Jan 2018 World Economic Forum: The Global Competitiveness Report (2017). http://www3.weforum.org/ docs/GCR2017-2018/05FullReport/TheGlobalCompetitivenessReport2017–2018.pdf. Accessed 21 Jan 2018 Bogoviz, A.V., Ragulina, Y.V., Lobova, S.V., Zhukov, B.M., Stepanova, O.M.: Services infrastructure forming in the process of transport logistics stock movement. Int. Rev. Manag. Mark. 6(6), 278–283 (2016) Brito, J., Castellanos-Nieves, D., Expósito, A., Moreno, J.A.: Soft computing methods in transport and logistics. Stud. Fuzziness Soft Comput. 360, 45–61 (2018) Neubauer, M., Schauer, O.: Human factors in the design of automated transport logistics. In: Advances in Intelligent Systems and Computing, vol. 597, pp. 1145–1156 (2018) Parygin, D., Sadovnikova, N., Kravets, A., Gnedkova, E.: Cognitive and ontological modeling for decision support in the tasks of the urban transportation system development management. In: 6th International Conference on Information, Intelligence, Systems and Applications (IISA), Corfu, pp. 1–5 (2015) Popkova, E.G., Yurev, V., Stepicheva, O., Denisov, N.: Transformation and concentration of intellectual capital as a factor of economic growth in the modern economy. Reg. Sect. Econ. Stud. 15(1), 53–60 (2015) Fernandes, A., Neves, J.: Sensitivity of traffic safety to the pavement and road environment conditions using driving simulations. J. Transp. Saf. Secur. 10(1–2), 88–104 (2018) Wang, L., Abdel-Aty, M., Wang, X., Yu, R.: Analysis and comparison of safety models using average daily, average hourly, and microscopic traffic. Accid. Anal. Prev. 111, 271–279 (2018) Lee, C., So, J., Ma, J.: Evaluation of countermeasures for red light running by traffic simulator– based surrogate safety measures. Traffic Inj. Prev. 19(1), 1–8 (2018) Haj-Salem, H., Farhi, N., Lebacque, J.P., Bhouri, N.: Development of coordinated ramp-metering based on multi-objective nonlinear optimization functions: traffic and safety. In: Advances in Intelligent Systems and Computing, vol. 572, pp. 334–354 (2018) Yuan, Q., Yang, H., Liu, Y.: Information security impacts future traffic safety of intelligent vehicle. In: Lecture Notes in Electrical Engineering, vol. 456, pp. 731–738 (2018) Gao, T., Wang, W., Li, M.: Study on the establishment of vulnerability source evaluation model for the road traffic safety. In: Lecture Notes in Electrical Engineering, vol. 419, pp. 339–347 (2018) Ghadban, N.R., Abdella, G.M., Al-Khalifa, K.N., Hamouda, A.M., Abdur-Rouf, K.B.: A real case-based study exploring influence of human age and gender on drivers’ behavior and traffic safety. In: Advances in Intelligent Systems and Computing, vol. 597, pp. 807–816 (2018)

Digital Currency in the Development of Payment Systems on the Bitcoin Platform Elena N. Egorova ✉ , Irina V. Mukhomorova, and Anton I. Mosalev (

)

Russian State Social University, Moscow, Russia [email protected], [email protected], [email protected]

Abstract. In modern conditions, the significant growth rate is based on the digital economy development and technological leadership. In order to increase human, intellectual and technological advantages in the digital economy, it is necessary to act in areas of systemic importance. The digital economy is the sale of goods and services based on digital electronic technologies. This is the economy of services where the seller or service provider and the consumer practically do not meet in person. Most transactions are made via the Internet. The digital currency is just a variation, a derivative tool, one of the types of blockchain system - the technology of decentralized data storage, the chain of transaction blocks, built according to certain rules and providing absolute protec‐ tion against changes. One of the integral infrastructural elements of the digital economy is electronic money, which appeared as the result of the long evolution of different money types. Currently, fiat money is keeping the leading position in the sphere of financial processes implementation. It is struggling to satisfy the needs of the owners. However, it is obvious that traditional paper currency is no longer able to cope with its tasks next to the growing economy in the virtual world. Thus, only digital means are able to completely replace them. Keywords: Digital currency · Cryptocurrency · Bitcoin JEL Classification Codes: G14 · G15 · G17

1

Introduction

In Russia, the digital economy has already been developing for a long time and it is forming at a fairly rapid pace. First of all, we are talking about the e-commerce market, or simply about online stores. Internet connectivity in Russia at the end of 2016 exceeded 70%. Russia is the leader in Europe in terms of the number of Internet users (84 million people). In 2016, the Russian Internet market grew by 21% up to 920 billion rubles. This is against the background of the decline in Russian GDP by 0.2%. Not every market has such growth rates. Moreover, the entire world economy in 2016 grew only by 2.6%. The main indicator in this area is the so-called bitcoin - a virtual payment system that involves an exchange, using rather than monetary means, but simply data from various financial institutions. © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 167–175, 2019. https://doi.org/10.1007/978-3-030-00102-5_17

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Bitcoin rate, like any digital or any another currency, is determined solely by offer and demand. Digital currencies are mainly used for transaction settlements. Demand for them, as well as their rate, to a great extent, depends on the readiness of economic entities to recognize these settlement funds. It is necessary to pay great attention to the terms of transactions. When payments are made in digital currencies, the commission is usually either not charged at all, or amounts some percent part of the standard banking commis‐ sions. Supporters of digital money make a hypothesis concerning the bootstrapping of cryptocurrencies and the use of the innovative technology in the banking sector and state organizations (Tepper 2016). In the last few years, serious progress has been made in this respect. Many large international networks began to accept payment for their goods and services in bitcoins. A number of states recognized bitcoin as official means of payment. It became possible to pay taxes and make other payments to the budget in certain cryptocurrencies. This brought benefits - taxes became being paid much more intensively. According to Bloom‐ berg agency, lately, no traditional currency has been growing so steadily. At the same time, cryptocurrency exchange rates tend to fluctuate considerably. The main reason for this is that the governments of several countries are expecting the legal‐ ization of cyber currency (Dmitrieva 2016). The material value of the digital currency increases every year, taking the right from fiduciary monetary units to be called inflation-resistant title signs. Bitcoin recognition, increasing number of adherents, network expansion and infrastructure improvement are the factors that are beneficial to the growth of its exchange rate. Development prospects of electronic money are very promising. This area represents a wide field since it affects many spheres of life of each individual, as well as business structures (from small enterprises to large corporations) (Krolevetsky 2011).

2

Materials and Methods

2.1 Qualitative Research Thanks to the development of information and computer technology, financial and other types of assets trading became commonplace. Traders (currency speculators) apply analysis methods, combining them with insider information and using a wide range of financial instruments. Digital currencies, which appeared only 7–8 years ago, opened new horizons in the sphere of financial assets trading. Due to high volatility indicators, alternative monetary units formed into an incomparable exchange instrument for finan‐ cial assets trading and Bitcoin is off the scale. The speculative market of alternative monetary units demonstrates incredible growth rates. More and more network users are joining the community of cryptocurrency traders, studying not only the basics of trade but also the behavioural factors of a particular digital currency. Today there are two trade directions in this sector:

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1. Speculation of cryptocurrencies with sufficient market capitalization solely (Bitcoin, Ethereum (https://bankcomat.com/news/efirium-ocherednoj-kandidat-na-postsamoj-populjarnoj-cifrovoj-valjuty.html), Litecoin (https://bankcomat.com/wiki/ litecoin.html), Monero, Zcash (https://bankcomat.com/news/tehnologija-zcash-eeosobennosti-i-sfera-primenenija.html), Dogecoin and others). 2. Speculative operations involving digital currencies and fiduciary monetary units (Popper 2016). Service Bitcoinwisdom.com, in this case, acts as an analytical tool to forecast the growth or decline in cryptocurrency rate. In other words, this resource is more intended to help precisely cryptocurrency traders who do not work with fiduciary title signs. Figure 1 shows the most popular answers to the question about the forecast of the bitcoin rate in 2016, which was posed to ordinary network users. As you can see, at that moment many people were mistaken, few expected high growth of bitcoin. The same thing could happen again in 2017.

Fig. 1. Users predictions about the forecast of the bitcoin value in 2016.

It has been suggested that bitcoin will become more stable as the market develops and new spheres of applications appear. Consequently, in 2017 the average rate will be 900-1,400 USD. At the same time, some experts believe that bitcoin can grow to 2000 USD. However, these predictions turned out to be incorrect (Fig. 2).

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Fig. 2. The actual bitcoin value in September 2016–February 2017

At the beginning of 2016, the bitcoin rate declined, on average, the rate was at the level of 355–380 USD. In January 2016, Mike Hern, one of BitcoinCore’s top devel‐ opers, left the platform. The publication of his article caused exchange rate drop by as much as 50 (up to 374 USD). In March 2016, the Cabinet of Japan recognizes bitcoin as one of the varieties of virtual currency, which can be used to pay for goods and services as ordinary money. In the same month, the largest online trading platform in South Africa, Bidorbuy, began to pay in cryptocurrency. Despite such significant expansion of bitcoin distribution, during February and March 2016 its rate did not change much and stayed within 395–415 USD. During April, bitcoin rate gradually increased to 451– 454 USD, and practically did not change. In early May, the cost of cryptocurrency declined by 10–15 dollars. Throughout the whole of May, the rate was steadily increasing, and by the 30th it had reached 600 USD. Thus, in less than a month, bitcoin grew for more than 150 USD. By this time, the total amount of currency capitalization exceeded 30 billion USD. The reason for such rapid leap of bitcoin value is not fully clear. At that point, financial experts noted that the rate started to grow after the increase in the volume of cryptocur‐ rency purchases in the Chinese market. By the end of May, investors from the Middle Kingdom started to buy bitcoins for 570 USD and more. According to the research, from January to May 2016, the volume of transactions for cryptocurrency purchase and sale with yuans increased by more than 15%. Until the middle of the month, bitcoin rate was constantly increasing. By June 13, it had reached 722 USD. After that, it dropped by more than a hundred to 603–605 USD. During July, bitcoin was gradually falling. Since the beginning of August, its rate continued to decline and by the middle of the month, it reached the mark of 579 USD. Almost the whole of September, the currency value did not change. Though, compared to August, bitcoin gained an average of about 40 USD. After that, its price was about 600 USD.

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In October, the bitcoin rate against the major world currencies was gradually increasing. In November, its value increased even more. In just two autumn months, the cryptocurrency grew from 600 to 780 USD. Many experts attribute this to the value fall of the Chinese yuan against the US dollar. In the first month of winter, bitcoin was constantly growing. By December 23, it reached the mark of 950 USD, but at the end of December to early January fell by a hundred. Most likely, this was due to low activity in the financial market during the New Year and Christmas holidays, after which the rate of the cryptocurrency exceeded the 1,000 USD mark. USD From February to June 2017, the bitcoin rate skyrocketed swiftly from 950 to 2,900USD. Since July it receded from its maximum and rapidly declined to 2,000–2050 USD. On September 2, 2017, the rate of the cryptocurrency for 10 min was 5,013 USD. On the Chinese exchange OKCoin, the value reached 5,149 USD. By 10:25 Moscow time, bitcoin fell in price to 4,788 USD. Since the beginning of 2017, the bitcoin rate has risen almost five-fold due to demand in Asia, and also because of ICO (Initial coin offering), where calculations are often made precisely in this cryptocurrency. 2.2 Methodological Approach In total there can be produced 21,000,000 bitcoins and not one more. This is a clear limit, which their number will gradually reach. At the beginning of 2014, there are about 12,000,000 BTC, at the beginning of 2017, 16,000,000. The fair price of bitcoins is detached from the market sentiment and is calculated solely on the basis of fundamental analysis. We shall consider the period until 2060 because by this time the number of bitcoins produced will come close to the maximum possible 21 million. The reward for the block will be negligibly small in relation to the present, having crossed the mark in three decimal places. Calculations are carried out in two ways: by analyzing the weight value of bitcoin in the global financial system. As a consequence, we will try to estimate the potential demand for it as a means of calculation, and also apply the second method: targeting the cost of one cryptocurrency unit production, which will continue till 2140. Let us consider one of the ways - analysis of the weight value of bitcoin in the global financial system. Now the global volume of funds is estimated at 81 trillion USD. Taking into account past periods, the forecast of growth of world GDP is at the level of 2.1% per year. Extrapolating the current values for 2060, we get:

81 ∗ 1.02143 = 197.9 trillion USD. We take into account the shadow economy, which volume is about 33% of world GDP or 81 * 0.33 = 26.73 trillion USD. We shall use the coefficient 1.021.

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By 2060, the volume of the shadow economy will be: 26.73 ∗ 1.02143 = 65.33 trillion USD.

The amount of finance in investment funds is now about 36 trillion USD. By 2060, it will be approximately equal to: 36 ∗ 1.02143 = 88 trillion USD.

Here we shall add the extrapolated value of the amount of venture investments by 2060 and get 88.5 trillion USD. Naturally, all financial transactions will never be conducted in the cryptocurrencies alone. With an expert method, we give them 3% and take the discount factor equal to 0.03. Emission is limited to a value of 21 million. It is possible to calculate the approx‐ imate bitcoin price by 2060: (197.9 + 65.33 + 88.5)∕0.000021 ∗ 0.03 = 502471 USD.

It should be considered that the cryptocurrency market is constantly evolving, and the volume of bitcoin among the common digital currency can decline. Let us suppose that the share of bitcoin capitalization will account for about 50% of all cryptocurrencies, so we will get the final price: 502,471 * 0,5 = 251,235 USD. These calculations are not a standard of accuracy but are only probabilistic in nature. Even in order to achieve the above-mentioned value in 3% of global turnover, largescale public recognition of cryptocurrency, state legalization, ease of use and investor confidence will be required.

3

Results

The regulation of cryptocurrency business remains a subject of discussion, and also at the state level. However, corresponding legal and regulatory framework is not suffi‐ ciently developed at the moment, therefore each fact of cryptocurrency relations emer‐ gence should be considered individually. As regards the prospects for the digital currency, the market is confident of its further growth. One of the first investors of Snapchat, Jeremy Lew, believes that by 2030 the cost of bitcoin will reach 500,000 USD. In the meantime, the creator of McAfee antivirus, John McAfee, gives for this three years. If we talk about the reasons for the phenomenal bitcoin rate increase, it rises due to strong Asian demand, and also because of ICO, where calculations often made in bitcoins. Previously, the offering data was almost unregulated. However, The U.S. Securities and Exchange Commission (SEC) announced that they would now be subject to the rules of securities placement. Regulatory tightening did not lead to the cooling of the sector. Since January 2017, according to Smith & Crown ICO, start-ups raised 1.33 billion USD. After 2 weeks (September 7, 2017) virtual currency ExioCoin ICO is expected. As noted by Bloom‐ berg, this would be the first sovereign cryptocurrency, later it would also become known

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which state produces it. According to the news agency, this is “one of the richest coun‐ tries in per capita income” (Miers et al. 2013). The Bank of China began testing a prototype of its own digital currency. The ECB, together with the Japanese regulator, initiated the creation of a common project for the use of a distributed registry in the market infrastructure. Meanwhile, the Dutch Central Bank has already created its own cryptocurrency, which is still used domestically. As for the Russian Central Bank, in 2016 it presented a prototype based on the technology of distributed registers - masterchain (Zayernyuk et al. 2016).

4

Discussion

Now there are certain steps towards the legalization of cryptocurrencies, and the number of people who know, use and invest in crypto-currencies is increasing exponentially. Some people believe in bright future for crypto-currencies, others consider them a soap bubble. Nevertheless, only bitcoin, which capitalization is comparable to well-known world companies, has already become a powerful tool, which has to be considered by the largest financial players. It is impossible to predict the future. Nevertheless, ignoring the global current trend of universal cryptocurrency distribution, we face a risk not only to lag behind the world but also, perhaps, to miss the best investment in our life. There are several factors that have positive impact on the implementation of projects in the field of electronic currency: • • • • •

Increase in the incomes of citizens. The expanding circle of Internet users by means of computer and other gadgets. Growth in the volume of payment for advertising services. Performing a large number of micropayments. The desire for comfort and time-saving.

If you objectively look at the prospects for the electronic money development, you can say with confidence that its future is optimistic. The potential inherent in it shows the opportunity to become a mean for global payment interaction. It is possible to ignore or deny the role of state regulation, perhaps it will disappear in due course as an unnec‐ essary element. However, at this stage, it seems more feasible that a part of some func‐ tions can be controlled by the state, and the rest is completely at the disposal of individual users. One can agree with this concept or deny it, argue and discuss what is happening at the present time. After all, the fourth stage of electronic money development is the most essential and significant. The level of development that has been achieved in the field of electronic payment systems, where electronic money is the main element, requires special attention. After all, it is enormously popular among hundreds of millions of users. Many types of electronic money and payment systems have been created. Based on the accumulated number of new qualities, functions, tools, this stage is coming to the end. Soon we will be on the threshold of a new stage. It is likely that this will be a transition to global money.

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Conclusions

Despite the fact that attempts to introduce digital currency have been made since the advent of the Internet, the practical use of coins to this day is negligible. In addition to the fact that many users are distrustful of this payment method, the distribution is also constrained by the ban on cryptocurrency in some countries. For example, Russia and China imposed restrictions on its use. However, it should be considered that bitcoins are already being used as a means of payment all over the world. Therefore, it is very difficult to really prohibit the use of electronic money. If we follow the dynamics of development, we can notice its positive value, because digital money has a number of undeniable advantages. At the same time, anonymity and lack of control make the cryptocurrency very attractive to the criminal underworld. Therefore, it is quite possible that some states may not like this distribution. High market speculation and high risks undermine trust to cryptocurrency (Antonopoulos 2014). In various countries the attitude to cryptocurrencies is different. The European Union regards them as a contractual means of payment, that is, as a service. Japan promotes the integration of digital currency into the traditional banking system. They fully recog‐ nize cryptocurrency as official means (Pshenichnikov 2015). There are also countries that have banned the use of digital money. For example, Bolivia and Bangladesh. As for the statements of The Central Bank of Russia regarding bitcoins, they only confirm that Russia has not yet decided how to deal with this phenomenon. At this point, the country is alert to it. Digital money is not allowed, and not prohibited. Cryptocurrencies are considered to be promising both for Russia and for the world as a whole. And this, in spite of the fact that today bitcoin as a means of payment in the Russian Federation is not popular, and many people are much more likely to pay rubles than strange bitcoins.

References Antonopoulos, A.: Mastering Bitcoin: Unlocking Digital Cryptocurrencies (2014) Crosby, M., Nachiappan Pattanayak P., Verma S., Kalyanaraman, V.: BlockChain Technology. Beyond Bitcoin. Sutardja Center for Entrepreneurship & Technology Technical report. http://scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf Der, B., Polak, P., Masri, M.: Investigation on the value relevance of accounting information: evidence from incorporated companies in the Singapore capital market. Invest. Manag. Financ. Innov. 13(3), 9–21 (2016) Dmitrieva, M.A.: Interest rate risk and foreign exchange risk management practice in Russian non-financial companies. J. New Econ. Assoc. 2(30), 129–159 (2016) Tapscott, D., Tapscott, A.: Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World (2016) Ethereum Isn’t a Blockchain. http://thebtcsg.com/blog/2017/8/8/ethereum-isnt-a-blockchain Greenspan, G.: Why Many Smart Contract Use Cases Are Simply Impossible (2016). https:// www.coindesk.com/three-smart-contract-misconceptions/

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Krolevetsky, V.E.: Transformation of views on the nature and functions of money. J. IN-ZAKON. 6(49), 44–50 (2011) Meshkova, T., Moiseyev, E.: Foresight applications to the analysis of global value chains. Foresight STI Gov. 10(1), 69–82 (2016) Miers, I., Garman, C., Green, M. Rubin, A.: Zerocoin: anonymous distributed e-cash from bitcoin. In: Proceedings of the 2013 IEEE Symposium on Security and Privacy, SP 2013, pp. 397–411. IEEE Computer Society, Washington, DC (2013) Nakamoto, S.: Bitcoin: a peer-to-peer electronic cash system. https://bitcoin.org/bitcoin.pdf Popper, N.: Digital gold: an incredible story of bitcoin, p. 358 (2016) Pshenichnikov, V.V.: The Debate about the need for a single world currency under the conditions of globalization and multipolarity of the modern world. Sci. Tech. Bull. St. Petersburg State Polytech. Univ. Econ. Sci. 2(216), 7–17 (2015). https://doi.org/10.5862/je.216.1 Tepper, A.: Bitcoin – money for all (2016) Zaernuk, V.M., Mukhomorova, I.V., Egorova, E.N.: Methodological approaches to identifying parameters of optimum business locations in the regions of the Russian Federation. J. Appl. Econ. Sci. 11(7), 1319–1328 (2016) Zayernyuk, V.M., Nazarova, Z.M., Mukhomorova, I.V., Egorova, E.N., Leonova, V.P.: Modern banking sector in Russia: Trends of development, control and supervision//Indian. J. Sci. Technol. 9(42), 104308 (2016)

Social Consequences of the Impact of Information Technologies on the Values of Modern Youth in the Conditions of the Global Financial and Economic Crisis Mariana Y. Lokova1 ✉ , Marina N. Khanova1, Gyuldzhan K. Azamatova1, Albina O. Vindizheva1, and Natalya N. Reshetnikova2 (

)

1

Kabardino-Balkarian State University, Nalchik, Russia [email protected], [email protected], [email protected], [email protected] 2 Rostov State University of Economics, Rostov-on-Don, Russia [email protected] Abstract. The development of information technology and information society actualizes Internet addiction as a social problem in the frame of financial-econom‐ ical crisis. The purpose of this study is to study the problem of Internet addiction and the social consequences of its impact on the value system of modern young people especially in the frame of financial-economical crisis. The presented anal‐ ysis is essential for a well-founded understanding of the manifestations of various kinds of dependence of modern youth and the social consequences of the phenom‐ enon under consideration, as well as the methods of working with them. Keywords: Youth · Information society · The Internet · Dependence · Values Needs · Alienation · Social protest · Prevention · Financial-economical crisis

Informatization and computerization of society is one of the most important processes of present-day Russia. Transition to information-oriented society has an irreversible impact on all areas of society. This is primarily knowledge and technologies based on it, acceleration of technical advance, expanded access to information resources via the Internet, as well as technological improvement and distribution around the world. Opportunities for new activities open up, while the information and technological envi‐ ronment as such contains the potential danger of deformations in the structure of person‐ ality and the ways of its social integration. In this regard, there is reason to assume that the development of information technologies in our modern age has both constructive and deconstructive consequences for a person. Information is an instrument and resource used for various purposes, and cannot be treated as an absolute value. Information influence can motivate a person to behave contrary to his/her own interests, block the availability of productive activities, and lead to social deformation in extreme cases. Many people love virtual space so much that they started substituting reality by the Internet where they spend most of the time. The process of functioning of conscious‐ nesses is gradually disrupted, and the cognitive functions are consequently decreased. © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 176–182, 2019. https://doi.org/10.1007/978-3-030-00102-5_18

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Scientists came to the conclusion that propensity for virtual world can be equated with smoking, alcoholism and drug addiction. The Internet has made such a strong change in the structure of communication that “personality” has turned out to be knocked out of its core. Today, the rate of exchange of messages and information is so high that people do not have time to develop their personal point of view, to individualize themselves, although a person could form personality in himself/herself before. In our opinion, Zasurskiy, I. commented on this phenomenon to the very point: “Communication has acquired a random nature, in which people act as an impersonal force” [5]. After all, excessive use of information technol‐ ogies by young people leads to escape from reality to virtual world. Eventually, young people acquire an irresistible attraction to the Internet, which hinders the cultural and spiritual development of a person, leads to a restriction of interests, and deprives them of healthy social needs. The constantly growing computerization of Russian society has made relevant a relatively new social problem - Internet addiction. There is a transformation of values and value-conscious hierarchy; the traditional values are related to norms and ideals. The virtual world creates a value of selection of knowledge which is important for everyday life, knowledge that is in demand in a fastchanging world. In psychological dictionary, the term “addiction” (literally meaning inclination, habitude) is defined as an obsessional need to perform certain actions despite adverse medical, psychological or social consequences. Addiction is defined as a subject’s pathological propensity for anything. The prevalence of Internet addiction in our modern age confirms the need to reveal the addicted persons, to study the socio-psychological characteristics of personality and to develop effective preventive measures. People started to bring up the issue of Internet addiction since the 90s of the XX century. The Internet was quite homogeneous at that time. The information space has significantly expanded since then. We began to observe such phenomena as Internet addiction to games, communication, Internet experience, etc. among young people. Websites with an anti-citizenship orientation appeared in the information field under consideration, which have a significant propagandistic impact of extremist orientation on young people, supported by verified and perfectly scientific technologies of neurolinguistic programming that make a young person fully addicted (materially and spiri‐ tually) to their authorities, while parents and relatives are losing authority and alienation occurs. In particular, the analysis of the Nalchik events of October 2005, when armed young people attacked the law enforcement agencies of the Republic and there were injured persons among the civilians, showed that society was confronted “with a frantic extreme adherence to beliefs imputed by emissaries and implicated in total rejection of established power and order in the Republic” [7]. Internet addiction of young people as a social problem of modern communication in the public space has raised new interest in the scientific sphere, causing certain concerns of the academic community. A great number of foreign research studies is dedicated to this type of addiction; they present its description from the perspective of psychology, sociology, and philosophy (K. Young and I. Goldberg, J. Suler, M. Orzak, M. Grifiggs, S. Stern, R. Davis, J. Grohol, J. Morahan-Martin, M. Fenishel). They investigated the diagnostic criteria, physical and psychological symptoms characteristic of Internet

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addiction, investigated the cognitive and behavioral model of the pathological use of the Internet, and examined the possibilities of the development of Internet addiction on the basis of other forms of addictive behavior. However, these researches are unlikely to contribute to a significant clarification of their specifics with respect to the modern Russian young people. Hence, the domestic experience is of paramount importance for our research. They started to delve into the problem of Internet addiction in Russia as late as a couple of decades ago. During this time, the scientists developed proprietary criteria for this addiction, investigated peculiar properties of personality of Internet-addicted users, studied the cultural features of the users of the Russian-speaking Internet. These are Russian scientists: Voiskunskiy, A.E., Mendelevich, V.D., Zhychkina, A.E., Yegorov, A.Y., Kuznetsova, Y.M. and Chudova, N.V., Lisetskiy, K.S., Loskutova, V.A., Radio nova M.S., and Spirkina, T.S. [1–4, 6, 8, 9, 12, 13]. At the same time, to date, there are no educational programs and recommendations in the academic literature that would systematize the information on the types of preventive and therapeutical work with young people that are addicted to social networks. Moreover, preventive measures, in our opinion, should be designed taking into account the specifics of different regions. The analysis of social consequences will allow identifying the main determinants of Internet addiction of young people and determining the methods of working with them. The article is aimed at studying the social consequences of the impact of information technology on the value system of modern young people. The provisions and conclusions of informatization theory and value-conscious adap‐ tation form theoretical and methodological basis of research. The essence of the meth‐ odology of this research lies in a complex approach which allows implementing the possibilities of combining the systemic, axiological and person-centered approaches. Theoretical and practical significance of research lies in the fact that its results will allow us to gain a better understanding of the degree of influence of the Internet on the value settings of young people. The results that were identified during the analysis, as well as special aspects of procedural nature of Internet addiction, its main dominants will improve the development of effective preventive measures of health-improving influence on the value world of the younger generation. For the purpose of this research, we used a test methodology developed by Kimberley Yang and adapted by the Russian researcher Loskutova, V.A. 99 of young people from the Kabardino-Balkarian Republic aged 16–20 years took part in the test. For a more detailed clarification of the results of research, we will place emphasis on the answers to some of the questions in the questionnaire: thus, to the question “How often do you find that you have lingered on the web longer than you intended to?” 18.8% of respond‐ ents answered “in very rare cases”, 35.6% - “sometimes”, 25.7% - “often”, 7.9% - “very often”, 9.9% - “always”. Real communication with their peers is replaced by entertain‐ ment in the Internet “in very rare cases” - 46.5%, “sometimes” - 27.7%, “often” - 13.8%, “very often” - 6.9%, “always” - 2.9% of respondents. The percentage of answers to the question “How often is your academic performance or success in any activity affected due to the use of the Internet?” was as follows: “in very rare cases” - 58.4% of respond‐ ents, “sometimes” - 28.7% of respondents, “often” - 7.9% of respondents, “very often” - 2.9% of respondents. Depression and bad mood when not online was experienced “in

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very rare cases” by 70.2% of respondents, “sometimes” - by 15.8% of respondents, “often” - by 5.9% of respondents, “very often” - 3.9% of respondents, “always” - 1.9% of respondents. Moreover, they are trying to conceal the duration of their stay in the Internet: “in very rare cases” - 61.3%, “sometimes” - 27.7%, “often” - 2.9%, “very often” - 5.9% of respondents. In general, the results of our research have shown that only 14.8% of respondents are aware of the presence of certain problems associated with excessive enthusiasm about the Internet. At present, the disapproval on the part of the elders due to excessive use of gadgets can be observed everywhere in the media, schools, universities, and even more so in families. It is fair to assume that young people who are aware of their own addiction to social networks can conceal this fact as they realize that they will be subject to disapproval. Every personality has its own peculiar value settings – weak/strong, approved/disap‐ proved by the particular social institutions. The existing and clearly defined value settings are only manifested as the dominants of consciousnesses in an intelligent and mature person. As the experience of previous decades has shown, prohibitions cannot change anything. Young people are always severe on various imposed authorities and ideals; this attitude is initially transformed into a hidden and then into a public social protest over time. In our opinion, Internet addiction of young people can be investigated with various degree of delving into the heart of the problem. It should be pointed out that in our research we analyze a social and philosophical aspect of relation to the fact that young people prefer virtual world over real world in the entire aggregate of their social and personal commitments. It is this process of socio-philosophical analysis that leads to the need for clarification of the ontologistic basis of all kinds of social protest. The central category of such analysis, in our opinion, is the category of “alienation” first put forward by Hegel, as a result of disidentification of the existence of the spirit and consciousnesses of the subject comprehending this existence. Alienation constantly appears as the central problem of the successful implementation of the frustration of personal hopes. Differ‐ entiation occurs for the living existence of an individual, which increases the remon‐ strative value-conscious choices of young people. It is a factor of economic insecurity for most of them. Therefore, an important task of social and philosophical analysis is the timely detection of the direction of vectors of its development [7]. All social problems of the modern era to a greater or lesser degree deal with family, are reflected in its well-being, ability to fulfill its numerous functions. If the family constellation is broken, psychological tension and conflicts in the intra-familial relations arise; the parents are not able to manage the parenting of children, to instill the positive qualities in them necessary for the formation of a productive member of society. Neglect of the interests of modern young people leads to a disdainful mood in the young environment. To a large extent, this circumstance has resulted in the detachment and social apathy of most of young people, which contributes to the formation of unco‐ operative behavior, depression, and the difficult adaptation in the society. We can observe the major refocusing of the value world of a young person. Children born at the turn of the XX and XXI centuries are the generation for which digital technologies is a natural habitat; they are the so-called “millenials”. They learned

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to use the tablet before reading and writing; communication in virtual space is their way of communicating with the world, so these young people can be easily manipulated by the experts in the psychology of information communication. The “death groups” have gained universal currency over the recent years; there you can order your own death under the pictures with the whales floating in the ocean and supplemented with hashtags “blue whale”, “wake me up at 4.20 a.m.”, “I’m game”, “quiet house”. Alexander Milkus in his article “New” Death Groups “in the Internet:” Blue Whales “Instigate the Children to Commit Suicide” points out that “when the wave of” suicide games “subsides - and it will definitely subside - something different will emerge, something similarly exciting and thrilling due to proximity of danger” [10]. The range of problems within the scope of social preventive measures for prevention of negative consequences of the influence of the Internet on the modern society continues to be relevant. The resolution of the outlined range of issues allows us to formulate several provi‐ sions that, in our opinion, generally cover the process of development of Internet addic‐ tion of young people. First of all, this is the relationship within the family. The formation of a personality, the molding of a character occurs in childhood and adolescence. In families where the relations of children and parents are characterized by indifference, insincerity, adoles‐ cents can barely master positive social experience and early lose the need for communi‐ cation with their parents. It is at this stage where the value system emerges that is detri‐ mental for further development under the influence of unfavorable factors. There is another side – hyperprotection, the so-called “motherly love” can bring a lot of suffering and grief to parents, children, and society in general [11, p. 16]. Hyperprotection in child‐ hood contributes to the emergence of infantile and diffident people, incapable of making decisions and be responsible for their actions. Any initiative, as well as the desire for independence, is not only suppressed, but also ignored and punished. Hyperprotection is a destructive force that is able to break any relations between people; difficulties in communication with the surrounding world, communication with people, their frequent conflicts with others. As a result, this influence results in formation of a personality that is characterized by reduced feeling of inherent value and affected identity. Psychological support of young people, and first of all, support of parents and the whole family is required. Harmony in the family allows the child to develop in a harmo‐ nious manner. It is in the family that the child receives assistance in social adaptation, he/she develops confidence in success in achievement of the desired goals. In addition, it is important for the young person to be given the right of self-selection. By the time he/she grows up, he/she will already know and adequately assess his/her own strength, and this means the right selection of profession and well formed value system. In our opinion, an essential factor which influences the development of Internet addiction is the “trend” which the society and especially the young people are exposed to. An active involvement in the web space seems to be trendy and edgy. It’s just a way to be like everyone, not to be behind the age, which is perceived by modern youth as a norm. Therefore, it is worth assuming that such a small percentage of young people recognizing the problem of Internet addiction identified during the questionnaire survey,

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bears evidence not of the absence of problem as such, but rather of the nature of their perception. In the conditions of educational institutions, it is necessary to take timely measures to prevent the Internet addiction of students and schoolchildren. Preventive measures should be primarily aimed at the development of a conscious attitude towards the use of informational flow by young people with a view to reducing the amount of time they spend in the Internet. It is necessary to provide knowledge about the mechanisms of the impact of the Internet on a person, about social consequences of development of Internet addiction, along with adequate control over the information available in the Internet. The solution to the issue of prohibition of websites developed by representatives of destructive sects, recognized as destructive and dangerous [17] and revealed as a result of such control, seems relevant at the same time. Personal fulfillment of a young person in the vital processes has a dominant role for this category. Also, the social characteristics of young people are influenced by leisure. However, during the socioeconomic crisis there is a discrepancy between leisure needs, interests and objective opportunities for their implementation, which characterizes the lifestyle of young people and can contribute to the emergence of certain deformations, including Internet addiction [16]. In order to increase the effectiveness of interpersonal interaction of young people, to increase the level of sociability, self-esteem and tolerance to stress, as well as reduced degree of addiction and social isolation, it is necessary to present every young person an opportunity to actively manifest himself/herself, his/her initiative in various kinds of leisure activities and entertainment. Both the content and the form of leisure activities of young people are very important and must necessarily meet the needs and interests of young people. The offered classes and entertainment activities should be diverse and interesting, should be entertaining and unobtrusive in their nature; only then they will be smoothly perceived by young men and girls [14]. Thus, the foundation of the stability of society are the value settings both of an individual personality and of various social groups. The globalization and informatiza‐ tion taking place in contemporary world actualize the problems of young people. These problems are interrelated and proceed from objective processes. Modern young people witness major changes affecting all life spheres of the society, influencing the entire way of life of a modern person. Young people make their living on the basis of core values and value system. When we analyze the value system of modern young people, we need to actualize the highly-effective behavioral strategies and personal resources, resultative goal-setting skills, the formation of a focus on the successful achievement of the desired goals [15, p. 542]. Of course, at all historical stages, young people played an important role in the exis‐ tence and development of mankind. Therefore, the value world of young people will always be the subject of intense dispute between the authors, since it faces the future, always vivid, always changing, always unique. The conducted research opens the pros‐ pects of further study of a problem of Internet addiction and the entire value system of modern young people. The next round of analysis will allow penetrating deeper into the structures of value consciousness of young people. The authors of this article do not

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close the topic, but invite us to continue the dialogue about the ways and prospects for the development of the value world of young people in the modern society.

References 1. Van, Sh.L., Voiskunskiy, A.E., Mitina, O.V., Karpukhina, A.I.: Relation of the stream experience to the psychological dependability on computer games. Psychol. J. Higher School Econ. 8(4), 73 (2011) 2. Voiskunskiy, A.E.: Concepts of addiction and physical presence in the context of behavior in the Internet. http://www.medpsy.ru/mprj/archiv_global/2015_4_33/nomer07.php 3. Yegorov, A.Y.: Internet addiction. Addictology Guide. Rech Publishing House, Saint Petersburg (2007) 4. Zhychkina, A.E.: Internet addiction scale of A. Zhychkina. (Electronic resource). http:// flogiston.ru/articles/netpsy/addiction 5. Zasurskiy, I.: The system of C pupils will be demolished. http://nooregistry.ru/news/sistematroechnikov-budet-snesena 6. Kotova, S.A.: Axiological problems of information-oriented society. Text of research article in sociology, pp. 43–44. KiberLeninka Electronic Library. https://cyberleninka.ru/article/n/ aksiologicheskie-problemy-informatsionnogo-obschestva 7. Lokova, M.Y.: Structural transformation of value system of young people in upgrading Russian society, thesis of Candidate of Philosophical Sciences, p. 87, 01 March 2007 8. Loskutova, V.A.: Internet addiction as a form of non-chemical substance dependence disorders. Text: synopsis of a thesis of Candidate of Medical Science. Novosibirsk State Medical Academy. Novosibirsk, 20 p., 13 April 2004 9. Loskutova, V.A.: Internet addiction - pathology of the XXI century? Text. Issues of mental medicine and ecology, No. 1. pp. 11–13 (2000) 10. Milkus, A.: New “Death Groups” in the Internet: “Blue Whales” Instigate the Children to Commit Suicide”. https://www.stav.kp.ru/daily/26642.7/3660934/ 11. Nekrasov, A.: Motherly Love. Amrita M Publishing House (2007) 12. Addictology Guide. Under the editorship of Prof. Mendelevich, V.D. Rech Publishing House, Saint Petersburg (2007) 13. Chudova, N.V.: Peculiar properties of the self-image of the “resident” of the Internet. http:// www.psitest.ru/pub/i-zavisimost.html 14. Kumykov, A.M., Shogenov, M.Z., Chemaev, N.A., Shogenova, F.Z., Reshetnikova, N.N.: Informal patterns of civil society and social stability at a local level. Espacios. 2017. T. 38. No. 57, p. 28 (2017) 15. Smagina, N.N., Magomedov, M.G., Buklanov, D.A.: Sustainable Competitive Advantage of the International Business Tourism on the Regional Level Overcoming Uncertainty of Institutional Environment as a Tool of Global Crisis Management Editors: Popkova, Elena G., pp. 541–548 (2017) 16. Vereshchagina, A.V., Gafiatulina, N.K., Kumykov, A.M., Stepanov, O.V., Samygin, S.I.: Gender analysis of social health of students. Review of European Studies, vol. 7, No. 7 (2015) 17. Volkov, Y.G., Khunagov, R.D., Kumykov, A.M., Magomedov, M.G., Krotov, D.V.: Sociology of the future: humanization of sociological thought. Int. J. Environ. Sci. Educ. 7(7), 9586–9597 (2016)

Factors of Socio-Economic Development of Rural Regions in the Area of Influence of City Agglomerations Maria A. Bitarova1(&), Konstantin V. Getmantsev1, Elena V. Ilyasova1, Ekaterina M. Krylova1, and Yuri I. Treshchevsky2 1 Kuban State University, Krasnodar, Russia [email protected], [email protected], [email protected], [email protected] 2 Voronezh State University, Voronezh, Russia [email protected]

Abstract. The authors study the factors that determine the character and direction of development of rural regions that are parts of an agglomeration. By the example of the Krasnodar city agglomeration, the processes of deformation of economy and social sphere of rural regions of the agglomeration are shown and quantitative and qualitative characteristics of forming tendencies of development of rural territories under the influence of agglomeration processes are given. Keywords: Regional development Factors of development of regional economy Agglomeration

 Regional economic space

JEL Classification Codes: R10 general R12 size and spatial distributions of regional economic activity R58 regional development planning and policy

Over the recent years, there has been information in the Russian mass media on the forming Krasnodar city agglomeration. The information was contradictory, with different structure of agglomeration and the number of its residents, structure of economy, etc. The thing is that the official notion “Krasnodar city agglomeration” is not established in the Krai laws, so it is necessary to define the Krasnodar agglomeration and its scale. For that, let us use the approach offered by G.M. Lappo, P.M. Polyanaya, and T.I. Selivanova. The researchers see the main criteria of distinguishing the limits of city agglomerations as the presence of city core with at least 250,000 people, presence of at least 2 communities around the core, circular migration, transport accessibility (1.5 h), and high development of the city infrastructure [4]. A. Neshchadin and A. Prilepin supplement this list with such factors as availability of houses in suburbs; free lands around the city; developed network of car roads; existing production connections; territories with recreation potential [8].

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 183–194, 2019. https://doi.org/10.1007/978-3-030-00102-5_19

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However, for determining the criterion of agglomeration, transport accessibility is used. From these positions, the structure of the territories of the Krasnodar city agglomeration is the following (Table 1) [3]. The Krasnodar city agglomeration is peculiar for the fact that its development is related to direction of two main transport highways: M-4 “Don”, M-25, A-146, and M-21. Another peculiarity of the Krasnodar city agglomeration is combination of one large city (Krasnodar) and several rural districts: Dinsky, Ust-Labinsky, Seversky, and Krasnoarmeysky. Goryachy Klyuch has a status of a city, but is actually a rural community [3]. Table 1. The main indicators that characterize the Krasnodar city agglomeration. Territory (municipal entity)

Area, square m

Krasnodar – core 841.4 of the agglomeration

Population, thousand people

Transport accessibility, Krasnodar, km

861.2



Dinsky district

1,352.0 131.0

Krasnoarmeysky district

1,897.7 103.5

Seversky district

2,122.0 115.1

Ust-Labinsky district

1,130.0 112.2

Goryachy Klyuch

1,755.6 59.3

Short characteristics of other criteria

– Houses in suburbs, free land around the city; – citizens’ business on rural territories 30 km; Federal highway Transit flows; labor migration district-city, “Don”; two regional purchase of real estate by roads; three railroads citizens, placement of city’s companies in the district 70 km Citizens’ business in the district; labor migration; purchase of real estate in border territories; construction of summer cottages Transit flows; Labor 30 km, federal highway migration district - city; “Pavlovskaya – purchase of real estate in the Novorossiysk”; railroad Krasnodar - Novorossiysk district by urban dwellers; placement of city companies in the district; tourism, leisure 59 km; federal highway; Transit flows; labor railroad branch migration district – city’ purchase of property in the district by urban dwellers; placement of city companies in the district 60 km; federal highway; Resort city; labor migration; railroad branch purchase of real estate by urban dwellers; placement of hotel business companies in the city

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Thus, the Krasnodar city agglomeration has only one core of development – Krasnodar – other municipalities creates belts of the agglomeration. The research object for studying influence of agglomeration on development of rural territories is Seversky district of Krasnodar Krai, which is a part of the Krasnodar city agglomeration. Official information, which characterizes Seversky district, describes it as an average rural district of Krasnodar Krai, located in south-western part of the region on the left bank of the Kuban river, on the north-western side of the Main Caucasus Ridge. The territory is 211, 000 hectares. Climate is moderately humid, with the average volume of precipitations - 700–800 mm. Population – 117,833 [12]. Seversky district is closely connected to the city with flows of labor migrations, business economic ties, tourist flows, placement of city companies in the district, and purchase of real estate property in the district by city dwellers. Natural resources – oil, natural gas, nonmetallic materials, clay, and mineral water. Seversky district is an industrial region and has a multi-profile industrial potential. In the structure of economy, 90% account for processing productions, including 80.4% for production of oil products. Also, the district produces brick, construction nonmetallic materials, oil industrial equipment, products of forest and timber processing industry, and products of food industry [3]. Agriculture is also very developed. The spheres of agriculture include plant growing and growing of wheat, buckwheat, sunflower, etc. Seversky district in the Krasnodar city agglomeration should be assessed from determining the factor of transport accessibility. Evaluation of distance and travel time from communities in view of administrative centers of Seversky district to Krasnodar was performed based on the data of the website https://www.rudorogi.ru/. The most distant communities include Plancheskaya Shchel – 112 км (3 h 17 min); Tkhamakha – 148 km (3 h 47 min); Mirny – 117 km (3 h 25 min); Ubinskaya – 142 km (3 h 12 min); Derbentskaya – 157 km (4 h+) [11]. It would be wrong to state that the whole Seversky district is a part of the Krasnodar city agglomeration. There are certain areas in the district that are involved in the agglomeration processes to a larger or lesser extent. Thus, Seversky district could be conventionally divided into three such areas, which are influenced by the city agglomeration differently; 1st area – communities that are near Krasnodar and on the federal highway A-146 (Krasnodar-Novorossiysk). These include communities of Afipsky, Ilsky, and Chernomorsky urban settlements. Travel time to Krasnodar – 1 h. 2nd area consists of communities of Lvovsky, Smolensky, Azovsky, and Kaluga rural settlements. They are 80 km from the highway Krasnodar-Novorossiysk, but have good commute to the city. 3rd area – the area of conventional agglomeration – consists of the communities that are remote from the highway Krasnodar-Novorossiysk; they have problems with regular transport and travel time. These are settlements of Mikhaylovsky, Grigoryevsky, and Shabanovsky settlements. Travel time to Krasnodar – 1.5 h. One of the most important consequences of territory’s entering the area of influence of the agglomeration is changes in the system of settlement. The place of settlement has

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been related to three preconditions: place of application of labor, convenience of the territory for life, and possibility of convenient movement [5]. Seversky district, being a part of the Krasnodar city agglomeration, inevitable faces the changes in the system of settlement. The general idea on changes in the system of settlement is given in Table 2 [12]. For a vivid idea of changes, let us study three periods over the recent twenty years.

Table 2. Changes in the system of population of Seversky district. Settlements

Years 1996

Afipsky urban locality Afipsky 18,412 Vodokachka 287 Vostochny 517 Kovalenko 387 Kosharsky 78 Neftekachka 114 Ilsky urban locality Ilsky 16,805 Derbentsky 1,022 Chernomorsky urban locality Chernomorsky 6,265 Oktyabrsky 914 Karsky 218 Novopetrovsky 1,026 Vesely 508 Kipyachy 318 Sputnik 128 Azovsky rural settlement Azovsky 2,308 Ubinsky 307 Grigoryevsky rural settlement Grigoryevsky 963 Stavropolsky 1,352 Kaluga rural settlement Kaluzhskaya 1,678 Chibiy 214 Lvovskoe rural settlement Lvovskoe 4,247 Krasny 255 Novoivanovsky 289

2006

2016

19,324 227 449 412 22 82

20,114 129 340 641 13 56

18,715 24,944 712 634 6,912 1,372 243 815 412 257 522

7,205 1,857 214 419 316 127 712

2,714 511

3,874 452

1,087 1,105

1,247 815

1,815 52

1,925 30

4,732 5,171 211 179 265 210 (continued)

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Table 2. (continued) Settlements

Years 1996 2006 Peschany 315 187 Stefanovsky 285 244 Aleksandrovskoe rural settlement Mikhaylovskoe 2,057 1,862 Aleksandrovsky 87 34 Ananyevsky 627 415 Novodmitrievskoe rural settlement Novodmitrievskaya 4,283 5,472 Shuvaev 1,072 825 Oazis 612 583 Novy 286 207 Severskoe rural settlement Severskaya 21,568 22,085 Bonchkovsky 638 758 Bondarenko 415 388 Volikov 127 95 Naumenkov 392 312 Novoalekseevsky 128 214 Svobodny 94 107 8 Marta 393 358 Predgorny 316 385 Smolenskoe rural settlement Krepostnaya 3,107 3,248 Smolenskaya 3,987 3,875 Mirny 482 468 Plancheskaya Shchel 312 344 Shabanovskoe rural settlement Shabanovskoe 422 458 Tkhamakha 397 355

2016 65 236 1,775 15 325 5,718 512 487 377 24,812 816 311 87 247 319 112 415 317 3,057 4,218 412 328 412 308

Positive dynamics of growth of the number of population of large settlements should be noted – especially, administrative centers of rural and city settlements of Seversky district. At the same time, population of small settlements decreases. At that, the closer the settlement to Krasnodar, the more positive the dynamics of its population. These are Afipsky, Vodokachka, Vostochny, and Novodmitrievskaya. Almost all “alpine” settlements: Shabanovskoy, Tkhamakha, Mirny, Plancheskaya Shchel and Chibit lose their population. The only exceptions are Azovskaya and Ubinskaya.

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All changes in the system of population of Seversky district repeat a well-known fact: rural population goes front he periphery to the center, and from the center – to cities. However, this is only partially true for Seversky district. Here the population goes not to Severskaya station but to several large cities on the federal highway Krasnodar-Novorossiysk; the settlements that are closes to Krasnodar grow very quickly. This shows that population does not leave Seversky district but just moves to more convenient communities, thus creating “rural” dormitory suburbs of Krasnodar. Another important tendency is positive balance of migration. According to the administration of Seversky district, the number of district’s population has been growing over the recent years largely due to inflow of new residents (Table 3) [6]. Table 3. Dynamics of population of Seversky district. Indicator Constant population, people Natural increase rate (+)/decrease (−) of population Migration increase rate (+)/decrease (−) of population, people

2011 113,094

2012 114,394

2013 115,149

2014 116,261

2015 117,073

2016 117,833

−278

−314

−87

−104

−117

−218

+827

+986

+668

+1008

+695

+542

Table 3 shows that with relatively stable indicators of natural growth of population, factual growth at the level of 2% per year is ensured by migration flow. It is possible to suppose that a part of the migration flow accounts for residents. Thus, there are two processes: the first is related to the practice of townshifting, when part of the citizens who are tired to city noise sell their apartments and move to cheaper urban areas. The second process is related to conscious choice of urban areas as a place of residence due to financial reasons and impossibility to continue living in a city. Geographical and transport proximity to Krasnodary should have caused changes in the district’s economy. In certain cases, such changes have a slight character and are determined by preservation of traditional agrarian specialization of the district – in other cases they are more vivid and are related to re-orientation of a par of district’s economy to the needs of the city agglomeration. There are three main directions of such changes. Firstly, changes in the structure of lands of Seversky district – in particular, reduction of agricultural land and increase of the share of settlements’ lands that are used for commerce. Seversky district is peculiar for reduction – though, insignificant – of the volumes of agricultural production (Table 4) [10].

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Table 4. Change of the number of agricultural companies of all forms of property and crop areas in Seversky district in 2012–2016. Indicators Number of agricultural organizations Farms Personal subsidiary plots Crop areas for all crop cultures in all households and farms, thousand hectares

Years 2012 9 369 718 38.3

2013 9 361 683 35.8

2014 8 354 677 30.7

2015 7 348 682 32.4

2016 7 346 684 31.7

These data show that the number of economic subjects have been reducing over recent five years. This is peculiar for large husbandries, as well as medium and small forms [9]. At the same time, crop areas reduced from 38.3 thousand hectares to 31.7 thousand hectares. That is, 6.6 thousand hectares are taken from the turnover [10]. On the opposite, areas of settlements increase (Table 5) [14]. Table 5. Change of the structure of lands of Seversky district in 2012-2016, hectares. Indicators Land of settlements Land of agriculture Land of special purpose Land of protected natural territories Land of forest fund Land of water fund Land of state reserve

Years 2012 2,911.15 65,982.4 135.85 0

2013 3,196.6 65,696.95 135.3 0

2014 3,581.6 65,311.95 132 0

2015 3,780.7 65,112.85 116.6 0

2016 4,085.4 64,808.15 234.85 0

101,649.9 7,218.35 3,210.35

101,395.8 7,226.6 3,210.35

101,264.9 7,228.25 3,210.35

100,986.6 7,228.25 3,210.35

100,884.9 7,267.85 3,210.35

The data show that only settlement land areas grow, while other categories remain unchanged or reduce. At that, growth takes place by means of agricultural land and forest fund. At the same time, it is possible to see that the settlements’ areas grow in proportion to reduction to crop areas (agricultural land). This process could be explained by two reasons. The first one is that households of the district that had mapping registration as personal subsidiary plots are being re-registered. This situation appeared in early 2000’s when a lot of land owners set the category of their land as private subsidiary plot, for the purpose of tax optimization. As of now, these households are registered as individual housing construction and production activities. The second process is related to withdrawal of a part of land of agricultural purpose for the needs of quickly growing communities – within Severskaya, Ilsky, and Afipsky, and their change for the needs of construction commerce, and industrial production (Table 6) [14].

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Table 6. Change of the types of allowed usage of lands of Seversky (according to the new classified – order No. 709), hectares. Type of allowed usage

Allowed usage

1.0 2.0 3.0

Agriculture Residential construction Public usage of capital construction objects Entrepreneurship Recreation Production activities Transport Defense and security Activities on special protection and study of nature Forestry Water objects General use of territory

4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0

Years 2014 5,344.8 1,814 27

2015 4,877 1,819 24

2016 4,949 1,823 22

418 75 1,387 12 2 4

507 82 1,437 15 2 4

522 84 1,487 17 2 4

814 27 148

812 28 147

815 28 145

The above data show that such types of allowed usage as “Residential construction”, “Entrepreneurship”, “Recreation”, and “Production activities” increase – at that, this increase is seen against the background of reduction of agricultural land. On the whole for the district, this situation is related to mass transfer of land plots for the needs of business: commercial trade and production of industrial goods (Table 7). Table 7. Indicators of production of goods and services in view of the main spheres of Seversky district’s economy. Indicators and measuring units Number of working industrial companies Volumes of industrial products, RUB million Number of agricultural organizations Agricultural products, RUB million Number of existing construction organizations Volumes of work performed according to construction contracts, RUB million Number of retail companies Retail turnover, RUB million

Years 2013 68 3,457 9 1,172 8 317

2014 72 3,872 8 1,187 6 509

2015 77 4,012 7 1,214 6 719

2016 85 4,271 7 1,107 7 798

147 1,148

152 1,364

158 1,683

166 1,934

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The above data show that industry, construction, and trade develop very quickly. At that, while industry is presented by the sphere of oil and chemistry, which are oriented at the needs of the whole region, two other spheres are related to positioning of the district in the Krasnodar city agglomeration. This is primarily construction of houses for citizens and for those preferring to reside in suburbs. Accordingly, construction of new residential blocks leads to appearance of stores and companies of the service sphere. The second direction in development of economy of Seversky district, which characterizes the influence of the agglomeration processes, is appearance of the companies that are oriented at the market of Krasnodar. Such companies appear primarily in the sphere of agricultural processing and production of food products. One of such companies is Il Agricultural Company LLC [7]. Ilsk Sausage Factory is a successful meat processing enterprise of the South of Russia, equipped with new technological equipment. The factory produces more than 80 types of products: sausage, dry sausage, and delicacies. Distribution of the stores of the Il company in Krasnodar Krai is shown in Table 8 [7]. Table 8. Trading area of Il in Krasnodar Krai. 2013 Seversky district 3 Krasnodar 4 Anapa 1 Novorossiysk 0

2014 3 5 1 0

2015 3 8 1 1

2016 3 9 1 1

The above data show that Il orients at the market of Krasnodar. Seversky district has only three stores, which are located along the federal highway “KrasnodarNovorossiysk” A – 146, with two stores in Novorossiysk and Anapa. Besides, only the Krasnodar branch increases the number of stores. The third direction of change of the district economy is appearance of the companies in Seversky district that were located in Krasnodar. For example, in 2014, a factory for production of plastic windows opened in Afipsky. The company’s website - http://krasnodar.okna-kpi.ru/ - states that the company works in Krasnodar, with the central office registered at 269 Severnaya St., Krasnodar, 350027, city phone number +7 (861) 201-22-21, but the production address is 17 Kryzhevnaya St., Afipsky. Before 2014, the company “KPI-okna” had had factory capacities in Krasnodar [2]. Thus, it is an example of simple movement of industrial production from Krasnodar to Seversky district. Another example is the company “Plastmass-uzor” LLC – production of plastic items – has been located before 2015 at 14 Vostochny St., Krasnodar. In 2015, the company changed registration – now it is 2 Lenina St., Chernomorsky, Seversky district, Krasnodar Krai. The data on the change of the company’s registration could be found at http://actez.ru/company/4728275 [1].

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Another example is Faber Farma LLC, which earlier was registered in Krasnodar at 12 Dlinnaya St.; it moved the production to Seversky district. In 2012, Spets-Avia moved its production from to Seversky District as well [1]. The reasons for movement of companies from Krasnodar to Seversky district include accessibility of land resources, availability of objects of production purpose, necessary infrastructure, low rent prices, relative distance to the city (important for polluting productions), accessibility of energy, and simplicity of connection to the electric grid, and positive attitude from residents and authorities. In most cases, the reason of movement of productions from Krasnodar to Seversky district is economic. Table 9 shows comparison of the cost of rent in Krasnodar and Seversky district. Table 9. Comparison of cost of rent of 1 sq.m. in Krasnodar and Severskaya, 2017, RUB. Office

Public use Free use premises premises Krasnodar 200–3,000 2,500–7,000 200–1,000 Severskaya 100–1,000 1,500–3,000 100–1,500

Production premises 1,000–3,000 1,000–2,000

Storage facilities 1,500–3,200 250–1,500

Trade facilities 500–7,000 600–2,000

The above data show that the rent cost is lower in Seversky by 30–40%, as compared to Krasnodar. At the same time, for the most popular directions the rent cost is the same. An important factor of selection of Seversky district by entrepreneurs is high accessibility of rent objects. For example, in Krasnodar the average waiting period constitutes 6–7 months. It is possible to conclude that Seversky district has a lot of city companies, while the rates and volume of movement of urban production to the district are low. It could be explained by the fact that Krasnodar has good conditions for entrepreneurs or by the crisis or other reasons. Goods transport accessibility of Seversky district for Krasnodar residents, together with diversity of landscapes and nature, led to the fact that Seversky started turning into the area of urban recreation. It is possible to distinguish several directions of development of this process. Firstly, development of construction of summer cottages. Starting from 1963, dacha cooperatives have been created in Seversky district. These cooperatives are peculiar for the fact that they have been created for residents of Krasnodar. An important factor of development of dacha settlements is their proximity to settlements of Seversky district. After the perestroika, in early 1990’s, these cooperatives lost their agricultural specialization and became recreation areas (Table 10). Proximity to Krasnodar and low prices for land led to growth of residential construction in Seversk region. Recently, Seversky district became peculiar for development of week-end tourism. Table 11 shows statistics of growth of the hotel sphere companies of Seversky district [10].

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Table 10. Volume of constructed residence in view of rural and urban settlements of Seversky district, thousand sq.m. No. 1 2 3 4 5 6 7 8 9 10 11 12

Settlement Afipskoe Oskoe Chernomorskoe Azoskoe Grigoryevskoe Kaluzhskoe Lvovskoe Aleksandrovskoe Novodmitrievskoe Severskoe Smolenskoe Shabanovskoe

2014 8.4 5.7 0.7 2.7 1.3 2.1 0.8 n/a 1.2 5.1 2.3 1.7

2015 5.6 3.8 1.8 3.1 1.8 2.5 0.5 0.3 1.8 7.7 2.5 1.2

2016 7.8 4.4 1.7 2.3 0.7 2.4 1.2 0.6 1.3 8.2 2.1 1.1

Table 11. Number of beds in all types of accommodation in Seversky district. No. 1 2 3 4 5

Establishment Sanatoria for adults Sanatoria for children Recreation centers Youth camps, hotels Motels, campings

2013 – – 1 14 17

2014 – – 1 18 17

2015 – – 1 21 17

2016 – – 1 22 18

The number of hotels grows due to servicing the transit flow and development of “week-end” tourism. On the whole, the district positions itself as an area of active recreation and family retreat. Acknowledgments. The research was performed with financial support from the RFFR within the project “Modeling the processes of differentiation of economic space of region in the conditions of regional economy transformation”.

References 1. Information on change of registration data of legal entities. Website “Actez – Catalog of legal entities”. http://actez.ru/company/4728275 2. KPI-Okna. Official website of KPI. http://krasnodar.okna-kpi.ru/. Accessed 3. Lavrova, T.G.: Krasnodar city agglomeration: development and management. Contours of global transformations: politics, economics, law, No. 5, pp. 80–89 (2015) 4. Lappo, G.M., Polyan, P.M., Selivanova, T.I. Agglomerations in Russia in the 21st century. City agglomerations of Russia. Demoscope 2010. No. 407. pp. 137–152 (2010)

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5. Leksin, V.N.: City agglomerations and the system of settlement: hopes and dangers. Infra-M, 277 p. (2011) 6. Migration in Seversky district of Krasnodar Krai. Materials of the migration center of Seversk district of Krasnodar Krai. http://www.sevadm.ru/2013/10/29/migracija.html. Accessed 7. Meat factory Ilsky. Official website. http://ilkombinat.ru/. Accessed 8. Neshchadin, A.A., Prilepin, A.M.: City agglomerations as a tool of dynamic socio-economic development of Russia’s regions. Information website of expert groups for work on “Strategy 2020” (2011). http://2020strategy.ru/g12/documents/32581727.html. Accessed 9. Official website of administration of Seversky district of Krasnodar Krai. http://www. sevadm.ru/. Accessed 10. Districts and cities of Krasnodar Krai: Statistical bulletin, p. 311. Federal State Statistics Sevice, Krasnodar (2017) 11. Calculation of distance between cities. Website “RUdorogi”. E-source: https://www. rudorogi.ru/ 12. Seversky district. Website “Free encyclopedia ‘Wikipedia’”. https://ru.wikipedia.org/wiki/% D0%A1%D0%B5%D0%B2%D0%B5%D1%80%D1%81%D0%BA%D0%B8%D0%B9_% D1%80%D0%B0%D0%B9%D0%BE%D0%BD. Accessed 13. Cost of rental of commercial premises. Website “Avito.ru”. http://avito.ru/comp/12712id. Accessed 14. Explication of lands of Seversky district. Materials of administration of Seversky district. Archive. Case No. 12/2016-n

Constructing Regional Social Inclusion: Foundations of Sociological Analysis Tatiana N. Yudina ✉ , Irina V. Dolgorukova, Egor Y. Kireev, Tatiana M. Bormotova, and Tatyana V. Fomicheva (

)

Russian State Social University, Moscow, Russia {judinatn,dolgorukovaiv,kireeveou,bormotovatm, fomichevatn}@rgsu.net

Abstract. The authors offer an interpretation of regional social inclusion as one of the most important indicators of population’s living standards. The purpose of the work is to analyze the main sociological approaches to constructing regional social inclusion. The main components of constructing social inclusion at the regional level are distinguished and the model of regional social inclusion is offered. Migration is viewed as a dynamic factor of constructing regional inclu‐ sion. Studying the problems and models of formation of regional social inclusion allows developing the main priorities of long-term strategy of social inclusion of the Russian society on the whole and its connection to the general strategy of socio-economic development of Russia. Based on the performed work, it is concluded that for the purpose of stimulating social inclusion, the measures of public authorities should be conducted at the level of local and regional commun‐ ities. Regional subjects should make efforts for strengthening social inclusion and provision of sustainable development. Keywords: Regional inclusion · Constructing · Sociological analysis · Migration Socio-economic development · Indicator of living standards JEL Classification Codes: Z13 · Z18

1

Introduction

The issues of social inclusion are paid a lot of attention as a direction of work in the conditions of globalization. Development of the idea of constructing social inclusion as a multi-aspect phenom‐ enon envisages not only inclusion and participation of everybody in economic, social, cultural, and political life but also a sense of solidarity and belonging to society, based on effective usage of civil rights and democracy and directly related to the history of formation and development of social policy on the whole. The policy of social inclusion is based on striving of society to increase of living standard and overcoming all manifestations of inequality. At present, this notion is expanded, and achievement of social inclusion is based on management of diversity. As a matter of fact, economic situation, social protection, social safety, and

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 195–202, 2019. https://doi.org/10.1007/978-3-030-00102-5_20

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acknowledgment of personality need management, which leads to creation of a program approach. The purpose of this approach is to overcome tension, discrimination, and social conflicts. At that, economic and social development is one thing. Sustainable development depends on effective management, which pays close attention to harmo‐ nization of relations among population. In multi-cultural societies, social inclusion acquires a special importance in the context of the necessity for tolerant attitude, support for diversity, and respect to different cultures. The central role is given to acknowledgment of diversity. For increasing the level of social inclusion, it is necessary to build the policy in view of the concept of diversity management. Migration processes are a decisive factor of regional development in the modern world. According to UN experts, total number of migrants constituted 213.9 million by 2010. In 2005–2010, it grew by 10% (Yudina et al. 2015). Influence of migration is manifested at all levels of regional development and creates two problems: firstly, inte‐ gration of immigrants into hosting regional community and access of newcomers to rights and possibilities; secondly, the problem of growth of multiculturalism. Migration processes and attitude towards immigrants is an important criterion and task of Europe for the future. Thus, the value of regional social inclusion is predetermined by the fact that it is the basic condition of stable economic development of specific region and its effective inclusion into development of community on the whole. It ensures social stability, which, on the one hand, allows reacting to regional challenges, and, on the other hand, developing preventive solutions to actual economic and social problems of the region. In regional education, which is peculiar for high level of social inclusion, innovations develop quicker and technological breakthroughs take place in developing spheres of regional economies. Recently, a lot of developing regions of Europe and Asia have been peculiar for necessity for improving the strategy of social inclusion. This is caused by new chal‐ lenges, which appear in the conditions of complex processes of globalization – e.g., the problems of migration of work force and competition between regions’ economies and within them.

2

Methodology

Sociological explanations of the state, based on social inclusion, are as follows: • works of T. Marshall (the issue of provision of minimum social support for partici‐ pation in society’s life); • the functional approach of T. Parsons (social policy as a means of solving social conflicts), with social solidarity to viewed as the main condition of social inclusion. • the Marxist theory (state of general well-being as a tool of capitalistic social relations) (Yarskaya 2003). • Theory of “Third way” of E. Giddens (Policy of acknowledgment of competition in the globalizing world and its further consideration as a basis of socially solid society).

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Regional model of social inclusion is based on the following general methodological principles: • complexity – importance of analysis and consideration of all aspects of the research object; • systemacity – establishment of causal connections between the object’s aspects; • science – using adequate methodology; • objectivity – authenticity and verifiability of information; • variability – finding several options of overcoming crisis situations; • correspondence to state interests and provision of social effect. In analysis of migration as the most important factor of social inclusion, the approach developed by the “group of high level” “On the path to active, just, and socially solid Europe” was used (Bohnke 2005). It envisages analysis of a wide specter of factors that determine the level of regional social inclusion in society - from development of democ‐ racy, functioning of economy, fighting social rejection and poverty, and creation of the atmosphere of solidarity (e.g., via developed mechanisms of just distribution of national wealth from higher class to middle class and lower class), development of mechanisms of adaptation of immigrants, protection of vulnerable social groups in the region to provision of equal access to culture and education. Special attention should be paid to the issues of formation of regional social inclusion, related to increase of risks of social inequality, processes of globalization, ageing, poverty, and weakening of inter-genera‐ tion ties.

3

Results

3.1 The Concept of Sociological Study of the Problems of Constructing the Regional Social Inclusion During development of a complex methodology of studying the problems of constructing social inclusion of region, it is necessary to take into account specifics of these processes that establish the notions “social inclusion” and “social development of region” (Yudina 2013). The procedure of diagnostics of region’s social inclusion could have several stages. At the first stage, all efforts are aimed at description of the real state of social inclusion in the region. Expertise of the region’s state is performed on the basis of objective data on the level of social inclusion and subjective evaluations by the region’s residents of the level of coordination of behavior of regional community’s members in the main spheres of activities. The purpose of the second type is to analyze the proper state of social inclusion in the region. At the third stage, comparison of objective and subjective indicators with proper ones is performed – which allows determining the level of region’s social inclusion. As a result, the level of difference between the proper or real states of regional social inclusion is determined. For each stage, indicators are developed – which fix the level of regional social inclusion. On the whole, diagnostics of social inclusion of region allows ensuring adoption of long-term and coordinated decisions on provision of well-being of all members,

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minimization of disproportions in region’s development, avoiding marginalization of people and stimulating harmonization of differences in achievement of well-being by all its members. 3.2 The Main Factors of Constructing the Regional Model of Social Inclusion The conceptual basis of studying the problems of social inclusion in region is based on understanding inclusion as a means of unification of integration processes within the administrative and territorial education, further development of economy, legal state, and civil society. It is envisaged that regional subjects stimulate increase of social inclu‐ sion. The main directions of such stimulation are as follows: – provision of guarantees for achievement of the corresponding level of social protec‐ tion; – stimulation in the sphere of employment, professional training, and protection of workers’ rights; – provision of effective protection of the most vulnerable groups of population; – stimulating the equality of possibilities during employment; – fighting social rejection and discrimination; – strengthening of cooperation in the issues of migration. The level of social inclusion could be measures. Socially solid society is the one characterized by the possibility of implementing social rights and peculiar for social responsibility, developed possibilities of social dialog, and high level of social security. Analysis of the problems of social inclusion should take place in view of studying the main components and criteria of social inclusion of population (Table 1) Table 1. Components and indicators of social inclusion. Component Justice, economic well-being

Indicator Mobility (social/geographic), inequality in distribution of incomes, sustainable poverty Self-esteem and acknowledgment of diversity People feeling discrimination against them Participation in public life Citizens’ participating in democratic processes Sense of belonging Levels of confidence (institutional, level of confidence in future, others) General responsibility Coverage and scale of social and civil dialog

At the national level, these indicators reflect the main principles of social inclusion: justice, self-esteem, sense of belonging to society, acknowledgment of diversity, and certain general responsibility. At the level of local community, measuring social inclusion requires development of effective measures of social policy. Development of these indicators is done by coor‐ dinating actions of the main interested parties.

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3.3 Migration as the Most Important Factor of Constructing the Regional Inclusion The other factors that determine dynamics of the process of constructing social inclusion include migration. This dynamic social phenomenon is the decisive factor of socioeconomic development of regions of the modern world. Six out of ten immigrants live in developed countries, and seven out of hundred international immigrants are refugees. Half of all international immigrants are women. 75% of all international immigrants are concentrated in 29 countries. According to 2010 estimates, the number of countries with population above 1 million, in which international immigrants accounted for more than 10% of population, constitutes 38. Due to immigration, in 2005–2010 the number of population of developed countries was growing by 2.2% per year, and population of developing countries was decreasing by 0.5%. In North America, population in 2005–2010 grew by means of international immigrants by 1.2 million people annually, and Europe’s population – by 1.3 million. In all large regions of the world there was intensive growth of population by means of migration flows. In South Europe, migration flow exceeded by 4.9% per year the value of the USA (3.3%) and North America (3.6%) (Osadchaya et al. 2016). Priority of formation of social inclusion in region requires targeted regional policy in the sphere of regulation of migration flows and attitude of people to immigrants. The largest international organizations offered general principles of such social policy. For example, UN recommendations postulate development of regional migration policy, which would reflect such aspects as reunion of families, role of migration flows in economic growth and development of region, provision of refuge, stimulation of regu‐ lated and prevention of unregulated migration, protection of refugees, responsibilities and rights of immigrants, integration of immigrants, and restoration of their civil status (Global Commission on International Migration 2005). Europe has no common position as to the rights provided to immigrants or their integration into society. Access of “newcomers” to social services, rights, and freedoms is one of the points of collision and emergence of social contradictions in European societies. A popular reaction to such discussions is protection of “national resources” and national culture (Tanatova et al. 2017). Integration of immigrants into the hosting society was and is a serious challenge for most regions. This is proved by the fact that integration of ethnic minorities and immigrants who came as a part of earlier immigra‐ tion wave has not ended. In a lot of regions of Europe, expat communities are being formed. Social, economic, ethnic, and even confessional factors have a role of potential or real sources of inequality and discrimination of people. There are a lot of reasons that determine the fact that in European societies integration of immigrants and national minorities is difficult, but the main reason is interconnection between dominating models of citizenship and state. Modern Europe consists of a lot of national states. European communities have a long way to integration of immigrants before them, despite the adopted constitutional principles, international responsibilities, and efforts for prevention of discrimination of labor immigrants. Integration of immigrants into the hosting regional society is thus the most important factor of constructing the regional inclusion.

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Discussion

Implementation of the concept of social inclusion cannot be conducted all over the state. Localization of territory is the main condition for reaching the purpose. Different coun‐ tries have different models of local territories. Thus, in order to achieve social inclusion of society, it is necessary to reduce the level of disproportions in development of regions. Of course establishment of social inclusion is possible only with establishment of strong social ties between people and real possibility for them to use their rights and readiness to perform voluntary obliga‐ tions. The necessity for evaluating the level of social inclusion in the regional view on the basis of complex analysis of its state, which considers all aspects of living activities, is obvious. Development of the methodology of sociological analysis should be formed in view of regional specifics of socio-economic, political, and cultural aspects. As for migration processes as a factor of constructing the regional inclusion, it should be noted that experts in the sphere of international immigration discuss a range of issues that require close attention and development of sustainable migration policy. Let us dwell on the most important ones. Thus, according to the expert community, negative effects from migration processes in the states of origin and state of destination of immigrants could be lowered with the help of special programs that set formal procedures during entrance and the procedure that simplifies acquisition of all social and civil rights of immigrants. At that, the formal procedures and criteria for incoming immigrants should be brought to correspondence with international human rights (International Migration Report 2015). Thus, it is necessary to note a position reflected in the recommendations of the Committee of ministries of members of the Council of Europe No. CM/Rec(2007)10 “On co-development and immigrants working in favor of development in the countries of their origin”. The notion “co-development” is treated as activities in the sphere of economic, cultural, social, or political development in the country of origin, which is based on consensus between organizations, private and public partners, immigrants in the states of origin and states of destination. It is defines that immigrants have to respect and know laws, values, principles, and customs of the hosting state, which, in its turn, should respect culture, religion, and customs of legal immigrants. For the purpose of supporting legal turnover and integration of legal immigrants, especially legal labor immigrants and their families, experts offer the hosting states considering the possibility of provision to legal immigrants of political and civil rights and liberties. At that, it is offered to organize the processes of stimulating adaptation of children of immigrants who arrived for a long term, creating the same conditions for professional training and receipt of education that are provided to citizens of this country and stimulate their doing business. Article 10 of the Convention of children rights and all generally acknowledged documents postulate that all states – and, primarily, hosting states – have to acknowledge the top-priority significance of reunion of families and stimulate inclusion of the corresponding provisions into their internal legislative acts for protecting families of legal immigrants.

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Conclusions/Recommendations

Regional inclusion is one of the decisive and stabilizing factors of formation of social and territorial inclusion. The main conditions of achieving social inclusion are as follows: – providing citizens with conditions for creation of decent living standards and selfimplementation; – establishing and supporting living standards; – effective system of social protection and fighting social exclusion and discrimination; – supporting socially significant professions and employees (scholars, teachers, etc.); – development of social entrepreneurship; – supporting middle class as a basis of social inclusion; – reducing differentiation in regional development; – increasing the level of development of local self-administration as a basis of partic‐ ipative democracy; – accessibility of qualitative education. Practical actions from public authorities, which stimulate social inclusion, should start from local and regional communities, cities and regions of Russia. The conceptual basis of studying the problems of social inclusion in region is founded in understanding inclusion as a means of unifying integration processes within administrative and territorial education in view of the vector of development of economy, legal state, and civil society. Regional subjects should stimulate strengthening of social inclusion. As a result of consideration of immigration process as the most important factor of constructing social inclusion, it is possible to conclude that this factor should be taken into account not only by regions that accept immigrants but also by regions of immi‐ grants’ origin. There are a lot of crossing points: cooperation between regions with excess of labor resources and regions with lack of labor resources and fighting human trade and illegal immigration, as well as studying mutual influence between immigration and other social problems. Bilateral and multi-sided agreements may serve strengthening of inter-regional connections and development of regional inclusion in various spheres. It is necessary to note the positive effect that may be brought by partnership between the corresponding departments of economically developed countries and states of immi‐ grants’ origin. It is mostly true for the sphere of formation of social institutes of devel‐ opment of labor capital. The “co-development” approach comes to the foreground, according to which large influence on formation of regional inclusion is performed by interaction between unions of immigrants and cooperation between states of origin of immigrants and hosting countries. It is necessary to create long-term regional strategies of social inclusion in the sphere of integration of immigrants and connection to the general strategy of socio-economic development of country on the whole. Inclusion is required by any society for over‐ coming the existing and new challenges caused by immigration.

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References Klimanov, V.V.: Regional systems and regional development (2003) Fedotova, V.G.: Social state and market. Free thought – 21st century, No. 7, p. 82 (2002) Yudina, T.N.: Regional social inclusion as the indicator of Russians’ living standards: sociological measure. Scientific notes of ZabSU. Series: Philosophy, sociology, culture science, and social work, No. 4(51) (2013) Yarskaya, V.N.: Social policy, social state, and social management: issues of analysis. JISP, No. 1 (2003) Bohnke, P.: First European Quality of Life Survey: Life Satisfaction, happiness and Sense of Belonging, European Foundation for the Improvement of Living and Working Conditions. Office for Official Publications of the European Communities, Luxembourg (2005) Bollen, K.A., Hoyle, R.H.: Perceived cohesion: a conceptual and empirical examination. Soc. Forces 69, 479–504 (1990) Ethnic Diversity and Social Cohesion Merlin Schaeffer, Wissenschaftszentrum Berlin für Sozialforschung, Germany. ISBN: 978-1-4094-6938-4 Global Commission on International Migration: Migration in an Interconnected World: New Directions for Action, New York, UN (2005) International Migration Report, New York (2015). http://www.un.org/en/development/desa/ population/migration/publications/migrationreport/docs/MigrationReport. Accessed 24 June 2017 Osadchaya, G., Yudina, T.: Migration processes and russia’s migration policy: from the newly independent states to the Eurasian economic union, East European Studies Budapest, pp. 34– 52 (2016) Tanatova, D.K., Yudina, T.N., Dolgorukova, I.V.: Models of public health management in the countries of central and eastern Europe and Russia: a comparative analysis, Economic and Social Development Book of Proceedings. Varazdin Development and Entrepreneurship Agency, Russian State Social University, pp. 446–454 (2017) Yudina, T.N., Osadchaya, G.I., Leskova, I.V., Dolgorukova, I.V., Kireev, E.Y.: The eurasian economic union: migration risks. Mediterr. J. Soc. Sci. 6(4), 451–457 (2015)

Financial Infrastructure of the Modern Economy

The Model of Managing the Development of Agricultural Machinery Market Infrastructure on the Basis of Public-Private Monitoring Irina Morozova1 ✉ , Tatiana Litvinova2, Ivan A. Mordvintsev3, and Olga V. Konina1 (

)

1

Volgograd State Technical University, Volgograd, Russian Federation [email protected] 2 Volgograd State Agrarian University, Volgograd, Russian Federation [email protected] 3 Volgograd State University, Volgograd, Russia [email protected]

Abstract. The purpose of the article is to develop a model of managing the development of agricultural machinery market infrastructure on the basis of public-private monitoring on the basis of modern Russia. In order to determine the need in development of agricultural machinery market infrastructure in modern Russia, the authors use time series analysis, with the help of which they study dynamics of the change of volume of investments into the fixed capital and their share in the structure of turnover of the companies involved in the sphere of agricultural machinery manufacture. The authors determine mismatch of the quantity and quality of infrastructural provision and the needs of domestic entre‐ preneurship in the agricultural machinery market. For solving this problem, it is recommended to implement the system of public-private monitoring, which supposes involvement of interested representatives into the processes of managing the development of agricultural machinery market infrastructure. The tasks of this monitoring are formulated in connection to distinguished components of the agricultural machinery market infrastructure. Keywords: Managing the infrastructure development Agricultural machinery market · Public-private monitoring

1

Introduction

The problems of provision of national food security have grown in a lot of modern countries due to the global financial crisis which has passed into the stage of stagnation. Due to that, government of the countries that do not specialize on agriculture have performed steps for development of agricultural production. One of the initial and most important steps is development of agricultural machinery market that provides machines and equipment for agriculture. Over the decades of stability of the global economic system, both these markets were paid insufficient attention in the countries that did not specialize in agriculture, as according to the Theory of relative advantages and the principle of international division © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 205–212, 2019. https://doi.org/10.1007/978-3-030-00102-5_21

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of labor it was more profitable to import agricultural products and agricultural machi‐ nery. Destruction of international economic relations led to impossibility to found on import of such strategically important products and caused the necessity for developing their import substitution. A key condition of the key realization of the policy of import substitution in the agricultural machinery market is development of infrastructure, which in most countries that do not specialize in agriculture, is characterized by strong moral and physical aging and deficit. According to our hypothesis, in order to achieve high effectiveness of managing the development of agricultural machinery market infrastructure, it is neces‐ sary to involve representatives of the public into its conduct. The purpose of the article is to develop the model of managing the development of agricultural machinery market infrastructure on the basis of public-private monitoring by the example of modern Russia.

2

Materials and Method

For determining the need for development of agricultural machinery market infrastruc‐ ture in modern Russia, the method of time series analysis is used, with the help of which dynamics of the change of volume of investments in fixed capital and their share in the structure of the turnover of companies involved in the sphere of agricultural machinery production are studied (Fig. 1). 5526.3

6000 5000 4000

3489

3872

4675.6 4216.7

3094 3000 2000 1000

1464.3

Investments into fixed capital, RUB billion Share of investments into fixed capital in the turnover structure, %

851.2 271.6 43.9 112.6 176.5 186.8 218.5 233.4 251.4

0 2000 2005 2011 2012 2013 2014 2015 2016 Fig. 1. Dynamics of change of the volume of investments in fixed capital and their share in the structure of turnover of companies involved in the sphere of agricultural machinery production in 2000–2016. Source: compiled by the authors on the basis of (Federal State Statistics Service 2016)

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207

Discussion

In this work, infrastructure of agricultural machinery market is treated as totality of interconnected structures that ensure functioning and development of companies that work on this market. We distinguished the following main components of agricultural machinery market infrastructure: • • • • • • •

institutional infrastructure; material and technical infrastructure; transport and logistics infrastructure; human infrastructure; information infrastructure; financial infrastructure; innovational infrastructure.

The sense and structure of agricultural machinery market infrastructure are viewed in detail in the materials of research of (Bogoviz and Mezhov 2015), (Przhedetskaya and Akopova 2015), (Kusakina et al. 2016), (Sadovnikova et al. 2013), (Morozova et al. 2017), (Popova et al. 2015), (Enikeeva et al. 2015), (Menshchikova and Tribunskaya 2015), (Janowitz 2014). (Cakula et al. 2013), (Bernardes 2015), (Garthwaite et al. 2015), (Grouiez 2012), (He 2015), (Bannikova et al. 2015), (Jacknowitz et al. 2015), (Maitra and Rao 2015), (Medernach and Burnod 2013), (Popkova et al. 2015a), (Popkova et al. 2015b).

4

Results

In the analytical report on development of agricultural machinery market (Butov 2016) and the Strategy of development of agricultural machine building until 2020 (RosAgroMash 2011), it is noted that infrastructural provision of the modern Russian agricultural machinery market is at a low level of development. The main argument in favor of this statement is growth of investments of the companies that work in this market into fixed capital. According to the official statistics, provided by the Federal State Statistics Service and presented in Fig. 1, the volume of investments into fixed capital of the companies in the Russian agricultural machinery market grew by 6.5 times in 2016 (RUB 5,526.3 billion) as compared to 2000 (RUB 851.2 billion). Their share in the structure of compa‐ nies’ turnover in the Russian agricultural machinery market also grew by 6 times, constituting 271.6% in 2016, as compared to 43.9% in 2000. This shows mismatch between the quantity and quality of infrastructural provision and the needs of domestic entrepreneurship in agricultural machinery market. For solving this problem, we recommend to implement the system of public-private moni‐ toring, which supposes involvement of interested parties into the process of managing the development of agricultural machinery market infrastructure. The tasks of this monitoring are formulated in connection to the distinguished components of agricultural machinery market infrastructure.

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In the sphere of institutional infrastructure, the sense of public-private monitoring of managing the development of agricultural machinery market infrastructure consists in determining the possibilities and perspectives for improvement of the normative and legal provision. It main tasks are as follows: • critical analysis of existing normative and legal provision of development of agri‐ cultural machinery market infrastructure; • preparation of recommendations for its improvement; • providing the prepared recommendations to legislative bodies of public authorities at the federal and regional levels and substantiation of the necessity for their appli‐ cation in practice. In the sphere of material and technical infrastructure, the logic of public-private monitoring of managing the development of agricultural machinery market infrastruc‐ ture consists in solving the problems related to the material and technical infrastructure. Its tasks are brought down to the following: • establishing cooperation between companies that work in the Russian agricultural machinery market; • determining the key problems of companies that work in the Russian agricultural machinery market, related to the material and technical infrastructure; • determining the methods of solving the distinguished problems and providing them to legislative bodies of public authorities at the federal and regional levels. In the sphere of transport and logistics infrastructure, the main sense of public-private monitoring of managing the development of agricultural machinery market infrastruc‐ ture consists in collection of full, precise, and topical information on the state of transport and logistics infrastructure and its drawbacks. Its main tasks include the following: • collection of evidences that confirm the negative state of transport and logistics infrastructure; • providing these evidences to legislative bodies of public authorities at the federal and regional levels; • control over targeted spending of assets received in the course of collection of trans‐ port tax on improvement of the state of transport and logistics infrastructure. In the sphere of human infrastructure, the sense of public-private monitoring of managing the development of agricultural machinery market infrastructure is manifested in mediation between companies that work in agricultural machinery market and univer‐ sities that train specialists for them. Its tasks are as follows: • determining contradictions in the educational market and labor market in the sphere of agricultural machinery; • determining the possibilities and perspectives of elimination of these contradictions; • consultations with universities and companies that work in agricultural machinery market for establishing the balance between demand and offer of human infrastruc‐ ture.

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In the sphere of information infrastructure, the logic of public-private monitoring of managing the development of agricultural machinery market infrastructure is based on elimination of the information deficit. Its main tasks are as follows: • developing cooperation with companies that work in the agricultural market; • determining their needs for agricultural machinery; • informing companies that work in agricultural machinery market on the current state of demand for their products. In the sphere of financial infrastructure, the sense of public-private monitoring of managing the development of agricultural machinery market infrastructure is manifested in stimulating the development of financial establishments that provide leasing, credit, and investment resources for the companies of this market. Its tasks are as follows: • determining the volume and character of the needs of companies that work in agri‐ cultural machinery market for financial resources; • development of potential schemes for implementation by financial establishments and the state in the interests of provision of necessary financial resources to the companies that work in agricultural machinery market; • establishing cooperation with financial establishments and offering these schemes to them and to the state. In the sphere of innovational infrastructure, the logic of public-private monitoring of managing the development of agricultural machinery market infrastructure consists in control over this market’s companies’ provision with innovations by domestic univer‐ sities. The sense of the tasks is brought down to the following: • determining the perspective directions of innovational development of companies that work in agricultural machinery market; • analysis of ratio of imported and domestic innovations that are implemented by companies that work in agricultural machinery market; • informing R&D institutes on existing needs for created innovations in the interests of full satisfaction of internal demand for them. Based on the offered recommendations, we compiled the model of managing the development of agricultural machinery market infrastructure on the basis of publicprivate monitoring (Fig. 2). As is seen from Fig. 2, using public-private monitoring ensures reduction of expen‐ ditures by means of using voluntary initiatives of the public and increase of efficiency of managing the development of agricultural machinery market infrastructure by means of involving the parties interested in achievement of the effect.

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Inovational infrastructure

stimulating the development of financial establishments that Financial infrastructure

Institutional infrastructure

solving the problems related to the material and technical infrastructure

Material and technical infrastructure

Tool: public-private monitoring for the collection of components of agricultural information on the state machinery market of Transport and infrastructure logistics infrastructure

providing financial resources for companies of this market Information infrastructure eliminating information deficit in agricultural machinery market

Human infrastructure

transport and logistics infrastructure and its drawbacks

mediation between the companies that work in agricultural machinery market and universities that train specialists for them

Result: reduction of expenditures by means of using voluntary initiatives or representatives of the public and increase of efficiency of managing the development of agricultural machinery market infrastructure by means of involvement of the parties interested in achievement of the effect

Fig. 2. Model of managing the development of agricultural machinery market infrastructure on the basis of public-private monitoring Source: compiled by the authors

5

Conclusions

It should be concluded that the developed model of managing the development of agri‐ cultural machinery market infrastructure on the basis of public-private monitoring supposes consideration of monitoring not as external independent control over the results but as direct participation of interested parties in the process of management. Due to that, the conducted monitoring allows evaluating the effectiveness of managing the development of agricultural machinery market infrastructure and increasing it, solving the appearing problems in the course of management. The offered model showed expedience of attracting interested representatives of the public to the process of managing the development of agricultural machinery market infrastructure. This ensures development of civil society and allows minimizing the managerial expenditures. However, it should be acknowledged that this model has

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fundamental character, and its implementation in economic practice of modern Russia and other countries requires more detailed elaboration. Adaptation of the developed model to the specifics of real economic systems is a perspective direction for continu‐ ation of this scientific research.

References Bannikova, N.V., Baydakov, A.N., Vaytsekhovskaya, S.S.: Identification of strategic alternatives in agribusiness. Mod. Appl. Sci. 9(4), 344–353 (2015) Bernardes, J.A.: New frontiers of capital in the Brazilian Cerrado: the dynamics and contradictions of the expansion of agrobusiness in the central-west region. Scripta Nova, 19 (2015) Bogoviz, A., Mezhov, S.: Models and tools for research of innovation processes. Mod. Appl. Sci. 9(3), 159–172 (2015) Cakula, S., Jakobsone, A., Motejlek, J.: Virtual business support infrastructure for entrepreneurs. Procedia Comput. Sci. 25, 281–288 (2013) Enikeeva, L.A., Stelmashonok, E.V., Stelmashonok, V.L.: Modeling of information protection system of business processes infrastructure on an industrial plant. Int. Bus. Manag. 10(3), 315– 319 (2015) Garthwaite, K.A., Collins, P.J., Bambra, C.: Food for thought: an ethnographic study of negotiating ill health and food insecurity in a UK foodbank. Soc. Sci. Med. 132(1), 38–44 (2015) Grouiez, P.: Des kolkhozes à l’agrobusiness en Russie. Etudes Rurales 190(2), 49–62 (2012) He, J.: Chinese public policy on fisheries subsidies: Reconciling trade, environmental and food security stakes. Mar. Policy 56(1), 106–116 (2015) Jacknowitz, A., Morrissey, T., Brannegan, A.: Food insecurity across the first five years: triggers of onset and exit. Child Youth Serv. Rev. 53(1), 24–33 (2015) Janowitz, M.: Sustainable infrastructure - from business case to investment. In: ICSI 2014: Creating Infrastructure for a Sustainable World - Proceedings of the 2014 International Conference on Sustainable Infrastructure, pp. 786–794 (2014) Kusakina, O.N., Bannikova, N.V., Morkovina, S.S., Litvinova, T.N.: State stimulation of development of small entrepreneurship in developing countries. Eur. Res. Stud. J. 19(2 Special Issue), 276–284 (2016) Maitra, C., Rao, D.S.P.: Poverty-food security nexus: evidence from a survey of urban slum dwellers in Kolkata. Source World Dev. 72(1), 308–325 (2015) Medernach, K., Burnod, P.: Unexpected changes in a Madagascan land system through agribusiness. Etudes Rural. 191(1), 63–76 (2013) Menshchikova, V.I., Tribunskaya, U.G.: Improvement of the infrastructure support system for business activities in different types of regions. Actual Probl. Econ. 163(1), 270–275 (2015) Morozova, I.A., Litvinova, T.N., Sycheva, A.V.: Transnational cluster initiatives in business as a top-priority direction of maximization of economic growth in Asian countries. Contributions to Economics, (9783319454610), pp. 113–119 (2017) Popkova, E.G., Abramov, S.A., Ermolina, L.V., Gandin, E.V.: Strategic effectiveness evaluation as integral part of the modern enterprise management. Asian Soc. Sci. 11(20), 16–21 (2015a) Popova, L., Popova, S.A., Dugina, T.A., Korobeynikov, D.A., Korobeynikova, O.M.: Cluster policy in agrarian sphere in implementation of concept of economic growth. Eur. Res. Stud. J. 18(Special Issue), 27–36 (2015)

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Przhedetskaya, N., Akopova, E.: Institutional designing of continuous education in Russia under the conditions of neo-economy and globalization. Reg. Sect. Econ. Stud. 15(2), 115–122 (2015) Sadovnikova, N., Parygin, D., Gnedkova, E., Kravets, A., Kizim, A., Ukustov, S.: Scenario forecasting of sustainable urban development based on cognitive model. In: Proceedings of the IADIS International Conference ICT, Society and Human Beings 2013, Proceedings of the IADIS International Conference e-Commerce 2013, pp. 115–119 (2013) Butov, A.M.: Agricultural machinery market (2016). https://dcenter.hse.ru/data/2016/12/29/ 1114670197/Pынoк%20agricultural%20мaшин%202016.pdf. Accessed 24 Aug 2017 Popkova, E.G., Chechina, O.S., Abramov, S.A.: Problem of the human capital quality reducing in conditions of educational unification. Mediterr. J. Soc. Sci. 6(3), 95–100 (2015b) RosAgroMash: Strategy of development of agricultural machine building of Russia until 2020 (2011). http://www.rosagromash.ru/attachments/Development%20Strategy.doc. Accessed 24 Aug 2017 Federal State Statistics Service: Russia in numbers. Federal State Statistics Service, Moscowa (2016)

Institutional Frameworks of Place Marketing in Russia: Barriers and New Possibilities Yulia I. Dubova1 ✉ , Vyacheslav V. Golikov2, Zhanna V. Gornostaeva3, and Vladimir Zhidkov4 (

)

1

3

Volgograd State Technical University, Volgograd, Russia [email protected] 2 Volgograd State Agrarian University, Volgograd, Russia Institute of Service Sphere and Entrepreneurship (branch) of Don State Technical University, Shakhty, Russia [email protected] 4 Don State Technical University, Rostov-on-Don, Russia [email protected]

Abstract. The purpose of the work is to study the institutional frameworks of place marketing in the Russian economy and to determine the main barriers on the path of its development and possibilities for activation of marketing activity at the level of regional economy in modern Russia. The information and analytical materials include the strategies of socio-economic development of Russia’s regions (as analogs of the strategies of place marketing) and the data of the Global Competitiveness Report of the Russian Federation for 2016–2017 according to the World Economic Forum. The methodology of this work is based on the method of logical analysis, analysis of causal connections, structural & functional, systemic, and problem analysis, as well as synthesis, induction, deduction, and formalization. As a result of the research, the authors came to the conclusion that despite a high level of regionalization and completion of market reformation of economy, the level of competition at the level of regions and intensity of place marketing are low in Russia due to strong institutional barriers. An algorithm of institutionalization of place marketing in modern Russia is offered in order to increase it. Keywords: Institutional frameworks · Place marketing · Regional competition Russia’s regions

1

Introduction

In the conditions of market economy, the concept of marketing becomes the main one at all levels of economic system. Like companies conduct marketing activities, regions also develop and implement place marketing. Like companies, modern regions compete for resources, including material, financial, and human, and sales markets, using the marketing tools. However, marketing activities at the territorial level has their specifics. In particular, the product is not separate goods and services but the whole regions which consumers © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 213–218, 2019. https://doi.org/10.1007/978-3-030-00102-5_22

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are not only external but also internal interested parties (citizens and business structures). This causes high complexity of place marketing as compared to usual marketing practice at the level of companies. Due to this, in a lot of countries with developing market economy, regions were not able to quickly adapt to new conditions – unlike companies – and to start large-scale marketing activities. In this regard, experience of modern Russia is interesting, as it is a country with transitional economy that is characterized by high level of regionalization which theoretically supposes a high level of competition at the level of regions and intensity of place marketing. Our hypothesis consists in the fact that in practice it is different, and marketing activities for modern Russian regions is a new phenomenon. The purpose of the work is to study the institutional frameworks of place marketing in the Russian economy and to determine the main barriers on the path of its development and possibilities for acti‐ vation of marketing activities at the level of regional economy in modern Russia.

2

Materials and Method

The information and analytical materials of the research include the strategies of socioeconomic development of Russia’s regions (as analogs of the strategies of place marketing) and the data of the Global Competitiveness Report of the RF for 2016–2017 according to the World Economic Forum. For the research, we selected the following indicators: • indicator of competition as a basis of marketing: intensity of territorial competition (6.01 Intensity of local competition); • indicator of institutional provision of economy: institutions (1st pillar: Institutions). Due to lack of official statistical and analytical information in the sphere of place marketing in Russia, the methodology of this work does not include the methods of statistical analysis but is based on the method of logical analysis, analysis of causal connections, structural & functional and problem analysis, as well as synthesis, induc‐ tion, deduction, and formalization.

3

Discussion

Institutional aspects of place marketing are studied in multiple works of such authors as (Akopov 2013), (Kravets et al. 2014), (Laghzaoui and Abakouy 2015), (Popkova 2014), (Popkova et al. 2013), (Skiter et al. 2015), (Pozdnyakova et al. 2015), and (Romanova et al. 2015). However, despite a large number of existing studies on this topic, it is not sufficiently elaborated from the practical point of view. Thus, the perspec‐ tives of overcoming the problems of place marketing are not that clear. This is a precon‐ dition for further research in this scientific sphere.

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Results

According to the Global Competitiveness Report of the modern Russia’s economy, it is peculiar for a low level of territorial competition (5 points out of 6, 81st place out of 136 according to the indicator 6.01 Intensity of local competition) and institutional provision for the economic system (3.6 points out of 6, 88th position out of 136 according to the indicator 1st pillar: Institutions). Analysis of strategies of socio-economic development of Russia’s regions showed that they have little in common with the strategies of place marketing. The key task, formulated in these strategies, is improvement of indicators of socio-economic devel‐ opment and acceleration of the rate of economic growth – i.e., improvement of the situation as compared to the previous period. The tasks in marketing strategies suppose increase of competitiveness, i.e., improve‐ ment of the situation as compared to rivals. The tools that are applied for managing of territories’ development are of the regulatory (main tool: preferences for regional companies), not marketing (advertising, branding, PR, etc.) character. On the basis of detailed study, we distinguish five institutional barriers on the path of development of place marketing in modern Russia. The first barrier – low level of involvement of Russian territories into the processes of global competition. Despite the formal openness of economy, modern Russia continues to use the protectionism measures. Due to this, Russia’s regions are not fully involved into such processes as international movement of production factors. As the risk of migration and resource drain (and, accordingly, involvement of new citizens, business structures, and resources) is minimal, the necessity for realization of place marketing disappears. The second barrier is the low level of internal (national) competition of the Russian territories. Distribution of national resources (assets of co-financing of regional devel‐ opment from the federal budget) is not performed on the competitive basis. Moreover, competitive regions are considered subsidized and receive a lot of resources. This does not create competition among the Russian regions and makes place marketing inexpe‐ dient. Without natural market stimuli, its conduct is inexpedient. The third barrier is lack of interest and incompetence of territorial authorities in the issues of place marketing. Lack of knowledge, skills, and experience of place marketing, as well as lack of the corresponding criterion in assessment of the quality of regional authorities’ work during HR decisions making at higher level of public authorities make it impossible for them to participate in implementation of place marketing. The fourth barrier is underdevelopment of the institutional environment for imple‐ mentation of place marketing. The normative and legal provision of place marketing in modern Russia is not sufficiently developed. In particular, there are not clear recom‐ mendations for development and implementation of regions’ marketing strategies and assessment of their effectiveness. Uncertainty of the institutional environment compli‐ cates the process of place marketing. Fifth barrier – underdevelopment of culture of place marketing in Russia. Lack of information on experience and successful examples of development and implementation of strategies in the sphere of place marketing, as well as norms and values of its

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implementation, is a reason for underdevelopment of informal institutional provision of this process. With development of market processes in economy of modern Russia new possi‐ bilities for overcoming these barriers appear. For their implementation, the following recommendations are offered. Firstly, it is necessary to strengthen the normative and legal foundation of place marketing. It is necessary to adopt a federal law that would regulate the activities of Russian regions in the sphere of place marketing and to make amendments into other laws. Secondly, it is necessary to prepare managerial personnel for implementation of place marketing. It is necessary to form the required competences by training and to establish success of place marketing as a criterion of their work. Thirdly, it is important to create conditions for exchange of experience in the sphere of place marketing. It is necessary to develop effective communications between Russian regions on the issues of place marketing. Fourthly, it is necessary to stimulate internal competition of regions by setting the requirements to successfulness of place marketing during distribution of territorial resources. Fifthly, it is necessary to create conditions for external competition of regions. The protectionist measures should be canceled and replaced by the mechanism of free competition in the conditions of open regional economy. For complex and successive implementation of the above recommendations, we offer to use the specially developed

Strengthening of the normative and legal basis of territorial marketing Training of managerial personnel for implementation of place marketing Creation of conditions for exchange of experience in the sphere of place marketing

Is institutional provision of place marketing formed? Stimulation of internal competition among regions

Creation of conditions for external competition among regions Reduction of regions’ competitiveness

Increase of disproportions

Growth of marketing activity of regions What is the result?

What is the result?

Growth of regions’ marketing activity Monitoring and control over place marketing in modern Russia

Fig. 1. Algorithm of institutionalization of place marketing in modern Russia Source: compiled by the authors

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algorithm of institutionalization of place marketing in modern Russia, which is shown in Fig. 1. As is seen from Fig. 1, the measures of federal government for institutionalization of place marketing in modern Russia are brought down to institutional provision (strengthening of the normative and legal basis, preparation of managerial personnel, and creation of conditions of exchange of experience). Only after verification of comple‐ tion of this process, it is recommended to start the stage of creating the competitive environment which makes Russian regions conduct place marketing. The final stage is federal monitoring and control over place marketing in modern Russia.

5

Conclusions

It should be concluded that the institutional frameworks of place marketing in Russia should not be viewed as barriers only. They rather determine peculiarities of its imple‐ mentation that are to be taken into account during adapting this practice to the Russian economic conditions. In this regard, the offered algorithm of institutionalization of place marketing in modern Russia could be useful. Institutional problems are not the only barriers on the path of development of place marketing in Russia. They also include the deficit of managerial personnel in regions that appeared after the wave of their reduction, low level of development of civil society and cooperation of entrepreneurship, due to which population and business cannot influence the management of region’s economy, etc. Studying these factors and the search for the means of highly effective management of them in the interests of devel‐ opment of place marketing in Russia should be done in further research.

References Akopov, S.E.: Development of the integration process within the territorial marketing of eurasecparticipating countries. World Appl. Sci. J. 28(7), 955–961 (2013) Kravets, A., Shcherbakov, M., Kultsova, M., Iijima, T.: Knowledge-based software engineering. 11th Joint Conference, JCKBSE 2014, Volgograd, Russia, 17–20 September, 2014. Proceedings (2014). Communications in Computer and Information Science. CCIS, vol. 466, pp. 56–81 (2014). vol. 24(1) Laghzaoui, F., Abakouy, M.: Territorial marketing practices in Morocco: Study of the experience in the city of Tangier. (Pratiques du marketing territorial au maroc: Etude de l’expérience de la ville de tanger). In: Proceedings of the 25th International Business Information Management Association Conference - Innovation Vision 2020: From Regional Development Sustainability to Global Economic Growth, IBIMA 2015, pp. 3379–3397 (2015) Popkova, E.G.: New prospects of economic growth in context of underdevelopment whirlpools phenomena. Appl. Econ. Int. Dev. 14(1), 5–25 (2014) Popkova, E.G., Shakhovskaya, L.S., Romanova, M.K., Dubova, Y.I.: Bases of transition of the territory to sustainable development: Modern city. World Appl. Sci. J. 23(11), 1499–1507 (2013) Pozdnyakova, U.A., Dubova, Y.I., Nadtochiy, I.I., (…), Rogachev, A.F., Golikov, V.V.: Scientific development of socio-ethical construction of ecological marketing. Mediterr. J. Soc. Sci. 6(5S1), 278–281 (2015)

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Romanova, N.A., Brachun, T.A., Dmitrieva, E.A.: Modern city positioning case study as a tool of territorial marketing: Magadan. Russ., Mediterr. J. Soc. Sci. 6(4), 245–249 (2015) Skiter, N., Semenychev, V., Litvinova, T.N.: Model of economic growth in Russia under conditions of integration into the world economy. Appl. Econ. Int. Dev. 15(2), 63–70 (2015) World Economic Forum. The Global Competitiveness Report 2016–2017. http://www3.weforum.org/ docs/GCR2016-2017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf. Accessed 28 August 2017

Directions of Perspective Development of Innovational Infrastructure of Russian Regions Larisa L. Alekhina1(&), Margarita N. Burtseva1, Anna G. Savina1, Svetlana A. Ilminskaya2, and Irina V. Skobliakova3 1 Orel State University of Economics and Trade, Orel, Russia [email protected], [email protected], [email protected] 2 Financial University Under the Government of the Russian Federation, Orel Branch, Moscow, Russia [email protected] 3 Orel State University, Orel, Russia [email protected]

Abstract. Existing problems of regional innovational economy are often caused by absence and/or incorrect management of the objects of innovational infrastructure. Ineffective measures within strategic programs of development and absence of the federal concepts for supporting the objects of innovational infrastructure do not allow concentrating efforts on the processes of transformation of regional environment in favor of technologization and informatization of society. Topicality of perspective development of innovational infrastructure determines significance of this process for increasing competitiveness of Russia’s regions. The purpose of this research is to consider periodization and to develop certain directions of development of innovational infrastructure in the regions of the RF. In order to achieve this goal, it is necessary to solve certain tasks: study the main types of innovational infrastructure that are used in the theoretical aspect of the announced research; determine peculiarities of the system of initiation of “model development” of innovational infrastructure in foreign countries; determine the key moments of creation and consecutive development of the Russian regional innovational infrastructure; form toppriority directions of perspective development of innovational infrastructure of the regions of the RF. The methodological tools include the following methods: grouping, concentration, classification, analysis, synthesis, and scenario periodization. Further development of this topic could be related to analysis and evaluation of international experience of implementing the perspective directions for development of innovational infrastructure of Russian regions. Keywords: Infrastructure  Innovations  Region Technological centers  Top-priority directions

 Business incubators

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1 Introduction The industrial infrastructure that remained from the post-Soviet past does not allow reaching the planned growth in the age of knowledge economy and technologies. High need for creation and development of innovational infrastructure sets new tasks before the state and regions, which are aimed at development of top-priority directions in this sphere. The existing business incubators, technological parks, and clusters are prototypes of innovational infrastructure. At that, the problem of financing and development of these objects as independence elements of innovational economy does not allow dividing the process of formation of a new paradigm of development in the subjects of the RF into stages. This thesis is substantiated by the following ideas. Firstly, ageing of production funds and scientific infrastructure does not stimulate modernization and implementation of innovational elements of effective management into economic activities of regions of depressive development. Secondly, implementation of ineffective subsidizing measures for attraction of investments for construction of innovational infrastructure postpones the process of shifting the development of territorial economies in favor of the technological model of innovational functioning of regional environment. Thirdly, absence of normative elaboration of the aspect of development of the innovational infrastructure objects in the regions of the RF leads to imbalance and underrun of these territories from socio-economic indicators of the leading subjects. These circumstances directly and indirectly influence socio-economic development of the subjects of the RF, also influencing different spheres of functioning of territorial economies. According to the determined problems, we deem it possible to form and conduct research on the topic of development of innovational infrastructure in the regions of the RF. The purpose of the research is to consider the process of periodization and to develop the directions of development of innovational infrastructure in regions of the RF. In order to achieve this goal, it is necessary to solve the following tasks: – consider the main types of innovational infrastructure that are used in the theoretical aspect of the announced research; – determine peculiarities of the system of initiation of “model development” of innovational infrastructure in foreign countries; – determine key aspects of creation and consecutive development of Russian regional innovational infrastructure; – form top-priority directions of perspective development of innovational infrastructure of regions of the RF. The methodology of the research includes grouping and concentration of peculiar elements of the system, classification of differentiated systems, analysis and synthesis, scenario periodization, and selective distinguishing of peculiar qualities of the research object.

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2 The Main Types of Innovational Infrastructure That Are Used in the Theoretical Aspect of the Announced Research The issue of classification of innovational infrastructure is studied in a lot of scientific works of Russia and foreign authors (Hendrick 1994; Yang et al. 2016; Stroeva et al. 2015). The key element is the principle of grouping of directions of development of the scientific object. Based on generalization of information, five key blocks of regional objects of innovational infrastructure are formed: 1. Objects of production direction (Balco and Greguš 2014; Simonova et al. 2017) reflect the accumulated potential of the elements of technological organization that include the centers of innovational and scientific development (industrial cluster, technological cluster, business incubator, center of transfer of technologies, engineering center, industrial associative associations). 2. Objects of expert direction deal with activities for provision of consulting and other supporting services within technological interaction between the subjects of regional infrastructure (information and consultation centers, centers of transformation technologies). 3. Objects of information and analytical direction (Kashitsyna and Berkovich 2014) are platform structures that allow adapting the existing information to the conditions of external environment and participating in the process of interaction within these generic systems (technological platforms, information platforms, intellectual platforms, analytical centers, statistical centers, and monitoring centers). 4. Objects of venture direction determine the process tools in the sphere of redistribution and increase of investment capital within innovational and scientific development of the regional infrastructure objects (banks and credit organizations (investment capital), venture funds, individual investors, investment groups). 5. Objects of educational direction form within their activities methodological preconditions of standardized professional qualities that are required for development of regional innovational infrastructure (universities, R&D centers and institutes, construction bureaus with innovational orientation). The main types of objects, which are formed on the basis of scientific literature, allow systematizing experience of development of regional innovational infrastructure in the countries of European, Asian, and American economic space.

3 The System of Initiation of “Model Development” of Innovational Infrastructure in Foreign Countries The system of initiation of “model development” in foreign countries is brought down to determining the object characteristics, participants of development, and models and tools that are used in the process of development of innovational infrastructure. The process of initiation of “model development” of innovational infrastructure is built on the basis of top-priority directions in the sphere of innovational policy, namely:

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– creation of innovational products for production sector (Menshchikova 2013); – transforming knowledge and technologies into new ideas and commercialized products (Shebeko 2016); – reproduction of personnel, which creates and develops innovational infrastructure (Kasarda and Rondinelli 1998). Let us generalize experience of “model development” of innovational infrastructure based on formation of adjacent country models: American, Asian, and European. The American model of “model development” of innovational infrastructure is formed under the influence of integrated innovational processes that take place in the USA. The key objects of innovational infrastructure in the American model are R&D parks and incubators. These objects are of top-priority for provision of innovational and technological development of the USA. Unlike the Russian system of management and development of innovational infrastructure, the main role of participants of financing belongs to the federal government, universities, colleges, and industrial and production corporations. Based on the models of “transfer of experience” and “technological interaction’, these participants create and develop projects within transformation of innovational infrastructure according to the conditions of the modern competitive environment. Transformation is the initial stage in support for innovational objects by means of programs, grants, and strategies in the sphere of innovational changes and centers of commercialization of technological products. The Asian model of “model development” is based on constant update (пwith the help of implementation of new projects) of the innovational infrastructure. The key objects of innovational infrastructure are cities-technological parks and brain cities. The top-priority concept of development of the innovational infrastructure is the precondition for creation of “cities of future” or the strategy “today is better than tomorrow” (Maier 2013). The system of financing of these programs is built on interaction between high-tech business, which commercializes technologies within the created innovational environment, and state as a participant of innovational interrelations. As a result, the model of initiation of “model development” of innovational infrastructure is brought down to formation of “useful effect turnover” – i.e., the system of relations in which each participant implements the planned initiatives. The tools of this system are not aimed at application of financial accumulation of assets in the objects of innovational infrastructure. Top-priority attention in this issue is paid to creation of the institutes of development, namely geographical centers of transfer technologies and companies under the direction of scientific society. The European model of “model development” of innovational infrastructure is observed in such countries as Belgium, the UK, Italy, the Netherlands, and France. This model is based on differentiated innovational infrastructural objects (technological parks and fundamental structures of regional economy). The presented objects are formed under the influence of cross-integration connections within the EU. The key investors within creation of innovational infrastructure are the European Investment Fund and commercial companies. On the whole, the European model is built on the basis of replacement of innovational technologies according to the programs of “correction of priorities” and “overtaking innovations”. It could be noted that the European model is a prototype of the American system of management and development of

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innovational infrastructure. Within the European model, innovational plans are developed and quasi-companies are created, which are oriented at market needs and consist of scientific groups. The presented models of initiation of “model development” of innovational infrastructure have similar and differentiated peculiarities. The European model of initiation is similar to the American one. Despite this, the European model has the features of the Asian system, related to the process of financing of innovational infrastructure. At that, the dominating position of the American model makes the representatives of the Asian economic space to move towards creation of a unique system of development of the objects of innovational and technological activities. The process of development of regional innovational infrastructure is completely different in the Russian economy. Figure 1 shows scenario periodization of directions of development of innovational infrastructure in the regions of the RF.

Creation of technological parks and business incubators

Formation of the model of regional innovational infrastructure (RII)

Conclusion of agreements on financial support for RII

1990-1995

Transformation of certain RII into centers of transfer of technologies Creation of the system of quick commercialization of innovations

Preparation of personnel for servicing RII

1996-2000 Selective support

Formation of federal and regional programs of development of RII

Creation of expert centers for innovational activities of RII

Provision of consulting support for innovational projects

2001-2005

Implementation of subsidizing measures within development of RII

Implementation of road maps of development of RII

Creation of data bases of experts within venture and technological funds

RII’s entering information platforms of the National Technological Initiative

Mass distribution of concepts and ideas of RII

2006-2010

System of non-correlation measures

2011-2017 Long-term initiatives

Fig. 1. Scenario periodization of directions of development of innovational infrastructure in the regions of the RF.

4 The Key Aspects of Creation and Progressive Development of Russian Regional Innovational Infrastructure Scenario periodization of the directions of development of innovational infrastructure in regions of the RF has five time periods. The orthodox scenarios of these stages are the concepts that are the main ones in the state innovational policy of the country: – selective support for the objects of innovational infrastructure (1990-2000) – the process of selective financing and development of project directions in the sphere of construction of regional innovational infrastructure;

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– system of non-correlation measures (2001-2010) – implementation of directions of innovational activities that are not structured and not related to each other; – formation of long-term initiatives (2011-2017) – development of long-term directions of development of regional innovational infrastructure in the aspect of full transformation and modernization of innovational policy of the subjects of the RF. Despite the duration of the scenario lag, stage-by-stage development of innovational infrastructure in the regions of the RF was performed in the course of five-year period. Let us view these periods, distinguishing the peculiarities of development of innovational infrastructure in the regions of the RF. Stage 1. Creation (1990-1995). This stage reflects fundamental directions for creation of the objects of regional innovational infrastructure, which consists in: – implementation of investment plans for construction of technological parks and business incubators; – formation of the model of regional innovational infrastructure; – conclusion of agreements on financial support for regional innovational infrastructure. Stage 2. Provision (1996-2000). In continuation of the first stage, the process of provision includes formation of the system of preparation of personnel for servicing regional innovational infrastructure, creation of the model of quick commercialization of innovations and determination of top-priority plans of transformation of certain regional objects of innovational infrastructure into the centers of transfer of technologies. Stage 3. Institutionalization of the process (2001-2005). In this period, under the control of the state structures, institutes and normative & legal basis for regulation and development of the objects of regional innovational infrastructure are formed. The measures of institutionalization of the process of development of the infrastructure objects include formation of federal and regional programs, creation of expert centers of innovational activities, and provision of consulting support for innovational projects. Stage 4. Improvement (2006-2010). In its essence, the process of development of regional objects of innovational infrastructure was started at the stage of improvement in early 2006. This stage put before the public authorities the issue of the necessity for providing the regional investors with subsidies during formation of new algorithms for interaction between state and business. Based on this, road maps were implemented into the system of state planning as information & analytical tools of implementation of short-term and long-term strategy of territory’s development. The ideas of creation and modernization of innovational infrastructure were reflected in all regional programs for stimulation in development of innovational activities of the subjects of the RF. Stage 5. Re-orientation. The final stage of development of innovational infrastructure in the recent years is related to the process of re-orientation of tasks in favor of technologization of innovational objects. Based on this task, data bases of experts within venture and technological funds are created and project elements of development of innovational infrastructure are reflected in the strategy of the National Technological Initiative. At that, formation of new approaches to improvement of regional innovational infrastructure does not allow for deep change in public conscience in favor

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of importance of perspectiveo development of this direction. Based on this thesis, it is possible to distinguish certain directions of development of innovational infrastructure of Russia’s regions, which are of top-priority importance.

5 Top-Priority Directions of Perspective Development of Innovational Infrastructure of Russia’s Regions Top-priority directions of perspective development of innovational infrastructure of Russia’s regions are formed on the basis of the system of algorithmic actions. The system of algorithmic actions envisages the plan of actions with stage-by-stage direction within the process of studying the scientific objects. Top-priority directions of perspective development of innovational infrastructure of Russia’s regions include five key measures that reflect managerial & analytical and legal aspects of the studied issue. I. Preparation of the federal program for usage and integration of regional agents for development of innovational infrastructure. The measures within this program are based on attraction of the main agents of regional economy for support in development of innovational infrastructure. The agents are various subjects of sectorial directions of the regional system of interrelations. For example, it for development of scientific centers with innovational production, it is expedient to use industrial companies, R&D centers in the sphere of solving the problems of industrial production, and other subjects of small and medium business. In this program, it is necessary to provide the algorithm of actions that will allow – on the basis of compromises and mutual interests – to form the system of development and commercialization of products within regional innovational infrastructure. II. Implementation of projects for development of regional innovational infrastructure within student graduation works. The presented direction is closely related to the attempt of the Ministry of Science and Education of the RF and certain large federal universities (e.g., Financial University with the Government of the RF) to implement the elements of project management into the system of state final attestation. Very often, the tool of project management is used at the chairs with practical experience of implementation of state and business studies within research order. According the fact that most universities partially function in the innovational environment, there emerged the issue of implementation of project management for development of these infrastructural objects. Subjects of educational environment that receive scientific services via application of innovational infrastructure must have a choice of specialties. Having selected the project mechanism, a student must be freed of preparation of graduate qualification work on another topic. III. Creation of information platform “Innovational experience”. Within this event, the key aspect is development of the information platform on transfer of experience in the sphere of development and management of the objects of innovational environment. Based on digitization and intellectualization of

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information space, the role of Internetized platforms for development of regional and innovational societies within national and international network platforms grows. Development of the information platform “Innovational experience” will allow for online consideration and analysis of the best global and Russian practices for development, transformation, and modernization of the objects of regional innovational infrastructure. IV. Allocation of articles of the subject of the RF for order of innovational products for development of the objects of regional innovational infrastructure. Financial support within regional budgets could be built not on the basis of direct subsidies for supporting the functioning of the objects of innovational infrastructure but through regional order for innovational products. Firstly, this mechanism will allow for more effective tracking of spent financial assets for these articles of the regional budget. Secondly, providing the objects of innovational infrastructure with regional order will form preconditions for development and communicative interaction between business structures within innovational activities. V. Creation of the model of management of regional innovational infrastructure (PERT, PATTERN). The key measure for development of the objects of regional innovational infrastructure is creation of the management model that would include stage-by-stage mechanism of implementation of this process. Imitation of this model should be performed with the method Program Evaluation Review Technique, which allows – on the basis of Gant diagrams and quantitative criteria of mathematical substantiation – implementing management of the studied object. The above top-priority directions of perspective development of innovational infrastructure of Russia’s regions are systemic components of the single process of functioning of structural objects within innovational environment. Gradual shift of directions from program provision to project management allows achieving planned results within development of innovational infrastructure. At that, gradation of toppriority directions and their informatization on the basis of developed platform will created a precedent in usage of digital technologies that are aimed at solving regional problems.

6 Conclusions The topic of generic classification of the objects of innovational infrastructure has a lot of proprietary divisions. They key principle of grouping and differentiation of generic objects is distinguishing the significance of innovational and technological initiative of innovational infrastructure in the aspect of region’s development. In this article, classification of innovational infrastructure was performed on the basis of distinguishing the key directions of top-priority functioning of objects that allowed determining their different characteristics (production, expert, information and analytical, venture, and educational). Based on analysis of the system of initiation of “model development”, structural models were determined, which are of top-priority value for functioning and

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development of innovational infrastructure in foreign countries: American, Asian, and European. The presented models of initiation of “model development” of innovational infrastructure have similar and different peculiarities. The European model of initiation is similar to the American one. Despite this, the European model has the qualities of the Asian model, related to the process of financing of development of innovational infrastructure. At that, the dominating position of the American model makes the Asian model to move towards creation of a unique system of development of the objects of innovational and technological activities. Development of the Russian market of innovational infrastructure is seen according to periodization, in which peculiarities of this process are scenarios and stages. It is established that development of regional innovational infrastructure in the RF took place on the basis of selective support for the objects of innovational infrastructure and the system of non-correlation measures and formation of long-term initiatives. These scenarios are seen according to the key periods of transformation of innovational market – namely, creation, provision, institutionalization, improvement, and reorientation of the process of development of regional infrastructure. Despite the intensive development of the issue of perspective functioning of innovational infrastructure in the regions of the RF, certain normative and information problems of regulation of these objects remain unsolved. According to the authors, it is necessary to pay attention to such directions of development as preparation of the federal program for usage and integration of regional agents for development of innovational infrastructure, implementation of projects within student graduation works, creation of information platform “Innovational experience”, allocation of articles of the regional budget for orders of innovational products, and imitation of the model of management of regional innovational infrastructure (PERT, PATTERN).

References Balco, P., Greguš, M.: The implementation of innovative services in education by using cloud infrastructure and their economic aspects. Glob. J. Flex. Syst. Manag. 15(1), 69–76 (2014) Hendrick, R.: An information infrastructure for innovative management of government. Public Adm. Rev. 54(6), 543–550 (1994) Kasarda, J.D., Rondinelli, D.A.: Innovative infrastructure agile manufactures. Sloan Manag. Rev. 39(2), 73–82 (1998) Kashitsyna, T., Berkovich, M.: Strategic development of the innovative infrastructure of region. Asian Soc. Sci. 10(21), 145–151 (2014) Maier, L.: Innovation incubators-entities of support of small and medium-sized enterprises’ competitiveness in the modern economy. Economie si Sociologie: Revista TeoreticoStiintifica, No. 2, pp. 67–86 (2013) Menshchikova, V.: Innovative development of the region: key directions of improvement of innovative infrastructure. In: Economy Modernization: New Challenges and Innovative Practice: Conference Proceedings, pp. 65–67. Scope Academic House B&M Publishing (2013) Shebeko, K.K.: Innovative infrastructure of scientific-industrial cluster. Economics and Baks No. 2, pp. 97–101 (2016)

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Simonova, E.V., Lyapina, I.R., Kovanova, E.S., Eldyaeva, N.A., Sibirskaya, E.V.: Characteristics of interaction between small innovational and large business for the purpose of increase of their competitiveness. In: Popkova, E.G. (ed.) Russia and the European Union, Development and Perspectives, pp. 407–413. Springer International Publishing, AG (2017) Stroeva, O., Lyapina, I., Konobeeva, E., Konobeeva, O.: Effectiveness of management of innovative activities in regional socio-economic systems. Eur. Res. Stud. XVIII, 59–72 (2015) Yang, T., Long, R., Li, W., Rehman, S.U.R.: Innovative application of the public-private partnership model to electric vehicle charging infrastructure in China. Sustainability 8(8), 738 (2016)

Strategic Goals of Socio-Economic Development of Regions in the Conditions of Economic and Financial Limitations Elena V. Endovitskaya(&), Igor E. Risin, and Yuri I. Treshchevsky Voronezh State University, Voronezh, Russia [email protected], [email protected], [email protected]

Abstract. The authors study the content and structure of strategic goals of Russia’s regions in the conditions of economic and financial limitation of the 2010’s. The global and Russian experience of strategic planning show the necessity for setting the system of goals that correspond to internal parameters and external conditions of socio-economic systems. At that, the goals must have quantitative characteristics. The authors study goal settings of a range of regions of the Russian Federation and substantiate and approbate – by the example of Voronezh Oblast – the theoretical and methodological approach to formation of the system of interconnected indicators that reflect achievement of the set strategic goals of region’s socio-economic development. As a result of the research, the content of strategic goals of socio-economic development of Voronezh Oblast is offered and the indicators of their achievement are determined. Keywords: Strategic goals Indicators

 Socio-economic development of region

GEL Classification Codes: R 58 R 58

 R 59

1 Introduction The state of socio-economic systems is subject to high risks, caused by quick changes in the global and national financial systems. The most mobile part of economy – finances – is subject to such changes, as it contains subjects of different institutional nature: public authorities of various levels, large business, small and medium business, individuals. This completely changes the conditions of competition in financial markets as compared to other sectors of economy. For example, as for industrial sphere, it is impossible to enter production without large own capital (except for separate examples of working in completely new directions of production in the sphere of information technologies). Even in this case, the effective “new idea” has to be supported by large investors who see the possibility of its implementation in real processes. The situation is different in the financial sphere – banking structure that are interested in attracting assets from economic subjects that are not aware of regularities of functioning of financial tools, create high demand through mass media and aggressive advertising. As a result, demand for certain financial tools grows very © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 229–235, 2019. https://doi.org/10.1007/978-3-030-00102-5_24

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quickly. There appears a situation, which is known in Russia as “financial pyramid” – it is built due to initiative of large “players” of the markets and it is supported by a lot of financially weak and incompetent subjects. Due to their large number, a financial machine is formed with low level of provision with material, labor, intellectual, and other resources. Limitations in this case are presented not by the state of financial tools but by insufficiency of their limitation. On the other hand, vectors of action of financial tools – due to their high mobility – change under the influence of the factors of economic, social, and political character. As to regions of Russia, the problem consists in the wide specter of emerging financial and economic limitations that are related to the regime of sanctions and counter-sanctions; reduction of prices for traditional export products; change of volumes and structure of import; new spatial and functional priorities of investment policy of the state.

2 Discussion One of the problems of strategic development of Russia’s regions is high level of their differentiation according to economic, social, and institutional parameters (Treshchevsky et al. 2017; Risin et al. 2017); (Sazonov et al. 2013; Popkova et al. 2018a, 2018b; Treshchevsky et al. 2018). Low predictability of the level of influence of new financial and other limitations on economy and social sphere of regions requires formation of tough basis of socio-economic policy, based on the strategy of region’s socio-economic development. In the conditions of financial and economic limitations to formation of strategies of regions, it is necessary to set additional requirements. Based on theoretical studies and practice of development of strategies of the regional level, we offer the main provisions of the theoretical and methodological approach to substantiating the goals of region’s socio-economic development: – region’s mission should reflect its functional specifics; – general goal of the new strategy should ensure succession and update of goals of the implemented strategy of socio-economic development of the region until 2020; – goals of subjects of management of various levels should take into account diversity of preferences of various institutional groups of the region (Endovitsky et al. 2017); – number of priorities in the economic, social, and spatial aspects should be limited (in our opinion – down to one priority in economy, social sphere, and organization of space); – goals should be determined quantitatively (in the usual conditions, goals could be reflected not only by quantitative indicators but also qualitative characteristics); – narrow list of goals is necessary – those that are critical for preserving stability of region’s socio-economic system; – it is important to ensure orientation at invariant (common for Russian regions) goals, defined in the program documents of the public authorities of the RF: the Strategy of national security of the RF; Message of the President to the Federal Assembly of the RF dated March 1, 2018; the Project of the Concept of spatial development of the RF. – social goals are oriented at support for poorly protected social groups of population, development of education and healthcare.

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3 Strategic Goals of Socio-Economic Development of Russia’s Regions In the enlarged form, strategic goals of region’s socio-economic development are determined by the example of Voronezh Oblast. 3.1

Systematization of the Goals that Are Set in the Program Documents of the Federal Center

The data presented in Table 1 allow stating the following: – goals in the documents of the Federal Center are oriented at achievement of similar but, mostly, various goals that are determined by specifics of the initial document; – each goal has a lot of variants of quantitative expression; – quantitative expression of goals, formulate in a range of documents (in this case – “Concept of the strategy of spatial development”), is difficult. Table 1. Strategic goals that are set by the Federal Center of the RF (selection). “Strategy of National Security of the RF”

Development of human potential Reduction of the level of social and material inequality of population Provision of economy’s transition to a new level of technological development Russia’s entering the leaders as to the volume of GDP Increase of social mobility, quality of general, professional, and higher education, and its accessibility for all categories of citizens Development of fundamental scientific studies Increase of life span Reduction of the level of disability and death rate Increase of the number of population

“May” Decrees of the President of the RF (2012), the Message of the President to the Federal Assembly of the RF Increase of rates and provision of sustainability of economic growth Increase of real income of population Preservation and strengthening of population’s health Increase of birth rate Increase of life span Improvement of population’s housing conditions Increase of accessibility of housing and quality of housing and utilities services Growth of the volume of high-tech medical help; liquidation of school buildings that are in critical condition;

The project of the Concept of spatial development of the RF

Creation of spatial environment that is favorable for human’s life activities Increase of competitiveness of the Russian economy based on its innovational modernization in view of modern factors of placement of production forces Maximum opening of regional and local socioeconomic potential Minimization of spatial transaction costs for economic subjects, supporting their mobility

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The above provisions require unambiguous definition of goals in strategic documents of the regions of the RF, which is usually in practice (Table 2). Table 2. Strategic goals of Russia’s regions (regions with the high level of elaboration of strategic documents). Regions of the RF Vologda Oblast

Kamchatka Krai Krasnoyarsk Krai

Republic of Bashkortostan Republic of Sakha (Yakutia)

St. Petersburg

Tambov Oblast

Khabarovsk Krai

Strategic goals Implementing the policy of population saving by preserving demographic potential and development of human capital by means of competitiveness of the sphere and formation of the space of human’s development Formation of conditions for sustainable socio-economic development of the Krai by means of optimal usage of territory’s unique resources Provision of high quality of population’s living standards and region’s attractiveness for residing on the basis of effective development of regional economy Competitive region with sustainable economy and developed social infrastructure, which is among top-10 Russia’s regions Leader of the Far East and Arctic area of the RF, comfortable and safe for realization of human capital, this republic has unique nature potential and is a “magnet for technologies” for life in the conditions of low temperatures and wide territories Provision of stable improvement of living standards of urban citizens on the basis of provision of sustainable economic growth with usage of the results of innovational and technological activities and increase of global competitiveness of St. Petersburg Leadership in population’s satisfaction with quality of life and environment on the basis of new industrialization, social modernization, full digitization, and effective state management Turning Khabarovsk Krai into the central growth pole of the Far East, which is the leader in the sphere of mutually determined growth of human capital, innovational economy, spatial organization, and international cooperation

The authors think that formulation of the general goal, which does not require specific quantitative expression, is justified. However, it should contain all components that characterize basic vectors of region’s development, which further on will be assessed quantitatively. 3.2

Strategic Goals of Region’s Socio-Economic Development (by the Example of Voronezh Oblast)

In the process of formation of the system of region’s strategic goals, it is necessary to ensure their succession. According to this requirement, two components are important for Voronezh Oblast: formation of favorable environment for living activities of human and development of entrepreneurship (set in the Strategy-2020).

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These goals are for a new time period (until 2035). For example, the list of strategic goals of Voronezh Oblast should include: – achieving leadership positions of the region in the Central Federal District as to the level of development of human capital and population’s living standards, reduction of socio-economic inequality; – achievement of indicators of dynamics of development of Voronezh Oblast’s economy, which are higher than average Russian indicators. It should be noted that succession envisages emergence of new goals. As to conditions of financial and economic limitations, rational spatial configuration is important, which allows ensuring economy of resources. Hence the new goal for regions – effective placement of productive forces, which is specific for the regions, their groups, and business structures (Vertakova et al. 2016). Appearance of such goal has to ensure economic growth, which is necessary in any conditions of socio-economic development (Popkova et al. 2018a, 2018b; Parakhina et al. 2017). A new goal for Voronezh Oblast is polycentric spatial development, which ensures creation of infrastructural basis that ensures effective specialization of municipal entities and preservation of their production potential (Makarov et al. 2017). This component of the strategy could be expressed by quantitative indicators that reflect the level of inter-municipal differences and are significant from the point of view of region’s population. At the same time, it is necessary to note weak compatibility of the indicators of the country’s regions – because their measuring is difficult due to different functional and spatial localization, complexities of measuring of parameters of socioeconomic development of municipal entities of the country. Table 3. The system of indicators of socio-economic development of Voronezh Oblast in the long-term. Goals 1. Achievement of leadership positions of Voronezh Oblast in the Central Federal District as to the level of human capital development and population’s living standards. Reduction of socio-economic inequality

Indicators 1. General birth rate (per thousand) 2. Expected life span (years) 3. Dynamics of real money income of population (interest to previous year) 4. Share of population with money incomes that are lower than the subsistence level (%) 5. Unemployment rate in full labor market (according to the methodology of International Labor Organization, %) 6. Total area of residential premises per 1 resident (m2) 7. Provision of pre-school children with places in pre-school educational establishments (per 100 children) 8. Share of expenditures in GRP for healthcare, education, and culture (%) 9. Index of physical volume of nature protection expenditures (continued)

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Goals 2. Supporting the dynamics of development of economy that exceeds the average Russian indicators and increase of its competitiveness. Strengthening of region’s positions in the global economic space

3. Provision of polycentric development of region’s economy

Indicators 10. GRP per capita (RUB per capita) 11. Volume of investments into fixed capital (RUB million) 12. Index of labor efficiency according to basic types of activities (% to the previous year) 13. Growth of products for the basic types of activities per year (%) 14. Turnover of small and medium companies per year (RUB million) 15. Share of products of high-tech and sciencedriven spheres in GRP (%) 16. Volume of direct foreign investments ($ million) 17. Volume of export ($ million) Coefficients of inter-municipal differences according to the indicators: 18. Provision with housing fund (m2 per capita) 19. Volume of investments into fixed capital per capita (RUB million) 20. Coefficient of natural growth (per thousand) 21. Coefficient of migration growth (per thousand) 22. Monthly average wages (RUB) 23. Beginning of operation of residential premises by means of all financing sources (m2)

As to the above three strategic goal, the strategy should contain the minimum set of indicators, which allow for easy determination of the level of goals’ achievement. For Voronezh Oblast, it is possible to offer the following set of indicators, which reflects three basic components of region’s development – human potential, economy, and organization of space. The offered system of indicators that are important for Voronezh Oblast is presented in Table 3.

4 Conclusions The performed analysis of strategic documents of the federal and regional levels showed that they are mostly oriented at achievement of qualitative indicators. Financial and economic limitations require formation of the system of strategic goals of regions’ development, which require unambiguous treatment of various economic processes. The set of strategic indicators, which characterize economic and social goals, could be

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unified according to the country’s regions. The block of indicators, which reflect the state and perspectives of spatial development, is individual as of now. Comparison of regions is complicated due to specifics of the state of their production forces. For the regions of the Central Federal District, it is possible to offer the indicators that characterize inter-municipal differences in the level of wages, provision with residential premises, investments into production and residential construction, and natural and immigration growth of population.

References Treshchevsky, Y., Nikitina, L., Litovkin, M., Mayorova, V.: Results of Innovational Activities of Russian Regions in View of the Types of Economic Culture. Russia and the European Union Development and Perspectives Part of the series Contributions to Economics. Book. Contributions to Economics, pp. 47–53 (2017) Risin, I.E., Treshchevsky, Y.I., Tabachnikova, M.B., Franovskaya, G.N.: Public Authorities and Business on the Possibilities of Region’s Development. In: Popkova, E. (ed.) Overcoming Uncertainty of Institutional Environment as a Tool of Global Crisis Management. Contributions to Economics, pp. 55–62. Springer, Cham (2017) Sazonov, S.P., Lukyanova, A.V., Popkova, E.G.: The financial budgeting governance in transitive economies. World Appl. Sci. J. 23(11), 1538–1547 (2013) Popkova, E.G., Bogoviz, A.V., Pozdnyakova, U.A., Przhedetskaya, N.V.: Specifics of economic growth of developing countries. Stud. Syst., Decis. Control 135, 139–146 (2018a) Treshchevsky, Y.I., Voronin, V.P., Tabachnikova, M.B., Franovskaya, G.N.: Economic and statistical analysis in evaluating the perspectives of structural changes of regions’ economy. In: Advances in Intelligent Systems and Computing, pp. 521–529. Springer International Publishing AG; Cham (2018) Endovitsky, D.A., Tabachnikova, M.B., Treshchevsky, Y.I.: Analysis of the economic optimism of the institutional groups and socio-economic systems. ASERS J. Adv. Res. Law Econ. VII (6, 28), 1745–1752 (2017) Vertakova, Y., Risin, I., Treshchevsky, Yu.: The methodical approach to the evaluation and development of clustering conditions of socio-economic space. In: Proceeding of the 27th International Business Information Management Association Conference – Innovation Management and Education Excellence Vision 2020: from Regional Development Sustainability to Global Economic Growth, IBIMA 2016 (2016) Popkova, E.G., Bogoviz, A.V., Ragulina, Y.V., Alekseev, A.N. Perspective model of activation of economic growth in modern Russia. Stud. Syst. Decis. Control 135, 171–177 (2018b) Parakhina, V.N., Ustaev, R.M., Boris, O.A., Maximenko, L.S., Belousov, I.N.: Study of tendencies of formation and evaluation of hr innovational potential of the regions of the Russian Federation. In: Popkova, E.G. (ed.) Overcoming Uncertainty of Institutional Environment as a Tool of Global Crisis Management, pp. 295–301. Springer International Publishing AG (2017) (Ser. Contributions to Economics) Makarov, E.I., Nikolaeva, Yu.R., Shubina, E.A., Golikova, G.V.: Impact of Risks on Stable and Safe Functioning of Transport and Logistics Cluster of the Transit Region (E-source). Russia and the European Union, Development and Perspectives. Popkova, E.G. (ed.), pp. 321–326. Springer International Publishing AG (2017). (Ser. Contributions to Economics)

Global Information Space: A Non-linear Approach Nelli I. Morozova ✉ , Olga S. Buryakova, Natalia Z. Aliyeva, and Elena B. Ivushkina (

)

Don State Technical University, Rostov-on-Don, Russia [email protected], [email protected], [email protected], [email protected]

Abstract. The study of the trends in the formation of the global digital space and the identification of threats and dangers of its development from the point of view of a nonlinear approach suggests that, on the one hand, the global digital space serves the interests of humanization, partnership, the formation of a post‐ industrial society on the whole earth, on the other hand, it introduces a new world order, forms representations about the unstable conflict-like self-organizing digital space (Ivushkina et al. 2017). The geopolitical dimension of the global digital space and the convergence-integration processes taking place in it in the context of cardinal global changes in the world can bring a non-linear under‐ standing of the modern society. To do this, it is necessary to identify the theoret‐ ical, methodological and conceptual aspects of modernization trends, the contra‐ dictoriness of the world dynamics and the formation of a global digital space that play a dual role: both development triggers and destabilizing factors for the formation of a global non-linear information society that take place in the modern global world and paradigmatically - categorical grid of information knowledge. The global digital space in the context of the non-linear approach requires the analysis of threats to information impacts of the global digital space and its dangers in the sphere of public, mass, national consciousness, as well as threats to the identity and lifestyle of a person in the global digital space. Keywords: Global digital space · Non-linear approach Contradictory world dynamics · Dangers and threats

1

Introduction

The global society enters the digital age via the processes of globalization, wide imple‐ mentation of information and communication technologies into all spheres of human activities, and quick expansion of the information space. Its influence is changing the information and communication reality, basic peculiarities and regularities of economy, society, and culture, its structure and identity of individuals. Digital media environment is an important part of the global digital space. Dynamics of development and estab‐ lishment of the global digital space are determined by domination of new technological revolution. Establishment of digital space is related to inclusion into it of the whole totality of network and computer technologies, as well as Internet resources. Development of digital space takes place according to the main technological trends, which include © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 236–240, 2019. https://doi.org/10.1007/978-3-030-00102-5_25

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development of telecommunication infrastructure, new computer, network, and mobile technologies, and implementation of technological innovations into complex sociotechnical systems. Such emerging global digital space determines the new information picture of the world, in which information becomes not only the driver of technical and social development, but the main characteristics of material systems and their interac‐ tion. However, together with the above positive characteristics of the global digital space, it also leads to global changes of the modern society, new threats, and inter-civilization contradictions. They include information wars, cyberterrorism, and information neocolonialism. More developed civilizations use information threats and try to ideologi‐ cally subdue weaker civilizations and set a new world order. Thus, the global digital space serves the interests of humanization, partnership, and establishment of postindustrial society in the whole world, but, on the other hand, it sets a new world order and forms ideas of unstable conflict self-organizing digital space, which makes it impor‐ tant to study this phenomenon in a new non-linear approach.

2

Theoretical Basis of the Research

The theoretical and methodological basis of the research includes the works of the scholars who studied ideological, general theoretical, and methodological problems of genesis and establishment of the global digital space. In particular, trends and risks of development of digital space are studied in the works of M.R. Arpentyeva, S.M. Bray‐ chevsky, V.A. Ilganaeva, V.P. Kolomiets, S.L. Urazova, N.O. Punchenko, L.A. Pronina, and E.I. Yaroslavtseva. Philosophical understanding of non-linear nature and synergy of the world and recon‐ sideration of the existing ideas of the world, society, and the global digital environment create synergetic non-linear ideology, which is presented in the works of V.I. Arshinov, K.K. Delokarov, S.P. Kapitsa, S.P. Kurdyumov, E.N. Knyazeva, A.P. Nazaretyan, G.G. Malinetsky, D.S. Chernavsky, etc. Analysis of the problem of reconsideration of the existing opinions on the global digital space from the point of view of the non-linear approach creates the idea of the mechanisms with the help of which digital environment becomes a moving force of transformations of social development – which is studied in the works of O.V. Syun‐ tyurenko, O.N. Yanitsky, and C. Beck. Despite the existing theoretical and methodological basis, it is necessary to note the absence of the generalizing research on the presented topic. The purpose of this article is to confirm the offered hypothesis that the methods that are based on synergy and nonlinearity allow presenting a new understanding of digital space, which will allow recon‐ sidering the current changes in the age of globalization. This problem was treatment of the global digital space, its nature, establishment, and solution in the unstable world. It is possible to offer using the possibilities and means of philosophy of knowledge for considering gnoseological aspects of the problems of the global digital space.

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Existence of information space in time is determined by existence of humanity. The current changes are predetermined by communication means, methods of storing and provision of information, and level of its accessibility. The notion “digital space” is related to the notion “information space”. It is “largely identical to the global treatment of information space, defined by the Strategy of development of information society as totality of information resources, created by subjects of information environment, inter‐ action of such subjects and their information systems, and the necessary information infrastructure” (Ovchinsky 2017). It is possible to say that “digital space is a metaphor, which characterizes the space of distribution of signals in any managing systems. It is obvious that digital environment (space) acquired a completely new quality with appearance of the Internet, based on information technologies and computational equipment” (Ovchinsky 2017). Digital environment is determined by digital technologies, which work with discrete signals, unlike analog technologies with continuous signals. Computational digital equipment uses digital technologies in computers, robototronics, radio, telecommunication devices, etc. The modern world is called digital world, which converges digital environment, digital technologies, digital society, digital state, and its citizens (Ovchinsky 2017). Year 2017 characterizes the decisive phase of digital revolution with the following factors: – Internet connection for each second person in the world; – implementation of completely new, breakthrough technologies (digital platform, digital eco-system, 3D-print, robotization, “Internet of things”); – total connection and emergence of digital interconnected world. These include digital platforms, digital eco-systems, deep analysis of big data, tech‐ nologies of “Industry 4.0” - 3D print, robototronics, and Internet of Things. As was mentioned in conceptual documents of the leaders of the digital world, the most impor‐ tant criterion of the country’s transition into the digital world is total connection, inte‐ gration of personal devices (multi-functional items), public networks, corporate networks, and government infrastructures into single whole – digital interconnected world. This interconnection is called convergence, which is applied at all levels of knowl‐ edge, technologies, and society. In a wide sense, “convergence is treated as growing and transforming interaction between scientific disciplines, technologies, societies, and spheres of human activities for achieving compatibility and integration. Convergence is important for information society, and analysis of social consequences of convergence allows solving the problems that cannot be solved by disciplinary sciences and allows creating new technologies and knowledge” (Baksansky 2014). At that, “various terrorist and extremist organizations widely use the mechanisms of information influence on individual, group, and public conscience for the purpose of increase of national and social tension, ethnic and religious hate, and propaganda of extremist ideology, and involvement of new participants with terrorist activities” (Beck 2016). Digital interconnected world increases the risks and threats proportionally and exponentially. This fact requires cardinal changes of approach to national digital security and cyber security as the main construct of digital security.

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Philosophy of science pays attention to change of the type of scientific rationality and way of thinking, change of paradigm of modern knowledge from classical to postclassical, possibility of using them for understanding the global digital space in totality of socio-humanitarian and natural factors. Scientific and methodological results of using non-linear ideas in this case is related to peculiarities of digital systems as open, complex, self-developing, and non-linear objects that change the nature of social and mass communications and to peculiarities of the processes that take place in them (branching, etc.). Complexity and non-linear character of formation of digital space lead to its special behavior, based on sensitivity to initial conditions, as a result of which crisis or cata‐ strophic development of the process in response to a slight initial influence is possible (Zayats 2017).

3

Methods and Objects of the Research

The theoretical and methodological basis of the research includes the works of foreign and Russian scholars. The research allows determining the common regularities of development of ideas on the global digital space and tracking transformation of its idea in the historical context. The methodological basis is the systemic approach, which orients the research at opening the integrity of the objects, determining multiple types of connections of complex object, and bringing them down to one theoretical picture. The systemic approach allows seeing the global digital space as a complex system in which elements of information and psychological convergence are connected. Consideration of the global problems, caused by its development, led to necessity for using the methods of the structural and functional approach. The tools of determining the specifics of the selected object include the comparativehistorical and comparative methods, which allow determining and comparing the levels in development of the studied object, determining historical parallels, and analyzing peculiarities of classical and modern concepts of convergence.

4

Research Results

The performed studies of development of the non-linear approach to the global digital space could be presented in the form of the following provisions. Studying the tendencies of formation of the global digital space and determining threats and dangers to its development from the point of view of the non-linear approach shows that on the one hand, the global digital space serves the interests of humanization, partnership, and establishment of post-industrial society in the world, and, on the other hand, introduces a new world order and forms ideas of unstable conflict self-organizing digital space. The tendencies of establishment of the global digital space and contra‐ diction of the world dynamics have a double role: as triggers of development and as destabilizing factors of formation of the global non-linear information society that take

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place in the unstable global world and in the paradigm-categorial grid of information knowledge. The received results allow showing cardinal changes in information and digital thinking in favor of non-linearity, in which realization of priorities of convergence and synergy comes to the foreground of the global digital society, which results in recon‐ sideration of the nature of digital influences on human and society. Apart from the above technological factor, which determines the new approach to digital society, there’s also a political factor. It is necessary to consider the threats of information influences of the global digital space and its danger in the sphere of public, mass, and national conscience, and threats to identity and way of human life in the global digital space. In all times, communication means and information space have been important tactical and strategic resources of power relations and a push for conflicts and wars. The concept of digital space is influenced also by the economic factor. The notion of information product is the process of objectification of information and the object of intensive business. Thus, digital space develops with three factors: technological progress, political relation, and market.

5

Conclusions

The article presents theoretical & methodological and conceptual aspects of tendencies of modernization, contradiction of the global dynamics and establishment of the global digital space, which have a double role: triggers of development and destabilizing factors of formation of the global non-linear information society, which take place in unstable global world and in the paradigm and categorical grid of information knowledge. Acknowledgments. The reported study was funded by RFBR according to the research project No. 18-314-00009.

References Ivushkina, E.B., Zayats, Z.V., Buryakova, O.S., Alieva, N.Z.: Information and psychological convergence: methodology of creation. In: Contributions to Economics, pp. 39–45 (2017). http://doi.org/10.1007/978-3-319-60696-5_6 Ovchinsky, V.S.: Digital world of the 21st century (2017). http://www.oboznik.ru/?p=56731 Baksansky, O.E.: Convergence of knowledge, technologies, and society: beyond convergent technologies. Philos. Cult. 7(79), 1061–1067 (2014) Beck, C.: Web of resistance: Deleuzian digital space and hacktivism. J. Cult. Res. 20, 1–16 (2016)

Economic Efficiency of Using the Electric Grid Complex: Problems of Reserves of Network Power and Development of Intelligent Technologies Olga Danilova(&) and Irina Belayeva Financial University under the Government of the Russian Federation, Moscow, Russia [email protected], [email protected]

Abstract. The key problems in the functioning of the Russian electric power industry are reliability, safety, quality and availability of electricity, environmental impact. Here we aim to: (1) to discuss the results of the reformation and prospects of the electric power industry development and (2) analyze the results of the simplified approach of technological connection of consumers to the network infrastructure. As a tool for increasing the responsibility for the reservation of extra capacity it is proposed to introduce a fee for services in transfer of electric energy on the basis of the amount of maximum power of the appliance. Payment by users is not fully used reserves of capacity will optimize existing network infrastructure to eliminate the construction of networks, rational load of the substation. The solution of the problem is proposed to be carried out on the basis of a differentiated approach and the formation of a mechanism for payment of unused capacity reserve taking into account the operational redistribution of electricity between consumers. The electric power industry needs a full-scale modernization, replacement of economically inefficient obsolete equipment with innovative, supporting the principle of Smart Grid intelligent energy systems. Transition of power engineering to digital technologies is the only possible way of improvement of quality and reliability of power supply and the solution of financial and economic problems of a network complex without growth of tariffs and additional load on consumers. Keywords: Electricity reform  Tariff setting in the electricity sector Economic system  Smart grids JEL Classification Codes: L94

 P42  P47

1 Introduction The aim of the energy policy pursued in Russia is to create an innovative and efficient energy sector of the national economy, ensuring energy security and sustainable industrial growth, increase the quality of life of the population, and strengthen the country’s foreign economic position. The growth of industrial production, which began in Russia in 2017 and continues in 2018, significantly increased the requirements for © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 241–250, 2019. https://doi.org/10.1007/978-3-030-00102-5_26

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energy information security, flexibility and reliability of the entire electric grid complex (Belayeva 2014). The development and regulation of the electric grid economy of the country is carried out in accordance with a set of measures defined in 1992 to reform the power industry and the formation of a competitive market for electricity (capacity). Over the years of reformation, more than a hundred and fifty legislative acts have been adopted on restructuring, privatization and streamlining the rules of operation of energy companies in the market environment, considerable experience has been accumulated with consumers of energy resources and services of energy companies (Aleshina 2016). In 2009, The Energy strategy of Russia for the period up to 2030 was adopted, approved by the order of The Government of the Russian Federation No. 1715-R of 13.11.2009, The General scheme of placement of electric power facilities until 2035, The State program “Energy Efficiency and Energy Development”. However, the unresolved task of reforming-the liberalization of the electricity market and increased competition, which should result in lower electricity tariffs for consumers, leads the industry to the opposite effects. The mechanism of competition between producers for contracts with consumers announced by the reformers does not work, and a significant increase in the network component in the final price of electricity is the reason for the steady growth of tariffs, a factor hindering the development of the entire national economy. The result of the reformation of the electric power industry was the deterioration of all technical and economic indicators: increased specific fuel consumption for electricity production, in the generation and power grid economy decreased utilization of installed capacity, increased loss of electricity for its transmission, significantly increased the number of production personnel (respectively, labor costs), the cost of construction of energy facilities has increased not only with the pre-reform period, but also in comparison with analogs of construction of power facilities by the leading foreign construction companies (Aleshina 2014). On average, the share of the network component in the price of electricity for consumers reaches 50%, which is significantly higher than the prices prevailing in the world. In the regions, the situation is even worse: the cost of electricity for consumers due to the network component in the prices of the wholesale market grows from 1.5 to 3 times. Given that the cost of gas, which accounts for more than 60% of thermal power plants in Russia, is below the world level, this price structure indicates the extremely low efficiency of the entire electrical industry. The uncontrolled growth of the number of territorial grid companies receiving regardless of the volume of services rendered as part of the “boiler” tariff based on the provision of the necessary gross revenue also contributed to the growth of electricity tariffs. These negative changes have led to an increase in the costs of all economic agents to pay for electricity (Danilova 2014). According to Russian experts, the amount of financial resources diverted from the financial turnover of the real sector enterprises as a result of the growth of electricity tariffs amounted to at least 550 billion rubles a year, including only due to cross-subsidization of the population and consumers equated to them by almost 300 billion rubles. Currently, the total maximum capacity of consumers with a maximum capacity of not less than 670 kW connected to the electrical networks of distribution subsidiaries of PJSC «ROSSETI» is 87 GW and is used by consumers at about 44%. Inefficient use of

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capacity occurs against the background of a chronic lack of investment in the power grid complex, significant physical and technological deterioration of electrical networks. The average technical level of installed equipment in electrical distribution networks corresponds to the equipment that was used in developed countries 25–30 years ago in a number of parameters. In fact, 50% of distribution electric networks have developed their normative term, and 75% – two normative term. The total wear of distribution networks has reached 70%, of main electric networks – about 50%, which is much higher than in other countries with the same territory, where the wear indicator is 27– 44%. The investment program of PJSC “FSK EES” («Federal grid company EES») for the period 2016–2020 25% of the funds will be allocated for the implementation of technological connection of consumers, 29% of the funds for the development of electrical networks and 46% of the funds for modernization of fixed assets. Investment programs of electric grid facilities of subsidiaries of PJSC “FSK EES” provide for modernization (renovation) of electric grid facilities in 2017–2026. in the amount of 495.7 billion rubles, and for the period 2021–2026 – 329.5 billion rubles. The main source of financing for these programs should be own funds (depreciation and profit) – 64%, attracted funds – 15%, the fee for technological connection – 9%, budget financing, additional equity issue – 2%, other sources – 10%. The construction and maintenance of excess capacity requires appropriate operating and investment costs, to which network organizations allocate funds intended for the modernization and renovation of electrical networks. Taking into account the above, the purpose of this article is to develop a clear coordinated strategy for the development of the electric power industry. Special attention is paid to the need for the introduction of digital technologies in the power grid infrastructure, the development of intelligent control systems, the formation of automated data centers, the development of intelligent metering systems of electric energy.

2 Materials and Methods 2.1

Descriptive Analysis

A serious problem in reforming the Russian electric power industry since 2005 has been the availability of technological connection of consumers to electric networks in the regions. In order to solve the problem in 2015 at the legislative level, a number of significant changes aimed at simplifying the procedures of technological connection were introduced: the number of administrative approval procedures and the connection time (up to 90 days) decreased, the cost of accession for preferential categories of consumers decreased, 50% of the investment component was excluded from the fee for technical connection. According to the Federal Law on modification of Article 23.2 of the Federal Law “On the Electric Power Industry” the payment for construction of objects of the power grid economy performed within technical accession of the power accepting devices with the maximum power to 150 kW is not levied. Construction of distribution networks from existing power grid facilities to the applicant’s site for connection is made entirely at the expense of the network company. As a result,

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according to the Ministry of energy of Russia, if 5 years ago, according to the criterion of accessibility of the electric grid infrastructure in the world Bank’s DoingBusiness rating, Russia took almost the last 184 place, in 2017 Russia entered the top ten countries in this indicator (Lyubimova 2015). Along with the positive result of simplification of the order of technical connection, the problem of optimization of network capacity reserves has sharply escalated. Every year the power company receives more than 500 thousand applications for new connection to electric networks. In accordance with the acts of technological connection in 2009–2016, the increase in the maximum capacity was 65 GW. Power generation by power plants of the Unified energy system of Russia in 2016 amounted to 59,576.3 million kWh, including thermal power plants – 59,324.0 million kWh., nuclear power plants - 252.3 million kWh. The structure of power generation by types of power plants of the Unified power system of Russia in 2016 is shown in Fig. 1.

Thermal power plant 58,6%

Power plants of industrial enterprises; 5,7%

Hydroelectric, wind farm, solar power plant 17,0%

Nuclear power plants 18,7% Fig. 1. Structure of power generation by types of power plants EES of Russia.

However, in practice, the connection of new consumers was not accompanied by a proportional increase in power consumption. Over the years of reforms in the electricity sector in the whole country, the useful power consumption has not increased by 1 kW-h. at the same time, the installed capacity of power plants has increased so much that more than 30 million kW of generation have been unclaimed (there are over the necessary reserves). Table 1 presents data on reserve capacities in the regions of the Russian Federation (the sample includes only entities with more than fifty largest consumers of electricity). The dynamics of real energy consumption was twice lower than the increase in capacity and the average for the Russian Federation is 58%, which indicates a low utilization of network capacity introduced during this period. In 2015, the non-performance of obligations on the part of applicants for the supply of capacities amounted to more than 10 GWh in the whole country, which is 38% of the total amount of reserved but unclaimed network capacity. The connection of new consumers in the regions is not accompanied by a comparable increase in power

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Table 1. Reserves of network capacity in consumers with Pmax over 3 MW, for 2016. Subject Russian Federation 1. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18. 19 20 21 22 23 24 25 26 27

Number of consumers

Tyumen region 80 Belgorod region 61 Kaluga region 62 Vladimir region 70 Omsk region 68 Moscow region 396 Perm region 61 Moscow 258 Samara region 80 Sverdlovsk region 181 Kirov region 50 Krasnodar region 122 Tula region 63 Ryazan region 55 Kemerovo region 68 Chelyabinsk region 113 Voronezh region 66 Altai territory 58 Saint-Petersburg 158 Orenburg region 57 Nizhny Novgorod region 115 Volgograd region 103 Chuvash Republic 50 Rostov region 121 Tver region 83 Krasnodar region 96 The remaining 38 1,053 subjects 28 Total 3,748

Electricities thousand kWh 36,226,163 7,627,078 982,772 1,940,008 3,238,991 3,143,956 8,003,835 3,819,295 6,424,396 12,282,534 2,132,445 2,235,663 1,755,980 1,847,718 1,837,353 9,003,518 2,502,657 981,017 2,767,104 4,537,990 5,120,870 3,738,274 1,495,703 2,035,914 1,199,107 1,773,101 63,643,209 192,296,651

P Fact. mW

Pmax. mW

4,389.3 6,406.7 990.5 1,485.6 229.9 440.7 297.0 571.7 616.9 1,256.9 2,035.4 4,228.4 1,635.5 3,489.1 848.9 1,834.8 876.3 1,942.9 2,026.0 4,550.3 319.7 750.3 473.8 1,238.2 350.8 924.7 263.5 740.1 408.3 1,203.9 1,643.3 4,922.9 421.4 1,302.1 181.2 589.3 324.2 1,054.6 631.5 2,091.1 748.7 2,776.9 626.3 2,427.1 244.1 957.2 445.3 1,923.8 195.4 954.1 323.5 1,698.8 21,546.7 51,762.2

Share of provision, % 31 33 48 48 51 52 53 54 55 55 57 62 62 64 66 67 68 69 69 70 73 74 74 77 80 81 53

29,893.6 71,856.8 58%

consumption, which indicates that the newly joined consumers do not use the requested value of the maximum power of 100%. For example, according to PJSC «Interregional distribution grid company of the North – West» and «Vologdaenergo» , in 2012–2016 in this region the average load of newly introduced power centers with voltage of 35 kV and above did not exceed 45%. This problem is typical for almost all regions of Russia. 2.2

Control Mechanism

The implementation of the state program to encourage consumers to join the electric grid has led to an overestimation and often irresponsible increase in the demand for new connections. According to the tariff setting in the electric power industry

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established by the Russian tariff system, the cost of services in transfer of electric energy does not depend on size of the maximum power declared within implementation of technology accession to the network organization, and is defined only by the actual volumes of consumption. Networked organizations bear the additional burden and financial costs of building and maintaining facilities that are not actually used. The increase in costs for the design, construction and reconstruction of power grid facilities and the operation of unloaded power grids leads to an increase in tariffs for consumers. Unreasonable forecasts lead to the construction of additional generating capacities that are operated underutilized and do not provide economic efficiency of investment. As a result, the investment component accounted for in tariffs for services is spent by network organizations not for its intended purpose - not for the modernization of existing electrical networks, but for activities on technological connection. Redundancy of excessive demand leads to increased capital investment, increased maintenance costs and maintenance of electrical networks in constant readiness to provide consumers with the full amount of declared maximum capacity. For example, in 2016 the volume of investment funds spent by the branch of PJSC «Interregional distribution grid company of Center» - «Kurskenergo» for technological connection amounted to 64% of the targeted investment of resources, and in 2017, the volume of these funds amounted to 58%. In 2014 – 2016 the amount of funds a branch of the PJSC «Interregional distribution grid company of the South» - «Astrakhanenergo» for the accession of the new regional consumers - the construction and reconstruction of substations and power lines, accounted for more than 60% of the investment program of the branch. For the purpose of rational use by consumers of the maximum power the Ministry of energy of the Russian Federation developed the mechanism of economic responsibility of consumers for use of incomplete volume of the declared capacities. The implementation of the proposed mechanism should ensure fair payment by consumers of all network capacity, including the reserved one (Kutovoy 2015). Payment of the reserved maximum power shall be made by the consumers having the maximum power of the power accepting devices not less than 670 kW. Tariffs for transmission services will be set for consumers with hourly electricity metering. Compensation of the corresponding expenses to owners of the reserved capacities is provided at observance of the following conditions: • the monthly actual capacity of the consumer in the preceding calendar year shall not exceed the maximum capacity by more than 60%; • actual capacity for the current calendar year shall also not exceed 60% of maximum capacity; • the amount of the maximum capacity to be paid for shall be determined as the difference between the maximum capacity and the actual capacity and the rate of payment, which shall gradually increase from 0.05 to 0.5 over a period of three years; • the fee for the reserved maximum capacity shall be determined by the rate for the maintenance of electric networks of the two-exhibition rate for services in transfer of the electric power differentially on voltage levels;

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• consumers from block stations for which the external network serves as a backup power source must pay 50% of the actual own power consumption, thereby compensating network organizations for the maintenance of networks. Implementation of the fair pricing mechanism should lead to the rejection of the use of excess maximum capacity and the fair distribution of its payment among consumers. The introduction of the charge for the reserved maximum capacity includes a mechanism in a single step, according to which deductions from revenue in tariff regulation should be applied to network organizations in case of insufficient load of power centers. For individual network organizations fee for the unused maximum power can lead to a decrease in the necessary gross revenue to 10%. This is a fairly high figure. Therefore, currently the decision a “phased transition” to paying major consumers of underutilized reserve capacity (discussing the period of 5 years). Over the years, it is planned to carry out a full-scale modernization of the Russian power grid, replace the equipment with a fundamentally new, innovative, development and introduction of digital technologies, an intelligent electricity metering system. 2.3

Management Tool

Replacement of technically and morally outdated and already economically inefficient infrastructure of the unified power system is an objective necessity for further development not only of the electric industry, but also of the entire national economy. Modern Supervisory control systems using existing Automated control system of technological process and SCADA TRACE MODE (High-tech Russian software system for process automation) cannot flexibly respond to emerging situational changes, which leads to failures and fan outages of network segments with appropriate financial, technical, material and other consequences (Spiridonov 2014). In recent years, specific measures for the transition of energy to digital technologies have been regularly reviewed at the government level. The implementation of a national project to develop an intelligent energy system in Russia will reduce infrastructure costs and create conditions for expanding investments not only in the energy sector, but also in other industries. A fairly new direction of energy modernization is the implementation of the national technology initiative (EnergyNet) project aimed at the introduction of Smart Grids technology with modern control and management devices in distribution networks. EnergyNet-the concept is quite extensive, uniting several large blocks in the field of electric power infrastructure. In addition to creating smart distribution networks, the EnergyNet project includes intelligent distribution power (solar panels, wind turbines, heat pumps, drives) and digital consumer services (flexible power consumption, transportation, etc.). Smart Grid includes a wide range of technological processes, modern information and communication technologies, innovative equipment and applications designed for the transmission of electricity from the manufacturer to the consumer. The intellectual network represents set of the consumers of software and hardware connected to generating sources and electro installations and information and analytical and control systems providing reliable and qualitative transfer of electric energy from sources to the

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receiver at the necessary time and in the necessary quantity. New principles, technology transfer and process control allow to combine at the technological level of consumers and producers of electricity in a single intelligent automated system. The main objectives of the introduction of such a system is: • ensuring high quality and reliability of power supply through the introduction of remote monitoring of equipment operation; • the ability of the power system to self-recovery as soon as possible after emergency shutdowns; • high resistance to physical and informational attacks; • integration of all types of energy generation and storage, use of communication and information technologies; • active involvement of electricity consumers in network management. A key characteristic of the smart grid lies in its ability automatically to prevent (reduce) the continuous supply of electricity, to solve the problem of quality management of power supply and control of accidents. It should be emphasized that the main safety requirement of Smart Grids technology is to prevent the risk of cascading failures. In order for the “smart” network to work, it is necessary to form the so - called power clusters – a single information and technological space of individual territories, which include enterprises of generation and transportation of energy, companies engaged in engineering, energy services, energy engineering and instrument-making enterprises, educational organizations. Intelligent processing of data coming from the network components, based on the Smart Grid technology platform, will optimize the use of electricity, improve the reliability and efficiency of energy systems, reduce energy losses, reduce resource costs, solve environmental problems, improve the quality of life of the population.

3 Results According to SAP expert estimates, the potential for GDP growth associated with the development of digital electricity will amount to 200 billion rubles, of which 100 billion rubles – in the electricity networks. As a result of the digital transformation of the network business, the profit growth of energy companies will be 4.3% of the current indicators. The main risks associated with the introduction of an intellectual power grid are connected, firstly, with a high cyber danger, which is due to the complex architecture of information and communication networks. Therefore, in the conceptual development of Smart Grid, considerable attention should be paid to ensuring cybersecurity, including the confidentiality, integrity and completeness of all information systems. Secondly, the security risks are related to the prevention of cascading failures. World and Russian practice shows that the main problems associated with the spread of Smart Grid technology are: a significant number of consumers who have different requirements for the quality of electrical energy; the lack of reliable energy storage; significant financial resources necessary for the implementation and operation of the system, the lack of standards and regulations; the lack of motivation by the management of the generating

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companies because the purpose of the implementation of the system – the energy savings and the earnings depend on the volume of sold electric energy (Chebanov et al. 2015). Despite these problems, the “smart grids” allow you to increase the capacity of overhead power lines and power supply reliability by 30%; to distribute the load curve due to power grid energy storage more power by 25–30%; to reduce the area that is covered by the grid facility due to the innovative materials and construction technologies; to reduce losses of electricity during its transmission by 25%, which will lead to savings 34–35 billion kWh per year and reduce the amount of fuel burned and emissions of carbon dioxide into the atmosphere.

4 Conclusions As a result of the provision of benefits to certain categories of electricity consumers in the regions of Russia, the demand for connection to electric networks has significantly increased. However, the increase in the number of new consumers did not result in a comparable increase in power consumption. The increase in the demand for electricity connections was not due to the activation of market mechanisms, but only to the measures of state support for the creation of new electrical facilities. Network organizations spend money not only on the creation of the necessary network infrastructure to consumers, but also on the maintenance of already built electrical networks, to maintain their readiness to issue to consumers the full amount of the declared maximum capacity, defined in the documents on technological connection. The source of funding for excess capacity is investment and operating funds that network organizations divert from the modernization and renovation of electrical networks. The solution to this problem may be the introduction of economic responsibility of consumers for reserving maximum capacity. A promising direction for solving the accumulated problems may be the introduction of an intelligent electricity metering system. Intelligent accounting will completely change the stereotypes of technological connection, as without digital authorization and binding to the metering device, the consumer will not be able to use the services of the network. Installation of electricity meters will allow consumers to access hourly consumption schedules, optimize the cost of electricity through the use of different tariffs. State bodies, in turn, will have the opportunity to monitor the reliability and quality of services, reliability of electricity balances for tariff regulation.

References State Program “Energy Efficiency and Energy Development” approved by the Government of the Russian Federation 29.05.2015 (№ 3384p-P9). http://i.cons-systems.ru/u/8c/0a55a8bcc311e4 aca5fbaefc9347ae. Accessed 22 Apr 2018 The strategy of the electric grid complex, approved by the Order of the government of the Russian Federation № 511-R (2013). http://www.rosseti.ru/. Accessed 22 Apr 2018 Aleshina, E.V.: Modern practice and problems of reforming infrastructure holdings in Russia. J. Manag. Sci. Modern World 2(1), 218–220 (2016)

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Aleshina, E.V.: Problems and prospects of development of electric grid business Russian Railways holding. Bulletin of Samara state University of Economics, No. 3(113), pp. 36–40 (2014) Belayeva, I: Socially responsible activities of the state and business. In: Proceedings of the International Multidisciplinary Scientific Conferences on Social Sciences and Arts (SGEM 2014), Albena, Bulgaria, 01 September 2010, pp. 357–363 (2014) Danilova, O.: Substainable development of territories of presence big business. In: Proceedings of the International Multidisciplinary Scientific Conferences on Social Sciences and Arts (SGEM 2014), Albena, Bulgaria, Sep 01.10.2014, pp. 373–380 (2014) Information about the availability of the network infrastructure of the branch PJSC «Interregional distribution grid company of the North – West» and «Vologdaenergo» for technological connection. http://www.invest35.ru/assets/files/docs/1_6____.pdf. Accessed 20 Apr 2018 Kutovoy, G.P.: Formation of forms and methods of state regulation of electric power industry during reforms of economic relations and privatization. Analytical review, Annex to the magazine «Energetik» , No. 12 (2015) Lyubimova, N.G.: Long-term supply of reliable and affordable power supply to consumers. Bulletin of the University, No. 10, pp. 76–79 (2015) The main provisions of the concept of the national project of the intellectual energy system of Russia. The Ministry of energy of Russia. Research Institute of the Russian Academy of Economics (2016) Report on the functioning of the EES of Russia. http://www.so-ups.ru/ Spiridonov, V.V.: Intellectual technologies in electric power systems proceedings of the International Conference “Applied research and technology”. MIT, Moscow, «VTU», pp. 51–53 (2014) Chebanov, K.A., Karamyan, O.Y., Solov’eva, Z.A.: The Result of the power industry reform in Russia. Technological development of the Russian fuel and energy complex under the influence of economic sanctions. Journal Modern problems of science and education, No. 5 (2015) Expert-Ural. It’s time to digitize the network. http://www.acexpert.ru/. Accessed 20 Apr 2018

Effectiveness of Financial Support for the Resource Base of Innovative Development in Regions During Crisis Sergey A. Grachev(&), Marina A. Gundorova, Oleg A. Donichev, Denis Y. Fraymovich, and Maria I. Zakirova Vladimir State University named after Alexander Grigorievich and Nikolai Grigorievich Stoletovs, Vladimir, Russia [email protected], [email protected], [email protected], [email protected]

Abstract. Overcoming the crisis consequences in the Russian economy objectively depends on the speed of introducing the latest technologies and equipment into the economy. The transfer of production equipment to an innovative type of development requires use of modern information systems, all types of resources, materials, and better human capital. However, the key criterion in the success of the innovative development of the regions is the effectiveness of financial security. This is the subject of this article. The analysis of the effectiveness of innovation financing of innovative activity by regions of two federal districts: Central and North-Western, which in fact are the leading districts in the country and account for the bulk of the produced innovative products and the gross regional product. Calculations were made based on data from official statistical compilations. The performed researches showed that in this period many regions of the listed districts achieved the maximum results of the cost effectiveness for technological innovations for the analyzed period. However, the general trend of changing the values of efficiency, starting from 2012, does not allow characterizing as rapidly growing. Keywords: Efficiency of financing  Innovation Overcoming the crisis  Knowledge economy JEL Classification Codes: G01

 Regional economy

 R10  O30

1 Introduction The need to overcome the lag in the country’s socio-economic development over recent years has been caused by the global financial crisis and the sanctions of Western countries, as well as the consequent sharp restriction of the flow of investment and loans from foreign banks into Russia. The problems are activation of own reserves, additional resource sources for activating innovative activities in the economy, ensuring the process of import substitution, introducing the latest equipment, modern technological processes and information management regimes for the output of products. © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 251–259, 2019. https://doi.org/10.1007/978-3-030-00102-5_27

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A detailed resource reorganization of regional economic systems is to be based on the use and development of information and communication technologies for their introduction into the production environment, replacement of resource-intensive production processes and the use of materials with better properties that determine the optimal parameters of technological methods. That will allow the output of products of a fundamentally higher consumer level. The scientists of the financial university under the government of the Russian Federation, in this regard, and also assessing the barriers that impede the innovative development of the Russian economy, among the main ones, they call financing that does not meet the requirements of time. They believe that it is the structure of financing that can show the degree of public interest in innovation, and economic growth is impossible without increasing of investments. This does not happen yet, it means that the organizational and financial basis for increasing innovation activity has not yet been created. In addition, the improvement of the process of financial and legal support for the implementation of innovations related to the transition of the economy to an innovative socially oriented model of development requires an increase in the profitability of investments in innovation and the widespread use of alternative sources of financing (Shestak 2017). In turn, scientists of the St. Petersburg branch of the Financial University argue that the government plays an important role in innovative production. The government, as a rule, incurs expenses associated with the innovation process, pursuing a certain tax and amortization policy, allocating subsidies, loans, creating compensation funds, and assisting in the retraining of personnel. To finance this process of modernization of depressed industries, the funds of efficient companies are attracted with a compensation mechanism that provides the creation of competitive funds jointly with the government funds. The value of assets is paid by organizations curtailing production in crisis sectors (Yakovleva and Kozlovskaya 2016). Foreign authors (Wessner 2009) write the similar experience and actions of the authorities, which stimulate the innovation process in their territories. Meanwhile, according to experts from the Institute of Economics of the Russian Academy of Sciences, despite the fact that the main tools used to support innovation in the most advanced regions of Russia are close to the practice of Western countries, until they provide a systemic effect, a critical mass of innovative development institutions is not formed. The missing link is mainly the mechanisms of financial support for innovative enterprises, and stimulation of the flow of innovative projects (Lenchuk 2013). Representatives of the Higher School of Economics, arguing that the innovative activity of enterprises is systematically reduced in the country. The notion of the role of the government as an active participant in the innovation process in modern conditions requires taking into account differences in the interests of structural units, both in the state management of innovations, and in science and business, which may contradict each other. The low share of the innovative sector means its weakness both in terms of creating new innovative products and their distribution. The consequence of this situation is the low return on costs in the industries that create innovations, and increasing dependence on foreign trade and the activities of TNC. The share of innovation costs and the share of innovative products are approximately equal: They received as much they spent (Kiseleva and Fonotov 2013).

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About similar problems, say foreign scientists researching the development of innovations in Russia. In particular, they note that the situation in the issues of innovative development of the economy has been changing for a long time only slightly. Innovation is still weak demand. There is a preferential purchase of finished equipment abroad, instead of promoting and implementing own development (Sulekh 2008; Satell 2017). The next major problem, which, along with insufficient funding, impedes the innovative development of the economy is, in the opinion of the Institute of Economics of the Russian Academy of Sciences, an acute shortage of specialists and workers capable of solving innovative tasks. We need new approaches to the level of professional training, and to ensure a new quality of the workforce, it is necessary to build up the country’s personnel potential by highly educated technical specialists, scientists, engineers and highly qualified workers whose primary function is the intellectual provision of the modernization policy through the development of new scientific directions, the development of competitive technologies, construction industrial enterprises and the organization of new productions. It is necessary to involve technocrats in the government, forming new technocratic elite (Lenchuk 2017). In this direction, scientists at the St. Petersburg University believe that, in relation to the conditions and specifics of the economic development of our country, the most important component of innovation policy should be the state support of R & D firms (not only those in which the government has a significant share in the capital but also private). The emphasis that has been recently made on stimulating innovative entrepreneurship in the face of small firms being created is certainly useful. But to solve the key tasks outlined in the main state documents of Russia’s innovative development, it is necessary to strengthen the promotion of innovation activities of large companies that are the basis for the development of the national economy, as well as seriously reduce the overall economic conditions. All this should lead to an increase in the demand for innovations, including those offered by small businesses (Motovilov 2014). Meanwhile, experts of the financial university under the government of the Russian Federation believe that for the development of innovative activity in the economy, not only funding is needed. At the macro level, innovation activity is influenced by: the presence of external challenges and the development strategy of the country, in which regulatory and legal support, the nation’s intellect, the optimal combination of market levers of self-regulation with state regulation are defined as integral parts. At the micro level, innovation activity is affected by the availability of a modern production base, organizational structures for enterprise management, the degree of development of economic democracy, the number of advanced enterprises, the introduction of new forms and wage systems, effective innovative management, competitive conditions, the implementation of innovation policy. At the same time, each phase of the innovation process requires specific support: the formation of educational programs and the payment of costs for the education of employees, the formation of personnel and the payment for work, evaluation and protection of the results of intellectual activity, payment for work premises, materials and warehouse, advertising and PR companies, etc. (Shestak 2017). An important place in this activity, according to Penza scientists, belongs to development institutions. Analysis of the activities of regional development institutes in five regions of the Volga Federal District showed that industrial parks and technoparks

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of regions can rightly be called growth points. In general, as of the beginning of 2017, 33 industrial parks operated on the territory of 11 subjects of the district. The volume of investments from budgets of all levels for their creation and development amounted to RUB 59 billion, the amount of tax deductions of residents is RUB 77 billion. It is no accident that, according to official statistics, about a quarter of the gross regional product of the Privolzhsky Federal District falls on high-tech and science intensive industries (Bondarenko et al. 2018).

2 Methodology After finishing the theoretical examination of the provisions of financial support innovative development of regions, we move on to the analysis of the effectiveness of the processes of innovation in the regions of Central and North-Western Federal District. Issues related to the analysis of the effectiveness of innovation in the regional context, in the last decade in the scientific environment are being revealed very actively. At the same time, in order to identify the location of the territories in terms of the level of high-tech development, researchers are offered a wide range of methodological approaches, often involving fundamentally different indicative characteristics and estimation algorithms. It must be acknowledged that to date, the interest in both quantitative monitoring procedures is increasing both from developers and practitioners (in educational, research and power structures) that can apply developed models for ranking and grouping regions at different levels of development of financial, personnel, material and non-material resources. In addition, practically free access of researchers to the databases published by state statistical bodies generates the relevance of the application of accurate assessment methods in the analysis of the functioning of regions. So, for example, in the work of domestic researchers from Mordovia State University named after N.P. Ogareva to evaluate the effectiveness of the regional innovation system proposed four functional blocks of indicators: financial and economic, scientificinnovative, information-communication and educational (Kormishkina and Koloskov 2017). In turn, for each factor i in a specific block on the basis of official Rosstat data using the formula of linear scaling (Glisin and Kalyuzhny 2011). (Which has recently become extremely widespread), a dimensionless indicator Ii (1) is calculated: Ii ¼

xi  xmin i ; xmax i  xmin i

ð1Þ

Where xi is the actual value of the indicator i; xmin i and xmax i - minimum and maximum values of indicators i in the analyzed sample (regions). The resulting index, which characterizes the efficiency of the processes occurring within each of the four blocks, is proposed to be determined using the average of the arithmetic mean. The effectiveness of the innovation system of the region as a whole the index of the “knowledge economy” (KSI), - according to the authors of the methodology, can also be estimated on the basis of the calculation of the arithmetic mean of the resulting indicators of functional blocks. Naturally, the higher the final

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score, the more actively innovative processes develop in the constituent entity of the Federation, and vice versa. An essential advantage of the above methodical approach is the obtaining of relative indicators, always in the interval from 0 to 1. Furthermore, the algorithmdeveloped action does not exclude the possibility of analyzing the “knowledge economy” as the indexes for different periods and across selected regions for comparing them with each other, as has been demonstrated by the authors. Attention is drawn to a very representative set of 26 factors on which research is carried out. At the same time, in this method there is no justification for using the average arithmetic value for searching the index of the “knowledge economy”. This approach, in fact, means that all indicators and processes for all functional blocks have equal factors and play the same role in the formation of an innovative management system. However, this assumption is very controversial. In addition, the ranking of the constituent entities on clusters based on KSI values refers exclusively to the selected period of time (year) and does not take into account the dynamic component, that is, the possible transformation of regions from one classification group to another when their final index change. Nevertheless, the considered approach is quite relevant and contributes to the methodology of diagnostics of the “knowledge economy” of the territories. Based on the above, solving the problem of determining the degree of expediency of development of financial resources in innovation activity, it is proposed to calculate the overall cost effectiveness for technological innovations (ETI) by using the following formula (2): ETI j; t ¼

V j; t ; ETI j; t  1

ð2Þ

Where V - the volume of innovative goods, works, services (million rubles); ETI - costs of technological innovation, i.e. actual costs associated with the implementation of various types of innovation activities performed on a regional scale (million rubles). They include current and capital costs. At the same time, as can be seen from the formula (2), it was suggested to take into account the chain reaction of investments (in the development of new technologies) for the results to estimate the indicator of the overall cost effectiveness for innovation activity. In this connection, expenses ETI are taken for a period ðt  1Þ preceding the phase of achieving ðtÞ certain volumes of improved products or services. In the framework of this article, based on the application of formula (2), it seems reasonable to analyze the effectiveness of financing innovative activity by regions of the two Federal Districts: Central and North-Western region, which, in fact, set a rhythm of the life of the whole country. The largest agglomerations in the population Moscow and St. Petersburg - act as the main territories in their districts and even in the state, concentrating huge personnel, scientific and technical, investment, educational and cultural capital. Nevertheless, they are the objects of endless scientific discussions about the rationality of allocating significant resources to the detriment of other regions of the Federation. Often, these territorial entities, when carrying out economic and statistical calculations, are referred to as “anomalies” and do not take into account in

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the samples, taking into account the absolute results of their functioning: GRP, investment size, number of small enterprises, number of employees, etc. But the performed analysis will be more correct and objective when correlating relative indicators.

3 Results Calculations of the effectiveness of financing innovative activity were carried out for 2000–2016 based on official statistics. Table 1 shows a fragment of the calculation, including the average and current (for the period 2016) values of the indicated indicators in the context of the selected regions. Table 1. Efficiency of innovation financing on the territories of the Russian Federation for 2000–2016. Regions

ETI Current (for 2016) Average (for 2000–2016 years)

The Russian Federation as a whole Central Federal District in general Belgorod region Bryansk region Vladimir region Voronezh region Ivanovo region Kaluga region Kostroma region Kursk region Lipetsk region Moscow region Oryol region Ryazan region Smolensk region Tambov region Tver region Tula region Yaroslavl region Moscow North-West Federal District in general Karelia Republic Komi Republic Arhangelsk region Vologda region Kaliningrad region Leningrad region Murmansk region Novgorod region Pskov region Saint Petersburg

3.63 4.08 23.57 20.64 2.13 2.74 0.92 1.20 5.36 24.16 6.81 2.66 2.14 2.97 1.52 2.44 4.94 5.74 4.13 4.79 3.84 3.69 14.95 1.33 41.34 0.93 1.63 3.20 3.13 5.58 3.92

3.87 3.95 11.33 11.93 4.85 4.68 4.78 4.83 7.75 3.82 11.76 8.02 7.45 3.96 4.47 4.54 7.00 3.62 3.22 3.06 3.82 2.90 8.15 2.90 15.46 10.55 1.75 3.14 5.11 5.70 3.93

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The results of calculations show that the maximum efficiency of innovation activity in 2016 among the regions of the Central Federal District was achieved by the Kursk region (24.16 rubles), and in the Vologda region (41.34 rubles.). The lowest figures in the analyzed districts are shown by Ivanovo region (0.92 rubles.) and Kaliningrad area (0.93 rubles). Turning to the consideration of the average results over ETI a 17-year time interval, the leading region- Bryansk region (11.93 rubles) and the territory with a minimum return in the form of innovative products per 1 ruble of enclosed in improving the technology of financial resources - in Moscow (3.06 rubles). This underlines the fact of extremely irrational development and inefficient control of huge investments in absolute terms, oriented to high-tech development, in the main megapolis of the country. In the North Western Federal District, a clear superiority in terms of average efficiency was again recorded for the Vologda region (15.46 rubles), and the minimum value for the Leningrad region (1.75 rubles). The schedule of changes in the analyzed indicators ETI from 2000 to 2016. for the RF, CFD and NWFO as a whole, as well as Moscow and St. Petersburg are shown in Fig. 1.

Fig. 1. The dynamics of changes in indicators ETI from 2000 to 2016 on the territories of the Russian Federation

The presented diagram gives grounds to assert that leading subjects and districts of the Russian Federation demonstrate practically identical trajectories of efficiency of development of financial resources for innovative activity, but within different limits of values. For example, the indicators for the country as a whole (marked in Fig. 1) fluctuate in the range from “2.95” to “5.43” rubles, and in St. Petersburg - from “1.23” up to “8.30” rubles. Very high values for 2000 appealed to the worsening of the situation until 2005. In the period, 2006–2008 most of the territories of the Russian Federation achieved significant improvements in results, but as can be seen from the graph, the global financial crisis did not allow the subjects to develop the former “speed”, which inevitably led in 2008–2010. To the stagnation of the achieved indicators ETI . At the same time, a definite “surge” in efficiency and hope for improvement was introduced

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by 2011. In this period, many regions achieved maximum, or close to them results, for the analyzed 17-year time interval. But the general trend of changing values ETI , starting from 2012, does not allow it to be characterized as rapidly growing, but, on the contrary, it forces us to assert about the amplitude interpreting the inertial and “belated” entry of the country into the sixth technological order and mastering the “knowledge economy”.

4 Conclusions The performed diagnostics of the levels of efficiency of financing innovative activity over a long period of time across the territories of the Russian Federation form prerequisites for strengthening control over the quality and reliability of fundamental research, as well as intensifying monitoring of the transformation of new developments and design solutions into the real sector of the economy. It should be noted that the key influence on the dynamics of development and generation of innovative knowledge in the regions is provided by motivating and institutional factors. At the same time, being practically inseparable from each other, they completely depend on the degree of attractiveness of the conditions initiated by the state for the development of entrepreneurship, launch of venture projects, the establishment of the functioning of research divisions of private companies, and the total involvement of human capital in a reproductive economic system. The presented technique can be applied in educational processes of universities and in activity of profile institutions that study trends and prospects for socio-economic development of regions. Also in fundamental work on the analysis of the effectiveness of financing innovation in a crisis period and in design and control of territorial strategic programs by the authorized services of the authorities.

References Shestak, V.P., Tyutyunik, I.G.: Financial and legal support of innovative activity. Finance: Theor. Pract. 21(6), 118–127 (2017) Yakovleva, E.A., Kozlovskaya, E.A.: Innovative development of the economy (the concept of import substitution). Bulletin of the Financial University, No. 6, pp. 54–62 (2016) Wessner, C.W.: Understanding Research, Science and Technology Parks. www.nap.edu/catalog/ 12546.html Lenchuk, E.B.: Formation of innovative infrastructure in the Russian regions. Bulletin of the Institute of Economics, Russian Academy of Sciences, No. 5, pp. 76–91 (2013) Kiseleva, V.V., Fonotov, A.G.: Structural problems of development of the national innovation system of the Russian Federation: Technological potential of industries. Innovations, No. 6, pp. 48–53 (2013) Sulekh, C.J.: Who Needs Innovations? (2008). http://triplehelixinstitute.org/sites/default/files/ uploaded/documents/summit2008/THX_Summit08_Sunday_7_Jain.pdf. (circulation date 20. 03.2018) Satell, G.: The 4 Types of Innovation and the Problems They Solve (2017). http://hbr.org/2017/ 06/the-4-types-of-innovation-and-the-problems-they-solve?referrat=03758&cm_vc=rr_page. top_right. (circulation date 20.03.2018)

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Lenchuk, E.B.: Formation of personnel potential for innovative economy. The economic revival of Russia, No. 1, pp. 22–26 (2017) Motovilov, O.V.: Analysis of the development of the national innovation system and measures to support it. Innovations, No. 7, pp. 34–38 (2014) Shestak, V.P.: Stimulating financing of innovation activity. Finance Theor. Pract. 21(5), 40–49 (2017) Bondarenko, V.V., Chakaev, R.R., Leskina, O.N., Tanina, M.A., Yudina, V.A., Kharitonova, T. V.: The role of regional development institutions in enhancing the innovation potential of the subjects of the russian federation. Reg. Econ. Theor. Pract. 16(1), 83–100 (2018) Kormishkina, L.A., Koloskov, D.A.: Innovative approaches to the formation of investment policy instruments from the point of view of the paradigm of neo-industrial development. Economic and social changes: facts, trends, forecast, T. 10. No. 6, pp. 226–228 (2017) Glisin, F., Kalyuzhny, V.: Monitoring of regional innovation systems. Economist, No. 6, pp. 21–22 (2011) Regions of Russia. Socio-economic indicators. 2017, p. 1150. Rosstat (2017) Federal State Statistics Service. http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/en/ statistics/publications/catalog/. (circulation date 15.03.2018)

Contents of the Third Age University in Russia: Prospects of Development Inna Vysotskaya ✉ , Tamara Yovanovich, Natalya Prom, Olga Toporkova, and Oxana Evtushenko (

)

Volgograd State Technical University, Volgograd, Russia [email protected]

Abstract. This article offers an analysis of the work of the Third Age Universities in Germany and Russia, in particular, the content aspect of their educational programs. The aim of this social institution is to improve the life quality of the elderly. The article identifies the problems that arose due to outdated approaches to solving this issue. In Russia these problems are the interdepartmental disunity of institutions, insufficient awareness of the training possibilities for third-aged people, absence of professional direction in education and insufficient consider‐ ation of the elderly peculiarities when drawing up educational programs. Wellplanned content of education at the Third Age University solves an important social task, helping the elderly to navigate in modern life, adequately respond to changes taking place in society and meet the needs for communication, exchange of experience and self-realization. The result of this work presented is the elab‐ oration of a measure system to develop the content aspect of the U3A in Russia that takes into account the needs and interests of the elderly, the needs of society and the experience of a U3A in Germany. Keywords: University of the Third Age · Content of education · Elderly Educational programs · Professional education · Social education JEL Classification Code: Z13

1

Introduction

Aging of a person entails not only changes in the state of his/her health, but also a certain reorientation of vital interests, needs and changes in social and family status. At the same time, in the demographic picture of modern European society there is a general tendency of aging of the population, on the one hand, and an increase in life expectancy, on the other. For example, in Germany it is 79.1, in France 81.0, in Britain 78.8. In Russia for the past 10 years, this indicator has increased by 5.1 (in 2006 the indicator was 66.7) and is 71.8 (Federal State Statistics Service 2012). To improve the quality of people’s life of this age group, special educational programs have been created. In this regard, of special interest is supplementary education, the so-called “University of the Third Age” (U3A), whose importance in the life of the elderly has been growing in recent years both in Europe and in Russia (Inter-settlement rayon library 2016).

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 260–272, 2019. https://doi.org/10.1007/978-3-030-00102-5_28

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The purpose of this study is to identify problems in the work of the U3A in Russia, based on the absence or insufficient consideration of such an important factor as the content of teaching and the principles of its formation, and develop general recommen‐ dations for the creation of modern educational programs for the U3A. For this purpose, the following tasks are to be solved: – to consider theoretical approaches to the educational content organization at the U3A; – highlight the main areas in the content of educational work for the elderly in modern Germany and Russia; – reveal tendencies of the content aspect development in the U3A in Russia; – identify the drawbacks of the content of work with the third age in the Russian educational system; and – justify the possibility of using German experience to improve the pedagogical system, taking into account Russian national characteristics. 1.1 Historical Background The first attempt to solve the problem of the elderly socialization in the educational area was the opening of the first institute for retired professionals in New York in 1962. Later, similar institutions appeared in France, Germany and other Western countries. The emergence and development of the U3As served as a kind of educational systems reac‐ tion to demographic changes in society and reflected the need to use the professional, cultural and social potential of the elderly (Vysotskaya 2015; Vysotskaya 2016). In Russia the society «Znanie» established the first open People’s U3A only in 1996. Now, this project is a part of the state program, designed to improve the skills, information and training of the elderly. It unites people of different social and mate‐ rial status and different professions. Any non-working pensioner can become a student of the University and attend different faculties and events that interest him. As a rule, such universities are opened on the basis of social protection institutions. The social-educational project “University of the Third Age” is being implemented in many municipalities of the Moscow region, St. Petersburg and the Leningrad region, Stavropol, Krasnoyarsk and some other regions of Russia. Many of its partic‐ ipants have already become active volunteers of the project in their municipal districts (Vysotskaya 2015; Vysotskaya 2016). 1.2 Modern Features of the University of the Third Age The U3A in the modern world is a new form of work with the elderly, which includes the organization of educational and training courses, creative workshops and course training in various programs. The main goal of the project is to create conditions for changing the elderly’s behavior stereotype and attitude towards the life, i.e. avoiding a passive, consumer attitude and forming a new model of personal behavior by involving the elderly in the educational process, developing and implementing socially significant projects and increasing their participation in public life (Inter-settlement rayon library of Kirishi 2016; Vysotskaya 2015).

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The work of these institutions represents a great practical experience in training of the elderly, which, however, requires a thorough study from the point of view of the scientific and theoretical foundations of pedagogical support for people at this age. The matters that need to be addressed firstly are the content, forms and methods of teaching at a U3A. This article offers a problem discussion of the teaching content at the U3A in Russia and the ways to solve them.

2

Methodology

To systematize the practical experience in organizing of the elderly education at the U3A in Germany and Russia, theoretical and practical works of the leading German and Russian experts (Eierdanz 1992; Fülgraf 1985; Kade 2001; Stadelhofer 2000; Becker 2004; Vallraven 2000; Schäuble 1995; Siebert 2008; Müller 1997; Kohli 1985; Kono‐ nigina 2008; Agapova 2001; Gromkova 2004; Ermolaeva 2002; Vershlovskiy 2012 and others) were considered. The following documentary sources have been carefully studied: (a) Documents and reports of the German Bundestag (2000–2015) (Bundestag; Bunde‐ sausbildungsförderungsgesetz; Bundesministerium); (b) Reports of state bodies and commissions of Germany (2000–2015) (Berufsbil‐ dungsbericht; Interim results; eLearning Program; Katholische Bundesarbeitsge‐ meinschaft); (c) Statistical almanacs of the Bundesministerium für Bildung und Forschung; Gruner + Jahr - Märkte + Tendenzen: Studienreisen, G + J Marktanalyse, Hamburg (1998; 1999); National Institute for Statistics, Survey of Equipment and Information and Communication Technologies in Household (2006); (d) Russian journals, pedagogical periodicals “New Znanie” (2000–2015); “Accredi‐ tation in Education” (2000–2015); “The Academic Gazette. Herald of St. Peters‐ burg “(2010–2015), as well as European journals “Hess. Blätter f. Volksbildung» (2010–2015); “Weiterbildung” (2010–2015); “International Journal of Environ‐ mental and Science Education” (2010–2015), etc., which allowed to carry out a comparative analysis and highlight the most priority areas for the content devel‐ opment of education of the third age people in Germany and Russia. The German state web sites and web pages of Russian educational institutions of additional adult education contributed to obtaining reliable data on the current devel‐ opment of the content of education of the U3A in Germany and Russia. A comparative analysis of the training content made it possible to compare the various meaningful directions of the elderly education in Germany and Russia.

3

Results

We consider the content of education as a pedagogically adapted system of knowledge, skills and experience of creative activity and emotional-volitional attitudes, the assim‐ ilation of which must ensure the formation of a fully developed personality, ready to

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preserve and develop the material and spiritual culture of society (Bim-Bud 2006). In other words, the content of education is what a student must learn as a result of training. The system of additional education for the elderly is successfully functioning in Germany, which is conditioned by an integrated approach that takes into account similar experiences in the USA, France, Japan, Spain (Bowling and Iliffe 2011; Hebestreit 2008; Mota-Pinto et al. 2010; Greenfield and Marks 2004) and other countries. In this regard, we see the importance of developing foreign experience for the disclosure, comparison and implementation of the most successful theoretical approaches and tech‐ nologies of education in Russian education, taking into account the content, types and forms of adult education in realizing their own potential and traditions. The pedagogical experience of working with the elderly in Germany is of particular interest, because there this direction in education is specific in terms of the theoretical foundations devel‐ opment of working with the elderly and the forms and content diversity (Vysotskaya 2016). The analysis of German experience in the program development for the U3A showed that with an adequate working out the content, forms and appropriate methods of work, the elderly manifest themselves as permanent participants and activists in the educa‐ tional programs preparation and implementation, being also assistants for the instructors of additional education institutions for seniors. In many organizations, the elderly are members of public councils, also organizers, who share their experience with the younger generation. Unfortunately, the Russian indicators of the elderly population’s activity are inferior to the European ones (Vysotskaya 2015). 3.1 Classification of the Educational Activities Content of the University of the Third Age In German pedagogy there are a number of classification approaches to the educational activities content of a U3A. Of greatest interest, in our opinion, are the developments of the researchers (Kade 1997; Eierdanz 1992; and Schäuble 1995), which most clearly reflected the content direction for the elderly and gave us grounds for excreting own classification of the educational content of the elderly. Kade’s classification is based on the principle of educational field, which made it possible to distinguish the following educational fields: (a) biography field, providing for work with professional and personal experiences of students with their subsequent application in new conditions (vocational education: pedagogy, medicine, computer literacy, etc.); (b) educational field of everyday life that offers ways to overcome the problems of everyday life through active lifestyles (health, psychology, tourism, health swim‐ ming, gymnastics, etc.); (c) educational field of creativity that promotes self-expression and the cultural content exchange with others (civil rights, local studies, music, literature, needlework, etc.); (d) educational field of productivity, which is a social direction, including voluntary work (social activities) (Kade 1997).

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The positive side of this classification is that it clearly tracks and divides the interests of older people. However, we believe that the educational field of everyday life and the field of creativity should be combined, as they both reflect the need of the elderly person actively and fruitfully to spend their free time to improve physical or psychological health. Eierdantz (1992) proposed a more detailed classification of educational programs of the U3A. He identified six areas on the basis of interest topics to the elderly: (1) elderly education as the transfer of knowledge about old age, aging and preparation for aging; (2) conversational circles with a communicative component, i.e. for working out and increasing the communication skill (for example, teaching foreign languages); (3) educational proposals covering topics that are especially interesting and specially designed for the elderly (topics on civil rights, health, local lore and others); (4) general education program; (5) elderly training the for post-professional activities; and (6) polit‐ ical education. There are many substantive areas in Eierdanz’s classification, but there is no clear basis for separating the content directions, there are also activities and thematic direc‐ tions in the classification. Schäuble (1995) subdivided out-of-university educational programs for pensioners according to their thematic principle. It highlights (1) traditional education for the elderly on the themes of culture and creativity, in music, vocal, literary and other circles, health, legal knowledge, local history topics that are offered in clubs of the elderly, shelters, voluntary associations and churches; (2) proposals that aim to communicate information or knowledge; themes on civil rights, health, history, social innovations and political events, implemented by enterprises, people’s institutions, universities, academies and free entrepreneurs working in the field of the elderly education, are offered primarily for people of preretirement age, as well as for the active part of the elderly. (3) a “practical start” which corresponds to the proposals on teaching new technologies and handling new household appliances, new digital technology, a computer and the Internet. (4) proposals based on professional and life experience, interpreted in relation to the new conditions; computer literacy, nurses and nannies training for the purpose of further employment; (5) “new beginning” associated with the experience, in which through education directed at experienced impressions of the events, reinforces self-consciousness and the meaning of life. This classification reflects a detailed picture of the most popular content areas in the training of the elderly. 3.2 The Main Areas in the Educational Work Content for the Elderly in Modern Germany The analysis of university websites, where training of older people is organized, and the disciplines presented at the U3A in Germany, made it possible to identify three main

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educational areas in the content of educational work for the elderly people that are most developed at the present stage (Vysotskaya 2015). The most common is a vocational education aimed at mastering practical skills, continuing professional activities, as well as technical education related to the development of the information society, important for any profession. In Germany, it is important to obtain certificates that give the oppor‐ tunity to realize their professional experience in connection with new activities in the post-professional period of life. The second on demand is social education, which is implemented through everyday life and the surrounding world. In this context, a public education is seen, based on the voluntary activity of the elderly in self-organized political and social representations. In Germany, the task of including the elderly into society is largely done through their participation in volunteer work (Kade 1997; Ahmadpour and Djavad Saghafi 2017). The analysis of programs of German U3A showed that the least popular is personal education, which is implemented within the framework of cultural and creative educa‐ tion. Leisure activities, which imply cultural and creative approaches in the elderly education, unite many different aspects of a person’s life into a single whole and form a clearer picture of the reality surrounding him (Bollnow 1962; Forchheimer 1994). Analysis of theoretical and practical experience of European and Russian specialists (Fülgraf 1985; Stadelhofer 2000; Vallraven et al. 2000; Kohli 1985; Kononigina 2008; Agapova and Kononygina 2001; Gromkova 2001; Ermolaeva 2001; Vershlovsky 2012) showed that the interests of the elderly have conditioned the content distribution in educational institutions. These fields reflect the trends in the development of modern third-generation education in Germany, where the professional content direction has found the most intensive development, since it enables using rich experience of the elderly in relation to a new life situation. In addition, the elderly themselves want to be active participants in the life of society, as noted in the statistics data, obtained by researchers. There is also a tendency to expand and deepen the specifics of the content areas (Vysotskaya 2015). 3.3 The Educational Content of the University of the Third Age in Russia Taking into account the demanded areas of interest, the development trends of modern education and the most developed areas in the educational work of the U3A, when studying the content of education for the elderly, we studied the experience of practical work in Russia. In the course of surveys concerning the most popular areas of interests of the elderly in Russia, Kononigina (2008) identified the following main interests of older people in the subject areas: 68% of respondents were interested in topics about health and medical knowledge; 53% in legal knowledge; and 38% wanted to study foreign languages (Kononigina 2008). These data are reflected in the content directions, which are currently being devel‐ oped in the educational institutions of Russia. The most popular is the social direction, since the emphasis is on the social component of the educational content and social activity, and this is the most accessible way of self-realization for the elderly, offered by social institutions in Russia (Vershlovsky 2008; Gromkova 2005; Ermolaeva 2011;

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Kononygina 2006). The social part of education has developed in the context of social changes and the demands that society makes on people living in it. The second most significant direction in Russia is cultural and creative educa‐ tion, which is the content of leisure activities (Vysotskaya 2015; Vershlovsky 2008; Kononygina 2006). Working with the elderly includes help in getting an adequate idea of old age as the time for disclosure of creative forces and abilities, adaptation to new social roles, style and way of life. At the same time, conditions are created for the manifestation and use of the knowledge and experience of the elderly. The cultural and creative direction is associated with creative development, which stim‐ ulates older adults to participate in educational projects. Creativity has a special impact on the lives of the elderly (Bollnow 1962; Stadelhofer 2015; Kohli 1985). Creative activity of elderly was studied by Kononigina (2008), Gromkova (2004), Vershlovsky (2012) and others. These researchers emphasized that the kind of activity contributes to the psyche improvement, inner world development and personal ties expansion for communication. So, institutions offering educational programs to older people in Russia, public organizations, social assistance centers and social services are mostly directed to socio-patriotic work or leisure time organ‐ ization for the elderly, which refers to the social and cultural-creative content. The third most important direction is the vocational and technical content, since the U3A in Russia has not yet become as widespread as in Germany, where the U3A work at all major universities and adult educational institutions. In Russia, there is no correlation between the U3A and existing educational institutions, which makes it difficult to develop a professional component of the educational content of the elderly (Vysotskaya 2015). However, there is an urgent need for this direction devel‐ opment in Russia due to the retirement and working age increase, changes in the scientific and technical sphere of work, etc. 3.4 Difficulties in Educational Work with the Elderly in Russia A comparative analysis of the programs of supplementary education institutions for the elderly in Russia has revealed a number of problems. (1) The analysis of the information posted on the Internet sites of U3A, as well as theoretical and practical works of gerontologists in Russia showed that the system of additional education for people of the third age is at the stage of institutional development. Russian specialists working with the elderly at the institutions of this type (Konnonigina is the chairman of the board of the Oryol regional public organ‐ ization of the society “Znanie” in Russia (Kononigina 2008; Kononigina 2006); Vershlovsky is a specialist in the field of continuing adult education (Vershlovsky 2012; Vershlovsky 2008); Gromkova is a specialist in professional personnel retraining (Gromkova 2004; Gromkova 2005), etc.) noted that there is an interde‐ partmental disunity of institutions, since there is no documentary and methodolog‐ ical component that would unite the work of these organizations. The system of U3A in Germany is established and organically introduced as a general education system, being a practical embodiment of the idea of education throughout not only

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the life of a person, but also in the social and production structure of the German society (Vysotskaya 2015). The reason for this situation in the educational system for the elderly in Russia was the historical events that caused state restructuring and disintegration of the old educational system. A positive influence on the educational system is also determined by the reform of education that is being progressively implemented in Russia. It is aimed at comprehensive improvement of the system and raising it to the international standard of education. Dozens of national univer‐ sities, U3As and public organizations (University of the III age in the day care unit in the State Library of the CSC “Kurkino”; University of the third age ITMO; University “Silver age” St. Petersburg; University of the third age in Kazan; University of the third age on the basis of the State Treasury Center “Zhulebino”; LKKSSON Lermontovsky Complex Center for Social Services for the Population of the Stavropol Territory), which are engaged in the education of the elderly, have recently appeared in Russia. This fact indicates a growing interest of the society and the state to education of people at the third age and, first of all, to its content. Being very popular in Russia, national universities provide many alternative oppor‐ tunities for the educational needs implementation of the elderly. The disunity of educational institutions is a consequence of the lack of experience exchange, which is a necessary condition for the institutionalization development for the elderly. Insufficient awareness of the training possibilities for the third age people and prac‐ tical experience of educational centers for this age group. Some elderly people receive information from friends and acquaintances, but not from the media. Whereas in Germany there is a good information system backed by the government and advertising agencies. Social and cultural-creative directions in the educational content of the elderly are widely spread in Russia. However, the professional direction remains without due attention, since vocational education requires the appropriate teaching staff and additional equipment, which leads to considerable costs. Educational programs in Russia do not always take into account the peculiarities of older people, the methods of teaching are not thoroughly studied, and there is no professional staff to work with the elderly. Because of the insufficient number of specialists to work with the elderly in Russia, the topical problem for the educational content development is the professional educators training for the U3A or preparing the elderly for work in additional education institutions as instructors. In Germany there is a fruitful system of animators, training masters, who in turn work with volunteers, including trainees themselves (Becker et al. 2004; Siebert 2008; Müller and Papenkort 1997; Eierdanz 1990; Kade 2001). In Russia this system of workers and the involvement of volunteers are still emerging (Kononigina 2008; Ermolaeva 2008; Gromkova 2004; Ermolaeva 2011; Kononigina 2006).

The additional education of the elderly contributes to the formation of a new value system and an aging culture that meets the requirements of a modern democratic society. The received system characteristic of the content, forms and methods of education of the U3A in Germany allows comprehending more deeply the patterns and tendencies of the improving additional education process in Russia.

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Discussion

4.1 Trends in the Educational Content for the Elderly in Russia The analysis of program content in a number of U3As in Russia made it possible to single out the following trends in the content aspect development. (1) The most developed content areas in Russia are social and cultural-creative, because there is accumulated experience of domestic specialists in the field of additional adult education, used in working with the elderly. However, according to many Russian experts, there is an urgent need to develop programs directly for the elderly, taking into account their contemporary interests, needs and specific age (Agapova and Kononygina 2001; Kononigina 2008; Gromkova 2004; Vershlovsky 2012; Ermolaeva 2011; Kononigina 2006). (2) In the field of vocational and technical content, programs are developed on indi‐ vidual subjects: computer literacy, digital technologies and foreign languages. However, this direction largely in the Russian practice is related to leisure activities, since it has no professional application of the knowledge gained so far. In this regard, the Russian U3A requires further study. An example is the education of elderly people in Germany; where there is a certification system of the received vocational education by the elderly and the employment system for the certified people of the third age. (3) There is an expansion and deepening of the content of all educational areas due to scientific and technical development. This is evidenced by the variety of projects that have emerged in Russia in the last decade. (4) The system of additional adult education in Russia seeks to systematize educational institutions for the elderly in Russia, to specify the goals and objectives of each institution, to determine the content of education and, in accordance with it, the forms and methods of working with people of the third age, which increases the interest of the elderly to learning. 4.2 The System of Measures for the Content Aspect Development of the University of Third Age in Russia The search conducted enabled us to work out a set of measures, essential for development of the U3A in Russia. (1) It is necessary to stimulate the development and implementation of innovative educational programs for the elderly aimed at increasing the competitiveness of older citizens in the sphere of employment through mastering modern technologies and improving the material well-being of this socially unprotected category of the population. (2) Contact improvement and development, experience exchange not only at the regional but also at the federal and international levels will significantly expand and improve this educational area, strengthen interuniversity contacts and exchange of experience in working with the elderly, cooperation of universities with

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enterprises, institutions for raising qualifications, trade unions and manufacturing enterprises. It is necessary to provide counseling to the elderly on educational opportunities and the impact of education on people, to ensure the wide dissemination of information to older people on the issues of education in social work institutions with the elderly, through publication in electronic and print media. To expand the horizons of older adults, meet their cognitive needs better and take into account individual characteristics, it is important to expand the educational programs content and increase the range of educational services for vocational training. Since there is an urgent need for Russian pensioners to continue working, it is important to develop such forms of educational services as preparation at preretirement age for post-professional activities that promotes the more active inte‐ gration of older adults into social, economic and political life through their partic‐ ipation in public associations. The practice of functioning of national U3As is expanding by opening branches in Russian cities on the basis of public educational organizations and social protection of the population. Taking into account the experience accumulated in Germany can contribute to the optimization of their work. It is necessary to improve the conditions for the professional development of specialists in adult education and expand their range of activities, including the education of older adults. Programs should take into account the needs of older people and the specifics of their education. In the future, it is important to form a training system for the older people education. The experience of German U3A, ensuring a gradual transition from pre-retirement to post-professional, people’s opportunities and interests implementation, the forms and work methods diversity, is a valuable source of enrichment, deepening and expanding the theory and practice of education for older people. To continuously monitor the experience of educational institutions for the elderly in assessing the quality of educational programs for them and to stimulate research on this issue. To promote the creation of a permanent system for the experience exchange among organizations, specialists, participants in the educational process from the regions in implementing educational programs for the elderly.

It is assumed that the implementation of the results of the research proposed into the sphere of additional education of the elderly in Russia will lead to an increase in the effectiveness of institutions of this kind, which is reflected in the increased attendance of U3A courses in Russia and the students’ satisfaction in the learning process. Ulti‐ mately, studying at the U3A helps to alleviate social and psychological tensions.

5

Conclusions

The result of this work is the elaboration of a measure system to develop the content aspect of the U3A in Russia that takes into account the needs and interests of the elderly, the needs of society and the experience of a U3A in Germany. Thus, properly structured

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content of education at the U3A solves an important social task, helping the elderly person to navigate in modern life and adequately respond to its changes. The study has identified three main educational areas in the content of educational work for the elderly, the most developed at the present stage, which have been used as the basis for the classification applied to the education of third age people: social, cultural, creative and vocational fields of education. To the development trends, we have attributed the inten‐ sive development of the social content direction, the expansion and deepening of the content of all educational directions in general, the systematization and specification of the goals and objectives of each institution, and, accordingly, the definition of the educational content.

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University “Silver age” St. Petersburg. http://silveryears.ru. Accessed 15 Oct 2016 University of the III age in the day care unit in the State Library of the CSC “Kurkino,”. http:// kcsokurkino.narod.ru/index/0-24. Accessed 28 Nov 2014 University of the third age in Kazan. http://www.pfrf.ru/branches/tatarstan/ news~2015/09/04/97378. Accessed 2 Nov 2017 University of the third age ITMO. http://u3a.ifmo.ru. Accessed 28 Nov 2014 University of the third age on the basis of the State Treasury Center “Zhulebino,” Moscow. http:// kcsojulebino.ru/site/30.html. Accessed 27 Nov 2017 Vallraven, K.P., Becker, S., Veelken, L.: Handbuch Altenbildung. Theorien und Konzepte für Gegenwart und Zukunft. Leske + Budrich, Opladen (Hg.) (2000) Vershlovsky, S.: Postgraduate education: the challenges of the time, Academic Herald. Bull. St. Petersburg Acad. Postgr. Teach. Educ. 1–2(18–19), 25–30 (2012) Vershlovsky, S.G.: Continuous education: historical and theoretical analysis of the phenomenon: monograph, p. 151. SPbAPPO, St. Petersburg (2008) Vysotskaya, I.V.: Stages of formation and development of the University of the Third Age in Germany, 238 p. Ph.D. thesis (2015). http://vspu.ru/sites/default/files/disfiles/dissertations/ dissertaciya_vysockaya_pdf.pdf#3. Accessed 9 Nov 2012 Vysotskaya, I.V.: Social Pedagogical Work with different age groups in Germany. Int. J. Environ. Sci. Educ. 11(16), 9448–9456 (2016)

Information Hindrances and Communication Barriers in Project Interactions Marianna S. Santalova1(&), Elvira P. Lesnikova2, Svetlana N. Nechaeva2, Alla V. Borshcheva1, and Olga G. Charykova3 1

3

Moscow Institute of Economics, Moscow, Russia [email protected], [email protected] 2 Voronezh Branch of the Plekhanov Russian Economic University, Voronezh, Russia [email protected], [email protected] Federal State Budget Scientific Institution “Scientific Research Institute of Economics and Organization of Agroindustrial Complex of Central Chernozem Region of the Russian Federation”, Voronezh, Russia [email protected]

Abstract. The article considers information interference and communication barriers in the project interactions of a commercial enterprise: distortion and loss of information, its lack in feedback channels; filters are identified through which the “Project Manager - Executor” information passes through the investigated enterprise (in terms of importance); a pragmatic filter was used in the way of official information from the source to the recipient, which showed that two main reasons prevent the use of such information, as the managers of the investigated commercial enterprise point out: “lack of time and high workload with current problems”. It is proved that distortion of messages, information overloads and unsatisfactory structure of the organization are barriers to effective organizational communications, including in project management. A general scheme for assessing the social and economic efficiency of communications in project management is presented. A model of communication management by processes for the project of a commercial enterprise was developed. Keywords: Information interference of communication Communication barriers  Project management Social and economic efficiency of communications in projects Model of project communications management

1 Introduction Interference in communicative interaction has long attracted the attention of researchers. E. Rogers and R. Agarwala Rogers identified four main problems: (1) information overload, (2) distortion and loss of information, (3) lack of information in the channels of negative feedback, (4) low speed of information flows.

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Information overload is the state of an individual (employee) or a system in which the information coming to them cannot be processed and used, which leads to disruptions in the communication process, a decrease in its effectiveness. Distortions and loss of information are quite common phenomena. Distortion is such transfer of information, in which its meaning is distorted. Loss is the loss of all or part of a message. In addition, there is a lack of information in the feedback channels. The communication system tends to distort information in direction that increases the likelihood of receiving rewards and reduces the likelihood of receiving punishment. As a result, the project manager has a distorted or completely wrong idea of what is going on below. Negative feedback from the lower levels should be encouraged by the project manager. Special channels of such feedback should be provided. It is also recommended to use informal contacts as another possible channel for feedback.

2 Materials and Methods In the process of research, methods of logical-semantic modeling, structural-functional, comparative and situational analysis, grouping of empirical data are used. The collection of primary sociological information was carried out through the study of documents, oral and expert interviews (managers). The empirical base of the research is the project activity of “GMZ” Liskinsky “- a network subsidiary of the largest holding in Russia of the “Dominant” Group. The enterprise being investigated - “GMZ” Liskinsky “- which produces dairy products, has regulatory and legal provisions in accordance with the current legal acts. The enterprise has introduced and certified: – – – – –

Quality management system according to ISO 9000 standards; HACCP security system according to ISO 22000 standards; environmental management system according to ISO 14000 standards; Occupational Safety and Health Management System ISO 18000; accreditation system for laboratories ISO 17000.

All projects are initiated and implemented according to the PMI PMBOK standards. At GMZ Liskinsky, a complex communication data flow has been formed, which considerably exceeds the regulations of the PMBOK standards adopted for the enterprise, and as a consequence, this flow is characterized by chaotic and duplicative functions of the project. The formal structure of the organization creates certain obstacles in the way of the communication flow, therefore, such interference in communicative interaction as a low speed of information flows is very often manifested [1]. In the course of the sociological survey conducted by the managers of the organization, it was clarified how often they encountered the problems of communicative interaction identified above. Judging by the data obtained (Fig. 1), more often in the studied one they face problems of distortion and loss of information (76%), and its lack in feedback channels (63%).

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Fig. 1. Comparative evaluation of organizational communication problems

F.I. Sharkov classifies communication interferences by character: 1. Technical interference - obstacles to a passing signal, when the source of such interference is the communication channel itself. Such interference can cover the communication channel completely or partially, distorting information or truncating (shortening) it. 2. Psychological hindrances - are related to the relationship between the communicator and the recipient, their relationship to each other, to the methods, content and form of communication. 3. Psychophysiological interference - arise due to sensory abilities, peculiarities of human perception, ability of the sender/receiver to remember and process information. 4. Social hindrances - are due to social norms, prohibitions, restrictions in obtaining information due to the belonging of communicants to different social groups. 5. Cultural-national interference - due to differences in traditions, norms, values, evaluation of various forms of communication, reaction to information received because of the belonging of communicants to different ethnic (religious, etc.) groups [2, p. 312]. Using the research data of A. Totskoy and the linear model of the communication process of Yu. Vorontsov [3], including class, social and personal-individual filters, semantic fields and fields of communication environment, let us single out the filters through which the information on the investigated enterprise (in terms of importance) is going: (1) a physical filter for receiving information associated with the specific characteristics of the channel of its transmission and possible distortions at the same time (clauses, reservations, electrical interference of communication and other technical inaccuracies in the interaction);

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(2) a semantic filter of interpretation of information, related to its “understanding/misunderstanding”; (3) an axiological filter of information evaluation, related to an adequate/inadequate assessment of its value; (4) a pragmatic filter for the use of information associated with the recipient’s decision on its application/non-use in connection with utility/uselessness for solving the assigned tasks (Fig. 2).

Fig. 2. Filters when information passes through the information channel “Project Manager Recipient”

In each organization there are both general and specific reasons for inadequate perception and understanding of information. This may be insufficient competence and qualification of the recipients of information; distrust to the communication channel; mistrust of the source of information. But even with adequate perception and understanding of the transmitted information message, there is no confidence in the effectiveness of communicative interaction. After all, it is still necessary to correctly assess the importance of information and use it correctly. Thus, in the organization under study, during an oral interview, 12 managers were asked to answer the question: are subordinates and responsible persons in the holding companies always correctly assessed the content and significance of the information transmitted to them. 73% of the respondents answered positively that it is quite a high level and testifies, firstly, about the optimistic assessment of managers, about the abilities of their subordinates to correctly assess information, and secondly, the high level of technological and organizational compliance of the work performed by the communicants. A pragmatic filter deserves special attention in the way of official information from the source to the receiver. The use of such information is hindered, as the managers of GMZ Liskinsky point out, two main reasons: “lack of time and high workload with current problems” (58%).

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Communication barriers also interfere with successful communication. Barriers of communication are obstacles in obtaining information transmitted through the channels of communication, and in its understanding. Communication barriers exist at macro and micro levels. To the macroblocks include complication of information, language barrier, overload or malfunction of information networks. Microbearers are associated with both the personal qualities of the sender/recipient of information, and with organizational problems. Microbloggers include: misunderstanding of information due to inability to explain it, verbalize it, misunderstanding on the part of the recipient because of low qualification, non-perception of information due to the multivalued interpretation, the relationship of the addressee to the sender and vice versa. The presence or absence of barriers in the communication channels is checked by comparing the information at the input and output of the communication channel, which is checked by feedback. For example, J. Podguretsky considers among the communicative barriers: differences in perception, language differences, noise, emotions, discrepancy between verbal and non-verbal messages, distrust. M.H. Meskon, F. Hedouri and M. Albert share barriers of interpersonal and organizational communication and refer to them perceptual, semantic, non-verbal, bad feedback, inability to listen [3, p. 34; 5]. A. Totskaya proposed the following classification of barriers to interpersonal and organizational communication [4]: (1) Perceptual-interpretational barriers: “presumption of reciprocity”, “assumption of similarity,” negative asymmetry of initial self-esteem, “intragroup favoritism”, “ignoring the information value of” the unheard, “status errors, dispositional errors”, predisposition in favor of one’s self, false uniqueness, arrogance. (2) semantic barriers: poorly formulated message, differences in the interpretation of symbols, falsification errors; (3) instrumental barriers: non-verbal obstacles, regime barriers, physical barriers; (4) emotional barriers: premature evaluation, emotional incompatibility; (5) procedural barriers: inability to listen, loss of information in communication cycles. Distortion of messages, information overloads and unsatisfactory structure of the organization are barriers to effective organizational communications, including in project management. Under effective communication in this study, we mean communication aimed at achieving enterprise goals, characterized by a high level of socioeconomic efficiency, the cost of which should be lower than the resulting effect [7, 8]. We will present a general scheme for assessing the social and economic efficiency of communications, consisting of five stages [9, p. 34] (Fig. 3). At the first stage, the external and internal environment of the enterprise is evaluated. The existing interrelations of the enterprise are analyzed in accordance with the specifics of the activity, identifying the communication needs that can help in the implementation of the project and the achievement of the objectives of the enterprise. At the second stage, the method of research of the communicative system for enterprises and the communicative technologies used in the project implementation are chosen. To do this, we often apply the method of peer review, which allows us to conduct a multifaceted analysis of enterprise communications, both in the management team and the project team, which will give the most adequate assessment.

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1. Determination of needs and specifics of the organization

2. Choice of research methods

3. Diagnostics of organizational communications

4. Interpreting of results

If communication is not effective

5. Determining the effectiveness of the communication system Fig. 3. General scheme for assessing the socio-economic efficiency of communications in project management.

At the stage of diagnostics of organizational communications, problems in the communication sphere and in the management of communications are revealed. In the opinion of many authors, the main criteria for assessing the effectiveness of communications were identified [10, 11]. – number of communication channels; – infrastructure of the communication space and its characteristics: integrity, adequacy of the environment, flexibility, the possibility of monitoring and adjusting; – satisfaction of information needs of interested persons and organizations; – balance between vertical, horizontal and diagonal communications within the organization, between documented (formal) information and verbal means; – speed of information transfer; – quality of information support (relevance, accessibility, sufficiency, level of implementation); – state of the socio-psychological climate in the team (communicative culture, the availability and implementation of communicative standards, the level of communicative competence of staff) [12]; – Organizational participation (from Latin: introducing the individual to the whole, the effort of top managers to expand the capabilities of individuals or groups of lower status, so that they have more weight in the specific activity of the organization, in our case, in project management); – feedback efficiency.

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1 AT THE INITIALIZATION OF THE PROJECT INPUTS

OUTPUTS

1 Sectoral market monitoring and forecast 2 SNW- and SWOT-analysis of the characteriscs of the organizaon 3 Assessment of the availability of financial resources

INSTRUMENTS AND METHODS 1 Communicaon technologies 2 Methods and means of communicaon in the external and internal environment

1 Decision of founders to iniate a project 2 Decision of the founders on the integraon of the project communicaon system into the enterprise communicaon environment 3 Formaon of the project team

4 Stakeholder Loyalty Evaluaon

2 AT THE STAGE OF THE PROJECT PLANNING INPUTS 1 Project Management Plan 2 Financial constraints on the management of communicaons

INSTRUMENTS AND METHODS

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1 Register of requirements for a communicaons management system

1 Communicaons Management Plan

2 Communicaon technologies

2 Adjust project documents

3 Enterprise Communicaon System

3 Informaon and sociological communicaon model

4 Idenficaon and analysis of stakeholders

4 Methods and means of communicaon

3 Formaon of the informaon base of the project (informaon expectaons)

3 AT THE PERFORMANCE OF THE PROJECT

OUTPUTS 1 Formed communicaons

INSTRUMENTS AND METHODS INPUTS 1 Communicaon management plan for the project

1 Informaon and sociological communicaon model 2 Project communicaon management system

2 Communicaon system and informaon base of the enterprise

3 Communicaon skills

3 Stakeholder Monitoring

5 Performers' reports on the current state of the project

4 Methods and means of communicaon

2 Adjustment of project documents and the Communicaon Management Plan 3 Correcve acons 4 Informaonal interacon with stakeholders to prevent problems and break down barriers 5 Replenishment of the project informaon base with reliable and mely informaon

4 AT THE STAGE OF PROJECT MONITORING OUTPUTS INSTRUMENTS AND METHODS INPUTS 1 Communicaon management plan for the project 2 Project Communicaons 3 Interim results

1 Project Communicaon Management System 2 Performer Reports 3 An intrinsic esmate 4 External evaluaon of the effecveness of the project by the founders' experts

1 Data on results achieved and effects 2 Register of recommendaons for adjusng the project 3 Correcng project documents and the Communicaons Management Plan 4 Updang the project informaon base

5 AT THE END OF THE COMPLETION OF THE PROJECT OUTPUTS INSTRUMENTS AND METHODS INPUTS 1 Communicaon management plan for the project 2 Informaon on intermediate and final results of project implementaon

1 Project Communicaon Management System 2 Project Team Report 3 Acceptance of the project 4 External evaluaon of the effecveness of the project by the founders' experts

1 Report on results achieved and effects project, incl. communicaons management 2 Updang the company's informaon base and archive 3 Increase in experience in project management, incl. in communicaons management

Fig. 4. Recommended model of communications management on the processes of the project “GMZ Liskinsky”

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At the fourth stage, the results are interpreted. This gives an opportunity to assess the existing communication problems of the enterprise, as well as their relevance to the needs and objectives of both the project and the organization (network interaction) in general. On the basis of the conducted diagnostics of organizational communications, as well as their interpretation make a conclusion about the quality and effectiveness of the communication system of the project. If the customer and the project sponsor are satisfied with the high quality of communications, the conclusion is made about an effective system for managing communications of the enterprise. If negative feedback/results are received, they return to the stage at which problems arose, that is, they repeat the choice of the research methodology.

3 Results On the base of ISO 21500:2012 Guidance on project management and PMBOK standards [13, 14] we developed and implemented model for managing process communications for the project of GMZ Liskinsky (Fig. 4). In the field of project management for a communicatively cultural project manager, it is important to pay attention to the satisfaction of the four communication needs of the project team members: (1) (2) (3) (4)

the need for briefing, regulations, the standards of action; feedback needs based on performance; the need for timely news and information; the need for social support.

The requirements for social communication should be reflected in the document “Communications Management Plan”.

4 Discussion The topic was discussed in the Voronezh branch of the Plekhanov Economic University, at the enterprise “GMZ Liskinsky”, where a model of communication management for project processes was introduced, in the Autonomous non-commercial organization of additional professional education “Alfa-Russ”. Acknowledgments. The communication management model of the project was implemented at the enterprise “GMZ Liskinsky”.

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References 1. Santalova, M.S., Lesnikova, E.A., Chudakova, E.A.: Expert models for evaluation of innovative entrepreneurial projects. Asian Soc. Sci. 11(20), 119–126 (2015) 2. Sharkov, F.I.: Communicology: The Fundamentals of Communication Theory, 4th edn., 488 p. Dashkov and K, Moscow (2017) 3. Podguretsky, Yu.: Paradigms of Modern Social Communication, 183 p. Izd-vo MGU, Moscow (2000) 4. Totskaya, I.V.: Social and technological model of communications management in the organization [Electronic resource], Author’s abstract. diss. сand. sociologist. sciences on spec. 22.00.08, 186 p. Belgorod (2009) 5. Mescón M.X., Meskon, M.X., Albert, M., Hedouri, F.: Fundamentals of Management, 3rd edn., 672 p. ID Williams Ltd., Moscow (2012). (Translated From English) 6. Lassuel, G.: Communicative process and its structure. Modern Problems of Social Communication, 342 p, St. Petersburg (1996) 7. Prokhorov, V.V.: Communication in Business [Electronic resource]. Electron. ed. http:// www.subscribe.ru. Accessed 02 Jan 2018 8. Reznik, S.D.: Management. Book 4. Managing Human Potential in Socio-Economic Systems: Monograph. SRC INFRA-M, 319 p. (2014) 9. Moiseeva, G.V., Skopin, O.V.: Communication as a key competence of the project manager [Electronic resource]. Modern Management Technologies, 11(11). - Electron. ed. http:// sovman.ru/article/1104. Accessed 20 Dec 2017 10. Akinshin, V.M.: Project approach to the implementation of the concept of sustainable development in the company: monograph. INFRA-M, 264 p. (2015) 11. Santalova, M.S.: Strategic analysis of commercial organization. Science and Technology 3, 117 (2015) 12. Santalova, M.S., Didenko, S.S.: Innovative approach to management assessment of personnel. Eur. Soc. Sci. J. 1–2, 86–90 (2015) 13. ISO 21500:2012 Guidance on project management 14. A Guide to the Project Management Body of Knowledge, USA: Project Management Institute, Inc., p. 310 (2013)

Conditions of the Internationalization of Chinese Yuan: Changes for Five Years Inna V. Kudryashova(&) Volgograd State University, Volgograd, Russia [email protected]

Abstract. The implementation by the People’s Republic of China (PRC) of the measures concerning the development of the sphere and the scale of the international use of its national currency provided the inclusion of the yuan since October 2016 together with the US dollar, euro, pound sterling and Japanese yen into the basket of currencies (Special Drawing Rights). In the article on the basis of the theoretical justification of the necessity of creation of all economic, institutional and organizational conditions of the internationalization of a currency factors that allowed achieving the contemporary level of the international use of the Chinese monetary unit as standard of value, unit of account and reserve currency are analyzed. The reasons contributing to the increase of the international status of the yuan in 2010–2015 are characterized. The determinants impeding the future growth of the demand for the national currency of China from the part of non-residents are discovered. Keywords: World currency  Currency internationalization  Chinese yuan Convertibility  Financial market  International reserves  Exchange rates JEL Classification: F31

 F33

1 Introduction The instability of the exchange rates of basic international currencies over the last decade on the one hand and also the impossibility of use of advantages when the national currency becomes a world currency on the other hand determined in many respects the aspiration of many countries to the internationalization of their national monetary units. The People’s Republic of China (PRC) started the practical implementation concerning the increase of the international status of its currency during the period of the global economic crisis of 2008–2009. Although in 2010 the first application of China was rejected, in November 2015 the IMF took a positive decision about the inclusion of the yuan into the list of currencies in the basket of the SDR. In the article on the basis of the analysis of the conditions of the increase of the international status of the yuan the factors contributing to its internationalization are characterized. The reasons constraining the widening of the spheres and the scale of its use by non-residents are revealed.

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 282–293, 2019. https://doi.org/10.1007/978-3-030-00102-5_30

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2 Literature Review The process of the widening of the international functions of a currency, its transformation into a world currency is complicated and is a multistage process, the result of this is the growth of the confidence to the monetary unit beyond the country issuer. At the same time the formation and clear manifestation of the advantages of the use of this currency as a standard of value, a unit of account and a store of value in comparison with currencies of other countries is taking place. The conclusions made on the basis of the existing research show that the achievement of such a position is possible under definite conditions which characterize the sustainability of the country within the international currency and financial system and the opportunity of the implementation of different transaction using its national currency. The basic macroeconomic condition of the internationalization of the functions of a monetary unit is the growth of its issuer weight in the world GDP. This weight is expected to be substantial, considerably higher than that of other countries and the economy is supposed to be an open one and play an important role in the international trade. The former Chairman of the Federal Reserve A. Greenspan (2001) pays attention to the fact that economic agents are disposed at choosing among all others the currency of country which has a sustainable, competitive, vibrant economy and is reliable in international trade and finance. Chinn and Frankel (2005) find that in the course of the increase of the international status, the currency of the country which has the largest weight in the world production, international trade and finance has a considerable natural advantage respective to other currencies. The Russian researchers Narkevich and Trunin (2012) prove that the volume of the economy of the country issuer and its weight in the world trade is a condition for the internationalization of the national currency. Indeed in order to single out from national monies one currency for the use as a world currency there should be an objective necessity in it from the part of non residents. In other words there should be a considerable and stable international demand for the monetary unit of the country or groups of counties issuing it. It is possible to provide this by means of the achievement of a large share in the world production and at the same time to be a large world exporter. Consequently monetary units of countries with small volumes of the GNP and of the export of goods and services cannot act as a world currency as the demand for them in foreign markets is not expected to be considerable. Another condition providing the internationalization of a currency is a recognizable, flexible regulation by government and the availability of a developed financial market in the country issuer or group of countries issuers. Greenspan (2001) notes that the availability of an open, well developed financial system being an indispensible part of a sustainable, competitive and open economy of a country increases the attractiveness of the business transactions with the use of the currency of this country.

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Chinn and Frankel (2005) believe that for the formation of a large scale and stable demand for currency from the part of non-residents the monetary market and capital market in the country (group of countries) issuing the currency are expected to be open, free and also well developed. Moiseev (2008) supposes that in order to increase the international status of a currency the authorities of the country should actively encourage the capital and monetary market where non-residents will be able to make their deposits and reserves. These financial markets are expected be open and liberal. Let’s make more precise some provisions reasonably mentioned by the scientists. An open financial market allows the foreigners investing into the financial instruments issued in the currency of this country. The developed national financial market may also provide alternative sources of financing and may determine a high demand for this currency from the part of non-residents. At the same time the role of the national banking system as one of the basic segments of the financial market in the process of the internationalization of a currency is determined by the following aspect. These are the banks which can mediate the global trade and investment flows using the currency and by means of offering a diversified set of assets in it for foreigners contributing by this to its wider international use. National markets of stocks and bonds by means of providing to foreign investors opportunities for the investment of private savings and official reserves can also increase the attractiveness and the degree of use of the currency of the given country. Pentti and Macedo (1978), Greenspan (2001), Chinn and Frankel (2005) mention the stability of the country as the condition of the currency internationalization. The stability of a currency is expressed through a low level of inflation and the absence of violent fluctuations of its price relative to other currencies. Pentti and Macedo point out that the most secure currency for all the investors regardless the country of its origin is the monetary unit of the country (group of countries) with the least unpredictable inflation. Under the condition of the absence of the limitations for the use of international currencies the most secure foreign currency acquires a wider use as a unit of the denomination of financial instruments. Greenspan pays attention to the fact that the reduction of the purchasing power will impede its use. But if a currency is a secure store of wealth even in period of economic fluctuations it will become attractive to investors. Chinn and Frankel point out that the purchasing power of the world currency even if it is used only as a unit of account should not fluctuate disorderly. This requirement should be observed if the assets of trade firms, investors and central banks are denominated. In this situation the long term stability of the currency is more important. In fact economic agents are interested in a long term stable purchasing power of this or that monetary unit. In other words a world currency can be the currency if in the country issuer (group of countries) the inflation rate is low and the exchange rate is not subject to considerable fluctuations. The Russian scientist Krasavina (2008) gives the opinion that one of the conditions of the achievement by monetary unit of the status of the world currency is the increase of international reserves by its issuer. The role of international reserves in this process is explained by the fact that they characterize the stability and the solidity of the financial situation of the county, guarantee the fulfillment of the taken international

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obligations, support of the liquidity in financial markets during crises and also they provide the regulation of the volatility of the currency exchange rate. Another condition of the internationalization of a currency is the absence of considerable limitations on its use in current and capital transactions of the balance of payments. Pollard (2001) supposes that the barriers to the exchange of one currency for other currencies limit its global use. Genberg (2009) also supposes that the internationalization of a currency implies the absence of limitations on its use in international financial transactions. The reason consists in the fact that the limitations on the convertibility of the currency for the transactions in the account of capital operations will increase the transaction costs of this currency and this fact will reduce its attractiveness in comparison with other currencies. Besides the limitations on the currency use in international financial transactions impede its use in the international trade of goods. As such a trade includes the elements of the financial nature (trade financing, currency exchange hedging) so the prohibition of such operations or a considerable price growth will become a barrier to the turnover of such currency and to the transactions of the current account. Thus the achievement of the status of the world currency is possible under following conditions. Firstly, it is a considerable weight of the issuer in the world production and export. Secondly, in the county issuer there should be an open, regulation free, developed market. Thirdly, the issuer is expected to have considerable international reserves. Fourth, the currency should be stable and this fact is expressed by a moderate inflation and an insignificant volatility of its rate. Fifth, there should not be considerable limitations on the use of the currency in current and capital transactions of the balance of payment. The further research (Kudryashova 2015) of the conditions of the internationalization of currencies allowed grouping them into two sub groups: these are economic ones and institutional and organizational ones. The availability of economic conditions in the country (groups of countries) issuing this currency provides the growth of confidence in it from the part of non residents and in the result a considerable and stable international demand for this currency is created. Also the economic situation provides the stability of a national currency. In its turn the economic conditions can be divided into two subgroups. The first one (weight in the world GDP, weight in the world export of goods and services, volume and development of the financial market) provides the creation of a considerable, large scale and stable demand for the currency of this issuer. The second subgroup of economic conditions (inflation rate, exchange rate dynamics, volume of international reserves) characterizes and provides the stability of this currency what is reflected on the positive dynamics of the demand for it. However without the creation of the economic prerequisites for the first subgroup a considerable increase of the international status of the currency is impossible. The creation of institutional and organizational conditions gives the opportunity of making various transactions in a certain currency and to assess the advantages of its use relative to other countries of the world. The conditions of this group include the absence of currency limitations in current and capital transactions of the balance of payments.

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3 Methodology and Materials The information about the volume and structure of international reserves of the countries (groups of countries) is available in the Data Template on International Reserves and Foreign Currency Liquidity of the IMF. A more complete statistics about the currency structure of reserve assets of different countries of the world is published by the IMF in the database of the Composition of Foreign Exchange Reserves. But this database contains the information only about some monetary units including the US dollar, euro, pound sterling (Great Britain), Japanese yen, Swiss franc and since 2013 about the Canadian dollar and the Australian dollar which were also included into this record. Consequently it is complicated to show the share of the yuan in the structure of international currency reserves using this source. The information about the yuan for year 2014 was published in the yearly report of the Bank for International Settlements. The data about the currency structure of cross-border payments is published monthly by the Society for Worldwide Interbank Financial Telecommunications. The statistical information about the GDP dynamics, export volume is found in the statistic base of UNCTAD. The qualitative indicators characterizing the degree of the development of separate segments of financial markets of the countries (groups of countries) under analysis are presented by the World Bank in the database Global Financial Development. The data about the inflation is presented in the Open Data of the World Bank. The comparative analysis method, historical method, method of absolute and relative indicators, table and graphical methods of research were used in the article for the analysis of the statistical information.

4 Results In practice the increase of the international status of the currency is expressed in the growth of scale and expansion of the sphere of its use by non-residents. It is possible to determine the degree of the internationalization of the currency using the indicators used by the IMF for the assessment of the freely usable currencies. The indices include: weight of the currency in trade financing, the weight in cross-border payments, share of currencies in official foreign exchange reserves, international debt securities outstanding, volume of transactions (turnover) in foreign exchange markets for wide trade and others. In 2010–2015 the values of these indicators for the Chinese yuan increased what shows the growth of demand for this currency beyond the country issuer. Nevertheless the degree of the internationalization of the national currency of the People’s Republic of China still remains lower than that of other world currencies. First of all the role of the yuan as the currency used for international trade financing increased considerably. So if in 2011 the Chinese yuan was not practically used in such operations but already in 2012 it became the third currency with the share of 4% after the US dollar and the euro in the total volume of transactions. In another four years it moved on the second place with the weight of the yuan of 9,1% from all the

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transactions. In 2015 the US dollar accounted for 80,1% of transactions, the euro accounted for 6,1%, the Japanese yen accounted for 1,9%. At the same period the yuan started being used considerably more often in the cross-border payments. If in January 2012 the Chinese national currency ranked the 20th in the total volume of cross border payments so by January 2015 it moved to the 5th rank with the share of 2% (to compare with: the weight of the Japanese yen at the same period was 2,8%). The total weight of basic world currencies exceeded 83%.1 However the weight of the Chinese yuan in the total volume of the foreign exchange reserves in the world remains negligible. In the end of 2014 it made up only 1%. About 93% of foreign exchange reserves is accounted for the US dollar, euro, pound sterling and the Japanese yen.2 The scale of use of the national currency of the People’s Republic of China in the international debt securities market in 2010–2015 was considerably lower than that of other world currencies. So the weight of yuan in the international market for bonds in 2016 made only 0.6%. The weight of the US dollar was 34.1%, of the euro it was 38.5%, of the pound sterling it was 9.6%, of the Japanese yen it was 2.0%. The role of the Chinese national currency in the volume of transactions in foreign exchange markets for wide trade is relatively insignificant so far but there is an upward trend in its use. In 2010–2016 the yuan moved up from rank 17 to rank 8 (4.0%) in the volume of transactions in foreign exchange markets. At the same time the level of the world currency (pound sterling) with the minimal rate of this index (11.8%) for 2016 was not attained.3 In 2010–2015 the People’s Republic of China achieved considerable results in the creation of economic, institutional and organizational conditions for the increase of the international status of the yuan. Let’s analyze in details the changes that took place. Nowadays the Chinese economy among all countries of the world ranks the 2nd after the USA on the basis of the absolute volume of the GDP. In 2010–2015 the contribution of China into the production of the world product increased 1.6 times and made more than 14% (Fig. 1). But as one of the issuers of world currencies is the association of countries (Euro area), the GDP of which exceeds the Chinese GDP, only the USA and the Euro area are ahead of China in the weight in the world GDP. Their shares in 2015 made up 15.3% and 24.0% correspondingly. Over several decades of the implementation of the policy of reforms and “openness” of China the country increased considerably its role in the international trade of goods and services. In 2015 China became one of the largest exporters of goods and

1

2

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Society for Worldwide Interbank Financial Telecommunications (2016), SWIFT RMB Monthly Tracker, Available at: https://www.swift.com/our-solutions/compliance-and-shared-services/businessintelligence/renminbi/rmb-tracker/document-centre#topic-tabs-menu (accessed 14.08.2016). International Monetary Fund (2017), Data Template on International Reserves and Foreign Currency Liquidity. Available at: http://data.imf.org/?sk=2DFB3380-3603-4D2C-90BE-A04D8BBCE237& ss=1481575224638 (accessed 24.02.2017) Bank for International Settlements (2016), Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets in 2016, Available at: http://www.bis.org/publ/rpfx16.htm (accessed 19. 09.2016).

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2015, Other, 36.6 2010, Other, 36.6 2015, China, 14.9 2010, China, 9.1 2015, Japan, 5.5 2010, Japan, 8.4 2015, United Kingdom, 3.8 Kingdom, 3.7 2015, Euro area, 15.3 2010, Euro area, 19.3 2

2015

2015, United States, 24.0 22.9

2010

Fig. 1. Weights of countries in the world GDP in 2010 and 2015. Source: UNCTAD, Data center. Available at: http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=96 (accessed 19.02.2017)

services in the world. Among the issuers of world currencies only the euro zone is ahead of China on this indicator (Fig. 2). Positive changes were observed also in the functioning of the national financial market of the China. Using for the assessment the degree of its development the absolute weight of some segments it becomes obvious that not only its considerable growth but also the achievement of the development of some world currencies issuers is important. Thus, the stock market capitalization of the People’s Republic of China grew in 2010–2015 twofold and exceeded $8 trillion. In the USA this indicator in 2015 exceeded $25 trillion and in the Euro area it made up a little bit more than $ 6 trillion. The bank assets volume increased more than 1,7 times and by the end of 2014 it made up $14.9 trillion and this is higher than the Euro area ($13,8 trillion), than the USA ($10.4 trillion) and Japan ($8.5 trillion). The dynamics of the scale of the debt market was positive and the growth rate for 5 years made 2.5 times and the absolute size reached $.,5 trillion. The analysis of the development of the financial market of China allows confirming that only the bank segment of the market corresponds to the level of the development of financial markets of the USA, Euro area, Great Britain and Japan. When analyzing the conditions of securities market and debt securities market of China the lagging behind the markets of world currencies issuers is observed (Table 1). The banking segment of the Chinese financial market provides for the moment the largest opportunities for the investments in yuans. According to the data of the World

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2015, Other, 45.2 2010, Other, 46.9 2015, China, 11.6 2010, China, 8.7 2015, Japan, 3.5 2010, Japan, 4.6 2015, United Kingdom, 3.7 2010, United Kingdom, 3.6

2015, Euro area, 25.4 2010, Euro area, 26.4 2015, United States, 10.6 2010, United States, 9.8

2015

2010

Fig. 2. Weights of countries in world export in 2010 and 2015 Source: UNCTAD, Data center. Available at: http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=96 (accessed 19.02.2017). Table 1. Indicators of financial markets development of world currencies issuers in 2015, % Country/Group of countries

Stock market capitalization to GDP

Deposit money banks assets’ to GDP 145.02

Outstanding domestic private debt securities to GDP

Outstanding domestic public debt securities to GDP

United 112.11 12.33 58.63 Kingdom United States 139.0 60.32 91.93 82.63 Japan 111.7 185.12 56.5 177.3 Euro area 65.3 102.72 37.83 46.63 2 China 74.4 143.4 28.7 16.1 1 The data for year 2012. 2 The data for year 2014. 3 The data for year 2011. Source: [World Bank, Global Financial Development. Available at: http://databank.worldbank. org/data/reports.aspx?source=global-financial-development (accessed 21.02.2017).]

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Bank, the growth rate of the assets of the banking system of China in 2010–2014 somewhat exceeded the growth rates of the GDP. As a result the ratio of deposit money banks assets’ to GDP increased and made up in 2014 more than 143% what is higher than the rate of world currencies issuers like the USA and the Euro area. The indicator of the stock market capitalization to GDP increased from 66.7% in 2010 to 7,4% in 2015. Although the value of this indicator of other world currencies issuers did not have in 2010–2015 a long term trend nevertheless in the end of the period under analysis it was higher than in China except the Euro area. It is obvious that the stock market of China is not the main source of company money in the People’s Republic of China. The debt securities market in China is considerably less capacious than the stock market. In 1990–2009 the ratio of the outstanding domestic private debt securities to GDP had a positive trend having attained the maximum at the level of 34%. In the years that followed its negative dynamics was observed. The market for governmental bonds has a lower capitalization. Starting with 1990 its value constantly grew and made up 18% in 2007. In 2008–2014 the value of this indicator was characterized by an insignificant volatility and in the issue it remained considerably lower than the values of the USA, Euro area, Great Britain and Japan. Besides low indicators of the capitalization the Chinese bond market remains comparatively closed for non-residents. Since 2015 the National bank of China allowed foreign Central banks, sovereign funds and international institutional investors working in the Chinese interbank bond market without obtaining a preliminary approval of the Chinese authorities. Besides asset management companies got the permission to invest $30 billion into the Chinese bonds in the program for qualified foreign institutional investors. However despite such measures the domestic bond market of China offers comparatively small opportunities for foreign investors of money investment. During the analyzed period the dynamics of the prices in China and also the scale of the fluctuations of the exchange rate of the yuan relative to other countries proved that the Chinese national currency was stable. In 2010–2015 the inflation in the People’s Republic of China was mild, its rate fluctuated in the boundaries from 1.4% to 5.4%. It is worth mentioning that at the same period the inflation rate of other world currency issuers was about the same (Fig. 3). The current order of the formation of the exchange rate of the yuan relative to other currencies does not imply its considerable volatility. The IMF defines the exchange rate regime in China as “Crawl-like arrangement, Monetary aggregate target” and also mentions that in fact the exchange rate of the yuan is pegged to the US dollar. The price of the Chinese national currency is determined not by the market forces but by the National bank of China. It sets rigid boundaries of the yuan exchange rate fluctuations relative to the American dollar. Since March 2014 this band was widened from 1 to 2%. The previous widening took place in April 2012, when the diapason was fixed within 1% instead of previous 0.5%. It is worth mentioning that the exchange rate of other world currencies (free floating exchange rate) differs considerably from the

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6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0

2010

2011

2012

2013

2014

2015

-2.0 China

Japan

United States

Euro area

United Kingdom

Fig. 3. Dynamics of inflation in various countries in 2010–2015, % Source: World Bank, Open Data, Inflation, consumer prices (annual %). Available at: http://data.worldbank.org/indicator/FP. CPI.TOTL.ZG (accessed 20.02.2017)

exchange rate functioning in the People’s Republic of China. The price of the US dollar, euro, pound sterling and the Japanese yen relative to other currencies is determined by market forces but does not exclude the opportunity of currency interventions for its stabilization. The creation in the People’s Republic of China of the largest in the world international currency reserves contributed to the stability of the yuan. Their total volume in 2015 made up $3.4 trillion. That is almost 1.2 times higher than in year 2010. The absolute total volume of reserve currencies of China exceeds the same indicator of Japan 2.8 times, of Euro area 4.6 times, of the USA almost 9 times, of Great Britain 26 times. The least positive changes during the analyzed period were observed in the course of a partial removal of limitations on the use of the Chinese national currency in capital transactions of balance of payments. The yuan is still not a freely convertible currency. And although the control measures are selectively cancelled, the operations account of other world currencies issuers is much more open than the Chinese one. The Chinese government plans to increase the convertibility of the yuan only by year 2020. The study of the experience of the internationalization of the pound sterling, US dollar, Japanese yen, Deutsch mark and French franc and the euro which replaced them proves that the achievement of the free convertibility of these currencies preceded the achievement of the status of the world currency and did not follow it.

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5 Conclusion Thus, for five years between the first and the second applications of the PRC for the inclusion of the yuan into the basket currency of SDR its internationalization increased considerably. The development of international functions of the Chinese national currency is confirmed by a considerable growth of its role as a currency used for international trade finance and for the implementation of international or cross-border payments and also for the formation of the tendency of the growth of volume of transactions volume with the yuan in the foreign exchange market for wide trade. At the same time the weight of the yuan in the total volume of official reserve holdings and also the scale of its use in the international debt securities market remains insignificant. Such a change of the international status of the yuan became the consequence of the following causes. The conditions of the widening of the sphere and scale of the international use of the national currency of the People’s Republic of China (share in the world economy and world trade, low inflation rate, volume of international reserves) created by 2010 became even more favorable. In case of creation of further conditions the impact growth of the People’s Republic of China on the creation of the world product and the yuan stability could provide in the long term period a more considerable demand for it. However at the present stage of development the stock and debt sector of the financial market in China cannot offer nonresidents similar opportunities for investments and for obtaining financing as highly developed markets of the USA, Euro area, Japan and Great Britain can. This fact has a negative impact on the competitiveness of the Chinese financial market and impedes the further internationalization of the yuan. Besides in spite of the relative liberalization the existing limitations on capital transactions of balance of payments will in future contribute to the widening of spheres and scale of international use of the Chinese national currency.

References Chinn, M., Frankel, J.: Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency? NBER Working Paper 11510 (2005) . http://www.nber.org/papers/ w11510. Accessed 30 Aug 2016 Eichengreen, B.: The Euro as a Reserve Currency (1997). http://eml.berkeley.edu/*eichengr/ research/mantokyo.pdf. Accessed 10 Sep 2016. https://doi.org/10.1006/jjie.1998.0411 Genberg, H.: Currency Internationalisation: Analytical and Policy Issues. HKIMR Working Paper 31/2009 (2009). https://ssrn.com/abstract=1628004 or http://dx.doi.org/10.2139/ssrn. 1628004. Accessed 02 Sep 2016 Kenen, P.B.: The Role of the Dollar as an International Currency, p. 40. Group of Thirty, New York (1983) Kouri, P.J.K., Macedo, de, J.B.: Exchange rates and the international adjustment process. Brookings Papers on Economic Activity, pp. 111–157 (1978). https://www.brookings.edu/ bpea-articles/exchange-rates-and-the-international-adjustment-process/. Accessed 11 Jan 2017 Krasavina, L.N.: Rossiyskiy rubl; kak mirovaya valuyta: strategicheskiy vyzov innovatsionnnogo razvitiya Rossii [The Russian ruble as the world currency: a strategic challenge]. Dengi i kredit 5, 11–18 (2008)

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Kudryashova, I.V.: Rol’ organizatsionnykh i institutionalnykh usloviy v formirovanii sovremennykh mirovykh valyut [The role of organizational and institutional conditions in the modern world currencies formation]. Finansy i kredit 40, 44–50 (2015a) Kudryashova, I.V.: Transformatisya ekonomicheskikh usloviy formirovaniya sovremennykh mirovykh valyut [The transformation of the economic conditions of the modern world currencies formation]. Finansy i kredit 38, 55–66 (2015b) Moiseev, S.: Rubl’ kak rezervnaya valyuta [Ruble as reserve currency]. Voprosy ekonomiki 9, 4–21 (2008) Narkevich, S.S., Trunin, P.V.: Rezervnye valyuty: factory stanovleniya I rol’ v mirovoy ekonomike [Reserve currencies: Factors of evolution and their role in the world economy], p. 136. The Gaidar Institute, Moscow (2012) Pollard, P.S.: The creation of the Euro and the role of the Dollar in international markets. Fed. Reserv. Bank St. Louis Rev. 83(5), 17–36 (2001). https://files.stlouisfed.org/files/htdocs/ publications/review/01/09/0109pp.pdf. Accessed 14 Sep 2016 Remarks by Chairman Alan Greenspan: The Euro as an international currency Before the Euro 50 Group Roundtable, Washington, D.C., Board of Governors of the Federal Reserve System (2001). http://www.federalreserve.gov/boarddocs/speeches/2001/200111302/. Accessed 10 Aug 2016 Tavlas, G.S., Ozeki, Y.: The internationalization of currencies: an appraisal of the Japanese Yen. In: International Monetary Fund, Occasional Paper 90 (1992). Available at: http://web.pdx. edu/*ito/Tavlas_Ozeki.pdf. DOI: http://dx.doi.org/10.5089/9781557751973.084 Accessed 30 Aug 2016

The International Business Cooperation and Its Influence on Enterprise Financial Security Under Globalization Natalia Reshetnikova1 ✉ , Magomedgabib Magomedov2, Dmitry Buklanov2, and Elena Zakharchenko3 (

1

)

Rostov State University of Economics, Don State Technical University, Rostov-on-Don, Russia [email protected] 2 Don State Technical University, Rostov-on-Don, Russia 3 Rostov State University of Economics, Rostov-on-Don, Russia [email protected] Abstract. This article is aimed to analyze the link between internationalization and Meetings-, Incentives-, Conventions- and Exhibitions (MICE) industry which is refer to the destination development. A comprehensive review of the totality of the processes associated with the regional market of Business Tourism, allowed to develop a number of actual tools that make it possible to obtain impor‐ tant practical results. One of these tools is a so called public-private partnership (PPP), to strengthen the trust between government and business representatives on regional level. Practical recommendations for the tourism business activity development can be applied in the regional, national and international business travel market. This article reveals the cooperation process between foreign private companies and the local government in organizing the development of the industry connected to MICE and its influence on enterprise financial security under the globalization. Keywords: Internationalization · Enterprise financial security · MICE Meetings industry · Business tourism

1

Introduction

The global tourism market is exposed to internationalization processes and as a result is forced to apply modern strategies, offering consumers innovative ways of tourism. Issues connected to the business communication, a requirement in the continuous inter‐ action of business participants, form a new way of thinking in the tourism industry evolution: “Business Tourism Development”. This article reveals the concept of inter‐ national Business Tourism. The main factor in the contemporary world tourism market is the growing process of internationalization between the actors in the tourism business sector. The main goal of this study is to justify the strategic orientations and effective oper‐ ation of institutional arrangements of the Meetings-, Incentives-, Conventions- and

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 294–308, 2019. https://doi.org/10.1007/978-3-030-00102-5_31

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Exhibitions (MICE) industry, due to the global transformational changes to enhance the internationalization of the actors in the tourism business activity. The methodology used in this research was to do a systematic analysis of national and regional components of the tourist services market, in the course of which system‐ atically contributing factors, as well as negative influences on the economic actors of the tourism business activity have been identified and described. The structure of this article is as follows; The first part is a description of the essence of the MICE industry, explaining this concept and its main components and elements. The next part shows the Business Tourism destination as a result of internationalization processes. The third section presents the cooperation of foreign private companies with the local government and Meetings-, Incentives-, Conventions- and ExhibitionsIndustry. The last part discusses the characteristic trends of public-private partnership (PPP) as a significant tool of the cooperation process between foreign private companies and the local government, to strengthen the trust between government and business representatives on regional level; the CVB structure and formation in the region is presented and enterprise financial security in the frame of globalization.

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Business Tourism Destination as a Result of Internationalization Processes

Internationalization of enterprises has attracted the attention of the scientific community in the twentieth century. Issues connected to business communications, continuous interaction between the participants of business and the increasing role of business contacts both at the national as well as on global level, formed a new tendency in the tourism industry. In this case, special importance is given to the study of the formation of and developments in the business travel market, the evolution of its origin; to define the leaders of the world market, the main actors and the stakeholders’ influence. One of the key, but quite poorly studied issues related to this segment, is the impact of business travel on the socioeconomic development of individual regions and groups of regions around the world. At the same time, the institutional and theoretical basis for the integration of the Russian regions’ development of the Business Tourism market is new and it demands reveal. The need for identifying regional segments of the domestic MICE-industry as a factor of business internationalization activity has led to the relevance of this study. Vector of the world economy at the present stage was transformed in the direction of expanding and enhancing the impact of internationalization of Business Tourism in the service market. In many countries, there is an increase in production of tourism services and in their share in the GDP, as a result the number of people employed in the services sector is increasing every year, which is supported by the growing number of national and international companies involved in the tourism services sector. Realizing the urgency of identifying the reasons of increasing income from the service sector in the GDP of developed countries at the present stage of the world economy development, we consider it appropriate to consult authoritative economists

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who have devoted their studies to the service sector and international trade in the service market in particular. For example, Christopher Lovelock, a widely recognized expert in the field of serv‐ ices, control theory and service organizations, says: the development of services includes: government policies, social changes, business trends, development of infor‐ mation technology, globalization and the internationalization of service organizations (Lovelock 2010). The rapid globalization of the world economy has increased the chances for the services market abroad both in developed countries and in emerging economies in recent decades. The effect of this is that services are becoming a driving force as well as the fastest growing sector in the international trade (e.g. Grönroos 1998; Javalgi and White 2002). This fact attracts researchers to follow the changes taking place in the industry. Despite this growing importance, the internationalization within the services sector remains an elusive and largely invisible business area (Javalgi, Martin and Young 2006). An important contribution to the study of the problems was brought by Western economists such as (Andersson 2000; Nordstrom 1991; Oviatt, and McDougall 2005). Their researches focus on the construction of theoretical models and strategies of inter‐ nationalization of companies. The study questions the transformation of domestic firms in multinational companies/corporations. The internationalization of the firm is an area of great research interest (Bilkey and Tesar 1977; Cavusgil 1980; Johanson and Vahlne 1977, 1990; Luostarinen 1979). One of the most important models in this field is the so called Uppsala Model, which was developed by Johanson and Vahlne 1977, 1990). The model explains internationaliza‐ tion as a process of increasing experiential knowledge (Eriksson et al., 1997; Penrose 1959). The discussion is focused on development over time, and the main theme is the firms’ behavior when it comes to different establishment sequences according to markets and entry modes. Markets are entered with successively greater psychic distance. Psychic distance is defined as the factors preventing or disturbing the flow of infor‐ mation between companies and markets. Examples of such factors are differences in language, culture, political systems, level of education, level of industrial development, etc. (Johanson and Wiedersheim-Paul 1975). The firm’s international behaviour in a single market is a consequence of a successively greater commitment and is described as follows. At the beginning there are no regular export activities, then export takes place via independent representatives, later through sales subsidiaries and finally a manufac‐ turing subsidiary is established (Johanson and Wiedersheim-Paul 1975). The Uppsala internationalization model and other process models have been criti‐ cised for being deterministic (Melin 1992; Reid 1981; Turnball 1987). If the companies are developed in accordance with the models, individuals will have no strategic choices. In this study, however, top management and entrepreneurs are regarded as important for the suppliers’ international strategies (Andersson 2000). In the 1990s the entrepreneurs’ importance for international business was highlighted by many researchers. Some researchers such as Welch and Luostarinen (1988) proposed the following interpretation of the concept, according to which the internationalization of the business activity of the enterprise is a «process of increasing involvement in international activ‐ ities of the company».

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Firms enter into foreign markets for several reasons. According to Root (1994) manufacturing firms and services firms enter foreign markets because home markets are stagnating or foreign markets are growing faster, some follow their domestic customers who are going international, some firms may go abroad in search of a greater sales volume or in order to reduce costs, thereby they strengthen their competitiveness at home as well as at foreign markets. This understanding of the internationalization of business enterprise has received the prevalence and relevance to the works of Western scholars. The Author formulated her own definition, where the internationalization of the business services in business travel is defined as an «integration process of the regional and national business services in Business Tourism infrastructure into a single global economic space, the expansion of territorial organization of Business Tourism oppor‐ tunities beyond the national economy». The following global tendencies demonstrate the relevance of the definition mentioned above: – Emergence of international hotel chains in the national market (Hyatt, Novotel, Hilton, Sheraton, Marriott, etc.); – International Congress Halls, World Trade Centers, CVB (Convention Bureaus), International airports, Transportation hubs (actors of the tourism business activity); – Strengthening the processes of internationalization and integration of national and regional business processes and services. – The main aim of this article is to solve the following tasks: – To specify place and role of the regional tourism under the internationalization processes; – To determine the place of Russia and the role of the Russian MICE sector in the global business travel market; – To analyze the current state and two assess potential of the international Business Tourism destination in the Business Tourism Development. The theoretical part of this study shows the global trend of growth and commitment to leading positions of business and professional services network such as submission service marketing, advertising, management, leasing, research, and information and technologies, consulting, auditing and accounting services. Its dynamics depends on the content of activities, it is critical from the standpoint of the development of a modern economy based on knowledge, and national competitive‐ ness. M. Porter (Porter 1990) provides illuminating insights into how nations can improve competitive advantage in an age of globalization. There are four main determinants of national competitive advantage: Factor Condi‐ tions; Demand Conditions such as Firm Strategy and Structure and Rivalry; Related and Supported Industries. However, in order to have positive results, the individual companies, the company leaders and the national governments need to work together. According to M Porter’s Approach to Globalization we formulate an idea of the PPP, that allows to strengthen trust between the government and business representatives on the regional level. PPPs may be seen as a cooperative alliance between the public and

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private sectors, in different areas of intervention which are traditionally inherent to the public sector, but without embracing a complete privatization process (Linder 1999). The underlying premise of PPPs is to benefit all parties involved, through alignment of their resources and goals. PPPs are becoming more common, because governments realize these agreements may have many tangible and immediate benefits, and the private sector is granted access to new markets and opportunities. According to Kim, Kim and Lee (2005), PPPs are essentially partnerships between public sector organiza‐ tions and private sector and corporate investors, for the purpose of conception, planning, funding, construction and supply of infrastructural equipment or exploration of services. ECLAC (2007) adds that PPPs are characterized by the sharing of risks, investment, resources, responsibility and rewards. Some authors, such as Goymen (2000), Marques and Santos (2016) consider that the creation of an organizational structure (CVB) using the common interests of stake‐ holders can be seen as an example of PPP on the regional level. Consequently, the existence of a CVB is required to promote cooperation between stake‐ holders and to pressure local, regional and national authorities in order to develop harmonized policies, appropriate branding, and marketing strategies in the particular territory. Under the conditions of the principles of management in the tourism industry there is a qualitative restructuring and diversification of business: expanding the scope of tourist services. There is a tendency for the synergy of functional and influence tourism and other businesses. The challenge is to expand and strengthen national tourism market. In this regard, it is important to develop Business Tourism as a socio-economic factor of innovative development. Cooperation of foreign private companies and the local government connected to Meetings-, Incentives-, Conventions- and Exhibitions is presented in this part at as a key factor of the concept of internationalization of this paper. The concept of «Business Tourism», «MICE», and «MICE-technologies» is increasingly common in the travel packages offered by major tour operators and event-companies. Following the recom‐ mendation of ICCA, most experts use the term «MI meeting industry» as a general notion, the term «MICE» is also used. Issues to influence the facts that determine the trends in the global Business Tourism market, are relevant to the modern tourist segment of the world economy, each factor deserves special observation and research. One of these factors of the modern world tourism market is the internationalization of tourism business activity. In Russia, it is particularly important to design and launch specific government programs that would aim at compre‐ hensive and practical development and promotion of the industry. Here, considerable efforts have been made by the government, business, non-governmental organizations and their clear and concrete understanding of the importance of addressing this problem. Promoting the development of Business Tourism, given its place in the economy and the nature of the industry as an important component of the Russian tourism industry, should be the respon‐ sibility of the government and the business community. The MICE industry as a conceptual category of tourist industry is closely linked with tourism and hospitality industry. It is an integral part of the tourism industry, providing a significant positive impact on the investment attractiveness and development of

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regional areas of the national economy, concerning to the context of international economical relationship. The MICE industry plays a significant role in the development of business, cultural and scientific relations between regions and countries. In addition, MICE - is one of the resources for integrating and developing companies through business education and participation in trade fairs and congresses. Business Tourism Development is one of the most important keys of the Business Tourism actors’ success. The MICE industry is a driver of economic, social and cultural development world‐ wide, as it: – creates added value for tourism and enhances the tourism economy, mainly in the low season (i.e. business events’ visitors are not only among the most lucrative tourist segments but they can extend their stay and/or return with family and friends/festivals and promotional events as showcase of excellence in the creative industries…); – creates jobs and retrains workforces (multiplicative effect of tourism industry); – increases trade through the promotion of international collaboration and the support of business and professional networks; – attracts investments by promoting the profile of hosting cities/regions provides opportunity for destinations’ regeneration, expansion and growth (i.e. infrastructure and services development); – spreads knowledge and enhances innovation and creativity. The author determined that the increase in the number of events is relevant to increase in implemented business projects and profit growth business entities of tourist destina‐ tions (see Table 1). Table 1. The enterprise financial security system building. An enterprise financial security sources of threats Possible ways to diversify the risks of negative scenarios High management efficiency, development of the Internal and external: conscious/unconscious actions of officials or subjects (state or municipal corporate governance system, optimality of the enterprise organizational structure authorities, counterparties/competitors, international organizations) Ensuring a high level of education and qualification of staff High-quality legal protection of all aspects of the enterprise Enterprise staff security, its capital and property, commercial interests High competitiveness achievement due to External: a combination of circumstances: the technological independence financial situation on the market for the sale of products of this enterprise, scientific discoveries Ensuring environmental safety through and technological developments) minimizing the destructive impact of production results on the state of the environment The information field and commercial secrets protection Source: compiled by the author Zakharchenko E.S. by (3), (4)

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Every year countries and cities around the world are forcing for the top positions and rankings, according to the number of conformed major meetings. The MICE-related events affect innovative processes for the economy and society and produces new tech‐ nologies development at regional and national levels. That is why the MICE industry can be the catalyst of the rapid development of modern business and communication infrastructure. Marques and Santos (2016) noted, that the areas with lower population density and lower supply of services and facilities have positioned themselves in this segment in order to attract a larger number of visitors and boost tourism, especially at the level of accommodation facilities situated in non-urban areas that have been able to adapt to the demands of this segment and contribute to meetings conducted in quieter places. Rostov-on-Don city is a one of the leader of the South of Russia in the development of MICE-industry. More than 50% of arrivals are connected with business and MICEevents. In comparison with other Russian cities, such as Sochi, Kazan, Ekaterinburg, Vladi‐ vostok which are the leader in their territories, Rostov-on-Don is one of the fastest developing region, having recognized the potential of this industry to bring economic, social and intellectual benefits. With ever more exhibition grounds (Vertol Expo), accommodation units (Sheraton, Hyatt, Mercure) and entertainment facilities, airport hub being constructed throughout the region, Rostov-on-Don and Rostov Land is strongly positioning itself as a leader in the Russian Federation in the sector of MICE. This situation is especially developing because of The 2018 FIFA World Cup which will held in Russia in 2018. One of the cities is Rostov-on-Don. This event is attracting a big amount of tourists who will bring investments to the region. One of the world leaders of the MICE industry is no doubt, Asia. With the massive development boom that is currently underway throughout Asia come both challenges and opportunities. New convention and exhibition facilities, hotels, casinos, integrated resorts and themed entertainment precincts are being developed throughout the region. This development of new products, combined with the world’s increasing focus on economic engagement in Asia, means that the entire region will enjoy strong growth in its conventions and meetings market. At the same time, the explosive growth of product means that there is an increased challenge in Asian destinations to ensure that they attract adequate levels of future busi‐ ness to sustain the health of all the hotels and venues that constitute their own facility inventories. To be successful, there can be no doubt that every destination will be seeking increases in tourism while also diversifying their markets so that every possible source of new business is fully developed. One of the key areas for this diversification will be the business events market – meetings, incentives, conventions and exhibitions. Governments throughout Asia have awoken to the fact that hosting these kinds of meetings is a vital form of global engage‐ ment – both economic and intellectual. They are adding MICE development to their economic policy statements because they see MICE as key to their economic develop‐ ment strategies. Throughout this process, the action of specialized organizational structures such as the CVBs, proves to be of great strategic importance.

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Aims and roles of CVB creating in the region Market research of MICE potential in the region Identifying the priorities of CVB for MICE development in the region Evaluating the effectiveness of the chosen strategy implementation Positive result: Preparing the constituent documents, organizational management structure by the Regional Chamber of Commerce. Forming the CVB memebrship Attracting funds for financing the CVB membership fees, budget subsidies Establishment of CVB Constituent Assembly Positive result: Marketing activities for promotion CVB at the regional, national and global markets of MICE-industry

Promotion of CVB: 1. Forming the CVB memebrship 2. Joining the Russian and international associations of business tourism organisations. 3. The participation of Regional Government as Supervisory Board in the activities of CVB

Recognition and promotion of Regional CVB in the international market MICE

Implementation of the strategy and indicated Mission of CVB

Monitoring the effectiveness of the CVB by representatives of the government and business authorities and membersof CVB

Fig. 1. The structural steps VCB creation and implementation in the region Source: By the author

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Gunn (1972) was the first person to conceptualize a tourism system. In his simple early model, he noted that attractions drive tourism. A corollary of this conceptualization was that as magnitude of the attraction increased, the number of visitors was likely to increase. This corollary was analogous to the theory of cumulative attraction, which had been formulated in the context of retailing. According to the survey of Governmental and business authorities of the Russian region, – Rostov Land, which was made by the Regional Chamber of Commerce of Rostov Land and business tourism organizations of Rostov-on-Don, since 2014, the majority of tourists visited the region are business tourists. In the frame of the Govern‐ mental program of Tourism Development, the Business Tourism is one of the significant element for Investment Development and Brand creation of the region in Rostov Land (Fig. 1). As we mentioned above that CVB plays a significant role in the attraction of tourists and promotion for territories, and based on the potential of resources and possibilities, the structure of creation and implementation of CVB in the region is presented above (see the picture). Thereby, contributing to the growth of the regional economy and prosperity of the region and its individual cities is a consequence of the functioning of the business travel industry.

3

Enterprise Financial Security

A complex process of developing new economic relations is taking place in Russian Federation as for now by building the fundamental basis of an effective state through ensuring the financial security of business entities. In connection with the relations aggravation between Russia and a number of Western countries, the country faces the task of adapting to new economic conditions. To achieve this strategic goal, the Strategy of Economic Security of the Russian Federation for the period until 2030 was adopted in 2015, according to which it is declared: the country’s economy development, ensuring economic security, including enterprises financial security, transferring them to a new technological level, and also the creation of conditions for the development of the individual, Russia’s entry into the number of leading coun‐ tries in terms of gross domestic product and a successful confrontation with the influence of internal and external threats (1). The enterprise financial security is customary to understand the state of its security against the negative influence of external and internal threats, destabilizing factors, under which a stable realization of the main commercial interests and goals of the stat‐ utory activity is ensured. (2) Based on the foregoing, Table 1 summarizes the main risks and threats to which business entities are exposed, as well as possible ways of protecting against them. It should be taken into account that the low level of financial security of the enterprise leads to its bankruptcy. The statistics of bankruptcies of legal entities for the last 5 years in the Russian Federation is presented in Fig. 2.

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The growth trend of the bankruptcies number of Russian enterprises presented in the picture illustrates their low financial security, the lack of mechanisms for adapting to the new economic situation, taking into account the anti-Russian sanctions introduced. 1400 1200 1000 800 600 400 200 0 Jan, 2013

Sep, 2013

Jan, 2014

Sep, 2014

Jan, 2015

Sep, 2015

Jan, 2016

Sep, 2016

Jan, 2017

Sep, 2017

Fig. 2. Bankruptcy of Russian companies, pcs. (2013–2017). Source: compiled by the author Zakharchenko E.S. by (5)

Among the main drivers of the Russian enterprises bankruptcies intensity can be called: the closure of external financial markets, the exchange rate volatility growth, the interest rates growth (due to the increase in the key rate of the Bank of Russia) and the deterioration of the conditions for refinancing enterprises. The main condition for the enterprise financial security is the ability to withstand existing and emerging hazards and threats, as discussed in Table 1 above. In order to have a high degree of financial security, the enterprise should be able to develop and implement the financial strategy independently in accordance with the objectives of the overall corporate strategy and the principles of corporate governance, in conditions of uncertain (taking into account newly introduced anti-Russian sanctions) and a competitive market environment. To ensure this, the business entity should maintain financial stability, ensure suffi‐ cient financial independence of the enterprise and flexibility in making financial deci‐ sions, and demonstrate the cost of equity growth (taking into account the concept of managing the company’s value). Thus, financial stability is a necessary, but insufficient condition for the financial security of an enterprise. These concepts are inextricably linked with each other, complementing each other. Consequently, the financial security provision can only be based on the financially sustainable development of the enterprise, in which conditions are created for the imple‐ mentation of such a financial mechanism that is able to adapt to the changing conditions of the internal and external environment.

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To assess the enterprise financial security level in order to prevent bankruptcy and liquidate management should be guided by the criteria for assessing financial security, such as: 1. Indicators or threshold values that characterize the activities of an enterprise in various functional areas. Compare with the actual performance of the company, the main of which are solvency ratios and liquidity, which also have certain regulatory (recom‐ mended) values. The key way to determine these indicators is to conduct a factor analysis of the enterprise based on data provided in the main forms of financial statements. The advantage of using the indicator approach to determining the degree of financial security of an enterprise is the ease with which basic formulas are used to calculate coefficients provided that the financial statements are reliable; 2. Integrated sets of indicators used with different levels (see Table 2). Table 2. The most effective indicators for assessing the financial security of an economic entity Non-financial indicators Indicators of production Production dynamics

Capacity utilization rate

Financial indicators Social indicators Level of remuneration of labor Total expected sales in relation to the average indicator for industry or the economy as a whole Wage arrears Actual and necessary amount of investments Loss of working hours Innovation activity level

Rate of renovation of fixed assets Human resources structure Level of congestion for a certain time Share of production in GDP Existence of a corporate social Assessment of competiveness responsibility Structure and technical resource of the fleet of machinery and equipment

Level of profitability of production Capital productivity Arrears (receivables and payables) Share of own sources of financing of working capital, materials, energy carriers for production

In addition, the company’s cost management concept, which is relevant both for business owners and potential investors, suggests that the growth of the well-being of the company’s owners is measured not only by the volume of installed capacities, the number of employees employed or the turnover of the company, but the market value of the enterprise owned by them. Consequently, if there is a growth in the value of the company in the long term, it is also planned to ensure the financial security of the enter‐ prise, which in turn serves as a guarantee of the investment attractiveness of the business. Thus, the highest level of financial security is achieved at those enterprises that take into account the specifics of the market for the production of products in the required volume, and also ensure the growth of investment attractiveness through continuous monitoring of the company’s market value.

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If this type of enterprise strategy is successfully implemented, the amount of funds coming into budgets of different levels will also increase, which will have a positive economic effect.

4

Conclusions

In the beginning of the article we declared the aim to find the link between the Interna‐ tionalization mad MICE industry. Business Tourism as an independent branch of the global economy is directly linked to the development of foreign economic relations, the desire to use the best practices of other countries in the creation of material and immaterial values, which enhances the quality and the number of international contacts. In this regard, the relevance of the issue of internationalization of the business travel segment comes to the fore, becoming one of the most important items on the global agenda. Creating an enabling environment for the participation of regional business in international economic relations, infrastructure upgrading of urban areas, attracting new investment to the region and companies, increased regional trade and increase in capacity of airports and hotels, and is an incen‐ tive factors in the internationalization of Business Tourism services in the context of the regional tourist market globalization. Meanwhile, as a support of the development of corporate communication, cooper‐ ation between businesses structures in the formation of a platform of PPP on regional and national level, the players of the national market of Business Tourism are joining forces to promote MICE opportunities in Russia. As we analyzed in this study the PPP in tourism sphere is a significant instrument of stabilization and economic development in Russian Federation. In this research paper described a definition of PPP and described its modern status in Russia. Described reasons for necessity of the development of this sphere of the economy. In this article is showing general tools and methods of classification of the regions according to the necessity in the governmental investments for the development. The main ways of the development of the PPP in the tourism sphere in Russia are described and analyzed by the author of this article. In this research paper you will also find successful examples of the creating PPP projects in Russia. The leader of the national market MICE - Association of Business Tourism, has teamed up with the international organization - Association of Corporate Governing business trips, for the further development of the Russian market of Business Tourism. According to the Association of Business Tourism such initiative involves the creation of a joint organization that will officially represent the interests of the largest interna‐ tional associations in the field of Business Tourism brand. New formats of cooperation will consolidate efforts to implement activities, training programs and exchange of experiences between professionals business-travel market. It is expected that the role of business travel will continue to grow. According to foreign experts, by 2020 the number of international business visitors will increase almost three-fold - from 0.6 billion to 1.6 billion.

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The Russians economists’ estimations are that the Russian market of business travel and meetings industry until 2016, can take 1.3 million visitors. By research’s results Euromonitor International Today, Russia is ranked 6th in the world in the field of Busi‐ ness Tourism. The practical implementation of the research findings and results of this paper is important for the Business Tourism development on the regional level and CVB imple‐ mentation as a key tool in the supply structure associated with the territory and in the management, planning and development of tourism destinations, especially those which want to assert themselves as successful Business Tourism destination.

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Normal Flow of Resources as a Basis for Improving the Quality of Final Financial Information Alexander A. Bazhenov1 ✉ , Igor E. Mizikovsky2, Ekaterina P. Garina3, Viktor P. Kuznetsov3, and Alexander I. Gavrilov4 (

)

1

Vladimir State University named after Alexander Grigorievich and Nikolai Grigorievich Stoletov, Vladimir, Russia [email protected] 2 National Research Nizhny Novgorod State University, Nizhny Novgorod, Russia [email protected] 3 Nizhny Novgorod State Pedagogical University Named After K. Minin, Nizhny Novgorod, Russia [email protected], [email protected] 4 Russian Academy of National Economy and Public Administration Under the President of the Russian Federation, Nizhny Novgorod Institute of Management, Dzerzhinsk, Russia [email protected] Abstract. The strategy of ensuring sustainable competitiveness of manufac‐ turing enterprises assumes, as one of the key directions, permanent economy and the most rational use of material resources: raw materials, basic materials, semifinished products, components and purchased products; fuel and energy for tech‐ nological needs. At the same time, there is obviously a lack of generally accepted, effective and inexpensive tools for implementing cost-effectiveness in the usual activities of the organization. The formation of conditions for the production and marketing of products (works, services) in which permanent savings and the rational use of material resources become possible depend not only on the sectoral features of the enterprise, but also on a number of specific factors: the region of location, the possibilities of the production infrastructure, the quality standards of the products produced, the owner’s requirements for structuring management, marketing conditions, logistics, currency rates, etc. The article explores the appli‐ cation of the expenditure rate for the purpose of saving and maximizing the rational use of material resources. It is shown that there is a need for a clear, unambiguous and scientifically grounded definition of the economic concept of the consumption rate of materials. A study was carried out and the author’s defi‐ nition of the “standard of materials costs” was formulated. Keywords: Resources · Norm · Expense · Organization · Costs · Validity · Losses Savings · SWOT analysis · Factors

1

Introduction

The effect of any measures to save and rationalize the costs of conventional activities is achieved through the systematic use over the long calendar period of tools. “One-off” activities, as a rule, are effective in the short-term time interval and, from the point of © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 309–315, 2019. https://doi.org/10.1007/978-3-030-00102-5_32

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view of systemic actions for the implementation of the strategy, are ineffective. In the formation of a set of tools that provides implementations of the strategy should take account of the effective application of each of them in a long time on the second run. One of such tools, as practice shows, is the expenditure cost rate, which has the ability to adapt flexibly and adaptively in various areas of the enterprise. The research conducted by the authors at a number of manufacturing enterprises of the Nizhny Novgorod indus‐ trial cluster showed that, unfortunately, in their corporate standards there is often no transparent and clearly formalized disclosure of expenditure norms for material resources, there is no description of the procedure for their calculation and subsequent application, taking into account the specifics of this economic subject. Therefore, in the opinion of the authors, the problem of harmonious “fit” of this instrument into the complex fabric of the enterprise’s management field in the sphere of normal activity remains urgent. Another problem identified in the study of the economy of manufacturing enterprises was the lack of a proper feasibility study for calculating expenditure norms, which leads to the use of normalized values of costs based on empirical, often arbitrary data. At most of the enterprises under investigation, there remains a pressing problem of timely updating and systematic use of the contents of the base of expenditure cost norms. In these conditions, the development and implementation of administrative influences to ensure systematic economy and maximize the rational use of material resources is significantly hampered.

2

Theoretical Bases of Research

The analysis of the theoretical and methodological base of the problematic subject, carried out by the authors of the article, showed the ambiguity of the researchers’ approaches to the definition of the concept of “material consumption rate”. It is quite obvious that the consumption rate is, first of all, the quantitative characteristic of resource consumption in the specific measurement. This paradigm is positioned by a team of authors under the guidance of Professor Safronov [15]. They approve that “the rate of material consumption should be understood as sufficient and necessary quantity for the manufacture of a unit of production.” Further in this source it is specified that “the rate of material consumption is a certain measure of costs, which reflects the situation that has not developed in the production of products, but gives a guide, gives purposeful character in the improvement of production, technology, type and style of the products.” Like any parameter that quantitatively characterizes the volume of consumption of materials in the usual activities of the organization, the rate of consumption requires timely updating, including based on the results of optimization and flexible “binding” to specific production and technological and organizational conditions. It is no coinci‐ dence that Stepanov, Afanasenko and Borisova [2] note that the norm “represents the optimal amount of expenditure of material resources for the production of a unit of production in specific technical, organizational and economic conditions of production”. At the same time, in a number of sources there is some “departure” from the obvious need for optimization and scientific justification for the regulatory parameters of the

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expenditure of materials, the identification of the consumption rate with the maximum allowable amount of resource use in normal operations is positioned. So, in the opinion of Ermakova and Dremlyugi [4], “the rate of consumption of materials is the maximum permissible amount of material for manufacturing a unit of a product of an established quality in accordance with the existing state of the techniques, technology and produc‐ tion organization.” Ulasovets in [3] emphasizes that the rate of consumption is “the maximum permissible amount of raw materials for the production of a unit of produc‐ tion… of an established quality, taking into account the planned organizational and technical conditions of production.” There is a position that assumes an emphasis on an administrative resource that does not rely on such concepts as “optimization”, “maximum values”, etc. An example is the opinion of Ginzburg [8], who approves that the norm is “the established value of the measure of consumption… of the material.” Meanwhile, in all the above opinions of scientists on the issue of scientific interpretation of the rate of consumption of materials, there is no “binding” of this concept to the calendar period, which also contradicts the policy of systemic adaptation of value to changing production and technological conditions. The definition of the concept of the norm, semantically corresponding with the calendar period, takes place in the works of a number of authoritative authors, but without emphasis on organizational and other production conditions. The results of the analysis of the theoretical and methodological base of this problem, carried out by the authors, are presented in Table 1. Table 1. Analysis of the theoretical and methodological basis of the concept of the norm of expenditure of materials in ordinary activities [13, 14] Scientific position Authors, sources Measure of the expenditure of material per unit Safronov, N.A., Vakhrushin, M.A., of products Rasskazova-Nikolaeva, S.A., Sidorova, M.I., Karpova, T.P. [11] The optimal value of the costs of material Stepanov, V.I., Afanasenko, I. D., Borisova, V. resources for the production of a unit of V., The site “Financial Dictionary of the trader” production… in specific technical, organizational and economic conditions of production The maximum permissible amount of material Ermakova, I.A., Dremlyuga, O.A., Ulasovets, for manufacturing a unit of a product of an V.G.,Websites “Open Source Content established quality in accordance with the Management”, “Economic Dictionary” GOST existing state of the techniques, technology and 14.322-83 “Standardization of the production organization consumption of materials. Basic provisions (with Amendment No. 1)” The rate of material consumption is planned per Nikolaeva, O.E., Shishkova, T.V., Bechtereva, unit of output, components or services E.V., [7], Zharikova, L.A., [10] Kerimov, V.E., produced during the period [12], Sukhov, R.L., Babaev, Yu.A The set value of the material consumption Ginzburg, A.I measure

According to GOST 14.322-83 “Standardization of the consumption of materials. The main provisions (with Amendment No. 1)” [9] the expenditure rate of material

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resources used in ordinary activities can be represented as a set consisting of three elements: • Useful resource consumption i.e. costs that are embodied in the product; • Technological waste caused by the established production technology and not mate‐ rialized in the product; • Loss, the amount of material irretrievably lost during the manufacturing process. Technological (return) wastes form the remnants of material resources that are subject to transfer in accordance with the technology used at the enterprise and produc‐ tion in other units of the organization as the basis for the production of other types of products (works, services). In accordance with the adopted regulatory documents in the field of accounting, they are subject to valuation at a reduced price of the initial material resource (at the price of possible use), if they can be used for the main production, but with increased costs (reduced output of finished products) and (or) for auxiliary produc‐ tion, including for the production of consumer goods (goods of cultural and household use and household use) or sold on the side. The estimation of a material resource for realization on the party is made at current market prices. Losses (irretrievable waste) are those waste “that the organization cannot use and realize and that are subject to… isolation in order to exclude the possibility of their further use”. Theoretically, they can also be attributed to losses.

3

Methodology of the Study

In the course of the study, the authors used theoretical methods of generalizing and comparing data, formalizing (structured description) of the characteristics of the object of investigation, SWOT-analysis, as well as empirical methods of observation and description of the subject area.

4

Analysis of the Results of the Study

The analysis showed that there is a need for a clear, unambiguous and scientifically justified definition of the economic concept of the consumption rate of materials. The authors formulated the following definition: “The rate of consumption of materials is a corporate-accepted and quantitatively identified measure of consumption of a certain resource per unit of product in specific processes of production and sale of products (works, services) in a certain calendar period of business activity” [4]. In addition, the authors found that the write-off of material costs at many enterprises occurs based on actual expenditure of resources documented during the production and sale of products, often without using the norms of resource consumption [2]. The absence of standardized costs at many enterprises, creates conditions for unreasonable spending of current assets at those enterprises where the rationing of resources is conducted, the information obtained showed that on the majority of them (about 95% of the total number of research organizations), the segment of expenditure norms of material resources is built on consolidated norms. It becomes difficult to differentiate expenditure norms in

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the context of the origin (centers) of costs and technological operations, which compli‐ cates not only the accounting and calculation work, but also significantly reduces the quality of the information field for developing management actions to maintain the economy and rationality of material costs [3]. The aggregate rate of consumption per unit of product is calculated as the aggregate of the consumption of homogeneous types (groups) of resources and cannot directly be the operational base for the operational control of the actual consumption of the material, since it reflects in general, at different operations and at different cost centers. In addition, the consolidated norm includes not only a “clean” amount of materials used for the product being manufactured, but also a number of auxiliary operations, including product quality testing, equipment adjustment, tool repair. At the same time, it should be noted that the reasons for the widespread prevalence of the methodological approach under consideration are relatively low labor input and a significant simplification of accounting for costs and calculating the cost of labor products, a virtually guaranteed success in automating this process. The analysis of the materials studied showed that, in fact, the complexity of the option for constructing the base of expenditure cost based on composite norms is several times lower in comparison with the variant assuming the specified norms as such. Studies prove that the specified rates of consumption of metal and other materials per unit of product approved by the enterprise are of key importance in normal opera‐ tions, including maintaining a regime of economy and rational use of the resource base. They are subject to reflection as a rule in the design specification of products and are in fact numerical characteristics of the expenditure of material resources in the specifica‐ tion of individual nomenclature groups (positions). A distinctive feature of the specified norms, according to the authors, is the absence in the design documentation of data on the weight of material blanks, waste and losses. Based on these norms, there are real opportunities for conducting accurate economic calculations in the enterprise’s accounting and calculation space and in budget planning, creating conditions for improving the quality of internal (management) reporting, and creating operating plans (for example, a production program) [1]. Specific norms are flexibly and adaptively “tied” to technological operations, products of production and, at the same time, to the centers of occurrence (responsibility) of costs. Competent use of the information and tool platform for the normalized costs of material resources will ensure the improvement of the quality of primary data on the costs incurred by opti‐ mizing the primary workflow, eliminating duplication of documents and reducing the flow of document. In turn, this will allow timely detection of deviations (overexpenditure or savings) of materials based on the approved database of operational specified stand‐ ards, including prior to the direct execution of the technological operation and inform the persons making managerial decisions about this. At the same time, it should be noted that the calculation of the specified norms, the creation and maintenance of the expen‐ diture base on their basis, updating and use in the management of the organization’s normal activities, is a laborious and expensive process that requires the attraction of additional forces and means of management of the enterprise. Table 2 presents the posi‐ tive and negative aspects of the use of the specified expenditure norms for material resources.

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Table 2. SWOT-analysis of the use of specified expenditure rates of material resources as a tool to ensure the economy mode [5, 6] Environment Inner

Outside

5

Positive sides Advantages: effective maintenance of a regime of economy and rational use of the resource base Additional features: is one of the important tools for the implementation of the organization’s competitiveness strategy

Negative sides “Weakening” properties: high labor input calculation, timely update and use Factors that may complicate the achievement of a strategic goal: attraction of additional forces and means of management of the enterprise

Conclusions

Based on the SWOT analysis carried out by the authors, the following conclusions can be drawn: 1. Write-off of material costs at many enterprises occurs because of actual expenditure of resources documented during production and sales of products, often without using the norms of resource consumption. 2. At the same time, the specified norms for the consumption of metal and other mate‐ rials per unit of product approved by the enterprise are of key importance in normal activities, including for maintaining a regime of economy and rational use of the resource base. 3. Based on these norms, there are real opportunities for conducting accurate economic calculations in the enterprise’s accounting and calculation space and in budget plan‐ ning, creating conditions for improving the quality of internal (management) reporting, and creating operational plans (for example, a production program).

References 1. Bazhenov, A.A.: Registers of accounting as the most important element of the informationaccounting field of the organization. In: Economics, Management, Finance in the View of Modern Research: Materials of the II European International Research and Practice Conference 20.11.17. Scientific Publishing Center “Open knowledge”. Hamburg, Germany, pp. 4–9 (2017) 2. Bazhenov, A.A.: The formation of the cost of inventory in the accounting (financial) statements. In: Human and Natural Sciences and Problems of Modern Communication: Materials of the I European International Research and Practice Conference 30.09.17. Scientific Publishing Center “Open knowledge”. Prague, Czech Republic, pp. 21–26 (2017) 3. Bazhenov, A.A., Mizikovsky, I.E.: Verification of the facts of the economic life of a unitary enterprise in the system of accounting and analytic space. In: Modern Research in Global Scientific Activities: Current Issues, Achievements and Innovations: Materials of the I European International Research and Practice Conference 31.07.17. Scientific Publishing Center “Open knowledge”. Sofia, Bulgaria, 2017. pp. 15–24 (2017)

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4. Mizikovsky, I.E., Bazhenov, A.A., Garin, A.P., Kuznetsova, S.N., Artemeva, M.V.: Basic accounting and planning aspects of the calculation of intra-factory turnover of returnable waste. Int. J. Econ. Perspect. 10(4), 340–345 (2016) 5. Garina, E., Kuznetsova, S., Romanovskaya, E., Garin, A., Kozlova, E., Suchodoev, D.: Forming of conditions for development of innovative activity of enterprises in high-tech industries of economy: a case of industrial parks. Int. J. Entrep. 21(3), 1–6 (2017). Research Article 6. Garina, E., Kuznetsova, S., Garin, A., Romanovskaya, E., Andryashina, N., Suchodoeva, L.: Increasing productivity of complex product of mechanic engineering using modern quality management methods. Acad. Strat. Manag. J. 16(4), 1–8 (2017). Research Article 7. Bekhtereva, E.V.: Cost: Rational and Effective Accounting of Costs. 5th edn., Pererab, Practical accounting. Omega, 148 p. (2011) 8. Ginzburg, A.I.: Economic analysis: Textbook for high schools. The standard of the third generation, 448 p. Peter, St. Petersburg (2011) 9. GOST 14.322-83: Standardization of the consumption of materials. Basic provisions (with Amendment No. 1). http://docs.cntd.ru/document/1200012273. Accessed 20 Jan 18 10. Zharikova, L.A.: Managerial Accounting: Textbook. allowance. Publishing house of Tambov State Technical University, Tambov, 136 p. (2004) 11. Karpova, T.P.: Management Accounting: Textbook for high schools. 2nd ed. Professional textbook: Accounting, 351 p. Unity-Dana (2004) 12. Kerimov, V.E., Suhov, R.L.: Accounting of costs and calculation of the cost of services in travel agencies. J. Account. 11, 44–49 (1999) 13. Vakhrushin, M.A., Rasskazova-Nikolaeva, S.A., Sidorov, M.I.: Management accounting-1: Training manual for the program of training and certification of professional accountants. Basic course, 141 p. Binfa (2011) 14. Babaev, Y.A.: Accounting for production costs and costing of products (works, services): Textbook. Pract. allowance, 160 p. University textbook (2007) 15. Safronov, N.A.: Business Economics: Textbook, 584 p. Lawyer (2007)

Economic Security as a Factor of Formation of Modern Russian Entrepreneurial Environment Ulyana A. Pozdnyakova ✉ and Margarita T. Kozhukhova (

)

Volgograd State Technical University Russia, Volgograd, Russia [email protected], [email protected]

Abstract. In the modern conditions of integration of national economy into the world economy, the problem of economic security and determination of the role and place of Russian entrepreneurship in globalized economy comes to the fore‐ ground. The authors determine interconnection between support and development of entrepreneurship and provision of national economic security. The authors determine conditions that influence formation and development of entrepreneu‐ rial activities and problems of Russian entrepreneurship in the conditions of inte‐ gration in the world market. A complex of measures is offered as a result. Keywords: Globalization · Entrepreneurship · Economic security Entrepreneurial environment · Problem of SME JEL Classification Codes: F6 · M6

1

Introduction

In the modern conditions of transition to open economy and integration of national economy into the global economy, the problem of economic security and determining the Russia’s role and place in the globalized economy comes to the foreground. According to M.D. Intriligator, globalization is large increase of scales of the global trade and other processes of international exchange in the conditions of more open, integrated, and borderless global economy (Intriligator 1998) Globalization transforms from the economic term, which means transnational func‐ tioning of economy, into a generalizing category that characterizes evolutional and revolutionary changes in social reality. Globalization of economy is a complex and contradictory process. On the one hand, it simplifies economic interaction between states, creates conditions for countries’ access to leading achievements of humanity, ensures saving of resources, and stimulates the global progress. At the same time, it increases economic wars – combination of actions aimed at achieving economic domination in supporting national economy through economic influence on economic system of another party with simultaneous provision of security and protection of own economic system (Loginov 2007). It should be added that not only countries but also transnational corporations and banks participate in these wars. A lot of states cannot stand such pressure, so their national industry is falling down.

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 316–324, 2019. https://doi.org/10.1007/978-3-030-00102-5_33

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A well-known economist J. Stiglitz proves that globalization destroys industry, stimulates growth of unemployment and poverty, slows down technological progress, and deepens ecological catastrophe on the planet (Stiglitz 2006). According to other authors, globalization is used by the USA as a tool for weakening or elimination of its geo-political opponents (Platonov 2008; Kissinger 2002) The process of globalization is very quick, but such advantages as distribution of modern technologies, possibilities of increase of financial potential for investments and consumption are gained not by everyone but only by the states that guide this process and possess intellectual, financial, and information possibilities. Recently, “financial globalization” has been distinguished as a separate category – it is the process of gradual unification of national and regional financial markets into one global financial market, and increase of interdependence between markets of sepa‐ rate financial tools (Rakhlis 2013) Having started developing market economy, Russia entered the path of open devel‐ opment, following the global tendencies, which show that opening the economy accel‐ erates development of the country. However, Russia, with insufficient competitiveness of economy, was not able to use advantages of open development. Excessive openness poses the highest danger for national economy, for it aggravates the problem of national interests and economic security of the state. Provision of economic security belongs to exclusive competence of the state. The task of the state is to ensure social stability of society, create conditions for entrepre‐ neurial activities, and fend possible threats to the country’s security. Entrepreneurial society has a large role in regulation of socio-economic processes. Development of entrepreneurship stimulates formation of middle-class and, thus, creation of public society in the country – which is interested in political stability, development of demo‐ cratic foundations, and increase of quality of human capital.

2

Methodology

In the conditions of integration of national economy into the global economy as an equal participant of production of goods and services, the main link is domestic entrepreneur‐ ship, and its development and increase of protection of its interests is one of the main conditions of excluding the long-term threat to national economic security. Based on this, the main priority of the state is supporting and developing entrepreneurship (Fig. 1). A special economic role in this process belongs to the sector of small entrepreneurship, which, as compared to large economic subjects, better adapts to changing economic conditions.

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U. A. Pozdnyakova and M. T. Kozhukhova Task of the state

Support for entrepreneurship

Creating favorable entrepreneurial environment

Ensuring economic security

Openness of economy

Fig. 1. Interaction between support and development of entrepreneurship and provision of national economic security. Source: compiled by the authors.

In order to confirm dependence of the level of national economic security on the level of development of small and medium entrepreneurship, let us view certain indi‐ cators of entrepreneurship in countries of the world. In developed countries, small and medium entrepreneurship (SME) is the basis of market economy – which is seen in high indicators that determine the level of develop‐ ment of SME. Thus, in the USA, the UK, Germany, Italy, and France, the sector of small and medium entrepreneurship produces 50–70% of GDP and provides more than 50% of employment (A RECOVERY ON THE HORIZON, 2013). Besides, this sector in developed countries acquires twice as many innovations than large companies, being a testing ground for innovational processes in industry, and activates structural transfor‐ mation of spheres by dynamic reaction to change of the structure of consumption. The most important function of small entrepreneurship is creative function, which is related to acquisition of competitive advantages. Its role grows in the modern economic system – innovational economy. Increase of the function that is related to innovations generates new economic climate for entrepreneurial activities and expands the market of technological developments and venture entrepreneurship. Besides, infra‐ structure of entrepreneurship develops, access to useful information expands, patent and license services strengthen, and tools and means of entrepreneurial activities improve. Also, small business is an important element, which stimulates development of compe‐ tition, as it possesses increased flexibility as compared to large business. Let us compare key indicators of the sector of SME in Russia and certain countries of the European Union (Table 1).

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Table 1. The main indicators of development of the sector of SME in difference countries, 2015 (Source of data for the EU countries: “Annual report on small and medium companies of the EU” - http://new.mspbank.ru/userfiles/2015EU.pdf; Source of data for the sector of SME in Russia – the Federal portal of SME http://smb.gov.ru/files/images/Пpeзeнтaция_cтpaтeгия.pdf). Countries

Number of SME, million

Russia EU (21 countries) USA Japan

5.6 21.6 22.5 9

Share of employed in SME of the total number of employed, % 25 66.9 50.1 69.5

Share of SME in GDP, % 19.2 58 52 51.6

On the whole, the sector of SME accounts for the large share of the Russian economy – however, according to the main indicators of the sector’s development, it is behind the leading economies of the world: the share of added value in GDP does not exceed 21%, which is by 2–4 times lower than in developed countries, and SME ensure only a quarter of employment (25%).

3

Results

Let us evaluate interconnection between the level of economic security, number of subjects of entrepreneurial activities, and sum of their turnover. Let us present the data in the table (Table 2). Table 2. Dependence of the number of subjects of SME and the sum of their turnover on the level of national economic security (Mamina 2012) 1998 Level of national economic 1.88 security Number of subjects of SME, 4.46 million Total turnover of SME, RUB 261.9* billion

2000 2.7

2007 5.89

2008 5.85

2009 5.08

2011 5.92

4.78

3.94

4.1

4.2

4.4

613.7*

15,468.9*

21,833

19,904

27,760.6

*(turnover of only small companies)

Let us use the methods of regression analysis. We cannot use multiple correlation, as dependent variable correlate with each other (the more the subjects of entrepreneur‐ ship, the larger the turnover sum). In the first case, let us suppose linear dependence of random value Y (number of subjects of SME) on X (level of national economic security). According to the least squares method, let us evaluate the level of correlation and build a theoretical model of paired regression. Let us performed the necessary calculations in Excel (Fig. 2).

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Fig. 2. Screenshot of calculations in Excel.

The equation of linear regression has the following form: 𝐘 = 4.81 − 0.11𝐗

Coefficient of linear paired correlation = −0.694 Theoretical coefficient of determination = 0.476 In the second case, let us suppose linear dependence of random value Y (turnover of subjects of SME) on X (level of national economic security). After similar calcula‐ tions, we have: Coefficient of linear paired correlation = 0.963 Thus, there is strong linear dependence between the level of national economic security and the number of subjects of entrepreneurship and the volume of their turnover. According to classics of political economy, entrepreneurial activities are developing under the influence of factors and conditions that predetermine successfulness of their activities. Thus, it is possible to say that implementation of entrepreneurial activities at the effective level is possible only with presence of entrepreneurial environment. In foreign scientific literature, definition “entrepreneurial environment” is rather rare, for it is replaced by “environment of entrepreneurial organization”, “business environ‐ ment”, “environment of organization”, etc. There is no shared opinion in the Russian literature on entrepreneurial environment. Within the first approach, it is offered to see entrepreneurial environment as a favor‐ able socio-economic, political, and civil & legal situation that ensures economic freedom for able-bodied citizens for conducting entrepreneurial activities, which are aimed at satisfaction of needs of all subjects of market economy. However, another approach states that conditions of entrepreneurial environment could stimulate entrepreneurial activities and hinder them. The third approach to determining entrepreneurial environment as a public economic situation, which includes the level of economic freedom, possibility of emergence of

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Economic • financial state of the country, population’s living standards, payment capacity, effective demand, level of development of financial and credit system, market situation, etc.. Organizational and technical • Infrastructure for development of entrepreneurial activities (system of commercial banks; legal, accounting, and audit companies, advertising agencies; transport and insurance companies). Scientific and technical • level of technological progress in basic spheres of economy, presence of innovational processes, level of their implementation in public production. Socio-cultural • Level of education in the country, professional and qualification structure of workforce, social and psychological climate of entrepreneurship, cultural and moral indicators of consumers, level of development of organizational and consumer culture. Political and legal • Legal protection of population and legal basis for entrepreneurial activities, stability of political situation, mechanisms of state management and procedures of making socially important decisions, development of property relations, level of development of civil law and legal consciousness in the country, mechanisms of interaction between economic subjects and their arbitrage, etc. . Demographic • Number and structure of population, indicators of natural movement of population, characteristics of labor market, number of e conomically active population, availability of jobs.

Fig. 3. Conditions that influence formation and development of entrepreneurial activities.

entrepreneurial sector, domination of the market type of economic relations, and usage of necessary resources, is rather interesting. Thus, generalizing the existing opinions, we offer the following definition of entre‐ preneurial environment – totality of economic, social, organizational & technical, polit‐ ical & legal, and other conditions that determine functioning of entrepreneurship and stimulate its development (Pozdnyakova 2015). Conditions that influence formation and development of entrepreneurial activities are shown in Fig. 3: It is possible to see correlation of the above conditions of entrepreneurial environ‐ ment with components of national economic security (Fig. 4). In the modern economic conditions, the main problems that hinder the development of Russian subjects of small and medium entrepreneurship at the modern stage are as follows (Fig. 5):

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globalization

globaliza tion

Sphere of economic security

SC

EcoC

STC

SME

MCC

globalization

Entrepreneurial environment

PLC

globalization

Fig. 4. The role of national economic security in formation of entrepreneurial environment. (SC – social component; EcoC – ecological component; SCT – scientific and technical component; MCC – moral and cultural component; PLC – political and legal component; SME – small and medium entrepreneurship.)

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Absence of initial capital, difficulty of access to financial resources

Absence of production and office premises Complexities of organizational procedures (licensing, certification, and allocation of land plots) Absence of necessary infrastructure and the system of information provision of entrepreneurial activities Absence of knowlege in management with entrepreneurs

Weak institutional and legal basis in the sphere of entrepreneurial activities Corruption of economy and administrative barriers that hinder development of entrepreneurial activities Fig. 5. The main problems that hinder development of Russian subjects of SME.

4

Conclusions

In the conditions of integration of Russian entrepreneurship into the global market, the issue of solving the above problems in implementation of strategic interests of economic security is especially urgent and consists in creation of conditions for active development of small and medium entrepreneurship (Kozhukhova 2015). This requires implementa‐ tion of the following complex of measures: – simplification of administrative procedures and reduction of related expenditures of companies during registration of business and at the start of entrepreneurial activities; – active stimulation of technological progress by providing a subsidized regime of taxation for companies of high-tech sector of economy for the period of establishment (2–3 years) and provision of subsidized conditions of rental of premises in municipal and federal ownership to small and medium companies that conduct R&D; – stimulation of crediting of entrepreneurial structures; – formation and development of entrepreneurial infrastructure, including provision of help for entrepreneurs in organizational, consultation, and other aspects of activities; – eliminating ineffective and excessive state regulation in the sphere of licensing and control over entrepreneurial activities; – support for exhibition activities, promotion of products of domestic entrepreneurship in regional and international markets, etc. – formation of legislative and legal environment for activities of market subjects.

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References A recovery on the horizon?. [E-source]. http://ec.europa.eu/enterprise/policies/sme/facts-figuresanalysis/performance-review/files/supporting-documents/2013/annual-report-smes-2013_en.pdf Stiglitz, J.: Globalization and its Discontents. London, 2002; Making Globalization Work. London (2006) Annual report on small and medium companies of the European Union. http://new.mspbank.ru/ userfiles/2015EU.pdf Intriligator, M.D.: Globalization as a source of international conflicts and growth of competition. Problems of Theory and Practice of Management, No. 6 (1998) Kissinger, H.: Does America Need Foreign Policy? (2002) Loginov, E.A.: Systemic problems of economic security. V.1. Economic security: geo-politics, p. 14. Nauchtekhizdat (2007) Mamina, M.T.: Ranking evaluation of the state of national economic security. Sci. Overv. 5, 592– 599 (2012) Platonov, O., Raizegger, G.: Why America dies: a view from East and West, part III (2008) Rakhlis, T.P., Koptyakova, S.V.: The role of banking system in the conditions of globalization of world economy [E-source]. Eur. J. Soc. Sci, 3(31) (2013). https://cyberleninka.ru/article/v/ finansovaya-globalizatsiya-kak-sovremennyy-etap-internatsionalizatsii-mirovogo-hozyaystva Federal portal of SME. http://smb.gov.ru/files/images/Пpeзeнтaция_cтpaтeгия.pdf Pozdnyakova, U.A.: The present and the future of economic development: a global aspect [Esource]. In: Popkova, E.G., Kuzlaeva, I.M., Pozdnyakova, U.A.: Global scientific society: integration, cooperation, and communication: materials of the conference (April 21–30, 2015 г.). Section No. 6. I Russian portal of online conferences. Marka Marketing Agency with VolSTU. Volgograd (2015). http://gs-conf.com/index.php/stati-i-vserossijskaya-elektron naya-seminar-konferentsiya-globalnoe-nauchnoe-soobshchestvo-integratsiya-kooperatsiyakommunikatsiya/36-nastoyashchee-i-budushchee-ekonomicheskogo-razvitiya-globalnyjaspekt Kozhukhova, M.T.: The role of small and medium entrepreneurship in provision of Russia’s economic security. In: Mamina, M.T.: Bulletin of Volgograd State Technical University: collection of articles. 4(131), VolSTU. Volgograd, 0,25 pr.p (2014)

Role of the State in Financial Mechanism of Development of Industrial Companies Vera I. Menshchikova1(&), Marina A. Kakushkina2, Evgeny V. Sukhanov3, and Irina B. Shapovalova3 1

2

3

Tambov State Technical University, Tambov, Russia [email protected] Russian Presidential Academy of National Economy and Public Administration, Tambov, Russia [email protected] Russian Presidential Academy of National Economy and Public Administration, Lipetsk, Russia [email protected]

Abstract. The purpose of the article is to study the key elements of state industrial policy from the positions of their influence on the financial mechanism of industrial companies. The authors offer a hypothesis that progressive development of industrial complex in the modern conditions is impossible without active state interference with these processes. The financial mechanism of development of industrial companies is presented as a system of external and internal elements, which contains the tools of formation, usage, and distribution of financial resources, aimed at provision of effective functioning of the real sector of economy. At that, state regulation in the sphere of industrial production is presented as conscientious influence of the state on industry for the purpose of provision of high effectiveness and social direction of its development. The measures of state influence on the financial mechanism of development of industry depending on the project scale and phases of products’ life cycle are distinguished. Interconnections between interest rates and the state of the industrial sector of economy are determined. A conclusion is made on the necessity for transition to monetary policy, which envisages simultaneous achievement of the whole totality of goals for provision of sustainable development of the country’s economy, manageability of inflation, increase of investments’ inflow, and systemic management of interest rates and other tools that influence the financial mechanism of industrial companies’ development. Keywords: Industry  Financial mechanism State industrial policy

 State support

1 Introduction During recent decades, the Russian industry was peculiar for negative tendencies, related to insufficiency of financial resources, which were used not only at the expanded but also at the simple reproduction of the main production funds of most sub-sectors of the industrial complex. Apart from that, high level of moral and physical wear of the © Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 325–333, 2019. https://doi.org/10.1007/978-3-030-00102-5_34

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main funds of the Russian industry does not allow manufacturing high-quality competitive products. In these conditions, the state implements industrial policy for stimulating the development of industrial companies, using a range of tools, among which the main role belongs to financial tools. Thus, actuality of the research aimed at studying the role of the state in the financial mechanism of development of industrial companies grows.

2 Methodology For determining the state, tendencies, and dynamics of development of industrial complex, the authors use the methods of comparative analysis and analysis of statistical information. The authors also use general scientific methods of research – induction, deduction, synthesis, and formalization. In order to study the essence and structure of the financial mechanism of development of industry, the authors use the methods of logical and structural analysis. The authors use the hypothesis that progressive development of industrial complex of the country depends on the state’s interference with its financial mechanism.

3 Results The performed research showed that the financial mechanism of development of industrial companies is rather complex – as to its essence and structure – element of economy. Scientific literature offers various approaches to this definition. At that, the researchers open the notion of the financial mechanism on the whole, without specification of its peculiarities as to the industrial sector of economy. Thus, A.G. Gryaznova and E.V. Markina think that “financial mechanism is a totality of types and forms of organization of financial relations, specific methods of formation and usage of financial resources and means of their quantitative determination” (Gryaznova and Markina 2005). In the work of S.V. Barulin and E.V. Barulina, the financial mechanism is seen as “totality of elements, forms, methods, and tools of formation and usage of financial resources, public and private economic incomes, that is to ensure complete functioning of the system of finances and implementation of the financial policy of the state and economic subjects” (Barulin and Barulina 2007). In definitions of certain researchers, state is seen as an institute that sets the rules of functioning of any financial mechanism. Thus, a group of authors under the guidance of A.M. Kovaleva considers “financial mechanism to be a system of management of finance, used for organization of interaction of financial relations and money funds for the purpose of effective influence on the final results of production, set by the state according to the requirements of economic laws” (Kovaleva et al. 2015). The structure of financial mechanism is peculiar for its complexity and ambiguity, as specific elements of this mechanism depend on diversity of financial relations that mediate the activities of industrial companies. Having generalized certain studies in the

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EXTERNAL ELEMENTS Normative and legal regulation (effective law)

Amortization, tax, and interest levers and stimuli (tax rates, tax subsidies, key rate, bank interest rate, amortization policy, etc.)

Tools of the financial market (securities, contracts, currency swaps, etc.)

Financial mechanism of development of industrial company

Internal elements Methods of financial management (planning, accounting, analysis, monitoring, and control)

Internal system of regulation (accounting policy, norming, investment policy, financial controlling, etc.).

Internal financial tools (debit and credit debts, pricing policy, etc.)

Fig. 1. Structure of the financial mechanism of industrial company (compiled by the authors).

sphere of structure of financial mechanism, we think that for industrial companies the financial mechanism of their development includes a range of elements (Fig. 1). Thus, according to the authors, the financial mechanism of development of industrial companies is a system of external and internal elements that contain the tools of formation, usage, and distribution of financial resources, aimed at provision of effective functioning of the real sector of economy. At that, the role of the state in provision of effective functioning of the real sector of economy is very important, as state regulation in the sphere of industrial production is conscientious influence of the state on industry for providing high effectiveness and social direction of its development. At present, the Russian Federation implements the Federal law dated December 31, 2014, 488-FZ “Regarding industrial policy in the Russian Federation”. According to this law, the main directions of stimulation of industrial development are the following types of state support: – financial support (subsidizing production and creation of infrastructure, provision of tax subsidies, assets of the Fund of development of industry, etc.); – provision of preferences during state purchases (bans and limitations for import, priority for products of Russian origin); – support for foreign economic activities (stimulation in promotion in foreign markets, provision of guarantees, etc.); – support for technological and innovational activities (placement of state orders for R&D, subsidizing of R&D, stimulation of implementation of innovations, etc.);

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– information support (catalogues, information resources, fairs, exhibitions, conferences, etc.); – support for development of HR potential (educational programs, additional professional education, etc.). The above forms of state support for development of industry are of the direct character. They are aimed at economic subjects of the industrial sector of economy. At that, selection of specific tools of state support depends on the scale of the project and the phase of product’s life cycle (Table 1). Table 1. The tools of state support for development of industrial companies depend on the scale of the project and manufactured products’ life cycle Life cycle phase Project scale Large industrial companies

Creation of product

Creation of new productions

Modernization, expansion of activities

State order for execution of R&D; direct support within state programs

Medium industrial companies

Compensation of expenditures for R&D

Small industrial companies

Programs for support for small and medium business

Subsidizing of expenditures; Compensation of compensation of interest for interest for credits credits for technical refor investment equipment projects State guarantees for credits for the projects of federal importance; supporting projects on the basis of project financing (credits and state guarantees for credits); special investment contracts; support for creation and modernization of industrial parks’ infrastructure Compensation of interest for Compensation of credits for technical reinterest for credits equipment; supporting export; for investment subsidizing of expenditures projects for increase of turnover assets Support for creation and modernization of infrastructure of industrial parks; special investment projects Advantages during state purchases of the program for support for small and medium business

Why does the state should interfere with the financial mechanism of industrial companies’ development? The answer to this question is obvious. At present, sustainable development of the Russian economic is connected to solving the problems of overcoming stagnation in industrial production; reduction of economy’s import dependence; increase of competitiveness of domestic companies’ products. Apart from that, there is a range of reasons of the fundamental character – contradiction between the market ethics and society’s ethics, limitation of economic space for the mechanism

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of competitive market, and “natural” character of monopolies, as well as factors of instability, etc. Provision of the innovational quality of industrial growth on the basis of full and fully effective employment of production factors is impossible without active state interference with financial mechanisms of industry’s development. Let us present the results of study of the state and tendencies of development of the Russian industry in 1990–2016. Thus, in recent decades, there have been tendencies of de-industrialization of industry in Russia, which were caused by implementation of state policy, which led to limitations for Russia in purchase of new technologies, brain drain, outflow of capitals, increase of further technological underrun from the leading industrial states, etc. Unfavorable conditions of functioning in the processing sectors of economy predetermined reduction of investments into these sectors, which led to reduction of production volumes. Thus, according to the Federal State Statistics Service (Federal State Statistics Service, 2017), during the recent two decades production of machines and equipment decreased in Russia. Production of tractors for agriculture and forestry reduced by more than 40 times in 2017, as compared to 1991; production of machines and equipment for light and textile industry reduced by 18 times; production of excavators reduced by 16.5 times; production of bulldozers reduced by 8 times, etc. The most negative tendency is seen on machine-building. Also, the index of industrial production is very low in Russia – 101% in 2017, as compared to 2016. Besides, material and technical base of the processing industry could have been much better: the share of worn out main funds reached 15%, and the level of wear exceeded 45% (Fig. 2).

share of worn out funds

level of wear, %

coefficient of removal

coefficient of update 0

5 2015

10 2014

15 2013

20 2012

25 2011

30

35

40

45

50

2010

Fig. 2. Material and technical base of the processing industry of Russia (compiled by the authors based Federal State Statistics Service).

According to the experts of the ranking agency RIA Ranking, “due to lack of financing, growth of production of machine-building, technological equipment, and aviation equipment stopped. These factors create threats to economic security for the Russian economy, reduce its competitiveness and investment attractiveness for longterm financing” (Analytical bulletin of RIA Ranking, 2017). For sustainable development of industrial companies, Russia requires investments, which will become a forcing factor primarily in the sectors of industry in which wear of

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the main funds exceeded 50%. However, growth rates of investments into the main capital of domestic industry remain very low, and sources for investments are usually unsubstantial own assets of industrial companies (Fig. 3).

32.20%

41.40% 58.60%

67.80%

Own assets

Own assets

2010

2016

Fig. 3. The structure of investments into fixed capital of industrial companies of Russia in 2010 and 2016 (compiled by the authors).

As the performed research showed, development of processing productions in the Russian industrial complex is restrained by a range of factors. Survey of managers and leading specialists of industrial companies of Tambov and Lipetsk Oblasts allowed determining such factors as insufficient level of demand for company’s products in the domestic market (54% of respondents), uncertainty of economic situation (50%), lack of financial assets (40%), high level of taxation (40%), etc. (Fig. 4). 22%

54%

40% 21% 30%

Insufficient demand for company's products in the domesc market Compeng import High level of taxaon

40% 50%

22%

Wear and absence of equipment Uncertainty of economic situaon High interest rate of commercial credit

Fig. 4. The main factors that hinder development of companies of the processing industry (compiled by the authors).

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As was mentioned earlier, state interference with activities of the industrial sector of economy could have a form of direct support (financial, investment, personnel, etc.) and indirect support (interest rates). According to domestic and foreign experience, one of the efficient mechanisms of influence on the state of the industrial sector is management of the refinancing rate, which – directly or indirectly – influences the financial and business activity in the country. In Russia, apart from refinancing rate, the key rate has been used since September 2013. It is called key rate due to its leading role during establishment of interests that are set by banks for any credit operations. It directly influences the banking funds and the level of inflation in the country. According to the experts of the Department of monetary policy of the Bank of Russia, “the key rate sets the money’s value, which, in its turn, influences the volumes of crediting. Reduction of the rate stimulates economic activities – on the one hand, ensures growth of production, on the other hand – increase of consumption, which leads to aggregated demand” (Bank of Russia, 2017). In other words, softening the monetary conditions, it is possible to stimulate aggregated demand. However, it is “important to consider the phase of the economy. Nowadays, when it is at the zero level, growth of aggregated demand does not bring the pro-inflation character, but this may change in the future. That’s why the Bank of Russia has to balance between stimulation of economy’s growth and prevention of inflation growth” (Bank of Russia, 2017). Studying interconnection between interest rates and economic growth (product issue) has been an important issue for scholars and practitioners. Thus, for example, in the Tobin monetary model of growth there’s a situation when “influencing offer and demand for money or other alternative assets and this changing their profitability, public authorities can influence profitability of investments that is ‘acceptable for investors’ (Tobin 1965). There are a lot of studies that open negative influence of interest rates on issue of products on the country. For example, the works of Jorgenson (Jorgenson 1963) and Wickens (Wickens 2008) open the negative character of connection between interests rates and issue; the researchers explain the negative influence of real interest rate on expenditures of companies, spent for capital. However, certain theories determine ambiguous influence of interest rate on issue. For example, (Arrow 1968) explains that “growth of interest rate, on the one hand, negatively influence the issue due to growth of expenditures for borrowings, and, on the other hand, positively influences the issue by means of increase of investments in the current period in the situation of agents’ expecting further growth of interest rates and, as a result, increase of expenditures caused by delay of decision on investing”. A group of Russian scholars came to the conclusion that “with increase of interest rates for credits, it is possible to see certain reduction of economic activity/At that, economic agents during making decisions on the value of investments into fixed capital use the adaptive forecasts of inflation” (Drobyshevsky et al. 2016). Application of the key rate in Russia during a short period of its existence showed that its change influences the level of inflation by the currency rate channel, stimulating inflow or outflow of foreign capital with the corresponding growth or reduction of interest rates, which leads to change of ruble exchange rate and conditions of activities of importers and exporters. Figure 5 shows dynamics of change of the key rate in Russia in 2013–2018.

332

V. I. Menshchikova et al. 18 16 14 12 10 8 6 4 2 0

Key rate (%)

Fig. 5. Dynamics of the key rate in Russia in 2013–2018 (compiled by the authors according to the data of the Bank of Russia from open sources).

Business requires financing of own investment projects – and it is not sufficient. Despite the programs that help business to obtain financing with reduced rate, it is very difficult to attract borrowed money for investment projects. Figure 6 shows comparison of annual average interest rates for credits and deposits in Russia and certain countries of the world in 2015.

45 40 35 30 25 20 15 10 5 0

10.02

6.04 32.01 2.75 11.4 Russia

0.6

5.6 China

5.28 Brazil deposit

Germany

0.42

0.84

1.22 Japan credit

3.55

3

Mexico

Canada

0.55

Fig. 6. Average annual interest rates for credits and deposits in Russia and certain countries of the world in 2015.

Thus, monetary policy that is implemented nowadays predetermined – together with other reasons – stagnation of the Russian processing industry. This is explained by the fact that it has no crediting of investments into development of production: the large part of capital investments is financed by means of companies’ own assets, and the share of production investments in assets of the banking system is very low. Besides, the transmission mechanism of the banking system, which ensures expanded reproduction by means of transformation of savings into investments, does not work – which

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is due to high interest rates and excessive volatility of ruble exchange rate. Such state of affairs leads to unambiguous opinion regarding the necessity for increase of the role of the state in development of the industrial sector of economy in modern Russia.

4 Conclusions As a result of the research, the offered hypothesis is proved – progressive development of industrial complex in modern Russia is impossible without active state policy. It should be noted that there’s a necessity for transition to multi-purpose monetary policy, which envisages simultaneous achievement of the totality of goals for provision of sustainable development of the country’s economy, manageability of inflation, increase of inflow of investments, and systemic management of interest rates and other tools that influence the financial mechanism of industrial companies’ development. There should be a complex of interconnected and well-coordinated measures for increase of competitiveness of the Russian industrial complex companies.

References Arrow, K.J.: Optimal capital policy with irreversible investment. Capital and Growth, Papers in Honour of Sir John Hicks, pp. 1–19 (1968) Jorgenson, D.: Papers and Proceedings of the Seventy-Fifth. Am. Econ. Rev. 53(2), 247–259 (1963) Tobin, J.: Money and economic growth. Econometrica J. Econ. Soc. 33(4), 671–684 (1965) Wickens, M.: Macroeconomic Theory: A Dynamic General Equilibrium Approach. Princeton University Press (2008) Barulin, S.V., Barulina, E.V.: Regarding the issue of the essence of finance: a new opinion on the debatable problem. Finances 7, 55–58 (2007) Drobyshevsky, S.M., Trunin, P.V., Bozhechkova, A.V., Sinelnikova-Muryleva, E.V.: Influence of interest rate on economic growth. Money Credit 9, 29–40 (2016) Mamonov, M., Pestova, A., Pankova, V., Akhmetov, R., Solntsev, O.: Financial Sector, Economic Growth, and Macro-Economic Stability: Series of Reports on Economic Studies. vol. 21. Bank of Russia (2017) Machine building: tendencies and forecasts. Analytical Bulletin of RIA Ranking Agency. www. riarating.ru Official web-site of the Bank of Russia. http://www.cbr.ru Official web-site of the Federal State Statistics Service. http://www.gks.ru Federal Law Dated December 31, 2014, No. 488-FZ Regarding Industrial Policy in the Russian Federation. SPS Consultant+ Gryaznova, A.G., Markina, E.V. (ed.): Finances. Finances and statistics, 504 p. (2005) Kovaleva, A.M. (ed.): Finances. 6th edn., 443 p. Yurait Publ., (2015)

Innovational Tools of Provision of Food Security Through State Support for the AIC in the Conditions of the Digital Economy Aleksei V. Bogoviz ✉ (

)

, Elena I. Semenova , and Ivan S. Sandu

Federal State Budgetary Scientific Institution “Federal Research Center of Agrarian Economy and Social Development of Rural Areas – All Russian Research Institute of Agricultural Economics”, Moscow, Russia [email protected], [email protected], [email protected]

Abstract. The purpose of the article is to develop innovational tools of provision of food security through state support for the AIC in the conditions of the digital economy in modern Russia. The authors use the systemic approach, within which the AIC is viewed as a comprehensive system of interconnected indicators, and the method of trend analysis for studying dynamics of change of the indicators of the state and development of the Russia’s AIC, analysis of causal connections for determining mutual dependence and succession of problem of development of modern Russia’s AIC, and the method of formalization for visualization of statistical and analytical data. The information and empirical basis of the research includes the data of the Economist Intelligence Unit, the World Bank, and the Federal State Statistics Service on dynamics of indicators of development of the Russia’s AIC for 2010–2017. As a result, the authors determine aggravation of the problem of provision of food security in modern Russia in 2018 and substan‐ tiate the impossibility of its successful solution with application of traditional (financial) tools of state support for the AIC, showing regularity of aggravation of this problem with the help of traditional tools. A conceptual scheme of provi‐ sion of food security through state support for the AIC in the condition of the digital economy is presented – it reflects expedient and high effectiveness of application of the developed innovational tools, which is based on the possibilities of digital economy. These tools allow reducing the load onto the federal budget for state support for the AIC due to foundation on non-financial tools and due to temporary character of the state support for the AIC, which is aimed at creation of conditions and stimulation of growth of competitiveness of the AIC companies and their further independent development. Keywords: Innovational tools · Provision of food security State support for the AIC · Digital economy · Modern Russia

1

Introduction

The agro-industrial complex (AIC) in the countries that do not specialize in products of this complex (unfavorable conditions for its development, etc.) is one of the most

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 334–340, 2019. https://doi.org/10.1007/978-3-030-00102-5_35

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vulnerable spheres of economy against the influence of globalization. High dependence of the AIC on the nature and geographic factor causes large differentiation of economic systems according to possibilities for development of this complex. That’s why in the countries that do not specialize in manufacture of the AIC products, globalization stimulates the increase of pressure on domestic manufacturers of the AIC products from foreign manufacturers that function in a more favorable environment and achieve larger efficiency with higher quality and lower products’ price. This aggravates the problem of provision of food security and raises the necessity for state support for the AIC. From the positions of economic effectiveness, traditional tools of state support for the AIC, which is brought down to subsidizing and provision of certain other financial preferences, is peculiar for low effectiveness, as, firstly, it envisages large and systemic expenditures of the federal budget due to establishment of dependence of companies of the AIC on state support, and, secondly, leads to reduction of quality and growth of prices for the AIC products and, therefore, preservation or even aggravation of the problem of food security. This predetermines high topicality of development of innovational tools of state support for the AIC, which allows for successful solution to the problem of provision of food security. The working hypothesis of the research is the idea that modern Russia is peculiar for low food security and needs state support for the AIC, and in the conditions of digital economy the access to usage of innovational tools opens, which allows achieving high effectiveness of this support. The purpose of the article is related to development of innovational tools of provision of food security through state support for the AIC in the conditions of digital economy in modern Russia.

2

Materials and Method

Drawbacks of traditional tools of state support for the AIC for provision of food security and the necessity for search for more effective alternative are emphasized in multiple works of such modern authors as (Bogoviz et al. 2018a), (Bogoviz et al. 2018b), (Bogoviz et al. 2018c), (Bogoviz et al. 2018d), (Bogoviz et al. 2018e), (Bogoviz et al. 2018f), (Mikhaylova et al. 2017), (Popova et al. 2018), and (Troyanskaya et al. 2017). Peculiarities and possibilities of digital economy to be a technological platform for modernization of economy, including state regulation of economic processes, are discussed in publications of such experts as (Boojihawon and Ngoasong 2018), (Curran 2018), (Elder-Vass 2018), (Martin-Shields and Bodanac 2018), (Popkova et al. 2017a), (Popkova et al. 2017b), and (Sandeep and Ravishankar 2018). At that, the issues of usage of possibilities of the digital economy for modernization of the tools of provision of food security through state support for the AIC are insuffi‐ ciently studied in the existing scientific literature and thus require further attention. For verification of the offered hypothesis, the authors use the systemic approach, within which the AIC is viewed as a comprehensive system of interconnected indicators; the method of trend analysis for studying dynamics of change of the indicators of state

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and development of Russia’s AIC; the method of analysis of causal connections for determining mutual influence and succession of the problems of development of modern Russia’s AIC, and the method of formalization for visualization of statistical and analyt‐ ical data. The information and empirical base of the research include the data of the Economist Intelligence Unit, the World Bank, and the Federal State Statistics Service on dynamics of the indicators of development of Russia’s AIC in 2010–2017, which are given in Table 1. Table 1. Dynamics of the values of indicators of development of Russia’s AIC in 2010–2017. Indicators

2010

2011

2012

2013

2014

2015

2016

2017

Position in 2017

Level of wear of the main funds, % Created added value, % of GDP Annual growth of labor efficiency, % Index of food security, points

42.1

42.8

42.5

42.7

43

41.6

41.2

41.1



3.867

3.919

3.697

3.619

4.066

4.558

4.740

4.791

99

103.2

103.8

103.3

102.2

100.7

98.1

99.7

99.3



No data

No data

68.3

60.9

62.7

63.8

62.3

66.2

41

Source: compiled by the authors based on: (Economist Intelligence Unit 2018), (World Bank 2018), (Federal State Statistics Service 2018a), (Federal State Statistics Service 2018b).

3

Results

The results of visualization and trend analysis of the data from Table 1 are shown in Fig. 1. 120 100 80

Wear of main funds, %

60

Created added value, % og GDP

40

Annual growth of labor efficiency, %

20

food security index, points

0 2010 2011 2012 2013 2014 2015 2016 2017 Fig. 1. Dynamics of values of the indicators of development of Russia’s AIC in 2010–2017. Source: compiled by the authors.

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As is seen from Fig. 1, at present Russia is peculiar for recession of the AIC and its low global competitiveness. This is shown by high level of wear of the main funds of the AIC companies (41.1% in 2017). Slight negative eight-year trend of this indicator (−2.38%) reflects the application but low efficiency of measures in the sphere of modernization of the main funds of the AIC. This is also shown by low added value, created by the AIC – in 2017 this value constituted 4.791% of Russia’s GDP (99th position in the world) – and negative annual growth (annual reduction) of labor efficiency in the AIC (by 3.78% over the last 8 years). As a result, the index of food security reduces (by 3.07% over 8 years, 41st position in the world in 2017), which shows aggravation of this problem in Russia. Systemic consideration of these tendencies allowed determining regularity of aggra‐ vation of the problem of provision of food security with foundation on the traditional tools of state support for the AIC in modern Russia (Fig. 2). Insufficiency and irrationality of usage of state financial support for the AIC

Wear of the main funds of the AIC companies

Growth of dependence of the AIC companies on state support

Increase of the volumes of state financial support for the AIC

Reduction of labor efficiency in the AIC and reduction of competitiveness of the AIC companies

Aggravation of the problem of food security

Fig. 2. Regularity of aggravation of the problem of provision of food security with foundation on traditional tools of state support for the AIC in modern Russia. Source: compiled by author.

As is seen from Fig. 2, the initial reason for emergence of this problem was insuffi‐ ciency and irrationality of usage of state financial support for the AIC, which did not allow for timely and full provision of modernization of the main funds in the AIC, which led to their wear. This was followed by reduction of labor efficiency in the AIC and reduction of competitiveness of the AIC companies. This led to aggravation of the problem of food security and initiated increase of the volumes of state financial support for the AIC. This measure led to increase of depend‐ ence of the AIC companies on state support and further reduction of their competitive‐ ness. Foundation on traditional (financial) tools of provision of food security through state support for the AIC does not allow solving this problem. For that, we developed innovational tools of provision of food security through state support for the AIC, which are accessible in the conditions of digital economy:

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– normative and legal provision of digital development of the AIC: non-financial tools, aimed at legislative establishment of the necessity for digital modernization of the AIC, development of the corresponding state strategy (program), and fixation of the necessity for only digital financial accounting and digital payments by the AIC companies, which will allow increasing transparency of their economic activities and increasing their credibility; – digital infrastructural provision of the AIC: the tools that envisages slight expendi‐ tures of the federal budget, aimed at creation of infrastructural conditions for doing digital business by the AIC companies, which allows optimizing their production and distribution processes; – digital production modernization of the AIC: financial tool, which envisages state subsidizing of modernization of the main funds of companies of the AIC on the basis of new digital technologies for their achieving global competitive advantages in the technological sphere, which will allow increasing efficiency and quality with reduc‐ tion of expenditures and prices. The logic of application of the offered innovational tools of provision of food security through state support for the AIC in the conditions of digital economy is reflected by the following conceptual scheme (Fig. 3). Achieved positive effect: growth of compe titiveness of the AIC companies, reduction of expenditures of the federal budget for state s upport for the AIC, successful solution to the problem of provision of food security

Digital production modernization of the AIC Digital infrastructural provision of the AIC

Normative and legal provision of digital development of AIC

-growth of labor efficiency in the AIC (due to authomatization of business processes); -increase of quality ofproducts of the AIC with reduction of expenditures for production. -establishment and deve lopment of digital entrepreneurship in the AIC; -optimization of production and distribution processes in the AIC. -creation of favorable conditions for digital modernization of the AIC; -growth of credibility of the AIC companies.

Goal: highly-effective provision of food security through state support for the AIC

Fig. 3. A conceptual scheme of provision of food security through state support for the AIC in the conditions of digital economy. Source: compiled by the authors.

As is seen from Fig. 3, application of the offered tools of provision of food security through state support for the AIC in the conditions of digital economy allows achieving positive effect that is related to growth of competitiveness of the AIC companies, reduc‐ tion of expenditures of the federal budget for state support of the AIC, and successful solution to the problem of provision of food security.

Innovational Tools of Provision of Food Security

4

339

Conclusions

The results of the performed research confirmed the working hypothesis, substantiating the aggravation of the problem of provision of food security in modern Russia in 2018 and impossibility of its successful solution with application of traditional (financial) tools of state support for the AIC. The offered conceptual scheme of provision of food security through state support of the AIC in the conditions of digital economy allowed substantiating expedience and high effectiveness of application of the developed inno‐ vational tools, based on the possibilities of digital economy. These tools allow reducing load on the federal budget for state support of the AIC due to foundation on non-financial tools (normative and legal provision of digital devel‐ opment of the AIC and digital infrastructural provision of the AIC) with minimum financial support in the form of subsidizing of digital modernization of the main funds of the AIC companies, as well as due to the temporary character of state support for the AIC, which is aimed at creation of conditions and stimulation of growth of competi‐ tiveness of the AIC companies and their further independent development. As a result, the problem of provision of food security is successfully solved.

References Bogoviz, A.V., Alekseev, A.N., Chepik, D.A.: Improvement of the economic mechanism of state support for innovational development of the Russian agro-industrial complex in the conditions of import substitution. In: Advances in Intelligent Systems and Computing, vol. 622, pp. 555– 561 (2018a) Bogoviz, A.V., Bugai, Y.A., Osipov, V.S.: Import substitution in the agro-industrial complex in the interests of provision of food security: Option or necessity? Adv. Intell. Syst. Comput. 622, 37–43 (2018a) Bogoviz, A.V., Lobova, S.V., Bugai, Y.A.: Effective import substitution in the agro-industrial complex: Competition or monopoly? Adv. Intell. Syst. Comput. 622, 30–36 (2018b) Bogoviz, A.V., Lobova, S.V., Ragulina, Y.V., Alekseev, A.N.: A critical review of Russia’s energy efficiency policies in agriculture. Int. J. Energy Econ. Policy 8(3), 67–75 (2018c) Bogoviz, A.V., Taranov, P.M., Shuvaev, A.V.: Innovational tools for provision of food security through state support for the agro-industrial complex in the conditions of digital economy. Adv. Intell. Syst. Comput. 622, 659–665 (2018d) Bogoviz, A.V., Tufetulov, A.M., Chepik, D.A.: The mechanism of activation of the process of import substitution in the agro-industrial complex for provision of food security. Adv. Intell. Syst. Comput. 622, 71–76 (2018e) Boojihawon, D.K., Ngoasong, Z.M.: Emerging digital business models in developing economies: the case of Cameroon. Strat. Change 27(2), 129–137 (2018) Curran, D.: Risk, innovation, and democracy in the digital economy. Eur. J. Soc.Theory 21(2), 207–226 (2018) Economist Intelligence Unit: Global Food Security Index (2018). http:// foodsecurityindex.eiu.com/Resources. Accessed 12 Feb 2018 Elder-Vass, D.: Lifeworld and systems in the digital economy. Eur. J. Soc. Theory 21(2), 227– 244 (2018)

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Martin-Shields, C.P., Bodanac, N.: Peacekeeping’s Digital Economy: The Role of Communication Technologies in Post-conflict Economic Growth. Int. Peacekeeping 25(3), 420–445 (2018) Mikhaylova, N.A., Babich, T.V., Smirnova, O.S.: Improvement of the state support mechanism for regional agro-industrial complex under the conditions of international sanctions and Russia’s membership in the WTO. In: Contributions to Economics, pp. 151–157. ISBN 978-3-319-60695-8 Popkova, E.G., Bogoviz, A.V., Lobova, S.V.: Vacuum in the structure of human capital: a view from the position of the theory of vacuum. In: Human Capital: Perspectives, Challenges and Future Directions, Hauppauge, pp. 163–181. Nova Science Publishers, Inc., Hauppauge, New York (2017a) Popkova, E.G., Morozova, I.A., Litvinova, T.N.: New challenges for human capital from the positions of its infrastructural role in the system of entrepreneurship. In: Human Capital: Perspectives, Challenges and Future Directions, pp. 257–275. Nova Science Publishers, Inc. Hauppauge, New York (2017b) Popova, L.V., Dugina, T.A., Skiter, N.N., Panova, N.S., Dosova, A.G.: New forms of state support for the agro-industrial complex in the conditions of digital economy as a basis of food security provision. Adv. Intell. Syst. Comput. 622, 681–687 (2018) Sandeep, M.S., Ravishankar, M.N.: Sociocultural transitions and developmental impacts in the digital economy of impact sourcing. Inf. Syst. J. 28(3), 563–586 (2018) Troyanskaya, M.A., Ostrovskiy, V.I., Litvinova, T.N., Matkovskaya, Y.S., Bogoviz, A.V.: Possibilities and perspectives for activation of sales in the agricultural machinery market within sectorial development of Russian and European economies. In: Contributions to Economics, pp. 473-480 (2017). ISBN 978-3-319-60695-8 World Bank: Agriculture, value added (% of GDP) (2018). https://data.worldbank.org/indicator/ NV.AGR.TOTL.ZS?view=chart&year_high_desc=true. Accessed 12 Feb 2018 Federal State Statistics Service: Indices of labor efficiency in economy (2018a). http:// www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/accounts/. Accessed 12 Feb 2018 Federal State Statistics Service: Main funds: level of wear (2018b). http://www.gks.ru/wps/wcm/ connect/rosstat_main/rosstat/ru/statistics/enterprise/fund/. Accessed 12 Feb 2018

Informatization of the Russian Society: Evaluation and Perspectives Julia V. Ragulina1 ✉ (

1

)

, Svetlana V. Lobova2 , and Alexander N. Alekseev3

Federal State Budgetary Scientific Institution “Federal Research Center of Agrarian Economy and Social Development of Rural Areas – All Russian Research Institute of Agricultural Economics”, Moscow, Russia [email protected] 2 Altai State University, Barnaul, Russia [email protected] 3 Plekhanov Russian University of Economics, Moscow, Russia [email protected]

Abstract. The purpose of the work is to determine the current state and perspec‐ tives of informatization of the Russian society in the aspect of increase of global competitiveness of Russia’s economy, by its informatization. The authors use the method of comparative analysis for comparing the level of informatization of the Russian society to the level of the OECD countries; and the methodology of the Theory of Games for compiling forecasting scenarios of further informatization of the Russian society for increasing competitiveness of modern Russia’s digital economy. The information and empirical basis of the research include the data of the World Economic Forum on the level and separate indicators of society’s informatization (through the prism of the index of network readiness) in Russia in 2012 and 2016, and in the countries of the OECD (on average) in 2016. It is concluded that modern Russia is peculiar for low level and slow rate of society’s informatization for achieving the level of the OECD countries in the mid-term (2020) with preservation of the current approach to state strategic management of this process. For ensuring the global competitiveness of Russia in the condi‐ tions of establishment of the global digital economy, it is recommended to change this approach, which envisages doubling of the volume of state target financing of the process of Russian society’s informatization, as well as reconsideration of the program (top-priority directions of informatization) in favor of emphasis on “weak spots”, which show the largest underrun from the OECD countries and slow rate of informatization. The key aspects are formation and development of digital entrepreneurship. For successful implementation of the offered new direc‐ tion of informatization of the Russian society, the authors’ recommendations are offered. Following the selected optimization scenario in modern Russia will allow increasing the results by three times and achieving the level of the OECD coun‐ tries by 2020, thus ensuring global competitiveness of Russia’s digital economy. Keywords: Informatization of the Russian society · Digital economy Competitiveness in the information sphere

© Springer Nature Switzerland AG 2019 E. G. Popkova (Ed.): ISC 2018, LNNS 57, pp. 341–347, 2019. https://doi.org/10.1007/978-3-030-00102-5_36

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Introduction

Informatization of modern economic systems, which started spontaneously, it now under the control of state regulators. This is caused by the fact that under the influence of the global informatization and increase of global competition in the information sphere, the goals of informatization went beyond the economic interests, related to optimization and increase of effectiveness of economic activities, and transferred to the level of inter‐ ests of society on the whole, which are oriented at increase of population’s living standard and growth of global competitiveness of economy. Thus, a problem of managing the process informatization appeared – it requires scientific substantiation of selection of certain strategies and tools that are based on highprecision forecasts and plans. However, due to insufficiency of accumulated experience of informatization in developing countries and impossibility for full foundation on experience of developed countries due to specific nature of their economic systems, the process of informatization in most of them is spontaneous – despite the state strategies and target financing. The authors offer a hypothesis that modern Russia is peculiar for low level of soci‐ ety’s informatization (as compared to developed countries of the OECD) and slow rate of implementation of this process, which does not allow overcoming the underrun; so it is necessary to reconsider the strategic approach to management of this process. The purpose of the work is to evaluate the current state and perspectives of informatization of the Russian society in the aspect of increase of global competitiveness of Russia’s economy through its informatization.

2

Materials and Method

Fundamental foundations and basic characteristics of the information (digital) economy are studied in the works (Abdikeev 2017), (Ereshko and Kokuytseva 2017), (Murdock 2017), (Petrenko et al. 2017), and (Sukhorukov et al. 2017). Practical features of the process of informatization of various modern economic systems are analyzed in the works (Bogoviz et al. 2017), (Gualandri 2017), (Igolnikova et al. 2017), (Issayeva et al. 2016), (Sukhodolov et al. 2018a), (Sukhodolov et al. 2018b), (Bogoviz et al. 2018a), (Bogoviz et al. 2018b), and (Ragulina et al. 2018). The authors use the method of comparative analysis for comparing the level of informatization of the Russian society to the level of the OECD countries; and the methodology of the Theory of Games for compiling forecast scenarios of further infor‐ matization of the Russian society for increasing the competitiveness of digital economy of modern Russia. The information and empirical basis of the research include the data of the World Economic Forum on the level and separate indicators of society’s infor‐ matization (through the prism of network readiness index) in Russia in 2012 and 2016 and in the OECD countries (on average) in 2016 (Fig. 1).

Informatization of the Russian Society

Using the ICT in society Using the ICT in economy

Political and legal… 7 6 5 4 3 2 1 0

Using the ICT by the state

Business and innovational… ICT infrastructure

Russia, 2016 OECD countries, 2016

ICT accessibility

Using the ICT in…

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Russia, 2012

Information literacy and… Individual usage of the…

Fig. 1. Indicators of informatization of the Russian society in 2016. Source: compiled by the authors based on: (World Economic Forum 2018a), (World Economic Forum 2018b).

3

Results

According to the National program of the RF “Information society” (2011–2020), in 2011–2016, informatization of the Russian society accounted for RUB 693.71 billion from the federal budget (Ministry of Communications and Mass Media of the Russian Federation 2018), which equals 1% of the 2016 GDP in current prices (GDP constituted RUB 85,880.6 billion). Due to implementation of measures within this program, 4.5 points out of 7 (41st position among 139 countries of the world) in 2016 were achieved as to network readiness index, according to the World Economic Forum (World Economic Forum 2018b), as compare to 4 points out of 7 (56th position among 142 countries of the world) in 2012 (World Economic Forum 2018a). Money measurement of the result of implementation of this program is connected to achievement of the volume of digital economy in Russia of the level of 3.9% of GDP in 2016 (McKinsey 2018) (RUB 3,349.34 billion). This shows high effectiveness of this program, as the result exceeds expenditures by almost five times (3,349.34/693.71 = 4.83). At the same time, Russia’s underrun from the OECD countries as to the level of society’s informatization society grew, with the average value of the network readiness index constituting 5.68 points in 2016. In 2018–2020, according to the above program, it is planned to spend RUB 516.82 billion from the federal budget (Ministry of Communications and Mass Media of the Russian Federation 2018). This allows compiling the basic (the one corresponding to the current course) forecasting scenario of informatization of the Russian society until 2020, with preservation of the current rate of growth of the network readiness index – 0.37 points (516.82*(4.5−4.0)/693.71). That is, its value will be at the level of 4.87 points, which is below the average value of the indicator among the OECD countries even in 2016, which will grow in 2020. Also, the current growth rate of the volume of digital economy will be preserved – RUB

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2,495.29 billion (516.82*3,349.34/693.71), which will constituted RUB 5,844.63 billion (3,349.34 + 2,495.29). Despite the fact that this scenario will be peculiar for high effec‐ tiveness of implementing the program of informatization of the Russian society (2,495.29/516.82 = 4.83), the level of this informatization will be lower than on average in the OECD countries, which will show low global competitiveness of the Russia’s digital economy. For determining the possibilities of increase of global competitiveness of the Russia’s digital economy, we deem it expedient to consider other scenarios – apart from the basic one – which allow achieving larger results in the sphere of informatization of the Russian society due to increase of the volume of financing of this process, and reconsider the program of its implementation with emphasis on development of its “weak spots”. At that, it is necessary to take into account the result in monetary expression and qualitative expression (comparing the level of informatization to the OECD countries). The compiled scenarios are analyzed with the usage of the Theory of Games and are presented in Table 1. Table 1. Forecast scenarios of informatization of the Russian society Until 2020. Scenario

Result, RUB billion QCC, shares of 1

Probability, shares of 1

Basic (preservation of the volume of financing and program)

2,495.29

4.87/5.68=0.86

1.00

Quick (increase of the volume of financing with preservation of the program)

2,495.29

4.87/5.68=0.86

0.2

4,990.58

5.24/5.68=0.92

0.8

Expanded (increase of the volume of financing with reconsideration of the program)

2,495.29

4.87/5.68=0.86

0.2

4,990.58

5.24/5.68=0.92

0.45

7,485.87

5.68/5.68=1

0.35

Expenditures, RUB billion 516.82

Effectiveness, shares of 1 (2,495.29*0.86* 1.00)/ 516.82=4.15

1,033.64

(2,465.29*0.86* 0.2+4,990.58* 0.92*0.8)/ 1,033.64=3.96

1,033.64

(2,465.29*0.86* 0.2+4,990.58* 0.92*0.45+7,4 85.87*1*0.35) /1,033.64= 4.94

Source: compiled by the authors.

In Table 1, the indicators are calculated in the following way: – result: increase of the volume of digital economy; – QCC – quality coefficient of competitiveness: ratio of the value of the network read‐ iness index of Russia to the average value of this index among the OECD countries; – probability: probability of achievement of result and QCC, in totality, according to the scenario, equals 1; – expenditures: volume of financing (assets of the federal budget); – effectiveness: [∑(result*QCC)*probability]/Expenditures As is seen from Table 1, in view of quality coefficient of competitiveness, effective‐ ness of the basic scenario became lower, constituting 4.15. Quick scenario, which envis‐ ages increase of the volume of financing by two times (up to RUB 1,033.64 billion) with

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preservation of the program, allows doubling the volume of the digital economy and the value of the network readiness index with probability of 0.8 with preservation of the indicators of efficiency of the basic scenario with 0.2 probability. However, despite this, the level of the OECD countries as to the value of the network readiness index will not be reached, so growth of expenditures will not lead to large increase of global competitiveness of the Russian digital economy, which determines low effectiveness of this scenario (3.96) and inexpedience of its practical implementa‐ tion. Expanded scenario, which envisages increase of the volume of financing (by two times, as compared to the basic scenario, to RUB 1,033.64 billion) allows increasing the volume of the digital economy and the value of the network readiness index by three times with 0.35 probability with preservation of the indicators of efficiency of quick scenario with 0.45 probability and the indicators of efficiency of the basic scenario with 0.2 probability. Due to this, the level of the OECD countries as to the network readiness index could be reached, which will lead to large increase of global competitiveness of the Russian digital economy. Effectiveness of this scenario is maximal (4.94), which is a basis for its practical implementation. Perspectives of implementation of the determined optimal (expanded) scenario of informatization of the Russian society are related to reconsid‐ eration of the key directions of informatization of the Russian society. According to the basic scenario, these directions are development of the system of education and HR training, formation of information infrastructure, provision of infor‐ mation security, achievement of technological results, and improvement of normative and legal regulation. At that, development of digital entrepreneurship is not envisages as a separate (top-priority) direction, through according to the index of usage of the ICT in entrepreneurship and the index of usage of the ICT in economy Russia is peculiar for large underrun from the OECD countries, and growth rate of the values of these indi‐ cators in Russia in 2016 is minimal, as compared to 2012. That’s why recommendations for successful implementation of the determined optimal (expanded) scenario of informatization of the Russian society include special attention to development of digital entrepreneurship in Russia, which requires the following measures: – simplifying the procedure (transfer into remote form within E-government) and establishment of zero prices for registration of digital companies; – social advertising of digital entrepreneurship, aimed at growth of its investment attractiveness and growth of trust of consumers to it; – creation of additional simplified system of taxation for digital entrepreneurship, which supposes lower tax rates (3% from income or 7.5% from difference between incomes and expenditures).

4

Conclusions

Thus, the offered hypothesis is proved; it is shown that modern Russia is peculiar for insufficiently high level and slow rate of society’s informatization for reaching the level

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of the OECD countries in the mid-term (2020) with preservation of the current approach to state strategic management of this process. That’s why for provision of global competitiveness of Russia in the conditions of formation of the digital economy, it is recommended to change this approach, which envisages doubling the volume of state target financing of the process of informatization of the Russian society and reconsideration of the program (top-priority directions of informatization) in favor of emphasis on “weak spouts”, in which the largest underrun from the OECD countries and slow rate of informatization are observed. The key aspects are formation and development of digital entrepreneurship. For successful implementation of the offered new direction of informatization of the Russian society, the authors’ recommendations are offered. Following the selected optimization scenario in modern Russia will allow increasing the results by three times and reaching the level of the OECD countries by 2020, this ensuring global competitiveness of the Russia’s digital economy. It should be concluded that a serious barrier on the path of successful informatization of the Russian society is aiming of the strategy of state management of this process only at growth of effectiveness of the economic system, due to which provision of global competitiveness of Russia in the information sphere is not envisaged and is not achieved. That’s why implementation of the optimization scenario requires adding additional goal into the state strategy, related to provision of global competitiveness of the Russia’s digital economy.

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