CC BY-NC-ND
24
M. K. Glazatova1
Imperatives of Business Regulation Development in Global Economy2
The article deals with the evolution of regulation frameworks in the light of structural shifts and industrial revolutions. The author used the theory of technological paradigms because it made possible to trace the changing needs of the expanding industrial sector.
Crucially, the paper dwells on the issue of applying different regulative tools in order to promote domestic production along with maintaining a competitive environment and encouraging entrepreneurial activities.
It is highlighted that in the information era technology transfer occurs so quickly and seamlessly that economic success only depends on possibilities of use of technology on the particular territory.
Key words: Kondratiev waves, technological paradigm, structural shifts, industrial revolution.
JEL: F13, F55
Introduction
During last decades, global shifts in interaction in the economic sphere, forced governments to change the set of tools of regulation. The vector of development of regulation in recent decades, slowly but inexorably shifted from instruments of direct financial impact on economic processes in the direction of creation of a conducive environment: development of institutions and supporting infrastructure; improvement of rules governing activities of economic agents; providing an optimal system for resolving disputes, etc.
Matters like investment regulation, intellectual property protection, technology transfer, preservation of brands, and determining the country of origin have risen to the forefront. In fact, the main problems are not production and sales of the product itself but rather ensuring property rights and choosing an optimal country for manufacturing activities. Obviously, the arsenal of instruments which are
1 Marina K. Glazatova — Ph.D. in Economics; Deputy Director, Institute of Trade Policy, National Research University Higher School of Economics (HSE), E-mail: <[email protected]>.
2 The article was submitted in November 2017.
42 Trade policy. Торговая политика / 2017. № 4/12. ISSN 2499-9415
actively used by regulatory bodies in the sphere of foreign trade became more and more supplemented by regulation of the internal market.
One can see not only interaction of regulatory instruments, but also blurring of differences between jurisdictions. It is possible due to harmonization of legislation, use of regulatory frameworks developed at the international level and approved by the majority of states as the best form of regulation policies, combining fulfillment of obligations of a state to provide security, stability of rights and freedoms, flexible framework for the entrepreneurial initiative, and to preserve the environment.
Analysis of the change of technological paradigms (structures) and in-depth study of the components of technology, raw materials and final products combined with large cycles of economic conditions, industrial revolution, and global economic shocks, allowed to trace and identify emerging institutions, which were a reaction to the challenges of changing markets and public (including first of all, consumer) behavior. The study monitored the evolution of the institutional environment from cycle to cycle. This helped to form a basis for systematization of instruments of state regulation used in each period. Among them those were identified that had been the core characteristic of the appropriate technology era (see Appendix, Table 1).
The study used the theory of technological paradigms because it made possible to trace the changing needs of the expanding industrial sector. Also one can see the evolution of the response to the question whether it was possible to stimulate domestic production without disturbing a healthy competitive environment and without worsening of conditions for entrepreneurial activities.
The results presented in Appendix, Table 2 demonstrate that, since the first industrial revolution and the first technological paradigm, i.e. from the late eighteenth century to the present time (or for three centuries), unchanged and critical imperative of regulation has been to ensure freedom of entrepreneurial activity combined with property rights while maintaining a normal level of competition. Along with development of large- scale economic activities, another imperative appeared — an independent judicial system providing fair and impartial analysis of controversial situations in commercial transactions, which is an additional guarantee of the stability of property rights.
Despite the fact that development in each period only exacerbated and revealed significance of these imperatives (for the third and the fourth technological paradigms) the world experienced the political dichotomy: it was divided into capitalist and socialist blocs. The socialist bloc denied basic imperatives.
Naturally, first of all, polarization shocked the main imperatives, namely private property was transformed to socialized property along with freedom of enterprise transformed to prohibition of entrepreneurship. But it did not affect the main principles of regulation which provided support for domestic production.
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Protectionist policies were typical for many states. The change of socio-economic formations in most of the countries of the socialist world happened at the turn between the fourth and the fifth technological paradigms. The explosive development of digital technologies has given accelerated dynamics to all economic processes, which coincided with changes in the architecture of the global economy.
First of all, it should be noted that a new type of economic agent appeared in the economic environment in the mid-20th century. In addition to states, various forms of enterprises (either commercial or non-commercial), households and physical persons as individual entrepreneurs, and transnational corporations (TNC) entered the scene as agents of economic activities. The mergers and acquisition processes converted them into a single pool of global business enterprises. It was a response to increased competition.
As it usually happens in available niches, TNCs quickly gained economic activity and serious influence first on economic, and later on political processes. Activities of transnational corporations have created a new form of economic cooperation — the global chain of added value. Increasing complexity of technologies, materials, and, in the end, final products deepened the division of labor.
Specialization became deeper and deeper focusing on individual process steps, which in turn was the catalyst for the development of small-sized enterprises better-adapted to narrow specialization, and also forced them to unite into chains for production of final products. Large businesses and corporations also benefited from this in terms of specialization and chains to minimize production costs actually providing the key competitive advantage.
Thus, a new set of international norms in the sphere of economy was established. The rapid development of international cooperation and integration led to the fact that international economic organizations developed rules which formed the set, starting from the 1950-60s that became known as international economic law. The ambition to create the best conditions for trade has intensified the process of harmonization of national legislation with internationally accepted norms and rules. The prospective results of this would probably be the harmonized national legislation through implementation of international standards into them.
Small business was considered to be a driving force that can provide diversification. Big business continues to play its role as support for the economy, but due to slowness, high social and fiscal risks should not be engaged in structural reforms. Its role is to consistently provide the tax for the budget.
Concluding remarks
Lastly, in many cases, in the information era technology transfer occurs so quickly and seamlessly that economic success depends only on possibilities of use of technology at the particular territory.
44 Trade policy. Торговая политика / 2017. № 4/12. ISSN 2499-9415
Naturally, these changes have stressed the significance of protection of resources invested in business (investment, technology, etc.), security settings, activities and products, stimulating development of small and medium enterprises.
The set of imperatives has also changed. The basic principles of freedom of entrepreneurial initiative, and ensuring the rights of ownership and maintaining a competitive environment were restored. In response to the technological develop- ^ 1 ment and emergence of new kinds of materials, the importance of protection of ¡gs -g intellectual property rights has increased. The share of state regulation is limited. | ^ But legitimate goals of ensuring security are rigidly fixed in every aspect. The im- §
perative of cooperation between the state and society and the priority of interna- |
tional norms appears and develops. As a perspective of the imperative there is a <i"| need to develop management strategies based on interactive strategic approach '■§
and competitive positioning because of disappeared boundaries in trade due to electronic platforms and electronic means of payment. The symbiosis of internal and external regulation is becoming more and more evident.
Appendix
Table 1
Comparative analysis of basic imperatives based on technological paradigms
Imperatives Technological paradigms
1 17721840 2 18301879 3 18801940 4 19301990 5 19852035 6 20202060
Protection of property rights ✓ ✓ ✓ Bipolar world ✓ ✓
Freedom of commercial transactions ✓ ✓ Bipolar world ✓ ✓
Freedom of entrepreneurship ✓ ✓ Bipolar world ✓ ✓
Protection of intellectual property ✓ ✓ ✓ ✓
Protectionism ✓ ✓ ✓ ✓
Growing role of the state ✓ ✓
Maintaining competitive environment ✓ Bipolar world ✓ ✓
Use of new means of payment ✓ (e.g. promissory note) ✓ (e.g. (bitcoin)
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Independent judicial system ✓ ✓
Non-discrimination ✓ ✓ ✓ ✓
State planning ✓ ✓
Socialization of ownership ✓ ✓
Differential treatment in trade ✓ ✓
Transparency ✓ ✓ ✓
Tariff liberalization ✓ ✓
Dispute settlement mechanism ✓ ✓ ✓
Limited state regulation ✓ ✓
Interaction between state and society ✓ ✓
Harmonization of mandatory standards ✓ ✓
Self-regulation ✓ ✓
Non-tariff regulation ✓ ✓
Priority of international norms ✓ ✓
Support institutions ✓ ✓
Strategy of rapid response + competitive benefits ✓
Symbiosis of internal and external regulation ✓
Protection of rights of purchasers ✓
Source: Compiled by the author.
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Trade policy. Торговая политика / 2017. № 4/12. ISSN 2499-9415
Table 2
Combinations of technological paradigms, Kondratiev waves, economic crises and respective regulation imperatives
Technological paradigm
No./ Key technologies and Industrial K-cycles Major global economic Key institutions Regulation imperatives and reasons for
Period level of production revolutions1 (periods) and political crises and their application
development monetary systems
I Creation of the first The first 1780-1810- 1789 - Declaration of - Trade unions - reducing Reasons: monopoly, establishment of
1772- manufacturing industrial upward wave the rights of a man and influence and regulation; market relations and regulation,
1840 industry - a textile revolution 1810-1817- citizen (France). - Creation of partnerships mechanization and concentration of
factory (spinning (mechanical the top 1816 - the among small enterprises production.
machines) production) 1817-1844- introduction of the (cooperation of private
Serial production, the downward gold standard by the capital); Imperatives:
mechanization of wave Bank of England - Creation of scientific and - expansion of freedom and property
labor. Emergence of ("...regardless of the engineering societies rights and conduct of commercial
first large companies. reasons for this, the (development of scientific transactions (J. Locke ( 1989): "The main
Initial accumulation free market recognized research); goal of people's entry into society is the
of capital. gold and silver as the - Entrepreneurship based desire to use their property peacefully
Emergence of most effective types of on inventions; and safely, and the laws and instruments
monopolies. money..."). Reserve - Use of a bill as a means of established in this society serve as the
currency - pound payment in sales main instrument and means for this.");
sterling. transactions; - formation of antimonopoly regulation;
1825 - stock market - Training for a type of - support and freedom of
panic activity along with work entrepreneurship;
1837 - second stock (professional training). - introduction of restrictions in foreign
market panic trade for the development of national
1820-1840- entrepreneurship (in England - special
overproduction import duties in order to reduce
competition with imports, and not to
replenish the treasury);
1 Dates are provided according to Schwab K. Four Industrial revolusion. World economic forum? 2016
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- measures of state support for exports were first applied ("...production and export of finished industrial products and foodstuffs were stimulated, and on the contrary, exports of raw materials and semi-finished products were taxed or banned to stimulate their own processing inside the country..."); - recognition of bills as a means of payment in international commodity turnover.
II Steam engine. 1844-1851 - 1867 - Paris currency - Replacement of guild Reasons: Development of transport
1830- Emergence of bottom system (free currency unions by trade unions and infrastructure accelerated turnover and
1879 locomotives and 1851-1870- conversion for gold, creation of the Trade the movement of labor resources.
steam navigation. upward wave the main international Union Congress in 1868; Development of the land market and
Construction of 1870-1875 - regulator is the - Formation of social other factors of production (the
railways. the top Conference (Paris, legislation; possibility of transporting heavy goods).
Development of coal 1875-1890- 1867)) - Formation of first rules of The beginning and development of
mining and trade. the downward 1873-1879 - international trade globalization. Concentration of
Development of wave Depression (Long) (conclusion of trade production with concentration of capital.
large companies. agreements with individual
Concentration of states); Imperatives:
capital, development - Establishment of state- - formation of a system of inalienable
of financial markets owned banks; rights: the state secures the protection of
and natural sciences. - Emergence of collective property rights, "but this same law
owners (joint-stock protects the individual from the state ...";
companies with limited - formation of the independence of the
liability); judicial system for protection of
- Formation of scientific contractual rights and private property
schools and teams (research [D. Hicks];
institutes); - protectionism (ensured development
- Development of of the economy of England, Prussia,
vocational education; Austria, and Sweden) [K. Hill, E.
- Appearance of copyright. Wallerstein]; - Protection of intellectual property rights.
III Industrial use of The second 1890-1896 - 1914-1918 - World 1919 - International Labor Reasons:
1880- electrical energy. industrial bottom War I Organization; Intensification of international
1940 Development of the revolution 1896-1914- 1917 - The Socialist 1920 - League of Nations; cooperation between countries (the era
electrical industry. (conveyor and upward wave Revolution - Bilateral agreements; ofbilateral agreements);
Invention of radio electricity) 1914-1920- 1922 - Genoese - Concentration of Bipolar world. Emergence of a system of
and telegraph. the peak currency system (Gold financial capital and state centralized planning and regulation
Emergence of 1920-1939 - standard, the main ubiquitous development of in countries of the socialist world.
steelmaking the downward international regulator the banking system. 1922 - formation of the USSR.
(Bessemer process, wave is the Conference Emergence of the state Intense population migration caused by
the converter) and, (Genoa, 1922). The regulator - the central bank the World War, the Great Russian
on its basis, currencies are which establishes rules for Revolution and the Great Depression.
development of exchanged for gold settlements and lending in Disruptions to international trade.
heavy engineering. through the USD, the conduct of trade Application of strict protectionist
Appearance of pound sterling, French operations; measures.
dynamite and cars. franc). 1929-1939 -Depression (Great) 1937 - Recession - Strengthening state participation in the economy. Expansion of the structure of institutions and Imperatives: - Strengthening the role of the state as a regulator in the economic and social
instruments of state spheres; - Most-favored-nation treatment;
regulation;
- Formation and - Application of protectionist measures
development of in foreign trade;
international organizations as institutions of international / - Application of state planning.
- Socialization of property in the bloc of socialist countries.
supranational regulation;
- Emergence of first
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IV Deep processing of 1960s - the 1939-1950 - 1941-1945 - The 1945 - the United Nations; Reasons:
1930- oil and gas. beginning of the the bottom Second World War 1947 - GATT; The Age of Keynesianism.
1990 Appearance of an Third Industrial 1950-1968- 1944 - Establishment 1948-1952 - European 1945-1984 - disintegration of the
internal combustion Revolution upward wave of the Bretton Woods Communities; colonial system. Emergence of a group of
engine and a jet (semiconductors 1968-1974 - currency system (Gold 1949 - Council for Mutual developing countries;
engine. Automation , personal the peak dollar standard, the Economic Assistance Large-scale international cooperation
of production. computers, the 1974-1984 - main international (CMEA); between countries;
Atomic fuel. A Internet). the downward regulator is the 1920 - Emergence of the Active phase of economic integration in
computer. Space wave International Permanent Chamber of the world;
exploration. Monetary Fund, the International Justice, which Establishment of most international
Development of currencies are was replaced by the organizations to which a number of
organic and exchanged for gold International Court of regulatory powers have been delegated
bioorganic through the USD) Justice in 1946 (formation by member states;
chemistry. Genetic Engineering. Synthetic materials and raw materials. Appearance of new structural materials. Mass production of consumer goods. Emergence of multinational companies. Oligopolistic competition. Formation of global value chains. Development of international trade. Development of international cooperation.
1968-1973 - Currency Crisis
1973 - The Oil Crisis 1976 - Establishment of the Jamaican currency system (Demonetization of gold, SDR Standard (Special Drawing Rights), the main international regulator is the International Monetary Fund).
of modern international law);
1945-1970 - Formation of the main international organizations that established regulatory agreements in the agreements (OECD, OPEC, FAO, IAEA, ICAO, Geneva UNECE Convention, etc.);
- Universities as institutes of merge of educational and scientific spheres;
- Emergence of international regulators in the form of international organizations (the International Monetary Fund, etc.);
- Vertical integration of production and the emergence of transnational corporations as a new economic agent;
- Emergence of global chains of value added as a new type of cooperative interaction;
- strengthening the role of the state as (1) a regulator; (2) Institute for the Guaranteeing and
Formation of rules for multilateral trade regulation;
Increased competition; Savings on scales;
Harmonization of policies of countries that are part of one integration education;
Processes of harmonization of national legislations;
Oligopoly and cartels in world markets; Political dichotomy (capitalism and socialism);
Fundamental theoretical discoveries; Government planning.
Imperatives:
- opposite directions of regulation (capitalist world - development of small and medium-sized business, socialist world - suppression of private entrepreneurial initiative);
- etatist model of regulation in the socialist countries;
- non-discrimination in the export / import of goods (most-favored-nation treatment (alignment of conditions for countries), national treatment (alignment of conditions for external / domestic producer));
- special differential treatment of trade regulation (exceptions to restrictions for
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Realization of Social Protection, (3) the Institute for Defense and Security and the emergence of the defense industry complex; - Emergence of the institution of an international regulator, in the capacity of which international organizations act; - Involvement of the state in the sphere of economic relations as an economic entity; - Extraterritoriality of investments; - Development of the institution of universal secondary education. developing countries); - transparency of mandatory requirements; - tariff liberalization; - formation of a mechanism for compulsion to comply with the norms of international agreements (dispute settlement mechanism).
V Development of 2000s - the 1984-1991 - 1991-to date 1989 - APEC; Reasons:
1985- technologies for the beginning of the the bottom 2008-2009 - financial 1991 - MERCOSUR; Globalization;
2035 creation of new Fourth 1991-2005 - crisis 1992 - the EU; The era of regional trade agreements;
materials, raw Industrial the upward 1995 - WTO; Expansion of international commodity
materials and types Revolution wave 2001 - SCO; turnover;
of energy. Further (global digital 2005-2008 - 2015 - International Emergence of electronic trading
exploration of outer networks, the peak Energy Charter; platforms and the blurring of borders for
space. Development artificial 2008-2010 - - Emergence of the global consumer choice;
of digital, intelligence, bearish wave Internet as an institution The focus of international regulation is
communicative and nanotechnology, for the exchange of on food security, ecology, life expectancy
biotechnologies. synthesis of information and social and quality, exchange of best
Nanotechnology. physical, communication; technologies;
Getting graphene. Robotics. Emergence and development of electronic commerce and 3D materials and technologies
biological and digital
technologies)
- Use of the Internet to create and develop the institution of electronic commerce;
- Emergence and development of the institution of state regulation of the transfer, deployment and use of information in electronic and digital form;
- Giving the mass media the role of the institution of influence on public consciousness;
- Restriction of the role of the state as a regulator;
- The fall of the role of professional associations;
- The emergence of institutions for multilateral trade regulation and global economic regulation;
- Multipolarity of the world economic system;
- Development of the institute of integration associations of countries;
- Providing the institute of intellectual property protection with new content in connection with
1990-1991 - disintegration of the USSR; 1991 - breakdown of the CMEA; Formation of the main integration associations of countries; Formation of a homogeneous economic environment based on market principles of functioning;
Decrease in the share of state regulation
in the economy (on a global scale due to
the fall of the socialist world);
Trade liberalization;
Application of extraterritoriality of law
in international relations.
Imperatives:
- Restriction of state regulation;
- Establishment of interaction between the state and society using public control mechanisms (assessment of regulatory impact, public discussion of draft mandatory norms, etc.);
- Liberal-etatist model of regulation;
- harmonization of national legislation with international norms and rules;
- Support for the development of entrepreneurship;
- Strengthening enforcement mechanisms to comply with international norms;
- Activation of self-regulation;
- Reduction in the use of direct tools to
appearance of new types of support producers (liberalization of tariff
products expressed in protection) and increased use of complex
electronic-digital form. non-tariff instruments; - Strict compliance with international agreements; - Focus on maintaining a competitive environment in the domestic market; - Development of institutional conditions for the development of entrepreneurship.
VI Development of 2010-2018- - Strengthening the role of Reasons:
2020- nanotechnology, the upward institutions to ensure Deepening international cooperation
2060 robotics, wave environmental protection, between countries and strengthening
biotechnology. 2018-2040 - protect historical heritage, economic alliances;
Artificial intelligence the top preserve planetary Reduction of transaction costs due to the
and global 2040-2050 - resources; harmonization of legislation (mandatory
information the downward - Formation and requirements);
networks. Wide wave development of quality of Increased information in training;
distribution of 3D 2050-2060 - life institutions (smart Industrial and technological chains
technologies. bottom cities, smart technologies); based on 3D technologies, artificial
Artificial organs - Formation and intelligence, the emergence of a new kind
based on 3D development of the of materials and raw materials;
technologies. High- institutions of smart Accelerated development and
speed transport regulation (expansion of implementation of new technologies;
systems. the capabilities of economic Widespread use of electronic commerce.
Robotization of agents, the formation of
production. Use of new forms of cooperative Imperatives:
renewable energy interaction); - use of flexible regulatory tools;
sources. - Emergence of the institution of global economic governance by the redistribution of food and energy resources. - application of symbiosis of mechanisms and tools of emergent strategic approach and competitive positioning ("the strategy should be
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oriented to creating conditions for the self-organization of systems: for example, laws and rules underlying competitive markets");
- regulation based on the priority of international law and, accordingly, the merger of internal regulation with the regulation of external markets, the formation of a standard set of regulation;
- The emphasis of regulation on ensuring a competitive environment when the borders of internal and external markets are blurred;
- Enhancing the role of providing and protecting the rights of purchasers and intellectual property.
Source: Compiled by the author.
References
In Russian
ния: Избранные труды. — М.: Академический проспект; Альма Матер, мической эволюции / Людвиг фон Мизес; пер. с англ. А. В. Куряева. —
др.; отв. ред. А. В. Аникин и др.]. — Москва: Наука, 1979.
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Trade policy. Торговая политика / 2017. № 4/12. ISSN 2499-9415
Глазатова М. К.1
Императивы развития регулирования предпринимательской деятельности в условиях глобальной экономики2
В данной статье рассмотрена эволюция системы мер регулирования в свете происходящих структурных сдвигов и промышленных революций. Применяется концепция технологических укладов, позволяющая отследить динамику условий деятельности индустриального сектора.
В работе подробно анализируется, насколько возможно успешно сочетать различные меры регулирования в целях расширения производства с поддержкой здоровой конкурентной среды и поощрением предпринимательской деятельности.
Подчеркивается, что в информационную эпоху перемещение технологий происходит настолько быстро, что успех в экономической сфере зависит преимущественно от их использования в конкретной стране.
Ключевые слова: волны Кондратьева, технологический уклад, структурные сдвиги, промышленная революция.
1БЬ: П3, Б55
1 Глазатова Марина Константиновна — к.э.н., Заместитель Директора Института торговой политики, Национальный исследовательский университет Высшая школа экономики, Москва, Россия. E-mail: <[email protected]>.
2 Статья сдана в редакцию в ноябре 2017 г.
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