Structural shifts of Russian economy in globalization process

Demchenko Svetlana K.; Yudina Margarita A.

Journal of Siberian Federal University. Humanities & Social Sciences 8 (2014 7) 1410-1422

УДК 338.1

Structural Shifts of Russian Economy in Globalization Process

Svetlana K. Demchenko* and Margarita A. Yudina

Siberian Federal University 79 Svobodny, Krasnoyarsk, 660041, Russia

Received 01.05.2014, received in revised form 12.06.2014, accepted 02.07.2014

The study tested structural shifts of Russian economy, characterizing it's involvement into the processes of globalization. The significance of Russian economy was defined within the following markets: capital and investment resources exchange; exchange of natural resources, means of production and consumer goods; exchange of human resources; exchange of technologies and innovations. The level of globalization of Russian economy was expressed through popular indexes. Authors gave their estimation of the place of Russian economy in modern processes of globalization. Russian economy indexes were analyzed by Authors in details and collated with developing countries' economy indexes. As a result Authors concluded a low level of involvement of Russian economy in global processes and substantiated the importance of Russian domestic implementation of human capital and research capacity, with the necessary application of deliberate government policy.

Keywords: structural analysis, structural change, globalization.

Introduction

Structural shifts of different trends and rates, accompanying the development of any national economy, can no arise, change and operate within the frameworks of a single economic system. National economy is not a closed system, but one of the parts of global economy with complicated interactions between economic systems with different levels of capital, technologies and infrastructure development, availability of human and natural resources, political system stability, etc. Uneven development of structural elements of global economy, differentiation on existence, availability and costs of production factors within the scales of individual national economies, foreign policy of states' governments result in

different structural shifts, and here any national economy is involved into the process, being an active or passive element of the operating global economic mechanism.

One of the latest examples of interdependence of national economies was the global financial crisis of 2008-2009, the consequences of which have been experienced by all national economies despite the fact that the cause of the crisis, routed in the USA, had nothing to do with them initially. Modern global economy has reached such level of globalization, when an event in one national economy inevitably influences all others, and the depth of such effect through cause-and-effect relations is greater the more significant role of this economy is in the global economic system.

* Corresponding author E-mail address: [email protected]

Interaction of a national economy with global economy happens in several key points: capital and investment resources exchange; exchange with natural resources, means of production and consumer goods; human resources exchange; exchange with a contribution into global research and technology development.

Structural shifts of Russian economy on import/export within capital market

Let's analyze structural shifts of Russian economy on import/export within capital market. Fig. 11 and Fig. 22 illustrate the trend of growth for absolute investments indexes into Russian economy as well as abroad. At the same time Fig. 33, demonstrating the balance of direct investmente, indicates that investmente abroad prevail over the investments into Russian economy, which often ia stated by negative balance on quarter outcomes. This unfavorable trend is also confirmed by graphic analysis of relative indexes - the growth rate of direct investments into Russian and abroad (Fig. 44). Probably, fotetgn tnvestors ate not yet certain about stability, security an, tigniiieant prospects for theit futute investments in Russian economy.

A significant surge in the 1st quarter of 2013 at the given diagrams is connected with a transaction of purchasing by the state company OJSC "Rosneft" of 100% share of TNK-BP Ltd. The first part of the transaction (purchasing of 100% share in TNK-BP Ltd.) is illustrated in the balance of payments as direct investments abroad in amount of USD 55 billion, the second - as receipt of direct investments from abroad in the amount of USD 15.7 billion. We consider that this transaction is not an exception from general regularities and trends in capital market of Russian economy, and matches them harmoniously. Except for that, the association of two biggest oil-business companies from different countries is another proof of promotion ot globalization processes in Russiat economy

T,e analysis of foreign trade transactions of the national economy is very important, as exactly trade transaction to the full extent can reveal competitive strengths of national economy and the level tf its involvemenr into globel economic procesaes.

T,e analysis of the structuee oe gloVal etport demonstrates that within the period between 22000 and 21011 Rusvian economy ttrengthened its pesitiona among the leader

Fig. 1. The dynamics ofdirect investments into Russia, USD mln.

Fig. 2. The dynamics of direct investments ofRussian economy abroad, USD mln.

Fig. 3. The dynamics of the balance ofdirect investments of Russian economy,USD mln.

exporting states, having moved from the 17th to the 9th place (Fig.55). However, such significant structural shift can hardly be called positive, considering the structure of Russian export where up to 72.2% is covered by the share of fuel-energy products and mineral raw materials. The analysis of the dynamics of the elements of Russia export also confirms that the change of the position of Russian export was fully performed due to the growth of export of fuel-

energy (mineral) products - in absolute indexes (between 2000 and 2011 - 6.5-fold growth), as well as in relative ones (from 53.5% in 2000 up to 70.3% in 2011 in the total export scope of Russian economy)6. It's worth noting that a significant part of the absolute increase of the amount of fuel and energy products export has been caused also by sufficient growth of the world's prices on oil products, marked between 2000 and 2008, before the global crisis.

Fig. 4. The dynamics ofthe growth rate of direct investments into Russia and abroad, %

1_USA

2_Germany

3_ Japan

4__France

5_UK

6_Canada

7_China

8_Italy

9_Netherlan2s

10_Hong Kong

11_Belgium

12_Korea

13_Mexico

14_Taipei

15_SinFapd»re

16_Spain

17_Russia

18_Malaysia

19_Sweden

220 Saudi Arabia

1_ China 2_USA 3_ Germany 4_ Japan 5 Netherlands

France 7 Korea Italy 9_Russia 10_ Bel gium 1l_UK

12_ Hong Kong 13_ Canada 14_ Singapore 15_Saudi Arabia 16_ Mexico 17_ Spain 18_ Taipei 19_ India 20UA0E

Fig. 5. The leadings exporting states between 2000 and 22011 (%% ofthe total export scope of all countries)

Therefore, the analysis of Russian economy export in the context of alobalizatioo depicts gigh-level iovolvement into global economic °roce sses, but only in a °edicated se gment of commodity line, which in fagt is represented by natural resources with insignificant share

of processing. Finished products of various industries of Russian economy, iecluding ^nonaou^^ oness, has no sufficient weight in the export structure, it is minimal. By thie, there are no oisible tends to im°dovement - its insufficient role keeps on falling. The established trend of

natural recourses export with preservation of significant degradation of remaining structural elements of export, to our mind, does not improve competitive ability to Russian economy, but on the opposite, undermine its stability and question strategic economic safety of Russia. By this, in other developing states we can observe quite other results of national economy movement, for example, the economy of China which lies in the category of developing economies, but in the structure of export is close to the structure of industrially-developed states.

The graphic analysis of the main importing states (Fig. 67) illusteates ghat Russian economy has also changed significantly its poaitions in the general rating - it moved faom the 28th place in 2000 to the 17th in e011. The analysis og thh impog seructure o( Russian economy demonstrates dominance of finished aoods of vaeious industriet, and uhe main role is played by 2 types of goods -caas, equipmenr hndtransportingvehicles-48.8%, clienncal indus(ry's goods, resins - 15.8°%o.8 The main locomotive of clianges in weighr of Russitn economy's import is only one type of products -

cars, equipment and transporting vehicles. The growth of food products and agricultural goods export, as well as chemical products and resin also exists but is not significant.

The structure and dynamics of structural elements of Russian economy's import, similarly to export, have clear disagreements with the import structure of industrially developed and even developing countries. The main import flows into these countries are represented by different natural and energy resources, and although a share of finished goods exists and is differentiated depepding from definite rconomy, it is rot defiping. Rugarding global economy and glowing globalizations processes Russian economy's import, without doubts, is one of itu significant elrments, but revaals only from the side og the final products' consumeas. This srtuation, as we suggest, is extremely unpeneficia( for Russiaa economy, as limiting onlv with the peocesses rf Soriign goads consumption it is impoisible to improve competitiveness and efficient of national economy. Rnductiop af import; grawih rates caused depVy ment of productian of cars and

1_USA 2_Germany 3_Japan 4_UK 5_France 6_Canada 7_Italy 8_China 9_Hong Kong 10_Netherlands 11_Mexico 12_Belgium 13_Korea 14_Spain 15_Taipei 16_Singapore 17_Switzerland 18_Malaysia 19_Sweden 20 Australia

1_USA

2_China

3_Germany

4_Japan

5_France

6_UK

7_Netherlands

8_Italy

9_Korea

10_Hong Kong

11_Canada

12_India

13_Belgium

14_Spain

15_Singapore

16_Mexico

17_Russia

18_Taipei

19_Australia

20_Turkey

Fig. 6. Leading importing states between 2000 and 2011 (% of the total import scope of all countries)

equipment with foreign investments attraction in Russia is the first positive event able to change the situation in future. However, we think, at the moment, these outlined shifts yet are very weak, and time is urgent for their further successful accomplishment, as well as favorable economic conditions and targeted state policy.

The analysis of migration processes in relation to Russian economy

The processes of globalization of global economy reveal also in labor force market where similarly to national economy, we observe redistribution of human resources depending from the best and the worst conditions for work and living. Naturally, international migration of labor force exists, but it is significantly complicated with such factors as governmental limitations, issuing of visa, residence permits, language barrier, high costs of moving. Regarding stimulating factors we can outline flexible migration policy of individual countries, as well as spread of English language as the mean of international communication.

The analysis of migration processes in relation to Russian economy shall be held in two directions - with the CIS states and non-CIS states. To our mind, this is necessary for deeper evaluation of the character of the trends revealed in migration processes. Former commonness of

economic and social spaces, cultural traditions, absence of language barrier, simplified procedure of obtaining residence permit among Russia and the CIS states ground a higher level of people's migration between them, comparing with non-CIS states.

The analysis of migration processes in Russia in relation to the CIS-states (Fig. 79 and Fig. 810) shows that during the whole period between 1997 and 2011 positive balance of migration was observed, by steady firm trend of reduction of migration from Russia and by uneven, sometimes multidirectional dynamics of migration to Russia.

It's worth to note that according to various sources of information, an impression form about migration to Russia of low-qualified labor force from the CIS-states where the level of living, as a rule, is significantly lower of the Russian one, and there is no option to realize working potential. By this, according to Mass Media, we observe significant number of cases of illegal migration to Russia and further employments of the CIS-states' citizens.

The dynamics of migration processes in Russia in respect to the non-CIS states (Fig. 911 and Fig. 1012) demonstrates another picture -the balance became positive only in 2007, and since then grows by steady gradual reduction of

Fig. 7. The dynamics of migration in the Russian Federation in respect to the CIS states, number of people

Fig. 8. The balance of migration in the Russian Federation in respect to the CIS-states, number of people

•Migration to Russia from non-CIS states 'Migration from Russia io non-CIS states

Fig. 9. The dynamics of migration in the Russian Fedenation in respecR to tae non-CIS states, numbor of people

Fig. 10. Migration balance in the Russian Federation in respect to the non-CIS states, number of people

migration from Russia. Noticeable is that the re is no confirmation of widely popular common point of view about significant migration flow from Russia to developed states: at first, each year reduction of migration from Russia is noticed (for example, if in 1997 89 312 people left

fhe country, than in 22011 - 14 2206 people, i.e. 6 times less), secondly, for 14 years following the statistics 661 126 people left the country, which comprises only about 0.5% of the total population of Russia13. But we should note, that in majority of cases Russia is left by high-qualified human

'Migration to Russia from CIS states Migration from Russia to CIS states

Fig. 11. The dynamics of migration in the Russian Federation, number of people

Fig. 12. The balance of migration in the Russian Federation, number of people

resources , attracted toy higher incomes and better quality of living iin developed states.

Considering the prevalence of migrations with the CIS-states, the general image of migration processes in Russia looks the following way: positive balance with a growth trend since 2004, gradual annual reduction of leave (Fig. 1114 and Fig. 1215).

Drawing the conclusion on the analysis of the labor force migration in Russian economy in the context of globalization, we can note that

first of all, these processes exist, but they are not that significant in the scales of global economy, and sncondly, now theoe are no negative trends on migration of labor force from Russia observed.

National economies interaction on technologies and innovations' market

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The next key point, through which the national economy interacts with other national economies, is the market of technologies and innovations, defining the way of the

global research and technology progress. The promotion of globalization processes in the sphere of innovational technologies is proven by the extension of international research and technology cooperation, increase of international trading of science-intensive products, the rate of technical novelties dissemination between national economies. "At the moment, despite the intensification of globalization processes of research and technology development national factors of this development dominate: the majority of MNC (multinational companies) still perform the main part of researches in the home base country. This situation is typical for the USA, Japan, Germany, France and Italy, within the territory of which 80-90% of R&D self-potential is preserved (the exceptions are Belgium and the Netherlands, which perform more than a half of their R&D abroad)".16

The contribution of Russian economy in the global research and technology development at the moment is yet minimal, which is proved by the statistics of international patent applications (Fig. 1317) - for 4 years Russia has filed only 2 473 international patent applications, which is 128 times less that the leader in applications -the USA. The fact that regarding the number of domestic patent applications Russian economy takes the sixth line in the rating may seem to be a nice result, however, according to individual authors, whom we agree with, this way Russia compensates its need in new technologies, "being new only for domestic market. Such situation can lead further underrun from the developed countries of the world, which have entered the step of the sixth technological mode".18

Importance and urgency of the subject of globalization, its influence on the processes

Domestic patent applications

International patent applications

Japan China Korea USA Germany Russia UK France Brazil Italy Canada Poland Spain Netherlands Finland Australia Sweden Switzerland Austria Israel

"77 597

USA Japan Germany Korea France Canada China UK

Switzerland Italy Sweden Netherlands Australia Finland Israel Austria Spain Russia Brazil Poland

317 340 04

-A— —A— —A— —f

% \

% % % %

Fig. 13. Rating of countries on domestic and international patent applications between 2005 and 2009, number of pieces

of development of national economy attract attention of not only many individual researchers and scientists, but also international consulting organizations, which use different indexes to compare the level of country's globalization.

Thus, for example, a famous international consulting agency Ernst & Young has performed the analysis of the globalization level of 60 leading world's economies on 20 main parameters, covering key aspects of international integration processes. As a result they calculated a special index - globalization index, which considers the following five criteria: trade openness, movement of capital and finance, exchange of technologies and ideas, movement of labor and cultural integration. According to this rating, published under the results of 201219, Russian economy underruns significantly and takes the 48th line of 60 available. The index growth of Russian economy is for 0.05 scores in comparison with 2011 lies within the range of the average index growth on majority of studied countries.

Globalization index, calculated by the consulting company A.T. Kearney in 2007 on the ground of 12 indicators in 4 categories20 (political relations, technology of communication, personal contacts and economic integration) demonstrates also not the very successful situation of Russia -the 62nd of 72.

The rating on KOF globalization index, developed by the Swiss Institute for Economy and Federal Swiss Institute for Technology on the ground of 24 variables21, depicts the level of Russian economy at the 45th line (of 207 countries).

The development of domestic version of the globalization index was performed also by Russian researchers22, following the results of which Russian economy is characterized with an average level of involvement into the processes of globalization.

Conclnsaon

Summarizing the analysis of the issues of the transformation of the structure of Russian economy in the process of globalization, we can conclude about general low level of involvement of Russian economy into global processes. With no doubts, Russian economy cooperates in various directions with different countries, and as well as many other states is subjected to the influence of global trends of economic growth or downturn. But the place, which Russian economy takes at the moment in global indexes, evidently does not correspond to its potential. This is obvious also by detailed analysis of Russian economy indexes themselves and in comparison with developing countries, which yet several years ago were far behind, and no have moved forward actively. Let's note that we should not limit with the line taken by Russian economy in international ratings, it's appropriate also to consider the qualitative compound. Thus, for example, good dynamics of export and import indexes growth has expressly raised the position of Russia in respect to other countries, by the analysis of structural component shows us, that in qualitative aspect it is not a move forward. Economy, which during years has been selling out its mineral resources, and lately has increased the rates, cannot be effective. In the context of global economy Russia has a passive line, the line of a "donor: and although these indexes are sometimes significant in scopes, they do not give sufficient bonuses at the moment, and which is the most important, they seriously limit the prospect of development in future.

Within the market of international trade, as well as in the global capital market, regarding investments Russia is of interest only to the countries in a narrow segment of natural-raw material resources, because neither in innovations and technologies, nor in competitiveness and the quality of individual types of productions Russia

has yet managed to become a leader. As we see, even a domestic large-scale project of Russian in the global capital market, i.e. purchasing of 100% share in TNK-BP Ltd was of the sphere of oil production and processing.

Lack of significant migration from the country and positive migration balance to some extent can be evaluated positively, but this, naturally, demands even deeper analysis. Existence or lack of significant migration is far not that important as the fact that human capital and

research potential should be implemented inside of the country, and not to flow gradually abroad, by this not disturbing the integrity of statistical data. For this, without doubts, significant is the policy of the state, as in this strategically important issue one shouldn't trust the processes of self-regulation. As for globalization, to our opinion, it will keep on playing a significant role, despite recent slowing down of the growth rates of individual national economies, as well as the global economy in general.

The figure is generated by the Authors following the data of the Central Bank of the Russian Federation, published at the web-site http://www.cbr.ru/statistics/?Prtid=svs&ch=PAR_30241#CheckedItem

The figure is generated by the Authors following the data of the WTO (World Trade Organization) available at www. wto.org/english/res_e/statis_e/its2001_e/its01_overview_e.htm and at www.wto.org/english/res_e/statis_e/its2012_e/ its 12_world_trade_dev_e. htm

Calculated by the Authors following the data of the Federal State Statistics Service of the Russian Federation, available at www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/ftrade/#

The figure is generated by the Authors following the data of the WTO (World Trade Organization) available at www. wto.org/english/res_e/statis_e/its2001_e/its01_overview_e.htm and at www.wto.org/english/res_e/statis_e/its2012_e/ its 12_world_trade_dev_e. htm

Calculated by the Authors following the data of the Federal State Statistics Service of the Russian Federation, available at www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/ftrade/#