Artificial Intelligence: Anthropogenic Nature vs. Social Origin (Advances in Intelligent Systems and Computing, 1100) 9783030393182, 3030393186

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Advances in Intelligent Systems and Computing 1100

Elena G. Popkova Bruno S. Sergi Editors

Artificial Intelligence: Anthropogenic Nature vs. Social Origin

Advances in Intelligent Systems and Computing Volume 1100

Series Editor Janusz Kacprzyk, Systems Research Institute, Polish Academy of Sciences, Warsaw, Poland Advisory Editors Nikhil R. Pal, Indian Statistical Institute, Kolkata, India Rafael Bello Perez, Faculty of Mathematics, Physics and Computing, Universidad Central de Las Villas, Santa Clara, Cuba Emilio S. Corchado, University of Salamanca, Salamanca, Spain Hani Hagras, School of Computer Science and Electronic Engineering, University of Essex, Colchester, UK László T. Kóczy, Department of Automation, Széchenyi István University, Gyor, Hungary Vladik Kreinovich, Department of Computer Science, University of Texas at El Paso, El Paso, TX, USA Chin-Teng Lin, Department of Electrical Engineering, National Chiao Tung University, Hsinchu, Taiwan Jie Lu, Faculty of Engineering and Information Technology, University of Technology Sydney, Sydney, NSW, Australia Patricia Melin, Graduate Program of Computer Science, Tijuana Institute of Technology, Tijuana, Mexico Nadia Nedjah, Department of Electronics Engineering, University of Rio de Janeiro, Rio de Janeiro, Brazil Ngoc Thanh Nguyen , Faculty of Computer Science and Management, Wrocław University of Technology, Wrocław, Poland Jun Wang, Department of Mechanical and Automation Engineering, The Chinese University of Hong Kong, Shatin, Hong Kong

The series “Advances in Intelligent Systems and Computing” contains publications on theory, applications, and design methods of Intelligent Systems and Intelligent Computing. Virtually all disciplines such as engineering, natural sciences, computer and information science, ICT, economics, business, e-commerce, environment, healthcare, life science are covered. The list of topics spans all the areas of modern intelligent systems and computing such as: computational intelligence, soft computing including neural networks, fuzzy systems, evolutionary computing and the fusion of these paradigms, social intelligence, ambient intelligence, computational neuroscience, artificial life, virtual worlds and society, cognitive science and systems, Perception and Vision, DNA and immune based systems, self-organizing and adaptive systems, e-Learning and teaching, human-centered and human-centric computing, recommender systems, intelligent control, robotics and mechatronics including human-machine teaming, knowledge-based paradigms, learning paradigms, machine ethics, intelligent data analysis, knowledge management, intelligent agents, intelligent decision making and support, intelligent network security, trust management, interactive entertainment, Web intelligence and multimedia. The publications within “Advances in Intelligent Systems and Computing” are primarily proceedings of important conferences, symposia and congresses. They cover significant recent developments in the field, both of a foundational and applicable character. An important characteristic feature of the series is the short publication time and world-wide distribution. This permits a rapid and broad dissemination of research results. ** Indexing: The books of this series are submitted to ISI Proceedings, EI-Compendex, DBLP, SCOPUS, Google Scholar and Springerlink **

More information about this series at http://www.springer.com/series/11156

Elena G. Popkova Bruno S. Sergi •

Editors

Artificial Intelligence: Anthropogenic Nature vs. Social Origin

123

Editors Elena G. Popkova Moscow State Institute of International Relations (MGIMO) Moscow, Russia

Bruno S. Sergi Davis Center for Russian and Eurasian Studies Harvard University Cambridge, MA, USA

ISSN 2194-5357 ISSN 2194-5365 (electronic) Advances in Intelligent Systems and Computing ISBN 978-3-030-39318-2 ISBN 978-3-030-39319-9 (eBook) https://doi.org/10.1007/978-3-030-39319-9 © Springer Nature Switzerland AG 2020 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, expressed 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

Introduction

Humanity has been studying the essence and principles of functioning of a human mind since before Christ. In particular, in the works of the ancient philosophers Socrates, Democritus, Plato, Aristotle and many others, there are reflections on thinking and cognition. At the end of the twentieth century, these reflections took shape in a self-sufficient science—cognitology (the science of cognition). Cognitology was originally created for the study of a human mind and developed in close interaction with related medical sciences (e.g., neurophysiology, neurology, psychology, etc.). Under the influence of the scientific-and-technological advance in the second decade of the twenty-first century, the concept of creating Artificial Intelligence emerged. Although the signs of the endowment of living things (e.g., animals) with elements of a human mind are traditionally present in the mythology and even in religion, science first recognized this possibility, what is more, on the basis of inanimate objects. Less than 10 years have passed from the emergence of the concept of creating Artificial Intelligence which was initially implemented in science fiction, to the first pilot projects and their real-world application (intelligent decision support technologies, specialized computer programs, e.g., intelligent face recognition technologies), and that is an unprecedentedly short period. Starting from 2012, the creation and massive expansion of Artificial Intelligence has been formalized in the national strategies of advanced countries (from Germany and the USA to the Republic of South Africa and Russia) as an official challenge of the development of the digital economy and Industry 4.0. Artificial Intelligence is machine thinking, multifaceted and contradictory. On the one hand, its carriers are technological devices which have no natural prerequisites for thinking as such. A human mind is conditional, and it embodies a set of programmed algorithms and logical settings. Since Artificial Intelligence is created on the model of human intelligence, it is anthropogenic and technogenic at the same time, since it is inherent in technological devices. This leads to a severe limitation of the possibilities of Artificial Intelligence, the thinking of which is many times more primitive than human thinking and which is not capable of spontaneous creativity and art. The activity of v

vi

Introduction

Artificial Intelligence does not depend on the mood of its carrier because machines have no emotions. Nevertheless, Artificial Intelligence significantly outperforms human intelligence in terms of performance, which is guaranteed to be high, while human intelligence is prone to errors and is unpredictable. On the other hand, using related (complementary) technologies such as the Internet of Things (IoT), machine communications of Artificial Intelligence are possible, which actually make it a constituent of conditionally social interaction. This creates opportunities for the possible formation of a special—machine—culture and specific machine-social institutions (institutions of machine “society”). Further, one of the goals of Artificial Intelligence lies in communication with humans, for which reason it is expected to become a constituent of human society— both the macro-social environment as a whole and the micro-social environment: the labor collective of a corporation, a group of parties interested in the activities of an enterprise, etc. Thus, the progress achieved in the engineering and industrial technology sciences is indicative of the fact that in the coming years (2020–2030), Artificial Intelligence will go beyond laboratories and will gain widespread currency in the economy. Like any new economic entity and participant in social interaction, Artificial Intelligence will most likely face the barriers on the way to its socialization, the reduction of which will require social adaptation of Artificial Intelligence and preparation of society to its expansion. This being said, the interests of all parties must be protected —developers, owners, users of Artificial Intelligence, as well as those who are not its beneficiaries, but deal with consequences of its application. As a result, the problem of the study of Artificial Intelligence from the perspective of social and human sciences as social, business and legal entities has emerged full-blown. Our book deals with this problem and is aimed at providing a more precise and comprehensive definition of the essence of Artificial Intelligence in the unity of its anthropogenic nature (including technogenic nature) and social origin, as well as the elaborating methodological and practical recommendations for managing the process of socialization of Artificial Intelligence. The book is a collection of research papers based on the results of the international research-to-practice conference “The 21st Century from the Positions of Modern Science Intellectual, Digital and Innovative Aspects” (May 23–24, 2019, Nizhny Novgorod, Russia) and the international research-to-practice conference “Economics of Pleasure: a Science of Enjoying Economic Activities” (October 3–5, Prague, Czech Republic). These conferences have been organized by the Autonomous Non-Profit Organization “Institute of Scientific Communications” (Volgograd). The information contained in the book has been arranged in the form of the four topic sections: 1. 2. 3. 4.

Artificial Intelligence as a subject of the digital economy; Contradiction of the nature of AI; Current directions of application of AI; Economic and legal regulation of AI.

Introduction

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Researchers show that even now there are many unsolved regulatory issues related to Artificial Intelligence, starting from the protection of intellectual property rights of its developers and owners and ending with responsibility for actions of Artificial Intelligence; moreover, the number and the extent of these problems will grow in proportion to the expansion of Artificial Intelligence and the expansion of its fields of application. Researchers have developed legal mechanisms for the solution of these problems and laid down the scientific foundation for preventing them and solving them expeditiously in the long view. These distinguished works demonstrate a high scientific level, theoretic and practical relevance of researches contained in this book. We hope that this book will be interesting and useful for a wide target audience, which is comprised of both developers of Artificial Intelligence (scientific research institutes and universities) and enterprises of Industry 4.0 interested in its implementation, as well as state regulators of the digital economy.

Organization

Gilyan V. Fedotova Irina V. Reikhanova

Nikolai I. Lomakin Agnessa O. Inshakova Innara R. Lyapina Natalia N. Skeeter Fyodor G. Myshko Mikhail Iu. Zakharov Olga A. Serova Irina I. Dubinina Evgenia E. Frolova N. N. Emelianova Valerii L. Muzykant Nelli I. Morozova Oksana U. Yuldasheva Valentina V. Poliakova Igor Ivanov Vladimir S. Osipov

Volgograd State Technical University, Volgograd, Russia Institute of Service Sphere and Entrepreneurship (branch) of Don State Technical University, Shakhty, Russia Volgograd State Technical University, Volgograd, Russian Federation Volgograd State University, Volgograd, Russia Orel State University, Orel, Russia Volgograd State Technical University, Volgograd, Russia State University of Management, Moscow, Russian Federation State University of Management, Moscow, Russian Federation Pskov State University, Pskov, Russia Volgograd Institute of Management–branch of RANEPA, Volgograd, Russia Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia RUDN University, Moscow, Russia RUDN University, Moscow, Russian Federation Don State Technical University, Rostov-on-Don, Russia Saint Petersburg State University of Economics, Saint Petersburg, Russian Federation State University of Management, Moscow, Russian Federation State University of Management, Moscow, Russian Federation MGIMO University, Moscow, Russia ix

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Inna V. Ershova Mingiyan N. Fedotov Ekaterina P. Rusakova Oksana Y. Yatsenko Konstantin V. Vodenko Fatima Shebzukhova

P. A. Banis Nelya A. Gluzman

Ekaterina Sarycheva Victoria N. Vlasova Alexander A. Silaev Anna N. Zhilkina Daria V. Moiseeva Marina B. Trachenko Petr V. Taranov Boris A. Anikin Alexander E. Epifanov Natalia Z. Aliyeva Elena Mitrofanova Teimur E. Zul’fugarzade Olga V. Dybina Elena A. Dergacheva Marina N. Oreshina

Organization

Kutafin Moscow State Law University (MSAL), Moscow, Russia LLC Teta Legal, Volgograd, Russia RUDN University, Moscow, Russian Federation State University of Management, Moscow, Russia Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia Karachay-Cherkess Republican Institute of Professional Development of Educational Workers, Cherkessk, Russia RUDN University, Moscow, Russia Federal State Budget Educational Institution of Higher Education “Togliatti State University,” Togliatti, Samara region, Russia Peoples’ Friendship University of Russia, Moscow, Russian Federation Rostov State Medical University, Rostov-on-Don, Russia State University of Management, Russia, Moscow State University of Management, Moscow, Russian Federation Volgograd State Technical University, Volgograd, Russian Federation State University of Management, Moscow, Russia Rostov State University of Economics, Rostov-on-Don State University of Management, Moscow, Russian Federation Volgograd Institute of Management–branch of RANEPA, Volgograd, Russian Federation Don State Technical University, Rostov-on-Don, Russia State University of Management, Moscow, Russian Federation Plekhanov Russian University of Economics, Moscow, Russia Tolyatti State University, Tolyatti Bryansk State Technical University, Bryansk, Russia State University of Management, Moscow, Russian Federation

Organization

Elena V. Susimenko Yu. A. Skachkova Denis Gugunskiy Tamara A. Kochubey Tigran T. Aliev Natalia A. Ilyina Yuri V. Przhedetsky

Liubov V. Plakhova Natalia Eryomina Svetlana E. Sitnikova Pavel M. Gureev Elena S. Akopova Dmitry Y. Znamensky Yuriy G. Volkov

K. Baktygulov

Valery V. Kasyanov Vladimir P. Kamyshansky

Irina V. Milkina Natalia V. Putilo

Tatiana T. Avdeeva Yulia G. Tyurina Viktor I. Bondin Viktorya A. Bondarenko

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Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia RUDN University, Moscow, Russia RUDN University, Moscow, Russia Volgograd State University, Volgograd, Russia Institute of World Civilization, Moscow, Russia Pskov State University, Pskov, Russia Federal State budget institution “Rostov Cancer Research Institute” of the Ministry of Health, Rostov-on-Don, Russia Orel State University of Economics and Trade, Orel, Russia Tomsk State University, Tomsk, Russian Federation Volgograd State Medical University, Volgograd, Russia State University of Management, Moscow, Russian Federation Rostov State University of Economics, Rostov-on-Don State University of Management, Moscow, Russia Institute of Sociology and Regional Studies, Southern Federal University, Rostov-on-Don, Russia Kyrgyz-Russian Slavic University after B.N. Yeltsin and Batken State University, Kyrgyzstan Kuban State University, Krasnodar, Russia Federal State Budgetary Educational Institution of Higher Education “Kuban State Agrarian University named after I.T. Trubilin,” Krasnodar, Russia State University of Management, Moscow, Russian Federation Institute of Legislation and Comparative Law under the Government of the Russian Federation, Moscow, Russia Kuban State University, Krasnodar, Russia Financial University under the Government of the Russian Federation, Moscow, Russia Southern Federal University, Rostov-on-Don, Russia Rostov State University of Economics, Rostov-on-Don, Russia

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Ksenia V. Vasilyeva Olga M. Mescheryakova N. Yu. Molchakov Vitaly V. Kikavets Sergey S. Chernykh Sabina R. Sharipova Artur V. Varlamov Olga S. Ivanchenko Dmitry A. Lipinsky Vyacheslav V. Burlakov Valery V. Kasyanov Nelli A. Saveleva Alla A. Kanke Victoria V. Kotlyarova Alla K. Polyanina P. Matukhin

Organization

State University of Management, Moscow, Russia RUDN University, Moscow, Russia Moscow State Institute of International Relations, Moscow, Russia Russian State University of Justice, Moscow, Russia Platov South-Russian State Polytechnic University (NPI), Novocherkassk Peter the Great St. Petersburg Polytechnic University, St. Petersburg, Russia Plekhanov Russian University of Economics, Moscow, Russia Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia Togliatti State University, Togliatti, Russia Moscow Polytechnic University, Moscow, Russian Federation Kuban State University, Krasnodar, Russia Sochi State University, Sochi, Russia State University of Management, Moscow, Russian Federation Southern Federal University, Rostov-on-Don, Russia Lobachevsky University, Nizhny Novgorod, Russia Peoples’ Friendship University of Russia, Moscow, Russian Federation

Contents

Artificial Intelligence as a Subject of the Digital Economy Webliometric Indicators of IT Expertise of Different Groups of Authors of Digital Educational Resources . . . . . . . . . . . . . . . . . . . . . Pavel Matukhin, Aleksandra Galkina, Irina Isaeva, Elena Provorotova, and Natalia Komissarova National Features of Forming a Digital Economy in Russia . . . . . . . . . . Pavel M. Gureev, Viktoriya V. Degtyareva, and Inna S. Prokhorova

3

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Cognitive Safety as the Basic Condition for Digitization of Cultural Heritage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mikhail Iu. Zakharov, Irina E. Starovoytova, and Anastasia V. Shishkova

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The Implementation of Principles of the Budget Process in the Financing of Public Procurement in the Digital Economy . . . . . . Vitaly V. Kikavets and Yulia K. Tsaregradskaya

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Conceptual Content of Digital Society . . . . . . . . . . . . . . . . . . . . . . . . . . Irina I. Dubinina, Evgenia V. Gulyaeva, and Liudmila G. Kompaneeva

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Digital Economy: Knowledge in the Logic of the Industry 4.0 Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Igor Ivanov, Tat’yana Luk’yanova, and Olga Belova

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Robotization in the Area of Labor and Employment: On the Verge of the Fourth Industrial Revolution . . . . . . . . . . . . . . . . . Natalia V. Putilo, Natalia S. Volkova, and Natalia V. Antonova

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Consumer Protection of Digital Financial Services in Russia and Abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evgenia E. Frolova, Elena P. Ermakova, and Olga V. Protopopova

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Contents

Industry 4.0 as a New Vector of Growth and Development of the Knowledge Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gilyan V. Fedotova, Galina F. Ushamirskaya, Yuriy I. Sigidov, Tatyana I. Kuzmina, and Natalia V. Mandrik Digital Economy: A Step into New Reality . . . . . . . . . . . . . . . . . . . . . . . Valentina V. Poliakova, Oksana A. Revzon, and Sona L. Sumbatyan

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The Role of the Digital Economy in the Retail Sphere . . . . . . . . . . . . . . 104 Nelli A. Saveleva, Victoria P. Erdakova, Evgeniy S. Ugriumov, and Tatiana A. Yudina Financing of Development of the Digital Infrastructure of “Smart” Cities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Marina B. Trachenko, Ekaterina S. Ulanova, and Anastasia V. Kozhanova Socio-economic Development of a Modern Region Based on Globally Oriented State Management . . . . . . . . . . . . . . . . . . . . . . . . 123 Yulia G. Tyurina, Anatoly A. Samorukov, Marina A. Kolmykova, and Nadezhda I. Seliverstova The Mechanism of Creating a Strategy of Sustainable Development of Company in the Eco-System of the Digital Economy . . . . . . . . . . . . . 131 Sabina R. Sharipova, Elena R. Schislyaeva, Elena S. Balashova, and Olga A. Saychenko Digital Literacy of Lawyers as a Condition of Legal Support for Business in the Digitization Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Inna V. Ershova, Olga A. Tarasenko, Ekaterina E. Enkova, and Elena V. Trofimova Financial and Economic and Information Aspects of Smart City – AI at Citizens’ Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Anna N. Zhilkina, Oleg N. Zhilkin, and Vladimir K. Krylov Human Capital and Identity in the Global Digital Space . . . . . . . . . . . . 156 Natalia Z. Aliyeva, Elena B. Ivushkina, Nelli I. Morozova, and Sergey L. Vasenev Dangers and Threats of the Global Digital Space: A Non-linear Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 Nelli I. Morozova, Olga S. Buryakova, and Natalia Z. Aliyeva Certain Challenges of Digitalization of the Economy in Russian Federation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Fyodor G. Myshko, Anatoly Y. Olimpiev, and Anna Y. Alexandrova The Development of New E-commerce Activities in Messina . . . . . . . . . 172 Rosalba Rizzo

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Legal Protection of Virtual and Augmented Reality Technologies . . . . . 184 Tamara A. Kochubey Marketing Mechanisms of Optimization of Decision-Making Regarding the Implementation of the National Oncology Program as Part of the Concept of Digital Medicine . . . . . . . . . . . . . . . 192 Yuri V. Przhedetsky, Natalia V. Przhedetskaya, Kseniya V. Borzenko, and Tatiana V. Panasenkova Cultural Space Digitalization: New Communication Forms . . . . . . . . . . 201 Valerii L. Muzykant, Olga V. Shlykova, Elena Yu. Burdovskaya, Roman A. Savastenko, and Elizaveta V. Muzykant Digitization and Problems of National Culture . . . . . . . . . . . . . . . . . . . . 210 Oksana Y. Yatsenko and Irina E. Starovoytova The Integration Vector of the Non-institutional Political Process . . . . . . 215 Fatima A. Shebzukhova and Ahmat A. Ebzeev Digitization of the System of Public Administration as the Leading Trend of Its Modernization in the Modern Socio-Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Konstantin V. Vodenko, Sergey S. Chernykh, Olesya E. Labadze, Evgeniya V. Zazulina, and Roman K. Litvyak Information Society and Challenges of the Digital Economy . . . . . . . . . 228 Elena A. Dergacheva, Oleg E. Backsanskij, Nataljya V. Popkova, Nataljya V. Petrukhina, and Irina V. Shlemina Sport in the Context of Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 Viktor I. Bondin, Nikolay P. Lyubetsky, Sergey I. Schalohyan, Maxim V. Gerasimov, and Sergey I. Samygin The Leading Attractors of Socio-Economic and Scientific and Innovative Development of Russia . . . . . . . . . . . . . . . . . . . . . . . . . . 248 Sergey S. Chernykh, Valeri V. Kasyanov, Irina G. Paliy, Anna V. Strichko, and Svetlana S. Tikhonovskova The Value Fundamentals for the Development of the Corporate Culture of Faculty Members in a Digital Society . . . . . . . . . . . . . . . . . . 256 Victoria V. Kotlyarova and Aleksandr G. Bermus Information and Communication Technologies in Work with Preschool Children with Autism . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 Olga V. Dybina Digital Future: Economic Growth, Social Adaptation, and Technological Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 Vladimir S. Osipov

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Contradiction of the Nature of AI Approaches to the Development of the Knowledge Economy in the Modern Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 Innara R. Lyapina, Olesya A. Stroeva, Elena V. Sibirskaya, Oksana E. Konobeeva, and Elena E. Konobeeva Artificial Intelligence: Problems and Prospects of Development . . . . . . . 306 Natalia N. Skeeter, Natalia V. Ketko, Aleksey B. Simonov, Aleksey G. Gagarin, and Irina A. Tislenkova Due Diligence in the Digital Era: Question of Attribution of International Responsibility to a State . . . . . . . . . . . . . . . . . . . . . . . . 319 P. A. Banis and M. V. Ilyashevich Method of Automatic Creation of Curriculum with a Competency-Based Learning Model . . . . . . . . . . . . . . . . . . . . . . 325 Natalia Eryomina and Yaroslav Lopukhin Communication Models of AI as Manifestations of Its Social Origin . . . 331 Olga A. Serova, Vyacheslav V. Golikov, Elena S. Petrenko, and Nikita O. Stolyarov Machine Learning: Anthropogenic Principles Vs. Social Principles . . . . 338 Natalia A. Ilyina, Alla A. Serebryakova, Platon A. Lifanov, and Chinara R. Kulueva AI as a Subject of Staff: Management and Team-Building . . . . . . . . . . . 345 Irina V. Reikhanova, Larisa A. Ilyina, Sergey E. Kuklev, and Aleksandr A. Zakharov The Mechanism of Social Adaptation of AI for Organization of Intellectual Consumption in the Digital Economy . . . . . . . . . . . . . . . 352 Arthur V. Varlamov, Yuliana A. Kitsay, Natalia V. Przhedetskaya, and Tatiana A. Zabaznova Revisiting the Place of Artificial Intelligence in Society and the State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359 Vladimir P. Kamyshansky, Evgenia Y. Rudenko, Evgeniy A. Kolomiets, and Dina R. Kripakova Dynamics and Structure of Investment Portfolios of Russian Banks Studied by the Artificial Intelligence System . . . . . . . . . . . . . . . . 365 Nikolai Lomakin, Alexey Petrukhin, Anna Shokhnekh, Olga Maximova, and Irina A. Samorodova The Modern Trends of Development of AI Technologies . . . . . . . . . . . . 374 Vyacheslav V. Burlakov, Olesya A. Dzyurdzya, Gilyan V. Fedotova, Aminat H. Alieva, and Elena N. Kravchenko

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AI as a Breakthrough Technology of Agriculture Development . . . . . . . 384 Gilyan V. Fedotova, Ruslan H. Ilyasov, Natalia E. Buletova, Tatyana A. Yakushkina, and Timur K. Kurbanov Features of Artificial Intelligence Simulation Models and Risks When Using Them . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 Alexander A. Silaev, Marina V. Bukhtoyarova, Galina Yu. Parshikova, and Snezhana V. Atoyan Model of Commercialization of University’s Innovations Based on AI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 Svetlana E. Sitnikova, Natalia S. Polusmakova, and Nikolay Y. Golovetsky The Problems of Legal Regulation of AI: A Rather-Legal Research . . . 411 Dmitry A. Lipinsky, Roman A. Romashov, Aleksandra A. Musatkina, Svetlana G. Golenok, and Elena A. Bryleva The Use of Intelligent Information Technologies in Analytical Studies (by the Example of Medical Science) . . . . . . . . . . . . . . . . . . . . . 417 Alla Kanke, Sergey Dumanskiy, and Lidiya Dumanskaya Transformation of Childhood in a Digital World . . . . . . . . . . . . . . . . . . 424 Alla K. Polianina and Alexandr O. Grudzinsky Current Directions of Application of AI An Assessment of the Response of Sovereign Bond Markets to Asset Purchase Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 Tarek Chebbi Information Technologies for the Formation of the European Space of Freedom, Security and Justice . . . . . . . . . . . . . . . . . . . . . . . . . 444 Agnessa O. Inshakova, Elena I. Inshakova, and Tatyana V. Deryugina Excel-Online Digital Tools for Training and Assessing Chemistry Knowledge of Foreign Students of Pre-university Department . . . . . . . . 454 Ekaterina Sarycheva, Pavel Matukhin, Elena Titova, Natal’ya Sarycheva, and Olga Gracheva Issues of Interdependence of External Debt of States and Human Rights in the UN Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 Yu. A. Skachkova Mechanisms and Tools of the Economic Security System of Economic Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468 Liubov V. Plakhova, Tatiana A. Alekhina, Evgenia V. Simonova, Nikolay V. Pokrovskiy, and Inna V. Karpova

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Weaknesses of Underground Banking Systems . . . . . . . . . . . . . . . . . . . 478 Fabian Teichmann and Marie-Christin Falker Compliance Incentives, Whistleblowing, and the Payment of Rewards for Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 Fabian Teichmann and Marie-Christin Falker Money Laundering Through Cryptocurrencies . . . . . . . . . . . . . . . . . . . 500 Fabian Teichmann and Marie-Christin Falker Network Communications of the Scientific Community on the Issues of State Scientific and Technical Policy Formation in Modern Russia . . . 512 Dmitry Y. Znamensky and Marina S. Kerre Science, Technology and Export – the EU Case . . . . . . . . . . . . . . . . . . . 519 Zuzana Kittová and Dušan Steinhauser Reducing Man-Made Threats by Adjusting Seismic Protection Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535 K. Baktygulov, B. S. Ordobayev, Dz. A. Ryspaev, A. Zh. Andashev, and A. M. Ghanyv Revisiting the Transparency of Public Authorities and Local Self-governing Authorities (Using the Example of the Central Administrative Okrug of Moscow) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 Irina V. Milkina, Alexander Yu Yakovlev, and Olga A. Petrina Family as a Factor of Social Inequality in the Context of the Modern Social Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 Victoria N. Vlasova, Yury S. Bortsov, Anna V. Aperyan, Sergey I. Samygin, and Petr S. Samygin Five Key Trends in the Global Architecture of the World Economy in the Conditions of Reducing Consequences of the Global Economic Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565 Petr V. Taranov, Elima A. Israilova, Lydia N. Roshchina, Alexander M. Basenko, and Sergei I. Samygin Issues and Paths to Improve the Policy in the Higher Professional Education Within the Innovative Development of Modern Society . . . . . 574 Elena V. Susimenko and Elena Y. Litvinenko Neoliberal Trends in the Global Economy . . . . . . . . . . . . . . . . . . . . . . . 582 Elena S. Akopova, Sergey V. Stadnik, Lydia N. Roshchina, Irina V. Kulikova, and Inna V. Ukraintseva Perspectives of Creativity of the Future Russian Society . . . . . . . . . . . . 593 Yuriy G. Volkov, Vagif D. Bayramov, and Aleksei P. Sitnikov

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Religious Orientations of Modern Youth and the National Policy . . . . . 601 Valery V. Kasyanov, Natalia Yu. Belikova, Dmitry V. Krotov, Sergey I. Samygin, and Sergey A. Merzakanov Russian Society: Demand for Self-cognition and Search for the Strategy of Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614 Yuriy G. Volkov The Modern State and Forms of Implementation and Regulation of Civil Control Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623 Olga S. Ivanchenko, Natalya V. Koloskova, Valeri V. Kasyanov, and Alexander P. Bandurin The Political and Administrative Elite in the Social Structure of the Russian Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631 Valery V. Kasyanov, Irina V. Lipchanskaya, Natalia N. Usataya, Vladimir V. Palkin, and Anna A. Kulikova Factor of the Center in the Disintegration and Integration Trends of the Non-institutional Political Process . . . . . . . . . . . . . . . . . . . . . . . . 642 Fatima A. Shebzukhova and Ahmat A. Ebzeev Disintegration Vector of the Non-institutional Political Process . . . . . . . 648 Fatima Shebzukhova and Ahmat Ebzeev Economic and Legal Regulation of AI Legal Models for Activities on the Exploration and Utilization of Space Resources: Towards the “Space-2030” Agenda . . . . . . . . . . . . 657 Denis Gugunskiy, Irina Chernykh, and Albert Khairutdinov Digital Rights as a New Object of Civil Rights: Issues of Substantive and Procedural Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665 Ekaterina P. Rusakova, Evgenia E. Frolova, and Anna I. Gorbacheva Alternative Energy in the Conditions of Cross-border Environmental Risks and Nanotechnology: The Geography of Economic and Legal Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674 Agnessa O. Inshakova, Elena I. Inshakova, Alexander E. Epifanov, and Azamat M. Shadzhe Formation of a Legal Model of Realizing the Interests and Protecting the Rights of Economic Entities Under the Economy Digitalization . . . . 686 Alexander E. Epifanov, Sergey N. Bratanovsky, and Marine Z. Abesalashvili Intellectual Property Exchange as a Platform for Exclusive Copyright Transfer by Means of Smart Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 693 Agnessa O. Inshakova, Tatiana V. Deryugina, and Evgenij Y. Malikov

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State Marketing: The Foreign Countries Experience in the Use of the Satisfaction with State Programs Methods . . . . . . . . . 706 Viktorya A. Bondarenko, Innessa N. Efremenko, Anna A. Manjula, and Marusya Smokova The Common Trends in the Financial Sector of Integration Process: The Securities Market and Single Market of Financial Services . . . . . . 716 Olga M. Mescheryakova and Julia J. Novak Cryptocurrency, Taxation and International Law: Contemporary Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725 N. N. Emelianova and A. A. Dementyev The Constitutional Dimension of the Environmental Security of the Russian Federation: Problems and Perspectives . . . . . . . . . . . . . . 732 N. Yu. Molchakov Artificial Intelligence System for Predicting the Price of the SIU8 Basic Asset of the SI-9.18 Option in the “Long Straddle” Strategy . . . . 739 Nikolai Lomakin, Alexey Petrukhin, Anna Shokhnekh, Oksana Gavrilova, and Olga Golodova AI for Assessing Financial Risk Conditioned by the Time-Series Volatility Using the GARCH-Method . . . . . . . . . . . . . . . . . . . . . . . . . . . 747 Nikolai I. Lomakin, Alexey V. Petrukhin, Anna V. Shokhnekh, Victoria S. Telyatnikova, and Yaroslava V. Meshcheryakova Immature Digital Expertise of the Educational Institution’s Managerial Staff as HR Risk to Education Development . . . . . . . . . . . . 756 Elena Mitrofanova, Aleksandra Mitrofanova, and Vladimir Tarasenko Digital Profile: Special Aspects of Legal Regulation . . . . . . . . . . . . . . . . 766 Mingiyan N. Fedotov, Alexander V. Sukhinin, Oksana A. Kovalenko, Viktoriya M. Romadikova, and Olga N. Kuznetsova Educational Environment in the Information Society as an Efficient Indicator of the Provision of High Level of Design Solutions and Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . 778 Nelya A. Gluzman, Evgenia V. Zhelnina, Snezhana V. Yavon, Tatyana N. Ivanova, Galina V. Akhmetzhanova, and Natalia B. Gorbacheva Improvement of Legal Groundwork for the Online Dispute Resolution System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 792 Teimur E. Zul’fugarzade, Madina A. Tsirina, and Olga I. Semykina Tendencies of Legal Regulation of Civil and Competitive Relations in the Sphere of the Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . 801 Ksenia V. Vasilyeva, Vladimir V. Popov, and Irina A. Strelnikova

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Legal Regulation of E-Commerce and Other Entrepreneurial Activities Conducted with Digital Technologies . . . . . . . . . . . . . . . . . . . 807 Tigran T. Aliev and Inessa V. Bit-Shabo Rural Territories in Spatial Development of a Region . . . . . . . . . . . . . . 814 Tatiana T. Avdeeva, Tatiana G. Lavrova, and Dmitry V. Urmanov Information Technologies in the Management of Technical Processes of Agricultural Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 Marina Oreshina, Anna Badina, and Mariya Belousova Developing a Construct and a Scale for Measuring the Internet-Store’s Web Usability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835 Oksana Yuldasheva, Dmitry Martsulevich, Mavlit Ahtyamov, and Veronika Shubaeva Forecasting of the Development of Fixed-Line Broadband Internet . . . . 845 Boris A. Anikin and Oleg B. Anikin The Modern Technetronic Society and Computer Crimes . . . . . . . . . . . 852 Dmitry A. Lipinsky, Aleksandra A. Musatkina, and Konstantin N. Evdokimov Financial Behavior of Russian Retired Persons . . . . . . . . . . . . . . . . . . . 858 Daria V. Moiseeva and Nadezhda V. Dulina Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 873 Author Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875

Artificial Intelligence as a Subject of the Digital Economy

Webliometric Indicators of IT Expertise of Different Groups of Authors of Digital Educational Resources Pavel Matukhin1(&), Aleksandra Galkina2, Irina Isaeva1, Elena Provorotova1, and Natalia Komissarova3 1

2

People’s Friendship University of Russia, Moscow, Russian Federation [email protected], [email protected], [email protected] Program Systems Institute named after A. K. Ailamazyan of the RAS, Moscow, Russian Federation [email protected] 3 Russian State Social University, Moscow, Russian Federation [email protected]

Abstract. A growing proportion of digital educational resources in the total number of study guides necessitates the development of new methods to assess publication activity and rating of authors, university chairs and departments and universities in general. The indicators of publication activity are necessary for making effective management decisions in education. Open data from electronic depositories served as sources of analysis. Custom-developed collector_stat program was used as a tool. On the example of sampling from the open online database of the Joint Fund of Electronic Resources “Science and Education”, we showed the results of calculation and analysis of the relationship between institutional status and IT-expertise of authors’ group of digital educational resources having different statuses in the education system. The group under study includes students of the pre-university training department and bachelor’s program, lecturers and associate professors, as well as administrative staff. The concept of an author’s position was introduced to assess the publication activity. On the back of this concept, we also adopted several integral and physical measures, which constitute a system of subset webliometrics of publications’ array. We observed high correlation and a linear dependence of the proposed measures and demonstrated the impact of management effects. The findings can be used to estimate the parameters and predict the indicators of groups and individual authors in the system of chairs, departments, and universities. Keywords: Digital educational resources
Developers Indicators
Management decisions
Webliometrics


IT competence


JEL code: I000

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 3–12, 2020. https://doi.org/10.1007/978-3-030-39319-9_1

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1 Introduction Progress in socio-economic conditions, sophisticated hardware and software for telecommunication systems and the scope of their introduction in everyday life and education within the digital economy, as well as effectiveness of government administration based on valuableness and continuity of knowledge, the priority of improving human capital quality raise the importance of the professional activity of a university professor. It also concerns his new capacity as a manager of student’s development at all educational levels (Yuzhakov 2011). In particular, the issue of providing quick access and evaluating the results of intellectual activity (RIA) of the developers of digital educational resources (DER) has become topical in the light of these circumstances. The assessment is based on the development of a wide range of scientific information depositories (websites of scientific publications, university portals, digital educational resource repositories) (Pushkareva 2017). Specialized information retrieval systems allow finding the required digital publications and build their webliography. Online access to an intellectual product makes it possible to monitor RIA of authors on DER in terms of particular indicators or their systems with the help of new methods of webliometrics (Galkina and Matukhin 2018). Target values makes it possible to evaluate the effectiveness of authors’ groups from a particular developer to the university in general (Order of the Ministry of Education and Science of the Russian Federation No. 1399 2016) and performance of faculty staff and students in groups and individually, and translate them into prompt and strategic management decisions (Sidorova 2015).

2 Methodology The purpose of the study is to develop several integral and particular indicators of the publication activity of DER developers, relating to various categories of participants in educational and professional communication. The database of the Joint Fund of Electronic Resources “Science and Education” or OFERNIO (Ob’jedinenny Fond Electronnykh Resursov Nauka I Obrazovanije, Ailamazyan Program Systems Institute of Russian Academy of Sciences) is selected as the factual basis of the study. The categorized calculation program of quantitative measures of publications’ array collector_stat was employed as the main software tool (Galkina and Grishan 2017). The issue of analyzing a wide array of broad-topic individual and collective electronic publications based on records from a specialized database is not covered in the subjectspecific literature, therefore this study can be referred to pilot one. On the back of this study, it is possible to determine further lines of topic development. Currently, the Government of the Russian Federation has set the objective of overcoming the limited acquisition of scientometric information of authors, relying on available technical capabilities of electronic depositories and qualitative and quantitative measures. OFERNIO is among such depositories. It’s traditional depository of scientific, methodological, pedagogical and other developments of scholars and professors of the Soviet (further, the Russian) system of higher and general education, academic and other institutions of science and technology (almost 800 institutions and

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tens of thousands of authors) that is accessible to a wide variety of developers pursuant to legal requirements and compliance with the level of information-technology training of end-users in solving the problems of data access, acquisition, processing, entry and update, etc. The objectives of this study are to obtain and analyze the statistical features of the author’s IT-expertise of a multi-tier developing groups of human, natural and technical areas and designed DER for use at different levels, including the preparatory department of the university, the bachelor’s program and the system of advanced training courses for professors (Titova and Savostianova 2018; Titova et al. 2018b; Gracheva and Matukhin 2019). The model of the development center group has been formed with help of the project method (Gracheva et al. 2013; Provotorova et al. 2013; Titova et al. 2013). In 2005–2018, a group of professors and students have developed several dozen of the resources registered by OFERNIO. The core of the development group included professors of linguistic (philologists and linguists), special discipline (medicine), information technology (computer science and programming). Students, university employees, and administrative staff were among the group. Start group training is advanced computer users. The objective of the DER webliography array has two aspects: organizational and nomenclature. The first one concerns the status of registration of developments in OFERNIO. The second one touches upon the accounting of a complete set of all information products. Some publications are dedicated to the issue of the status of a registration document (Advertising and Technical Specification, ATS) (Neustroyev et al. 2017). Until 2017, documents of OFERNIO had been integrated into the core of the National Electronic Library (NEB) and had been regarded in author indexation. As a consequence, we observe the removal of a huge array of scientific works, including 76% of educational resources, from the country’s scientific nomenclature. The certificate of DER registration issued as a result of ATS expert assessment is an expert product verified in terms of such parameters as a novelty, scientificity, relevance, etc. For the analysis of the web sampling, we applied the principle of publication subset allocation generated by OFERNIO for each development in terms of the system of genre, functional, volume, location and other features. Based on that, we made a general vision of each development or their set is formed, which gives a good impression of the objects under study. The essence of the approach is consistent with the traditional understanding of information by Ashby (1959). It involves the procedure of selecting objects based on the difference in at least one feature which is a standard for the theory of information, information technology, and databases. Below follows a list of digital products generated by OFERNIO for each registered DER. 1. Advertising and Technical Specification is the main document of the publications’ group. The document is made in hard copy and endorsed by all authors. The code of Unified System for Program Documentation is assigned to the document after ATS verification and attributes it as an official document and an object of copyright priority. It is stored in the fund’s archive. Paper and electronic versions of ATS are identical. To get access you need to know the document number and form its URL http://www.ofernio.ru/rto_files_ofernio/No.doc.

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2. The certificate of registration of an electronic resource is a title document of the developers’ copyright on DER. It is issued in hard copy as a specific form document of B-level security in accordance with GOST. 3. The information card (IC) has a paper and electronic version, 2 copies for the author and the fund’s archive. IR DER is an accounting document with records of all development attributes. The intended purpose of the IC, as well as the Certificate, is to establish the authorship and developer’s priority. 4. Russian abstract of supporting scientific style speech is prepared by the authors as an integral part of registration documents suite in electronic form, the term of operation is unlimited. It is intended to express informing and preliminary assessment of source contents by the reader. 5. Russian abstract in the network edition (mass media) “Navigator in the World of Science and Education” (in Russian) is a copy of the described above. It is featured by express informing but located in another place, i.e. distinguished by publication format (electronic online journal) and Internet location. The journal has its network address, or URL (Unified Resource Locator). 6. Russian abstract located in the ATS Library of the OFERNIO has its network address, or URL. 7. English abstract is included in the database. Common access is provided due to its location in the English issue of the electronic journal “The Navigator in the World of Science and Education”. The translation of the abstract into English makes the development international and accessible in search engines and authors of scientific papers around the world. 8. Digital Depository of R&D Dissertations and Science-Technology Documents are designed to pursue government and science-technology policy on design, development, and utilization of an effective info-communication infrastructure. Availability in the database of Digital Depository of Dissertations and ScienceTechnology Documents allows accounting the paper within the fulfillment of specialized state programs. 9. DOI (Digital Object Identifier) is the network presentation of RIA assigned by the OFERNIO under an agency agreement with CrossRef Corporation as of the beginning of 2018. This attribute of ATS allows for location in the standard webliography of foreign publications and provision of full-fledged access around the world. It also creates a positive image of the text and its author(s). ATS in the CrossRef Corporation base automatically exhibits it in scientometric systems such as Clarivative Analytics. This fact is important for DER authors. More detailed data on the fund’s publications are given in the following publication (Galkina et al. 2018). Detailed webliometric accounting of all fund’s publications has two aspects: quantitative and qualitative. The quantitative aspect means the number of documents registered and publications based on them, but it may seem redundant. Besides, in 8 cases out of 9 individual publications have the same name. As a result, registration of all information products as independent publications may be denied. The practical importance of the quantitative aspect of the proposed methodology is to justify a full-fledged accounting of all authors’ publications. This will allow making reasonable management decisions.

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The qualitative aspect allows considering every single web publication in terms of parameters and comparing them. Also, the authors form own understanding of the variety of genres and formats to present RIA in a unique range of locations. The result of accounting the full list of publications of the OFERNIO in the report by the professorDER developer is an exhaustive multi-dimensional report which can be hardly made by university staff or information system of departmental, federal or international level. The array of publications of the OFERNIO shows all the features of the digital library design processes that take place outside the formal framework of classroom communication and gives an idea of all the stages of DER publications’ preparation. The collector_stat system, which was developed within the implementation of the state program for processing information stored in the archives by fund’s staff (Order of the Ministry of Education and Science of the Russian Federation No. P-516, 2017) provides information on the group of authors, academic disciplines, educational levels, techniques and other development attributes. As a result of data output, a set of quantitative measures is generated that allows building a multidisciplinary scientific and pedagogical profile of the subject of intellectual activity. Research methods: selection, description, and classification of information objects (publications), processing of input data for computer analysis, preliminary calculations, output analysis, subsumption of results by scientometric properties, computer technology, statistical processing, including graphical, correlation and regression analysis, interpretation of the results

3 Findings We have used sampling from the database of the OFERNIO consisting of 65 records as a factual background of the study (Matukhin et al. 2018a, b, c). Following the above list of intellectual products, we have drawn up a complete list of individual publications (Matukhin et al. 2018a, b, c). Then, we computed the differential parameters of particular categories of authors and individual publications (P.G. Matukhin et al. 2018), compared them, and carried out graphic, correlation and regression analysis (Provotorova et al. 2018). We have revealed common factors and deviations, and features that help to explain the specific behavioral patterns of particular categories of DER authors in relation to their status (Galkina and Matukhin 2018). At the first stage of the estimated data analysis, the relationship between the number of authors’ positions (AP) and the number of authors with a corresponding AP indicator. Fifty-three authors have up to 10 publications, 8 authors – from 11 to 20 publications, 4 authors – from 21 to 30 publications, 11 authors – from 31 to 40 publications, 3 authors – from 41 to 50 publications, and 1 author – 70, 180 and 480 publications respectively. Figure 1 shows that this relationship is approximately hyperbolic. This type of dependence clearly expresses the process of DER array generation. The participants are professors who continuously write new educational IP and accumulating tens/hundreds of developments over the years. They lie on a horizontal shelf of the graph that corresponds to large volumes of intellectual products and the number of authors (equal to 1).

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RelaƟonship between AP figure and the number of DER authors

55 50 45

Number of authors

40 35 30 25 20 15 10 5 0 0

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Fig. 1. The relationship between the number of author positions and the number of authors.

Colleagues are episodically involved in the design process. There may be 10 people with a lower number of registrations (up to 50) like in our situation. The starting point of the graph constructs a vertical branch. It corresponds to a large number of authors with a single publication. As a rule, these are students attracted by professors to designing within the educational process, term papers and graduation dissertations. The peak of the graph corresponds to the repeated participation of students of polytechnic schools in the development both within the training and writing graduation dissertation. This peak illustrates the impact of the management effects on DER design. In our situation, the authors of this subgroup had been exposed to such effects at the preliminary stage of the learning process where students familiarized with the procedure of preparing documents and submitting their developments for registration. Further, this experience was used in writing the graduation project. Texts of diplomas were also located in the depository, and documents and links to the fund’s publication were included in the bibliography of diploma projects and submitted to the State Commission. The fact of the publication activity of DER student-developers was positively assessed in determining in making the final decision. In addition to general indicators, database software of the OFERNIO allows estimating some specific indicators of IP array under study. For this purpose, we divided the group of authors into subgroups in accordance with the status of project participants, i.e. their positions in the educational institution. We classified such categories as college students (5 people), bachelor students (50 people), professors (14 people), associate professors (11 people), and administrators (3 people). The output of the AUTHORS module of the collector_stat program was supplemented by the corresponding attribute of each author. Using the conditional operator COUNTIF Excel, we computed the number of authors for each category and the proportion of categories in the group.

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Based on calculations of the AUTHORS module, we estimated and carried out IP distribution analysis by categories of developers using the conditional sum operator. Almost 60% of authors ratings are professors and associate professors. This is nearly 2 times higher in the total number of developers. With a relatively smaller number in the group, professors make a greater contribution to the number of author’s position. The percentage of students’ author’s position is 38, which is much lower than their share in the group number. This result is explained by the fact that professors constitute a constant part of developers’ cohort and take part in many projects. The students, on the contrary, is often limited to single participation. Upon completion of studying the subject, they rarely (without special management techniques) return to the update of DER and give the opportunity to new generations. At the same time, under particular management effects, students can continue to develop their expertise, participate in new projects or upgrade their previous developments. We have got interesting data in the study of the dependencies of the author’s subgroups’ features. The results of graphical and correlation analysis show that the cohort of developers naturally divided into 2 subgroups. These are frequent projects members who took part in several developments, and occasional who took part in less than two projects on average. The first subgroup can be attributed to those with a higher level of general author and specific IT expertise. The second one is represented by those who have acquired basic skills and first practical experience and can further raise their level. As Fig. 2 shows, the points corresponding to different categories of authors demonstrate high consistency with the linear dependence.

Group share in the total AP number, percent

Dependence of group share in the total AP number on the number of DER authors' group members 120.0 100.0 80.0 60.0 40.0 20.0 0.0 0

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Number of group members

Fig. 2. The relationship between the number of members of the DER authors’ group and their proportion in the author’s position array.

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Figures 3 and 4 show that the correlation areas of the other two pairs of indicators have the same structure. All points on them are close to the trend line. The first point (“Administrators” group) lies on this line. The second point (“College students” group) lies slightly higher, the third one (“Associate professors”) is below the trend. The point of “Professors” group on the first of these graphs is above the trend, on the second one it lies on this line. Thus, these pairs of indicators can also be used to describe the research findings of publications arrays as features of the general and IT expertise of DER authors. Now it has become possible to reveal some qualitative details and generalized features of publications’ array by a group of authors based on the standard output of the collector_stat program. The division of the authors’ cohort into subgroups by status features allows us to introduce and calculate the differential parameters of the educational framework, carry out graphical, correlation and regression analysis, and reveal strong linear dependencies between them.

70

The dependence of the average AP number per author on the number of group members

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Average AP number

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The dependence of the average AP number on the group's share in the total AP number

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Fig. 3. The dependence of the average AP number on the number of group members.

0

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Fig. 4. The dependence of the average AP number on the group’s share in the total AP number.

Correlation analysis of the complete and censored populations of authors revealed the presence of a group of frequent developers and a particular category of occasional project participants in this cohort. In subgroups of frequent participants, we have revealed strong linear dependencies of several pairs of quantitative differential parameters. The technology of the EXCEL processor built-in functions and operators as an addition to the standard capabilities of the system and the technique itself can be applied to the analysis of other output blocks of the collector_stat system.

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The use of proposed webometric measures based on the collector_stat program output will make it possible to monitor the availability of frequent developers among university staff, reveal occasional participants, determine the number of professors, students and course attendees participating in projects throughout the entire training period, etc. The findings can be obtained for the university in general, as well as for departments, for advanced training and retraining courses in particular. An analysis of findings will provide a full-fledged picture of the intensity and quality of DER development, the arrangement of the activities of the development group and the quality of the overall intellectual product. It also contributes to the evolvement of technologies for the accumulation of intellectual resources and monitoring of faculty staff and the university as a whole.

References Galkina, A.I., Matukhin, P.G.: Status-based qualification characteristics of the IT competence of E-manuals’ developers estimated by the webliography analysis of the “Science and Education” fund. In: Grinshkun, V.V. Informatization of Continuing Education 2018 = Informatization of Continuing Education - 2018 (ICE 2018): Proceedings of the International Scientific Conference, Moscow, 14–17 October 2018, vol. 2, pp. 378–382. PFUR, Moscow (2018). http://unisop.pfur.ru/RegName06_rep. Accessed 20 Jan 2019. (in 2 volumes) Titova, E., Savostianova, E., Yakushev, V., Matuchin, P., Savchenko, E.: Online complex supporting the distance education course in human anatomy for foreign pre-university medical students. Rev. ESPACIOS 39(10), 34–43 (2018a) Gracheva, O.A., Matukhin, P.G., Komissarova, N., Saltykova, O.V., Kopylova, P.A.: Some principles of the computer RFL workbook development:the interactive vocabulary and grammar elements. XLinguae 12(1), 103–115 (2019). http://www.xlinguae.eu/2019_12_01_ 08.html Galkina, A.I., Grishan, I.A.: Program collector_stat v.1.0/M.: CITIS-No AAAA-A17117041810029-2 as of October 23, 2017 Galkina, A.I., Matukhin, P.G., Provotorova, E.A.: Acmeological structure of the group of developers of electronic educational resources. Akmeology 67(3), 10–16 (2018) Gracheva, O.A., Matukhin, P.G., Elsgolts, S.L.: Interdisciplinary IT projects in the development of russian language study guide for physicists. Informatiz. Educ. 4, 27–39 (2013). Bulletin of the People’s Friendship University of Russia Matukhin, P.G., Galkina, A.I., Gracheva, O.A., Komissarova, N.V., Zaporozhets, V.V., Saltykova, O.V.: Electronic portfolio for the “Russian Language 2016-2020” program. Educ. Technol. Soc. 21(4), 360–372 (2018a). https://www.j-ets.net/ETS/russian/depository/ v21_i4/pdf/8.pdf. Accessed 20 Jan 2019 Matukhin, P.G., Galkina, A.I., Provotorova, E.A., Gracheva, O.A., Titova, E.P.: Scientific and pedagogical portrait of the developers of study guides on the Latin Language, Russian as a Foreign Language, and general disciplines. Educ. Technol. Soc. 21(4), 373–389 (2018b). https://www.j-ets.net/ETS/russian/depository/v21_i4/pdf/9.pdf. Accessed 20 Jan 2019 Matukhin, P.G., Galkina, A.I., Provotorova, E.A., Gracheva, O.A., Titova, E.P.: Analysis of publications of ailamazyan program systems institute of Russian academy of sciences through collector_stat program. Educ. Technol. Soc. 21(4), 408–420 (2018c). https://www.j-ets.net/ ETS/russian/depository/v21_i4/pdf/11.pdf. Accessed 20 Jan 2019

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Neustroyev, S.S.: Russian initiative developments (Initiative. Enterprise. Sagacity) In: Neustroyev, S.S., Predybailo, V.A., Galkina, A.I., Burnasheva, E.A., Grishan, I.A. (eds.) : Federal State-Funded Scientific Institution “Institute of Education Management of the Russian Academy of Education”, 110 p. Science and Innovation Center Publishing House, Saint-Louis (2017) Provotorova, E.A., Titova, E.P., Matukhin, P.G., Sarycheva, N.N.: Cooperative IT projects as a technology of linguistic-computer simulation of expert’s language profile. In: Collection of Scientific Papers “Modern Technologies and Techniques in Teaching a Professionally Oriented Foreign Language”, No. 1. People’s Friendship University of Russia, Moscow, pp. 124–129 (2013) Provotorova, E.A., Galkina, A.I., Matukhin, P.G., Titova, E.P., Grachyova, O.A.: Subjectlinguistic features of developing study guides for foreign students. Educ. Technol. Soc. 21(4), 390–407 (2018). https://www.j-ets.net/ETS/russian/depository/v21_i4/pdf. Accessed 20 Jan 2019 Order of the Ministry of Education and Science of the Russian Federation No. 1399 “On Amendments to the Indicators of Monitoring of the Education System” as of 11 November 2016. Collected Acts of the President and Government of the Russian Federation (2016) Pushkareva, G.V.: Information support of the government policy on the issue of performance. In: Authority, Information Technology, Mass Consciousness: The Main Trends of Modern Political Development, pp. 92–101. ARGAMAK-MEDIA, Moscow (2017) The Resolution of the Ministry of Education and Science No. P-516 “On Introduction in the State Assignment of 2017 for Scientific and Educational Institutions of Higher Education Under the Authority of the Ministry of Education and Science of the Russian Federation of Activities Proposed by the Departments of the Ministry of Education and Science of the Russian Federation and Determination of the Scope of Their Financial Support” as of 25 August 2017. Collected Acts of the President and Government of the Russian Federation (2017) Sidorova, A.A.: Higher Education in Modern Russia: State Strategy. 192 p. ARGAMAK-MEDI, Moscow (2015) Titova, E.P., Provotorova, E.A., Matukhin, P.G.: Joint subject-language IT projects as an element of the continuous development of professors’ ICT expertise. In: Proceedings of the 23rd International Conference-Exhibition “Information Technologies in Education”, Part III. Publishing House of the Computational Mathematics and Cybernetics Department of Moscow State University named after M.V. Lomonosov, pp. 26–28 (2013) Titova, E.P., Savostyanova, E.B., Matukhin, P.G., Savchenko, E.L., Silaeva, L.V.: The experience in application of Microsoft One Drive cloud technologies as a means of supporting distant learning of the human anatomy course. Morphology 3(153), 271 (2018b) Ashby, W.R.: Introduction to Cybernetics. Publishing House of Foreign Literature, Moscow (1959). Edited by Uspensky, V.A Yuzhakov, E.N.: Development Process Arrangement: Ontology and Methodology of Development Management, 216 p.“ID V. Ema”, Moscow (2011)

National Features of Forming a Digital Economy in Russia Pavel M. Gureev(&), Viktoriya V. Degtyareva, and Inna S. Prokhorova State University of Management, Moscow, Russian Federation [email protected], [email protected], [email protected]

Abstract. The article analyzes current trends in the development of the Russian economy in the context of globalization and the comprehensive penetration of information technologies into all spheres of economic relations; explores terminological approaches; identifies peculiar properties and features of the digital economy, problems of developing its theoretical base; identifies the main transformation effects of the digital economy and the implementation objectives of its development strategy. Results: 1. The terminological apparatus of the concept “digital economy” is revealed. 2. The main reasons for Russia’s lagging behind in the digitalization of the economy are identified, which consist in a contradictory understanding of the essence of the term “digital economy”. 3. The ways of solving problems by making changes to the Civil Code of the Russian Federation and fixing some terms in the legal field are considered. Keywords: Digitalization Digital technologies JEL Code: O10


Digital economy
Globalization of economy



O20
O30

1 Introduction The modern trend of economic development is the penetration of digital technologies into real economic processes. This phenomenon, called the “digital economy”, covers all the spheres of economic relations subjects. “Digital breakthroughs in technology, economics and organization in the 21st century have no historical precedent. The exponential pace of development foreshadows the transformation of everything.” (Sologubova 2018).

2 Background and Methodology The following methods were employed: universal scientific methods, including methods of idealization and formalization. The experimental research methods of observation, modeling, abstraction, comparison. The term “digital economy” was introduced in 1995 by the American computer scientist Nicholas Negroponte. Currently, there are two approaches to this term: © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 13–20, 2020. https://doi.org/10.1007/978-3-030-39319-9_2

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– classical approach: “the digital economy is an economy based on digital technologies and at the same time it is more correct to characterize exclusively the field of electronic goods and services (Urmantseva 2017); – advanced approach: “the digital economy is an economic production using digital technologies… Within the framework of this economic model, the existing market business models experience a radical transformation, the model of surplus value formation changes significantly, the value of intermediaries at all levels in the economy is acutely reduced. In addition, the importance of an individual approach to the product formation increases because now we can simulate anything.” (Urmantseva 2017). Sometimes the concept of “digital economy” is used “as a level of economic development level characteristic at the stage of transition to the sixth technological mode when the tendency to “automate” intellectual processes using ICT (information and communication technologies) becomes leading… In relation to the classical definition of the term “economy,” we can say that this is a system of relations for production, distribution, exchange and consumption on the basis of ICT (Lastovich 2017). Currently, the term “digital economy” is used by scientists, politicians and entrepreneurs. The practical application of this concept is “successfully implemented by Norway, Sweden, Denmark, South Korea and other countries. Russia is among the top 5 countries with the best digitalization rate of expansion” (Naumkin 2018). In Russia, the share of the digital economy in GDP is 2.1%, along with the mobile segment 5.06%” (Denisov 2017). At the same time, “Russia is significantly lagging behind on the digital economy development level from the countries leading in digitalization” (Kupchishina 2018).

3 Discussion and Results One of the reasons for Russia’s lagging in the digitalization of the economy is not a clear, and sometimes contradictory understanding of the essence of this phenomenon. Thus, in the program “Digital economy of the Russian Federation”, a digital economy is understood as “an economic mode characterized by a transition to a qualitatively new level of using information and telecommunication technologies in every sphere of social and economic activity.” (Prime Minister of the Russian Federation 2017). The “Strategy for the Development of the Information Society in the Russian Federation for 2017–2030”, approved by the President of the Russian Federation, provides a different definition in content and by implication, contrary to the above definition: “Digital economy is an economic activity wherein the key factor of production is digital data, processing of large volumes and the use of the results of the analysis of which, compared with traditional forms of management, can significantly increase the efficiency of various types of production, technologies, equipment, storage, sale, delivery of goods and services” (President of the Russian Federation Putin 2017). At the same time, the new economic structure objective is: “the creation of an ecosystem of the digital economy of the Russian Federation wherein data in digital form is a key factor of production in all areas of socio-economic activity…”

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(Prime Minister of the Russian Federation 2017). “Both documents are devoted mainly to the development of the information technology industry branch, which support by the state is actively and unsuccessfully lobbied by interested officials and business. And telecommunications, another component of ICT, turned out to be in the role of a stepson and are not ready to ensure the digital transformation of the economy.” (Lastovich 2017). In addition, it should be noted that, in the listed approaches, the most important characteristic of the digital economy, which is the essence of the mechanism of its functioning - artificial intelligence, is excluded from consideration (Averkin et al. 2018). Artificial intelligence as a synthesis of machine and artificial intelligence, is the technological foundation for the development of the digital economy. The development of such a software that has the ability to model the internal structure of the system including pattern recognition, speech synthesis, real-time control, determines the speed of digital technology. The main assignment of intellectual technologies today is the processing of knowledge related to the solution of complex issues caused by the low formalization of the knowledge of specialists, where logical processing of information is more important than computational (Lapina 2017). In this context, the digital economy is called the electronic economy, i.e., the economy, which development is due to the achievements in the sectors of microelectronics, information technology and telecommunications (Keshelava 2017). Despite the apparent contradictions in the above definitions in the professional community, it was understood that “one of the main tools for restructuring and the process of forming a digital economy and “a new industry” is a balanced scientifically based structural macroeconomic policy, as well as synchronization of state industrial, luster and regional policies development” (Babkin 2018). Understanding the essence allowed to reveal the endemic features of the digital economy: 1. Economic activities of business entities are focused on digital infrastructure platforms. 2. Increasing the contribution of individual subjects of economic relations in the national economy common economic development. 3. Expanded implementation of personalized service models into the management practice. 4. Orientation of the activities of economic entities to work under conditions of the digital environment including a specific set of functions (services) that provide for the needs and direct interaction of all economic system subjects. 5. The increasing role of direct interaction between producers and goods endconsumers. 6. Lack of a clear scientific and theoretical basis for the digital economy development. In the conditions of the economy globalization, the processes of information channels expansion and standardization of goods (services) provided by economic entities proceed intensively. In this situation, market players are forced to pay increased attention to the rapid implementation of technologies, which meet the needs of specific consumers but not the average buyer. Significant growth rates of digital marketing opportunities contribute to the transformation of interaction traditional chains between the consumer and the manufacturer “into connected, intelligent, scalable and fast

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supply chains” (Kupriyanovskiy et al. 2017). Individual business activity participants make a significant contribution to the digital economy. Their activity changes the usual segments of trade relations: the relationship between organizations and the consumer (B2C) is complemented by relations of the type “individual participant and organization” (C2B). One of the features of the digital economy are the problems and risks that are always present when introducing electronic information technologies: – – – – –

threat of violation of the country’s sovereignty in the digital space; informational vulnerability of personal and institutional data; changing the labor market structure; the need to make changes to the regulatory and legal framework; the need to restructure business models and interaction schemes of economic agents (Kupchishina 2018).

During the formation of the modern economy, it is necessary to take into account the market appearance of a fundamentally new product, namely - information. In addition, it is necessary to take into account that “the welfare and standard of living standards of a society is directly related to the specific energy consumption, and social status is replaced by social prestige and authority.” (Babkin 2018). The lack of a proven scientific methodology for building a digital economy creates fundamental limitations and predetermines problems in the development of the digital economy in Russia, since the existing theoretical background of economic theory worked out for the development of the services sector (intangible production) and the producing economy is not suitable for a correct description of the digital economy. To date, the scientific background of the digital economy is in its infancy. There are very few sources of scientific literature providing fundamental knowledge of artificial intelligence and the digital economy. At the same time, a systematic approach in the available sources should be noted. (Lapina 2017; Keshelava 2017). The authors (Lapina 2017) give the methodology of intelligent information systems: the basics of the theory of expert systems, neural systems, knowledge of engineering technologies, logic programming languages. For the first time, a systematic view of the “digital economy” category is presented. The authors of the “digital economy” project (Keshelava 2017) define the condition for the existence of a digital economy - the socalled “hybrid world” as a result of the merging of the real and virtual world (Keshelava 2017, pp. 7–9), give a description of the infrastructure of the “digital economy”, establish the relationship between the “digital” economy and economic theory. However, the study of the methodology of “digital economy” is not common in the educational environment. In 2017, the World Bank’s next report Digital Dividends containing a record on the state of the digital economy in the world was published. The report says that “In many cases, digital technologies have stimulated economic growth, created opportunities and increased the services rendering efficiency. However, the cumulative effect of their use turned out to be weaker than expected and is unevenly distributed (World Bank 2016), as there is a “digital divide” in the development of economic entities – only about 15% of the world population can afford to pay for broadband Internet (Sologubova 2017).

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It is understood that for the potential of the “digital economy” maximizing, it is necessary to: – improve the legislative base in order to ensure equal competition between business entities; – implement activities aimed at creating a balance between the qualifications of workers and the new economy requirements; – ensure the accountability of economic development institutions. The problem of legal regulation of the digital economy in the Russian Federation is tried to be solved due to the rapidly changing situation in this field. Thus, according to the words of the Deputy Administrator of the Government Office, Maxim Akimov, in the spring session of 2019, the State Duma plans to introduce 10 bills relating to the antitrust regulation of the digital economy, securing information as an object of civil rights, determining the status of digital technologies in the financial sector, including technologies of distributed registries (Akimov 2018). But there is a time lag for the adoption of such important bills. If in the autumn session of the State Duma in 2018, it was planned to submit for consideration 17 bills relating to the Internet of things, regulation of archives; smart contracts; rules for filing electronic claims and determining the status of relevant digital documents, fewer bills have been introduced on actual basis. This is confirmed by Dmitry Sazonov, Deputy Chairman of the Committee on Economic Policy, Industry, Innovative Development and Entrepreneur, in accordance with the “Digital Week” held in September 2018 in the State Duma. He said that in the autumn session it is planned to consider only 9 bills (Sazonov 2018). Currently, one of the objects of lawmaking, submitted for consideration on March 26, 2018 by the State Duma deputies V. Volodin, P.V. Krashennikov et al. is the bill # 424632-7 “On Amendments to Parts One, Two and Four of the Civil Code of the RF. The main provisions of this bill are changes in the existing legal system, the introduction of new articles, for example, such as “digital rights”, “digital money”, and their addition within the framework of digital use and application. By May 25, 2018, this bill was passed by the State Duma only in the first reading (State Duma of the Federal Assembly of the Russian Federation 2018; State Duma Committee on State Construction and Legislation 2018). Legal support for the functioning of the digital economy in European countries also exists and began its formation 10–15 years ago. For example, in the UK, a law artrecognized in the digital economy in 2010 was revised in 2017 (The Queen’s most Excellent Majesty 2010; 2017). If in 2010 the basis of this law was copyright of online users, regulation of domains, telecommunications services, etc., then major changes were made by the year of 2017, such as regulation of marketing, data exchange, restrictions on the use of communication devices, etc. The change of this law is associated with the high rates of digital trends development leading to the update and actualization of the subject of lawmaking. France currently operates the Law adopted in 2004 “On confidence in the digital economy” amended in 2015 (WIPO 2004), which regulates the technical services providers activities, communications, e-commerce, and security as well.

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Since the digital economy has received in our country a dynamic development trend in this regard, the legal framework must have time to support its development trends. Thus, the transformational effects of the “digital economy” concept implementation determine the need to revise the principles of managing innovative development of the economy, as well as changing or clarifying the terminological base. The main transformational effects arising during the integration of digital (information) processes into the economy are: 1. The increasing role of digital (information) resources in creating the value of products by business entities; 2. Automation of management and production processes based on the implementation of innovations combining artificial intelligence, additive technologies and the Internet of things; 3. Intensification of market interactions of business entities based on digital (information) technologies; 4. Transformation of information products (services) into an independent marketbased sector.

4 Conclusions Summarizing everything, we can say the following. The development of the digital economy should focus not only on the technological infrastructure. It is necessary to pay sufficient attention to the formation of institutions, which hereinafter will determine the conditions for the digital economy evolution: education, labor resources and the normative area. It is necessary to envisage the systematic creation of the digital economy infrastructure itself for its further development in the interests of the country. One of the most important areas of the economy digitalization at present is the introduction of IT infrastructure key technologies. The systematic development of data transmission networks determines the ability to produce secure, high-speed and efficient communications and transactions.

References Akimov, M.: The government in 2019 will make a decision on the legal regulation of the digital economy (2018). https://tass.ru/ekonomika/4975554. Accessed 12 Nov 2018 Averkin, N.N., et al.: Dictionary of Artificial Intelligence (2018). [Electronic resource]. http:// booksee.org/book/504091. Accessed 12 Nov 2018 Babkin, A.V.: Innovative economy of industry. Peter the Great St. Petersburg Polytechnic University (SPbPU) - Conferences. INPROM. Conference Reports 2018. In: Innovation Clusters of the Digital Economy: Drivers of Development: Proceedings of a Scientific and Practical Conference with International Participation, p. 535. Polytechnic University Publishing House, St. Petersburg. http://inecprom.spbstu.ru/files/inprom-2018/inprom-2018. pdf. Accessed 02 Nov 2018

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Denisov, A.: Experts evaluate the contribution of the digital economy to the GDP of Russia. From: RIA NEWS - “Russia today”. Society (2017). https://ria.ru/20171213/1510858102. html. Accessed 29 Oct 2018 Keshelava, A.V.: Introduction to the “Digital” economy” Geo-systems All-Union Scientific Research Institute, Moscow (2017). 28 p. [Electronic resource]. http://spkurdyumov.ru/ uploads/2017/07/vvedenie-v-cifrovuyu-ekonomiku-na-poroge-cifrovogo-budushhego.pdf. Accessed 27 Nov 2017 Kupchishina, E.V.: Evolution of the digital economy concepts as a phenomenon of neoeconomics. Public administration. Electronic Bulletin, #68, pp. 426–442 (2018). https:// cyberleninka.ru/article/v/evolyutsiya-kontseptsiy-tsifrovoy-ekonomiki-kak-fenomenaneoekonomiki. Accessed 01 Nov 2018 Kupriyanovskiy, V.P., et al.: Digital supply chains and block chain-based technologies in a collaborative economy. Int. J. Open Inf. Technol. (INJOIT) 5, 80–95 (2017) Lapina, A.V.: Intellectual information systems. Tutorial (2017). [Electronic resource]. http://files. lib.sfu-kras.ru/ebibl/umkd/228/u_course.pdf. Accessed 27 Nov 2017 Lastovich, B.: ICT-infrastructure of the digital economy. Simple truths (2017). From: ICS Media – ICS # 07–08 2017, articles. http://www.iksmedia.ru/articles/5434122-IKTinfrastrukturacifrovoj-ekonomik.html. Accessed 21 Oct 2018 Naumkin, M.: Five trends of the digital economy of Russia in 2018. From: RB.RU - Author columns. Site RusBase, 29 March 2018. https://rb.ru/opinion/ekonomika-rossii/. Accessed 29 Oct 2018 President of the Russian Federation Putin, V.: Decree #203 of 9 May 2017 “Strategy of the Information Society Development in the Russian Federation for the years of 2017–2030”. (2017). http://www.garant.ru/products/ipo/prime/doc/71570570/#ixzz5Uq26Qg9L/. Accessed 31 Oct 2018 Prime Minister of the Russian Federation: The government of Russian Federation. Order #1632-р of 28.07.2017 г. On approval of the program “Digital Economy of the Russian Federation” (2017). file:///C:/Users/User/Downloads/9gFM4FHj4PsB79I5v7yLVuPgu4bvR7M0.pdf. Accessed 02 Nov 2018 Sazonov, D.: The challenges of the digital economy require appropriate legislative decision (2018). http://duma.gov.ru/news/28241/. Accessed 12 Nov 2018 Sologubova, G.S.: The phenomena of the digital economy. In: III International Scientific and Practical Conference “Vladimir tract-the Road to New Technologies in Tourism”, pp. 13–26 (2017). https://www.econ.msu.ru/sys/raw.php?o=44108&p=attachment. Accessed 02 Nov 2018 Sologubova, G.S.: On the issue of digitalization of the economy and labor market problems (2018). http://digital-economy.ru/stati/k-voprosu-o-tsifrovizatsii-ekonomiki-i-problemakhrynka-truda/. Accessed 21 June 2018 State Duma Committee on State Construction and Legislation: The bill # 424632-7 “On Amendments to Parts One, Two and Four of the Civil Code of Russia (about digital rights)” (2018). http://sozd.duma.gov.ru/bill/424632-7. Accessed 12 Nov 2018 State Duma of the Federal Assembly of the Russian Federation: The bill on “digital rights” is recommended for first reading (2018). http://duma.gov.ru/news/26969/. Accessed 12 Nov 2018 The Queen’s most Excellent Majesty: Digital Economy Act 2010 (2010). http://www.legislation. gov.uk/ukpga/2010/24/contents. Accessed 12 Nov 2018 The Queen’s most Excellent Majesty: Digital Economy Act 2017 (2017). http://www.legislation. gov.uk/ukpga/2017/30/contents. Accessed 12 Nov 2018

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Urmantseva, A.: Digital Economy: how specialists understand this term. From: The Russian state news agency RIA Novosti – RIA Science (2017). https://ria.ru/science/20170616/ 1496663946.html/. Accessed 21 Oct 2018 WIPO.: France. Law #2004-575 dated 21.06.2004 On building confidence in the digital economy, 6 August 2015. wipo.int. http://www.wipo.int/wipolex/ru/details.jsp?id=15802. Accessed 12 Nov 2018 World bank: Digital Dividends From: Business & Information Technology 2017, Issue # 03 (66). World Bank, World Development Report 2017 (2016). http://bit.samag.ru/archive/article/ 1826/. Accessed 21 Nov 2018

Cognitive Safety as the Basic Condition for Digitization of Cultural Heritage Mikhail Iu. Zakharov(&), Irina E. Starovoytova, and Anastasia V. Shishkova State University of Management, Moscow, Russian Federation [email protected], [email protected], [email protected]

Abstract. The article considers the problems arising in information society due to the necessity of digitization of cultural heritage: cognitive impoverishment of the society; commodification of knowledge; difficulty of separation of valuable knowledge from the communal information realm for its transfer to future generation; determination of cultural value of knowledge; inadequacy of computer security for protection of knowledge; digitization of tacit knowledge. The article focuses on difficulties of presentation and transfer of knowledge falling beyond the scope of the paradigm of scientific rationality – tacit (silent) knowledge. Methodology: In the study, the following classical theoretical philosophical methods were used: generalization, analogy, abstraction, analysis and synthesis. Moreover, the authors applied the comparative method, logical and gnoseological analysis and analytical and descriptive method for preliminary systematization of the accumulated data. Results: 1. An analysis of the features of tacit knowledge from ancient times (Laozi) to modern day is presented; problems and prospects of transformation of tacit knowledge into explicit knowledge in the context of current information technologies (including machine learning and artificial intelligence) are discussed. 2. An argument is made that studies in the area of tacit knowledge will help improve the model of human behavior and therefore promote further development of artificial intelligence. 3. The problem of information security in the modern society is considered: the authors conclude that a broader concept – cognitive safety – should be introduced and further developed. In the framework of cognitive safety, the problem of protection of communal intellectual and spiritual heritage can be solved. Recommendations: The presented results can be used in further studies of the problem of cultural heritage digitization, in development of applications and guidelines for a wide circle of state, commercial and non-profit organizations and institutions to be put in practice. Keywords: Cultural heritage
Digitization knowledge
Artificial intelligence JEL Code: Z10


Cognitive safety
Tacit


0330

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 21–27, 2020. https://doi.org/10.1007/978-3-030-39319-9_3

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1 Introduction The developing digital society is characterized by a special position of knowledge, its transformation into a crucial strategic resource and global cultural value of humanity. Informational flows are limited only by state-established barriers. A 2017 study shows that administrative barriers in the way of mobility negatively affect international traffic of knowledge: they decrease academic mobility, reduce opportunities to directly share information between researches and therefore the flow of knowledge is blocked by “paper walls” (Orazbayev 2017). At the same time, the problem of protecting not only planetary, but, in many cases, national forms of knowledge, as well as of management mechanisms for storage and usage of communal cognitive resources, has not been solved at the state level. Computer security prevents unauthorized access and data modification but it’s not enough to safeguard knowledge.

2 Background and Methodology In the study, the following classical theoretical philosophical methods were used: generalization, analogy, abstraction, analysis and synthesis. Moreover, the authors applied the comparative method to identify similarities and differences between the considered processes and phenomena in various historical types of societies, logical and gnoseological analysis for introduction of concepts and categories necessary for the study, and analytical and descriptive method for preliminary systematization of the accumulated data. It is necessary to acknowledge current cognitive impoverishment of the society. Despite informational wealth created by the development of various information sources and easier access to them, the society experiences an acute lack of knowledge and faces a problem of separation of valuable knowledge from the total communal information realm. In information society, “knowledge is and will be produced in order to be sold, it is and will be consumed in order to be valorised in a new production: in both cases, the goal is exchange” (Lyotard 1984). Therefore, anything that doesn’t possess immediate “use-value” may be lost.

3 Discussion and Results 3.1

The Problem of Knowledge Objectivization

Knowledge is not only personal, i.e. is produced by an individual and exists in an individual mind, but also transpersonal: it has its own independent life beyond its creator. This process is called externalization of knowledge. Many Russian and foreign researchers have spoken about the possibility of independent autonomous existence of knowledge in collective consciousness. For example, C. Popper talked about a world where knowledge lives independently; J.-F. Lyotard also wrote about externalization of knowledge.

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Leaving its creator, knowledge becomes information which can become substantial as a paper document or a digit. In practice, in everyday life a person deals with information perceiving it in its entirety as certain knowledge. Therefore, information is a product of remote, transformed knowledge, and it is important to differentiate between human knowledge and its material presentation as information – a recording on a material carrier. This is complicated by the fact that information and knowledge have autonomous, independent life in the society, and their value varies in different times, different social circumstances. 3.2

Mechanism of Knowledge Preservation

Another problem is posed by the mechanisms of preservation of knowledge. In any given time, the society created these mechanisms depending on the stage of its development. It took millennia for the humanity to learn to accumulate, process and preserve knowledge; and the understanding of what to accumulate and how to preserve has been changing too. Humanity has been creating institutions of memory – libraries, museums, archives – and today we have vast experience in management of the process of storage, but it can hardly be standardized. As a result, societal subjects must solve this problem by themselves. A new round of development of expert systems for isolation, transfer and usage of information is associated with the development of information technologies. Studies on the on usage of information technologies including artificial intelligence began to appear as early as the 1980s (Collins et al. 1985; Cooke and Mcdonald 1986; Bloomfield 1988; Anderson 1982; Hayes-Roth et al. 1983). But nonetheless, a significant part of human cultural legacy has been lost forever. In the post-industrial period, society faced the fact that the volume of electronic information significantly surpassed total information on other carriers (Lyman and Varian 2003). While information on clay tablets, birchbark letters, blade bones, tortoise shells, paper carriers partially “survived” to our days, no one can guarantee such a long life for electronic carriers. Digital format also has a lifecycle and requires systemic updates associated with aging and exclusion of equipment and software from usage. The paradox is that the number of formats for information storage grows but the lifetime of digital documents drastically decreases due to continuous changeover of technologies. All this pushes away the prospect of formation of a united professional consciousness, creates a patch-wise view of the world for future generations. A term “digital amnesia” fully embodies the situation that the subsequent generations will face. Obviously, humanity must preserve scientific knowledge for the future generations. But scientific knowledge shouldn’t be absolutized, it inherently can’t embody all features of knowledge and unite all the ways of cognitive exploration of the world. 3.3

Danger of Tacit Knowledge Loss

Apart from scientific discourse, there is a narrative, and cultural value of both types of knowledge is significant. As J.-F. Lyotard stated, “it can fit into the new channels, and become operational, only if learning is translated into quantities of information. We can predict that anything in the constituted body of knowledge that is not translatable in this

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way will be abandoned” (Lyotard 1984). Obviously, there’s a danger of losing nonscientific forms of knowledge which resist rationalization. Spiritual culture of any society contains irrational, extrascientific, religious, mystic knowledge, knowledge of spiritual practices and, finally, of individual types of national arts (for example, martial arts) which have their own cognitive place and act as certain values influencing functioning of a society. A term “tacit knowledge”, or “silent knowledge”, attributed to Polaniy (1958), has been widely used in scientific circles and is being actively developed by modern practitioners and theorists of philosophy of science, knowledge management and other disciplines (Collins 2010; Gascoigne and Thornton 2013; Turner 2014). Specifically, Collins in his study Tacit and Explicit Knowledge identifies three different types of tacit knowledge: (1) relational tacit knowledge is knowledge that, in principle, can be described, or made explicit, if we discover it and make enough effort to do so; (2) somatic tacit knowledge is knowledge of physical motions that we can do but can’t describe, such as keeping balance or riding a bike; (3) collective tacit knowledge is knowledge associated with social interactions, for example, rules of a language (Collins 2010). W. Gulick has analyzed the aforementioned studies and stated that many of the aspects of tacit knowledge discovered by Polaniy still await further analysis; computerized approach proposed by Collins may play an important part in this process. However, W. Gulick thinks that a more promising approach was proposed in Turner’s studies which in combination with advances in complexity theory, neuroscience and ecological evolution allow to expand and use the potential of tacit knowledge to the fullest (Gulick 2015). It is interesting, that the great Chinese thinker Laozi, and not a Western scientist, was at the origin of the problem. In his main and only text Tao Te Ching, he writes of a certain silent knowledge which can be passed on, but traditional channels are only partially suitable for it. In Chapter 56 he notes: “Those who know don’t talk. Those who talk don’t know” (Lao 2006). This, at the first glance, not only contradicts the European understanding of the nature of knowledge but common sense. At least three characteristics of tacit knowledge can be identified. First of all, this knowledge, like any other knowledge, is unified and cohesive. With that in mind, Laozi solves the problem of subject–object interaction in his own way: to know an object, one must know themselves, their own hollowness, and only then the acquired knowledge can be compared to other knowledge. In this united knowledge, internal and external knowledge are distinguished. Internal knowledge is foundational, it doesn’t have a verbal envelope, and its usefulness is determined by the presence of a certain hollow receptacle or formal absence of the material. “We join spokes together in a wheel, but it is the center hole that makes the wagon move. We shape clay into a pot, but it is the emptiness inside that holds whatever we want. We hammer wood for a house, but it is the inner space that makes it livable. We work with being, but non-being is what we use” (Lao 2006). Therefore, external existent in knowledge doesn’t guarantee the existence of knowledge, and the essence of this knowledge is determined by a presence of cognitive emptiness which can contain innermost knowledge. This hollowness depends on the following: (1) it can accept the necessary knowledge and become the basis for formation of new knowledge; (2) if it’s been exhausted, the volume filled, it signals it; (3) if the emptiness is limitless and it doesn’t have a delineated accommodation, this object is not of the cognitive sphere.

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The second feature of tacit knowledge is its silent character. Verbal form is not necessary for its existence, silence is the main condition for existence of emptiness. Internal knowledge can’t be expressed, and can only be transformed into external knowledge simultaneously acquiring verbal form. At the same time, not all words are suitable for expression of taciturnity, but only those rare unique words that can, at least in the form of a hint, reflect Tao. The choice of these words is a complicated procedure because it involves solving of an overacting problem: expression of something that in its nature is beyond words; selection of sensually perceived words which can serve as a guide to concealed meaning and, therefore, to the cognitive potential hidden within. The third feature of tacit knowledge is its specific existence. From the point of view of European consciousness, two aspects of existence are considered: existence of phenomena and matter of the environment on their own; and existence as a certain entity in the consciousness. Knowledge in the European, rational, sense is, in one way or another, certain knowledge tightly associated with the material. In Tao traditions, the existence of knowledge acquires a fundamentally different meaning, it is determined by its hollowness. If knowledge exists, then it can hold emptiness, and only if it can contain, it exists. If we consider Tao Te Ching from this position, then the text has existed for so long only because of the emptiness containing everything that is hiding between Laozi’s lines. Non-existence is the basis, the necessary condition for the existence of knowledge. It seems that presentation and transfer of tacit knowledge in particular is in danger to be severely corrupted or lost in the era of information technologies. Currently, researches give varying estimations of the effectiveness of using information technologies (including machine learning and artificial intelligence) for discovery and transfer of tacit knowledge. In one already classic study on the problems of knowledge management in institutions, the authors argue against rigid distinction between tacit and explicit knowledge and propose a model of a “knowledge spiral” wherein tacit knowledge cyclically transforms into explicit knowledge and vice versa (Nonaka and Takeuchi 1995). Contrasting tacit and explicit knowledge, researches usually point at the fact that explicit knowledge, unlike tacit knowledge, can be formalized. Arguing this, the author of a 2005 study notes that human inability to formalize tacit knowledge doesn’t mean that computers won’t be able to do it (Fenstermacher 2005). These ideas resonate with the arguments on how research in the field of tacit knowledge can improve the model of human behavior and, therefore, promote further development of artificial intelligence. In one study, a model was proposed stating that knowledge consists of explicit and tacit components, and the latter can be further divided into articulable and inarticulable knowledge. Articulable tacit knowledge can be comprehended by our mind and expressed verbally; inarticulable knowledge lies in the area of subconscious and cannot be reflected upon consciously. However, the authors conclude that inarticulable tacit knowledge can be comprehended through the analysis of social behavior through different pattern recognition and data mining technologies (Ocegueda-Miramontes et al. 2018). Many supporters of technocentric approaches agree with these arguments, but critics justly note that although relational tacit knowledge proposed by H. Collins can on some level be expressed and formalized using modern technologies, there hasn’t yet been created any successful methods for isolation and transfer of collective tacit knowledge (Sanzogni et al. 2017).

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In a 2018 study dedicated to analysis of the effectiveness of using electronic instruments for trading knowledge, the authors concluded that electronic instruments used for creation and facilitation of direct communication, for example, for audio conferences or text messaging, help sharing tacit knowledge, while instruments with other functions, for example, e-mail, are ineffective in transferring tacit knowledge (Castaneda and Toulson 2018). Another line of research is associated with development of a system combining human and machine intellects. The authors of one of the studies on this subject concluded that it is necessary to develop instruments for knowledge transfer from experienced users to novices and from knowledgeable individuals to automatic systems, as well as for transformation of tacit knowledge into explicit knowledge. As a partial solution, the authors propose a model of digital coaching wherein users can receive relevant advice from the system adapted to cognitive abilities of every individual user (Carlsson 2017).

4 Conclusions Considering all of the problems described here, we see a necessity to establish a broader concept of cognitive safety. In the framework of cognitive safety, a problem of protection of intellectual heritage of the society, achievements of world science and culture, spiritual values as a whole can be solved. Cognitive safety has the following crucial goals: prevention of cognitive impoverishment of the society and management of commodification of knowledge; selection of knowledge to be passed to further generations from the whole of information; determination of cultural value of knowledge; digitization of tacit knowledge, etc. Tacit knowledge especially requires protection. Being by its nature internal, tacit knowledge exist in external knowledge in a latent form. There is a fragile bond between internal and external which requires certain conditions for its existence. Cognitive safety must create these conditions. Technologies of securing knowledge existing in external formats have already been developed while creation of a technology protecting internal knowledge is a task for the future.

References Anderson, J.R.: Acquisition of cognitive skill. Psychol. Rev. 89(4), 369–406 (1982) Bloomfield, B.P.: Expert systems and human knowledge: a view from the sociology of science. AI Soc. 2(1), 17–29 (1988) Hayes-Roth, F., Waterman, D.A., Lenat, D.B. (eds.): Building Expert Systems. Addison-Wesley, London (1983) Carlsson, C.: Decision Analytics – Key to Digitalisation. Inf. Sci. 460–461, 424–438 (2017) Castaneda, D.I., Toulson, P.: The effectiveness of electronic tools to share knowledge. In: Proceedings of the 13th International Conference on e-Learning ICEL, vol. 2018, pp. 46–51 (2018) Collins, H.M.: Tacit and Explicit Knowledge. University of Chicago Press, Chicago (2010)

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Collins, H.M., Green, R.H., Draper, R.C.: Where’s the expertise: expert systems as a medium of knowledge transfer. In: Merry, M. (ed.) Expert System 1985: Proceedings or the 5th Technical Conference of the British Computer Society Specialist Group on Expert Systems, pp. 323–334. Cambridge University Press, Cambridge (1985) Cooke, N.M., Mcdonald, J.E.: A formal methodology for acquiring and representing expert knowledge. Proc. IEEE 74(10), 1422–1430 (1986) Fenstermacher, K.D.: The tyranny of tacit knowledge: what artificial intelligence tells us about knowledge representation. In: Proceedings of the Annual Hawaii International Conference on System Sciences, p. 243 (2005) Gascoigne, N., Thornton, T.: Tacit Knowledge. Acumen, Durham (2013) Gulick, W.: Relating Polanyi’s tacit dimension to social epistemology: three recent interpretations. Soc. Epistemol. 30(3), 297–325 (2015) Lao, T., Mitchell, S. (trans.).: Tao Te Ching: A New English Version (Perennial Classics), Harper Perennial Modern Classics, (2006). (Reprint edition, 5 September 2006) Lyman, P., Varian, H.R.: How much information. Release of the University of California, 27 October 2003. http://groups.ischool.berkeley.edu/archive/how-much-info-2003/. Accessed 15 Sept 2018 Lyotard, J.-F.: The Postmodern Condition (1979). Manchester University Press, Manchester (1984) Nonaka, I., Takeuchi, H.: The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford University Press, Oxford (1995) Ocegueda-Miramontes, V., Rodríguez-Díaz, A., Castro, J.R., Sanchez, M.A., Mendoza, O.: On modeling tacit knowledge for intelligent systems. In: Sanchez, M., Aguilar, L., CastañónPuga, M., Rodríguez-Díaz, A. (eds.) Computer Science and Engineering—Theory and Applications. Studies in Systems, Decision and Control, vol. 143, pp. 69–87. Springer, Cham (2018) Orazbayev, S.: International knowledge flows and the administrative barriers to mobility. Res. Policy 46(9), 1655–1665 (2017) Polanyi, M.: Personal knowledge. Towards a Post-Critical Philosophy, Routledge, London, first published 1958 (1958). (corrected edition 1962) Sanzogni, L., Guzman, G., Busch, P.: Artificial intelligence and knowledge management: questioning the tacit dimension. Prometheus 35(1), 37–56 (2017) Turner, S.P.: Understanding the Tacit. Routledge Studies in Social and Political Thought, vol. 81. Routledge, New York (2014)

The Implementation of Principles of the Budget Process in the Financing of Public Procurement in the Digital Economy Vitaly V. Kikavets1(&)

and Yulia K. Tsaregradskaya2

1

2

Russian State University of Justice, Moscow, Russia [email protected] Moscow State Law University (MSLU), Moscow, Russia [email protected]

Abstract. Objective. Reveals the particularities of the implementation of the principles of the budget process as a basis for the protection of economic entities interests of in the financing of public procurement, as well as the legal and financial management of the contract system in the procurement (hereinafter – the contract system). The research methodology is represented by a complex of general scientific (systematic and structural, statistical, analysis and synthesis, abstraction) and private scientific (comparative legal, formal legal and content analysis of legal acts) methods. Conclusions: (1) the effectiveness of public spending is directly related to the efficiency of financing process of all public functions, including public procurements; (2) the results of norm-setting for public procurement are mainly aimed at the implementation of administrative functions, which do not affect and do not fully take into account the financial component of the process, providing public needs in goods, works or services; (3) additional financial expenses of public customers and participants of procurements, caused by transaction costs, invariably lead to price increase of received goods, works, services – and, exceeding real saving, don’t facilitate efficiency of use of budgetary funds; (4) the most important principles of the budget sphere for the budget process, ensuring the interests of economic entities in the financing of public procurement, are: effective spending of budget funds, planning, targeting and earmarking character, transparency and legality; (5) public procurement-making should be carried out in the conditions of determining the priorities, established by the state and affecting the reasonableness and effectiveness of budget expenses. Such priorities can be detected in documents, providing budget process, for example, in the forecast of socioeconomic development of a territory, which helps planning of budget for the next financial year. Recommendations. The analysis of the principles of budget process and the contract system provides the possibility to work out recommendations for the regulatory framework of additional principles in the budget legislation, making possible not only to ensure the most effective financing of the needs of the Russian Federation, but also to protect the legal interests of economic entities in the process of financing public procurements. Scientific and practical significance. The performed research develops the theory and practice of procurement financing, allows examining the experience © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 28–35, 2020. https://doi.org/10.1007/978-3-030-39319-9_4

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of foreign countries in the implementation of budget spending on the needs of a state and the possibility of its implementation in the national practice of budget relations. Keywords: Financial law
Budget
Public and private interests procurement
Contract system in the procurement


Public

JEL: K29

1 Methodology The basic part of the research is based on a significant number of works of scientists, completed earlier, both with regard to budget spending and to financial support of state (public) procurement – a significant amount of work dedicated to the financial support of public procurement in Russia: Classification of transaction costs in the contract system in the procurement (Kikavets 2018), History of legal regulation of public procurements in Russia: financial aspects (Kikavets 2019); – efficiency of budget spending was considered in the following works: Improvement the efficiency of budget spending of the system of state orders and procurements (Nabiev and Arykbaev 2008), Budgeting for efficiency? A case study of the public education systems of Canada (Mou et al. 2019) and etc. – transparency of the budget process was researched in the following works: The new Budget process and its implications for tax policy making (Sanger 2018), Transparency of law making and fiscal democracy in the Middle East (Abdellatif et al. 2019) and etc. – the legality of the budget process was indicated in Case Comment: Execution of budget lines suspended following doubts as to legality of expenditure (1998) and etc. The review of the basic works in budget process and financing of public procurements predetermined the methodology of this research. In our research we based on a complex of general scientific (system-structural, statistical, analysis and synthesis, abstraction) and private scientific (legal comparative, formal legal and content analysis of legal acts) methods.

2 Introduction Currently in Russian Federation there are tendencies of chaotic legal regulation of public procurements, combined with complete ignore by the federal executive authorities not only the public interests of customers, including mainly public financial interests, but also private financial interests of business (suppliers, contractors, performers). This position has been repeatedly reflected earlier by foreign experts in their works. For example, American researchers and journalists have repeatedly draw the attention to the fact that customers of all world powers will constantly face problems, caused by

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public procurement performance (Thai 2005). The EBRD in its report on the regulation of procurements in transition economies noted that contrary to the recommended “best practice” procurements legislation in Russia provides mainly procedures with the selection of suppliers and contractors with lowest price. It is also established complete ignore of problems with effectiveness of procurement procedures combined with disproportionate, excessive, constantly becoming more complete legal regulation (EBRD 2011). The effectiveness of public expenses is directly related to the efficiency of the financing process for all public functions. The process of financing public procurements is carried out within one of the methods of financial activity of the state. The theory of financial law distinguishes two main methods of such activity, associated with distribution and use of monetary funds: financing and crediting (Gracheva 2014). In this research it is necessary to deal with financing, which is understood as gratuitous and irrevocable provision of monetary funds (Gracheva 2014). For the purpose of financial support of public procurement, the budget allocates funds on the terms of gratuitousness and irrevocability (if the recipient of the funds uses them for their intended purpose), even if state used borrowed funds for its formation in the conditions of the budget deficit, using method of crediting. Since the procedure for spending budgetary funds is developed and approved by the Budget code of the Russian Federation, we propose to consider the problem of protecting the interests of economic entities in the financing of public procurement through the principles of the budget process. This allowed us to formulate the main hypotheses of the research. Performing its internal and external functions, the state ensures complete satisfaction of public interests, including by means of procurement of goods, works and services at the expense of the budget. The principles of the budget process, worked out in the late 1990s, do not fully take into account the specifics of financial support for public procurement, especially the observance and protection of financial interests, both public and private. Moreover, the practice of legal regulation the procurement procedure is still considered by executive and legislative authorities separately from the budget process, which is unacceptable from our point of view! We believe that the current principles of the budget process need to be not only reexanimated for application and implementation in practice, but also need to be complemented by some new, taking into account the need to maintain a balance of public and private financial interests in the process of financial provision of public needs for goods, works and services in the digital economy.

3 Results Understanding of process of financing public procurement is impossible without an analysis of the basic ideas, inherent in the use of funds of the state budget. In this regard, it is sensible to consider the principles of the budget process namely, which enables to realize and protect the interests of economic entities in the financing of public procurement. In addition, funds downstream to the implementation of the state task takes place in the process of implementation of one of the stages of the budget process – budget execution.

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A state by legal regulation of public relations, on the one hand, ensures the legality of some interests of entities or groups of entities, and on the other hand, prohibits some other interests. We have the right to state that all social relations regulated by certain rules of law are built, first of all, on the interest of each particular entity or group of entities in whole. Sharing a reasonable legal position on the need for a state to take into account the interconnection of the process of formation procurement with the budget process (Nabiev and Arykbaev 2008) in order to optimize budget expenditures for efficiency and effectiveness of use of budgetary funds, we believe that the above specified financial interests of economic entities are realized, first of all, taking into account the principles of the budget process. And since the principles of the budget process do not have normative basement, and form as a result of scientific comprehension of the basic ideas of the budget law and the budget system, we shall consider the possibility of their application in the process of implementation as a basis for protecting the interests of economic entities. In legal science principles are traditionally considered as primary norms of law, specifying their content. Considering the legal principles in the context of economic relations, it is worth bearing in mind the opinion of D. V. Vinnitskiy, that for a long time the main basis in the research of the principles of law was the position of F. Engels on the gradual transfer of “economic relations in the legal principles”, therefore, in the formation of legal ideas should be taken into account economic interests, and therefore we can talk about the rule that the economy determines the situation in legal regulation (Vinnitskiy 2003). The above said allows us to turn to the analysis of the basic principles of the budget process, regulating the financing of public procurements, taking into consideration the basic ideas, underlying the budget law and the budget system. The budget legislation of Russia establishes a list of principles of budget system, which are projected on the budget process as well. In our opinion, the most important of all the principles of the budget sphere for the budget process, ensuring the interests of economic entities in the financing of public procurements, are the following principles: effective use of budget funds, planning, addressable and target character, transparency and legality. The principle of effective use of monetary funds makes possible to indicate as a priority of the state budget policy not a budget savings, but an achievement of maximum results in spending the appropriate resources. This principle is distinguishing for most of countries, including Kazakhstan, where especial consideration is given to intrusion of budgeting, directed to result as an important factor of improvement of efficiency of budget (Kadyrova et al. 2017). We believe that the formation of public procurements should be carried out in the conditions of determining the priorities, established by a state and affecting the reasonableness and effectiveness of budget expenses. It is possible to reflect such priorities in the documents, providing budgetary process, for example, in the forecast of social economic development of a territory, which facilitates planning of a budget for the next financial year (Shevchenko 2002).

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In this regard, a state, as an economic entity, at the stage of compose and execution of a budget is obliged to consider the implementation of one of two goals: achieving the planned results or achieving the best result. In the first case, a state should strive to save the borrowed funds, which may infringe upon interests of other economic entities – procurement participants. In the second case, if achieving a better result than planned, a state can use the full amount of monetary funds, provided for financing of public procurements. Following such approach, interests of all economic entities can presumably be satisfied. In the expenditure of financial recourses for the financing of public procurement principle of planning is also of no small importance, expressed in the fact that the activities of a state on the formation, distribution and spending of financial resources is based on financial plans, developed in accordance with the state plans and programs of socio-economic development of the territory, as well as plans of enterprises, organizations and institutions. Forms of financial plans are, in particular, budgets of different levels of the budget system of the Russian Federation. Planning of financial activity is a necessity for market relations, being an important element of the regulation of economic and social development and financial management, although it has its own particularities. This statement is confirmed by the practice of budgetary relations, formed in the European Union. All countries of the European Union are obliged to submit drafts of budgets to the special commission, because while developing them, they should be aware of their obligations arising from the legislation of the Union, as well as take into account the economic partnership programs, applicable to states-members. Thus, if planning budgets, the members-states of the Union are obliged to ensure their compliance with its budget rules, so that these drafts do not compromise the functioning of the European monetary union. This procedure for the submission of draftы щa budgets was implemented in the post-crisis development period of the European Union, when the number of deficit budgets increased (Seyad and Sideek 2015: 30(5)). The implementation of new information technologies in budgeting allows to specify budget plans online, in particular, as noted by Ilyin and Ilyin this can be illustrated by the example of the online-service “cost planning” (Ilyin and Ilyin 2016). From a theoretical point of view, the principle of planning, in fact, is designed to protect the interests of the economic entity, reflecting and guaranteeing the actual availability of funding for goods, works and services necessary for a state. However, rather short terms of planning – one financial year, do not allow in practice to use this principle as protection of interests of the economic entity in full. The principle of targeting and earmarking of budgetary funds include budgetary allocations should be given to the exact recipients of these funds with an indication of the purpose of their use. For example, if we analyze the purpose of allocating budgetary funds to the state institution, in accordance with cl. 69.1 and 70 of the Russian Budget code, it is the recipient of budgetary funds for purchase of goods, works and services for state needs. There is an opinion in the scientific literature that budgetary allocations for the provision of public services are not considered as an separate form of budget expenditure.

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The budget legislation provides for the allocation of subsidies from a state budget to budgetary and autonomous institutions to finance their performance of the state task. The procedure for determining the amount and determination of such subsidies is established by acts of executive bodies, which always include provisions on the audit control for compliance with conditions, objectives and procedure of granting subsidies by body, managing the budget, which evidences of the implementation of the principle of targeting and earmarking character of budgetary funds, allocated for financing of procurements. The provided financial control of spending of the allocated funds is the basis of protection of all economic entities participating in procurements. The principle of transparency (openness), used in the creation of budget system, is distinctive for the budget process in the financing of public procurements as well. The effect of this principle in this process is manifested in the following: – compulsory publication in mass media of approved budgets and reports on its execution, containing information financial resources, allocated and spent for public procurements; – providing access to information, placed in the information and telecommunication network “Internet” on the single portal of the budget system of the Russian Federation. It should be borne in mind that the concept of creation and development of the state integrated information system of public finance management “Electronic budget”, developed in 2011, ensuring the development of the digital economy in the state, is currently implemented in the Russian Federation. Noting the importance of this principle, Arrowsmith points out that the transparent system allows parties to have an understanding of the rules, used for handling procurement, as well as to obtain information on specific purchases (Arrowsmith 1998). The foreign practice of the budget process paid considerable attention to the transparency of spending financial resources of a state budget as well. A striking example of improving budget transparency can be: the recommendations of the International Monetary Fund of the United Kingdom to pay attention to financial transparency of the budget process (Sanger 2018: 2); in the Middle East countries, recommendations to implement the “on-line” structure and order of the legislative process of budget approval, taking into account the fact that they are not always based on national priorities and preferences (Abdellatif et al. 2019: 43 (1)). At the same time, foreign colleagues note that the principle of openness promotes wide understanding of the public that a significant part of financial losses for the customers budget is increasingly coursed by banal inefficiency of the officials, engaged in purchases, than by corruption (Bandiera et al. 2009). In conclusion, we would like to say that the principle of legality, which means strict compliance with the requirements of financial and legal norms by all participants of the relations, that have surfaced in the process of financing procurement activities. It applies to public authorities and local self-government, enterprises, organizations, institutions, officials and citizens. This principle follows from clause One of the Constitution of the Russian Federation, which defined the Russian Federation as a legal state in which the norms of law are present.

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The principle of legality is considered to be one of the main, both in domestic and in foreign practice of budgetary legal relations. It is significant that the European court of justice recognized the illegal financing of some budget funds of the European Union, because of the fact that order of incur budget expenditures is legally regulated, providing that any outlays, included in Union budget, should be approved by special law, governing the implementation of such expenses (Execution of budget in suspended following doubts as to legality of expenditure: Case Comment 1998: 12).

4 Conclusions This research revealed that the principles of the budget process in the public procurement field theoretically assume a certain, but not quite sufficient basis for the protection of the financial interests of economic entities. In addition, it is noted that it is impossible to implement practically the principles of the budget process in full due to a number of reasons, including the fact that the legal regulation of this sphere is simultaneously carried out by the norms of administrative, civil and financial law. At the same time, the legislative and executive bodies flatly give priority to administrative norms of law, to the detriment of others. The contract system should work not for the sake of the procedure, but for the result. In this regard, the theory defines specific principles for it: competition, honesty, transparency, efficiency, better knowledge of price, resource allocation, risk of termination and homogeneity (Schooner 2011). A number of named principles found its Russian legislation – openness, transparency of information about the procurement contract system, ensuring competition, professionalism of customers, stimulating innovation, unity of the contract procurement system, responsibility for the effectiveness of satisfaction of state and municipal needs, the effectiveness of making procurements. Analyzing the principles of the budget process and the contract system, we can see the imposition of basic ideas without which the relations on financial support of procurement activities will be untenable, in particular there are transparency, openness and efficiency. Having considered the implementation of principles of the budget process as the basis for the protection of economic entities interests in the financing of public procurements, it can be recommended to perpetuated in budget legislation the principle of responsibility for effectiveness of spending budgetary funds for provision of state and municipal needs, mentioning that it is a question of financing needs of the Russian Federation, necessary for performance of all its functions and powers. Determining of the problem, which of the principles are most important, is a complex and practically situational task, since no system can function in accordance with all the provided principles simultaneously.

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References Abdellatif, L.M., Zaky, M., Ramadan, M., Mazahreh, J., Elghandour, I.: Transparency of law making and fiscal democracy in the Middle East. Pub. Sect. Econ. 43(1), 49–77 (2019) Arrowsmith, S.: Towards a multilateral agreement on transparency in government procurement. Int. Comp. Law Q. 47, 793–796 (1998) Bandiera, O., Prat, A., Valletti, T.: Active and passive waste in government spending: evidence from a policy experiment. Am. Econ. Rev. 99(4), 1278–1308 (2009) Decarolis, F.: Awarding price, contract performance and bids screening: evidence from procurement auctions. Am. Econ. J. Appl. Econ. 6(1), 108–132 (2014) Execution of budget lines suspended following doubts as to legality of expenditure: Case Comment (EU Focus), no. 12, pp. 14–15 (1998) EBRD. Public procurement assessment report. Review of Laws and Practice in EBRD Region. EBRD (2011). 204 p. https://www.ebrd.com/downloads/legal/procurement/ppreport.pdf. Accessed 25 June 2019 Gracheva, E.Yu. (ed.): Financial Law. Prospekt, Moscow (2014) Ilyin, A.V., Ilyin, V.D.: Variational online budgeting taking into account the priorities of expense items. Agris On-line Papers Econ. Inform. 8(3), 51–56 (2016) Kadyrova, M., Junusbekova, G., Sadyrbayev, Y.: Management of budget efficiency: evidence from Kazakhstan. Int. J. Econ. Perspect. 11(2), 409–417 (2017) Kikavets, V.: Classification of transaction costs in contract system of the procurement sector. Financ. Law 1, 21–25 (2018) Kikavets, V.: History of Legal Regulation of Public Procurements in Russia: Financial Aspects. Prospekt, Moscow (2019) 128 p. Thai, K.V.: Challenges in Public Procurement: An International Perspective. Florida Atlantic University, Public Procurement Research Center, PrAcademicsPress, Florida (2005). 407 p. Mou, H., Atkinson, M.M., Marshall, J.: Budgeting for efficiency? A case study of the public education systems of Canada. Appl. Econ. 51(34), 3740–3757 (2019) Nabiev, R., Arykbaev, R.: Improving the efficiency of budget expenditures of the state orders and procurement system. Acc. Budg. Non-profit Organ. (15), 18–21 (2008) Stepin, V. (Chief Editor): New philosophical encyclopedia in 4 volumes, vol. 3. Myisl, Мoscow (2001). 694 p. Sanger, C.: The new Budget process and its implications for tax policy making. Br. Tax Rev. 2, 168–175 (2018) Seyad, S.M.: A legal analysis of the control of national budgets by the EU institutions. J. Int. Bank. Law Regul. 30(5), 251–260 (2015) Schooner, S.L.: Desiderata: objectives for a system of government contract law. Public Procure. Law Rev. 11, 103 (2011) Shevchenko, M., Oshurkov, A.: State order - what it is and what the third sector should know about it. Prevention of corruption in the budget process, St. Petersburg Humanitarian-Political Center «Strategy» , pp. 41–56 (2002) Vinnitskiy, D.: Russian tax law: problems of theory and practice. SPb (2003)

Conceptual Content of Digital Society Irina I. Dubinina(&), Evgenia V. Gulyaeva, and Liudmila G. Kompaneeva Volgograd Institute of Management – Branch of RANEPA, Volgograd, Russia [email protected], [email protected], [email protected]

Abstract. This article is dedicated to study of the conceptual field of digital society. Relying upon the method of definitional analysis, the authors identified the main categories used in the definitions: subject; characteristics/features of the subject; actions of the subject; field of action of the subject; object; characteristics/ features of the object; actions of the object; field of action of the object; environment. Presentation of definitions as formula charts allowed revealing deeper relationships rooted in the definitions and discovering functions not lying on the surface. Irrespective of peculiarities of meanings of the subjects used in the definitions, we can distinguish information and society as two main subjects. All actions of society and information actually come down to three functions: operations with information; operations with society; operations with material labor. As a result of the study, we concluded that society and information perform the same number of functions; they are identical; both society and information have a subjective-objective nature, since their actions are aimed at both the external environment and themselves. Numerous, concretized, detailed actions, primarily, with information, are a significant element of the conceptual content of information society. Based on the frequency parameter, we concluded that the main emphasis in the definitions is placed on developing non-material labor, which further leads to the change of such areas of society as social, political, economic, cultural, information and communication. During the study the systemic components of the concept “digital field” were identified, namely, axiological, evolutionary, educational, historical, subject and instrumental. Keywords: Digital society
Definitional analysis
Conceptual content Postindustrial society
Subjective-objective nature of information




1 Introduction At the modern stage of the world community development, the expressions “digital society”, “information society”, “knowledge society”, “network society” are some of the phrases that are most common and quite frequently used in articles, books, international and national documents dedicated to society development strategies. Authors more often use these phrases as synonymous, and it can be explained, because the information or electronic digital revolution is the basis of such society. Without going into technological aspects, we will emphasize only a well-known fact – the digital form of object presentation occupies a key position in the information society. When © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 36–49, 2020. https://doi.org/10.1007/978-3-030-39319-9_5

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thinking about digital society we first need to consider the information society; which is very much linked to the advancement of digital information and communication technologies, not least the internet (Information society, www). The process of digitization of society covers the increasing number of segments of population, the increasing number of countries, it is worldwide and comparable with the most milestone events in mankind development regarding both its impact and its effects. Many articles are dedicated to information/digital society due to relevance of this phenomenon; they relate to various fields of activity: economy, politics, management, healthcare, education, etc. Perhaps, exactly linguistics can cover all these parts, from the point of view of analysis of language content, which ultimately would be auxiliary for all the above-mentioned subject areas.

2 Background and Methodology In this article we set a goal to study the conceptual field of the phrase “digital/information society”, because authors, as already mentioned above, use these phrases as synonymous. We are going to apply definitional analysis in order to identify the set of those attributes of the phenomenon which are significant for its correct designation with the use of this phrase. We believe that due to this method we will be able to study this concept thoroughly and, therefore, to describe more fully the place of “digital society” in the linguistic worldview of modern man, which can not be referred to naive, however, strictly speaking, can not be called scientific as well. In the course of our study we rely upon the definition of the concept included in the Big Encyclopedic Dictionary, Section “Linguistics”: “concept is a thought reflecting things and phenomena of reality in a generalized form through fixing their properties and relationships; the latter (properties and relationships) serve as common and specific attributes in the concept that refer to classes of things and phenomena” (Linguistics. Big Encyclopedic Dictionary 2000). The first stage consisted of several steps. 16 definitions, seven in the Russian language and nine in the English language, were selected randomly from the Internet environment. Selection of the material under study was performed according to the following criteria: (1) the goal of our study is to identify how modern people understand the phrase “digital society”; (2) the main source of information, whether we want it or not, is the Internet environment, i.e., if someone wants to know what information society is, this phrase will be entered into a search engine, which we actually did. Further, we carried out the analysis and chose the repeated components of the definitions. First group: Subject (Subject); Characteristics/Features of the Subject (Subject + Modifier); Actions of the Subject (Verb); Characteristics of the Action (Verb + Modifier); Field of Action of the Subject (Sphere); Environment. Second group: Object (Object); Characteristics/Features of the Object (Object + Modifier); Actions of the Object (Verb); Characteristics of the Action (Verb + Modifier); Field of Action of the Object (Sphere); Environment. As a result of reconsideration of the definitions, from the point of view of the chosen categories, it was found out that: (1) there are several subjects in some

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definitions; (2) the subject can be simultaneously the object; (3) there can be also several objects available; (4) objects can have an impact on another object (other objects); (5) society can serve as the environment, and be the subject. When we began to present definitions in the form of formula charts, we identified a fact that was not obvious before, namely, the subjective-objective nature of information as a factor influencing development of society and the subjective-objective position of society as a condition of implementing development. Such components as the first/second subject, primary/secondary object were introduced in the course of analysis. Moreover, another component of the definition was identified, namely, the idea of development, which is expressed by both direct and indirect means. Due to this methodology, deeper relationships rooted in definitions were revealed and functions not lying on the surface were discovered. We present the obtained charts below in order not to disturb the logic of our study.

3 Discussion and Results (1) “Information society is the society in which information and the level of its application and accessibility fundamentally affect economic, social and cultural living conditions of citizens” (Decree of the President of the Russian Federation 2017). The basic characteristic in this definition is information, as a means determining the level of living of society members – “fundamentally affect”. The idea of development is expressed by indirect means. The word “to affect” means “to change properties, the state, etc. of someone or something in any manner” (ABBYY, www). Information is considered as a resource and serves as a subject affecting living conditions of citizens. However, application of information is necessary, consequently, information also serves as a primary object. Therefore, living conditions of citizens become a secondary object. Economic, social and cultural fields of application are distinguished. In relation to information there are two conditions, the level of application and accessibility. The characteristic of information impact, fundamental, is given. Chart of definition (1): Environment: Subject (Information) (= Object 1 ← Verb 1) ! Verb 2 (+ modifier) ! Object 2 (Conditions of Living) + Spheres. (2) “Knowledge society is the society in which obtaining, saving, producing and distributing reliable information with consideration of the strategic national priorities of the Russian Federation have a superior importance for development of a citizen, economy and the state” (Decree of the President of the Russian Federation 2017). This definition includes three objects (citizen, economy, the state) which outline three fields of application of information: social, economic and the field of management. Information serves as a subject, because it determines development of these fields. However, information itself is also a primary object, because it is exposed to four actions: obtaining, saving, producing and distributing. Therefore, citizen, economy, the state are secondary objects. The feature of information, as “reliable”, is described. The conditions are set forth: consideration of the strategic national priorities of the Russian Federation. Chart of definition (2):

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Environment: Subject (Information) (= Object 1 (+ modifier) ← Verb 1, 2, 3, 4) ! Verb 5 (+ modifier) ! Object 2 (Citizen, Economy, State) + Spheres + Conditions. (3) “Information society is the society in which the majority of workers are involved in production, storage, processing and sale of information, especially its supreme form, knowledge” (Information society, www). The subjects, “workers”, are distinguished. They perform the following four actions (operations) with the object, information: “production, storage, processing and sale”, irrespective of the field of action. The concept of a whole new level of information, knowledge, is introduced. The idea of development can be traced also in this definition through the phrase “supreme” (the highest stage in development (ABBYY, www) form of information. Chart of definition (3): Environment: Subject (Workers) ! Verb1, 2, 3, 4 ! Object (Information) (+modifier). (4) “Information society is the society in which production of knowledge and information based on advanced information technology, i.e., informativity, rather than material production, becomes the foundation of development” (Definition and the main concepts, www). Information, knowledge and advanced information technology serve as primary objects, because they are exposed to an action, production. The emphasis in this definition is placed on development of society, due to production of knowledge and information, which for this reason serve as the subject, and society is given the role of a secondary object. Moreover, the idea of development is expressed also by indirect means, the word “advanced”, which means “superior to others regarding the level of its development; progressive” (ABBYY). Production of information dominates material production. A new feature of information is introduced, informativity, which means “saturation of content, information, volume of knowledge data” (New Dictionary of Foreign Words 2009). Chart of definition (4): Environment: Subject (Information) (= Object 1 ← Verb 1) ! Verb 2 ! Object 2 (Society). (5) “Information society is a concept of postindustrial society; a new historical phase of civilization development, in which information and knowledge are the main products of production” (Information society, www). Priority is given to the feature of society, postindustrial, the transition to another form is emphasized, the evolutionary component, a new historical phase of development, the use of the word “civilization” in the definition indicates a significant degree of progress, changes. Products of production are determined, information and knowledge, which are objects in this definition. Chart of definition (5): Time (+ evolution modifier): Object (Information, Knowledge) ← Verb = Environment. (6) “Information society is the stage in mankind development, when physical labor as the basis of industrial society gives way to information and knowledge” (Kalnoy 2002). In this definition the emphasis is also placed on the change of society, which is based on predominance of non-material production over material production. Moreover, information and knowledge serve as subjects taking the place of physical labor, the object in this definition. Chart of definition (6):

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Time (+ evolution modifier): Subject (Information, Knowledge) ! Verb ! Object (Physical labor) = Environment. (7) “Information society is the society in which all means of information technology, i.e., computers, integrated systems, cable and any other communications, video devices, software, research are aimed at making information publicly available and widely introduced in production and life” (Ishchenko 2007). The central place in the definition is given to objects, means of information technology, because they are exposed to actions, “aimed at”. These objects are specified in detail: “computers, integrated systems, cable and any other communications, video devices, software, research”. On the other hand, since means of information technology produce actions themselves (“in order to make information”), they become subjects. Information serves as a secondary object. The required features/characteristics of information, publicly available and widely introduced, are stated. In addition, the fields of application, production and life, are accentuated. Chart of definition (7): Environment: Subject (Information Technologies) (= Object 1 ← Verb1) ! Verb2 ! Object 2 (Information) (+ modifier) (+ Spheres). (8) “A Digital Society is a modern, progressive society that is formed as a result of the adoption and integration of Information and Communication Technologies at home, work, education and recreation” (What does digital society mean?, www). The primary objects exposed to the actions “adoption and integration” are information and communication technologies. Society is a secondary object, because it “is formed as a result of the adoption and integration”. Forming society, information and communication technologies are presented as the subject. Features of society are stated, modern and progressive. The field of application are specified in detail: home, work, education and recreation. The use of the adjective “progressive” (progressive – happening or developing gradually or in stages (ABBYY) in the definition indicates the idea of development. Chart of definition (8): Subject (Information, Communication Technologies) (= Object 1 ← Verb 1, 2) ! Verb ! Object 2 (Society) (+ modifier) + Spheres) = Environment. (9) “Information society refers to societies in which the creation, dissemination, use and manipulation of information has become significant to political, economic, social and cultural endeavours” (Information society, www). In this definition, the range of actions performed with the object (information) becomes wider: creation, dissemination, use and manipulation. However, in its turn, influencing endeavours, secondary objects, information serves as the subject. The fields of action, political, economic, social and cultural, are described. The idea of development, which is reflected in the word “creation” (the action or process of bringing something into existence), is presented (ABBYY). Chart of definition (9): Environment: Subject (Information) (= Object 1 ← Verb 1, 2, 3, 4) ! Verb (+ modifier) ! Object 2 (Endeavours) + Spheres. (10) “An information society is a society where the creation, distribution, use, integration and manipulation of information is a significant economic, political, and cultural activity” (What is an information society?, www). In this definition, information performs also a subjective-objective function. On the one hand, it is an object (primary), actions with information itself are stated: creation, distribution, use, integration and manipulation. On the other hand, influencing economic, political, and

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cultural activities, the secondary objects, information becomes the subject. The fields of application, economic, political, and cultural are accentuated. The idea of development, which is reflected in the word “creation” (the action or process of bringing something into existence) is presented (ABBYY). Chart of definition (10): Environment: Subject (Information) = Object 1 ← Verb 1, 2, 3, 4, 5) ! Verb 6 (+ modifier) ! Object 2 (Activities) (+ Spheres). (11) “Kasiwulaya and Gomo (Makerere University) allude that information societies are those that have intensified their use of IT for economic, social, cultural and political transformation” (What is an information society?, www). In the definition proposed by Kasiwulaya and Gomo, information technologies serve as a primary object, the main role is given to the first subject, society, which produces an action, intensifies use of IT. The aim of society is stated, transformation of economic, social, cultural and political fields. Information technologies become a secondary subject, leading to transformation of different types of activity (economic, social, cultural and political), which serve as secondary objects. The idea of development is presented, it is reflected by the words “intensify” (it becomes greater in strength, amount, or degree) (ABBYY, www), and “transformation” (the process or a period of changing from one state or condition to another) (ABBYY, www). Chart of definition (11): Subject 1 (Society) ! Verb1 ! Object 1/= Subject 2 (Information Technology) ! Verb 2 ! Object 2 (Activities) = Environment. (12) “Some people, such as Antonio Negri, characterize the information society as one in which people do immaterial labour” (What is an information society?, www). Antonio Negri distinguishes subjects (people), which carry out work in the field of nonmaterial production. Chart of definition (12): Environment: Subject (People) ! Verb ! Object (Immaterial labour). (13) “A society that organizes itself around knowledge in the interest of social control, and the management of innovation and change” (Daniel Bell 1976, at What is an information society?, www). In the definition by Daniel Bell, a society serves as a first subject, it is also a primary object, since it “organizes itself” on the basis of knowledge (around knowledge), which serves in these relationships as a secondary object. However, knowledge has an influence on a society (it organizes itself around knowledge), therefore, we can consider it also as a second subject. Innovation and change refer to secondary objects. The aim is distinguished, control in the social field. The function of a society is determined, it consists in management of innovation and change. The distinctive peculiarity of this definition is distinguishing the need for control of novelties by the state, as a result of intensive use of knowledge. The idea of development is presented, it is expressed by the word “change” (become different) (ABBYY). Chart of definition (13): Subject 1 (Society) (= Object 1 ← Verb 1 ← Subject 1 (Society)) $ Verb 2 $ Object 2a = Subject 2 (Information) ! Object 2b (Innovation and Change) + Spheres = Environment. (14) “A society where information is used as an economic resource, the community harnesses/exploits it, and behind it all an industry develops which produces the necessary information” (Nick Moore 1977, What is an information society?, www). Information serves as a primary object, its characteristic as an economic resource is an important aspect. A society serves as the subject. The idea of control by a society is

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included also in this definition, since the word “harness” means “control and make use of” (ABBYY). However, control is also performed over the second object, information technologies, which, in their turn, are the second subject because they produce the necessary information. The idea of development is presented, it is reflected by the words “develop” (grow or cause to grow and become more mature, advanced, or elaborate) and “produce” (create or form (something) as part of a physical, biological, or chemical process) (ABBYY). Chart of definition (14): Environment: Subject 1 (Society) ! Verb 1, 2 ! Object 1 (Information)/Object 2 (Industry) (= Subject 2 (Industry) ! Verb 3 ! Object 1 (Information)). (15) “A new type of society, where the possession of information is the driving force behind its transformation and development where human intellectual creativity flourishes” (Yoneji Masuda 1980, What is an information society?, www). The feature of society is introduced, a new type, information serves as a primary object, the action in relation to information, possession, is specified. In the English language, the word “possession” is defined as “the state of having, owning, or controlling something”. Therefore, possession of information means that information is available, it is property, and control is performed over it. The role or purpose of information, the driving force of transformation and development of society, is identified, consequently, information, rather possession of information, is a first subject, and society serves as a secondary object. The characteristic of society is described, where human intellectual creativity flourishes. A second subject appears, human intellectual creativity, which demonstrates a high degree of development (“flourishes” means develops rapidly and successfully) (ABBYY). The idea of development is also expressed by the word “new” (produced, introduced, or discovered recently or now for the first time; not existing before) (ABBYY). Chart of definition (15): Environment: Subject 1 (Information) (= Object (Information) 1 ← Verb 1, 2, 3) ! Verb 1, 2 ! Object 2 (Society); Subject 2 (Human Intellectual Creativity) ! Verb 4. (16) “Societies that have become dependent upon complex electronic information networks and which allocate a major portion of their resources to information and communication activities” (Melody 1990, What is an information society?, www). Societies, according to this definition, allocate a major portion of their resources in the fields of information and communication and, consequently, serve as a subject. On the other hand, society is defined as an object, because it becomes dependent upon complex electronic information networks, the second subject. Information and communication activities serve as secondary objects because actions are performed in relation to them. Chart of definition (16): Subject 1 (Society) (= Object 1 (Society) ← Verb 1 ← Subject 2 (Electronic Information Networks) ! Verb 2 ! Object 2 (Information and Communication Activities) = Environment. Classification of analyzed material: As a result of analysis of the definitions of digital/information society, we found that all the definitions, excluding one definition (5), specify the subject. We also investigated which of the subjects are the most repetitive, which can be observed in the following table:

Conceptual Content of Digital Society Subject Information Society Knowledge and information Majority of workers Means of information technology Information and communication technologies Information technologies People Intellectual creativity Electronic information networks Knowledge

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Frequency of use 5 4 2 1 1 1 2 1 1 1 1

The data given in the table allow drawing a conclusion that information and society as subjects are the most repetitive. However, if we abstract from the nuances of meanings of the subjects used in the definitions, we can distinguish information and society as two main subjects: society (people, the majority of workers) and information (knowledge, means of information technology, communication technologies, information technologies, intellectual creativity, electronic information networks). On the basis of the obtained information, two approaches can be distinguished: in some, more repetitive definitions (ABBYY), the main role is given to information, in other ones, few (6), to society, which performs certain actions with information. The subject performs a very wide range of actions: Society Involved in production, storage, processing and sale of information Have intensified their use of IT Do immaterial labour Organizes itself Harnesses Exploits Flourishes Allocate a major portion of their resources

Information Has a superior importance for development of citizen, economy and the state Has become significant… Is a significant… Fundamentally affects Is the driving force Becomes the foundation of development Making information publicly available and widely introduced in production and life Is formed Displaces non-material labor (physical labor gives way to information and knowledge)

The considered actions provide the grounds for the following conclusions. All actions of society actually come down to three functions: (1) operations with information (production, storage, processing, sale, control, use); (2) operations with society (organizes itself); (3) operations with material labor (change from material production to non-material one: reorganization, intensification, redistribution of resources).

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Functions of information include: (1) operations with society (formation, development, influence, etc.); (2) operations with information (implementation of requirements of accessibility and possibility of introduction of information, etc.); (3) operations with material labor (displacement of physical labor). Therefore, on the basis of the identified functions of society and information, we can say that: (1) society and information perform the same number of functions; (2) the functions are identical; (3) both society and information have a subjective-objective nature, since their actions are aimed at both the external environment and themselves. The definitions contain the following significant characteristics: Society Postindustrial society New historical phase of civilization development Stage in humankind development Modern Progressive New type Dependent upon complex electronic information networks

Information Reliable Publicly available Driving force of transformation and development of society Main product of production Its supreme form, knowledge As informativity

The considered characteristics and features allow drawing a range of conclusions. First, the adjectives “reliable” and “publicly available” reflect the value-based requirements to information, bringing an axiological component to the conceptual field “information society”. Second, the described features of information place the emphasis on its change, transformation. In this case both direct (driving force) and indirect (main product of production, supreme form) means are used. This element of content can be characterized as evolutionary, reflecting the idea of transformation. Third, the adjectives (postindustrial, new, progressive) describing information society also contain the repeated idea of development of knowledge, indicating another component important for defining digital society, educational. This allows us to draw a conclusion about importance of the parallel process of changes occurring with information and society as a result of enhancement of the knowledge level. Finally, the conceptual field includes the idea of importance for history, “a new historical phase of civilization development”, consequently, we can rightfully speak of the historical component indicating remarkability and exclusive importance of digital/information society. Separate attention should be paid to the fact that within one definition society and information can serve as two forms, being simultaneously the subject and the object. According to the analysis, we identified the following data: Subject = Object Society Information

Frequency of use 2 11

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Therefore, at this stage we can draw a conclusion that the subjective-objective function of society, within one definition, is not reflected widely in the definitions studied by us. On the other hand, the point of view that information itself, serving as the object and changing due to this fact, becomes the subject changing the world is presented in a large number of definitions. Each definition contains an object. In some there are two objects, in the relations of subordination in the majority of cases. On the basis of the sequence of impact which reveals cause-and-effect relations, we distinguished primary and secondary objects: Primary object 1. Information

Frequency of use 10

2. Knowledge

2

3. Information technologies

3

4. Physical labor

1

5. Means of information technology, (i.e., computers, integrated systems, cable and any other communications, video devices, software, research) 6. Communication technologies 7. Non-material labor

1

8. Society

3

1 1

Secondary object 1. Economic, social and cultural living conditions 2. (Development) citizen 3. (Development) state 4. (Development) economy 5. Society

6. Information 7. Political, economic, social and cultural endeavours 8. Economic, political, and cultural activity 9. Economic, social, cultural and political transformation 10. Knowledge 11. Innovation 12. Changes 13. Information and Communication Activities

Frequency of use 1

1 1 1 3

2 1

1

1

1 1 1 1

Thus, the group of primary objects may be reduced to three groups due to the synonymy of some of the described phenomena:

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(1) non-material labor (information; knowledge; advanced information technology; communication technologies, means of information technology) (16); (2) physical labor (1); (3) society (3). Relying upon the parameter of frequency, we can draw a conclusion that the main emphasis in the definitions is placed on development of non-material labor, which further leads to the change of society. Changing, undergoing various transformations, the above-mentioned primary objects cause development of secondary objects, which cover the following areas: (1) social (social and cultural living conditions; citizens; society; social endeavours; social transformation); (2) political (state; political endeavours; political activity; political transformation); (3) economic (economic living conditions; economy; economic endeavours; economic activity; economic transformation); (4) information and communication (information; knowledge; innovation; changes; Information and Communication Activities); (5) culture (social and cultural living conditions; cultural endeavours; cultural activity; cultural transformation). As a result, we come to the conclusion that in the analyzed definitions non-material labor changes lead to transformation of a whole range of fields of human activity, a number of which, nevertheless, is limited to five areas: social, political, economic, cultural, information and communication. This gives us reason for distinguishing a subject component in the conceptual field “information society”; this component covers one or another field of human activity. Primary and secondary objects are exposed to the following actions: Primary objects 1 Application (of information) 2 3 4

Ensuring accessibility (of information) Obtaining (information) Saving (information)

5

Producing (information)

6

Storage (of information)

7 8 9 10

Processing (of information) Sale (of information) Change (of physical labor) To ensure accessibility (of information) To ensure the possibility of introduction (of information) To determine the purpose (of means of information technology)

11 12

Secondary objects 1 Influence (on the fields of activity in society) 2 Development (of the fields of activity in society) 3 Formation (of society) 4 Impact (has become significant) (on the fields of activity in society) 5 Transformation (of the fields of activity in society) 6 Management (of innovation and changes) 7 Development of society 8 Dependence of society

(continued)

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(continued) Primary objects 13 Adoption (of information) 14 Integration (of information) 15 Creation (of information) 16 Dissemination (of information) 17 Use (of information) 18 Manipulation (of information) 19 Distribution (of information) 20 Intensification of use (of information technologies) 21 Organization (of society) (organizes itself) 22 Control (of information) 23 Possession (of information) 24 Placement (of information) 25 Operation (of information)

Secondary objects

The conducted analysis allows drawing a conclusion that numerous, concretized, detailed actions, primarily, with information (22), are a significant element of the conceptual content of information society. There are three actions described in relation to society, physical labor and means of information technology, one per each of them. Such a degree of detailing of actions indicates importance of works carried out with information for establishment of information society. We find confirmation of this in the second column. The result of a wide variety of actions with information (primary object) is development of society/political, economic, social and cultural activity (secondary objects). The analyzed material proves that the instrumental component occupies an important position in the conceptual content of information society. As shown by the definitional analysis, the idea of development of society, its change is presented, one way or another, in each definition. This conceptional component is expressed by various language means. Besides the direct use of the word “development”, in definitions this function can be performed by other words containing the seme of development, change in their meaning: (1) nouns (creation, transformation); (2) verbs (influence, intensify, change, develop, produce, flourish); (3) adjectives (supreme, progressive, new). Availability of these language means is caused by the evolutionary nature of the concept “information society”.

4 Conclusions Therefore, the method of definitional analysis and generalization operations allowed distinguishing repeated, interconnected components of the conceptual field “information/digital society”, which allows considering it as a system. Subject and object are most important categories, which are applied in the analyzed definitions.

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Society and information serve as the main subjects but information prevails in this role, which is revealed by the fact that it is given the “dominant” position. The study showed that information and society perform an identical set of functions: operations with information, operations with society, operations with material labor. Therefore, information and society have a subjective-objective nature because their actions are aimed at both the external environment and themselves. Qualitative characteristics of information and society identified in the course of the analysis of definitions reflect the following systemic components: axiological, evolutionary, educational and historical. As a result of the definitional analysis, it was found out that the idea of development of society is expressed by various language means, which is caused by the evolutionary nature of the concept “information society”. Society and information within one definition can perform several functions, in particular, being simultaneously the subject and the object. The subjective-objective function of society is not presented so widely as one of information, which, serving as the object and changing, as a result becomes the subject itself, and this subject changes various fields of activity and society as a whole. Object is the necessary component of definition. According to subordination relations, objects are divided into primary and secondary, those exposed to actions of primary ones. The group of primary objects includes information (interpreted as relating to non-material labor), physical labor, society. The data on frequency of use show that the central topic in the definitions is development of non-material labor, as a result of which changes occur in society. Transformations in the area of non-material labor lead to the change in a particular range of fields of human activity: social, political, economic, cultural, information and communication. This gives us reason for distinguishing the following system component, in the conceptual field “information society”, the subject component, which indicates one or another area of activity. The instrumental component can be referred to systemic elements of the conceptual content of information society because in the definitions there is a high degree of detailing of actions carried out with objects, primarily, with information. Therefore, the concept “information society” is a complex entity containing information and society as the main categories, subject and object. Information and society have a subjective-objective nature; perform operations limited in terms of the impact vector but unlimited in terms of the degree of operation detailing that lead to changes in the social, political, economic, cultural, information and communication fields; serve as primary and secondary objects the interaction of which results in a new stage of mankind development. This entity includes the following systemic components: axiological, evolutionary, educational, historical, subject and instrumental. Acknowledgments. The work is written with the support of Volgograd Institute of Management – RANEPA Branch, within the framework of research project No. 01-2018VIU “CompetencyBased Model of State Civil and Municipal Employee in the Context of Society Digitization (in Terms of Volgograd Region)”.

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References Linguistics. Big Encyclopedic Dictionary [Yazykoznanie. Bolshoy entsiklopedicheskiy slovar]. Editor in Chief V.N. Yartseva, 2nd edn, p. 688: ill. Great Russian Encyclopedia [Bolshaya rossiyskaya entsiklopediya], Moscow (2000) Government of the Russian Federation Decree of July 28, 2017, No. 1632-r Moscow Decree of the President of the Russian Federation on the Strategy for the Development of Information Society in the Russian Federation for 2017–2030 of May 9, 2017, No. 203 Information society [Informatsionnoe obshchestvo]. https://ru.wikipedia.org/wiki/Инфopмaци oннoe_oбщecтвo. Accessed 22 Jan 2019 Definition and the main concepts of information society [Opredelenie i osnovnye ponyatiya informatsionnogo obshchestva]. https://studfiles.net/preview/5780951/page:4/. Accessed 20 Jan 2019 New Dictionary of Foreign Words [Novyy slovar inostrannykh slov], by EdwART, 2009 – [Electronic resource]/Dictionaries and encyclopedias on Academic. http://dic.academic.ru. Accessed 20 Jan 2019 Information society [Informatsionnoe obshchestvo]. https://dic.academic.ru/dic.nsf/ruwiki/ 159688. Accessed 20 Jan 2019 Kalnoy, I.I.: Philosophy [Filosofiya]: Textbook. – Simferopol: Business-Inform, p. 328 (2002) Ishchenko, M.V.: Information society: approaches to determination of the essence of categories [Informatsionnoe obshchestvo: podkhody k opredeleniyu sushchnosti kategoriy]. Bulletin of Omsk University [Vestnik Omskogo universiteta]. Series “Economics” [“Ekonomika” 2007”], 1, pp. 47–54 (2007) What does digital society mean? https://answers.yahoo.com/question/index?qid=201110101926 18AAxbnYr. Accessed 20 Jan 2019 Digital society and the information age. https://www.futurelearn.com/courses/digital-society/0/ steps/23808. Accessed 20 Jan 2019 Information society. https://en.wikipedia.org/wiki/Information_society. Accessed 20 Jan 2019 What is an information society? Media Essay. https://www.ukessays.com/essays/media/what-isan-information-society-media-essay.php. Accessed 20 Jan 2019 ABBYY Lingvo electronic dictionary. http://www.abbyy.ru. Accessed 5 Feb 2019

Digital Economy: Knowledge in the Logic of the Industry 4.0 Concept Igor Ivanov(&), Tat’yana Luk’yanova, and Olga Belova State University of Management, Moscow, Russian Federation [email protected], [email protected], [email protected]

Abstract. The purpose of the article is to reveal the distinctive features and trends of the transition of the Russian economy to the digital form. Achievement of this purpose requires solving problems related to assessing the role of knowledge in the course of digital transformation, studying the relationship between the concepts of the digital economy and the Industry 4.0, and tackling methodological issues of knowledge introduction in developing business models of activity by enterprises. The methodological background of the study is the concept of the digital economy and “Industry 4.0”, as well as their numerous interpretations in Russian and foreign literature. We considered the main premises of the Industry 4.0 concept and its place in the digital economy. We highlighted the development of digital technologies in Russia, as well as in the most economically developed countries. We showed the place of knowledge in digitalization of the economy, the peculiarities of converting implicit knowledge into explicit form and drew up the pyramid of knowledge. An analysis of the writings dedicated to this problem made it possible to prove the role of the company as a depository of knowledge incorporated into business processes, as well as present areas of knowledge utilization to develop the dynamic capabilities of the company. We proposed a business model of the company’s activity, the distinguishing feature of which is the reliance on key expertise and dynamic capabilities of the company. To sum up, we conclude that foremost enterprises of the real sector of the economy should take part in the execution of the “Digital Economy of the Russian Federation” program, evolving and using innovative business models of activity and developing key expertise and dynamic knowledge-based capabilities. Keywords: Business model
Dynamic capabilities Knowledge
Digital economy
Key competencies JEL Code: O14


Industry – 4.0



O25
O33
L20

1 Introduction The technological revolution is manifested in the intensely-growing Industry 4.0 concept. This process is determined by the diffusion of information technology which results in a transition to a digital economy and higher role of knowledge in society (Kaufman 2018). © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 50–59, 2020. https://doi.org/10.1007/978-3-030-39319-9_6

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The changes mustn’t be overlooked, countries are stepping up their efforts in the “Industry 4.0” global race. As Schwab notes (Schwab 2016), the nature of the changes is so fundamental that world history has not yet passed a similar era that combines both great opportunities and potential dangers. In his annual address to the Federal Assembly as of March 01, 2018, President of the Russian Federation V.V. Putin said that “…today the world has a huge technological potential, which allows us to make a breakthrough in the quality of life, in the modernization of the economy, infrastructure, and public administration. How effectively we can use the tremendous capabilities of the technological revolution? How we will face challenges? It depends solely on us. The coming years will be decisive for the future of the country in this sense.” Chuikin (2011) remarks that the search for factors that provide sustainable competitive advantages for companies and their utilization becomes essential in these conditions. Knowledge-based company assets have increasingly become specific, hardto-copy factors. Indeed, information converted into knowledge and transferred to network space becomes the most important economic resource. Accordingly, we necessitate developing new business models with the “knowledge” component. Such opportunities give company dynamic capabilities that form new elements for business models to be developed (Teece et al. 1997).

2 Background and Methodology The purpose of this study is to discover the relationship between the factors acting in the digital ecosystem with key links such as the exchange of knowledge and advanced technologies. Within the framework of the topic under study we need to answer some questions. 1. What is the relationship between Industry 4.0 concept, knowledge economy, and the digital economy? 2. How does the role of knowledge change in the course of digital transformation? 3. How to regard the knowledge that promise and open up unique opportunities in the business model of an enterprise? Within the topic of the study, we applied several concepts as a methodological background. As Rüttimann et al. (2016) point out, the concept of “Industry 4.0” is developing now; also, they list the things that are commonly understood under this term: new goods and new services, new business model, “Internet of Things”, big data, virtual reality, fully automated production. Today, this concept is undergoing wide-scale and historically important changes as well as the dramatic transformation of global value chains (Schwab 2016). The concept of the digital economy is also only conceptualized by scholars. In our opinion, one should rely on recent studies in this area. Thus, Bukht and Hicks (2018) consider the “digital sector” as the basis of the digital economy: IT/ICT enterprises that produce the major digital goods and services. The digital economy itself, i.e. the part of

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the economy that is represented by companies working foremost with digital technologies and having a business model based on digital goods or services, consists of the digital sector in combination with forward-looking digital and platform services. The most extensive approach that considers the use of ICT in all sectors of the economy is represented by the concept of “digital economy” (Bukht and Hicks 2018). The framework of the studies on the company as knowledge generator and the role of organizational, individual, formalized and non-formalized knowledge were laid as far back as in 1995 (Nonaka and Takeuchi 1995). The resource approach involves the concept of dynamic capabilities, under which the company is a depository of knowledge built-in business processes. Besides, the concept of knowledge management is a continuation of the resource approach (Teece 2011, Chuikin 2011, Petizhev 2017). The above-listed approaches have different applications and development but complement each other to a great extent. They should be thoroughly studied since they are the basis for the development of digital enterprises in the real economy.

3 Discussion and Findings 3.1

The Accomplishment of the “Industry 4.0” Concept Based on the Knowledge-Driven and Digital Economy

In Russia, there is a common definition of the digital economy as an economic activity with digital data as a key factor of production. The processing of large arrays of data and the use of analysis outcomes can dramatically increase the efficiency of various types of production, technologies, equipment, storage, sales delivery of goods and services compared in contrast with traditional forms of economic management. The knowledge-based economy with information and knowledge as factors of production passes through a digital transformation that broadens the opportunities of new knowledge to be developed and used. The long-standing definition of the knowledge-based economy and the concept of the digital economy adopted in the Russian Federation have common features, for example, the decisive role of data, information, and knowledge; but they cannot be recognized alternative. Thus, Woods (2016) argues that the difference between prosperity in the inherited knowledge-based economy and the new digital economy is the rate of company’s response based on the data from all sources. Recognizing “Industry 4.0” as the level of the “digitalized economy”, Bukht and Hicks define the digital economy as part of the total output, which is completely or mainly produced on the back of digital technologies by companies with multi-tier business model based on digital goods or services (Fig. 1) (Bay and Hicks 2018). The emergence of “Industry 4.0” concept was preceded by three stages of the Industrial Revolution: 1. 18th century (introduction of steam-engine machine production); 2. 20th century (emergence of mass flow-line production); 3. Late 20th century (automation of production; introduction of electronics and information technology; the advent of the Internet, IT technology, digital platforms, sustainable communication channels, as well as the increased extent of information

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The third tier: digitalized economy The second tier: digital economy The first tier: digital (IT/ICT) sector

Network business

Production of component parts Information services

Digital services

Software and ITconsulting

E-commerce Industry 4.0 Precision agricultural technology

Platform economy

Telecommunications

Algorithmic economy Gig economy

Collaborative economy

Fig. 1. Three tiers of the digital economy (Bay and Hicks 2018)

contributed to the emergence of open information systems and global industrial networks). All these developments had a tremendous impact on the modern economy and business and promoted the advancement of automation towards the fourth stage of industrialization. Many of these elements have been successfully applied for a long time, but it is their integration into a single system that will allow developing Industry 4.0 concept and ensuring a new level of production efficiency and additional revenue through the use of digital technologies, establishment of networking between suppliers and partners, as well as introducing innovative business models. The concept of “Industry 4.0” provides the development of digital enterprises. A digital enterprise is an organization that uses information technology as a competitive advantage in all areas of activity. The countries with the most advanced digital economy are Germany, the USA, Great Britain, Sweden, the Netherlands, and South Korea. The rate of digitization in Germany is 33% now, and it is expected to increase this share to 82% by 2021. Under the forecast, the proportion of digital technologies in the manufacturing process of this country in 2022 can grow by 3.8 times on average, by 4.5 times – in machine engineering, by 4.4 times – in the automotive industry, and threefold – in IT industry (Plakitkin and Plakitkina 2018). In addition to Germany, the United States achieved progress in the Industry 4.0 execution. In 2014, it established the Consortium of Industrial Internet, promoting practical application of the Internet of Things.

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Japan is discussing the concepts suggesting the use of Internet networks at smart enterprises that would connect mini-computers embedded in the manufacturing equipment. In China, there is a working concept of “Chinese Production-2025”. It sets the goal of developing the entire industry to a level corresponding to the third paradigm (“Industry 3.0”), and in 2025 to reach the fourth level (“Industry 4.0.”). As for economic digitalization in Russia, it is still lagging behind the above countries. The proportion of technologically innovative countries in the Russian Federation was 8.8% in 2014 against 34, 37 and 55% in the UK, France, and Germany respectively. R&D costs of industrial enterprises in Russia in 2015 amounted to 0.3% of GDP against 1.54% in China, 1.79% in the United States and 2.72% in Japan. In absolute terms, R&D costs of industrial enterprises in the USA and China are almost 30 times higher than the costs of Russian ones. This predetermines Russia’s lag in two key phenomena of the new technological revolution: digitalization and platformization. By the Resolution, the Government of the country approved the program “Digital Economy of the Russian Federation” to overcome this lag in Russia. The ecosystem of the digital economy of the Russian Federation can be established by achieving the following figures in 2024: – developing at least 10 national leading companies; – no less than 10 industry-specific digital platforms successfully operating for basic domain areas of the economy; – founding at least 500 successful small and medium enterprises engaged in the design of digital technologies and platforms for the provision of digital services. Digitalization means a revolution in the economy, i.e. a sharp decrease of time expenditures for the accomplishment of business processes, which leads to the growing capacity of output by cutting the production costs and supply prices consequently. As estimated by the Ministry of Industry and Trade of Russia, by 2024 labor productivity in the country’s economy should increase by 30%, and the proportion of machinery and equipment in Russian exports should grow from 8 to 13% (Plakitkin and Plakitkina 2018). In our opinion, the efforts of the country’s leadership to overcome the digital lag in Russia should be supplemented by companies’ measures on the production of new knowledge as drivers for the development of a digital enterprise and elaboration of new business models that meet demands of today. 3.2

Knowledge as a Driver of the Digital Economy

The main driver of progress in the digital economy is knowledge, including formalized and implicit knowledge possessed by management and staff, which act as the platform of the company’s dynamic capabilities (Teece 2011). The pyramid of knowledge, which reflects the relationship between the concepts of information and knowledge, has become traditional (Fig. 2). A specific feature of the hierarchy described above is that every previous level is complemented by particular features of the subsequent one. Thus, the information adds context, facilitates the understanding of links and relationships. Knowledge adds a mechanism of information use, an understanding of laws and patterns. Wisdom adds

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Wisdom Knowledge Information Data Fig. 2. The pyramid of knowledge (Ackoff 1989).

conditions of knowledge use and understanding of principles. The first two levels characterize the past (experience). The top two levels describe the future (new). The system (organization) become more complicated in passing to every next level. The traditional education system disposes of the so-called formalized, or explicit, knowledge. Thereat, the knowledge is transferred to other people in oral or written form, as a document, instructions, regulations, etc. In digital ecosystems, the emphasis is placed on non-formalized knowledge. This knowledge (implicit, procedural) is based on personal experience, intuition, personal know-how, which is hard to be formalized. Such knowledge not only contributes to the achievement of goals but also promotes the acquisition of new knowledge. Formalized (explicit) and non-formalized (implicit) knowledge interact in the generation of new knowledge under the model (Fig. 3).

1. Socialization Implicit knowledge → Implicit knowledge

4. Assimilation Explicit knowledge → Implicit knowledge

2. Alienation Implicit knowledge → Explicit knowledge

3. Combination Explicit knowledge → Explicit knowledge Fig. 3. The spiral of knowledge transformation (Nonaka and Takeuchi 1995).

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Socialization is the exchange of experience between people, for example, monitoring of aт expert’s work. Alienation is the process of developing implicit knowledge in a formalized form (hypothesis, concept, model, etc.). The source of such knowledge can be an analytical expert, and the knowledge can be presented in the form of a diagram, text, or knowledge base of an expert system. The combination is a process of combining formalized knowledge and developing a new formal model. Assimilation occurs when available formalized knowledge is transformed into nonformalized models of knowledge of a particular person. “…Implicit knowledge is hard-to-algorithmized and hard-to-verbalized. It’s personal, multilayer, heterogeneous, strictly individual; it can be aggregated into implicit corporate knowledge within a particular company in appropriate institutional forms. It is these features that determine its uniqueness, importance, and indispensability as an economic resource of the company” (Bakhareva 2012). Thus, knowledge management in these terms is a new vision of management methods, organizational mechanisms, and management techniques that have an impact on the competitive advantages of enterprises (Kaufman 2018). 3.3

The Company’s Business Model Based on Key Expertise and Dynamic Capabilities

Jiang (2015) notes that companies raise productivity through the transfer of knowledge, introduces the concept of dynamic capability, and stresses that the acquisition of knowledge and their utilization can enhance the companies’ performance and that, a knowledge transfer model is being developed in the framework of dynamic capacity encouragement. The combination of particular expertise of the company with its dynamic develops unique expertise that gives an opportunity to create a unique value proposition, open new markets, and reduce risks in its activities. An enterprise should understand how to transform a current business model with regard to capabilities and expertise. Key expertise is understood as the unique knowledge and skills of the company and employees that create unique value for the consumer and new markets for the company. Examples of key expertise are knowledge, qualifications, skills, employees’ experience, corporate culture, software, patents, licenses… It is appropriate to note that key expertise is unstable since it depends heavily on the external environment. That is why a company must possess both the expertise and the ability to create, maintain and develop it (Teece et al. 1997). Dynamic capabilities are a system of features of the company and employees that assess the company’s ability to effectively use its key expertise. The above system can include, for example, the ability of continuous learning, the ability to exchange and use knowledge, the ability to develop new skills, flexibility and adaptability, the ability to envisage and adequately assess external changes, and the ability to make quick and sound decisions. The companies must change and transform in a due time to innovate the business model. Jiang (2015) classifies dynamic capabilities into capabilities of opportunities’

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recognition, resource allocation, three-dimensional recovery of the company, and develops a knowledge transfer model in the context of dynamic capability encouragement, as shown in Fig. 4. Knowledge transfer is a key factor to raise the company’s performance with the contribution of dynamic capabilities.

Recognition of opportunities

Knowledge acquisition

Knowledge use

Company

Resource integration

Organizational framework

Fig. 4. A model of knowledge transfer in the context of the development of dynamic capabilities (Jiang 2015).

Organizational competence Key expertise

Target groups of consumers

Core product

Key resources Key partners

Relations with customers

Dynamic capabilities

Key types of activity

Supply channels

Value creation system

Financial model Expenditure pattern

Income flows

Fig. 5. The framework of the company’s business model based on key expertise and dynamic capabilities

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Nowadays, there are many business models of the company’s activity. Despite their advantages, they do not take into account such important factors as key expertise and dynamic capabilities and the company’s abilities. With the above in mind, the authors propose their business model of the performance of a modern manufacturing enterprise based on its key expertise and dynamic capabilities (Fig. 5). Since knowledge assets in itself do not provide value, they should often be joined with other intangible and physical elements as a product having value for the customer (Teece 2011), which is also specified in the business model.

4 Conclusions Information converted into knowledge and transferred to network space has become the foundation of the digital economy. The exchange of knowledge, the technologies that make it possible and people who can take part in this exchange and manage are key factors of the digital economy. The digital economy and the knowledge-based economy are the backgrounds of the Industry 4.0 concept, under which digital enterprises will be developing. The government of the Russian Federation adopted the program “Digital Economy of the Russian Federation” to be duly integrated into the global processes of digital transformation and take digital opportunities. Enterprises of the real economy should be prioritized participants of this program. One of the solutions can be the development of business models based on key expertise and dynamic capabilities of the company.

References Ackoff, R.: From data to wisdom. J. Appl. Syst. Anal. 16, 3–9 (1989) Bakhareva, T.V.: Implicit knowledge and its use in the company. Bull. Saratov State Socio Econ. Univ. 4(43) (2012). https://cyberleninka.ru/article/n/neyavnoe-znanie-i-ego-ispolzovanie-vfirme. Accessed 28 Oct 2018 Bukht, R., Hicks, R.: Defining, conceptualizing and measuring the digital economy. Bull. Int. Organ. 13(2), 143–172 (2018) Chuikin, A.M.: The concept of dynamic capabilities and analysis of the strategic potential of the learning organization. Bull. Baltic Fed. Univ. named after I. Kant 9, 147–162 (2011) Jiang, P.: Knowledge transfer in firms under the promotion of dynamic capability research. Mod. Econ. 6, 965–970 (2015). https://doi.org/10.4236/me.2015.69091 Kaufman, N.Y.: Transformation of knowledge management in the digital economy. Creative Econ. 3, 261–270 (2018) Nonaka, I., Takeuchi, H.: The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation, p. 284. Oxford University Press, New York (1995) Petizhev, A.D.: The use of dynamic capabilities as the factor of creating competitive advantages. Bus. Strategy 6(38) (2017). https://www.strategybusiness.ru/jour/issue/view/38. Accessed 25 Oct 2018) Plakitkin, Y.A., Plakitkina, L.S.: Industry 4.0 and the digital economy of the Russian Federation programs: opportunities and prospects in the coal industry. Min. Ind. 1(137), 22–28 (2018)

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Rüttimann, B.G., Stöckli, M.T.: Lean and industry 4.0—twins, partners, or contenders? A due clarification regarding the supposed clash of two production systems. J. Serv. Sci. Manage. 9 (6) (2016). https://file.scirp.org/pdf/JSSM_2016120515423709.pdf Schwab, K.: The Fourth Industrial Revolution (2016). https://en.b-ok.org/book/2765495/. Accessed 6 July 2018 Teece, D.J., Pisano, G., Shuen, A.: Dynamic capabilities and strategic management. Strateg. Manag. J. 18(7), 509–533 (1997) Teece, D.J.: Dynamic Capabilities: A Guide for managers, March/April 2011. https:// iveybusinessjournal.com/publication/dynamic-capabilities-a-guide-for-managers/. Accessed 10 Aug 2018 Woods, J.: Twilight of the Knowledge Economy and the Rise Of Digital Economy, 24 May 2016. https://news.sap.com/2016/05/twilight-of-the-knowledge-economy-and-the-rise-of-digitaleconomy/. Accessed 15 Sept 2018

Robotization in the Area of Labor and Employment: On the Verge of the Fourth Industrial Revolution Natalia V. Putilo(&) , Natalia S. Volkova and Natalia V. Antonova

,

Institute of Legislation and Comparative Law under the Government of the Russian Federation, Moscow, Russia [email protected], [email protected], [email protected]

Abstract. Purpose: The particular aspects of the upcoming transformation in the area of labor and employment within the context of the new technological revolution are being examined in the article. Design/Methodology/Approach: This article with the use of available social, scientifically-educative and economic statistics, as well as on the basis of systematic and “look-ahead” methods covers the directions of transformation of social relations in the area of labor in the context of automation and robotization of manufacturing within the technological shift of the new age – the Fourth Industrial Revolution. Findings: The major conclusions formulated as the outcome of the conducted research can be structured in the following way:

• the anticipated result of the digital development of the economy in the upcoming years (before 2025) will be the widespread robotization (from manufacturing to agriculture, from retail sales to the service sector); this will require establishing additional arrangements for minimizing social risks related to the transformation of the area of labor (global labor market polarization leading to the ultimate displacement of the standard form of employment with its untypical forms like remote work, outsourcing, work in the “online platforms”, “cloud” etc.; high technological unemployment related to rejection of human resources in favor of intelligent robots and further decline of the salary level for remaining human workers etc.); • mass robotization of manufacturing and services sector, including creation and introduction of artificial intelligence, over time will require solving the problems of necessity of introducing the status of electronic personality to intelligent robots, defining their legal capacity in the civil, labor and others fields of law which will lead to either the rejection of previously formulated principles of the legal regulations or their fundamental conversion;

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 60–75, 2020. https://doi.org/10.1007/978-3-030-39319-9_7

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• exponential paces of development of the new technological revolution will require the relevant legal formalization (legalization) newly originated public relations – including relations in the area of labor, employment, and social security – definition of their core, conceptual framework, and focused targeting. This process will be followed by increasing harmonization and integration of legal systems and the system of common values that will turn the Fourth Industrial Revolution into the new opportunities for all members of society. Originality/Value: The purpose of the study is to analyze the restructure of the labor market and the employment due to the widespread introduction of smart robots and artificial intelligence. Such analysis helped to develop a number of original ideas aimed at maintaining stable employment and preventing technological unemployment in the world and in the Russian Federation. Keywords: Labor relations
Worker
Labor market
The area of labor and employment
Robot
Artificial intelligence (AI)
The fourth industrial revolution (“industry 4.0”)
Robotization JEL Code: I24
I25
K31
K38
N30
F22
F63
F66
J11
J14
O15
Z13

1 Introduction The thought about the future in the area of labor are induced by the Fourth Industrial Revolution (“industry 4.0”) together with the breakthrough in the field of artificial intelligence (AI), robotization, internet of things (IoT), 3-D printing, nano- and biotechnology, accumulation and storage of energy and the number of other innovations. Unrestricted opportunities of the robotics, neural network, cloud and quantum computing allow to successfully apply them in various branches of economy with an obvious profit for the business community. Rejecting the “human resources” in favor of robots contributes to lifting the financial millstone of salary, taxes, social charges on several acknowledged social risks. The robot barely starves, requires increased social protection or feels the need to support themselves and the members of the family. Analytical investigations of the large consulting corporations such as McKinsey Global Institute, PricewaterhouseCoopers Forrester Research, Gartner, and others adduce the unpromising statistics on percentage of released workers as a result of automatization of manufacturing in the coming decade (before 2030) from 15% to 30% human workers or approximately 1,5 billion people (McKinsey Global Institute 2018). In other words, the new technological shift or the Fourth Industrial Revolution that is a destructive trend of the labor market for the first time in the history is able to reduce the number of workplaces for people rapidly. However, the different variants, of course, of events are anticipated: from transition of people to exclusively intellectual, creative work to the entire subordination of people to AI as high technology is improving (De Vos 2018). Normative recommendations that mark “vital” are adopted that established

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in the national legislation of the country “the ethical and legal rules would not suppress and impede rapid development of innovations” (European Parliament Resolution (European Parliament, EP) dated 16th February 2017 no.: 2015/2013 (INL) P8_TAPROV (2017)0051). Therefore, the education system, employment and social policy will be the first to be effected by the fundamental transformation of social relations. The labor market in the nearest future will be able to face the problems of competition between human workers and intelligent robots that can reproduce a series of actions according to predetermined algorithms and are capable of generating independent solutions for both working professions that require low qualification (elevator operator, usher, call-center operator etc.) and intellectually oriented professions (archivist, librarian, tour agent, lecturer etc.) (Atlas novyih professiy: Agentstvo strategicheskih initsiativ «Skolkovo» 2014). At this point, the main challenge for governments of countries appears to be retaining previous labor rights and social guarantees for human workers, providing them with opportunities for extra education, re-education, and training. It seems to be impossible to stop the process of complete labor automation (Ford 2016). Despite the fact that the international community in recent years has been discussing the question of possible recognition of intelligent robots (complex cyberphysical systems equipped with AI) as a legal entity and providing them with the status of electronic persons (EP – Electronic Personhood), consideration of possible legal capacity of intelligent robots has not been made as a plan of legislature. The automated systems (AI) that take the responsibilities of the decision-making and organization processes of interaction in the “human environment” without damage to its participants has not been created yet. Moreover, the normative framework that would directly regulate the field of robotics, use of robots and AI in the Russian Federation and other countries of the world has not been created yet. Law-making entities of the developed countries have only pointed a number of directions on developing legal rules, for example: “Robot Ethics Charter”, 2007 and “Intelligent robots development and distribution promotion”, 2008 in the South Korea; («Robotics Industry Development Plan (2016–2020)», 2016) and the Global state development program “Made in China 2025”, 2015 in China; «Robotics 2020» («Multi-Annual Roadmap»), developed «SPARC» and European Parliament resolution 2015/2103(INL) “Civil Law Rules on Robotics”; “National Robotics Initiative”, 2011 (Version 2.0) and “Roadmap for US Robotics”, 2011 in the USA and others. It is obvious that the further technological jump in the robotization and artificial intelligence will make it possible for Russian legislator to transform into reality and implement in practice the acts of a similar orientation, especially in the areas of labor and social protection.

2 Methodology The general didactical idea is that the widespread introduction of intelligent robots and artificial intelligence will lead to the global reconstruction of the labor market where the major task for the world community, including the Russian Federation, is expressed in maintaining the stable employment and avoiding technological unemployment.

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This becomes possible if the just competitive environment for human workers of different education level and qualifications, their education, and re-education due to released professions/positions occupied with intelligent robots are saved. However, Russian expert scientists method that was developed for monitoring “potential scope of technological elimination of parts of state population” due to introduction of new technologies can be applied during evaluation of the risks of “impossible re-education” and creation of workplaces for citizens that involuntary form the area of “economic unawareness” (Zemtsov 2017). In other words, for auspicious functioning of the labor market in conditions of the Fourth Industrial Revolution elimination of already existing barriers in the movement of human workers in professional, industrial, and regional senses will be required. Strengthening of the relocation processes will become an effective means of the rise of the adaptive capacity in the labor market and growth in the labor productivity (Vishnevskaya 2019).

3 Results Almanac of new professions (“Atlas of new professions”) (later – Atlas of professions) (Atlas novyih professiy: Agentstvo strategicheskih initsiativ «Skolkovo» 2014), gives an overview of 19 promising sectors of economy and their corresponding professions 15–20 years ahead. This project is one of the few experimental researches about modernization of the labor market in the nearest future. It is planned to be established by the leading international recruiting companies in accordance with their plans of development (developing new markets, launching new products, applying new technologies etc.). According to the Skolkovo experts’ predictions, as a result of the automation and robotization of the major sectos of economy in the labor market, 186 new professions are supposed to appear, 57 “professions-retire” are supposed to disappear until 2030. Mainly the specialists with average skills intended for a big number of template actions are under the threat. The reasons for obsolescence of such professions are evidenced by the inferred data of American economist David H. Autor (Autor’s curve) for evaluation of employment changes in US industries from 1980 to 2005 depending on the qualifications of employees (Atlas novyih professiy: Agentstvo strategicheskih initsiativ «Skolkovo» 2014). As an explanation of the greatest number of risks concerning workers of average qualification, as opposed to low- and highly skilled workers, two circumstances were accepted. First, the tasks of the average complexity are most exposed to automation because they contain enough template components not to create obstacles to the introduction of new technologies. Second, the professions of the average qualification that have already typically achieved the necessary high paying level, which allows making the automation economically attractive for business owners. Preservation of the previous positions in the labor market for workers of low and average qualification becomes possible through acquiring new universal “over professional” skills aimed at intersectorial interaction, that increase the efficiency of professional activity. Mastering these skills can be considered as a compensation mechanism for “losses in the labor market” due to the probable technological unemployment.

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The Atlas of the professions includes the following: – systematical thinking (ability to define complex systems and work with them, including system engineering); – the skills of intersectoral communication (understanding of technologies, processes and market conditions in various related and unrelated sectors); – the ability to manage projects and; – IT-solution programming/Management of sophisticated automated complexes/Working with artificial intelligence; – client-oriented approach, the ability to work with the consumer inquiries; – multi-language and multi-culture (English influence and knowledge of a second language, understanding of national and cultural context of partner countries, understanding of the specifics of working in industries in other countries); – the ability to work in teams, groups and individually; – working in the mode of high uncertainty and quick change of task conditions (ability to make decision quick, respond to changes in working conditions, ability to allocate resources and manage their time); – artistic creativity, the presence of a developed aesthetic taste; – economical production”. The listed skills will be recognized as the most demanded in the following fields of work from the list of 186 new professions in: biotechnology, medicine, the field of energy storage, managing power usage, ground transportation, water transport; aviation; space; and etc. The list of professions and their legal analysis are given in the Monograph (Legal Concept of Robotization 2019). All of these activities will require appropriate education in at least two different professions (specialties), including areas of training in one profession (specialty), which will lead in the future to revisal of the principles of building State educational standards with the aim of forming universal “over professional” knowledge and skills among the students. At the same time, as innovative technologies become more complex unconditional leadership will be given to knowledge and skills of managing complex automated systems and intelligent robots, including interaction with artificial intelligence. The list of 57 obsolete professions or “professions-retire” from the Atlas of professions also includes intellectually orientation professions and working professions, aging of which is chronologically represented within two periods: (1) 2013–2020; (2) 2020–2030. During the first period (2013–2020), such intellectual professions as a surveyor, a stenographer/decryptor, copywriter, travel agent, lecturer, librarian, document expert/archivist, tester, any-key specialist will “retire”. Working “professions-retire” of this period include: usher, valet, call center operator, elevator operator, postman. During the second period (2020–2030), the intellectual professions will be “retired”: legal adviser, notary, pharmacist, analyst, broker/realtor, secretary/receptionist, municipal worker, logistician, dispatcher, bank operator, journalist, diagnostician, driller, System Administrator; and also working professions: watchman, miner, train driver, traffic police inspector, miner, packer, cook, foreman, seamstress/shoemaker, taxi driver.

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Professions in the course of their aging are influenced by a number of factors that have different degrees of intensity which can be attributed to the factors that partially “take away work” (robot, program, guest worker) or to the factors that completely “take away work” (outsourcing, bacteria, 3D-Printer). The central place among the factors that partially take away work (profession) at the current stage is fairly given to robots (robotization in manufacture, construction, agriculture, retail sales, services, etc.). Before the development and implementation of AI, the need for the workers (IT specialists) that maintain robots will continue and even increase, which compensates for losses from possible technological unemployment. At the same time, with the development of AI the urgent need to create and maintain jobs for such workers will remain in the past, which will entail the transition of robotization to the status of a factor that completely takes away work. So, from the industrial sphere and the sphere of construction, robots have first replaced the workers of heavy physical labor, and then the lighter ones. Robots perform up to 90% of production and construction operations that require precision and a large amount of energy consumption, that sometimes are unavailable to humans (unloading/loading, moving goods from one point to another, finished products to the warehouse; spot welding and grinding, collecting mechanical and electronic details, etc.). Robots are able to replace people even where the complex process of assembling finished parts, laying wires and other operations designed for the capabilities of human hands is expected (Briody 2013). According to Mr. Ford’s fair comment, over time, there will not be a single area in which the robot could not compete with humans, even in those niches that are designed for the hand-eye coordination (Ford 2016). People will be able to maintain their position only in the sphere of production management (construction) and control over the execution of their operations by machines. But this is also temporarily, given the pace of improvement of intelligent robots and the rapid widespread introduction of AI. A serious step was the development of Russian and Italian scientists who were able to create an artificial neural network based on polymer memristors (analogs of “synapses” - electronic connections in the brain). It can be used in systems of intelligent control devices, including fully autonomous robots. The network is capable of performing logical operations, their accumulation and further generation. She is self-learning, and her possibilities are almost endless. It is worth adding that the creation of quantum computers, which are currently being developed, will significantly accelerate the modernization of such control systems. A similar situation also awaits the sphere of transport technologies and agriculture. Automatic robotic transport, including automatic trains in the metro (Copenhagen, Paris, Beijing, Barcelona, Atlanta, etc.) are no longer uncommon. In South Korea, China and Japan, trains of the MAGLEV system (electromagnetic levitation technology) were launched, are actively introduced in Germany and a number of other developed countries. Special attention should be paid to unmanned aircraft, especially in the field of the military-industrial complex. Military ships-robots are also created. In agriculture, the crowding out of human workers is accompanied by the rapid introduction of biotechnology and its transformation into a type of industrial production. An example of this is the development of the Russian company Cognitive Technologies. It presented the first robotic tractor-drone that had been tested in the fields of the Republic of Tatarstan.

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Even in the field of design, which has always been considered to be an exclusively intellectual (“human”) platform, a competitive environment is clearly being formed with complete displacement of people from material production. Modern computeraided design (CAD) systems, including systems that operate without human participation, are already being used to design mechanical engineering infrastructure and electronic equipment, and to carry out design and survey work in the construction industry, including in determining the cost of design documentation. Such systems are being used even to design outfit (for example, the Maya Cloth module). Russian scientists rightly emphasize that for human workers, who are displaced from the sphere of material production, the service sector performs the compensating function. However, with time this sector risks losing its position as the final substitution of human workers by intelligent robots (Vatoropin et al. 2017). Even today, there is an introduction of humanoid robots that help in caring for the sick and the elderly. For example, in Japan the Pepper robot performs the functions of a junior medical staff. Over time, this may lead to crowding out of a similar cohort of human health workers. An example of the competition of intelligent robots with people in medicine robotssurgeons can be considered. Robot-surgeons not only help doctors carry out operations that require high-precision actions, which are sometimes inaccessible to humans, but also can perform surgical operations autonomously by themselves. So, the STAR robot from the USA applies stitches without human help, and with better quality than a professional surgeon. STAR uses computer vision, fluorescent materials and 3D cameras. Depending on the images obtained, the robot selects the optimal sewingtechnique and performs it with the machine accuracy. On the verge of ethically permissible, the introduction of robots-priests occurs (Germany, Japan). Presently the desired innovations are used exclusively in order to attract tourists and increase the interest of young generations in the matters of faith and religion. However, it cannot be excluded that with the development of AI, robots will not penetrate into brittle matters. Such areas of service as catering, tourism and hotel service are also subjected to robotization. Robots-waiters have appeared in China, robotic hotels - in Japan. There robots are employed as attendants (cleaners, receptionists, etc.). Robotization seized both the area of state administration and military affairs. The largest armies of the world are moving in the direction of increasing the new generation weapons associated with the creation of unmanned aircraft, tanks, infantry fire support vehicles, military equipment, etc. Robots and androids aimed at performing power functions (military, police, and security) are being created. As they are modernized, in the nearest future there will be a final disappearance of such professions as police officer and security guard. “Smart program” or AI is the second factor that partially takes work away is starting to compete with intellectual workers, especially in banking and services. In 2016, the head of Sberbank G. Gref, while evaluating the performance of Sberbank in the last five years, noted that robots now make about 50% of decisions previously made by humans, and after five years, robots can make 80% of decisions using artificial intelligence. At this rate, according to G. Gref, in five years there will be no need for gaining higher education of a “financier” (Gref 2016).

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Automated institutions management systems that lead to reduction in the number of administrative staff through the implementation of a smart program are being actively improved in the fields of education and medicine. Thus, the introduction of more sophisticated automated systems based on modern Web technologies, such as the Author-University system, in education will lead to a noticeable reduction in administrative and auxiliary educational staff. With the development and implementation of artificial intelligence, it will be possible to suggest the replacement of the faculty. The example in medicine is the automated MedLink system used for automated calculation of health indicators among the population, personal recording of treatment results and provided services, introduction of electronic document management, including a medical card, maintenance of self-automated patient registration for an appointment, introduction of such tasks as: key performance indicators and treatment standards, calculation of payment to doctors for services, registration of doctors and vacancies, opportunities for a doctor to have access to the data of any patient, accounting to results Rsov LPU. Further development of AI will allow medical workers to make more accurate diagnoses in the early stages of the disease. So in 2013, artificial intelligence IBM Watson began to diagnose cancer. The program can detect cancer with 90% accuracy, while the accuracy of even an experienced doctor diagnostician is only 50%. With the introduction of self-learning systems of AI, which will be able to independently diagnose diseases, this task will be completely solved. The views of experts on the development of IT-technologies, the appearance and introduction of AI systems in the field of public administration become even more realistic. It is possible that in the future the state will retain only political and power functions, while administrative functions will be minimized. Already today, automated services (online registration) that can reduce the number of officials are appearing. Migrant workers who came from other countries, poor areas of their own country, as the third factor that partially takes work away, are a phenomenon characteristic of any economically developed country of the world. Such workers have advantages for lowskilled work (cleaning the streets, repairs or housework, etc.) due to their willingness to work for much lower wages and unpretentious attitude to working conditions. The factors that completely take away work (profession) include: outsourcing, biotechnology, 3D-printer (This problem is described in detail in the Monograph (Legal Concept of Robotization 2019)). So, the analysis of new professions and “professions-retire”, as well as the factors determining the fate of a particular job (profession), made it possible to draw two important conclusions: • As central factors that are still partially taking work, the widespread robotization (from manufacturing to agriculture, from retail sales to the service sector) and the further development of artificial intelligence in the nearest future will lead to a significant decrease in employment in economically advanced countries with the prospect of a complete displacement of people from many branches of public life. • The ongoing changes show that the biggest number of risks is experienced by workers of the average qualification as the most adapted to the introduction of innovative technologies, which will inevitably lead to the elimination of a large number of professions that do not provide for “over professional” (intersectoral)

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skills, while simultaneously increasing high-skilled jobs that compensate for losses from possible technological unemployment. At the same time, the need for IT professionals maintaining complex automated systems and intelligent robots equipped with AI will increase in proportion to the introduction of fresh innovations

4 Discussion The question of the exponential impact of the new technologies on the labor market has been studied for quite a long time both in the foreign literature (Balkin 2015; Scholten et al. 2016; Eidenmueller 2017; Hawken et al. 2013; Schwab and Davis 2018, etc.) and in the works of Russian scientists (Dudin et al. 2016; Dudin et al. 2017; Inshakova et al. 2017; Nesterov 2017; Vatoropin et al. 2017; Neznamov and Naumov 2018; Yastrebov 2018; Gadjiev 2018, etc.). Scientific research in the recent years mainly concerns the development and implementation of AI, as well as the legal regulation of its use, including from the perspective of the interaction of the employer with human workers and AI at the level of organizations. At the same time, fundamental work on the transformation of labor relations and labor legislation under the conditions of the new industrial revolution have not been conducted yet. Certain aspects of the transformation of the specified relations were considered in the works of Andreeva et al. (2017), Kapelyushnikov et al. (2017), Kostyan et al. (2017), Zemtsov (2017), Rogalev et al. (2018), Filippova et al. (2017), Frolova et al. (2018) and a number of other Russian and foreign researchers. The analysis of the mentioned above scientific works gives the reason to believe that the probable consequences for employment and the social sphere associated with aging of some and the appearance of new professions are still poorly predictable. On the one hand, the rapid complication of the process of robotization shows that neither gaining education nor developing of new skills in the future will save from unemployment, the main threat and risk in the labor market. On the other hand, it is impossible not to take into account the mechanisms of employment transformation: the appearance of jobs in new industries, the probable introduction of technological, financial, legal, and other restrictions on automation and robotization of jobs. For large regions of heterogeneous countries such as Russia, USA, China, Brazil, the social consequences of technological changes will have the pronounced geographic (regional and urban) specifics, will cause large-scale migrations in the socio-economic space (Zemtsov 2017; Kapelyushnikov et al. 2017). In the regions and cities with a high risk of robotization the formation of new “old industrial” and “old service” areas with an increased level of social tension is possible. For Russia, such trends actually represent the risk of the appearance of a new sphere of potential technological exclusion of citizens from the regional economy – “the economy of ignorance”, “the society of ignorance” (Zemtsov 2017). Today in Russia, the level of use of industrial robots is lower than in most developed countries, and the cost of labor is low compared to the cost of introducing robots (especially considering the increase in migration from less developed countries). For comparison, in Russia there is about one industrial robot per 1,000 workers, while the world average

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is about 69. According to the expert data, the share of potentially automated workplaces in the Russian Federation as a whole can be estimated at 44% without external part-timers (Zemtsov 2017). According to the more modest estimates, robotization will be about 15%, while other workers who have risks of losing their jobs will be focused on more creative and intellectual positions within their professions after retraining. The highest estimates of robotization in the Russian Federation are obtained for regions with relatively developed manufacturing industry, where the introduction of industrial robots is the most promising: Leningrad, Vladimir, Kaluga, Lipetsk, Novgorod regions, the lowest - in the least developed regions (Zemtsov 2017). A striking example is the automation of AvtoVAZ in Tolyatti, where the number of employees has declined by more than 70 thousand people since 2007. It should be remembered that a special model of the labor market is being implemented in Russia where economic crises do not lead to an increase in the fixed unemployment: workers are transferred to the part-time employment, expanding their participation in additional activities outside the formal sector (both as part-time workers and as a part of self-employed) (Gimpelson and Kapelyushnikov 2015). For example, in many small settlements one of the most significant adaptation mechanisms is the transition to the subsistence farming, the various forms of self-employment (Inshakova et al. 2018). And as a result, a significant part of the population falls out of the modern processes of creating, using new knowledge, technologies, and products. If the economy of the Russian Federation develops within the framework of the global trends in increasing labor productivity and introducing labor-saving technologies, in order to preserve employment it will be necessary to develop and implement the large-scale retraining programs for new professions, develop creative industries and stimulate entrepreneurial initiative. As shown by the expert assessments of the dissemination processes of information and communication technologies (Zemtsov 2017), most regions of Russia (except Moscow and St. Petersburg) significantly lag behind in the introduction of new products, but the rate of “diffusion of innovations” is several times higher than abroad subsequently. At the same time, dimensional models of the spread of innovation repeat each other. Leading regions and outsiders in the implementation of, for example, mobile communications retained their positions in the spread of the Internet, electronic services and a number of other innovations. Thus, the lag of robotization processes in most regions of Russia can be replaced by a dramatic rise in the 2020s (Zemtsov 2017). Here a situation is possible in which the Government of the Russian Federation and the labor market will respond to the technological challenges with a delay, since the introduction of new training programs, the creation and development of innovative companies will take time. In this case, there may be a gap between the objectively increasing number of unemployed and the appearance of new vacancies. In some regions with a high proportion of vulnerable sectors, a situation of longterm (and in some cases permanent) decrease in employment is possible. It is known that the long-term unemployment sharply reduces a person’s chances to further participate in economic activities, which leads to the large-scale interregional and international migrations, posing unpredictable challenges to the regional social policy. It is possible to agree with the opinion of Russian experts that in order to reduce the share of potentially excluded from the economy workers and equalize the inevitable

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robotization processes in society, it is necessary to focus on strengthening the following four factors: education level, income level, level of implementation of information and communication technologies, level of entrepreneurship development (Zemtsov 2017). The higher the level of education and, accordingly, the level of qualification of the regional population, the faster it adapts to the introduction of new jobs and search for them. The richer the population is financially, the less vulnerable it is to robotization because the potential for adaptation to social and economic changes is high with the availability of resources for retraining, moving, opening a new direction for development. At the same time, a large role is assigned not only to the general indicator of population income, but also to the specifics of their distribution within society in order to avoid social inequality, which objectively leads to the exclusion of an even greater number of citizens from the modern economy. In turn, the level of development of information technology contributes to the creation of the new markets and areas of employment. The higher the level of possession of information technologies among the population, the higher is its ability to independently learn, master innovations. The high level of development of information technology in the regions also indicates the achievement of the required level of adaptation of the population to the environmental changes. The conditions for the development of entrepreneurship and the activity of this sector directly affect the creation of the new areas of employment, the realization of creative potential, and, consequently, the decline in the share of potentially excluded from the regional economy people. The potential dynamics in the sphere of employment over time will require adjustment of the legislative base. The search for the legal regulation is already being conducted by the developed countries both at the national and international levels. On the one hand, legislative amendments should use the economic benefits of a high level of innovation, be flexible; on the other hand, guarantee the preservation of the previous labor and social rights for all members of society. One of the effective recommendations of the Global Commission of the International Labor Organization (ILO) on the future of work is the revival of the social contract between governments, workers’ organizations and employers. A social contract could “provide employees with a fair share of economic progress, respect for their rights, and protection from the risks in exchange in return for their continued contribution to the economic development.” The basis for maintaining the relevance of such contract should be the social dialogue, which would allow managing the changes with the full participation of all actors in the are of labor, including millions of presently detached (“the society of ignorance”, “the economy of ignorance”) workers. The ILO recommends that shaping the future in the area of labor, including the issues of “industry 4.0,” should take place in the three main areas: – increase in investment in the development of human abilities, namely: the provision of the universal right to lifelong learning, which will allow to acquire professional and over professional skills, retrain and improve skills; increase of investment in institutions, policies, and strategies that will support people during the transitions in

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the newly emerging (industrial) work environment; implementation of the gender equality agenda; providing the universal social protection from birth to old age; – increase in investment in the institutions of the labor market, which involves: establishment of a universal labor guarantee; strengthening sovereign time control; ensuring the collective representation of workers and employers through the social dialogue as a public good with the active assistance of the state policy; the introduction and application of technology solely in the interests of the decent work; – increase in investment in the decent and stable employment, which includes already at the stage up to 2030: stimulating investment in the key areas in order to ensure the decent and stable employment; changing the structure of business incentives in the interests of long-term investment approaches, as well as addressing the issue of the formation of additional indicators of human development and their welfare. These recommendations can be the basis for the subsequent transformation of the labor legislation, formed in the period of industrial society and not taken into account the new risks and new situations related to the development of innovative technologies. Implementation of the individual ILO recommendations is already being carried out by the countries at the national levels. In Russia, the need for system changes in the labor legislation is clearly seen in a number of documents at the federal level, in particular, in the Decree of the Government of the Russian Federation of April 18, 2016 No. 317 “On the Implementation of the National Technological Initiative” and the Decree of the President of the Russian Federation of May 9, 2017. No. 203 “On the Strategy for the Information Society Development in the Russian Federation for 2017–2030”. The task of eliminating obstacles for the development of high-tech business and preventing the appearance of the new ones was set in the “Digital Economy of the Russian Federation” program (hereinafter referred to as the Program), approved by the Order of the Government of the Russian Federation of July 28, 2017 No. 1632-p. A separate emphasis in it is placed on the problems of Russia’s lagging behind the countries leading in digitalization, which is explained by the gaps in the regulatory framework and the unfavorable business environment. It also proposes the ways out of their current situation, which are designed for the period up to 2024. The first in the list of directions is the area of labor (the normative regulation of labor and personnel). It should be noted that the forthcoming reform of the area of labor is equally inevitable both for Russia and for the leading countries in the field of automation and robotizating manufacture and other branches of the human interaction. At the same time, fundamental changes in the legal regulation of employment may be caused by: – the formation of models of the new environment: new professions that require over professional interaction, the development of over professional skills; communication culture due to the new technological structure, etc.; – the need to create conditions for lifelong learning with the use of the new online technologies, dual education; the formation of the entrepreneurial universities, capable of preparing not only personnel, but that also can conduct applied research and create innovative companies on their basis; – the need for the new safety standards due to the coexistence of artificial intelligence with natural “human” intelligence in the neighboring workplaces;

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– the need to create legal norms for the new sectors of economy, where their technological, financial, legal, and other restrictions on the automation and robotization of workplaces that give priority to the “human” resources (Frolova et al. 2018) will operate; – the need to warn and prevent discrimination associated with the different accessibility of new innovative technologies for workers, allowing in the shortest possible time to achieve the set results of work in relation to other workers who do not have the capabilities and abilities to their development and further use. The legal framework that is prepared taking into account these factors should include appropriate legal registration of the newly emerging social relations in the area of labor, employment, and social security, definition of the essense of the regulatory legal acts, conceptual apparatus and target orientation. This process is impossible without the harmonization and integration of the legal systems and a system of the shared values that will turn Industry 4.0 into the new opportunities for all members of society.

5 Conclusions Summarizing this article, it is necessary to resume that solving the probable problems during the “reformatting” of labor relations with the participation of robots is seen in fixing at the legislative level a number of autonomy limitations of robotized systems, as well as rules of interaction between human workers and robots in areas where their work will be joint. With the right approach of the legislator to the “reformatting” of labor relations in a given manner, the legal status for human-workers in the social organization of labor will receive significant advantages. Favorable opportunities for human-workers will be expressed primarily in the transfer of part of their functionality to smart robots, which will significantly reduce the time and deadlines for the tasks set to the workers. Under these conditions, the implementation of a number of ILO recommendations on investing in labor market institutions will become a reality: working time will become more limited, and employees will get more guarantees for free disposal of personal time while meeting the needs of enterprises and organizations. The available free time can be actively used by employees to acquire new professions (positions): vocational training, retraining and advanced training with the direct assistance of the employer or by the directions of the employment services, which will require appropriate changes in the legislation. In the Russian Federation - in the Labor Code of the Russian Federation and the Law of the Russian Federation of April 19, 1991 No. 1032-1 (amended on December 11, 2018) “On employment of the population in the Russian Federation”. Problems of interaction in the framework of labor relations are closely integrated with problems in other spheres of human existence. Thus, the fundamental transformation of social relations will firstly effect educational system, science, culture and sports. This will require changes in regulations of both federal and regional nature.

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The norms, regulating the area of labor relationship, are facing the conflicting tasks. On the one hand, such norms are designed to ensure that stability of employment, to protect the employees as the weak side of the labor relationship. On the other hand, such norms cannot and should not be an obstacle to the process of “effective adaptation” of the sphere of employment to technological changes and new challenges of modern globalization of the economy. Therefore, the most effective mechanism for adapting to technological changes is the elimination of barriers to the movement of workers in a professional, sectoral and regional context, as well as preventing significant costs for workers in respect of which the risks of job loss have already been implemented. Within the framework of this article, the following crucial issues have not been reflected: (a) the methodology for assessing the compliance of Russian law of labor and employment with new technological challenges; (b) features of the “prognostic” stages, reflecting the change in the technological structure on the example of the Russian Federation and a number of other industrialized countries, as well as the types of specific regulatory legal acts in the sphere of labor and employment that are subject to transformation due to the consistent implementation of each of the specified stages. The authors expect to uncover, supplement and develop these, as well as some other aspects of the transformation of relations in the sphere of labor and employment (in the context of Industry 4.0) in other research papers on this and similar subjects.

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Consumer Protection of Digital Financial Services in Russia and Abroad Evgenia E. Frolova(&) , Elena P. Ermakova and Olga V. Protopopova

,

Peoples’ Friendship University of Russia (RUDN University), Moscow, Russia [email protected], [email protected], [email protected]

Abstract. Purpose: The purpose of the chapter to study the features of the legal regulation of consumer protection of digital banking in the European Union, USA, China and Russia. In 2019, the Internet user audience in Russia amounted to 90 million people (75.4% of the country’s adult population). More than 50% of the European population (250 million people) and 40% of the Chinese population (approximately 560 million people) use digital banking in everyday life. Therefore, the protection of the rights of consumers of digital financial services are facing governments of all countries of the world. Design/methodology/approach: In this chapter, the authors studied and analyzed the provisions of legislation, judicial practice, the doctrines of the European Union, the USA, China, and the Russian Federation. Findings: It is shown that the legal regulation of consumer protection of digital financial services should not be too strict and excessive. Excessive regulation causes digital financial service providers to travel to other countries where regulation is milder or absent altogether, which happened in the United States in 2018. The government had to cancel some very tough provisions of Dodd-Frank 2010. On the other hand, the comparatively lenient regulation of the distribution of digital banking services, for example in China, has led to the emergence of a number of fraudulent schemes in the field of Internet banking. Under pressure from the indignant public, the Chinese government had to take urgent measures to rectify the situation Originality/value: The novelty lies in the analysis of a number of regulatory acts, including: acts of the European Union (Regulation (EU) 2016/679 of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data; Directive (EU) 2015/2366 on EU-wide payment services (PSD2)); the USA (Dodd–Frank Wall Street Reform and Consumer Protection Act (2010); Economic Growth, Regulatory Relief, and Consumer Protection Act (2018) (EGRRCPA)); China (General Rules of the Civil Law of China; Law of Consumer Rights and Interests; Cybersecurity Law 2017) and the Russian Federation (Law “On Protection of Consumer Rights” of 07.02.1992 (as amended on March 18, 2019)). Keywords: Financial system
Digital financial services “fintech”
Financial transactions
Consumer protection JEL Code: G 21


Technology


K 41

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 76–87, 2020. https://doi.org/10.1007/978-3-030-39319-9_8

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1 Introduction Over the past decade, the global Internet Finance industry has grown and diversified at breakneck speed. Hundreds of millions of people now use online payment services to make financial transactions, turn to peer-to-peer (P2P) credit platforms or online banks to borrow money, and bypass conventional financial institutions to invest their savings in online investment funds. This has changed the way people access and interact with financial products (Loubere 2017). The types of services provided by Internet banking include: (1) services for payment of bills, (2) services for the transfer of funds, (3) obtaining credit cards, (4) investing through Internet banking, (5) shopping on the Internet; (6) insurance, etc. the Service of payment of bills via the Internet helps to facilitate the payment of bills for electricity and telephone, mobile phone bills, credit cards and insurance premiums, as banks have connections with various utility companies, service providers and insurance companies (Banerjee 2017). The money transfer service allows you to transfer almost instantly any amount of money from one account to another of the same or any other Bank, whereas in a traditional Bank it takes about three working days. With the help of Internet banking, customers can not only pay their credit card bills online, but also receive credit on their cards. Investing via Internet banking, investors can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited to their account. You can make purchases on the Internet and make payments via Internet banking. You can also buy railway and air tickets via Internet banking.

2 Materials and Method The scientific base of this article is formed on the basis of works of Russian and foreign scientists. Among the works of Russian authors who study the protection of the rights of consumers of financial services in the Asia-Pacific region, we should mention the monograph “Resolution of financial disputes in the APR countries (Australia, Hong Kong, India, Indonesia, China, Malaysia, New Zealand, Singapore, USA, Thailand, Japan)” (2019) and some scientific articles: Ermakova et al. (2018), Frolova (2015), Inshakova and Tymchuk (2018), Inshakova et al. (2016), Dudin et al. (2014). Protection of the rights of consumers of digital financial services in the European Union received coverage in the works of foreign authors: Banerjee (2017), Stamegna and Karakas (2019); reference materials of the EU. Problems of consumer protection in the United States set out in articles: Burgess (2017), Kenton (2019), Mott (2018). Digital banking in China and consumer protection of such services studied by the works: Hong (2017), Loubere (2017), Tobin and Volts (2018), Tsai (2017), Wang (2018). The scientific development of the content of this chapter of the monograph is carried out on the basis of the general scientific method of historical materialism. General scientific methods of cognition are used: dialectical, hypothetical-deductive method, generalization, induction and deduction, analysis and synthesis, empirical description. The study also used private science methods: juridical-dogmatic, statistical method, method of comparative legal analysis, other.

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3 Results 3.1

European Union

The protection of the rights of consumers were seen the bodies of the EU since the 1970. Although today the level of protection is considered to be one of the highest in the world, consumers in the EU still face a number of challenges. Since June 2010, the Directive 2008/48/EC on credit agreements for consumers has established General rules for consumer credit aimed at harmonizing laws, regulations and administrative acts on consumer credit in the EU. The Directive was amended in 2014. Changes and has come into force in 2016. The Directive applies to personal loans in the amount of 200 to 75 000 Euros, repayable in more than a month. The Directive does not apply to mortgages or deferred debit cards. The EU has a “Deposit guarantee System”, introduced by the EU regulation 1995 (Deposit guarantee schemes), which reimburses consumers for money lost from current and Deposit accounts when a financial institution cannot recover money due to financial difficulties. The EU regulation 2015 (Deposit guarantee Schemes) replaced the EU Regulation 1995. According to the provisions of the regulation, the payment process begins only after it is established that a financial institution cannot return money to consumers because of its financial condition. The maximum requirement per person is 100% of all deposits held by a financial institution, but not more than 100,000 euros (Dudin et al. 2014). The Deposit guarantee scheme is financed by the authorized credit institutions of each EU member state. In addition, the EU has a platform “FINNET”, which is a pan-European network of out-of-court complaints about financial services. The platform was designed specifically to facilitate out-of-court resolution of consumer disputes when a service provider is established in an EU member state other than where the consumer resides (FIN-NET 2019). In April 2018, the EU Commission proposed a «new deal for consumers» to modernize consumer protection regulations. The bodies of the EU, it was decided to undertake legislative reforms aimed at facilitating the participation of consumers in the digital single market and the reform of the rules on confidentiality and data protection (EU policies 2019). E-Commerce is one of the cornerstones of the Single digital market strategy, and the EU has taken several steps to make it easier and safer for European consumers to shop online across the EU. To fully realize the potential of electronic Commerce, EU bodies have worked on: (1) the revised Payment Services Directive; (2) new Rules to stop unjustified geoblocking, which entered into force on 3 December 2018; (3) revised Consumer protection rules, which will enter into force in 2020; (4) new VAT rules for online sales of goods and services, which will enter into force in 2021. The first EU Directive on the protection of personal data was Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data. This Directive was repealed by the General Data Protection Regulation (EU) 2016/679 (GDPR). This Regulation entered into force in 2016 and began to apply from May 25, 2018. (Inshakova and Tymchuk 2018). Some experts argue that the current EU legislation on data protection, competition and consumer protection does not define “Big data”, which creates a blind spot that needs to be

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addressed. Therefore, the European Supervisory authorities - The European Banking Authority (EBA), The European Securities and Markets Authority (ESMA) and The European Insurance and Occupational Pensions Authority (EIOPA) has prepared a number of draft amendments to the GDPR and other General rules of consumer protection (Stamegna and Karakas 2019). The adoption of the Regulations has great importance for the protection of the rights of consumers of financial services. GDPR puts a lot of requirements, which is able to prevent violations of the rights of consumers in all probabilities, as in the case of “Equifax” and “Facebook”. Moreover, if any company has data on European customers, they are obliged to protect them, as well as completely clean at the request of the client. The changes in the GDPR standardize enhanced protection for consumers and their personal information - even for organizations outside Europe that still retain such personal information about Europeans as part of their operations. Thus, any business in the US working with European clients will have to comply with the new rules. Organizations that do not comply with the GDPR will have to pay fines of $ 23.5 million. That’s US, or 4 percent of your income whichever is greater (Mott 2018). It should be noted that the current Program of consumer protection in the EU terminated in accordance with the proposal of The Multiannual Financial Framework (MFF) 2020–2027. Measures for protecting consumers are instead included in The New Single market program under the title: «Single market, innovation and digital». The New Program is aimed at consolidating a number of activities that were previously funded separately. The EU Commission claims that the merger of various categories of protection into one Program will help to minimize duplication, promote synergies and improved cooperation of member countries of the EU (EU policies 2019). 3.2

USA

The global financial crisis has shown governments around the world the need for better consumer protection and financial literacy. Under the Dodd-Frank Act (2010), the United States established the Federal Deposit Insurance Corporation (FDIC) (Kabza 2017). The act established financial instruments for the protection of consumers, financial institutions and systemic protections; the act established The Financial Consumer Protection Bureau (Ermakova et al. 2018). Numerous provisions of the law, set out on more than 2,300 pages, have been implemented for several years and are aimed at reducing various risks in the US financial system. President Donald Trump promised to repeal the Dodd-Frank Act, and on May 22, 2018, The House of Representatives voted to reject significant parts of the Dodd-Frank Act (Kenton 2019), as enshrined in the new U.S. Federal Act in 2018- The Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The acts mentioned above contain general consumer protection issues; certain financial protection issues are regulated in the United States by specific regulations. Regulation of privacy, disclosure, fraud prevention, anti-money laundering, including in the field of IT risks (IT risk) and cyber security: the US Financial Privacy Act (1974) contains a Rule of Privacy of the use of the client’s personal data, which is that banks and other financial institutions must inform the consumer about their policy with respect to personal information and must refuse to provide the client’s data to third

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parties (Inshakova et al. 2016). The Bank secret Act (1970), also known as The Foreign Exchange and Foreign Currency Reporting Act, requires financial institutions to assist the U.S. government in detecting and preventing money laundering. In particular, the law requires financial institutions to keep a record of purchases of negotiable instruments in cash, record reports if the aggregate daily amount exceeds $10,000, and report suspicious activities that could mean money laundering, tax evasion, or other criminal activity. The USA PATRIOT Act (2001) allows financial institutions to set limits on new accounts until the identity of the account holder is confirmed. Consumer protection on the issue of monetary deposits and lending: the Cash deposits of consumers of financial services are protected: (1) The Truth in Savings Act (TISA) (1991), The Electronic Fund Transfer Act (1978) и The Expedited Funds Availability Act (EFAA) (1987). The Truth in Savings Act (1991) established uniform disclosure requirements for the terms and conditions relating to interest and fees in the provision of information and the opening of a new savings account. The Electronic Fund Transfer Act (1978) established the rights and obligations of consumers and the obligations of all participants in electronic funds transfers. The Expedited Funds Availability Act (1987) defines a standard when checks can be deposited into a chequing accounts and provides a maximum shelf life of the money. Consumer rights in lending are protected by The Home Mortgage Disclosure Act (1975), The Equal Credit Opportunity Act (1974) and The Truth in Lending Act (1968). The protection of international remittances: the mission of the Bureau of Financial Consumer Protection (CFPB) is to make financial markets fairer for consumers, to ensure compliance with the relevant rules and to provide consumers with the opportunity to take more control over their economic lives. Bureau CFPB is responsible for oversight of all international transfers in the United States worth more than $15 (TransferWise 2018). The US Treasury Department’s Internal Revenue Service (IRS) primarily collects reports on international bank transfers of $10,000 or more. Reporting is usually created by a Bank or money transfer service to ensure that transfers are not related to illegal activities such as money laundering or crime financing. Digital currencies such as Bitcoin and its underlying Blockchain Protocol provide a technical platform for a new global payment infrastructure, noted by Kyle Burgess, Executive Director and Editor in Chief, Consumers Research (Burgess 2017). Every year «Consumers Research» hold a seminar in Bretton Woods, New Hampshire, in the spirit of the first such conference in 1944 the Conference “Bretton Woods-2016” brought together representatives of legislative bodies, as well as a diverse range of participants fintech, traditional financial industry and blockchain professionals to jointly address consumer protection issues. The participants of the conference adopted the final document «Consumer Protection in the Digital Economy» (Bretton 2016), which emphasized that as for any other product, consumer protection should be at the forefront of the development and implementation of digital currency and financial services based on blockchain. In the subsection “Recommended solutions” of the stipulated document, it was noted that “We already see that us regulators are forcing some companies working with digital currencies to create inadequate or inappropriate regulatory frameworks. … This harms American consumers because these businesses cannot afford to operate in an environment that requires unnecessary licenses. Instead,

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these businesses seek refuge abroad, taking with them their innovations and new product offerings. Moreover, none of the consumers of digital financial services in the US would be better off if the regulatory environment in a country with strong regulatory institutions and effective rule of law is so burdensome that businesses flee to States where consumer protection laws are negligible or unenforceable» (Burgess 2017). 3.3

China

According to the latest statistics, 40% of China’s population uses only mobile payments, with less than 100 yuan in cash ($15). In 2016, China’s consumers spent 157.55 trillion RMB (US $ 22.8 trillion) via mobile payment platforms, compared to US $ 112 billion in the US (Tobin and Volz 2018). Unlike the US, where credit cards issued by a traditional Bank are behind most non-cash transactions, mobile payment services in China are dominated by Internet giants such as Tencent and AntFinancial, supported by Alibaba, which occupy respectively 40% and 54% of the mobile payment market according to iResearch. China’s financial regulators are trying to catch up to cope with this unprecedented industry (Hong 2017). The booming Chinese Internet Finance industry is characterized by diversity and innovation, with a huge number of providers entering the market in an attempt to benefit from the sudden liberalization of financial services in the country. This has led to the development of a wide range of credit and investment products designed for a diverse client base - from poor and marginalized rural populations to large urban enterprises in search of investment capital. Digital loans are mainly provided by two types of online financial institutions: online banks and P2P platforms. Online banks such as WeBank (Tencent) and MyBank (AlibabaGroup) are intended for those who participate in e-Commerce platforms, including owners and customers of Taobao (Loubere 2017). Protection of the rights of consumers of digital financial services in China is primarily regulated by General regulations relating to this area: The Law of the People’s Republic of China on the Protection of Consumer Rights and Interests (as amended in 2009 and 2013); The Cybersecurity Law of the People’s Republic of China (Effective June 1, 2017). The norms of a General nature should also include article 127 of the General Rules of the Civil Law of China 2017, which is fixed: If the laws contain provisions on the protection of data and virtual property on the Internet, such laws must be observed (Wenhao 2018). In addition, consumer protection regulations have been incorporated into the by-laws governing digital banking in China: (1) Guiding Opinions on Promoting the Healthy Development of Internet Finance (Guiding Opinions) 2015; (2) Interim Measures on Administration of the Business Activities of Peer-toPeer Lending Information Intermediaries (the «Interim Measures») 2016. The Chinese P2P market is the largest in the world: in 2016, almost 6,000 P2P platforms provided transactions worth about one trillion Yuan. In 2017, the volume of P2P lending transactions reached 2.8 trillion Yuan (Tobin and Volz 2018). Some major platforms, such as paipaidai, served more than two million active borrowers and lenders (Loubere 2017). «Interim measures» were introduced in 2016 against the backdrop of exponential growth in the P2P lending industry. In part, this growth was facilitated by the relatively weak regulation of Internet Finance in China to stimulate

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creativity among market participants and help small and micro-startups raise funds. However, over the past two years, several fraudulent platforms have been identified, causing huge financial losses to creditors and the general public and causing social unrest in some parts of China (Linklaters 2016). Until recently, in China, literally anyone could launch a website and start raising funds from active investors, noted chinese researcher professor K. S. Tsai (Tsai 2017). In the absence of adequate regulation, nearly 65% of China’s P2P platforms no longer operate due to bankruptcy or fraud. The collapse of Ezubao in 2015 was a prime example of the risk associated with free FINTECH. The scheme of her work was fully revealed in the winter of 2016. It operated under the guise of an online lending platform, issuing loans without the use of traditional banking mechanisms. The platform attracted 7.6 billion dollars (over 50 billion Yuan) from almost 1 million people. A significant part of the funds its founders spent on personal enrichment (Banki.ru 2017). A similar gap in consumer protection can be seen in predatory lending to chinese female students. In mid-2016, chinese and international media reported that various P2P platforms, including «Jiedaibao.com» , used Nude photos of female borrowers as collateral for their loans. Called «naked loans» (luotiao jiedai, 裸條借貸), the platforms forced students to take out additional usurious loans when they were unable to make payments, threatening to post their photos on social networks and send them to friends and family (Cossa 2018). In 2016, the China Banking Regulatory Commission (CBRC) has banned unauthorized financial institutions from lending to students. Because of the pervasive failures of the P2P and digital financial abuse CBRC in August 2016 restricted individual borrowing from P2P platforms up to 200,000 Yuan (Tsai 2017). China tightens regulation on mobile payment applications: Chinese regulators are increasingly concerned about the platform of electronic payments run by the deposits of users and introduce new methods of payments, has recently imposed a number of restrictions that will harm the revenue streams of companies and will limit their quick pace of expansion, wrote in January 2019, the Chinese Explorer, Wang Yue (Wang 2018). On December 30, 2018, Halyk Bank of China Increased the ratio of reserve funds of payment platforms from 20% to 50%, under its own centralized management, so that the Bank could better track how these funds are used. This measure, which comes into effect in April 2019 and will be gradually increased to 100% of the reserve funds, should reduce the hundreds of million yuan of interest payments that Tencent and Ant Financial currently receive by placing approximately $ 75 billion of reserves in commercial banks or investing in other funds. Previously, the people’s Bank of China did not directly control the reserve funds, and thus firms could potentially abuse their customers’ money (Frolova 2015). In an effort to curb online banking fraud, the people’s Bank of China imposed restrictions on payment by QR code at the end of December 2018, which users can scan with “Alipay” or “TenPay” to make purchases or order services. Based on security measures and user credentials, transaction limits are set at 500 Yuan ($77), 1000 Yuan ($154) or 5000 Yuan ($769). Such problems have already arisen. Thus, in the southern province of China - Guangzhou as a result of fraud with QR codes, a total of 14.5 million were stolen. RMB, when fraudsters replaced legitimate codes with fake ones or introduced malicious software into them to steal

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information from a personal Bank account. In Foshan city, police arrested a man who stole more than 900,000 yuan (($138,000) using fake QR codes (Wang 2018). In China, compared to Europe and the US, personal data privacy rules are not so strict, which gives Chinese companies enough opportunities to collect, monitor and analyze user data for their own growth. In recent years, the Chinese public is increasingly discussing this problem. Chinese giant “Alipay”, which in 2017 collected data on people’s total spending and classified their buying habits for interactive viewing inside their app, apologized for this in their official microblog “Weibo” after users complained on social networks that they had not received proper notification of the privacy agreement from the company that allows “Alipay” to share a wide range of user data with other agencies. Meanwhile, representatives of the second giant of Internet banking - the company “Tencent” - explained that the company does not store the history of chat users. “Traditionally, privacy has not been a priority in China. If this happens, the payment industry will not develop so quickly,” noted Chinese observers (Wang 2018). 3.4

Russia

By the beginning of 2019, the audience of Internet users in Russia amounted to 90 million people (+3 million people last year) and reached 75.4% of the adult population of the country. The main trend is the growth of mobile Internet in recent years. Meanwhile the beginning of 2019, the share of Internet users on mobile devices reached 61%. A year earlier, this figure was 56%. First of all, the audience of users who access the Internet from smartphones is growing. However, the protection of the rights of consumers of digital financial services is not properly regulated at the legislative level in Russia. Protection of the rights of consumers of digital services is based on the provisions of the Law of the Russian Federation of 07.02.1992 N 2300-1 (ed. of 18.03.2009) «On protection of consumer rights». The Bank of Russia defined «Internet banking» as a method of remote banking customer service, carried out by credit institutions on the Internet (including through the WEB-site(s) on the Internet) and including information and operational interaction with them. Therefore, in a broad sense, for the protection of Internet banking customers, the General provisions that apply to consumers of traditional banking services, concentrated in the regulations on banking services which can be also applicable. Back in June 2016, the Chairman of the Board of the International Confederation of consumer societies D. Yanin noted the importance of Internet banking security issues: «Banks are not making enough efforts to ensure the safety of Internet customer service: 30% of the banks studied do not offer any means of enhancing security, and none of the banks provides a free antivirus, despite the presence of serious threats to the financial security of customers. The monitoring also revealed the problem of shifting the responsibility of banks for the security of Internet transactions to customers. In 77% of the banks studied, the agreements contain provisions that allow the Bank to knowingly remove responsibility for the correct functioning of the Internet service» (KonfOP 2016). At the same time, paragraph 3 of article 847 of the Civil Code of the Russian Federation courts sometimes interpret as the right of the Bank in the contract to shift all risks from the use of digital means of identification to the customers themselves, regardless of the quality

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and security of the banking service. In support of this position, the courts also use references to various rules of banks containing limitations of their responsibility for the execution of orders issued by unauthorized persons, but with the use of means of customer identification (Appeal ordinance of the Nizhny Novgorod regional court of January 14, 2016 in case N 33-506/2016 //ATP consultant Plus) (Saveliev 2016). Currently, the normative consolidation of Internet banking security standards is contained in the Standard of the Bank of Russia. Information security of organizations of the banking system of the Russian Federation. General provisions “Paragraph 7.8.6 of the Standard, in particular, contains the following measures: protection of payment information from distortion, falsification, redirection, unauthorized destruction, etc.” Given the technically specific nature of the provision of Internet banking services, a special degree of risk for users of this service, it is necessary to have a special regulatory regulation of these legal relations at the level of the law, noted Savelyev D. B. In 2018, the Federal service for supervision of consumer rights protection and human welfare of the Russian Federation (Rospotrebnadzor) presented the Report the state of consumer protection in the financial sector in 2017, which noted that in 2017 in the courts of General jurisdiction of the Russian Federation received 83 277 civil cases on the protection of the rights of consumers of financial services, which is 23.4% of the total number of civil cases (355 385), with more than half of civil cases against consumers was initiated on claims of financial institutions. The use of mediation procedures in the field of consumer legal relations is still isolated, with all cases recorded in the reporting period (4 cases) relate to disputes between credit institutions (banks) and their customers. The most frequent disputes, the courts of justice, with the amount of claims up to 50 thousand rubles (Rospotrebnadzor 2018). In the report emphasized that the key measures in the field of improving the legal base in the sphere of consumer rights protection are the development and approval of the «Concept of codification of the legislation of the Russian Federation on protection of consumer rights» (March 2019), the broad public discussion of this concept with the participation of scientific and expert communities, public organizations and the business community (November 2019) and the development of a new legislative act of the Russian Federation (the code) on the protection of consumers’ rights (November 2023).

4 Conclusion The authors of this article concluded that the legal regulation of consumer protection of digital financial services should not be too strict and excessive. Excessive regulation means that digital financial service providers are moving to other countries where regulation is more lax or non-existent, which is what happened in the United States when the government needed to repeal some of the overly harsh provisions of the Dodd-Frank Act of 2010 in 2018. On the other hand, too soft regulation of the spread of digital banking services, as, for example, in China, has led to the emergence of a number of fraudulent schemes in the field of Internet banking. The Chinese government had to take urgent measures to remedy the situation under pressure from the outraged public. Consumer confidence in a well-functioning financial services market contributes to long-term financial stability, growth, efficiency and innovation. Consumer

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protection is increasingly becoming a major concern that goes beyond the financial stability of Supervisory institutions (Kabza 2017). The Russian legislator should take into account the above points when developing a new legislative act - the Consumer Protection Code, which is planned to be adopted in 2023. Acknowledgements. The reported study was funded by RFBR according to the research project №17-03-00093 “a” (scientific adviser - E. E. Frolova).

References Banerjee, R.: Internet Banking – Legal Issues (2017). http://rajdeepandjoyeeta.com/internetbanking-legal-issues. Accessed 03 July 2019 Banks.ru. The head of the PRC’s largest financial pyramid was sentenced to a life sentence on 12/09/2017 (2017). https://www.banki.ru/news/lenta/?id=10004147. Accessed 26 Feb 2019 Bretton, W.: Consumer Protection in the Digital Currency Economy (2016). http:// consumersresearch.org/research/papers/bretton-woods-2016-protecting-consumers-in-thedigital-currency-economy. Accessed 16 Mar 2019 Burges, K.: Protecting Consumers in the Digital Currency Economy, 18 May 2017. https://www. centerforfinancialinclusion.org/protecting-consumers-in-the-digital-currency-economy. Accessed 06 Mar 2019 Cossa. Bare loans: Chinese young people actively take microloans, leaving intimate photos on bail (2018). https://www.yaplakal.com/forum3/topic1878447.html. Accessed 26 Feb 2019 Digital Single Market. New EU rules on e-commerce (2019). https://ec.europa.eu/digital-singlemarket/en/new-eu-rules-e-commerce. Accessed 22 Mar 2019 Dudin, M.N., Sekerin, V.D., Smirnova, O.O., Frolova, E.E., Sepiashvili, E.N.: State anti-crisis management of banking sector: looking for optimization ways and contemporary development trends. J. Adv. Res. Law Econ. 5(2), 74–81 (2014) Ermakova, E.P., Rusakova, E.P., Sitkareva, E.V., Frolova, E.E.: Main components of protecting consumers of financial products in Asian-Oceanic (APAC) countries. Int. J. Eng. Technol. (UAE) 7(4.38), 157–163 (2018) EU policies. Protecting European consumers. BRIEFING: EU policies – Delivering for citizens (2019). http://www.europarl.europa.eu/RegData/etudes/BRIE/2019/633141/EPRS_BRI (2019)633141_EN.pdf. Accessed 17 Mar 2019 EUR-Lex. Geo-Blocking: a new Regulation enters into force (2018). https://eur-lex.europa.eu/ content/news/geo-blocking-regulation-enters-into-force.html. Accessed 22 Mar 2019 European Commission. Single market, innovation and digital - legal texts and factsheets (2018). https://ec.europa.eu/commission/publications/single-market-innovation-and-digital_en. Accessed 20 Mar 2019 European Parliament. Think Tank. Modernisation of EU consumer protection rules. A new deal for consumers (2018). http://www.europarl.europa.eu/RegData/etudes/BRIE/2018/623547/ EPRS_BRI(2018)623547_EN.pdf. Accessed 22 Mar 2019 FIN-NET (2019). https://ec.europa.eu/info/fin-net_en. Accessed 12 Mar 2019 Frolova, E.E.: Mechanisms of action of instruments of the monetary policy of China in the first decade of the XXI century. In: Materials of the International Scientific-Practical Conference: International scientific-Practical Conference “Prospects of Development Of Legal Science, Practice and Education in the Asia-Pacific Region”, Vladivostok, Far Eastern Federal University, 25 September 2015, pp. 174–189 (2015)

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Frolova, E., et al.: Resolution of financial disputes in the APR countries (Australia, Hong Kong, India, Indonesia, China, Malaysia, New Zealand, Singapore, USA, Thailand, Japan) (2019). Monograph. Ed. Her. E.E. Frolova and E.P. Ermakova. M. Ed. Infotropic Media, p. 407 (2019) Hong, J.: How China’s Central Bank is Clamping Down on the Mobile Payment Industry, 18 August 2017. https://www.forbes.com/sites/jinshanhong/2017/08/18/how-chinas-centralbank-is-clamping-down-on-the-mobile-payment-industry/#62272ca250be. Accessed 14 Mar 2019 Inshakova, A.O., Tymchuk, YuA: Digital technology alternative dispute resolution: foreign practice and prospects of application in Russia. Law Adm. XXI Century 1(46), 23–31 (2018) Inshakova, A., Frolov, D., Kazachenok, S., Maruschak, I.: Institutionalization of intellectual property on resource-saving technologies and materials: a comparative institutional study of USA and Russia. J. Adv. Res. Law Econ. VII(6(20)), 1373–1382 (2016) Kabza, M.: The role of central banks in protecting financial services’ consumers grows, 10 October 2017. Central European Financial Observer (2017). https://financialobserver.eu/ poland/the-role-of-central-banks-in-protecting-financial-services-consumers-grows. Accessed 21 Mar 2019 Kenton, W.: Dodd-Frank Wall Street Reform and Consumer Protection Act (2019). https://www. investopedia.com/terms/d/dodd-frank-financial-regulatory-reform-bill.asp. Accessed 14 Mar 2019 KonfOP. KonfOP assessed the state of protection of the rights of users of banking online services, 1 July 2016. http://konfop.ru. Accessed 19 Mar 2019 Linklaters. P2P lending in China enters into a regulated era (2016). https://lpscdn.linklaters.com/ -/media/files/linklaters/pdf/mkt/shanghai/160816_china. Accessed 13 Mar 2019 Loubere, N.: China’s Internet Finance Boom and Tyrannies of Inclusion. 2017/4 (2017). https:// journals.openedition.org/chinaperspectives/7454. Accessed 01 Mar 2019 Motto, S.: Why Europe’s Payments Regulation Could Rock the U.S. Payments Industry (2018). https://www.tsys.com/news-innovation/whats-new/Articles-and-Blogs/nGenuity-Journal/ why-europes-payments-regulation-could-rock-the-us-payments-industry.html. Accessed 21 Mar 2019 Rospotrebnadzor. Report “On the state of consumer protection in the financial sector in 2017”, Moscow (2018). https://rospotrebnadzor.ru/upload/iblock/096/doklad-2017.pdf. Accessed 21 Mar 2019 Saveliev, D.B.: Civil law aspects of risk sharing in Internet banking //Banking Law, 2016, N 3. Branches of law. Analytical portal (2016). http://xn—7sbbaj7auwnffhk.xn–p 1ai/article/19696. Accessed 19 Mar 2019 Stamegna, C., Karakas, C.: Fintech (financial technology) and the European Union State of play and outlook. EPRS (European Parliamentary Research Service). Members’ Research Service PE 635.513 – February 2019. http://www.europarl.europa.eu/RegData/etudes/BRIE/ 2019/635513/EPRS_BRI(2019)635513_EN.pdf Accessed 07 Mar 2019 Tobin, D., Volz, U.: The Development and Transformation of the People’s Republic of China’s Financial System. ADBI Working Paper 825. Tokyo: Asian Development Bank Institute (2018). https://www.adb.org/publications/development-and-transformation-prcfinancialsystem. Accessed 13 Mar 2019 TransferWise. International wire regulations: The IRS, your rights, and rules you should know, 28 July 2018. https://transferwise.com/us/blog/international-wire-transfer-regulations. Accessed 16 Mar 2019 Tsai Kellee, S.: FinTech and Financial Inclusion in China. HKUST Thought Leadership Briefs No. 20 (2017). https://iems.ust.hk/tlb20. Accessed 13 Mar 2019

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Wang, Y.: China Tightens Regulation Over Mobile Payment Apps – What’s Next For Tencent and Ant Financial? 3 January 2018. https://www.forbes.com/sites/ywang/2018/01/03/chinatightens-regulation-over-mobile-payment-apps-whats-next-for-tencent-and-ant-financial/ #3dc50a4f7f1d. Accessed 14 Mar 2019 Wenhao, S.: Cryptocurrency laws and regulations in China. Asia Business, 12 July 2018. https:// www.vantageasia.com/cryptocurrency-law-china. Accessed 15 Mar 2019

Industry 4.0 as a New Vector of Growth and Development of the Knowledge Economy Gilyan V. Fedotova1,2(&), Galina F. Ushamirskaya3, Yuriy I. Sigidov4, Tatyana I. Kuzmina5, and Natalia V. Mandrik6 1

Volga Region Research Institute of Production and Processing of Meat and Dairy Products, Volgograd, Russian Federation [email protected] 2 Volgograd State Technical University, Volgograd, Russian Federation 3 Volzhsky Institute of Economics, Pedagogics and Law, Volzhsky, Russia [email protected] 4 Kuban State Agrarian University, Krasnodar, Russian Federation [email protected] 5 Plekhanov Russian University of Economics, Moscow, Russian Federation [email protected] 6 MIREA - Russian Technological University, Moscow, Russia [email protected]

Abstract. Purpose: The purpose of the work is to evaluate the current changes in the structure of national economic systems as a result of the transition to Industry 4.0. Global competition in the world markets does not allow for increase of the volumes of production with purely conservative methods of cheapening of the manufactured product or service. In this situation, there’s a need for new solutions and approaches to the production process – i.e., transition to a new digital platform of interaction. In the conditions of informatization, only the companies that can transform their resources for new requirement of the forming economic model will remain in the market. This requires certain knowledge and understanding of the current changes – i.e., it is necessary to form a team of skilled specialists in the sphere of digitization, who possess the corresponding competencies. These specialists are to be trained by the corresponding educational establishments, which are a part of the infrastructure of the knowledge economy. According to the set goal, the following tasks are solved in this work: evaluation of the current tendencies of digitization of the social mode in view of transition to Industry 4.0; substantiation of the role of knowledge as the key resource in the model of the knowledge economy; proving that investments into creation and transfer of new knowledge will allow a country to increase competitive advantages and to ensure stable economic growth; evaluation of the volumes of state financing into the system of education and scientific research in Russia; determination of the main basic blocks of the knowledge economy; distinguishing specific features of the model of the knowledge economy in the conditions of transformation and transition to the philosophy of Industry 4.0. Methodology: The authors use the methods of normative and legal analysis and evaluation of the modern situation in the sphere of state management of the

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 88–97, 2020. https://doi.org/10.1007/978-3-030-39319-9_9

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national economic system, content analysis, statistical analysis, formalization, and analogy. Results: In view of transition to the Fourth industrial revolution, traditional systems of interaction and organization of the process of production lose their former importance and competitiveness. In a new model of technological development, first roles belong to such information resource as knowledge, which is generated and passed by certain spheres of the national economy. In the structure of cost of manufactured goods and services, the cost of new knowledge accounts for a large share – as this resource takes the country’s production system to a new qualitative level of development. The authors substantiate the transition of the conservative model of economy to a new model of the knowledge economy and develop recommendations for correction and improvement of this transition. Conclusions: The authors systematize and substantiate the current processes of informatization – primarily, in the sphere of education and science. Keywords: Industry 4.0
Digitization resource
Education
Science JEL Code: A2


Knowledge economy
Information


D83
E22
H52
I25

1 Introduction The world has entered the age of Industry 4.0 – the Fourth industrial revolution, which brought a transformation in the traditional spheres of public life of a lot of countries and primarily in realization of its necessity with the population. According to the research of We Are Social and Hootsuite, as of early 2019 there was 5.11 billion users of mobile communications (growth by 2% per year); 4.39 billion Internet users (growth by 9% per year); 3.48 billion users of social networks (growth by 9% per year). These numbers show that half of the population of the world have Internet connection. People prefer the virtual sphere to the real sphere of life. These processes are inevitable, but it is necessary to control them and use them for really important and useful spheres of public transformations. Analysis of the dynamics of growth of Internet audience (Fig. 1) in 2012–2019 showed that Internet has occupied a stable niche in life, providing the opportunities of the online space (communication, e-commerce, education, information, and business contacts). Apart from the Internet of Things (IoT), Industry 4.0 allows forming a network space, which – by means of reduction of the time of data transfer, replacement of manual labor with machine labor, saving financial resources, and exclusion of the human factor and errors – will be solving the problems, performing tasks, and increasing efficiency. This concept became very popular at the 2016 World Economic Forum, when a lot of countries confirmed the inevitability of transformation of the structure of economy and worries regarding the possible reductions of investments in the future due to high efficiency of the information systems. However, the world statistics show growth of

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6.1

16 5.4

15

22

37

39

2016

2017

32

26

2014

2015

volume

45

48

2018

2019

growth

Fig. 1. Dynamics of growth of Internet audience in the world in 2012–2019.

investments into technological development of economy, which is reflected in the volume of sales of the market of IT (Table 1). Table 1. Dynamics of sales of the world market of IT. Type IT

Data centers Commercial software Equipment IT services Communication services Sum

2017 Expenditures (USD billion)

Growth (%)

2018 Expenditures (USD billion)

Growth (%)

2019 (evaluation) Expenditures Growth (USD billion) (%)

181 369

6.4 10.4

192 405

6 9,9

195 439

1.6 8.3

665 931 1.392

5.7 4.1 1.1

689 987 1.425

3,6 5,9 2,4

706 1.034 1.442

2.4 4.7 1.2

3,359

3.9

3,699

4.5

1.816

3.2

Source: https://www.computerworld.ru/news/Gartner-v-2019-godu-mirovoy-rynok-IT-vyrastet-na-32

According to the data of Table 1, sales in the IT market continue growing – which shows high demand from commercial companies for software and information services. This sphere will continue developing and becoming complex – which leads to the necessity for training skilled personnel for the digital environment (developers, operators, administrators, and managers). Experience of knowledge, which was accumulated by humanity, serves the formation of new competencies. In the technological system, the main share of the cost of manufactured product or service accounts for knowledge, which changes very quickly. It is necessary to accumulate, transport, and use new knowledge – this requires a specific system of education, which allows storing knowledge in a digital form. As knowledge is an economic resource, it is possible to speak of the formation of the knowledge economy.

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2 Materials and Method A lot of Russian and foreign scholars study the issues of formation, development, and transformation of the modern economic systems within the transition to the Fourth industrial revolution. There a lot of scientific studies on this topic – but the scholars’ opinions differ a lot. Some authors substantiate the necessity for developing mechanisms within the search for new solutions on optimization of traditional structures and mechanisms in view of transition to a new level of development – Industry 4.0. These authors include (Vallhagen et al. 2017), (Vertakova et al. 2016), (Plotnikov et al. 2015), (Wehle et al. 2015), (Wiedemann and Wolff 2013), and (Kayl et al. 2012). Other scholars focus on the new wide opportunities and develop new methodologies for building an optimal system of the digital economic environment for obtaining the maximum effect and competitive positions by means of technological breakthrough. These include (Meudt et al. 2017), (Maksimchuk and Pershina 2017), (Santana et al. 2017) and (Labzunov 2017). The third group of scholars expands the sphere of research by other adjacent spheres of public life and proves their transformation within Industry 4.0. These include (Kim et al. 2016), (Mozaffari et al. 2015), and (Robersy et al. 2016). The fourth group of authors emphasizes the necessity for reconsideration of analog systems that are peculiar for developing economic and the necessity for building technological platforms for growth of efficiency and quality. Thus, high differentiation of the levels of economic development and quality of life of population in developed and developing countries could be overcome. This group includes (Ragulina et al. 2015), (Popkova et al. 2018), (Bogoviz et al. 2017), (Kayl et al. 2017), (Rogova 2018), and (Fedotova et al. 2019). The overview of scientific studies of various authors showed that science is based on the traditional isolationist and competitive approaches to managing the Fourth industrial revolution, which envisages formation and development of Industry 4.0 primarily in developed countries at the initial stage. This approach is peculiar for the most developed fundamental and methodological basis. According to a lot of Russian and foreign scholars, there’s a necessity for a new approach to implementing the principles of the Fourth industrial revolution, as this will allow for equal distribution of benefits between all participants of the global economic system. Investments into development of intellectual capital and formation of the knowledge economy provide equal opportunities for countries that have no natural resources and favorable climate for competing in the digital sphere, by forming new breakthrough technologies and knowledge. The methodological basis of the research includes systemic, problem, and structural & functional analysis, as well as the special-purpose method and formalization.

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3 Results Information is the main resource in the conditions of network interaction. For a human, information has a value only in the form of certain knowledge. At present, knowledge is a resource that is created by human; it allows human to develop, improving and creating new knowledge. Like other resource (land, capital, and labor), knowledge is consumers and updated in the course of time. However, in the conditions of a new technological mode, it is necessary to generate new knowledge – based on experience of past years – and to create completely new ideas and breakthrough technologies of development, and form a new idea of the world. It is obvious that the new economic mode is based on knowledge – so it is possible to speak of the knowledge economy. The knowledge economy is a system in which new knowledge is created and used in a rational way. Knowledge is the main resource of a new economic mode, due to which innovative development of the whole social life takes place. Knowledge accounts for a large share in the cost of manufactures goods and services. Strengthening of the economic basis in this system requires investments into education of a country’s population. Various international organizations (the UN and the World Bank) measure quality of human capital in a country by compiling rankings. Thus, according to the World Bank, which calculates the Human Development Index for various countries, Russia was ranked 34th out of 157 countries in 2018 (Russia was among countries with high level of human capital). Competitiveness of human resources in the global market of labor and the country’s position in the international arena are determined by successfulness of the implemented policy in the sphere of development of human capital (Fig. 2).

0.88

0.84

0.84

0.8

0.79

0.79

0.78

0.77

0.76

0.76

0.73 0.67 0.56 0.41

high incomes

incomes above average

0.44

incomes below average

Fig. 2. Index of human capital in certain countries in 2018. Source: World Bank.

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According to the World Bank, for the population of Russia born in 2018 the labor efficiency will constitute 0.73% of possible 100% - under the condition of obtaining full education and good health. In this situation, HDI of Russia is higher as compared to some countries of Europe and Central Asia. The leaders of the rating are Singapore, Japan, and South Korea – which state policy focuses on education and science, leading to sustainable economic growth. Apart from HDI, the global rating of development of human capital and index of development of information and communication technologies are developed. However, all the above indicators characterize the potential capabilities of a certain state’s economy for transition to the model of the knowledge economy. Knowledge, as the key resource of the model of the knowledge economy, influences and changes the structure of national economy. The classical classification of the spheres of national economy is brought down to the spheres of the material and non-material sectors. However, the knowledge economy should have spheres that generate new knowledge, spheres that transport new knowledge to users, and spheres that use new knowledge in their production activities. In the model of the knowledge economy, the very structure of economy changes – and the first role belongs to the sphere of production and transfer of new knowledge, as this enables growth of the whole economic system, competitiveness of domestic companies and organizations, and quality of life of the population. Development of the spheres that generate knowledge requires a targeted state policy in the sphere of education, increase of the quality of education, and modernization of the existing educational basis. Education should be accessible for all categories of people on the whole territory of a country. In this case, the digital educational environment and implementation of the strategic state programs of society’s development could serve this purpose. In Russia, the national project “Education” is implemented. The main directions of financing and volumes of the project are shown in Fig. 3.

Social activity Social elevators for everyone

1.9 0.9

New features for everyone

0.9

9.6

Young professionals

Digital educational environment

Success of every child Modern school Total

1.4

14.4

20.9

27.1

Teacher of the future

1.3 0.9

0.9

Education exports

Support for families with children

1.3

0.2

23.8

1.7

23.8

1.7

3.2

16.7 0.7 9.9

16.7 0.7

1

12.6

14.4

49.6

45.2

104.8

118.1

2019

2020

1.7

45.6 128.4

2021

Fig. 3. Expenditures of the state budget of the Russian Federation of the national project “Education”, RUB billion.

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Implementation of the state programs in the sphere of education stimulates the increase the share of skilled personnel in economy, formation of creativity with young people and preservation of a desire for life-long learning. Apart from the above federal projects in the educational sphere, the state plans the financial support for the leading universities of the Russian Federation, which could compete in the international educational market with the global educational centers. Improving own educational environment, the state conducts preparation of human capital, which will work in the digital environment and will create new knowledge. From this position, such economy could be considered the knowledge economy – economy that creates, disseminates, and uses knowledge for own economic development. It should be noted that formal education is not the only method of receipt of knowledge. Knowledge could be obtained beyond the educational establishments (personal experience, professional skills, and examples). In certain cases, such method of obtaining knowledge could be more effective than official education in a specialized establishment. From our point of view, such method of transfer of knowledge should also be taken into account. According to the World Bank, the knowledge economy is based on four main blocks, which determine this model’s platform: institutional structure; innovative system; education and training; information infrastructure (Fig. 4).

1.Institutional structure

2.Innovative system

Knowledge economy

3.Education and training

4.Information infrastructure

Fig. 4. The main blocks of the knowledge economy Source: World Bank.

Apart from foundation of the above blocks, the knowledge economy has a range of specific features: – competitiveness is obtained by companies that actively implement the latest achievements of science and technology, react to the changes in the market, and adapt to them; – the sphere of interests moves into the digital environment, where a lot of managerial decisions are formed, and the search for partners takes place;

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– production systems move from analog systems of work to the digital ones, in which mechanical and automatic labor is replaced by robotized labor, controlled by operators; – globalization of economic systems leads to erasure of national borders, as the digital environment allows for direct communication and conclusion of contracts by subjects from different continents; – more and more new technologies appear – and the speed of their implementation into the production activities grows. Thus, the knowledge economy is a hi-tech model of managing the latest achievements of the modern science, which ensures high competitiveness and quick economic growth in the spheres that implement its latest achievements into their practice. The infrastructure of the knowledge economy consists of the global information “web”, through which information is passed to all participants of the network model. Internet allows supporting the model of the knowledge economy in which knowledge turns into the most important production factor – so there’s a need for investments into development and support for high-quality human capital. It is very difficult to evaluate knowledge quantitatively. The existing methodology of evaluation of knowledge envisages two indices—the Knowledge Economy Index (KEI) and the Knowledge Index (KI). The Knowledge Economy Index is a complex indicator for evaluating the effectiveness of country’s usage of knowledge for its economic and public development. The level of development of a country or region as to the knowledge economy is characterized here. The Knowledge Index is a complex economic indicator for evaluating the country’s ability to create, accept, and disseminate knowledge. It characterizes the potential of a certain country or region as to the knowledge economy. The above indicators reflect the level of the country’s development, but the landmark is only the indicator of economic growth of the country. Growth rates of economy will show the technological development and successful implementation of the principles of the knowledge economy. Eventually, the knowledge economy aims at increasing the quality of life in the conditions of full-scale digitization of production of goods, works, and services – when human needs become the decisive factor of formation of offer in the market. This model strives to liquidate routine and manual labor, leaving a human only with the function of control over machines and generation of new ideas and technologies. In certain cases, there’s a probability that population that cannot master new technologies will have nothing to do in this model. In this case, there should be spheres of activities that would allow handicapped people to find their purpose and niche in labor.

4 Conclusion It should be noted that transition to a new model of the knowledge economy is inevitable for a lot of countries. The philosophy of the Fourth industrial revolution dictates new principles of organization of public life. Russia will have to change the

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structure of the national economy, striving to increase their competition positions in the international market. Thus, it is necessary to pay attention to the following elements of a new economic model: – more thorough attitude to planning of financing of national projects on development of the educational environment. The recurrent aspects should be excluded; it is necessary to develop specialties that will be of high demand in the future. The state has to take into account not only the formal means of transfer of knowledge but also pay attention to informal data transfer. In this situation, the practices of revival of tutoring and World Skills competitions are very interesting; – supporting creative and innovative principles of undergraduates and creating the infrastructure of exchange of experience, ideas, and skills; – creating a favorable entrepreneurial climate in the country for national companies and maximum support for entrepreneurial initiatives at all levels of authorities. Development of a competitive market environment requires tax, administrative, and anti-corruption tools of regulation of the activities of national and foreign companies; – stimulating private investors – Russia and foreign – for financing of development of science and education and developing endowment funds with educational establishments; – formation of national scientific communities and network interactions in various spheres of science and technology; – developing the system of commercialization of scientific and test projects, the system of patenting and protection of intellectual property rights. The above recommendations could help to move the existing model of the national economy to the model of the knowledge economy that conforms to the requirements of Industry 4.0 and allows increasing competitiveness of domestic production in the conditions of globalization and integration of sales market and network interaction. Acknowledgments. The reported study was funded by RFBR according to the research project No. 18-010-00103 A.

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Kim, N.S., Park, B., Lee, K.-D.: A knowledge based freight management decision support system incorporating economies of scale: multimodal minimum cost flow optimization approach. Inf. Technol. Manag. 17(1), 81–94 (2016) Maksimchuk, O., Pershina, T.: A new paradigm of industrial system optimization based on the conception “industry 4.0”. In: MATEC Web of Conferences, vol. 129, p. 04006 (2017) Meudt, T., Kaiser, J., Metternich, J., Spieckermann, S.: Value stream mapping and value stream simulation in times of digitization and industry 4.0 - an app for manufacturing optimization. [Wertstrommodellierung und - simulation im zeichen von digitalisierung und industrie 4.0: Eine app zur produktionsoptimierung]. ZWF Zeitschrift fuer Wirtschaftlichen Fabrikbetrieb 112(12), 865–868 (2017) Mozaffari, A., Azad, N.L., Fathi, A.: Simultaneous knowledge-based identification and optimization of PHEV fuel economy using hyper-level Paretobased chaotic Lamarckian immune algorithm, MSBA and fuzzy programming. Int. J. Intell. Comput. Cybern. 8(1), 2–27 (2015) 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 (2018) Ragulina, Y.V., Stroiteleva, E.V., Miller, A.I.: Modeling of integration processes in the business structures. Mod. Appl. Sci. 9(3), 145–158 (2015) Santana, A., Afonso, P., Zanin, A., Wernke, R.: Costing models for capacity optimization in Industry 4.0: trade-off between used capacity and operational efficiency. Proc. Manuf. 13, 1183–1190 (2017) Vallhagen, J., Almgren, T., Thörnblad, K.: Advanced use of data as an enabler for adaptive production control using mathematical optimization – an application of industry 4.0 principles. Proc. Manuf. 11, 663–670 (2017) Wehle, H.-D., Dietel, M.: Industry 4.0 - solution for the optimization of maintenance processes. [Industrie 4.0 – Lösung zur Optimierung von Instandhaltungsprozessen]. InformatikSpektrum 38(3), 211–216 (2015) Wiedemann, M., Wolff, D.: Maintenance - Fields of action for the optimization of software technical support in the context of Industry 4.0: Reports from the Inpro Innovation Academy (Part 1). [Instandhaltung-Handlungsfelder zur optimierung der softwaretechnischen Unterstützung im kontext von industrie 4.0: Berichte aus der inpro-innovationsakademie (teil 1)]. ZWF Zeitschrift fuer Wirtschaftlichen Fabrikbetrieb 108(11), 805–808 (2013) Plotnikov, V., Fedotova, G.V., Popkova, E.G., Kastyrina, A.A.: Harmonization of strategic planning indicators of territories’ socioeconomic growth. Reg. Sectoral Econ. Stud. 15(2), 105–114 (2015) Vertakova, Y., Plotnikov, V., Fedotova, G.: The system of indicators for indicative management of a region and its clusters. Proc. Econ. Finance 39, 184–191 (2016) Robersy, I.S., Guseva, A.I., Lebedev, N.A., Ismagilova, T.V., Kuzmina, T.I., Bolkova, Y.S.: The impact of the global financial crisis on Russia’s cooperation with the countries of EurAsES. Int. J. Econ. Financ. Issues 6(SI), 300–306 (2016) Rogova, V.A.: Personnel problems of development of hi-tech technologies in Russia in view of the Global innovation index. Russ. Technol. J. 6(4), 105–116 (2018). https://rtj.mirea.ru/ upload/medialibrary/1a7/RTZH_4_2018.pdf Labzunov, P.P.: Methodology of managing an industrial company’s expenses in the modern society. Russ. Technol. J. 5(2), 70–77 (2017) Fedotova, V.V., Kovalenko, O.A., Malyutina, T.D., Glushchenko, A.V., Sukhinin, A.V.: Transformation of information security systems of enterprises in the context of digitization of the national economy. In: Popkova, E.G. (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Book Series Studies in Computational Intelligence, vol. 826, pp. 811–822. Springer, Cham (2019)

Digital Economy: A Step into New Reality Valentina V. Poliakova(&) , Oksana A. Revzon and Sona L. Sumbatyan

,

State University of Management, Moscow, Russian Federation [email protected], [email protected], [email protected]

Abstract. In the modern society, technologies of the digital economy create preconditions for transition to a new form of relations in management of all spheres of activities, transforming the usual processes. The authors perform an overview of the directions of development of the digital society as a new scientific paradigm in economy. The authors determine the problems of transition to the digital reality and provide the strategic target settings of the countries that have experience of such transformation or are interested in acceleration of these processes. Vectors of development of the Russian economy into a new qualitative state are considered. Keywords: Digital transformation


Digital economy
IT
Digitization

JEL Code: O33

1 Introduction In the global economy, the role of the digital economy constantly grows. The issue of society became an object of discussions in the scientific and expert communities. The initial point of open discussions became the World Economic Forum in 2015, at which Professor Klaus Schwab discussed the issues of the coming global social crisis and the Fourth industrial revolution. The society is peculiar for mixture of the technologies of the physical, digital, and biological worlds, which creates new opportunities and influences the political, social, and economic systems (Schwab 2017). During the annual message to the Federal Assembly in 2016, the President of the Russian Federation Vladimir Putin announced the start of a large systemic program of development of economy of a new technological generation – the digital economy, as an element of national security, technological independence, and growth of population’s well-being. He also noted the necessity for creating an effective system of risk management (President’s message to the Federal Assembly 2016). The Government developed and adopted the national program “Digital economy of the Russian Federation”. The national program contains six federal projects: normative regulation of the digital environment, information infrastructure, personnel for the digital economy, information security, digital technologies, and digital state management (Program “Digital economy of the Russian Federation” 2017).

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 98–103, 2020. https://doi.org/10.1007/978-3-030-39319-9_10

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This work presents an evaluation of the level of development of the digital economy of the leading countries of the world, which results could be used for formation and correction of strategies and plans of digital transformation of economic subjects.

2 Preconditions and Methods of the Research Analysis and evaluation of the level of development of the digital economy of a country are focused around three indicative points: drivers of development of the digital economy; level of transformation of the key spheres of society’s activities under the influence of digitization; influence of digital innovations on the main macroeconomic variables. The main inclusive digital technologies include Big Data, neurotechnologies and AI, systems of distributed register, quantum technologies, new production technologies, industrial Internet, components of robototronics and sensors; wireless communications, and technologies of virtual and alternate reality.

3 Debatable Issues and Research Results In the 21st century, development of the digital economy influences all countries of the world. A lot of researchers consider the digital economy from various positions: the first group defines the digital economy as an international market of online goods and services; the second group defines the digital economy as an economic system in which added value forms based on information and communication technologies; the third group defines the digital economy as a system of economic and sociocultural relations that are based on digital technologies. The researchers agree on importance of the digital economy – as a driver of competitiveness and development of countries. The leading countries of the world develop their own strategies of digitization in the interests of nations. The UK sees the goal of development of the digital economy in the global leadership in creation of cyber space that would ensure prosperity of the nation by means of growth of labor efficiency, creation of skilled and highly-paid jobs in the future, and safe life and online labor for citizens (UK Digital Strategy 2017). The USA, as the leader in the international trade, uses digital technologies for supporting dissemination of Internet as a global platform for communication, trade, self-realization of people, and innovations (Davidson 2016). The government of Singapore is ready to experiment in the sphere of digitization of society, as it thinks that in the scale of a state it is possible to quickly test, develop, and implement decisions. Singapore’s strategy aims at creation of “smart” nation, for supporting better life, strengthening communities, and creating more opportunities for everyone (Smart Nation Singapore 2016). China aims at increase of quality of life by means of effective production. The role of the main tool of increasing the effectiveness of production belongs to the sector of

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IT. The strategy’s central element is formation of the Internet economy that is based on digital technologies (Katasonov 2017). Canada has adopted a complex plan for provision Canadians with all that is necessary for future digital skills and tools. In Germany, digital transformation opens perspectives and opportunities for growth of competitiveness of economy and quality of life. The purpose of digital Australia is to become the leading country, with high level of Internet connection and usage of digital technologies. On the whole, all countries see their future in the digital reality. Evaluation of measuring of the scales and influence of the digital economy is performed according to different methodological approaches, which leads to absence of common indicators. According to Boston Consulting Group, the main indicator of development of the digital economy is the size of the network segment (“Internet economy”), which will constitute USD 16 trillion by 2035 (The Internet Economy in the G-20 2012). The international consulting company Accenture analyzes the volume of economy that is based on usage of various forms of digital skills and digital capital. According to their forecast, the share of the digital economy will constitute 24.7% in the global GDP by 2021 (USD 21.2 trillion) (Accenture Strategy 2018) (Table 1). Table 1. Forecast of the scales of the digital economy for countries. Country

2021 GDP, USD Volume of the digital billion economy, USD billion World 85,642 21,155 Brazil 2,028 498 UK 2,847 979 Germany 3,675 1,104 China 14,725 1,851 Russia 1,725 97 USA 20,464 7,432 Japan 5,083 1,116 *based on Accenture Strategy.

Share of the digital economy in GDP, % 24.7 24.6 34.4 30.0 12.6 5.6 36.3 22.0

We see that the leaders as to the share of the digital economy in GDP are the USA, the UK, and Germany. The USA is the leader as to the absolute value of the volume of the digital economy, followed by China and Japan. The Russian Association for Electronic Communications includes into the digital element of economy all segments of the market in which added value is created with the help of digital (information) technologies. As of year-end 2017, contribution of the digital economy of the Russian Federation was 5.06% of GDP (RUB 4.35 trillion), and, with growth rates of 10.7% per year, it will constitute RUB 7–8.75 trillion by 2021 (Runet economics 2017).

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Government of Russia pays a lot of attention to digital development, which is expressed in its decisions. The Government adopted the program “Digital economy of the Russian Federation”. Within the direction “Normative regulation” it is necessary to eliminate the key legal limitations and create separate legal institutes for solving the primary tasks of formation of the digital economy and creation of a constant mechanism of managing the changes and competencies. The direction “Formation of research competencies and technological developments” aims at analysis of technologies and perspective markets, formation of an institutional environment for development of R&D; formation of infrastructure for creation of a network of digital platforms and development of technological innovations; commercialization of perspective product solutions based on inclusive technologies; stimulation of demand for products of the digital economy. The purposes of the direction “Information infrastructure” are providing communication networks for collection and transfer of data in view of new technical requirements; providing citizens, business, and public authorities with accessible, sustainable, safe, and effective services for storing and processing of data based on domestic infrastructure, which allows exporting these services; developing and ensuring the work of digital platforms for citizens, business, and authorities. The direction “Information security” has the following purposes: provision of unity, sustainability, and safety of the ICT infrastructure of the Russian Federation at all levels of the information space; provision of the organizational and legal protection of personality, business, and state in interaction in the conditions of the digital economy; creation of conditions for the leading positions of the Russian Federation in the sphere of export of services and technologies of information security; consideration of national interests in international documents on the issues of information security. A systemic project of e-government of the Russian Federation simplifies access to state services and raises the Russia’s position in the UN rating on development of egovernment (Russia was ranked 35th in 2016). The concept of e-government stimulates the growth of transparency of the business environment, expands companies’ participation in the online system of state purchases, and leads to increase of the number of services that are provided in the online form. Implementation of the project of online purchases will allow increasing the transparency of the procedures, simplifying participation in purchases, increasing competition, and reducing corruption. Based on the experience of Australia and the UK, Russia creates a legislative basis that regulates storing of users’ data by communications operators and Internet companies. In the sphere of regulation of digital financial assets, Russia’s authorities discuss the corresponding law draft. The issues of regulation of crypto economy in Russia and the world are very important from the position of identifying public risks, implementation of the best standards for minimization of tax risks and risks of money laundering. The Committee on standardization “Firmware of technologies of distributed register and blockchain” was created in Russia in 2017. Despite the popularity of blockchain technologies in the world and its quick growth, Russia and the world do not have common standards for their application.

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The Committee will allow Russia to develop the national standards of implementation and usage of blockchain technologies and to coordinate the development international standards in this sphere. In view of the necessity for formation and development of the digital economy, the national business community requires a discussion of the scientifically substantiated program, in which the legislative basis should be built. However, one of the key problems of using new technologies is provision of safety in the wide sense of this word. Creation of new technologies leads to replacement of human by digital tools (Ivanov 2013). In conditions of the coming of the age of digital reality, the countries that implement the economic digital system receive a chance to become a leader of a new digital world (Veerpalu et al. 2010).

4 Conclusions At present, the global economy sees the formation of necessary conditions for accelerating the process of digitization, which is necessary for transition to new reality. Solving large-scale tasks in development of the digital economy unifies different countries – despites the uniqueness of geographical, economic, and socio-cultural context of each country. Digitization changes the technical and economic contribution, stimulates the transition to a new level of industrialization, and changes the society’s treatment of the digital technologies. The process of transition to the digital reality is on the path of formation of the legislative basis and accumulation of experience.

References Schwab, K.: The Fourth Industrial Revolution. Crown Publishing Group, New York (2017). p. 16 Message of the President of the Russian Federation to the Federal Assembly (2016). www. kremlin.ru/events/president/news/53379. Accessed 15 Nov 2018 Program “Digital economy of the Russian Federation”. www.static.government.ru/media/files/ 9gFM4FHj4PsB79I5v7yLVuPgu4bvR7M0.pdf. Accessed 15 Nov 2018 UK Digital Strategy 2017/Department for Digital, Culture Media & Sport, 1 March 2017. www. gov.uk/government/publications/uk-digital-strategy/uk-digital-strategy. Accessed 14 Nov 2018 Davidson, A.: Commerce Department Digital Economy Agenda 2016/Department of Commerce, United States of America, May 2016. www.ntia.doc.gov/files/ntia/publications/alan_ davidson_digital_economy_agenda_deba_presensation_051616.pdf. Accessed 14 Nov 2018 About Smart Nation. Smart Nation Singapore. www.smartnation.sg/about-smartnation. Accessed 14 Nov 2018 Katasonov, V.Y.: Regarding the Chinese digital economy/Vsesovetnik (Internet journal). www. vsesovetnik.ru/archives/22055. Accessed 14 Nov 2018

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The Internet Economy in the G-20. www.bcg.com/publications/2012/technology-digitaltechnology-planning-internet-economy-g20-4-2-trillion-opportunity.aspx. Accessed 14 Nov 2018 Accenture Strategy. www.accenture.com/us-en/strategy-index. Accessed 14 Nov 2018 Runet economics/Digital economy of Russia 2017. www.raec.ru/activity/analytics/9884/. Accessed 14 Nov 2018 Ivanov, V.V.: Perspective treasure: possibilities, risks and threats. Econ. Strat. 4, 2–5 (2013) Veerpalu, V.E., Volodina, E.E., Devyatkin, E.E.: “Digital revolution” as a guarantee of effective development of economy. Works of the Research Institute of Radio, no. 3. pp. 11–17 (2010)

The Role of the Digital Economy in the Retail Sphere Nelli A. Saveleva(&), Victoria P. Erdakova, Evgeniy S. Ugriumov, and Tatiana A. Yudina Sochi State University, Sochi, Russia [email protected], [email protected], [email protected], [email protected]

Abstract. Purpose: The purpose of the work is to determine the role of the digital economy (by the example of AI) in the retail sphere and to develop recommendations for its successful execution. Design/Methodology/Approach: The authors use the methods of regression and correlation analysis for determining the influence of analytics of Big Data (as a specific manifestation of usage of AI in economy) on growth rate of retail Internet trade in top 10 countries as to growth rate in 2018. Findings: The authors perform comparative analysis of execution of AI’s functions in retail trade and develop a model of application of AI in retail trade with domination of its social origin. Originality/Value: It is substantiated that the role of AI in the retail sphere consists not in intellectual decision support for purchases in the interests of their rationalization but in satisfaction of consumers’ social needs. During individual online retail purchases, AI is not an analytical tool but a companion that allows making the required purchases and obtaining pleasure from the process. This conclusion shows that perspectives of commercialization of AI in digital retail trade are very wide – but at the same time, their practical implementation requires socialization of AI. Keywords: Digital economy Retail trade JEL Code: A13


AI
Social origin
Anthropogenic nature



C31
F17
L81
O31
O32
O33
O34
O35
O38

1 Introduction One of the most perspective growth vectors of the digital economy in the mid-term is Industry 4.0, which core is AI – as a breakthrough digital technology of modern times. As the initial idea of transition to Industry 4.0 was connected to modernization of industry – which predetermined the name of the transition – most of the existing studies on AI belong to the industrial sphere. As a rule, internal usage of AI by the company for automation of the production processes is envisaged. The role of AI consists in provision of rationalization of economic activities (reduction of costs and growth of efficiency). © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 104–110, 2020. https://doi.org/10.1007/978-3-030-39319-9_11

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In the course of the Fourth industrial revolution it becomes more obvious that development of breakthrough digital technologies requires implementation of large venture investment projects, while the volume of the market of these technologies under the condition of the elite character (narrow specialization and high cost) is limited by certain largest and transnational companies that show high innovative activity. This causes a risk of return of investments into breakthrough digital technologies – and, in particular, AI – and increases the attractiveness of the alternative strategy of obtaining the “scale effect”, which envisages mass dissemination of breakthrough technologies with the possibility of their diversified usage and their moderate price. Online retail trade is among the potential sales markets of AI. The specifics of application of AI in the retail sphere consist in the fact that its users are not sellers/manufacturers (as in industry) but buyers – which shifts the emphasis in application of AI. Its external usage (beyond the company) and the necessity for communication with non-professionals – mass consumers, a lot of whom have limited digital competencies – create a new challenge for AI at the modern stage of development of the digital economy. Here we offer a hypothesis that AI plays a new role in the retail sphere: social origin of AI dominates over the anthropogenic nature. The purpose of the work is to determine the role of the digital economy (by the example of AI) in the retail sphere and to develop recommendations for its successful execution.

2 Materials and Method The foundations and practical experience of usage of AI in entrepreneurship in the interests of development of the digital economy and Industry 4.0 are discussed in the works Petrenko et al. (2018), Popkova (2019), Popkova et al. (2019), Popkova et al. (2018), Popkova and Parakhina (2019), Popkova and Sergi (2018), Popkova et al. (2019), Sergi et al. (2019), and Sergi (2019). The specifics of digital modernization of retail trade are studied in the works Di Rienzo et al. (2016), Huang et al. (2019), Keeling et al. (2013), Maixé-Altés (2018), and Pei and Yan (2019). However, the role of AI in retail trade is not defined by the modern economic science – we’ll try to full this gap. For proving the offered hypothesis we use the methods of regression and correlation analysis. The influence of analytics of Big Data (as specific manifestation of usage of AI in economy) on growth rate of retail Internet trade in top 10 countries as to growth rate in 2018 is determined. The basic data are shown in Fig. 1, results of analysis are shown in Fig. 2.

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70 59

60

58

57

55

49

50 40 30

29.4 20 19

20 12

10.6

10

5

6

5.2

11 8.2

11.5

10

8

8.4 9

0 China

India Mexico Brazil Russia

Growth rate of retail Internet trade, %

Italy

UK

Canada Spain Sweden

Use of big data and analytics, position 1-63

Fig. 1. Growth rate of retail trade and activity of Big Data analytics in the selected countries in 2018. Source: compiled by the authors based on Shopolog (2019), IMD (2019).

Growth rate of retail Internet trade, %

35 30 25 20 y = -0.1766x + 17.216 R² = 0.2804

15 10 5 0 0

10

20 30 40 50 Use of big data and analytics, position 1-63

60

70

Fig. 2. Regression curve. Source: calculated and compiled by the authors.

As is seen from Fig. 2, growth of activity of analytics of Big Data by 1 position (improvement of the position in the global rating) accelerates the growth rate of retail Internet trade by 0.1766%. The established positive (in this case, reverse) connection between the indicators shows the demand for AI in the retail sphere. At the same time, weak correlation (28.04%) shows that domination of the technical component (anthropogenic nature) with AI, which is in demand in industry, is insignificant in retail trade, where the main criterion of decision making is not rationality but satisfaction of consumers’ social needs.

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3 Results As a result of logical analysis of the process of purchasing by individual consumers in the sphere of online retail trade (in the B2C segment – business to consumers) we determined that this process differs from the process of online business purchases (in the B2B segment – business to business). Business purchases are aimed at satisfying the company’s objective need, without which it cannot function and/or develop. Effectiveness of business purchases is assessed from the positions of rationality – full satisfaction of the need for the lowest price is preferable. Very often, AI is not required during business purchases – as they are made by professionals who have full information on the market. Individual purchases in the retail sphere are performed by non-professionals and this requires help from AI. The satisfied need is mostly objective – consumers could make without it. Effectiveness of individual purchases is assessed in a complex manner; it could be high even if the purchase is not made or is made not in a rational way. In a lot of cases, the very process of shopping is important – as time spent with pleasure or a hobby. For proving the offered hypothesis, we perform comparative analysis of the functions that AI performs during domination of its social origin (social component) and during dominating of its anthropogenic nature (technical component) (Table 1). Table 1. Comparative analysis of AI’s execution of its function AI in retail trade, with its different nature. Functions of AI in retail trade Search for the required product

Execution of functions depending on Anthropogenic nature Request for precise description from the consumer; search for hits in the consumer’s request and characteristics of the products

Help during decision making on the purchase

Comparing available alternatives according to the formal criteria

Automatic purchases

Automatic orders and payment for the selected product, informing on the delivery

Source: developed and compiled by the authors.

the nature of AI Social origin Discussion of consumer’s need with the consumer; qualitative assessment of each product according to the criterions of its potential value for the consumer Comparing available alternatives according to the formal and informal criteria, tips and commentaries for the consumer Automatic order and payment for the selected product, “joy” from the purchase together with the buyer, joint waiting and emotional tracking of the product, automatic collection and sending of the review to the seller

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As is seen in Table 1, one of the functions of AI in retail trade is the search for the required product. In case of the anthropogenic nature, AI requests from the consumer the precise description and looks for the hits among the products’ characteristics. However, very often a buyer cannot formulate his need and set its formal characteristics. For example, the need “look good” could be satisfied with the help of various products – and the consumer cannot determine the size, color, or form. In case of the social origin, AI discusses the consumer’s needs and performs qualitative assessment of each product according to its potential value for the consumer. Another function of AI in retail trade is help during decision making regarding the purchase. In case of the anthropogenic nature, AI compares available alternatives. In case of the social origin, AI compares available alternatives according to the formal and informal criteria, provides tips and comments regarding the product. Another function of AI in retail trade consists in automatic purchases. In case of the anthropogenic nature, AI performs automatic order and payment for the selected product and informs the consumer. In case of the social origin, AI performs automatic order and payment for the selected product, expresses “joy” from the purchase, waits for the product together with the consumer, and automatically collects and sends the review to the seller. We developed a model of application of AI in retail trade in case of domination of its social origin (Fig. 3). 2. Specification and discussion of the need, psychological support (if necessary)

Seller 1

Seller n

7. Report, tracking, joy AI

Seller 2 …

1. Request for a retail product

3. Sorting, comparison, qualitative analysis 6. purchase and tracking of the product 8. automatic review

Buyer

4. Discussion of possible variants of satisfaction of the need, comments, help in selection, praise 5. Approval of jointly selected product n, command to purchase it

Fig. 3. The model of application of AI in retail trade in case of domination of its social origin. Source: developed and compiled by the authors.

As is seen in Fig. 3, at the first stage the buyer requests a retail product. At the second stage, AI specifies and discusses the need and provides psychological support for the consumer (if necessary). At the third stage, AI performed sorting, comparison, and qualitative analysis of the products that are presented in the market.

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At the fourth stage, AI discusses possible variants of satisfaction of the need with the consumers, provides help in selection, and praises the consumer’s selection. At the fifth stage, the consumer approves the jointly selected product and issues a command to purchase it. At the sixth stage, AI purchases the product and tracks its shipping. At the seventh stage, it reports to the consumer and expresses joy from the performed purchase. At the eighth stage, it sends a review to the seller.

4 Conclusion Thus, as a result of the research the offered hypothesis has been proved; it has been substantiated that the role of AI in the retail sphere consists not in intellectual decision support for purchases in the interests of their rationalization, but in satisfaction of the consumers’ social needs. During online retail purchases, AI are not an analytical tool but a companion that helps making the necessary purchases and receiving joy from this. This proves that perspectives of commercialization of AI in digital retail trade are very wide; however, their practical implementation requires socialization of AI. Acknowledgments. The work was prepared as a result of the research performed according to the grant No. 19-410-230059p_a of the Russian Fund for Fundamental Research.

References Di Rienzo, A., Tagliaferri, P., Arenella, F., Garzotto, F., Frà, C., Cremonesi, P., Valla, M.: Bridging physical space and digital landscape to drive retail innovation. In: Proceedings of the Workshop on Advanced Visual Interfaces AVI, 07–10 June 2016, pp. 356–357 (2016) Huang, Y., Chai, Y., Liu, Y., Shen, J.: Architecture of next-generation e-commerce platform. Tsinghua Sci. Technol. 24(1), 18–29 (2019) IMD: World Digital Competitiveness Ranking 2018 (2019). https://www.imd.org/globalassets/ wcc/docs/imd_world_digital_competitiveness_ranking_2018.pdf. Accessed 30 Aug 2019 Keeling, K., Keeling, D., McGoldrick, P.: Retail relationships in a digital age. J. Bus. Res. 66(7), 847–855 (2013) Maixé-Altés, J.C.: Retail trade and payment innovations in the digital era: a cross-industry and multi-country approach. Bus. Hist. 2(1), 18–26 (2018) Pei, Z., Yan, R.: Cooperative behavior and information sharing in the e-commerce age. Ind. Mark. Manage. 76, 12–22 (2019) Petrenko, E., Pritvorova, T., Dzhazykbaeva, B.: Sustainable development processes: service sector in post-industrial economy. J. Secur. Sustain. Issues 7(4), 781–791 (2018). https://doi. org/10.9770/jssi.2018.7.4(14) Popkova, E.G.: Preconditions of formation and development of industry 4.0 in the conditions of knowledge economy. Stud. Syst. Decis. Control 169(1), 65–72 (2019) Popkova, E.G., Egorova, E.N., Popova, E., Pozdnyakova, U.A.: The model of state management of economy on the basis of the internet of things. Stud. Comput. Intell. 826(1), 1137–1144 (2019)

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Popkova, E.G., Morozova, I.A., Litvinova, T.N.: Transformational processes in the media system under industry conditions 4.0: future outlines and perspectives. In: Kuznetsova, I.A. (ed.) Designing the Mass Media as a Homeostatic System by Means of Automation Engineering: Basic Concepts, Structure, Components, vol. 7, no. 1, pp. 145–154 (2018). Sukhodolov, A.P.: Theor. Pract. Issues Journalism Popkova, E.G., Parakhina, V.N.: Managing the global financial system on the basis of artificial intelligence: possibilities and limitations. In: Lecture Notes in Networks and Systems, vol. 57, no. 1, pp. 939–946 (2019) Popkova, E.G., Sergi, B.S.: Will industry 4.0 and other innovations impact Russia’s development? In: Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, pp. 51–68. Emerald Publishing Limited, Bingley (2018) Sergi, B.S., Popkova, E.G., Sozinova, A.A., Fetisova, O.V.: Modeling Russian Industrial, Tech, and Financial Cooperation with the Asia-Pacific region. In: Sergi, B.S. (ed.) Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Sergi, B.S. (ed.): Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Shopolog: Statistics of Internet trade in the countries of the world (2019). https://www.shopolog. ru/metodichka/analytics/statistika-internet-torgovli-v-stranakh-mira/. Accessed 30 Aug 2019

Financing of Development of the Digital Infrastructure of “Smart” Cities Marina B. Trachenko(&), Ekaterina S. Ulanova, and Anastasia V. Kozhanova State University of Management, Moscow, Russia [email protected], [email protected], [email protected]

Abstract. The purpose of the work is to study the digital infrastructure of “smart” cities, substantiate the models of financing of the digital infrastructure of a “smart” city, and to develop recommendations for development of a payment system as an important tool of this infrastructure. The authors use the methods of bibliographic analysis, logical analysis, synthesis, systemic approach, and analysis of factual and planned data of the Moscow budget. Results: 1. Tendencies of development of the digital infrastructure of a “smart” city are determined, and expedience of creation of a city payment system as a tool of digital infrastructure is shown. 2. Social significance of such payment system is shown and the main requirements to it are formulated. 3. The models of financing of the digital infrastructure of a “smart” city with attraction of the assets of the budget, private business, and population are substantiated. The obtained results allowed offering the creation of a one—rank payment system in the trusted environment of a city with application of the blockchain technology and approbating it as a test project in Moscow within implementation of the strategy of Moscow “Smart city – 2030”, which will allow connecting all organizations that provide services for payments and using and developing new methods of payment. The performed research confirms the expedience of development and implementation of the concept of “smart” city in Russia, which conforms to the global trend and is confirmed by the positive practical experience of application of such technologies. This experience could become popular in Russia, helping to solve macro-economic problems in a lot of spheres. Keywords: Blockchain
Models of financing city
Digital infrastructure JEL Code: G20


Payment system
“Smart”


R51
R58

1 Introduction The global tendency of urbanization consists in development of cities as the integration socio-economic centers. According to the forecasts of the UN, urban population will grow significantly by 2030. While 55% of the world population lived in cities in 2016, this indicator will reach 60% by 2030 (United Nations 2016). Despite the expected © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 111–122, 2020. https://doi.org/10.1007/978-3-030-39319-9_12

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demographic decline, Russia will preserve the tendency of increase of the urban population – primarily, by means of migration processes (Ministry of Economic Development of Russia 2018). Quick urbanization is accompanied by appearance of a whole range of problems as to water and electric energy supply, services in the educational sphere, healthcare, etc. (Volkov et al. 2015). Effective solution of these problems of large cities is connected to development of “smart” cities based on new information and communication technologies and creation of digital infrastructure. University of Massachusetts conducted a study the confirmed that concepts of “smart” cities are the leading directions of development in the future (Formichelli 2016). The purpose of this work is to substantiate the models of financing of the digital infrastructure of a “smart” city and to develop recommendations for development of a payment system as an important tool of its digital infrastructure.

2 Research Methods The authors use the methods of bibliographic analysis, logical analysis, synthesis, systemic approach, and analysis of factual and planned data of the budget of the city of Moscow. The concept of “smart” city appeared in late 1990’s and has become very popular, which led to increase of the number of studies aimed at finding the related definitions (Ahvenniemi et al. 2017; Angelidou 2015; Anthopoulos et al. 2016; Giffinger et al. 2008; Kumar et al. 2018; Monfaredzadeh and Berardi 2015; Neirotti et al. 2014). Despite the existing opinions that definitions and practical application of the concept of “smart” city are not fully clear and have too many aspects (Nilssen 2018), and strategic planning of development of “smart” cities is still an abstract idea (Angelidou 2014), most researchers agree that the concept of “smart” city is based on the idea of integration of all city services and rational usage of the objects of city infrastructure. Application of new digital and telecommunication technologies for increasing the effectiveness of city management, reduction of expenditures for usage of resources, improvement of quality of life, involvement of population into the city life, and attraction of investments resources are the main tasks of a “smart” city. The sense of this category is best described by the definition offered by the experts of the International Telecommunication Union: A smart sustainable city is an innovative city that uses information and communication technologies (ICTs) and other means to improve quality of life, efficiency of urban operation and services, and competitiveness, while ensuring that it meets the needs of present and future generations with respect to economic, social, environmental as well as cultural aspects (Center of Strategic Researches 2018). “Smart” cities become capitals and centers of the digital economy; their development is closely connected to the strategy and policy of a country on digitization – however, receipt and implementation of modern technologies is much quicker. Cities become a “concentrated” form of the digital economy (Kupriyanovskiy et al. 2016).

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The notion of “smart” city evolves, and standards and solutions are created based on the best practices. Standards help cities to use the indicators for measuring the effectiveness of city services and quality of life in dynamics and to have a comparison with other cities as to a large specter of the indicators of effectiveness. According to ISO 37120 (GOST R ISO 37120-2015 “Sustainable cities and communities. Indicators for city services and quality of life”), a city could be evaluated according to the main and auxiliary indicators. The main indicators are significant from the point of view of management and evaluation of effectiveness of city services and quality of life. For the purpose of dissemination of the leading experience, the standard appoints cities to have reports on 17 groups of indicators, which reflect the main spheres of city life: economy, education, finances, telecommunications, innovations, etc.

3 Debatable Issues and Research Results 3.1

Payment Systems of “Smart” Cities

The key factor of development of “smart” cities is infrastructure, which creates the basic layer for formation of city services and the common digital space of the city. The infrastructure of “smart” city (smart infrastructure) consists of the physical and digital infrastructures. The digital infrastructure contains technical means (computer systems, means, and systems of telecommunication, means of notification, sensors, cameras, etc.), standards, protocols, and program means of various purposes. The program means of the digital infrastructure could be divided into platform, inclusive, and special. The digital infrastructure of a “smart” city is the basis for managing all spheres of community’s life. Accumulation of data and their correct usage in the digital infrastructure is the task of the city authorities. These data create a unified information platform on the activities of specific functional spheres: state services, energy sphere, healthcare, transport, etc. This will allow for quick and easy reaction to the changes of the environment – even in the emergency conditions. In the digital economy, “smart” cities move from the priority of improvement of technical equipment to development of services that have to improve population’s quality of life. Evaluation of cities focuses on the services that “smart” cities are able to provide to their citizens. An indicator of development of the digital infrastructure of a “smart” city should be availability and usage of the modern payment systems, as most city services require payment for instantaneous receipt of the services. For example, the services of the transport system of a “smart” city have to provide an opportunity to pay for parking, commute, or carsharing. According to an overview of the Bank for International Settlements, all leaders in digitization have modern payment systems (Bank for International Settlements CPMI 2016). The information on the payment systems that are used in Singapore, Seoul, and London is shown in Table 1.

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Table 1. Payment systems of the cities that are leaders in development of the “Smart City” concept. City

Payment system

Seoul

Electronic Banking System (EBS)/ CD/ATM System Faster Payments Service (FPS) Fast And Secure Transfers (FAST)

London Singapore

Year of the start of implementation of the payment system 2001

Year of the start of implementation of the Smart City concept 2004

2008

2013

2014

2014

Analysis showed that development of modern payment systems with the leaders exceeds or takes place simultaneously with development of “smart” cities, as presence of functional infrastructure in the form of convenient and quick payment systems allows developing other city services. The modern city payment systems use new technologies for payment and are built by the principles of 24/7 accessibility, real time calculations, and without commissions and operators. Intermediaries in the payment infrastructure are a forced measure of the payment system with a centralized method of interaction that appeared 50 years ago. For example, at the crowdfunding platform Boomstarter the commission is 3.5% (REGNUM 2018). The modern technologies of distributed registers allow for optimization of the payment environment of the city, eliminating intermediaries, and making the payments more effective. For example, the program of Singapore sets a task of creation of a “bank-free” payment system in 2019 (Government of Singapore 2018). Payment system of a “smart” city is a totality of tools and methods that are used for transferring money and payments within the city. It should be created as a socially important payment system, as the level and quality of its development determine the citizens’ trust to the city authorities and citizens’ activity in usage of the city’s digital infrastructure. Quality of socially important payment system is determined primarily by reliability of payments that are provided by the city and absence of commissions. Most of the services that are provided by the city require linked settlements, to which citizens and city authorities set the following requirements: guaranteed and quick receipt of money and absence of commissions. For the city, this element of the digital infrastructure should be “inclusive” – it should be applied in all spheres of life of a “smart” city. The created payment system of a “smart” city should be accelerator of the city’s digital infrastructure and its basic element. Development of a city payment system could take place in three ways: implementation as a municipal service (city’s property), implementation according to the rules that are set by the city (private property with city’s control), and development within a competitive environment (private property, without city’s control). Until now, Moscow has been peculiar for chaotic development of payment systems, with partial or limited control from the city and large number of participants (intermediaries and payment agents), which set their commissions. As to the number of the means of payment of travel in public transport, Moscow is among the three leaders,

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together with Singapore and Tokyo. For example, a Troyka transport card is used, which sphere of application is constantly expanded: together with payment for subway, trams, buses, etc., it is possible to pay for entrance tickets to the zoo and planetarium, with payment for taxi and carsharing in plans. Contract-free payment for travel in public transport could be implemented in Moscow in 2019 – it is offered to use mobile phone or card with a special chip (Liksutov 2018). The most popular means of cashless payment in Moscow are presented in Fig. 1. Almost 100% involvement of the Moscow population with cashless payments and usage of different methods of payment show a good basis for further development of payment system of a “smart” city based on digital technologies.

100% 90%

96%

80% 70% 60% 50%

40% 32%

40% 30%

16%

20% 10% 0%

Bank cards Mobile bank

Internet bank

E-money

Fig. 1. Methods of cashless payment for services in Moscow. Source: Compiled by the authors based on a survey of 1,000 residents of Moscow performed by the experts of the Department of information technologies of Moscow and “Yandex.Money” in September 2018. https://blockchain.ru

The Moscow’s strategy “Smart city – 2030” sets a goal of development of technologies of payment without using cash and plastic cards and formulates the initiative on formation of a unified virtual “purse” of a Moscow resident (Moscow Government 2018a). Creation of the “purse” should take place with application of modern technologies – which are distributed registers. Creation of one-rank payment system in the trusted environment of the city (with application of blockchain technology) will allow involving all organizations that provide services for payments as of now and using and developing new methods of payment. Such system will be ready to use any fiat currency for payments (including with the internal function of exchange for legal payment means) and will be able to quickly adapt to usage of private crypto currencies.

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Trusted environment of a payment system includes channels of communication and servers that are used for functioning of the payment system and that underwent the measures on information protection. Banks and non-bank credit organizations have to obtain permits from the city for connection to this payment environment. As a result, a “smart” city will have a consortium of banks and bank credit organizations that participate in the city payment system. The participants will be able to raise their attractiveness for citizens, and citizens will be able to select the payment method. As of now, payment methods could be non-cash money in bank accounts or accounts of bank credit organizations and electronic money. In future, these might also include crypto currencies. 3.2

Models of Financing of “Smart” Cities

Billions

Implementation of the strategic initiatives of development of digital infrastructure of Moscow will require large financing and determination of its model. Financial provision of the state program “Information city” (2010–2019) requires RUB 591 billion, of

90.00

81

80.00 70.00

55

60.00

59

63

65

71

80 71

50.00 40.00 30.00

21

24

20.00 10.00 0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Budget of Moscow city Federal budget funds Funds of legal and physical entities Funds of all financing sources Fig. 2. Financial provision of the state program of Moscow “Information city”. Source: Compiled by the authors based on the data of the information portal “Open budget of Moscow” http://budget. mos.ru/gp_infocity

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which RUB 389 billion – from the city budget. Dynamics and structure of financing of this state program are shown in Fig. 2. The assets of private investors for financing of the state program “Information city” have been attracted in Moscow since 2012. During the period of the Program’s implementation - from 2012 to 2019 – the share of private sources of financing constituted 32%–42%, and the assets of the Moscow budget exceeded the assets of legal entities and individuals by 1.4–2.1 times. The planned Moscow program “Smart city” envisages full development of the digital infrastructure as the unified system of city management, including various spheres of citizens’ life activities: transport, healthcare, education etc. The basis for successful implementation of this project is the program that has been prepared according to the previous program “Electronic Moscow” and “Information city” infrastructure and the perspective of development of AI. For developing the project of the “Smart city” strategy, the Moscow budget did not envisage the increase of expenditures for digitization of infrastructure, which is shown in Table 2: plan of financing of the state program “Information city” envisaged reduction of expenditures in 2019 by 18%, as compared to 2018 (Moscow Government 2017). However, implementation of the “Smart city” strategy envisages significant increase of the volumes of financing: by 28% in 2019, and by 13% in 2021 (Moscow Government 2018b). Table 2. Expenditures for “information city” and “smart city” in the budget of Moscow, RUB billion. 2018 (fact)

57.9

2019 (plan) Draft law on the budget of Moscow for 2019 and the planned period of 2020 and 2021 74.3

Law on the budget of Moscow for 2018 and the planned period of 2019 and 2020 47.7

2020 (plan) Draft law on the budget of Moscow for 2019 and the planned period of 2020 and 2021 81.5

Law on the budget of Moscow for 2018 and the planned period of 2019 and 2020 42.8

2021 (plan) Draft law on the budget of Moscow for 2019 and the planned period of 2020 and 2021 83.9

Analysis of financing of the programs that are connected to development of the Moscow digital infrastructure shows their significance and increase, as well as involvement of various stakeholders. That’s why one of the key tasks that determines the strategy of development of “smart” cities is the search for sources and determination of the model of financing. According to the research company Markets and Markets, the volume of the market of technologies of a “smart” city constituted USD 424.68 billion in 2017; it will reach USD 1.2 trillion in 2022 (Marketsandmarkets 2018). In the course of increase of various groups of technological solutions, this niche

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becomes more attractive for investments from a whole range of players (business, state, local communities, population, etc.). A perspective direction of financing of development of the digital infrastructure of a “smart” city is attraction of the business environment. Public-private partnership could become one of the main tools of managing the financing of “smart” cities. According to the Center for development of PPP, there are more than 20,000 projects in Russia – but this market could increase by two times (REGNUM 2018). The government and municipalities – as guarantors of social justice in partnership with business, leader in innovations and organizational effectiveness – unite their advantages during implementation of “smart” infrastructural projects of the city (Frolova and Medvedeva 2018). Constructive interaction between the state and business in the sphere of development of “smart” cities will allow municipalities to reduce expenditures for implementation of the digital infrastructure, attract innovations, and increase awareness and interest of city residents and quality of their life. For the purpose of increase of interest of business in the projects of development of digital infrastructure of “smart” cities and for expansion of the possibilities for close partnership interrelations, the state has to provide improved conditions of crediting for innovative projects, create financial mechanisms of additional tax and customs payments from implementation of investments projects based on the created digital infrastructure, provide help in receipt of subsidies for R&D and permits for their approbation and usage, compensate for expenditures for creation, modernization, and (or) reconstruction of the objects of infrastructure to managing companies of private industrial parks, industrial technological parks, technological parks of hi-tech, and private managers. Apart from private investors, for financing of “smart” technologies municipalities could attract the city residents, using the models of crowdfunding and crowdinvesting. Examples of positive foreign experience is crowdfunding financing of an outside pool and recreation area in New York with a Manhattan view: wooden bridge with 10,000 owners, between the Rotterdam districts separated by a highway (Hoffmann 2016). In the crowdfunding platform Planeta.ru, social projects (financing of festivals, etc.) are the leaders (19%), which shows population’s involvement and high probability of participation in the investments in development of a “smart” city (Shakirova and Nosyrev 2017). For this, the activities of the public authorities should be aimed at increasing the citizens’ awareness in the sphere of new technologies, organization of meetings, demonstration measures for application of new technologies, etc. However, financing of expensive technologies will be difficult, due to the large period of their return and limited financial abilities of individuals. Development of partnership relations between residents and municipal authorities largely depends on effectiveness of work of the latter on increase of population’s awareness in the sphere of “smart” technologies. The problems of financing of the digital infrastructure of “smart” cities could be solved with international experience. The European Commission publishes special mid-term programs for development of digital infrastructure “Digital Single Market Policy”, the last of which envisages investments into research and innovations in the sphere of IT of the world level for stimulating the growth of jobs through public-private partnership, using the opportunities within the programs of financing until 2020

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(European Commission 2018a). The program announces the increase of competitiveness in the sphere of digital technologies as one of the main strategic goals. This task is to be solved with attraction of innovations – for increase of the speed of Internet and level and trust and security in different spheres of provision of public services. Besides, the European Commission developed a project “European Innovation Partnership (EIP) on Smart Cities and Communities”, within which acceleration of implementation of these solution is to be performed by unifying the European cities, leaders of the industrial sphere, and representatives of the civil society for development of “smart” cities of Europe. As a result, the European innovative partnership obtained 370 obligations on financing and development of “smart” solutions in the sphere of energy and transport. These obligations attract more than 3,000 partners from all over Europe and create a large potential for increasing the attractiveness of cities and creation of opportunities for business (European Commission 2018b). Consulting company Easy Park publishes the index of “smart” cities, which includes 100 large cities that are assessed according to 19 indicators (Easy Park 2017). In 2017, Copenhagen became the best city – as to development of digital transport infrastructure, stability, and quality of city management. In this city, digitization of infrastructure, as in many other cities, became an urgent need due to increasing number of residents and car transport. In the recent years, the authorities were able to successfully solve the problem of traffic jams and parking. Besides, the city develops ecological programs that can solve the problem of pollution. For financing of “smart” solutions, the municipality attracts private innovative companies. Several innovative companies created an ecologically safe “smart” district with 40,000 people – which is a territory of sustainable development. Copenhagen provided data bases for developing an app that allows for minimization of the time requires for search for free parking spots around the city (Stroev and Reshetnikov 2017). The British city of Glasgow exceeded other cities of the UK and received financing of GBP 24 million from the Council for Technological Strategy (Innovate UK) for studying the innovative means of usage of technologies and data for provision of safer and more sustainable life in the city. During the recent 18 months, Glasgow has been developing a range of initiatives, developing a concept of smart city (Innovate UK 2018). Increase of attractiveness of financing of the digital infrastructure of “smart” cities depends on the interest of the public authorities in development of this process. Experience of most states that develop these directions shows a large level of involvement of high authorities in the development of “smart” cities. Based on the above, it is possible to offer the models of financial provision of the digital infrastructure of “smart” cities (Table 3). Table 3. Models of financing of the digital infrastructure of a “smart” city. Title Model of state financing

Characteristics of the model State fully finances the development, implementation, and servicing of the digital infrastructure (continued)

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Title Model of co-financing (public-private and municipal & private partnership) Model “infrastructural” mortgage

Service model of financing (model of attraction of the operator with investment obligations)

Model of direct financing

Model of hybrid financing

Model of crowdfunding and crowdinvesting

Characteristics of the model Financing of the digital infrastructure involves the city administration, commercial companies, and city residents Creation of the object of “smart” infrastructure of the city by private business in credit, which is paid by means of regular payments from the regional and federal budgets or payments from the object’s users Private company invests into implementation of new digital technologies and performs servicing of these technologies before and after the full term of return of investments. The technologies are owned by the city; the state stimulates the acceleration of return period by providing credits with small interest, tax subsidies, etc. Commercial companies implement and service digital technologies and collect payments from city residents Projects of the digital infrastructure are cofinanced by mezzanine investor, who also provides additional guarantee for the creditor Financing of projects of “smart” infrastructure by means of the assets of the city population

4 Conclusions Despite the absence of the unified federal program for development of “smart” cities in Russia, a lot of entities participate in its implementation – the Ministry for Construction and such corporations as Rostelecom, Rostekh, and Rosatom. The Ministry for Construction prepare a project “Smart city”, which will act until 2024 and will attract RUB 12.5 billion. Its implementation will stimulate the implementation of new technologies in the sphere of digitization of services of urban economy (Volokhina 2018). The performed research confirms the expedience of development and implementation of the concept of “smart” city in Russia – this conforms to the trend of the world leaders. If it offered to develop the digital infrastructure of a “smart” city, which is connected to formation of a unified virtual “purse” of a city resident: creation of a onerank payment system in the trusted environment of the city with application of blockchain technology and its approbation as a pilot project in Moscow within the strategy “Smart city – 2030”. The authors substantiate the models of financing of development of the digital infrastructure of a “smart” city with attraction of the assets of the budget, private business, and population. Effectiveness of city management

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determined quality of life of the city population and population of the country. Positive experience of usage of new technologies could be disseminated around the country, stimulating the solution of macro-economic problems in the transport sphere, energy sphere social development, healthcare, etc.

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Socio-economic Development of a Modern Region Based on Globally Oriented State Management Yulia G. Tyurina1(&), Anatoly A. Samorukov2, Marina A. Kolmykova2, and Nadezhda I. Seliverstova2 1

Financial University Under the Government of the Russian Federation, Moscow, Russia [email protected] 2 Orenburg State University, Orenburg, Russia

Abstract. Purpose: The purpose of the work is to develop the scientific and methodological provision of globally oriented state management of a region for optimization of its socio-economic development. Design/methodology/approach: The authors develop a method of determining the global orientation of state management of region’s economy, which reflects the effectiveness of managing the globalization factor in this process. The authors also use the method of building regression curve (regression analysis) for substantiating the positive influence of globally oriented state management of economies of the regions of the Volga Federal District of the Russian Federation on GDP per capita in these regions in 2018. Findings: Approbation of the developed method by the example of regions of the Volga Federal District of the Russian Federation in 2018 showed that state management of these regions’ economy is globally oriented, but there are perspectives of increasing the effectiveness of management of the globalization factor. Originality/value: For maximization of effectiveness of state management of socio-economic development of the regions of the Volga Federal District of the Russian Federation according to management of the globalization factor, it is recommended to increase global orientation of this management by 5.79 times. As among the indicators that are taken into account during assessment of global orientation of regions of the Volga Federal District of the Russian Federation the lowest value is observed with the indicator of economic security (dependence on import), it is recommended to pay main attention to the issues of development of import substitution. Keywords: Socio-economic development
State management economy
Globalization
Effectiveness
Regions of Russia JEL Code: C21


Region’s


D61
F01
F62
O18
P25
R11
R13
R58

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 123–130, 2020. https://doi.org/10.1007/978-3-030-39319-9_13

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1 Introduction Modern regions are influenced by the globalization factor, as most of the national economic systems are integrated into the global economy. The influence of this factor on region’s economy could be different – and, therefore, contradictory. On the one hand, the most obvious result of globalization is growth of competition in the regional markets. Appearance of new players (effect of novelty), which are very often transnational (marketing effect and price dumping) could lead to reduction of competitiveness of regional companies and their bankruptcy. This is stimulated by socioeconomic unification, which result is loss of uniqueness by regional entrepreneurship. On the other hand, possibilities for independent arrival at new markets for regional companies will also grow. Expanded possibilities of selling product stimulate the increase of the production volume by regional companies and diversification of their activities, and new (imported) technologies stimulate growth of their efficiency. A direct consequence is growth of innovative activity of entrepreneurship with creation of new markets. Competitiveness of regional entrepreneurship could grow due to additional opportunities of supply optimization. Insufficient attention or low effectiveness of managing the globalization factor could cause or increase the negative consequences of this factor’s influence, as well as limit or hinder the receipt of advantages from the region’s economy’s globalization. Thus, the issue of creation of scientific provision of highly-effective management of the globalization factor during state management of region’s socio-economic development – i.e., achievement of the global orientation of this management – becomes very important. In order to solve the set problem it is necessary to deal with two tasks. The first task is evaluating the effectiveness of managing the factor of globalization during state management of region’s socio-economic development. The second task is determining the perspectives of maximization of this effectiveness. The purpose of this work is to develop the scientific and methodological provision of the globally oriented state management of a region for optimization of its socio-economic development.

2 Materials and Method Functioning and development of the regional economy under the influence of the globalization factor are studied in the works (Carrizo et al. 2016), (Kusurgasheva et al. 2017), (Springborg 2016), (Yu 2017), (Zhang 2016), Sergi et al. (2019), Sergi (2019), and Shakhovskaya et al. (2018). Certain issues of managing the globalization factor during state management of region’s economy are studied in (Bar et al. 2016), (Grabar et al. 2017), (Mottaeva 2016), (Popkova and Sukhodolov 2017a), (Popkova and Sukhodolov 2017b), (Ragulina et al. 2018), (Shichiyakh et al. 2017), (Wolfe and Bramwell 2016), (Zakharova et al. 2016), and Tyurina et al. (2018). The methodological issues of evaluation and maximization of effectiveness of managing the globalization factor during state management of region’s socio-economic development are poorly studied. The search for answers to these questions is difficult due to inapplicability of the classical formula of effectiveness evaluation – ratio of

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profit to expenditures – to state management of the globalization factor. While profits from globalization could be evaluated, expenditures for state management of the globalization factor cannot be distinguished in the total structure of state expenditures and thus cannot be determined precisely. That’s why here we offer to use not the factual expenditures but potential – alternative – costs. This will allow adapting the classical formula of effectiveness evaluation to the practice of state management of the globalization factor. We also deem it necessary to perform systemic accounting of the manifestations of the influence of the globalization factor on the region’s economy and management of this factor. That’s why the profits should be determined according to the components of the SWOT analysis. Profits (for each region) from state management of the globalization factor include competitiveness, quality of life, investments into innovations, and economic security (ratio of export to import), and alternative costs include the best national values of the above indicators (the best for the country). Evaluation of effectiveness of state management of the globalization factor should be performed according to the following formula: Cego ¼ ðCuo þ Cln þ Csi þ CltÞ=4;

ð1Þ

where Cego – coefficient of global orientation of state management of the globalization factor in the region; Cuo – coefficient of using the opportunities (strengths of the region), which is ratio of competitiveness of the evaluated region to the maximum level of competitiveness among the country’s regions; Cln – coefficient of limiting the negative influence of globalization on the region’s socio-economic system, calculated as ratio of quality of life in the evaluated region to the maximum quality of life of this country’s regions; Csi – coefficient of strategic investing into globally-oriented development of the region, calculated as ratio of investments into innovations per capita in the evaluated region to the maximum level of investments into innovations per capita among the country’s regions; Clt – coefficient of leveling the strategic threats to globalization for the region’s economy, calculated as ratio of economic security (ratio of export to import) of the evaluated region to the maximum level of economic security among the country’s regions. All the above indicators are measured in shares of 1. Here we offer to classify the practices of state management of region’s economy according to management of the globalization factor and to distinguish: – Internally oriented practices of state management of region’s socio-economic development, which envisage maximum limitation of the influence of the globalization factor on the region’s economy and low effectiveness of managing this factor (Cego < 0.5);

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– Globally-oriented practices of state management of region’s socio-economic development, which ensure the region’s openness and highly-effective management of the globalization factor (Cego  0.5). For approbation of the offered hypothesis we selected 10 regions of the Volga Federal District of the Russian Federation, which are peculiar for the highest openness (susceptibility of globalization through the prism of the share of foreign trade turnover in the structure of GRP) in 2018: the Republic of Tatarstan (0.22%), the Udmurt Republic (0.03%), Perm Krai (0.13%), Kirov Oblast (0.10%), Nizhny Novgorod Oblast (0.14%), Orenburg Oblast (0.10%), Penza Oblast (0.04%), Samara Oblast (0.13%), Saratov Oblast (0.07%), and Ulyanovsk Oblast (0.09%).

3 Results The results of the performed evaluation of the level of global orientation of state management of economy of the regions of the Volga Federal District of the Russian Federation in 2018 (calculation of the indicators Cuo, Cln, Csi, and Clt) are presented in Table 1. Based on the data of Table 1 and according to Formula (1) we calculate the coefficients of global orientation of state management of the globalization factor in the regions of the Volga Federal District of the Russian Federation in 2018. For example, in Orenburg Oblast Cego = (0.55 + 0.62 + 0.84 + 0.32)/4 = 0.58. The results of the evaluation are shown graphically in Fig. 1.

1.20 1.00 0.80 0.60 0.40 0.20 0.00

0.96 0.78

0.66 0.44

0.58 0.37

0.69 0.43

0.45 0.50

0.59

Fig. 1. Coefficients of global orientation of state management of the globalization factor in the regions of the Volga Federal District of the Russian Federation in 2018. Source: calculation by the authors.

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As is seen from Fig. 1, effectiveness of state management of the globalization factor in the regions of the Volga Federal District of the Russian Federation in 2018 is rather high on average: Cego  0.5, which allows considering this management globally oriented. The regression curve of dependence of GDP per capita (y) on Cego (x) in regions of the Volga Federal District of the Russian Federation in 2018 is shown in Fig. 2.

GRP per capita, RUB

600000 500000

y = 103914x + 98538 R² = 0.7586

400000 300000 200000 100000 0 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 Level of global orientation of state management of region's economy, shares of 1

Fig. 2. The regression curve of dependence of GDP per capita (y) on Cego (x) in the regions of the Volga Federal District of the Russian Federation in 2018. Source: calculated by the authors.

The built regression curve shows that increase of the coefficient of global orientation of state management of region’s economy by 0.1 leads to growth of GDP per capita by RUB 103,914 (correlation – 75.86%). The average Russian level of GDP per capita in 2018 constitutes RUB 472,161.9 (Federal State Statistics Service 2018). That’s why the strategic priority of state management of economy of the regions of the Volga Federal District of the Russian Federation is achieving the average Russian level of GDP per capita. Putting the target value y into the regression equation from Fig. 1 we receive 472161.9 = 103914 * x + 98538. Solving this equation, we see that maximization of GDP per capita in the regions of the Volga Federal District of the Russian Federation (increase by 38.03% - to RUB 472,161.9) requires increase of the level of global orientation of state management of these regions’ economies by 5.9 times – to 3.98.

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Table 1. Results of evaluation of the level of global orientation of state management of economies of the regions of the Volga Federal District of the Russian Federation in 2018. Region of the Volga Federal District of the Russian Federation

Competitiveness

Quality of life

Investments into innovations

Economic security

Points

Points

RUB per capita

Csi (/108734), %

Shares of 1

Clt (/7.02), %

Cuo (/88.049), %

Cln (/77.371), %

GRP per capital, RUB

Republic of Tatarstan

75.069 0.85

66.147 0.85

163.920

1.51

4.35

0.62

499,778.6

Udmurt Republic

42.200 0.48

46.506 0.60

52.775

0.49

1.43

0.20

356,042.7

Perm Krai

57.054 0.65

46.650 0.60

96.591

0.89

3.38

0.48

414,418.5

Kirov Oblast

34.594 0.39

40.183 0.52

44.289

0.41

1.13

0.16

224,776.0

Nizhny Novgorod Oblast

58.715 0.67

55.077 0.71

75.302

0.69

7.34

1.05

363,327.8

Orenburg Oblast

48.810 0.55

47.763 0.62

91.605

0.84

2.26

0.32

387,570

Penza Oblast

35.315 0.40

48.511 0.63

54.277

0.50

1.36

0.19

251,717.5

Samara Oblast

61.083 0.69

54.214 0.70

78.617

0.72

4.51

0.64

397,857.2

Saratov Oblast 44.794 0.51

47.222 0.61

58.866

0.54

0.96

0.14

263,773.6

Ulyanovsk Oblast

37.403 0.42

48.779 0.63

73.461

0.68

1.88

0.27

261,500.3

On average

49.504 0.56

50.105 0.65

78,970.3 0.73

2.86

0.41

342,076.2

Source: compiled by the authors based on RIA Rating (2019a), RIA Rating (2019b), Federal State Statistics Service (2018).

4 Conclusion As a result of the research, the authors’ method of determining the global orientation of state management of region’s economy has been developed – which reflects the effectiveness of managing the globalization factor in this process. Approbation of this method by the example of regions of the Volga Federal District of the Russian Federation in 2018 showed that state management of these regions’ economy is globally oriented - but there are perspectives of increase of effectiveness of managing the globalization factor. Foe maximization of the effectiveness of state management of socio-economic development of the regions of the Volga Federal District of the Russian Federation according to management of the globalization factor, it is recommended to increase the global orientation of this management by 5.79 times. As among the indicators that are taken into account during evaluation of the global orientation of the regions of the Volga Federal District of the Russian Federation the lowest value is peculiar for the indicator of economic security (dependence on import), it is recommended to pay main attention to the issues of development of import substitution.

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The Mechanism of Creating a Strategy of Sustainable Development of Company in the Eco-System of the Digital Economy Sabina R. Sharipova1(&) , Elena R. Schislyaeva2 Elena S. Balashova1 , and Olga A. Saychenko2 1

,

Peter the Great St. Petersburg Polytechnic University, St. Petersburg, Russia [email protected], [email protected] 2 St. Petersburg State Marine Technical University, St. Petersburg, Russia {schislyaeva,saychenko}@corp.smtu.ru

Abstract. Topicality of the research is established through the main tendencies in the digital economy and development of industrial companies. The authors determine the main problems of the digital economy and show that industrial companies - as a subject of the digital economy – could provide a mechanism of managing the eco-system and, as a result, the negative factors – a mechanism of developing a strategy of sustainable development of companies. The purpose of the work is to create a mechanism of developing a strategy of sustainable company in the eco-system of the digital economy. The stages of the mechanism of developing a strategy are presented: strategic analysis, development of the strategy, creation of a mechanism of implementing the strategy, and implementation and control over effectiveness of the implementation. The research shows that through management of the factors of external and internal digital environments industrial companies influence the sustainability of business ties and influence the moral foundations of employees and consumers. It is established that development of a strategy of sustainable development of a company is impossible without creation of competencies with the managers and specialists in the sphere of digital technologies and without a tool of control over effectiveness of the strategy implementation. It is recommended to study such topics as tool and methods of creating a strategy of managing the eco-system the digital economy and the factors of influence of industrial companies on the digital economy’s eco-system. Keywords: Mechanism
Industrial companies
Management of eco-system Sustainable development
Digital economy JEL Code: O140





L600
D200
Z100

1 Introduction The Fourth technological revolution stimulates the creation and development of a new stage of development of economy - the digital economy – which was adopted as the key direction of development at the 46th World Economic Forum. Klaus Schwab treats © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 131–138, 2020. https://doi.org/10.1007/978-3-030-39319-9_14

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this direction as “mixture of the technologies of the physical, digital, and biological world, which creates new opportunities and influences the political, social, and economic systems” (Schwab et al. 2016; Salimanyanova 2018). 2017 saw the adoption of the national program “Digital economy of the Russian Federation” for “creating the conditions for development of the society of knowledge, increasing the well-being and quality of life of citizens through increasing the accessibility and quality of goods and services that are manufactured in the digital economy with the usage of the modern digital technologies, increasing the level of awareness and digital literacy, increasing the accessibility and quality of state services for citizens, and raising security in the country and beyond its borders” (Decree of the Government of the Russian Federation 2017). The digital economy is peculiar for several tendencies (Chernyshov 2018, Gnatyshina and Salamatov 2017, Buttner and Muller 2018, Härting et al. 2018, Lenkenhoffa et al. 2018, Pagoropoulos et al. 2017, Tvenge and Martinsen 2018): – interdisciplinary scientific directions are formed – due to which inventions are made in the spheres that were inaccessible for research in the past; – additive and transcendent technologies, which stimulate production of new goods and services, are created; – the process of authomatization of production based on AI takes place; – technologies are implemented into all spheres of activities of business, public authorities, and individuals; – technologies develop and disseminate with exponential speed at the global scale; – cultural paradigms change, and network forms of communications appear. The tendencies of development of the digital economy influence the integration of the activities of various communities and institutes, forming the digital eco-system. Eco-system of the digital economy is “partnership of organizations that ensure constant interaction between their technological platforms, applied Internet services, analytical systems, and information systems of public authorities of the Russian Federation, organizations, and citizens” (Chernyshov 2018). The purpose of creation of an ecosystem is “providing population with digital services that are formed in real time, in view of observation of all norms and regulations and in the conditions of maximum trust” (Akatkin et al. 2017). However, the process of digitization of society and production is criticized due to the fact that the negative consequences and potential contradictions already exist. The main problems and threats to the digital age are as follows (Gorbunova et al. 2017; Safronchuk 2017): – The subjects of control and management of the processes of the digital economy are not determined. The state is a manufacturer and consumer of digital goods and services at the same time – which puts certain limitations on citizens. Society could be bereaved of the access to information and technologies for the purpose of more effective state management. Besides, implementation of technologies and robotization lead to replacement of personnel, reduction of middle class, and reduction of population’s effective demand.

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– The problem of protection of intellectual and author’s right appears. In the age of quick dissemination of information and erasure of limits between the private and the public, it becomes difficult to identify the original source of information and to distinguish knowledge from the “information noise”. Moreover, improvement of technologies leads to intellectual gap and social tension between the individuals that are behind the technological progress and individuals that develop technologies. – absence of systemic knowledge and categorical tools in the digital culture leads to distortion of values and the moral foundation of the society. Creation and transfer of information are peculiar for a chaotic order, and accumulated knowledge goes away together with its bearer. The growth rates of technological digital progress exceed the process of creation of the methodology in the sphere of education, in view of new tendencies. The digital economy has the largest influence on the industrial sphere, in which the process of integration of technologies takes place at all levels of management, from the moment of R&D up to service and post-sale maintenance. As any technological revolution, the Fourth industrial revolution changes the process of production by implementing hi-tech machines and equipment, application of autonomous robots, virtual modeling of production processes, and usage of cloud solutions for data storage. Companies use digitization of products for collecting information for processing and analysis of data, for improving the product’s characteristics, for bringing it to the final consumer, and for providing new types of goods and services – e.g., creation of a personalized catalog of goods. Creation of new digital products is accompanied by the change of the business models, which lead to optimization of expenditures, elimination of the best elements of management, and receipt of additional revenues. All changes that are caused by digitization of economy require organization of new forms of strategies of business, where the principles of demand and offer transform, new markets of commodities and services appear, and open dialog between business, public authorities, and consumer take place. In the modern conditions, industrial companies face the following challenges: necessity for training personnel that possess the principles and knowledge of the digital economy; organization of production and infrastructure that ensure creation of secure and technological product; creation of algorithms of management for reducing socioeconomic and ecological risks. In the conditions of digitization of economy and emergence of a digital eco-system, the optimal tool for industrial companies that would ensure the process of their integration into the modern conditions and would determine their place in the digital eco-system could be development of the strategy of sustainable development. Based on the above tendencies in the digital economy and the need for adapting industrial companies to the changing conditions, the topicality of this research is established. In the conditions of transformation of the digital economy, the purpose of this research is creating a mechanism of developing a strategy of sustainable development of industrial companies.

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2 Methodology Eco-system of the digital economy envisages establishment of partnership relations and communications with different institutes, in the conditions of regular solution of threats and challenges of the social, ecological, and economic character. In the digital economy, the strategy of sustainable development of a company is a mechanism of methods and tools for provision of effective and competitive functioning in the economic, social, and ecological directions in the present and the future. Moreover, creation of the strategy of sustainable development allows establishing sustainable business ties with representatives of state structures, intermediaries, buyers, and interested parties; developing the organizational culture that is based on the principles of openness and loyalty. As a result, a company could make managerial decisions that stimulate determination of the most perspective directions of the company’s activities in the conditions of digitization and influence its development and improvement. Studies in this sphere (Gusev 2016; Lytneva 2016; Bocken et al. 2014; Chesbrough 2007; Geissdoerfer et al. 2018; Luqmani et al. 2017; Roome and Louche 2015; Sas et al. 2017, Uvarova et al. 2016) allow forming a mechanism of developing a strategy of sustainable development of the company that includes 4 stages: strategic analysis, development of the strategy, creation of the mechanism of implementing the strategy, and implementation and control over effectiveness of the implementation. 2.1

Strategic Analysis

At the first stage, the mission and goals of the company are determined, and the tasks and indicators for evaluating the activities are formulated. The company’s mission becomes the basis of the corporate culture and translates the principles of doing business and establishment of partnership relations with interested parties. When forming the goals, it is necessary to take into account such principles as measurability, specificity, achievability, and determination in time – which allow determining the company’s position in the market, availability of resources, means of doing business and its development, and responsibility before the interested parties. Depending on the mission and goal, analysis of the internal and external factors, which influence the company’s functioning, is performed via surveys, observations, and expert evaluation. The obtained information is the basis for forecasting of potential opportunities, threats, and risks, as well as the tendencies of development and improvement of the indicators. Special attention should be paid to analysis of the sphere, availability of market segments, product’s life cycles, presence of rivals, and the rivals’ competitive advantages. The result of strategic analysis is specification and formulation of the company’s mission, goals, and direction of the activities. 2.2

Development of the Strategy

The second stage of creation of the mechanism of developing the strategy of sustainable development of an industrial company envisages preparation of the company’s strategy that conforms to the principles of ecological safety, security, competitiveness, and transparency. Depending on the volume of investments and budget, a managerial

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decision on the direction of development could be made: diversification, merger, entering new sales markets, implementation of new technologies, or optimization of production. In the conditions of the digital economy special attention is paid to R&D, digital technologies, AI, automation of business processes, and the Internet of Things. As sustainable development envisages activities within three directions – ecological, economic, and social – the company should choose perspective technologies that allow achieving optimization of production, ensure security of the production processes, stimulate the development of culture of work with Big Data, create infrastructure for interaction with the consumer, and control the state of the employees at work. 2.3

Creation of a Mechanism of Implementing the Strategy

Creation of a mechanism of implementing the strategy of sustainable development of industrial company consists in compilation of a complex of measures and programs for 3–10 years, which include (Babkina 2013): – setting the principles and rules of managerial decisions; – determining the indicators of the results of the strategic decisions implementation; – specification of the tasks and measures for implementing the strategy of sustainable development in view of the budget assets; – coordination and control over execution of the tasks. Based on the strategy of sustainable development, functional strategies are compiled – they are responsible for implementation of specific directions of economic activities: research work, HR management, sales and marketing, logistics, and managing the investments and production. 2.4

Implementation and Control Over Effectiveness

Implementation of the strategy requires multi-functional implementation of the developed programs and availability of financial and personnel resources. When implementing the strategy of sustainable development of a company, it is necessary to develop a system of control over implementation of the measures – a system of the indicators, which include ecological, economic, and social indicators. It is also necessary to create an algorithm of comparing the indicators and analyzing the possible deviations. Based on the obtained results it is possible to correct the program of measures for implementing the strategy of sustainable development and the goals and tasks of the company.

3 Results The digital economy transforms economic and technological thinking, creates a new eco-system of existence of society, business, and public authorities, and predetermines the necessity for sustainable development of industrial company and the mechanisms

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and tools for managing it. The following tendencies have been determined as a result of the research: – in the eco-system of the digital economy, the mechanism of developing a strategy of sustainable development of industrial company has a systemic character, including a complex of methods and tools for achieving the goals of sustainable development; – strategy of sustainable development of industrial company allows taking into account the factors of social, ecological, and economic directions and managing them, thus influencing the eco-system of the digital economy; – development of the strategy of sustainable development of a company starts with setting the mission and goals – which means development of the organizational culture according to the tendencies of development of economy. This solution becomes possible during development of the competencies of managers and specialists in the sphere of digitization, forecasting analytics, working with Big Data, ecological security, and saving of resources, creating a basis for moral culture and education of employees; – implementation of the strategy of sustainable development of industrial company requires regular monitoring and analysis of the factors that influence sustainability, for implementing changes into goals, tasks, and measures for increasing the effectiveness of managing the strategy in the conditions of digitization.

4 Conclusions The digital economy creates a new eco-system with the digital way of thinking, culture, and new institutes of management. The digital world is connected to the biological world intensively and naturally through implementation of AI, cloud solutions, the Internet of Things, and blockchain. Eco-system of the digital economy forms new principles of interaction of business, consumer, and state structures, creates the cultural and philosophical foundation of the digital society, automatizes business processes, and optimizes the work of the production capacities. Solving the emerging threats and problems of the digital economy – e.g., determining the role of human in the digital society, information terrorism, data and knowledge management – requires a complex approach and participation of various institutes. Industrial companies, as the main drivers of the digital economy, could offer not only technological solutions but also tools for managing the eco-system. The mechanism of sustainable development of industrial company is one of the management tools. Organizational culture, which is the basis of a company’s sustainable development, could influence the cultural changes in the eco-system of the digital economy through transparent business ties with intermediaries, provision of safe and technological products and services to consumer, and implementation of the Internet of Things at production – thus reducing ecological and social risks. In view of the importance of research in the sphere of the digital economy and industrial companies in the digital eco-system, further development of the research should be aimed at methods and tools for creating a strategy of managing the ecosystem the digital economy, developing the methods of management and organization

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of a digital industrial company, and determining the factors of influence of industrial companies on the eco-system of the digital economy.

References Akatkin, Y.M., Karpov, O.E., Konyavsky, V.A., Yasinovskaya, E.D.: Digital economy: a conceptual architecture of the eco-system of the digital sphere. Bus. Inform. 4(42), 17–28 (2017) Babkina, N.I.: Stages and specific features of strategic management of development of an industrial company. Sci. Tech. Bull. SPbSPU. Econ. Sci. 1–1, 73–81 (2013) Bocken, N.M.P., Short, S.W., Rana, P., Evans, S.: A literature and practice review to develop sustainable business model archetypes. J. Clean. Prod. 65, 42–56 (2014) Buttner, R., Muller, E.: Changeability of manufacturing companies in the context of digitalization. In: 28th International Conference on Flexible Automation and Intelligent Manufacturing (FAIM 2018), Columbus, OH, USA, 11–14 June 2018, vol. 17, pp. 539–546 (2018) Chernyshov, A.G.: Strategy and philosophy of digitization. Vlast 26(5), 13–21 (2018) Chesbrough, H.: Business model innovation: it’s not just about technology anymore. Strat. Leadersh. 35(6), 12–17 (2007) Geissdoerfer, M., Vladimirova, D., Evans, S.: Sustainable business model innovation: a review. J. Clean. Prod. 198, 401–416 (2018) Gnatyshina, E.V., Salamatov, A.A.: Digitization and formation of a digital culture: social and educational aspects. Bull. Chelyabinsk State Pedagog. Univ. 8, 19–24 (2017) Gorbunova, I.A., Galkina, O.V., Kazantseva, E.E., Radova, A.E.: Big digital revolution of the 21st century: threats and perspectives. Bull. Sci. 11(11), 24 (2017) Gusev, I.S.: Mechanism of developing a strategy of managing the sustainable development of the companies of the meat processing industry. Theory Pract. Serv.: Econ. Soc. Sphere Technol. 2 (28), 31–37 (2016) Härting, R., Reichsteina, C., Schadb, M.: Potentials of digital business models – empirical investigation of data driven impacts in industry. Procedia Computer Science 126, 1495–1506 (2018). In: 22nd International Conference on Knowledge-Based and Intelligent Information & Engineering Systems Lenkenhoffa, K., Wilkensa, U., Zhengb, M., Süßea, T., Kuhlenköttera, B., Mingb, X.: Key challenges of digital business ecosystem development and how to cope with them. Procedia CIRP 73, 167–172 (2018) Luqmani, A., Leacha, M., Jessona, D.: Factors behind sustainable business innovation: the case of a global carpet manufacturing company. Environ. Innov. Soc. Transit. 24, 94–105 (2017) Lytneva, N.A.: Mechanism of managing the sustainable development of industrial companies. Mod. Technol. Manag. 4(64), 11 (2016) Pagoropoulos, A., Pigosso, D., McAloone, T.: The emergent role of digital technologies in the circular economy: a review. In: The 9th CIRP IPSS Conference: Circular Perspectives on Product/Service-Systems, vol. 64, pp. 19–24 (2017) Decree of the Government of the Russian Federation: Regarding the adoption of the program ‘Digital economy Russian Federation’, No. 1632, 28 July 2017. http://static.government.ru/ media/files/9gFM4FHj4PsB79I5v7yLVuPgu4bvR7M0.pdf. Accessed 1 Nov 2018 Salimyanova, I.G.: Digital economy as the key direction of the fourth industrial revolution. Bull. Fac. Manag. SPbSEU 3(1), 211–216 (2018)

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Safronchuk, M.V.: Digital movement of the revolution (the fourth industrial revolution and digital transformation). Econ. Manag.: Probl. Solut. 5(11), 52–56 (2017) Sas, D., Kyösti, P., Karlberg, M., Reed, S.: Toward an improved strategy for functional product development by predicting environmental and economic sustainability. Procedia CIRP 59, 208–213 (2017) Schwab, K.: Fourth Industrial Revolution, p. 208. Eksmo, Moscow (2016) Roome, N., Louche, C.: Journeying toward business models for sustainability: a conceptual model found inside the black box of organisational transformation. Organ. Environ. 29(1), 11–35 (2015) Tvenge, N., Martinsen, K.: Integration of digital learning in industry 4.0. Procedia Manuf. 23, 261–266 (2018) Decree of the President of the Russian Federation: Regarding the strategy of development of information society in the Russian Federation for 2017–2030, No. 203, 9 May 2017. http:// kremlin.ru/acts/bank/41919. Accessed 1 Nov 2018 Uvarova, S., Belyaeva, S., Kankhva, V., Vlasenko, V.: Implementation of innovative strategy in underground construction as a basis for sustainable economic development of a construction enterprise. Procedia Eng. 165, 1317–1322 (2016). In: 15th International scientific conference “Underground Urbanisation as a Prerequisite for Sustainable Development”

Digital Literacy of Lawyers as a Condition of Legal Support for Business in the Digitization Era Inna V. Ershova(&)

, Olga A. Tarasenko , Ekaterina E. Enkova, and Elena V. Trofimova

Kutafin Moscow State Law University (MSAL), Moscow, Russia [email protected], [email protected], [email protected], [email protected]

Abstract. Goal. In the context of formation of information society, digital literacy is pivotal in the solution of problems facing the education. This paper has been prepared in order to provide a scientific substantiation of an integrated approach to solving the problems of improving digital literacy of students and teachers in preparing lawyers for the business sector, as well as increased use of tailored education with the formation of an individual educational path. Methods. In order to achieve the goal set, the authors of research use a number of methods: general scientific (analysis, synthesis, generalization, induction and deduction, classification, interpretation), special scientific (comparative, statistical, sociological). Results. The research has shown that the formation of individual educational paths, designed to be instrumental in training lawyers for the modern economy, implies the introduction of alternative forms of provision of educational services based on digital technologies. This area of development of legal education requires a fundamental change in the level of digital literacy of teachers, as well as acquisition of tutor competencies by them. A wide variety of doctrinal interpretations of the concept of digital literacy prevents from choosing an efficient toolkit for solving the national task of assisting citizens in eliminating digital illiteracy. The digital literacy of teachers should include knowledge and skills in the field of educational policy and ethics of the application of information and communication technologies, the ability to make the best use of them in the teaching process, professional growth and management of educational activities. Comparison of tools that are practically applied in domestic and foreign universities within the framework of the general and specific model of the formation of an individual educational path revealed their advantages and disadvantages, as well as a range of problems of the submodel for individuals with disabilities. Conclusions. The authors offer a suggestion to enshrine the legal definition of the concept of digital literacy in the Russian legislation, to more actively involve major companies in the IT retraining of teachers, particularly teachers of the humanities, within the scope of relevant professional development programs. The mechanism for the implementation of the submodel of the formation of an individual educational path for individuals with disabilities calls for improvement in terms of development of alternative certification procedure, as well as security of the right to extend the time needed for learning the master’s programs. © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 139–147, 2020. https://doi.org/10.1007/978-3-030-39319-9_15

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Business
Polling JEL Codes: I21


Digitization
Lawyers
Individual educational


K20
O33
O38

1 Introduction The National Program “Digital Economy of the Russian Federation” is being implemented in the Russian Federation at present (the passport was approved by the Presidium of the Presidential Council for Strategic Development and National Projects, Minutes No. 16 of 24.12.2018), the structural element of which is a Federal Project “Personnel for the digital economy”. In turn, within the framework of the specified project, a task has been formulated to help citizens master digital literacy and digital economy competencies. In the meantime, according to the Regional Public Organization “Tsentr Internet Tekhnologiy”, in 2018, the mean value of the digital literacy index of citizens of the Russian Federation was 4.52 points, which is 14.7% less as compared to the previous year (5.99 points) and 2.7% less as compared to the point of time at the beginning of measurements in 2015 (4.79 points). It is important to emphasize that the formation of digital literacy is both an objective and a subjective process. The objective component relies on activities the results of which are included in the program documents as target indicators. Thus, in accordance with the abovementioned National Program “Digital Economy of the Russian Federation” by the time of completion of its implementation (12/31/2024), 10 million people should be trained in online programs for the development of digital literacy. As for the subjective component, it is individual and is largely determined by the cognitive characteristics of students. The authors of this paper have conducted the experiment involving the development of the individual competency profile of a master’s student. The results of the experiment which involved more than 100 students in the Master’s program “Legal support for business (business lawyer)” of the University named after O.E. Kutafin (MSAL), identified a wide range of opinions of students on which competencies they personally regard as top-priority in digital economy, what knowledge and skills the students intend to receive in the University1. Given the current conditions, the role of individualized learning with the formation of an individual educational path is growing. Young lawyers must be clearly aware of their place in the digital economy, which is based on the foundation of information society (Tarakanov et al. 2019). Please note that the National Program “Digital Economy of the Russian Federation” provides for the training of 1 million people for them to develop digital economy competencies within the state system of personal digital certificates. We believe that at

1

Ethical approval was obtained from the ethics committee. Members of the ethics committee are Aliya M. Bazieva, Aleksey Rogachev and Larisa Popova. Furthermore, all participants gave their informed consent to be cited anonymously in this study before its commencement. Interview partners also gave their informed consent to be recorded and their statements be transcribed.

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present it is important to identify models of the formation of an individual educational path of students, their maintenance and implementation mechanism, including the capabilities of introduction of alternative forms of provision of educational services based on digital technologies. An individual mention should be made of a person responsible for the development of individual educational programs. In accordance with Order of the Ministry of Health and Social Development of Russia No. 1n of 11.11.2011 “On Approving the Unified Qualification Guide for the positions of managers, specialists and employees, section “Qualification profile of the positions of principals and specialists of higher vocational and further vocational education”, performance of official duties to develop students’ ability to act independently, to assist in planning step-by-step actions to achieve an image of the future professional activity, in the formation of an individual educational path: selection of elective courses, topics of academic research, consultations on career issues, including self-determination when a scientific career is chosen, admission to the postgraduate training program is vested in the tutor. It is interesting that in the Skolkovo’s Atlas of New Professions there is information about the emergence of a tutor profession before 2020.

2 Results 2.1

Genesis of the Concept of Digital Literacy

The concept of digital literacy is not defined in any regulatory legal acts of the Russian Federation; as a result, there is no clear idea of this term in the professional community. At the same time, in order to choose an efficient toolkit for solving the national task of assisting citizens in mastering digital illiteracy, it should be understood what exactly the Russians, including business lawyers, have to master. The term “digital literacy” was popularized for the first time in 1997 by Paul Gilster. He defined digital literacy as the ability to understand and use information obtained by means of computer in various formats from a wide range of sources, and outlined the criteria for its achievement: (1) the ability to manipulate various semiotic systems, advanced critical thinking (media literacy); (2) the skills to find the necessary information and tools for working with it, the ability to quickly master these tools (information literacy); (3) the skills of communication with other users (communicative competency); (4) the skills of producing information in its diverse forms and formats (creative competency) (Gilster 1997). The original definition was made specific by Alan Martin, who treated digital literacy as comprehension, attitudes and ability of individuals to properly use digital tools and means for identification, access, control, integration, assessment, analysis and synthesis of digital resources; building systems of new knowledge, as well as communicating with other people for the purpose of constructive social actions in the context of specific life situations (Martin and Madigan 2006).

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In Russia, the first papers regarding digital literacy were published in 2010. By the mid-2019, the database of the Russian Science Citation Index contained approximately 250 papers with keywords “digital literacy”. On a website with the same name which was specially created to measure the index of digital literacy of Russians and events aimed at increasing the level of knowledge and competencies of population in this field, digital literacy is defined as a set of knowledge and skills that are necessary for the safe and efficient use of digital technologies and web resources. At the same time, it includes three components: digital consumption (using Internet services for work and life), digital competencies (skills in efficient use of technologies) and digital security (the basics of online security) (Digital Literacy. What is it, 2018). By the way, even Paul Gilster warned us: “A key component of digital literacy is discretion”. This term is actively discussed during numerous research and practice events dedicated to the problems of education. We will present only some interpretations. The participants in the Discussion on the topic “Digital Literacy. What is this?” within the framework of the Moscow International Exhibition of Education in April 2018, said in summary that digital literacy is the ability to use the opportunities that modern society opens with all of its technologies, the ability to communicate with people in a new social format and be ethical and attentive to each other (What is digital literacy?, 2018). During the All-Russian conference “From the Digit to Digital Literacy: Problems and Solutions” held in December 2018, the Vice-Rector for Informatization and Quality Assessment of Education of Tomsk Regional Institute for Professional Development and Further Training of Educators Boris Iliukhin suggested that digital literacy should be regarded as a set of skills (including the use of information and communication technologies (ICT), ensuring the success of a person, and pointed out that it should not be identified with PC literacy (Vozovikova 2018). Over the past few years, the category under study has become the subject of serious academic pursuits. Thus, the Professor of National Research University - Higher School of Economics Alexander Sharikov identified four basic approaches to the consideration of digital literacy, that are present in the Russian-language research literature and conceptually differ from each other, in particular: information & communication technology approach (ICT approach), psychological- pedagogical approach, media-informational approach, and “industrial” approach. As a consequence of conceptualization of designated approaches, the author put forward a fourcomponent model of digital literacy (Sharikov 2018). Extension of the concepts of digital literacy, caused by such factors as: the rapid growth of opportunities provided by the Internet and its popularity among the rising generation, the emergence of the implication of the need to study it, consolidation of the competency-based approach in federal educational standards, - urged the researchers to turn to the development of the concept of digital competency. According to the academic literature, digital competency shall mean an individual’s ability to confidently, efficiently, critically and safely select and apply information & communication technologies in various spheres of life (information environment, communications, consumption, Technosphere), based on continuous mastery of competencies (knowledge, abilities, motivation, responsibility), as well as his/her preparedness for such an activity. Formulated differently, digital competency is not only

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the total amount of general usage and professional knowledge and skills that are presented in various models of ICT-competency, information competency, but also the attitude towards effective performance and personal attitude to it, based on a sense of responsibility (Soldatova and Rasskazova 2014). 2.2

Increasing the Level of Digital Literacy of Teachers

The UNESCO Information for All (IFAP) program, based on international practices, has formulated “indicators of development of information society”, defining digital literacy as a fundamental skill in life. In May 2007, 16 key indicators were approved for monitoring the process of achievement of goals in education in the context of formation of information society. For 7 of 16 indicators, it is digital literacy that is pivotal (Lecture 3 “Digital literacy as a component of life skills” 2015). On January 1, 2017, the Professional Standard “Teacher of vocational training, vocational education and further vocational education” came into force, approved by Order of the Ministry of Labor of Russia of 08.09.2015 No. 608n (hereinafter referred to as the Professional Standard). The term “digital literacy” does not appear in it. However, the labor function of an employee when teaching education courses, disciplines (modules) or conducting certain types of studies in undergraduate program, specialist program, Master’s program, postgraduate training program includes the necessary skills in the application of modern technical training aids and educational technologies, including the implementation of e-learning, the use of remote educational technologies, information and communication technologies, electronic educational and informational resources (Paragraphs 3.8.1, 3.9.1, 3.10.1 of the Professional Standard). All teachers holding the posts of assistant, teacher, senior teacher, assistant professor, or professor must have these skills. The digital literacy of teachers should include knowledge and skills in the field of educational policy and ethics of the application of information and communication technologies, the ability to make the best use of them in the teaching process, professional growth and management of educational activities (Ershova et al. 2019). Teachers-lawyers with deep knowledge in law, competent in law enforcement, and having vast experience in communicating with students, often lack the “technical” component. At the same time, the amount of knowledge and skills in the digital field that future legal experts should master, increases: electronic interaction with government authorities (registration and tax authorities, courts, etc.) and counterparties, legal support for e-commerce, activities in financial markets and other types of modern business call not only for a lawyer’s fluency in digital technologies, but also for the understanding of the essence of their functioning and regulation. We believe that the problem of provision of modern information and communication tools to teachers should be solved in an integrated manner. Thus, within the framework of the priority project “Modern digital educational environment in the Russian Federation” (the passport was approved by the Presidium of the Presidential Council for Strategic Development and Top-Priority Projects, Minutes No. 9 of 10.25.2016), ten regional centers of competence in online education were created, where teachers receive necessary knowledge and skills in the field of

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online technologies, the development and examination of online courses and their integration into the educational process. It is noteworthy that organizational structures (committees, departments, etc.) which are directly engaged in the management of this work, were established jointly with representatives of big business in all countries that are members of the Organization for Economic Cooperation and Development (OECD) for the coordination of papers intended for the professional teaching of digital literacy to the population, development of courseware, programs for various levels of education, visual aids, electronic versions of educational materials. Therefore, in each of the OECD countries, there is a close interaction between public authorities and entrepreneurs in the solution of a nationwide problem – informatization of society (Gorelov and Litun 2018). Higher educational institutions should more actively implement the programs for professional development of their employees with regard to their learning of advanced information and communication technologies so that teachers were adapted to solving the problems of innovative development of higher education. For example, in April 2019, at the Financial University under the auspices of the Government of the Russian Federation, one could take courses in the program “Modern information and communication technologies in educational activity”. Finally, self-education has been and remains an effective means of acquiring, deepening and improving expertise, knowledge and skills regardless of the type of literacy. Given the will. In order to identify the opinions of representatives of the community of professionals regarding the problems raised in this paper, the authors conducted a survey of 23 teachers of Kutafin Moscow State Law University (MSAL). According to its results, more than half of respondents (60.86%) believe that there is no need to enshrine the legal definition of the concept of digital literacy in laws and regulations, being of opinion that validation of this concept will not contribute to an increase in its level among Russians. We will not conceal the fact that such law nihilism among representatives of the legal community is disturbing. About ¾ of the respondents are of the opinion that the level of digital literacy of students is higher as compared to that of teachers at present. According to the respondents’ opinion, their level of digital literacy is not low: 91.3% of respondents claimed that their level of digital literacy is average, and 8.7% of respondents claimed that their level of digital literacy is high. Moreover, more than 90% of respondents intend to further increase their level of digital literacy. The most possible forms of such an increase include listening to online courses on the Internet (56.5%), attending the on-the-job refresher courses in the university (52.1%), exchange of experience with colleagues at tutorial workshops, roundtable discussions, and conferences (43.5%). The traditional form of acquiring of knowledge turned out to be less demanded: as little as 21.8% of respondents believe that reading professional literature academic literature is beneficial to them. 2.3

Individual Educational Path of Individualized Learning

Modern education in higher educational institutions faces the need to implement the principle of individualized learning, which, as was indicated above, is stipulated by the

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presence of the social and regulatory contract. Comparing the tools, making it possible to implement an individual educational path that are practically applied in domestic and foreign universities, one can single out the general and the specific models of the formation of an individual educational path. The general model, prevailing in Russian universities, satisfies the needs relating to the tools that all students have. It provides a choice of a relatively small number of elective disciplines, research topics, and training places. Information support for students is usually provided by the administration of institutes, academic advisers or senior students. In addition to the above, please note that the results of a survey conducted by the authors in the University named after O.E. Kutafin (MSAL) made it clear that students rarely seek teachers’ help in the formation of an individual educational path. Such cases were mentioned by only one third (34.78%) of respondents. The advantages of the general model of the formation of an individual educational path include a repeatedly tested and, accordingly, sustained curriculum, a clear timeline for mastering the curriculum, a high degree of specialization in education, provision of educational programs with educational material and academic literature, ability to respond to market demands by including the popular disciplines in the variable part of the educational program. A specific model forms the basis of flexible educational programs, where the modular principle of development and implementation of the program, which implies the possibility of its development on the basis of the “construction set of competencies”, acts as a tool for ensuring individual educational paths. A specific model of an individual educational path contains aspects that are not shared by all students, but only by some of them. It is characterized by a vast number of elective disciplines, by the possibility of choosing the sequence of their study and the level of mastery, as well as tutor support of the students. The advantage of this model is that students are able to choose not only specialized elective courses, but also applied ones, for example, the “Digital Culture” elective course which is currently in demand. We shall note that a variation of both models of an individual educational path is a submodel for individuals with disabilities. A distinctive reference point of the model of an individual educational path for individuals with disabilities is the possibility of extension of certain time needed for learning of educational programs. In particular, individuals with disabilities are granted the right to extend the period of education under the Bachelor’s program, not more than one year as compared to the period of education for any mode of attendance. In contrast, individuals with disabilities, being the full-time students of the master’s program, were denied this right, whereas part-time and extramural master’s students can extend the time needed for learning the program by five months, but only if the highest council of educational institution will make such a decision. We believe that the lack of opportunity and (or) guarantee for individuals with disabilities studying under the master’s program, to extend the time needed for learning the program, adversely affects their situation. It appears that this shortcoming should be eliminated by introducing a norm conferring the right to individuals with disabilities to extend the period of education under the Master’s program not more than five months as compared to the period of education for any mode of attendance, into the standard.

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It is appropriate to add here that when it comes to this category of students, foreign experts use the term Learning Support Plan – LSP. At the same time, L. Kendall notes that the implementation of these plans still leaves something to be desired, in particular due to the fact that LSPs, although useful, have “one size fit for all people with disabilities” and also suffer from a lack of well-elaborated mechanisms of alternative certification procedure, environmental accessibility and lack of awareness of personnel about the needs of persons with disabilities (Kendall 2016). The experience of the authors of this paper suggests that all the shortcomings listed by the foreign researcher, unfortunately, are inherent in the Russian system of higher education, too. Thus, in the course of the questionnaire survey conducted by the authors, more than one half of respondents (56.5%) found it difficult to answer, and more than one third of respondents (34.78%) answered negatively to the question: does the university where you work have an alternative certification procedure for students with disabilities? These figures are self-explanatory. In this regard, in the formation of individual educational paths for individuals with disabilities, it is recommended to pay increased attention to the issues of their current, intermediate and final certification, based on the clinical features of the disease of each particular student.

3 Conclusions If is comforting that representatives of various sectoral sciences give the highest priority to the study of the concept of digital literacy in Russia at present, being aware of its importance when training personnel for the digital economy. At the same time, the presence of a wide range of doctrinal interpretations, by no means helps the law enforcers to increase the level of digital literacy of Russians. Of course, the consolidation of a definition in a regulatory act is not a panacea as well. And yet, in the absence of a clearly defined attitude of the legislator to the content of this phenomenon, it is impossible to develop indicators and key figures that would be indicative of the fulfillment of the task set by the country’s leadership by the authorized bodies. Therefore, we deem it appropriate to enshrine the legal definition of the concept of digital literacy in the Russian legislation. In order to develop students’ skills that are adequate to the XXI century, educators must learn to confidently use ICTs and integrate digital literacy with other professional competencies owned by them. State and universities, clearly understanding the urgent need in the IT retraining of teachers, particularly teachers of the humanities, implement relevant professional development programs. One should refer to international practices to actively involve major companies in this process. But the most important thing is to ensure that an increase in the level of digital literacy becomes a conscious need, not an externally imposed obligation, for every teacher. Higher educational institutions implement the general and the specific models of an individual educational path, which are very much different from each other. Both models fit into the regulatory framework, and the priority of any of them is in the plane of preference for university administration and the students themselves. A variation of both models is the submodel for individuals with disabilities, the mechanism for the

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implementation of which calls for improvement in terms of development of alternative certification procedure, as well as security of the right to extend the time needed for learning the master’s programs. Acknowledgments. The reported study was funded by RFBR according to the research project No. 18-29-16081 “Transformation of the conceptual framework for the training of lawyers for business in the digital economy”.

References A lecture on the topic “Communication technology in education” for students of I year full-time training direction 44.03.02 Psycho-pedagogical education profile Psychology and social pedagogy in the 2015–2016 academic year. Lecture 3 “Digital literacy as a component of life skills”. https://helpiks.org/5-91071.html. Accessed 23 Aug 2019 Digital Literacy. What is it? http://цифpoвaягpaмoтнocть.pф/. Accessed 23 Aug 2019 Ershova, I.V., Tarasenko, O.A., Enkova, E.E., Kvitsinia, N.: The phenomenon of digitization in legal business education. In: Popkova, E.G. (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Studies in Computational Intelligence, vol. 826, pp. 145–152. Springer, Cham (2019) Gilster, P.: Digital Literacy. Wiley Computer Publishing, New York (1997) Martin, A., Madigan, D.: Digital Literacies for Learning. Facet, London (2006) Gorelov, N.A., Litun, V.V.: Foreign experience in teaching digital literacy. Russ. J. Labor Econ. 5(2), 343–350 (2018) Kendall, L.: Higher education and disability: exploring student experiences. Cogent Educ. 3(1) (2016). https://www.tandfonline.com/doi/full/10.1080/2331186X.2016.1256142. Accessed 12 Aug 2020 Soldatova, G.U., Rasskazova, E.I.: Psychological models of digital competence in Russian adolescents and parents. Natl. Psychol. J. 2(14), 27–35 (2014) Sharikov, A.V.: Concepts of digital literacy: Russian experience. Commun. Tools Media Design 3(3), 96–112 (2018) Tarakanov, V.V., Inshakova, A.O., Dolinskaya, V.V.: Information society, digital economy and law. In: Popkova, E.G. (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Studies in Computational Intelligence, vol. 826, pp. 3–15. Springer, Cham (2019) Vozovikova, T.: Digital literacy forgot to define (2018). http://www.sib-science.info/ru/ conferences/termin-tsifrovoy-gramotnosti-zabyli-14122018. Accessed 23 Aug 2019 What is digital literacy? http://edu.mgou.ru/topical/1740/. Accessed 23 Aug 2019

Financial and Economic and Information Aspects of Smart City – AI at Citizens’ Service Anna N. Zhilkina1(&), Oleg N. Zhilkin2, and Vladimir K. Krylov1 1

State University of Management, Moscow, Russian Federation {an_zhilkina,vk_krylov}@guu.ru 2 RUDN University, Moscow, Russian Federation [email protected]

Abstract. The article dwells on the issues of transformation of modern cities during implementation of the achievements in the sphere of AI with emphasis on the financial & economic and information components. The purpose is to study the influence and to determine the perspectives of the financial & economic and information aspects on development of “smart” city. The research object is Russian large and important cities and foreign cities. The authors use such methods as analysis, synthesis, deduction, induction, observation, comparison, grouping, abstraction, and expert evaluation. The research results showed that 1. The notion “smart” city and application of AI constantly expands with development of information technologies and the growing needs of citizens in authentic and full information and high-quality and quick services. 2. Indicators of “smart city” could be divided into 7 directions: smart management, smart technologies, smart infrastructure, smart economy, smart finances, smart citizens, and smart environment. It is concluded that development of economy in Russia is impossible without “Smart city”, and only constant usage of the achievements of new information technologies will allow remaining at a competitive level in the global economy. Keywords: Finances JEL Code: O10


Economy
Information technologies
Smart city
AI


O12

1 Introduction The second half of the 20th century could be considered a start of the age of information technologies. Creation of PC’s and start of usage of Internet for business purposes opened new perspectives for each user. Creation of generally accessible resources for citizens allowed for automation of an important problem: interrelations between customer and legislators (C2G) and feedback (G2C). In the 21st century, we speak of smart cities. The notion is derived from “smart community” of the Silicon Valley, which treated it as a targeted cooperation between citizens and business for improving life and labor conditions with the usage of available information technologies (Smart Communities Guidebook 1997). According to Vienna University of Technology, a modern European “smart city” should have smart environment, smart people, smart mobility © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 148–155, 2020. https://doi.org/10.1007/978-3-030-39319-9_16

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(integrated transport systems with the usage of information and communication technologies and ecological types of transport), smart way of life, smart economy, and smart management (Vienna University of Technology 2007). For measuring the level of development of “smart city”, let us use the indicators offered by National Research Institute of Technologies and Communications (National Research Institute of Technologies and Communications 2018).

2 Methodology The following methods are used: analysis, synthesis, deduction, induction, observation, comparison, grouping, abstraction, and expert evaluation.

3 Results 3.1

The Notion “Smart City”

Smart city is a city in which smart technologies are actively used in the most important spheres of the city conglomerate. This includes the city economy and city infrastructure: transport and logistics, financial analytics, banking, smart management of buildings, commerce, e-government, communications, education, energy sphere, tracking emergency situations and reaction to them, public catering, healthcare, production and service sphere, wholesale and retail, public security, ecology and monitoring of environment, water and natural gas supply, etc. Organization of the process of “intellectual” city management is a rather complex system, which requires consideration of diverse factors and the specifics of customs and preferences of the city residents. The notion is derived from “smart community” of the Silicon Valley, which treated it as a targeted cooperation between citizens and business for improving life and labor conditions with the usage of available information technologies (Smart Communities Guidebook 1997). According to “The Statistics Portal” (Global B2C e-commerce sales 2018), there was average growth of gross volume of sales - 14% - in 2012–2018; relative growth up to 19% in 2012–2014 was replaced by reduction of relative growth to 10% in the following years (Fig. 1). The notion “smart city” includes creation of a favorable environment for growth of human capital. According to Vienna University of Technology, a modern European “smart city” should have the following: (1) smart environment (it should be energy effective, use renewable energy sources, protect the environment, and save resources); (2) smart people (it should make people smart and, as a result, possess social and human capital – skilled users of information and communication technologies; it should provide accessible education, participate in public life and be entrepreneurial); (3) smart mobility (integrated transport systems with the usage of information and communication technologies and ecological types of transport);

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Fig. 1. Global indicators of the dynamics of sales in the B2B sector. Source: The Statistics Portal.

(4) smart way of living (smart consumption and planning, social interaction, healthy way of living); (5) smart economy (competitive economy, which manufactures new products, provides new services, and applies new business models in view of digitization and which uses international cooperation); (6) smart management (involvement of citizens in decision making (service “active citizen”), comfortable services, open data) (Vienna University of Technology 2007). Also, smart city could be considered differently. National Research Institute of Technologies and Communications determined the indicators characterizing development of 7 key direction of a smart city: smart economy, smart management, smart citizens, smart technologies, smart environment, smart infrastructure, and smart finances. 3.2

Indicators of “Smart City”

All companies that have any connection to smart technologies deal with ranking of “smart cities”. According to J. Wood from IESE Business School (University of Navarra) (Johnny Wood 2018), the “smartest” city of the world is New York – which is due to its role at the most important economic center in the world. It occupies the leading position in city planning. London occupies the 2nd position, being the leader in development and application of human capital – due to a large number of high-quality business schools and universities. Paris occupies the 3rd position, being the second city as to the number of foreign tourists, first – as to geography of coverage, and first – as to mobility and transport (due to the system of underground, system of joint usage of bicycles, and hi-speed trains).

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English company “Easy Park Group” performed a ranking of “smart cities” based on analysis of 19 indicators, which include “How a city become smarter”, “Public transport”, “City planning”, “Education”, “Participation of citizens”. According to the aggregate index, the leaders are representatives of Denmark, Finland, France, and Italy. Only one representative of Russia – Moscow – is in top 100. Indicators of “smart city”, offered by National Research Institute of Technologies and Communications, were selected in view of accessibility of information for all presented cities and their relevance to the level of development of the key directions of “smart city” (National Research Institute of Technologies and Communications 2018). Thus, at present, based on open sources, it is possible to “measure” the level of a smart city according to the above directions with the usage of the following indicators. Direction of “smart economy”. Level of development of city infrastructure for scientific and innovative activities. Level of development of activities in the sphere of information and communication technologies. Level of development of the system of Internet reservation of accommodation. Direction “Smart management”. Level of development of information and communication systems of city administration. Level of information openness of city authorities. Level of citizens’ involvement in city management. Level of visits to official web-portals of city administration. Level of development of documents of strategic planning. Direction “Smart citizens”. Level of accessibility of information on the labor market in the city. Level of activity of Internet users. Level of development of online cards of students. Direction “Smart technologies” Level of development of networks of free wi-fi. Level of development of networks of mobile broadband access. Level of development of communication networks for telemetric services. Level of development of services of free wi-fi in public transport. Direction “Smart environment” Level of activity of citizens and city administration in liquidation of illegal dumps. Level of development of the systems of monitoring and prevention of threats to ecological safety. Direction “Smart infrastructure”. Level of development of the system of speed cameras. Level of development of car sharing services in a city. Level of development of online monitoring of public transport. Level of development of services of online search and payment for taxi. Level of development of the network of charging stations for electric cars. Level of development of information systems of city planning management. Direction “Smart finances”. Level of development of systems of banking self-service. Level of transparency of state purchases.

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Level of development of the system of non-cash payment for public transport. The above list of indicators is not final. It should be noted that as of now smart technologies are developing very quickly in Russia. Thus, for example, the activities of insurance companies contain telematics systems for the program “smart insurance” (Zhilkin and Mantsurov 2016a, b), and similar systems for the program “smart lease” are used in everyday work of transport companies (Zhilkin and Mantsurov 2016a, b). 3.3

Results of Evaluation of the Indicators for Russia

The results of the research are rather predictable. In “Indicators of smart cities of National Research Institute of Technologies and Communications 2017”, a comparison of 15 largest Russian cities is performed: Moscow, St. Petersburg, Novosibirsk, Ekaterinburg, Nizhny Novgorod, Kazan, Chelyabinsk, Omsk, Samara, Rostov-on-Don, Ufa, Krasnoyarsk, Perm, Voronezh, Volgograd, and the resort city of Sochi (due to the fact that Sochi’s infrastructure and smart technologies were developed intensively during preparation for the 2015 Winter Olympics, 2017 Confederations Cup, and 2018 FIFA World Cup) (National Research Institute of Technologies and Communications 2018) (Table 1). Moscow is the winner for most direction; it is followed by St. Petersburg and Kazan. Kazan is the leader for the direction “Smart economy”; Novosibirsk is the leader for the direction “Smart environment”. If the value of Moscow’s indicator is 100%, its execution in St. Petersburg constitutes 87.77%, in Kazan - 86.79%, in Novosibirsk – 80.28%, in Ekaterinburg – 78.30%, and in Krasnoyarsk – 77.51%. The 60–70% groups includes Ufa (68.64%), Perm (66.07%), Rostov-on-Don (65.88%), Sochi (64.89%), Chelyabinsk (64.69%), Omsk (63.51%), Voronezh (62.92%), and Nizhny Novgorod (62.72%). Samara and Volgograd’s indicator constitutes 55.03%. Thus, even the most digitized Russian cities have a lot to learn from each other and from “smart cities” of other countries. 3.4

Mega Hubs of the Digital Economy in the World

A lot of cities of the world are justly considered to me “smart” cities. The history of development of factual implementation of approaches to creation of “smart city systems is described in detail; London occupies a serious role in this description (Kupriyanovsky et al. 2016) The term “Smart” cities is not treated only in connection to cities anymore. There are agglomerations that are called mega hubs of the digital economy (based on the UN data): 1. Mega cities are regional “capitals” of the global digital economy. These include Greater London, New York, Paris, Shanghai, and (São Paulo. 2. Mega regions – Johannesburg and Pretoria, which form a unified economic region with population of more than 15 million people and which define the economy of South Africa.

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3. Mega corridors, which connect mega cities through mega regions – Hong Kong – Shenzhen – Guangzhou in China (120 million people). 4. Cities with population above 500,000 people. 5. Adjacent cities and settlements.

Table 1. Rating of Russian smart cities. Role

City

Values of average indicator of smart city

Value of the indicator for the direction Smart Smart Smart Smart Smart Smart Smart management technologies infrastructure economy finances citizens environment

1

Moscow

0.72

0.75

0.86

0.92

0.36

0.85

0.90

0,43

2

St. Petersburg

0.64

0.59

0.82

0.63

0.50

0.76

0.66

0,49

3

Kazan

0.63

0.49

0.56

0.49

0.74

0.71

0.79

0.62

4

Novosibirsk

0.58

0.20

0.56

0.45

0.38

0.79

0.69

1.00

5

Ekaterinburg

0.57

0.38

0.66

0.38

0.61

0.81

0.84

0.29

6

Krasnoyarsk

0.56

0.17

0.75

0.44

0.39

0.73

0.76

0.69

7

Ufa

0.50

0.28

0.33

0.47

0.55

0.61

0.79

0.45

8–9

Rostov-on-Don

0.48

0.24

0.54

0.41

0.31

0.73

0.55

0.56

8–9

Perm

0.48

0.30

0.58

0.39

0.45

0.64

0.75

0.24

10–11

Chelyabinsk

0.47

0.18

0.31

0.44

0.41

0.70

0.56

0.68

10–11

Sochi

0.47

0.37

0.17

0.61

0.64

0.63

0.51

0.36

12–13

Omsk

0.46

0.29

0.30

0.39

0.35

0.66

0.57

0.66 0.45

12–13

Voronezh

0.46

0.16

0.45

0.54

0.56

0.42

0.61

14

Nizhny Novgorod

0.45

0.15

0.50

0.34

0.48

0.72

0.81

0.18

15–16

Samara

0.40

0.08

0.30

0.32

0.48

0.67

0.55

0.39

15–16

Volgograd

0.40

0.22

0.44

0.24

0.25

0.54

0.63

0.47

3.5

Example of Manifestation of “Smart” City in the Sphere of Population’s Financial Solutions

Manifestation of “smart city” is possible at the everyday level (receipt of results of medical tests via Internet, remote medicine), and at the unobvious level – macroeconomic. Let us consider it in detail. An ordinary citizen in a “smart city” – who has to belong to “smart people” – wants to know the currency exchange rate and the possible tendencies of its changes, inflation expectations of government, and the key rate of the Central Bank. The policy of inflation targeting envisages public announcement of the target landmark of growth of prices – which means establishment of “nominal anchor”, which stimulates reduction of inflation expectations and stabilizes growth of prices, which raises predictability of economic development, protects population’s savings from depreciation, allows implementing production and investment plans and realizing longterm savings, thus providing favorable conditions for economic growth. However, it is known that priority of reduction of inflation could lead to stricter monetary policy - and then the conditions of economic growth will become unfavorable.

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However, it is unclear which price index is to be used – though consumer prices index is widely used for this purpose. Such indicators as general level of prices and manufacturers’ prices index are also important. Of course, interconnection between these indices is very important, and they should be controlled with more indicators than just basic inflation. Surveys among population and companies are used for calculating the indicator of inflation expectations. However, the indicators do not coincide. So what does the population use as a landmark and which prices attract attention of companies? As for basic inflation, this is a part of the inflation process that is connected to a currency rate, monetary policy, and inflation expectations – except for the part that is subject to the influence of state regulation and various unstable factors. The Bank of Russia treats basic inflation as a process that excludes the influence of structural factors (changing the regulated prices and tariffs for paid services for the population) and prices for fruit and vegetables (The main directions 2018). Of course, basic inflation characterizes the results of the influence of monetary factors on the inflation processes to a larger extent. However, this does not mean that the influence of other economic variables on the studied processes should not be analyzed. There’s a need for high level of processing of information, its correctness, and timeliness of provision.

4 Conclusions In our opinion, development of economy in Russia should use the achievements of information technologies, including “Smart city” – as this approach develops all directions of activities of each Russian city and solves the main problems – transport, ecological, communal services, and development of accessible environment for everyone.

References Smart Communities Guidebook: How California’s Communities Can Thrive in Digital Age, San Diego (1997) Smart cities: Ranking of European medium-sized cities. Vienna University of Technology, Vienna (2007). http://www.smart-cities.eu/downlord/smart_cities_final_report.pdf. Accessed 15 Aug 2018 National Research Institute of Technologies and Communications. Indicators of smart cities: Moscow, National Research Institute of Technologies and Communications (2018). http:// www.niitc.ru/publications/SmartCities.pdf. Accessed 15 Oct 2018 Kupriyanovsky, V.P., et al.: Smart cities as ‘capitals’ of the digital economy. Int. J. Open Inf. Technol. 4(2), 41–52 (2016). ISSN 2307-8162 Main directions of the unified state monetary policy for 2019 and 2020–2021 (2018) Johnny Wood The Smartest Cities in The World in 2018 (2018). https://www.forbes.com/sites/ iese/2018/07/13/the-smartest-cities-in-the-world-in-2018/#416139df2efc. Accessed: 15 Dec 2018

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Global B2C e-commerce sales 2012–2018 (2011). https://www.statista.com/statistics/261245/ b2c-e-commerce-sales-worldwide/. Accessed 16 Dec 2018 Smart Cities Index (2018). https://easyparkgroup.com/smart-cities-index. Accessed 14 Dec 2018 Zhilkin, O.N., Mantsurov, K.B.: Integration of telematics tools into the activities of insurance companies. Project “Smart insurance”. Bulletin of University. No. 7-8/2016, pp. 202–207. GOUVPPO GUU Publ., Moscow (2016a) Zhilkin, O.N., Konstantin, B.: Mantsurov «The ‘Clever’ Leasing as a Tool for Integration of Telematic Tools in the Activity of Leasing Companies». In: Global Business and Technology Association Eighteenth Annual International Conference Readings Book, pp. 530–537. GBATA, New York (2016b). (ISBN 1-932917-12-8, ISSN 2471-6006)

Human Capital and Identity in the Global Digital Space Natalia Z. Aliyeva(&), Elena B. Ivushkina, Nelli I. Morozova, and Sergey L. Vasenev Don State Technical University, Rostov-on-Don, Russia {alinat1,morozova-nelli-86}@yandex.ru, [email protected], [email protected]

Abstract. Human capital constitutes between two-thirds and three-fourths of the national wealth of countries. Therefore, the problem of human capital is fundamental. Combining all modern sciences, this problem has become interdisciplinary, requiring interdisciplinary interaction of economists, psychologists, sociologists, mathematicians, and specialists in the field of informatics. The relevance of the research on this scientific problem is due to the fact that the digital economy as part of the global digital space, on the one hand, serves the interests of humanization, partnership, the development of a digital society throughout the earth, and on the other hand, produces a gap between new digital technologies and outdated human capital. A wide range of side problems that have arisen not only in economics, but also in a number of other disciplines require an interdisciplinary approach to the analysis of human capital. Keywords: Human capital
The era of the digital economy
Interdisciplinary approach

1 Introduction The recent decade was peculiar for formation of the global digital space and socioeconomic transformation of the global and Russian economic systems. A transformation transition of the industrial economy to the digital economy takes place. Digital transformation creates hi-tech infrastructures (digital space), changes economic relations (digital economy) and the level of relations between society and the state (digital government). As a result, it creates new digital society. In the conditions of transition to the digital economy, human capital becomes the main factor of innovative economic growth. The purpose of the work is to confirm the hypothesis that analysis and methods that are based on the interdisciplinary approach allow for a new understanding of the transformations and formation of human capital, which will allow considering the changes in the age of the digital economy [1]. Thus, the task of this research is to analyze the transformations and formation of human capital in the conditions of development of global digital space and security of its development from the point of view of interdisciplinarity of the research. © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 156–161, 2020. https://doi.org/10.1007/978-3-030-39319-9_17

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2 Theoretical Basis of the Research Human capital in the modern world undergoes significant transformation. In the 19th century, human capital was manifested as accumulation of physical capital, presented in the form of material production means. In the 20th century, human skills and abilities in the form of production resource and source of socio-economic development acquired an important role. Development of intellect-intensive spheres of economy brings intellectual capital into human capital. While there was a narrow definition of socio-economic category “human capital” as educational human capital, the following expanded definition includes investments into science, health, information, services, culture, and art. Human capital acquires a network character in the digital economy. Transformation of the Russian and global economic systems causes transition from the industrial economy to the information & network economy [1]. Thus, human capital is enriched with new information and digital content and network qualities, functions, and competencies [2]. At present, classical economic and mathematical models of human capital and modern econometric and computer approaches develop – which stimulate the successfulness of labor. Application of the modern mathematical and computer methods allows creating arrays of the data of “digital footprints of person”, which allow solving the tasks that appear in the sphere of development and usage of human capital. Further development of the category “human capital” is connected to addition of the components that ensure security of people, increase of population’s living standards by means of empirical determination of qualities of people and the processes of their formation. This requires using the disciplines that allow conducting analysis of psychological, neurophysiological, and social qualities that influence labor activities of people. One of the definitions of human capital is “intensive synthetic and complex production factor of development of economy and society, which includes creative labor resources, innovative system, highly-efficient accumulated knowledge, systems of provision of professional information, tools of intellectual and organizational labor, quality of life and intellectual activities, which ensure effective functioning of human capital” [3]. In the conditions of globalization of the modern world, free transition of any capital – including human capital – through countries, regions, and cities takes place. It is accompanied by high competition. In such understanding, human capital is seen as the main factor of competitiveness. Therefore, there’s a need for research and modeling of the influence of human capital and psychological qualities of population on the socioeconomic achievements of countries. The current “digitization” of economy requires fundamental research of the natural, artificial, and hybrid intelligence. It is necessary to study the processes and conditions of formation of a talented person and the role of talents in formation of achievements of certain organizations, countries, and humankind on the whole. The result of the above analysis is the conclusion that human capital is the object of study of various spheres of sciences and diverse directions of its definition.

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Thus, human capital should be considered at the interdisciplinary level, using the studies in different spheres: economics, IT, social sciences, economic psychology, political psychology, etc. Implementation of the research requires the interdisciplinary interaction of economists, psychologies, sociologists, philosophers, mathematicians, IT specialists, etc. Establishment of interdisciplinarity of the problem of human capital points out at the necessity for new theoretical approaches, based on analysis of development of human capital in the context of global tendencies of intellectualization of economy and creative usage of the historical experience. One of these approaches is the interdisciplinary approach. It is organization of studies of human capital in the form that envisages cooperation between representatives of various disciplines in solving the complex of problems relating to human capital. The main principles of the interdisciplinary approach is the comprehensive study of human capital based on equality and integration of sciences. The principle of interdisciplinarity could be the main one in studying human capital. It is possible to state that without the usage of interdisciplinarity it is impossible to study human capital thoroughly and deeply. Human capital is a complex and multi-aspect phenomenon. N.A. Buranshina distinguished several main approaches: “most scholars see human capital as a set of human skills and abilities. Other scholars consider only those acquired through formal education; other scholars define it through investments in human, which ensure accumulation of certain abilities and qualities. Certain researchers also include social, psychological, ideological, and cultural characteristics of people. The latter is peculiar for the Russian studies” [4]. Human capital is a result of various types of human activities: receiving education, upbringing, and labor skills. Expenditures for acquisition of knowledge are treated as investments that form capital, which, in future, will bring regular income to its owner in the form of good wages, prestigious and interesting work, increase of social status, etc. [3]. It should be noted that spatial and economic transformations, caused by appearance of intellectual systems in our life, aggravated the problem of reduction of the labor market. In the near future, there could appear the problems of interrelations between machines and human in the labor market. One of the key issues regarding the development in the near future is the problem of the labor market and human capital in the modern world of intellectual machines [5]. Thus, human capital is the object of study of various disciplines. Comprehensive study of human capital is aimed at consideration of interdisciplinary problems with the corresponding usage of approaches, methods, and results of the research that were accumulated by various sciences. The performed analysis shows that despite the existing theoretical and methodological basis, the generalizing interdisciplinary research on the set problem is absent, which shows the necessity for this study.

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3 Methods An analysis of transformations and formation of human capital and intellectual potential in the age of global digital transformations in the world and development of the digital economy is performed. Understanding the global world with its complex digital space is complicated by the diversity of the problems of the theoretical and methodological character, which require the search for new categories and methodological tools. Such problem is understanding human capital in the digital economy as a part of the global digital space. Human – with education, qualification, and experience, as a resource not used sufficiently – is studied at various levels. The offered approaches and methods that lie in the basis of the offered research could be divided into three groups, according to the level of generalization and width of the circle of explained phenomena. The first groups contains the interdisciplinary approach with the tools of different sciences: economics, social sciences, biology, pedagogics, psychology, etc. They add dynamic measuring into analysis of socio-economic processes, acknowledging the presence of common global tendencies. The second group includes the methods and tools relating to human capital, education, healthcare, etc. The third group contains the economic and mathematical methods that are necessary for analyzing the mutual influence of human development and inequalities of distribution of its components. They include analysis of dynamics, economic & mathematical modeling and forecasting, cluster analysis, and graphic and table means of data visualization. The interdisciplinary approach and the presented research methods allows solving the set task due to substantial changes in digital thinking – when realization of priorities of convergence and interdisciplinarity come to the foreground of understanding the transformations and formation of human capital in the global digital space. Reliability of the obtained results is ensured by elaboration of the methodological tools and by content analysis of the facts and dependencies of the digital global world.

4 Research Results Importance of the research on the presented scientific topic is predetermined by the fact that the digital economy – as a part of the global digital space, on the one hand, serves the interests of humanization, partnership, and formation of the post-industrial society around the world, and, on the other hand, causes accumulation of technological underdevelopment, a gap between technologies and abilities to use them, and loss of competitiveness that leads an organization to “recession”. The reasons of the emerging gap could be human capital of low quality, which is also managed without good effect. The problem consists in increase of the gap between technologies and abilities to use them. The problem could be solved by continuous development of human resources and management of quality of human capital and intellectual potential. This research attempts at solving this problem by analyzing human capital and intellectual potential by convergence of different aspects and the interdisciplinary

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approach. It is necessary to analyze – at the territorial, sectorial, and global levels – development of human capital and evaluate the dependencies of human capital and intellectual potential from the economic, social, managerial, natural, and anthropogenic factors. Provision of constant development of human capital and intellectual potential becomes the key factor of security of highly-competitive and trans border digital economy [5]. The performed analysis showed that the digital economy in the global digital space has a geo-political dimension – due to the current integration processes of development of human capital and intellectual potential in the context of cardinal global changes in the world, which they could add to the interdisciplinary understanding of the modern society. The theoretical & methodological and conceptual aspects of the tendencies of the “trans-border” state of Russia, which is currently in the industrial and postindustrial phase, determine the realization of the place and role in the new world; contradiction of dynamics and establishment of the digital economy and human capital, which have a dual role: triggers of development and destabilizing factors of formation of the digital society, which are present in the modern global world and the paradigm and category network of digital knowledge. The situation in the modern world changes rapidly. While the population of the world has been growing constantly and has been a driving force of development, the number of people for production is reducing. “The key role is acquires by technologies aimed not at production and distribution of goods and services but at human” [6]. The digital economy brings new risks and threats - primarily, in the human environment, where the technological components constantly expand. An inseparable part of this environment is the digital space. It influences humans in the form of the following factors: – – – – – – – – – – – –

influence on the physical and psychological state of a human; negative formation of “click” co-knowledge; loss of the border between reality and illusions; external knowledge (in the memory of a digital devices), not internal knowledge (own memory); information inequality; differentiation into rich people (1%) and other people. The influence of the digital economy on society implies the following factors: economic information equality, caused by the cost of information transfer; information inequality, caused by territorial technical capabilities of telecommunication systems; threats to personal security of citizens due to imperfection of the systems of information protection; threats of the most dangerous forms of crime: terrorism, crimes against human, banking activities, and protection of intellectual property; threats to national security, which create information terrorism, unsanctioned information influence on society, and technical systems of security provision; formation of negative attitude towards science and technologies.

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The performed analysis of transformation of the influences of the digital economy on the sphere of human capital and intellectual potential shows quick increase of the speed of transformations, decrease of the labor market, and increase of requirements to human capital and non-stop education. According to Boston Consulting Group, most of able-bodied Russians do not have skills and competencies for working in modern markets. Despite the insufficiency of professionals in the sphere of business, demand for knowledge is low. In the BCG report, this situation is called the absence of “growth values”. As a result, highly-qualified labor, which includes intellectual and creative work, is performed by 17% of population – which is a characteristic of a resource economy. The problem of defining the picture of the future appears. Digital inequality will divide people according to the spheres of activities in the following way: 2 people out of 100 work in agriculture, 10 – in industry, and 13 – in management. Other people will not improve the positive economic results. Their employment is a serious challenge for the 21st century.

5 Conclusions The interdisciplinary approach brings significant changes into the modern understanding of the problem of human capital in the global digital space – transition to understanding human capital as a complex self-organizing system; in the methodological aspect – analyzing the transformations and threats to security of human capital based on the paradigm of convergent thinking. The applied significance of the research consists in the possibility of using the obtained conclusions for establishing the ideological, gnoseological, and methodological foundations of human capital in the global digital space. Acknowledgments. The research was performed with financial support of the Russian Fund for Fundamental Research within scientific project No. 18-314-00009.

References 1. Dyatlov, S.A., Miropolsky, D.Y., Plotnikov, V.A. (eds.): State and market: a new quality of interaction in the information and network economy. Monograph in 2 volumes, vol. 1. SPb (2007) 2. Dyatlov, S.A.: Information foundations of economic relations. Hum. Sci. (2) 25–34 (1998) 3. Nesterov, A.K.: Human capital. Educational encyclopedia. ODiplom.ru [E-source]. http:// odiplom.ru/lab/chelovecheskii-kapital.html. Accessed 21 May 2019 4. Buranshina, N.A.: Human capital in the modern interdisciplinary studies. Creat. Econ. 5(10), 74–79 (2011) 5. Shestakova, I.G.: Human capital in the digital age. Sci. J. NIU ITMO (1) (2018). Series “Economics and ecological management 6. Ivanov, V.V., Malinetsky, G.G.: Digital economy: myths, reality and perspective, 64 p. Russian Academy of Sciences, Moscow (2017)

Dangers and Threats of the Global Digital Space: A Non-linear Approach Nelli I. Morozova(&), Olga S. Buryakova, and Natalia Z. Aliyeva Don State Technical University, Rostov-on-Don, Russia [email protected], [email protected], [email protected]

Abstract. The world is changing before our eyes. Digital technology is gradually becoming an integral part of all areas of everyday life. Digital transformations of the modern world are taking place: in the sphere of economic relations - the digital economy, in the sphere of interaction between society and the state - digital government, in the field of high-tech infrastructure - digital space, in the sphere of state development - digital society. The problem of dangers and threats in the era of the digital economy is considered. Particular attention is paid to information conflicts and wars that threaten the development of society in the field of human rights and freedoms. The analysis of development trends, dangers and risks in the global digital space is carried out from the standpoint of postnonclassical science, the theory of selforganization and non-linear challenges. Keywords: Global digital space
Digital economy and threats
Non-linear challenges


Digitalization
Dangers

1 Introduction The digital economy and digitization of the modern life become a reality. The 2015 World Economic Forum announced the start of the Fourth industrial revolution, which leads to mixing of physical, digital, and biological techologies. In 2017, the Government of the Russian Federation developed and adopted the program of development of the digital economy until 2024. The necessity for such a program is predetermined by creation of technological independence of Russia and the national security. There are a lot of dangers and risks of the digital economy. The threats to personal security include imperfection of the systems of information protection, which allows criminal structures to form information data bases. New threats to public security, which appear due to uncontrolled usage of information, lead to terrorism, crimes against personality, intellectual and banking activities, etc. The threats to national security include information terrorism, unsanctioned information influence on society and technical systems of security provision, and cyber threats. Thus, there appears a necessity for strengthening of information security and increase of sustainability of all elements of the infrastructure, financial system, and the system of state management. The digital economy has faced a range of theoretical and methodological problems that go beyond the range of the historic and economic tradition – which actualized the © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 162–166, 2020. https://doi.org/10.1007/978-3-030-39319-9_18

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research in the aspect of non-linear challenges. Understanding the global digital world with its complex non-linear processes requires a search for new categories and methods. Here the authors study the digital economy in the age of global transformations in the world in the context of non-linearity and synergetic science. One of the problems of the global digital space is security, understanding the information conflicts and wars, their genesis, nature, formation, and solution in the modern unstable world. These include non-linear conflicts and wars, including cyber wars, which are fought at the level of techologies with digital weapon, crypto wars, etc. At present, this problem is a state with random breakthroughs in non-linearity and systemic nature, which could be called crisis. A solution to the existing situation in the modern world could be usage of the capabilities and means of the non-linear science for considering the gnoseological aspects of these problems at the modern stage. The answer to the question “what is the key to understanding of quickly growing strange and wonderful digital reality?” is “it seems the key will be the theory of selforganization or synergy” [1, p. 116]. Zang notes the change of the economic mode of society and the key economic ideas and quick complication of the real world. Technologies, society, quality of life, and people change even more quickly. “This specific feature of the modern society makes the attempts of explaining the economic life from the positions of pure science very complicated and even impossible” [2, p. 12]. Zang sees limitations of traditional economics in static economic systems. In the digital economy, the main objects are non-linear, unstable, and unsustainable processes of the type of fluctuations, and evolutional self-organizing systems, which are present in different spheres of human activities. The following task emerges: opening the cardinal shifts in digital thinking in favor of non-linearity, in which realization of the priorities of non-linearity and synergy comes to the foreground of creation of the global digital space, which result is reconsideration of the nature of digital techologies in view of human and society.

2 Theoretical Research Basis Reconsideration of the nature of the global digital space and the digital economy is connected to its possible unpredictability, which could lead to a global war. Non-linear processes have a wide range and appear during catastrophes, provision of national and international security, etc. The global digital space and the digital economy are nonlinear systems that are peculiar for instability, uncertainty, and non-linearity. These systems could pass from the state of relative stability into chaos. The concept of non-linearity – in application to the digital economy as a system – envisages the possibility of the following states of its sub-systems: stability, transfer into the state of instability, and chaos. A stable system could be susceptible only to local influences. The system in the state of chaos often leads to the processes of destruction. The processes in information systems require a state between stability and chaos. Complex system could have self-organization as an “ability of the system to reproduce its behavior in the changing conditions” [3, p. 128]. The problems related to evolution and changes in non-linear unstable economic systems – such as the digital economy – belong to “synergetic economics”. It was

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developed based on synergetics of Hermann Haken. Synergetic economics considers linearity and non-linearity, sustainability and unsustainability, stability, and changes in their interaction. Unlike the traditional economics, synergetic economics treats nonlinearity, unsustainability, and instability as a complexity of economic dynamics. Specifics of non-linear thinking is characterized by a breakthrough in understanding of the ideas on the non-linear nature of conflicts and wars and are given in the works of Bikbov [4], Arzumanyan [5], Neklessa [6], Teteryuk, Chizhevsky [7], et al. It should be noted that non-linearity is becoming a new paradigm of dangers and risks of the digital economy, including conflicts and wars. The digital economy is primarily new technologies, which create new technological risks. Information security in this treatment includes the risks of implementing new techologies. According to Natalya Kasperskaya, they include “quick imposing and borrowing of Western techologies, degradation of own competencies; new vulnerabilities, spying, personal data leak, loss of privacy; risk of quick conquer of new markets by transnational companies; loss of jobs, unemployment, social tension, and appearance of a layer of vagabonds; legal uncertainty, ethical problems, growth of fraud, reduction of quality and responsibility, “robotization” of humans, growth of social estrangement; disappearance of privacy, excessive advertising, new digital totalitarianism; conquer of economy by stronger and wealthier foreign players; external management of economy” [8]. The result of the digital economy could be a new stage of digital colonization. It is primarily characterized by the fact that the digital economy does not belong to us – because the digital economy is controlled from abroad.

3 Methods and Objects of the Research The authors analyze the global digital transformations in the world and development of the digital economy. Understanding the global world with its complex information space has faced the diversity of problems of the theoretical and methodological character, which require the search for new categories and methods, Such understanding of the digital economy as a part of the global digital space and a source of formation of threats and dangers has an interdisciplinary character of a complex and unambiguous process of using a whole complex of philosophical and general scientific methods: analytical and phenomenological and the principles of objectivity, general connection, contradiction, comparative analysis, synthesis, and scientific generalization. The most perspective methods used here are the methods and tools of the p postnonclassical school – primarily, the non-linear and synergetic approach. This is caused by the fact that economic systems, including the systems of the digital economy, are non-linear. They experience the problems related to evolution and changes in non-linear unsustainable economic, information, and social systems. The authors also use the interdisciplinary approach and tools from economics, social science, technical sciences, etc. It adds the dynamic dimension into analysis of socio-economic processes, acknowledging the presence of common global tendencies. The inter-disciplinary and non-linear approaches and the presented research methods allow solving the set task due to cardinal shifts in digital thinking, when realization of the priorities of non-linearity and inter-disciplinarity comes to the

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foreground of understanding the transformations in the global digital space. Reliability of the obtained results is ensured by elaboration of the adequate methodological tools and content analysis of the facts and dependencies of the digital global world.

4 Research Results 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 the non-linear approach suggests that, on the one hand, the global digital space serves the interests of humanization, partnership, and the formation of a post-industrial society. On the other hand, the global digital space introduces a new world order, forms the concept of unstable conflictogenic self-organization of digital space. Currently, the digital economy and digitalization are being introduced into the global digital space. The penetration of digitalization into the global space introduces new threats - not only informational, but also political, economic, technological. One of the main threats “is becoming a growing dependence on advanced countries with advanced technology, which in a new way raises the question of the security of countries and their loss of their sovereignty. There is a growing threat of weakening human potential in underdeveloped countries, where the so-called erosion of human potential takes place” [9, p. 71]. The geo-political dimension of the global digital space and convergence-integration processes taking place in the context of dramatic global changes in the world can bring a non-linear understanding of modern digital society. This requires determination of the theoretical, methodological, and conceptual aspects of the modernization tendencies and contradiction of dynamics of the world and formation of the global digital space, which have a dual role: triggers of development and destabilizing factors of formation of global non-linear information society, which take place in the modern global world and the paradigm and categorical network of information knowledge. The global digital space in the context of the non-linear approach requires analysis of the consequences of information threats to the global digital space and its dangers in the sphere of public and national self-awareness, as well as the threats to identity and mode of life of human in the global digital space. In the modern world, the foreground of the non-linear problems belongs to the framework of new notions of conflicts and wars: asymmetric, hybrid, information, nonlinear, crawling, and network-centric wars, cyber wars, rebel wars, proxy wars, and dispersive para-wars, which could not be solved with the methods of the classical conflictology. Conflicts and wars are a non-linear phenomenon, which defines their complexity and unpredictability. The postnonclassical science is able to study the cardinal changes in conflictogenic thinking, in which realization of priorities of non-linearity comes to the foreground of creation of conflictogenic knowledge, which result is reconsideration and re-evaluation of the nature and essence of non-linear conflicts and wars. It should be noted that Clausewitz in his monograph “On War” came to understanding of the fact that war is a non-linear phenomenon, which leads to its complexity and unpredictability [10]. According to Clausewitz – Prussian warlord, military

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theorist, and historian – unpredictability of war is caused by the non-linear factors, which lead to interaction and randomness. There are attempts of formulation of these notions in modern sciences. In his turn, the French mathematician Jules Henri Poincaré brought down randomness to statistically random phenomena; increase of microreasons; analytical blindness. At present, information conflicts and wars are considered as complex adaptive systems that have qualities of openness, sensibility to initial conditions, and interaction of agents in the network. Conflicts and wars are peculiar for unpredictability of behavior, non-linear dynamics, adaptation to the changes of the system and environment, and processes of self-organization.

5 Conclusions Non-linear character of dangers and threats in the global digital space brings significant changes into their modern understanding: transition to understanding the digital space as a complex self-organizing system; necessity for conducting analysis of security based on the paradigm of non-linear thinking. Applied significance of the research consists in the possibility to use the obtained conclusions for establishing the ideological, gnoseological, and methodological foundations of security of the global digital space. Acknowledgments. The research was performed with financial support from the Russian Fund for Fundamental Research within the scientific project No. 18-314-00009.

References 1. Akhromeeva, T.S., Malinetsky, G.G., Posashkov, S.A.: Senses and values of digital reality: future. Wars. Synergetics. Philos. Sci. 6, 104–120 (2017) 2. Zang, V.-B.: Synergetic Economics. Time and Changes in the Non-linear Economic Theory: Translated from English. Mir, Moscow (1999). 335 p. 3. Konyshev, V.N.: American neo-realism on the nature of war, 372 p. SPb: Nauka (2004) 4. Bikbov, A.: First non-linearity [E-source]. http://info.tatcenter.ru/article/136107/ 5. Arzumanyan, R.: Non-linear nature of war. J. “21st Cent.” 1, 109–149 (2005). Scientific and educational fund “Noravank” 6. Neklessa, A.I.: Hybrid war. The image and parameters of military conflicts in the 21st century. [E-source]. http://www.centrasia.ru/newsA.php?st=1442612400 7. Teteryuk, A.S., Chizhevsky, Y.A.: Asymmetric conflicts in the theory of international relations: the modern aspects of study. Comparat. Polit. 4(21), 25–26 (2015) 8. Kasperskaya, N.: The digital economy and risks of digital colonization [E-source]. https:// ivan4.ru/news/traditsionnye_semeynye_tsennosti/the_digital_economy_and_the_risks_of_ digital_colonization_n_kasperskaya_developed_theses_of_the_spee 9. Danilova, N.F., Saraeva, I.V.: Global digital space: perspectives and threats to economic development of countries. Bull. Saratov Univ. Series “Econ. Manag. Law” 19(1), 65–73 (2019) 10. Von Clausewitz, C.: On War, trans. Peter Paret and Michael Howard. Princeton University Press, Princeton (1976). 593 p.

Certain Challenges of Digitalization of the Economy in Russian Federation Fyodor G. Myshko(&), Anatoly Y. Olimpiev, and Anna Y. Alexandrova State University of Management, Moscow, Russian Federation [email protected], [email protected], [email protected]

Abstract. The article based on the analysis of literature and legislation on the digitalization of the economy in the Russian Federation contains several generalizing judgments: the most important direction of economic development in the Russian Federation is its digitalization; digitalization of the economy means the formation of the a separate system of normative legal acts (as a rule, Federal laws of the Russian Federation) that do not conflict with the Constitution of the Russian Federation; regulatory legal act, specially designed for the digitalization of the economy, could be the Federal law of the Russian Federation “On the application of digital technologies in the economy of the Russian Federation”. Keywords: Russian Federation
Digitalization on the economy
Digital economy
Digital law
Digital technologies in law
E-justice
Blockchain

The subject-matter of this paper is the correlation of economics and law. First off, a few words about the state of the theory regarding the digitalization of the economy. Thus, according to Sharandina, N.L., the digital economy is a national priority. “We have to admit the delay of statutory regulation, its movement in the wake of the digital economy, since both technologies and telecommunication networks are developing much faster” [1]. Solovykh, N.N. paid attention to the personnel aspect of the digital economy. “A key resource of the digital economy is a human being whose roles, functions and competencies will substantially change in a digital environment. A person of the digital economy is a personality who is not only adapted to the possibilities and limitations of the digital economy, but also enjoys its benefits on a daily basis and experiences with minimal discomfort from digital shock, constantly adapting to new conditions, studying throughout his/her life, whose limited health condition is compensated by digital technologies. As a user of digital technologies in the digital economy, an employee is both a professional and a student. There is a lack of knowledge about information technologies, the main models of their application to ensure the efficient activity of a professional. It is necessary to have the competences of the XXI century, that is, to have not only the ability to use information and communication technologies (ICT) in a confident and efficient way, the ability to develop cross-cultural network communications, as well as the ability to continuously learn and improve, turn ideas into actions through creativity, through innovations and risk assessment, through ability to plan and © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 167–171, 2020. https://doi.org/10.1007/978-3-030-39319-9_19

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manage projects, think in a critical and creative manner. New competencies include proactiveness and responsibility, adaptability and innovativeness, entrepreneurial attitude and emotional intelligence” [2]. Like-minded authors (Aliev, V.M. and Solovykh, N.N.) treat the digital economy through the prism of digital sovereignty. “In a situation of exacerbation of the “Cold War”, the intensified political and economic sanctions against Russia, one cannot build the foundation of the digital economy as the economy of the future based on “borrowed technologies”. Therefore, the solution of the digitalization of the economy is inherent in the solution of the second (organically bound to the first) problem - import substitution in the field of information technologies, which should be solved as soon as possible. Most of the IT infrastructure of the country should be moved to Russian software” [3]. K.L. Tomashevsky investigated the current trends in the impact of the digital economy on the social and labor sphere through the example of Belarus and Russia. “In a general conclusion of the paper, we would like to note that the limited scope of application of agreements (terms) on non-competition, introduced in Belarus in the IT sphere, with a well-elaborated legal mechanism borrowed from economically developed countries guaranteeing reasonable restrictions for workers in terms of employment in competing companies (with a maximum period of one year and a minimum compensation paid in addition to wages), generally meets the goals for which Decree No. 8 was adopted. The experience in the application of non-competition pacts in the future which was time-tested in the IT sphere can be used in other sectors of the Belarusian economy, as well as taken into consideration by the Russian legislator. At the same time, the state that proclaimed itself social in its Constitution, should not build special privileged conditions only for programmers and other IT specialists in the XXI century. It would be better to use more liberal mechanisms to promote the digitalization of the national economy without indirect discrimination in the remuneration of other categories of employees not directly employed in the IT sphere”) [4]. Poddubny, E.O. substantiated the appropriateness of the functioning of the electronic justice system. “The rapid development of modern technologies allows us to take sure steps towards improving various systems, even as massive system as the judicial one. Based on the comparison of systems of the Russian Federation and the system used in Singapore, it may be concluded that the system that is used in the Russian Federation is not fully developed yet; there are gaps in the process of registration and distribution of documents, there is no access to persons participating in the case to the extent necessary. It appears that this system is developing without taking into account the opinions of all parties, interested in the process of improvement and development of justice”) [5]. The proposals of Bykov, A.Y. are distinguished by their “peculiar nature”: “In Russia, it is necessary to create digital ministry of defense, digital ministry of industry, digital ministry of economy, digital ministry of education and science, digital police, digital revenue service and digital antimonopoly service. These and other digital frames of government should: (a) utilize hardware and (b) software to reliably ensure the cybersecurity of the whole country where: (c) the law should become the third main framework of the cybersecurity and digital economy of Russia” [6]. We are interested in the judgments of the authors (Galuzo, VN and Kanafin, NA), who critically analyzed the publication of the President of the Constitutional Court of

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the Russian Federation V. Zorkin “Law in the Digital World” [7]. “Thus, in point of fact, we are talking about searching for the optimum correlation of economics and law: The efforts of scientists and practitioners should be aimed at finding a magic potion for the name of which various terms are currently proposed (“digital economy”, “digital law” etc.) This will probably allow transforming the Russian Federation into the state of law with efficient economy. As for the digital law as such, then it needs to be considered as an early result of specific search for the correlation of economics and law: after all, this is nonsense, not reality” [8]. Apparently, not-so-perfect scientific research results regarding the digitalization of the economy also predetermine the imperfection of the legislation of the Russian Federation. First of all, we draw attention to the Constitution of the Russian Federation of December 12, 1993: “1. The unity of the economic space, free movement of goods, services and financial resources, support of competition, and freedom of economic activity are guaranteed in the Russian Federation. 2. Private, state, municipal and other forms of ownership are equally recognized and protected are guaranteed in the Russian Federation” - Article 8) [9]. The provisions of part 4 of Article 15 of the Constitution of the Russian Federation allows borrowing the provisions of certain regulatory legal acts (for example, “Declaration of cooperation within the framework of the European partnership in the field of blockchain technologies”, adopted in Brussels on 10.04.2018, was not published in official sources), including in the field of the digital economy [9–15]. In support of this fact, we cite the Order of Rosstandart “On the establishment of the Interoperability Technical Committee “Software and hardware tools of distributed registry and blockchain technologies” No. 2831 of December 15, 2017. According to Article 160 of the Civil Code of the Russian Federation (Part 1 of October 21, 1994), the use of electronic signature is allowed [16]. In the Federal Law of the Russian Federation “On Information, Information Technologies and the Protection of Information” of July 8, 2006 [17]. This Federal Law regulates relations arising in: (1) exercising the right to search, receipt, transfer, production and dissemination of information; (2) applying informational technologies; (3) ensuring protection of information. We shall put emphasis on the subordinate regulatory legal act: Decree of the President of the Russian Federation “On the Strategy for the development of the information society in the Russian Federation for 2017–2030” No. 203 of May 9, 2017 [18], which ratifies the “Strategy for the development of the information society in the Russian Federation for 2017–2030”. “This Strategy defines the goals, objectives and measures for the implementation of domestic and foreign policy of the Russian Federation in the field of application of information and communication technologies, aimed at developing the information society, forming the national digital economy, serving the national interests and implementing strategic national priorities” - Paragraph 1 of the Strategy for the development of the information society in the Russian Federation for 2017–2030”. The program “Digital economy of the Russian Federation” was approved by order of the Government of the Russian Federation No. 1632-r of July 28, 2017 [19]. “This Program is implemented in accordance with the goals, objectives, directions, scopes

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and terms of implementation of the main measures of the state policy of the Russian Federation to create the necessary conditions for the development of digital economy of the Russian Federation, in which digital data is a key factor of production in all fields of socioeconomic activity, which increases the country’s competitiveness, the quality of living of its citizens, ensures economic growth and national sovereignty”. Thus, only when there is optimum correlation of economics and law, the Russian Federation will be able to become a developed state of law. Based on the foregoing, we can express several opinions. First, the most important line of development in the Russian Federation is its digitalization. Second, digitization of the economy means the formation of an isolated system of regulatory legal acts (usually Federal Laws of the Russian Federation), not conflicting with the Constitution of the Russian Federation. Third, a regulatory legal act that was specially intended for the digitalization of the economy, could be the Federal Law of the Russian Federation “On the use of digital technologies in the economy of the Russian Federation”.

References 1. Sharandina, N.L.: Digital economy as a top-priority national development goal of the Russian Federation: legal aspect. Finansovoe Pravo 9, 17–21 (2018) 2. Solovykh, N.N.: Digital economy dictates the need for qualified personnel with new competencies. Rossiyskiy Sledovatel’ 5, 64–68 (2018) 3. Aliev, V.M., Solovykh, N.N.: Digital economy confronted us with the need to solve the problem of ensuring digital sovereignty. Bezopasnost’ Biznesa 3, 18–22 (2018) 4. Tomashevsky, K.L.: Digital economy and innovations in the industrial regulation in the IT sphere in the Republic of Belarus. Trudovoe Pravo Rossii Rubezhom 2, 14–17 (2018) 5. Poddubny, E.O.: Towards optimization of the activity of courts in Russia through e-filing. Pravo Tsyfrovaya Ekon. 1, 31–34 (2018) 6. Bykov, A.Y.: The Law of the Digital Economy: Certain National Economic and Political Risks. Prospekt Publishing House, Moscow (2018) 7. Rossiyskaya Gazeta, pp. 1, 4, 30 May 2018 8. Galuzo, V.N., Kanafin, N.A.: Digital law in the Russian Federation. Obrazovanie Pravo 9 (2018) 9. Collection of Legislative Acts of the Russian Federation. No. 31. of Article 4398 (2014) 10. Brykin, K.I.: Blockchain as a means of implementing the principle of transparency (openness) in the field of public finance. Finansovoe Pravo 4, 39–42 (2018) 11. Broy, U.S.: Blockchain and cybercurrencies: do we need a new regulatory framework? Pravo Tsyfrovaya Ekon. 1, 13–20 (2018) 12. Novoselova, L., Medvedeva, T.: Blockchain for voting by shareholders. Khozyaystvo Pravo 10, 10–21 (2017) 13. Korovyakovsky, D.G.: The use of blockchain technologies in customs affairs: foreign experience and Russian prospects. Tamozhennoe Delo 2, 3–8 (2018) 14. Nedorezkov, V.V.: Cryptocurrencies based on blockchain technology: legal regulation issues. Bankovskoe Pravo 4, 45–48 (2017) 15. Vaypan, V.A.: Legal regulation of the digital economy. Predprinimatelskoe Pravo Suppl. “Pravo Biznes” 1, 12–17 (2018)

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Collection of Legislative Acts of the Russian Federation. No. 32, Article 3301 (1994) Collection of Legislative Acts of the Russian Federation. No. 31 (Part I), Article 3448 (2006) Collection of Legislative Acts of the Russian Federation. No. 20, Article 2901 (2017) Collection of Legislative Acts of the Russian Federation. No. 32, Article 5138 (2017)

The Development of New E-commerce Activities in Messina Rosalba Rizzo(&) University of Messina, Messina, Italy [email protected] Abstract. Italy provides a positive environment for the establishment and the development of e-commerce activities. These entities are mostly formed based on innovative ideas and they are important for spreading an innovation-oriented entrepreneurial culture, creating qualified employment, for young people in particular, attracting talents and capital from abroad and promoting social mobility and merit. Investigating the main start-up motives of microentrepreneurs in the province of Messina (Italy), this research focuses on providing some first example on the phenomenon of “new e-commerce activities” (nECA), innovative start-ups by analysing the key factors that facilitate entrepreneurs to start small businesses. Business policies are also discussed. Keywords: E-commerce


Start-up
Entrepreneurship

1 Introduction In 1990s, the debut of e-commerce with the first online sites and its spiralling growth with real explosion of sites and new channels such as sale platforms have determined the use of other forms of digital transmission of processing data in the retail world (Goyal et al. 2019). Online sale is now an activity that has come overwhelmingly into our daily lives. From animal products to design pieces, from clothing to food: there is nothing better than buying them with a click (Adekola and Sergi 2016). As reported by CorCom (www.corrierercomunicazioni.it), in Italy e-commerce is growing fast and modifying the way many companies do business. According to ISTAT data, in July 2018 there was an increase by 13.6% compared to July 2017 for online sales, the traditional trade declined by 0.6% on total of sales in value and by 1.8% in volume and the value of retail sales shows a slight decline for large retailers (−0.1%) and a more substantial decrease for small-scale businesses (1.5%), explains the Institute. According to these data of the business register, it is clear that the e-commerce in Italy grew by 9% in 2018 and registered 17,432 companies active in the country. In just the past eight years, e-commerce has expanded from the desktop to mobile devices, in fact more than half of online shoppers arrive from their smartphones (Goyal et al. 2019). From the analysis carried out by the Consorzio Netcomm and Diennea, a digital marketing company, emerges exactly how touchpoints and triggers (e-mail, SMS and app notifications) are the most effective devices to reach the customer and make him the first step in the buying process: about 25% of online purchases are direct consequences of this marketing tool. It is also true that the customer, after being © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 172–183, 2020. https://doi.org/10.1007/978-3-030-39319-9_20

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reached by the first direct marketing tools, before buying products, searches as much information as possible on the product through the search engines (19%), the website of the brand itself (17.3%) and sites that allow them to compare the price (17,1%). An equally interesting component in consumer decision-making is the increasingly significant role of shops. The visit to the store or branch before or after the online purchase is more recurrent in the case of purchases and banking products (42.5%), food (35%) and clothing (31.7%) while it is more limited in case of trips (17.2%) and insurance (18%). Such behavior could be attributed to the fact that the travels and insurances represent the first developed fields on e-commerce in fact, the online sales on the total retail turn out among the highest ones. The research also presented at Netcomm Forum 2019, shows that the customer journey of online purchases is, on average, more articulated than the purchase path that is developed for the offline channel, in relation to the same product categories. Before proceeding with an online purchase, in fact, consumers activate on average 1.6 touchpoints, a number that for offline purchases is around 0.9. This is particularly relevant for retailers, who must consider the importance of the channels they control, from websites to social channels, to blogs and forums, all strategic channels to get in touch with the digital consumer. Companies, therefore, have to develop a strategy to accompany consumers in their purchasing path, in which the personalization of the relationship is becoming one of the keys to the success of their marketing actions. The e-commerce as it was conceived a few years ago is changing because the consumer was first and foremost to change and the concept of e-commerce is giving way to that of digital commerce, “which takes account of all the transformations that have occurred and are still taking place in the process of buying consumers” (Roberto Liscia, Presidente Netcomm). In this sector, start-ups play a leading role: it is not by chance that exit, funding and acquisitions are registered, often among young companies faithful to the new electronic commerce (Serarols 2008). In evolutionary terms, the history of organizations and small business is full of experiences and evidence (Simon 1993) but there is not enough literature focusing on the very early step of a company, the start-up phase (Salmzadeh 2015a; Goyal and Sergi 2015; Goyal et al. 2016). So, it is reasonable the question “What are the start-ups and how they develop?” To answer this question, three key issues are discussed: the new market environment with startups, the economic and social impact of the Italian policy framework for innovative start-ups (Start-up Act) and the lifecycle of start-ups.

2 Start-Up Phenomenon: A Glance In recent years in Italy, following the economic crisis and the bankruptcy of many small and medium-sized enterprises, a new business model has emerged: The Start up. This term has traditionally been used to indicate the period immediately following the start of a business. Now, however, it has lost its temporal meaning and specifically defines a certain type of enterprise. The term Start up means a company aimed at creating innovative products and services, the results of a creative idea and a business model configured for rapid growth, according to a scalable and repeatable scheme (Goyal et al. 2014, 2017, and 2019; Kaiser and Muller 2013). With the term start up

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two distinct realities are identified. On the one hand, reference is made to a revolutionary recent activity present in a company already established in the target market. On the other hand, there is a reference to an innovative new company, focused on the need for start-up in the target market (Salamzadeh 2015). In the paper will be referred to the start-up of second type, that is enterprises of new constitution, centralized on a high technological and scientific level. The concept of start-up originated in the 1990s in the United States of America and quickly spread throughout the world (Owers and Sergi 2019). It has developed mostly in the California area known as Silicon Valley, where the large and efficient cluster of research centers, universities and laboratories has allowed the rapid development of many innovative realities (Popkova et al. 2018). The start-up phenomenon stems from the need to focus on the exploitation of research, in particular with regard to innovative phenomena. Start-ups often originate from two triggers: an idea and its market analysis. First of all, there is a creative and revolutionary idea, which often coincides with the result of the thought of a group of entrepreneurs, typically young, who have a great desire to get involved. Moreover, it is an idea that arises from scientific research and a careful analysis of a given phenomenon: usually, if the idea is considered scientifically valid and complies with the specifications of feasibility, from project to spin-off (Sergi et al. 2019a, b). The term spin-off technically defines the transition of a phenomenon. In the case of start-ups, the spin-off is the moment of the constitution of the company, in support of the innovative idea, in order to guarantee the development and the relative creation of value. Once the intrinsic value of the idea or scientific research has been consolidated, then, we move on to the actual constitution of the start-up. In a dynamic and flexible place like Silicon Valley, therefore, start-ups could find all the necessary support for the development of entrepreneurial activity. The American government has fully understood the importance of the phenomenon that was exploding and has decided to invest and support it. In January 2011, US President Barack Obama introduced the “start-up initiative America”, in order to support the phenomenon of start-ups and encourage the domestic private sector to invest more (Owers and Sergi 2019). One of the main manoeuvres of the programme was the establishment of a $2 billion fund to support the creation of innovative new businesses. In addition to the abolition of the capital gain tax for small businesses, the programme introduced a change to the patent registration procedures needed to set up an innovative start-up (http://www.whitehouse.gov/ economy/business/startup-america). In the Italian panorama, on the contrary, also due to the economic crisis and the absence of a system to support the entrepreneurial youth, the market was going to stagnate, and it was necessary to consider countermeasures at the ever-higher default rate. One of the projects planned to invest time, resources and money in the start-up sector. Many Italian entrepreneurs have decided to take an example from some well-known realities of Silicon Valley, starting new business. Unlike a company S.R.L., for example, the start-up has the advantage of enjoying more facilities from the government, as it is an alternative entrepreneurial form to the traditional ones, less protected and riskier. For example, to the start-up the Italian State offers greater possibilities for the realization of its revolutionary idea, because they are considered to be more at risk than other types of enterprise and tend to have little financial resources and technical knowledge.

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Innovative start-ups are a source of employment, a positive stimulus for the whole industrial system and they defend innovations within many sectors. Thanks to start-ups, young entrepreneurs can give life to their dreams and ideas, putting themselves at stake, using their skills and those of the collaborators working to support the project. The number of start-ups started and certified in 2016 has reached the threshold of 6,000 units, with a rate of growth that is accelerating increasingly, thanks to a strong regulatory system and increased interest in the sector by donors. However, it is important to consider that today the start-ups rate that fail, even before being launched, is very high, even more than the success rate. This trend indicates that there is still much to improve in the sector, especially at the level of management strategies. Although this is a recent and evolving phenomenon, we do not have a single definition of start-ups. On the contrary, in literature we find many notions. We can start by considering the English translation of the term, which identifies the start of certain activity in general. A first definition means the start up as the operation and the period during which you start a business (http://www.professionisti.it/enciclopedia/voce/1824/ Startup). Initially, the term start-up was strongly linked to new business realities in the IT and technology sectors. Today, however, start-ups are defined all new and growing activities, belonging to every type of sector. With the term start up, therefore, we mean the start of a new entrepreneurial activity, whatever it may be, with the aim of leading it to success. These are, in fact, business projects characterised by intense innovation and very well-structured growth plans. According to an economic vision, as we will go to consider it, with the term start-up it is identified a new enterprise in the forms of a temporary organization or a society of capital in search of a repeatable and scalable business model (http://www.professionisti.it/enciclopedia/voce/1824/Startup). According to Peter Thiel, a prominent entrepreneur, co-founder of PayPal and a great start-up scholar, “The technology is miraculous because it allows us to do more with less, bringing our core capabilities to a higher level” (Thiel and Masters 2014: 68). From this notion we can understand how technology is a key and distinctive element for successful start-ups. According to the founder of PayPal could not exist a civilized world like ours without technology. He argues that “In a world of scarce resources, globalization without technology is unsustainable” (Thiel and Masters 2014: 134) and that “The new technology tends to come from new enterprises: start-ups” (Thiel and Masters 2014: 150). According to Thiel, technology is not typical of large companies already developed in the market, but small, new and flexible companies, such as startups (Thiel and Masters 2014: 150 e ss). Often, it is difficult to develop new projects when organisations are large and inflexible. The start-ups, however, can enjoy several advantages thanks to their small size, which makes them much more dynamic. It is clear, however, that without third-party support, start-ups would not be able to achieve success. Therefore, they operate on the principle that working with others, in order to realize their project, is the best way, but we do not have to forget to remain small, flexible and dynamic enough to be able to really do it (Thiel and Masters 2014: 155). According to Thiel, therefore, start-ups are those new flexible and young organisations that use technology to create something innovative.

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In the literature we find other notions of start-up. It is important that one given by Eric Ries, young entrepreneur and author of the “Lean Method Startup”, of which we do not discuss in this context. He defines the start-up as “a human institution designed to create new products and services in conditions of extreme uncertainty” (Ries 2011: XVII). From this definition one might think that it is enough to have an innovative idea, structure it and proceed with the implementation. Actually, the process is much more complex: you need to identify a winning business idea, find the necessary funding, assess the market and the risks associated with it, structure an efficient communication plan and much more. The start-up is also defined as a human organization with a particular innovative purpose or goal. It is understood that the start-up, in addition to having an innovative idea winning, has to also pursue an effective purpose. It is about finding a tailor-made market, between product and customer, that is innovative and that allows you to start a successful business model. To do this, it is fundamental to know in depth the customers and their real needs, in order to be able to relate them and to relate with the innovation that you want to propose (www.iltweet.it/close-una-startup-cerchiamo-difare-chiarezza/). Therefore, the start-ups are first of all, human organizations, that launch a new product or a new idea, in an unknown context. For this reason, it is essential to know well what are the tools that each start-upper has at its disposal to enter a new market, in particular communicative ones. Today, in addition to the IT and high-tech sector, new innovative business realities are emerging in every market sector, such as the agri-food and clothing sector. However, the technological sector is still considered the most important, as it based on dynamic business and characterized by rapid rates of innovation. To be precise, the industrial sectors considered high-tech are those defined as high-intensity investment in innovation and research and development and, for these characteristics, are considered the best for the creation of start-ups. It is not necessary for an innovative enterprise to have only technology and high–risk finance as its key features. The essential and distinctive aspect for a start-up is, instead, the exponential and dynamic growth both from an economic and dimensional point of view (http://www.ideastartup.it/). Moreover, because start-ups are businesses that are created from scratch, they have the risk of being denied funding because they lack entrepreneurial credibility. While all these factors make start-ups as structures with a high-risk rate, on the other hand, they also guarantee a greater profit perspective, thanks to the high dynamism and flexibility typical of the young structure and still in the definition phase. This is a fundamental characteristic since it allows them to implement non-conventional and economic communication strategies, which have a greater impact than traditional communication tools. To avoid errors and easily overcome market risks, start-up theorists say that they have to always make a thorough market analysis before starting their business. Specifically, they must identify the objectives to be achieved, the characteristics of the market and the real needs of customers, monitor the actions of competitors, but also the strategy to be implemented and the resources needed to put them into practice. Usually start-ups were born and started in complete autonomy, but in this way, they risk getting bogged down in front of the first management problem. It is therefore advisable to consider entrusting oneself or being assisted from the outset by experts in the sector, such as accountants or entrepreneurs, in order to minimise the risk

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of failure. An important supporting role for start-ups is given by business incubators, a place where spaces and services are shared, and businesses have access to them and shared networking. Great support for the start of the business is also offered by the company’s accelerators, which support the company with mentorship, a physical place to operate and the services necessary for its growth (Freear et al. 2002: 275–287). The first management task of a start-up is to make itself known, to circulate its name and its offer in the market, through a good plan of communication. To achieve this goal, it is essential to succeed in growing and climbing the business, with the aim of acquiring market shares and customers increasingly important for their economy, through the use of communication strategies low cost and unconventional. 2.1

The Italian “Start-up Act”

The Italian Decree-law 179/2012 introduced some measures in a view of creating an encouraging environment for small creative start-ups through a number of interdependent devices, including “fast-track” and zero cost incorporation, simplified bankruptcy procedures, tax incentives for equity investment, and a public guarantee scheme for bank credit. In this way Italy has set up an organic regulation aimed at promoting the birth and growth of new companies with high technological value. The policy objective is to support the development of an innovation-oriented business ecosystem, able of creating new employment and attracting human and financial investment from the world. The articles 25–32 of decree law 178/2012 can be considered the nucleus of a real “Start-up Act Italian”. Art. 25 introduces a specific notion of “new technological enterprise”: the innovative start-up. Following a completely new approach, in favor of this type of business, a vast body of legislation has been prepared (art. 26 and later) and provides for new tools and benefit measures that affect the entire life cycle of the company, from its birth to the expansion and maturity phases. Support for new innovative entrepreneurship is suggested by various industrial policy objectives. The Startup Act has the goal to promote a model of sustainable development: an effort that cannot be separated from the development of an ecosystem (small and medium-sized enterprises, large corporations, specialized service providers such as incubators and accelerators, and of course the world of university and research) driven by an entrepreneurial culture dedicated to innovation. Through economic development and the creation of new business opportunities, the lawmaker aims to encourage employment, especially youth, and to stimulate social mobility. Moreover, it is assumed that a more dynamic and innovation-oriented business environment is an essential component for attracting and retaining human and financial investment from around the world in Italy. More than seven years after its entry into force, the policy has become increasingly rooted in the Italian business environment: referring to the report of 8 July, 2019 published by the Ministry of Economic Development, the certified innovative start-ups have exceeded quota 10,000 representing approximately 3% of all the new companies with capital in profit started in the last five years. Including companies that in the meantime have ceased or have lost the status of a new innovative company, the

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companies which have benefited from the policy since 2013 are more than 15,000. Independent researches – i.e. OECD (Organization for Economic Co-operation and Development) in 2018 – have shown how the facilities have had a decisive and significant impact on the development and innovation potential of companies that have used the facilities offered (www.ocse.org). Thanks to the collaboration with the Bank of Italy the OECD, in the report of “The Evaluation of the Italian Start-Up Act”, also shows that Italian Start-up Act (ISA) has a strong influence both “on input and output variables of the companies involved: the book value of capital, turnover, added value, and the tangible and intangible assets of innovative start-ups are about 10–15% higher than other new companies [with coinciding features] that have opted not to enter the policy, or that accessed it at a later stage” (Ministry of economic Development, 2018 https://www.mise.gov.it/index.php/en/202-news-english/2038715-italian-startupact-online-the-oecd-report). Moreover, you can also read as follows “The positive effects of the policy are even stronger for start-ups that have had access to bank credit through the Public Guarantee Fund for SMEs [small-medium size enterprises] which start-ups can access free of charge and through a streamlined procedure: innovative start-ups have better opportunities to obtain loans (the probability of acceptance is about one third higher), for a higher amount (the net flow of loans increases by about 14 percentage points), and with lower interest rate (about 1 percentage points). The effects on the propensity to invest – especially in intangible assets such as patents – are also very significant” (Ministry of economic Development, 2018 https://www.mise.gov. it/index.php/en/202-news-english/2038715-italian-startup-act-online-the-oecd-report). The Startup Act as intended in its original layout has been affected over time by several regulatory updates, which have upgraded the overall plant without affecting its main points. Measures such as Decree-Law January 24, 2015, No. 3, Law December 11, 2016, No. 232 (Budget Law 2017), and Law December 30, 2018, No. 145 (Budget Law 2019) have refined, strengthened and expanded the offer of facilities provided. Further measures, not attributable to the original core of the policy on innovative startups, then intervened to enrich the overall framework of measures in favor of innovative entrepreneurship: these include “The Industrial Plan 4.0” and the launch of the new “Innovation and Emerging Technologies Funds”. This document focuses on measures specifically dedicated to innovative start-ups, but also provides a glimpse of the wider panorama of national innovation policies mentioned above.

3 The Lifecycle of Start-Ups For start-ups the intensity, quality and typology of the relationships that a company establishes with the world of finance depend on the phase of the life cycle of the enterprise. Each phase has distinctive characteristics and the financial needs of the company depend on them. The latter is influenced by variables such as the trend of sales, the intensity of absorption of invested capital and the capacity for self-financing. The economic life of a Start-up can be divided into five stages as follows in the Fig. 1 (Tsai and Lan 2006).

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MATURITY IPO Buyback Secondary Sale Write-off CREATION STAGE Product Market Fit High Investment Venture Capital SEED STAGE Team work Valua on Average Investment Accellerators/Incubators PRE-SEED STAGE Individual effort Evalua on Personal/family/friends funds Business plan BOOTSTRAPPING STAGE Searching for Problem-Solu on Fit Customer discovery Early adopters

Fig. 1. Lifecycle of start-ups (source: self-elaborated)

• Bootstrapping Stage Exploration First phase characterized by the identification of a problem. Once identified, it is necessary to understand how much this latter is actually felt by customers through customer discovery. It is important to intercept the “early adopters”, which will be willing to help in finding the solution and then implement it. At the moment therefore, investments are not needed, but only many tests and the production of the Minimum Viable Product (MVP)1. • Pre-Seed Stage It is typically the initial period, following the conception of the idea in which the entrepreneur assesses the feasibility of the project and begins to examine the market opportunities and his skills. At this stage the levels of risk are high and therefore the investments are lower. In particular, funding comes from personal savings and investments by friends or family. Most of the time this stage ends with the drafting of a business plan, a document that is used as a guide for the development of subsequent activities. • Seed Stage A phase in which it is not possible to demonstrate the adequacy of the entrepreneurial idea and funding is also required to demonstrate the technical validity of the innovation that you want to propose to the market. In other words, it is the period of time necessary for the technical and qualitative development of the project.

1

MVP is the first concrete step when you start your own activity that we could call a working “prototype”.

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• Creation Stage Round A (Start-Up) The executive phase in which the company launches itself on the market. The product or service is already in production: the product can be sold, and it is possible to count the first customers and the first revenues but, its commercial validity has yet to be verified. Round B (Growth) The stage at which the number of customers and sales increase and with them the turnover. At this stage a further capital injection may be needed to meet the growing demand. The risks associated with the company tend to be reduced, as at this point you have multiple data to analyze and study our reference market. • Maturity Exit Period of transition from the start-up stage to another phase, not necessarily in a company itself: – IPO: the start-up becomes public and is then listed on the stock exchange – Acquisition of the holding by third parties – Buyback: the entrepreneur re-purchases the quotas of the start-up (yielded previously during the phase of collection of the investments) remaining therefore the only owner of the company – secondary rises: the entrepreneur sells the shares of the company to third parties, but retains some of them – write-off: Investors withdraw from the investment as they see the company close to bankruptcy. A start-up is therefore born from an idea but, an idea however beautiful, it is not enough: first of all, you have to start a company and find someone who believes in this company. The former are usually FFFs (Family, Friends and fools) or non-repayable funding provided by corporate or public authorities. These initial investments should make it possible to set up the start-up and validate the market and be able to move to the creation of the product or at least to the prototype. At the moment when the company and the team exist, crowdfunding is used or people who invest in companies in exchange for participation, present or future, in the capital (business angels), incubators or accelerators (Lambin 2012). Again, access to credit facility is never a bad idea, if well weighed with the loans received through venture capital to have a balanced credit exposure and that does not force the company in the medium/short term to burn too much cash to pay large interest. As soon as the production activity is complete, the product is on the market and you begin to see the first revenues, the main objective is to climb and continue to grow the business by drawing on investments from Venture Capital or to resort again to crowdfunding, a good method to grow quickly, also exploiting the communication lever of a campaign (Manchanda and Muralidharan 2014). So, you work on business model, marketing plan and business strategy to acquire customers to expand, starting to think about internationalization. The number of users and customers is growing exponentially, and turnover is increasing. If everything goes as planned, you should move towards the stage where investors get a return on their investment: listing on the stock exchange (the company is now so

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successful as to make an IPO and then to be listed on the stock exchange, allowing previous investors to sell their shares/shares on the market);acquisition (the company is sold to third parties, usually large competitors who decide to acquire innovative startups allowing investors to sell their shares and realise a capital gain); distribution of dividends, which however remains at the discretion of the company, and that in the case of innovative start-ups cannot happen as long as the status of innovative start-up (i.e. 5 years) is maintained; the founders buy back the shares which they had previously sold to investors.

4 Start-Ups: A Case Study In this section, the first results of a survey on working conditions among self-employed are displayed by the author and in particular, it concentrates on start-up reasons of the self-employed. The survey, which covers the period January–April 2019, focuses on a sample of microenterprises provided by Camera di Commercio of Messina. The sample of microenterprises (employing 0–10 persons) also includes small enterprises with a low business activity. The data analyzed derive from telephone interviews conducted with randomly selected micro-entrepreneurs in the province of Messina, yielding a total of 900 interviews. Data analysis has been conducted with the statistical software SAS (Statistical Analysis System). The first step shows, according to their socio-demographic profile, how one-quarter of participants are under 40 years of age, half were aged 40–50 and the remainder 51 year and older. All the sample are males, and majority of the micro-entrepreneurs were born in Messina and the province of Messina. It is relevant the gender variable: the data show that men start a business activity more than women. This reason is built on the fact the men are breadwinners, they want to earn money while women consider their business venture as an opportunity work with family (Delmar and Davidsson 1997). Almost half participate in retail (sale and communication) and the remain are business service. Most of the participants are well educated, with two-thirds having a university degree. The micro-entrepreneurs do not have a business partner, and almost one-third have employees see Appendix 1.

5 Conclusion According to the literature review, the motivation driving entrepreneurs for selfemployment seems to be a high degree of independence explained as the desire to be free from formal, bureaucratic organisations (Deakins and Whittam 2000; Yusuf 1995; Chay 1993; Eden 1975). Other features that attract individuals to self-employment include personal achievement, economic rewards, high job security, the potential for experiencing challenging opportunities (Carter et al. 2003; Jamal 1997; Birley and Westhead 1994; Shane et al. 1991) and individual, psychological, and environmental aspects (Shane 2003). The result of this research reveals that the reasons, previously mentioned, prevail in starting self-owned businesses in Messina and the government

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supports microentrepreneurs in order to contribute to the economic development of the country (Bruton et al. 2008). Sitography www.corrierercomunicazioni.it www.ideastartup.it/ www.iltweet.it/close-una-startup-cerchiamo-difare-chiarezza/ www.mise.gov.it/index.php/en/202-news-english/2038715-italian-startup-actonline-the-oecd-report www.ocse.org www.professionisti.it/enciclopedia/voce/1824/Startup www.whitehouse.gov/economy/business/startup-america

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Jamal, M.: Job stress, satisfaction, and mental health: an empirical examination of self-employed and non-self-employed Canadians. J. Small Bus. Manag. 35(4), 48–57 (1997) Kaiser, U., Müller, B.: Team heterogeneity in start-ups and its development over time. ZEWCentre for European Economic Research Discussion Paper, (13-058) (2013) Lambin, J.J.: Market-Driven Management. Marketing strategico e operativo. McGraw-Hill, New York (2012) Manchanda, K., Muralidharan, P.: Crowdfunding: a new paradigm in start-up financing. In: Global Conference on Business & Finance Proceedings, vol. 9, No. 1, pp. 369–374. Institute for Business & Finance Research, January 2014 Owers, J.E., Sergi, B.S.: The evolution of financing entrepreneurship. In: Sergi, B.S., Scanlon, C. C. (eds.) Entrepreneurship and Development in the 21st Century, pp. 161–170. Emerald Publishing Limited, Bingley (2019) Popkova, E.G., Popova, E.V., Sergi, B.S.: Clusters and innovational networks toward sustainable growth. In: Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, pp. 107–124. Emerald Publishing Limited, Bingley (2018) Ries, E.: The Lean Start-Up. How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Business, p. XVII. Crown Business, New York (2011) Salamzadeh, A.: New venture creation: controversial perspectives and theories. Econ. Anal. 48 (3/4), 101–109 (2015) Serarols, C.: The process of business start-ups in the internet: a multiple case study. Int. J. Technol. Manag. 43(1–3), 142–159 (2008) Sergi, B.S., Popkova, E.G., Bogoviz, A.V., Ragulina, J.V.: Entrepreneurship and economic growth: the experience of developed and developing countries. In: Sergi, B.S., Scanlon, C.C. (eds.) Entrepreneurship and Development in the 21st Century, pp. 3–32. Emerald Publishing Limited, Bingley (2019a) Sergi, B.S., Popkova, E., Bogoviz, A., Litvinova, T.: Understanding Industry 4.0: AI, the Internet of Things, and the Future of Work. Emerald Publishing Limited, Bingley (2019b) Shane, S.: A General Theory of Entrepreneurship. Edvard Elgar, Cheltenham (2003) Shane, S., Kolvereid, L., Westhead, P.: An exploratory examination of the reasons leading to new firm formation across country and gender. J. Bus. Ventur. 6, 431–446 (1991) Simon, H.A.: Strategy and organizational evolution. Strateg. Manag. J. 14(52), 131–142 (1993) Tsai, S.D., Lan, T.T.: Development of a Startup Business—A Complexity Theory Perspective. National Sun Yat-Sen University, Kaohsiung (2006) Thiel, P., Masters, B.: Zero to One: Notes on Startups, or How to Build the Future. Crown Business, ebook, New York (2014) Yusuf, A.: Critical success factors for small business: perceptions of South Pacific enterprises. J. Small Bus. Manag. 33(2), 68–73 (1995)

Legal Protection of Virtual and Augmented Reality Technologies Tamara A. Kochubey(&) Volgograd State University, Volgograd, Russia [email protected]

Abstract. The paper presents the analysis of contemporary issues associated with the legal protection of such intellectual property items as virtual and augmented reality technologies. The author gives consideration to the definitions of abovementioned technologies, their similarity and difference. Attention is drawn to the fact that software is the essence of virtual and augmented reality technologies, therefore, the legal protection regime granted to computer programs should be the basic regime of legal protection of these items. At the same time, it is emphasized that virtual and augmented reality technologies use not only software programs, but also various images, musical works, multimedia, design solutions, for which reason these technologies go outside the framework of legislative definition of computer programs and act rather as complex intellectual property. This, in particular, relates them with computer games, and there is good reason behind the fact that virtual and augmented reality technologies gained momentum in the gaming environment in the first place. From here, the author draws attention to the need for developing and introducing into legislation a regulatory definition of technologies under study, which will serve as a basis for choosing the optimum regime of their legal protection. From the perspective of the author, the most advanced regime of legal protection for these technologies is the patent protection regime. Keywords: Virtual reality protection


Augmented reality
Intellectual property
Legal

1 Materials The basis of legal framework is composed of provisions of Part 4 of the Civil Code of the Russian Federation regulating relations in the field of intellectual property as well as provisions of international legislation (WIPO Copyright Treaty 1996 etc.). Doctrinal views that compose the scientific framework for the research are presented in papers of such authors as Grin’, E.S., Inshakova, A.O., Koroliova, A.G., Otiutskiy, G.P., Solodkina, E.A. et al. These papers deal with the issues of the impact of modern information society on the development of law areas of this development the concept and varieties of virtual and augmented reality technologies and problems of their legal protection. In addition the author of research used materials from the judicial practice of arbitration courts (cases Nos. A33-14511/2011 and A50-11517/2012). © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 184–191, 2020. https://doi.org/10.1007/978-3-030-39319-9_21

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2 Methods The research study of the subject-matter of this paper is based on the general scientific dialectical method of cognition. In addition the author used a combination of logical methods such as analysis synthesis deduction and induction as well as legal methods (formal legal comparative legal).

3 Introduction Information technologies become increasingly important in the early XXI century. Information and technologies used for its collection, processing and transfer have become a valuable resource, the possession of which has been contested by the leading states of our planet. The legal regulation of relations in the field of intellectual property on information technologies currently becomes increasingly important both at the level of theory and in legal practice [2, p. 6]. There is good reason for the researchers to point out that the law is being subject to active transformation in the context of the rapid growth of information society [12, p. 3]. The efficient legal framework in this field acts as an essential element of dynamic development of both the culture and civil society. In a modern post-industrial society (which many people often call informational), computer programs and algorithms have taken on special significance. Computer programs as an object of investment relations are an intellectual property item and therefore combine both the product of mind and rather complex industrial labor. It is known that the costs for the creation of software are many times are higher than the costs of manufacturing of computers as such. Virtual and augmented reality technologies are some of the most fastest growing types of computer programs as intellectual property items. These technologies have high potential as compared to the existing practices of living, production, education, which is not even fully implemented due to the ongoing development of scientific and technological progress. Even as we speak, a great many digital doubles of real-world spaces and objects has been accumulated already, which contributes to the dynamic digitization of the world. Such virtual environments can be designed for specific tasks. Moreover, the virtual world can be adapted to the needs of the user and change depending on the tasks being solved. Technologies of construction of virtual environments are commonly referred to as virtual reality technologies (VR technologies). VR technologies blur the line between our conventional reality and its digital incarnation. The qualitative growth of abovementioned technologies, as well as their wide application all over the world has resulted in the emergence of a wide range of legal problems (for example, the development of protection mechanisms). In connection with the high rate of development of virtual and augmented reality technologies, it becomes apparent that they need more efficient legal protection than the modern level of development of intellectual property law can provide them with.

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4 The Concept of Virtual and Augmented Reality The legal nature of virtual and augmented reality technologies is understudied in science. Therefore, an important task arising from the goals of this research is the development of an appropriate conceptual framework. Although these technologies rightly enjoy huge popularity in technical publications and the mass media, it is not that easy to formally define the concepts of “virtual reality” and “augmented reality”. This is due to the following reasons: (1) high rate of development of these technologies, for which reason their essential features change fairly quickly; (2) the same technology combined with other technologies may refer to virtual or augmented reality, and, at the same time, may refer to it no more if combined with others; (3) the term “virtual reality” is widely used in philosophy and psychology to refer to any fictional (conceptual) worlds as a contrast to the real world. For example, as Otiutskiy, G.P. points out, “virtual reality is described by contemporary researchers either as a world of ideas (or symbols, or even simulacra), or as a particular specific mental content” [4, p. 162]. From this perspective, such spaces as the Internet, as well as any visionary world, implemented in a work of fiction (a book, a motion-picture) can be considered as virtual relativity. Conventionally, virtual reality shall be understood to mean artificial environment created with the use of software and perceived by a human being as reality (this definition is taken from the analytics developed by the WIPO [13]). At the same time, there are also more extensive definitions of this concept. Thus, for example, Solodkina defines virtual reality as “the generation and operation of objects, real-world or imaginary, based on their graphic representation, simulation of their physical properties and their ability to influence and be independently present in space, as well as creation of such objects by means of a special computing platform” [7, p. 191]. In general, virtuality is defined as “a property of an ideal object, which means creating a simulation of objective reality or presenting a world invented by the author, with the use of computer technologies” [1, p. 92]. At the same time, augmented reality is defined in science as “technology which implies superimposition of information in the form of text, graphics, audio and other virtual objects on the real-world objects in real-time mode” [10, p. 479]. Formulated differently, augmented reality - is the technology that fills our environment with virtual objects that interact with the real world, but only in the minds of those users who use a particular augmented reality technology. We shall compare virtual and augmented reality via examples. If a user puts on a VR Helmet and uses software simulating driving on a race track, then he/she will see a computer simulation of the view out of the driver’s seat in a racing car in front of him/her. By controlling the steering wheel he/she holds in the real world, the user can influence the object of the virtual world. That is, the picture will simulate a ride on the car in accordance with wheel turnings by the user. This is virtual reality.

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If a user puts on augmented reality glasses or uses some other access-enabling technology, he/she starts seeing in the real world not only real-life objects, but also virtual objects, which interact with real-world objects. Thus, in the Korean drama “Memories of the Alhambra” (2018), the plot is based on the fact that people use simple registration on the server of a computer game to gain access to augmented reality on the streets of the Spanish city of Granada: they meet and interact with virtual characters whom non-players cannot see, they fight duels with other players using virtual weapons, they can virtually get help information about real-world objects etc. We can conclude from the above examples that the main difference between virtual reality and augmented reality is that virtual reality creates a completely autonomous artificial world that is absolutely not connected with reality (except for access-enabling technology). At the same time, technologies under study also have common features that have important legal meaning specifically from the perspective of intellectual property. They include: (1) communion of intellectual property which includes virtual and augmented reality technologies; (2) common destinations: both virtual and augmented reality are primarily a social interaction environment. At present, these technologies are most often used for gaming purposes, but their use for business meetings and personal meetings has been gaining popularity recently.

5 Virtual and Augmented Reality as the Objects of Legal Protection The essence of virtual or augmented reality technologies consists in software, since its essential feature which can be deduced from definitions discussed above is the information technology with special properties. In most cases, a virtual environment is formed thanks to computer games (the game Pockemon Go can be mentioned as an instance). According to Russian civil law, these objects belong to the category of computer programs (Article 1261 of the Civil Code of the Russian Federation). A computer program is a copyright item in the first place. As a matter of law, in order to be copyright items, pieces of work must meet two requirements: have an objective form and be the result of creative activity (i.e. be original, be creative). A computer program does not belong to any of these categories, but is a set of commands and data that are designed for the functioning of computers and other computer devices [6]. In the first place, it should be pointed out that the only condition for the protectability of a computer program is the creative nature of activity of its author during its creation [8], since exclusively technical, non-creative work will not entail the creation of a copyright item. In addition, researchers point out the application of the criteria for the protectability of a computer program, such as originality and novelty of a piece of work, by courts in some cases [3]. Copyright applies to every computer program which is expressed in physical form, regardless of any physical media. The form of preservation does not play any

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significant role: the program is subject to protection both in electronic form and in hard copy (if its code is recorded). Therefore, the right of ownership of physical media is not associated with the copyrights in the computer program. A computer program must fulfill its specified purpose – maintain computer devices in order to obtain a specific result [5]. A computer program is subject to protection from the very moment of its creation. Protection is not provided to a program the creation of which pursuant to the Russian law is a crime and may cause harm to society, the state or a specific individual, even if such a program has never been used. The Criminal Code of the Russian Federation enshrines two meaningful features of the wrongfulness of a computer program: unauthorized nature and advance knowledge of program action. Unauthorized nature means being a focus on achieving a result without a permit from the owner of the computer or other legitimate user. Whereas advance knowledge means a conviction based on well-known objective features that the program has a specific nature. Malicious nature of a program can be determined by the way it is used, and not by its designated purpose. For the exercise and occurrence of the right to authorship, registration of the piece of work or compliance with any formalities or other special documentation of piece of work is not required. Furthermore, it should be borne in mind that computer programs have one interesting feature as compared to other copyright items: the author has the right to register a computer program or a semi-conductor topography with the Federal Intellectual Property Service if he/she so desires. At the same time, one cannot disregard the fact that in addition to software, virtual and augmented reality technologies use images, video, musical and other pieces, which is indicative of the complex nature of these technologies. Technologies under consideration frequently use databases (Paragraph 2 of Article 1260 of the Civil Code of the Russian Federation). For example, mobile application Google Maps and the abovementioned game Pockemon Go use databases with maps. Therefore, legal protection regime granted to computer programs acts as a point of reference for the provision of legal protection to virtual and augmented reality technologies. Please note that computer programs protection regime, established by standards of the Civil Code of the Russian Federation, generally conforms to international standards (Article 4 of WIPO Copyright Treaty 1996, Paragraph 1 of Article 10 of the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994). Nevertheless, it appears that there is a long-standing need for legislative isolation of virtual and augmented reality technologies as an independent object of legal protection.

6 Legal Protection of Virtual and Augmented Reality Technologies by Means of Patents Recently, there has been an increase in the number of patent applications filed in global practice, which is indicative both of the high rate of development of information technologies and of the desire of parties concerned to maintain competitive advantages by ensuring the protection of their inventions. However, computer programs protection regime using the norms of patent law is contradictory from the perspective of Russian law.

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In order to receive a patent, software subject to Article 1350 of the Civil Code of the Russian Federation must meet three patentability requirements: – novelty (i.e., the invention is unknown at the current level of technology); – a certain inventive level (i.e., this invention should not be obvious for an expert based on the current level of technology); – industrial applicability (i.e. the possibility of using it in various spheres of life of society). Besides, there is a problematic question as to whether software is characterized by a certain degree of inventiveness, since the creation of any program usually involves both the already-known programming languages and the known problem-solving algorithms. As a result, from the perspective of inventive level of software code, many computer programs will be obvious to experts in this field. Industrial applicability of the program raises certain doubts as well. The concept of invention is generally used to denote a technical solution that refers to a product (a device, a substance, a strain of organism etc.) or a method of its creation. Thus, it is understood that the invention should lead to some kind of material and technical result. Computer programs usually act as abstract ideas, algorithms, and methods that are used to obtain the material and technical result. However, if the program is an immediate part of the apparatus which operates only on the basis of certain software, there are no obstacles to patenting this program together with the device. At the same time, the global practice of issuance of patents on software solutions in the field of virtual and augmented reality is not so strict. Thus, the WIPO analysis that has already been mentioned above, specifies the most popular areas of inventions in this field such as: – – – – –

3D-modelling, data processing, display devices, image data processing, interface devices and processing devices [13].

The patent for a device for simulating articles of clothing that was issued in the United States can serve as the real example of such technical solutions [11]. It should be noted that the registration of the patent on computer programs under the legislation of the European Union and the United States is only possible if the program is inextricably connected with the controlled device. Thus, Article 52 of European Patent Convention states that patent protection is not provided to software that is not designed to control a technological device that was applied for as an invention. In the United States, the patent on computer programs is only issued when this software is associated a particular hardware or is used to transform an object into some other state [9]. As a matter of principle, this condition is quite achievable for virtual and augmented reality technologies, since they can be accessed only if a certain technical device is available (VR Helmet, augmented reality glasses, a mobile device with installed applications, etc.).

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7 Results The wide variety of results of intellectual activity used in the field of virtual and augmented reality technologies, causes problems in ensuring their legal protection. The legal protection regime granted to computer programs is the closest in terms of its content; at the same time, it should not go unnoticed that virtual and augmented reality technologies use not only software programs, but also audio and multimedia pieces, graphical and design solutions. This brings technologies under study beyond the scope of their perception as software programs only and brings them closer to the concept of their perception as a complex intellectual property item, which needs independent legal protection.

8 Conclusion It appears that there is a long-standing need for legislative isolation of virtual and augmented reality technologies as an independent object of legal protection. It is necessary not only to enshrine in legislation the definitions of virtual and augmented reality as intellectual property items in the legislation, but also to determine the optimal regime of their legal protection. It appears that the patent protection regime is the most promising regime for technologies under study.

References 1. Grin’, E.S., Koroliova, A.G.: Formation of basic models of protection of virtual and augmented reality technologies in the field of intellectual property law. Aktual’nye Problemy Rossiyskogo Prava 6, 90–97 (2019) 2. Inshakova, A.O.: The response of law to the challenges of cutting-edge technologies in innovative Russia. Legal Concept = Pravovaya Paradigma 17(4), 6–15 (2018) 3. Kashanin, A.V.: Actual requirements of the creative nature of pieces of work in the Russian doctrine and legal practice. Zakony Rossii: Opyt Analiz Praktika 8, 50–59 (2016) 4. Otiutskiy, G.P.: Interpretation of virtual reality: methodological difficulties. Istoricheskie, Filosofskie, Politicheskie i Yuridicheskie Nauki, Kulturologiya i Iskusstvovedenie. Voprosy Teorii i Praktiki 2-2(52), 162–164 (2015) 5. Regulation of the Federal Anti-Monopoly Service of the East Siberian District of 07.25.2013 in the case No. A33-14511/2011. http://kad.arbitr.ru/Document/Pdf/6cecc738-5da8-4faf-8f7976525db66480/8ba0a26f-2a83-4d09-9649-6d51f9731e05/A33-14511-2011_20130725_Postanovlenie_kassacionnoj_instancii.pdf?isAddStamp=True. Accessed 31 Aug 2019 6. Regulation of the Federal Anti-Monopoly Service of the Ural District of 10.06.2013 in the case No. A50-11517/2012. http://kad.arbitr.ru/Document/Pdf/d4e8b9cf-4899-440d-83b0-d1c9ea143f92/3f73e9a4-f9b8-42fe-90a3-368040871723/A50-11517-2012_20130610_Reshenija_i_postanovlenija.pdf?isAddStamp=True. Accessed 31 Aug 2019 7. Solodkina, E.A.: Revisiting the definition of the concept of virtual reality. News Bull. Peoples’ Friendship Univ. Russia. Ser. “Philos.” 1, 189–196 (2004) 8. Solomonenko, L.: Criteria of protectability of a piece of work. IS. Avtorskoe Pravo i Smezhnye Prava 2, 51–57 (2016)

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9. Churilov, A.: Computer programs protection regimes: an invention, a commercial secret or a literary work? IS. Avtorskoe Pravo i Smezhnye Prava 7, 35–44 (2017) 10. Yakovlev, B.S., Pustov, S.I.: History, special aspects and prospects of augmented reality technology. News Bull. Tula State Univ. Tekhnicheskie Nauki 3, 479–484 (2013) 11. US Patent No. 8,275,590. https://patents.google.com/patent/US8275590B2/en. Accessed 31 Aug 2019 12. Tarakanov, V.V., Inshakova, A.O., Dolinskaya, V.V.: Information society, digital economy and law. In: Popkova, E.G. (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Studies in Computational Intelligence, vol. 826, pp. 3–15. Springer, Cham (2019) 13. Virtual Reality: Patent Landscape Analysis. https://www.wipo.int/edocs/plrdocs/en/ lexinnova_plr_virtual_reality.pdf. Accessed 31 Aug 2019

Marketing Mechanisms of Optimization of Decision-Making Regarding the Implementation of the National Oncology Program as Part of the Concept of Digital Medicine Yuri V. Przhedetsky1(&), Natalia V. Przhedetskaya2, Kseniya V. Borzenko2, and Tatiana V. Panasenkova2 Federal State Budget Institution “Rostov Cancer Research Institute” of the Ministry of Health, Rostov-on-Don, Russia [email protected] 2 Federal State Budget Institution “Rostov State Economic University’’ of the Ministry of Education and Science of the Russian Federation, Rostov-on-Don, Russia [email protected], [email protected], [email protected] 1

Abstract. Purpose: This paper is aimed at justifying the preferability of application of the marketing approach and identifying promising marketing mechanisms for optimizing decision-making regarding the implementation of the National Oncology Program in Russia as part of the concept of digital medicine. Design/methodology/approach: The authors rely on the comparative study method which we use to compare the directive approach (that is used in presentday Russia) with the marketing (suggested) approach to optimization of decision-making regarding the implementation of the National Oncology Program as part of the concept of digital medicine. We use the opinion polling method to assess the optimality of decisions on the implementation of the National Oncology Program as part of the concept of digital medicine in present-day Russia on the basis of a directive approach. Findings: It has been established that the directive approach used in presentday Russia actually prevents from making optimal decisions on the implementation of the National Oncology Program as part of the concept of digital medicine. The key problems of the existing approach consist in fundamental failure to achieve return on investment as well as chronic underfunding of the digital modernization of oncologic dispensaries. Originality/value: The marketing approach coping with the deficiencies in the directive approach and making optimal decisions on the implementation of the National Oncology Program as part of the concept of digital medicine, since it fully meets the present needs of the population in this program, as well as the requirements specified to it by the society, being characterized by interactivity, flexibility and high efficiency. Keywords: Marketing
Optimization program
Digital medicine
Russia JEL Codes: D81


Decision-making
National oncology


G11
H51
I18
O31
O32
O33
O38

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 192–200, 2020. https://doi.org/10.1007/978-3-030-39319-9_22

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1 Introduction The urgent character of the National Oncology Program in present-day Russia is due to the fact that the problem of diagnosis and treatment of oncological diseases in this country is particularly acute and is yet to be resolved at present. Thus, in 2018, according to the GLOBOCAN 2018 rating, Russia ranked 5th in the world in terms of the number of deaths of cancer patients (314,611 cases), 2nd in the world in terms of cancer mortality, adjusted for standardized age composition (119.2 cases per 100,000 people), and 2nd in the world in terms of cumulative risk (percentage of newborns who will die from cancer before they reach the age of 75: 13.54%) according to expert estimates of the International Agency for Research of Cancer (2019). A likely cause of this situation is the low detection rate of oncological diseases due to the low accessibility and low quality of their diagnosis, as evidenced by the materials of the Global Burden of Disease report, prepared by experts of the Institute for Health Metrics and Evaluation (2019). Digital medicine forms the basis for the implementation of this program in Russia, as well as in other advanced countries of the world, as it allows increasing the accessibility of medical services for the diagnosis and treatment of oncological diseases and reducing mortality from them. A directive approach to decision-making regarding the implementation of the National Oncology Program as part of the concept of digital medicine has been used in Russia since 2017, in connection with the adoption of the National Program “Digital Economy of the Russian Federation” pursuant to Government Decree No. 1632-R of the Russian Federation (2019) of July 28, 2017. This approach implies reliance on the state plan created at the level of macroeconomics. Although directive approach provides the most complete coverage of regions of Russia by digital medicine and balanced (with minimum distinctions between regions) implementation of the National Oncology Program, it fails to fully meet the present needs of the population in this program, as well as requirements specified to it by the society. First, the National Oncology Program should be interactive. The process of provision of services for the diagnosis and treatment of oncological diseases is subject to permanent changes. For example, as little as a few years ago, most consumers preferred to make an appointment with a doctor personally, to undergo medical tests and diagnostics due to low trust in digital technologies; today, however (2019) electronic record hits the big time in Russia. Therefore, during the implementation of the National Oncology Program as part of digital medicine, the current capabilities of science, technology, the state and oncologic dispensaries, as well as the present needs of society, must be taken into consideration. Second, the National Oncology Program should be flexible. The needs for diagnosis and treatment of oncological diseases are unique in each region of Russia. According to statistical information provided by the Ministry of Health of the Russian Federation (News.ru 2019), the number of cancer patients is high in the Kursk Region (3239.3 per 100 thousand of patients), in the Republic of Mordovia (3,145.4) and in the Krasnodar Territory (3,086), and the smallest number of cancer patients is in the Republic of Dagestan (835.3), in the Republic of Tyva (889) and in the Chechen Republic (1024.3). Therefore, the National Oncology Program should take into account specific features of each region.

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Third, the National Oncology Program should be efficient. On the one hand, this program should assume the smallest possible burden on federal and regional state budgets due to the risk of their shortage as a result of the multiplicity of other socially important programs in present-day Russia (for example, birth rate promotion programs, antipoverty programs, environmental protection programs). On the other hand, the National Oncology Program should provide pronounced results (reduction of the number of cancer patients and reduction of mortality from these diseases), and not a formal implementation of the plan (purchase of digital equipment, advanced training of public health care workers). Our hypothesis in this research is that the directive approach fails to provide making optimal decisions on the implementation of the National Oncology Program as part of the concept of digital medicine. In this regard, a new, more advanced approach is needed; in our opinion, such an approach is the marketing approach. This paper is aimed at justifying the preferability of application of the marketing approach and identifying promising marketing mechanisms for optimizing decision-making regarding the implementation of the National Oncology Program in Russia as part of the concept of digital medicine.

2 Materials and Methods Consideration to the process of decision-making regarding the implementation of the National Oncology and its optimization problems was given in papers of such researchers as Przhedetsky et al. (2018a, b), Przhedetsky et al. (2019). The concept of digital medicine and the prospects for its application for the implementation of the National Oncology Program are presented in the works of such researchers as Popkova (2019), Popkova and Sergi (2019), Petrenko et al. (2018), Popkova and Sergi (2018). Nevertheless, the degree of elaborateness of the problem of this research is low due to understudied opportunities and advantages of the use of the marketing approach to optimization of decision-making regarding the implementation of the National Oncology Program as part of the concept of digital medicine. This paper deals with filling the identified gap through the substantiation of advantages and simulation of the use of marketing mechanisms for optimizing decision-making regarding the implementation of the National Oncology Program as part of the concept of digital medicine. In the pursuance of this research, we rely on the comparative study method which we use to compare (and to contrast with each other) the directive approach (that is used in present-day Russia) and the marketing approach (that is suggested by us) to the optimization of decision-making regarding the implementation of the National Oncology Program as part of the concept of digital medicine. We use the opinion polling method to assess the optimality of decisions on the implementation of the National Oncology Program as part of the concept of digital medicine in present-day Russia on the basis of a directive approach. We have used this method to hold an opinion poll among the consumers of medical services for the diagnosis and treatment of oncological diseases in 3 oncologic dispensaries of the Rostov Region: Oncologic Dispensary of Rostov-on-Don, Municipal Oncologic Dispensary and Clinical Oncologic Dispensary.

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We conducted an opinion poll in June 20191. The total number of respondents amounted to 4800 people, of which 50% are female and 50% are male. Age composition: 75% of respondents are patients over 50 years old (are the least sensitive to digital technologies), 10% of respondents are patients between 30 and 50 years old (are fairly sensitive to digital technologies) and 5% of respondents are patients under 30 years old (are the most sensitive to digital technologies). In order to conduct our opinion poll, we developed a special form that allowed us to assess the optimality of decisions in points depending on the responses of the respondents (Table 1). Table 1. Consumer survey form for assessing the optimality of decisions made on the implementation of the National Oncology Program as part of directive approach Decisions made What technologies are being introduced How is the digital modernization funded How is return on investment achieved The way efficiency is assessed and officials are held liable Efficiency of labor and quality of services Willingness to receive digital services

Possible answers and points given (corresponding to these answers) 3 points 2 points 1 point Sought-after and Sought-after, but Non-sought-after and/or advanced obsolescent obsolete Funding is superfluous

Sufficient funding

Return of investment is Investment yields a return Return of not achieved investment is (unprofitableness) achieved Assessment is not made, Assessment is Accurate and reliable assessment of efficiency, neither accurate nor no responsibility is borne reliable, officials are brought to responsibility is responsibility partial High Average Low

Willing, but conventional services are preferred Source: developed and compiled by the authors

1

Lack of funding (severe shortage of funds)

Digital services are preferred

Are unwilling to receive digital services, radically protest against their introduction

Ethical approval was obtained from the ethics committee. Members of the ethics committee are Natalya Vovchenko, Tatiana V. Epifanova and Kanikey T. Samieva. Furthermore, all participants gave their informed consent to be cited anonymously in this study before its commencement. Interview partners also gave their informed consent to be recorded and their statements be transcribed.

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3 Results The results of our comparative study of directive and marketing approaches to decision-making regarding the implementation of the National Oncology Program as part of the concept of digital medicine (from the perspective of mechanisms used) are shown in Table 2. Table 2. A comparative study of directive and marketing approaches to decision-making regarding the implementation of the National Oncology Program as part of the concept of digital medicine Decisions made What technologies should be introduced How to fund the digital modernization How to achieve return on investment How to assess efficiency and hold officials liable How to achieve good performance and high quality How to stimulate the demand for digital services

Directive mechanisms Planning Budgeting

Abandoning the idea of return on investment State monitoring and control Labor rate setting, standardization of services National social advertising for digital services Source: developed and compiled by the authors

Marketing mechanisms Marketing research (opinion polling among interested parties) Marketing of investment of oncologic dispensaries Marketing mix of oncologic dispensaries Marketing research (collecting feedback from interested parties) Personnel marketing (attracting, retaining, training, promoting) Marketing mix of oncologic dispensaries

As can be seen from Table 2, when making decisions on what digital technologies should be introduced for the implementation of the National Oncology Program, the directive mechanism of planning is used in Russia at present, involving a selection of technologies depending on capabilities of the state. As an alternative, we suggest using the mechanism for the pursuance of marketing research in the form of a poll of interested parties (direct marketing). This will allow identifying those technologies that are the most in-demand by consumers. When making decisions on how to fund the digital modernization, the directive mechanism of budgeting is used in Russia at present for the implementation of the National Oncology Program, which involves reliance on public funding. The shortage of funds in state budgets leads to underfunding of the oncology program. As an alternative, we suggest using the investment marketing mechanisms, which allows raising private investment, decreasing burden on state budget and providing full-scale funding of oncology programs. When making decisions on how to achieve return on investment, a decision to abandon the idea of return on investment which is treated as government grants and subsidies, has been made in Russia for the implementation of the National Oncology

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Program. As an alternative, we suggest using the marketing mix mechanism, which allows driving fee-for-service medicine and provide return on private investment. When making decisions on how to assess efficiency and hold officials liable, the directive mechanism of state monitoring and control is used in Russia at present for the implementation of the National Oncology Program. As an alternative, we suggest using the marketing research mechanism by collecting feedback from interested parties (reverse marketing) in order to obtain the most reliable information. When making decisions on how to achieve good performance and high quality, the directive mechanism of labor rate setting and standardization of services is used in Russia at present for the implementation of the National Oncology Program. As an alternative, we suggest using the personnel marketing mechanism to attract and retain the best medical staff, to develop it by means of training and provision of work incentives. When making decisions on how to stimulate the demand for digital services for the implementation of the National Oncology Program the directive mechanism of national social advertising for digital services, which force-feeds their use, is used in Russia at present. As an alternative, we suggest using the marketing mix mechanism, which allows improving their competitive ability. The results of our assessment of the optimality of decision-making regarding the implementation of the National Oncology Program in Russia as part of digital medicine in 2018 are shown in Fig. 1.

Готовность получать цифровые услуги

2.97

Производительность труда и качество

2.64

Как оценивается эффективность и привлекаются к ответственности должностные лица

2.18

Как обеспечивается окупаемость инвестиций

1.26

Как финансируется цифровая модернизация

1.05

Какие технологии внедряются

2.36 0

1

2

3

Fig. 1. Results assessing the optimality of decision-making regarding the implementation of the National Oncology Program in Russia as part of digital medicine in 2018. Source: calculated and plotted by the authors

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/diagram: Willingness to receive digital services Efficiency of labor and quality of services The way efficiency is assessed and officials are held liable How is return on investment achieved How is the digital modernization funded What technologies are being introduced/ As can be seen from Fig. 1, the willingness to receive digital services is fairly high (2.97 points: digital services are preferred). Efficiency of labor and quality of services are fairly high as well (2.64 points). At the same time, the assessment of efficiency and bringing officials to responsibility are complicated (2.18 points). There is no return on investment in the implementation of the National Oncology Program as part of digital medicine (1.26 points). The digital modernization of oncologic dispensaries is underfunded (1.05 points). The selection of technologies to be introduced is scarcely ever correct; popular yet obsolescent technologies are introduced in most cases (2.36 points). The opinion polling have demonstrated that there is a lack of the optimality of decisions made within the scope of directive mechanism. We have developed the following model for the systematic (most efficient) use of marketing mechanisms for optimizing decision-making regarding the implementation of the National Oncology Program as part of the concept of digital medicine (Fig. 2).

State

budgetary restrictions

present needs (demand) 2 investment marketing available investment 3 Marketing mix popular services 4 Personnel marketing high quality of services

monitoring demand promotion

5 feedback collection

Consumers of services for the diagnosis and treatment of oncological diseases

1 Marketing research

services

Consumers of services for the diagnosis and treatment of oncological diseases

Fig. 2. The model of the systematic use of marketing mechanisms for optimizing decisionmaking regarding the implementation of the National Oncology Program as part of the concept of digital medicine. Source: developed and compiled by the authors

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As we can see from Fig. 2, the model we put forward involves (1) carrying out of marketing research of oncological trials. Investment marketing with due consideration of the identified current needs (demand) (2). The state sets budgetary restrictions which are used to attract investments. Then marketing mix of oncologic dispensaries (3) is performed, making it possible to stimulate the demand for digital medicine. Besides, the state participates in this process by means of social advertising. Personnel marketing is performed to maintain the high quality of popular services (4). After that, feedback (5) is collected, which serves as the basis for the state-public monitoring of the activities of oncologic dispensaries. Then there is a return to the first stage, and the process (cycle) is repeated. As a result, the most optimal decision-making is achieved at each stage of implementation of the National Oncology Program as part of the concept of digital medicine.

4 Conclusion Thus, the suggested hypothesis has been confirmed: the directive approach used in present-day Russia actually prevents from making optimal decisions on the implementation of the National Oncology Program as part of the concept of digital medicine. The key problems of the existing approach consist in fundamental failure to achieve return on investment as well as chronic underfunding of the digital modernization of oncologic dispensaries. The marketing approach allows coping with these deficiencies and making optimal decisions on the implementation of the National Oncology Program as part of the concept of digital medicine, since it fully meets the present needs of the population in this program, as well as the requirements specified to it by the society, being characterized by interactivity, flexibility and high efficiency.

References The Institute for Health Metrics and Evaluation. Global Burden of Disease (2019). http://www. healthdata.org/gbd. Accessed 13 Aug 2019 International Agency for Research of Cancer. GLOBOCAN 2018 (2019). https://gco.iarc.fr/. Accessed 13 Aug 2019 Government of the Russian Federation (2019). Decree No. 1632-R of July 28, 2017 on approval of enclosed Program “Digital economy of the Russian Federation”. http://static.government. ru/media/files/9gFM4FHj4PsB79I5v7yLVuPgu4bvR7M0.pdf. Accessed 13 Aug 2019 News.ru. Statistical information provided by the Ministry of Health of the Russian Federation concerning the incidence of oncological diseases (2019). https://news.ru/health/zdoroveonkologiya-minzdrav-regiony/. Accessed 13 Aug 2019 Popkova, E.G.: Preconditions of formation and development of industry 4.0 in the conditions of knowledge economy. Stud. Syst. Decis. Control 169, 65–72 (2019) Popkova, E.G., Sergi, B.S. (eds.): Digital Economy: Complexity and Variety vs Rationality. Springer, Heidelberg (2019) Przhedetsky, Y.V., Przhedetskaya, N.V., Panasenkova, T.V., Pozdnyakova, V.V., Khokhlova, O.V.: Transformation of consumers’ behavior in the conditions of digital economy by the example of services in cancer treatment. Adv. Intell. Syst. Comput. 622, 631–637 (2018a)

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Przhedetsky, Y.V., Przhedetskaya, N.V., Przhedetskaya, V.Y., Bondarenko, V.A., Borzenko, K. V.: The role of social-ethical marketing and information and communication technologies in response to challenges of oncology. Eur. Res. Stud. J. 21(Spec. Issue 1), 377–386 (2018b) Przhedetsky, Y.V., Przhedetskaya, N.V., Przhedetskaya, V.Y., Borzenko, K.V.: Social networks as a tool of early detection of cancer. Adv. Intell. Syst. Comput. 726, 887–894 (2019) Petrenko, E., Pritvorova, T., Dzhazykbaeva, B.: Sustainable developmet processes: service sector in post-industrial economy. J. Secur. Sustain. Issues 7(4), 781–791 (2018). https://doi.org/10. 9770/jssi.2018.7.4(14) Popkova, E.G., Sergi, B.S.: Will industry 4.0 and other innovations impact Russia’s development? In: Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, pp. 51–68. Emerald Publishing Limited, Bingley (2018)

Cultural Space Digitalization: New Communication Forms Valerii L. Muzykant1(&), Olga V. Shlykova2, Elena Yu. Burdovskaya1, Roman A. Savastenko1, and Elizaveta V. Muzykant1 1

2

RUDN University, Moscow, Russian Federation [email protected], [email protected], [email protected], [email protected] Russian Presidential Academy of National Economy and Public Administration, Moscow, Russian Federation [email protected]

Abstract. The emergence of the Internet environment and rapid development of new media has already led to significant qualitative changes in the configuration of the media space. Russia has already become the sixth world in terms of the size of the Internet audience. In turn, the introduction of digital technologies - computer, broadcast, telecommunications - entailed a major transformation of both media structures and the media communication as a whole, as well as the media texts themselves. Media texts as texts of a fundamentally new type have already had a significant impact on the processes occurring directly in the stylistic system of national languages. In this context, the semiosphere, as a structure that requires decoding an encoded text. It has a number of distinctive features, and its decoding involves crossing the border, if when encoding a text message, the original language parameters take into account the specifics of the same semiotic system to which the addressee belongs. According to TNS company, out of 123 million Russians aged 12 and over, 67%, or 83 million people, used the Internet at least once in the last month. At a turning-point in 2015, the monthly Internet audience reached 78 million people aged 18 and over, and penetration, according to the Public Opinion Foundation, increased from 72% to 78% of the adult population of Russia. In capital cities Moscow and St. Petersburg, the highest penetration rate was recorded - 78% and 79% respectively, the smallest in villages (56%). Since that period, more than 50% of online transactions in Russia are made from mobile devices. According to the online panel of the TNS Web Index, 86.1 million Russians (69%) used the Internet during the last month (data for July 2016), with 62.9 million people (51.1%) using the Internet using mobile device. Based on the data of the 2015 survey, we can conclude that the growth of the Runet audience occurs according to the crisis scenario. The optimistic forecast according to TNS Web Index, was 72%, the crisis forecast - 69%. As you know, in any semiosphere ignoring the culture of the country where the message was sent to the inhabitants led to the destruction of the communication dialogue. Very often the encoded texts still remain improperly decoded because of hidden meanings, difficult to understand context, subtext and, of course, implication. Convergence processes, having moved into the sphere of media, record the changes that have taken place both © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 201–209, 2020. https://doi.org/10.1007/978-3-030-39319-9_23

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V. L. Muzykant et al. on the technological and in other directions: economic, spatial, professional, cultural and - for us the main thing - the language. As a result, new management methods were developed to quickly create an original information product for the purpose of its placement in different media environments. No wonder, the process of on line and off line integration is traditionally accompanied by duplication of content. Keywords: Multimedia culture
Informatization
Internet resources
ICT competences
Digital archives
Electronic libraries
Digitized museum collections

1 Introduction The terms “multimedia culture”, “electronic culture” and “digital culture” came to be actively used in the late 1990s. Dutch scientist Kim Veltman was one of the first to define the concept of “electronic culture”, he links this phenomenon to traditional objects of culture and art represented using of information and communication technologies (Veltman 2002). The scope of the concept includes, according to Veltman, digital libraries, virtual museums, multimedia reconstruction of monuments, semantic network on the Internet, that systematizes and catalogizes factual material of cultural studies, archaeology, ethnography, art history, historiography, etc. In 2010, Ministry of culture of the Russian Federation studied “Assessment of the impact of Informatization of cultural institutions on the quality of services (on the example of three subjects of the Russian Federation)” as a part of the first wave of a comprehensive study (Report 2010) and analyzed the current state of electronic culture in the Moscow and Pskov regions and the Chuvash Republic. The first wave of studies was devoted to the analysis of dynamics and forecasting of development of Informatization of culture. The main research task of the authors was the following: to conduct a comprehensive analysis and identify how the quality of services provided to institutions depend on the level of information resources, hardware and software in the context of the “Strategy for the development of information society in the Russian Federation” implementation; to develop criteria for assessing the social effectiveness of electronic resources and services in the field of culture and evaluate them by these criteria.; to correlate data on dynamics of electronic culture of three regions with allRussian indicators; to develop recommendations for governing bodies of national culture on equipment of cultural institutions by means of informatization and internetization to increase social efficiency of cultural policy.

2 Methodology The concept of the work was based on the understanding of culture as follows: (1) managed segment of culture, a specialized industry under the jurisdiction of the Ministry of culture of the Moscow region;

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(2) as a non-sectoral (general social) form of the state of society and public consciousness, determined by many factors, and, above all, spontaneously developing segment of electronic culture. To determine the level of informatization of cultural institutions and its impact on the quality of services, the following methods were used: a survey in which the emphasis was placed not only on the technical equipment of cultural institutions but also on the effective use of information and communication technologies to provide quality services to the population. The method of expert evaluations was used to evaluate and rank the sites of selected cultural institutions and included affixing ratings corresponding to the level of development of the site, according to the method of A. Chugunov (Borisov 2009). Quantitative measurements of the “weight” of the libraries’ sites and cultural and leisure institutions based on counting citations and site traffic were carried out by the method of S. Kholod (Kholod 2007). The survey was conducted in more than 100 large libraries and included 17 indicators characterizing the level of information readiness of such regions as the Moscow, Pskov regions and the Republic of Chuvashia. It was found that the equipment of libraries in the three regions increased significantly in 2007–2010. Thus, the level of penetration of personal computers (PCs) into libraries increased by almost 16%, and the number of PCs themselves increased by 1.4 times. As the results of the survey showed, in the three regions under consideration, the level of library equipment with computers at the end of 2010 was about 52% (according to statistics in 2009 – 46.7%, according to 2007 – 36.5%). There are significant differences between the categories of libraries: while all 100% of “Regional libraries” have PCs, in the category “Citywide and district (central) libraries and library networks” only 72.7% of institutions have PCs, and in the category “Grassroots urban, village and rural libraries and branches” only 44% have PCs. Thus, one library in the category “Regional libraries” accounts for almost 34 personal computers. In the institutions of the category “Citywide and district (central) libraries and library networks” this figure is 4 times lower (7 computers), and in the category “Grassroots urban, village and rural libraries and branches” the library has only one PC. Currently, the level of equipment of cultural institutions is determined not only by the PC, but the infrastructure as a whole, the level of information and communication security, as well as ICT competencies of employees of cultural institutions. According to the analysis, only 31.8% of all libraries with PCs have access to the Internet, 12% of libraries have local network servers, 6.3% have web servers, 17% of those with Internet access have e-mail, which is only 5% of all libraries, and it indicates a low level of equipment. The second wave of the study was conducted in 2017 by “Rosatom”, the laboratory for monitoring the cultural space of cities. One of the analysis areas was the web representation of cultural institutions (Shlykova 2017). This study was based on the existing Russian methods of web representations valuation for cultural institutions, which were designed to compile ratings of Russian regions in terms of the development of Internet resources in the field of culture. In this study, sites were evaluated in two categories: web representation of the region’s culture and technological development of Internet resources (Internet and Modern Society 2009).

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The first category included 3 indicators: “Information fulness of Internet resources”; “The degree of interactivity and the possibility of receiving services in electronic form”; “The level of the region culture representation”. The second category included “Web mastering” and “Technical availability”. The indicator “Information fullness of Internet resources” is designed to define, if sites are filled with significant information: how fully the information about institution activities is presented; whether it is an informing card of the resource or a multifunctional portal. A set of items included in the indicator “Information saturation of Internet resources” was developed for each category and the specifics of the institution (Museum, archive, etc.) was considered. The indicator “The degree of interactivity and the possibility of receiving services in electronic form” allows to identify the interactivity of the resource and checks if it is possible to discuss the activities of the institution and the quality of the resource, to make an order and pay for services in electronic form. The indicator “The level of the region culture representation” allows to estimate how much attention is paid to the culture of the region and check, if there are any announcements or reports on cultural events of the region. Indicators “Web mastering” and “Technical availability” are to evaluate the resource in terms of functionality, usability and from a technical point of view.

3 Discussion and Results The analysis showed that almost all cultural institutions of the closed cities are involved in the process of forming the Internet cultural space of the region and have their web representations that meet criteria and standards. In the analysis of the sites special attention was drawn to such indicators of web activity as the availability of the website/page, the mobile version of the site, navigation, completeness and timeliness of information, design, a feedback from the site visitors and visitors of the cultural institution, news and posters, attendance to total population in the region, the provision of electronic services (in accordance with the requirements of the Order of the Government of the Russian Federation from December 17, 2009 of No. 1993-r), the frequency of the events for different social groups. Almost all the 13 surveyed cities that represent 78 cultural institutions have their websites or social media pages. Social networks, of course, have opportunities to promote cultural services of institutions on the Internet, as well as to create brand awareness on the Internet. The representation of cultural institutions in social networks shows that information is often duplicated by the site and aims at expanding the audience. Cities-leaders of site-building (Novouralsk, in particular, the sites of the library and Museum, the site of the Drama and Comedy Theater of Ozersk, the Central children’s library of Seversk, Museum complex Lesnoy, etc.) are moving to another level of reflection, i.e. an audit of the site to identify the ways to promote it, because identifying the potential of the site should be done not to stop the quality indicator from falling, but before it, to prevent the fall and strengthen the stability of users’ attraction. Many sites are focused on its user. So, the site of the Central Children’s Library named after S. T. Aksakov is made considering child psychology, there are many quest

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games and performances that lead to reading books. The Puppet Theatre “The Golden Key” located in Zheleznogorsk city is almost the only one that has a site fully translated into English. Many actual posters leading to ticket orders appeared in a few sites. For example, in Seversky musical theatre tickets can be ordered through e-mail, and Zheleznogorsk operetta theatre has an elegant poster built into the online ticket booking. Category “Independent assessment of service quality” provides a thorough report on the results of the city’s opinion poll. The following conclusions can be made on the basis of the web-monitoring assessments of the network activity of cultural institutions. (1) the use of the latest information technologies has contributed to fundamental changes in the sphere of culture, partly transformed the professional activities of cultural institutions, although it did not fundamentally determine their success, but became a factor in the emergence of fundamentally new types of resources and services; (2) the quality of electronic resources and services depends on the competence of employees of cultural institutions in the field of information technology. There is a contradiction between users-visitors who freely use new technologies and professional personnel in the field of culture, among which the percentage of using computer technology is quite small; (3) in most of the surveyed institutions, employees are confident that electronic services are in demand but should be introduced gradually, not immediately; (4) among the social groups that will primarily use e-services, representatives of institutions identified youth, schoolchildren and groups of tourists. The creation of a virtual culture space is largely determined by the institutions that lead the cultural sphere and coordinate its activities. In areas where coordination extends to the sphere of Internet representation, the grounds for the emergence of a single virtual environment are created. Further development of the modern, revolutionary transforming society culture will expand the understanding of its basic foundations and innovative impact on the cultural “code” as a whole, but, at the same time, convince that new information technologies have come not instead of traditional social institutions, but together with them to create cultural diversity. E-Culture Net3 was developed recently, which is a European network of expert centers for research and education in the field of electronic culture, and it is a qualitatively new socio-anthropological reality. It should be noted that the digitization of information (i.e. its presentation in audio, video and other forms) is something bigger than the instrumental use of technical capabilities. This is a fundamentally different digital sphere of human socio-cultural activity. Electronic technologies and the Internet are opening previously unknown forms of human expression, changing the roles and statuses of cultural institutions. Researchers are right when they say that an institution of electronic culture, such as a virtual museum, is not just a collection of graphic images reproduced on a computer, but a new reality into which a person gets used (Shlykova 2017). Therefore, the sociological approach developed by researchers allows us to consider electronic (and multimedia) culture as a set of social institutions organized on the

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basis of modern IT-tools in order to promote the digital society: e-commerce, economics, politics, science, education, culture and others. (People, culture and society 2005). This understanding of e-culture emphasizes the fact that information society and the digital communication sphere are being formed and means not only the use of new technological formats of communication, but also new opportunities for the expression and functioning in all spheres of life of society, changes in social relations, values, norms, behaviors. At the same time, technological knowledge is an essential part of culture, embedded in its new stereotypes, rituals and norms. Accumulating different approaches to multimedia culture in the context of a new life perception and fundamentally new communication forms, we believe that this phenomenon can be defined as a new type of transforming culture, “metamorphosis” culture, which occurs due to the development of electronic communication. The lack of researches that study the initial level and state of culture in the conditions of modern internetization and mediatization of society indicates that the complex synthetic nature of the object under study is not amenable to a sufficiently complete description and study from the standpoint of any science, theory or concept. Therefore, its study requires the development of an integrated and multidisciplinary approach. A comprehensive theory of this level has not been developed yet, although such a direction of applied cultural studies as information cultural studies, which explores the strategic priorities of the global culture, as well as the digitalization of cultural heritage, the creation and transmission of electronic versions of memory institutions, as well as the genesis of new multimedia forms of artistic expression and creativity, is becoming extremely popular now (Castells 2000; Colin 2015). Modern multimedia environment with its resource and technological content is a new value, which indicates a change in the paradigm of social communications. A special space is being formed to create a super-saturated information field that almost everywhere surrounds modern man. In the era of electronic transformation, people receive different types of cultural information as a new resource for the activation of interests and level of competence through a variety of means, including electronic. Multimedia technologies lead to universal, cultural exchange, the peculiarity of which is that this phenomenon not only captures the broadcast audience phenomenon in the forms of the phenomenon, but also predicts its development, appealing to the imagination of the recipient, and “real”, through the system of sound, visual, and today tactile and aromatic series. Being a characteristic of such form of intercultural communication as network communication, multimedia promotes connection of the whole worlds and continents with individual type of perception of various types of information, artistry of communication in a Network with an unlimited set of audiovisual, interactive, hypertext and hypermedia means. Electronic objects surround us everywhere and make us completely dependent. Mornings begin with checking e-mail, and accidentally forgotten phone or tablet puts in an awkward situation, “poisons” the day not only of a business person, but also of an ordinary student. One journalist said he came to the conference without a laptop and felt naked, it is a vivid evidence of the specifics of Time, because we live now not so much in Space as in Time, we do business “at the speed of thought” (according to B. Gates) and learn in the rhythm of the click.

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It is important to take into account that electronic culture acts today as a kind of “symbolic mediator”, a kind of “symbolic slice” of the “culture of virtual reality”, where the criteria of culture is the degree of semantic, symbolic “saturation” of human creative activity (Zaitsev 2015). This “cultural content” paradigm of multimedia culture as a sign-symbolic system allows to endow all spheres of human activity, especially creative, and turn all phenomena into special signs-symbols. Values depend on interpretations of the value attitude to ideas, things and people. The distinction between value, price and market value is erased in modern culture, that lives according to the market laws. Value is measured by its price (it should be noted that in relation to cultural heritage and memory resources this conclusion is not an axiom). The modern media market is trying to adapt not only to the material but also to the spiritual social needs and aestheticizes the act of buying and selling. Viral marketing videos can be not only a way to promote a product, but also a perfectly directed project involving first-class actors, diverse shades of the game, showing it primarily as a cultural service. Different interpretations of values are important for the study of values and value attitude in the information society to the emergence of new social media, to a virtual way to transform the “view of the world”, which infinitely expand the communication space, turn a person into a slave of information civilization. At the same time, the more Network services are improved, the more challenges and threats the “culture of new opportunities” carries. At the same time, the functioning of traditional (let’s call it “book”) culture in a digitized form can proceed in two ways. Firstly, in the form of an adequate copy of the actual realities (for example, the above-mentioned electronic library, which contains scanned books). Secondly, as a result of the reception and interpretation of such a copy by the Internet community (as quoting e-books, as a blog dedicated to impressions from visiting a virtual museum, etc.). This duality can be explained by referring to the division of the Internet into two “quite autonomous regions” noted by V. Emelin and A. Tkhostov, who identify “information space and communication space” (Internet and modern society 2009). Hypothetical electronic library performs in general only informative cultural function and belongs therefore to the field of information space. However, the same electronic library, being discussed, for example, in any chat or forum, is transferred to the space of communication and functions differently. The greatest number of falsifications (incorrect citation, error in attribution of authorship, etc.) is generated and distributed in the field of communication. In this regard, the statement of M. Castells that “reliability is a very valuable quality for information hunters in the world of infinite information” (Zavershinsky 2003) is true. In relation to the infinite space of the Internet reliability is not just a valuable, but a key quality of any information, otherwise, the meaning of any content becomes questionable. In this regard, we cannot but agree with ideas that that structurally and functionally there are four processes: devaluation of constructive traditional values; fixation of destructive value orientations due to their rootedness in the mental and unconscious layers; heavy assimilation of constructive new values and rapid inclusion of destructive new values.

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4 Conclusion The cultural environment becomes fundamentally different and changes significantly under the influence of information flows, text and electronic resources distributed with their help, as well as gives rise to fundamentally different cultural forms of “symbolic capital”, i.e. digital archives, digital libraries, digitized museum collections, etc. This increases the relevance of such problems as meeting the dynamically growing cultural and information needs of modern users, developing a digital strategy for the preservation of electronic heritage, regulating cross-border flows of information and data, responsibility for the creation, use and dissemination of information, censorship, legal and regulatory support of information processes, information protection, etc. One of the paradoxes of information and communication technologies is that these phenomena are more beneficial primarily to “strong” cultures and structures with power. New technologies that allow to increase the ability of human influence on nature and himself and society, give rise to difficulties such as: • preservation of identity within the global universalization; • the emergence of new economic barriers to access to information, resulting in countries that have information and have not any; • changing the “status” of phenomena such as information and communication as they become major components of cultural influence and economic power. Socio-cultural processes in Russia are characterized by contradictory trends, among which the crystallization of the cultural image of ethnic groups and the reproduction of regional national landscapes of memory are recognized as positive. A vital element in the structure of modern view of the world is the problem of developing digital strategies for cultural development on the international and national levels, sustainable cultural negotiation mechanism between the world of things, people, the world of information and knowledge, to have guarantees long-term preservation of the essential nature of cultural heritage and its identity. A special mission in these conditions is assigned, in our opinion, to such cultural institutions, educational institutions, which with the help of modern technologies create unique resources that allow users to target in an endless stream of diverse information, to oppose the market to the true values, consistent with the principles of humanism, progress and freedom. This meets the modern cultural needs of young people and takes them away from the “trash basket” available on the Network. The further development of electronic culture will allow to expand the understanding of its specifics on the preservation of socio-cultural experience in electronic form, on the renewal of cultural institutions (including institutions of renewal of knowledge and innovative impact on the cultural “code”), as well as the broadcast of cultural experience in multimedia variations that affect the “genes” of cultural and historical. It is important to comprehend the total consequences of this development of the real history of the “humanization” of the world. Acknowledgements. The authoring team expresses gratitude to the management of RUDN University. The publication has been prepared with the support of the «RUDN Program 5-100».

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References Borisov, N., Svetlova, P., Chugunov, A.: Methods to evaluate web representations of cultural institutions of Russian regions. In: Internet and Modern Society: Proceedings of the XII Russian Joint Conference, St. Petersburg, 27–29 October 2009, pp. 72–74 (2009) Veltman, K.: Electronic culture: achievements and prospects. Inf. Soc. 1, 24–30 (2002) Internet and Modern Society: Proceedings of the XII Russian Joint Conference, St. Petersburg, October 27–29, pp. 72–74 (2009) Zavershinsky, K.: Culture and cultural studies in the life of society (2003). http://www.gumer. info/bibliotek_Buks/Culture/Zaver/03.php. Accessed 12 Nov 2018 Zaitsev, V., Shlykova, O.: Falsifications in the World wide Web: challenges of digitalization and cultural realities. Library business-2015. Document and information communications and libraries in the cultural space, education and science. In: Skvortsovsk Reading: Proceedings of the XX International Scientific Conference Part 3. Moscow State University of Culture, Moscow, pp. 41–44 (2015) Castells, M.: The Information age: Economics, society and culture. Tansl. from Eng., 458 p. HSE, Moscow (2000) Colin, K., Ursul, A.: Information and culture. Introduction to information culturology, 300 p. Strategic Priorities, Moscow (2015) Report on the research work “Assessment of the impact of Informatization of cultural institutions on the quality of services” (on the example of three regions of the Russian Federation). Summarizing Book, 39 p. ANO “Art-Plus”; LLC “Company MIS-inform”, Moscow (2010) Kholod, S.: (2007). www.kholod.jurmaster.ru/tools/ranks.php People, culture and society in the context of globalization of the modern world: Proceedings of the III International Scientific Conference. Issue 3. Electronic culture and new humanitarian technologies of the XXI century, pp. 236–240. Russian Institute of Cultural Studies, Moscow (2005) Shlykova, O.: Culture: signs of the information revolution. Revolution and culture: through the prism of time: Monograph. Ural Federal University named after. The First President of Russia Boris Yeltsin, Ural Department of scientific and educational cultural society of Russia. Editorin-chief N. Kirillova, pp. 156–167. Publishing House of Ural State University, Yekaterinburg (2017)

Digitization and Problems of National Culture Oksana Y. Yatsenko(&) and Irina E. Starovoytova State University of Management, Moscow, Russia [email protected], [email protected]

Abstract. The article considers the problems that arise during the implementation of the digital economy as a global project. The following philosophical methods were used in the research: analysis, synthesis, generalization, abstraction. Besides, the authors used analytical-descriptive, hypothetical-deductive and dialectical research methods. Results: 1. The ambiguous consequences of the digitalization process are discussed: the shortcomings of market and state digitalization strategies, the erosion of the value system of a cultural community, the vulnerability of some demographic groups, the contradictory nature of the digitalization of social management, the confrontation between artificial intelligence and national culture. 2. The conclusion about “multiplication” of cultural and civilizational vectors of developing society is made. 3. Confidence is expressed in the ability of man as the main addressee of innovative transformations to contribute to the preservation of national cultural values in the face of the challenges of globalization. The results of the study can be used in further studies of the problems facing the national culture in the process of digitalization, in the development of proposals and recommendations to a wide range of government, commercial and public organizations and institutions for use in management activities. Keywords: Digital economy culture
Globalization JEL Code: A13


Information economy
Digitization
National


F29
O31

1 Introduction Digital technologies are the basis for the information society, which is part of the systemic phenomenon of globalization (Meadows et al. 1972; Peccei 1977). There is no unity in the scientific community on the question of naming this stage of social development. Thus, Z. Brzezinski calls it “technotronic” (Brzezinsky 1970); D. Bell – “postindustrial” (Bell 1999); E. Giddens - “post-traditional” (Giddens et al. 1991); R. Dahrendorf and P. Drucker “post-capitalist” (Dahrendorf 1959; Drucker 1993); A. Touraine – “programmable” (Touraine 1992). The basis of this stage of civilizational development is the digital economy. The digital economy began in developed countries, and today penetrates those countries where there are no prerequisites for its implementation at the expense of local resources. Optimistic scenarios for the implementation of the digital economy as a global project raise the question of its impact on individual cultural communities, © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 210–214, 2020. https://doi.org/10.1007/978-3-030-39319-9_24

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which are affected by advanced means of communication and technological innovations in the field of Economics, although they are not independent players in the track of progressive development. The impact of digital technologies is not limited, however, to the economic sphere. In our opinion, national culture is in danger.

2 Background and Methodology During the study, such classical theoretical philosophical methods as the method of abstraction, analysis, and synthesis were used. In addition, the authors used the analytical-descriptive method for preliminary systematization of the accumulated data, the hypothetical-deductive method when proposing the hypothesis of the study and the dialectical method, which requires to consider the developing object in all the diversity of its sides, from the point of view of its internal inconsistency. The goals and objectives of the information society are set and implemented in the cultural space, which has significant resources that can both accelerate the process of introduction of modern technologies and actively prevent such introduction. The dialectical confrontation between culture and civilization in the implementation of digital technologies has both general cultural and specific national characteristics, due to the public response to global challenges and factors related to the history and traditions of such societies. In the formula of national success, technological progress and the public good are equalized, which excludes the ethical components and assessments of progress. This is signaled, in particular, by the education system focused on the growth of the information capacity of disciplines to the detriment of moral components (Yatsenko 2013). National culture may be completely unsuitable for such a direct intervention in the social space created by generations. Therefore, every culture is naturally critical to the introduction of innovations of this kind. The interaction of economic, political, spiritual factors of social life has been described by many theoretical scientists. (Weber 2016; Durkheim 1972; Comte 2011; Spencer 2012) and other philosophers defined society as a dynamically changing being, which provides mainly linear progress under the influence of objective and subjective factors of social management. But if we consider digitalization not as an obviously progressive stage in the development of society, we can identify several conflicts that accompany the process of digitalization.

3 Discussion and Results 3.1

Digitalization Through Myths

Digital technologies come into a cultural space in which there are no prerequisites for their existence. Therefore, the development of the idea of digital progress in any culture (especially one with a backward economic structure) takes place through language. And this is the language of myth because it is myth that allows to realize cultural community as part of a broad general cultural paradigm. The meta-discursive nature of

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myth, as a piece of knowledge outside of this living culture, helps to perceive the modern phenomena of progress no worse than it did in the early historical epochs. The need for myth is the need for a holistic worldview, justified and secured by centuries of cultural practices. “There is in a sense a paradox, as the postmodern era distances itself from the possible myths, but the people of this era do still need myths or at least their simulation” (Lyotard 1979). The belief in the unconditional progressiveness of digitalization is also mythological, as well as the belief that the informatization of society is an unconditional good, despite the lack of good reasons for such optimism. Myths readily perform the social order for a progressive image of the future and integrate society into the world development scenario. 3.2

Disadvantages of Digitalization Strategies

One of the strategies of digitalization is liberal (market). Beneficiaries of the processes of digitalization of society offer as a universal market strategy and rely on the “selfregulation” of the market, which, on the one hand, provides freedom of entry into the market for new technologies and businesses specializing in highly intelligent products, on the other hand, involves the process of “monetization”, convertibility of this kind of activity into an economic product. The investor and the consumer have an illusion that such products are cheap. Especially often the fruits of intellectual activity become underestimated in those societies that are habitually focused on significant resource costs arising in the process of material production. Another disadvantage of this strategy is the “free” privatization of intellectual property of inventors by entities investing in start-up projects. As a result, a significant part of breakthrough technologies is left undeveloped, as it was alienated from its author. Another part of the alienated intellectual product becomes a technological resource of giant companies, which do not need to change the technology, as the production is already profitable. The second strategy of digitalization is state (authoritarian). The state can act as the initiator and moderator of the digitalization process. Digitalization is declared as a social need, a radical way to improve the standard of living of the population and increase economic efficiency. The entire cultural community, the entire population of the country is undergoing such digitalization. The authoritarian strategy of introducing technology ignores the interests of humanity in favor of the interests of the national community. All the energy of technological breakthrough is directed to the creation of destructive weapons, etc. 3.3

Cultural Problems of Digitalization

It is necessary to comprehensively analyze the penetration of globalization under the guise of digital technologies into national and cultural communities. The culture approach allows to define the resistance of national cultures in the conditions of erosion of value systems on a global scale. When considering this phenomenon in the legal field, one can see a legal conflict: the legal personality of digital technologies and artificial intelligence opposes the established legal personality of the national culture, traditionally enshrined in the national mentality and legal field. Another problem of

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such penetration is the vulnerability of certain demographic groups. One such group is youth (Starovoytova 2017). Fragmentation of individual and social consciousness, generated by information civilization, leads to omnivorous, uncritical pluralism in many areas of society: science, education, morality. A young man in a high-tech civilization is cut off from the roots, lonely, devoid of values, not integrated into society, embittered. And from all this increases its suggestibility, pliability to any manipulative influences. And this is another problem of modern society, which needs to be discussed, understood and solved. The digitalization of social management is also a serious problem. Historically developed (Yatsenko 2014) and created by new global patterns of social management structures do not cancel modern “redundancy” of culture, which affects the digital environment: economics, communication, society. Digitalization of social management has an ambivalent orientation: on the one hand, it can certainly contribute to the structuring and simplification of systemic interactions in social practice of various levels and degrees of complexity. On the other hand, the digitalization of the work of managers leads to the erosion of values, to the loss of national and cultural identity in this area of society.

4 Conclusion In the context of globalization, the cultural and civilizational vectors of human development “multiply”. The technological consolidation of a globalizing society opposes the processes of national self-identification, unification within the framework of a common cultural tradition and historical memory characteristic of individual peoples and regional communities. The methods offered to such social associations of “entering” into the progressive, civilized, advanced space of modernity can be rejected. Scenarios of transformation of national cultures into global segments of the world community often do not coincide with those that scientists develop as the most obvious (Costanza 1999). Human, as a part and bearer of the national cultural order is the addressee of innovative processes, will exist in the rapidly changing reality of a new, digital social being. And the extension or reduction of the life cycle of the national culture, which constitutes the “natural” social environment of its habitat depends only on him. Digitization is the current stage of development of global processes, in which the individual, in the process of awareness of self-existence, must take a position of either an active subject or realize helplessness and remain in the position of a passive spectator of global development and become the target object of the digitization.

References Brzezinsky, Zb.: Between Two Age, p. 9. The Viking Press, New York (1970) Callenbach, E.: Ecotopia: The Notebooks and Reports of William Weston. Banyan Tree Books, Berkeley (1975) Castells, M.: Information technology, globalization and social development, pp. 222–225. UNRISD, Geneva (1999)

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Costanza, R.: Star Trek, Ecotopia, Big Government or Mad Max? Futurist, no. 2, pp. 23–38 (1999) Comte, A.: Spirit of Positive Philosophy [Text]. Transl. from FR. By I. Shapiro, Foreword by M. M. Kovalevsky. URSS, Moscow (2011) Dahrendorf, R.: Class and Class Conflict in Industrial Society, pp. 51–59, 98–105. Stanford University Press, Stanford (1959) Drucker, P.F.: Post-Capitalist Society. Harper, New York (1993) Ellul, J.: Le systeme technicienne. “The Technological Society” (1965) Giddens, A.: Fate, risk and safety. Thesis, vol. 5, pp. 107–134 (1994) Giddens, A.: Modernity and Self-Identity, pp. 2–3. Polity Press, Cambridge (1991) Lyotard, J.-F.: The Postmodern Condition. Moscow, St. Peterburg (1998). Transl.: Lyotard, JeanFrancois La condition postmoderne Lyotard Jean-Francois La condition postmoderne Les Editions De Minuit (1979) Meadows, D.H., Meadows, D.L., Randers, J., Behrens, W.W.: The limits to growth: a report for the club of rome’s project on the predicament of mankind, New York (1972) Peccei, A.: The Human Quality. Pergamon Press, Oxford, New York (1977) Spencer, H.: Education: Intellectual, Moral, and Physical [Text]. Transl. from eng. by M. Lazareva, 3rd edn. LIBROKOM, Moscow (2012). 228 p. Weber, M.: Economy and Society: Essays on Understanding Sociology, vol. 4. Higher School of Economics, Moscow (2016) Starovoytova, I.: “On some negative consequences of the global spread of artificial intelligence” step into the future: artificial intelligence and the digital economy. In: Proceedings of the International Scientific and Practical Conference, pp. 157–161. State University of Management (2017) Yatsenko, O.: Basic approaches to understand the nature of social management in the history of philosophy. Gazette of the University (State University of management), no. 9, pp. 301–304. State University of Management (2014) Yatsenko, O.: Higher school in the modern information space. In: Actual Management Problems - 2013: Materials of the 18th International Scientific and Practical Conference, no. 4, pp. 142– 146, 248 p. State University of Management SUM (2013)

The Integration Vector of the Non-institutional Political Process Fatima A. Shebzukhova(&) and Ahmat A. Ebzeev The Karachay-Cherkess Republican Institute of Professional Development of Educational Workers, Cherkessk, Russia [email protected], [email protected]

Abstract. The article reveals the ethnopolitical aspect of the reintegration of the political space in the North Caucasus. This study will be carried out with the use of empirical material and the results of an expert survey of various subjects of the Russian Federation, including the multi-ethnic Karachay-Cherkess Republic. Keywords: Reintegration
Disintegration
Non-institutionalized political process
Ethnos
Karachay-Cherkess Republic
North Caucasus

The study of the reintegration and disintegration problems in the political space allows developing several approaches in the theoretical analysis of the processes of ethnopolitical integration in the internal Russian geopolitics. The structure of the political space in the territory traditionally inhabited by different ethnic groups and confessions, such as the North Caucasus, has some peculiarities. The article aims to reveal the ethno-political aspect of the political space reintegration in the North Caucasus. The study of political reintegration processes in the geostrategic space of the North Caucasus is be carried out with the involvement of empirical material and the results of an expert survey in several regions of the Russian Federation, including the multiethnic Karachay-Cherkess Republic. Within the context of international relations, political integration or reintegration is considered as a part of European integration, although similar processes take place in other regions (Morozov 2005). Famous political strategist Z. Brzezinski, political authority M. Albright and other political and scientific figures of the United States adhere to the idea of a unipolar world and the superiority of the United States over other countries of the world (Krauthammer 1990–1991). Authoritative futurologist F. Fukuyama believes that the ideological evolution has ended, and here is the end of liberal democracy as the only correct form of government (Tsygankov 2002). According to American analyst D. Calleo, American globalism is stylized and means “unipolar Pax Americana” but not the diverse world of opinions in which power must be shared. The gap between fixed unipolar consciousness and increasing pluralistic ideas is in fact constantly growing, which may cause a certain danger (Calleo 1999).

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Neo-realist theories optimistically formulate the idea that the role of states in the future still will be strong, despite all the processes of convergence or integration into a single political, economic, cultural and information space (Mearsheimer 1990). Theories of neo-institutionalism assign a major role to transnational organizations, both political and economic. Various opinions are expressed on that, as, for example, the “Concert of Powers” by R. Rosecrans. The powers agree on the common ideological and political principles of the coalition, which over time attracts an increasing number of countries that collectively cannot balance this group (Rosecrance 1992). The path to reintegration is complicated because the structure of international relations is sophisticating and the number of actors in the international political arena, as well as the number of powers and transnational corporations and associations, is increasing. This cultural homogeneity was discussed by such supporters of the realistic direction as R. Aron and H. J. Morgenthau (Morgenthau 1985). I. Wallerstein believes that integration processes are inherent in the periphery, where different states and civilizations collide and contend (Cheshkov 1992). I. Wallerstein and other like-minded people, such as G. Derluguian emphasize that the peripheral areas are influenced by the leading central powers (Derluguian 2001, pp. 55–80). In a globalizing society, there is no need for Imperial administration, due to the legal literacy of the civilian population. In the geopolitical space as regulatory legal mechanisms are supranational economic organizations-WTO, IMF, clubs of world elites on interests as Bilderberg club, Paris club, Davos, Salzburg, religious denominations, funds that determine scholarships and grants for scientific research, nongovernmental organizations, and many others. Theorists of globalization are criticized by some scientists and analysts in the United States. Among them are Barber (1995), Korton (1995), Daly and Cobb (1989), Buchanan (1998). J.Goldsmith is a European scholarly critic of globalism and counterglobalism, he opposed the “Washington consensus” (Goldsmith 1994). K. Walts is an American analyst who believes that for the sake of national, religious or ethnic goals, people are willing to sacrifice their well-being (Waltz 2000, p. 52). Some researchers consider globalization profanity, a myth that was designed to hide the true confrontation and confrontation between the world’s economies. Among such critics are Hirst and Thompson (1996). John Gray as a representative of American foreign policy says that globalization is a dangerous and erroneous project, even though America and several major powers have advantages from this process (Broad, Cavanagh 1999). Using Marxist methodology Tilly (1992), Arrighi (1999), Anderson (1974), Mann (1986–1993) and others understand integration processes as the predominance of corporate globalism in capitalist systems, the dominance of corporations and banks. I. Wallerstein supports this view and fears that the definition of “citizen of the world” is deeply ambiguous. This is a ploy to have the opportunity to preserve special privileges (Wallerstein 1974–1989). Two-thirds of financial flows and goods account for such developed Northern powers as the United States, Germany, Britain, Canada. The same countries profit from globalization (Weiss 1998).

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The redistribution of power in the world has left many countries outside the new system of governing or dominant countries. The government of those countries that are not in the privileged stratum, cannot determine the political and economic course of their state, as they are limited by the rule of a superpower (Friedman 1999). Globalization, by deceptively promoting freedom, actually reduces it and often resorts to repressive methods. R. Menon and I. Wimbush believe that this situation leads to the fact that ethnic minorities acquire a wider space for maneuver, as the state loses leverage over these minorities since they become transparent to the world community (Menon, Wimbush. Asia in the 21st Century. Power Politics is Alive and Will 2000). “The exclusion of entire societies from the process of global modernization increases the risk of ethnic conflicts, terrorism, armed conflicts”, – states H. de Santis (de H. Mutualism 1998–1999). Analysts of the North Caucasus, who deal with issues of reintegration in this region, are interested in Eurasian criticism of globalization processes (The Eurasian Project: the Caucasian Vector 2005). Eurasians consider the North Caucasus region problematic for the implementation of this project. The Caucasian region, according to them, should be transformed not into a set of monoethnic entities included in the composition of any regional state, but into a single Federation based on common values and characteristics (Eurasian mission, program materials of the “International Eurasian Movement” 2005). An interesting analysis of political reintegration was conducted by S. Huntington in the context of the civilizations clash (Huntington 1993). The disintegrating factor in his theory is performed by the process of culture collision. It means that fear, ethnocentrism, chauvinism and xenophobia lead to conflicts and increase them, and it happens much faster than mechanisms are created to confront these phenomena. Like-minded such ideas as Galtung (1981). H. Mackinder in the “The Geographical Pivot of History” at the beginning of the 20th century named the territory, which bordered by the Caspian, Black, Mediterranean, Red seas and Persian Gulf, as “Five Seas”. Later such authors as S. Peres and A. Nairn named this region “the New Middle East”, Z. Brzezinski – “Eurasian Balkans” in 1997, and J. Camp, R. Garkavi in 1997 – “the Greater Middle East” (Maksimenko 2000). These authors note the functional value of this region since it contains 40% of the world’s natural gas reserves and 70% of the world’s oil reserves. German researcher K. Haushofer began to raise integration issues in geopolitics. He drew from the works of Ratzel, Kjellen, Mackinder, Vidal de la Blache, Mahan an interesting dual phenomenon of confrontation between maritime forces and continental or in other words thalassocracy (power through sea) against tellurocracy (power through land)”. The existing dualism of naval forces and land forces put Germany in the difficult position of geopolitical self-determination. The only option to form a great future for Germany was an alliance with Russia, with which it was possible to form a “New Eurasian Order” and redraw the continent to bring it out of the Maritime control. This is the doctrine of geopolitics of K. Haushofer and his associates. In the Russian tradition of geopolitics among such authors as K. Hajiyev, A. Dugin (Dugin 1997), M. Delyagin, M. Ilyin, A. Panarin, etc. there is a belief that the Caucasus has been both the subject and object of global processes for several centuries. Other

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scientists as Lapshin (2006), V. Dzidzoev, V. Chernous (Chernous 2004), G. Novikova, V. Yurchenko, I. Dobaev and others analyzed integration processes in the Caucasus in the context of national security. American scientists A. Cohen, Z. Brzezinski, G. Hale investigate geostrategic problems of the region. A. Bogaturov, V. Konovalov, V. Ryabtsev and others tried to describe the role of the Caucasus region in modern international relations. Some politicians and political scientists, such as V. Surkov, D. Medvedev, Y. Latynina, A. Prokhanov, V. Krupnov (Krupnov 2003), describe the foreign policy of the Caucasus region. Salnikov, Ivashov, Dzhegutanov (2006) have a philosophical understanding of the processes and problems caused by globalization in the multiethnic region. V. Tsymbursky, L. Ruban, N. Lomagin and others suggest considering the political factors of regionalization of the North Caucasus as a geostrategic subject and object. Political scientist A.V. Lubsky formulated three challenges that regionalization presented to Russia. They are strengthening the vertical of state power, carried out by V. V. Putin, considering regional specifics in the development of regional policy, and finally, the training of new management personnel for the new socio-economic and political conditions of Russia (Lubsky 2005). The issue of political reintegration of the North Caucasus was not analyzed separately. Therefore, we have tried to analyze the geostrategic aspect of reintegration processes in the North Caucasus. Now we understand geostrategy as a system consisting of three elements: the strategy of geopolitics, geoeconomics strategy and geoculture strategy. Each of these theoretical elements has its own direction in paradigms. 1. In geopolitics, the subject is the state, and the content is the force of deterrence, the balance of power; 2. In geoeconomics, the main subject at present are transnational companies, and the content of activity are trade, competition, cooperation; 3. In geoculture, the subject is the person, and the content of the action are dialogue, cooperation and trust (Kuznetsov 2003). Features of reintegration processes in the North Caucasus were the object of the expert survey conducted by the author. The survey was attended by representatives of all regions of the Russian Federation, relating, in our opinion, to the North Caucasus region. Experts identified several key features. Thus, the modern political elites of the subjects of the Russian Federation of the North Caucasus no longer demonstrate open separatism but try to build such relations with the federal center, in which the demonstration of loyalty to the center would be combined with the right of regional elites to “internal political autonomy”. The study of the reintegration of the political space of the North Caucasus allowed the author to draw a few conclusions. Political reintegration is understood as an objective process of overcoming structural powerlessness in modern interethnic relations, avoiding ethnocentrism, destroying nationalism, suppressing ethno-religious radicalism and xenophobia through the creation and promulgation, assimilation and translation of common values, cultural norms, as well as increasing the interest and need for economic cooperation.

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The success of reintegration processes can be assessed through the following parameters: • The needs of stakeholders, the availability of motivation; • Various forms of manifestation: legal, economic, political, military, etc.; • Availability of such resources for reintegration as power, economic, financial, socio-political resources, etc.; • Level of interaction in the reintegration process: interstate, interregional, intraregional, etc.; • The degree of depth, breadth, intensity of reintegration processes. The need for political integration of the North Caucasus regions arose for several reasons, which were realized by the people and the ruling elite. It should be noted also that there is the need to ensure security, as well as to keep all life support systems in order (energy, communications, food systems, etc.). To varying degrees, all regions of the North Caucasus experience similar needs and differ only in the motivational component. The geopolitical approach and methods may differ and contradict each other. Therefore, by designating different geostrategic landmarks, it is necessary to simultaneously identify the determinism of the driving forces of political disintegration in the North Caucasus.

References Anderson, P.: Lineages of the Absolutist State. New Left Books, London (1974) Arrighi, G.: Globalization and historical macrosociology. In: Lughod, J.L. (ed.) Sociology for the Twenty-First Century, pp. 117–133. University of Chicago Press, Chicago (1999) Barber, D.: Jihad vs. MacWorld. New York University Press, New York (1995) Broad, R., Cavanagh, J.: The death of Washington consensus?. World Policy J. (Fall), 86 (1999) Buchanan, P.: The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy. New York University Press, New York (1998) Calleo, D.: The United States and the great powers. World Policy J. (Fall), 12 (1999) Cheshkov, M.: Criticism of the world system approach and the concept of capitalism by I. Wallerstein. Scientific and analytical review, Moscow (1992) Chernous, V.: Caucasus in the system of Eurasian security: from bipolarity through Atlanticism to global security. Caucasus region: ways of stabilization. In: Volkov, Y. (ed.) Proceedings of the International Scientific Conference, Rostov on Don, pp. 44–69 (2004) Tsygankov, A.P.: Failed dialogue with Fukuyama. Of Western ideas in a multicultural world and the responsibility of intellectuals. Quest. Philos. (8), 3–23 (2002) Daly, H., Cobb, J.: For the Common Goods: Redirecting the Economy toward Community, the Environment, and a Sustainable Future. Boston University Press, Boston (1989) Derluguian, G.: The capitalist world-system and socialism. In: Motyl, A.J. (ed.) Encyclopedia of Nationalism. Fundamental Issues, vol. 1, pp. 55–80, New York (2001) Dugin, A.: Fundamentals of geopolitics, Moscow (1997) Eurasian mission (program materials of the “International Eurasian Movement”), Moscow (2005) The Eurasian project: the Caucasian vector. South Russian Review, no. 30, Rostov on Don (2005)

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Friedman, Th.: The Lexus and the Olive Tree. New York University Press, New York (1999) Galtung, J.: Western civilization: anatomy and pathology. Alternative 7(2), 145–170 (1981). (Fall) Goldsmith, J.S.: The Trap. New York University Press, New York (1994) Huntington, S.: The clash of civilizations. Foreign Aff. 72(3), 22–49 (1993). (Summer) Hirst, P.: The Global Economy: Myths and Realities. Int. Aff. (73) (1997) Hirst, P., Thompson, G.: Globalization in Question: The International Economy and the Possibilities of Governance. Cambridge University Press, Cambridge (1996) Korton, D.: When Corporations Rule the World, West Hartford (1995) Krauthammer, Ch.: The unipolar moment. Foreign Aff. 70(1), 23–33 (America and the World 1990–1991) Krupnov, Y.: Russia: between the West and East, St. Petersburg (2004) Krupnov, Y.: To become a world power, Moscow (2003) Kuznetsov, V.: Sociology of culture of ideological compromise: geocultural aspect. Security of Eurasia, no. 4, October-December, p. 352, Moscow (2003) Lapshin, V.: On the need to develop a meta-methodology of ideological concepts of national security of Russia. The Role of ideology in transformational processes in Russia: national and regional aspects: Proceedings of the International Scientific Conference April 20–21, 2006 Part 2, Rostov on Don (2006) Lubsky, A.: Conflictogenic factors in the South of Russia: research methodology and social realities, Rostov on Don, p. 6 (2005) Mann, M.: The Sources of Social Power, vol. I–II. Cambridge University Press, Cambridge (1986–1993) Menon, R., Wimbush, E.: Asia in the 21st Century. Power Politics Alive and Will. The National Interest (Spring), pp. 84–85 (2000) Mearsheimer, J.: Back to the future: instability in Europe after the gold war. Int. Secur. 17(1), 5– 56 (1990). (Summer) Morgenthau, H.: Politics Among Nations. The Struggle for Power and Peace, pp. 233–240, New York (1985) Morozov, V.: Comprehension of integration in Europe. Int. Processes (3), 154–158 (2005) Wiener, A., Diez, T. (eds.): European Integration Theory. Oxford, New York (2004) Maksimenko, V.: For a detailed discussion of traditional geopolitical views on the “Five Seas”. Central Asia and the Caucasus: the Foundation of geopolitical unity, no. 9 (2000) Rosecrance, R.: A new concert of powers. Foreign Aff. 71(2), 64–82 (1992). (Spring) Salnikov, V., Ivashov, L., Dzhegutanov, B.: The philosophy of globalization (methodological foundations of the geopolitical doctrine of Russia), Monograph, St. Petersburg (2006) de H. Mutualism, S.: An American strategy for the next century. World Policy J., 47 (1998– 1999). (Winter) Tilly, C.: Coercion, Capital, and European States, AD 1990–1992. Blackwell, Oxford (1992) Waltz, K.: Globalization and American power. Natl. Interest (spring), 52 (2000) Wallerstein, I.: The Modern World-System, vol. I–III. Academic Press, San-Diego (1974–1989) Weiss, L.: The Myth of the Powerless State: Governing the Economy in a Global Era, p. 186. Cambridge University Press, Cambridge (1998)

Digitization of the System of Public Administration as the Leading Trend of Its Modernization in the Modern Socio-Economic Conditions Konstantin V. Vodenko1(&), Sergey S. Chernykh1, Olesya E. Labadze1, Evgeniya V. Zazulina2, and Roman K. Litvyak1 1

2

Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia [email protected], [email protected], [email protected], [email protected] Institute of Service and Business (Branch), Don State Technical University, Shakhty, Russia [email protected]

Abstract. The authors analyze the perspectives of digitization of the Russian system of state management, which development takes place against the background of crisis phenomena in the national economy. Studying the specifics and dynamics of digitization of state management in Russia allows concluding that the process of digitization corresponds to the global trends of modernization, showing high growth rates. Positive aspects of digitization of the system of state management are connected to increase of the general level of transparency and real economic profits, related to intensification and quality of management, which takes place as a result of real time economy. Possible negative tendencies include the risks of precarization of able-bodied population, including the representatives of Russian civil servants of the lower and medium levels. Keywords: Digitization “Information” capitalism


Digital economy
System of state management

Online state services
“Digital” bureaucracy

1 Introduction At present, the fact of transition to the new economic mode has become inevitable and irreversible; it allows using digital technologies for increasing the quality and speed of management of economy and society, offering innovational products and services. The modern global economy underwent large transformations when entering the age of “digitization”, which will only increase in the future. It is obvious that digitization of economy expands the time of leisure and provides opportunities for involvement with “new” business practices (start-up) and successful business projects. The Russian experts are optimistic and confident that Russia in ready to the “digital age”. For example, according to the official data of the Ministry of Communications, “as of year-end 2015, 39.6% of population used online state services in Russia, while © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 221–227, 2020. https://doi.org/10.1007/978-3-030-39319-9_26

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the 2016 indicator constituted 51.3%. More than 50% of Russians use online state services” (Zemskova 2017). Thus, large significant growth of labor efficiency by means of time economy and overcoming hard manual labor (by means of robotization of production), and wide implementation of online services that can raise the effectiveness of the work of the tax system are a fact that already came into life. According to most experts, Russia has a large potential of “digitization” (What is the Digital Economy 2018), which could become an important resources of digitization of government and social management bodies. A lot of citizens, especially youth, cannot conduct their activities without online services and the economic transactions in the digital environment of the global society. As a result of digitization, tiresome waiting lines in different establishments become the past, and this is a background for qualitative growth of Internet trade.

2 Materials and Methods More than fifty years ago, the scientific literature provided outlines of the future – in the wide sense – “information” society, which is to replace the society with the “classical” industrial basis. Digitization of economy and various segments of social management and control becomes the leading trend of development of civilization of the future. The earliest works, which appeared more than fifty years ago (D. Bell and E. Toffler), devoted to “information” society”, has a rather futuristic character and, in the course of real development of civilization, were corrected in view of empirical data and real division of labor. Within the concept basis of the studied problems, it is necessary to mention the works of such authors as D. Bell (Bell 1999), E. Toffler (Toffler 2010), and C. Clark (Clark 1991), as well as Russian scholars V.L. Inozemtsev (Inozemtsev 2014) and S.D. Valentey (Valentey 2015), who strive to adapt the discourses of various “postindustrial” theories to the real problems of the Russian modernization. Thus, for example, an important indicator of the “digital” economy will be large growth of the tertiary sector of economy by means of reduction of the share of industrial production in GDP of the leading technological countries. However, this does not mean that developed “digital” economy excludes the development of “new” industrial spheres – on the contrary, it develops in cooperation with the latter. This is especially important for the Russian economy, which undergoes stagnation caused by slowdown of growth rates of labor efficiency, loss of skilled engineering personnel, and decrease of the general technological equipment of industrial companies. According to (Kumar 1978), the provisions devoted to the modern “postindustrialism, which have their origin in the classical works of D. Bell, it is possible to see the development of the Weber principle of continuing rationalization of capitalistic societies. The main provisions of Y. Khabermas (Khabermas 2007) on intensification of the processes of instrumental rationalization of bureaucracy and practices of management, implemented on the basis of total technologization of the modern society, which takes place in the conditions when science and technology acquire the functions of “ideology”, could be treated in the same way. Large contribution into studying the “digital” society and the “new spirit of capitalism” was made by French scholars Luc Boltanski and E. Chiapello (Boltanski and

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Chiapello 2011), which in their works emphasize the “network vision of the world” and development of new forms of management and coaching. It is interesting that the largest modern researcher of the global “information” order M. Castells (Castells 2000) in his description of information society also prefers to speak of the age of “information” capitalism. That’s why it is necessary to agree with the opinion of the British theorist F. Webster that “digital” or “global network society in which we find ourselves today is a fuller implementation, or transmutation, of well-known principles of the capitalistic society” (Webster 2004, 370). Thus, as a result of analysis of the sources on these problems, it becomes obvious that the theoretical and methodological basis of studying the perspectives of digitization of the system of state management in Russia is in the course of the Weber and post-Marxist sociology, oriented at studying the transformations of “later” capitalism due to growth of information, interactive and digital technologies, development of network society, and general problems of rationalization of management.

3 Results At present, formation of the digital economy and practices of state management of the social sphere is a visible process, which could be seen by most citizens of Russia – even those who have minimum knowledge in the sphere of economics. Thus, “the Russians take for granted the presence of the Internet, which provides all necessary information – this means that people positively accept all new electronic opportunities and are ready to expand the level of digital technologies in their life” (Fedorkov and Biryukov 2017). That’s why public expectations – despite the forecasts of the opponents of digitization – are aimed primarily at positive acceptance of further expansion of the digital sphere. However, formation of the digital economy is bringing additional risks and threats, connected to security problems – of which the government is fully aware. Besides, another problem is growth of cybercrimes in the financial sector of the digital economy. The issue of usage and limits of legitimacy of cryptocurrensies and the corresponding operations with them is still unsolved. However, it is obvious that digital technologies will become a powerful attractor of any national economy as a subject (global player), who strives for successful economic integration in the global society and overcoming or substantial correction of own dependence on export of hydrocarbons (Kamko and Kirdina-Chandler 2018). Flexibility and speed in management of various social segments by means of development of human resources and capital are the priority of development of the modern economy, which is based on achievements of digital programs of development. Thus, complex improvement of the work of the modern Russian bureaucracy requires the increase of quality of management of the Russian resources (primarily people, money, and time spent for achievement of a certain benefit). Reduction of time required for conduct of certain procedures will increase the speed of implementation of the programs of “routine” work with population and will raise labor efficiency. It is obvious that digital economy largely modifies human communication, making it more accessible, which, in its turn, makes interaction between citizens and the

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bureaucratic system easier. “Regular economy is economic activities of society and the totality of relations that form in the system of production, distribution, exchange, and consumption. The digital economy is a part of economic relations that are conducted by the Internet, mobile communications, etc.” (Solozhentsev 2018). Besides, the digital economy creates a large number of network structures, which increase the flows of exchange of goods and services, building various “rhizome” clusters. Replacement of the large number of hierarchical business structures by their network analogs positively influences the development of economy on the whole, creating additional niches for online entrepreneurship. As a result, under the pressure of the “digital” economy, the very process of buy and sell also transforms – and, therefore, the role of specialists in the sphere of professional marketing and promotion of new brands, goods, and services also changes. Thus, the experts on new economic mode suppose that “the new position of new digital economy could be merging of marketing and process of buy and sell into one process. Due to “World Wide Web (w.w.w.)” – the system that has almost no limitations – each product becomes accessible everywhere where online commerce is organizes. A gap between the desire and purchase in the “online” regime disappears: the search for the desired product and its purchase are not divided by physical and sensual barriers – they are merged into one process in the conditions of the digital economy” (Zubarev 2017, 183). In view of the previously determined tendencies, it is possible to forecast that in the near future the electronic network will be more commercialized, which may also lead to experience of large rationalization of consumption by means of reduction of “toxic” expenditures and reduction of effect from unfair advertising. Moreover, implementation of digital technological platforms will lead to expansion of freedom of buyers, increasing communication between them and sellers (providers) of goods and services. Real analysis of comments on the Internet allows for quick conclusions on the needs of consumers, who are able to influence the economic projects of the manufacturers, including those that provide various contents. It is expedient to pay attention to the fact that certain hi-tech corporations (primarily, Google) already turned their projects into the segments of the global AI, which helps in search for information and actively studies preferences of the customers who are in the field of its influence.

4 Discussion Thus, the modern tendencies of the global economy continue to hew to the course of the global network – the Internet – which allows, based on implementation of information and digital technologies, stimulating further accumulation of human capital and development of AI. Thus, the first position in the system of state regulation of the socio-economic sphere should belong to the technologies of smart management of various objects of social infrastructure (including unmanned transport vehicles, etc.). Technological (digital) platform becomes in the “new” economy the most important generator of provision of services that are oriented at the needs of a specific individual, achieved as a result of qualitative increase of monitoring of the consumer environment. “Digital technological platform (technological and digital basis of the

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new economy) will provide unique opportunities for implementing the methodology of selective and targeted interaction between socio-economic subjects. Formation of data bases and large arrays of data (BigData), as well as emergence of new digital technologies of work with information on supercomputers, allows each individual to determine the subjects’ preferences and to generate targeted influences” (Zubarev 2017, 183). Thus, in the conditions of digital globalization, the real and effective tool of management is individual approach to the participant of relations – consumer of provided online services. On the whole, against the background of quick development of the digital economy, it is possible to observe emergence of “new” economic cultures and sub-cultures, which are the result if intensification of communications in the sphere of civil society, which becomes also “digital” in its turn. New technologies lead to growth of autonomous “charity” and emergence of charity projects of a new type, when “subscribers” are ready to finance the bloggers and the “content” that are interesting for them. In its turn, this raises the flexibility of “new” media that work via the Internet. Thus it becomes obvious that whole segments of the “digital” economy turned into rather successful (“informal”) institutes: – donating – form of donation received by Internet actor (as a rule, a blogger who conducts “creative” activities for creation of information and other products) for content that is presented via the Internet; – crowdsourcing – attraction of amateur specialists (“fans”) and creative abilities of enthusiast that work on the voluntary basis. Here we speak of innovations aimed for consumer (of digital services), on whom the manufacturers count as users in terms of needs and direct creation of products in view of their modernization; practices of active attraction of buyers/consumers (of digital goods and services) to management of quality of provided services and strategic management for promotion of certain products; involvement of consumers in competing projects; – crowdfunding – group cooperation of donors (groups financing, which became possible in the conditions of digitization of the global economy), which unifies their financial and intellectual resources for supporting certain “creative” projects (representatives of media, cinematography, and music “craft” industry) and charity activities. The above institutes became an inseparable segment of the digital economy in the whole (connected by the Internet) world. As a result of active usage of crowdsourcing and crowdfunding, a lot of tasks of production and distribution of products are solved. Thus, the perspectives of digitization of the national system of state management of socio-economic processes are very positive, especially in view of the high level of technical literacy of the Russian population. Besides, digitization of the Russian economy could stimulate diversification and further technologization according to the common global trends. In the short-tern, the state has to reduce the total number of functions on servicing the population, which should make human resources free from tiresome routine, connected to mass and everyday bureaucratic procedures. Accordingly, a range of state function of the service character should be performed by technological platforms on the Internet that are integrated with business.

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Also, within the information society there will be a lot of “new” jobs, connected to production and provision of various Internet content. On the other hand, risks of “digitization” may lead to precarization of a large part of the population. In the conditions of mass “digital” economy, new requirements should be set to educational programs of the large number of bureaucratic personnel and training of a range of economic and managerial specialties. Thus, here we speak not only of one-sided control over population via the digital government but of state’s inclusion into the projects of digital management of society. Moreover, the state can minimize security risks (including privacy risks), which appear due to expansion of total monitoring from international corporations.

5 Conclusions Thus, the digital environment provides a lot of opportunities for implementing individual creativity, which is also connected to commercial rationality, which is oriented at increase of living standards. Preservation of human resources and investments into human capital could be activated by the environment of the digital economy. Digitization of state management could offer the following services in the near future: – replacement of a range of licensing (bureaucratic) procedures with procedures of the indicative character; – provision of property deals by registration of companies in the real time conditions; – connection to electric grids and construction permits, issued within a week; – total marking of products, which will allow for liquidation of counterfeit products and will turn buyer into controller of provided goods and services; – reduction of mandatory requirements to representatives of private business and implementation of specialized platforms that could liquidate corruption; – digitization of document turnover between citizens, companies, and the state, which will lead to reduction of excessive reports; – implementation of online cash registers in retail, which allows for instantaneous transfer of information on purchases to the tax bodies; – digitization of state data bases and reduction of government employees; – constant monitoring of the financial history of citizens and instantaneous crediting of fair borrowers; – increase of transparency of judicial bodies with the help of open Internet translations from court proceedings.

References Bell, D.: The Future Post-Industrial Society. Akademia, Moscow (1999) Boltanski, L., Chiapello, E.: Dead Spirit of Capitalism. New Literature Overview, Moscow (2011) Castells, M.: The Rise of the Network Society, 2nd edn. Blackwell, Oxford (2000)

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Clark, C.: The Conditions of Economic Progress. Logan Pub., Logan (1991) Fedorkov, A.A., Biryukov, O.A.: Digital economy: special aspects of management and tendencies of development. St. Petersburg J. Econ. (3), 140–147 (2017) Inozemtsev, V.L.: Post-industrial/industrial dichotomy. World Changes (1), 144−147 (2014) Kamko, E.V., Kirdina-Chandler, S.G.: Institutional structure of the Russian national innovational system: path defendence – effect. Actual Probl. Econ. Law 12(1), 45 (2018) Khabermas, Y.: Technology and Science as “Ideology”. Praksis, Мoscow (2007) Kumar, K.: Prophesy and progress: The Sociology of Industrial and Postindustrial Society. Alien Lane, London (1978) Solozhentsev, E.D.: Digital management of state and economy. Actual Probl. Econ. Manag. 1(17), 136–153 (2018) Toffler, A.: The Third Wavea. AST Publ., Moscow (2010) Valentey, S.D.: Reindustrialization of the Russian Economy in the Conditions of New Threats. G.V. Plekhanov Russian University of Economics, Moscow (2015) Webster, F.: The Theory of Information Society. Aspekt Press, Moscow (2004) What is the Digital Economy. http://fingramota.org/teoriya-finansov/item/2198-chto-takoetsifrovaya-ekonomika. Accessed 15 Aug 2018 Zemskova, I.A.: Digitization as a factor of increase of state services’ quality. Bull. Saratov State Socio-Econ. Univ. 5(69), 80–83 (2017) Zubarev, A.E.: Digital economy as a form of manifestation of regularities of the new economy’s development. Bull. Pac. State Univ. 4(47), 177–184 (2017)

Information Society and Challenges of the Digital Economy Elena A. Dergacheva1(&), Oleg E. Backsanskij2, Natalya V. Popkova1, Nataljya V. Petrukhina1, and Irina V. Shlemina1 1

2

Bryansk State Technical University, Bryansk, Russia [email protected], [email protected], [email protected], [email protected] Russian National Research Medical University named after N.I. Pirogov, Moscow, Russia [email protected]

Abstract. This chapter is devoted to consideration of information society formation stages in connection with the processes social changes, digital economy, nature and convergent technologies. At the beginning of new Millennium due to the strengthening of information and communication interactions digital economy becomes an integral part of modern society. The content characteristics of such a society and the prospects for its development are considered in conclusion. Keywords: Post-industrial (information) society
Social and technogenic development
NBICS technologies
Digital economy

1 Introduction In the works of T. Veblen and J. Burnham (the beginning of the XX century), they formulated the first concept of the increasing role of science, technic and technology in economic development of society. Since all these means increase the efficiency of use in mass production of scientific and technical progress achievements, there is a need to form good social order through transmission of power from the industrialists (owners) to the bearers of “technical rationality” – the technocrats (managers and engineers, i.e. representatives of the technical elite). Their interests as a whole coincide with the specific direction of technology and society development, focused on providing high incomes both for the owners and the technical elite. These reflections formed the basis of the first technocracy concepts. At the same time, the original ideas of these theories about the special social role of knowledge holders (in relation to Industrialists) were expressed in the early XIX century by SaintSimon, the author of the term “industrial society”. In the works of A. Conte, K. Marx, E. Durkheim this term is developed as well. Later on, in the mid-twentieth century due to the significant progress of science and technology in the works of R. Aron, J. Galbraith, R. Dahrendorf et al. They created the concept of industrial society. The scientists state that “industrial society concept” comprehensively characterises the © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 228–236, 2020. https://doi.org/10.1007/978-3-030-39319-9_27

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socio-economic system of capitalism and even socialism (as manifestations of such a society). J. Galbraith explained, that these types of social systems are convertible, i.e. converge takes place in the course of industrial development in many qualitative social parameters.

2 Materials and Methods In response to these planetary transformations in the middle of the twentieth century, they put forward the concept of post-industrial society, which was scientifically substantiated and widely spread in 1960–1970. Its main provisions are formulated by Bell (1999). In connection with the ideas that appeared in the 1960s on appearance of information society, D. Bell does not object to refinement of post-industrialism theory by studies of informatisation processes. The term “information society” was introduced in scientific notion in the works of F. Machlup, T. Umesao, Y. Hayashi devoted to the dynamics of science-intensive industries, and was conceptually formed in 1980 when the book of Y. Masuda was released.

3 Results and Discussion At the heart of scientific and technological progress as well as of constant updating of technology there is a special kind of rationality defined as technical rationality. Technology today is involved in formation of communication “cultural codes”, defining methods of socialisation and inculturation of society members. Technical skills are translated as part of traditions and the rules of handling technology – as part of value orientations; consequently, technical rationality is one of the main components of social reproduction process and affects formation of specific historical social systems directly. To analyse the interaction of technical rationality and technical behavior, the one-sided and emotionally colored interpretations of the technique, widely adopted by the “near-philosophical journalism” is not enough as it excludes a large amount of empirical material from consideration. For the formation of technological culture, and translation of norms and values that make up the content of technical thinking and technical behavior, as well as for updating social norms related to technology (Popkova 2019a, b, 20–21) they need systematic scientific and philosophical research of technology. Technical rationality, according to H. Lenk, is now used “in the economy and many areas of everyday life” in order to “minimize effort or cost and maximize the degree of achievement”. It helps to “evaluate the means and success when achieving the goal” and, in fact, “is a kind of action rationality, a pragmatic concept of projects, action plans and decisions rationalization”. It is technical rationality, according to H. Lenk, that is “a modular construction used in traditional classical approaches of economic man (homo economicus) and in orientation to utility” (Lenk 2012, 131–132). The purpose of technical rationality is the search for the means and creation of technology (material or intellectual) to achieve the goal. The basic principles of technical rationality were created by generalisation and

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conceptualization of technical practices that treat reality as a result of purposeful transformations. These postulates are as follows (Popkova 2019a, b, 48–49). 1. The essence of the phenomenon is its cause, and the meaning of process is the purpose of its implementation. To create a technical device or technology, we are to set a goal that is beyond the act of creation itself. The technology is implemented for something useful, not for its own sake: therefore, the activity is presented in the form of a causal chain, each link of which is a means to implement the next link, and all together they lead to a certain goal, useful for us, but not for these links. 2. Two sides of the phenomenon are the active subject and the passive object. Technology is created by us and obeys us; on the contrary, we create and manage it, using it for our own purposes. Other relations between technology and man (the feedback, emerging in the twentieth century) is still perceived by us as inappropriate and are the result of some error. 3. The whole is the sum of elements, the process is the sum of operations. When planning a technological process or designing a technical complex, a person mentally collects it from the parts that are created the first. 4. The single is a special case of the general. Technical products are usually produced in series; technologies must be implemented repeatedly in the presence of external conditions. Even if at the moment they exist in a single copy, the possibility of their reproduction is provided. These principles are axioms for any process of understanding existing processes or creating new ones. The leading technologies of post-industrial (as information) society development are associated with introduction of energy and resource-saving processes, reduction of the industrial production sector, increase of the role of creative work and use of artificial components instead of natural. D. Bell originally formed his concept of postindustrialism as overcoming manufacturer’s technocracy and developing educational services. At the same time, the service sector, consisting of financial, informational, educational, consulting, medical and the other social services, in the process of its development is saturating with artificial components and processes (including nonbiosphere substances and chemistry). Unfortunately, D. Bell pays no attention to this fact, though the services are not less technocratic than production. The trends in development of the modern globalizing world community so far confirm the “technocratic realism” of postindustrialism concepts, since not only the processes of production, but services carry the destructive power of technology and artificial in General and are based on the complex impact of technocratic factors (Demidenko and Dergacheva 2019). However, in the theories of post-industrial and information society universalising social processes are considered in a certain isolation from the natural, so these concepts can hardly claim to a comprehensive explanation of the trends of social and social development. The biosphere is not just a natural environment of a globalizing society. Moreover, thanks to this environment, society develops the processes of its social, natural and biological life. D. Bell, other sociologists and economists are studying the increasing complexity of social life, which has its own laws. But these laws are derived only from the analysis of economic and technological modernization (as technocratic factors) of the development of capitalist society. As a result, the processes of changes in

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the biosphere and its life associated with them, which develop on the basis of biosphere laws and are deeply transformed by the artificial elements included in them, are out of the field of consideration. In domestic social scientific literature is gaining popularity the anthropogenic theory of social technogenic development. This alternative complements and develops the well-known foreign sociological concept of post-industrialism (and information society), proposed by D. Bell in the 60-ies of XX century. The origins of development of the technogenic civilization (society) concept, date back to the turn of the 80–90-ies of XX century, to the works of academician V. S. Stepin. In afteryears, the most complete justification for this theory was given in the works of Demidenko (1993, 2000) and Dergacheva (2005, 2011) (Dergacheva 2011; Dergacheva 2016; Demidenko et al. 2015), Popkova (2008). In the early 2000s, directed by Professor E. S. Demidenko the scientific and philosophical school of research on social and technogenic development of the world was formed at the Bryansk State Technical University (Trifankov and Dergachev 2016). Proponents of the postindustrial theory pinned hopes of solving socio-economic problems with the development of science and technology, but left in isolation the consequences of technocratic development impact on society and nature. Therefore, these theories could not claim a comprehensive explanation of the laws of socio-natural and socio-economic development. This one-sidedness of postindustrial and Marxist concepts was brought to the attention of E. S. Demidenko and E. A. Dergacheva who pointed out that the study of social relations “industry”, including economic development, does not allow to build strategic forecasts of global interrelated changes in society, its economy and the biosphere (Demidenko and Dergacheva 2015). Therefore, researchers are expanding their understanding of the ongoing social changes, emphasising that the globalising technogenic social development leads to the spread of artificial environment of the population (the technosphere and its integral component – the digital economy) mainly in cities, the growth of transitional transformational and socio-natural processes. As emphasized, “technogenic component is expanding across the planet multidimensional integration and interaction of technosphere components (artificial materialsubject and field of the world, that are its components) with social and natural processes, the effects of such integrations. Complication of technology is reflected in globalization of the technogenic society, leading to transformation and even degradation of the biosphere” (Dergacheva 2016, 46). Taking into account the specificity of direction of social artificial development in the context of research of the scientific school, clarifications to the existing terminology are made, new concepts of “industrial-technogenic”, “post-industrial-technogenic society” (and “information-technogenic society”) are substantiated (Dergacheva 2016). All that allows to expand the possibilities of philosophical and economic research of the modern world processes. In the industrial-technogenic society, science, technology (industry and urban settlements) are formed and qualitatively improved in the direction to increase the scale and capacity, having an impact on socio-economic and natural processes. There goes not just gradual industrialisation of economy on the basis of total scientific and technical productive forces, but a radical change in the nature of technical, economic, biological relations and formation of artificial conditions of society.

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The technosphere is expanding and becoming qualitatively more complex – not only production processes, but also intellectual activity, as well as human activity, and even individual elements and processes of the biosphere (bio -, nano - and transgenic technologies) have fallen into its sphere of influence. There was a shift in public production as well: the industrial sector was reduced, the role of science-intensive, information-based industries increased. In industrialised countries there began formation of post-industrial-technogenic social systems. But information technologies (which are essentially industrial) did not cancel the existence of the industry and did not allow to overcome the negative growing destructive impact on the biosphere environment. With the decreasing scale of specific weight of the industry there continued (compressed in space) industrialisation and informatisation of industrial objects, society and transformed nature. The course towards formation of artificial systems and processes (and transformation of natural processes) can be explained by the fact that in conditions of globalising stagnation of social and technogenic development and unevenness in increasing scientific, technological and information support of societies has a negative impact on their economic progress, leading to aggravation of problems in the evolving socio-natural system. NBIC (nano-, bio-, informational and cognitive) convergence is not only of great scientific and technological importance. The technological opportunities offered by the NBIC convergence will inevitably lead to serious cultural, philosophical and social upheavals (Roco and Bainbridge 2004). In particular, it concerns the revision of traditional ideas about such fundamental concepts as life, mind, man, nature and existence. Historically, these categories were formed and developed within a rather slowly changing society. Therefore, these categories correctly describe only the phenomena and objects that do not go beyond the familiar and habitual. There is no use trying to manage them with the same content to describe the new world that is going to appear before our eyes with the help of convergence technologies – just as it is impossible to use indivisible, unchanging Democritus atoms to describe thermonuclear fusion. It is possible that humanity will have to move from the certainty based on everyday experience to understanding that in the real world there are no clear boundaries between many phenomena, previously considered dichotomous. First of all, in light of recent research the usual distinction between living and non-living loses its meaning. Starting with Democritus, philosophers considered the problem of similarities and differences between the living and the inanimate. However, for a long time this problem was considered mainly from idealistic or even esoteric positions. Natural scientists have been considering this problem long ago (even Lamarck described the differences between living and non-living). Thus, viruses are usually not referred to either living or non-living systems, and are treated as an intermediate level of complexity. After the discovery of prions 18 – the complex organic molecules capable of reproduction – the boundary between living and non-living has become even more blurred. The development of bio-and nanotechnology threatens to erase this line completely. The construction of a whole range of functional systems of continuously complicated design – from simple mechanical nanodevices to living intelligent beings – means that there is no fundamental difference between living and non-living, there are only systems with varying degrees of characteristics traditionally associated with life.

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The distinction between a thinking system with mind and free will and a hardcoded one is also gradually erased. In neurophysiology, for example, there is an understanding that the human brain is a biological machine: a flexible, yet programmed cybernetic system. The development of neurophysiology has shown that human abilities (such as facial recognition, goal setting, etc.) are localized and can be switched on or off due to organic damage to certain areas of the brain or injection of certain substances into the body. On this understanding of the work of thinking, the Russian expert in the field of artificial intelligence A. L. Shamis believes that “it is possible that all interpretations of the psychological level will be possible at the level of brain computer modeling. Including the interpretation of such features of the brain as intuition, insight, creativity and even humor.” And it is possible that the living is just a very complex inanimate, and the intelligent is just a very complex irrational… The living beings even now can be created “artificially”: with the help of genetic engineering. Soon it will be possible to create complex living beings (including using nanotechnology) from individual elements of molecular size. In addition to expanding the boundaries of human creativity, this will inevitably mean a transformation of our ideas about birth and death (Baksanskij et al. 2010). The system development of the information society is possible with the help of legal regulation of the mechanisms of implementation of interacting subjects in the information sphere. The international principles for the creation of the information society, as well as approaches to its creation, are reflected in the Okinawa Charter on the global information society (2000), the Declaration of principles on “Building an information society - a global challenge in the new Millennium” (2003), the Tunis commitment action Plan (2005). The legal basis for the development of the information society of the Russian Federation is the Decree of the President of the Russian Federation of 09.05.2017 N 203 “On the Strategy of development of the information society in the Russian Federation for 2017–2030”. In this decree, the information society is defined as a society in which information and the level of its application and accessibility fundamentally affect economic and socio-cultural conditions of citizens’ life. It is worth to mention that in 2018 more than 80 million people became users of the Russian Internet segment, through which they get access to electronic media, information systems of different bodies and levels, social networks. In Russia, the information society is characterised by a wide spread and availability of mobile devices (on average, one Russian has two mobile phone numbers), as well as wireless technologies and communication networks. The established system of providing state and municipal services in electronic form contains more than 34 million citizens of our country connected to it. Thus, all the citizens of our large country have the right to send requests, letters, complaints in electronic form to the authorities of all levels. The information society is a society of a new type, which allows its subjects to use new opportunities of the created global information networks, information and telecommunication technologies in all the spheres of activity of both the person, and the created legal entities, state bodies of different levels providing mutually beneficial advantages by all the subjects of information relations.

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The features of the information society include the following: (1) a high degree of information technologies development and their intensive and widespread use by all the subjects of legal relations: public authorities, local self-government, business structures, representatives of science and individuals; (2) the significant effect of the use of information and communication technologies in various fields of their application, expressed in equal access of all the related subjects to information resources; creation and development of information systems and databases, as well as improving the management of state structures in compliance with the universally recognized rights and freedoms of man and citizen. The analysis of information society strategy allowed to determine its goals. Among them: creating a digital economy; ensuring the priority and protection of national interests of the country in the field of digital economy; the increasing influence of the digital economy on the country’s GDP growth; formation of unified information space of the Russian Federation taking into account the interests of all interacting subjects; the formation of a new technological basis for development of economy and social sphere of society; development of information and communication infrastructure of the Russian Federation; development and improvement of domestic information and communication technologies that can ensure their competitiveness outside the country, in the international arena. The strategy of development of the information society also provides a definition of the digital economy by which the legislator understands the economic activity. The key factors of this activity is production of data in digital form. Processing large volumes of the data and the use of this analysis of which in comparison with traditional forms of management can significantly improve the efficiency of various types of production, technology, equipment, storage, sale, delivery of goods and services. An important document determining the formation of the digital economy in the Russian Federation is the State program “Digital economy”, which provides the development of the following areas: legal regulation of the digital environment, information infrastructure, personnel for the digital economy, information security, digital technology, digital public administration. Having a significant impact on development of traditional sectors of the economy, information and communication technologies help to achieve the volume of sales of goods and services to the Russians using the Internet in 2,3% of gross domestic product according to the data for 2015. In the digital economy, information should be considered as a special resource of the economic system, an element of the market mechanism, a type of economic activity, a public good, as well as a competition factor. The main object of interaction in economics of information type is information and knowledge, the subject being a “network person”. Based on this, the widespread introduction and development of information technology allows not only to rationally use and combine resources for high-tech business, but also allows to effectively use its results. The network effect of the information interaction of regional innovation subsystems can be several times greater than the scale of the effect of forms of interaction existing outside the network and bring a significant economic effect to the network participants. Thus, in the context of spatial transformation of the national innovation system, when it seeks to be organised in the form of a network, the regional innovation

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subsystems should have all the features of a network element, which means: (a) to have a common goal of scientific and technological development of the regions; (b) to use all types of network resources and attract the necessary resources for the scientific and technological development of the regions; (c) to focus on the long-term mutually beneficial cooperation for high-tech business, to discuss new formats of partnership; (d) to carry out their own ideas, implement new breakthrough technologies, to promote innovative projects, to share experiences and knowledge, and to search for potential partners. Network interaction pushes and shifts the boundaries of regional innovation subsystems, allowing to attract and accumulate resources for implementation of innovative developments, using the scientific and technological potential, formed both in a certain region and the country as a whole, as well as partner countries at the international level.

4 Conclusion The development of information society provides only a priority scenario for its development, which means the need for the state to create favorable institutional conditions for the use of information and communication technologies, improving the legislation of the country, investment from budgets of all the levels, including the involvement of private budgets, improvement and creation of business structures breakthrough information and communication technologies, the advantage of which is estimated by foreign countries, as well as formation of national technological platforms for online education, online medicine, a unified infrastructure of e-government, the National Electronic Library. The development of the digital economy can have a significant impact on the growth rate of the gross domestic product of the Russian Federation. The most important mandatory stage of the creative process in digital economy is materialization of the preceding ideas, which is carried out in two stages. At the first stage, ideas are transformed into information that reproduces the algorithms embedded in them by material means. No doubt that this stage is obligatory for all the processes of creative activity without exception. The second stage is implemented in differently in different processes. Thus, in the process of transformation of reality there is a transformation of ideas into material objects according to the above described technology. In the processes of cognition the information obtained at the first stage is laid in the appropriate memory cells of the brain and is extracted from there, if necessary, for further use (Dergacheva and Backsanskij 2017). Thus, technocratic evolution of society and nature integrates the totality of XVIII– XXI centuries transformations in transition to the artificial system of human life regulation, which is the digital economy. At the same time, the phases of industrialism and postindustrialism are only intermediate stages of the world’s progressive social and technogenic development. The technology-related evolution of modern societies is a broader basis for philosophical and economic studies carried out in the Economics of transformation at different stages of socio-technogenic development (Dergacheva 2016). The fundamentally new approach to the analysis of the social transformations

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allows realizing the need for development of interdisciplinary research in Russia and the whole world to form the programme for sustainable development of digital economy adequate to the modern realities.

References Baksanskij, O.E., Gnatik, E.N., Kucher, E.N.: Nanotechnology Biomedicine: Philosophy of Education in the Mirror of Interdisciplinary Context. URSS, Moscow (2010) Demidenko, E.S., Dergacheva, E.A.: Basic economic trends in terms of socio-technogenic development of the world. In: 2018 Proceedings of the International Scientific Conference “Far East Con” (ISCFEC 2018). Advances in Economics, Business and Management Research, vol. 47, pp. 1090–1092. Atlantis press (2019) Dergacheva, Е.А., Backsanskij, О.Е.: Economic man under conditions of world socialtechnogenic development. In: The European Proceedings of Social & Behavioural Sciences. International Conference « Responsible Research and Innovation 2016 » , pp. 192–200 (2017) Bell, D.: The coming post-industrial society: experience of social forecasting. Academia, Moscow (1999) Demidenko, E.S., Dergacheva, E.A.: Socio-philosophical analysis of formation and development of the concept of technogenic societ. Sovremennye problemy nauki i obrazovanija, no. 2 (2015). http://www.science-education.ru/131-23481 Dergacheva, E.A.: The Concept of Socio-Techno-Natural Globalization: Interdisciplinary Analysis. Lenand, Moscow (2016) Dergacheva, E.A.: Filosofija tehnogennogo obshhestva [Philosophy of the Technogenic Society]. Lenand, Moscow (2011) Lenk, H.: Types and metatypes of rationality. Rationality and its boundaries. In: Guseynov, A.A., Lectorsky, V.A. (eds.) Proceedings of the International Scientific Conference “Rationality and its Boundaries”, 15–18 September 2011, pp. 127–138. IFRAN, Moscow (2012) (in Russian) Popkova, N.V.: Humanitarization of teaching philosophy as a fight against the expansion of technical rationality. «Alma mater» (Vestnik vysshej shkoly) 2, 16–21 (2019a). (In Russian) Popkova, N.V.: The place of philosophy in the culture of industrial society: a critique of technical reason. Kul’tura i iskusstvo 4, 37–52 (2019b). (in Russian) Popkova, N.V.: Filosofiya tekhnosfery [The Philosophy of the Technosphere]. Librokom, Moscow (2008) Roco, M., Bainbridge, W. (eds.): Converging Technologies for Improving Human Performance: Nanotechnology, Biotechnology, Information Technology and Cognitive Science, Arlington (2004). http://www.transhumanism-russia.ru/content/view/498/116/ednref1 Trifankov, Y., Dergachev, K.: A brief review of the modern development of the world and life in the works of scientists of Bryansk philosophical school of social-technogenic world development. In: SHS Web of Conferences. RPTSS 2015 – International Conference on Research Paradigms Transformation in Social Sciences, vol. 28 (2016) Demidenko, E.S.: Ecotechnological Apocalypse, or “the end of the world” of natural man (Report to the XIX World Philosophical Congress). Ochug, Bryansk (1993) Demidenko, E.S.: Technogenic civilization: transformation of society, nature and man. In: Man of Technogenic Civilization at the Turn of Two Millennia, pp. 23–42. Kaliningrad State Technical University, Kaliningrad (2000) Dergacheva, E.A.: Technogenic society and the contradictory nature of its rationality. Bryansk State Technical University, Bryansk (2005)

Sport in the Context of Globalization Viktor I. Bondin1(&), Nikolay P. Lyubetsky2, Sergey I. Schalohyan2, Maxim V. Gerasimov3, and Sergey I. Samygin4 1

3

Southern Federal University, Rostov-on-Don, Russia [email protected] 2 Don State Technical University, Rostov-on-Don, Russia [email protected], [email protected] Russian State University of Justice, Rostov Branch, Rostov-on-Don, Russia [email protected] 4 Rostov State University of Economics, Rostov-on-Don, Russia [email protected]

Abstract. This chapter offers an insight into the role of modern sport as one of the driving forces of cultural globalization. The modern model of sport, formed in Western societies, embodies the features characteristic for modern Western societies. They are, above all, individualism, secularism, competition, ethics of success and achievement, the cult of health and physical beauty, professionalism, specialization, rationalism, etc. Getting the global spread of sport, for example, with the help of modern media, it not only involves thousands of people in specific behavioral practices that subordinate rationalized universal norms, but also changes the values, standards of conduct and way of life outside the proper sphere of professional sport. In the chapter, this modernizing impact of sport in the era of globalization is considered on the example of Islamic societies. Keywords: Sport
National identity
Globalization
Politicization of sport Ideology
Agents of globalization
Islam
Culture




1 Introduction In recent decades, globalization has been a reality of the modern world, radically changing all aspects of human existence (Gafiatulina et al. 2016). There are many theoretical approaches to the phenomenon of globalization, and the process of globalization itself includes several important aspects. First, we should talk about the economic aspect of globalization, which implies the formation of a global economy, which has linked practically all societies to relations of interdependence and the global division of labor. The subjects of the global economy are various transnational commercial structures, their activities go far beyond national borders, and incomes often exceed the budgets of individual states (Taranov et al. 2018). The second significant aspect of globalization concerns the sphere of politics and international relations. It has long been noted that one of the main consequences of globalization is a slight weakening of the sovereignty of nation states. Today, along with the states and their unions, governmental and non-governmental international © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 237–247, 2020. https://doi.org/10.1007/978-3-030-39319-9_28

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organizations with various forms of influence from local to global, there are a lot of other subjects of international relations. These organizations may be political as well as professional, charities, human rights, environmental, religious and others. Many of these organizations are so influential that it is possible to talk about their unique policy. Virtually all major international organizations are, in addition to their main functions, agents of Western cultural influence. These include international sports organizations. An important aspect of globalization, discussed in this chapter, is the cultural aspect. Globalization leads to the formation of a global cultural space, heterogeneous and controversial, in which various influences intersect, but Western influence nevertheless dominates. The dissemination of values and norms characteristic of Western culture is an essential element of cultural globalization (Vaskov et al. 2018). The chapter considers how the influence of Western culture is carried out through the globalization of the Western model of sport.

2 Materials and Methods Sociology of sport explores the organizational forms, social functions of sport, the whole complex of relations between sport and other areas of social life. The sociology of sport also explores the influence of sport on culture, values and lifestyle, just as the reverse impact: the conditionality of sport based on available value systems and ideological orientations. Within the framework of a sociological approach, the interrelationship of sport – and collective identity, sport and religion, the importance of sport for various social groups, in particular, for young people, is studied (Gafiatulina et al. 2018a, b). In modern conditions, sport is interconnected with political processes, which is also the subject of scientific research. Sport is becoming one of the main factors determining national identities and strengthening the prestige of a particular state. International sports competitions, especially the Olympic Games, often acquire political significance, being at the same time cultural events that attract the attention of the global audience. In modern societies, permeated with media technologies, sport has become one of the most popular mass shows, which has an impact on its perception and its representation in the mass consciousness. Thus, sport and the media, the mediaisation of sport are also an important area of research in the modern sociology of sport. Asking why we should study sport today, we can single out three main reasons: sport is an important part of human life; sport is associated with certain ideas and values; in modern societies, sport has become an essential part of social and political life. Sport has also become an element of mass culture and consumer culture, which determines the cultural approach to the analysis of the phenomenon of sport. Outstanding athletes become “stars” like movie stars; they not only attract attention but also serve as role models and turn into opinion leaders. Sports teams become symbolic representations of various social groups, ranging from specific communities of fans to nations in general, when it comes to international competitions.

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Sport is also explored in the context of a gender perspective (Kroska 2000). Sport has a dual effect on existing gender stereotypes. On the one hand, the gender differentiation of sport, due to the biological differences between men and women, gives objectivity to gender differences, which to some extent contradicts the most radical ideas about the designed nature of gender (Vereshchagina et al. 2015). On the other hand, sport contributes to the emancipation of women, the orientation of women to the development of their own potential, the desire to achieve goals. Demonstrating the achievements of women athletes, modern sport shatters the stereotypes about the role of women that persist today, especially outside the West. In this regard, sport is becoming a global factor in women’s emancipation throughout the world. Today, even traditionalist-oriented Islamic states are beginning to allow their athletes to participate in international competitions, which indicates the high prestige of sport and the awareness of its importance for strengthening national identity (Shakbanova et al. 2018). Not only gender, but also racial stereotypes and racial segregation are overcome within the framework of the growing mass popularity of sport and its importance for national prestige (Smith 2009). Obviously, the achievements of athletes belonging to different races and ethnic groups clearly demonstrate the falsity of stereotypes about the biological inequality of races; on the other hand, the multi-ethnic and racially heterogeneous composition of national teams contributes to the realization that racial and ethnic heterogeneity cannot be a significant obstacle to national integration. Today, the problem of sport is explored in the framework of various theoretical sociological approaches: from structural functionalism and symbolic interactionism to frame theory (Serra 2015). The relevance of a sociological analysis of sport, based on various theoretical approaches. confirms the growing number of scientific publications devoted to the problem. It is worth mentioning such works as: Coakley, J.J. Sports in society: Issues and controversies (Coakley 2015), Coakley, J.J. & Burnett, C. Sports in society: Issues and controversies (Coakley and Burnett 2014), Sport and Modern Social Theorists (2010), etc. In recent decades, as the dynamics of globalization processes increase, a sociological study of sport in a global perspective has become increasingly important. The directions and ideological guidelines of this study will depend on the theoretical understanding of the globalization process itself. The transformation of modern professional sport into a global phenomenon is obvious; in this respect, it is interesting how to evaluate this process and its impact on individual nations, national health (Gafiatulina et al. 2018a, b) how the globalization of sport fits into the general logic of globalization. This problem can be considered from different points of view - for example, from an economic point of view, since sport today is integrated into a global market, political or cultural. Nevertheless, in this chapter, sport is viewed precisely in the context of cultural globalization; theoretically, the author relies on some ideas about the essence of cultural globalization, formulated by Peter Berger (Berger 2002).

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3 Results Globalization has an impact on all aspects of social and cultural life. This influence changes political relations, introducing new subjects into their system, affects the social structure and the economy that goes beyond the borders of national states, strengthens the interdependence of human societies. In the sphere of culture, globalization, above all, destroys the closed nature of national cultures, giving rise to intensive cultural exchange and dialogue, and the mega-structures such as transnational media or individuals can be subjects of this exchange. Speaking of cultural globalization, it is necessary to emphasize the multidimensionality of this process. Undoubtedly, the most important aspect of cultural globalization is the expansion of Western culture and lifestyle. However, cultural globalization is not limited to this. The spread of Western values and behavior patterns is accompanied by their modification, heightens interest in their own cultural heritage, generates cultural creativity, and brings many hybrid cultural forms to life. Finally, Western societies themselves are not only a donor, but also a recipient in terms of cultural influences. For quite a long time, many elements of non-Western cultures have become part of Western mass culture, and in this, modified and westernized form, they can return to their “cultural homeland” - this is the most noticeable logic in the dissemination of religious ideas. Yet we are interested in the pivotal direction of cultural globalization - expansion of Western culture and, as Berger points out, this is not so much about Western culture in its full extent, but about elements of culture directly related to modernization, modernity. It can be said that the core of cultural globalization is cultural expansion of modernity. The expansion of modern culture is associated with the expansion of Western institutions that are transforming into universal ones. This applies to not only economic and political institutions, but also technologies, science, education, media, health care (Gafiatulina et al. 2017), consumption, entertainment mass culture, as well as the modern urban lifestyle associated with the modern urban environment, which is structured in a specific way. An important role in the spread of Western culture belongs to agents of cultural globalization. This concept was introduced by Berger (Berger 2002). He also identified the main agents. These he attributed such social subjects as Western-oriented intellectuals, above all, scientific and related to the field of cultural creativity, the business elite, focused on western business methods (after Samuel Huntington Berger calls this group the “Davos Club”), transnational media, as well as various transnational social and cultural movements. Representatives of these communities and structures not only share Western values and living standards, but also contribute to their dissemination in “their” societies. It seems that the successful term of Berger can be applied in relation to other social subjects. We believe that representatives of professional sport, especially its elites, can also be viewed as agents of cultural globalization and the global spread of Western standards.

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Sport in one form or another can be viewed as a cultural universality. But modern sport, both mass and professional, is an invention of Western culture, which originated in antiquity - the cradle of Western civilization. However, closer and immediate sources of modern sport are found in the UK and the USA, where in the middle of the 19th century professional sports teams first appeared. British influence in the world led to the widespread and growing popularity of British sports, such as football. The transformation of sport into an international phenomenon was also associated with the emergence of the International Olympic Committee in 1894 and with the revival of the Olympic Games in 1896 - modeled on the ancient ones. Representatives from fourteen countries participated in the first Olympiad, which was held in Athens, most of the participants were Europeans. In 1904, the International Football Federation (FIFA) was founded in Paris by representatives of France, Belgium, Denmark, the Netherlands, Spain, Sweden and Switzerland. The first nonEuropean country that joined the Federation was South Africa, soon followed by Argentina and Chile (1912) and the United States (1913). In 1930, the first football world championship was held in Uruguay. After the Second World War and the strengthening of international US influence, such “American” sports as basketball and volleyball also began to spread throughout the world. International Volleyball Federation (FIVB) organized its first world championship in 1949, while International Basketball Federation (FIBA) in 1950. Thus, the international influence of certain kinds of sport is associated with a political factor domination in the international arena, as well as - with the prevailing economic and cultural influence. Being involved in international sports associations was becoming one of the hallmarks of being a leading power. Thus, sport became a conductor of Western cultural and political influence in the world. Almost immediately after its emergence, turning into an international phenomenon, modern sport became the forerunner of globalization. When globalization began to gain momentum in the last quarter of the twentieth century, sport became one of the most rapidly globalizing spheres of social life. At the same time, by globalizing, it has paradoxically been contributing to the strengthening of national identities in the world where this identity becomes more and more problematic. The globalization of sport is expressed in a number of organizational and economic trends. Thus, modern sport is managed and regulated by a number of international organizations (IOC, FIFA, etc.) concentrated in the hands huge revenues from the sale of the right to demonstrate matches in media, advertising, sponsorship, and others. In this regard, we can say that sport is one of the subsystems of the global economy, and sports organizations are its subjects. International sports organizations determine the choice of athletes of products of certain companies that produce sports equipment and clothing, thus, athletes perform certain economic tasks, in addition to their participation in sporting events. Athletes themselves are transformed into a kind of live product, which various clubs and associations exchange, based on a variety of purposes. Modern sport is one of the areas where competition is particularly high, what is more the competition “natural” for sport is intensified by market one, which involves athletes of various nationalities.

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In the global information world, there is a fusion of sport and media - media corporations often own subsidiaries that relate to sport (Wright 1999). Victories of national teams in international competitions and especially at the Olympics are perceived in the modern world as an element of prestige, which predetermines the focus of the respective organizations on the use of all possible legal (and sometimes illegal) ways to achieve victory. National teams often include players from other countries. The national composition of the teams is not as important as their formal affiliation to a particular state. Nevertheless, even in such a paradoxical situation, the victories of national teams strengthen the sense of national pride. At the same time, there is a rise of fan communities related not only to certain sports clubs, but also to individual athletes - and these fan communities themselves can be transnational in nature. The profession of an athlete today is one of the most globalized professions. The world of modern sport itself is like a model of the globalized world as a whole. Due to its almost universal spread and popularity, sport can be considered as an agent of globalization in two aspects - formal and substantive. We have already considered the formal one above - it lies in the fact that the sphere of professional sport is organized and functions based on transnational logic and obeying transnational subjects of management. Participating in competitions as part of different national teams, professional athletes themselves are “people of the world” - their careers are not limited to the borders of individual states. The substantive aspect is the cultural influence of sport. Having emerged within the framework of Western civilization and being associated with the Western way of life and Western values, modern universal sport contributes to their global spreading. Moreover, this cultural influence is often not recognized by those who advocate the preservation of national identity and “traditional values”. Attractiveness and global popularity of sport is so great, that the problem of its cultural otherness does not attract much attention. If protests against “liberal values” and “consumer ideology” are a fairly common motive for critics of cultural globalism, then protest against participation in international sports events and the development of their own sports sphere is not too noticeable, only sometimes surprises the fact that national teams include citizens of other states. The exception in this case is Islamic societies. Modern sport, as noted above, has been formed within the framework of modern Western culture and embodies many of its basic principles. The spread of the western model of sport means the spread of these principles. Following the rationalization paradigm formulated by M. Weber, it can be noted that the organization of modern sport reflects the characteristics of a modern rationalized society, including such characteristics as the desire for equality and free competition, secularism of behavioral norms, specialization, professionalization, principles of formal organization and bureaucratic management. All these characteristics are expressed in the sports space even more clearly than in society as a whole. Sport can be called its quintessence, a peculiar model. The process of globalization as a universal spread of modern institutions, and, therefore, the above mentioned features of modernity, emergence and spread of Western mass culture and global media caused the universalization of sport; turning it into a spectacle facilitated this process. Values and practices embodied in sport have

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become a part of cultures outside the western world, forming various combinations with local historical heritage. It should be noted that the spread of sport entails not only the formation of a certain professional niche: sport affects everyday behavior, the concept of beauty, influences fashion and leisure activities, and contributes to the formation of new groups and subcultures. Byhovskaja notes that the universalization of sport contributes to the “creation and use of sports constructs and representatives in “non-sporting” sociocultural practices: in mass communication, politics, business, art, education, and show industry” (Byhovskaja 2010, 616). Outside the western world, sport forms a new space of opportunities for individuals and even social groups; its use in education contributes to socialization, integration, and prevention of various forms of deviation (Chikaeva et al. 2018). The inclusion of sport in everyday practice is associated with the assertion of the values of a healthy and active lifestyle. Not only sport of the highest achievements, but also other types of sport activity deeply affect the culture. For example, fitness. Fitness is associated with a new attitude to the body, a kind of cult of beauty and youth, the desire to overcome or slow down the processes previously considered natural due to age phases and reproductive activity. The cult of beauty also contributed to the spread of new areas of medicine, such as plastic surgery. Sport can be associated with political activity. Abdulkarimov notes: “In some cases, football becomes a kind of cultural Rubicon between traditional and new, urban and rural, which has far-reaching consequences for society. Thus, in Iran, the victory of Iranian football players over the Australian team in November 1997 caused such a powerful wave of social movement that some politicians called it “football revolution” because for the Iranian society this event was the beginning of the movement along the path of democratic reforms. In the end, the result of these events was the coming to power of the supporters of the liberal-religious circles” (Abdulkarimov 2011). Thus, the influence of values promoted by sport goes far beyond the boundaries of professional sport itself. Sport contributes to the change in traditional lifestyles, overcoming gender and racial inequalities, increasing political activity, demonstrating clearly that personal achievements do not depend on the statutes prescribed. Franke points to the importance of media in asserting the values of sport and its popularization, noting that media broadcasting implies participation in live sports events, with the help of a special reconstructing language creates myths and semantic prerequisites for linking people into a specific community of sports fans (Franke 2006). The following data speaks about the scale of such “communities”: “During the World Cup in Japan and Korea in 2002, experts counted 28.8 billion television inclusions. This means that each of the 6.2 billion people on Earth, according to statistics, more than four times connected to the finals of the tournament. According to “Big Count”, a statistical study by the International Federation of Football Associations - FIFA (Federation Internationale de Football Association), conducted in 2000, has a total of 242 million players in the world, which corresponds to 4.1% of the world’s population. FIFA has 207 member societies and, thus, its distribution area on Earth is even wider than that of the UN” (Ajzenberg 2006).

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Modern sports researchers tend to see in it an activity space in which one can observe various manifestations of social relations and processes - from rivalry and competition to intercultural communication and exchange (Ponomarev et al. 2018). In sports space there may be conflicting trends. Thus, contributing to the affirmation of universal values, it activates reflection in relation to its own cultural specificity and the desire to preserve it. This can be seen in the example of Islamic societies, the presence of which in the global sports space is becoming more and more noticeable. Their entry into this sphere has caused various consequences: from a compromise and transformation of traditional behaviors, especially for women, to an attempt to create an alternative to global sport. For example, representatives of Arab countries, who decided to take part in the Olympic Games, were forced to agree with the rules of the competition - from units of measure to the uniform of athletes - and a set of sports that were inherent in the western model. This did not happen absolutely without conflict, and, for example, Muslim women have still been experiencing difficulties in their sports career. Although Islam does not prohibit women from playing sports (Benn 2010), it imposes such restrictions on women’s public behavior that many kinds of sport become inaccessible to Muslim women. In a highly dynamic modern society, characterized by the interweaving of the trend of globalization, localization and regionalization, the relationship between the Western and non-Western, in particular, the Islamic world, has a paradoxical and antinomic character of attraction and repulsion, rivalry and interdependence, cultural contradictions and cultural exchange. Paradoxically, the relationship between the Western and Islamic worlds includes both interaction and rapprochement, as well as mutual aversion. This is also manifested in the reaction of Islamic societies to the universalization of the western model of sport. On the one hand, Western kinds of sport are becoming a part of the modernizing culture of Islamic peoples. However, on the other hand, some Muslim traditional sports for Muslims are getting almost universal distribution. For example, the Persian horse polo, Turkic belt wrestling and other traditional martial arts. As a response to the challenges of globalization, there is an increase in interest and practically a revival of forgotten forms of traditional competitions, or such forms are invented. Interesting examples of such reconstruction can be found not only within the framework of Islamic culture, but, for example, among modern Slavic neo-pagans with their “Slavic martial arts”. The global spread of Western sports values often gives rise to a negative reaction from the conservative part of Islamic societies. This is expressed in the propaganda of “traditional sports” by the governmental institutions or religious groups, which becomes an element of official public policy, as well as in a rather aggressive preaching of extreme fundamentalists directed primarily against sportswear, opening the body, which, first of all, concerns women. Activation of Islamic fundamentalism at the end of the twentieth and early twenty-first centuries. led to some reduction in Muslim participation in global sports events. Statistics show a decrease in the number of Muslim countries that include women in the Olympic teams. If in 1992 in Barcelona there were thirty-five such teams, then in Athens in 2004 there were only four. Therefore, the process of “desecularization” noted by many modern researchers affects professional sport, the sphere that seems to be so far from religion. At the same time, the emergence of the Pan-Arab and Women’s Islamic Games demonstrates the recognition of the high

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value of modern sport for Islamic states and attempts to develop models of sports behavior suitable for Muslim men and women. Almost the main obstacle limiting the full participation of Islamic countries in global sports events is the discrepancy between those behavioral patterns that are characteristic of modern professional athletes/sportswomen - and traditional Islamic views on the decent behavior of women. At the same time, not sport itself as physical activity is the main obstacle, but “inappropriate” behavior of women in front of the audience and violation of the traditional female Muslim “dress code”, which, however, is variable in different societies - and its different variations limit the capabilities of sportswomen in varying degrees. The participation of Muslim women in international competitions is limited to those kinds of sport that allow them to achieve some compromise between Muslim and common sporting rules. Nevertheless, the penetration of sport into the life of Muslim societies is much wider than the participation of professional athletes in international competitions - sport has penetrated deep into everyday life, and here different strategies of behavior are possible for women, allowing them to combine the value of sport and respect for traditions. Sport in Islamic countries, like in almost all countries of the world today, has integrated into the education system, and become part of a healthy lifestyle. In Oman, for example, women coaches, like their female students, wear traditional clothing, and the sports space is gender segregated. In such a situation, women can play sports, which is already a significant change in values and way of life, but a noticeable participation in international sports events is excluded. In Iran, gender segmentation of sport has led to the formation of a separate, but influential female sports movement. In Syria and Morocco, the researchers note intensification of the struggle for women’s equality in sport. Representatives of the current European Islam demonstrate a variety of options for sports behavior, and in this case, they have the freedom of choice, while many choose not to give up sports and not to give up tradition and identity, but their synthesis (Benn 2010). Sport is thus an important channel in spreading the value of gender equality. Islamic societies have not progressed so far along this path, but it should not be forgotten that the western model of sport not so long ago was very far from the principles of gender equality. When the modern Olympic movement arose (1896), athletes were only men; women’s penetration into sport was not trouble-free, while Western societies by that time had been much freer from religious regulation than the current Muslim ones. Given the logic of “retarded” modernization, the situation of women’s sport in many Islamic countries demonstrates significant progress towards a rethinking of gender stereotypes and the foundations of the traditional way of life.

4 Conclusions Modern sport as a set of ideas, practices and organizational structures can be considered as one of the agents of cultural globalization. The modern model of sport was formed within the framework of the Western culture, mainly in the Anglo-Saxon world, but quickly gained European and then global influence.

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The modern model of sport embodies a whole range of values of modern Western culture: individualism and belief in the unlimited possibilities of man, the ideal of physical beauty, strength and health, secular in its essence the spirit of rivalry and competition, the gaming start, nationalism (sport almost immediately turned into a tool for conquering national prestige and strengthening national identity), rationalized formal organization and specialization of activity, professionalism, and gender equality (a feature that did not appear even immediately in European sport). All these values have been spreading globally due to the growing popularity of sport not only as a professional activity, but also as a spectacle, a form of leisure activities and maintaining a healthy lifestyle. Thus, the popularity of sport contributes to the assertion of not just Western values, but elements of the Universalist culture of modernism far beyond the borders of the Western world. That is why sport can be considered as an agent of globalization, this function is implemented through international sports organizations, the involvement of athletes from various countries of the world in professional sport, and the promotion of sport through modern global media. However, the global spread of the Western model of sport is not only a process of unilateral cultural influence. The perception of Western models generates a growing interest in their own cultural traditions, in this case, in reference to the tradition of folk martial arts and various competitions in mastership, to the reconstruction and construction of traditions. On the other hand, the standards of modern sport can be in conflict with traditional religious norms discussed in the chapter on the example of the interaction of the Western model of sport and Islam, which leads not only to the opposition, but also to the cultural synthesis demonstrating the attractiveness of modern sport, even for societies, opposing the cultural logic of globalization.

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Gafiatulina, N.Kh., Lyubetsky, N.P., Samygin, S.I.: Social health of Russian youth in the era of globalization, Russian, Moscow, 235 p. (2016). (in Russian) Gafiatulina, N.Kh., Tarasenko, L.V., Samygin, S.I., Eliseeva, S.Yu.: Social health and perception of risks by students living in southern Russian regions (based on sociological questioning data obtained in Rostov-on-Don). Health Risk Anal. 4, 66–75 (2017). (in Russian) Gratton, C.: The economic importance of modern sport. Cult. Sport Soc. 1(1), 101–117 (1998) Vaskov, M., Rezvanov, A., Kasyanov, V., Samygin, S., Gafiatulina, N., Zagutin, D., Scherbakova, L.: Value orientations of Russian youth in the system of managing the moral security of society. Her. Natl. Acad. Manag. Staff. Cult. Arts (2), 134–140 (2018). http:// heraldnamsca.in.ua/index.php/hnamsca/article/view/309 Gafiatulina, N.Kh., Rachipa, A.V., Vorobyev, G.A., Kasyanov, V.V., Chapurko, T.M., Pavlenko, I.I., Samygin, S.I.: Socio-political changes as a socio-cultural trauma for the social health of Russian youth. Mod. J. Lang. Teach. Methods 8(5), 602–609 (2018a) Gafiatulina, N.Kh., Vorobyev, G.A., Imgrunt, S.I., Samygin, S.I., Latysheva, A.T., Ermakova, L.I., Kobysheva, L.I.: Social health of student youth in south Russia: analysis of the perception of socio-cultural risks. Mod. J. Lang. Teach. Methods 8(6), 32–41 (2018b) Smith, E.: Race, Sport, and the American Dream. Carolina Academic Press, Durham (2009) Kroska, A.: Conceptualizing and measuring gender ideology as an identity. Gend. Soc. 14(3), 368–394 (2000) Coakley, J.J.: Sports in Society: Issues and Controversies. McGraw-Hill, New York (2015) Coakley, J.J., Burnett, C.: Sports in Society: Issues and Controversies (South African Edition). Van Schaik, Pretoria (2014) Shakbanova, M.M., Gafiatulina, N.Kh., Samygin, S.I., Chapurko, T.M., Levaya, N.A., Bineeva, N.K.: Youth of the south of Russia: specifics of manifestation of ethnic identity (on the example of the Dagestan republic). Purusharta 10(2), 111–119 (2018) Serra, P.: Sociology of sport. In: Rudansky-Kloppers, S., Strydom, J. (eds.) Principles of Sport Management, pp. 57–93. Oxford Press University (2015) Giulianotti, R. (ed.): Sport and Modern Social Theorists, p. 252. Palgrave Macmillan, New York (2004) Ponomarev, E.I., Schalohyan, S.I., Kosinov, S.S.: Football World Cup 2018 as an impulse for the development of the sports movement among Russian youth. National health, no. 2 (2018). www.national-zdorov.ru. (in Russian) Benn, T., Pfister, G., Jawad, H.: Muslim Women and Sport, p. 278. Routledge, New York (2010) Taranov, P.V., Basenko, A.M., Roshchina, L.N., Kulikova, I.V., Israilova, E.A., Samygin, S.I.: Crisis of the education system in Russia under the world economic crisis. Mod. J. Lang. Teach. Methods 8(7), 349–358 (2018) Vereshchagina, A., Gafiatulina, N.К., Kumykov, A., Stepanov, O., Samygin, S.: Gender analysis of social health of students. Rev. Eur. Stud. 7(7), 223–230 (2015). http://www.ccsenet.org/ journal/index.php/res/article/view/48999 Wright, G.: The impact of globalisation. New Polit. Econ. 4(2), 268–273 (1999)

The Leading Attractors of Socio-Economic and Scientific and Innovative Development of Russia Sergey S. Chernykh1(&), Valeri V. Kasyanov2, Irina G. Paliy3, Anna V. Strichko4, and Svetlana S. Tikhonovskova1 1

Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia [email protected], [email protected] 2 Kuban State University, Krasnodar, Russia [email protected] 3 Rostov State University of Economics, Rostov-on-Don, Russia [email protected] 4 Institute of Service and Entrepreneurship (Branch), Don State Technical University, Shakhty, Russia [email protected]

Abstract. This chapter presents analysis of the attractors of the national system of socio-economic and scientific & innovative development of Russia, which are already working or could soon become the drivers of technological breakthrough. The performed analysis showed that the leading attractors of socioeconomic and scientific & innovative development could influence the trajectory of general development in a rather ambivalent way. Emphasis is made on the fact that without a strong scientific & innovative segment of the industry it would be impossible to achieve significant success in formation of the modern economy. The most significant attractors include the defense industry, which effectiveness is directly related to achievements of the Russian scholars; and the segment of the Russian economy that is oriented at export of energy resources. It is concluded that successful “digitization” of the national economy and increase of quality of government control (effective work of e-government) could become one of the important attractors of development of Russia, for saving managerial resources and time and for fighting corruption. Keywords: Attractors of socio-economic and scientific & innovative development
Economic culture
Neo-institutionalism
Trajectory of public development
Innovations
Modernization
Digitization of the national economy

1 Introduction Totality of the specific strivings of the Russian society and the special trajectory to which it moves (as a complex system) in its own development should be treated as attractors – i.e., special tendencies that are predetermined by natural conditions, © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 248–255, 2020. https://doi.org/10.1007/978-3-030-39319-9_29

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historical culture, and the existing institutional environment. The crisis states in which the system is involved could pass to various attractors, which might result in (sometimes negative) shift and changes of its trajectory. Attractors have a rather simple form, which determines dependence of socioeconomic entities on certain conditions and their inclination to reproduction of previous (usual for the system) states, which opens a possibility to calculate rather probable scenarios of their systemic development. The attractors draw the surrounding socioeconomic and managerial indicators, as a result of which it is possible to forecast the trajectory and scenarios of development of a certain system (Boronnikov 2013). Thus, attractors could directly influence the scientific & innovative development of the country. The influence could also be negative, which might lead to technological “underrun” (Shamina and Shmatko 2015). Thus, concerning Russia as a country with an integrated socio-economic, cultural, and scientific system, it is possible to note a rather contradictory attractor – the country’s dependence on the resource export, which does not always positively influence the country’s development, including primarily the real perspectives of the innovative character.

2 Materials and Methods In the scientific literature, studying the attractors of socio-economic and scientific & innovative development is closely connected to determining certain cultural and historical patterns – “path dependence” – which is interpreted primarily in the interdisciplinary discourse of neo-institutionalism, which unified the qualities if historical analysis of the existing economic, political, socio-cultural, etc. (formal and informal) institutes. That’s why one must realize that conservative and informal institutes could be used as positive attractors, when customs and traditions are successfully integrated into the project of modernization. It is possible to agree with the classics of the institutional theory – in particular, North – that the institutional diversity, which is peculiar for certain systems, is a guarantee of stability of the economic order in the conditions of social changes (North 1981). A large contribution into development of the institutional theory was done by Leibenstein (1966), who described the institutional mechanisms of X-efficiency. The principle of methodological holism was introduced into institutional analysis by Polanyi (1977), who showed deep roots of economic institutes in the socio-cultural structure of the whole society. On the whole, in the context of conceptual description of the studied problems, it is necessary to note the works on macro-historical sociology of Collins (2010), in which author uses the historical experience of the social systems with high dependence of economy on the government. Besides, R. Collins notes that the “statist” ideology is best combined with rather “militarized regimes” in the economic and in the wide socio-cultural sense (Collins 2010, pp. 414–415). Analysis of the Russian institutional matrix, which is given in detail in the work of Kirdina (2014), opens a possibility to determine specific attractors of the socioeconomic and scientific & innovative development of Russia, which are connected not only to cultural and historical (civilization) factors of changes that set the vector of transformations, but also the geographical and climate features of the society’s

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functioning as an integrated system. Attractors largely depend on the previous path of development of “path-dependence”, which could create serious (inertia) obstacles in the aspect of the innovative breakthrough. Having studied the experience of modernization of a range of the leading Western countries, Auzan (2017) came to conclusion that leaving the “path” could be accelerate in case of the change of the boundary conditions of social orders. For example, traditional paternalist institutes, which are peculiar for a range of countries of the Far East, do not slow down the progress of their technological and institutional development but stimulate its development and ensure cultural protection and cultural rearward. Experience of the Far Eastern countries cannot be used by Russia in full, as Russia, according to Nureev and Runov (2010) is a rather “Western” and “European” country according to certain parameters and its cultural and political heritage. It is obvious that narrow pragmatism is not always a guarantee of socio-economic success and does not always create (automatically) the innovative activity. Following the main settings of the Weber sociology, Zarubina states that innovative development could be blocked by such forms of culture that “are oriented at narrow practical and utilitarian attitude towards the world, which hinders going beyond the limits of the obvious and natural and which chains human in the efforts to adapt to the surrounding world, instead of changing it. It is know that inventions of the general civilization significance, made in ancient China (compass, gunpowder) were not further developed outside of the narrow ritual sphere and did not have significant influence on the society’s development” (Zarubina 2014). Thus, based on the main provisions of the followers of institutionalism, it is possible to conclude that differentiation and development of the existing institutes takes place gradually under the influence of the value structure of the society – also due to the traditional ethic norms, concentration of human capital, trust between its members, and general level of legal culture. Informal and traditional institutes (which are usually treated as customs) together with peculiarities of the ethno-cultural economy could – with the corresponding organization – become the drivers of economic development, including by means of increasing the level of trust between various economic agents. On the whole, the main provisions of the institutional theory still preserve the heuristic value and are the methodological basis of further research of the leading attractors socio-economic and scientific & innovative development of Russia.

3 Results Obviously, orientation at production and export of energy resources is a powerful attractor of development of any, even hi-tech (example – the diversified economy of the USA), economy, which has to be treated as the leading resource of supporting the social stability and development. However, on the one hand, possession, development, and export of energy resources are still a rather attractive economic model, but, on the other hand, they hinder the diversification of the national economy, development, and active implementation of “high” (nature protection and resource saving) technologies. Besides, threats for the Russian export of energy resources due to escalation of the

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Western sanctions could lead to destructive and “sudden” consequences for the domestic economy and for the political system of Russia on the whole. The scientific & innovative development of Russia in the domestic institutional system is still determined by the crisis phenomena, which are connected to external (unfavorable) “geo-political” conditions, and by internal institutional imbalance (managerial crisis and deficit of rational planning and strategic thinking). That’s why, according to the leading modern researchers – representatives of neo-institutionalism – “as to the national innovational system the project of institutional design, which envisages the necessary balance of the institutes of X - and Y- type for efficient interaction between the main participants of the research sector – government, business, and science – has not yet forms” (Kamko and Kirdina-Chandler 2018). The government has high hopes for technological breakthrough and the program of “digitization” of the national economy (including digitization of a range of government services and creation of e-government). That’s why experts note high potential of the Russian economy in this issue. For example, they think that “despite the relatively low level of digitization, Russia shows stable rates of growth and is at the peak of digital development, attracting investors in the economy. In the rating of digital economies, Russia has 39th position; its neighbors are China, India, Malaysia, and the Philippines. The leading “digital” countries are Norway, Sweden, and Switzerland. Top 10 include the USA, the UK, Denmark, Finland, Singapore, South Korea, and Hong Kong” (What is digital economy 2018). It is possible to conclude that the process of digitization of the Russian economy is at the level of large industrial (“developing”) countries, including the Asian “tigers” (Singapore, South Korea, and Hong Kong), which show “wonders” of duration of economic growth together with high speed of implementation of innovative achievements. The program of digitization of economy could have large positive influence on the system of government control, as it envisages further implementation of effective practices of city management (“smart city” system at the level of municipalities, which will allow saving large managerial resources and time). Implementation of the program could lead to growth of digital literacy of population and increase transparency of the national system of management, raising the public control over the executive authorities and reducing corruption risks. Thus, development of the “digital” economy is active implementation of computer technologies: services for provision of online services (including government services), various online payments, crowd funding, online banking, online advertising, etc. The presented program of economy’s digitization, according to the government documents, is determined by the following three levels, which, in close interaction, influence of life of citizens and society on the whole: market and spheres of economy (spheres of activities), where interaction of specific subjects (suppliers and consumers of goods, works, and services) takes place; platforms and technologies, where competencies for development of the markets and spheres of economy (spheres of activities) form; environment that creates conditions for development of platforms and technologies and for effective interaction between the subjects of markets and spheres of economy (spheres of activities) and covers normative regulation, information infrastructure, personnel, and information security” (Regarding adoption of the program “Digital economy of the Russian Federation: Decree of the Government of the Russian

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Federation dated July 28, 2017, No. 1632-r). On the whole, the offered program largely conforms to the main global trends of the information society and is aimed at creation of a developed technological spheres and the modern institutional environment. Despite the “new” attractors of digitization, as well as acknowledged scientific innovations that appear from the union with the defense industry, it is necessary – for the purpose of harmonious development – to take into account the processing industry. In the global division of labor Russia preserves the role of the largest supplier of energy resources, and it is inexpedient to refuse from this role. Intensification of industrial growth is hindered not only by the general uncertainty of the economic situation but also by the high level of taxation, high interest rate for loans (12–15%), the financial policy that is conducted against the background of the officially declared inflation of 3– 4%, reducing demand in the domestic market, and high tariffs of the Russian monopolies (Assessment of dynamics of the factors that influence business and the measures aimed at restoration of economic growth 2018). Imbalance of the Russian industry continues to grow; in order to overcome it, it is necessary to use the program of stimulating the processing industry, including the spheres that are connected to the energy sphere (and processing of energy resources).

4 Discussion During a lot of centuries of Russia’s development, and especially in the Soviet period, the scientific & innovative potential of the country was concentrated in the defense industry. Thus, in late 20th century – i.e., in the situation of the achieved peak of the Soviet scientific and technical, and what’s more important, aggregate military, power, approximately 70% of the economic potential of the USSR was spent for satisfying the needs of the military industry, which was predetermined by the armaments drive and was disproportional for harmonious development of the socio-economic system on the whole (as other spheres of social life were financed residually. Such outsized development of the military industry with obvious damage to other spheres of public life was largely predetermined by long isolation of the USSR and the planned economy, together with internal ideological settings, which hindered the development of the economic initiative. Orientation at the needs of the military industry allowed the Soviet technical science to achieve the leading innovative results. After the dissolution of the USSR, Russia received an abstract opportunity of development for own national interests without any claims for the global communist domination. Implementation of such opportunity envisaged transformation of the military industry into the technical and defense complex with a dual task: (a) provision of military security of the country against any threats; (b) turning all spheres of the national economy into the main generator of innovative development on the basis of technological progress, with active usage of the whole integration potential of development that is concentrated in the military complex, in case of dual-purpose productions and during conversion” (Larionov and Obchinnikov 2017). Though the above scenario was not fully implemented after the dissolution of the USSR, the capacities of the military and industrial complex are still one of the key attractors of the scientific & innovative development of Russia,

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and it ensures large export of the Russian weapons (2nd position in the world) and the inflow of young and perspective scholars in the sphere of military industry. Development of the military industry is still among the prerogatives of government control, which are aimed at solving further geopolitical and strategic projects and at supporting the corresponding military status at the international arena. However, as to the index of militarization, Russia is currently 5th in the world, which is better than the “oversized” situation of the Soviet period. The index of militarization is calculated by the scale 0–1000 based on ratio of military expenditures to GDP and expenditures for healthcare; ratio of number of military personnel, reserve, and paramilitary formations to the population and number of doctors in the country; and ratio of heavy armaments to population. The first position belongs to Israel, with the militarization level of 892.9” (Nureev and Busygin 2017). The tendencies of recent years show possible crisis phenomena of this sphere, as the experts note that there has been decrease of government orders in the sphere of military production (Government orders for military enterprises to reduce 2016). It is obvious, that the sphere is under pressure from the Western sanctions, which allowed determining a deficit of the products of precision engineering and microelectronics. The sanctions led to growth of the cost of the Russian space program (Russia’s space program’s cost grew by 30% due to the sanctions 2015); in recent years, this sphere has experienced a crisis of responsible management. The search for replacements of the sanction products leads to the fact that the influence of the Chinese industry grew in the military sphere, and the necessary electronic products (components for weapons) from China became the “easiest” replacements of the Western products. Fundamental science preserves significance as an attractor of the Russian industry, especially including hi-tech and innovative segments of production. “Participation of the organizations of the sector of fundamental science in completion of works for creation of innovative technologies and products is somewhat less important as compared to the above direction of usage of the research results for development of the spheres of economy. However, the share of the projects that are performed by the organizations of the sector is rather high – 58.6%. A vivid leader for the total number of projects is national research universities. Their share constitutes 27.9%. Academic organizations perform 18.9% of projects for creation of technologies and products. The third position with the indicator of 5% belongs to government scientific centers” (Mindeli et al. 2017). Thus, it is possible to conclude that establishments of fundamental science still perform a very important role in modernization of the processing industry, which shows high potential of innovativeness of a whole range of spheres. The researchers note that in 2017 “70% of Russian companies showed the absence of domestic analogs of resources and equipment as the main obstacle for import substitution … In the processing industry, wear and tear of the fixed funds exceeds 78%, which is twice as high as the critical value of this indicator. The results are logical: since the middle of 2017 the industry has been in the state of recession, annual growth of production slowed down to 1% …, which is twice as low as the forecast of the Ministry of Economic Development of the RF … Year 2017 showed reduction of the financial result in the processing industry and growth of import by 24% … for certain goods import was even higher. This shows increase of import, not import substitution” (Rumyantseva 2018). The above tendencies show a serious crisis, which

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could lead to the situation when national GDP is formed mainly by means of export of natural resources, which will lead to slowdown of innovative development. A lot of spheres of the Russian industry (engineering tools, medicine, pharmaceutical industry, etc.) – despite the sanctions and the proclaimed course at import substitution – still depend on foreign equipment and products of machine building (more than 50% in each sphere accounts for imported equipment). The main factors that hinder import substitution include also real reduction of revenues of most people (especially in the last four years), restrictive budget policy, and low accessibility of credits for manufacturers.

5 Conclusions Based on the global experience, it is possible to conclude that countries with the most developed (including “digital”) economies have not only developed science, which is integrated in business, but also a perspective (export-oriented) military industry. Thus, the performed analysis showed that the leading attractors of socio-economic and scientific & innovative development could have ambivalent influence on the trajectory of general development. Recently, the problems related to industrial imbalance have been manifested as acts of lack of coordination between the government bureaucracy, representatives of the scientific community, and private business. This takes place against the background of further governmentalization of national business; however, most orders of the scientific & innovative complex are still oriented at defense purposes, and most military corporations are oriented at the government capital. Without a strong scientific & innovative segment of the economy it is impossible to achieve significant success in formation of the modern economy. The most significant attractors include the defense industry, which effectiveness is directly related to achievements of the Russian scholars; and the segment of the Russian economy that is oriented at export of energy resources. In case of incorrect usage of the budget assets, the latter attractor could support the trajectory of unilateral development of the country. The problems of the processing industry – in particular, deficit in the sphere of precision machine building and micro-electronics – are also the restraining factors of import substitution, which has become a guarantee for survival of the key industrial spheres, especially the defense industry. It is noted that successful “digitization” of the national economy and management (effective work of e-government, etc.) could become an important attractors of development of the country, for saving managerial resources and time and fighting corruption. Acknowledgments. The research was performed within the grant of the President of the Russian Federation for state support for the leading scientific schools of the Russian Federation (NSh-2582.2020.6) «Public policy in the field of higher education and development of innovative potential of youth: economic and non-economic determinants and mechanisms in the conditions of regionalization of social space and the formation of industry 4.0»

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References Leibenstein, H.: Allocative efficiency vs. X-efficiency. Am. Econ. Rev. 56(3), 392–415 (1966) North, D.C.: Structure and Change in Economic History. Northon, New York (1981) Polanyi, K.: The Livelihood of Man (Studies in Social Discontinuity). Academy Press Inc, New York (1977) Auzan, A.A.: Development and “path depenednece”. World Econ. Int. Relat. 61, 96–105 (2017) Boronnikov, D.A.: Regarding attractors and the concept of sustainable development of Russia. Bull. Moscow State Tech. Univ. 1(4(18)), 279–286 (2013) Government orders for military companies to reduce. http://www.ng.ru/economics/2016-04-20/ 4_mashino.html. Accessed 09 Dec 2017 Zarubina, N.N.: Socio-cultural and institutional contradictions: challenges for the Russia’s innovative development. Sociol. Sci. Soc. Pract. 2(06)), 34–47 (2014) Kamko, E.V., Kirdina-Chandler, S.G.: The institutional structure of the Russian national innovative system: Path Defendence – Effect. Curr. Problems Econ. Law 12(1(45)), 149–160 (2018) Kirdina, S.G.: Institutional Matrices and Development of Russia: Introduction into the X-YTheory. SPb (2014). (468 p.) Russia’s space program’s cost grew by 30% due to the sanctions/RIA Novosti, 21 May 2015. https://ria.ru/space/20150521/1065690842.html. Accessed 02 Dec 2016 Larionov, I.K., Ovchinnikov, V.V.: Security and progress – the concept of turning defense industry into the generator of innovative development and national economy of Russia based on technological progress. Econ. Syst. 10(2(37)), 10–16 (2017) Mindeli, L.E., Medvedev, T.Y., Gornostaeva, A.N.: Fundamental science: contribution into modernization of economy (2017) Nureev, R.M., Bysygin, E.G.: Economic sanctions as a factor of modernization of the Russian defense industry. J. Inst. Stud. 9(3), 97–118 (2017) Nureev, R.M., Runov, A.B.: Russia and Europe: path dependence (experience of the institutional analysis of the history of economic development), Kaliningrad (2010). (294 p.) Assessment of dynamics of the factors that influence business and the measures aimed at restoration of economic growth. All-Russian Public Opinion Research Center, Moscow (2018). 19 p. https://www.wciom.ru/fileadmin/file/reports_conferences/2018/2018-05-21_ predprinimatel.pdf. Accessed 15 Aug 2018 Rumyantseva, E.E.L Russian industry: problems and paths of further development. Eocon. Industry 11(2) (2018) What is digital economy. http://fingramota.org/teoriya-finansov/item/2198-chto-takoe-tsifrovayaekonomika. Accessed 15 Aug 2018 Shamina, L.K., Shmatko, A.D.: The factors of provision of innovative development of economy in the conditions of aggravation of the global energy problems. Problems Mod. Econ. 2(54), 400–401 (2015) Collins, R.: Macro-history: essays of sociology of large duration. Моscow, URSS (2010)

The Value Fundamentals for the Development of the Corporate Culture of Faculty Members in a Digital Society Victoria V. Kotlyarova1,2(&) and Aleksandr G. Bermus1 1

2

Southern Federal University, Rostov-on-Don, Russia [email protected], [email protected] Institute of Service and Entrepreneurship (Branch), Don State Technical University, Shakhty, Russia

Abstract. The chapter analyzes the primary factors and difficulties of corporate culture development for faculty members. We studied current elements of corporate culture values for faculty members of the Institute of Service and Business (branch) of the Don State Technical University with the help of OCAI technique by Cameron-Quinn and the authors’ questionnaire. The chapter shows that the preferences of faculty members are quite evenly distributed among all types of the corporate culture. We demonstrate that the process of corporate culture development for faculty members of some Russian universities is emerging. (Ethical approval was obtained from the ethics committee. Members of the ethics committee are Tatiana Litvinova, Yulia Dubova and Olesya A. Stroeva. Furthermore, all participants gave their informed consent to be cited anonymously in this study before its commencement.) Keywords: Corporate culture


Values
Higher education
Corporate values

1 Introduction The modern world is characterized by globalization, digitalization, and internationalization of all areas of public life, including such an important area as education. Within the global changes of the 21st century associated with the transition to a post-industrial society, the shift of value system from the professional point of view gets particular importance. Also, in this regard, development and further evolution of corporate culture become increasingly important, because it creates conditions for productive activity and competitiveness of any institution as well as fills the people’s work with meaning and content, stimulate creativity and innovation. This kind of survey has become especially topical for high school because it was it which has undergone the most apparent changes under the impact of challenges of modern times. This process also touched Russian higher education institutions. The accession to the Bologna process, the introduction of credit-based modular learning, the growth of the non-government sector in education: all of these changes, which are effects of globalization to some extent, directly or indirectly influenced the development of the corporate culture of faculty members. Modernization of education in the © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 256–266, 2020. https://doi.org/10.1007/978-3-030-39319-9_30

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21st century gives an impetus to upgrade and harmonize social-labor relations and processes, one of them is the development and distribution of the corporate culture of faculty members (Vodenko 2019). Research rationale is also determined by the fact that one of the urgent needs of present times is to ensure the development of human capital in terms of global challenges. In our opinion, the university system of education and science plays a leading role in the resolution of the above issues. However, a modern university within the genesis of the information society and socio-cultural transformations needs a new system of value-regulation ideas that will ensure its existence and will regulate social life and personal self-fulfillment. We think that the very corporate culture should become such a system of values in order to assist the fulfillment of intellectual capital and personal creative potential. The hypothesis of the study is in the assumption that the value foundations for the development of the corporate culture of faculty members in a digital society will help improving the performance of a higher education institution if the specialists of this institution identify themselves as a professional community for which a corporate culture is a powerful tool of social and organizational management, representing a combination of professional values, principles of activity, morals that are parts of all processes aimed at the provision of high-quality educational services. The purpose of the study is to analyze the value foundations of the corporate culture development for faculty members in a digital society.

2 Materials and Methods The subject-matter under analysis is studied in a large number of scientific and methodological publications. The concept of corporate culture, the issue of values in organizational and industrial relations have been thoroughly examined: from the sociological works by K. Marx, F. Engels, E. Durkheim, F. Tennis to a more global “management theory” of the early 20th century as well as the widespread theory of “dividing values” (the idea adopted from Japanese culture to set up an organization with moral values that would unite the whole team). The study of collective relationships was considerably contributed by the foreign scientists such as G. Blumer, M. Weber, G. Garfinkel, I. Hoffmann, T. Parsons, A. Straus, T. Schelling, A. Schütz, and T. Lukman as well as specialists on management theory C. Gray, G. Kunda, G. Morgan, S. Robbins and others. Understanding of values in the framework of a corporate culture based on a threelevel model of the well-known sociologist E. Shane is the most common to specialized literature (Schein 2012). His approach is still one of the most efficient. In general, the analysis of the corporate culture research shows that many foreign authors make studies within the well-known theoretical constructs by E. Schein, D. Eldridge, A. Crombie, X. Schwartz, M. Porter, G. Lynch and offer their interpretation in specific terms and with objects different in nature. Together with the works of internationally recognized authors, it is worth noting the publications of scientists from Russia and neighboring countries who regard the

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specifics of post-socialist societies and offer adapted models of the corporate culture. We should note the researches by O.I. Zhdanov, T.S. Kienko, I.V. Kovalenko, L.B. Lagunova, B.Z. Milner, N.A. Patutina, T.O. Solomanidina, and others. Modern literature also contains many publications devoted to the issues of corporate culture in educational institutions in the era of globalization accompanied by the digitization of socio-cultural space. Ideas of social “McDonaldization” in the era of globalization served as the foundation for the concept by G. Ritzer on the role of universities in modern society. Universities are considered as a means of education use owing to the provision of educational services where the goods are degrees and qualifications (Ritzer 2008). The basic principle in the publication by G. Ritzer was associated with the research by M. Weber and his theory of social rationalization. Theory by G. Ritzer was subjected to criticism. He was blamed in the misuse of Weber’s theory of rationality (Wynyard 1998); he was blamed in the adoption of a single spatial view of the world governed by the single logic of rationalization (Turner 2003). It was suggested that if he had used other ideas, he would have provided a more complete understanding of the McDonalds phenomenon. However, the work by G. Ritzer was also highly appreciated for assistance in the understanding of the modern world and social conditions that combine everyday experience (Kellner 1999). Notwithstanding the criticism, almost no one doubted that his work was a powerful tool to analyze particular aspects of modern culture with education as a part of it. The fact that the issue of education development in a digital society is a popular topic of scientific discourse determines a wide range of sources to be used for its analysis. In particular, American economist G. Friedman, vice president for Blackboard education strategy (Blackboard is an education technology provider), reviews modern higher education as an area that demonstrates a growing potential of profitability and intertwines these new formations with the economic terms of the global market (Freedman 2008). Another American researcher of Indian origin S. Chinnamnai gives great importance to technological mediation in the impact of globalization on education (Chinnammai 2005). In his opinion, it is the development of communication technologies that contribute to the increasing scope of educational opportunities. The Swedish researcher of the globalization expanded into education P. Solberg concerning this issue emphasizes that educational systems differently respond to changes in the new economic, political and cultural world orders (Sahlberg 2004). Corporate culture as a system of subconscious values and beliefs shared by members of the organization is analyzed by E.C. Martins and F. Terblanche (Martins and Terblanche 2003). They stress that higher education institutions have not to copy a model suitable for business organizations. In their opinion, corporate culture is open to creativity and innovation and is aimed at both success and inspiration, the discovery of strategies, tools, attitudes, and values. Russian scientists also cannot but pay attention to the issue of corporate culture development in educational institutions. The chapter by Y. Pokholkov, V. Pushnykh, and M. Mitrofanova revealed the results of corporate culture study in modern Russian technical universities, which was carried out for its enhanced response to external challenges (Pokholkov et al. 2011). The authors note that changes in the university’s activity also cause changes in the development of its corporate culture. This concerns new requirements for graduates, social requirements and ones to the university management system.

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The chapter by O. Smirnova considers the phenomenon of corporate culture from an acmeological point, defining human resources as the human component of an organization (Smirnova 2010). The author examines the role of the psychological climate in the organization and issues of relations within the values of labor and management subject as well as their consistency with the values of the organization. The submitted review gives reason to state that the issues of features, framework, and functions of corporate culture are thoroughly studied, but the essence, mechanisms of development, and value foundations for the corporate culture of faculty members are understudied. The purpose of research can be achieved with the use of a significant range of methodological and theoretical approaches of social management, philosophy of education, social and global studies. Therefore, we use a comprehensive interdisciplinary approach. The theoretical and methodological basis of the research is the works of leading Russian and foreign scientists on the issues of corporate culture development of faculty members in a digital society. Integrated and multidimensional nature of the stated topic determined the application of similar scientific methods and methodological approaches. In particular, we considered the phenomenon of education as integrity utilizing a systemic approach. The principle of objectivity made it possible to analyze the scientific research results on the development of corporate culture in the education system and helped to use various statistical data.

3 Results Corporate culture is a powerful tool for personnel management: it ensures the longterm success of an enterprise on the market of goods and services, contributes to the humanization of all areas of activity and development of a great national idea. The main elements of corporate culture are values and practices that can be typologized depend on the actor, his place in the organizational hierarchy, collective or individual nature. Each activity in general, and teaching, in particular, can be represented as an activity on the implementation of socially and personally essential values. It should be noted that the mean values of teaching that exist at each stage, in any aspect and direction are the person and society, their benefit, improvement, and development. For the development of an efficient corporate culture, one needs to account traditional values; therefore a particular basis is naturally required. We accept the attitude of J. Coleman as a justification. He believes that for a productive corporate culture there are several essential foundations inextricably bound up with each other (Coleman 2013). Further, we analyze the most critical factors in the development of the corporate culture of faculty members. The first factor is the values. In this aspect, it is reasonable to refer to the classification by M. Rokich. According to it, all values are divided into two main groups: inherent, essential, stable (values-goals) and instrumental (values-means), which help

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to achieve particular goals. The first group of values develops those guidelines which the educational process in higher school should be directed at. They are as follows: basic (life, person, good, and such); national (national idea, native language, etc.); civil (democratic rights and responsibilities, etc.); family (love, fidelity, support, etc.); personal (creative activity, life optimism, decency, etc.). Instrumental values that ensure the implementation of goals-values is also vital for the development of corporate culture. These include modern pedagogical tools, methods, and forms of work, education technologies, humanistic relations between the participants of the educational process. The second factor is the goal or mission of the organization inextricably bound up with teaching. Recent years function and role of a university professor’s activity has much changed in new higher school. It has the following main characteristics: – a combination of special (scientific) and pedagogical components of professional activity, which requires continuous improvement as a didactician, methodologist, and pedagogical technologist; – direct engagement of the professor in the research and scientific-methodical activity (supervision of students’ research activity); – development of both professional and social and personal qualities of students; – the quality of the training of future specialists depends on the professor (society and government continuously step up the demands), in particular, on their ability to solve challenging tasks in practice, to design and conduct research, self-improve; therefore, the role of the professor is to arrange practice-oriented activities of students; – new social demands to faculty members are determined by globalization and internationalization; according to it, the professor plays the role of the actor in international educational and scientific cooperation; – the teacher is part of the integral faculty community of universities, whose wellcoordinated work is aimed at the achievement of common purpose. About the latter aspect, the performance of an individual professor and the faculty community is aimed at the achievement of common purpose (improvement of the quality of educational and professional training of students subsequently competitive on the labor market). This is possible provided both acceptance, but also support of the values of higher education institution as an educational corporation by the professor, his desire to be recognized as part of the teaching community, to cooperate with all actors of the university’s educational environment, to establish a useful model of corporate behavior, to maintain a favorable social and psychological climate based on the development of relevant model of interpersonal interaction, etc. Today we see an essential process of establishing corporate ethics codes, which is typical to many universities of the Russian Federation: Moscow State University named after M.V. Lomonosov, Southern Federal University, Northern State Medical University, Vladimir University, etc. These documents develop moral values and requirements for the whole organization to prevent possible harm from the unmoral acts of its members. Everything listed above in total is referred to as the second factor in the development of the corporate culture of a university professor.

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The third factor in the development of corporate culture is people. In contrast with the two previous ones, this factor is associated with personal assessments by education officers of the possible development of corporate culture in their educational institution. Therefore, it is crucial to study the already established elements of corporate culture values. Many educational institutions set such purposes. In late 2018 the authors took part in a study carried out based on the Sociological Laboratory of the Institute of Service and Business (branch) of Don State University in the town of Shakhty. The study was intended to clarify a set of issues: – whether corporate culture is typical for faculty members; – what type it is referred to; – how strong it is. In general, the sampling consisted of 97 faculty members. Thirty-seven of them were 35 years old, 32 – from 36 to 50 years old, and 28 – over 51 years old. The average age was 41.3 years. The study was carried out using the OCAI traditional methods by Cameron-Quinn and the authors’ questionnaire. Model by K. Cameron and R. Quinn have the highest value within the application in the diagnostic assessment of corporate culture (Cameron and Quinn 2001). According to this model, a typology is developed through the determination of the company’s orientation (internal focus and integration – external focus and differentiation) as well as a solution to the problems (stability and control – flexibility and discontinuity). According to the OCAI method by Cameron-Quinn, 25% of all surveyed faculty members were referred to clan corporate culture, 23.8% to adhocratic type, 25% preferred the market culture and 26.2% –the hierarchical one. These data give reason to suggest that the values of the hierarchical corporate culture prevail in the pedagogical university, but the values of the clan and market one is evenly distributed. Fewer faculty members chose the values of the adhocratic corporate culture. A survey by the OCAI method showed that the preferences according to age were distributed as follows: – Under 35 years old: clan corporate culture (24.0%), adhocratic (22.2%), market (24.4%), hierarchical (29.5%); – 36–50 years old: clan corporate culture (25.9%), adhocratic (22.6%), market (26.1%), hierarchical (25.5%); – over 51 years old: clan corporate culture (25%), adhocratic (23.8%), market (24.4%), hierarchical (26.7%). So, the data of the survey showed that the preferences of faculty members were quite evenly distributed among all types of the corporate culture. Therefore, we set the research task to determine the importance of corporate culture for faculty members. We have developed an 11-question survey. The survey included three leading blocks that describe the axiological model of corporate culture: “Knowledge and Management” block (questions 1–4), “Work” block (questions 7, 5, 11) and “Communication and motivation” block (questions 6, 8, 9, 10). When assessing the motivational profile of university staff, we used the technique to measure the achievement motivation by A.A. Mehrabian. In addition to the diagnostic

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tool function, this survey serves as a developing a factor of corporate culture, stimulating surveyed to perceive already existing cultural and organizational stereotypes, both ideological and professional. The first question was intended to reveal surveyed knowledge about corporate culture. According to the results, we have the following data on the understanding of “corporate culture” category and its role in the enterprise’s activity. Only 7% of the surveyed understand the essence of corporate culture and recognize it as a useful tool in personnel policy. Sixty-five percent of surveyed associated corporate culture only with a variety of corporate parties, rest and leisure. Nearly 20% consider it unnecessary for the performance of social institutions as well as for business principles, rules of behavior, traditions, and customs. Eight percent of surveyed is unaware of the essence and role of the corporate culture. As concerns the impact of corporate culture on the results of activities, the answers are mainly distributed as follows: 40% believe that corporate culture mainly affects the figures of labor discipline; 25% think that the university’s profit depends on the level of corporate culture, therefore it should be in demand not by current faculty members, but by the support staff (employees of the department engaged in economic activities); 5% say that corporate culture has no direct influence on performance figures, and 30% specify other performance indicators in addition to ones enumerated in the survey. In the course of the survey, we revealed that 50% of surveyed assess their performance as average, 40% demonstrate high labor productivity, and only 10% is undecided. In the opinion of some employees, the main qualities in work are accuracy and diligence (63.5%), team skills (53.2%) as well as perseverance and patience (47.4%), communication skills (42.3%) and time management skills (39.3%). Independence, creative and leadership qualities of employees have insufficient demand. On the answers about the development of corporate culture, we can conclude that the university management scarcely declares and interpret the rules of corporate culture to employees. Most teachers perceive corporate culture as a form of leisure, more than a quarter of surveyed believe that corporate culture is whatsoever unnecessary to an educational institution or does not know anything about it. The analysis shows that the first measure in the design of corporate culture is to assess the current culture and values. To determine a corporate mission is also essential. Its essence is the purpose of the company (both in the broad and narrow sense), which make it possible for employees and managers to view the activities from the perspective of the whole society. Thus, the corporate culture of a higher educational institution is developed under the influence of subjective and objective factors. External factors are political, economic, regulatory and legal terms of performance, the social system of values. These also include cultural and national traditions, public opinion, etc. We also consider intraorganizational factors that affect the corporate culture of each university. Foremost, there are specific features of the educational institution, the history of development and evolution, framework, etc. Subjective factors are the rules and values of the personnel, beliefs, goals, personal interests, etc.

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4 Discussions Today, education is a consolidating social institution that helps the distribution of fundamental social values. The 21st century changed not only the number of higher educational institutions, their specializations, and teaching methods but foremost their attitude to knowledge. Also, in the modern information society, we see changing expectations and requirements for higher education, the nature of the relations between science, education, technology, and production. They no longer have linear relations. The very statement to study value foundations of the corporate culture for faculty members in a digital society seems somewhat surprising, and the development of corporate culture faces several challenges. Firstly, the activities of most higher education institutions are strictly regulated and do not admit an essential change in the procedure for the provision of educational services. Moreover, the corporate culture of faculty members in a digital society strongly resists transformation. Corporate culture does not always meet the new needs of higher education, and the terms of the external environment since cultural values usually reflect past actions. The discrepancy between desired and actual cultural rules and values can be called a cultural gap. It is the situation that causes the need for a purposeful impact on corporate culture. This is determined by the fact that the term of the professional activity of faculty members is much longer than the term of administrator’s activity (Kashner 1990). Therefore, both the faculty members and modern conservatism of the educational system act as dampeners of corporate culture development in terms of a quick-changing social reality. As far back as 1984, V. Clark wrote that such resistance is the most critical factor of institutional processes in education (Clark 1984). Within digital society, there are negative trends primarily related to the distortion of social value foundations. The transformation undergone by Russian society spread their influence on all areas of public life. However, the man’s consciousness experiences the most considerable influence. This process particularly touches upon the spiritual area of society, as the conditions and guidelines of social life which determine the factors of spirituality and the preservation of fundamental values and traditions (Natsis 2016) suffer changes. We believe that the clash of value systems, imbalance, removal of traditional values and imposition of foreign ones, neglect of spiritual and moral rules can entail grave transformations in the performance of the educational system as a social institution. Secondly, the systems of corporate cultures acting in the social space of our country are mainly aimed at profit-making. Despite the occurring processes of monetization higher education institutions are not high-profitable organizations. A. Levine determines non-profitability as one of the leading barriers to the progress of the corporate culture transformation (Levine 1980). It should be noted that at this stage of development of the national education system universities implementing the waiting line theory market higher education, which leads to alteration of management models and ideologies of influence on the activities of respective educational institutions. According to the concept by G. Ritzer takes place “McDonaldization” of higher education, and massification of higher education that become stable in Russia: in 1993 2.613 thousand people of 10,000 studied in higher educational institutions of the

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country, and in 2016 – 4.399 thousand people, which is more than 27% of the population in the age of 15–24 years (Russia in figures 2017). Universities are considered as a means of using education through the provision of educational services, where the “goods” are degrees and qualifications. Thirdly, the essential feature of the higher education system performance is its continuous complication in a digital society. It is traditionally identified with such concepts as internationalization, informatization, digitalization, and globalization. Within internationalization, transnationalization, and globalization of the educational area, there is an expansion of educational services’ export, which in the last decades has become the most important priority of the government policy of the United States, Great Britain, France, Germany, and recently, of Australia and China. In the early 21st century, the competition of countries exporting education on the global market of services reaches a new level. This is because the training of specialists for foreign countries is becoming one of the most economically important items in the export of services (Galichin 2015). Significant social and cultural transformations in terms of globalization are continuously stimulating the upgrade and improvement of education systems. Educational systems of almost all countries are in reformation and modernization. The Russian education system today also does not fully meet current imperatives and shows its inconsistency with the satisfaction of consumer’s growing needs. Fourthly, the issue of necessary application of the social market system of corporate culture in Russia, which is typical for the West European countries, is problematic. In this situation, there will be involuntary acculturation, because it is tough to create own particular type of corporate culture, especially in institutions of higher education, within the prevalence of different values. Criticizing the acculturation as a “political strategy of late capitalism,” F. Jameson, emphasizes the Americanization. As a result of the distribution of American culture and its direct authority, ideas, values, and features of other national cultures change. A growing number of countries supplement the American society, and their national cultures are gradually passing and becoming a cultural heritage (Jameson 2009). As Russian researchers note, “there is a need to introduce digital technologies into the education system, however, it is important to do this carefully, based on the results of scientific research and the scientific substantiation of this objectively necessary process” (Bazhenova and Bespalova 2019, 315). Fifthly, the traditional gap between data processing and communication is virtually reduced, and the information space becomes merging owing to network technologies and new means of communication. The birth and development of the Internet provided a unique opportunity for experiments with human identity and almost unlimited possibilities of self-expression (Kotlyarova et al. 2017). Within broadening of mind games based on the destruction of the old ideological value systems and the artificial creation of new spiritual and political idols, the role of principal values as the spiritual foundation for the development of the corporate culture of faculty members dramatically increases. The authors of the study believe that within digital society it is necessary to create own corporate values based on national identity, which is not an inborn trait of personality and which regards historical, religious, mental, cultural, economic factors peculiar exactly to our country. Russian society entered the 21st century with “spiritual flaws” accumulated over a deep, most deep-rooted mass skepticism, unbelief, spiritual

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disappointment, which turned into an epochal crisis of traditional value systems, uncertain ideas, personal value paradigms, instability of social actors’ identity. In Russia, there is an ideological development of national identity model relying on the unity of man and the society to which he belongs. As we know, national identity arises from an acquired awareness of the universal nature of culture, history, and language (Rembold and Carrier 2011). This is a functional model that unites people not only about a single law coming from common traditional culture but also about a single spiritual principle. Spiritual ideals determine the higher reasons for existence and the direction of social development, building the “spiritual core” of a nation, and perform the function of togetherness and invigoration (Kotlyarova 2011).

5 Conclusion Corporate culture primarily reproduces a set of values and behavior models, methods of activity of a particular company’s members, which were acquired in the coordination of goals, values, ways of interaction and communication. They are an internal resource, the human capacity of the company’s development, space for improvement and modernization of its activities. An analysis of a corporate culture essence in educational institutions and theoretical approaches to its study showed that it could be considered in general as a representative culture. It is a system of elements acting for improvement of the company’s performance and the quality of educational services in a digital society. Paths for the development of corporate culture in educational institutions are associated with necessary regard to some factors both objective and subjective nature. The development of a corporate culture of Russian faculty members within a digital society cannot be identical to a similar process in Western countries, because, on the one hand, perception of corporate culture and its values are much different, and on the other hand, a number of meaningful features of a national character can contribute to the adoption of regulatory values of corporate culture. The results of a sociological survey showed that the development of the corporate culture of faculty members from some Russian universities is emerging. For this process, there are the following prerequisites: interest in the phenomenon of corporate culture, high psychological and ethical criteria for the level of corporate culture development, and highly-motivated activity of faculty members from Russian universities.

References Chinnammai, S.: Effects of globalization on education and culture. In: Materials of the ICDE International Conference, no. 5, pp. 2–6 (2005) Clark, B.R.: Academic culture. Yale Higher Education Working Group Paper (1984) Coleman, J.S.: Components of a great corporate culture (2013). https://hbr.org/2013/05/sixcomponents-of-culture

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Freedman, G.: Unlocking the global education imperative core challenge & critical responses (2008). http://blackboard.com/blackboard/gordon_freedman. Accessed 12 Apr 2018 Jameson, F.: Globalization as a philosophical issue. In: Valences of the Dialectic, London, New York (2009) Kashner, J.B.: Changing corporate culture. In: Steeples, D.W. (ed.) Managing Change in Higher Education. New Directions for Higher Education, vol. 71, pp. 19–28. Jossey-Bass Publishers, San Francisco (1990) Kellner, D.: Theorizing mcdonaldization: a multiperspective approach. In: Smart, B. (ed.) Resisting McDonaldization, pp. 186–206. Sage, London (1999) Vodenko, K.V.: Problems and perspectives of state regulation of system of education in the context of provision of Russia’s national security. Int. J. Educ. Manag. 33(3), 462–469 (2019) Levine, A.: Why Innovation Fails. State University of New York Press, Albany (1980) Martins, E.C., Terblanche, F.: Building organizational culture stimulates creativity and innovation. Eur. J. Innov. Manag. 6(1), 64–74 (2003) Natsis, E.: A new discourse on spirituality in public education. Confronting the challenges in a post-secular society. Int. J. Child. Spirit. 21, 66–77 (2016) Rembold, E., Carrier, R.: Space and identity: constructions of national identities in an age of globalization. Natl. Identities 13, 361–377 (2011) Ritzer, G.: The McDonaldization of Society 5. Pine Forge Press, Los Angeles (2008) Sahlberg, P.: Teaching and globalization. Manag. Glob. Transitions 2, 65–83 (2004) Turner, B.S.: McDonaldization: linearity and liquidity in consumer cultures. Am. Behav. Sci. 47, 137–152 (2003) Wynyard, R.: The bunless burger. In: Alfino, M., Caputo, J., Wynyard. R. (eds.) McDonaldization Revisited. Critical Essays on Consumer Culture, pp. 159–174. Praeger, Westport (1998) Galichin, V.A.: The International Market of Educational Services: Main Characteristics and Development Trends, 60 p. Publishing House “Delo”, Ranepa (2015) Cameron, K., Quinn, R.: Diagnostic Assessment and Alteration of Organizational Culture, 320 p. Piter, SPb (2001) Kotlyarova, V.V.: New value crisis and the search for universal human values. Hum. Soc. Sci. 2, 86–95 (2011) Kotlyarova, V.V., Chebotareva, E.A., Novikov, S.V.: Transformation of science and education in the information society: axiological aspects. Educ. Sci. Sci. Pers. 4, 218–221 (2017) Pokholkov, Yu.P., Pushnykh, V.A., Mitrofanova, M.V.: The corporate culture of Russian technical universities. Alma Mater. High School Bull. 9, 66–71 (2011) Russia in numbers. Brief Statistical Book, Rosstat, vol. 511, p. 143 (2017) Smirnova, I.A.: Corporate culture as an acmeological phenomenon. World Psychol. 4, 252–265 (2010) Schein, E.: Organizational Culture and Leadership, 3rd ed., 336 p. Piter, SPb (2012). Translation from English by V.A. Spivak (ed.) Bazhenova, E.Yu., Bespalova, A.A.: Interdisciplinary practices of the academic world in the conditions of the formation of the digital society. Humanit. South Russia 8(1), 310–319 (2019)

Information and Communication Technologies in Work with Preschool Children with Autism Olga V. Dybina(&) Tolyatti State University, Tolyatti, Russia [email protected]

Abstract. This article is devoted to the disclosure of information and communication technologies when working with preschool children with autism. The relevance of the question chosen for research is directly related to the ongoing process of computerization of education in Russia. The field of scientific branches is outlined, within the framework of which research is being carried out on the informatization of education, the organization of the process of mastering children by information technologies. We have analyzed theoretical studies, according to which there are now virtually no means of correctional and developmental orientation and programs for preschool children with autism. The article focuses on the use of information and communication technologies in working with children with this pathology. The material has practical value, allows using the offered games on mastering by children ways of acquaintance with the subject world in preschool educational organizations. This problem is multifaceted. Keywords: Senior preschool age children with autism spectrum disorders Object world
Computer game
Transformation
Stages of acquaintance




1 Introduction The positive impact of the ICT in the educational process is confirmed by a growing amount of literature on the use of ICT in preschool organizations. Modern children interact with a wide range of technologies in their daily lives and become competent users of devices, such as computers, mobile phones, game consoles, digital video and communication devices, without the aid of any instructions. Since children are faced with new technologies every day, they can affect their competence and skills in using new technological tools. The computer supports and enhances the learning and development of children, as children use computers to study, play, solve problems and manipulate objects on the screen. So it is not surprising that computer games acquire a significant place in the life of modern preschoolers. For young children, they offer computer games that replace traditional children’s games (Nikolopoulou and Gialamas 2015; Moursund 2005). Computer tools allow the child to focus on a specific task, which let the application of different parameters and the ability to reproduce them indefinitely, and can also develop according to a model adapted to the age, competencies and type of pathology of each child. Computer games applied to preschool children should be flexible enough © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 267–271, 2020. https://doi.org/10.1007/978-3-030-39319-9_31

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to adapt to the specifics of each child and integrate the personal data of his or her own world and the views familiar to the child. Forms of ICT (video, computer and tablet games) are also used in correctional and developmental work with preschool children. They form and develop various skills, abilities and aspects of children’s development. Since the 1990s, D. Strickland began to develop various virtual intervention strategies for children with autism. She relied on the formation of useful safety skills (for example, what kind of traffic light allows you to cross the road). Despite the primitive technologies of that time, the results of the study showed the effectiveness of such interventions (Hughes 2009). There are many developments of computer and virtual programs for teaching social skills to children and adolescents with ASD, which have not yet passed the stage of the ascertaining experiment (Wright 2013). S. Cankaya emphasizes that research in the field of educational technologies for children with autism is mainly focused on the use of video technologies. There are quite a few studies in the literature that use video technology to teach social and communication skills and use these skills in a natural environment (Cankaya and Kuzu 2010). A. Anderson describes a tablet application such as TOBY (Therapy Outcomes by You), which is based on the basic principles of behavioral therapy and teaches a child imitation, sensory discrimination, language and social skills. Like traditional behavioral therapy, TOBY focuses on global skills and not on the individual skills of children with autism. This study compared children with autism using and not using TOBY as supplemental material for 6 months. The results of the group using TOBY were higher than in the other group, but it was not possible to correlate between the time spent on TOBY and the level of effectiveness. The author of the study also notes that simulating the environment as part of a tablet game provides children with a safe place to practice various types of life skills (Anderson 2018). Sehaba et al. (2005), propose using a multi-agent system for correctional development work and rehabilitation of children with autism – a system consisting of several interacting self-learning agents, which are actually artificial intelligence (AI). In this case, agents provide the ability to interact with people. Agents allow you to monitor and analyze the behavior of the child in order to adapt the tasks to the child’s level. According to their findings, educational computer games should be flexible enough to take into account the individual differences of each child with autism. These games should include your own world and the child’s views. In the computer games used in the study, the game was carried out with objects that determined the interest of the child. The simulation results obtained during the study are interesting and promising. However, the authors note that additional experiments are needed to verify the proposed models and architecture. Scientists believe that it is important to include the dynamic creation of a child’s profile and the development of an agent who can request verification to ensure protocol consistency (Sehaba et al. 2005). There are other examples of the use of ICT as a means of corrective development work with children with ASD. For example, in the study (Blum-Dimaya et al. 2010) proposes to combine computer games and a visual schedule from TEACCH therapy to form leisure skills in children. This study demonstrated that a training module, consisting of a class schedule and video models embedded in a video game, as well as

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multi-instance training, was effective in teaching young children with autism a generalized repertoire taking into account age-related leisure skills through the video game Guitar Hero II. Russia also has experience in the use of ICT for educational purposes with children with ASD. So, for example, Vorobiev et al. (2016) described the experience of using computer games that are based on the Kinect sensor in the correction of motor disorders in children with ASD. The authors propose increasing the effectiveness of computer games as follows: “the design of computer games for children with ASD should include a clear methodological description of the actions of the teacher (defectologist) in teaching the correct motor patterns (using the entire arsenal of educational tools); the presence of an extensive multilevel network of algorithms for performing game actions for children with different variants (types) of praxis disorders and with different nosologies of disorders. We believe that it is necessary to determine the goal, objectives of the game or quest, to describe the conditions for organizing the process of ICT application in the design of algorithms and technologies for preschool children with ASD” (1, p. 321). Data on the effectiveness of ICT as a means in corrective development work with preschool children with ASD are not provided in many sources, since most ICT for children with ASD are not implemented beyond the development stage of the formative experiment. According to the research of Ern (2014), in which she assessed the level of effectiveness of various computer and video games, the most effective were: Kinect Sports & Rabbids “Alive and Kicking” (a game for generating attention, emotions and behavioral attitudes), Junior Detective Program – a program for young detectives (forms an understanding of emotions and social skills), Collaborate Puzzle game – a joint puzzle game (forms social behavior), an interactive game based on emotions (forms social interaction and communication skills) (Ern 2014). Thus, based on the above data, we can talk about the effectiveness and relevance of the use of ICT as a means of introducing children to autism with the social world. The main advantage of this type of technology is the use of all kinds of modifications inside the games, designed taking into account the individual needs of children. The purpose of this article is to determine the stages of familiarization of preschool children with the subject world, with the help of which preschool children with autism can look inside this world, into the world of computer science and be active and independent. Description. The study was organized on the basis of kindergartens of the autonomous non-profit organization of preschool education “Planeta detstva “Lada” in Togliatti, Russia. The experiment involved children of preschool age in the amount of 150 people and educators in the amount of 40 people.1 Particular attention was paid to the selection of information tools based on the criteria for familiarizing children with autism with the subject world. The basis for the study was the modification and development of computer games in accordance with the 1

Ethical approval was obtained from the ethics committee. Members of the ethics committee are Larisa Shakhovskaya, Yulia Dubova and Nadezhda A. Serebryakova. Parents/legally authorized representatives of participants gave their informed consents to be transcribed and cited.

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peculiarities of familiarizing children with autism with the subject world, taking into account the individual characteristics of familiarizing themselves with the subject world in children of this sample, as well as providing the ability to transfer acquired skills in computer games to didactic material. The study used different versions of computer games. The first version of computer games is aimed at forming ideas about the variety of objects, their multifunctionality. It involves the use of: different types of collections collected and decorated by the hands of children and adults; creative tasks for working with them (think up: new conditions for their use; options for combining and sharing them; other actions with them, etc.). The second version of computer games is aimed at mastering actions of an algorithmic nature. It involves: the use of ready-made algorithms; reproduction of the subject change algorithm; inclusion of repetitions through the compilation of algorithms. The children were offered the following computer games: – training games: “Learn to make a plan”, “Arrange everything in order”, etc. – entertaining games: “Make a chain of objects”, “Let’s put things in order”, etc. – practical games: “Draw the action”, “Draw the diagram”, What was hidden at the points, “Guess the riddle”, “Decrypt”, “Find the way”, “Come into the country of knowledge”, etc. For example, in the computer game “Find the Way”, children perform collective tasks on the screen. They connect the dots, find out the name of the first landmark (car); guess what is broken in the subject and “repair” it, approach the second reference point (Dybina 2002). Results. The obvious result was the positive dynamics of familiarizing preschoolers with autism with the objective world. By the end of the experiment, many children with this pathology have changed the level of development of the objective world in the direction of increasing compared with children in the control groups, which indicates the effectiveness of the use of computer games. Conclusion. The implementation of computer games for preschool children with autism spectrum disorders provides the beginning of the formation of information competence in these children. This is confirmed by studies in which it is noted that for autistic children, the complexity of the material is important. Using familiarization of children with autism spectrum disorders with the subject world in the work of a teacher makes it possible to strengthen the process of development of different spheres of a child’s personality, change his position in relation to surrounding reality, understand its diversity and multifunctionality.

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References Dybina, O.V.: Formirovanie tvorchestva u detej doshkol’nogo vozrasta v processe oznakomleniya s predmetnym mirom: author’s abstract of the dissertation of a doctor of pedagogical sciences, 45 p. (2002) Anderson, A.: For children with autism, tablet app may deliver life skills. Autism Research News, 4 p. (2018) Blum-Dimaya, A., Reeve, S.A., Reeve, K.F., Hoch, H.: Teaching children with autism to play a video game using activity schedules and game-embedded simultaneous video modeling. Educ. Treat. Child. 33(3), 351–370 (2010) Cankaya, S., Kuzu, A.: Investigating the characteristics of educational computer games developed for children with autism: a project proposal. Procedia Soc. Behav. Sci. 9, 825–830 (2010) Ern, A.M.: The use of gamification and serious games within interventions for children with autism spectrum disorder: a systematic review. Department of Positive Psychology and Technology, 32 p. (2014) Hughes, V.: Virtual games teach real-world skills to kids with autism. Autism Research News, 7 p. (2009) Moursund, D.: Introduction to information and communication technology in education, USA, 121 p. (2005) Nikolopoulou, K., Gialamas, V.: ICT and play in preschool: early childhood teachers’ beliefs and confidence. Int. J. Early Years Educ. 23, 409–425 (2015) Sehaba, K., Estraillier, P., Lambert, D.: Interactive educational games for autistic children with agent-based system. In: International Federation for Information Processing, pp. 422–432 (2005) Wright, J.: Conversation with avatar teaches social skills. Autism Research News (2013). https:// www.spectrumnews.org/news/toolbox/conversation-with-avatar-teaches-social-skills/ Vorobyov, V.F., Galaktionova, G.M., lekhanova, O.L., Tsarenko, I.V.: Possibilities of using computergames based on the kinect sensor in the correction of motor disorders in children with ASD.Kompleksnoe soprovozhdenie detej s rasstrojstvami autisticheskogo spektra. In: Haustova, A.V. (ed.) Proceedings of the IAll-Russian Scientific and Practical Conference, 14– 16 December 2016, pp. 318–321. FSBEI HE MGPPU, Moscow (2016)

Digital Future: Economic Growth, Social Adaptation, and Technological Perspectives Vladimir S. Osipov(&) MGIMO University, Moscow, Russia [email protected]

Abstract. This chapter takes a systematic approach to researching the sustainability of the global digital economy. Stability at the macroeconomic level is accompanied by a ratio of aggregate demand and aggregate supply, due to which equilibrium is achieved. In the digital economy, several major transformations of the world economy are taking place at once: national borders are eroding, the role of the state in regulating monetary policy is decreasing, the role of institutional competition between different jurisdictions is growing, the flows of labor and capital are expanding, and uncontrolled global Internet platforms business giants, are emerging which determine the direction of world development. The chapter shows the trends in the world economy under the influence of digitalization, and also highlights three effects: economies of scale, ratchet and hysteresis, as areas of research. Their influence on the ongoing economic processes on a planetary scale begins to manifest itself somewhat differently than in the framework of national economies, which makes their study relevant for understanding the ongoing global processes. Keywords: Digital economy effect
Hysteresis


Sustainability
Economies of scale
Ratchet

1 Introduction 1.1

Sustainability of the Global Digital Economy

Macroeconomic equilibrium is a central problem of national and global reproduction. This is a key category of economic theory and economic policy, characterizing the balance and proportionality of economic processes: production and consumption, supply and demand, production costs and results, material and financial flows. Global equilibrium reflects the choice that suits all business entities on a planetary scale. Distinguish between ideal and real balance. An ideal (theoretically desirable) equilibrium is achieved through the economic behavior of business entities with the full optimal realization of their interests in all structural elements, sectors, and areas of a globalized economy. Achieving such a balance requires compliance with the following conditions of reproduction: firstly, all consumers must find consumer goods on the market; secondly, all entrepreneurs should find factors of production in the market; thirdly, the entire product of last year should be implemented. Globalization and harmonization of trade rules, trade agreements and WTO activities contribute to © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 272–292, 2020. https://doi.org/10.1007/978-3-030-39319-9_32

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expanding the ability to meet these three conditions. Ideal balance proceeds from the prerequisites of perfect competition and the absence of externalities (side effects for other business entities). In the real economy, various violations of these requirements are observed. Experience shows that there are no such phenomena as perfect competition and the “pure market”. The role of positive and negative side effects of entrepreneurial activity is great. Cyclic and structural crises, inflation bring the economy out of balance. However, even in the conditions of these imbalances, the economic system can be brought into dynamic equilibrium, which will reflect market realities with all their contradictions. A real global macroeconomic equilibrium is an equilibrium established in the world economy in conditions of imperfect competition with the coordination of external and internal factors of influence on the world market. Distinguish between private and general equilibrium. Private is the equilibrium in a single market of goods, services, factors of production. General equilibrium is the simultaneous equilibrium in all markets, the equilibrium of the economic system as a whole, or the macroeconomic equilibrium. The mismatch between real equilibrium and ideal does not detract from the importance of a theoretical analysis of the laws of social reproduction and the development of abstract schemes and models of macroeconomic equilibrium. These models help to understand the mechanism of self-regulation of the global economy, identify factors that deviate from real processes to ideal processes, and formulate a globalized economic policy coordinated at the highest level (G7, G20, WTO, UN, etc.). Any economic system is an interconnection of various business entities or, in other words, economic (production) units. Their behavior is the same: they adapt to solvent demand and at the same time strive to provide themselves with a steady and steady income. The enterprises are interconnected by deliveries, monetary relations. In these conditions, the possibility of increasing production in one business unit should correspond with the same processes in related industries, in transport support. If we take into account that the production of any final product involves interconnection from 100 to 300 enterprises, then we can imagine what the total scale of interconnections of business units is. These relations in the conditions of the market are very mobile, especially since each production unit has a certain autonomy. If, while maintaining such mobility under the conditions of market mechanisms, the stable development of the entire economic system is ensured, then we are talking about balanced, equilibrium economic growth. Equilibrium, balanced growth is achievable with various combinations of resources. The result is different, so the balance can be achieved with different production efficiency. Thus, balanced growth and effective growth are not identical concepts, although they imply one another. Balance, or equilibrium, characterizes the state of the economic system as a whole organism, as a set of local interconnected subsystems that are characterized by necessary, stable, repeating causally related relationships between economic phenomena and governed by local laws (for example, the law of substitution of production factors) These laws usually characterize the development of a separate subsystem or the movement of its internal elements. It is important to note that it was the digitalization of production processes that contributed to the erosion of national economic borders and globalized value chains depending on the conditions of the international division of labor.

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Digitalization has destroyed the time lags between decision making and putting it into practice. Ideas began to be realized much faster, and the competition turned into hyper-competition. Buyers benefit from this, since now they are not connected by national borders for the purchase of goods and services, but do it on a planetary scale. Of course, the simplification of the interaction between the buyer and the seller is facilitated by digital platforms, providing a new global sustainable macroequilibrium. Complete economic equilibrium is the structural optimum of the economic system, to which society strives, but never fully achieves it, due to the constant change in the “optimum” itself as the ideal of proportionality. For the economy to develop in a balanced manner, it must rely on the reserves that are necessary for economic maneuver. In this case, a saturated market, assuming a certain excess of goods over demand, creates the stability of economic relations in the country. This stability, due to digitalization, turns out to be weakly stable, since the national economy, due to the destruction of national trade borders, should also take into account surpluses of goods in other countries, which shifts the global level equilibrium compared to the national level equilibrium in terms of the time factor for ensuring transactions. The presence of a reserve of necessary resources localizes production failures and prevents them from spreading to a wide chain of economic links connected with each other by the division of labor. This type of overproduction blocks the resulting disproportionality, which, of course, strengthens the stability of the economic system (we specially can see this situation in agriculture, (Zeldner 2019)). With a saturated globalized market, the role of Internet connections and virtual contracts is growing. 1.2

Legal Regulation of Contractual Relations in the Digital Economy

The development of global computer information and telecommunication technologies makes the territorial borders of nation states permeable to information, financial and material flows, creating a new area of economic activity and undermining the application of regulatory acts regulating activities within territorial borders. In fact, there may be doubt about the legitimacy of the regulations of individual countries, since Internet technologies make it easy to circumvent them if they create some kind of interference in the flow of traffic. The Internet has changed the boundaries of territories and allowed globalization to spread its influence throughout the globe. Protectionist policies are becoming disadvantageous for nation-states; they are forced to open up to material flows from the outside in order to direct their flows abroad. But at the same time, there is a process of establishing other boundaries - in the Internet space, by restricting access to certain resources and technologies by establishing barriers and access passwords. New borders isolate space on the World Wide Web, which at the same time creates the need for legal regulation of network behavior. As soon as borders appear, those who manage these borders also appear. But management must obey certain rules, otherwise voluntarism will lead to users leaving the corresponding segment. The mutual interest of users and managers creates the need to develop common rules that will create the ability to extract utility from the corresponding segment. Here we come to the fact that there is a need to establish institutions for regulating Internet and network relations. Since the formation of institutions and the control over their implementation is in the hands of persons not related to government bodies, it is

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obvious that the actions of such persons are a priori recognized as threatening the foundations of statehood, hence the endless innovation in isolating the Internet in the territories of nation-states (the most advanced in this part turned out to be the People’s Republic of China, where Google, WhatsApp, Viber, Wikipedia, and many other platforms and sites are banned. But at the same time, Chinese own state-owned WeChat platform is actively developing). In the Russian Federation, Federal Law dated 01.05.2019 No. 90-FZ “On Amending the Federal Law “On Communications” and the Federal Law “On Information, Information Technologies and the Protection of Information””, which is also called the Law “On Sovereign Internet”, was adopted. The law “establishes requirements for the operation of communication network management systems in the event of threats to the stability, security and integrity of the functioning of the information and telecommunication network “Internet” and the public communications network in the Russian Federation”. Thus, the Russian Federation began its journey to establish institutions of state regulation of the Internet sphere in the territory of a sovereign state. Of course, this law immediately provoked public debate about the real purpose of its adoption. It should be noted that such attempts by national states do not remove the problem of regulating legal relations on the World Wide Web, and the rules of conduct in it are actively developed and implemented (Skryl et al. 2018). On the other hand, governments are actively using the capabilities of the World Wide Web to improve public administration and move to more effective forms of interaction with citizens through platforms such as “Open Government”, “Electronic Government”. It is important to note that state actions cannot stop the digital, self-regulatory exchange of services, ideas and information. At the same time, one can observe another trend - towards the unification of the rules for the use of resources. Individual managers are forced to harmonize the rules of conduct on their platforms, methods of access to resources. These harmonized rules are expected to play the role of law, determining the status of an individual, property rights, dispute resolution processes based on the crystallization of collective discussion of the basic values that underpin the functioning of the Internet. The main feature of Internet law will be its extraterritorial nature as opposed to the territorial nature of national law. The territorial nature of national law was formed on the basis of historical traditions, the characteristics of each national state, and it also developed due to its dependence on the former path (gauge effect). Even social upheavals and revolutions led to short-term sharp changes in legislation, which subsequently returned to the previous mechanisms and procedures for regulating public relations—the gauge effect is so strong. The national state and its authorities intuitively feel uneasy about the spread of the Internet, as they are outside the mechanism of its regulation. Any misunderstanding of any person initially causes fear or anxiety, this is normal. Gradual addiction to the unknown, his ongoing research removes a sense of fear. Fear is replaced by curiosity, and then interest, as the new turns out to be an effective tool for solving a certain group of problems. This behavior is characteristic of the individual, but why it is not so characteristic of public authorities. Here it is possible that fear causes a threat to the existence of the state, because one of the most important functions of producing positive law is lost. Obviously, the rejection of rule-making is

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unthinkable for the state. However, whether the state is able to withstand the new reality remains a question. In our opinion, even if China fails to completely isolate the sovereign Internet from the general web (only a part of the common platforms are blocked), then, probably, attempts to isolate the Internet in a separate segment on a separate territory of a nation-state are all the more utopian. It would be more logical to take advantage of Internet platforms to implement their own policies, and without taking into account national borders. Actually, the Russian Federation is trying to realize this idea by promoting its own national values through world platforms, explaining its position on pressing issues of international relations, defending historical memory against attempts to distort it for the sake of the populist momentary needs of individual leaders of national states. In our opinion, Internet platforms, through self-organization, strive for a balanced flow of information, even in conditions of pressure on the media, however, you can find different versions and points of view on the same issue. Another thing is that bots are algorithmized in such a way that people see only the information that they prefer to see. And if the user has repeatedly accessed one source of information that he trusts, the user will receive information in accordance with his preferences and never one that contradicts the selected source. This creates fertile ground for manipulating the consciousness of society. The authorities are tempted to social engineering, which can influence the behavior of citizens in the way necessary for the authorities. Platforms help convince voters to vote for a single party or candidate. A logical question arises: does the voter make a choice or is the choice made for the voter, but is made out by his hands? On the other hand, are state authorities of nation-states so wrong in seeking to regulate the Internet if there is a real threat of a change in the political order in the country. It is already well known that the color revolution in Egypt could not take place without using the Internet to organize the activities of protesters. This means that the threat to the political order in the country is real, and hence the state’s desire to control the network is justified. As you know, rulemaking requires a special mechanism for translating the law into reality. This mechanism depends on the real ability to exercise physical control and impose sanctions on those who dare to break the law. If the norm does not contain sanctions, then the likelihood of compliance is not too high, because for noncompliance with any adverse consequences will not follow. The situation is completely different in Internet law, as violation of the rules leads to sanctions (blocking access, deleting content, fines, etc.). There are practically no unauthorized norms, since there is no sense in introducing them, since no one will comply with them. What is the difference in Internet law and, for example, in administrative or criminal law. The difference is that in real life no one can find out about an individual’s violation, what they are currently trying to fix by planting numerous security cameras for citizens and their behavior. On the Internet, an individual’s behavior is open and his actions are visible, even if he tries to hide using submasks, for example, Tor-browser. The offender is necessarily and more likely than in real life to be identified and punished. This stimulates the disciplined behavior of most users. The correlation between state territorial borders and the borders of Internet law reflects the rooted correlation between the results of the behavior of individual individuals, regardless of their nationality.

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The Internet space breaks the correspondence between a legally significant action and the physical location of the subject of the action. The global information and telecommunications network breaks the ties that are characteristic of networkless interaction. Thus, the connection between the geographical location and the right of national governments to proclaim control over behavior is breaking. This leads to the fact that the individual seeks to fulfill the rules established in the network rather than national legislation. The geographical position is also divorced from the consequences of the behavior of the individual in the network, rendered to other individuals or individually defined things. The legitimacy of the actions of the national government to implement the rules applicable to global phenomena is also detached from the geographical position of the subject of legal relations, which leads to its opportunistic behavior. It follows that the Internet is changing the rules-formation system based on the boundaries between the physical space and the physical position of the subject of legal relations - the network user. It becomes completely natural for an individual that the national government cannot regulate the behavior of individuals on the network, that the state is weaker in network legal relations than in the physical world within the boundaries of the national territory. The physical location of the subjects and objects of legal relations is practically irrelevant for the implementation of these legal relations, since the information equally quickly reaches the addressee anywhere in the world, bypassing the physical borders of states. This creates additional incentives to find the most effective ways to carry out economic activity, as consumers have the opportunity to turn not only to another national producer of goods, work, services, but also to foreign ones. A consumer can easily make a transaction anywhere in the world, which leads to increased competition between manufacturers for each consumer. The consumer, on the contrary, is expanding the possibilities of searching for the manufacturer who will offer him the most complete conditions for satisfying his needs. This phenomenon gives rise to hypercompetitive relations when national producers compete on local consumers not only with each other, but also with foreign manufacturers. Expanding the circle of competitors entails the intensification of competition, the acceleration of all processes from production to delivery of the product and disposal of its residues. The Internet space has no physical territorial national boundaries, since the cost and speed of sending and receiving information sent via the network does not depend on the physical location of the addressee. Messages are transmitted from one physically defined place to any other physically defined place without damage, modifications, destruction, delays, without any physical marks or artificial barriers that, offline, can become an obstacle to the transmission of information. It is even more important that such “freedom” of the flow of information is convenient for conducting economic activity concluding transactions with persons with whom there is no physical contact, but who can offer the best conditions for executing the transaction. It is enough to pay attention to the platforms for the sale of housing, various goods, books, types of services and works. The state, however, is trying to find the possibility of controlling material flow, which is managed online. So, there are known initiatives to lower the threshold of online trading and levy customs duties through post offices, where buyers receive

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goods purchased through network platforms. The extraterritorial sign of trade here is taken as the basis for the collection of customs duties, that is, if it is impossible to control the beginning of the flow, or the initiative to organize it, then you can control the completion of the flow. It is important to note that control becomes possible due to the materialization of the online operation in the form of goods that came to the post office from abroad. It is important to understand how the state could control the financial flow in the network. Banks that conduct plastic card transactions can be of great help here. Under pressure from central banks and national governments, banks disclose information about the transactions of their customers, usually when exceeding a certain amount of transfers. Under the guise of combating the financing of terrorism and money laundering, financial flows are monitored through the network. Capital flows can have a much more destructive effect on the political order than material flows, as financing can be directed to support opposition parties or politicians to overthrow a legitimate government, as was done during the color revolution in Egypt and several other countries. However, even here individuals seem to have found a way to circumvent control by nation states. Offshore banks located again outside the physical borders of national states where the individual is physically located provide anonymous financial services. Offshore banks are not only not interested in the origin of the funds, but also in the entities between which the transaction takes place. It should be noted that, of course, such channels can also be used by terrorist organizations, but in most cases, they are used to hide financial resources from taxation in national states. Some countries are testing systems of electronic barriers or filtering information flows, because faced with the consequences of an uncontrolled flow of information or finances, and realizing the inability to control electronic flows due to their virtuality and ability to cross physical boundaries, governments are not inactive. It is important to note that the emergence of state-initiated electronic filters is accompanied by the creation of new configurations of information flows, finances and objects, which reduces the efforts of the state to a minimum of efficiency. Creating a new configuration is carried out in the interests of users in accordance with their request. This is because the network operates on the basis of self-organization with a large number of capable and proactive players, because the network does not have a geographically localized meeting of leaders who would have a stronger right to regulate than other groups or individuals with programming abilities. The right to regulation is actually tied to the ability to program, which makes the participants in network relations equally strong in the right of regulation, and again, regardless of their geographical location. The extraterritorial principle of the functioning of the network also creates certain difficulties with the regulation of legal relations between their participants within the network. What right is there to apply if geographically the participants in the legal relations are far apart and have different citizenship. De facto, all events on the Internet occur, but are not geographically linked to any country, that is, nowhere specifically, while they are interested in entities that are not only real, that is, have citizenship, occupation, property, etc.., but they are also virtual at the same time, because they operate through email addresses, virtual accounts, therefore, no physically existing and geographically attached authority can be entitled to demand that an individual’s actions be subordinated to his rules.

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This situation of virtual entities is attractive for economic and other activities, since the lack of control compared to offline activities offers additional benefits, in addition to the comfort of uncontrolled behavior on the network. This trend was picked up, as it turned out, primarily by financial organizations. In fact, there are no more classical banks, they all transfer their activities to the virtual space and manage operations through special mobile applications. An example here would be Tinkoff Bank, which has no offices at all and is completely located on the network. Other major players strive for this - AlfaBank, Sberbank, VTB, etc. Visits to the bank are no longer required, because all transactions (payment for services, goods, opening/closing of deposits, management of a pension account, transfers, etc.) can be carried out in applications. Modern cyberspace researchers propose considering cyberspace not only without being tied to the territorial borders of states, but as a whole that needs legal regulation (Osipov et al. 2018). For example, the many legal and substantive difficulties created by electronic communications that cross borders can be resolved thanks to one simple principle: representing cyberspace as a separate place for legal analysis by recognizing the legally valid border between cyberspace and the real world. Such a proposal is not without reason, because it is not possible to determine the boundaries within cyberspace, so it is necessary to consider the network as a whole, where legal regulation is possible and even desirable to prevent fraud and more efficient distribution of resources due to rooted institutions.

2 Globalization and Digitalization Most developed countries have national strategies and programs for digitalizing the economy and society. The goals and objectives of countries are generally similar, but approaches to the implementation of policies are somewhat different. Some of the initiatives are embedded in the wider supranational scientific, technological and innovative agenda. So, the digital development strategies of Germany (Digital Strategy 2025) and other EU countries are consistent with the pan-European digital agenda (Digital Agenda for Europe, 2010) Existing “digital” initiatives are usually characterized by a clear continuity and are based on the results of previous strategic and program documents in the field of ICT. In most countries, the development of the first strategies in this area dates back to the late 1990s and early 2000s. Thus, the initiative of the European Union “Electronic Europe” (eEurope) on the transition to the information society was adopted in 1999. Throughout the 2000s, the main objectives of the digitalization policy were related both to building an information infrastructure and stimulating the gradual penetration of ICT into various fields of activity. In the framework of the implementation of the National Broadband Strategy (2010) in the UK, the goal was reached to provide the population mainly in rural areas with high-speed broadband Internet (download speed - 24 Mb/s). The next stage of government policy - the launch of pilot programs for the introduction of digital technologies in industry - is associated with the search for new sources of growth due to the global financial and economic crisis of 2008–2009. The Industry 4.0 initiative launched in 2011 brought together a set of projects for the creation,

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implementation and use of digital solutions in manufacturing (Stroiteleva et al. 2019). National programs of this period are aimed at the dissemination of scalable and effective solutions for enterprises. Currently, the politics of the leading countries of the world are witnessing a transition to a comprehensive digital agenda. The main goals are the digital transformation of public administration, the development of information and communication infrastructure based on new technologies, the strengthening of information security, the development of digital skills and competencies. Particular attention is paid to regulatory aspects related to the construction and use of broadband network infrastructure, access to the radio frequency spectrum, market regulation, etc. In addition, strategies are being developed for introducing individual digital technologies with high potential effects in various sectors of the economy (for example, the German National Artificial Intelligence Development Strategy 2018). The transition to digital technology helps strengthen the competitiveness of national economies. In particular, France’s International Digital Strategy (France’s International Digital Strategy, 2017) aims to bring approaches to regulate the introduction and use of digital technologies closer together, ensure the security of cyberspace and the inclusion of states in the common digital agenda. Given the proliferation of digital platforms at the international level, special attention is paid to the norms and rules that guarantee a variety of technological solutions and equal conditions of a competitive environment. The digital agenda, measures and effects of policies in the field of the digital economy are becoming the subject of active discussion at leading world platforms. OECD Going Digital horizontal project The implementation of the OECD Going Digital project, initiated in 2017, is aimed at solving the following problems: • development of general principles of policy in the field of the digital economy, affecting all sectors of the economy and aimed at achieving sustainable economic growth and ensuring the well-being of society; • conducting an in-depth analysis of existing policies aimed at digital transformation in individual sectors, including a study of the level of development, effects and risks of digitalization; • analysis of problems arising from the digital transformation, including those related to employment of the population and providing citizens with the skills and knowledge necessary in the digital economy; • the implications of digital transformation for competition and market openness; • performance effects of the digital transformation on public welfare; assessing the level of development of the digital economy. The main prerequisite for the success of the digitalization policy is the coordination of actions and constant communication of authorities, business, scientific, educational and expert communities. Particular attention is paid to monitoring and evaluating the impact and effectiveness of policies. So, since 2013, the Digital Economy Index has been calculated annually in Germany, which characterizes the level of digital transformation of the economy and its individual sectors. At the same time, despite the overall high importance of the tasks of digitalization, there is some imbalance between the goals of the programs: a little more attention is paid to digitalization of public administration, the least to the promotion of the use of digital solutions by the population; measures to support business digitalization occupy an intermediate position.

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States promote digitalization in two main areas - by supporting the ICT sector and industries - users of digital solutions. For the latter, support mechanisms span three blocks: (1) research and development; (2) testing and implementation; (3) stimulating demand for digital technologies, including supporting the export of related products and services. To achieve the goals of the digital agenda, both traditional financial and nonfinancial support measures are applied, as well as newer ones, taking into account the specifics of end-to-end digital technologies. The majority of governments’ portfolio of measures is dominated by financial instruments, with a substantial part of national programs focused on supporting small and medium enterprises (SMEs) and start-ups. Public-private co-financing of programs is becoming a key principle of innovation policy and serves to stimulate the commercialization of new solutions based on competitive selection. Research and development support relies on traditional grants and grants. Along with this, new tools are being developed that provide a synergistic effect and involve the maximum circle of centers of competence. Among them, the central place is occupied by digital research platforms. In particular, in the USA, special platforms have been created for joint research and testing of solutions in the field of wireless communications (Platforms for Advanced Wireless Research). The mechanisms for introducing digital technologies are characterized by a noticeable variety: test sites are being created (for example, in the field of autonomous driving in Germany), test sites (in the field of blockchain technologies in the Republic of Korea), etc. A significant part of the initiatives are aimed at stimulating the technological development of SMEs - transfer of technology Guy, assistance in finding counterparties, obtaining financial support (online platform for searching and accumulating technological solutions in the Republic of Korea). With regard to industrial digitalization, a similar model is used, covering the entire innovation cycle - from the development, commercialization of technologies and further to implementation (catapult centers for high-value-added industries in the UK, manufacturing innovation institutes in the USA, innovation centers in the Republic of Korea, test laboratories “Industry 4.0”in Australia, etc.) (Bogoviz et al. 2019). The most complex and at the same time effective already in the short term is a block of measures related to stimulating demand for SCT. To ensure the massive spread of digital technology among enterprises, flexible mechanisms are used, primarily tax incentives. They allow you to cover a wide range of economic agents (for example, accelerated depreciation or tax credit for investment in information technology in Japan). Along with concessional loans for the purchase of digital products and services, various types of vouchers are actively used to support SMEs, including innovative ones (subsidies for SMEs in the EU) to connect to high-speed communication networks (grants to provide households and SMEs with fiber access 1 Gb broadband. Given the role of the state as a major consumer, measures are being taken to simplify the mechanism of public procurement of digital solutions, in particular those created by SMEs. To do this, the terms for conducting competitive procedures are reduced, limits are set for the duration and cost of contracts (Australia), access to tenders for companies with less than two years of

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market experience (USA) is ensured and others. In order to implement long-term initiatives, special funds are being created to digitalize industries (a fund in France for investing in equity or quasi-equity capital of ICT companies subject to private investment), including the general government (technology modernization fund in USA). An important place in the package of measures to stimulate demand for digital technologies is taken by regulatory measures. These include standardization at the level of international organizations and industry consortia (Industry 4.0 technology standardization roadmap in Germany), normative consolidation of various aspects of the introduction and use of digital technologies, the creation of “regulatory sandboxes” (for unmanned aircraft systems in the USA), radio control -frequency spectrum for commercial use (auctions for the purchase of licenses for 5G networks in the USA). Most initiatives for the implementation of SCT are implemented on the basis of pilot projects (blockchain projects in public administration in the Republic of Korea, pilot launch of 5G networks in a number of cities in France, etc.). Of particular interest are tools related to the search for more flexible interaction mechanisms (Stroiteleva et al. 2019). 2.1

Sustainability of the Global Economy

In 2017, the Russian Government adopted the Digital Economy of the Russian Federation program in order to implement the Strategy for the Development of the Information Society in the Russian Federation for 2017–2030 (Bogoviz et al. 2018; Perelet 2018). As a result, the relatively sharp boundaries that existed in the 20th century. Between economic and social policies, as well as between public and private spheres, they become fuzzy. Old ways of doing things, including management, are not necessarily sustainable. The central point of the new economy is Data Science and people with the specialty of data scientist. Under the umbrella name of data science, there are many different, not yet systematized methods and technologies for analyzing large volumes of data, and there is no true data science that could be called that name. Data science is nothing more than a generic name for the sum of technologies for producing data products. The digital economy allows us to maintain the sustainability of the Earth’s ecosystem, the transition to a green economy, as well as restore the destroyed areas in this area, for example, by monitoring green “big data”, including online screening of a whole range of relevant indicators. Planetary boundaries define the biophysical boundaries within which humanity can flourish. There are probably many ways that can ensure inclusive and sustainable development in this space. These paths will be disputed: different cultures, having their own needs, attitudes and values, will in their own way consider costs, risks and benefits. Power in the world is unevenly distributed between social groups, and the problems of development and social justice will be enormous, since the biophysical limitations of the Earth are real and not subject to political negotiations (Perelet 2018). The concept of a green economy does not replace the concept of sustainable development, but achieving sustainability is almost entirely dependent on creating an efficient economy. Over the decades when new wealth was created using a model of a polluting, resource - and energy-intensive economy, society did not solve such problems as social stratification and depletion of resources, and we are still far from

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achieving the “UN sustainable development goals”. Sustainability remains a critical long-term goal, but to achieve it we must make the economy green. Of interest is the possibility of reaching a qualitatively different level in the development and use of green technologies of a wide range associated with the greening of the technosphere. Unlike natural raw materials, when using data, their quantity does not decrease, but, on the contrary, increases, this is a qualitatively new phenomenon. The creation of technologies for working with data in an avalanche-like manner forms the need for new technologies. The economy did not know such a phenomenon of positive feedback. By analogy with electrification and computerization, talk now about datification and the digital economy. The combination of extreme connectivity with extreme automation on the foundation of extreme performance opens up the possibility of creating large systems built on the basis of a cyber approach (Perelet 2018). In the US, the digital economy has had a huge impact on employment and economic growth. For example, in 2014, the United States based on ICT exported services worth about $ 400 billion - more than half of all US service exports. This increased the total real US GDP by more than 1% per year, and millions of new jobs were created. Almost all industries, from manufacturing to financial services, education, agriculture and healthcare, have benefited from the introduction of digital technology. Innovative companies are constantly being created in the USA, however, the success of American entrepreneurship in the digital economy was not predetermined and did not arise in a vacuum. For a digital economy to flourish, governments working with other stakeholders create a legal, political, and diplomatic environment that fosters creativity, competition, and investment. The initiator of the term “digital economy” is considered by the businessman Don Tapscott. He advocates a network approach that can be applied to business and to almost any aspect of human activity - education, healthcare, work and entertainment (Tapscott 1996). The emergence of networks can change the very method of doing business, as it attracts the collective experience of know-how to solve problems and promote innovation. However, will communication between people take a new level to the point where consciousness will move from individuals to organizations? Organizations that have no consciousness are not capable of learning, just like people. By gaining consciousness, organizations acquire the ability to learn, and this is a necessary condition for survival. The network mind serves as the missing link in organizational learning, and conscious organization can become the foundation of a flexible learning organization. It is possible that a networked mind can cross organizational boundaries and arouse a deeper level of social consciousness - in communities, nations and around the world. For the Organization for Economic Cooperation and Development (OECD), “digital economy” is a generic term used to describe markets that focus on digital technologies, including electronic commerce. In addition to the economic and social impacts, the environmental aspect of the digital economy deserves special attention, as it is essential for sustainable development. A green economy is not a new economy, but rather the greening of an existing economy. But this process requires a fundamental shift in systems that satisfy our needs, that is, do not correspond to the traditional economic paradigm of business. The EU’s 7th Environmental Action Plan aims to build long-term sustainability so that by

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2050, humanity can live within the planet’s environmental constraints (Novikova et al. 2019; Machnev et al. 2018). This concept is based on smart citizenship that brings people and technology together to create an innovative, sustainable knowledge economy. It includes the implementation of a number of measures to stimulate eco-innovation and the efficient use of innovation resources. The current thinking about the development of the world economy and societies is focused on two problems: the potential of information and communication technologies (ICT) and the problem of environmental sustainability ICTs consume 3.6% of global electricity and create 1.4% of carbon emissions. In this regard, it is often recommended that the public sector create and operate energyefficient data centers based on renewable energy sources. The importance of achieving environmental sustainability was recognized at the 1992 Earth Summit in Rio de Janeiro. Sustainable development was defined by the World Commission on Environment and Development as “development that meets the needs of the present, without compromising the ability of future generations to satisfy their own needs” (Evteev and Perelet 1988; Souter et al. 2010; von Weizsaecker and Wijkman 2018). For this, it is necessary that man ceases to destroy the planet. Under the dictates of the financial system, the economy is tempted to speculate and seeks to widen the gaps in wealth and income. It is necessary to integrate the environmental impact of the digital economy. Simplification of environmental impact research generates unsuccessful technology futures. The digital economy is changing human relationships with the environment (Pashentsev et al. 2019). As a solution to environmental problems, the concept of a “sustainable digital economy” is proposed for the benefit of the economy, the environment and society. The synergies between the digital economy and green economy strategies have been recognized in developed countries. Traditionally, environmental policies and strategies have been considered separately from economic and social development policies. In recent years, the prospects for sustainable development and environmental issues have become more comprehensive. 2.2

Economies of Scale

The world is constantly changing, and in recent years, one has heard more and more often about the growing role of advanced technologies and innovations in the development of the economy. The latest technologies can increase the efficiency of production and business processes. Traditional approaches and working methods change as the latest technologies penetrate into all new branches and spheres of human activity. Earlier mentioned by us, Dan Tapscott describes how the way of life of people can and should change under the influence of information and communication technologies ICT, and focuses on the connections between users - primarily on the possibilities of network interaction between people from different geographical locations, areas of activity, etc. It is the avalanche-like growth of information links that is the foundation of the new digital globalized economy. According to Dan Tapscott, it is the development of the digital economy that should become the main engine of globalization. He lists ten technological changes that

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will accompany the development of the new economy and make the world economy more efficient. In particular, Tapscott points out the need for the introduction of broadband Internet access, combining various data - audio, video, text in multimedia, the transition from proprietary to open source software, as well as the emergence of various aspects of virtual reality and artificial intelligence. In 2017, we can conclude that all these shifts have already occurred. ICTs have had a tremendous impact on many sectors of the economy, but the depth of this effect and the speed of changes occurring in each sector are different. A systematic approach to studying the sustainability of the global digital economy allows us to assess the influence of economies of scale on the establishment of macroeconomic equilibrium on a planetary scale (Corsi et al. 2019). In order to plan the development of a company, its management needs to know what is the relationship between the number of factors of production used and the volume of output, that is, what is the economies of scale. This dependence is expressed by the production function. Its nature depends on the type of production. In some cases, output is growing faster than the number of factors involved, in others - more slowly. It also happens that the volume of production is proportional to the number of factors involved. For example, the number of clients daily served by a hairdresser is almost proportional to the number of hairdressers working. In such cases, it is said that there is a constant economies of scale. This means that an increase in a given number of times the number of factors of production leads to an increase in output by the same number of times. If output increases faster than proportionally with respect to production factors, they say that there is an increasing scale effect. If output grows more slowly than in proportion, the diminishing economies of scale. For the digital economy, the economies of scale are clearly increasing in nature, since output is carried out with more efficient use of production factors (technological advances, territorial localization of production) and with access to the necessary production factors expanded to a planetary scale. Due to the harmonization of trade, customs procedures and interstate agreements, access to the markets of production factors is expanding, while digitalization sweeps the boundaries of the production process, which makes creating a product cheaper. An important factor in the behavior of economies of scale in the global economy will be the time horizon for the effects of economies of scale. It is sharply explosive and with the opening of markets for factors of production will gradually fade until a new incentive to expand due to new technologies is received. However, as in the classical sense, the economies of scale in the digital globalized economy have the same manifestation nature when at the beginning of development the producer observes an increasing economies of scale, as he manages to realize the benefits associated with specialization and distribution of labor. Then, when the shortcomings of small production are eliminated, the firm experiences a period of constant economies of scale. And after that, it falls into a wide zone of a diminishing scale effect. It is important to note that competition in digital markets has certain distinctive features. First, competition between businesses and Internet platforms is generally more important than competition between businesses. In other words, the dominance or even the monopoly of Internet platforms almost always succeeds. Secondly, digital markets are often characterized by a strong economies of

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scale, which reinforces this feature of competition due to the dominant position of Internet platforms. Thirdly, many digital markets are bilateral, therefore at least two user groups benefit from the use of a digital platform. For example, search engines are used by individuals to access information on the Internet and advertisers to access viewers. Fourth, digital markets are characterized by high rates of investment and innovation, which lead to rapid technological progress in the industry. Competition in the digital markets is clearly cyclical. A successful firm may gain significant market power, but this dominance may be vulnerable to the next cycle of innovation. 2.3

Ratchet Effect

The ratchet effect is an effect in economic theory, where the ratchet is a mechanism that prevents the wheel from turning in the opposite direction. A number of economic indicators, having increased in the short term, are not necessarily reduced to the initial level. The term was first coined by Joseph S. Berliner in 1952 as part of an analysis of the motivations of company managers. It is important to note that the “ratchet effect” does not apply to individual products and can only occur on their totality. An increase in aggregate demand causes an increase in prices for goods, while a decrease in aggregate demand does not necessarily lead to a decrease in the aggregate price level, especially in the short term. Prices remain stable and there is a ratchet effect. The economic sense of this effect is that price changes upward are easier than downward, that is, price inflexibility downwards. The reasons for the effect may be: fixed wage contracts in the cost of production; decreased productivity due to lower wages; losses from investments in training personnel who decided to change their employer; legal factors related to the minimum wage and minimum level of compensation for the dismissal of employees; monopolism in the markets, state policy of regulating prices or the actions of trade unions that impede the reduction of nominal wages (Gehring and Dörfler 2019). What happens to digital markets and how does the ratchet effect on them manifest itself? In a globalized economy, wage fixing in contracts is becoming less and less important, piece-rate wages or piece-rate wages are gaining importance, as, for example, in project groups. Thus, the effect of ratchet due to wage fixation cannot manifest itself in the digital economy. It should also be noted that the digital economy is getting rid of living labor in favor of capital, which is also reflected in a decrease in the ratchet effect. A decrease in labor productivity as a factor in the ratchet effect cannot take place in the digital economy, since it provides an explosive increase in labor productivity, that is, on the contrary, it reduces the ratchet effect, and on a global scale (Ahn et al. 2018). Investments in training personnel when changing employers on the scale of the digital globalized economy are negligible and their influence can be neglected. Monopoly in the markets is being overcome by blurring the state borders for trade and monopolism is weakening due to the expansion of the supply of goods and services, however, the main “heroes” of the digital revolution, the Internet platforms, gain global monopoly power by directly accessing goods and consumers. And here, the ratchet effect will play a role if online platforms plan to abuse their monopoly position. But even such plans do not have a long-term perspective, as consumers will instantly switch to another Internet platform that offers more suitable conditions. Moreover, the

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new Internet platform will appear very quickly, as soon as the old one begins to abuse its monopoly position. Finally, public policy as a factor in the manifestation of the ratchet effect does retain its relevance (Higgs 1987). The government is constantly faced with a dilemma: to admit to its citizens that it is ineffective or to continue the previous economic policy of strengthening state regulation to “overcome the consequences of the crisis” that is generated by this very state regulation. The role of the state over the past, at least half a century, has increased, but economic crises are becoming deeper and longer. A change in the role of the state in economic relations can take place in several directions: the introduction of e-government, the digitalization of public services, the reduction of administrative barriers, and the transition to a service state. It is important to note that all these paths are possible when implementing the ideas of the digital economy for the public sector. Thus, the ratchet effect is also likely to lose its significance, since even the state, under the influence of digitalization, will be forced to restructure and compete with other states for the quality of the institutional environment. 2.4

Hysteresis Effect

Consider the effect of the third effect - the hysteresis effect in the framework of a systematic approach to studying the sustainability of the global digital economy. Hysteresis in the economy refers to an event that persists in the future, even after eliminating the factors that led to the occurrence of this event. Unemployment (Trejo García et al. 2017) and international trade (Argilés-Bosch et al. 2017) are two areas that are mainly used to explain the effect of hysteresis. Hysteresis in the economy occurs when one event affects the course of the economy in the future. An example of hysteresis in an economy is the delayed effect of unemployment. The current unemployment rate in any economy includes the natural unemployment rate and cyclical unemployment. The natural unemployment rate is the unemployment rate in an economy where inflation does not rise or fall, and includes frictional and structural unemployment. The natural unemployment rate is not equal to zero, as workers will always be in search of a better job, but its percentage is low. Cyclical unemployment is caused by a downturn in the business cycle. Workers lose their jobs when businesses lay off during a period of low demand and declining business income. When the economy enters the expansionist phase again, it is expected that enterprises will start hiring the unemployed again and that the unemployment rate in the economy will begin to decline to normal or natural unemployment until cyclical unemployment is zero. Of course, this is an ideal scenario, but hysteresis tells a different story. Hysteresis claims that as unemployment rises, more people are adjusting to lower living standards. As they become accustomed to a lower standard of living, people cannot be so motivated to achieve the desired higher standard of living. In addition, as more people become unemployed, it becomes more socially acceptable to remain unemployed. After the labor market returns to normal, some unemployed may not be interested in returning to work.

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Hysteresis in unemployment can also be observed when enterprises switch to automation during a downturn in the market. Workers who do not have the skills necessary to work on equipment or newly installed technologies will be unemployed when the economy begins to recover. In addition to hiring only qualified specialists, these companies will have to hire fewer workers than before the recession stage. In fact, the loss of work skills will lead to the displacement of workers from the cyclical stage of unemployment to the structural group of unemployment. An increase in structural unemployment will lead to an increase in the natural unemployment rate. Now let us examine what happens to the labor market in the digital economy in order to explain the effect of the hysteresis effect under the new conditions. The digitalization of the industry, the introduction of the Internet of things, the expansion of robotics together created an insurmountable obstacle to the implementation of import substitution policies in the framework of previous successful recipes. It turned out that the growth of industry due to robotization and digitalization is not accompanied by the growth of jobs, and therefore the growth of well-being of the population. Quite the contrary, since there have been alarming trends of widening inequality with a simultaneous high level of economic growth and a decrease in the number of jobs. Modern studies (Ford 2015; Srnicek 2017; Srnicek and Williams 2015; Mason 2015) show that in the very near future, due to robotization and digitalization, individual professions will be a thing of the past. Thus, the introduction of online cash registers allows tax authorities to monitor the financial condition of firms, plan the level of tax burden and the future amount of taxes collected. This begs the legitimate question, but what will happen to the accountants? The widespread use of big data technologies makes it possible to make more informed decisions in a much shorter time. So, machines have already learned how to determine the diagnosis of a disease faster than a person than a professional doctor and even a consultation of doctors. The ability of machines to process large amounts of information faster than humans increases the analytical function of bots, which means that this type of activity can also get rid of living labor. The accuracy of the diagnosis made by the machine is higher than that of a person. Bots learned to write related texts, which allows you to get readymade journal articles when entering the source information. The widespread use of digital technologies in education, the recording of lectures, the introduction of electronic testing, makes the presence of a teacher in the audience unnecessary. Looking into the future, we can assume that the regulatory legal acts of the machine will be able to write more efficiently, as well as learn to make more balanced (and therefore legal) court decisions. A symptom of this trend is the fact of the dismissal of lawyers in banks involved in court cases - it turns out to write claims easier, faster and more efficiently using the bot. All types of activities that, in one way or another, are associated with routine operations, repetitive actions, regularity and the ability to algorithmize, are rejected by the labor factor, such jobs will be occupied by robots. If we recall the classic of economic science A. Smith and his theory of the division of labor, then when imposing his judgments on today’s reality, we get a paradoxical situation when, as the degree of specialization increases, different types of activities or individual operations become easier to automate and, therefore, gradually displace such operations are living labor.

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Robotization and digitalization allow capital to abandon the labor factor almost completely, but at the same time achieve high profits from the production and sale of goods. When introducing e-government technologies, the public administration system can also get rid of some of the civil servants responsible for performing routine standardized operations - issuing documents, registering legally significant actions, and adopting algorithm-regulated decisions on certain issues in social and economic activities. The new look of the capital factor makes it impossible to implement the policy of import substitution, since the goal of improving the welfare of the population is not achieved. It turns out that technological advances, digitalization and robotization have prevented the creation of new jobs, but in fact have made the labor factor much less important in the production function. Entrepreneurs, of course, agree to reduce labor costs and get rid of state regulation by reducing the use of the labor factor in their industries. However, what are the consequences of this for people? How will people be able to earn income if the labor factor ceases to play a significant role in production, that is, labor ceases to be a necessary factor in production? In general, the trend of widening income inequality in capitalist countries was accompanied by an increase in labor productivity. This alarming trend leads to the fact that the share of labor in national income is steadily decreasing against the background of an increase in the share of capital. It turns out that machines are becoming the main means of increasing labor productivity. Machines themselves turn into workers and squeeze living labor out of the reproduction process. The forerunner of these trends lay in the consequences of economic recessions. American economists Jaimovich and Siu (2012) investigated how the replacement of jobs cut during the crisis, new jobs while expanding economic activity. It turned out that middle-class jobs are most at risk of complete disappearance, while new jobs after economic recovery are created in lowpaid sectors and spheres of economic activity. Many jobs are created on a part-time basis. However, official statistics record only quantitative indicators, but try not to reflect the qualitative parameters of lost and newly created jobs. K. B. Frey and M. Osborne from Oxford University note that in the very near future, professions, which account for almost half of all employed in the US economy, can become victims of automation and robotics (Frey and Osborne 2013). Some scholars, as well as politicians in some countries, in particular Switzerland, Finland and Canada (Standing 2008; Usman 2017; Bregman 2017), proposed a solution in the form of an unconditional income in a fixed amount, when some monetary compensation comes from the state budget directly to citizens in the form of a gratuitous non-refundable payment. On the one hand, taxation of entrepreneurs who robotic production and refuse to use the labor factor should be sufficient to provide unconditional income to all citizens of the country, but on the other hand, there are risks of the international division of labor, when the state may be unable to pursue an industrial policy so as to ensure sufficient cash inflow to the state budget. Then social upheavals are inevitable, similar to the Luddite movement, when citizens will be forced to destroy robotic industries. Political upheavals in the form of revolutions are also possible, since citizens who are unable to improve their material well-being and driven into poverty by despair will demand revolutionary changes.

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Another way to solve the problem of the release of the labor factor in connection with robotization and digitalization while reconciling the former workers with the fact of the release, but with the preservation of prosperity, may be a model of forced corporatization of robotic industries with the transfer of part of the shares to the released workers. Dividend payments, along with unconditional income, will increase the material well-being of the released workers, but, at the same time, will force them to save robotic production. In our opinion, the formation of a new model of the relationship between capital and society, not only by means of unconditional income, but also by forced corporatization in favor of the dismissed workers, will create an optimal balance of interests of the state, business and society, as well as repay possible social upheavals. The model of compulsory corporatization, of course, needs political support, since business, using various lobbying organizations, direct bribery of politicians, will surely resist such changes. However, it should be recognized that one unconditional income will not be enough to maintain socio-economic balance, and the violation of the fragile balance is fraught with negative consequences not only for society and the state, but also for business. Political will becomes a decisive factor in the implementation of the legislative initiative for forced corporatization, that is, the mandatory and gratuitous transfer of part of the shares of the robotic enterprise to retiring employees. The institutionalization of such a political decision will open up the possibility of technical re-equipment of enterprises, but will maintain a balance of social equilibrium. To prevent hysteresis when natural unemployment goes out of control, the government has to deal with cyclical unemployment when it appears. An expansionary monetary policy that provides for lower interest rates for cheaper loans can stimulate the economy when cyclical unemployment is high. The government may use expansionary fiscal policies to increase the budget deficit, although this may take longer. Finally, the government can intervene by increasing the cost of jobs, mainly affected by cyclical unemployment, such as the construction sector. By killing unemployment in the bud, the economy can avoid the effects of hysteresis. This makes it clear that unemployment will increase with the increasing influence of digital technologies on economic processes, while the capabilities of national governments to conduct an independent monetary policy are almost lost. The effect of hysteresis will increase with increasing labor release.

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Contradiction of the Nature of AI

Approaches to the Development of the Knowledge Economy in the Modern Conditions Innara R. Lyapina1(&), Olesya A. Stroeva2, Elena V. Sibirskaya3, Oksana E. Konobeeva4, and Elena E. Konobeeva4 1

Orel State University, Orel, Russia [email protected] 2 Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia [email protected] 3 Plekhanov Russian University of Economics, Moscow, Russia [email protected] 4 Orel State University of Economics and Trade, Orel, Russia [email protected], [email protected]

Abstract. The asymmetry of information processes governed the erosion of the postindustrial paradigm. In place of the declared factors in the development of the service sector came the economy of knowledge. The absence of welldeveloped structures of the knowledge economy requires new challenges for society. Transparency of processes requires the emergence of approaches to the development of the knowledge economy in modern conditions. This thesis determines the significance of the chosen research topic. The purpose of the scientific article is to consider approaches to the development of the knowledge economy in modern conditions. The objectives of the study are to consideration of the infrastructure characteristics of the knowledge economy; to determination of theoretical prerequisites for the development of the knowledge economy; to the allocation of a formalized basis for the formation of the knowledge economy; to proposal of approaches to the development of the knowledge economy. The methods of writing a scientific article are the method of theoretical premises, the method of evolutionary development, the method of essence – relationship, the method of species characteristics, the method of typologization, the method of abstraction, the method of distraction from the concrete, the method of idealization, the method of diagnosis, the method of implication and generalization. Keywords: The knowledge economy
Approaches
Institutions Innovations
The human capital
The economic paradigm




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1 Introduction The modernization of the conditions of the world economy is changing the foundations of the national economy. The transformation of society models the need to define the postulates of the new economic paradigm. The basis of this process includes knowledge. The knowledge regulates the position of the new economic paradigm. Consider them in more detail. The knowledge as an instrument of economics. The knowledge is a means of forming a new economic paradigm. The economic paradigm is transformed on the basis of factors and criteria of the internal and external environment. Under the system refers to the economy. To change the internal and external environment of the economy, it is necessary to use tools. Processes regenerate existing connections between economic agents. Economic agents produce changes in the economy. Knowledge transforms the relationship between economic agents. The knowledge is a double tool. On the one hand, knowledge modifies the structure of the economy. On the other hand, knowledge contributes to the appearance of external prerequisites for adjusting the conditions of existence of economic agents. The knowledge as a mechanism of economics. The knowledge duplicates the functions of the economy. The knowledge is the mechanism of economics. The mechanism allows to determine the direction of the economy. The knowledge forms the economy. The mechanism is based on the functioning of structural units. Structural units of knowledge are information processes, the philosophy, the concept, species characteristics, logical connections. The knowledge as the basis for modeling post-industrial society. The knowledge personifies the type of economic development. The shift in the foundations of the postindustrial society leads to the transformation of the innovation sector processes. Highperformance industry, the scope of innovative services is defined as the driving force of knowledge. The knowledge is produced through human capital. The knowledge is accumulated in the framework of intellectual and technological systems. Modeling these systems leads to the formation of an integrated post-industrial society. The knowledge as a technology of transformation of the economic concept. The technological basis of knowledge is expressed through processes. Processes form the relationship between elements of the economy. The transformation of the selected relationships leads to the formation of new elements. This factor allows us to group the system of economic development conditions. The topic of the development of the knowledge economy is quite relevant. The lack of well-developed approaches to the development of the knowledge economy in modern conditions determines the importance and importance of studying this aspect of the topic being studied. The purpose of the scientific article is to consider approaches to the development of the knowledge economy in modern conditions. Realization of the stated goal requires the following tasks: – to consider the basic infrastructural characteristics of the knowledge economy; – to determine the theoretical background for the development of the knowledge economy;

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– to identify the formalized basis for the formation of the knowledge economy; – to propose approaches to the development of the knowledge economy.

2 Methods The methodology of approaches to the development of the knowledge economy in modern realities is based on theoretical tools of scientific knowledge. Methods of scientific knowledge state the essence, structure and ways of developing the knowledge economy. The essence of the knowledge economy is determined on the basis of the following methodological apparatus: – the method of theoretical prerequisites is the study of the basis for the emergence of the concept of “the knowledge economy” – the method of evolutionary development is the historical periodization of the concept of “the knowledge economy”; – the method of essence – relationship is the connection between the essential elements of the concept “the knowledge economy”. The structure of the economy of knowledge produces specific and typed characteristics of the presented definition. The knowledge economy applies the method of species characteristics, the method of typologization, the method of abstraction. Ways of development of the knowledge economy are formed on the basis of application the method of abstraction from the concrete, the method of idealization, the method of diagnostics, the method of implication and generalization. Dedicated methods determine the internal structure of the study. The methods allow studying the infrastructural characteristics of the knowledge economy. External manifestations of the knowledge economy are based on the allocation of a formalized basis for the formation of the knowledge economy. Main Part. The knowledge economy is a social product. The knowledge economy considers the human capital and the knowledge. The knowledge economy is investigated on the basis of the methodological characteristics and infrastructure characteristics. Methodical characteristics reveal the main points of the concept of “the knowledge economy”. The relevant factor is not decisive in conducting this study. This factor leads to the absence of the need to develop a methodological apparatus in the field of the knowledge economy. The most significant species characteristic is the infrastructure (Fig. 1). Infrastructure characteristics determine the structural elements of the knowledge economy (White et al. 2013). The study of characteristics models the idea of the development of the necessary elements of the knowledge economy. Figure 1 formed the infrastructure characteristics of the knowledge economy. Planes of the knowledge economy are: – the information society is a way of developing the social system based on the principle of employment of the population in the sectors of information orientation (Shutilin 2016);

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THE KNOWLEDGE ECONOMY

Thr science and the education The human capital

Technology

The basic science

Information society

State institutions

The business investment

The innovative production Fig. 1. Infrastructure characteristics of the knowledge economy

– innovative production is the process of creating a product (goods, services), characterized by ways and methods of increasing efficiency and reducing product costs (Doronina 2013); – fundamental science is a direction of cognitive activity based on the application of the theoretical part and experimental methods of new knowledge (Goryaynova and Kurach 2014). The selected planes harmonize the infrastructure characteristics of the knowledge economy. The characteristics of the knowledge economy are based on the grouping of elements of the information direction, the production direction and the scientific direction. The limitations of these areas is a positive and at the same time negative characteristic. The positive moment states the fact about the interaction of the science, the practice and the society in the reproduction of the knowledge economy. On the other hand, the aspect of limitation indicates the impossibility of supplementing the foundations of the knowledge economy with other characteristics. Consider some of the infrastructural characteristics of the knowledge economy:

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1. State institutions are a certain type of social groups endowed with state functions with a limited system of management of social entities and processes (Nouri et al. 2013). The study of the “state institution” element focuses attention on the interaction of the information society, production and science in the context of a unified technological environment. Dedicated planes allow us to state the need to form a state institution in the field of knowledge economy formation. Within the framework of the knowledge economy model, the definition of processes and rules of interaction between all participants of the information, production and scientific environment is understood. 2. Science and education are structural elements that form the field of the human knowledge through the study of the fundamentals in the field of the studied problems. Science and education have a correlation relationship. The use of these elements does not allow to state the existence of the knowledge as the main components of the economic paradigm. Science and education define the indivisibility of the knowledge creation as a product of the knowledge economy. Science and education provide a methodological consideration of the knowledge economy. 3. The human capital is an aggregate characteristic that determines the degree of concentration of knowledge and skills required for the implementation of priority areas of social and economic activities (Logachev 2013). The human capital advocates public investment. The degree of development of knowledge, skills and abilities determines the stage of achievement of the criteria of the knowledge economy. The human capital determines the totality of characteristic potentials. 4. The technology is a set of methods and tools of knowledge in order to achieve a positive result (Demtsura 2016). The technology is a tool for the economy of knowledge. The technology determines the way knowledge is formed. On the basis of technology, the concept of the knowledge economy is implemented. Technologies are concentrated in high-performance industries. Technologies predetermine the material side of the knowledge economy. Firstly, technologies assume the indivisibility of knowledge and the product produced. Secondly, technologies apply knowledge as a driving force of production in the country. Thirdly, the use of technology in the production process increases the value of knowledge used in practice. 5. Business investment is the allocation of capital in areas that allow for additional profit (Borbugulov 2015). The concept introduced is the most common. The knowledge economy is needed in financing that contributes to obtaining intellectual and financial income. Business investments are a tool for the development of knowledge in the context of the scientific, the industrial and their information areas of the knowledge economy. The infrastructure characteristics of the knowledge economy form the foundation of the conditions required for considering the approaches to the development of this phenomenon. The concretization of the selected characteristics is associated with the study of the theoretical prerequisites for the development of the knowledge economy (Fig. 2). The prerequisites for the development of a knowledge-based economy are based on the establishment of causal relationships for the occurrence of this phenomenon. Within

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The emergence of technological innovation

Approaches to the study of problems

Increase knowledge economy agents Knowledge of services prevail over product

Lack of deficit and limited benefits

The emergence of scientific knowledge in practice

Fig. 2. Background of the development of the knowledge economy

the framework of this circumstance, six prerequisites for the development of the knowledge economy are identified. The highlighted prerequisites are based on the following components technological innovation, problem component, agent-based interaction, priority of knowledge, scientific knowledge, limited benefits. Consider the prerequisites in detail: 1. The emergence of technological innovation due to the formation of the final result of innovation. Technological innovations are the product and process that defines the essential theoretical background. Innovation as a product of the knowledge economy is based on the use of technological factors to create a new product (product, service). Innovation as a process of knowledge economy involves the modernization of methods and technologies for creating a product (product, service). The emergence of technological innovations predetermines the formation of a new concept for modeling the production cycle in the knowledge economy. 2. Isolation of approaches to the study of the problem. The transformation of the economic paradigm leads to changes in the social and social structure. Old principles and rules are fatalized. Conceptual approaches are aimed at solving problems of the knowledge economy. Approaches predetermine the methodical component. Methodical components express the multidimensionality of the processes of the knowledge economy. Methodical components smooth the disadvantages of transformation of the social and social structure. 3. Increase agents of the economy of knowledge. This premise reflects the number of participants in the knowledge economy. The knowledge economy implies the inclusion of a large number of agents of the national economy in this process. These sectors produce the emergence of innovative knowledge. The implication of this process is impossible without concentration in the economy of knowledge of agents. The emergence of agents aren’t a single prerequisite for the development of the knowledge economy. An increase in agents is produced.

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4. The knowledge of services prevail over product knowledge. The highlighted premise is based on an understanding of the product of the knowledge economy. Initially, the product of the economy is a service. The transformation of knowledge gained is an important indicator. The service is primary product appearance in the economy of knowledge. The knowledge of the service is the highest priority over the knowledge of the product. 5. The emergence of scientific functions in practice. The development of scientific functionality remains theorized. The aspect of the theorization of the knowledge economy is quite significant. This aspect remains without practical application. The concepts and approaches of the knowledge economy must be adapted to practical directions. The knowledge economy establishes a close relationship between scientific developments and their implementation in practice. 6. Lack of deficit and limited benefits. The knowledge can’t be limited and scarce. The knowledge is a tool for development. This orthodoxy is conditional and is formed in the context of a time factor. Knowledge is changing and modernizing. New criteria and norms appear for the development of the knowledge. The knowledge isn’t a limited good. The above prerequisites allowed us to make a small addition in the framework of the studied topic. An important component are the prerequisites for the emergence and development of the knowledge economy. Selected grounds aren’t formalized. These bases are invariant. In order to complement the research topic, let us single out the formalized basis for the formation of the knowledge economy (Fig. 3). A formalized framework implies an abstract study of this phenomenon from conceptual features. The study of the formation of the knowledge economy is based on the identification of features and framework elements of the knowledge economy. At its core, a formalized framework studies the requirements of the knowledge economy. INNOVATION Creating discrete knowledge EDUCATION Formation of an information product INFORMATION

Providing specific consumption

Establishment of a management institute

Knowledge as a public good INSTITUTE Fig. 3. The formalized basis for the formation of the knowledge economy

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Figure 3 presents a formalized framework based on four elements: 1. Innovation. This element defines the creation of new products and services based on discrete knowledge. The model of discrete knowledge involves a set of continuous elements of scientific knowledge. The discrete knowledge model is adaptive. The adaptive nature of innovation is aimed at adapting knowledge to the conditions of the local environment. 2. Education. Dedicated basis is aimed at the formation of an information product on the means of realization of creative human capital in the learning process. Information product regulates the creation of innovations based on discrete knowledge. The interacting factor of innovation and education allows for specific consumption within the framework of the knowledge economy. 3. Information. This element provides the essence of the knowledge economy; these are methods and tools for knowledge transfer. Information allows you to carry out operations related to improving the quality of management, performance and flexible shift of emphasis in order to simulate the existing situation. As part of producing information, it is possible to achieve a transformation of technological changes. 4. Institute. This element implies the existence of an institutional infrastructure of the knowledge economy. Institutional infrastructure forms economic incentives for various agents of the economy. Institutional infrastructure is regulated by the positions of the development of the knowledge economy. Firstly, the widespread dissemination of knowledge. Secondly, the effective use of knowledge for the purpose of social transformation of society. Knowledge acts as a public good. The formalized basis for the formation of the knowledge economy determines the structural component of this phenomenon. The structural component is based on approaches to the development of the knowledge economy in modern conditions. Based on the essence – relationship method, the following approaches to the development of the knowledge economy are formed (Fig. 4). The system of approaches to the development of the knowledge economy that is highlighted in Fig. 4 is a four-step algorithm with the final result. The end result is a semiotic system of knowledge economy. The seven-tactical system of the knowledge economy is a combination of the many elements of an open redistribution of information. Information models knowledge in the right direction. Information creates the conditions for the implementation of economic processes. Consider the selected approaches to the development of the knowledge economy. In the four-step algorithm, the initial link is the method of structuring society. Social change is primary in the knowledge economy. The method of structuring society is aimed at dividing society into sectoral directions. This division concerns the areas of knowledge economy. The social status of the population in this aspect is not affected. The most in-depth presentation of the approach to the development of the knowledge economy is the stimulation direction. Stimulation direction acts to achieve a specific goal. The goal is a semiotic system of the knowledge economy. Motivating directions focus on stimulating functionality and are positively rated. As stimulation directions to the development of the knowledge economy, we define the following components:

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METHOD OF SOCIETY STRUCTURING

II. STIMULATION DIRECTION OF THE DEVELOPMENT OF THE KNOWLEDGE ECONOMY

III.

IV.

CONCEPT OF KNOWLEDGE DISTRIBUTION

SECTORAL APPROACH TO THE KNOWLEDGE ECONOMY

SEMIOTICATIVE SYSTEM OF THE KNOWLEDGE ECONOMY Fig. 4. Approaches to the development of the knowledge economy

– manipulative actions aimed at using the latest scientific achievements in the framework of the development of the knowledge economy; – elimination of state administrative barriers to the introduction of innovations in economic processes; – introduction of technological changes in the socio – economic paradigm. The next step is the concept of disseminating knowledge. The distribution aspect is dictated by the formation of the semiotic system of the knowledge economy. Spreading knowledge is a complex process. The aspect of complexity is conceptual views. The concept of disseminating knowledge includes stimulating directions, the method of structuring society. An integrated view of the knowledge dissemination process forms a sectoral approach to knowledge differentiation. Sectoral approach to the differentiation of knowledge involves the use of methodological ideas about of the knowledge economy. The sectoral approach is aimed at the legalization of theoretical methods – tools into practical activities. The main tools are: the method of diffusing knowledge, the method of adapting to transparent changes, the method of adapting knowledge to innovation, the method of real compliance, the method of alternative variations. The formed four-step algorithm with the final result within the framework of approaches to the development of the knowledge economy allows us to note the importance of the theorized application of these elements. Theorization allows you to develop a form of the phenomenon. The factor of theorization determines the prerequisites for the development of the knowledge economy. The factor of theorization performs the methodical functions of the knowledge economy.

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3 Conclusions The study led to the following conclusions. 1. The considered infrastructural characteristics are based on the interaction of elements in three dimensions: the information society, the basic science and the innovative production. The presence of elements of the economy of knowledge allows us to state the process of creating infrastructure characteristics. The presence of elements of the knowledge economy doesn’t reveal qualitative properties and characteristics. 2. Theoretical prerequisites for the development of the knowledge economy are highlighted on the basis of proposals for the formation of the knowledge economy. These prerequisites include: the emergence of technological innovations, the isolation of approaches to the study of problems, the increase of knowledge economy agents, the prevalence of “knowledge services” over “product knowledge”, the emergence of scientific functionality in practice, the absence of scarcity and limited benefits. 3. The formalized basis for the formation of the knowledge economy is defined as the foundation that establishes the essence of this phenomenon. The basis of the formalized framework are innovation, institutions, information, education. The interaction of these elements allows you to create a discrete system of knowledge, to form an information product, within which knowledge will be a public good. The highlighted aspects ensure competitive consumption in the knowledge economy. 4. As an approach to the development of the knowledge economy in modern conditions, a four-step algorithm was formed. This algorithm is aimed at achieving a specific result of the semiotic system of the knowledge economy. This result is determined by the importance of disseminating information in the knowledge economy. Related elements in this algorithm are: the method of structuring society, stimulating directions, the concept of knowledge dissemination, sectoral approach to the differentiation of knowledge.

References Doronina, M.S.: Role of the state in formation of the knowledge economy. Problemy ekonomiki (Khar’kov) 1, 43–48 (2013) Nouri, R., Karimi, S., Ashrafi-rizi, H., Nouri, A.: Knowledge economy core journals: identification through lista database analysis. Acta Informatica Medica 21(1), 60–62 (2013) White, D.S., Ariguzo, G.C., Gunasekaran, A.: The structural components of a knowledge-based economy. Int. J. Bus. Innov. Res. 7(4), 504–518 (2013) Borbugulov, M.U.: Ekonomika znaniy - osnova innovatsionnoy ekonomiki. Vestnik KyrgyzskoRossiyskogo slavyanskogo universiteta 15(3), 14–16 (2015)

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Goryaynova, T.P., Kurach, A.Ye.: K voprosu o vliyanii znaniy na natsional’nuyu ekonomiku. Vestnik RAYEN 14(1), 136–138 (2014) Demtsura, S.S.: Rol’ ekonomiki znaniya v modernizatsii ekonomiki Rossii. Vyzovy global’nogo mira. Vestnik IMTP 1–2(9–10), 51–57 (2016) Logachev, V.A.: O vzaimosvyazi innovatsionnoy ekonomiki i ekonomicheskikh znaniy. Vestnik Altayskoy akademii ekonomiki i prava 4(31), 12–15 (2013) Shutilin, V.: Gotovyye tekhnologicheskiye znaniya dlya ekonomik dogonyayushchego razvitiya. Nauka i innovatsii 3(157), 36–39 (2016)

Artificial Intelligence: Problems and Prospects of Development Natalia N. Skeeter(&), Natalia V. Ketko, Aleksey B. Simonov, Aleksey G. Gagarin, and Irina A. Tislenkova Volgograd State Technical University, Volgograd, Russia [email protected], [email protected], [email protected], [email protected], [email protected]

Abstract. The purpose of this article is to identify main problems and prospects of artificial systems advance and study algorithmic methods simulating human brain and overall structure in this type of systems. As methodology for solving these problems we have chosen the systematic approach and the expert analysis methods to determine the probability of having options for artificial intelligence systems development implemented. Keywords: Artificial intelligence
Expert systems
Machine learning Decision making support
Decision support methods JEL Classification Codes: C65





C14
C02

1 Introduction The idea of creating artificial intelligence appeared in the 20th century, but its active practical implementation became possible since the invention of programmable machines – computers. As their power developed, the tasks that were solved by artificial intelligence systems became more complicated and differentiated. The main difference between artificial intelligence system and conventional software is the ability of such system to learn, make decisions, that is, to function like human brain. Artificial intelligence systems are created of two main types: 1. the expert systems in which artificial intelligence are implemented in the form of intelligent behavior that allows computer to learn, show, explain and give advice. 2. the smart machines are computer realization of human abilities to understand, think, teach and behave just like humans do. The main direction in developing artificial intelligence systems nowadays is development of algorithms, combined into a single program, which simulate such human functions as reasoning, training and problem solving. The main distinctive features of programs with artificial intelligence elements are: the ability to answer universal questions; the ability to adapt new modifications of the program, combining independent updated pieces of information, in such a way that, when making changes in the code of one program module as part of a program, © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 306–318, 2020. https://doi.org/10.1007/978-3-030-39319-9_34

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structure integrity of the entire program is not violated, and therefore doesn’t demand its alteration. Some elements of artificial intelligence systems are used in many areas of information industry, for example, in gaming industry, especially in games that require logical reasoning, like chess. Here artificial intelligence acts as a computer ability to calculate variety of solutions based on heuristic knowledge. In programs containing functions of communication with a person, artificial intelligence is expressed by the function of understanding human spoken language [5]. The artificial intelligence system had further development in the speech recognition programs, where a human ability to hear and understand speech is algorithmized. The system can determine not only interlocutor’s language, but also can process various accents and slangs. Handwriting recognition is similarly one of the elements of the artificial intelligence system that simulates the ability of a person to read and perceive written characters. The system recognizes letters by their form and translates them into the editable text. The artificial intelligence systems are developed the most in robotics, namely in creating the intelligent robots that are already able to perform more complex tasks than software. The intelligent robots’ program algorithms control various types of sensors by means of which physical abilities of heat, light, pressure, sound, motion or hit perception are imitated. In addition to sensor control, the program algorithms have selfstudy functions.

2 Methodology One of the directions in the modern artificial intelligence systems development is creation of the expert systems that solve the problem of decision support. The expert system structure differs from conventional systems: in addition to database, it contains knowledge base - one of the artificial intelligence elements (Fig. 1). The system also contains elements allowing to include the expert system into artificial intelligence systems as it is a subsystem of knowledge extraction and mechanism of logic conclusion, which makes comparison between the user-entered input parameters and the existing system knowledge, and gives optimal solution. However, it is impossible to do without human participation to assess the situation if high level uncertainty data is entered into such system. The system itself can offer both evaluation criteria and the alternatives, but requires a subjective opinion of an expert, rather a group of experts to assess the significance of a criterion or alternative. In this case, the system acts only as a tool that helps to carry out convolution of the expert judgments with high accuracy and within a short period of time. The expert system operation algorithm has two main stages. The first stage is learning or constracting the knowledge basis. The knowledge base contains facts and knowledge. The imperative knowledge is represented by two rules, named IF-THEN products. The second stage is making output of the possible solutions by machine inference based on the direct or reverse chain of reasoning and giving answers to user’s questions.

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Knowledge Subsystem

Experts

System training specialist

OUTPUT INPUT SYSTEM

KNOWLEDGE BASE

transmists information

Learning Subsystem transmists information

transmists knowledge transmists information

Inference mechanism DATA BASE

Recommendation generation subsystem

User

Fig. 1. Expert system structure

Formation of the knowledge base by means of the reasoning direct chain is carried out according to the following algorithm: Each rule has the following structure If Conditioni1 = Valuei1 and Conditioni2 = Valuei2 and Conditioni3 = Valuei3 then Questioni = Decisioni where i is the number of rule, Conditioni1,2,3 are the facts of rulei, Valuei1,2,3 is the value of Conditionij, Questioni - Questioni of rulei, Decisioni – content or output value of Questioni. Experts set the number of rules when training the knowledge base. To ensure handling of facts and fact values in output algorithm, it is necessary to take into account their relationship in certain rule and make an output corresponding to this set of facts. For this purpose, the expert system provides a database, which is presented in the form with the following structures: the array of condition variables, the array of output variables, the lists of condition and output variables, the sequence of output variables. First, we form an array of condition variables and an array of output variables, and only after entering all the rules, lists of condition and output variables are built.

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After knowledge base and database are formed, an array of output variables is analyzed and list of output variables is generated. The analysis is carried out according to the following algorithm: 1. a link between output variable array and output variable lists is provided. 2. lists of variables output are checked for repetitions. 3. condition variables array is analyzed in the same way to form a list of condition variables. After checking procedures, the variable conditions table and output variable table are formed. The output procedure is initiated after complete formation of the knowledge base and database. The output is the search for rules, depending on current output variable in the knowledge base. If the system finds a match between current variable and output variable, the rule validation procedure is activated. If the rule is valid, i.e. the user’s answers match the values stored in the knowledge base; the received output variable is stored in the output sequence of output variables to become the next current variable output. The last matching variable of the output variable system is displayed. If the user requests explanation of the received output, the system displays all triggered elements of the variable conditions list in reverse sequence. When the expert system is used to solve a problem with a high level of uncertainty, the system is additionally connected to the fuzzy information processing module, based on the methods of expert evaluation with the fuzzy inference, related to methods of decision-making procedures support. To use qualitative indicators in development of information flows, the following algorithm is used: – to carry out an average assessment of each from the quality indicators:
ij = mj ¼ m

N;K X


ij m

j¼1; i¼1

where – mj is the average score of the j-th qualitative indicator;
ij is the point score “weight” of the j-th qualitative indicator, set by the i-th expert; – m – weighted average score: mj ¼

N X i¼1

mij  ai =

N X

mij

i¼1

where – mj – weighted average score of j-th quality indicator; – mij – the point value of the assessment j-th quality indicator by the i-th expert; – ai – the weight, reflecting the significance i-th expert.

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After determining the average weighted score of the qualitative indicators, it is necessary to conduct a computer convolution of the expert information, for this purpose, to determine the fuzzy ratio of dominance of one over another, which is determined by the function µD(a, b), characterizing the intensity of its dominance:  lða; bÞ ¼

M ða; bÞ  M ðb; aÞ; if M ða; bÞ [ M ðb; aÞ 0; otherwise;

where µ(a, b) is a function of preferences, reflecting the intensity of the domination of a motif over the motif b; M(a, b) is a function of agreement that motive a is preferable to employee than motive b; M(b, a) is a function of disagreement that motive a is preferable for an employee than motive b. Next, we calculate the intensity of dominance of each indicator by crossing all the indicators µND(a, b) for all indicators that are not dominated by any indicators. 2

3

6 7 7 la ðMa Þ ¼ min lND ðb; aÞ ¼ min6 41  lða; bÞ b ¼ 1; . . .; n 5 ¼ 1  max lD ðb; aÞ b 6¼ a ¼ 1  max½M ðb; aÞ  M ða; bÞ Where µ*(Ma) is a function of the indicator belonging to the set of non – dominated indicators.    l Ma ¼ maxa¼1;...;n 8l ðM2a Þ 39 > > > > > > > 7> 6 > = < 7> 6 7 6 ¼ 1  min max6M a ¼ 1; . . .; n ðb; aÞ  M ða; bÞ7 > 7> 6 > > > 5> 4 b ¼ 1; . . .; n > > > > ; : b 6¼ a Where Ma is an indicator from the set of non-dominant indicators [2, 6, 7]. In this case, recommendations, received from the system, undergo the expert evaluation procedure and, accordingly, the mathematical processing of their judgments. The second global direction in development of artificial intelligence scientific school is designing «smart machines». These artificial intelligence systems have the same basic structure as the expert systems; the main difference between these systems is their ability for self-education. Currently, the scientific field developing design of self-learning systems is called machine learning. Machine learning is considered like a branch of artificial intelligence, the main idea of which is to make the computer not just use a pre-written algorithm, but ensure that it

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taught itself to solve the problem. The tasks solved in the framework of machine learning can be classified into the following types: 1. Regression problems with algorithm to determine values of established indicators and their confidence interval on the basis of various features. 2. Classification tasks with algorithms allowing predicting categorical response based on the various signs, for example, text recognition by handwriting. 3. The task of clustering aiming to group the input parameters according to the condition of similarity in predetermined evaluation criteria. 4. Dimensionality reduction problems with algorithms allowing the system to learn how to describe large data not by N features, but by a smaller number, for example, data compression or archiving. 5. Anomaly detection tasks, aiming at training the system to distinguish anomaly from “non-anomaly” on the basis of certain characteristics. These tasks are similar to classification tasks, however, they are allocated to a separate category because the feature of anomaly detection is that there are very few or no examples of anomalies for training the model, so we can’t attribute such task to classification tasks group. Knowledge with which artificial intelligence system works must be presented in a certain form. There are two categories of the knowledge representation methods in artificial intelligence systems. • cognitive; • logical. Cognitive methods are based on the study of verbal (i.e. word) and visual-figurative forms of knowledge representation in the process of human thinking. These methods include presentation of knowledge in the form of: • production model; • frames; • semantic network. Logical methods are based on the use of any formal logical system, in particular, the use of predicate logic. Production models are the most common in the expert systems. For logical conclusion of knowledge, as a rule, they are presented in the form of rules-productions. In case of increasing the amount of knowledge in solving complex problems, the knowledge grouping and usage of structures, larger and clearer than rules, are required. These structures include frames. The frame can be represented as a structure of the following form: f ½\S1 ; V1 [ ; \S2 ; V2 [


\Sk ; Vk [  where f is frame name; - i-slot;

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Si – name of i-slot; Vi – value of the i-slot A frame can have a hierarchical structure [3]. Semantic network displays a set of objects from subject area and relationships between them. The features correspond to vertices of the network, and relations correspond to arcs connecting them. The main relations are of the type “is” and “has”. Knowledge representation is fulfilled by using predicate logic. A predicate is a function that, depending on its elements, takes the value «true» or «false». The binary predicate Q(x, y) characterizes relation between two objects. The following algorithms are used for self-training: 1. Decision tree. This algorithm is used in decision support systems and is based on the use of a tree graph model that takes into account their potential consequences. The main advantage of decision tree is that it structures and systematizes the problem, and final decision is made on the basis of logical conclusions. 2. Naive Bayesian classification. Naive Bayesian classifiers belong to the group of simple probability classifiers and are based on Bayes’ theorem, which in case of artificial intelligence systems considers functions as independent ones. It is used in systems carrying out: – – – –

definition of spam; automatic linking of news articles to thematic headings; identification of emotional coloring of the text; face recognition and other patterns on images.

3. Least square method. Least squares method is one implementation of linear regression. Variants of its implementation include the smallest squares. It is used to minimize errors by creating an error metric. 4. Logistic regression. Logistic regression is a way to determine relationship between variables, one of which is categorically dependent and the other is independent. In artificial intelligence systems, logistic regression is a serious statistical method of predicting events that involves one or more independent variables. This algorithm is widely used in economic sphere, for example, to predict the profit from launching a new product. 5. Support vector method (SVM) is a set of algorithms required to solve classification and regression analysis problems. SVM and its variants help to solve such complex problems of machine learning, as the splicing the DNA and determining gender of a person in the photo. 6. Ensemble method is based on machine learning algorithms that generate a set of classifiers that allow defining all objects from the newly received data on the basis of their averaging or evaluation of expert judgments. Ensemble method contains a group of additional algorithms:

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– boosting – converts weak models into strong ones by forming an ensemble of classifiers (improving intersection); – bagging (bagging) – collects complicated classifiers, while simultaneously teaching the basic (improving association); – correction of errors in output encoding. Ensemble method has several advantages over other algorithms: – it minimizes the impact of randomness by averaging errors of each base classifier; – it reduces dispersion; – it excludes going beyond the set. 7. Clustering is distribution of a set of objects into categories so that in each category – cluster – there are the most similar elements. 8. Principal component analysis (PCA). Principal components method is statistical operation of orthogonal transformation, which aims to translate observations of variables that may be somehow related to each other into a set of principal components – values that are not linearly correlated. 9. Singular value decomposition (SVD). In linear algebra, singular value decomposition is defined as decomposition of a rectangular matrix consisting of complex or real numbers. Matrix M of dimension [m*n] is decomposed as follows: M ¼ URV Where U and V - unitary matrices; R is diagonal matrix. Singular value decomposition is used in computer vision technologies [3]. 10. Independent component analysis (ICA) is statistical technique that identifies hidden factors that affect random variables and signals. In contrast to analysis of main components, analysis of independent components is more effective, especially in cases where classical approaches do not work, due to ability to detect hidden causes and phenomena, this algorithm is used in astronomy, medicine, speech recognition, as well as in tasks of automatic testing and analysis of financial indicators dynamics.

3 Results Currently, artificial intellect development covers more and more areas of human activity. Thus, in expert systems field the system capable of understanding questions in natural language and looking for answers in the database (Watson system) has been developed and successfully applied. This system is used in cancer diagnosis, solving financial problems, as well as in big data analysis.

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Artificial intelligence is used to recognize faces, save energy, by means of tracking of smartphone applications activity. It distributes tasks between processor cores, providing sufficient power with minimal energy. Modern achievements in artificial intelligence development have reached the sphere of culture and art. They allow you to teach the system to draw pictures, even according to their textual description. Artificial intelligence can compose and perform music as well as write poetry. Especially widely artificial intelligence systems are used in the field of decision support in medical industry. As a rule, these systems diagnose patients’ diseases. Special attention is paid to anticancer therapy. Such systems are called robots or bots. Medical bots monitor patient’s vital signs and warn doctors about the probability of death. The program systematically analyzes information and calculates risks of adverse outcome. Some systems are able to recognize the level of pain by facial expressions. Artificial intelligence is actively used to analyze speech and search for signs of mental illness. Owing to the rapid aging of the world population, a particularly pressing problem becomes ensuring a comfortable lifestyle for people in old age [4]. Nowadays a new social direction of artificial intelligence application is developed in creation of botnurses to help elderly people living alone and people living in nursing homes [10]. Human-like artificial intelligence will be an indispensable social partner in the life of lonely disabled and elderly people, building speech interaction with them using existing semiotic systems and taking into account current social and situational context. The bot will use natural language in interaction with the user based on data about gender, status and emotional state of a person [11]. Thus, old people feel the need to talk all the time, forming their thoughts with the help of reminisced expressions. Providing the bot-nurse with verbal code templates typical for any communicant of older age group, for example, allusions-stamps - references to well-known statements and facts of the past, will help to simulate similarity of life experience of the man and the bot, to make communication interesting [9]. Artificial intelligence-nurse will facilitate the elderly period of aging emotionally, because it will meet the main psychological needs of this age in the process of interaction. Organizing reciting senior citizen’s thoughts in the open, artificial intelligence can help them hide aging, identify themselves with a younger social group, remain faithful to their principles, keep self-esteem at a satisfactory level and focus other people’s attention on the power of their mind [8]. The main prospect of artificial intelligence development is to endow it with morality. As part of creation moral qualities in artificial intelligence systems, they are given complex choice tasks relating to people’s life and death, but the solution of these problems violates the law of robotics, according to which a robot cannot harm a person. Further developments in this direction can be very dangerous, as they can teach robots to decide whether a person will live or not.

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One of the main problems of artificial intelligence development is the problem of security, namely violation of three basic laws by bots: 1. A bot cannot harm a person by its action or inaction. 2. A bot must obey commands of a person except the cases when there is violation of the first law. 3. A bot must take care of its safety, in compliance with first and second laws. In general, these laws ensure human security, but the main problem is that the machine and the bot do not have a sense system, for training they use the knowledge loaded into them by experts or obtained as a result of identified patterns inherent in them by man. For artificial intelligence system, the concept of “harm” is exactly the same input information as for determining whether the action of the system will harm a person. It requires certain criteria for assessing what is harm. Since this concept is complex, it will be difficult for artificial intelligence system to identify this concept, as well as to determine its significance. The second important problem of artificial intelligence development is widespread replacement of human labor by machine. Bots can sell programs, control the payment of licenses. Unlike humans, they are available at any time, any day of the week. In manufacturing, robots simplify and systematize complex work, reduce costs, increase productivity and labor efficiency. This situation contributes to complete replacement of human labor. In this case, in the future, there is a possibility of massive unemployment. The need for unskilled personnel will decrease, since working with artificial intelligence requires a high level of knowledge among employees interacting with such technologies. Thus, rapid development and penetration of artificial intelligence in all spheres of human activity can lead to global social problem – job loss. There are problems in creation of artificial intelligence systems, namely the problems of neural networks. This is due to the fact that neurons, modeled in programs, are greatly simplified, and compared with human neurons. For a more reliable simulation of the human brain, it is necessary to create artificial nerve cells that interact directly with neurons. At present science can not create artificial nerve cells. The problem of “network paralysis”, when a signal error of one neuron disables the entire network, is commonly found in such type of systems. The main problem of expert systems is that they are applicable only in a narrow field, because they give only expected solutions without explaining the reasons for their choice, its justification, and guided by a set of rules for building solutions laid down in them by experts. Expert systems require constant updating, even if they are self-training. They need to be adjusted in accordance with changing environmental conditions. And intervention in such system usually requires its refactoring. Without updates, such system quickly loses its relevance, and updating requires a lot of time from specialists. During implementation of decentralized artificial intelligence in multi-agent systems used for managing a large number of agents, arises the problem of coordination lack in control centers. As a result, the whole system quickly breaks down. These problems generally call into question further development of this field of science.

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Creating artificial intelligence systems by means of genetic algorithms have a high probability of violation human security. There is a risk for the system based on such algorithms to reach the conclusion of its superiority over man. In artificial intelligence systems, knowledge is presented to organize the connection between environment and computer. The main problem is that computer operates exact values, and environment is not such a value. Development of artificial intelligence systems forms a number of ethical problems, such as loss of independence and even humanity. Development of speech recognition technology stimulates widespread use of electronic espionage and telephone surveillance means, which consequently leads to loss of civil liberties, including personal rights and freedoms. Wide distribution of artificial intelligence systems could lead to a global degradation of people, because when making decisions they will begin to rely not on their professional experience and knowledge, but on expert systems results.

4 Discussion Currently, artificial intelligence is an indispensable tool in many areas of human activity. This is due to the following main advantages of artificial intelligence over human intellect: – Low probability of error. – Inability to forget anything. Artificial intelligence has absolute memory. – Impossibility of accidental ignoring factors and dependencies, as artificial intelligence algorithms clearly justify each action. Thus, within the framework of tests carried out at Pittsburgh University medical center, artificial intelligence system managed to prevent six deaths of seriously ill patients. Nowadays human mind is not developed enough to take into account a huge number of factors, because it simply ignores little changes of indicators and does not reveal relationship between them. – Artificial intelligence does not have the ability to feel doubt; it evaluates probabilities and chooses the high one strictly in accordance with the algorithm, and therefore, it can justify each action. – There is no emotional impact on decision-making process. – Ability toto plan many steps ahead. – Having resources to consider all possible scenarios. Artificial intelligence is superior to human intellect in solving problems that are associated with big data analysis, clear logic and need to remember large amounts of information. However, in creative sphere, artificial intelligence cannot surpass man, because creative activity cannot be algorithmized, creativity cannot be incorporated into artificial intelligence system in the form of algorithm set. It is an indisputable fact that artificial intelligence contributes to the change of the environment, as it finds new applications. However, the main task of its developers is to comply with laws of human security preservation, as well as its use for the benefit of mankind. To do this, it is necessary to develop rules to regulate artificial intelligence systems and transfer experience gained by mankind to these systems.

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It should also be noted that some models used to create artificial intelligence are far from perfect, which generates shortcomings in artificial intelligence. Thus, the most common models used for development of artificial intelligence in the form of expert systems are productive, because to make logical conclusion, it is necessary to present knowledge in rules-production form. This form of rules has a number of disadvantages, namely: 1. Unclear mutual relations in rules; 2. Complexity in assessing integral knowledge image; 3. Reducing inference speed with significant increase in the number of rules. Thus, with increase in expert systems knowledge amount, grouping of knowledge and use of structures that are larger and more visible than rules is required. Summarizing the above, we can conclude that artificial intelligence systems are an integral part of human life, but it is vital to take care of its further development. Artificial intelligence should act as an assistant in those areas of intellectual activity where it exceeds the ability of man, but it should not replace man in their activities.

5 Conclusions Development of artificial intelligence systems is based on patterns of human behavior determined by the type of stimulus - reaction, and reinforcement of relationship between them. Modern intelligent systems development level does not yet allow creating algorithms simulating reinforcement of reaction to stimulus, but it is replaced by a set of algorithms pre-installed in the system. To recreate human brain in the form of artificial intelligence system is currently an impossible task, because its structure is very complex and has been studied by man only 18%. But even if the developers can fully simulate its structure in machine version, there will arise another problem: how to pass such knowledge and experience to such kind of brain? This problem is due to the fact that a human is born with the ability to learn. Human brain has the ability to develop in social activity throughout a person’s life. So it has been proven that a child can independently acquire some skills of speaking without parents’ help while watching TV and listening to the radio. One of the main psychological problems in creation of artificial intelligence is development of the means to endow such systems with self-analysis and self-esteem. The ability to understand that it exists must be built into the system. Up to now, the developers have not been able to implement these characteristics in the form of software algorithms. The second point is the need to have motivation and internal desire to perform some action. This ability makes the system intellectual. So that the system became artificial intelligence system, close to human intellect, it must be able to set goals and choose ways to achieve them. Thus, artificial intelligence system must have the ability for self-analysis due to which, it would be able to identify motives for its activities necessary for setting goals and solving problems. Currently, there are only hypothetical ways to create such

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systems in the form of multiprocessor spaces where information is accumulated and used by a certain set of rules, since motivation is a spontaneous human process that does not have a clear causal relationship, which in turn makes it impossible to represent it in the form of algorithm set.

References 1. Aiello, G., Giovino, I., Vallone, M., Catania, P., Argento, A.: A decision support system based on multisensory data fusion for sustainable greenhouse management. J. Cleaner Prod. 172, 4057–4065 (2018) 2. Zadeh, L.: From computing with numbers to computing with words—from manipulation of measurements to manipulation of perceptions. Int. J. Appl. Math. Comput. Sci. 12(3), 307– 324 (2002) 3. Peter, F.: Machine Learning. The science and art of building algorithms that extract knowledge from data. DMK-Press Publishing House (2012) 4. Ponomareva, N.N.: Process of demographic ageing: essence, features and consequences in the world countries. Bull. Novosibirsk State Pedagogical Univ. 6(16), 58–65 (2013) 5. Popkova, H.G.: Scientific library of dissertations and abstracts disserCat. http://www. dissercat.com/content/formirovanie-kontseptsii-novogo-kachestva-ekonomicheskogo-rostav-usloviyakh-globalizatsii#ixzz4p3PLuxPl. Wages and well-being 6. Saaty, T.L.: A scaling method for priorities in hierarchical structures. J. Math. Psychol. 15(3), 234–281 (1977) 7. Salo, A.A., Hamalainen, R.P.: On the measurement of preferences in the analytic hierarchy process. Multi-Criteria Decis. Anal. 6, 309–319 (1997) 8. Tislenkova, I.A.: Volgograd, cultural and historical realities of the past era in the speech of the characters in modern British drama. Izvestiya VGSPU 2(125), 132–136 (2018) 9. Tislenkova, I.A., et al.: Precedent texts amount in communicant speech during late maturity period (based on English language) Volgograd. Izvestiya VGSPU 4(137), 198–202 (2019) 10. Williams, M.A.: Robot social intelligence. In: Social Robotics, pp. 45–55. Springer (2012) 11. Yang, S., et al.: Experiences developing socially acceptable interactions for a robotic trash barrel. In: 2015 24th IEEE Robot and Human Interactive Communication (ROMAN), pp. 277–284 (2015)

Due Diligence in the Digital Era: Question of Attribution of International Responsibility to a State P. A. Banis(&) and M. V. Ilyashevich RUDN University, Moscow, Russia [email protected], [email protected]

Abstract. The goal of the article is to highlight the problems, existing in the field of invocation of due diligence obligations to internationally wrongful acts, committed with the use of cyberspace. The authors highlight the existing problems that could appear in the field, such as the necessity to differentiate between the more and less technically developed states due to the difference in their capabilities to exercise due diligence in respect of the cyberoperations emanating from their territory. They emphasize the need for an international cooperation in what concerns responses to cyberoperations as the mean for achieving security in the field. The authors also highlight the need for proper cyber-hygiene as a mean for prevention of malicious cyberoperations, which should be based on international cooperation. Invocation of responsibility for violation of due diligence obligations can help the injured states to have certain redress, and nowadays serve as one of the proper means for attribution of responsibility for cyber operations in breach of rights and interests of other states concerned. Finally, they submit that a proper way to respond to the violations of due diligence should be a cautious one and exercised by means of pacific settlement of disputes. In their study the authors rely on the existing practice of the international courts and tribunals, as well as on the international doctrine. Methods In course of the study, a combination of methods was implied, such as the analysis, comparative legal method, inductive, deductive, logical, interpretive, dynamic and hermeneutics method. Keywords: International law
International responsibility
Cyberspace
Internationally wrongful act
Attribution of responsibility
International court of justice JEL Code: K330


K420

1 Introduction Due to the today’s rising issue of the use of the Internet with the purpose of commission of acts, that fall under description of internationally wrongful, there appears to be a need for an approach to counteract them. However, recognition of the perpetrators © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 319–324, 2020. https://doi.org/10.1007/978-3-030-39319-9_35

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still remains an issue. Starting from the cyberattacks on Georgia on 2007, which are alleged to have been committed by Russia, and to the current dates there are no cases, where the states could collect enough data with the view of bringing a claim to an international tribunal or at least providing plausible evidence to support their allegations to the public. So far there are no fruitful normative progress, the international scholars are attempting to fill the existing gaps, if not with suggestions of a proper regulation thereof, but with the ways to address the problem of holding wrongdoers accountable, and invocation of due diligence obligations appears to be a productive way to have a certain remedy for a “victim” state.

2 Results The level of development of electronic communications and data transmission in the regular peoples’ lives, as well as in functioning of the international community of States is apparent to the extent making remarks thereon needless. Same is true regard to its future expansion. Sadly, however, means that could be used for the sole purpose of progression of friendly relations and promotion of cooperation between States, are used as an instrument of their disruption – commission of internationally wrongful acts. Despite being one of the key elements of the law of international responsibility, the issue of attribution of internationally wrongful acts still contains areas of controversy, even those emerging with time. One of the relatively recent gaps is the question of attribution of internationally wrongful conduct to a state in case of its commission with the use of cyberspace. It currently appears possible to conclude that the existing provisions, governing attribution of the wrongful conduct, do not suffice that goal. The key document in the area – the United Nations International Law Commission’s Articles on Responsibility of States for Internationally Wrongful Acts of 2001 – still remains a non-binding document. Although it is true that some of its provisions constitute codification of the existing customary international law, the other part remains its progressive development. The legal doctrine, however, seems to be quiet eagerly filled with options of covering the loopholes in the area concerned. Most of the solutions proposed relate to the lowering of the standard of proof, invoking due diligence obligations. However, it can be observed that certain authors tend to not extend the effect of the public international law on the cyberspace (Schmitt 2013). In that respect, however, it appears relevant to recall the International Court of Justice’s Advisory Opinion on the Legality of the Threat or Use of Nuclear Weapons, which provided, that prohibition of threat or use of force “[does] not refer to specific weapons”, but is applied “to any use of force, regardless of the weapons employed” (Reports of Judgments, Advisory Opinions and Orders, Legality of the Threat or Use of Nuclear Weapons 1996). The obligation of due diligence is currently confirmed by a number of decisions of international court and is well-settled in the body of the customary international law (Stephens and French 2016).

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It was first the Island of Palmas arbitration, where the tribunal stated that the territorial sovereignty “involves the exclusive right to display the activities of the State”, having, “as a corollary a duty: the obligation to protect within the territory the rights of other States” (Reports of International Arbitral Awards Island of Palmas Volume II 2006). Later, in 1949 the ICJ, clarifying that the Albanian authorities were under an obligation to warn the British ships of an imminent danger that the minefield posed to them, which should has been done based on, inter alia, “elementary considerations of humanity”, pronounced that it is “every State’s obligation not to allow knowingly its territory to be used for acts contrary to the rights of other States” (Reports of Judgments, Advisory Opinions and Orders, the Corfu Channel Case (Merits) 1949). The Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide of 2007 brought even more light on the fulfillment of the due diligence obligations, clarifying that the obligation in question is the one of conduct, not of result, as well as setting multiple parameters to be used in the assessment of whether that obligation was fulfilled (Reports of Judgments, Advisory Opinions and Orders Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide 2007). Finally, the Case Concerning Pulp Mills on the River Uruguay case of 2010, cites the ICJ’s findings in the Corfu Channel case and in the Advisory Opinion Legality of the Threat or Use of Nuclear Weapons, reaffirming that “the principle of prevention, as a customary rule, has its origins in the due diligence that is required of a State in its territory” (Reports of Judgments, Advisory Opinions and Orders, Case Concerning Pulp Mills on the River Uruguay (Argentina v. Uruguay) 2010). The application to the cyberspace of due diligence, however, may prove to be much trickier that to the events, taking place on the physical realm solely. That is due to the problems, that the use of the Internet poses, such as the anonymity of its users, possibilities to hide one’s location, information about the identity, as well as to mislead those aiming to track the malicious activities, and also the ability to track the cyberattack through multiple jurisdictions. Furthermore, application of due diligence is also complicated by the necessity to differentiate between the less and more developed countries, thus judging by their capabilities to properly address the peril to the targeted country; by the need to answer the question whether a state, from the territory of which was the cyberattack launched is alone to exercise due diligence, or the “transit” states, through which the cyberattack is tracked, are under that obligation too; what should the responses to the violation of due diligence obligation look like. The parameters, provided by the ICJ in the Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide, which are to be taken into account when assessing compliance with the due diligence obligation, are as follows. Firstly, it is the state’s “capacity to influence effectively the action of persons likely to commit, or already committing, genocide” (Reports of Judgments, Advisory Opinions and Orders Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide 2007). It is further clarified that this capacity depends, not limited to, from the wording of the ICJ, on “geographical distance of the State concerned from the scene of the events, and on the strength of the political links, as well as links of all other kinds, between the authorities of that State

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and the main actors in the events”, as well as the legal framework, existent in the state in question, that would allow it to act (Reports of Judgments, Advisory Opinions and Orders Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide 2007). Finally, the obligation of due diligence will not be complied with only so far, the violation of the rights and interests of the “injured” state took place (Reports of Judgments, Advisory Opinions and Orders Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide 2007). Application of the findings above to the situation of a wrongful act, committed with the use of cyberspace, allows to conclude that the legal, hardware and software capacities of a state are to be considered. In terms of the legal framework, it can be said that the existence of the rules providing for so-called cyber-hygiene that would allow the state to monitor activities in the cyberspace, and punish those, that may, among others, interfere with the other states’ rights and interest, prohibited on the national level. In this respect, the Council of Europe Budapest Convention on Cybercrime of 2001 may be an example. It features provisions, obliging states parties to it to punish the illegal access to computer systems without a right to do so; interception of nonpublic data; interference with data in the forms of “damaging, deletion, deterioration, alteration or suppression”; system interference by means of “inputting, transmitting, damaging, deleting, deteriorating, altering or suppressing computer data”; finally, the misuse of a device with the view of the commission of the offences listed above (Convention on Cybercrime 2001). Articles 20 and 21 of the said convention provide for the real-time collection of computer data and interception of content of the data (Convention on Cybercrime 2001). Certainly, this has to be done in compliance with the state’s concerned human rights obligations, that exist under the respective treaties in force for it, as article 15 of the Budapest convention provides. The importance of monitoring is derived from the fact that the obligation of prevention is invoked at the moment the state learns or should have learned of the malicious activities, directed at other states (Reports of Judgments, Advisory Opinions and Orders Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide 2007). The technical side of the issue may prove to be more complicated, since, a state’s technological development may not allow it to effectively monitor and cease illegal acts in its cyberspace, as it requires constant software and hardware updates and training of the personnel. Although here, one should recall that the obligation of due diligence is not the one of result (Reports of Judgments, Advisory Opinions and Orders Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide 2007), but the one of conduct, meaning that the states should deploy all measures available and in good faith to cease actions, emanating from or being directed through the cyber-infrastructure located under its jurisdiction. Finally, a state, failing to exercise due diligence, when it could have done so, but stating that the measures that would have been applied, would not suffice to cease the malicious activity, will be in breach of the obligation of due diligence. In what concerns the application of due diligence to the transit states, there appears to be no consensus so far. According to the Tallinn Manual on the International Law

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Applicable to Cyber Warfare, views of the International Group of Expert divided between its application to the extent that, if a transit state is aware of a cyber-operation, then it has to act with the aim to terminate it save for cases where such operation, if blocked, will be re-transmitted through a different state (Schmitt 2013). At this point it was considered that no obligation to terminate an operation exists, since it would lack any effect (Schmitt 2013). On the other hand, it was considered that the obligation of due diligence should be applied to the state, from which territory the operation was launched alone (Schmitt 2013). It appears possible to conclude that a balanced approach is to be exercised with respect to the due diligence obligations of a transit state, meaning that, if it comes to its knowledge that the malicious cyber-operation is being routed through it, and, so far the burden of its prevention does not outweigh the harm that would be dealt to the targeted state (Schmitt 2015), it should act to terminate the operation. Furthermore, fulfillment of the due diligence obligations should not be devoid of any practical outcome, as described above – then, in case of inaction, there should be no breach of that obligation. Finally, since the cyberattacks appear to be more frequent nowadays, states are searching for appropriate responses to the threats. It is proposed, that the cyberoperations may entitle a state to resort to such measures, as the countermeasures, plea of necessity and, where the cyberattack rises to the level of an armed one – to selfdefense in line with Article 51 of the Charter of the United Nations (Charter of the United Nations and Statute of the International Court of Justice 1945; Schmitt 2017). In the view of the authors, resort to the countermeasures, plea of necessity, and selfdefense as a response to the violation of the due diligence obligations are inappropriate even given the damage that was or could be dealt. The International Law Commission’s Draft Articles on Responsibility of States for Internationally Wrongful Acts of 2001 list the measures above as circumstances, precluding wrongfulness (Yearbook of the International Law Commission 2001). Article 26 of the said document provides that none of the circumstances, precluding wrongfulness, “preclude the wrongfulness of any act of a State which is not in conformity with an obligation arising under a peremptory norm of general international law” (Yearbook of the International Law Commission 2001). Given that the use of cyberspace offensively is often related to be a violation of one’s sovereignty and interference with internal affairs of a state, it appears to be impossible to have recourse to the measures above, save for the cases, where it is established beyond reasonable doubt that the cyberattack in question can be attributed to a state, from which it was launched. Some authors advocate for recourse to the plea of necessity for the non-state conduct, since “The state need only locate the technological source of the harmful operation and assess the consequences of its own response—factual and legal attribution is not a precondition to action. Responses are permissible even when they amount to an internationally wrongful act, such as a violation of the sovereignty of a state that is completely uninvolved in the underlying harmful cyber operations” even in case it has exercised due diligence but failed to terminate the operation (Schmitt 2015). In our view, a more cautious approach is to be exercised, given that violation of a peremptory norm will follow, which is prohibited by the international law despite of any circumstances.

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3 Conclusions/Recommendations The misuse of cyberspace poses great threats to the stability of international relations, as well as to the peace and wellbeing of the international community. With the view to preserve the them, extreme caution is to be exercised in resort to responses to threats of unknown origin. A better way would be to have recourse to the pacific settlement of disputes arising from the alleged violation of the due diligence obligations. Furthermore, the cyber-hygiene and cooperation, based on an agreement, or exercised bona fide (Inshakova et al. 2018), will be very helpful in achieving the goal of prevention of harmful cyber-activities.

References Charter of the United Nations and Statute of the International Court of Justice (1945). https:// treaties.un.org/doc/publication/ctc/uncharter.pdf. Accessed 21 June 2019 Convention on Cybercrime (2001). http://www.europarl.europa.eu/meetdocs/2014_2019/ documents/libe/dv/7_conv_budapest_/7_conv_budapest_en.pdf. Accessed 20 June 2019 Inshakova, A., Goncharov, A., Kazachenok, O.: “The imperatives of financial policy in the sphere of the digital economy: impacts on increasing investment activity and tax potential of Russian regions”. In: Proceedings of the International Scientific Conference «Competitive, Sustainable and Secure Development of the Regional Economy: Response to Global Challenges», pp. 337–342. Atlantis Press, Amsterdam (2018) Reports of International Arbitral Awards, Island of Palmas case (Netherlands, USA), Volume II (2006). http://legal.un.org/riaa/cases/vol_II/829–871.pdf. Accessed 21 June 2019 Reports of Judgments, Advisory Opinions and Orders, Case Concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide (2007). https://www. icj-cij.org/files/case-related/91/091-20070226-JUD-01-00-EN.pdf Reports of Judgments, Advisory Opinions and Orders, Case Concerning Pulp Mills on the River Uruguay (Argentina v. Uruguay) (2010). https://www.icj-cij.org/files/case-related/135/13520100420-JUD-01-00-EN.pdf. Accessed 20 June 2019 Reports of Judgments, Advisory Opinions and Orders, the Corfu Channel Case (Merits) (1949). https://www.icj-cij.org/files/case-related/1/001-19490409-JUD-01-00-EN.pdf. Accessed 21 June 2019 Reports of Judgments, Advisory Opinions and Orders, Legality of the Threat or Use of Nuclear Weapons (1996). https://www.icj-cij.org/files/case-related/95/095-19960708-ADV-01-00EN.pdf. Accessed 19 June 2019 Stephens, T., French, D.: ILA Study Group on Due Diligence in International Law Second Report (2016). https://ila.vettoreweb.com/Storage/Download.aspx?DbStorageId= 1427&StorageFileGuid=ed229726-4796-47f2-b891-8cafa221685f. Accessed 20 June 2019 Schmitt, M.: In Defense of Due Diligence in Cyberspace (2015). https://www.yalelawjournal. org/forum/in-defense-of-due-diligence-in-cyberspace. Accessed 19 June 2019 Schmitt, M.: Peacetime Cyber Responses and Wartime Cyber Operations Under International Law: An Analytical Vade Mecum (2017). https://harvardnsj.org/wp-content/uploads/sites/13/ 2017/02/Schmitt-NSJ-Vol-8.pdf. Accessed 21 June 2019 Schmitt, M.: Tallinn Manual on the International Law Applicable to Cyber Warfare (2013). http://csef.ru/media/articles/3990/3990.pdf. Accessed 18 June 2019 Yearbook of the International Law Commission (2001). http://legal.un.org/ilc/publications/ yearbooks/english/ilc_2001_v2_p2.pdf. Accessed 21 June 2019

Method of Automatic Creation of Curriculum with a Competency-Based Learning Model Natalia Eryomina(&) and Yaroslav Lopukhin Tomsk State University, Tomsk, Russian Federation [email protected], [email protected]

Abstract. The reality of digital economy changes rapidly and sets flexible, modular and asynchronous structure of the training process, to prepare specialists possessing the necessary professional competence. At the same time, the bachelor’s program must meet the requirements of regulatory documents. Therefore, an educational institution needs an automated development of individual curricula that ensure formation of relevant competence through student’s participation in various forms of educational activities, including electronic courses. This work aims at creation of an information model of the curriculum allowing to automate the process of curriculum development in the framework of the competence-based learning approach. The proposed model is based on competence maps as a part of educational standard describing the disciplines of the curriculum in terms of ensuring the development of professional competences of a future specialist. Using these maps Competences and Disciplines matrices are built. The model curriculum is implemented as a three-dimensional array and curriculum requirements are formalized using the apparatus of Boolean algebra. A method proposes an automated curriculum development by constructing corresponding arrays of Boolean vectors allowing to develop the curriculum that forms the competence of a specialist in line with the requirements of regulatory documents. Keywords: Competency


Curriculum
Boolean vectors

JEL Code: A220 economic education and teaching of economics Undergraduate




Digital economy as a new paradigm of economic development requires an innovative approach to personnel training. Both the content of training, designed to form the future specialist’s competency, allowing him to use modern digital technologies, and a form of education should be innovative. Innovative content conflicts with the traditional format of the transfer of knowledge and skills, and therefore generates many new forms of education: e-learning platform (Learning Management System), e-learning, trainings, webinars (Bonk et al. 2015; Eom and Ashill 2018; Yang 2015). The linear structure of the educational process, characteristic of classical education, is replaced by a modular, parallel, asynchronous structure that is customized to the needs of each individual learner (Blayone et al. 2017). This trend is more characteristic of corporate education (Felstead 2018), as well as individual retraining for changing the professional © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 325–330, 2020. https://doi.org/10.1007/978-3-030-39319-9_36

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sphere. However, it is also reflected in the practice of the activities of such traditional personnel providers as higher and secondary educational institutions. Thus, the training program at Tomsk State University includes elective courses that are included in the main educational program, campus courses available to all students of the university, regardless of their specialization. A student can study one or several disciplines remotely on the portal of open online education and their results will be credited. It is also possible to study in a foreign university for one or several semesters according to the program of academic mobility (Deriglazova et al. 2018). There is no doubt that these possibilities will eventually become more widely available and diverse. A competency-based approach to education implies that a set of disciplines of the curriculum is aimed at the formation of certain competencies of students (Plutenko et al. 2018; Bergsmann 2015; Konyakhina 2012). To justify the inclusion of each discipline in the training program, it is necessary to formulate a list of the formed competencies and indicate the required level of development of each competency. For this purpose, in the Russian educational practice a map of competencies is drawn up for each discipline (Calhoun et al. 2005). A complex of all disciplines of the curriculum should ensure the formation of all the competencies declared in the training program (Boahin and Hofman 2014; Azarova and Zolotaryova 2010). Theoretically, a competency-based approach allows the integration of any external courses into the educational process that can develop the necessary competency of the student to the required level. However, the educational process of a traditional educational institution is governed by numerous legal acts, the requirements of which set a rigid framework. In particular, the semester and weekly learning load, the ratio of types of training activities, are standardized. Matching of all requirements is needed during the formation of the curriculum and related documents: a working training plan, a timetable of the educational process, etc. In the traditional approach to training, the compilation of a curriculum is a rather laborious task, but the result fully justifies the costs: the curriculum is formed for the entire educational program and is applied unchanged over the years. When changing the approach to education, the traditional task of forming a curriculum becomes much more complicated. In fact, instead of developing a unified curriculum for the entire educational program that lasts for quite a long period, it becomes necessary to form a package of individual curricula. If taken to the maximum, the number of individual learning paths and corresponding curricula coincides with the number of students in an educational institution. And since in the digital era the change in the content of education, following the change in emerging technologies, is significantly accelerated (Ackoff and Greenberg 2008; Dede et al. 2016), it is obvious that this package must be revised almost annually. So, an innovative approach to the formation of the educational path is required and there is a need to automate the process of developing curricula. Therefore, the task is to create a formalized curriculum model. Let us imagine the curriculum of the educational program as a set of disciplines, distributed over time by study periods and designed to ensure the formation of a certain set of competencies. The set of competencies is defined by the educational standard, and each of them must be developed to a certain level, for example, three levels of development can be distinguished: basic, advanced and in-depth. An academic semester is traditionally considered as a study period, but without loss the generality, other time periods can be considered. It is assumed that academic disciplines should be

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distributed by semesters according to an increasing level of mastering competences. The set of disciplines studied in the framework of the educational program is determined by the educational institution. If a student uses some external elements of the educational process (academic mobility programs, online courses, trainings, etc.), documents of the university (for example, the provision on the re-crediting of disciplines) should provide a mechanism for converting outcomes of such learning. The number of credit time units of mastering a discipline, allocated for each academic subject, is defined by the university in advance. If a student has taken advantage of one of the alternative opportunities for studying the discipline, not the real time spent studying the subject, but the time planned to study a similar discipline with a standard approach is considered. Now we formalize the task of drawing up a working curriculum with a competencebased learning model. Let the educational standard define a set of competencies ki , 1  i  K, each of which has L levels of development. For simplicity, let us assume that the number of levels of development is the same for all subjects. Otherwise, you can choose the maximum possible level of development of all competencies as L and enter dummy levels for all other competencies, bringing their number to L for each competency. The main educational program in a specialty covers a study of a specific set of academic disciplines dj , 1  j  D during S semesters. For each discipline dj one can build a model of a competencies map in the form of a matrix A j of K  L size, where the element ailj , located at the intersection of row i and column l, is equal to one if this discipline dj develops a competency ki to a level l. Otherwise, the element ailj is equal to zero. Thus, the matrix A j (let us call it “Competencies matrix”) sets the competencies developed by a discipline for the discipline dj . A set of all matrices A j , 1  j  D determines the entire set of disciplines of the curriculum. To develop all the required competencies of student in full, educational program should meet a necessary and sufficient condition: for any i and l D X

ailj  1:

ð1Þ

j¼1

Based on the Competencies matrices for each competence ki , one can build a matrix Bi of D  L size, where the element bijl , located at the intersection of row j and column l, is equal to one if this discipline dj develops a competency ki to a level l. Otherwise, the element bijl is equal to zero. Let us call matrix Bi “Disciplines matrix”, since for each competency in it we can determine which discipline develops this competence at each of the levels. Condition (1) for the Disciplines matrices can be formulated as follows: for any i и l D X j¼1

bijl  1:

ð2Þ

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Let the educational process in accordance with the educational program last for S semesters. Denote the complexity of a discipline dj in credits as tj , and the total complexity of the semester s as Ts , 1  s  S. Thus, the curriculum must meet the following conditions: – full implementation of the curriculum develops all the student’s competencies declared in the educational standard to the required level (the requirement of the standard); – total complexity of each semester is equal to the fixed value Ts (the requirement of a fixed labor intensity). Let us consider a three-dimensional array of S-component boolean vectors (Whitesitt 2010) where:  
ijl ¼ x1ijl ; x2ijl ; . . .; xSijl ; X where: 1  i  K; 1  j  D; 1  l  L; 1  s  S;

ð3Þ

as a model curriculum. Vector component xSijl ¼ 1, if a discipline dj in semester s develops a competency ki to a level l, otherwise, xSijl ¼ 0. Let us formalize the requirements for the curriculum. The requirement of the standard is: for any i and l D


ijl  6
0: _X

ð4Þ

j¼1

Each discipline dj has a matching binary vector   K L Yj ¼ y1j ; y2j ; . . .; ySj ¼ _ _ X il : i¼1 l¼1

ð5Þ

Without loss of generality, we will assume that each discipline is studied in full during one semester. In this case for any j the weight of a boolean vector Yj , i.e. the number of single components in it will be equal to one:   Yj  ¼ 1:

ð6Þ

Then the requirement of a fixed labor intensity can be written like this: D X

c j t j ¼ Ts ;

j¼1

 Where cj ¼

1; if ysj ¼ 1; 1  s  S: 1; if ysj ¼ 0;

ð7Þ

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Thus, the task of creating a curriculum is reduced to building an array of Boolean vectors (3) that satisfy the conditions (4) and (7). To solve it, the following method can be used. First, we create an array of partially specified vectors: if a discipline dj is involved in the development of a competency ki to a level l, then we set an indefinite value “–”,
ijl , otherwise vector X
ijl is zero. to all components of the corresponding vector X In the first step, we will compile a list of disciplines that will be studied in the first semester. It is obvious that only disciplines involved in the development of the first level of competencies can enter it. It should be noted that in general form a discipline can be responsible for several competencies at once, as well as develop the same competency at several levels at once. Therefore, it is necessary to consider the set Z1 of
ij1 , satisfying a condition: a corresponding discipline develops some nonzero vectors X competencies ki to the first level and at the same time does not develop any other competencies to a level above the first, i.e.
ij1 ¼
0 & X
ijl 6¼
0 _ X
ijl ¼
X 0; 1  i  K; 1  j  D; l [ 1:

ð8Þ

Let us randomly choose one of the possible first semester disciplines dj , and include
ij l ; 1  i  K; 1  l  L as one it in the curriculum, defining all partially defined vectors X in the first component and zeros in all subsequent components. Considered vectors become fully defined and are excluded from the set Z1 . Similarly, we will add other disciplines from the possible ones in the first semester, until the total labor intensity of the chosen disciplines reaches the value T1 : After that, the first component of the
^ is defined as zero for all disciplines d^ corresponding partially defined vectors X ijl j (Eryomina 2017). If using a complete enumeration approach, the number of possible options for sets of disciplines of the first semester can be estimated as the number of combinations of D=L by D=S. However, there are many additional conditions in practice, for example: each semester should contain a discipline from a specific block, one discipline should immediately precede another, some disciplines need to be studied in a certain semester, etc. By formalizing these requirements and verifying the compliance of the options under consideration with them, it is possible to reduce the choice significantly. In the second and subsequent steps, the procedure is repeated for each semester. In this, each time a set Zs of considered vectors is formed by partially specified vectors
ijl , for which vectors X
ijl1 are completely defined. X The proposed procedure finds all possible solutions of the problem. In the absence of solutions, it is proposed to change the initial conditions (for example, the complexity of individual disciplines) and repeat the procedure. Thus, the procedure can be automated. This will help minimize labor costs of preparation of individual curricula allowing the use of various forms of education, while strictly following the requirements of the educational standard in terms of the development of competencies.

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References Ackoff, R., Greenberg, D.: Turning Learning Right Side Up: Putting Education Back on Track. Wharton School Publishing, New Jersey (2008) Azarova, R.N., Zolotaryova, N.M.: Development of a competence passport: Guidelines for projects organizers and faculty groups of universities. Moscow (2010) Bergsmann, E.: Evaluation of competence based teaching in higher education: from theory to practice. Eval. Prog. Plan. 52, 1–9 (2015) Blayone, T.J.B., van Oostveen, R., Barber, W., DiGiuseppe, M., Childs, E.: Democratizing digital learning: theorizing the fully online learning community model. Int. J. Educ. Technol. High. Educ. 14(1), 13 (2017) Boahin, P., Hofman, W.H.A.: Perceived effects of competency-based training on the acquisition of professional skills. Int. J. Educ. Dev. 36, 81–89 (2014) Bonk, C.J., Lee, M.M., Reeves, T.C., Reynolds, T.H.: MOOCs and open education around the world (2015). http://publicationshare.com/moocsbook. Accessed: 23 Nov 2018 Calhoun, J.G., Rowney, R., Eng, E., Hoffman, Y.: Competency mapping and analysis for public health preparedness training initiatives. Public Health Rep. 120(Suppl. 1), 91–99 (2005) Dede, C., Eisenkraft, A., Frumin, K., Hartley, A.: Teacher Learning in the Digital Age: Online Professional Development in STEM Education. Harvard Education Press, Cambridge (2016) Deriglazova, L.V., et al.: Future university: development strategy. Tomsk State Univ. J. Hist. 52, 71–81 (2018) Eom, S.B., Ashill, N.J.: A system’s view of E-learning success model. Decis. Sci. J. Innov. Educ. 16(1), 42–76 (2018) Eryomina, N.L.: Method of curriculum development with a competence-based learning model. In: Actual Problems of Numerical Modeling and Information Technology: Materials of the International Scientific-Practical Conference, Sochi Research Center of the Russian Academy of Sciences, Russia, Sochi, pp. 33–35 (2017) Felstead, A.: Tracing the connections: short-termism, training and recession. Int. J. Hum. Res. Manag. 29(4), 664–682 (2018) Konyakhina, I.V.: Competence approach in higher professional education (theoreticalmethodological aspects). Tomsk State Pedagogical Univ. Bull. 11(126), 69–71 (2012) Plutenko, A.D., Leyfa, A.V., Kozyr, A.V., Haletskaya, T.V.: Specific features of vocational education and training of engineering personnel for high-tech businesses. Eur. J. Contemp. Educ. 7(2), 360–371 (2018) Yang, S.: Topical scopes of digital and data curation curricula. Proc. Assoc. Inf. Sci. Technol. 52(1), 1–4 (2015) Whitesitt, J.E.: Boolean Algebra and Its Applications. Dover (2010)

Communication Models of AI as Manifestations of Its Social Origin Olga A. Serova1(&) , Vyacheslav V. Golikov2, Elena S. Petrenko1 , and Nikita O. Stolyarov1 1 Pskov State University, Pskov, Russia [email protected], [email protected], [email protected] 2 Volgograd State Medical University, Volgograd, Russia

Abstract. Purpose: The purpose of the article is to determine the perspectives of socialization of AI and to model its communications. The author’s hypothesis H1 is that AI of the future will have a vivid social origin. Design/methodology/approach: The authors perform critical analysis of the statistics of AI in 2016–2019, using the methods of modeling of socio-economic processes, logical analysis, and formalization. Findings: The offered hypothesis is confirmed. It is proved that AI is characterized by a vivid social origin. Machine communications (without human participation) form the main value of AI in the conditions of Industry 4.0 and thus will be further developed in the near future. Originality/value: The models of production (internal) and marketing (external) communications of AI are developed and presented. It is substantiated that AI could be a participant of “machine dialog”, which envisages mutual exchange of information between it and digital devices and, if necessary, the query for additional information. This is the basis of human communications and thus creates preconditions for formation of machine society and socialization of AI in it. Keywords: Machine communications
AI (AI) Machine society
Social origin
Industry 4.0 JEL Code: A13


Internet of Things (IoT)



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1 Introduction AI is one of the most perspective and popular digital technologies of the modern times. The key issue is the perspectives of its socialization and the risks of competition between human intellect and AI, which cause the threat to growth of unemployment and reduction of quality of life. This issue emerged due to the start of the Fourth industrial revolution, in which conditions AI quickly develops – as it is the central element of most of the created cyber-physical systems (sets of fully automatized machine devices).

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 331–337, 2020. https://doi.org/10.1007/978-3-030-39319-9_37

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When the first inventions in the sphere of AI were used in practice (late 20th century), its capabilities were too narrow. Intellectual technologies of decision support allows for automation of only separate components of the process of management, while human performed the main functions. High risk of mistakes of AI predetermined the necessity for additional revision of its computations and conclusions, and thus automation of management was only relative. Development of digital technologies allowed for significant success in the sphere of automation of management. Intellectual decision support is used for Big Data processing, which “manual” analysis is impossible. This allows for automation of not only separate managerial processes at companies but also the process of provision of state services (e-government). In the conditions of formation of Industry 4.0, AI received a new, more powerful impulse for development. There are a lot of examples of fully automatized industrial companies (plants and factories), and their number grows annually. Mass consumers could use intellectual technologies of face recognition, and marketing offers become more intellectual (individualized). Communications between AI and human are a modern reality. Thus, a modern problem of the economic science is determining the perspectives of socialization of AI. For solving this problem, the authors perform the modeling of AI communications. Hypothesis H1 is that AI of the future will have a vivid social origin.

2 Materials and Method In the existing academic literature, there are two alternative hypotheses, within each of which scientific studies are performed. The first hypothesis (H0) is that AI has serious limitations regarding communications, and thus machine society – even if it is formed in the distant future – will be an exclusive phenomenon and will be different from human society, but competition between humans and machines is impossible. This hypothesis is considered in the works Burrel (2019), Daugherty et al. (2019), Duan et al. (2019), Feng (2019), Ford (2013), Lowe (2019), Miller (2019), Osório and Pinto (2019), and Perc et al. (2019). The second (opposite) hypothesis (H1) is connected to acknowledging wide opportunities and perspectives of socialization of AI. Representatives of this opinion publish materials on the topic of machine vision and machine communications within cyber-physical systems, of which the most popular is the Internet of Things (IoT). This hypothesis is presented in the works Petrenko et al. (2018), Popkova (2019), Popkova et al. (2019), Popkova et al. (2018), Popkova and Parakhina (2019), Popkova and Sergi (2018), Popkova et al. (2019), Sergi et al. (2019), and Sergi (2019). Here we support the second hypothesis (H1). However, the existing statistical data on the topic of AI do not allow proving or disproving any of the existing scientific hypotheses. These data are shown in Fig. 1. Thus, the report of the President of the International Federation of Robotics (2019) dated June 26, 2019 notes that as of this period there are 384,000 installed and exploited robots in the world. This information could be treated ambiguously. On the one hand, a lot of robots around the world could be connected with hi-speed (industrial)

Communication Models of AI as Manifestations of Its Social Origin Number of robots, thousand 450 400 350 300 250 200 150 100 50 0

Trend (growth): 51.78% in 384 3 years, annual growth – 17.26% 253

333

Volume of AI sales, USD billion 30 23.9

25 20 Trend (growth): 206.41% in 3 years, annual growth – 15 60.80% 10

7.8

5 2016

2019

0 2016

2019

Fig. 1. Statistics of AI in 2016–2019. Source: compiled by the authors based on International Federation of Robotics (2019), Statista (2019).

Internet (IoT), which will form a large machine society. On the other hand, absence of social interaction between robots, in view of their large number, could be viewed as a proof of essential impossibility of creation of machine society. The report of Statista (2019) “Global automation market size in 2016 and 2020” states that in the global market of automation of the processes of production, consumption, and state management (3D print and other technologies) the share of AI (2016) constituted 3.7% and sales volume of AI was assessed at USD 7.8 billion. By the end of 2019, the share of AI in the global market of automation will reach 5.4%, and the volumes of its sales will reach USD 23.9 billion. The economic sense of this information could be various. On the one hand, growth of popularity of AI among the automation means shows the increase of its capabilities and its uniqueness as compared to other means of automation. A probable reason of this uniqueness could be hidden social nature of AI. On the other hand, absence of social manifestations of AI – despite the expansion of its network – could be treated as a sign of its anti-social nature. Verification of hypothesis H1 (and disproval of hypothesis H0) could be done with the help of determining the models of communications of AI, which will prove its social nature. For this we use modeling of socio-economic processes, logical analysis, and formalization.

3 Results We developed two perspective models of AI communications, which could and probably will be implemented in practice in the mid-term (until 2024). The models are shown in Figs. 2 and 3.

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collected data (information) commands

IoT commands

IoT

AI

information Machine vision IoT

commands

information

observation Digital device β

Digital device α

Employee

Fig. 2. The model of production (internal) communications of AI. Source: developed and compiled by the authors.

Internet, IoT, and Ubiquitous Computing information on orders orders

AI

marketing information (advertising and surveys)

Buyer

feedback

Consumers (e.g., target audience)

Fig. 3. The model of marketing (external) communications of AI. Source: developed and compiled by the authors.

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According to Fig. 2, AI conducts direct and reverse internal communications – i.e., participates in “machine dialog”. It passes commands (e.g., “start of production” and “termination of production”) to digital devices (a, b, etc.) at the company and receives information from them (e.g., “command performed”, “command cannot be performed due to…”, “failures in the work of device”). AI could also “observe” the company’s employees with the help of machine vision (video surveillance systems that are connected to the IoT) and pass commands to it (e.g., “start observation”, “stop observation”, “start observing a specific employee”). According to Fig. 3, marketing (external) communications of AI could be performed via common Internet (not necessarily broadband) and via the Internet of Things, as well as via Ubiquitous Computing. AI could perform direct marketing communications – pass the marketing information to consumers (target audience or mass consumers) in the form of advertising (information on new offers of the company and its competitive advantages) and surveys (readiness to purchase the company’s products and consumer preferences). Using direct marketing communications, AI could inform buyers on the status of their purchases (e.g., “order accepts”, “order in work”, “delay with order”, etc.). Direct marketing communications of AI envisage collection of feedback from consumers (offers, results of surveys, etc.) and acceptance of orders.

4 Conclusion Thus, the presented models of internal and external communications of AI confirm the offered hypothesis (H1) and show that it is characterized by a vivid social origin. Machine communications (without human participation) form the main value of AI in the conditions of Industry 4.0 and thus will be further developed in the near future. In the course of the research we determined that AI could be a participant of full “machine dialog”, which envisages mutual exchange of information between it and digital devices and, if necessary, queries for additional information. This is the basis of human communications and thus will create preconditions for the formation of machine society and socialization of AI in it. At the same time, it should be noted that AI does not prefer any digital devices, and their communications have strictly business direction and are strictly regulated. This is the essential difference between them and human communications, which could be spontaneous and non-business. These differences between machine communications and human communications show the limited capabilities of socialization of AI – it could be a full member only of machine society (if it is formed in the future), and AI cannot communicate as a human’s equal in the human society. This must be taken into account during further studies of the social origin of AI. It is recommended to pay attention to the issues of socialization of AI in the machine and human societies – we think that an important role in this process should belong to machine learning.

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References Burrell, L.: Artificial intelligence brings out the worst and the best in us. MITS Loan Manag. Rev. 60(2), 18–26 (2019) Daugherty, P.R., Wilson, H.J., Chowdhury, R.: Using artificial intelligence to promote diversity. MITS Loan Manag. Rev. 60(2), 10–12 (2019) Duan, Y., Edwards, J.S., Dwivedi, Y.K.: Artificial intelligence for decision making in the era of Big Data – evolution, challenges and research agenda. Int. J. Inf. Manage. 48(1), 63–71 (2019) Feng, T.: Cognitive Function of Artificial Intelligence Literature. IOP Conf. Ser. Mater. Sci. Eng. 573(1), 12–26 (2019) Ford, M.: Could artificial intelligence create an unemployment crisis? Commun. ACM 56(7), 37– 39 (2013) International Federation of Robotics. President’s Report Jun 26, 2019 (2019). https://ifr.org/. Accessed 24 Aug 2019 Lowe, D.: Artificial intelligence, or statistics? Significance 16(4), 7 (2019) Miller, A.: The intrinsically linked future for human and Artificial Intelligence interaction. J. Big Data 6(1), 38–42 (2019) Osório, A., Pinto, A.: Information, uncertainty and the manipulability of artificial intelligence autonomous vehicles systems. Int. J. Hum. Comput. Stud. 130(1), 40–46 (2019) Perc, M., Ozer, M., Hojnik, J.: Social and juristic challenges of artificial intelligence. Palgrave Commun. 5(1), 10 (2019) Petrenko, E., Pritvorova, T., Dzhazykbaeva, B.: Sustainable development processes: Service sector in post-industrial economy. J. Secur. Sustain. Issues 7(4), 781–791 (2018). https://doi. org/10.9770/jssi.2018.7.4(14) Popkova, E.G.: Preconditions of formation and development of industry 4.0 in the conditions of knowledge economy. Stud. Syst. Decis. Control 169(1), 65–72 (2019) Popkova, E.G., Egorova, E.N., Popova, E., Pozdnyakova, U.A.: The model of state management of economy on the basis of the internet of things. Stud. Comput. Intell. 826(1), 1137–1144 (2019) Popkova, E.G., Morozova, I.A., Litvinova, T.N.: Transformational processes in the media system under industry conditions 4.0: future outlines and perspectives (reflections on the article by Alexander P. Sukhodolov, DSc. In Economics, Professor and Irina A. Kuznetsova, PhD in Engineering, Associate Professor “designing the mass media as a homeostatic system by means of automation engineering: basic concepts, structure, components”). Theor. Pract. Issues Journal. 7(1), 145–154 (2018) Popkova, E.G., Parakhina, V.N.: Managing the global financial system on the basis of artificial intelligence: possibilities and limitations. Lect. Notes Netw. Syst. 57(1), 939–946 (2019) Popkova, E.G., Sergi, B.S. (eds.): Digital Economy: Complexity and Variety vs Rationality. Springer, Heidelberg (2019) Popkova, E.G., Sergi, B.S.: Will industry 4.0 and other innovations impact Russia’s development? In: Bruno, S.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, (pp. 51–68). Emerald Publishing Limited, Bingley (2018) Sergi, B.S., Popkova, E.G., Sozinova, A.A., Fetisova, O.V.: Modeling Russian industrial, tech, and financial cooperation with the Asia-Pacific region. In: Sergi, B.S. (ed.) Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019)

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Sergi, B.S. (ed.): Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Statista. Global automation market size in 2016 and 2020, by segment (in billion U.S. dollars) (2019). https://www.statista.com/statistics/257170/global-automation-market-revenue-byend-market/. Accessed 24 Aug 2019

Machine Learning: Anthropogenic Principles Vs. Social Principles Natalia A. Ilyina1(&) , Alla A. Serebryakova1 , Platon A. Lifanov2, and Chinara R. Kulueva3 1

Pskov State University, Pskov, Russia [email protected], [email protected] 2 Volgograd State Pedagogical University, Volgograd, Russia [email protected] 3 Osh State University, Osh, Kyrgyzstan [email protected] Abstract. Purpose: The purpose of the work is to develop the principles of machine learning and the logic of their application in the practice of modern companies depending on the specifics of using AI. Design/methodology/approach: The authors analyze the directions of the usage of Internet by companies in Russia in 2019. This allows proving that Internet (as a technology that precedes AI) is used with different activity in the social (envisaging communications with people) and anthropogenic (envisaging machine communications under manager’s control) directions. Findings: It is determined that AI could be used for two opposite types of activities – machine communications with humans (mass usage) and for independent activities under manager’s control (professional usage). AI cannot perform these two types of activities at the same high level, so specialization of AI – depending on the specifics of its usage at the company – is expedient. Originality/value: The authors develop a mixed approach to machine learning, which allows determining the company’s needs for machine learning (with the help of the proprietary algorithm) and satisfying them based on the offered anthropogenic or social signs. This approach formed the scientific and methodological provision of machine learning and allowed for standardization of this process – ensuring its high flexibility and adaptability to each company’s needs. Keywords: Machine learning
Anthropogenic character
Social character
Communications between humans and machines
Machine communications JEL Code: A13


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1 Introduction AI, which was considered to be sci-fi in the 20th century, became an everyday reality of economic subjects (companies, marketing agencies, and online consumers) and the object of scientific research in the 21st century. The needs for AI grew significantly under the influence of the Fourth industrial revolution (transition to Industry 4.0), which caused the necessity for expanding its possibilities through learning. © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 338–344, 2020. https://doi.org/10.1007/978-3-030-39319-9_38

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In the modern science, research in the sphere of machine learning is usually multidisciplinary – it is performed at the joint of technical and social sciences. However, the organizational and managerial platform for machine learning is not yet formed as of now. Due to this, there are two opposite approaches to organization of the process of machine learning. The first approach envisages standardization: different development of AI, which allows making it universal – ensuring its application in various spheres of the economic activities. However, this approach has not been implemented in practices, and the attempts of AI development in different directions increase the gaps in its capabilities and reduce it efficiency. The second approach is connected to diversification: adaptation of AI to the needs of each economic subject. The growing number of specialized studies that are aimed at developing the recommendations for application of AI in certain economic functions is a proof of representatives of technical sciences acknowledging the high complexity or even impossibility of combination of all capabilities in AI – as a lot of them are opposite. Within the second approach, representatives of technical sciences offer practical solutions for each situation. This leads to fragmentary application of AI and to methodological basis for machine learning at some companies with simultaneous absence of the methodological basis for machine learning at other companies of the same sphere (e.g., processing industry). This emphasizes the importance of studying AI from the positions of the economic science. In this research we offer a hypothesis of the necessity for development and application of a combined approach and development of the basic principles of machine learning, which would allow systematizing the methodology of this process and conducting machine learning at each company based on the common principles. The purpose of the work is to develop the principles of machine learning and the logic of their application in the practice of modern companies depending on the specifics of using AI.

2 Materials and Method Content analysis of the existing studies and publications on the topic of AI showed that it perform two types of activities. The first type of activities is connected to communications with humans. This type of activities is peculiar for companies of the trade and service spheres for automation of their marketing activities (promotion and sales of products). The processes of communications between AI and humans are described in the works Abbass (2019), Guzman and Lewis (2019), Kritzler et al. (2019), Mehrotra (2019), Miller (2019), Schneider et al. (2019), and Segal (2019). The second type of activities is conducted without human participation. This type of activities is most popular at industrial companies for automation of the production processes. The activities of AI without human participation are considered in the works Petrenko et al. (2018), Popkova (2019), Popkova et al. (2019), Popkova et al. (2018), Popkova and Parakhina (2019), Popkova and Sergi (2018), Popkova et al. (2019), Sergi et al. (2019), and Sergi (2019).

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Activities connected to communication with humans

The performed literature overview showed that the distinguished types of activities are opposite to each other. Communications with humans require social character from AI – focus on external manifestations and attractiveness for human (e.g., politeness, attentiveness, and analysis of non-digital information – gestures and emotion of nonprofessionals) – and activities without human participation require the anthropogenic character of AI – focus on internal processes (which show high efficiency during analysis of digital information), but which is comfortable for usage by a human (manager, professional). This conclusion is confirmed by statistical data on usage of digital technologies that precede AI. Statistics in Russia in 2019 by the example of Internet are shown in Fig. 1. Sales Purchases

18.10

Hiring personnel

37.00

Videoconferences

38.10

Professional training of… Activities without human participation

12.10

Access to online data bases Solving managerial and… Financial operations Information search in Internet

39.50 29.10 52.70 64.20 82.10

0.00 20.00 40.00 60.00 80.00 100.00 Fig. 1. Directions of internet usage by Russian companies in 2019, % companies. Source: compiled by the authors based on National Research University “Higher School of Economics” (2019).

As is seen from Fig. 1, usage of software and Internet without human participation (professional usage) dominates in Russia in 2019 – search for information on Internet is performed by 82.1% of Russian companies’ managers, 64.2% use Internet for financial operations, 52.7% use Internet for solving organizational & managerial and economic tasks, and 29.1% use Internet for access to online data bases. Usage of Internet with direct human participation (mass usage) is also popular in Russia in 2019 – Internet sales are performed by 12.1% of Russian companies, Internet purchases – by 18.1% of companies, personnel hire via Internet – 37%, videoconferences are conducted by 38.10%, and professional training of personnel is conducted by 39.5% of companies. Therefore, two types of AI are necessary – mass (for usage by interested parties) and professional (for usage by the company’s manager). Training of each type of AI should be based on own principles – social principles (in case of mass AI) and anthropogenic principles (in case of professional AI).

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3 Results The directions of the activities AI and the corresponding principles of its work are determined in Table 1. Table 1. Principles of work of AI that conform to the corresponding directions of its activities Directions of activities AI Social Interaction with human (collection of information) Receipt of commands from the manager (in case of intellectual decision support)

Anthropogenic

Machine communications (request, collection, and transfer of information, transfer of commands) Independent activities (processing of information, decision making)

Principles of work of AI – Flexibility: ability for face, voice, and gesture recognition; – Interactive character: ability to reach emotions and take them into account during interaction with human; – Human-friendliness: interface that is clear for each human, with possibility of personal change of settings (sound, color, special commands) depending on the preferences; – Adaptability: remembering the manner of communications of each human and his preferences and ability to adapt to them – Unification: common software for all connected digital devices and compatibility of data; – Standardization: universal models of machine communications, which recognize and use all connected digital devices; – Optimization: possession of different methods of data processing and ability to select the most effective method; – Differentiation: ability for differentiated treatment of the results of analysis and selection of treatment according to the manager’s requests

Source: developed and compiled by the authors.

As is seen from Table 1, one of the social (envisaging communications in the form “human-machine”) directions of the activities of AI is direct interaction with human (collection of information) – e.g., during receipt of orders. Another social direction of AI activities is receipt of commands from the manager (in case of intellectual decision support). For implementation of these directions, machine learning should be conducted according to the following principles:

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– Flexibility: ability for face, voice, and gesture recognition; – Interactivity: ability to reach emotions and take them into account during interaction with human; – Human-friendliness: interface that is clear for each human, with a possibility personal settings (sound, color, and special commands) – depending on the preferences; – Adaptability: remembering the manner of communications of each human and his preferences and ability to adapt to them. One of the anthropogenic (envisaging communications in the form “machinemachine” with provision of information to human – manager) directions is machine communications (request, collection, and transfer of information, transfer of commands) – e.g., based on the IoT. Another anthropogenic direction of the AI activities is independent activities (processing of information and decision making). Machine learning should be conducted according to the following principles: – unification: common software for all connected digital devices and compatibility of data; – standardization: universal models of machine communications, which recognize and use all connected digital devices; – optimization: possession of different methods of data processing and ability to select the most effective one for the situation; – differentiation: ability for differentiated treatment of analysis and selection of treatment according to the manager’s requests. The following algorithm is offered for machine learning (Fig. 2).

Determining the activities that dominate in the work of AI at this company Mixed activities

Communications with humans: interaction with human and receipt of commands from the manager

Determining the key drawbacks in the work of AI

Drawbacks in communications with humans

Learning by the social principles: flexibility, interactivity, human-friendliness, and adaptability

Drawbacks in activities without human participation

Activities without human participation: machine communications and independent activities

Learning by the anthropogenic principles: unification, standardization, optimization, and differentiation

Fig. 2. Algorithm of machine learning. Source: developed and compiled by the authors.

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As is seen from Fig. 2, the first stage of the developed algorithm is determining the activities that dominate in the work of AI at the company. These could be communications with humans (interaction with human and receipt of commands from the manager) or activities without human participation (machine communications and independent activities under the manager’s control). However, it is sometimes difficult to determine the dominating direction in practice. That’s why the developed algorithm contains the second stage, at which the key drawbacks in the work of AI (“complaints” from employees, consumers, and managers) are determined. These could be drawbacks in communications with humans or drawbacks in the activities without human participation. Depending on the dominating type of activities and the drawbacks of AI at the given company, its training will be based on the social or anthropogenic principles.

4 Conclusion Thus, we have determined that AI could be used for two opposite types of activities – machine communications with humans (mass usage) – and independent activities under the manager’s control (professional usage). AI cannot perform these two types of activities at the same high level, so specialization of AI depending on the specifics of its usage at the company is necessary. We have also developed a mixed approach to machine learning, which allows determining the company’s needs for machine learning (with the help of the proprietary algorithm) and satisfying them based on the offered anthropogenic or social signs. This approach formed the scientific and methodological provision of machine learning and allowed for standardization of this process, at the same time ensuring its high flexibility and adaptability to each company’s needs.

References Abbass, H.A.: Social integration of artificial intelligence: functions, automation allocation logic and human-autonomy trust. Cogn. Comput. 11(2), 159–171 (2019) Guzman, A.L., Lewis, S.C.: Artificial intelligence and communication: a human-machine communication research agenda. New Media Soc. 2(1), 65–77 (2019) Kritzler, M., Hodges, J., Yu, D., Shukla, H., Michahelles, F.: Digital companion for industry artificial meets human intelligence. In: The Web Conference 2019 - Companion of the World Wide Web Conference, WWW 2019, pp. 663–667 (2019) Mehrotra, A.: Artificial intelligence in financial services - need to blend automation with human touch. In: 2019 International Conference on Automation, Computational and Technology Management, ICACTM 2019, 8776741, pp. 342–347 (2019) Miller, A.: The intrinsically linked future for human and Artificial Intelligence interaction. J. Big Data 6(1), 38 (2019) Petrenko, E., Pritvorova, T., Dzhazykbaeva, B.: Sustainable development processes: Service sector in post-industrial economy. J. Secur. Sustain. Issues 7(4), 781–791 (2018). https://doi. org/10.9770/jssi.2018.7.4(14)

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Popkova, E.G.: Preconditions of formation and development of industry 4.0 in the conditions of knowledge economy. Stud. Syst. Decis. Control 169(1), 65–72 (2019) Popkova, E.G., Egorova, E.N., Popova, E., Pozdnyakova, U.A.: The model of state management of economy on the basis of the internet of things. Stud. Comput. Intell. 826(1), 1137–1144 (2019) Popkova, E.G., Morozova, I.A., Litvinova, T.N.: Transformational processes in the media system under industry conditions 4.0: future outlines and perspectives (reflections on the article by Alexander P. Sukhodolov, DSc. In Economics, Professor and Irina A. Kuznetsova, PhD in Engineering, Associate Professor “Designing the mass media as a homeostatic system by means of automation engineering: Basic concepts, structure, components”). Theor. Pract. Issues Journal. 7(1), 145–154 (2018) Popkova, E.G., Parakhina, V.N.: Managing the global financial system on the basis of artificial intelligence: possibilities and limitations. Lect. Notes Netw. Syst. 57(1), 939–946 (2019) Popkova, E.G., Sergi, B.S.: Will industry 4.0 and other innovations impact Russia’s development? In: Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, pp. 51–68. Emerald Publishing Limited, Bingley (2018) Popkova, E.G., Sergi, B.S. (eds.): Digital Economy: Complexity and Variety vs Rationality. Springer, Heidelberg (2019) Schneider, B., Asprion, P.M., Grimberg, F.: Human-centered artificial intelligence: a multidimensional approach towards real world evidence. In: ICEIS 2019 - Proceedings of the 21st International Conference on Enterprise Information Systems, vol. 1, pp. 369–378 (2019) Segal, M.: A more human approach to artificial intelligence. Nature 571(7766), S18 (2019) Sergi, B.S., Popkova, E.G., Sozinova, A.A., Fetisova, O.V.: Modeling Russian industrial, tech, and financial cooperation with the Asia-Pacific region. In: Sergi, B.S. (ed.) Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Sergi, B.S. (ed.): Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) National Research University “Higher School of Economics”. Digital economy 2019: short statistical collection (2019). https://www.hse.ru/primarydata/ice2019kr/. Accessed 26 Aug 2019

AI as a Subject of Staff: Management and Team-Building Irina V. Reikhanova1(&) , Larisa A. Ilyina2 , Sergey E. Kuklev3 , and Aleksandr A. Zakharov3 1

Institute of Service Sphere and Entrepreneurship (branch) of Don State Technical University, Shakhty, Russia [email protected] 2 Samara State Technical University, Samara, Russia [email protected] 3 Pskov State University, Pskov, Russia [email protected], [email protected]

Abstract. Purpose: The purpose of the work is to develop the scientific and methodological provision of AI management as a subject of the staff. Design/methodology/approach: The research is performed at the theoretical level of the economic science with application of the methods of scientific abstraction and modeling of socio-economic processes and systems. The authors also develop their own methodology of evaluating the effectiveness of AI management as a subject of the staff. Findings: The authors develop a conceptual model of AI management as a subject of the staff. Criteria of evaluating the effectiveness of AI management as a subject of the staff are developed. The algorithm of optimization of AI management as a subject of the staff according to the criterion of effectiveness is offered. Originality/value: It is substantiated that AI could be a full member of the staff, but it requires specialized and flexible management. Each company should select an optimal variant of AI usage: during individual work or team work, by the conditions of limitation or expansion of its usage. AI management is different, depending on its usage during the individual work or in a team with the company’s employees. Authors’ recommendations are offered for both directions of AI management. Keywords: AI
Human resources
Staff
Management of intellectual resources
HR and AI manager
Individual work
Team-building JEL Code: A13 O38


C31
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1 Introduction In the process of the Fourth industrial revolution, AI passed three stages in its development. At the first stage, AI was used for intellectual decision support. It as an analytical tool of company management, while manager remained the subject of © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 345–351, 2020. https://doi.org/10.1007/978-3-030-39319-9_39

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management. At the second stage, AI became the object of management of fully automatized production. At this stage, AI became autonomous – which showed its evolution. At present, transfer to the third stages of development of AI takes place – it envisages its socialization. In particular, AI is to become the subject of staff. Unlike the previous stages, at which AI processed final digital data, this stage envisages independent formalization of non-digital data during communications with humans. Scholars and experts in the sphere of research and practical application of AI agree that for the purpose of reduction of risks and maximization of advantages the labor specialization of AI should take place under the control of the company’s manager. During research of the issue of labor specialization of AI in the existing scientific literature, main attention is paid to the issues of managing the employees’ adaptation to interaction with AI. Of course, the future changes could cause strong stress with the modern employees, undermine their motivation for labor, and lead to a protest against AI – that’s why management of employees’ adaptation to implementation of AI is necessary. Not enough attention is paid to the issues of social adaptation of AI, for which becoming the subject of staff is also a serious change and a vivid leap in development. This work is to fill the determined gap and to develop the scientific and methodological provision of AI management as a subject of the staff.

2 Materials and Method In the course of an overview of the research literature on the issues of socialization of AI, we determined that most publications in this spheres focus on solving the technical tasks of assigning AI with the ability of highly effective communication with humans. The most actively developed tasks include development of technologies of face and speech recognition, speech reproduction of information by AI, and qualitative analysis of information, which allows giving it an emotional character. For example, AI is already able to provide a weather forecast and show joy (if the weather is fine) or pity (if the weather is bad). These tasks are considered in the works Abbass (2019), Chitty and Dias (2018), Erol et al. (2019), and Perc et al. (2019). The issues of AI management are studied in detail in the works Petrenko et al. (2018), Popkova (2019), Popkova et al. (2019), Popkova et al. (2018), Popkova and Parakhina (2019), Popkova and Sergi (2018), Popkova et al. (2019), Sergi et al. (2019), and Sergi (2019). However, despite the high level of elaboration of these issues, the setting of the problem of AI social adaptation management and its becoming the subject of staff is new for the modern science and requires further research.

3 Results Our vision of AI management as a subject of the staff is shown in the following model (Fig. 1).

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Company manager who controls intellectual resources (HR* and AI**)

Individual work

goal setting, evaluation of individual results

Employee 1 Employee 1

compe tition

Employee 3

distribution of functions, evaluation of individual contribution

AI ** – “friendly” reports; interface; – ability to – trainability. perform different tasks

Team work Employee 4 coope Employee 5 ration Employee 6

Result: the fullest implementation of the potential of growth of efficiency at a company *HR – human resources of the company; **AI – company’s AI.

Fig. 1. Model of AI management as a subject of the staff. Source: developed and compiled by the authors.

As is seen from Fig. 1, two types of activities are conducted at the company at the same time: individual work and team work; different employees are involved in them, through simultaneous participation of the same employees in both types of activities is possible. Management of intellectual resources (HR and AI) is performed by the manager. During execution of individual work, AI management is connected to clear setting of the goal. Due to competition between all intellectual resources, AI has to perform the set task quickly and effectively. The manager also assesses the individual results of each employee and AI according to the criterion of quality (correctness of execution of the task), quantity (volume of performed task), and speed (time spent for execution of the task). Based on this, the complex indicator of labor efficiency is calculated. Like all employees, AI forms reports on the performed work and provides it to the manager for compilation of the corporate rating of individual work. Depending on the compiled rating, personnel decisions are made – bonuses for the best employees, firing the worst employees, additional investments, or limitation of usage of AI. Also, it has to perform different tasks (performing various types of activities at the company) for stimulating competition and ensuring replacement of employees if necessary. When executing team work, AI management consists in distribution of functions – i.e., determining the task that could be performed by AI or the task that could not be performed by the employees. In this case, evaluation of the individual contribution is necessary – for determining significance of each employee and AI for success of the team work.

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Working in a team, AI has to perform its work quickly and effectively and to avoid undermining the employees’ motivation. For this, AI requires a “friendly” interface, which allows for quick and simple programming by the team members, and trainability, which allows AI to master the specifics of the team (read the employees’ mood, assess their efficiency, and master “know-how”). An important component of AI management as a subject of the staff is evaluation of effectiveness. For this, the following estimate criteria are offered (Table 1). Table 1. Criteria of assessment of effectiveness of AI management as a subject of the staff. Work function of AI Individual work

Criterion of assessment of effectiveness of AI management as a subject of the staff Correctness, timeliness, and completeness of reports of AI on the result of its work Ability to diversify the duties (execution of different duties) Ability of company employees to replace AI Ability of AI to replace company’s employees

Team work

“Friendliness” of AI interface (simplicity and convenience of usage) Trainability of AI (ability to adapt to the team) Correctness of execution of the task during distribution of labor (violation of the limits of task execution, completeness of its execution) Possibilities of team members to replace AI

Regardless of the performed function

Ratio of labor efficiency of AI to average labor efficiency of the employees Share of work time during which AI works continuously Ratio of advantages from usage of AI (additional profit) to expenditures for its purchase and servicing Source: developed and compiled by the authors.

Measuring unit RW, points 0–10 DD, points 0–10 RI, points 0–10 RE, points 0–10 DI, points 0–10 TI, points 0–10 CE, points 0–10 PI, points 0–10 LE, share of 1 WT, % RA, share of 1

As is seen from 1, we offer the criteria for assessing the effectiveness of AI management as a subject of the staff during execution of various functions (participation in different types of activities) and independence from the function (types of activities). Assessment of qualitative criteria is performed in points with the method of expert evaluations (by the manager). Based on the offered criteria, we developed an algorithm of optimization of AI management (AI) as a subject of the staff according to the criterion of effectiveness (Fig. 2).

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Analysis of results of criterial evaluation of effectiveness of AI management as a subject of staff RI>5

No (AI is irreplaceable)

Yes (AI is replaceable) LE>5 WT>80% ПЗ>5

No (AI is unprofitable) PI>5 Full refusal from AI

Yes (AI is profitable)

DI>5 TI>5 CE>5

Yes (AI successfully works in a team)

Нет (AI has no success in team work) Maximum limitation of usage of AI in a team

No (AI does not cope with individual work) Only team usage of AI

PI>5

Yes (AI is replaceable)

No (AI is Individual work of irreplaceable) AI RW>5 DD>5 Yes (AI is

No (AI cannot replace employees) RE>5 Individual and team usage of AI

successful individually) Yes (AI can replace employees) Dismissal of employees and full automation

Fig. 2. Algorithm of optimization of AI management (AI) as a subject of the staff according to the criterion of effectiveness. Source: developed and compiled by the authors.

As is seen from Fig. 2, the manager analyzes the results of criterial assessment of effectiveness of AI management as a subject of the staff. First off, it is necessary to determine to which extent the company needs AI – whether it is replaceable or not. If AI is replaceable (RI > 5), evaluation of profitability of usage of AI at the company is performed. If AI is replaceable and not profitable (LE > 5, WT > 5 = 80%, PS > 5), and the company’s employees can perform work tasks without it (PI > 5), a decision on full refusal from the tested AI is made. If team work is impossible without AI (PI  5), a decision on maximum limitation of usage of AI in the team is made. If AI is irreplaceable (RI  5 or LE  5, WT  80%, RA  5), successfulness of its work in a team is evaluated. If AI works in the team successfully (DI > 5, TI > 5, CE > 5), but could be replaced by other team members (PI > 5), AI is transferred to individual work. In the opposite case, perspectives of replacement of employees by AI are considered. If AI does not cope with individual work (RW  5, DD  5), a decision on its purely team usage is made. If AI can replace the company’s employees (RE > 5), a decision on dismissal of the employees and full automation of the company is made. In the opposite case (if RW > 5, DD > 5, but RE  5), active, team, and individual usage of AI is conducted.

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4 Conclusion Thus, AI could be a full member of staff – but it requires specialized and flexible management. Each company has to select the optimal variant of usage of AI: during individual work or team work, by the conditions of limitation or expansion of its usage. AI management is different – depending on its usage during individual work or during work with the company’s employees. Thus, the manager of intellectual resources (including HR and AI) of the company will have a very high burden. During further research, attention should be paid to determining a set of competencies of the manager for intellectual resources at a company that uses AI as a subject of staff and to developing the scientific and methodological recommendations for training the manager, including advanced training.

References Abbass, H.A.: Social integration of artificial intelligence: functions, automation allocation logic and human-autonomy trust. Cogn. Comput. 11(2), 159–171 (2019) Chitty, N., Dias, S.: Artificial intelligence, soft power and social transformation. J. Content Commun. Commun. 7, 1–14 (2018) Erol, B.A., Majumdar, A., Benavidez, P., Rad, P., Choo, K.R., Jamshidi, M.: Toward artificial emotional intelligence for cooperative social human-machine interaction. IEEE Trans. Comput. Soc. Syst. 127–128 (2019) Perc, M., Ozer, M., Hojnik, J.: Social and juristic challenges of artificial intelligence. Palgrave Commun. 5(1), 10 (2019) Petrenko, E., Pritvorova, T., Dzhazykbaeva, B.: Sustainable development processes: service sector in post-industrial economy. J. Secur. Sustain. Issues 7(4), 781–791 (2018). https://doi. org/10.9770/jssi.2018.7.4(14) Popkova, E.G.: Preconditions of formation and development of industry 4.0 in the conditions of knowledge economy. Stud. Syst. Decis. Control 169(1), 65–72 (2019) Popkova, E.G., Egorova, E.N., Popova, E., Pozdnyakova, U.A.: The model of state management of economy on the basis of the internet of things. Stud. Comput. Intell. 826(1), 1137–1144 (2019) Popkova, E.G., Morozova, I.A., Litvinova, T.N.: Transformational processes in the media system under industry conditions 4.0: future outlines and perspectives (reflections on the article by Alexander P. Sukhodolov, DSc. In Economics, Professor and Irina A. Kuznetsova, PhD in Engineering, Associate Professor “Designing the mass media as a homeostatic system by means of automation engineering: Basic concepts, structure, components”). Theor. Pract. Issues Journal. 7(1), 145–154 (2018) Popkova, E.G., Parakhina, V.N.: Managing the global financial system on the basis of artificial intelligence: possibilities and limitations. Lecture Notes in Networks and Systems, vol. 57, no. 1, pp. 939–946 (2019)

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Popkova, E.G., Sergi, B.S.: Will industry 4.0 and other innovations impact Russia’s development? In: Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, pp. 51–68. Emerald Publishing Limited, Bingley (2018) Popkova, E.G., Sergi, B.S. (eds.): Digital Economy: Complexity and Variety vs. Rationality. Springer International Publishing, Cham (2019) Sergi, B.S., Popkova, E.G., Sozinova, A.A., Fetisova, O.V.: Modeling Russian industrial, tech, and financial cooperation with the Asia-Pacific region. In: Sergi, B.S. (ed.) Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Sergi, B.S. (ed.): Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019)

The Mechanism of Social Adaptation of AI for Organization of Intellectual Consumption in the Digital Economy Arthur V. Varlamov1(&) , Yuliana A. Kitsay2 , Natalia V. Przhedetskaya3, and Tatiana A. Zabaznova4 1

2

3

4

Plekhanov Russian University of Economics, Moscow, Russia [email protected] Immanuel Kant Baltic Federal University, Kaliningrad, Russia [email protected] Rostov State University of Economics, Rostov-on-Don, Russia [email protected] Volgograd State University of Architecture and Construction, Volgograd, Russia [email protected]

Abstract. Purpose: The purpose of the work is to develop a mechanism of social adaptation of AI for organization of intellectual consumption in the digital economy. Design/methodology/approach: The authors perform a trend analysis of the global statistics of online trade in 2014–2018 and determine the countries in which average income from online trade per one seller in 2018 was the highest. Findings: It is determined that in the digital economy the potential demand for intellectual consumption is high and has a tendency for growth – which was observed during the last five years (2014–2018). The authors determine top 10 countries with the highest level of development of the digital economy and high popularity of online trade – the USA, the UK, Sweden, France, Germany, Japan, Spain, Russia, and Brazil. In these countries, usage of AI for organization of intellectual consumption is most popular. Originality/value: The developed mechanism of social adaptation of AI for intellectual consumption in the digital economy showed that the key factors of organization of this process are goals and level of digital literacy of consumers. Depending on the influence of these factors, it is necessary to select and implement the proper measures of social adaptation of AI by the company. These include creation of a lot of templates for various requests of consumers, development of “emotions” of AI, and improvement of abilities of AI for face and speech recognition. When selecting the measures, it is recommended to use the developed algorithm of optimization of social adaptation of AI at a company. Keywords: Social adaptation
AI
Organization
Intellectual consumption Online trade
Digital economy JEL Code: A13





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© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 352–358, 2020. https://doi.org/10.1007/978-3-030-39319-9_40

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1 Introduction Successful experience of using AI in the process of organization and management of automatized production strengthened its positions as one of the most perspective and popular breakthrough digital technologies of Industry 4.0. At the same time, AI is one of the most complex and resource-intensive technologies. Despite the multiple advantages of AI (high efficiency, ecological effectiveness, etc.), it is not of high demand in a lot of countries, as automation is inexpedient due to high accessibility and low cost of human resources. Also, even in the countries where automation of production is profitable and popular the modern global economy is peculiar for postindustrial specialization, and the share of the real (production sector) reduces annually. Thus, a problem of commercialization of AI emerges. Our hypothesis is the following: solution of this problem is connected to organization of intellectual consumption in the digital economy. This direction of commercialization of AI is very perspective, as it allows using it during the marketing and sales activities of industrial companies (if they are present in the whole chain of added value and independent sales of products) and in the activities of the service sphere’s companies (primarily, during the intermediary activities at the last stages of the added value chain). In both cases, AI is used in the online trade, which could be either a separate business process or the main activities of the company. Using AI during organization of intellectual consumption in the digital economy differs from its usage during automation of production. At present, AI receives the commands from a professional manager (expert in the sphere of information and communication technologies, who knows languages of programming) and conducts communications with the same digital devices at the company (with common software and settings). In the long-term, for using AI during organization of intellectual consumption in the digital economy he will receive commands from non-professionals (mass consumers who do not know programming languages) and conduct communications with various digital devices (with different software and settings). That’s why there’s a need for transformation of AI for bringing it in correspondence with the new requirements. We suggest calling this process social adaptation of AI, as it is aimed at AI’s becoming a participant of communications with humans (specific subject of human society) and intellectual machines (subject of the machine society). Our research is aimed at developing a mechanism of social adaptation of AI for organization of intellectual consumption in the digital economy.

2 Materials and Method The perspectives of organization of intellectual consumption in the digital economy are considered in the works Barenji et al. (2019), Leung et al. (2018), Liang et al. (2019), Vătămănescu et al. (2018), Xue et al. (2016), Zhang et al. (2019), Zhang et al. (2018), and Zhongsheng et al. (2017). Certain issues of usage of AI in economy, which indirectly influence the process of its social adaptation, are considered in the works Petrenko et al. (2018), Popkova (2019), Popkova et al. (2019), Popkova et al. (2018),

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Popkova and Parakhina (2019), Popkova and Sergi (2018), Popkova et al. (2019), Sergi et al. (2019), and Sergi (2019). The performed literature overview showed that the problem of social adaptation of AI for organization of intellectual consumption in the digital economy is poorly studied and requires further research. For verifying the offered hypothesis we use the global statistics of online trade (Figs. 1 and 2). 10 8 6

6.7

5.9

8.8

8.2

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4 2 0 2014

2015

2016

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Fig. 1. Estimated online retail sales worldwide in 2014–2018, % of total retail sales. Source: compiled by the authors based on Invespcro (2019).

As is seen from Fig. 1, during the last five years the share of online trade in the global trade grew by 1.49 times – from 5.9% in 2014 to 8.8% in 2018 – and will probably continue growing in the future. This shows potentially high demand for usage of AI during organization of intellectual consumption in the digital economy. 2000 1800 1600 1400 1200 1000 800 600 400 200 0

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Fig. 2. Top countries by average e-commerce revenue by online shopper in 2018, USD. Source: built by the authors based on Invespcro (2019).

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As is seen from Fig. 2, as of 2018, average revenue from e-commerce per one seller was high in the following top 10 countries: the USA (USD 1,804), UK (USD 1,629), Sweden (USD 1,446), France (USD 1,228), Germany (USD 1,064), Japan (USD 968), Spain (USD 849), China (USD 626), Russia (USD 396), and Brazil (USD 350). In the above countries, high demand for usage of AI for organization of intellectual consumption in the digital economy is expected.

3 Results

3a. Template answer

Consumer or its digital device

1.Order/request for data

AI

Non-standard (no template)

2b. Analysis 3bα. Recurrent

Was present previously 3bβ. Storing in archive

6b. New template

4b. Request for answer

New

Menu of work with AI

Template (standard) – template is found

2a. Storing as popular

5b. Independent answer

Data base of knowledge (templates) and experience (archive)

The mechanism of social adaptation of AI for organization of intellectual consumption in the digital economy is shown by the example of one company in Fig. 3.

Manager

Fig. 3. The mechanism of social adaptation of AI for organization of intellectual consumption in the digital economy Source: developed and compiled by the authors.

As is seen from Fig. 3, AI receives an order or request for data (e.g., qualities of a product or order of shipping) from a consumer or his digital device (1). If the request is of the template form (the corresponding template is found), AI stores it as popular (its template will be found quicker next time) (2a), consumer receives a template answer (3a). If the request is non-standard (no template is found), AI uses archive (2b). Previously met request is marked as recurrent (3ba), and new request is stored in archive (3bb). Non-standard request is passed to manager (4b), who answers the consumer (5b). The knowledge data base receives a new template for this request (6b) – especially, if it is recurrent.

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According to the presented mechanism, the process of social adaptation of AI for organization of intellectual consumption in the digital economy requires the following measures from the company: – Creation of a lot of templates for various requests of consumers; there should be logical ties between the templates, so that AI could select the correct ones; – Development of “emotions” of AI: adding evaluations and templates of answers; – Improvement of AI’s abilities for face recognition (for recognizing customers); – Improving AI’s abilities for speech recognition (for reducing the number of mistakes). Each of these measures requires large investments. For reducing the investment burden on companies, we developed an algorithm of optimization of social adaptation of AI (Fig. 4).

Envisaged and important

Are communications with human envisaged and important?

What is the level of digital literacy of consumers?

What is the purpose of consumers’ using AI? AI as a speaker Development of “emotions” of AI and improvement of face recognition

AI as recipient of orders Improvement of clarity of speech recognition by AI

Not envisages or insignificant

high Increase of the number of templates and training AI to use them

low Constant machine learning and increase of flexibility of AI

Fig. 4. Algorithm of optimization of social adaptation of AI at a company. Source: developed and compiled by the authors.

As is seen from Fig. 4, it is determined whether communications between AI and human are important. If communications in the form “human-machine” are the basis of usage of AI during online trade at this company, it is necessary to determine for which purpose the consumers use AI. When AI is a speaker, it is expedient to develop “emotions” of AI and to improve its abilities of face recognition. When AI is a recipient of orders, it is recommended to improve its abilities for speech recognition. If the company’s e-commerce is based on communications in the form “machinemachine” (communications with human are not frequent), the level of consumers’ digital literacy is determined. If this level is high, it is offered to increase the number of templates and improve AI’s abilities to use them. When the level of consumers’ digital literacy is low (they cannot formulate the request clearly and the templates are useless), it is recommended to train AI and increase its flexibility (for interaction with digital devices with different software).

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4 Conclusion Thus, the performed trend analysis of the global statistics of e-commerce confirmed the offered hypothesis and showed that the digital economy is peculiar for large demand for intellectual consumption with a tendency for growth – which was observed during the last five years (2014–2018). We also determined top 10 countries with the highest level of development of the digital economy and the highest popularity of e-commerce - the USA, the UK, Sweden, France, Germany, Japan, Spain, Russia, and Brazil. In these countries, usage of AI for organization of intellectual consumption is the most popular. The developed mechanism of social adaptation of AI for intellectual consumption in the digital economy showed that the key factors of organization of this process are goals and level of digital literacy of the consumers. Depending on the influence of these factors, it is necessary to select and implement the best measures of social adaptation of AI by the company. These measures include creation of a lot of templates for various requests of consumers, development of “emotions” of AI, and improvement of AI’s abilities for face and speech recognition. When selecting the measures, it is recommended to use the developed algorithm of optimization of social adaptation of AI at a company.

References Barenji, A.V., Wang, W.M., Li, Z., Guerra-Zubiaga, D.A.: Intelligent E-commerce logistics platform using hybrid agent based approach. Transp. Res. Part E: Logist. Transp. Rev. 126, 15–31 (2019) Invespcro: Global Online Retail Spending – Statistics and Trends (2019). https://www.invespcro. com/blog/global-online-retail-spending-statistics-and-trends/. Accessed 27 Aug 2019 Leung, K.H., Choy, K.L., Siu, P.K.Y., Ho, G.T., Lam, H.Y., Lee, C.K.M.: A B2C e-commerce intelligent system for re-engineering the e-order fulfilment process. Expert Systems Appl. 91, 386–401 (2018) Liang, C.-C., Liang, W.-Y., Tseng, T.-L.: Evaluation of intelligent agents in consumer-tobusiness e-Commerce. Comput. Stand. Interf. 65, 122–131 (2019) Petrenko, E., Pritvorova, T., Dzhazykbaeva, B.: Sustainable development processes: service sector in post-industrial economy. J. Secur. Sustain. Issues 7(4), 781–791 (2018). https://doi. org/10.9770/jssi.2018.7.4(14) Popkova, E.G.: Preconditions of formation and development of industry 4.0 in the conditions of knowledge economy. Stud. Syst. Decis. Control 169(1), 65–72 (2019) Popkova, E.G., Egorova, E.N., Popova, E., Pozdnyakova, U.A.: The model of state management of economy on the basis of the internet of things. Stud. Comput. Intell. 826(1), 1137–1144 (2019) Popkova, E.G., Morozova, I.A., Litvinova, T.N.: Transformational processes in the media system under industry conditions 4.0: future outlines and perspectives (reflections on the article by Alexander P. Sukhodolov, DSc. In Economics, Professor and Irina A. Kuznetsova, PhD in Engineering, Associate Professor “Designing the mass media as a homeostatic system by means of automation engineering: Basic concepts, structure, components”). Theor. Pract. Issues Journal. 7(1), 145–154 (2018)

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Popkova, E.G., Parakhina, V.N.: Managing the global financial system on the basis of artificial intelligence: possibilities and limitations. Lecture Notes in Networks and Systems, vol. 57, no. 1, pp. 939–946 (2019) Popkova, E.G., Sergi, B.S.: Will industry 4.0 and other innovations impact Russia’s development? In: Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, pp. 51–68. Emerald Publishing Limited, Bingley (2018) Popkova, E.G., Sergi, B.S. (eds.): Digital Economy: Complexity and Variety vs. Rationality. Springer, Cham (2019) Sergi, B.S., Popkova, E.G., Sozinova, A.A., Fetisova, O.V.: Modeling Russian industrial, tech, and financial cooperation with the Asia-Pacific region. In: Sergi, B.S. (ed.) Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Sergi, B.S. (ed.): Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley, UK (2019) Vătămănescu, E.-M., Alexandru, V.-A., Cristea, G., Radu, L., Chirica, O.: A demand-side perspective of bioeconomy: the influence of online intellectual capital on consumption. Amfiteatru Econ. 20(49), 553–566 (2018) Xue, W., Xiao, B., Mu, L.: Intelligent mining on purchase information and recommendation system for e-commerce. In: IEEE International Conference on Industrial Engineering and Engineering Management, 2016-January, pp. 611–615 (2016). 7385720 Zhang, K., Xu, Y., Liu, W.: Empirical analysis of the intelligent influence factors of social network services effectiveness in e-commerce based on human learning behaviors. Psychol. Res. Behav. Manag. 12, 417–425 (2019) Zhang, M., Yao, Y., Jiang, Y., Li, B., Tang, C.: Accountable mobile E-commerce scheme in intelligent cloud system transactions. J. Ambient Intell. Humaniz. Comput. 9(6), 1889–1899 (2018) Zhongsheng, W., Kang, H., Shujuan, H.: Study on the user’s interested strength level algorithm in intelligent E-Commerce. In: Proceedings of 2016 IEEE International Conference on Electronic Information and Communication Technology, ICEICT 2016, pp. 103–106 (2017). 7879661

Revisiting the Place of Artificial Intelligence in Society and the State Vladimir P. Kamyshansky1(&), Evgenia Y. Rudenko1, Evgeniy A. Kolomiets2, and Dina R. Kripakova3 Federal State Budgetary Educational Institution of Higher Education “Kuban State Agrarian University named after I.T. Trubilin”, Krasnodar, Russia {vpkam,golushko1}@rambler.ru 2 North-Caucasus Branch of the Federal State Budgetary Educational Institution of Higher Education “Russian State University of Justice”, Krasnodar, Russia [email protected] 3 Federal State Educational Institution of Higher Education “Astrakhan State University”, Astrakhan, Russia [email protected] 1

Abstract. Expanded spheres of application of Artificial Intelligence, its qualitative improvement, increasing possibilities of its self-organization and development raises a question as to the way a man and machine will coexist and interact in the future. A question as to whether a man will use Artificial Intelligence as one of the objects of civil law rights or whether they will have to interact with each other as independent persons at civil law becomes a question of principle. It is not yet clear what status Artificial Intelligence will have and the future of a mankind directly depends on the solution of this issue. Purpose: The purpose of this paper is an attempt to consider the positive and negative value of Artificial Intelligence for a man, as well as the risks associated with the widespread introduction of Artificial Intelligence in human activities and its continuous improvement. Design/methodology/approach: The authors of paper have used general scientific methods of scientific cognition (dialectical, inductive, deductive, analytical, synthetical) and specific scientific methods of scientific cognition (formal legal, interpretative). Findings: A conclusion is drawn that there is a need for such a definition of Artificial Intelligence that would be unambiguous and uniform for all countries. There is a long-standing need for the legal regulation of Artificial Intelligence, which should also be as uniform as possible for various legal orders. The risks associated with Artificial Intelligence can in many respects be compared with the risk of using nuclear weapons. The interaction between heads of states on Artificial Intelligence should be open and continuous. Originality/value: A conclusion is drawn that so far there is no reason to recognize the systems with Artificial Intelligence as the persons at law even by analogy with a legal entity. Keywords: Intelligence Person at law


Artificial Intelligence
Society
Man
Value


JEL Code: K150 © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 359–364, 2020. https://doi.org/10.1007/978-3-030-39319-9_41

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1 Introduction At present, the term “Artificial Intelligence” shall mean the following: science/technology of creation and perception of intelligent machines, which are more intelligent than simple computer programs; the intellectual property/ability of these intelligent machines; intelligent machines themselves that possess the above property/ability (Maslov 2014). Such a variety of interpretations of this term allows us to use it universally and to claim that we are living not just in the era of Artificial Intelligence, but in the era of Artificial Intelligence that is constantly improving. From this perspective, indeed, we can suggest that in some cases it efficiently replaces, for example, the intelligence of a doctor, a bank official, an employee of State Automobile Inspectorate, a lawyer. Besides, Artificial Intelligence is invisibly present in our everyday life. For example, when parking a car on an intelligent fee-based parking, we get a card with the number of the car and the time when this card was issued. Isn’t it the work of Artificial Intelligence? It is pointless to deny the almost universal application of Artificial Intelligence until its clear and unambiguous definition is formulated not only in science, in practice, but also in regulations and standards. Of course, the formulation of the concept is a work for the future and not only lawyers, but also economists, philosophers, sociologists and engineers are actively working on this issue. We hope that the definition of the concept of “Artificial Intelligence” will be sooner or later elaborated by legal science; in the meantime, it is worth paying attention to how a man will live under the conditions of the total presence of Artificial Intelligence next to him. After all, it is obvious that the content of Artificial Intelligence cannot be amounted to that of an animal, a car or other things helping a man to live and/or making his life more comfortable and/or more interesting. Artificial Intelligence is something more by definition.

2 Methods The methodological basis of research consists of a set of general scientific (dialectical, inductive, deductive, analytical, synthetical) and specific scientific methods (formal legal, interpretative).

3 Results We can’t but agree with those researchers who claim that the interaction between a man and Artificial Intelligence differs radically from its interaction with natural intelligence. This eventually leads to a modification of “the intellectual sphere of humans and improvement of its effectiveness in society of information culture” (Sergeev 2013). The effectiveness of Artificial Intelligence can be improved in a great variety of ways, in particular, by improving human intelligence. Such statements that a man must increase his efficiency in order to survive in competition with Artificial Intelligence can lead to the fact that the idea of the value of human life, developed thousands of years ago, and the idea of man himself as the

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highest value (as enshrined, for example, in the Constitution of the Russian Federation) will be eliminated in favor of Artificial Intelligence, which, due to its technical power and unlimited opportunities for self-improvement, can actually replace a man with itself and cease his existence as a biologic species. In particular, philosophers call our attention to this fact. They argue that the man-made impact on human health occurs both on the physical and on the axiological-worldview level. The process of global tecnification turns a man from the actor into the element, the factor of artificial environment. The intervention of technologies into the natural world, to which a man belongs, becomes a standard phenomenon (Ilianovich 2016). Just a little while ago, the man-made impact on human health occurred because of his/her volition, in the name of which a man sought to delegate the solution of his life problems to machines. However, at present, at least in developed countries, a man can no longer give evidence of his independence from machines and, consequently, of his freedom from Artificial Intelligence. Partially imposed and habitual dependence on Artificial Intelligence leads to the fact that human energy is rapidly dying out (Panarin 2019). This cannot but make us afraid, because it leads to sloth and, as a result, to the degradation of a man, not only physical but also mental. The concept of “existential vacuum”, which is defined as the absence of a person’s deliberately selected ideas that guide his life, has been increasingly used recently (Zaharov 2014). Psychoanalysts are increasingly describing a new type of neurosis, which is characterized mainly by a loss of interest and shiftlessness (Frankl 1990). It can even be argued that this happens consciously when a man intentionally refuses to take initiative and is not eager in being interested in anything. This can be clearly seen when analyzing the papers of most university students. The lack of research interest (albeit superficial), the unconditional “faith” in information received from the information and telecommunications network, compiled papers – of all this is more the standard than the exception. Indeed, Artificial Intelligence can eliminate a man’s aspiration for research, for reflection, since it is able to perform complex analysis within the shortest possible period of time and more qualitatively than a man. Due to the unconditional ability of Artificial Intelligence to efficiently and smoothly, automatically and autonomously perform routine functions that do not require any intelligent effort, a man loses specific workplaces, and the workload on a man is reduced. If in the case of the loss of workplaces the problems for a man in the form of unemployment are immediately obvious, then in the case of reduced workload, you would think the benefits of the work of Artificial Intelligence can be observed, but this is only at first glance. After all, the impending increasing psychological tension of a man is absolutely obvious, since the thoughts that Artificial Intelligence will eventually be able to fulfill such labor functions that a man is currently performing will arise increasingly more often. All of the above will naturally lead to psychological problems of a particular person, social tension and widespread disunity of society. Some researchers call “Artificial Intelligence” an evil genius that cannot be “intelligent” in the human sense of this word, but is able to evolve (sometimes the term “evolution simulation” is used) by analogy with the evolution of living organisms, when genes diverge from their former structure during mutation, but with natural selection, organisms converge on such mutation that is best adapted to the environment. This can be exemplified by the stories recorded by programmers. The machines

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were assigned tasks that they had to solve without clearly defined instructions. The experiments were aimed at finding out whether machines can independently find a problem-solving algorithm. In one task, the machine had to find out how to land a plane with minimum force. The machine “crashed” the plane several times, killing all the virtual people on board, because it “believed” that only in this way would the force be minimum. In another experiment, the robot was programmed to move forward as quickly as possible. Instead of creating legs and walking, the robot transformed into a lofty tower and fell frontwards. Indeed, the task was performed in the maximum efficient way. In the natural environment, wheat “uses” the same strategy for reproduction: tall stalks fall and their seeds land much further from the place in which they would land if the stalks did not fall and the seeds were shed from a vertical stalk. This example clearly demonstrates how effectively Artificial Intelligence mutates in a simulated environment: why walk when you can just fall (Thompson 2018). The situations presented above give pause for thinking about the fact that Artificial Intelligence can displace a man, or, if necessary, bend a human being to submission. Some researchers are not so pessimistic when introducing the concept of diffuse human intelligence. It is argued that the higher the level of Artificial Intelligence is, the more effective diffuse human intelligence is. Without defining the latter, researchers provide the following example: it is estimated that a cheating student has higher intelligence than a non-cheating student when passing an exam. The Internet environment, in fact, is a peculiar kind of intelligent cheat sheet (tooltip), since, like a cheat sheet, it contains processed and recorded information. “Efficient interaction between natural intelligence and Artificial Intelligence enhances the capabilities of human intelligence in the artificial environment, but only in certain areas provided by technologies” (Sergeev 2013). Thanks to Artificial Intelligence, “human energy will be naturally redirected to another channel”, and this is an enormous advantage for humanity (So how will humans and Artificial Intelligence interact? 2019). According to researchers, in economics, Artificial Intelligence will not be able to completely replace a man. Nevertheless, Artificial Intelligence really does radically change how work is done and who does it. The impact of Artificial Intelligence will consist in complementing and expanding human capabilities, rather than replacing them. According to research, it was found that companies achieve better performance when people and machines work cooperatively, their forces complement and strengthen each other: leadership, teamwork, creativity and social skills of a man, as well as speed, scalability and quantitative capabilities of machines (Wilson et al. 2018). There are publications about the unlikely scenario according to which Artificial Intelligence will destroy a man as a biologic species. To do this, one should create Artificial Intelligence equivalent to the intelligence of a human being. This Artificial Intelligence should gain a complete understanding of how it works. It must independently self-improve by creating super-intelligent Artificial Intelligence, and must intentionally or accidentally start consuming resources, and a man will not be able to deactivate this Artificial Intelligence. In addition, if Artificial Intelligence is to destroy humans, it is necessary that Artificial Intelligence is minded to do it, that is, it is expected that Artificial Intelligence must have emotions - something that Artificial Intelligence doesn’t have and will never have for sure (Shermer 2019).

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In any case, regardless of scenarios of interaction between a man and Artificial Intelligence, technological regression is unacceptable. It is necessary to look for new meanings of life, namely: “the maximum development of the scientific and artistic imagination of a person… since the limits of creative abilities of a human being are either unlimited or simply enormous” (Zaharov 2014). Possible outbreaks of violence due to the common usage of Artificial Intelligence, as well as modification of cultural and moral values can and should be mitigated with a single understanding of the essence and the form of Artificial Intelligence, and not only at the levels of a particular country, but in the whole world. All members of the world community must develop uniform rules regarding Artificial Intelligence, uniform norms of behavior. It is necessary to use a law that is able to fulfill its function in society specifically because of its form, and not its content, as such behavior pattern. “The documentary form of law ensures the unity of the social and normative field, “marking” those regulations and permissions that within the framework of this community do not need additional substantiation of their significance” (Vetutnev 2010). The legal regulation of the use of Artificial Intelligence must be uniform in all countries. We support, albeit with reservations, the idea that there is currently no need to recognize the robot endowed with Artificial Intelligence as a person at law (Open Letter to the European Commission: Artificial Intelligence and Robotics 2018). At present, the thinking of lawyers is based on postulates laid down by Roman law, according to which such persons at law can be individuals and legal entities only. These familiar categories can be changed, but this process is not instantaneous. The most important thing is to confidently justify the need for the appearance of a new person at law, but this has not yet been done. Therefore, in theory, in several stages (starting from the person - the representative of the interests of an individual), the carrier of Artificial Intelligence can be recognized as a person at law (Kamyshansky et al. 2019). At the moment, given the current legislation, robots that are not a computer program can be regarded as movable complex things – sources of increased danger, and robots in the form of computer programs can be regarded as the result of intellectual activity (Kamyshansky et al. 2019).

4 Conclusions/Recommendations The understanding of the essence and the form of Artificial Intelligence must be uniform in all countries. All members of the world community must develop uniform rules regarding Artificial Intelligence, uniform samples of behavior. This can be achieved with the help of law and legislation. The legal regulation of the use of Artificial Intelligence must be uniform in all countries. At present, there is no reason to recognize the carrier of Artificial Intelligence as a full-fledged person at law, since its legal status can be successfully regulated by applicable law. At the same time, harm from autonomous actions of Artificial Intelligence, excluding the influence of the will of its copyright holder or developer, raises a question on the definition of the concept of the subject of liability. The legal uncertainty regarding the authorship of works of art and other results of intellectual activity, created

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by Artificial Intelligence, needs to be resolved as well. In the future, stage-by-stage recognition of the carrier of Artificial Intelligence as a person at law is possible.

References Maslov, V.M.: High technology and the phenomenon of the posthuman in modern society, Nizhny Novgorod State Technical University named after R.E. Alekseev, Nizhny Novgorod, N/Novgorod (2014) Sergeev, S.F.: Artificial and natural intelligence in technogenic educational environments. Open Educ. (2), 52–60 (2013) Ilianovich, I.B.: Technogenic civilization: the main aspects of the conceptualization of concepts. Sci. Bull. Crimea 2(2) (2016) Panarin, A.S.: A people without an elite: between despair and hope (2019). https://www.litmir. me/br/?b=66925&p=7. Accessed 19 Aug 2019 Zaharov, A.V.: Technogenic civilization: influence on the meanings of human existence. Hum. Soc.-Econ. Sci. (1), 8–12 (2014) Frankl, V.: Man in Search of Meaning. Progress, Moscow (1990) Thompson, D.: The Spooky Genius of Artificial Intelligence AI doesn’t think - it evolves (2018). https://www.theatlantic.com/ideas/archive/2018/09/can-artificial-intelligence-be-smarterthan-a-human-being/571498/. Accessed 19 Aug 2019 So how will humans and Artificial Intelligence interact? (2019). https://sys4tec.com/company/ press_center/press_about/intellect-reality. Accessed 19 Aug 2019 Wilson, H.J., Daugherty, P.R.: Collaborative Intelligence: Humans and AI Are Joining Forces (2019). https://hbr.org/2018/07/collaborative-intelligence-humans-and-ai-are-joining-forces. Accessed 19 Aug 2019 Shermer, M.: Artificial Intelligence Is Not a Threat - Yet. Artificial Intelligence as existential threat (2019). https://www.scientificamerican.com/article/artificial-intelligence-is-not-athreat-mdash-yet/. Accessed 19 Aug 2019 Vetutnev, Yu.Yu.: Legal form as an integrating principle. Bull. Volgograd State Univ. 5(1(12)), 5–13 (2010) Open Letter to the European Commission: Artificial Intelligence and Robotics. http://www. robotics-openletter.eu. Accessed 19 Aug 2019 Kamyshansky, V.P., Koretsky, A.V.: The concept and legal status of the carrier of Artificial Intelligence. Auth. Law (1), 42–50 (2019) Kamyshansky, V.P., Rudenko, E.Y., Kolominetz, E.A., Osadchenko, E.O.: Regarding the issue of the essence of legal treatment and the possibility of granting legal status to a robot in civil law. Stud. Comput. Intell. 826, 299–306 (2019)

Dynamics and Structure of Investment Portfolios of Russian Banks Studied by the Artificial Intelligence System Nikolai Lomakin1(&) , Alexey Petrukhin1, Anna Shokhnekh2, Olga Maximova3, and Irina A. Samorodova4 1

3

Volgograd State Technical University, Volgograd, Russian Federation [email protected], [email protected] 2 Volgograd State Social and Pedagogical University, Volgograd, Russian Federation [email protected] Volzhsky Politechnical Institute Branch VSTU, Volzhsky, Russian Federation [email protected] 4 Volgograd State University, Volgograd, Russian Federation [email protected]

Abstract. The article presents the results of study of the dynamics and structure of the investment portfolios of Russian banks by means of an artificial intelligence system. There has been suggested and proven a hypothesis that a neural network applied provides quantization of data and makes it possible to identify patterns that further form a neural network—a perceptron that allows predicting bank profits based on its input data in a market uncertainty. The dynamics and structure of the investment portfolios of Russian banks for 2015–2017 have been studied. The trends in the formation of the investment portfolios in the Russian banking system as a whole have been analyzed and identified; visualization of the multidimensional space of factorial features (assets, stocks and profits) has been obtained due to quantization of big data. The influence of a number of factors has been revealed, for example, the influence of an investment portfolio structure on the bank’s profit. The perceptron was applied to calculate a predicted value of the “bank profit”. The relevance of the study is determined by the fact that an artificial intelligence system has been formed, which allows predicting bank profits based on input parameters, including stocks, bonds and bills in its investment portfolio in the conditions of market uncertainty. The management of the bank’s investment portfolio is important, since in modern conditions, it is relevant from the point of view of effective strategic management. Effective portfolio management is based on financial risk management, which ultimately provides support for making management decisions regarding the dynamics and structure of the investment portfolio and ensures maximum profit.

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 365–373, 2020. https://doi.org/10.1007/978-3-030-39319-9_42

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N. Lomakin et al. Keywords: Volume and structure Perceptron
Profit forecast


Investment portfolio
Neural network


JEL Code: G32

1 Introduction Much research of Western and Russian scientists are currently devoted to studying the problems of commercial banks, but a lot of them remain insufficiently studied, for example, the use of artificial intelligence systems to support management decisionmaking in the banking sector. The relevance of the study is determined by the fact that there has been formed an artificial intelligence system, a “perceptron,” that allows predicting bank profits based on input parameters, including stocks, bonds and bills in its investment portfolio in the conditions of market uncertainty, As practice shows, the management of the investment portfolio of a bank is important, since it is relevant from the point of view of effective strategic management in modern conditions. Effective investment portfolio management is built on risk management in the face of increasing market uncertainty. This ultimately provides support for making management decisions regarding the dynamics of the volume and for the investment portfolio structure and ensures maximum profit. There has been suggested and proven a hypothesis that a neural network applied provides quantization of data and makes it possible to identify patterns that further form a neural network - a perceptron that allows predicting bank profits based on its input data in a market uncertainty.

2 Methodology The immaturity of scientific approach to the problems of managing the investment portfolio should be noted, which causes a great practical importance of the issues affected. Management of the investment portfolio is important and provides banks with an additional source of liquidity from portfolio investments and stock trading amid the negative dynamics of lending. The nominal dynamics of the loan portfolio of the Russian banking system in 2016 turned out to be negative and worst in the newest Russian history, both in nominal and real terms. The volume of loan debt of Russian banks in nominal terms decreased by 3.3%, against a growth of 10.4% in 2015 (2018). Thus, by the end of 2016, the historical anti-record that had been maintained since 2009, when for the first time in history the loan portfolio of Russian banks decreased by 0.3%, was updated. It is worth noting that for the previous 5 years (2011–2015), the increase in the loan portfolio had averaged 20%. In absolute terms, for 2016 the investment portfolios of Russian banks decreased by 1.8 trillion RUB to 55.6 trillion RUB.

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In the conditions of growing market uncertainty and all types of risk, the management of investment portfolios by Russian banks requires the use of a modern mathematical apparatus—artificial intelligence systems. Many scientists have devoted their work to the study of these issues. The methodology of portfolio investment management was investigated in works by G. Markowitz, U. Sharp, N. Lomakin (Lomakin et al. 2018) et al. The bank portfolio as an independent object of management is considered in works of many authors. According to S. Pashova, formation of an innovative investment share as a direction to optimize the investment portfolio of a bank is of great importance (Pashova 2012). Risk management issues have always been among the priorities in portfolio investment. In particular, F. Knight proposed his classical concept of a correlation between risk and uncertainty (Knight 2003). Paying tribute to the significance of the studies mentioned, it should be noted that the issues of artificial intelligence systems in supporting managerial decision-making in portfolio investment have been poorly investigated. Often, nonlinear economicmathematical methods, in particular artificial intelligence systems known to science, appear not to be adapted to the management of the bank’s investment portfolio. Further development of artificial intelligence systems will use machine learning. According to experts, machine learning is able to process large amounts of historical data and improve many aspects of the financial ecosystem (Machine learning 2018). Financial markets are becoming more efficient, which complicates their use by conventional methods. Some experts have been already using a plethora of available data to apply complex quantitative methods, such as machine learning (Shane et al. 2018). Using computers for online trading and investment is not a new conception. From the earliest days of the calculations, the machines were used for financial calculations and analysis. However, recent advances in artificial intelligence (AI) and, more specifically, machine learning have introduced new and innovative ways to use computing power for better financial management (2018). Therefore, so many financial companies are investing heavily in machine learning research and development. The development of blockchain and cryptocurrency should be referred to as promising areas, the portfolios of the latter being controlled by special neural systems. So, access to accurate information anytime and anywhere is vital for successful cryptography. This is where the Blockfolio app appears. A number of authors, including Eugenio Martínez and Jose Manuel, proposed to consider quantitative investment strategies commonly used, including quantitative factors that are classified into four categories, i.e., low volatility, cost, quality and momemtum (Eugenio and Jose 2018). Very interesting is the investment management model proposed by John A. and Michael S., who were interested in applying for long-term investments using publicly available basic information of a company, the so-called “factor model”.

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3 Results Using the Russian Deductor platform, the data were quantized for further use in the development of the perceptron neural network to obtain the forecast values of the bank’s profit depending on the structure of the investment portfolio (Table 1). Table 1. A fragment of initial data

According to the calculations of the Invest-Foresight, the total investment in securities of 548 operating Russian banks as of March 1, 2017 amounted to 8.83 trillion RUB. This was about 12% of net assets (for technical reasons, the data from 3 banks, including Alfa Bank, is not taken into account). A year earlier, on March 1, 2016, investment in securities amounted to 8.99 trillion RUB, a decrease was of approximately 158 billion RUB. However, the decline in investment in securities occurred pro rata to the decrease in bank assets themselves: now, like a year ago, the share of securities in net assets was about 12%. The quantization results for 2015–2017 are presented in Table 2. Table 2. Quantization results for 2015–2017 (Quantization 2018)

At the same time, business loans in nominal terms as of year-end 2016 declined even more, by 6.9%, primarily due to a reduction in corporate lending by 9.5%, while retail lending, by contrast, grew by 1.1%. As of the end of the year, the volume of loans to the economy decreased by 3.0 trillion RUB to 40.9 trillion RUBS as of January 1, 2017. Of these, 30.1 trillion RUB were accounted for the corporate loan portfolio, and 10.8 trillion RUB for personal loans.

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However, it can be assumed that the bank investments would have decreased much more, if during this period there had been no additional capitalization of banks in via federal loan bonds (FLB). It was the debt obligations of the federal authorities on the banks’ balance sheets that showed a special growth over the past year. For the period under review (from March to March), federal securities on the balance sheets of banks increased from 2.79 to 3.23 trillion RUB. The increase amounted to 529.9 billion RUB, or 19%. The share of federal bonds in banks’ securities portfolios for the year increased from 31% to 37.5%. The investment portfolio structure in a certain way influenced the performance of banks (Fig. 1).

Fig. 1. Dynamics of the structure, size of the bank investment portfolio and profits

The investment portfolio structure in banks with different asset-sizes developed in different ways. The neural network formed nine groups of banks in terms of assets-size at intervals (Table 3).

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Groups Asset Intervals

Number of banks

Share of stock, %

Share of bonds, %

1

34

2.1

90.7

34

7.0

35

2 3 4 5 6 7 8 9

Before 1870274 1870274– 2800070 2800070– 3629298 3629298– 5351772 5351772– 11515860 11515860– 28200293 28200293– 82964012 82964012– 244237223 from 24423723

Share of a bill, %

Return on assets, %

7.7

Profit. thousand rub. 220683

81.7

11.3

752887

+0.93

0.6

93.2

6.2

1202760

+1.03

35

4.3

85.4

10.4

1349936

+0.86

35

2

92.1

5.9

321808

+0.1

35

5.6

88.2

6.2

3134649

+0.5

35

2.9

91.6

5.5

10043423

+0.52

34

3.5

94.2

2.3

313649

+0.5

34

2.8

96.9

0.35

−20703464 −0.27

+0.4

The dependence of the investment portfolio structure on the factors is shown in Fig. 2.

Fig. 2. Dependence of the investment portfolio structure on factors

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The histogram of banks in terms of the mass of profit, share of stocks and assets value is presented by groups in Fig. 3.

Fig. 3. Dependence of profit on the investment portfolio structure

Conducting one or another investment policy that is clearly observed in the share of stocks, the banks end up with different profits at the end of the year. Using the “what-if” function allowed getting a bank’s profit forecast for the next year with an error not exceeding 5% (Fig. 4).

Fig. 4. Perceptron’s “What-If” function

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So, for example, in 2017 VTB Bank had actual profit of 9118313 thousand RUB, and the predicted value was 9132717.8527721 thousand RUB. The deviation was 1.001579772. The forecast error level in the neural network model was 2.55205%. The correlation between the profit/loss of the bank and share of bonds in the investment portfolio, when the size of the bank changes (the value of assets), has been revealed (Fig. 5).

Fig. 5. Dynamics of profit depending on the share of bonds in the investment portfolio and the value of assets, 2017

There is a dynamics of profit depending on the share of bonds in the investment portfolio. This is a very important trend.

4 Conclusions Based on the study conducted, the following conclusions were made: – the use of quantization of data is important in order to obtain certain statistical information on commercial banks in the context of grouping intervals of the model; – the use of a perceptron neural network is advisable to predict bank profits in the conditions of market uncertainty; – the results obtained are of practical importance, the algorithm developed can be used to predict bank profits. Acknowledgments. We acknowledge the support of the Russian Foundation for Basic Research (project no. 18-010-01210 – A).

References Rating of banks in terms of loan portfolio as of January 1, 2017 (2018). http://riarating.ru/banks/ 20170207/630055528.html. Assessed 9 Oct 2019

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Lomakin, N.I., Krykhtina, D.A., Lomakina, A.N., Sergienko, V.: Criteria for the formation of the bond portfolio of a commercial bank. In: XII Interregional Scientific-Practical Conference. The Interaction Between Enterprises And Universities: Science, Personnel and Innovation (Volzhsky, 26 April 2016): Proceed./VPI (branch) VSTU. Volgograd, 2016, pp. 153–158 (2016) Pashova, S.: Formation of Innovation and Investment Share as the Direction of Optimizing of the Bank loan Portfolio Bìznes Inform, no. 7, pp. 145–148 (2012) Knight, F.: Risk, Uncertainty, and Profit. (Transl.) Moscow: Delo, 2003. 360 p. (2003) Machine learning in finance: Why, what & how (2018). https://towardsdatascience.com/machinelearning-in-finance-why-what-how-d524a2357b56. Assessed 9 Oct 2018 Shane, O., Chris, K., Craig, B., Derek, B.: Big Data and Machine Learning, May 2018 (2018). https://dir.richardsongmp.com/documents/259951/0/Big+Data+and+Machine+Learning +Primer+-+RGMP+v2.pdf/2a25f867-3f1e-4c56-b096-3fd19b1aed7b. Assessed 09 Oct 2018 This company changes the DNA of investing - through machine learning (2018). https:// thenextweb.com/investing-2-0/2018/07/25/etoro-investing-with-machine-learning/. Assessed 09 Oct 2018 Stock selection using machine learning techniques (2018). https://ddd.uab.cat/pub/tfg/2017/ 189582/TFG_josemanueleugeniomartinez.pdf. Assessed 9 Oct 2018 Deep learning and long-term investment, comparison with factors (2018). https://ddd.uab.cat/ pub/tfg/2017/189582/TFG_josemanueleugeniomartinez.pdf. Assessed 9 Oct 2018 Quantification (2018). https://basegroup.ru/deductor/function/algorithm/quantification. Assessed 15 Oct 2018

The Modern Trends of Development of AI Technologies Vyacheslav V. Burlakov1, Olesya A. Dzyurdzya1, Gilyan V. Fedotova2,3(&), Aminat H. Alieva4, and Elena N. Kravchenko5 1

Moscow Polytechnic University, Moscow, Russian Federation [email protected], [email protected] 2 Volga Region Research Institute of Production and Processing of Meat and Dairy Products, Volgograd, Russian Federation [email protected] 3 Volgograd State Technical University, Volgograd, Russian Federation 4 Chechen State University, Grozny, Russian Federation [email protected] 5 Volgograd Branch of the Plekhanov Russian University of Economics, Volgograd, Russian Federation [email protected] Abstract. Purpose: The purpose of the work is to determine and evaluate the main trends of development of technologies of AI in the national economy. Technologies of AI are used by a lot of countries in all spheres of public life; a lot of money is invested into research and development of new technologies; new normative documents and standards of implementation of IT into everyday life are adopted. Application of intellectual technologies changes the environment and transforms the traditional ideas of usual processes, but their implementation is still chaotic. The obtained results and effects of the work of AI are not systemic – however, they do influence the economic growth in certain spheres and corporations, which proves their high potential and hidden opportunities. That’s why the authors aim at solving the following tasks: performing an overview of the main achievements in the sphere of AI, evaluating the volumes of investments of various governments into scientific research on search for new intellectual solutions, providing examples of the most progressive intellectual technologies that are applied by various corporations around the world, considering the sub-complexes of AI, and systematizing the most perspective trends of development of AI for 10 years. Studying the accumulated experience of development and implementation of “smart” technologies will allow determining the most successful and popular technologies in the modern society. Methodology: The authors use the methods of normative & legal analysis and evaluation of the modern situation in the sphere of state management of the national economic system, content analysis, statistical analysis, formalization, and analogy. Results: AI allows solving a lot of tasks, which the humankind was facing in the course of several centuries. The main problem consists in adequate application of new achievements of science and technology in the practical life of society. The results of implementation of certain intellectual solutions into © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 374–383, 2020. https://doi.org/10.1007/978-3-030-39319-9_43

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various spheres of economy and public life already showed large positive results (growth of effectiveness, growth of speed, automatic processing new knowledge, etc.), which confirms large perspectives and potential of AI. The authors study the main components of AI (machine learning and deep learning) and determine the future trends of search and development of intellectual technologies. Conclusions: The specifics of this work consist in systematization and complex substantiation of the main trends of development of AI in the world market. The performed overview allows for evaluation of the scales of current transformations in the global economy and determining the most breakthrough directions of future scientific research in the sphere of AI. Keywords: AI
National strategy Computer vision
Investments JEL Code: A2


Machine learning
Deep learning



D83
E22
H52
I25

1 Introduction The modern technologies of AI are a new age in the future of economy, which transforms the system of interrelations in all spheres of the national economy and public life. Intellectual solutions are new principles and tools of solving everyday life without human participation. AI contains such elements as machine learning (ML) and deep learning (DL) – so it is necessary to differentiate them. Quick development of AI requires constant inflow of new information, which is generated due to development of science and technology. The level of development of AI depends on the volume and quality of incoming information. Accumulation, storing, and processing of information require centers for processing, cloud data bases, and high security of data – all this requires large finances, which will provide high growth of the global GDP. Thus, according to studies, AI will add up to USD 15.7 trillion in the global GDP by 2030 or 14% to the current level; USD 6.6 trillion will be received by means of growth of labor efficiency. The highest investments will be made by China – USD 7 trillion and the USA – USD 3.7 trillion (Fig. 1).

Fig. 1. Forecasts of growth of GDP for regions of development of AI. Source: Sizing the prize What’s the real value of AI for your business and how can you capitalize? Access mode: www. pwc.com/gx/en/issues/analytics/assets/pwc-ai-analysis-sizing-the-prize-report.pdf.

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According to the forecasts, the maximum growth of GDP will be observed in China – 26.1%, the minimum growth – in Latin America (5.4%). There’s no direct dependence on the volume of investments and growth of GDP to growth of additional expenditures. Expenditures will reduce, as personnel will be solving more creative and strategic tasks. The other side of the coin is loss of jobs by people who perform routine work and are not interested in retraining. This will lead to growth of social tension – especially in developing countries. The country that will achieve success in the sphere of creation and implementation of AI into the labor processes and public life will become a monopolist in the world market of the future. Due to this, a lot of countries adopt their own national strategies in the sphere of AI and promotion of intellectual technologies. A more detailed list of countries is shown in Fig. 2.

Fig. 2. List of countries that have adopted national strategies in the sphere of AI and promotion of intellectual technologies for 2017–2018. Source: Overview of national strategies in the sphere of AI. Access mode: zen.yandex.ru/media/aiqcnt/obzor-nacionalnyh-strategii-v-oblasti-ii-5bcc70 93496cf000abdde06b.

All developed and adopted national strategies focus their efforts on various aspects of policy in the sphere of research: search and scientific developments, search for talents and support for them, interaction between the state and business, development of normative acts in the sphere of protection of rights, development of data base and digital infrastructure, and standardization of the process of development and implementation of intellectual technologies. In 2019, Russia started developing a project of the national strategy of development of technologies in the sphere of AI, which is to be adopted in late 2019. Budget for development of AI will be approved in 2020. The specific features of the national strategy are six key factors that define it: algorithms and mathematical methods; development of program and technological solutions; storing, collection, and processing of data; developing a specialized firmware; training of personnel; normative regulation.

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2 Materials and Method The search for new intellectual solutions has been on minds of a lot of scholars for the last fifty years. The first to show interest in the issues of modeling of the work of human brain were developers of the programs of machine learning for teaching chess (Newell et al. 2008) and programs of machine translation (Gordin 2015), (Korolev 2010). After that, the research on development of technologies of AI moved to the sphere of software and were positioned as computer technologies. This stage was peculiar for wide application of technologies of artificial neural networks, which allow for imitation of biologically living organisms and their mutations – which expands the sphere of application of AI in the modern world. As of now, there is already certain scientific experience in the sphere of technologies of AI and their implementation into the practice of work of foreign and domestic companies of various spheres of economy. The authors who studied the problem of development of AI include (Marsden and Sonnino 2008), (Mizyun 2008), (Kharitonenkov 2011), (Plotnikov et al. 2015), (Vertakova et al. 2016), (Presnyakova 2016), (Robersy 2016), (Bogoviz et al. 2017), (Kayl et al. 2017), (Dudin et al. 2018), (Fedotova et al. 2018), (Kovazhenkov et al. 2019a), (Giannakis and Bruggeman 2015), (Cheyns et al. 2017), (Tsvetkov 2017), (Lyasnikov 2018) and (Kovazhenkov et al. 2019b). The technology of machine vision and machine learning are studied in the works (Forsyth and Pons 2004), (Shapiro and Stockman 2006), (Vizilter et al. 2010), (Brink et al. 2017), (Brockman 2017). The performed overview of the scientific publications of Russian and foreign economists showed high popularity of this direction of the research. The continuing process of transformation of national economies and development of technologies of AI in different countries dictate the necessity for constant search and development of new intellectual solutions in different spheres of public life. The methodology of this work includes systemic, problem, and graphic analysis, the special-purpose method, and formalization.

3 Results AI becomes an inseparable part of public life. Large financial investments are necessary for supporting and developing the intellectual technologies. Evaluation of the investments in the global market of AI, performed by Frost & Sullivan, shows that the leaders are the USA, China, and the UK (Fig. 3).

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682

Total USA UK

13036.89

429

6398.61

124

Israel

42

China

53

Canada

34

569.49 278.4 5505.22 285.17

number of deals

Canada 34

China 53

Israel 42

UK 124

USA 429

Total 682

investments, USD million

285.17

5505.22

278.4

569.49

6398.61

13036.89

Fig. 3. Volumes of investments of foreign countries into development of AI, as of year-end 2017.

Evaluation of the investments of the USA and the number of concluded deals in the AI market show leadership of the USA. However, in view of average cost of a deal, China is the leader – the average deal in the last two years was USD 100 million vs. USD 15 million and USD 5.4 million in the USA and the UK, accordingly. According to analysts of Frost & Sullivan, sustainable growth of the market of AI technologies in the world will be predetermined by integration of smart applications in such spheres as robototronics and creation and development of the systems of cognitive, neuromorphic, quantum, and scale calculations. Regarding the objects of investing, the most popular companies for investors in 2018 were Chinese SenseTime (USD 1,200 million), UBTech Robotics (USD 820 million), Megvii Technology (USD 600 million), YITU Technology (USD 300 million) and American Dataminer (USD 391 million), CrowdStrike (USD 200 million), and Pony.ai (USD 214 million). Technological AI startups attracted attention of such companies as Alibaba Group, Fidelity International, General Atlantic, Accel, IBM, Google, CloudMinds, Affectiva, etc. The structure of the global market of application of technologies in the sphere of AI as of year-end 2017 shows domination of the usage of intellectual technologies in the sphere of quality management (Fig. 4).

The Modern Trends of Development of AI Technologies

51.1

Other Fraud Analysis and Investigation Systems

9

Automated Threat Prevention Systems

9.8

Automated Customer Support Services

9.8

Diagnostic and treatment systems

10

Systems of research and recommendations in the field of quality management

379

10.3

Fig. 4. The main spheres of application of the systems of AI (%). Source: IDC: In 2017, the global market of AI systems to grow by 1.5 times. – Access: https://www.computerworld.ru/ news/IDC-v-2017-godu-mirovoy-rynok-sistem-iskusstvennogo-intellekta-vyrastetbolee-chem-vpoltora-raza

AI became the key technological trend of 2018, and the volume of global investments into it exceeded USD 500 million. According to the forecasts of Markets and Markets, the AI market will reach USD 5 billion in 2020 by means of application of technologies of machine learning and speech recognition in advertising, retail, finances, and healthcare. Gartner think that by 2020 around 40% of all interactions with virtual speech assistants will be based on the data processed by neural networks. The technologies of machine learning have become popular recently – creation of a data base of training examples, based on which neural network or machine can make decisions and act, train, and identify new incoming information. Another trend direction of development of AI is the technology of deep learning, based on artificial neural networks with multi-layer architecture. Deep learning is unique due to the fact that machine finds the signs (key features of something by which one class of objects could be distinguished from another) and structures them according to the hierarchy: simple ones lead to complex ones. The technology of deep learning is an inseparable part of research in the sphere of speech and image recognition, during creation of the systems of unmanned vehicles, diagnostics of diseases, and other complex tasks. Development of the technologies of deep learning led to IBM’s technology of distributed deep learning (DDL), which allows reducing the time of training of artificial neural network. A perspective direction in the sphere of AI is research for determining the structure of human brain. Such projects require very large investments, as such studies are conducted by certain countries and large corporations. These projects are analysis of brain structure – reverse design, which supposes thorough study of human brain and presentation of brain’s activities in the form of firmware and software. Success of such research will allow writing a program that possesses AI of the human level. An example of such projects could be Human Brain Project (HBP), organized by the team from the Swiss Federal Institute of Technology under the guidance of

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professor Henry Markram. The purpose of the project is to synthesize all knowledge on brain into one model of brain in a supercomputer. The project is to be finished in 2023. Project SyNAPSE, financed by DARPA and IBM, seeks the goal of creation of a physical copy of brain in the form of special microchips with artificial neurons. This direction was called neuromorphic electronics. China is implementing similar project. However, comprehensive modeling of brain is impossible due to limited capabilities of modern supercomputers (this requires efficiency that is by 3–4 times higher than the current efficiency). Other global projects in which the AI methods and systemic analytics are to be used, include continuation of the project “Human genome”, which is to determine DNA sequences of all living creatures of the planet. Amazon Third Way develops a project “Earth Bank of Codes”. Russian companies invest less, which is caused by the need for state support for these measures. According to assessments, development of technologies of AI in Russia requires RUB 100 billion before 2024 and RUB 180 billion before 2030. A leader in promotion of intellectual technologies in the domestic market is Sberbank of Russia, which is preparing a Road map on development of AI in Russia. According to this project, five sub-technologies – components of “inclusive” digital technologies “Neurotechnologies and AI” – will be distinguished. It is supposed that support for development of machine vision will requires 205 of the assets, and perspective methods and technologies in AI – also 20%. 15% of the assets will be spent for development of speech recognition and synthesis. The remaining funds should be distributed equally for the following sub-technologies (10% each): “Recommendation systems and intellectual systems for decision support”, “Neurointerfaces, neurostimulation, and neurosensing”, and “Neuroprosthetics”. Implementation of this project will require expenditures at each stage of development and commercialization of AI solutions: financing of fundamental research (RUB 20 billion), support for development of prototypes for all sub-technologies (RUB 40 billion), and support for their commercialization from the state (RUB 120 billion, of which more than 50% will be spent for healthcare and agriculture). Apart from large corporations, financing of research on development of AI is performed by the Russian Fund for Fundamental Research and the Russian Scientific Fund – however, due to absence of coordination of the works the financing of R&D is insufficient and fragmentary. Military robototronics’ development is more systemic. There are ongoing works on the programs of speech, face, and image recognition, unmanned vehicles, and other AI applications. Large Russian companies use AI for their business. MTS uses the technologies of machine vision for forecasting a user’s desire to use a certain service. An offer is made even before the user asks the company to connect him to the service. This saves the user’s time and increases the sales level. Sberbank and Moscow Institute of Physics and Technology work on a project on using technologies of AI in a call center. The task of this project – called “Neurointellect iPavlov” – is to develop the algorithms of deep machine learning for creation of conversational AI. This technology has to reduce the burden on the employees and to raise the quality of work with customers. Yandex develops AI applications for optimization of production in industry. Besides, the company presented a method of machine learning CatBoost – a successor of the method “Matrixnet”, which is used in almost all Yandex services.

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Academic and university science conducts separate studies on AI – but large-scale and coordinated R&D on AI is absent. The state of teaching cognitive sciences is especially poor. There are no high-quality lecturers, and training programs are far behind the requirements of the labor market.

4 Conclusion It is possible to conclude that the problem of possibility or impossibility of using AI in everyday life has been solved. Intellectual technologies are a strong part of our life, having replaced a lot of devices and services and having increased the quality of life of an individual. A 50-year history of development of AI showed that there are no serious obstacles on the path of achievement of hi-tech solutions and their successful application for the best of humanity. The achieved results of implementation of various “smart” technologies into the production process and public life have a chaotic and fragmentary character. A lot of countries, in view of the necessity for complex research in this sphere, developed and adopted the national strategies of development of AI, invest into large-scale project of research in the sphere of AI, and create scientific infrastructure and university towns. The USA and China achieved the largest success in this sphere, as they invest a lot into science and research. Despite the achieved results in the sphere of AI, groups of scholars work around the world for expanding and finding new opportunities in application of “smart” technologies. The main future perspective directions of development of intellectual technologies are as follows: (1) deep learning – teaching neural network in real time; (2) further development of robototronics, analysis of incoming information by a robot and making the corresponding decisions; (3) developing neuromorphic microchips and computers on the their basis; (4) scientific research on mapping of human brain and modeling its work; (5) developing the systems of speech recognition in the aspect of understanding the speech and adequate processing of information in view of the context; (6) scientific research on development of interfaces brain – computer; (7) studying the systems of group behavior of robots and interaction of robots and humans in the course of execution of joint operations; (8) dissemination of the Internet of Things, usage of “smart technologies” with it; (9) development of navigation of unmanned vehicles in the human environment (unmanned cars); (10) development of a completely new class of systems of the type “human intellect on demand”, services of robots on demand (RaaS), etc.; (11) hyper-personalized services. As the user is connected to the network 24/7, based on his past data and the model of behavior the apps and AI will have to forecast the services to be offered to him and forecast the optimal solutions; (12) fighting the effect of “catastrophic forgetfulness” in “smart” systems;

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(13) development of the normative and legal basis of usage of robots; (14) development of such directions as text recognition based on precedents, etc. The above directions of development of “smart” technologies will be change life on the Earth and allow solving a lot of global problems of the humankind (famine, fatal illnesses, catastrophes, etc.). Acknowledgments. The reported study was funded by RFBR according to the research project No. 18-010-00103 A.

References Bogoviz, A.V., Lobova, S.V., Ragulina, Y.V., Luchitskaya, L.B., Shutova, T.V.: Boosting innovative activity in companies: problems and potential. J. Appl. Econ. Sci. 12(6), 1690– 1701 (2017) Brink, H., Richards, D., Feverolf, M.: Machine Learning. Programmer’s Library, 336 s Ill (2017) Brockman, D.: What We Think About Cars That Think: World Leading Scientists About Artificial Intelligence, 552 p. Alpina Non-Fiction, Paris (2017) Dudin, M.N., Lyasnikov, N.V., Reshetov, KYu., Smirnova, O.O., Vysotskaya, N.V.: Economic profit as indicator of food retailing enterprises performance. Eur. Res. Stud. J. 21(1), 468–479 (2018) Gordin, M.D.: Scientific Babel: The Language of Science from the Fall of Latin to the Rise of English. Profile Books, London (2015). ISBN 978-1-781-25114-0 Fedotova, G.V., Ilyasov, R.K., Kovalenko, O.A., Tkachenko, D.D., Malyutina, T.D.: Imperatives of forecasting of socio-economic development of russian economy. In: Popkova, E.G. (ed.) The Future of the Global Financial System: Downfall or Harmony: Materials of Conference, Limassol, Cyprus, 13–14 April 2018. LNCS, vol. 57, pp. 908–921. Springer, Cham (2019) Kayl, I.I., Epinina, V.S., Bakhracheva, Y.S., Velikanov, V.V., Korobova, S.I.: Effectiveness and efficiency of public management of socio-economic processes at the city level. In: Overcoming Uncertainty of Institutional Environment as a Tool of Global Crisis Management, pp. 185–190 (2017) Kharitonenkov, A.S.: The evolution of the administrative-legal mechanism of management of national projects and state programs. State administration (26) (2011) Korolev, L.N.: Evolutional computations, neuronet, genetic algorithms – formal statements. J. Math. Sci. 168(1), 80–88 (2010) Mizyun, V.A.: Intellectual enterprise management. Publishing House of the St. Petersburg Academy of Management and Economics, St. Petersburg (2008) Newell, A., Show, J.S., Simon, H.: Modeling human thinking with the help of an electronic computing machine. In: Gippenreyter, Y.B., et al. Psychology of thinking, pp. 133–134. AST, Astrel (2008) Presnyakova, A.D. Modern project management. Modern scientific research and innovation (6) (2016) Marsden, T., Sonnino, R.: Rural development and the regional state: denying multifunctional agriculture in the UK. J. Rural Stud. 24(4), 422–431 (2008) Cheyns, E., Daviron, B., Djama, M., Fouilleux, E., Guéneau, S.: The Standardization of Sustainable Development Through the Insertion of Agricultural Global Value Chains into International Markets. Sustainable Development and Tropical Agri-Chains, pp. 283–303. Springer, Dordrecht (2017)

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Giannakis, E., Bruggeman, A.: The highly variable economic performance of European agriculture. Land Use Policy 45, 26–35 (2015) Plotnikov, V., Fedotova, G.V., Popkova, E.G., Kastyrina, A.A.: Harmonization of strategic planning indicators of territories’ socioeconomic growth. Regional Sectoral Econ. Stud. 15-2 (July-December), 105–114 (2015) Vertakova, Y., Plotnikov, V., Fedotova, G.: The system of indicators for indicative management of a region and its clusters. Procedia Econ. Finance 39, 184–191 (2016) Vizilter, Yu.V., Zheltov, S.Yu., Bondarenko, A.V., Osokov, M.V., Morzhin, A.V.: Image Processing and Analysis in Machine Vision Problems: Course of Lectures and Practical Exercises, 672 p. Fizmatkniga, Moscow (2010) Sekerin, V.D., Burlakov, V.V., Gorokhova, A.E., Dzurdzya, O.A.: Innovations’ latency sources. Revista Espacios 38(62), 26 (2017a) Sekerin, V.D., Burlakov, V.V., Bank, V.S., Gorokhova, A.E.: Latency of innovations as economic category of innovative process. Revista Espacios 38(33), 22 (2017b) Forsyth, D., Pons, J.: Computer Vision: The Modern Approach, p. 928s. Williams Publishing House, Chicago (2004) Kovazhenkov, M.A., Fedotova, G.V., Kulikova, N.N., Sultanova, M.K., Mandrik, N.V.: Search for new economic solutions of the problem of food security. In: Popkova, E.G., (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Studies in Computational Intelligence, vol. 826, pp. 1011–1022. Springer, Cham (2019a) Shapiro, L., Stockman, J.: Computer Vision, p. 752. Laboratory knowledge, Moscow (2006) Kovazhenkov, M.A., Fedotova, G.V., Kurbanov, T.K., Uchurova, E.O., Tserenova, B.I.: Verification of State Programs of Geographically-Distributed Economic Systems. In: Popkova, E.G. (ed.) The Future of the Global Financial System: Downfall or Harmony: Materials of Conference, Limassol, Cyprus, 13–14 April 2018. LNNS, vol. 57, pp. 1043– 1053. Springer, Cham (2019b)

AI as a Breakthrough Technology of Agriculture Development Gilyan V. Fedotova1,2(&), Ruslan H. Ilyasov3, Natalia E. Buletova4, Tatyana A. Yakushkina5, and Timur K. Kurbanov6 1

Volga Region Research Institute of Production and Processing of Meat and Dairy Products, Volgograd, Russian Federation [email protected] 2 Volgograd State Technical University, Volgograd, Russian Federation 3 Chechen State University, Grozny, Russian Federation [email protected] 4 Volgograd Institute of Management - Branch of the Russian Academy of National Economy and Public Administration, Volgograd, Russian Federation [email protected] 5 Bryansk Branch of the Russian Academy of National Economy and Public Administration, Bryansk, Russian Federation [email protected] 6 General A. V. Khrulev Military Academy of Logistics, St. Petersburg, Russia [email protected]

Abstract. Purpose: The purpose of the work is to evaluate the current changes in the structure of the national economic systems as a result of transition to intellectual technologies of managing production processes in various spheres of public life. The authors pay attention to specific features of development of the modern agriculture in the conditions of the growing threat of food deficit. The problem of growth of population of the Earth dictates the necessity for intensification of production of food products by the spheres of agriculture. The production areas are stable, so it is necessary to look for new innovative means of production, which allow for maximum reduction of the cost and increase of the volumes of the manufactured products. The course at informatization of all spheres of public life via implementation of digital tools and mechanisms is aimed at development of hidden potentials and reserves of the existing traditional means and solutions of the problems. Application of digital technologies allows for a new reproduction cycle, exclusion of irrational solutions, and more precise modeling of the tactic and strategy of development of the events. According to the set goal, the authors strive to solve the following tasks: assessment of the level of modern development of the Russian agricultural sphere in view of the tendencies of formation of the information society and information economy, which emphasizes the importance of modernizing the traditional sphere; distinguishing the main intellectual solutions of the problems of intensification of agricultural production; paying attention to absence of the normative and legal regulation; determining the directions of development of the Russian law; analyzing all stages of the agricultural cycle and determining the possibilities of rationalization of the whole process – from preparation to realization of finished products. © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 384–393, 2020. https://doi.org/10.1007/978-3-030-39319-9_44

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Separate attempts of Russian farmers to implement new tools do not provide a significant effect – as there’s a need for systemic planning and state support for digitization. The work in this direction is conducted by the Ministry of Agriculture of the Russian Federation, with a project of the state program “Digital agriculture” and a road map FoodNet (Smart agriculture) in development. Methodology: The authors use the methods of normative and legal analysis and evaluation of the modern situation in the sphere of state management of the national economic system, content analysis, statistical analysis, formalization, and analogy. Results: In view of transition to the Fourth industrial revolution, the traditional systems of interaction and organization of production lose their topicality and become uncompetitive. For increasing the competitiveness in the Russian and global markets, companies of various spheres have to observe the modern tendencies and perform modernization of the production basis and the system of management through implementation of technologies based on AI. The companies of the agricultural sphere perform a search and approbation of various intellectual technologies and receive positive results of their application – which influences the profitability level. The authors of this work perform an overview of the most popular technologies of intellectual management of production and make conclusions on the necessity of full-scale implementation of such systems. Conclusions: The specific feature of this work consists in systematization and complex substantiation of the current processes of implementation of AI technologies in the spheres of the agro-industrial complex. Keywords: AI


Agriculture
Spheres of AIC
Machine vision

JEL Code: A2


D83
E22
H52
I25

1 Introduction AI is widely applied in various spheres of the national economy. These technologies aim at search and solution of a lot of problems on planning, forecasting, and processing of large arrays of data. As of now, Russia forms the Project of the National strategy development of technologies in the sphere of AI, which is to become an addition to the national program “Digital economy of the Russian Federation”. The developed project will be based on the following principles: (1) creation of new foundations and mathematical methods and principles of work of AI; (2) growth of HR and intellectual potential in the sphere of IT; (3) development of a new legislative basis in view of a new technological reality; (4) formation of the effective legal regulation of turnover of data and the leading infrastructure for their processing and storing and wide digital education.

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As of 2019, 30 countries have adopted National strategies of AI. AI is a sphere of science that develops intellectual computer systems with the abilities to understand, learn, think, analyze, and solve problems. AI could be treated as a certain range of algorithms and program systems that are able to understand and process information, as well as make decisions based on the received data. AI is a complex of adjacent technologies and processes with the ability to think and act. The specter of application of these technologies constantly expands by means of new program and tools that include support for AI. By 2020, most of the manufactured and applied program products will be based on AI technologies. The key elements of AI are machine vision, natural speech recognition, speech synthesis recognition, recommendation systems, and systems of decision making, as well as technologies of automatized machine learning. The main technological directions of application of these elements are shown in Fig. 1.

Fig. 1. Technological directions of using AI. Source: Deloitte.

Technologies of AI are widely used in marketing, advertising, telecommunications, industrial complex, and banking. In large corporations, these technologies are aimed at solving technological and logistical tasks, increasing the information security from external threats and effectiveness of targeting, and attracting new customers and partners. According to the studies of rating agencies among Russian companies, the most popular expectations from implementation of AI into the production processes are economic growth – 94% of the respondents, labor efficiency – 93%, innovative development – 92%, and creation of new jobs – 69% (Fig. 2).

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64 Creation of new jobs

69 83

Innovative development

92 78

Labor efficiency

93 68

Economic growth

94 Respondent's company

Respondent's industry

Fig. 2. Expected influence of AI technologies in 2019–2024.

Assessment of the results of the survey shows that respondents expect economic effects from implementation of AI into the production processes, as well as creation of new jobs and professions. AI is applied in various spheres of economy and social life, where it solves specific and the most complex problems. Let us consider the most successful technologies of AI in certain spheres of economy (Fig. 3).

FINANCES (preventing fraud, customer services, control over bank activities) EDUCATION (objectivity of evaluation, individual programs, implementing the student’s potential) ORGANIZATION OF SALES (creation of comfortable conditions, preventing infrastructural disasters, support for handicapped people) SECURITY STRUCTURES (executing functions that are dangerous for human life, preventing crimes, objectivity of punishment

MEDICINE (regular diagnostics of health, developing new drugs, telemedicine) AGRICULTURE (automation of harvesting, fighting insects, support for “hothouse” conditions) INDUSTRY (automation, reduction of costs, increase of product quality) TRANSPORT (road safety, online schedules, fighting traffic jams)

Fig. 3. Application of AI in social life.

We see that AI is applied not only in industry but also in agriculture. In the spheres of the agro-industrial complex, intellectual solutions will allow maximizing profit, avoiding losses of harvest, fighting parasites and drought, replacing mechanical labor with robotized labor, and raising quality of life in rural territories.

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2 Materials and Method As the practice of a lot of companies from various countries shows, the technologies are developed and implemented into practice almost instantaneously – which is a natural process of development of society. Developments in the sphere of AI are used in a limited way – due to impossibility of forecasting its actions in the future. The scientific world still discusses the necessity for implementing the intellectual technologies in all spheres of public life and replacing manual labor with them. Experts in the sphere of AI think that by 2030 the global GDP will grow by 15% due to implementation of new technologies into traditional spheres of production and processing. Digital technologies and usage of AI in the modern theories and practices of managing national projects of development of the information and communication technologies are studied in (Marsden and Sonnino 2008; Mizyun 2008; Kharitonenkov 2011; Plotnikov et al. 2015; Vertakova et al. 2016; Presnyakova 2016; Robersy et al. 2016; Akimova et al. 2017; Bogoviz et al. 2017; Kayl et al. 2017; Dudin et al. 2018; Fedotova et al. 2018; Kovazhenkov 2018). The issues of implementation of intellectual technologies for solving the problems of famine and intensification of agricultural production are studied in the works (Giannakis and Bruggeman 2015; Cheyns et al. 2017; Tsvetkov 2017; Lyasnikov 2018; Kovazhenkov 2019). Thus, we see that AI is actively used in all spheres of public life. The country that gains leadership in the market of intellectual technologies will become the global monopolist.

3 Results Agriculture us a strategically important sphere of provision of national food security in the conditions of the current sanctions and intensification of the import substitution program. The potential of this sphere in Russia is rather high – as it is supported by large agricultural areas, favorable climate, and large areas for cattle breeding. The doctrine of Russia’s food security defines the indicators of food provision of Russians with the main food products. At the time of the adoption of the Doctrine, neither of the indicator was achieved. As of 2019, almost all indicators conform to their target volumes – except for milk and dairy products. Russian population consumes insufficient volume of milk – which influences the health of the young population. As of year-end 2018, the lower threshold level of provision with milk was not achieved. The volumes of milk production at all types of agricultural companies are shown in Fig. 4. Figure 4 shows that despite the growth of milk production in 2017–2018, there’s still probability of decline of production in the years to come – if no measures for increasing the efficiency of milk production are take. If the current cattle population

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31508 31204

31197 30640

29865

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y = 31247e-0.005x

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Fig. 4. Dynamics of the volumes of milk production in Russia in 2010–2018, thousand tons.

preserves, growth of milk production will be possible only by means of increase of efficiency of the production process and reduction of losses during the production. Thus, within the adopted project “Digital agriculture”, a range of innovations based on technologies of AI has been planned (Fig. 5).

Increase of the Russian complex digital agricultural solutions for companies of the AIC: “Smart farm” “Smart field” “Smart cattle” “Smart hothouse” “Smart processing” “Smart storage” “Smart agricultural office”

Fig. 5. The key innovations of the “Digital agriculture” office.

The main key innovations are digital platforms: “Smart farm”, “Smart field”, etc. All these platforms are large volumes of information that are accumulated and processed with the help of Big Data technologies. The project developers believe that implementation of digital into production of agricultural products will ensure a technological breakthrough. The project envisages creation of intellectual systems of planning, accounting, and subsidizing of agricultural manufacturers and online support for exported agricultural products. Implementations of the project requires 2–3 years of

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Pcs.

USD million

training of specialists in the sphere of digital technologies – IT zootechnicians and IT agriculturers – which will be provided via the online educational system “Earth of knowledge”. Specialists forecast growth of crop yield in the global agriculture by 70% by 2050 – if the current rates of implementation of AI into agricultural production preserve. Such problems as loss of crop, absence of resources for harvesting, absence of favorable climatic conditions, and attacks of insects and parasites could be overcome with the help of “smart” technologies that are based on the algorithms of machine vision. Machine vision is based on development of specific mathematical models (artificial neural networks), which are similar to biological neural cells of living organisms. Such technology allows imitating the behavior and forecasting the development of animals and plants. The mechanism of forecasting for several periods in the future allows predicting the development and possible deviations (diseases and death) of living organisms, which allows preventing the consequences and avoiding a negative situation. The intellectual system could use Big Data for determining the reasons of development of a negative situation and could offer preventive measures. Such technologies could prevent loss of crops, death of cattle, and damage from insects and parasites. Another perspective direction of digitization in the spheres of the AIC is robototronics, which is actively used in a lot of countries. Popularity of agricultural robots has been growing in the course of recent five years and will be growing even faster. The dynamics of sales and the forecast of sales of robots could be seen in Fig. 6.

Sales Deliveries

Fig. 6. Dynamics of global sales of agricultural robots, USD million. Source: Agriculture 4.0: How digital farming is revolutionizing the future of food. Access: https://www.techrepublic.com/ article/agriculture-4-0-how-digital-farming-is-revolutionizing-the-future-of-food/ (Accessed: 29. 06.2019).

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There are three main directions of using robots in the agricultural complex: • unmanned transport vehicles and aircraft; • automatized systems of vegetation of agricultural plants; • automatized systems of managing dairy farms. Unmanned Transport Vehicles and Aircraft Unmanned systems that are installed on tractors and forklifts lead to reduction of the influence of human factor and allow for minimization of the risk of theft of fuel or harvest. The systems of precise positioning also allow reducing the excessive spending of fertilizers and chemicals. At present, the leading manufacturers of the systems of unmanned agricultural transport are John Deere (USA), Autonomous Tractor Corporation (USA), AGCO Corporation (USA), and CNH Industrial (Netherlands). Automatized Systems of Vegetation of Agricultural Plants An important element of smart farming for online and off-line work is usage of various sensors. They measure qualities of soil, plants, and cattle as to electric, electromagnetic, optimal, mechanical, laser, acoustic, and thermic parameters. Various types and systems of sensors deal primarily with the operations of applying liquid mineral fertilizers and observation of plants, as well as assessment of crop yield. Automatized Systems of Dairy Farms Management In cattle-breeding, technologies GPS/GLONASS and RFID (Radio Frequency Identification) allow solving a set of the production and managerial tasks, thus liquidating the possibility of mistakes, accelerating the processing of information, and simplifying the determination of positive and negative heritage. One of the most popular electronic systems of herd management is Afimilk from S. A.E. Afikim (Israel), with modules for the automatized system of managing the cow movement, automatic system of weighing in movement, system of identification, measuring of milk yield, identifier, and ambulatory. Module AfiFarm is the main tool of her and farm management. It contains even electronic secretary, controller of washing system, and the devices that determines the state of cows’ comfort. DeLaval (Sweden) offer two systems of farm management: ALPRO™ for any milk houses and rotor systems and DelPro™ for milking robots and cowshed with tied cows. Wide application of robototronics in the AIC will allow saving people from routine and hard work, providing them with a change to deal with processing and analysis of obtained data and planning of development of the sphere. Intellectual technologies will allow increasing the rates of production of agricultural food products and providing the global food market with domestic food products. Food export could become one of the perspective directions of development of international activities and will allow reducing the volumes of energy export. Improvement of the directions of implementation of AI technologies into different spheres of the digital economy in the future will be connected to development of the normative basis in this sphere. A good normative and technical basis ensures the set quality of application of the technology and the corresponding economic effect. Certain works in this direction are already in process.

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4 Conclusion It should be noted that transition to the intellectual technologies of development of the economic model is inevitable. AI was successful in pilot projects, but these technologies have not reached full-scale implementation. The main problems of absence of full-scale development of intellectual technologies include high investments; absence of developed normative bass of regulation of interrelations between subjects in the sphere of IT; deficit of skilled engineers in the sphere of IT. However, the practice shows that a lot of companies (including Russian ones) are interested in these technologies, purchase test models and achieve certain results. Acknowledgments. The reported study was funded by RFBR according to the research project No. 18-010-00103 A.

References Project “Digital agriculture” of the Ministry of Agriculture of the Russian Federation. https:// www.dairynews.ru/news-image/2018/December/20181203/tsifr_s_hozyaystvo.pdf. Accessed 12 July 2019 Akimova, R.A., Epifanova, N.Sh., Zhukov, V.M.: Possibilities of agile adaptive model for management. Bull. Astrakhan State Techn. Univ. Ser.: Econ. (1), 7–15 (2017) Bogoviz, A.V., Lobova, S.V., Ragulina, Y.V., Luchitskaya, L.B., Shutova, T.V.: Boosting innovative activity in companies: problems and potential. J. Appl. Econ. Sci. 12(6), 1690– 1701 (2017) Dudin, M.N., Lyasnikov, N.V., Reshetov, K.Yu., Smirnova, O.O., Vysotskaya, N.V.: Economic profit as indicator of food retailing enterprises performance. Eur. Res. Stud. J. 21(1), 468–479 (2018) Fedotova, G.V., Ilyasov, R.K., Kovalenko, O.A., Tkachenko, D.D., Malyutina, T.D.: Imperatives of forecasting of socio-economic development of russian economy. In: Popkova, E.G. (ed.) The Future of the Global Financial System: Downfall or Harmony: [Materials of Conference (Limassol, Cyprus, 13–14 April 2018)]. LNNS, vol. 57, pp. 908–921. Springer, Cham (2019) Kayl, I.I., Epinina, V.S., Bakhracheva, Y.S., Velikanov, V.V., Korobova, S.I.: Effectiveness and efficiency of public management of socio-economic processes at the city level. Overcoming Uncertainty of Institutional Environment as a Tool of Global Crisis Management, pp. 185– 190 (2017) Kharitonenkov, A.S.: The evolution of the administrative-legal mechanism of management of national projects and state programs. State administration (26) 2011 Lyasnikov, N.V.: Agro-industrial complex of Russia and the need to ensure food security in the context of international sanctions. Prob. Market Econ. (2), 19–25 (2018) Mizyun, V.A.: Intellectual Enterprise Management. Publishing House of the St. Petersburg Academy of Management and Economics, St. Petersburg (2008) Presnyakova, A.D.: Modern project management. Mod. Sci. Res. Innov. (6) 2016 Tsvetkov, V.A.: Agro-industrial complex of Russia: current state, necessary and sufficient conditions for overcoming the crisis. Prob. Market Econ. (3), 14–16 (2017) Marsden, T., Sonnino, R.: Rural development and the regional state: denying multifunctional agriculture in the UK. J. Rural Stud. 24(4), 422–431 (2008)

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Cheyns, E., Daviron, B., Djama, M., Fouilleux, E., Guéneau, S.: The standardization of sustainable development through the insertion of agricultural global value chains into international markets. In: Sustainable Development and Tropical Agri-chains, pp. 283–303. Springer, Dordrecht (2017) Giannakis, E., Bruggeman, A.: The highly variable economic performance of European agriculture. Land Use Policy 45, 26–35 (2015) Plotnikov, V., Fedotova, G.V., Popkova, E.G., Kastyrina, A.A.: Harmonization of strategic planning indicators of territories’ socioeconomic growth. Reg. Sectoral Econ. Stud. 15-2 (July–December), 105–114 (2015) Vertakova, Y., Plotnikov, V., Fedotova, G.: The system of indicators for indicative management of a region and its clusters. Procedia Econ. Finan. 39, 184–191 (2016) Robersy, I.S., Guseva, A.I., Lebedev, N.A., Ismagilova, T.V., Kuzmina, T.I., Bolkova, Y.S.: The impact of the global financial crisis on russia’scooperation with the countries of EurAsES. Int. J. Econ. Finan. Issues 6(SI), 300–306 (2016) Kovazhenkov, M.A., Fedotova, G.V., Kulikova, N.N., Sultanova, M.K., Mandrik, N.V.: Search for new economic solutions of the problem of food security. In: Popkova, E.G. (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. SCI, vol. 826, pp. 1011–1022. Springer, Cham (2019) Kovazhenkov, M.A., Fedotova, G.V., Kurbanov, T.K., Uchurova, E.O., Tserenova, B.I.: Verification of state programs of geographically-distributed economic systems. In: Popkova, E.G. (ed.) The Future of the Global Financial System: Downfall or Harmony: [Materials of Conference (Limassol, Cyprus, 13–14 April 2018)]. LNNS, vol. 57, pp. 1043–1053. Springer, Cham (2018)

Features of Artificial Intelligence Simulation Models and Risks When Using Them Alexander A. Silaev(&), Marina V. Bukhtoyarova, Galina Yu. Parshikova, and Snezhana V. Atoyan State University of Management, Moscow, Russia [email protected], [email protected], [email protected], [email protected]

Abstract. This paper is aimed at emphasizing that ample opportunities in robotics have made their appearance at the current stage of development of computer technologies. Modern computer technologies make it possible to analyze an enormous number of input and output actions on the management systems. Ample opportunities in robotics make their appearance, making it possible to create and commission machines with Artificial Intelligence. The authors of the paper give consideration to the problem of creation of Artificial Intelligence which is capable of carrying out operation an infinite aggregate of operations. The management processes can be implemented using the Artificial Intelligence simulation modeling. The simulation modeling is able to provide feedback and to achieve the evolution of the capabilities of human intelligence through the use of the “method of successive approximations”. The methodological foundation of this paper consists in the economics and statistics analysis of the most common probability theory distributions: normal, exponential and uniform. The authors analyze difficulties on the way toward the selection of methods and algorithms able to solve the problem of creation of Artificial Intelligence. The result of work consists in the assessment of managerial decision-making risk functions in every distribution of random variables under consideration. In addition, the generalization of risk functions in the multidimensional stochastic process – a multiplicative model with functional shift – has been constructed. We note finally: using the capabilities of the simulation modeling and modern computer technologies will allow making the best choice in the creation and control of machines endowed with Artificial Intelligence. Keywords: Simulation model function


Artificial Intelligence
Robotics
Risk

1 Introduction The opportunity to model, create and manage Artificial Intelligence has appeared at the present stage of development of innovative technologies. Robotics has gone so far that machines endowed with primitive Artificial Intelligence as of yet, are able to replace people in various professions, in diverse spheres of economic life. In the near future, Artificial Intelligence can become the foundation for the economic development of the © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 394–403, 2020. https://doi.org/10.1007/978-3-030-39319-9_45

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country, as well as the foundation for the state administrative apparatus. A digital improvement of state administration can be observed at present. For managers of any link, it is advisable to use digitization of all aspects of management activity: the digit began prevailing over the letter. As early as two centuries ago, at the beginning of the 19th century, the great German writer Ernst Theodor Amadeus Hoffmann created fairytale written works in which he explored the topic of “man and automatic machine” (Hoffmann 1983). In one of his fairytale and philosophical works, Hoffmann presented to the reader the image of a student in love with a rich, beautiful, but capricious and even hysterical girl. The sorcerer and magician—the girl’s father, who did not want to see the poor student as the bridegroom of his rich daughter, created the doll named Coppelia, who looked amazingly similar to his daughter. This doll had a calm, programmed temper, which was very different from the daughter of the magician - ambitious, hysterical and wayward in her whims - the prototype of the created doll. Poor student, having met a beautiful, calm and kind doll, falls madly in love with her, since she did kick against the student, fulfilled all his wishes, was caressing and kind to him, unlike her original. In this amazing philosophical fairytale, Hoffmann contrasts a human being - the daughter of a sorcerer, and an artificially created model - a mechanical doll endowed with Artificial Intelligence. And in this contraposition, the author’s robot doll is more appealing, much more attractive than a human being. At present, too, in the era of simulation, creation and development of Artificial Intelligence, mechanical robots have an increasing number of human skills, qualities and abilities, and therefore are increasingly able to replace humans in various fields of economic and management activity.

2 Methods When it comes to the possibility of mathematical modeling and the creation of robots endowed with Artificial Intelligence, it should be proved that the risk function for actions of decision makers is much greater than the risk of errors during the actions of robots endowed with Artificial Intelligence. As a consequence, judging from statistical formulas (Zamkov et al. 2009), reliability function of the adequate choice of behavior, a strategy for decision makers, is much lower than in the case when the decision is made by a robot, naturally, on the hypothesis that a robot was created by a group of talented experts in the field of development of Artificial Intelligence. If we take it as an axiom that the purpose of research in the field of Artificial Intelligence (AI) is to teach, or rather, to “learn” to simulate the multifaceted aspects of activity of the human mind using a computer as accurately as possible, then we must admit: the simulation modeling is able to provide feedback and to achieve the evolution of the capabilities of human intelligence through the use of the “method of successive approximations”. Thus, in the relatively simple problem of confrontation (conflict) in Yekaterinburg, associated with the construction of an Orthodox church of St. Yekaterina in the city center, AI is able to compile the necessary and sufficient list of issues put to a referendum and taking into account the interests of all strata of the city’s population. It should be taken into account that the group of people who are “against”

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the construction also includes believing citizens, however, there is not a single atheist in the group of people who are “for” the construction. Therefore, the scalar criterion “for – against” or “atheist – believer” is insufficient for a sociological question: even if the issue of construction is resolved, further conflicts may also occur in other (not necessarily related) issues. It becomes clear to economic politicians who are confident that the resolution of any dispute can be presented and expressed in monetary terms, that, for example, religious sponsors that are weakly correlated by monetary criterion, are willing to allocate a good deal of money for the construction of both the church itself and the infrastructure associated with it, and even so, the problem is exacerbated. Therefore, the construction and simulation of Artificial Intelligence, which can present the most complex municipal component, taking into account sociological and human factors, as well as even more transcendental aspects of mass human consciousness, subconsciousness, psychology, physical actions and even reflexes, require computers and robotics to infiltrate the most hidden depths of human nature, moreover, in a differentiated, not integrated, manner. Whether a computer, or rather, its developers, can handle this, that is the question! Is it possible to create Artificial Intelligence or maybe newly created Artificial Intelligence is doomed to be very limited, and therefore – poor. The fact that the engineering industry called robotics is capable of performing intelligent operations, the fact that expert computer systems, encoding knowledge and conditions that apply even to agencies such as the Ministry of Emergencies, can alert security services to the possible fatal flight accidents - allows the experts in systems management to hope: these related issues and problems may well be solved in the near future (Barrat 2018). However, the possibility of creating close-to-adequate robotic models that simulate the possibilities of a problem facing the so-called Big Brain does not yet follow herefrom. Is the problem of formation of simulation isomorphism - this term belongs to the authors of the paper - solvable or not? Will this proposed solution be a finite or infinite set of machine instructions (Bostrom 2016)? Therefore, it is or is not possible to build (even if infinite) an algorithm the presentation of which between the dynamic function of the brain and computer program is the simulation isomorphism: a one-for-one operator that translates computer commands into impulses, and somatomental brain movements - into dynamic computer programs? This task seems impossible. For example, how can we take into account that not all parts of the brain are equally involved in the formation of consciousness: the cerebellum is much more similar to the “automatic device” than the cerebral cortex. The working hypothesis consists in the fact the algorithm of Artificial Intelligence, i.e. simulation model of robotics, - can be built (Tegmark 2019), and it will work in test mode: one should program a basic list of questions, both rational and irrational, and even transcendental. According to estimates, based on the first approximation, the square matrix of such tests would not exceed the dimension [***], which is not a largescale array for an ultramodern computer. Computers are the carriers of the philosophy of Artificial Intelligence, and the principle of the conscious vector that is directed towards the field of destructive risks, towards the field of instability of the management system (why behead a beloved Robot ?!) should not be incorporated into their integrated program, but, on the contrary, a positive program should be incorporated, which would allow the management system to return to the field of homeostasis that was

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abandoned by it (Penrose 2015). Optimistic specialists who stick to such unblighted prospects will inevitably be confronted by reasonable antagonists. They will object, for example, as follows: the properties of the human mind cannot be isomorphic ally represented in the logical actions of an ultramodern computer, if only because the creation of not only finite, but even if infinite set is not able to solve the problem of the simulation modeling of a human brain, since the set of “virtual” operations of the latter is continual (Rapoport et al. 2015). Please note that the problem of whether a set the power of which exceeds the power of a countable set but is less than the power of continuum exists or not, hasn’t been resolved thus far. Topologists use two Martin’s axioms that are logically opposite to each other. According to the first of them, the set of intermediate power – between the countable set and the continuum – exists. According to the second axiom, the set of intermediate power does not exist. Each of these axioms generates its own theory of sets, both of which are informal. If the researcher of Artificial Intelligence management systems accepts the axiom of the existence of an algorithm focused on the simulation of continuous work of the human brain, and if the set of operations in this algorithm is countable, the probability of the “start” of this algorithm on a PC is positive (another issue is how can it be assessed?). However, if we assume the alternative axiom about the continuity of a set of acceptable solutions accepted by human brain, then the probability of a computer “starting up” with an isomorphic program is equal to zero.

3 Results Having analyzed the difficulties that await the researcher on the way toward natural selection of methods and algorithms able to solve the problem of creation of Artificial Intelligence, we proceed to the economics and statistics analysis of the most common probability theory distributions and risk function assessment in each of them. Normal distribution or Gaussian distribution is a distribution of random variables that pretty exactly characterize the distribution of probability density of results of financial, innovation, production and economic activities in real-world economic life of the country, since the indicators simulating these processes are determined by a very large number of independent random variables. Normal distribution is used for the risk assessment as well, since data is usually based on a number of discrete quantities. Such theoretical background and testing of models for risk analysis with the use of normal distribution are indicative of the adequacy of such theoretic instrument for the analysis of real-world processes of economic and management activity. For the normal distribution, probability density is defined as: ðxMÞ2 1 f ðxÞ ¼ pffiffiffiffiffiffi
e 2r2 ; r 2p

where M is the mathematical expectation and r is the mean-square deviation of random variable X.

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Falling of a random variable X in a specified interval ða; bÞ shall be computed using the formula Zb f ðtÞdt ¼ Uð

Pða\X\bÞ ¼ a

bM aM Þ  Uð Þ; r r

Rx t2 where UðxÞ ¼ p1ffiffiffiffi e 2 dt is Laplace’s function at x  0, the values of which are 2p 0

presented in special Tables depending on the parameter x. Laplace’s function is uneven, with the region of variation from 0 to 0.5, more precisely UðxÞ 2 ½0; 12Þ, where lim UðxÞ ¼ 0;5.

x! þ 1

It should be noted that the managerial decision-making risk function is directly proportional to the mean-square deviation (Belov 2015), i.e. variance with elasticity coefficient equal to one-half: risk ¼ const
r ¼ const
D1=2 : Whereas reliability of the work product of Artificial Intelligence - a robot - is inversely proportional to the mean-square deviation, or variance with elasticity coefficient equal to one-half. The quality of operation of Artificial Intelligence can be characterized by the mathematical expectation or the mean value of continuous random variable. Whereas reliability of its work is simulated in the simplest case by the probability of falling in a specified interval with final boundaries, i.e. the length of the unknown interval becomes the most important characteristic or indicator of reliability. For the normal probability distribution law, there is a “three-sigma rule”: the probability of falling in a specified interval equal to the “mathematical expectation minus three sigmas to the mathematical expectation plus three sigmas” greater than or equal to 99.73%. Statistically, about 0.27% of negative decisions of the robot go beyond this interval. If the stochastic process under study is subordinate to normal probability distribution law, then decision maker can assess the reliability interval length of managerial decision as such that is equal to the six “sigmas”, which allows varying exogenous functions (input actions) when making high -risk decisions, since the risk is proportional to the mean-square deviation with elasticity coefficient close to 1. Hence, for a normally distributed continuous random variable, the risk function must be less than or equal to the one-sixth of the reliability function: 0\risk 

1
reliability: 6

When making managerial decisions, one should distinguish certain areas of risk depending on the level of potential financial losses. For this purpose, risk scales have been developed and are used to adjust the behavior of decision makers and forced to take economic risks (Fomichev 2016).

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Not a mean-square deviation, but a variable that is called probable deviation or mean deviation or “mean error” is commonly used as dispersion characteristics (Venttsel’ 2018). Probable deviation is half the length of the segment symmetric with respect to the center of scatter, the probability of falling in which is equal to fifty per cent. The geometrically probable deviation is equal to half the length of the segment of the X-axis, symmetric with respect to the center of scatter, which half the area of distribution curve relies on. We shall denote the probable deviation by E. Since with a large number of experiments, half of the values of random variable X on the average deviates from M by more than E, and half of them deviates from M by less than E, the term “mean deviation” has been introduced. The probability that the deviation of random variable X from mean value M in absolute magnitude does not exceed a positive number e ¼ rt is given by the ratio: rt 1 PðjX  M j\eÞ ¼ 2Uð Þ ¼ : r 2 The probable deviation, as well as the dispersion characteristic, should be in direct relationship to the mean-square deviation r. In order to determine this dependence, we shall calculate the probability of event jX  M j\e: e 1 PðjX  M j\eÞ ¼ Uð pffiffiffiÞ ¼ : 2 r 2 The above formulas are used in practical applications for the calculation of probability of falling of a random variable X in a specified interval. If we consider the demonstrative law of distribution of probabilities of continuous random variable with probability density  f ðxÞ ¼

0; k
ekx ;

x\0 ; x0

so that for any positive value of parameter k Zþ 1

k
ekx dx ¼ 1;

0

where k is the intensity of the flow of decision options received by the robot endowed with Artificial Intelligence, then when simulating the exponential distribution risk function, it should be noted that the risk function is inversely proportional to the intensity of the flow of decision options, since for the exponential distribution of the mathematical expectation M ¼ 1k ¼ k1 with elasticity coefficient equal to minus 1; the mean-square deviation is equal to the mathematical expectation with elasticity coefficient equal to minus 1 r ¼ k1 ¼ M.

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Consequently, if the continuous stochastic process under study is subordinate to exponential distribution, then the risk function for a decision maker is directly proportional to the intensity of the flow of decision options that are presented for consideration by Artificial Intelligence. We may admit an increase in high-risk cases and the extension of the reliability interval of the optimum decision-making. However, it should be noted that as the decision-making reliability interval length increases, reliability function decreases, since the probability density tends to zero when x goes to infinity and has righthand horizontal asymptote. It should be emphasized that the risk function with respect to the mean-square deviation has elasticity coefficient equal to 1, and the risk function in the dispersive measure has elasticity equal to one half. In the analysis of random variables that are processed by Artificial Intelligence, it is necessary to strive for unbiased estimates for the mathematical expectation and variance. If the weighted average statistical estimate for the mathematical expectation of continuous random variable is already unbiased, then an adjustment is necessary in the estimation of variance: 2 σнесмещ =

n 2 σсмещ , n −1

where n is the dimension of the stochastic vector of input information. Given that in the precomputer era there were belated views that excluded development of models simulating the activity of a human brain, as perfectly exemplified by Artificial Intelligence models, at the present stage of extensive development of society, the creation of Artificial Intelligence models is not only desirable, but also necessary. The modeling law can be chosen based on the following considerations (Venttsel’ 2018): (1) Given the weighted mean value of the stochastic input vector equal to the meansquare deviation r, it is expedient to give consideration to the exponential distribution of continuous random variable, since the following formulas are correct for it:: MðXÞ ¼ rðXÞ ¼

1 1 DðXÞ ¼ 2 ¼ k2 : k k

The mean-square deviation rðXÞ ¼ k1 with elasticity coefficient that is equal to minus 1 should be regarded as the risk function under such a random variable distribution law. That said, k is the intensity of the incoming flow of decision-making options. (2) If the mathematical expectation of the stochastic input vector and the meansquare deviation are independent parametric variables, where the thickest value, the median and the mathematical expectation are equal, then the robot endowed with Artificial Intelligence must perceive the unknown distribution of continuous random 1 variable as normal; furthermore, f ðMÞ ¼ pffiffiffiffi is the ordinate of the maximum proba2pr bility density, r is the mean-square deviation. If this is the case, the decision-making risk function is proportional to the mean-square deviation r with elasticity coefficient

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equal to 1. It should be pointed out that in case of increased diffusion of random variable in relation to its weighted mean value expansion of the area of high-risk decisions will follow, since variance - spread in values - is proportional to the risk function with elasticity coefficient equal to two. An example of the negative consequences of expanding the area of high-risk operations in case of increased spread in random variables can be the conflict between Rosneft and JSFC Sistema in midNovember 2018 in St. Petersburg at the oil exchange or the negative situation related to pollution of Russian oil by chlorides in April 2019. (3) When we give consideration to the uniform distribution of random variable, the mathematical expectation, variance and the mean-square deviation shall be calculated using the following formulas: MðXÞ ¼

aþb ðb  aÞ2 ba ; DðXÞ ¼ ; rðXÞ ¼ pffiffiffi : 2 12 2 3

Given the uniform distribution of continuous random variable, the risk function is proportional to the elasticity of the domain of definition of random variable, i.e. length pffiffiffi of section (b − a). That said, the risk function is 2 3  3; 4 times less than the length (measure) in this domain. The construction of the risk function allows natural generalization, namely: if there are several scalar risks in the multidimensional stochastic process, then they can be grouped into a multiplicative model in the following form: r ¼ c
ra11
ra22
ra33 ; . . .; rann Here, r - is the risk function (endogenous variable), r1 ; r2 ; r3 ; . . .; rn - is the meansquare deviations for each factor “provoking” the risk (high-risk operations); a1 ; a2 ; . . .; an are their corresponding elasticity coefficients of the influence of argument factors on the function factor, c is the constant, regulating the dimension of economic quantities and indicators. This model is addilog, but has a significant disadvantage: if, for example, the risk of emergence of a third (second, etc.) “threatening” factor is equal to zero, i.e. r3 ¼ 0, then the aggregate risk r ¼ 0. At the same time, it seems obvious that the first, second, fourth, etc. factors can cause a risk level well above zero. What should a mathematician do as a system researcher? The authors suggest an idea according to which scalar risks should be formed in a multiplicative manner as before, but with a functional shift. We shall present a vector summary of the action of “threatening” factors that impacted the risk function in the form of the following products: r ¼ c
ð1 þ r1 Þa1
ð1 þ r2 Þa2
ð1 þ r3 Þa3 . . .ð1 þ rn Þan :

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Let us assume again that r3 ¼ 0, i.e. the third factor “drops out of the struggle”. Then, ð1 þ r3 Þa3 ¼ 1 with any elasticity coefficient a3 , “one cartridge” simply falls out of the “risk magazine” r ¼ c
ð1 þ r1 Þa1
ð1 þ r2 Þa2
ð1 þ r3 Þa3 . . .ð1 þ rn Þan ; and accounting comes down to the analysis of the remaining (n − 1) risk factors. Next, we take the logarithm of a general model, and now finding the risk is reduced to solving the classical linear system using the least-square method: ln r ¼ ln c þ a1 lnð1 þ r1 Þ þ a2 lnð1 þ r2 Þ þ . . .an lnð1 þ rn Þ: If sufficient conditions corresponding to the Markov’s theorem (Zamkov 2009) are fulfilled, the parameter estimates c; a1 ; a2 ; . . .; an will be consistent and unbiased.

4 Conclusion Since modern computer technologies provide an opportunity to analyze an enormous number of input and output actions on the management systems, ample opportunities in robotics have been recently emerging making it possible to create and commission machines with Artificial Intelligence. It must be understood that the management processes can also be implemented using the Artificial Intelligence simulation modeling. The impact of Artificial Intelligence on the management system can also occur with some delay, i.e. with lag. A robot endowed with Artificial Intelligence and making managerial decisions with time delay, has significantly less stochastic delay or lag. We can provide an example of a robot playing, for example, chess with a professional chess player. A well-designed Artificial Intelligence will never make an uncontrollable decision, unlike a human being with his own temper, moods, mindset, attitude of mind and well-being, which can greatly affect, for example, the work of an air traffic controller, a specialist in conflict war games with extermination, etc. (Bostrom 2016). It may be that in the near future a banker or a businessman with uneven temper can be replaced by a robot endowed with Artificial Intelligence, modeled by top-ranked specialists. For example, the mayors who make inefficient decisions may possibly be replaced by programmed robots endowed with Artificial Intelligence. The creation of Artificial Intelligence, as a complex and unsolved problem, cannot be represented by a single research area. According to the authors, since the possibilities of the simulation modeling and modern computer technologies are unlimited, then the synthesis of areas - game theory, theory of probability, theory of graphs, and robotics, will make it possible to make the best choice using the simulation modeling upon the estimation of a large number of options. Acknowledgments. The authors render their thanks to the key expert of the State University of Management on issues of the digital economy, Doctor of Economics, Professor Tereliansky, P.V.

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References Barrat, J.: Our Final Invention. Artificial Intelligence and the End of the Human Era, 560 p. Alpina Non-Fiction, Moscow (2018) Belov, P.G.: Risk Management, System Analysis and Simulation. Part 3, 736 p. Yurait, Moscow (2015) Bostrom, N.: Superintelligence: Paths, Dangers, Strategies. “MIF bez BK” afcf7f36-d209-11e41a494-0025905a0812, 760 p. (2016) Venttsel’, E.S.: The Theory of Probability, 658 p. Yustitsiya, Moscow (2018) Hoffmann, E.T.A.: Short Stories, Belles Letters, Moscow, 399 p. (1983) Zamkov, O.O., et al.: Mathematical Methods in Economy, 384 p. Delo i Servis, Moscow (2009) Penrose, R.: The Emperor’s New Mind: Concerning Computers, Minds and The Laws of Physics, 416 p. Lenand, Moscow (2015) Rapoport, G.N., et al.: Biological and Artificial Intelligence. Part 4. Perception of the Outer World by Individual Carriers of Intelligence, 184 p. Lenand, Moscow (2015) Tegmark, M.: Life 3.0: Being Human in the Age of Artificial Intelligence, 560 p. Corpus, Moscow (2019) Fomichev, A.N.: Risk Management, 372 p. Dashkov i Ko, Moscow (2016)

Model of Commercialization of University’s Innovations Based on AI Svetlana E. Sitnikova1(&), Natalia S. Polusmakova2, and Nikolay Y. Golovetsky3 1

3

Volgograd State Medical University, Volgograd, Russia [email protected] 2 Volgograd State University, Volgograd, Russia [email protected] Financial University under the Government of the Russian Federation, Moscow, Russia [email protected]

Abstract. Purpose: The purpose of the work is to determine the current problems of commercialization of universities’ innovations in modern Russia, to substantiate the perspectives of solving them, and to develop a model of organization of this process based on AI. Design/Methodology/Approach: The authors use the information and analytical materials as a result of monitoring of effectiveness of the activities of educational organizations of higher education in 2018, performed by the Ministry of Science and Education of the Russian Federation. The research is performed by the example of universities of Volgograd Oblast (Russia), which show high research activities and consider commercialization of their innovations as one of the main sources of revenues. The data are processed with the help of comparative analysis, calculation of direct average, and correlation analysis. Findings: It is determined that imperfection of the existing practice of commercialization of universities’ innovations is explained by the negative influence of the “human factor”, which is connected to fragmentary analysis of the market of innovations, reduction of university’s profit during conclusion of an agreement on supply of innovations, and incompleteness of the provided services that are necessary for commercialization of innovations. This influence is overcome in the developed authors’ model of commercialization of university’s innovations based on AI. Originality/Value: The offered model envisages full-scale intellectual decision support during the whole process of commercialization of university’s innovations, from formation of the offer of innovations in the market to automatized engineering at the company that implemented university’s innovations. Thus, the model’s advantages are achieved – reduction of burden on the university’s representative, who is responsible for commercialization of innovations, and maximization of profit (revenue) of the university from it. Keywords: Commercialization Russia
AI JEL Code: H52


Innovations
University
Human factor



I22
I23
L21
L44
O30
O31
O32
O33
O34

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 404–410, 2020. https://doi.org/10.1007/978-3-030-39319-9_46

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1 Introduction Functioning and development of universities in modern Russia is influenced by two factors. 1st factor: growth of the requirements of the state and society to self-financing of universities. Possibilities of financing of universities’ activities become more limited, which leads to the necessity for their self-financing. The influence of this factor has increased recently, against the background of the global depression that caused the crisis of the Russian economy, and growth of the scale of state programs aimed at modernization of the economy and social support for the population. Together with provision of paid educational services, R&D and implementation of their results are a perspective direction of commercial activities of a modern university and, accordingly, a source of its revenues. 2nd factor: final formation of the market relations in the scientific sphere. Consumers of the educational and research services that are provided by a modern university are ready to purchase these services by the market terms (according to an agreement/contract), but they demand high quality of the services from the university and their provision in strict (agreed upon) terms. There is competition between offer (among universities and other suppliers of services) and demand (among consumers of services – companies that implement innovations). Modern Russian universities that conduct R&D are usually funded by the state and are peculiar for a complex bureaucratic organizational structure – which reduces their flexibility and marketing activity. Based on this, we offer a hypothesis that “human factor” hinders the commercialization of university’s innovations, and the perspectives of improvement of this process are connected to implementation of AI. The purpose of this work is to determine the current problems of commercialization of universities’ innovations in modern Russia, to substantiate the perspectives of solving them, and to develop a model of organization of this process based on AI.

2 Materials and Method The specifics of commercialization of innovations of modern universities and related problems are studied in detail in the existing literature: Bansi (2018), Gong and Peng (2018), Rasli and Kowang (2017), Razak and Murray (2017), and Sitnikova et al. (2018). Various perspective directions of implementing AI into the modern economic practice for automation of machine processes and intellectual decision support are reflected in the works Caridad et al. (2019), Carter (2018), Deggans et al. (2019), Jakšič and Marinč (2019), Kose (2019), Petrenko et al. (2018), Popkova (2019), Popkova et al. (2019), Popkova et al. (2018), Popkova and Parakhina (2019), Popkova and Sergi (2018), Popkova and Sergi (2019), Sánchez-Medina et al. (2019), Sergi et al. (2019), Sergi (2019), Tubaro and Casilli (2019), and Wall (2018). However, the opportunities and perspectives of applying AI to commercialization of university’s innovations are poorly studied and require additional research, aimed at reduction of uncertainty and risk of this process and at development of the concept of its organization.

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The economic and mathematical sense of the offered hypothesis is that not all innovations that are created by universities could be commercialized – due to which university’s R&D are returned in the best case, and are unprofitable in the worst case. Therefore, the difference between revenues and expenditures of a university for creation of innovations should equal or be above zero, and there should be weak correlation of the university’s revenues from commercialization of innovations to expenditures for them. For verification of the offered hypothesis, the information and analytical materials of the monitoring of effectiveness of the activities of educational organizations of higher education in 2018, performed by the Ministry of Science and Education of the Russian Federation, are used. The research is performed by the example of universities of Volgograd Oblast (Russia), which show high research activity and consider commercialization of their innovations as one of the main sources of their revenues. The indicators of expenditures for R&D are as follows: – total volume of R&D; – total number of organization’s publication per 100 workers of science and education. The indicators of the results of commercialization of innovations of universities are as follows: – – – –

total volume of assets from R&D that were conducted with own means; revenues from R&D per one worker of science and education; share of university’s revenues from R&D in total revenues of the university; share of non-budget assets in revenues from R&D.

These data are processed with the help of comparative analysis, calculation of direct average, and correlation analysis. The initial data are shown in Table 1. Table 1. Expenditures and results of commercialization of innovations of universities of Volgograd Oblast in 2018. Total number of organization’s publications per 100 workers of science and education

Total volume of revenues from R&D that were conducted with own assets, RUB thousand

Revenues from R&D per one worker of science and education, RUB thousand

Share of university’s revenues from R&D in the total revenues of the university, %

Share of nonbudget assets in revenues from R&D, %

University

Total volume of R7D, RUB thousand

Volgograd State Medical University Volgograd State University Volgograd State SocioPedagogical University

125446.90 367.93

98534.4

110.66

6.14

84.98

54477.80 617.70

54096.0

2.52

6.21

2.43

28111.30 433.44

28111.3

55.20

4.10

89.39

(continued)

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Table 1. (continued) Total volume of revenues from R&D that were conducted with own assets, RUB thousand

Revenues from R&D per one worker of science and education, RUB thousand

Share of university’s revenues from R&D in the total revenues of the university, %

Share of nonbudget assets in revenues from R&D, %

124345.20 588.19

124345.2

163.48

12.78

69.92

424526.50 647.70

406572.2

585.16

24.77

95.38

151381.50 530.99

142332.0

183.40

10.8

68.42

University

Total volume of R7D, RUB thousand

Volgograd State Agrarian University Volgograd State Technical University On average

Total number of organization’s publications per 100 workers of science and education

Source: compiled and calculated by the authors based on Ministry of Science and Education of the Russian Federation (2019).

3 Results Analysis of the data from Table 1 showed that investments in R&D do not bring profit to universities of Volgograd Oblast, and in some cases they bring losses. Thus, for example, total volume of R&D performed by Volgograd State Medical University in 2018 constituted RUB 125446.90 thousand, and the total volume of assets from realization of R&D was lower by 21.45%, constituting RUB 98534.4 thousand. The results of the correlation analysis are shown in Fig. 1.

1.50 1.00 0.50

1.00

0.99 0.54

0.96 0.48

0.66 0.44 -0.39

0.00 -0.50

Total volume of revenues Revenues from R&D per Share of university's from R&D performed one worker of science revenues from R&D in with own means, RUB and education, RUB university's total thousand thousand revenues, %

Share of non-budget assets in revenues from R&D, %

Correlation with total volume of R&D Correlation with number of publications per one worker of science and education Fig. 1. The results of the correlation analysis of expenditures and results of R&D of universities of Volgograd Oblast in 2018. Source: calculated and compiled by the authors.

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As is shown in Fig. 1, correlation of expenditures for R&D and revenues from commercialization of innovations of universities of Volgograd Oblast in 2018 was low. Thus, correlation of the share of non-budget assets in revenues from R&D with the total volume of R&D constituted 44%, and with total number of publications per 100 workers of science and education was negative. This confirms the offered hypothesis of non-optimality of the existing practice of commercialization of universities’ innovations and the necessity for its improvement. The problems that appear in the process of commercialization of university’s innovations are as follows: 1. Fragmentary analysis of the market of innovations, which leads to conduct of unpopular R&D and formation of the offer of innovations that has low competitiveness in the market; 2. Reduction of the university’s profit during conclusion of agreement on supply of innovations (demand for small payment), and conclusion of agreements that cannot be executed (incorrect calculation of the terms of R&D and their results); 3. Incompleteness of the provided services that are necessary for commercialization of innovations. In particular, in most cases engineering services are required, the payment for which is not envisaged by the agreement – so they are not profitable for the university. For solving the above problems, the following model of commercialization of university’s innovations based on AI is offered (Fig. 2). AI 2 intellectual support for the formation of offer of innovations in the market

competitive offer

Market of innovations

University’s representative, who’s responsible for commercialization of innovations

3 intellectual support for determination of the terms of the agreement

demand for university’s offer

mutually profitable agreement

Company that purchases and implements the university’s innovations

4 informing on the course of the agreement execution, intellectual support for implementation of innovations (automatized engineering)

1 Big Dataanalysis of risks

Fig. 2. The model of commercialization of university’s innovations based on AI. Source: developed and compiled by the authors.

As is seen from Fig. 2, AI performs Big Data analysis of the market of innovations, aimed at determining the value, tendencies of change, and ratio of demand to offer, as well as the level of prices. Based on the results of the analysis, AI performs intellectual support for the formation of offer of innovations in the market for the university’s representative, who’s responsible for commercialization of innovations – depending on the organizational structure of the university, this could be specialist of the marketing department, faculty dean, head of the chair, rector and his deputies, and worker of education and science.

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Due to this, the university’s representative presents a competitive offer in the market, which has demand from the company. AI provides intellectual support for determining the terms of the agreement, due to which a mutually profitable agreement is concluded, which takes into account all details of the process of commercialization of innovations. AI also informs the company on the course of execution of the agreement and provides intellectual support for implementation of innovations (automatized engineering).

4 Conclusion The results of the performed research confirm the offered hypothesis that imperfection of the existing practice of commercialization of universities’ innovations could be explained by the negative influence of the “human factor”, caused by fragmentary analysis of the market of innovations, reduction of the university’s profit during conclusion of the agreement on innovations supply, and incompleteness of the provided services that are required for commercialization of innovations. This influence is overcome in the developed author’s model of commercialization of university’s innovations based on AI. The offered model envisages full-scale intellectual decision support during the whole process of commercialization of university’s innovations, from formation of the offer of innovations in the market to automatized engineering at the company that implements the university’s innovations. This helps to achieve the model’s advantages – reduction of burden on the university’s representative, who’s responsible for commercialization of innovations, and maximization of the university’s profit from it.

References Bansi, R.: Management of innovation - constraints on commercialization of university innovation: evidence from SA. In: Proceedings of the European Conference on Innovation and Entrepreneurship, ECIE, September 2018, pp. 87–93 (2018) Caridad, D., Hančlová, J., El Woujoud Bousselmi, H., Caridad y López del Río, L.: Corporate rating forecasting using Artificial Intelligence statistical techniques. Investment Manag. Financ. Innovations 16(2), 295–312 (2019) Carter, D.: How real is the impact of artificial intelligence? The business information survey 2018. Bus. Inf. Rev. 35(3), 99–115 (2018) Deggans, J., Krulicky, T., Kovacova, M., Valaskova, K., Poliak, M.: Cognitively enhanced products, output growth, and labor market changes: will artificial intelligence replace workers by automating their jobs? Econ. Manag. Finan. Markets 14(1), 38–43 (2019) Gong, H., Peng, S.: Effects of patent policy on innovation outputs and commercialization: evidence from universities in China. Scientometrics 117(2), 687–703 (2018) Jakšič, M., Marinč, M.: Relationship banking and information technology: the role of artificial intelligence and FinTech. Risk Manag. 21(1) (2019) Kose, U.: Using artificial intelligence techniques for economic time series prediction. In: Contemporary Studies in Economic and Financial Analysis, vol. 101, pp. 13–28 (2019)

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Petrenko, E., Pritvorova, T., Dzhazykbaeva, B.: Sustainable development processes: service sector in post-industrial economy. J. Secur. Sustain. Issues 7(4), 781–791 (2018). https://doi. org/10.9770/jssi.2018.7.4(14) Popkova, E.G.: Preconditions of formation and development of industry 4.0 in the conditions of knowledge economy. In: Studies in Systems, Decision and Control, vol. 169, no. (1), pp. 65– 72 (2019) Popkova, E.G., Egorova, E.N., Popova, E., Pozdnyakova, U.A.: The model of state management of economy on the basis of the internet of things. In: Studies in Computational Intelligence, vol. 826, no. 1, pp. 1137–1144 (2019) Popkova, E.G., Morozova, I.A., Litvinova, T.N.: Transformational processes in the media system under industry conditions 4.0: future outlines and perspectives. In: Kuznetsova, I.A. (ed.) Designing the Mass Media as a Homeostatic System by Means of Automation Engineering: Basic Concepts, Structure, Components (2018). Sukhodolov, A.P.: Theor. Pract. Issues Journalism 7(1), 145–154 (2018) Popkova, E.G., Parakhina, V.N.: Managing the global financial system on the basis of artificial intelligence: possibilities and limitations. In: Lecture Notes in Networks and Systems, vol. 57, no. 1, pp. 939–946 (2019) Popkova, E.G., Sergi, B.S.: Will Industry 4.0 and other innovations impact Russia’s development? In: Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, pp. 51–68. Emerald Publishing Limited, Bingley (2018) Popkova, E.G., Sergi, B.S. (eds.): Digital Economy: Complexity and Variety vs. Rationality. Springer International Publishing, Cham (2019) Rasli, A., Kowang, T.O.: Universities innovation and technology commercialization challenges and solutions from the perspectives of Malaysian research universities. AIP Conf. Proc. 1902, 020057 (2017) Razak, A.A., Murray, P.A.: Innovation strategies for successful commercialisation in public universities. Int. J. Innov. Sci. 9(3), 296–314 (2017) Sánchez-Medina, A.J., Blázquez-Santana, F., Alonso, J.B.: Do auditors reflect the true image of the company contrary to the clients’ interests? In: An Artificial Intelligence Approach, vol. 155, no. 2, pp. 529–545 (2019). Journal of Business Ethics Sergi, B.S., Popkova, E.G., Sozinova, A.A., Fetisova, O.V.: Modeling Russian Industrial, Tech, and Financial Cooperation with the Asia-Pacific Region. In: Sergi, B.S. (ed.) Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Sergi, B.S. (ed.): Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Sitnikova, S.E., Halo, L.A., Polusmakova, N.S.: Problems and perspectives of improving the process of innovations’ commercialization in a modern university. In: Advances in Intelligent Systems and Computing, vol. 622, pp. 321–327 (2018) Tubaro, P., Casilli, A.A.: Micro-work, artificial intelligence and the automotive industry. J. Ind. Bus. Econ. 46(3), 333–345 (2019) Wall, L.D.: Some financial regulatory implications of artificial intelligence. J. Econ. Bus. 100, 55–63 (2018) Ministry of Science and Education of the Russian Federation: Information and analytical materials by the results of monitoring of effectiveness of the activities of educational organizations of higher education in 2018 (2019). http://indicators.miccedu.ru/monitoring/ 2018/_vpo/material.php?type=2&id=10602. Accessed 18 Sept 2019

The Problems of Legal Regulation of AI: A Rather-Legal Research Dmitry A. Lipinsky1(&), Roman A. Romashov2, Aleksandra A. Musatkina1, Svetlana G. Golenok2, and Elena A. Bryleva3 1

3

Togliatti State University, Togliatti, Russia [email protected], [email protected] 2 Institute of Economics and Law of Petrozavodsk State University, Petrozavodsk, Russia [email protected], [email protected] Federal Treasury Educational Institution of Higher Education Perm Institute of the Federal Penitentiary Service, Perm, Russia [email protected]

Abstract. The purpose of the research is to generalize the legislative experience of certain states in the sphere of legal regulation of AI and determine the main problems and tendencies of development. The methodology of the research includes dialectical, rather-legal, comparative & legal, and formal & legal methods. The authors analyze the problem of legal regulation of AI in the context of human right for safety. Attention is paid to the notion “electronic person”, and the issue of assigning the legal status to AI is considered. The authors study the legislative experience in these spheres of the USA, China and the EU countries. The authors also substantiate the necessity for development and adoption of the framework international convention, in which all accumulated experience in this sphere is to be generalized. Based on this convention, the countries should develop their domestic normative legal acts. Keywords: Legal regulation
AI
Comparative jurisprudence experience
Human rights
Right for safety


International

1 Introduction The dominating role in the modern legal systems belongs to rights of human, person, and citizen – as they, according to the experience, are one of the most effective tools of state’s influence on the society. After emergence of new international associations (the EU), the role of this institute went beyond the separate states – at the international level. Deep transformation of public relations and their legal regulation taka place due to significant and quick changes in the sphere of politics, economy, science, etc. We’re interested in active implementation of robototronics into AI and society’s life. It is noted that global revenues from cognitive systems and AI, according to the forecasts, will grow from USD 8 billion to more than USD 47 billion in 2020 [1, p. 5].

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 411–416, 2020. https://doi.org/10.1007/978-3-030-39319-9_47

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This factor cannot but introduce important and often unpredictable corrections in the part of influence on personality and group subject, including in the legal sense. Wide opportunities for application of AI and robototronics for provision of material needs in society inevitably lead to the existing human resources’ becoming excessive; thus, according to F. Fukuyama from Stanford University, one of the main tendencies in society is reduction of interest in democracy and bureaucratization of domestic life [2]. Thus, for example, for more than two decades the West – under the pretense of protection of human rights – actively interferes with domestic politics of various countries, seeking its own political interests. This leads to neglect of human rights. Alexandre del Valle was rights in saying, “From the purely humanitarian point of view, the Western values (humanism, human rights, and freedom of speech) belong to heritage of the whole humanity – not only the West. Still it is important to distinguish them from the current policy, as they are equaled for hiding the Western neoimperialism” [3]. Thus, evaluating the importance of human rights and the necessity for their domination during formation of law in a legal state, it is necessary to be attentive with the studies of legal regulation in the sphere of AI and robototronics. As was mentioned, wide usage of AI and robototronics will influence the rights and liberties of human and citizen. This implementation has its process and cons. The positive effect is obvious – economic effect for the state and positive effect for population, in the form of freeing people from hazardous production, etc.). That’s why we shall not dwell on this aspect. Negative consequences are unclear and could be determined only during the application. The legal problems that emerge in the process deserve close attention.

2 Analysis and Discussion Wide sphere of application of AI leads to the fact that various rights of human and citizen are influenced. Thus, for example, application of AI in the military sphere could violate the natural and basic right of human – right for life. Application of AI in the sphere of state management could lead to violation of citizens’ rights in the election sphere. Thus, for example, the system of social ratings, which is actively used in China, violates the main principle of human and citizen rights – the principle of human equality and non-discrimination. The elements of AI could be used in court – for the purpose of accelerating the process of court proceedings. However, there is a risk of violation of the principles of justice, which is the basic principle adopted at the supra-national level. The right for personal life and personalized information could be brought down to zero or seriously limited with the help of AI technologies. Intellectual rights are also put into doubt, if we speak of using AI, while all perspectives of development of society show that material value of the objects of intellectual rights exceeds the cost of material objects and services. Usage of robototronics at production endangers the whole complex of labor law – in the sphere of physical and knowledge work. Besides, the requirements of digitization of economy, proclaimed by the Government of the Russian Federation, also envisage active robotization of production.

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One of the most interesting legal problems of present time is determining the character of the legal status of so called “electronic persons”, which notion was offered by the European Parliament [4, p. 59]. According to it, electronic persons are the most sophisticated autonomous robots with specific rights and obligations, including that of making good any damage they may cause, and applying electronic personality to cases where robots make smart autonomous decisions or otherwise interact with third parties independently. This is a rather debatable statement – especially, regarding responsibility – but the very fact that the world speaks of the possibility and necessity for assigning AI objects with certain legal personality requires certain scientific consideration. The concept of electronic persons is completely new for jurisprudence and it is necessary to understand its place in the usual framework of definition of legal personality. In order not to re-invent a bicycle, it is only logical to apply the existing concepts of legal personality to electronic persons. It is necessary to determine such qualities of AI unit that would – in the legal form – express mixed characteristics that are peculiar for a human and rights of the creator, as well as the elements that are peculiar only for AI. It should be reminded that all subjects of law are divided into individual and group subjects. Accordingly, it is logical to offer the following differentiation for electronic persons: – legal personality of electronic persons as if it were compatible to human; – legal personality of electronic persons as if it were compatible with legal entity. Such classification is not very good, actually – as a range of the basic elements of legal personality of an individual could not be applied to AI unit due to at least technical imperfection of robots. In particular, it is impossible to bring it to legal responsibility, and it cannot make decisions with moral character. Perhaps, it will be expedient to get back to this in the future – if AI possesses the characteristics of AI from sci-fi books. It is rather interesting that in 2017 there was a draft law in the US Congress “Regarding the basic understanding of applicability and realistic evolution of AI”, which contained the attempt at legal definition of AI [5], but did not envisage assigning any legal personality to it. If the notion of legal personality of AI unit is derived based on the qualities of legal personality of a legal entity, a lot of problems arise. Of course, external similarity could be determined during consideration of AI unit as a construction of legal fiction. Thus, theoretically, it would be possible to solve the problems of application and development of AI technologies within the existing law. Electronic persons have external similarities with legal entities, as they are the means of achievement of a certain goal and act in the interests of owners. A robot’s owner created a legal fiction, controlled only by him. However, it is impossible to use only the external similarity; in case of deeper changes in development of AI and robototronics it will be necessary to get back to the necessity for defining the legal status of electronic persons, which would combine the elements of the subject of law (to a lesser extent) and the object of law (to a larger extent). The attempt of comparing electronic persons to human persons in the legal sense brings us to similar questions, which were answered long ago as to human person – it is

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so called “digital personality” [6, pp. 306–401], which allows storing and collecting all information, including any data of the confidential character (medical, family, economic, business, etc.). Such “portfolio” determines the existence of personality in the digital and real world, from the moment of birth of a human – “beginning of digital life” (opening of the corresponding files) and until the moment of “digital death” (closure and archiving of files). Parameters of such digital life are accompanied by certain rights and obligations, the latter of which could be ensured by enforcement actions from the state machine – up to criminal investigation. It is possible to speak that there is a certain Hard for digital personality – means of digitization of information on a human and surrounding world, as well as the means of its accumulation and storing. Soft for digital personality is also created – AI programs that allow developing the algorithm of managing human behavior. Merging of human personality with its digital components, which has already begun, requires a smart approach to formation of law in this sphere. It is necessary to take into account the possibilities and limitations set by AI and generally acknowledged human values – humanism and morality. It is necessary to build – at the legislative level – the ratio between allowable “humanization” of AI and “digitization” of human personality. It is possible to see the complexity of this by the example of the approach to education in most countries of the world – so called “competence-based” approach, which turns human into a mechanical performer of a certain function (or a set of several functions). A clear regulation of actions during such approach limits the non-standard and constructive approach to solving the tasks – which is a disadvantage in the conditions of constant changes of the modern realia. Formation of “obedient” performer is stimulated by the system of education, including higher education, when, instead of independent analysis of the changing situation and the ability for non-standard and independent solution of certain tasks, it is offer to choose a solution from a list of prepared solutions. Such training forms so called clip thinking, which creates conditions for further deformation of personality during contact with AI units. The problems of legal regulation of AI technologies were studied in 1970’s in the USA, with more than 100 university programs containing AI courses [7, p. 11]. However, the first normative legal acts in this sphere were adopted only 20 years later, and since 2015 the problem of legal regulation of AI entered the supra-national level and is acknowledged in most developed countries of the world. It should be noted that most of the adopted legal documents in the sphere of AI and robototronics have a recommendation character (declarations, charters, etc.). However, the importance of some of them is high – as they formed the basis for further development of normative acts in this sphere. For AI units, the Institute of Electrical and Electronics Engineers (IEEE) developed certain ethical standards: 1. Standard of ethical influence of robotized and intellectual systems – for actions of the unit that directly or indirectly influence human’s behavior and emotions. 2. Standard of fail-safety – for creation of effective security measures, which reduce the risk of mistakes, and safe termination of exploitation of compromised systems. 3. Standard of unit’s influence on society’s well-being – for consideration of changes that are made by AI devices into human well-being, growth of labor efficiency, and economic growth [8].

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For developers of AI units, the Japanese Association for AI offered a range of ethical principles [9], which should be observed during programming and development of AI units. These include the principles of humanism, legality, respect for privacy, security, transparency, responsibility before society, etc. The legal documents in the sphere of regulation of AI include the South Korean Robot Ethics Charter, which determines the ethical standards for robots and humans, in particular: joint prospering of human and machine; supporting each other’s honor; creation of robots according to the best samples; ban for damaging humans; caring about robot; government’s control over observation of these rules [10, 11]. In 2017, these principles were supplemented and expanded as a result of a conference of developers and researchers in the sphere of AI: humanism of goal, value and perspective of creation, usage, and study of phenomena of AI, their connection with science, culture, and production, and refusal from using them in activities that are hostile for humanity. In the USA, absence of systemic normative legal acts in the sphere of AI and robototronics is compensated by specialized documents – e.g., in the sphere of automatized transport vehicles. The emerging conflict situations are solved with the help of precedent law [12]. Justified criticism from the expert community is caused by the absence of the developed official strategies – at the level of the states and at the supra-national level [13]. China has a complex system of normative legal acts in the sphere of AI and robototronics – in particular, a document of the strategic character – 13th Five-year plan of development (2016—2020) [14], which defines the general development of AI technologies and robototronics in China. Also, there is a global state program of development “Made in China—2025” [15], according to which China is to become a leader in the market of robototronics and AI in 2030. Russia is at the first stage of consideration of the necessity for AI regulation [5, p. 15, 20]. An important step in legal regulation of AI is the General Strategy of digital market, approved by the Council of Europe in 2015 [16]. In 2018, 25 members of the EU adopted the Declaration on Cooperation on Artificial Intelligence.

3 Conclusions 1. Effect and possible damage from AI should be in the sphere of legal regulation, which is only being formed as of now. Society has to be ready for new challenges and threats, and this requires rapid legal development in view of the future public relations. 2. Analysis of various normative legal acts, as well as initiatives in the sphere of regulation of AI, shows similarity of the problems that are solved with their help. Thus, we conclude that there’s a necessity for development and adoption of a framework international convention, in which all generalized experience in this sphere will be gathered. Based on this convention, the countries should develop their domestic normative legal acts.

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References 1. Firth-Butterfield, K., Chae, Y., Allgrove, B., Kitsara, I.: Artificial Intelligence Collides with Patent Law: White Paper/Center for the Fourth Industrial Revolution, 23 p. World Economic Forum, Geneva (2018). http://www3.weforum.org/docs/WEF_48540_WP_End_of_ Innovation_Protecting_Patent_Law.pdf. Accessed 20 June 2019 2. Danilov, I.: Fukuyama to reveal a secret of Putin and Trump. RIA Novosti, 17 September 2018. https://ria.ru/20180917/1528675757.html. Accessed 20 June 2019 3. Valle, A.: Why is liberal democracy losing. https://inosmi.ru/politic/20160328/235889927. html. Accessed 20 June 2019 4. Krausová, A.: Intersections between law and artificial intelligence. Int. J. Comput. 27(1), 55– 68 (2017) 5. Morkhat, P.M.: AI unit as electronic person. Bull. Moscow State Oblast University Ser. “Jurisprudence” (2), 61–73 (2018) 6. Morkhat, P.M.: Law and AI, 544 p. Unity Dana (2018). Ponkin, I.V. (ed.) 7. Hunt, E.: AI. MIR (1978). 588 p. 8. IEEE presented three new law of robototronics. https://hightech.fm/2017/11/21/ieeeannounces-3-ai-standards. Accessed 13 May 2019 9. The Japanese Society for Artificial Intelligence Ethical Guidelines. The Japanese Society for Artificial Intelligence (JSAI). http://ai-elsi.org/wp-content/uploads/2017/05/JSAI-EthicalGuidelines-1.pdf. Accessed 13 May 2019 10. Kim, E.H.M.: Legal regulation of autonomous systems in South Korea on the example of robot legislation. https://www.jura.uni. Accessed 13 May 2019 11. wuerzburg.de/fileadmin/_migrated/content_uploads/Legal_Regulation_of_Autonomous_ Systems_in_South_Korea_on_the_Example_of_Robot_Legislation_-_Hilgendorf_Kim_05. pdf. Accessed 13 May 2019 12. Calo, R.: Robots in American Law. In: Social Science Research Network. https://papers.ssrn. com/sol3/papers.cfm?abstract_id=2737598. Accessed 13 May 2019 13. Here’s how the US needs to prepare for the age of artificial intelligence. Technology Review, April 2018. https://www.technologyreview.com/s/610379/heres-how-the-us-needs-toprepare-for-the-age-of-artificial-intelligence/. Accessed 13 May 2019 14. The 13th Five-Year Plan For Economic and Social Development of the People’s Republic of China (2016—2020): National Development and Reform Commission (NDRC) People’s Republic of China (2016). http://en.ndrc.gov.cn/newsrelease/201612/P02016120764576523 3498.pdf. Accessed 13 May 2019 15. Global state program of development “Made in China—2025”: U.S. Chamber of Commerce. https://www.uschamber.com/sites/default/files/final_made_in_china_2025_report_full.pdf. Accessed 20 June 2019 16. Communication from the Commission COM: 192 «A Digital Single Market Strategy for Europe». The European Commission thinks that creation of the unified digital market could bring EUR 415 billion annually and created hundreds of thousands of jobs (2015). https://ec. europa.eu. Accessed 20 June 2019

The Use of Intelligent Information Technologies in Analytical Studies (by the Example of Medical Science) Alla Kanke1(&), Sergey Dumanskiy2, and Lidiya Dumanskaya1 1

2

State University of Management, Moscow, Russian Federation {aa_kanke,la_dumanskaya}@guu.ru Federal Medical Biophysical Center named after A.I. Burnazyan, Moscow, Russian Federation [email protected]

Abstract. The article presents results of the study of development of a sequence of diseases and associated syndromes for a long period of time in workers who were exposed to ionizing radiation (IR) on the shop floor. The authors revealed the effect of the dose received, age of onset of the primary disease, duration of work under harmful conditions on the sequence of diagnosed diseases. The source of information is the Database (DB) of workers of chemical companies who have worked with radioactive materials for a long time. The hybrid sequence clustering algorithm that was software-implemented in the MS SQL Server Analysis Services Data Mining environment was chosen as the research method. The structure of the information analysis model is revealed, which is based on two algorithms - EM clustering for the formation of similar groups of patients and the analysis of Markovian chains to determine the probability of transitions of forms of diseases. Keywords: Algorithm
Data mining epidemiological studies JEL Code: I0


Sequence clustering
Radiation


O15

1 Introduction The proposed information is a continuation of the topic of real-world application of Microsoft algorithms in medical radiation epidemiological studies (Biryukov and Dumansky 2016). In this case, the sequence clustering algorithm will be considered to identify the sequence of alternation of manifestations over time in workers who suffered from exposure to ionizing radiation (IR). It is known that human disease progression processes develop in a certain order - one disease phase supersedes another etc. For example, the beginning of each specific disease is characterized by a premorbid state (the disease is not yet manifested, yet the person has already fallen sick), followed by manifestation (the disease evolves into the open stage) and the outcome (the final result of the disease is either when the person recovers or he/she has residual effects, © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 417–423, 2020. https://doi.org/10.1007/978-3-030-39319-9_48

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or death occurs). Inside each stage, during the progression of the disease, one can observe hidden (latent) or already more or less noticeable, differentiated stages of the disease. The knowledge of the sequence of detected stages of disease processes of the utmost importance for the prognosis of diseases and human treatment. This paper deals with the study of the procedure for finding syndromes of primary and concomitant diseases in workers who were exposed to ionizing radiation.

2 Materials and Methods The initial source of information was a cohort of workers at a chemical plant who were exposed to ionizing radiation during their work on the shop floor and subsequently were repeatedly treated in specialized clinics for an appreciable length of time. The initial information was acquired from patient histories collected within the framework of the Federal State Budgetary Institution “The State Scientific Center of the Russian Federation – Burnazyan Federal Medical Biophysical Center”.1 It was presented in the form of a Table in Excel format, where the columns were used to indicate: patient identification number, year of birth, the date and the year of hospital admission, profession, year of beginning and end of work with ionizing radiation, the main diagnosis and its code, year of disclosure of occupational disease, codes of the syndromes of the primary and concomitant diseases. The set of syndromes and concomitant diseases revealed in a patient varies from one hospitalization to the other, which provides an opportunity to conduct the retrospective analysis of the incidence of diseases through time. The research method selected is the sequence clustering algorithm (SCA) implemented in the MSSQL Server Analysis Services Data Mining environment (Petkovich 2014; Harinath (2010). SCA is a hybrid algorithm which includes the methods of clustering of elements (sequences) according to the selected features (ExpectationMaximization (EM) algorithm) with the analysis of Markovian chains (The Sequence Clustering Algorithm (Microsoft) 2016; Anderson 2016; Wentzel 1980) to determine the probabilities of transitions of the status of a particular system (person with their diseases) and include them (sequences) into corresponding clusters. First a set of the most probable system status transition sequences is formed, after that the elements of this set are used as input data for the clustering algorithm using the EM method which was first introduced in 1977 by the researchers of Harvard University (EM 2016; Dempster et al. 1977). The study of the course of diseases in workers who were exposed to ionizing radiation, is carried out with the use of Microsoft Data Mining Sequence Clustering model in which the two ready-made interconnected tables are input; the structure of these tables is shown in Fig. 1 of the paper (Biryukov and Dumansky 2016); moreover, one of them (Nested_Sequence_Cluster) is enclosed with respect to the other (Case_Table_Ass_Alg). The enclosed Table contains grouped entries with the same

1

Ethical approval was obtained from the ethics committee. Members of the ethics committee are Elena S. Petrenko, Tatiana P. Pritvorova and Natalia A. Brovko.

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foreign key value (Type1_GasHospitlizatonID), which correspond to one entry with the same value, yet the master key value already, in the primary Table. If all patient admissions are listed in the primary Table (Case_Table_Ass_Alg), the enclosed Table presents the sequences of all diseases that were registered at the moment of the corresponding hospital admission, sorted and numbered in ascending order inside it. The content of the first table discloses information about the patient and his hospital admissions. For example, for a worker whose identification number (ID) is equal to 69, four hospital admissions were registered with ID equal to 93, 94, 95 and 96. The details characterizing the patient shall include: Count_Year_Working - number of years of work on the shop floor; BasicDeseaseCode is the code of the primary disease; Sex_Type1_DictionaryID is the gender identifier; AgeBegginingBasicIllness is the age of onset of the primary disease. The content of the second Table shows the diseases (e.g. asthenic syndrome, occupational cataract, depression of secretory and acid-excretory function of the mucosa, second-degree chronic radiation sickness etc.) that were revealed with a patient for the hospital admission of a person under a certain identification number. In turn, the specified details of the worker are classified in a category with the following values presented in Table 1. Table 1. Values of details, characterizing the patient by categories Category Name Count_Year_Working (number of years of work on the shop floor)

AgeBegginingBasicIllness C (age of onset of the primary disease) CatIlness (classification of diseases by severity)

Value Low_Stg (short record of service) Moderate_Stg (average record of service) Hire_Stg (short record of service) Young Middle Old Heavy (severe disease)

Distinctive features characterizing the patient Name Parameter values Count_Year_Workin (number of years of work on the shop floor)

6 to 10 years old

Over 11 years old

AgeBegginingBasicIllness C (age of onset of the primary disease) BasicDeseaseCode (code of the primary disease)

Middle (normal disease)

Gender

Other (mild disease) Male Female

0 to 5 years old

Sex_Type1_DictionaryID (gender identifier)

Under 29 years old 30 to 39 years old Over 40 years old 8896 (first-degree chronic radiation sickness), 8897 (second-degree chronic radiation sickness), 8898 (third-degree chronic radiation sickness) 8899 (residual effects of chronic radiation sickness), 10808 (exposure to ionizing radiation) All other codes except 8896, 8897, 8898, 8899, 10808 187 (male) 188 (female)

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3 Results and Discussion After model setting (setting the estimated number of clusters (4 units in our situation), the maximum number of sequence states (20), etc.) and deploying it to the server, we obtain the image shown in Fig. 1. It contains 5 tabs: – – – – –

Data Data Data Data Data

mining mining mining mining mining

structure; models; model viewer; accuracy diagram; model forecast.

Fig. 1. Detailed sequence clustering model

On the “Cluster diagram” tab of the “Data mining model viewer” tab, the “Flood fill variable” drop-down list is set to “Fill” as shown in Fig. 1, which is reflective of the density of saturation of clusters with elements (formed sequences of diseases). For example, cluster 1 (the darkest one) contains 157 sequences, and clusters 3.4 and 2 contain 136, 62 and 56 sequences respectively. The lines between the clusters are reflective of the stability of the bonds: the strongest bonds can be observed between the third and the first clusters, as well as between the second and the fourth clusters. When the name is selected from a particular category from the drop-down box “Flood fill variable”, the category value in column “Status” and clusters are colored in different hues, showing the degree of their filling, while moving the cursor to any cluster will highlight percentages for selected values.

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When the tab “Cluster profiles” is selected, a pictogram of each cluster and the entire sample will be displayed by the names of categories and their values. The column “Variables” lists the names of categories set for the study, the column “States” indicates the content and the color range for each name of categories, and subsequent columns show pictograms for the entire sample and for each individual cluster by category values. After right-clicking on the intersection of the category and the relevant cluster, the contextual content for the selected element is highlighted. Having performed this operation for the category “IllnesUnName” (names of diseases), we obtained the distribution of percentage of diseases for the entire study sample and for each of the 4 clusters. After that, Table 2 was filled in. The following conclusions regarding our research can be drawn from Table 2. Serious diseases (CatIlnes, equal to Heavy) correspond to clusters 1 and 3 (100% and 99.2% respectively). For clusters 4 and 2, the same data are 34.1% and 11% respectively. At the same time, the number of years of work on the shop floor (Count_Year_Working) with the lowest indicator (5 years) and the largest percentage – 82.1% falls on cluster 1. In the category “Age of onset of the primary disease” (AgeBegginingBasicIllnessC) (under 29 years old), the largest percentage of 51% is also occupied by cluster 1. Based on the foregoing, it may be concluded that workers from this cluster were in the area with the highest exposure dose for not so long (they have 100% serious illnesses) and at a younger age compared with other clusters, especially with the fourth cluster and the second cluster. Table 2. Content of clusters by categories Category Name AgeBegginingBasicIllnessC age of onset of the primary disease

Value

Young Middle Old CatIlness - classification of Heavy (severe diseases by severity disease) Other (mild disease) Middle (normal disease) Count_Year_Working Low_St (long number of years of work on the record of service) shop floor Moderate_St (average record of service) Hire_St (long record of service) Gender Male Female

Cluster Entire Cluster 1 Cluster 3 Cluster 4 Cluster 2 sample 0.197 0.247 0.536 0.770

0.510 0.300 0.190 1.00

0.08 0.010 0.983 0.992

0.068 0.502 0.430 0.341

0.021 0.457 0.521 0.110

0.133

0.00

0.008

0.584

0.391

0.077

0.00

0.00

0.075

0.499

0.597

0.821

0.441

0.502

0.641

0.267

0.167

0.334

0.444

0.138

0.096

0.012

0.185

0.054

0.604 0.396

0.546 0.454

0.605 0.395

0.672 0.328

0,221 0.715 0.285

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Clusters 1 and 3 are similar in terms of severity of primary disease, but differ according to the record of service in the area IR and the age of onset of the primary disease. Relatively young patients according to the age of onset of the primary disease and a shorter stay in the area with IR, compared to cluster 3, are concentrated in cluster 1. This points to the fact that younger workers (cluster 1) worked in the IR-exposed area with the highest exposure dose compared to workers of the older age of onset of the primary disease (cluster 3). Further studies showed how these features influenced the structure of diseases and the sequence of their transitions, the probability with which this form of disease predetermines the other disease that is diagnosed after it, for each cluster, as well as for the entire sample. Having set the value “Fill (all)” in the “State transitions” tab of the “Cluster” dropdown list, we obtained state transitions both for the entire sample and for each of the four clusters. The study of cluster 1 has shown the following: its characteristic feature is that “first-degree chronic radiation sickness (CRS1)” is absolutely definitely preceded by the timing-wise disclosure of “Coronary artery disease” and “Other vascular syndromes of the brain (I60-I67)” with percentages in the cluster of 0.2% and 0.4% respectively. If the patient has the “Plutonium Carrier” syndrome, then “Osteological Syndrome” will follow with a 72% probability in time. Similar characteristics can be given for clusters 2, 3, 4 respectively and the entire sample as a whole. By clicking on the “Cluster characteristics” tab, you can select the values for the entire sample and the required cluster to view in the “Data mining model viewer” tab in the “Cluster” drop-down list. Description of values for clusters consists of three columns: “Variables” (names of categories), “Values” (values of categories) and “Probability” (Relative value showing the category value in the cluster). For example, the first cluster is characterized by diseases with category value “Heavy”, record of service in the area of exposure to IR - Low_Stg, etc. The value “[Start] asthenovegetative syndrome” indicates that the set of diseases revealed in this cluster is dominated by chains initial link of which is the name of disease, indicated by the arrow. The “Cluster Comparison” tab allows comparing the characteristics of individual clusters with each other. Our research showed that the following sequence of recording of diagnoses in time is inherent in cluster 1: “Other vascular syndromes of the brain in cerebrovascular diseases (I60 - I67)”, then “first-degree chronic radiation sickness”, “Coronary artery disease”, then “first-degree chronic radiation sickness”. The following sequence of recording of diagnoses in time is the most probable sequence for cluster 3: “Vertebral osteochondrosis in adults”, then “first-degree chronic radiation sickness”. This means that in younger patients in an environment with the highest exposure to ionizing radiation, the vessels of the brain and the heart are most likely to be affected (cluster 1), while human spine is the weakest link for older workers exposed to relatively moderate exposure to ionizing radiation (cluster 3). Cluster 4 is characterized by the following sequence of recording of diagnoses in time: “Diseases characterized by hypertension syndrome”, then “first-degree chronic radiation sickness”; cluster 2 is characterized by the following sequence of recording of diagnoses in time: “Depression of secretory and acid-excretory function of the mucosa”, then “first-degree chronic radiation sickness”.

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4 Conclusions Based on the foregoing, it may be concluded that radioactive radiation primarily affects the most sensitive parts of the human body, depending on the dose of IR, age of the patient, duration of work under harmful conditions etc. The application of highly intelligent research approaches allows revealing the hidden consistent patterns of pathological changes in the human body developing over time that have been exposed to harmful factors of professional activities, from seemingly poorly structured and less informative initial data. Sequence clustering algorithm can be used not only to study the course of disease processes in case of ionizing damage, but also in case of other pathogenic factors affecting a person in various sectors: production sector, while ensuring the life safety of the population living in close proximity to hazardous production facilities, in sports medicine - in identifying the effects of physical exertion on athletes. In addition, the proposed Sequence Clustering algorithm can ideally be used to study cancer cell mutations and reveal the most probable transitions of one type pathogenic cells to another type. The knowledge of resistant chains of cancer cell mutations for the purposes of treating oncological diseases will enable the most effective selection of drugs, types of therapy, etc. (Dempster et al. 1977; Turajlic and Swanton 2016).

References Alekseeva, T.V., Amiridi, Y.V., Dick, V.V.: Information Analytical Systems: Textbook. Synergy Moscow Financial and Industrial University, Moscow (2013) Anderson, D.A.: Discrete Mathematics and Combinatorics: Translated from English Popular Science Edition. ID Williams LLC, Moscow (2016) Biryukov, A.P., Dumansky, S.M.: Identification of comorbidity of occupational diseases caused by pathogenic factors using associative algorithms using the example of cohort victims of ionizing radiation. Med. Extreme Situations 2(56), 13–24 (2016) Dempster, A.P., Laird, N.M., Rubin, D.B.: Maximum likelihood from incomplete data via the EM algorithm. J. R. Stat. Soc. Ser. B (Methodol.) 39(1), 1–38 (1977) EM: Scalable clustering algorithm, base group labs (data analysis technologies) (2016). https:// basegroup.ru/community/articles/em. Accessed 12 May2016 Harinath, S.: Microsoft SQL Server Analysis Services 2008 and MDX for Professionals. Microsoft I.D. Williams, Moscow (2010) Petkovich, D.: Microsoft SQL Server 2012 Beginner’s Guide: Translation from English. BHVPetersburg, Saint Petersburg (2014) The Sequence Clustering Algorithm (Microsoft): TechNet.Microsoft.com (2016). https://technet. microsoft.com/ru-ru/library/ms175462(v=sql.110).aspx. Accessed 5 Dec 2016 Turajlic, S., Swanton, C.: Metastasis as an evolutionary process. Science 352(6282), 169–175 (2016) Wentzel, E.S.: Operations research: objectives, principles, methodology. Science, the main edition of the physical and mathematical literature (1980)

Transformation of Childhood in a Digital World Alla K. Polianina(&) and Alexandr O. Grudzinsky Lobachevsky University, Nizhny Novgorod, Russia [email protected], [email protected]

Abstract. The paper deals with the problem of transformation of childhood as a social construct, issues of changes in the elements of phenomenon of a group of children under the influence of digitization of all areas of life. The main trends of reorganization of growing-up processes, socialization and identification of modern children are identified: the emergence of a new criterion for social stratification – multitasking capabilities of an individual; exacerbation of the crisis of “the optimum form” and the formation of the phenomenon of “eternal puberty”; powerful growth of the “industry of emotions”, which exploits emotional area of a child by increasing the “degree” of expressivity and shock value of content, dependence on a constant influx of emotions; the growth of the background mode of transmission of information and forcing a child to consume (the problem of involuntary multitasking); increased differentiation within the group of children caused by the algorithm of operation and analysis of search queries on the Internet and the completion of the cultural circle (development space) by information that is automatically selected and proposed by the System; elitization of the cultural capital of society; disappearance of “the optimum form” as the cultural behavior pattern; the limits of cultural integration based on digital connectivity and the risks of the maximum integration (unification) of meanings in the form of impossibility of the “New”, as wek as impossibility of development are outlined. A secondary analysis of the results of the social research into the audience of digital audio content is carried out. The authors point out the need to overcome erosion of the growing-up space and the image of an adult, to develop new mechanisms for the translation of cultural background, as well as relevant cognitive adaptive responses to challenges of the digital world. Keywords: Disappearance of childhood
Kidult
Digital media Industry of emotions
“Optimum form”
Multitasking


Identity


1 Alternate Versions of Childhood in the Scientific Discourse High dynamism of the present, transforming familiar daily life in its social projection forms new phenomena associated with digital culture. The processes of rapid changes in the forms of existence and interaction with the world around set new tasks that require elaboration of an anchored position and new approaches. The uncertainty, complexity and diversity of the all-pervading digital world significantly change the certainties that existed before it appeared with regard to many events and phenomena, © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 424–431, 2020. https://doi.org/10.1007/978-3-030-39319-9_49

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including the phenomenon of childhood. Fundamentally different impacts on factors of human environment, its transitivity and the indeterminacy of the future are especially significant in the focus of modification of the basic elements of childhood. Digital society as a cultural context for the development of mankind gives rise to another childhood - to be more exact, another growing-up space. These changes have not gone unnoticed and were even predicted. The studies of childhood and children in connection with revolutionary changes in the social development environment touch upon various aspects of childhood as a social education and lead to such conclusions and forecasts that, although contradictory at times, indicate a severe crisis of intergenerational interactions, sociogenesis mechanisms, and even the risks of anthropogenesis. The emphasis is laid on modifications of the children’s social status and the typology of childhood theories based on them (Mayorova-Shcheglova 2014), the age classification of childhood is criticized, and the classical culturehistorical theory of development of the personality based on age periodization and the “ideology of the norm” is in doubt (Polivanova 2016), there is an increasing predominance of intra-age distinctions over inter-age distinctions and the loss of age significancy as a characteristic of a child (individual), the disappearance of childhood is postulated due to accessibility of information that used to be off-limits to children (adult secret), the overlap of the adulthood and childhood (Postman 1982), the advent of era of kidalts (“adult children”). Researchers highlight trends of changes in the social practices of parenting and education, including the “divergence” of socialization paths; deformations of parenthood, the emergence of “quasi-childhood” and “quasi-parenthood” (MayorovaShcheglova 2014). Researchers point out the transformations of the psyche, including the formation of transactive memory, the need to develop multitasking (Soldatova 2017) and, at the same time, claim the harm of multitasking. The scope of the study includes overall trends of social transformations in connection with the digitalization of society which also affect the change in the children’s social group: a decrease in the total number of social practices due to phenomenon of the “Internet of Things”, a decrease in capacity to create, risks in identity formation; experiments with identity on the Web; the danger of network thinking; dulling of sensory perception (sensory deprivation) and limitation of sensory signals; contraction of network connectedness in the setting of constriction of personal autonomy space; a decrease in the socializing impact of social institutions and, in general, a reduction of the role of the state in the arrangement of social life, the beginning of the gradual abolition of social institutions; a sharp decrease in the significancy of historical experience; the creation of previously unknown experience that had no parallel in the past.

2 Trends of Digital Transformation of Childhood Global digitalization means a wide range of social changes, the formation of fundamentally new models of social processes, the manifestation of global integration in the form of unification of values, disappearance of standards and patterns, symbols of different interpretations. Since very childhood, a person meets the “boom of diversity” of most of the familiar phenomena of social life. The problems of multiculturalism,

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which have already become commonplace in the social sciences, are exacerbated by the increasing availability of knowledge and the fundamental impossibility of ideological guidelines in the global network society. It appears that the growth of cultural diversity and integration processes is not endless and already implies a weakening of intensity with the emergence of a certain social phenomenon as a result of the maximum possible integration. The formation of a “single semiotic body” of mankind excludes active integration and is the maximum consolidation of media connectedness, identification of integration objects and elimination of inconsistency between them, any differences, unification, impossibility of the “New”, since any new things are immediately integrated with everything and cease to exist, being dissolved in it. However, first of all, the phenomenon of the so-called mosaic identity diverts us from the perception of socialization as a gradual acquirement of sociocultural norms in connection with de-bordering of the norm and the crisis of the “ideology of the norm”. According to some authors, socialization is an obsolescent term that requires replacement. In the context of a “prefigurative” model of translation of experience focused on the capabilities of the child (a socializing person), the functions of traditional sources of socialization (family and school) diminish. What is meant here is such capabilities of a child that are directly related to the capabilities of information processing and the rate of its transformation into knowledge. That being said, we can formulate the first direction of the impact of digitization on childhood as the actualization of multitasking capacity, the crucial importance of adaptive cognitive abilities of a child in the modern information-concentrated developmental situation. The observed emergence of new criteria for social stratification – the ability of an individual to perform fast and profound information processing (Eco 1989) – stipulates the need for reconsideration of mechanisms for childrearing and preservation of historic memory of mankind. It appears that the development of such abilities in a child is one of the toppriority tasks in a world of condensing information noise. This gives rise to the idea of compulsory learning of multitasking as a necessary skill, with the assumption that the so-called neuroplasticity (ability of neurons to change under the influence of external factors) allows a person to do this. However, the studies of multitasking confirm that multitasking can be either “easy” or “difficult” depending on the frequency and duration of contact with various media (Ophir et al. 2009). Representatives of the “difficult” form of multitasking revealed a shortage of operative memory and absence of mind as a result of the maximum expansion of the area of attention, as well as an inability to identify priorities (Sanbonmatsu et al. 2013), a decrease in the quality of information processing and analysis (Loh 2014). The “difficulty” of media-multitasking depends on the density of information space, not only on the conscious media behavior, therefore, a “difficult” form in a child may occur even independently of him/her in a situation of involuntary consumption of the media. And in this case, it appears that the skills of critical filtration of information, a conscious attitude towards involving himself/herself in various activities and the responsible distribution of limited cognitive resources for an unusually short period of time constitute the most important adaptive response to the challenges of digital reality. The internalization processes that are at the heart of mental development are the first to undergo the action of the accelerating flow of diverse (contradictory) meanings and symbols caused by digitization of the growing-up space. An overabundance of

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messages leads to the loss of their value and necessitates the search for new forms of conveying meaning, not in the form of a message (text, including crealized), and the development of the ability to highlight relevant information and filter information noise. It is suggested that the method of “functional silence” should be used as one of the tools as the design of such space of daily living activities of a child in which information flows can be controlled, being subordinated only to the subject of communication, are adequate to his/her age-specific needs and do not obligate any multitasking. The problems facing researchers of childhood problems today pertain to the possibilities of social construction of childhood in a situation of poorly predicted transformations and unprecedented rate of social changes. The decomposition of the social substance of childhood noted by the authors (Postman 1982) is relevant to all universals of childhood, including: comparison of childhood and adulthood; institutions and agents of socialization; cultural, economic and ethnic contexts of development situations; values of age limits and periodization of childhood; social status of a child and relations with the “close adult” (parent). Apprehension of the modification of social practices regarding children contributes to changing strategies for constructing childhood. The accumulation of human potential is the main characteristic of childhood as a social construct, which is responsible for its paramount social importance and excludes any experimental errors. The existence of childhood is mediated by the existence of adulthood, and deformation of the image of an adult will result in the destruction of childhood as a phenomenon. Erasing the distinctions between children and adults, juvenation of the older generations in the family, namely the demonstration of such forms of behavior that are characteristic of teenagers, the instability and ambiguousness of conventional growing-up markers – family and professional statuses, the extreme diversity of growing-up patterns leads to the escalation of the childhood crisis. Today, childhood is characterized by the increase in the number of social practices which are not directly related to parenting and are ageless (fashion industry, participation of children in music and other shows etc.). In the environment of creolization of growingup channels, confusion of forms, a child is drawn into alternative integration practices via digital media and communications that eliminate division into adult and juvenile space, and a child becomes drawn into the flow of meanings addressed to the entire mankined, regardless of age and vulnerability of children, calling for care and protection. As a result, eternal puberty is the Megatrend of post-modern digital society in the setting of crisis of “the optimum form”. The next vector of change in the construct of childhood under the influence of digitization is the emergence of an alternative algorithm for conveying and perceiving the meaning, which is increasingly turning into a visual form supported by the huge potential of digital media. The so-called “visual twist” and related emotional twist demonstrates the simplification of the perception of the image of a message to an image or an animated image with musical accompaniment. This phenomenon, which is known to researchers and is characteristic of society as a whole, acquires special significance in the context of modern childhood. The importance of the emotional area in development of a child determines the impact of visual culture on childhood. In the course of development of digital communications, children have obtained the opportunity to become creators of content, not only consumers of it. And for the uptake of

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visual content does not require knowledge of the semiotic structure of the text or literacy, which has always been a distinctive feature of an adult. It is sufficient to be able to interpret emotional messages, that is, to have a skill that is less dependent on the cognitive abilities inherent in an adult. The requirements of rational consciousness give way to the expressiveness of perception of what he/she sees. This trend can be described as an “emotional twist”, and managing the media can be described as an “industry of emotions.” The exploitation of consumer emotions has long been studied in various research areas, especially in the study of suggestive impacts of advertising, mass media and PR industry. And in a situation where promotional materials command a large part of content, emotional signals in the endless struggle for attention can lead to fatigue and obtundation of the emotional area, and to emotional trauma. This is evidenced by the popularity of humorous media products, various shows discussing conflict situations, life tragedies, family dramas, that is something that was previously behind the fence of the private area. The hyper-emotional nature of digital communication and entertainment content, being the most popular thing in the children’s community, cultivates the effect of a constant need for experiencing emotions. Watching and creating videos (for example, social network “LIKE”, which has become extremely popular among teenage girls), receiving “like-stroking” is entirely aimed at emotions. The cultivation of hyperemotionality is also associated with the diverse content of information space of children, which is often (and involuntarily) consumed in the background, which includes the never-ending playback of pieces of music, radio, pathos of cinematography, “hot news” content etc. The information flow on an unlimited scale, excluding the possibility of independent regulation of media saturation (e.g. when a child listens to the car radio), forces a child to an emotional response, neurotizing him/her. The extent of involuntary consumption of information noise in the background by children is evidenced by the data of the study of consumers of the digital audio content and online audio advertisement which was conducted by the Mediaskop research company in the fall of 2018 among residents of Russian cities with more than 100 thousand city dwellers. The study covered 850 people; the online interviewing method “The effectiveness of audio advertising on the Internet” was used, access mode: https://iabrus.ru/www/doc/audio_ad/%21Online%20audio% 20ad_Mediascope_141118_logo.pdf (last accessed date: December 2018). It has been found that music is the most popular online audio content. 95% of respondents listen to it, and one third of respondents listen to it every day. Most often they listen to music when doing household chores (62%), on the road (61%), while relaxing at home (56%), on a trip (38%), on a walk (33%). Among them, 85% of respondents said they were willing to listen to audio advertising in exchange for access to free content. Conspicuous is the fact that 68% of respondents have minor children. This means that audio content is most often listened in situations where children and parents are beneath the same roof. In other words, children (there may be several children) of 68% of respondents who are at home and not working there, or those respondents who are taking a walk or traveling, are forced to consume information regardless of age restrictions. It was the digital format for broadcasting audio content that made it possible to consume it in any situation, opened up ample opportunities for access to it, thereby escalating the problem in the field of the so-called information hygiene.

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Another result of the impact of digital communications on childhood is the increased differentiation within the group of children in connection with the denial (rejection) of the correct information (necessary for development) that requires cognitive abilities for its perception. The information gap among children can be caused by their belonging to families with different “cultural capital” (Bourdieu 1982) and corresponding to heuristic activity and “educational behavior” of a child. Despite ample opportunities of independent selection of content represented by digital technologies, no equality can be achieved in the obtainment of information that is relevant to the development of children. On the contrary, operation algorithms of modern telecommunication networks allow not only to perform search query analysis, but also to independently select content for each user on an individual basis following this analysis. Thus, the child’s interest in the form of queries in the search system is analyzed by the system automatically and is subsequently presented with each access to it. Former search queries of a child complete the circle of information automatically coming to him/her, and, in the absence of new queries differing from his/her former queries, limit and form the range of his/her interests. In this regard, it can be argued that the inability of a child from a family with weak cultural capital to learn information really necessary for his/her development, for example, research studies, classical literature, art etc., presented in a relevant format, is increasingly becoming elitist, means the closure of information space of development of a child. Technical capabilities of processing of topics that are entered into the search system in the course of the access against the background of increasing Internet utilization rate serve as the factor of social stratification of society. In our opinion, the disappearance of “the optimum form” which we have briefly mentioned above is a pervasive trend of digital transformation of childhood. The point at issue is about deformation of the social construct “adulthood” as an image of “completed action” and a landmark for children with regard to their future. This is the basis of children’s mental projection of their life and comparison with the image of themselves. The loss of monopoly on information and knowledge associated with the availability of information resources by an adult, indicates a gradual elimination of distinctions between childhood and adulthood. Disappearance of the ideal causes degradation in the understanding of the norm and the polarities from it in the form of ideal and deviation, that is, the development of social anomie. An adult loses the image of being perfect in the field of technologies; this is evidenced by studies of the level of the so-called digital competency (Soldatova 2015), as well as the authority of a guide in a life journey. The “optimum form” which is treated by Vygotsky, L.S. as the goal of development, is the cultural behavior pattern, the pursuance of which presents the transformation of “natural” mental functions into higher (“cultural”), that is, the formation from involuntary, direct forms of behavior (which are also inherent in animals) through the use of norms and values existing in society into fundamentally different, inherent in a person as a personality. Today, the explosive growth of digital technologies, the complexity of filtering the information received by children and the rate of social transformations undermine the very idea of the fundamental qualities of a personality and the need to follow the direction determined by the previous generation. New anthropological space includes the idea of childhood as a period of improvement of a personality, and of a child as someone who still has to live a real life, that is, about

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him/her who is still becoming, not as someone who has become established. Since society recognizes the admissibility of maintaining the actual state of a child without the need for improvement, it may mean the admissibility of recognizing the absence of a norm and, accordingly, the absence of deviation, the loss of ideas about what is due, the rejection of the ideal, shame and culture as such. Approaches to the investigation of childhood based on age standards are vigorously criticized (Morrow 2011); moreover, the age norm as such comes close to the interpretation of violence similarly to the discriminatory attribute. The criticism of the age norm is based by authors on the existence of certain “other models of childhood”. The dissolution of “the optimum form” in the vast variety of growing-up practices has an impact on the elimination of the institutions for development, primarily of family and formal education. A decrease in parental influence (parental authority), a decrease in the authority of a close adult due to the illusion of equalization in terms of knowledge, assuming that it is digital competency that is of the greatest importance, indeed, demonstrates emancipation from well-known forms of official and unofficial powers (Inglehart 2012).

3 Conclusion Searching for a new model of social design of childhood. Reconsideration of the growing-up path of modern children requires consideration of the numerous, contradictory at times, trends of transformation of childhood world under the impact of digital technologies. The need of society for development and adaptation to dramatically changed interaction conditions requires elaboration of new mechanisms for cultural transmission and development. The parenting concept is currently undergoing significant metamorphoses that are directly associated with the substitution of the former mechanism of vertical hierarchical channels for a fundamentally new mechanism of horizontal social communication. Socialization is transformed from the former growing-up spaces - families and schools - that are losing their structure, into those spaces that are most immersed into the digital world, a world of impressions, a stream of emotions and “funny” neverending variability, which removes a person from the zone of responsibility, illusion of power and his/her own significance as one of the millions of communicants, namely into the peer community and subculture, the media and leisure. The sociocultural situation of modern childhood which is characterized by the loss of an adult reference pattern and requirements to growing-up, can be generally described as the never-ending puberty. All told, the need of a child for care and unconditional parental love neither disappears, not it is satisfied with knowledge, but requires practice. In reality which excludes a close adult as an example of the future, a child turns out to be isolated in the uncontrolled information noise, with its “tearing” identity, looking for and failing to find place. Erosion of social forms and constructs, including childhood, is the result of erosion of the ideal and loss of values, and not its cause. If the image of an adult is the most abstracted from animal (instinctive) nature, and the child is closer to it, then disappearance of an adult is a simplification or “evolutionary setback”.

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Therefore, the set digital course of social construct of childhood means the definiteness of the transformation vectors of the attributes of socialisation in a situation of extreme media diffusion and the dissolution of meanings in a world of condensing information noise, under the conditions of domination of involuntary consumption situations of certain types of information (especially audio content). As the analysis of the abovementioned study shows, this is most strongly pronounced in leisure time, at home, with parents. All of the above requires a child to develop an adaptive response in the form of establishment of cognitive control over the flow of messages and considerable efforts when searching and finding his own identity in a climate of semantic emptiness. The question of justifiability of design of childhood these days with digital determinants is a question of design goals and patterns, managing growing-up spaces and supporting them with the use of social control mechanisms, improving reciprocality and coordination of actions of a child and an adult, assuming the burden of responsibility for the future by an adult.

References Bourdieu, P.: Les rites d’institution, Actes de la recherche en sciences socials, p. 120 (1982) Donohue, G.A., Tichenor, P.J., Olien, C.N.: Mass media and the knowledge gap research article (1975) Eco U: The Aesthetics of Chaos-mos: The Middle Ages of James Joyce. Cambridge (1989) Ophir, E., Nass, C., Wagner, A.D.: Cognitive control in media multitaskers. Proc. Nat. Acad. Sci. 106(37) 15583–15587 (2009). Accessed 18 Oct 2018 https://doi.org/10.1073/pnas.090362 0106 Loh, K.K., Kanai, R.: Higher media multi-tasking activity is associated with smaller gray-matter density in the anterior cingulate cortex. PLoS one 9(9) (2014) Accessed 18 Oct 2018 https:// doi.org/10.1371/journal.pone.0106698 Morrow, V.: Understanding Children and Childhood, 2nd edn. p. 35, Centre for Children and Young People, Southern Cross University, Lismore (2011) Postman, N.: The Disappearance of Childhood. Delacorte Press, New York (1982). 177 p. Sanbonmatsu, D.M., Strayer, D.L., Medeiros-Ward, N., Watson, J.M.: Who multi-tasks and why? Multi-tasking ability, perceived multi-tasking ability, impulsivity, and sensation seeking PLoS One 8(1) (2013) Accessed 18 Oct 2018 https://doi.org/10.1371/journal.pone.0054402 Inglehart, R.: Removing the tangles in the ties between culture and institutions using the example of emancipation of mankind. Zhurnal Sotsiologii i Sotsialnoy Antropologii 15(4), 12–43 (2012) Mayorova-Shcheglova, S.N.: Transformations of childhood in the early XXI century: towards more precise definition of the concept of social formation of childhood. Bull. Russ. State Univ. Humanit. (4), 173–183 (2014) Polivanova, K.N.: Childhood in a changing world. Sovremennaya Zarubezhnaya Psikhologiya 5 (2), 5–10 (2016) Soldatova, G.U., Trifonova, A.V.: Media-multitasking: should we be anxious?. Deti v Informatsionnom Obshchestve. (28), 26–37 (2017) Soldatova, G.U., Shliapnikov, V.N.: Digital competency of Russian teachers. Psikhologicheskaya Nauka i Obrazovanie 20(4), 5–18 (2015)

Current Directions of Application of AI

An Assessment of the Response of Sovereign Bond Markets to Asset Purchase Programs Tarek Chebbi(&) University of Sousse, Erriadh, Sousse, Tunisia [email protected]

1 Introduction Face to the financial crisis of 2007–2008, the US Federal Reserve (Fed) decided to reduce its target rate which is considered as the conventional monetary policy tool. By the end of 2008, this rate effectively hit the Zero Lower Bound (ZLB)1. However, constrained by the ZLB, the Fed was impelled to resort to unconventional monetary tools, including the forward guidance regarding its future monetary policy and the Large-Scale Asset Purchase (LSAP) programs or commonly known as “Quantitative Easing” (QE). The ultimate goal of these tools was to support sovereign debt markets by lowering long term interest rates and to ultimately stimulate real economic activity. The LSAP measures largely expanded the Fed’s balance sheet from $800 billion at the beginning of the crisis to almost $3 trillion by mid-2011. As a consequence of the financial crisis and severe tensions caused by the euro area sovereign crisis, the European monetary authorities engaged in series of changes in the target rate.2 On October 8, 2008, the European Central Bank (ECB) and a part of coordination with the Fed, decided to reduce the target rate by 50 basis points. With short term rates constrained by historically low levels and the usual response in the financial sector, economy and sovereign debt markets wasn’t nearly enough, this setting became a serious distress for European monetary authorities. The ECB’s conventional actions shortfall is evident! Subsequently, the monetary policymakers responded by abandoning the traditional use of the conventional tool and began to implement unconventional monetary policy actions with the objective of addressing European economy, restoring financial stability and containing pressure in sovereign bond markets (Sergi 1994; 2000). Empirical investigations of the effects of unconventional policies on the sovereign bond yields by employing standard regression, event-study methodology have yielded a consensus on the LSAP’s effectiveness. The general finding is that sovereign bond yields are strongly reduced, which is interpreted as expansionary, in concomitance with

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Over about 16 months, the Federal Open Market Committee decided to cut the fed fund target rate repeatedly from a peak level which stood at 5.25% in August 2007 to a range between 0% and 0.25% in December 16, 2008. See Adekola and Sergi 2016.

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 435–443, 2020. https://doi.org/10.1007/978-3-030-39319-9_50

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the sole central banks’ announcement of unconventional policy and/or the actual amount of asset purchases. The current chapter reviews the response of sovereign bond markets to the Fed’s and the BCE’s unconventional monetary policies. It begins by describing the main asset purchase programs announced and implemented by each central bank. Next, it summarizes the theoretical channels through which the unconventional operations might influence long-term interest rates. Finally, it reports the empirical literature on the effectiveness of asset purchase programs from the side of sovereign bond markets.

2 Asset Purchase Programs: The Fed and ECB Through quantitative easing, the Fed announced and implemented several plans involving the purchases of longer term government agency debt securities and Mortgage-Backed Securities (MBS), and longer term sovereign bonds. Notably, the ultimate objective of these unconventional actions was to ensure that financial conditions were more accommodative by lowering long term yields in order to support debt markets and consequently to promote real economic activity. The different waves of purchases lead to a ballooning of the Fed’s balance sheet, about a five-fold expansion from less than $1 trillion at the start of the crisis to $4.5 trillion. The first round of Fed’s QE programs is launched in November 25, 2008 with the announcements of the plans to purchase of $600 billion in housing agency debt and MBS. On March 18, 2009, the Fed announced that the purchase measures were then intensified and expanded to comprise longer term Treasuries. These additional purchases consist of $750 billion in MBS, $100 billion in agency debt, and $300 billion in sovereign bonds. Note that market participants were surprised by the March announcement which in turn induced a very large asset’s effects. This program was terminated in March 2010. Given that the crisis was stepped up, the Fed announced on November 2010 the purchase of an additional $600 billion of Treasury securities within the second round of QE. A large part of assets purchased under this program was Treasury bonds with maturities ranging from one and ten years. Under the Fed’s QE2 there are no purchases of MBS. This characteristic differentiates the design of this program from both the first and third rounds of QE. Note that the QE2 program was completed in June 2011. Third, the Fed announced the implementation of the Maturity Extension Program (MEP) over the period of September 2011 until June 2012. According to the MEP program, the Fed intended to extend the maturities of its Treasury portfolio by purchasing of long term Treasuries with remaining maturities of 6 to 30 years, which is compensated by the sales of an equal amount of short term Treasuries with remaining maturities of 3 months to 3 years. Finally, the Fed also announced on September 13, 2012 a third round of QE involving the purchase of $40 billion of MBS per month. After three months, the Fed announced on December 12, 2012 that the program would be expanded by additional monthly purchases of longer term Treasury assets amounting to $45 billion. The Fed ceased its monthly asset purchases under this program in October 2014.

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In the aftermath of the financial crisis and the serious debt problems in the euro area, the European monetary policymakers responded by taking several unconventional monetary actions with the objective of restraining financial instability and alleviating distress surrounding euro area sovereign bonds and market dysfunctions. We outline briefly the main asset purchase programs launched by the ECB. To revive the functioning of primary and secondary compartments of covered bond market the European monetary authorities adopted two covered bond purchase programs (CBPP), respectively in May 2009 and November 2011. This market is considered as an indispensable source of banks’ refinancing. The purchase operations under the first program which was announced on 7 May 2009, and implemented during the window of July 2009 to June 2010, cumulated outstanding amount of €60 billion. On 6 October 2011, the ECB announced the second round of purchase of covered bonds. The purchased bonds involved under this program, which was implemented during the period of November 2011 and October 2012, was amounting to around €16 billion. Note that the ECB launched on September 4, 2014 a third program of this kind with initial duration of 2 years. The second category of ECB’s asset purchase programs was the so-called Securities Market Program (SMP). In May 2010, the European authorities started purchasing longer term sovereign bonds with the intention to guarantee depth and liquidity in secondary bond markets of countries under stress. Under the SMP, purchase actions were initially restricted to Greek, Portuguese and Irish sovereign debts, and in second phase were extended to cover Italian and Spanish sovereign bonds. On February 2012, the SMP purchased a total of roughly €220 billion of sovereign bonds issued by stressed countries, where at almost one half of that purchases were sovereign debts of Italy (Falagiarda and Reitz, 2015). Note that the SMP was ended with the introduction of the Outright Money Transactions (OMT) considered as the third category of ECB’s asset purchase programs. Shortly after the famous speech of the President of the ECB, M. Draghi in London on July 2012 claiming that the ECB is “ready to do whatever it takes to preserve the euro”, the OMT was announced on 2 August 2012, to be adopted in September of the same year. Under this program, the ECB could buy sovereign bonds with maturities of 1–3 years issued by a government asking for financial assistance. Recently, the ECB has joined major central banks and decided the implementation of significant QE policies in a context where short term rates constrained at their lower bound, through an Asset Purchase Programme (APP), which constitute the fourth asset purchase program. Announced on 22 January 2015, the ECB’s APP had the main objective of addressing deflation risks and to ease borrowing conditions of households and firms. This program proceeds by purchasing debts issued from governments, agencies and institutions in the euro area. Under this program, the ECB intended to sold €60 billion per month during the period of March 2015 and until at least September 2016, with a total estimated at over €1 trillion.

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3 A Literature Review of the Transmission Channels Recent literature from the United States and Europe investigates a number of potential channels through which the unconventional monetary policies may influence long term interest rates. These channels are not mutually exclusive, given that some may be at play simultaneously. We briefly summarize the main channels based on the seminal studies by Krishnamurthy and Vissing-Jorgensen (2011) and Glick and Leduc (2012) for QE by the Fed and Fratzscher et al. (2016) for ECB’s unconventional monetary policies. In addition, we report the main empirical evidence. First, one channel operates via the portfolio balance effects of announcements related to asset purchase programs in that by purchasing a large quantity of assets, such us, Treasuries by the Fed, and government or covered bonds issued by euro area banks by the ECB, the monetary authorities decrease the overall supply of assets being purchased available to private sector, and thus induce their associated yields to decline3. Regarding the euro zone, the unconventional monetary policies through this channel generate more favorable circumstances for economic recovery resulting in decline of sovereign risk associated with countries under stress.4 Many researchers and central bank policymakers attribute the LSAP’s effects on Treasury yields to the portfolio balance channel. For instance, former Fed Chairman Bernanke (2010) and Gagnon et al. (2011)5 indicate that the Fed’s LSAP work principally via this channel. For the euro area, Falagiarda and Reitz (2015) indicate that the main ECB’s asset purchase programs, such as CBPP, SMP and OMT, are transmitted to the economy and financial markets through the portfolio balance channel. More recently, Priftis and Vogel (2017) confirmed the portfolio rebalancing effects for the expanded asset purchase program announced in January 2015. An additional and distinct motive why the Fed’s and ECB’s asset purchase programs may also impact government bonds futures markets is that they can be considered as a signal regarding the central bank’s perception of future economic conditions and policy actions. This channel works mainly by emphasizing the role of expectations of private agents. Particularly, such programs induced investors to feel that conditions are worse in the future, they will increase the demand for Treasuries viewed as safe-haven assets, which in turn reduced the long term interest rates. Alternatively, asset purchase announcements may potentially be a signal of the central bank’s commitment to keep short term risk-free interest rates lower in the future, which in turn result in reducing long term interest rates through the expectations hypothesis of the term structure (Chinn 2013). As for the empirical evidence for such channel, Saka et al. (2015) indicate that the OMT announcements signaled market participants by the intention of ECB to take up the function of lender of last resort. Also, Falagiarda and Reitz (2015) show that

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The decrease in long term yields is attributed to a reduction of the risk premium. Some researchers, e.g. Krishnamurthy and Vissing-Jorgensen, 2011, refereed also to the term premium channel. See also Bogoev et al. 2012; Petrevski et al. 2012. The authors find that the QE1 announcements lowered the ten year Treasury yields by 91 basis points (see Table 1 for more details), while the ten year term premium reduced by 71 basis points.

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transmission of SMP announcements is operated in large part by this channel. For the United States context, Krishnamurthy and Jorgen-Vessing (2011) find that the signaling channel contributes between 20 and 40 basis points to the total decline in the ten year Treasury yield over the QE1 phase. Christensen and Rudebusch (2012) attributed the large part of declines in ten year Treasury yields subsequent to announcements of Fed’s QE to lower policy expectations. Importantly, the authors show that more than half of the reaction of yields was originated from signaling channel. Bauer and Rudebusch (2014) confirmed the strong signaling effects by showing that the expectations component explains roughly 50% of the total fell in yields under the QE1. Contrary to Gagnon et al. (2011) such results point to that the magnitude of the portfolio balance channel may not be the principal source of changes in yields. Finally, central banks may affect liquidity premiums by purchasing long term sovereign bonds. In this setting, the monetary interventions are viewed by market participants as the equivalent of the presence of a new large buyer into purchased asset markets. Specifically, central banks’ asset purchase programs will improve the liquidity and functioning of the market and thus will lower the associated liquidity premia by making a counterparty easier to find. Empirical investigations on the efficacy of this channel, (e.g., Christensen and Gillan 2014; Hancock and Passmore 2012; Eser and Schwaab 2016; and De Pooter et al. 2018; and others) have argued that the Fed’s and ECB’s asset purchases were effective in improving the functioning of market of targeted assets, and thus lowering liquidity premia. On the contrary, once the central bank has announced the intention of purchase of important amount of sovereign bonds, this may lead to the scarcity of such securities, and to fall of the number of transactions given that it will be harder for investors to find counterparties for trades. In this case, the scarcity effects will lower market liquidity. Recently, Schlepper et al. (2017) have presented evidence from German government bond market that indicates that the public sector purchase program induced an increase in scarcity and this pattern has increased over time.

4 Assessing the Effectiveness of Unconventional Monetary on Sovereign Yields and Spreads The success of unconventional monetary policies, intervening through the different asset purchase programs on the secondary bond markets, in lowering the longer term sovereign yields and spreads appears to be well established. For the United States, seminal contributions based on different methodologies suggest that Treasury yields and other securities decreased on days in which the Fed issued communications about the increase of its holdings of longer term securities. Remarkably, Gagnon et al. (2011) show that the cumulative decrease in the ten year Treasury yield reaches the value of 91 basis points over the eight key announcements concerning the Fed’s first LSAP program. Christensen and Rudebusch (2012) find that the announcements of bond purchase programs highlighted in Gagnon et al. (2011) induced a comparable cumulative reduction in ten year US Treasury yields (89 basis points). Krishnamurthy and Jorgen-Vessing (2011) report that Treasury yields for the

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same maturity declined by almost 107 basis points following a five key QE1 announcement dates. Table 16 reports the changes in ten year Treasury yields on each day when the Fed announced communications concerning the First LSAP. Also, it displays the cumulative changes in interest rates over the selected announcements by authors. The largest negative effect on the Treasury yields is for the QE1 announcements. By contrast, the response to succeeding programs was smaller. More specifically, Krishnamurthy and Jorgen-Vessing (2011) and Ehlers (2012) find that the impact of QE2 within a two day window is –30 and –40 basis points, respectively. Regarding the third round of QE, Bauer and Neely (2014) show a small impact on Treasury yields. For the euro zone, an extensive literature has focused on the impact of unconventional monetary policies by the ECB on the sovereign bond yields and spreads. For instance, Altavilla, et al. (2016) report that the OMT announcement strongly reduced the Italian and Spanish sovereign yields by almost 200 and 100 basis points, respectively for two and ten maturities. The difference in the magnitude of response corroborates with the target of the OMT actions focusing on the bonds with remaining maturities of 3 years or less. Ghysels et al. (2017) find clear evidence that SMP actions succeeded in decreasing sovereign yields of the countries under the program, except Greece. In particular, they find that the effect on ten year yields for Italian and Spanish bonds to be about 230 basis points. They find also that the purchases under SMP program lowered the Italian and Spanish two year maturity yields by around 320 and 180 basis points, respectively. Trebesch and Zettelmeyer (2018) find a decline of 180 to 200 basis points in yields over the purchases of Greek sovereign bonds under the initial SMP program. Notably, this effect dissipated within the first eight weeks of the program. Recent articles looked on the effectiveness of the ECB’s APP. For instance, de Santis (2016) reports that the APP purchases were effective in reducing the GDPweighted 10-year euro area sovereign bond yield by 56 basis points during the period of September 2014 and February 2015. Similarly, Andrade et al. (2016) show that the ten year government bond yields significantly declined over the January 2015 announcement. Looking now at the effect of ECB’s asset purchase programs on the sovereign yield spreads in the euro area rather than levels. Szczerbowicz et al. (2015) indicate that the announcements related to SMP and OMT programs have been extremely effective in lowering the sovereign bond spreads in periphery countries, whereas the French yield spreads responsed very small if at all. In addition, Falagiarda and Reitz (2015) approved yield spread decreasing effects. Their findings report in fact that SMP news were successful in bringing down the perceived sovereign risk of stressed euro area countries (Greece, Ireland, Italy, Portugal, and Spain), however estimates showed that the OMT announcements strongly reduced Italian and Spanish yield spreads. Kilponen, et al. (2015) show that the SMP and OMT announcements were strongly effective in calming the euro area sovereign bond markets that they have decreased the ten year government bond spreads.

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Table 1 is taken from Krishnamurthy and Vissing-Jorgensen (2011, Table 3); Gagnon et al. (2011, Tables 1); Christensen and Rudebusch (2012, Table 4). Changes are given in basis points.

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Table 1. Changes in ten year Treasury yields around LSAP dates (QE1) Date

November 25, 2008 December 1, 2008 December 16, 2008 January 28, 2009 March 18, 2009 August 12, 2009 September 23, 2009 November 4, 2009 Total net change

Event

Initial LSAP Announcement Chairman Speech FOMC Statement FOMC Statement FOMC Statement FOMC Statement FOMC Statement FOMC Statement

Study Gagnon et al. (2011) −22

Krishnamurthy and Jorgen-Vessing (2011) −36

Christensen and Rudebusch (2012) −21

−19

−25

−22

−26

−33

−17

28

12

−41

−52

14 −47 5

6

−3

−2

6

7

−91

−107

−89

5 Response of Bond Liquidity to Asset Purchase Announcements While the motives and effectiveness of unconventional monetary policies in the United States and Eurozone have been intensely debated, and highlighting that such policies were a successful tools in lowering Treasury yields and spreads, the effects of LSAP on sovereign bond market functioning, and namely on liquidity premiums associated with the purchased assets have received much less attention. Yet, we know surprisingly that empirical literature to date does not seem to provide a clear direction on this issue. For instance, Kandrac and Schlusche (2013) provide empirical evidence that Treasury purchases during the various QE programs have had no significant impact on liquidity. By contrast, Christensen and Gillan (2014) find that the during the QE2 program, Treasury inflation-protected securities (TIPS) purchases have enhanced the liquidity of market for TIPS by means of rising the sellers’ bargaining power. A recent study of De Pooter, et al. (2018) provides empirical evidence that the weekly SMP holdings operated by the ECB during the period of May 2010 until March 2012 reduced the liquidity premia associated with sovereign bonds. In particular, the authors find a clear evidence of instantaneous impact materialized in fell of premiums between 32-40 basis points from the purchase of 1% of the government bond outstanding. Eser and Schwaab (2016) show that the SMP purchase operations

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considerably improved sovereign bond market liquidity conditions which are materialized in terms of lower premiums. In addition, Schlepper et al. (2017) examine the response of German government bond liquidity to ECB’s public sector purchase program announced on March 2015 based on intra-day transaction-level data. They show that such program had a negative effect on the liquidity and this pattern has increased over time, indicating the importance of scarcity effects in bond markets.

6 Conclusions The major central banks were impelled to use the unconventional policies given the financial crisis and serious debt problems in the euro area, deep recession, and short term rates constrained near zero. Since the inception of these tools, a vast literature engaged in studies empirically investigating their effects on bond prices. Much evidence about the impact of announcements of asset purchase programs comes from event study methodology examining a short-term response of bond yields. Importantly, event study evidence highlighted that such announcements lowered bonds yields. In addition, yields on actual bonds that are purchased under LSAP program fell more than yields on bonds that were not concerned by such program (D’Amico and King 2010). Together the portfolio balance and signaling effects seem to be the principal drivers of asset purchase programs. Some researchers have also extended analysis to account for the LSAP’ effects on sovereign bond liquidity. But, there is no consensus, however, has thus far been achieved on this topic.

References Adekola, A., Sergi, B.S.: Global Business Management: A Cross-Cultural Perspective. Routledge, Abingdon (2016) Altavilla, C., Giannone, D., Lenza, M.: The financial and macroeconomic effects of OMT announcements. Int. J. Cent. Bank. 12(3), 29–57 (2016) Andrade, P., Breckenfelder, J., De Fiore, F., Karadi, P., Tristani, O.: The ECB’s asset purchase programme: an early assessment. ECB Working Paper No. 1956 (2016) Bauer, M.D., Neely, C.J.: International channels of the Fed’s unconventional monetary policy. J. Int. Money Finan. 44, 24–46 (2014) Bauer, M.D., Rudebusch, G.D.: The signaling channel for Federal Reserve bond purchases. Int. J. Cent. Bank 10(3), 233–289 (2014) Bernanke, B.: The economic outlook and monetary policy. Speech given in the Federal Reserve Bank of Kansas City Economic Symposium, 27 August 2010 Bogoev, J., Petrevski, G., Sergi, B.S.: Investigating the link between central bank independence and inflation in central and Eastern Europe: evidence from panel data models. Eastern Eur. Econ. 50(4), 78–96 (2012a) Bogoev, J., Petrevski, G., Sergi, B.S.: Reducing inflation in ex-communist economies independent central banks versus financial sector development. Prob. Post Communism 59(4), 38–55 (2012b) Chinn, M.D.: Global spillovers and domestic monetary policy. BIS Working Papers (436) (2013)

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Christensen, J.H.E., Gillan, J.M.: Does quantitative easing affect market liquidity? Federal Reserve Bank of San Francisco Working Paper Series, Working Paper, 2013–26 (2014) Christensen, J.H.E., Rudebusch, G.D.: The response of interest rates to U.S. and U.K. quantitative easing. Econ. J. 122, 385–414 (2012) D’Amico, S., King, T.B.: Flow and stock effects of large-scale Treasury purchases. Working Paper, Finance and Economics Discussion Series No. 2010-52, Board of Governors of the Federal Reserve System (2010) De Pooter, M., Martin, R.F., Pruitt, S.: The liquidity effects of official bond market intervention. J. Finan. Quant. Anal. 53(1), 243–268 (2018) De Santis, R.A.: Impact of the asset purchase programme on euro area government bond yields using market news. ECB Working Paper Series No 1939, July 2016 Ehlers, T.: The effectiveness of the Federal Reserve’s Maturity Extension Program—Operation Twist 2: the portfolio rebalancing channel and public debt management. BIS Papers, no. 65 (2012) Eser, F., Schwaab, B.: Evaluating the impact of unconventional monetary policy measures: empirical evidence from the ECB’s securities markets programme. J. Finan. Econ. 119(1), 147–167 (2016) Falagiarda, M., Reitz, S.: Announcements of ECB unconventional programs: implications for the sovereign spreads of stressed euro area countries. J. Int. Money Finan. 53(C), 276–295 (2015) Fratzscher, M., Lo Duca, M., Straub, R.: ECB unconventional monetary policy: market impact and international spillovers. IMF Econ. Rev. 64(1), 37–74 (2016) Gagnon, J., Raskin, M., Remache, J., Sack, B.: The financial market effect of Federal Reserve’s large-scale asset purchases. Int. J. Cent. Bank. 7(1), 3–43 (2011) Ghysels, E., Idier, J., Manganelli, S., Vergote, O.: A high frequency assessment of the ECB securities markets programme. J. Eur. Econ. Assoc. 15(1), 218–243 (2017) Glick, R., Leduc, S.: Central bank announcements of asset purchases and the impact on global financial and commodity markets. J. Int. Money Finan. 31(8), 2078–2101 (2012) Hancock, D., Passmore, S.W.: The Federal Reserve’s portfolio and its effects on mortgage markets. Board of Governors of the Federal Reserve System, Working Paper (2012) Kandrac, J., Schlusche, B.: Flow effects of large-scale asset purchases. Econ. Lett. 121, 330–335 (2013) Kilponen, J., Laakkonen, H., Vilmunen, J.: Sovereign risk, European crisis-resolution policies, and bond spreads. Int. J. Cent. Bank. 11(2), 285–323 (2015) Krishnamurthy, A., Vissing-Jorgensen, A.: The effects of quantitative easing on interest rates: channels and implications for policy. Brookings Pap. Econ. Act. 2, 215–287 (2011) Petrevski, G., Bogoev, J., Sergi, B.S.: The link between central bank independence and inflation in Central and Eastern Europe: are the results sensitive to endogeneity issue omitted dynamics and subjectivity Bias? J. Post Keynesian Econ. 34(4), 611–651 (2012) Priftis, R., Vogel, L.: The macroeconomic effects of the ECB’s evolving QE programme: a model-based analysis. Open Econ. Rev. 28, 823–845 (2017) Trebesch, C., Zettelmeyer, J.: ECB interventions in distressed sovereign debt markets: the case of Greek bonds. IMF Econ. Rev. 66(2), 287–332 (2018) Schlepper, K., Riordan, R., Hofer, H., Schrimpf, A.: Scarcity effects of QE: a transaction-level analysis in the Bund market. BIS Working Papers, No 625 (2017) Sergi, B.S.: On the statutory autonomy of the Czech national bank. Eastern Eur. Econ. 32(5), 23– 35 (1994) Sergi, B.S.: A new index of independence of 12 European national central banks: the 1980s and early 1990s. J. Transnational Manage. Dev. 5(2), 41–57 (2000) Szczerbowicz, U.: The ECB unconventional monetary policies: have they lowered market borrowing costs for banks and governments? Int. J. Cent. Bank. 11(4), 91–127 (2015)

Information Technologies for the Formation of the European Space of Freedom, Security and Justice Agnessa O. Inshakova(&), Elena I. Inshakova, and Tatyana V. Deryugina Volgograd State University, Volgograd, Russia {gimchp,inshakovaei}@volsu.ru, [email protected], [email protected]

Abstract. The article is devoted to the pan-European information technologies aimed at optimizing the control of crossing the state borders of the panEuropean territory, which is part of the Schengen area, taking into account such factors of development of modern reality as globalization and regionalization of the world economy, as well as the growing threat of international terrorism. Automated interstate information systems are considered in the article as a necessary measure of compensatory nature in the conditions of the common economic space functioning on the principles of freedom of movement of goods, services, capital and labor. As a result of the conducted research the priority measures of effective functioning and legal development of SIS are named and reasoned. Recommendations on legal provision of safety of functioning of network and information systems of the EU providing uninterrupted functioning of internal market are given. Formulated changes and additions to a number of existing EU instruments, in particular: Regulation EU №1987/2006. on the establishment, operation and use SIS II, Regulation on the visa information system, the EU Regulation №1987/2006 of 20.12.2006 on the establishment, operation and use of the Schengen information system (SIS II), Regulation EU №603/2013 of 26.06.2013 establishing the «Eurodac», Regulation EU 2017/2226 of 30.11.2017 establishing the entry exit - system, Regulation EU №1077/2011 of 25.10.2011 establishing a European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice, Schengen Borders Code, Visa Code. Keywords: Interstate cooperation
Information society
Automated information systems
Telecommunication technologies
International regional integration association
Common European legal space
Legal system of the European union
Schengen agreement
Schengen achievements
Schengen informational system
European space of freedom, security and justice JEL Code: K30


K33
K36

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 444–453, 2020. https://doi.org/10.1007/978-3-030-39319-9_51

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1 Introduction Fundamental changes in interstate cooperation today are determined by the openness and transparency of the economy of the state and society, which are undoubted indicators of modern global economic development. Analyzing the prospective trends of this development, experts note two main areas that are in a complex, ambiguous, and sometimes contradictory interaction (Inshakova 2010; Inshakova, Kiseleva 2016). On the one hand, there is an unprecedented process of globalization of the world economy, and on the other – the growth of international regional integration associations (Mosey 2002; Inshakova 2004). These processes caused the intensification of international relations, accompanied by huge migration flows, control over which in the conditions of the information society development can be optimized through the use of the automated information systems. Special research attention of lawyers and international economists is paid to the information systems of control of entry and exit of foreign citizens, operating in the United States and in the Schengen area integrated into the legal system of the European Union (Kashcheev 2006).

2 Materials So, certain aspects of the functioning of the Schengen information system, as well as domestic state information system of migration registration are considered in the works of Biryukov «European law: before and after the Lisbon Treaty» (Moscow, Statut 2013), in training material of author team under the editorship of S. J. Kashkina «Law of the European Union» (Moscow: Prospect, 2015), in doctoral thesis of Zinchenko «Migration law in international legal doctrine and practice: formation and development prospects» (Moscow 2012). As well as in dissertations of a candidate of legal sciences like: Balsamova «Evolution of European Union legislation on the legal status of citizens of countries outside the EU» (Moscow, 2012), Kozhaeva «Readmission procedure in international law» (Moscow 2014). Yastrebova’s monographic study «International legal mechanisms of migration regulation: doctrinal approaches and experience of the Russian Federation» (Moscow 2014) is devoted to the problems of illegal migration, the search for opportunities and forms of interstate cooperation in the field of prevention of illegal migration, including within the EU. The issues of creating mechanisms of information interaction with the Schengen information system of the second generation in the field of police cooperation are considered in the doctoral thesis of Mashugina «Legal and organizational basis of the activities of the police of the Republic of Estonia and its role in ensuring public security» (Moscow 2015), Nikishkina «Legal regulation of police cooperation in the European Union» (Moscow 2015).

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3 Methods The results of the temporal analysis of the formation of the Schengen information system suggest that the main body of norms relating to the freedom of movement of people in the European Union (hereinafter - the EU) is primarily associated with the rules of crossing state borders. An interdisciplinary study of the economic and legal regulation of the functioning of the SIS in the EU will prevent similar negative trends in our country in relation to the functioning of automated information systems. The first of them – the state information system of migration registration (hereinafter - SISMR) – has been functioning since 2007 and is an information basis for the implementation of functions for control, supervision and provision of public services in the field of migration, formed on the basis of data from a number of information banks (Zinchenko 2012). The second system is the state system of migration and registration, as well as the production, registration and control of the circulation of identity documents (hereinafter - Mir system). Its purpose is to ensure the effectiveness of the implementation of the state policy in the field of migration and registration, as well as the manufacture, registration and control of the circulation of identity documents. The methodological basis of the study is a systematic approach, which in the framework of the universal method of research – dialectical materialism is used. The system approach is implemented by using the number of interrelated methods, namely: analysis, synthesis, subject-object, structural and functional, historical and logical, comparative methods. As part of the private scientific legal methods are used: dogmatic, legal and technical, method of interpretation of law, state-legal modeling, comparative legal method. As part of private scientific economic methods are used: the method of theoretical modeling, method of formalization, the techniques of statistical analysis.

4 Features of the Normative Formation of the «European Space of Freedom, Security and Justice» An important milestone towards the realization of the freedom of movement of persons signed on 14 June 1985 an Agreement on the gradual abolition of checks at the common borders between Germany, France, Belgium, the Netherlands and Luxembourg (Benelux) or the so-called Schengen agreement (Kashkina 2009). It proposed measures aimed at the gradual elimination of border checks at the common borders of the signatories (The Schengen acquis 2018). However, the 1985 Schengen agreement has a basic kind of preliminary nature and gas a historical interest today (Kashkin and Chetverikov 2000). The main document is the Schengen Agreement of 1985 (the Schengen Convention). It was signed on 14 June 1985, near the town of Schengen, Luxembourg. This document entered into force on March 26, 1995. Since then, about 200 million citizens from seven EU States have entered into a new era - the era of full freedom of movement between the countries that signed the Schengen agreement (Nikishkin 2015; Biryukov 2013).

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After the adoption of the Amsterdam treaty of 1997 and its protocols, the priority of the European Union has been the establishment of a «European space of freedom, security and justice» (article 29 of the EU Treaty). The implementation of this task is carried out with the help of the Schengen information system (Schengen Information System (SIS)), which has been operating since 26 March 1995, and is designed to «maintain public order and security, including national security, as well as to implement the provisions of the Schengen Convention on the freedom of movement». Now SIS II is a key link between the law enforcement authorities of the member States of the Schengen area in the framework of cooperation with Europol and Eurojust in the shortest possible time around the clock to ensure the interaction between the competent services through the provision of complete information in the form of a legitimate reason to apply to subjects of criminal-legal consequences of the crimes and offences. However, its work built also at the expense of interagency information requests in other systems, for example, VIS, EURODAC, ECRIS (European information system for criminal cases). The importance of system can be assessed by its functional role. Thus, the warning introduced in the Schengen information system in accordance with article 95 will have the same effect as the request for temporary arrest in accordance with article 16 of the European Convention on extradition of 13 September 1957 (article 64 of the Schengen Convention), which is, in fact, equates it to a judicial act. In the context of the growing threat of international terrorism, the Schengen information system is currently in the process of improvement. The main reforms, which were also necessary in connection with the accession of new States to the EU in 2001, were due to the inability of SIS to withstand the technical burden due to the increase in the number of States connected to it. After connecting a number of States to the SIS, it was renamed SIS1+. The process of reforming the Schengen information system has not been completed. Thus, in order to improve the level of security and simplify the regime of free movement of services, goods and people within the Schengen area, as well as to simplify the exchange of information between the competent authorities of the Schengen member States, it was decided to form the Schengen information system of the second generation (SIS-II) (Regulation (EC) No 1987/2006, 2018). It began its work at the end of spring 2013.

5 Factors Contributing to the Need to Strengthen Information and Legal Instruments for the Implementation of SIS At present, in view of the ongoing process of EU enlargement (Velyaminov 2015), it can be argued that issues related to economic and legal regulation of the connection of new States to the SIS have not lost their relevance. Practice has shown, however, that the Schengen information system of the second generation could not fully cope with its tasks (Nigmatullin 2016). For example, over the past three years (2015–2017), in the

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EU has seen an increase in illegal border crossings, a constant threat to internal security, as evidenced by a series of terrorist attacks. The burden on national migration systems has increased significantly due to the huge flow of refugees (Yastrebova 2014) from Libya and Syria. These problems have given rise to the inevitable necessity to consolidate and comprehensively strengthen the EU’s information, economic and legal instruments for border management, migration and security. Clearly, therefore, that the SIS is not always able to ensure the security of borders. Thus, in 2017 [16] due to the fact that some terrorists, as it was previously established, were EU citizens and used freedom of movement, appropriate measures for random checks of EU citizens on certain categories of databases for border security were approved. Another problem that exists in the functioning of all information systems in the EU, including SIS II, is the unsatisfactory quality of information that is provided by the EU information systems to authorized officials. National authorities face a complex landscape of different managed information systems. Moreover, the data management architecture for boundaries and security is fragmented because the information is stored separately in unrelated systems, resulting in information whitespace in General. This, in turn, makes it difficult to combat identity fraud. It is also important to note that, in general, end-users do not always have quick and systematic access to all the information they need to perform their tasks (The Council on establishing a framework for interoperability between EU information systems (borders and visa) and amending Council Decision 2004/512/EC, Regulation (EC) No 767/2008, 2018; Kozhaeva 2014). In order to address these shortcomings, since April 2016, work has begun on the following three areas, which required adequate legal support: maximizing the benefits of existing information systems, developing new and additional systems to address gaps in information systems and improving the compatibility of information systems. The activities in the first area are based on following momets. In parallel with the legislative work (in particular, the introduction of the obligation of member States to create warnings in the SIS, if information is requested about the person who committed the crime of terrorist orientation, the automatic fingerprint identification system (AFIS), etc.), steps are being taken to enhance the exchange of information. For example, Europol reports that during 2017 over a million SIENA1 messages were exchanged between Europol, member States and third parties (Communication from the commission to the European parliament, the European council and the council 2018). In addition, every 5 years, the EU Commission conducts a procedure for assessing the effectiveness of the implementation of SIS in member States (in 2017 in Denmark, Iceland, Sweden, Portugal, Spain, Croatia, Norway and the UK), following which in case of violations, official recommendations are issued to address them.

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SIENA (Secure Information Exchange Network) - it is an application managed by Europol that provides fast and secure communication and exchange of operational and strategic information related to crime.

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Referring to the second area, it should be emphasized that the main issues currently under development or harmonization are related to the elimination of gaps in the existing information systems. As for the third direction, here a promising proposal is the development of the order of interaction between the existing EU information systems, among which: the Entry/ Exit System (EES); Visa Information System (VIS); the European Travel Information System (ETIAS); Eurodac; Schengen Information System (SIS); European Information System of criminal communications for third-country nationals (ECRIS-TCN); Europol. In this regard, it is proposed to create a European search portal (ESP) to ensure the authorities of the member States and EU bodies quick, effective, systematic and controlled access to the EU information systems. The ESP will not process any new data or store it. The portal will act as a single window for requests to various Central systems in full compliance with the requirements for access control and data protection of the basic systems. We believe that this initiative is very timely. The creation of a European search portal enables competent authorities, including authorities in charge of issuing visas quickly and efficiently verify the documents through the implementation of a single search and retrieve results from all systems to which they have access, and not to search for information in each system separately. The introduction of a European search portal is also expected to have a positive impact on migration and asylum procedures. The inclusion of biometric data in the SIS, the creation of links to identifiers known in the proposed system and the information charing from Europol, will allow the relevant authorities to filter asylum applications from known criminals who mix with the flow of asylum seekers, hopefully to be unnoticed. This will allow to minimize risks of fraudulent activities with identity data of the person. However, this is not the only proposal aimed at improving the compatibility of information systems. Thus, on February 26, 2018, the EU Council initiated a regular meeting to discuss the prospects for the development and functioning of information systems, where discussed proposals to expand the compatibility and interaction of information systems at this stage on the basis and with the resources of the eu-LISA Agency. By increasing interoperability of information systems to ensure maximum horizontal interaction in solving problems in the field of freedom of movement and border control is expected to increase the efficiency of information systems.

6 Results Thus, interoperability can be identified as a priority for the development of systems. At the same time, it is necessary to intensify the search for ways and their legislative consolidation to maintain the standards of speed of operation and data protection, because with the full mutual use of resource bases of systems leads to difficulties with operational access due to the unprocessed architecture of their interaction. In addition, have not been worked out the provisions on data formats in systems, electronic forms of input information, its list, as well as methods of data protection in case of cyberattacks in the conditions of combined data arrays of information systems and the

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discrepancy of access rights within the developed rules that ensure the protection of information when it used by its end-users. The decision of compatibility we can see in the creation of universal forms of prevention (Universal Message Format - UMF), which should provide an adequate level and quality of data in the «warning» and to solve the issue of compatibility. At the same time, extensive work on improving the legislation in this direction has not yet been carried out. According to the authors, another interrelated direction of legal improvement of this sphere is the development of the European strategy of integrated border management. The essence of integrated border management is the interaction of the member countries of the Schengen agreements at all levels, including in the field of border management and information exchange (Machugina 2015), joint risk analysis and the use of pan-European and national capacities and resources. Consequently, European integrated border management serves both the migration policy and the security policy of the Union. The next problem to be mentioned in the context of this study is the legal security of the EU information systems. Information systems, especially the Internet, play an important role in facilitating the cross-border movement of goods, services and people. These systems can be the target of those subjects, who commit malicious intentional acts aimed at damaging or disrupting the operation of such systems, resulting in significant financial losses, undermining user confidence and generally causing serious damage to the EU economy. Accordingly, the security of network and information systems is necessary for the smooth functioning of the domestic market. Therefore, to effectively address the security challenges of network and information systems in the EU was elected a global approach, covering general requirements for the exchange of information, cooperation and security for operators of essential services and providers of digital services. Thus, the security function in the protection of data in SIS II is carried out by the European data protection supervision (EDPS), identifying violations of the storage and distribution of personal information, including work in information systems. Also at the state level, offices of national data protection bodies have been established, and a coordination group on the supervision of SIS II (SIS II SCG) has been established within the framework of inter-state cooperation. In addition, the European Agency for network and information security (ENISA) was established to support and facilitate strategic cooperation among member States on the security of network and information systems.

7 Conclusion Thus, the system established within the EU aimed at establishing a «European space of freedom, security and justice» is characterized by a number of shortcomings, without the elimination of which it is not possible to achieve the goals for which it was created. The study of this kind of foreign experience of legal regulation by the Russian expert community is an important area of research. Earlier in Russia there was a real prospect of integration into the single European economic space created under the auspices of the EU, which in turn required the convergence of Russian legislation with

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European minimum standards. In addition, the EU and Russia have been negotiating for a long time on the implementation of common steps on visa-free short-term trips of Russian and EU citizens (EU-Russia visa dialogue). However, the situation has changed dramatically in the last few years. In the context of the complicated foreign economic and foreign policy situation in the world, the aggravation of relations between Russia, the United States and the EU, economic sanctions against our state, we can not talk about unconditional rapprochement. At the same time, the study of the practice of creating and functioning of the SIS is still remains a research interest, but in terms of stabilization of foreign policy and foreign economic cooperation with the EU under the sanctions. And also, within the need to build interstate cooperation in integration associations with the participation of the Russian Federation, such as EEU and BRICS. With regard to the priority measures for the effective functioning and legal development of the SIS, the results of the study should include, first of all, the maximization of work to ensure the full implementation of the information system throughout the Schengen area and to supplement articles 4, 9, 10 of the EU Regulation No. 1987/2006 of the European Parliament and of the Council of 20 December 2006 on the establishment, operation and use of the Schengen information system of the second generation (SIS II) with provisions aimed at improving its architecture. In addition, it is recommended to develop and adopt a special regulation that establishes the legal framework for interaction between the existing EU information systems and the subsequent introduction of the European search portal. The lastpoint will require additions to other EU regulations, namely article 8 of the Schengen Border Code, article 21 of the Visa Code, as well as regulations on individual information systems operating in the EU, namely: Chapter 2 of the Visa Information System Regulations; 50 of EC Regulation No. 1987/2006 of the European Parliament and of the Council of 20 December 2006 on the establishment, operation and use of the Schengen Information System second generation (SIS II); article 22 of Regulation (EC) No. 603/2013 of the European Parliament and the Council of 26 June 2013 on the establishment of «Eurodac»; article 32 of Regulation (EC) 2017/2226 of the European Parliament and the Council of 30 November 2017, providing an entry/ exit system (EES) in terms of necessity of the reference in a single search portal. Furthermore, Regulation (EU) No. 1077/2011 of the European Parliament and of the Council of 25 October 2011 on the establishment of the European Agency for the operational management of large-scale systems in the field of freedom, security and justice should be supplemented by a new article 5.1 «Tasks related to the functioning of the European search portal (ESP)», in which it should be assigned the status of the Agency as a body responsible for the operational management of the European search portal (ESP), as well as the tasks assigned to it, related to the security and supervision of the technical condition of the portal.

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References Biryukov, M.M.: European Law: Before and After the Lisbon Treaty: A Textbook. Statute, Moscow (2013). 240 p. Communication from the commission to the European parliament, the European council and the council. Thirteenth progress report towards an effective and genuine Security Union (2018). EUR-Lex: https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1522305554245&uri=CELEX:52018DC0046 Inshakova, A.O.: Schengen information system as a measure of compensatory nature within the framework of Schengen achievements. Russ. Laws Experience Anal. Pract. 4, 73–78 (2010) Inshakova, A.O., Kiseleva, E.V.: Fundamentals of the Schengen law of the European Union. In: Abashidze, A.H., Inshakova, A.O. (eds.) The Law of the European Union: Textbook and Workshop for Bachelor’s and Master’s Degree. Yurayt Publishing House, Moscow (2016). 482 p. Inshakova, E.I.: Economic integration in the CIS: methodology, strategy, mechanism: thesis for the degree of doctor of economic Sciences. St. Petersburg (2004). 418 p. Kashcheev, S.V.: Foreign experience of legal regulation of entry and exit of foreign citizens. Int. Public Private Law 1, 42–43 (2006) Kashkin, S.Y., Chetverikov, A.O.: The Schengen Agreement. Education Publication, Moscow (2000). 1167 p. Kashkina, S.J.: European Union Law: The Textbook. Lawyer, Moscow (2009). 386 p. Kozhaeva, O.S.: Institute of readmission in international law: thesis for the degree of candidate of legal Sciences, Moscow (2014). 236 p. Machugina, E.V.: Legal and organizational basis of activity of police of the Republic of Estonia and its role in ensuring public safety: the dissertation on competition of a scientific degree of candidate of legal Sciences, Moscow (2015). 184 p. Mosey, G.: The processes of globalization and regionalization in the world economy. Economist 9, 23–36 (2002) Nigmatullin, R.V.: On countering threats and challenges from the perspective of modern international law. Legal World 11, 54–58 (2016) Nikishkin, I.K.: Legal regulation of police cooperation in the European Union: thesis for the degree of candidate of legal Sciences, Moscow (2015). 204 p. Regulation (EC) No 1987/2006 of the European Parliament and of the Council of 20 December 2006 on the establishment, operation and use of the second generation Schengen Information System (SIS II) (2018). EUR-Lex: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri= uriserv:OJ.L_.2006.381.01.0004.01.ENG&toc=OJ:L:2006:381:TOC Regulation (EU) 2017/458 of the European Parliament and of the Council of 15 March 2017 amending Regulation (EU) 2016/399 as regards the reinforcement of checks against relevant databases at external borders, OJ L 74, 18.3.2017, pp. 1–7 (2018). EUR-Lex: http://data. europa.eu/eli/reg/2017/458/oj The Council on establishing a framework for interoperability between EU information systems (borders and visa) and amending Council Decision 2004/512/EC, Regulation (EC) No 767/2008, Council Decision 2008/633/JHA, Regulation (EU) 2016/399 and Regulation (EU) 2017/2226 and Proposal for a Regulation of the European Parliament and the Council on establishing a framework for interoperability between EU information systems (police and judicial cooperation, asylum and migration) (2018). EUR-Lex: http://data.consilium.europa. eu/doc/document/ST-15729-2017-ADD-3/EN/pdf

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The Schengen acquis – Agreement between the Governments of the States of the Benelux Economic Union, the Federal Republic of Germany and the French Republic on the gradual abolition of checks at their common borders, OJ L 239, 22.9.2000, pp. 13–18 (2018). EURlex: http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1520302449542&uri=CELEX:4200 0A0922(01) Velyaminov, G.M.: International Law: Experiments. Statute, Moscow (2015). 1006 p. Yastrebova, A.: International Legal Mechanisms of Migration Regulation: Doctrinal Approaches and Experience of the Russian Federation. WACO, Moscow (2014). 464 p. Zinchenko N.N.: Migration law in international legal doctrine and practice: formation and prospects of development: thesis for the degree of doctor of law, Moscow (2012). 480 p.

Excel-Online Digital Tools for Training and Assessing Chemistry Knowledge of Foreign Students of Pre-university Department Ekaterina Sarycheva(&), Pavel Matukhin, Elena Titova, Natal’ya Sarycheva, and Olga Gracheva People’s Friendship University of Russia (RUDN University), Moscow Miklukho-Maklaya str.6, Moscow, Russia [email protected], [email protected], [email protected], [email protected], [email protected]

Abstract. The results of developing and testing digital elements of a distant computer system for assessment of chemistry knowledge to control the training level of foreign students of the pre-university department are provided. The Excel-online table kit is designed to support the training of foreign citizens for selection testing and continuous and midterm assessment tests. It is supposed to rely on BYOD technology, provide online access to tests and simulators via students’ mobile devices. The system is focused primarily on assessing knowledge of the subject. The wordings of the questions do not require fluent Russian language and do not contain complicated speech patterns. Answers also consist of the simplest phrases. The technology of using Excel-online tables as an environment for the development and performance of simulators and tests is described. Students are offered the opportunity to pass training on model sets of two-type test questions. The effectiveness of digital technology of automated transformation of the Russian version of the table test into any other language is shown. The described approach with regard to the level of students’ knowledge of the Russian language, multi-lingual test and the opportunity of preliminary training can lift language, technological and other barriers and assess exactly the knowledge of chemistry, but not the Russian language or information technology. The publication has been prepared under the support of the “People’s Friendship University of Russia Program No. 5-100”. Keywords: Foreign students Computer testing
Excel


Digital learning technologies
Chemistry


JEL Classification Code: I230

1 Introduction Thanks to the mass-scale diffusion and use of mobile devices and Internet communication technologies in recent years, it has become possible to push the time and space frames of the classroom. Digitalization of higher education certainly raises its quality at © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 454–462, 2020. https://doi.org/10.1007/978-3-030-39319-9_52

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all educational stages–from preparatory training for university entrance to graduation. Digital online technologies lead in education since their application increases the number of available resources. The most important form of learning activity at the preuniversity training department for foreign citizens going to study in Russia is assessing their knowledge of general subjects in the chosen program of training. Computer testing based on mobile Internet access systems has become widely used as a basic method for assessing student’s knowledge of chemistry along with oral and written tests at the pre-university training department. It is elaborated using authors’ elements of tutor’s digital complex, computer classes, BYOD technologies (Titova et al. 2018a, b; Gracheva et al. 2019). This paper provides a description of the training structure and basic techniques and applications of simulator-test components of the author’s kit of online-support digital tools for foreign students learning chemistry. The main goals of the complex are the capability to provide students with the best possible access to the author’s training tools and ensure assessment of chemistry as a major subject of future engineers, physicians, veterinarians and farmers against the background of yet poor knowledge of the Russian language by students of the pre-university training department. At the same time, the information and technological emphasis of assessment are laid on training for tests and holding them using students’ mobile devices (Matukhin et al. 2016; Gracheva and Matukhin 2016). Due to the extremely wide range of native speakers entering the university from over 140 countries, the technology presented later is developed with regard to the multi-lingual modification of digital products obtained through its use. Also, applications are not limited solely to chemical science. The development can be used for training and assessment in any subject.

2 Methodology Test assessment of knowledge based on new digital technologies is surely an important element of the whole complex of testing and assessment characterized by special advantages against other types of knowledge assessment (Sarycheva et al. 2016). Computer form of the test presentation is more technologically-advanced. It allows for easy changing of task size, a combination of questions and execution time. It makes it possible to assess knowledge of a whole group of students with different expertise of both the chemical science and the Russian language in any unit of this academic discipline. The computer system ensures an impartial assessment. In the course of online testing technology design, we have aimed to obtain a complex of digital testing and assessment materials, but also to enable foreign citizens to pass preliminary self-training for the test in a convenient form. Publicly accessed test materials as online simulators play a training role and give an opportunity to self-train for selection testing. This form of educational online communication allows the tutor to estimate the intensity of a student’s educational activity. Publication of tests in the corporate university system Moodle makes it possible to get the test results and give individual recommendations to every student. The use of author subject-specific, including multilingual, test versions in the BYOD technology mode at the stage of

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pre-university training also helps foreign students and tutor to overcome the language barrier (Titova et al. 2011; Titova et al. 2013a, b, c, d, e; El’sgol’ts et al. 2014). It should be noted that a specific feature of the technology presented here is that making author subject-specific tests requires considerable time expenses, as well as new expertise in the application of modern digital technologies for teaching a major discipline. Professional knowledge of both general and chemical Russian language is no less important. Nevertheless, practice shows that the costs for preliminary training are covered by the repeated and long-standing use of the developed tools and rapid check of students’ answers. The choice of test language plays a particular role in the design stage of the author’s digital training and testing tools. The language is determined following the goals set. Tests to determine the knowledge of chemistry for continuous and midterm assessment are made up in the Russian language as the state instruction language. As for selection testing, which determines the initial knowledge of foreign students, tests made in an Excel spreadsheet processor can be easily transformed into any other language. For this purpose, they are translated into the native language of the student candidate. Also, our practice provides for the use of an intermediary language (Davletkeldieva et al. 2012; Sarycheva et al. 2018). English known by most of our student candidates acts in the capacity of the intermediate language. Thus, at the stage of selection testing, the use of multilingual versions of computer tests already help student and tutor to overcome the language barrier. This point is extremely important when assessing the knowledge of the subject in the group consisting of several dozens of foreign citizens. In such a situation, our digital system enables each student to choose the most convenient option from the range of test languages. In addition to the possible selection of the main language and range of additional ones, the second direction of our developments is to design software tools for training and holding tests. An important thing here is to minimize the information-technology barrier. Test developer should give to the student an opportunity to concentrate precisely on the wording of the questions and choose the correct answers, but not on learning the management techniques of the information system where the test was made up. The choice fell on an Excel spreadsheet processor inasmuch foremost that this program is included in a computer science training course of almost all countries and students of the pre-university department know the basic techniques of its operation. They easily learn all the necessary information about passing the test during brief instructional advice. Similarly, tutors with advanced computer knowledge quickly master the technology of making up simple tests using built-in Excel functions [5] (Matukhin et al. 2016). An important circumstance is that the cloud version of Excel online adequately displays the chemical symbols built into the table cells, including subscripts and superscripts. This is not always provided by specialized survey systems. The presented results were obtained as the advancement of previously developed techniques (Matyash et al. 2014; Titova et al. 2013a, b, c, d, e). All activities were carried out within joint projects of tutors of major, linguistic and IT disciplines (Provotorova et al. 2013a, b).

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3 Findings A kit of digital tools for distant computer chemistry test was made up at the Chemistry and Biology Chair of Russian Language and General Disciplines Department of the People’s Friendship University of Russia to intensify and monitor learning activities of foreign students in medical, biological, chemical and engineering training program. It is part of the system of information and methodological support of leaning during preuniversity training of foreign students for admission to leading Russian universities. The complex is a multifunctional teaching tool. For some years, it has been used for selection, continuous and midterm testing, reinforcement of information learned. The test suite covers the main units of the chemistry course studied by foreign citizens in the course of training for further university studies in the Russian language. The assessment and training complex consists of a set of Excel processor table files, which includes a workbook, simulator files, and test option sets. All components are hosted on the Microsoft OneDrive cloud storage (Titova et al. 2013a, b, c, d, e; El’sgol’ts et al. 2014; Titova et al. 2018a, b). Thus, the elements of the complex, designed as Excel-online files, can be accessed both from desktop computers connected to the Internet and from students’ mobile devices (tablets, smartphones, etc.). The Excel-online workbook form is a type of web page the view of which in mobile device browsers doesn’t require additional conversion. This allows us to push the limits of educational communication, to supplement the standard of the class-lesson system with asynchronous and asymptotic forms (individual and group, including a flexi-time study schedule independently chosen by the student) through simple means. The workbook is the basis of the complex. It is a base of questions and answers (Titova et al. 2013a, b, c, d, e). The base contains 300 quiz-like questions on all topics of the course. There are five-choice questions (only one is correct). Questions on one study unit are presented by blocks. The block consists of 5 questions relating to one small study topic (see Fig. 1). 161 Валентность брома в молекуле Br2 равна: 162 Валентность кислорода в молекуле O2 равна: 163 Валентность азота в молекуле N2 равна: 164 Валентность серы в молекуле SO2 равна: 165 Валентность серы в молекуле SO3 равна:

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The questions are formulated using the simplest grammatical patterns of the Russian language corresponding to the word order in an English sentence. This makes it easier for a foreign student to understand the essence of the question. Thus, at the first stage of training, we can assess knowledge of chemistry even under the very poor command of the Russian language. This approach allows quick change of the wording with to any other foreign language. Besides, we can frame new questions in one thematic block by copying and changing only the object name. Tests designed for students at later training stages contain compound statements and grammatical patterns; their perception requires students’ proficiency in scientific Russian language.

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When answering a question, a student can choose only one answer out of five possible. Questions are formulated in a way that excludes the possibility of the answer to be guessed. Five questions from one block relate to one small study topic and therefore have a similar meaning. If the student does not know the training content, then all the answers to any question seem correct. We took into account the most common mistakes when drawing up questions. Files of simulators and test options are generated by copying from a workbook. They can be made upon one narrow topic, one study unit or the entire course. With the help of the basic workbook, we have the opportunity to draw up a large number of task options. Also, it is possible to vary the test size with regard to the time allowed for the execution and the question complexity. After forming the question base, the required security settings and modules for test results’ assessment are connected. Forming a common base of questions for the entire course allows presenting training tasks in any combination (Sarycheva et al. 2018; Matukhin et al. 2018a, b). On the base can be developed simulators of four types, such as linear open (LO), linear closed (LC), random open (RO) and random closed (RC). The order of questions in the Linear-type simulators is maintained like in the source workbook. Random sampling and the question order are generated by simulators. The indicator of the resulting answer to each question can be open or closed depending on the task set (Table 1). Table 1. Types of simulators Type of simulator Linear Open (LO) Linear Closed (LC) Random Open (RO) Random Closed (RC)

Question order Resulting answer Saved Open Saved Closed Changed Open Changed Closed

Figure 2 shows a fragment of the first-type simulator. This is a linear open simulator (LO). The order of questions in the simulator corresponds to the order of material presented in the study guide. At the basic course of chemistry students first study elementary particles, then electronic configurations of atoms. This type of simulator can be used at the initial stage of topic learning and students answer questions as they study the training material. The student reads the question, chooses the correct answer, enters the corresponding code (letter) in the Answer column and immediately sees the result in the Check column as one out of two values of the check logical variable (YES or NO). This simulator is used only as a teaching tool for each study unit independently. The Linear Closed Type simulator (LC) is different from the Linear Open simulator (LO) only by hidden “Check” column. The student sees the result only after the entire test will be passed. This test option is also used only for self-assessment. The generator of random test options is designed on question base and linear simulator tables. Sorting the table by the random key RND, we get new sets of question tuples with a random sequence. They are used to formulate a frame of check classroom test options. Simulators of the third and fourth types (random open (RO) and random

Excel-Online Digital Tools ВОПРОС Заряд ядра атома кобальта равен Заряд ядра атома хрома равен Заряд ядра атома магния равен Заряд ядра атома кремния равен Число неспаренных электронов в основном состоянии атома натрия равно Число неспаренных электронов в основном состоянии атома кремния равно Число неспаренных электронов в основном состоянии атома фосфора равно Число неспаренных электронов в основном состоянии атома железа равно Число неспаренных электронов в основном состоянии атома марганца равно

А + 13 + 13 + 13 + 13 1 1 1 1 1

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Fig. 2. A fragment of the linear open simulator on the topic “Atomic Structure”

closed (RC)) are developed this way. Figure 3 shows a fragment of a random open simulator (RO) on the topic “Atomic Structure”. № 1 2 3

ВОПРОС Заряд ядра атома алюминия равен Количество нейтронов в изотопе железа 56Fe равно Количество электронов в основном состоянии атома натрия равно

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Электронная конфигурация атома алюминия Имеет электронную конфигурацию, одинаковую с атомом неона:

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А В С D Е ОТВЕТ РЕЗУЛЬТАТ + 13 + 27 + 24 + 12 + 14 A ДА 28 30 26 35 18 B ДА 1 2 3 4 5 A ДА 1s2 2s2 2p6 3s2 3p2 1s2 2s2 2p6 3s2 3p4 1s2 2s2 2p6 3s2 3p6 1s2 2s2 2p6 3s2 3p1 1s2 2s2 2p6 3s2 D ДА Na + Se 2Ba 2+ Fr + Cl B ДА

Fig. 3. Fragment of a random open simulator (Topic “Atom Structure”)

This type of test can be made up of modules on one or several topics. Students use it to be trained for midterm and final testing. A random combination of questions makes it possible to repeatedly pass tests and improve the results. In the random closed type simulator (RC), the last column Check is closed. This is the only type of test that can be used to assess student’s learning activities. Figure 4 shows the assessment module. It is drawn up as an auxiliary table and is placed below the test. It is designed for the automatic check of test results and calculation of grade. The tutor determines the grading scale and programs grade computation (in our situation, a five-mark grading system). The result of completed test loos like in Fig. 5.

Fig. 4. Assessment module

Fig. 5. Test result

The simple technology of using Excel tables as an environment for the development of simulators and tests presented herein is not limited to the examples described above. One of the directions of development is the expansion of the language range. Using a tabular form allows easily replacing the Russian wording with any other. Thus, we can quickly transform our templates into the sector of any language. Developed tools have become multilingual.

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4 Conclusion The complex of the author digital training and assessment techniques to determine the knowledge of chemistry by foreign students submitted for consideration in this paper is convenient to use since students can access any of the elements both from desktop computers connected to the Internet and on own mobile devices (smartphones, tablets, etc.). This is ensured by the location of the whole complex in a special folder of the OneDrive cloud storage of the Microsoft network service. Elements can be accessed via links both from desktop computers connected to the Internet and students’ mobile devices (tablets, smartphones, etc.). It is possible to place links to simulator and test files in the tutor’s account, for example, in the Moodle corporate information system for support of university educational process (Matukhin et al. 2018a, b; Zaporozhets et al. 2017). Using the system settings, the tutor can open access to training or assessment tests for students at the required time and set the time of their completion and range of questions. Thus, a student can repeatedly deal with questions from one study unit (in acquiring, consolidating and assessing knowledge). The student can carry out the tests several times until he achieves the desired result. Repeated execution of tests on one study topic allows foreign students to quickly learn a large number of chemical terms. Since the report on the completion of the study assignment is automatically sent by the system to the tutor, he can continuously monitor the performance of each student. Simple simulators and tests in the form of Excel tables are especially popular among foreign students at the initial stage of their adaptation to the Russian education system. Practical application of our developments has shown that they help a foreign student and tutor to overcome linguistic and information-technology barriers. Thus, foreign students faster get used to the new environment and feel less nervous when passing tests, and the learning process becomes more comfortable.

References Titova, E., Savost’yanova, E., Yakushev, V., Matuchin, P., Savchenko, E.: Online complex supporting the distance education course in human anatomy for foreign pre-university medical students. Revista ESPACIOS 39(10), 34–43 (2018a) Gracheva, O.A., Matukhin, P.G., Komissarova, N.V., Saltykova, O.V., Kopylova, P.A.: Some principles of the computer RFL workbook development: the interactive vocabulary and grammar elements. XLinguae XII(1), 103–115 (2019). http://www.xlinguae.eu/2019_12_01_ 08.html Gracheva, O.A., Matukhin, P.G.: Innovative elements in teaching basic physics to foreign students using the OneDrive cloud resource and the Moodle LMS in mobile mode. In: AllRussian Research and Practice Conference “Topical Issues of Fulfilling Educational Programs in Pre-University Training Departments for Foreign Citizens”, Institute of Russian Language and Culture of Moscow State University named after M.V. Lomonosov, Moscow, 16–18 May 2016: Collected Articles (illustrated)/Editors-in-Chief M.N. Rusetskaya, E.V. Koltakova, M. (2016). 584 p.

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Davletkel’dieva, A.A., Provotorova, E.A., Matukhin, P.G., Vyalova, T.K.: An integrated contentlanguage approach in the development of electronic study guides for foreign students of preuniversity training department. Bull. People’s Friendsh. Univ. Russ. Ser. Informatiz. Educ. 4, 67–72 (2012) Zaporozhets, V.V., Isaeva, I.E., Levicheva, S.V., Malykh, E.A., Matukhin, P.G., Mikhlik, M.M., Khegai, V.K.: Automated making up of GIFT test quiz files on the topic “English Grammar: Irregular Verbs” for the Moodle system in word and excel. Russian Independent Developments (Initiative. Enterprise. Sagacity), pp. 104–105. Scientific Publication, SaintLouis (2017) Matukhin, P.G., Gracheva, O.A., Els’gol’ts, S.L., Pevnitskaya, E.V.: Tabular arrangement of educational content as the basis of the BYOD complex for support and control of teaching of foreign students to physics and the Russian language of physics using MS OneDrive cloud resource. In: Proceedings of the International Research and Practice Conference “Informatization of Engineering Education” INFORINO 2016. Moscow Institute of Energy, Moscow (2016) Matyash, G.A., Matukhin, P.G., Anikina, E.O., Provotorova, E.A.: Making up Tests in Microsoft Office Excel. Question Base, Simulators, Question Generator, Tests. Chronicles of Science and Education, no. 7. Institute of Scientific Information and Monitoring of the Russian Academy of Education, Moscow (2014) Provotorova, E.A., Titova, E.P., Matukhin, P.G.: Human Musco-skeletal System. A Program Kit. Russian-Latin Test Crossword Puzzles “Hot Potatoes” with English Interface. [Electronic resource]. Joint Fund of Electronic Resources “Science and Education” Institute of Scientific Information and Monitoring of Russian Academy of Education, Moscow, 17 September 2013a. ESPD code: 02076881.00964-01 99 01 Provotorova, E.A., Titova, E.P., Matukhin, P.G., Sarycheva, N.N.: Cooperated IT projects as a technology of Linguo-computer modeling of specialist’s language profile. In: Collection of Scientific Papers “Modern Technologies and Techniques in Teaching a Professionallyoriented Foreign Language”, vol. 1, pp. 124–129. People’s Friendship University of Russia, Moscow (2013b) Sarycheva, E.A., Sarycheva, N.N., Yakushev, V.V.: The use of test techniques for monitoring and teaching chemistry basics to foreign students in peoples’ friendship university of Russia. In: Topical Issues of Fulfilling Educational Programs in Pre-University Training Departments for Foreign Citizens: Collection of Articles of the All-Russian Research and Practice Conference of State Institute of Russian Language named after A. S. Pushkin, Moscow, 16– 18 May 2016, pp. 425–431 (2016) Sarycheva, E.A., Matukhin, P.G., Titova, E.P., Sarycheva, N.N.: EXCEL tables as a methodological environment to prepare chemistry tests for foreign students of preuniversity training department. In: The 3rd All-Russian Research and Practice Conference “Topical Issues of Fulfilling Educational Programs in Pre-University Training Departments for Foreign Citizens”, Moscow, 20–21 September 2018: Collection of Articles/Editor-inChief M.N. Rusetskaya, E.V. Koltakova, pp. 677–684. State University of Russian Language named after A.S. Pushkin, Moscow (2018) Titova, E.P., Matukhin, P.G., Provotorova, E.A., Yakushev, V.V., Anokhina, E.V.: Human Musco-skeletal Apparatus. Collection of Assignments and Tests for Foreign Students. (Russian, Latin, English, and Additional Languages) [Electronic Resource]. Institute of Scientific Information and Monitoring of the Russian Academy of Education, Moscow (2013a). “Chronicles of Science and Education”, No 7 (50). http://ofernio.ru/portal/ newspaper.php

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Titova, E.P., Savost’yanova, E.B., Savchenko, E.L., Matukhin, P.G.: A multi-lingual approach to training of foreign students at the initial stage of education. In: Proceedings of the 5th International Research and Practice Conference “Russian Man in the Break of Eras: Quo Vadis?”, pp. 25–26. Yekaterinburg University of Human Sciences (2011) Titova, E.P., Matukhin, P.G., Zabolotnaya, I.M., Provotorova, E.A.: Developing electronic support toolkit for learning of the anatomy course by foreign medical students of the preuniversity training department of using microsoft SkyDrive cloud technologies. Nat. Tech. Sci. 5, 299–305 (2013b) Titova, E.P., Matukhin, P.G., Provotorova, E.A., Yakushev, V.V., Anokhina, E.V.: Human Musco-skeletal Apparatus. Collection of Assignments and Tests for Foreign Students. Database. Inv. no. 19504, 1 July 2013. Database of the Joint Fund for Electronic Resources “Science and Education” (2013c). http://www.ofernio.ru/rto_files_ofernio/1950.doc. Accessed 20 Jan 2019 Titova, E.P., Provotorova, E.A., Matukhin, P.G.: Multi-lingual content-language tests as components of teaching and learning support kit for medical students at the initial stages of educational and vocational training. In: Mathematical 6th International Research and Practice Scientific Conference “Higher School: Experience, Issues, Prospects”, pp. 747–752. Peoples’ Friendship University of Russia, Moscow (2013d) Titova, E.P., Provotorova, E.A., Matukhin, P.G.: Joint content-language IT projects as an element of the continuous development of ICT-expertise of tutors. In: Proceedings of the 23rd International Conference-Exhibition “Information Technologies in Education”, Part III, pp. 26–28 (2013e) Titova, E.P., Savost’yanova, E.B., Matukhin, P.G., Savchenko, E.L., Silaeva, L.V.: The experience of using microsoft one drive cloud technologies as a support tool of distant learning of the human anatomy course. In: MORPHOLOGY: Archive of Anatomy, Embryology and Histology, Proceedings of the 14th Congress of the International Association of Morphologists, 19–20 September 2018, no. 3 (153), p. 271. Eskulap Publishing House, St. Petersburg (2018b) El’sgol’ts, S.L., Provotorova, E.A., Titova, E.P., Gracheva, O.A., Pevnitskaya, E.V., Matukhin, P.G.: Educational adaptation of foreign students of natural and human science departments with elements of BYOD access to the online components of teaching and learning support kit using ONE-DRIVE. In: 24th International Conference-Exhibition “Information Technologies in Education”. Collection of Proceedings, Part II, pp. 89–90. Moscow State University, Moscow (2014) Matukhin, P.G., Gracheva, O.A., Provotorova, E.A., Komissarova, N.V., Saltykova, O.V.: Tables as simple interface of teachers’ personal information systems for mass language teaching and learning support: the case of the word, excel, note, GIFT, LMS MOODLE and QUIZLET joint use. In: Proceedings of the 4th International Conference on Information Technologies in Engineering Education, MPI, Moscow, 24–26 October, pp. 441–446. MPI Publishing, Moscow (2018a) Matukhin, P.G., Sarycheva, E.A., Komissarova, N.V.: EXCEL spreadsheets as environment for developing tests in chemistry for teaching and training of foreign students. In: Informatization of Continuing Education - 2018 (ICE 2018): Proceedings of the International Scientific Conference, Moscow, 14–17 October 2018, in 2 volumes/Under General Editorship of V.V. Grinshkun, vol. 1, pp. 582–585. People’s Friendship University of Russia, Moscow (2018b)

Issues of Interdependence of External Debt of States and Human Rights in the UN Activities Yu. A. Skachkova(&) RUDN University, Moscow, Russia [email protected]

Abstract. The concept of public debt has been known to mankind for a long time. In science, there are various approaches to its understanding. Some believe that the public debt has an adverse effect on the state, worsens the budget policy of the state, increasing, among other things, the burden of the nation, which is considered to be negative for the state’s economy and development of society as a whole. According to the second approach, financing of state expenditures with the help of a loan is recommended, since it allows to achieve an optimal distribution of the investment burden for the state and to avoid raising taxes to ensure state activities in emergency situations. Today, this paradigm is reinforced by understanding of the human rights aspects of public debt. According to the research, a massive violation of economic and social human rights has been evidenced in borrowing states. Such data takes on special significance in the context of the need to achieve the Sustainable Development Goals (2016– 2030), since it will be extremely difficult for these states to achieve them. Although the primary responsibility for fulfilling international human rights obligations lies with states, but other entities, including international development, trade and finance institutions, and private corporations are also obliged to comply with international human rights obligations. Depending on the circumstances, such entities are also obliged to ensure that human rights are not violated by third parties, as well as to develop, adopt, finance and implement strategies and programs to eliminate the causes that impede the enjoyment of human rights. Methods The methodological basis of the study involves a combination of general scientific (dialectical, historical, inductive, deductive, analytical, synthetic) and private scientific methods (formal legal, comparative legal, interpretative, statistical, procedural and dynamic). Keywords: Sovereign debt
Development
Socio-economic rights
Poverty
International finance

1 Introduction Throughout the history of mankind, states have entered into loan agreements to finance their policies. Considering the issues of public debt, it should be noted that traditionally, in science, there are two major theories of public debt: negative and positive. © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 463–467, 2020. https://doi.org/10.1007/978-3-030-39319-9_53

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According to the first approach the public debt worsens the budget policy of the state, increasing, among other things, the burden of the nation, which is considered to be negative for the state’s economy and development of society as a whole (Ricardo 1951). According to the second approach, financing of state expenditures with the help of a loan is recommended, since it allows to achieve an optimal distribution of the investment burden (Goldmann 2018) for the state and to avoid raising taxes to ensure state activities in emergency situations (Solovova 2015). At present, public debt is an organic component of the financial systems of the overwhelming majority of countries of the world (the only exception is five countries in the world that have no debt obligations - they are small in terms of territory, their economy is based on development of tourism, agriculture or one industrial sphere Macau, Brunei, Liechtenstein, British Virgin Islands and Palau) (Tsaregradskaya 2017). Consequently, of particular importance are the priorities and areas of debt policy, in the framework of which the public debt is formed, serviced, and legally regulated taking into account the dual attitude to its necessity. Nevertheless, the debt should always be evaluated objectively, because if the government decides to use loans, it means there is a need to improve its financial performance. Today, the issue of public debt is also considered from a human rights perspective, primarily referring to the negative impact of public debt on the realization of the right to food, the right to health, the right to education, the right to development and the right to self-determination (Bantekas and Lumina 2018).

2 Results The issue of the external debt of states has been on the agenda of various UN human rights bodies for almost 30 years. Since the 1990s, the Commission on Human Rights and subsequently the Human Rights Council have drawn attention to the problems that an excessive burden of external debt and economic reform policies pose to the enjoyment of human rights, especially in developing countries (Human Rights Commission 1998, 2005). In addition, since 1997, these bodies have sought to address such issues through the establishment of thematic mandates, which have undergone a number of changes over the years. The concluding observations of various human rights treaty bodies on the submitted country reports also indicate that the heavy burden of foreign debt and dependence on foreign aid may hamper the efforts of the participating states to enforce their human rights treaty obligations, especially the ones concerning the enjoyment of economic, social and cultural rights. Analysis of the resolutions and decisions adopted by the UN human rights bodies on foreign debt and economic reform policies over the years indicates that there are differences in the nature of voting on a mandate among developed countries (or creditor countries), which oppose this mandate on the basis that such bodies are not among the proper structures that can deal with external debt issues, and developing countries (mainly debtor countries), the vast majority of which support such mandate. However, this obstacle can be overcome by adopting the principle of shared responsibility for the observance of human rights by all interested parties. The international community is responsible for ensuring that human rights issues are considered on a holistic basis,

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which should include a discussion of the causes of human rights violations and the conditions under which they occur. The burden of external debt is one of the main factors hindering sustainable development and the enjoyment of human rights in many developing countries. Research results indicate that in some countries more financial resources are spent annually on debt servicing than on such human rights-related public services as education and health, and that despite debt cancellation under the Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative, the debt of many countries is still very substantial, which makes it difficult for them to achieve the United Nations Sustainable Development Goals (2016–2030) (Abashidze 2016) and the realization of economic, social and cultural rights (Harris and Lane 2018). In addition, the impact of debt relief is often leveled by economic reform policies that debtor countries often must comply with or implement, as well as unfavorable terms for trade. There are also a number of countries that spend a substantial portion of their national resources on debt servicing by fulfilling their obligations regarding the realization of economic, social and cultural rights, but are excluded from participating in existing debt relief initiatives because they do not meet relevant requirements. These problems once again point to the need to use a new approach, when considering the debt problem, that ensures, in particular, consideration of human rights aspects and does not create difficult economic conditions, in contrast to the approach that has prevailed until recently and which was aimed solely at fighting poverty. In general, these issues should be considered in the general context, in particular, the goals proclaimed in the UN Charter, which provide for the international cooperation in solving international problems of economic and social nature; the call by the 1993 World Vienna Conference on Human Rights to the international community to assist in alleviating the external debt burden of developing countries in order to complement the efforts of such countries to fulfill their human rights obligations; the UN Millennium Declaration (resolution 55/2, goal 8 “To develop a global partnership for development”); The United Nations Sustainable Development Goals (2016–2030), above all, Goal 17 “Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development”, which includes the achievement of several tasks, including Task 17.4: “Assist developing countries in attaining long-term debt sustainability through coordinated policies aimed at fostering debt financing, debt relief and debt restructuring, as appropriate, and address the external debt of highly indebted poor countries to reduce debt distress” (Resolution, 2015). The need to consider the consequences of external debt and other relevant international financial obligations of states for the implementation of human rights is based on the principle of international assistance and international cooperation, which is either indirectly or directly envisaged in numerous international human rights instruments. These include the Universal Declaration of Human Rights (Article 28); Declaration on the Right to Development (Article 3 (3)); International Covenant on Economic, Social and Cultural Rights (Article 2 (1) and Articles 22 and 23); and the Convention on the Rights of the Child (Article 4). It must be emphasized that international cooperation in the promotion of human rights is also one of the main objectives of the UN enshrined in Article 1 (3) of the

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Charter. In addition, Article 56 of the Charter obliges Member States to cooperate with the Organization in order to achieve its purposes, including the promotion of universal respect for, and observance of, human rights and fundamental freedoms for all. One of the key aspects of the obligation on international cooperation is that states should not adopt or implement, either individually or through membership in international organizations, policies and practices that pose a threat to respect for human rights. In addition, it is imperative that development cooperation helps promote and respect human rights. In this regard, it should be noted that the human rights treaty bodies, in particular, the Committee on Economic, Social and Cultural Rights (general comment), urge international financial institutions to pay more attention to ensuring the protection of human rights in their credit policies, credit agreements and debt relief initiatives. Finally, in accordance with the United Nations Inter-Agency Statement of Common Understanding, all development cooperation programs, strategies and technical assistance should contribute to the realization of human rights enshrined in the Universal Declaration of Human Rights and other international human rights instruments, and all cooperation and development planning should be carried out in accordance with the human rights standards contained in these documents.

3 Conclusion/Recommendations In conclusion, it should be noted that all people have the right to actively, freely and constructively participate in civil, economic, social, cultural and political development, within which all human rights can be fully realized and contribute to such development and enjoy its benefits. Although the primary responsibility for fulfilling international human rights obligations lies with states, there is a growing consensus that other entities, including international development, trade and finance institutions, and private corporations, are obliged to comply with international human rights obligations (Abashidze 2017). Depending on the circumstances, such entities are also obliged to ensure that human rights are not violated by third parties, as well as to develop, adopt, finance and implement strategies and programs to eliminate the causes that impede the enjoyment of human rights.

References Abashidze, A.K., Solntsev, A.M., Kiseleva, E.V., Koneva, A.E., Kruglov, D.A.: Achievement of sustainable development goals (2016–2030): international legal dimension. Indian J. Sci. Technol. 9(37), 1–9 (2016) Bantekas, I., Lumina, C.: Sovereign Debt and Human Rights. Oxford University Press, Oxford (2018) Abashidze, A.K., Kislitsyna, N.F., Solntsev, A.M. (eds.): Business and human rights. RUDN, Moscow (2017) Harris, E., Lane, C.: Debt as an obstacle to the sustainable development goals (2018). https:// www.un.org/development/desa/en/news/financing/debt-as-an-obstacle-to-sdgs.html General comment No. 4 on the right to adequate housing (1991)

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Goldmann, M.: Foreign investment, sovereign debt, and human rights. In: Chapter for Ilias Bantekas and Cephas Lumina (eds.) Sovereign Debt and Human Rights, OUP, SSRN, 24 August 2018 (2018). https://ssrn.com/abstract=3103632 Human Rights Commission resolutions 24 April 1998, 19 April 2005 Resolution 70/1: “Transforming Our World: The 2030 Agenda for Sustainable Development” adopted by the United Nations General Assembly on 25 September 2015 Ricardo, D.: On the Principles of Political Economy and Taxation, vol. 1, p. 246, Cambridge (1951). Hume, D.: Of Public Credit. Essays Moral, Political and Literary. vol. I, p. 366, New edn. London (1882) Solovova, E.V.: Public credit as an institution of financial law through the example of the Russian Federation and the United States, p. 47. Monograph, Moscow (2015) Tarakanov, V.V., Inshakova, A.O., Dolinskaya, V.V.: Information society, digital economy and law. In: Popkova, E.G. (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT/Studies in Computational Intelligence, vol. 826, pp. 3–15. Springer, Cham (2019) Tsaregradskaya, Yu.K.: Legal regulation of public debt in the context of Russia’s debt policy for 2017–2019. Actual problems of Russian law, vol. 11, pp. 91–95 (2017)

Mechanisms and Tools of the Economic Security System of Economic Entities Liubov V. Plakhova(&), Tatiana A. Alekhina, Evgenia V. Simonova, Nikolay V. Pokrovskiy, and Inna V. Karpova Orel State University of Economics and Trade, Orel, Russia [email protected], [email protected], [email protected], [email protected], [email protected]

Abstract. Business entities are exposed to the risk component of the implementation of their activities. Negative features of the economic activity require the creation of a system of economic security. Economic security should provide an effective functional basis for minimizing risks. The use of effective mechanisms and tools is quite important. The lack of a scientific study of this issue actualizes the research topic. The purpose of the scientific article is to consider the mechanisms and tools of the economic security system of economic entities. The objectives of the study are to the consideration of economic entities of economic security; to highlighting the relationship of economic entities of the economic security; to definition of tools of the economic security system of economic entities; to the formation of the mechanisms of the economic security system of economic entities. The methodological basis for writing a scientific article was the method of theorization, the grouping method, the method of isolating characteristics, the method of revealing definitional foundations, the method of subjectively identifying elements, the method of establishing causeeffect relationships, the method of mutually reinforcing elements, the method of modeling the situation, the method of determining elements of the totality, the method of forming events, the systematization method, an implication method, the generalization method, the method for highlighting important elements. Keywords: Mechanism
Tool System
Reserve
Monitoring


Economic security
Business entity


1 Introduction The economy is changing in accordance with the transformation of the processes of the economic paradigm. The economic paradigm generates new reproductive functions. The obsolete foundations of economic development are being replaced by new postulates. New economic postulates form the conditions for good governance. New economic postulates effectively model short-term and medium-term growth of economic indicators. New postulates accompany an increase in the level of riskiness of the economic development of economic entities. Business entities are at risk. This circumstance is justified in the framework of two characteristics. Firstly, business entities act as controlled agents. Accountability is associated with the presence of the function © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 468–477, 2020. https://doi.org/10.1007/978-3-030-39319-9_54

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of subordination of economic entities in relation to constructive entities. Secondly, business entities are exposed to risks and threats associated with inefficient use of available resources. This aspect produces a problem characteristic of the study of the economic security of economic entities. Economic security of business entities has distinctive characteristics. The concept of «the economic security» is viewed from different angles. This differentiation is caused by the subject component. Economic security at the macro level is a set of processes that determine the state of the economy through indicators. These indicators are the steady growth, the solvency, the stability and the sustainability of the system. Economic security at the macro level is identical to national security. Economic security at the micro level is isolated by the economic activity of entities. The emphasis is on the efficient use of resources of economic entities. As part of the economic security of business entities, studies are conducted aimed at determining the functional components of agents. Functional components can be applied based on the use of effective tools and mechanisms of the economic security system of economic entities. This circumstance is due to the following features. Firstly, economic security tools are factors transforming processes. Secondly, tools are the basis for the formation of conditions for ensuring economic security of economic entities. Thirdly, mechanisms trigger processes for the interaction of economic entities. The selected mechanisms and tools most clearly regulate the economic security system of economic entities. This research topic is quite significant and relevant. The purpose of scientific research is to consider the mechanisms and tools of the economic security system of economic entities. The objectives of the study are: – to consider economic entities of economic security; – to highlight the ties of economic entities in the framework of ensuring economic security; – to identify the tools of the economic security system of economic entities; – to form the mechanisms of the economic security system of economic entities. Tasks reveal the topic of a scientific article based on the use of theoretical research tools. A fairly important component are research methods.

2 Methods Methodological prerequisites for research are revealed through the application of scientific and general scientific methods. Group separation of these methods can be reflected in the compilation of the instrumental apparatus. The main research tools are: 1. The study of the theoretical basis of economic entities of economic security. The main methods are the theorization method, the grouping method, the method of isolating characteristics, the method of revealing the definitional foundations, the method of subjective selection of elements. 2. The study of the relations of interaction of economic entities on economic security. The main methods are the method of establishing cause-effect relationships, the method of mutual reinforcement of elements.

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3. The allocation of tools of the economic security system of economic entities. The main methods are the situation modeling method, the method of determining the elements of the population, the method of forming events. 4. The formation of the mechanism of the economic security system of economic entities. The main methods are the systematization method, the method of implication, the method of generalizing tools, the method of highlighting important elements. Methods reveal the key objectives of the study. Methods allow you to create a comprehensive view of the mechanisms and tools of the economic security system of economic entities. Research tasks need to be uncovered.

3 Main Part The study of the process of economic security is associated with the consideration of the concept of «the economic entity». The economic entity is a fairly significant unit. The economic entity is a participant in the microeconomic environment. The most common definition is the following concept. The economic entity is a person engaged in entrepreneurial activity and carries out economic and economic functions within the framework of a single microeconomic environment (Dent 2001). The economic entity carries out production activities. This activity is aimed at producing economic activity of the population. This aspect transforms the concept of business entities. The economic entity is an entity regulated by the legal field engaged in activities in the field of production or sale of goods, work of services (Pautova 2003). This definition important features of the concept. These features are: – the formation of human capital (Bezugly 2012); – the desire for managerial decision-making (Tyurev 2017); – the use of production factors for the implementation of their activities (Solozhentsev 2015). Business entities are agents of the microeconomic environment. The economic entity is a type of agent providing practical activities to achieve the necessary results (Fig. 1). An important feature of this concept is the presence of a result. This concept is due to the presence of the following postulates. Postulates reflect: – type of agents is a structural unit revealing economic activities to ensure economic security; – practical activity is a form of active manifestation of actions of subjects in the field of economic security; – specific actions are targeted decisions aimed at ensuring economic security; – achievement of the result is the desire to realize the goal of economic security. Economic subjects of economic security are multifaceted. Types of business entities are differentiated. Types of economic entities have a fairly wide species range. Economic entities of the economic security are defined through the characteristic features of intersectoral separation of the management system.

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The business entity is a type of agent providing practical activities to achieve the result The destructive subject

The constructive subject The collegial management body

The sole management body

The household

The business entity The household group

The compony

Fig. 1. Economic entities of the economic security

Consider the subjects in detail. These include: – households are a self-sufficient system of social reproduction and consumption based on the principle of isolation of management (Varnaliy et al. 2016); – the company is an independent business entity with legal rights and obligations in the framework of production, marketing or other professional activities (Socurova 2019); – the sole management body is a link in economic activity that makes decisions through the consolidation of personal duties; – the collegial management body is a link in economic activity that makes a decision through consolidation of collective responsibilities; – business entity is an association of business entities within the industry field based on contractual obligations (Soynikov 2015); – constructive subjects are external agents of the economic activity, acting as organizers of the system of legislative and judicial rule-making; – destructive subjects are external agents of economic activity that are in constant imbalance in the process of management and decision making. The distinguished differentiation divides economic entities on the principle of direct and indirect participation in professional activities. Direct participation is characteristic of households, companies, business groups. Intermediate values are held by sole and collective management bodies. On the one hand, the formation of a system of economic security is unconditional. The functional responsibilities of business entities regulate indirect interaction with participants in the formation of economic security. Indirectly involved in this activity are constructive and destructive subjects. Constructive subjects regulate the system of the economic security. Destructive subjects determine

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conditional participation in this system on mutually beneficial conditions. Economic entities of the economic security system are interconnected (Fig. 2). The household

The compony

The sole management body The collegial management body The business entity

1 2 3

1– planning, development and decision making on ensuring economic security 2– rational use of cash

3,4– development of strategies and functions

4

5 6

The constructive subject

AGENT

5– implementation of the concept in the field of economic security of the enterprise

7 The destructive subject

6– development of legal framework for economic security

7– formation of corporate reserves

Fig. 2. Interaction of economic entities to ensure economic security

The interaction of business entities is reflected through communication with the agent. The business entity is a full-fledged participant in the economic security system. Functional features of business entities are expressed in activities. These measures have a positive impact on the economic security system. These measures determine the strategic basis for the implementation of the economic security system. Each business entity determines a range of functions. The functions are aimed at ensuring economic security. Households are planning for economic security. The planning system is related to decision making. The pool of formed decisions is modeled as part of the plan. The plan allows for the implementation of measures to ensure the economic security of the subject in question. Companies rationally use cash. The main criterion for the economic security of the company is maintaining a stable financial side. Companies maintain liquidity and financial stability. The sole management body and the collegial management body have similar functionality to ensure economic security. This functionality is determined by the strategic orientation. This system is similar to households. The business entity system

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contributes to the implementation of decisions based on managerial functionality. The strategic basis determines the role of the sole and collective management bodies for the long term. Business entities are provided with the implementation of the functional component of economic security. The economic security system of business groups imitate functional actions. The functional basis is quite an important component. The importance aspect is dictated by the presence of contractual relations in the system of ensuring the economic security of business groups. Constructive and destructive subjects have indirect relationships. Constructive subjects develop the legal framework for economic security cooperation. Destructive subjects create corporate reserves. Constructive subjects are subjects of norm-setting activity. Destructive subjects are aimed at reducing risk. In general, the identified relationships between business entities allow us to identify tools and form the mechanisms of the economic security system of business entities. An important feature is the application of the principles of compliance to the study of tools of the economic security system.

4 Result The principles of correspondence of a stable system of relations are statements reflecting the characteristic structural features of the distinguished system. In Fig. 3, five basic principles of compliance with a sustainable system are regulated. These principles reflect the economic security system of economic entities. The principle of timeliness reflects the time frame of the system. This principle indicates the limited time and timely development of the economic security system of economic entities. The principle of flexibility denies the autarky of the system. The distinguished principle testifies to the study of additional directions that modify the system of economic security. The principle of competence determines the functional support of the economic security system. The principle of efficiency expresses the achievement of indicators by minimizing costs. On the one hand, effectiveness implies the presence of a fulfilled goal. On the other hand, this result is achieved by minimizing costs and losses. The principle of systemicity accumulates elements of the general totality. The formulated principles determine the significance of the tools of the economic security system of economic entities. The tools offered have a number of limitations. These restrictions are declared through the methodological basis. Tools must comply with the requirements of these principles. The author proposed activities that are tools of the economic security system. Events ensure the existence of a system of economic security of economic entities. Activities govern mechanisms. Consider the selected tools in more detail. 1. Economic risk management involves the development of measures related to minimizing economic risks. The main principle of the risk management process is timeliness. Timeliness of the application of the developed measures helps to identify the risk component. Timeliness contributes to planning decisions on emerging issues. The structural element in the risk management system is the

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Economic risk management

Formation of a business intelligence system The system of economic protection of the enterprise

– timeliness – flexibility – competence – efficiency

Monitoring the business entity

– systematic

Adaptation to activities of destructive subjects Fig. 3. Tools of the economic security system of economic entities

identification of the risk component. The identification process is built on the basis of various risk minimization models. The identification process determines the economic security system. This tool allows you to apply the system of economic security of an economic entity ex post. 2. Formation of a business intelligence system is a tool aimed at collecting and analyzing information for making managerial decisions in the field of increasing the competitive capabilities of an economic entity. The process of collecting and analyzing data is associated with the identification of problem-causal relationships. The basic principle is flexibility. The principle of flexibility is necessary for adjusting business entities to market conditions. The measures taken include: the assessment of the risk component, the elaboration of concepts for introducing new trends, the identifying channels for information leakage and new developments, the training employees within the framework of a system to prevent negative consequences from these conditions.

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3. The system of economic protection of the enterprise begins with a study of the protective component of the economic security system. The principle of competency plays a priority role. This principle ensures the availability of an effective component in the economic security system. The economic protection system of the enterprise is working on issues in the field of eliminating economic threats in the current activities of the enterprise. The economic protection system of the enterprise ensures the safety of the resource component, the current liquidity of funds, and the strategic plan for the economic and financial development of the enterprise. 4. Monitoring of the business entity acts as a tool for tracking failures in the economic security system. The principle of efficiency regulates monitoring as a tool for monitoring economic activity. The process of monitoring the activities of an economic entity is a continuous tool of the economic security system. Firstly, monitoring provides information and analytical data in the planning process. Monitoring allows you to implement the strategic objectives of economic activity through the use of identified analytical information. Secondly, monitoring is a tool for continuous change tracking. Transformation processes affect the functioning of the enterprise. Variability of the medium increases the rate of transformation. 5. Adaptation to destructive entities is the process of adapting an enterprise to destructive entities. Competition allows you to simulate some of the positions of an economic entity in order to develop measures to adapt to the market. Adaptation to destructive subjects involves the search for solutions to develop a system of mutual work with competitors. The main tool is the principle of consistency. Consistency is aimed at accounting for all the signs and principles. A detailed study of each destructive subject of economic security with the identification of various aspects of its professional activity. In general, the proposed tools are precautionary in nature. Dedicated tools contribute to ensuring the system of economic security of the subject. The economic security system is aimed at minimizing economic risks and generating results. The mechanisms of the economic security system of economic entities are presented in Fig. 4. The author of the scientific article has formed four mechanisms of the economic security system of economic entities. The mechanisms reflect various aspects of the economic security system of an economic entity. The functional mechanism regulates the process side of the economic activity of the business entity. The administrative mechanism expresses the features of local rule-making of an economic entity. The economic mechanism develops a system for planning the economic activity of an economic entity. The backup mechanism provides a certain level of reserves and resources for the effective functioning of the enterprise. The functional mechanism is based on the declared concept. The concept is expressed in the framework of the philosophy of the business entity. The organizational structure and system of economic security is built in the framework of a single toolkit. This tool is the function. The functional basis of the economic security system is associated with the development of various economic processes. Each subject performs a specific set of functions. The economic activity of the business entity is quite well planned. Limited resources of economic entities are determined in value terms. The economic security system is autocratic. The economic security system is not subject to change.

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THE FUNCTIONAL MECHANISM (philosophy, functions, resources) THE ADMINISTRATIVE MECHANISM (regulation, regulation, licensing) THE ECONOMIC MECHANISM (diagnostics, planning, controlling) THE RESERVE MECHANISM (planning, accumulation, diversification) Fig. 4. The mechanisms of the economic security system of economic entities

The administrative mechanism acts as a local rule-making activity of an economic entity. The economic security process is built on the basis of declarative foundations. This mechanism defines the system of regulation and regulation as the basis of economic activity. The process of regulation and regulation is undergoing the least changes. The rationing process is associated with clearly established rules in the framework of economic activity. The tightening of these rules is produced in the context of licensing. The presented mechanism is subject to change. The emergence of negative prerequisites for economic activity is minimized. Full denial of a possible negative situation in this mechanism is not provided. The economic mechanism of economic security determines the ways and forms of strengthening the material base of the enterprise. The key tool of the economic mechanism is diagnostics. Diagnostics is aimed at constant monitoring of economic activity. Diagnostics is impossible without an established planning system. Planning allows you to predict the possible features and changes of the business entity. Planning develops measures to finance economic activities within the framework of the budget and standards. Tracking these standards ensures a clear implementation of a controlling-based economic security system. The reserve mechanism of the economic security system forms a totality of resources to ensure the current functioning, planned implementation, strategic measures. The backup mechanism is streamlined. The planning system reflects the aspect of resource accumulation. Resources for the current operation of the enterprise are defined as the most liquid. Their standard ranges from 60% to 70% of the company’s liquid resources. Liquidity is paramount. Resources for planned implementation are allocated for the implementation of projects. The share of these resources does not exceed 20% of the total liquid cash. Resources providing a system of strategic measures are the smallest. This type of resources is necessary to provide a flexible system of reformatting the activities of an economic entity. In the total share of backup provision, this type of resources does not exceed 10%.

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In general, the implementation of the economic security system should be built on the basis of the four mechanisms presented above. The highlighted feature regulates the economic security system.

5 Conclusion The study formed the following conclusions. 1. The basis was the identification of the nature and determination of the types of economic entities of economic security. The economic entity is a type of agent that provides practical activities to achieve the necessary results. The species structure of business entities is disclosed through agents, namely: households, companies, the sole management body, the collegial management body, the business entity, constructive and destructive subjects. 2. The distinguished relations of economic entities quite clearly defined the functional basis for ensuring economic security. Each subject has a range of functions. The range of functions is diversified and not duplicated between business entities. This aspect determines the importance of the established interaction between all business entities. 3. The instruments of the economic security system of economic entities are the management of economic risks, the formation of a business intelligence system, the creation of an economic protection system for an enterprise, monitoring the activities of an economic entity and adaptation to destructive entities. 4. The author of a scientific article identifies as mechanisms: the functional mechanism, the administrative mechanism, the economic mechanism, the reserve mechanism. Mechanisms provide conditions for the economic security of an economic entity in its own areas. The combined application of mechanisms will determine a single system of economic security of an economic entity.

References Dent, C.M.: Singapore’s foreign economic policy: the pursuit of economic security. Contemp. Southeast Asia J. Int. Strat. Aff. 23(1), 1–23 (2001) Varnaliy, Z., Onyshchenko, S., Masliy, O.: Preventing threats as a precondition to increase the level of economic security of the state. ScienceRise 7(1(24)), 41–46 (2016) Soynikov, M.A.: Some theoretical problems of economic security. Contemp. Probl. Soc. Work. 1 (1(1)), 176–183 (2015) Bezugly, E.A.: Evolution of views on the concept of “economic security of the organization”. J. Belthat Univ. Coop. Econ. Law 4(44), 291–294 (2012) Pautova, A.V.: From the economic security of the state to the economic security of the organization. Secur. Eurasia 4(14), 682–686 (2003) Socurova, M.B.: Economic security administration of the social and economic system. Mod. Sci. Res. Innov. 1(93), 18 (2019) Solozhentsev, E.D.: Top economy. Economic security management of socio-economic systems. Natl. Secur. Strat. Plan. 2-1(10), 31–41 (2015) Tyurev, V.K.: Ensuring the economic security of the company. Chachopis Econ. Reforms 2(26), 86–90 (2017)

Weaknesses of Underground Banking Systems Fabian Teichmann(&) and Marie-Christin Falker Teichmann International (Schweiz) AG, Dufourstr. 124, 9000 St. Gallen, Switzerland [email protected], [email protected]

Abstract. The purpose of this paper is to delineate the compliance risks associated with underground banking systems by investigating how underground banking systems, such as hawala and the black market peso exchange, can be utilized to circumvent existing anti-money laundering and anti-terrorism financing measures. Thus, informal interviews were held with 50 presumed criminals who utilize underground banking, and formal interviews were conducted with 50 compliance experts to gain insight into the perspectives of both. The findings of the interviews were analyzed using qualitative content analysis. Thereafter, a questionnaire was distributed to 200 compliance experts within the scope of a quantitative study. It was found that even though underground banking systems are not necessarily used for illegal activities, they are highly suitable for money laundering and terrorism financing purposes and should therefore be prohibited. Although their main purpose is to facilitate money transfers to regions that do not have access to a regular or trustworthy banking system, they are frequently abused by criminals. Despite the rather small sample size and the subjective perspective of a qualitative content analysis, the findings are applicable on a large scale. The study aims to fill the during the literature review identified research gap by illustrating how offenders operate using underground banking systems. Since underground bankers are not subject to the same strict compliance regulations as financial institutions, the risks of underground banking systems significantly outweigh their positive aspects. The majority of the existing literature focuses predominantly on money laundering and terrorism financing prevention mechanisms while thoroughly discussing some underground banking systems and their functions. However, most approaches fail to consider the criminal’s perspective, which represents a major limitation. To successfully prevent money laundering and terrorism financing, compliance officers, legislators, and authorities must be able to reconstruct the actions of offenders. Therefore, it is necessary to consider both perspectives. Keywords: Underground banking systems
Hawala
Black market peso exchange
Fei ch’ien
Money laundering
Terrorism financing
Compliance

1 Introduction Underground banking systems have a long tradition in many cultures and have existed longer than official financial systems. For instance, Chinese underground banking systems were established between 628 and 907 CE and Arabic hawala banking dates back to early medieval times. By comparison, the first bank of the United States was © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 478–489, 2020. https://doi.org/10.1007/978-3-030-39319-9_55

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established in 1791 (Johnston 2019). These alternative systems are usually deeply rooted in the cultures from which they originate and are passed down from one generation to the next. Examples of underground banking systems include hawala, fei ch’ien, and the black market peso exchange. Underground banking systems are most often utilized in regions without existing reliable or official banking systems. Frequently, immigrants employ underground banking systems to transfer money to their family members in need. Somalia is one example of a country or area where underground banking systems are frequently utilized for this purpose. In Somalia, which has no state bank, remittances by family members make up twice as much of the country’s income as humanitarian aid. In fact, underground banking systems are sometimes the only way that funds can be transferred reliably. The systems are also popular in areas where inhabitants are not settled and live as nomads. No matter their origin, these systems usually function in the same way. There is always a transfer of funds involved which does not necessarily entail a physical exchange. Frequently, a currency exchange is conducted during the exchange as well. At the same time, however, underground banking systems are prone to abuse. Due to their lack of official regulation, obligatory identification, and paper trail, they are highly suitable to money laundering and terrorism financing objectives. Meanwhile, the existing literature focuses mainly on the functioning of compliance measures. It will be shown that the currently existing anti-money laundering and anti-terrorism financing measures have thus far been ineffective in combating the issues. The purpose of this paper is to demonstrate how underground banking systems are utilized by criminals to launder illicit funds and finance terrorist organizations. In this, concrete methods which are used in the daily operations of money launderers and terrorism financers will be illustrated. The objective is to give legislators, authorities, and compliance officers an insight into the minds of criminals, so that the misappropriation of underground banking systems for illegal purposes can be recognized and prevented adequately (Teichmann and Sergi 2018). Therefore, informal interviews with 50 presumed criminals were conducted within the scope of a pre-study. Thereafter, during the main study, 50 selected experts were interviewed. Thus, the perspectives of both criminals and prevention experts could be explored, which ensured the attainment of a comprehensive overview over the issues. Only when both perspectives are considered, compliance measures and regulations can be ideally adapted to the challenges of money laundering and terrorism financing prevention.

2 Literature Review 2.1

Money Laundering and Terrorism Financing

Money laundering was first declared a criminal offense in response to the United States’ war on drugs in 1986 (Sharman 2008; Takáts 2007). Nonetheless, the phenomenon is likely as ancient as money itself (Muller et al. 2007). While most of the existing literature focuses on the fact that money laundering exists, how exactly money launderers operate is rarely detailed. Instead, organizations and their applied

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compliance mechanisms are frequently the main focus. Money laundering continues to confront international legislators, authorities, and law enforcement agencies with severe challenges as an immense source of global concern (Harvey 2004; van Duyne 1994; Walker 1999). Evidently, most efforts to combat money laundering thus far have not been effective (Schneider 2008) Therefore, a different approach to discussing money laundering prevention mechanisms is needed. The purpose of money laundering is to create a seemingly legal background for incriminated funds so that the actual origins of the assets cannot be traced (van Duyne 2003); however, there is no universal definition of money laundering, as it varies according to jurisdiction (van Fossen 2003). Even though narcotics trafficking triggered the implementation of anti-money laundering legislation, incriminated funds may stem from other forms of crime, as well (Levi 2002). Frequently, organized crime, human trafficking, corruption, tax evasion, and prostitution are sources of illegitimate income that require laundering (Hampton and Levi 1999; Lilley 2003). Moreover, money laundering often occurs in conjunction with terrorism financing (Koh 2006). Money laundering is a three-stage process involving placement, layering, and integration. During placement, most evidence that could facilitate the tracing of the origins of the funds in question is removed (Graber 2009). Thereafter, the funds are layered. During layering, a plausible background story is attributed to the funds. In the final step, integration, the funds are integrated into the legal economy (Arzt et al. 2009; Schneider and Windischbauer 2008; Trechsel 1997). To achieve integration, the incriminated funds are transferred through multiple bank accounts in various jurisdictions because their passage through several states hinders investigation and should render authorities unable to trace their origins (Gao and Xu 2009). In contrast to money laundering, in terrorism financing, the origins of the transferred funds are irrelevant (FATF 2008). When investigating terrorism financing, the methods of asset transfer are investigated rather than the origins of the funds. In the fight against terrorism financing, financial institutions must rely on government support since they lack the necessary training and resources to prosecute terrorism financiers (Zagaris 2004), thus necessitating close cooperation between banks and the authorities (Schroeder 2001). 2.2

Underground Banking Systems

Oftentimes, underground banking systems are used by persons who desire to transfer part of their wages from Switzerland, for example, to family members in their home country. Many immigrants maintain close relationships to their families, especially if their relatives depend on them financially. It should further be noted that most of the time, only individuals from certain cultural backgrounds have access to underground banking systems. For instance, hawala, which is an ancient Arabic underground banking system, is deeply rooted in the Muslim culture (Varese 2015) and is based on trust. Hawala translates to “transfer” or “trust” (ACFE 2019). With hawala, there is usually no physical exchange of funds. The Chinese underground system fei ch’ien, which translates to “flying money,” functions similarly to hawala. Again, money is not actually moved, but value is transferred. Just like hawala, it was invented centuries ago and is based on trust.

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Fei ch’ien is mostly used for capital flight, tax evasion, the remittance of wages, and the repatriation of profits. It is also frequently misused by criminal organizations. Unlike hawala, little is known about fei ch’ien, and the system continues to be a mystery to outsiders (Cassara 2015). One major advantage of underground banking systems is that they require no resources other than a phone and a middleman to exchange or transfer funds. No account, no patience, and no written correspondence is needed. To illegal immigrants in particular, underground banking systems represent a trustworthy alternative to the traditional banking system. As the systems are based on trust, bankers who betray their customers are disqualified irrevocably, which is a tremendous difference from how banks are treated in the western world (Stahnke 2009). Furthermore, they are sometimes the only safe means by which to transfer money. In cultures where underground banking is practiced, the system is considered an institutional arrangement, which overcomes the risk of transaction partners engaging in opportunistic behavior (Neue Zürcher Zeitung 2002). Due to the complete lack of a paper trail and identification guidelines, underground banking systems are extremely popular with money launderers and terrorism financiers. They usually allow a transfer of funds to occur within a couple hours, which makes them significantly faster than the traditional banking system. Evidently, underground bankers provide the same services as financial institutions but at a lower price, more quickly, and without requiring their customers to identify themselves. Generally, the system is highly anonymous and discreet. Underground banking is most popular in corrupt states and countries torn apart by civil war. Systems like hawala transfer millions of dollars in funds on a daily basis and are much less risky than physically transporting cash, which is why many terrorism financiers prefer to use them. It has been substantiated that al-Qaeda used money transfers from Kuwait and Yemen to Nairobi to finance their attacks on US embassies in Kenya and Tanzania in 1998 (Focus Magazin 2001). Further, hawala has demonstrably been used by militant Kashmiri rebels in India, Pakistani drug and arms dealers, and human traffickers (Focus Magazin 2001). 2.3

Legal Framework

In most jurisdictions, underground banking systems are illegal, as they entail a number of compliance risks. In particular, they can be abused for the purposes of terrorism financing and money laundering. Since systems like hawala are based on trust and a traditional honor codex, there is no paper trail. Furthermore, underground banking systems are not regulated and do not require identification. The person who orders the transfer does not receive a receipt, but rather a piece of paper with a code written on it. Therefore, it is difficult for authorities to substantiate the placement of incriminated funds. The same is true for transfers to terrorist organizations; in the absence of a receipt, the authorities will hardly be able to prove that money has been transferred. Western countries like Austria assess the risks associated with underground banking as moderate to high. According to a 2019 Austrian risk analysis, which is based on 2013 FATF guidance, hawala banking is predominantly used in conjunction with drug dealing, people smuggling, and business operations in countries without a

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functioning banking system. The analysis lists a number of risk-increasing aspects of the system: businesses are not licensed, there is no paper trail, no accounting, and more (BMF 2015). However, not all jurisdictions prohibit underground banking. In many countries, such as those in South Asia, underground banking remains the only way to successfully transfer funds, which is why some nations might tolerate it. 2.4

Research Gap

As demonstrated in the literature review, the literature on money laundering and terrorism financing issues abounds. Moreover, certain underground banking systems, such as hawala, have been investigated quite thoroughly. However, not much is known about what happens when these issues intersect. Thus, the majority of the existing literature does not explore how underground banking systems are used for money laundering and terrorism financing purposes. Even though it is acknowledged that underground banking systems are frequently misappropriated, the exact steps taken by money launderers and terrorism financiers to do so remain largely unknown. The present study partially fills this research gap by reconstructing the concrete steps and methods criminals use to launder illicit funds and finance terrorism through underground banking systems. The methodology that has been employed for this purpose will be presented hereafter.

3 Methodology Since the weaknesses of underground banking systems have been little investigated in the past, an exploratory approach to the subject was deemed most suitable. Due to this study’s exploratory nature, no hypothesis could be formed at the beginning of the investigation. In order to analyze how underground banking systems can be utilized for money laundering and terrorism financing, interviews with both alleged criminals and compliance experts were conducted. In particular, 50 alleged criminals and 50 compliance experts were interviewed.1 The objective was to find out how exactly criminals manage to circumvent existing compliance measures. The methodology was divided into three distinct parts. At first, a pre-study was conducted in order to investigate weaknesses of underground banking systems from the perspectives of criminals. As criminals fear a possible prosecution, they usually do not agree to being recorded. Therefore, the 50 informal interviews that were held were conducted in person. Based on these conversations, memory minutes were created. To

1

Ethical approval was obtained from the ethics committee, as the interviewed compliance experts attested, they had not committed any criminal offenses within the scope of their work discussed in the present study; with the alleged money launderers, hypothetical situations, not their personal experiences were discussed. Members of the ethics committee are BLaw Katharina Kuhn, MLaw Aniq Iselin, and BLaw Matthias Becker. Furthermore, all participants gave their informed consent to be cited anonymously in this study before its commencement. Formal interview partners gave their informed consent to be recorded and their statements be transcribed. Informal interview partners gave their informed consent for the memory-based, anonymous transcription of interviews.

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warrant the anonymity of informal interview partners, neither the conversations were recorded, nor their names were included in the memory minutes. Therefore, the statements of presumed offenders could only be considered marginally during the main study. During the main study, expert interviews were conducted. The objective was to identify gaps in the existing money laundering and terrorism financing prevention mechanisms from the perspectives of prevention experts. These 50 formal interviews were conducted mainly via video chat due to the interview partners’ busy schedules and diffuse locations. In particular, experts from Germany, Switzerland, Austria, Liechtenstein, and the United Arab Emirates were interviewed. Their answers were recorded and transcribed anonymously. The main goal of these interviews was to comprehensively investigate the expertise of interview partners (Bogner et al. 2014: p. 24). Thereafter, qualitative content analysis was performed, and a category system was created. From the statements of the compliance experts, key statements were derived. These key statements were categorized and assessed through triangulation (Healy and Perry 2000; Mays and Pope 2000; Morse et al. 2002). Within the scope of the quantitative analysis, the findings of the qualitative research were verified. Based on the qualitative analysis, hypotheses were formed which were then distributed to 200 compliance officials in the form of a questionnaire and tested quantitatively. The aim of the quantitative study was to determine whether compliance officers are aware of circumvention methods. Furthermore, it was investigated whether compliance officers believe that money launderers and terrorism financers are relocating to less-regulated sectors than the financial sector, and how often compliance officers encounter underground banking systems in their daily operations. Based on an analysis of their statements, the following hypotheses were developed: 1. Compliance officials believe underground banking systems are suited to money laundering and terrorism financing. 2. Compliance officials believe the detection risks when laundering money or financing terrorism through underground banking systems are low. 3. Compliance officials only seldom encounter money laundering or terrorism financing through underground banking systems. Even though internationally acting compliance experts from different cultural backgrounds were interviewed, it is possible that holding conversations with different experts from other parts of the world or at different times could have led to different results (Morse et al. 2002). Nonetheless, a point of theoretical satiation was reached as the experts’ statements became repetitive after a while. Furthermore, the findings did not vary significantly, which implies that a larger sample would hardly have altered them. This suggests that even though the sample size was rather small and limited to Europe, the study’s findings can be applied on a larger scale. Through the recording and transcription of the formal interviews, information loss could largely be avoided. However, qualitative analyses are always subjective to a certain degree, as they are determined by a single person’s perspective. The informal interviews, on the other hand, were not transcribed, which is why the risk that information was lost or interpreted wrongly persists. Nonetheless, the risk was accepted, for

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the alternative would have been to not include presumed criminals’ perspectives at all. Moreover, the interview partners were able to answer freely without having to fear the legal repercussions, since the scenarios discussed were based on hypothetical situations and not the interviewees’ actual experiences.

4 Empirical Findings 4.1

Money Laundering and Terrorism Financing: General Procedure

A typical hawala exchange could be conducted as follows. A person in Switzerland intends to send money to their relatives in Iraq. As Iraq has been devastated by war and instability, they decide to utilize hawala since it is faster and cheaper than a regular bank transfer. The person frequents a hawala banker (“hawaladar”) and entrusts them with the amount they desire to transfer (in Swiss francs). Hawaladars can be found at the tailor’s, in takeaway diners, at kiosks, travel agencies, and more. To individuals outside of a culture in which hawala is commonplace, these locations may look like regular shops, but they frequently offer money transfer services on the quiet. The hawaladar then connects with another hawaladar in Iraq, and they agree on a code consisting of random numbers via the telephone. The person who made the transfer contacts their family members and tells them the code. Thereafter, the family members approach their hawaladar, give them the code, and receive the payment in Iraqi dinars. Hence, the funds are not physically exchanged. Instead, both hawaladars note their transactions and regularly balance their accounts between each other. If one hawaladar in Germany owes a second one in Pakistan 10,000 euros, they may create forged invoices to balance their accounts. The Pakistani hawaladar provides goods worth 10,000 euros but invoices the recipient for 20,000 euros. After receiving the shipment, the German hawaladar compensates the Pakistani one with 20,000 euros so that both bankers are debt-free again. Another possible scenario is that a person residing in Germany needs to send money to their relatives in Somalia. Not only is Somalia extremely poor and many people cannot survive there without the help of others, the country also has no formal legal system and is frequently described as an anarchist society. In addition, Transparency International ranks Somalia last in the Corruption Perceptions Index, which analyzes perceived corruption levels in 180 countries around the world (Transparency International 2019). Therefore, it seems reasonable that a person would choose to use underground banking to make their transfer, as it would appear to be more trustworthy than any other (legal) option in Somalia. The traditional banking system and its safety mechanisms can be circumvented through the use of underground banking systems. Banks are subject to strict compliance regulations and are legally required to report suspicious transactions. Generally, financial institutions are extremely cautious when dealing with customers from certain regions. In the event that a customer has a common Middle Eastern name, which has been blacklisted due to one individual’s terrorist activities, their transactions will automatically be scrutinized particularly strictly. Involvement in a possible terrorism financing scandal would have terrible consequences for a bank’s reputation, which is

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why financial institutions operate with extreme caution and spend tremendous amounts of money to enforce compliance. Furthermore, in many conflict areas, citizens have no access to official banking systems, which is why underground banking systems are particularly suited to terrorism financing. A person who intends to finance a terrorist organization using hawala would frequent an establishment that offers hawala services. The hawaladar takes the money and hands the person a piece of paper with the identification code. The person contacts the terrorists they are funding in Syria, for example, and tells them the code. The hawaladar calls another hawaladar in Syria and informs them of the transfer. Thereafter, the terrorists meet with the Syrian hawaladar, give them the code, and are handed the money. Both hawaladars take a commission and balance their accounts between each other in future transfers or via import–export transactions. No physical exchange takes place and there are no receipts. When laundering money through underground banking systems, the procedure followed is similar to that of terrorism financing. Generally, money laundering consists of three steps: placement, layering, and integration. The black market peso exchange is an underground banking system which is frequently used for money laundering purposes, especially in the United States. The practice is popular with money launderers and narcotics traffickers from Mexico and Colombia. As many legitimate businesses in the Americas that deal with the USA suffer from a lack of access to US dollars, they use so-called peso brokers for their currency exchange. The dollars that these Latinx customers receive from their peso brokers is often dirty drug money. Latinx money launderers utilize the system to ensure that their incriminated funds do not physically cross international borders. Instead, drug traffickers purchase legitimate goods in the United States using their incriminated funds. They buy these products on behalf of a Mexican or Colombian businessperson; thus, they use their cartel money to facilitate imports to legitimate South American businesses. After receiving the goods, which were bought in the United States, the businessperson reimburses the cartel in pesos. Thus, the cartel is able to place their incriminated funds by purchasing the goods and the subsequent receipt of pesos represents the layering. At the same time, the proceeds of the cartel’s illegal drug trading in the USA, which need to be transferred back to their home country in the local currency, are exchanged and find their way to the cartel without actually leaving the United States. Thereafter, the money launderers in Mexico or elsewhere may deposit the pesos and conduct multiple transfers, preferably through multiple jurisdictions to integrate the funds. Alternatively, they could be invested in stocks or a legitimate business.

5 Discussion The most common reason for using underground banking systems is the circumvention of financial institutions’ high exchange fees. Most of the time, underground banking systems offer better exchange rates and conditions because they are not interested in generating high profits. In addition, the transfer is conducted much quicker than a legal transfer. Furthermore, the lack of identification requirements is advantageous for certain customers, such as illegal immigrants. Moreover, individuals who use underground

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banking may circumvent tax requirements (Financial Crimes Enforcement Network and Interpol/FOPAC 2010). In China, underground banking is extremely common even though it is illegal. In the past, the Chinese government has admitted that there are about 400 billion US dollars in their underground banking system. The reason is that many Chinese banks do not provide small and medium-sized businesses with loans because they are considered too high risk. At the same time, they lend to large companies at low rates who in turn lend to smaller businesses at rates of 60% to 180%. Due to the fact that smaller businesses make up 70% of employment and 60% of the country’s GDP, these socalled “black banks” have many customers (Lopez 2011). China imposes strict limits on the amount of money that is allowed to leave the country in order to keep the value of its currency stable. During the stock market crash in 2015, which was accompanied by a government-led devaluation of China’s currency, the set limits were surpassed. In order to ensure that money remained in China, the government banned all cryptocurrency trading platforms and imposed controls on outbound investments (Wee 2017). The underground banking system, however, has seriously negative consequences for the economy. In the event of an economic downturn, private businesses will be unable to pay back their loans. If this happens, the first casualty is usually the housing sector, for black bank housing loans have been extremely popular in the past. Therefore, housing prices need to remain stagnant in order to prevent a “domino effect” from occurring. At the same time, the government intends to make housing more affordable. If they lower interest rates, however, they risk causing inflation (Lopez 2011). Underground banking systems usually have a long tradition and are an integral part of many cultures. Therefore, their elimination seems nearly impossible. In addition, harshly prosecuting participants in underground banking systems will impact the lives of many people, especially those who send money back to their relatives in crisis areas. At the same time, it has been proven that hawala in particular has been used to finance a number of terrorist attacks. Furthermore, the black market peso exchange is frequently used by drug dealers and criminal gangs in the Americas. Therefore, the negative aspects of underground banking systems outweigh the positive ones, as they may be utilized to harm cities, people, and the economy. Economists are convinced that 95% of underground money transfers are not connected to crime. Legislators and authorities, however, disagree. The German Federal Criminal Police Office, for instance, argues that hawala is particularly suited to terrorism financing (Stahnke 2009: p. 2). Even though there is no data on the global volume of hawala transactions, it is estimated that in German-speaking countries alone it amounts to around three or four million US dollars (Stahnke 2009: p. 2). Authorities and legislators are advised not to tolerate any form of underground banking due to its deficient regulation and identification requirements. It does not seem reasonable to impose strict compliance regulations, including official registration and background checks, on financial institutions when underground bankers are able to conduct their business without having to worry about the implementation of the same regulations. Underground banking systems pose immense threats to international safety, as they remain risk factors for money laundering and terrorism financing.

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Therefore, underground banking systems must be met with harsh regulations, as they are not a trivial offense. In order to identify underground banking schemes and their misappropriation for the purposes of money laundering and terrorism financing, authorities and law enforcement should consider employing undercover agents. This approach could entail severe risks for the undercover agent should they be found out, which is why their safety must be ensured. At the same time, they should be from an ethnic background that makes their operations in the underground system seem plausible. Another possible option would be remote online searches of electronic devices; however, this option is not legal (Teichmann 2017).

6 Conclusion Underground banking systems usually have a long tradition and are firmly grounded in the cultures from which they originate. Therefore, it is nearly impossible to completely undermine these forms of money transfer. While there are many underground banking systems, some have been investigated quite thoroughly whereas others remain a mystery to outsiders. As shown in this article, the financial sector’s compliance measures can be circumvented by laundering money and financing terrorism through underground banking systems. These networks are not regulated, and anti-money laundering, as well as anti-terrorism financing standards, do not apply. The beneficial owner of the funds is also rarely identified. Compared to the official banking system, underground banking systems are simply not regulated. These systems usually operate in secrecy and are not easy for outsiders to identify. Furthermore, money launderers and terrorism financiers continue to abuse these systems in order to conduct their illegal business. From a compliance perspective, it makes sense to illegalize all forms of underground banking without exception. Customers’ reasons for utilizing them do not matter as their risks outweigh their benefits. In addition, the operators of underground banking systems should be sanctioned harshly. Alternatively, innovative detection methods, like the use of undercover agents or secret remote online searches of electronic devices, should be considered. The latter, however, are currently illegal. When employing undercover agents, it is imperative that they come from an ethnic background which makes their infiltration of hawala service providers, for example, plausible. Nonetheless, undercover agents are frequently recognized and must be protected. At the moment, money laundering and terrorism financing through underground banking systems remain highly feasible in most countries. In order to be able to either regulate or eliminate underground banking, authorities must be able to detect it first. To achieve this goal, undercover agents must be granted more liberties and the legalization of remote online searches of electronic devices should be reconsidered.

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Neue Zürcher Zeitung: Hawala – Geldüberweisung ohne Spuren, 31 May 2002. https://www.nzz. ch/article86PF2-1.397550. Accessed 08 July 2019 Schneider, F.: Money laundering and financial means of organised crime: some preliminary empirical findings. Glob. Bus. Econ. Rev. 10(3), 309–330 (2008) Schneider, F., Windischbauer, U.: Money laundering: some facts. Eur. J. Law Econ. 26(3), 387– 404 (2008) Schroeder, W.R.: Money laundering. FBI Law Enforc. Bull. 70(5), 1–12 (2001) Sharman, J.C.: Power and discourse in policy diffusion: anti-money laundering in developing states. Int. Stud. Q. 52(3), 635–656 (2008) Stahnke, J.: Geld von Mensch zu Mensch. Frankfurter Allgemeine Zeitung, 11 August 2009. https://www.faz.net/aktuell/finanzen/fonds-mehr/hawala-finanzsystem-geld-von-mensch-zumensch-1575427.html. Accessed 05 July 2019 Takáts, E.: A theory of ‘crying wolf’: the economics of money laundering enforcement. No. 7–81. IMF Working Paper, International Monetary Fund (2007). https://www.imf.org/ external/pubs/ft/wp/2007/wp0781.pdf. Accessed 30 Sept 2019 Teichmann, F.: Financing terrorism through hawala banking in Switzerland. J. Financ. Crime 25(2), 1–9 (2017) Teichmann, F., Sergi, B.S.: Compliance in Multinational Corporations – Business Risks in Bribery, Money Laundering, Terrorism Financing and Sanctions. Bingley, Emerald (2018) Transparency International: Corruption perceptions index 2018 (2019). https://www. transparency.org/cpi2018. Accessed 30 Sept 2019 Trechsel, S.: Geldwäscherei: Prävention und Massnahmen zur Bekämpfung. Schulthess Polygraphischer Verlag, Zürich (1997) van Duyne, P.C.: Money-laundering: estimates in fog. J. Financ. Crime 2(1), 58–74 (1994) van Duyne, P.C.: Money laundering policy – fears and facts. In: van Duyne, P.C., von Lampe, K., Newell, J.L. (eds.) Criminal Finances and Organising Crime in Europe. Enfield Publishing & Distribution Company, Enfield, pp. 67–104 (2003) van Fossen, A.B.: Money laundering, global financial instability, and tax havens in the Pacific Islands. Contemp. Pac. 15(2), 237–275 (2003) Varese, F.: Milliardenströme ohne Kontrolle. Süddeutsche Zeitung, 8 February 2015, pp. 1–2. https://www.sueddeutsche.de/wirtschaft/islamischer-geldtransfer-milliardenstroeme-ohne-kon trolle-1.2333482. Accessed 05 July 2019 Walker, J.: How big is global money laundering? J. Money Laund. Control. 3(1), 25–37 (1999) Wee, S.-L.: China busts a $3 billion underground bank as it tightens its grip on money. New York Times, 23 November 2017. https://www.nytimes.com/2017/11/23/business/chinaunderground-bank-3-billion.html. Accessed 18 Sept 2019 Zagaris, B.: Merging of the anti-money laundering and counter-terrorism financial enforcement regimes after September 11, 2001. Berkeley J. Int. Law 22(123), 123–158 (2004)

Compliance Incentives, Whistleblowing, and the Payment of Rewards for Information Fabian Teichmann(&) and Marie-Christin Falker Teichmann International (Schweiz) AG, Dufourstrasse 124, 9000 St. Gallen, Switzerland [email protected], [email protected]

Abstract. The present research paper analyzes the issue of compliance incentives, which includes whistleblowing and the payment of rewards for information. In particular, it will be investigated, how whistleblowing can be encouraged for a more effective combat of internal company corruption. Further, suggestions for effective reward systems will be made. Compliance incentives, whistleblowing, and the payment of rewards for information have thus far not been investigated in sufficient depth. Thus, no clear hypothesis could be formulated through reference to the literature review. Therefore, an exploratory approach was adopted for this research. In order to gain a first access to the field, ten selected experts were interviewed. Thereafter, a summarizing content analysis was conducted. If correctly designed, incentive systems and whistleblowing schemes can be extremely helpful in ensuring compliance in multinational corporations. At the same time, wrong incentives may have highly negative consequences which could long lastingly damage the corporation. The findings of the study can only be generalized to a certain extent, as a narrow set of data was analyzed. It is possible, that different rules might apply to dissimilar cultural settings. Although the analyzed data set was saturated, different results could have emerged from interviews conducted in other areas or during alternative time periods. Compliance incentives, whistleblowing, and the payment of rewards have thus far not been investigated in depth. The purpose of this study is to explore these new fields and develop innovative theory in order to gain a deeper understanding of the phenomena. The present study partially fills the identified literature gap by illustrating how wrong incentives may negatively influence compliance in multinational corporations. At the same time, examples for effective incentives are given and the importance of whistleblowing for the success of a corporation is stressed. Keywords: Corruption Compliance


Whistleblowing
Bribery
Incentives
Rewards


1 Introduction Corruption, particularly bribery, represents a grave issue for multinational corporations. As the involved parties are usually not interested in exposing non-compliant behavior in their enterprise, one can assume there is a high number of unknown cases. Whereas the involved employees frequently profit from non-compliant misdemeanor in the form © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 490–499, 2020. https://doi.org/10.1007/978-3-030-39319-9_56

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of bribery, board members bear the associated risks. Particularly in sales, employees’ wages frequently depend on commissions and bonuses. Therefore, these persons strive to reach high sales figures, so that the variable portion of their wage increases. At the same time, the prevention of corruption and misdemeanor is of immense importance to corporate management, as the establishment of a criminal company culture must be avoided at all cost. Moreover, penal and supervisory risks must be minimized, so that a longtime survival of the company can be ensured. In case of a prosecution, shareholders and board members take enormous personal risks, as they are the ones who bear all responsibility (Teichmann and Sergi 2018). One possible solution to the issue could be the implementation of incentives, which reward employees based on compliant behavior. This may include whistleblowing incentives. Whistleblowers who report misdemeanor and advert to nuisances in the company, are a major factor in the combat of corruption. Employees frequently blow the whistle out of the conviction that the company may benefit from their report. However, despite good intentions, a report may have devastating consequences for whistleblowers: Unfair treatment, dismissal or demotion are possible (Transparency International 2010). Thus, it must be stressed that whistleblowers act in the best interest of their company by advocating for lawful behavior (Transparency International 2010). It is up to upper management to interpret these reports as helpful assistance (Transparency International 2010). The most well-known whistleblower is the American former CIA-agent Edward Snowden. Subsequently to his publishing of documents detailing the intelligence agency NSA’s global monitoring program, Snowden was forced to leave the country. Ultimately, he was granted asylum in Russia (Tagesanzeiger 2019). In 2014, he was awarded the alternative Nobel prize, namely the Right Livelihood Award, which constituted a vital symbol for the importance of whistleblowing. However, Snowden was unable to attend the awarding in Sweden, since he could have been extradited to the United States. Especially in light of the fact that whistleblowers are frequently isolated and sometimes even lose their jobs, career or their marriage, Snowden’s award is an exemplary token for the honorableness of whistleblowing. Literature Review Corruption and Incentives in Multinational Corporations Corruption continues to represent a significant obstacle to socio-economic development (Sergi and Qerimi 2007). Generally, corruption can be defined as “the misuse of public or private office for personal gain” (Sergi and Qerimi 2012). According to Transparency International, corruption is prevalent in countries where democratic foundations are weakened and where undemocratic and populistic leaders abuse these foundations to their advantage (Transparency International 2019). The organization’s Corruption Perceptions Index (CPI) measures perceived levels of corruption in the public sector. Generally, no full democracy reaches a lower score than 50 out of 100 on their CPI, and no country with autocratic characteristics reaches a score higher than 50. In addition, so-called “soft-factors” such as a lack of women in leadership roles or ethical failings have been associated with higher levels of corruption (Kaufmann 1997; Swamy et al. 2001).

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Even though bribery and corruption have been addressed in a few studies, the overwhelming majority of research discusses wages and bribery in the public sector and focuses on adequate wages instead of incentives (Goel and Rich 1989; Di Tella and Schargrodsky 2003; Becker and Stigler 1974; Van Rijckeghem and Weder 2001). A 2012 study by Bruno S. Sergi and Qerim Qerimi impressively highlights the correlation between economic freedom and corruption. Sergi and Qerimi detail how countries which score high results on the Index of Economic Freedom (IEF) by the Heritage Foundation and the Wall Street Journal, are at the same time making the “most notable progress in dismantling corrupt behavior” (Sergi and Qerimi 2012). Therefore, it may be argued that higher degrees of economic freedom facilitate the fight against corruption, which represents a “critical measure of institutional performance” (Sergi and Qerimi 2012). It is necessary to be aware of this relationship, so that it may be addressed accordingly. Further, corruption impedes sound policy-making and economic growth. In the past, particularly the bribing of foreign officials has been proven to be a frequently used means in multinational corporations. Even though facilitation payments have since then been outlawed, they remain expected in certain regions (Tanzi and Davoodi 1998). Therefore, corruption continues to be a global issue, which affects both developing and developed countries. However, it is difficult to determine what causes it (Treisman 2000). On a smaller scale, corruption constitutes a major issue in multinational corporations, as well. There are different types of corruption in corporations, which include, for instance, the neglect of safety precautions by superiors, the payment of bribes, and unclear references for donations. When it comes to incentives, they sometimes may even encourage employees to pay bribes. Most incentives reward employees based on performance indicators such as sales. At the same time, they are usually not used to enforce compliance. With monetary incentives, it has been found that they have multiple positive effects. The main advantage of monetary incentive plans is that they may be adapted to individual employees, teams, departments, or divisions while often not requiring the consent of shareholders (Murphy and Jensen 2011). At the same time, monetary incentives may have unintended negative consequences, as money is not an efficient motivator when it comes to intrinsic motivation (Clark and Wilson 1961). Intrinsic motivation is driven by internal rewards, which means motivation arises from within the individual (Cherry 2019). For instance, creativity cannot be facilitated through bonus payments alone (Kreps 1997). Alternative incentives such as long-term contracts can prove to be helpful in these situations (Narayanan 1985). Therefore, personal and individual factors must always be considered when defining incentives (Hollenbeck and Klein 1987). Moreover, monetary incentives which reward employees for sales may prove to have negative consequences on compliance, as employees might feel compelled to reach company benchmarks, even if it means paying a bribe in order to close a deal. Nonetheless, monetary incentives can aid with the attracting of educated and compliant professionals (Ferraz and Finan 2009). Thus, particularly anti-bribery incentives might play an important role in the recruitment process. Compliant individuals will likely agree with having a large proportion of their salary be dependent on compliant behavior. On the contrary, corrupt individuals will disagree with basing their salary on compliance. Using this method, multinational corporations will be able to attract law-abiding employees (Teichmann 2017).

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The issues which arise from the payment of bonuses based on sales may be resolved, at least partly, through negative bonuses. In this system, employees could be held financially liable for their non-compliance. Typically, employees do not favor having to pay back a portion of their salary at the end of the year (Murphy and Jensen 2011). Particularly with tasks which require diligence instead of skill, this system could prove to be valuable (Aron and Olivella 1994). Methodology Literature Gap/Research Goals As demonstrated in the literature review, much research has been conducted on corruption and incentive systems. However, it is usually not discussed, how incentive systems could be adapted to eliminate corruption in multinational corporations. Meanwhile, compliance violations continue to negatively affect both governments and multinational corporations. Further, corruption impedes a country’s economic efficiency, justice system, and legitimation of state activities. Even though several approaches to the elimination of bribery have been taken, it continues to be a severe issue in many countries. Therefore, the market apparently fails to regulate itself (Teichmann 2017). Since bribery has been outlawed by international treaties such as the OECD Anti-Bribery Convention, all multinational corporations are constantly being met with increasingly strict compliance standards. Therefore, corruption in multinational corporations might prove detrimental, as it endangers the company’s existence. The failure of formal rules and control mechanisms to eliminate bribery in multinational corporations, may be explained by agency theory. Principals (The corporation) and agents (employees) pursue different goals and act in their own best interest. Therefore, agents may act against their principal’s interest. Due to information asymmetries, the establishment of control mechanisms can be insufficient in ensuring compliance. Therefore, one should consider aligning the interests of agents and principals. In this context, incentives such as rewards for information might be a key factor to success (Teichmann 2017). Whereas prior research focuses predominantly on the party receiving the bribe, the objective of this study is to explore the perspective of the party paying the bribe. Frequently, it is falsely assumed that multinational corporations have no interest in eliminating corruption, as their overarching goal is to create value for shareholders. However, in most countries, corporations are subjected to strict compliance measures which oblige them to enforce anti-bribery measures. Due to these measures, noncompliance could seriously endanger their existence, which is why companies usually have no interest in tolerating corruption. Research Design As compliance incentives, whistleblowing, and the payment of rewards for information have not been investigated sufficiently in the past, no clear hypothesis could be formulated initially. Therefore, an explorative approach was chosen for the purpose of this study. The objective was to develop innovative theory in order to gain a deeper understanding of corruption in multinational corporations and incentives for their

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elimination. In particular, ten selected experts were interviewed to gain first insights to the field.1 Their statements were analyzed during a summarizing content analysis (Vaismoradi et al. 2013; Thomson 2011). Expert interviews aid with the development of hypotheses and the identification of important questions, which may later be utilized for further research through the utilization of mixed methods (Elo and Kyngäas 2008; Creswell and Clark 2007; Bryman 2006). One challenge in the selection of interview partners was that typically, individuals who are experienced in the payment of bribes are not willing to discuss their activities, as it might lead to a prosecution. On the other hand, individuals who are willing to discuss the issue, typically lack the necessary personal experience. Therefore, measuring corruption can be difficult, for even when interview partners are guaranteed anonymity, they usually remain hesitant to discuss the issue. Thus, they could be tempted to give false answers. Within the scope of a quantitative research, one would be able to generate large amounts of data, however, multinational corporations are unlikely to reveal highquality insights due to legal concerns (Teichmann 2017). Therefore, experts which are concerned with the preventative perspective seemed to be suitable interview partners, as they were more likely to reveal valuable insights (Dorussen et al. 2005). At the same time, these experts, normally do not engage in criminal activities, which is why they were able to discuss the topic freely. Limitations to this approach included that even though these experts, namely compliance officers, forensic services experts, and researchers, are familiar with the payment of bribes in multinational corporations, it is unlikely they have experienced it first-hand. Moreover, they are usually biased, since most companies advocate a “zerotolerance” approach toward bribery (Teichmann 2017). Further, the findings of the study can only be generalized to a certain extent due to the comparatively small sample size. Nonetheless, the theoretical saturation point was reached after ten interviews. In addition, interviews with different experts, at other times, or in other locations could have led to different results. However, it must be stressed that a theoretical saturation was achieved. The interviews were conducted face-to-face, via video chat, or via phone. Generally, personal conversations are preferable over phone interviews. Due to busy schedules and the scattered locations of experts, however, it was not always possible to meet in person, even though this approach was deemed most suitable. Therefore, video chats, were chosen as a helpful alternative, as they offer the flexibility of phone interviews while allowing the interviewer to note physical aspects such as facial expressions (Teichmann 2017).

1

Ethical approval was obtained from the ethics committee, as interview partners attested, they had not committed any criminal offenses within the scope of their work discussed in the present study. Members of the ethics committee are BLaw Katharina Kuhn, MLaw Aniq Iselin, and BLaw Matthias Becker. Furthermore, all participants gave their informed consent to be cited anonymously in this study before its commencement. Interview partners also gave their informed consent to be recorded and their statements be transcribed.

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All interviews were recorded and subsequently transcribed, which included the highlighting of non-verbal clues and hesitations (Gläser and Laudel 2010). Thereafter, a qualitative content analysis was conducted (Mayring, 2010). From the expert statements, key statements were derived, which were categorized and assessed through triangulation (Healy and Perry 2000; Mays and Pope 2000; Morse et al. 2002). Empirical Findings When a company rewards employees based on performance indicators such as sales while neglecting compliance, it is signalized that sales are more important than compliant behavior. This may lead to the establishment of a criminal company culture and a methodical promotion of misdemeanor. From the principal’s perspective, a resulting bribery scandal would have disastrous consequences, as it would entail tremendous cost and even imprisonments cannot be ruled out. In the long run, this could amount to the company’s downfall. Therefore, it is of immense importance that compliance is prioritized in the corporation. Corruption within the corporation may be exemplified through bribery. In the past, it was common in many corporations to pay bribes to business partners. When bribery was ruled out, many employees were confronted with a conflict: While the corporation informed them of the new legal framework and asked them to behave accordingly, business partners continued to expect these payments. This was particularly true for nations with less strict anti-corruption legislations. As a consequence, corporations were faced with financial losses as they lost international business partners to competitors who were willing to continue to bribe them. Thus, some employees began to prefer bribery over compliance, especially when their wage was dependent on commission. Instead of taking a stance against corruption, many corporations continued to tolerate this behavior, which led to immense ambiguities (Teichmann 2017: p. 4f.). Incentive systems should be designed to reward both productivity and compliance with anti-bribery rules. Further, they should reflect the principal’s interest in both productivity and compliance. One possible solution to the issue would be the implementation of a performance matrix which rates employees based on both productivity and compliance. For instance, employees could be rated between 1 and 5 and if they score less than 3 in one of the areas, their entire bonus is declined or at least reduced. Thus, it can be ensured that employees perform well in all areas. Further, a combination of the areas communicates that performance and compliance are equally important to the corporation. Moreover, the neglect of compliance guidelines should be punished with a negative bonus. Such a system could prove to be particularly effective in corrupt countries. It also makes sense to implement whistleblowing measures, as they offer the possibility to proceed against corruption before a prosecution is initiated. A prosecution could possibly lead to an immense reputation loss, which could in the worst case lead to the downfall of a corporation. Whistleblowing could be rewarded with a proportion of the fine which could be avoided thanks to the report. For the payment of bonuses predefined criteria should be established. As bribery happens covertly, the measurement of performances could prove to be difficult. As a result, there is a risk that employees are rewarded for compliance, simply because their misdemeanor has not been detected. A bonus which is only paid after a few years could be a possible solution to this. Furthermore, the company culture might

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be negatively impacted by the establishment of compliance incentives, as employees who are rewarded for whistleblowing monitor each other. This may lead to a lack of trust among employees which could impair their productivity and creativity. Suggestions Whistleblowers Whistleblowers must be aware that their report might be interpreted as an attack on the company. Thus, blowing the whistle may lead to antipathies on the part of the employers. Due to this reason, personal consequences of blowing the whistle should be discussed with a trusted person in order to identify whether these consequences are deemed acceptable. At the same time, one must consider the risk of being laid off and how a dismissal would influence one’s future career (Transparency International 2010). Unfortunately, the fear that whistleblowing might cost one’s job, frequently proves itself in practice. Whistleblowers are advised to document observations to the best of their abilities. This includes reports and other activities on the part of the whistleblower. For investigation, no company computer, phone or e-mail account should be utilized, as the data could be used against the whistleblower. Moreover, one should find allies before management effectuates one’s isolation. Allies could be coworkers who have noticed nuisances, as well. Further, the chance that a report leads to change is higher when a group of individuals blows the whistle together. In addition, a lawyer should be consulted (Transparency International 2010). Corporations Board members should have an immense interest in well-functioning reporting systems, as whistleblowers contribute to the elimination of nuisances in the corporation. Therefore, the implementation of compliance incentives should be encouraged. Within the scope of compliance incentives, whistleblowing incentives and rewards for information should be established. Whistleblowers put the corporation in a position where it is able to avert possible reputational damages or a prosecution (Transparency International 2013). Therefore, corporations are advised to promote whistleblowing. The implementation of whistleblowing measures can motivate employees to share their knowledge of corruption with the employer. A support of whistleblowing comes with two major advantages for the company. Firstly, it may aid the company with anticipating corruption scandals and self-reporting non-compliant behavior to the authorities. Secondly, the knowledge that they are being monitored by their coworkers, motivates employees to act compliantly (Teichmann 2017: p. 3). Within the corporation, whistleblowing should further be rewarded with a bonus. Here, a prerequisite is that allegations are justified, as otherwise malevolence or false reports might be the result. Therefore, wrong reports should be penalized with a malus. This, however, requires that whistleblowers disclose their identities. Therefore, it is of importance that the corporation management communicates that whistleblowing will not lead to social ostracism or other negative consequences such as a dismissal. It is in the best interest of corporations to undermine corruption in order to avoid penal consequences. Generally, corporations may employ bonuses to reward compliance and maluses to punish non-compliance (Teichmann 2017: p. 4f.).

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Naturally, a financial compensation of whistleblowing and compliance entails a number of risks and potential disadvantages. For instance, the awarding of bonuses could have negative effects on relationships between employees and reduce their trust in each other. This could lead to a decrease in motivation and anxiety in employees. Further, the possibility that companies only find out about violations of anti-corruption regulations after a bonus has already been paid, persists (Teichmann 2017: p. 3). The impending ostracism of whistleblowers represents a severe issue which tells a lot about an organization’s culture. Managers who are blameless should not be opposed to whistleblowing, as it contributes to the company’s improvement. Generally, the company’s atmosphere should encourage employees to approach their managers with worries and concerns without having to worry about possible negative consequences. This strengthens trust within the team. Legislators Whistleblowers must be protected more efficiently by legislators, particularly in respect of private law. For this purpose, legislators should create more detailed safeguarding provisions. In particular, it should be defined more clearly, under which circumstances employees may be exonerated from their duty of loyalty and obligation to confidentiality. Moreover, corporations should be obliged to establish adequate reporting procedures for nuisances. Internal as well as external registration offices should be equipped with appropriate investigative competencies. Further, the anonymity of whistleblowers must be ensured, for as long as they wish for. Negative consequences may never arise from a legitimate report. Therefore, whistleblowers are to be protected from being laid off (Transparency International 2013).

2 Conclusion The enforcement of compliance remains a complex issue which necessitates an interdisciplinary approach. An elimination of wrong incentives and a concurrent introduction of right incentives could significantly contribute to a company culture, which fosters compliance and strives for behaviors which are in accordance with the set rules. Only thus can a corporation survive in the long run. As most multinational corporations reward employees for several forms of desired behaviors, rewards for compliance should be an inherent part of their incentive systems, as well. Considering that compliance is crucial for the longtime survival of a company, it cannot be neglected under any circumstance. Toward employees, it must be communicated that compliance is equally as important as productivity, so they are not tempted to resort to illegal means to increase their sales. When it comes to whistleblowing, it should generally be encouraged by companies. Instead of interpreting reports as an attack on the corporation, corporate management should recognize the potential use of these reports. It is in the best interest of the company, to resolve corruption and nuisances internally, before the media or prosecutors take notice of them. Moreover, principals should communicate that they take reports seriously and handle any information entrusted in them responsibly. It must be signalized that whistleblowers render a worthwhile service to the company and that

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their efforts are appreciated. Thus, corporations should consider the implementation of compliance bonuses. At the same time, non-compliance should be punished with a negative bonus. One major disadvantage of whistleblowing is that it may possibly lead to trust issues within teams and lead to enviousness at the workplace. Therefore, corporations must clearly communicate that whistleblowing is explicitly wished-for and that employees who follow compliance rules and guidelines do not need to fear any negative consequences.

References Aron, D.J., Olivella, P.: Bonus and penalty schemes as equilibrium incentive devices, with application to manufacturing systems. J. Law Econ. Organ. 10(1), 1–34 (1994) Becker, G.S., Stigler, G.J.: Law enforcement, malfeasance, and compensation of enforcers. J. Legal Stud. 3(1), 1–18 (1974) Bryman, A.: The debate about quantitative and qualitative research: how is it done? Qual. Res. 6 (1), 97–113 (2006) Cherry, K.: “Intrinsic Motivation” (2019). https://www.verywellmind.com/what-is-intrinsicmotivation-2795385. Accessed 27 Sept 2019 Clark, P.B., Wilson, J.Q.: Incentive systems: a theory of organizations. Adm. Sci. Q. 6, 129–166 (1961) Creswell, J.W., Clark, V.L.P.: Designing and Conducting Mixed Methods Research. SAGE Publications, Thousand Oaks (2007) DiTella, R., Schargrodsky, E.: The role of wages and auditing during a crackdown on corruption in the city of Buenos Aires. J. Law Econ. 46(1), 269–669 (2003) Dorussen, H., Lenz, H., Blavoukos, S.: Assessing the reliability and validity of expert interviews. Eur. Union Polit. 6(3), 315–337 (2005) Elo, S., Kyngäs, H.: The qualitative content analysis process. J. Adv. Nurs. 62(1), 107–115 (2008) Ferraz, C., Finan, F.: Motivating politicians: the impacts of monetary incentives on quality and performance (Working paper series no. 14906), National Bureau of Economic Research, Cambridge (2009) Gläser, J., Laudel, G.: Experteninterviews und qualitative Inhaltsanalyse: als Instrumente rekonstruierender Untersuchungen. VS Verlag für Sozialwissenschaften, Wiesbaden (2010) Goel, R.K., Rich, D.P.: On the economic incentives for taking bribes. Public Choice 61(3), 269– 275 (1989) Healy, M., Perry, C.: Comprehensive criteria to judge validity and reliability of qualitative research within the realism paradigm. Qual. Market Res.: Int. J. 3(3), 118–126 (2000) Hollenbeck, J.R., Klein, H.J.: Goal commitment and the goal-setting process: problems, prospects, and proposals for future research. J. Appl. Psychol. 72(2), 212–220 (1987) Kaufmann, D.: Corruption: the facts. Foreign Policy 107(Summer), 114–131 (1997) Kreps, D.M.: Intrinsic motivation and extrinsic incentives. Am. Econ. Rev. 87(2), 359–364 (1997) Mayring, P.: Qualitative Inhaltsanalyse: Grundlagen und Techniken. Beltz, Weinheim (2002) Mays, N., Pope, C.: Assessing quality in qualitative research. BMJ Br. Med. J. 320(7226), 50–60 (2000) Morse, J.M., Barrett, M., Mayan, M., Olson, K., Spiers, J.: Verification strategies for establishing reliability and validity in qualitative research. Int. J. Qual. Methods 1(2), 13–22 (2002)

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Murphy, K.J., Jensen, M.C.: CEO bonus plans: and how to fix them, HBS working papers, pp. 12–022, Harvard Business School, Boston (2011) Narayanan, M.P.: Managerial incentives for short-term results. J. Finance 40(5), 1469–1484 (1985) Sergi, B., Qerimi, Q.: Fighting corruption and organized crime as a means of socio-economic development in South-East Europe. SEER – South-East Eur. Rev. Labour Soc. Aff. 10(2), 81– 94 (2007) Sergi, B., Querimi, Q.: The boundaries of a neglected relationship: corruption and economic freedom. Problems of Economic Transition, December 2012 (2012) Swarmy, A., Knack, S., Lee, Y., Azfar, O.: Gender and corruption. J. Dev. Econ. 64(1), 25–55 (2001) Tagesanzeiger: EU-Parlament schützt Whistleblower vor Vergeltung (2019). https://www. tagesanzeiger.ch/ausland/europa/euparlament-schuetzt-whistleblower-vor-vergeltung/story/ 20527788. Accessed 23 Sept 2019 Tanzi, V., Davoodi, H.R.: “Roads to Nowhere: How Corruption in Public Investments Hurts Growth (Economic Issues, 12). International Monetary Fund, Washington (1998) Teichmann, F.: Anti-Bribery Compliance Incentives. Kassel University Press, Kassel (2017) Teichmann, F., Sergi, B.S.: Compliance in Multinational Corporations – Business Risks in Bribery, Money Laundering, Terrorism Financing and Sanctions. Emerald, Bingley (2018) Thomson, S.B.: Qualitative research: validity. J. Adm. Gov. 6(1/2), 77–82 (2011) Transparency International (Switzerland), “Leitfaden für Whistleblower” (2010). https:// transparency.ch/publikationen/leitfaden-fuer-whistleblower/. Accessed 23 Sept 2019 Transparency International (Switzerland), « Whistleblowing » (2013). https://transparency.ch/ whistleblowing/. Accessed 23 Sept 2019 Transparency International (Switzerland), “Corruption Perceptions Index 2018” (2019). https:// transparency.ch/korruptionsindex/corruption-perception-index-2018/. Accessed 06 Sept 2019 Treisman, D.: The cause of corruption: a cross-national study. J. Public Econ. 76(3), 339–457 (2000) Vaismoradi, M., Turunen, H., Bondas, T.: Content analysis and thematic analysis: implications for conducting a qualitative descriptive study. Nurs. Health Sci. 15(3), 398–405 (2013) Van Rijeckeghem, C., Weder, B.: Bureaucratic corruption and the rate of temptation: Do wages in the civil service affect corruption, and by how much? J. Dev. Econ. 65(2), 307–331 (2001)

Money Laundering Through Cryptocurrencies Fabian Teichmann(&) and Marie-Christin Falker Teichmann International (Schweiz) AG, Dufourstr. 124, 9000 St. Gallen, Switzerland [email protected], [email protected] Abstract. This paper analyses compliance risks associated with cryptocurrencies, particularly investigating how cryptocurrencies can be misappropriated to launder money. It demonstrates how criminals use cryptocurrencies to circumvent existing anti-money laundering measures. The first author interviewed compliance officers and presumed criminals to gain a comprehensive overview of the topic. Interview findings were subjected to qualitative content analysis. Thereafter, questionnaires were distributed to 200 compliance experts and their responses were quantitatively analysed. As regular cryptocurrencies like Bitcoin are not regulated, they pose immense compliance threats from the perspectives of legislators and law enforcement. Conversely, the blockchain technology which powers them files all transactions, which increases their safety. Nonetheless, cryptocurrency users remain anonymous because they are assigned random usernames. Therefore, cryptocurrencies are high-risk in terms of money laundering and other cybercrimes. The study’s sample was comparatively small, and qualitative analyses are always influenced by the interviewer’s personal perspective. Furthermore, interviews with different persons could yield different results. Most prior studies adopt a compliance perspective on the issue of money laundering. However, to be able to effectively prevent money laundering, compliance officers and authorities must understand how money launderers act. Our study provides valuable insight into criminals’ perspective. This study partially fills the identified literature gap by illustrating how money launderers operate using cryptocurrencies. With such limited existing regulation of cryptocurrencies, they continue to entail significant compliance risks. Keywords: Money laundering Compliance


Cryptocurrencies
Bitcoin
Libra


1 Introduction Money laundering is a global issue which is usually associated with organised crime and tax fraud. It comprises three stages: placement, layering, and integration. As compliance efforts focus mainly on the financial sector, many compliance officers believe that money launderers are retreating to less regulated sectors, such as cryptocurrencies. Compliance experts argue that cryptocurrencies are extremely high-risk of being used to launder money and finance terrorism. There is no uniform definition of cryptocurrencies. The Financial Action Task Force (FATF) defines them as a sub-group of virtual currencies, which are digital representations of value and can be traded digitally. They also function as an exchange © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 500–511, 2020. https://doi.org/10.1007/978-3-030-39319-9_57

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medium, a unit of calculation, or a value storage entity (FATF 2014). Cryptocurrencies are characterised by insufficient regulation and high anonymity, which has both positive and negative implications. To explore how money launderers utilise cryptocurrencies to launder illicit funds, the first author met with 70 prevention experts and 35 presumed criminals. During the interviews, strategies for money laundering through cryptocurrencies were identified. The findings were subjected to qualitative content analysis, which informed the development of a questionnaire subsequently distributed to 200 compliance experts. The study’s objective is to provide compliance officers with an insight into the operations of money launderers, thus helping them to more effectively prevent money laundering through cryptocurrencies. This paper aims to discover and analyse the concrete steps taken by criminals to launder incriminated funds through cryptocurrencies. Based on these findings, we offer recommendations for compliance officers and companies that deal with cryptocurrencies. As compliance officers seldom encounter cases of money laundering through cryptocurrencies, the current focus on the financial sector should be reconsidered.

2 Literature Review 2.1

Money Laundering

There is no universal definition of money laundering. However, most definitions delineate money laundering as an action which aims to conceal the illegitimate origins of assets (Johnson and Desmond 2003). In most cases, incriminated funds are the proceeds of some form of criminal activity. The majority of money laundering studies focus predominantly on organisations the mechanisms they apply to prevent the phenomenon (Bagella et al. 2009; Takáts 2007). Furthermore, existing data on how much money is laundered annually is scarce and based on estimates. In addition, little is known about the worldwide volume of organised crime. Money laundering was first declared illegal in 1986 to attempt to tackle the raging drug war in the United States (Sharman 2008). To reduce the profitability of drug trading, anti-money laundering (AML) measures were implemented (Pieth 2015). Thus far, efforts to combat money laundering have proven largely ineffective (Schneider 2008), so money laundering remains a global security issue (Harvey 2004; Van Duyne 1994; Walker 1999). Incriminated funds frequently originate from organised crime, arms trafficking, prostitution, tax evasion, and other similar offences (Gaetke and Welling 1992; Lilley 2003; Hampton and Levi 1999). The national implementation of AML measures is evaluated by the FATF, which coordinates global efforts to fight the issue (Alexander 2001; Doyle 2001; Levi and Gilmore 2002). However, the FATF has limited capability to operate through informal networks (Perkel 2004). In addition, its efforts are concentrated on the financial sector. In the fight against money laundering, financial institutions are crucial partners to governments (De Koker 2006). They are subject to many compliance measures, which create additional recruitment and training costs (Favarel-Garrigues et al. 2008). To effectively enforce compliance, banks must be acquainted with their clients and know

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the origins of their funds. However, they do not have the necessary capacities to investigate and prevent money laundering (Alford 1993). Ultimately, the successful implementation of AML measures depends on individual bankers (Moser 1995). Therefore, it is important to create incentives which reward bankers’ compliance. Ultimately, different countries need to enforce different AML legislation, as there is no universal solution to the issue (Vaithilingam and Nair 2007). It is important that these measures do not burden free trade or compromise citizens’ freedom. Moreover, both security and freedom for all citizens must be ensured (Vleck 2008). 2.2

Origin and Functioning of Decentralised Cryptocurrencies

The first cryptocurrency, namely Bitcoin, was announced as an electronic peer-to-peer payment system at the end of 2008. The original intention of Bitcoin’s creators was not to create a cryptocurrency, as every prior attempt to create a centralised digital currency had failed (Bloggeeks 2019). Bitcoin remains the most important cryptocurrency. From the consumer’s perspective, its advantages include lower transaction fees, compared to the traditional banking system, and decentralisation, which makes it practically immune to hacking. Since the invention of Bitcoin, multiple other cryptocurrencies have been launched, which are also referred to as altcoins. This paper focuses mainly on Bitcoin, being the best-known cryptocurrency. However, other cryptocurrencies mostly function in the same way. Bitcoin uses peerto-peer technology to facilitate instant payments. The currency is fully decentralised, which means there is no central entity or server to govern it. One issue that initially confronted Bitcoin’s creators was the need to avoid double spending. With fiat money, double spending is avoided by documenting all balances in a central server. To avoid double spending in a decentralised system, all peers must have access to complete lists of all transactions. For this system to function, every peer must agree to the protocoling. This prompts the question of how agreement can be reached without a central entity. By finding a solution, Bitcoin’s inventor Satoshi Nakamoto revolutionised the market (Bloggeeks 2019). Every single Bitcoin transaction is documented irrevocably in the blockchain once it has been confirmed. Blockchains power all decentralised cryptocurrencies. New bitcoins are created by “miners”. Instead of a central bank, cryptocurrencies use countless individual computers – so-called “nodes” – to process transactions. Every node represents a blockchain conjunction. Nodes connect to a certain cryptocurrency through open-source software or via download. A node may download the blockchain either partly (lightweight node) or fully (full node). Lightweight nodes ensure the system’s integrity by downloading parts of the blockchain, which they use to verify sequences of previously mined blocks. Full nodes, by contrast, download the entire blockchain and mine or encode transaction blocks. As a reward, they receive coins. Lightweight nodes ensure that this task is conducted in accordance with the rules (Händel 2019). Generally, the more nodes a blockchain entails, the greater its stability and network speed. As there is no single entity, which could be hacked, the blockchain’s decentralisation also increases security.

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Bitcoins are not tangible, as they represent a certain value documented on a public ledger in the cloud. Bitcoin users access their funds using a “key”, comprising a string of letters and numbers set by a mathematical algorithm. Generally, there are public and private keys. Public keys function similarly to bank account numbers and are publicly visible so that bitcoins can be transferred to them. The private key, by contrast, is utilised to authorise transactions (Frankenfield 2019). Cryptocurrencies can be used globally without any restrictions. They are extremely secure, yet also highly volatile. Fluctuations between 10 and 100% are completely normal for most cryptocurrencies. Other well-known and established cryptocurrencies include Ethereum, Litecoin, Ripple, and Monero. Due to their innovative organisation, many people consider cryptocurrencies menacing. According to Nakamoto, Bitcoin is a system which is not based on trust. Nakamoto also frequently stresses Bitcoin’s “otherness” (Bloggeeks 2019). This “otherness” can be advantageous for users. Bitcoin is based on encodings, which are, in turn, based on math. Therefore, Bitcoin addresses are extremely safe, as it is impossible to bypass these encodings. This makes cryptocurrencies extremely attractive from the consumer’s perspective. From a compliance perspective, however, cryptocurrencies entail enormous risks, as neither transactions nor accounts are linked to real persons. Since every user obtains an address formed of random numbers, it nearly impossible to trace addresses back to their users. This anonymity makes cryptocurrencies highly dangerous in terms of compliance. 2.3

Centralised Cryptocurrencies

Centralised cryptocurrencies are a rather new phenomenon and have developed from their decentralised predecessors. Today’s most heatedly discussed so-called “stablecoin” is probably Facebook’s Libra, due to be launched in 2020 (The Economist 2019). Libra is governed by the Libra Association, which is registered in Switzerland. The Libra Association includes renowned members, such as Uber, Visa, and Spotify (Libra 2019a). According to Facebook, Libra can be defined as a simple global currency, which is supposed to especially benefit persons in developing countries with no access to financial services (Libra 2019b). Compared to other cryptocurrencies like Bitcoin, Libra is supposed to be much less volatile. Most consumers, however, are sceptical about the Libra Association’s ability to ensure data privacy, considering Facebook’s implication in multiple data protection scandals. For the same reason, other entities such as the European Central Bank (ECB) are extremely cautious of Libra. Thus, the ECB has announced that Libra will be regulated extremely strictly (Kaaru 2019). Libra differs from decentralised cryptocurrencies because it is similarly centralised to fiat money. Nonetheless, Libra is powered by blockchain technologies. Like the Bitcoin blockchain, the Libra one comprises nodes. However, the Libra blockchain is not decentralised: instead, all Libra nodes are controlled by the Libra Association. Facebook argues that Libra’s centralisation will facilitate faster development of the desired global financial structure (Libra 2019a). By contrast, decentralised models cannot build this structure as quickly. Yet consumers critical of Facebook’s data policy are unlikely to be enthusiastic about Libra’s centralisation.

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Libra is also supposed to be fully compliant, which is its central difference from decentralised cryptocurrencies. Full compliance means that Libra will follow the U.S. Financial Crimes Enforcement Network’s guidelines, including AML and antiterrorism financing measures (Libra 2019a). As Libra is a stablecoin, its value will be linked to the value of real assets. Thus, the Libra Association will hold a reserve of currencies and low-risk bonds which govern the value of all circulating Libra entities (CoinMarketCap 2019). From the consumer’s perspective, Libra offers many potential benefits: it should facilitate global money transfers by accelerating their execution and lowering transaction costs, such as currency exchange rates. For companies, Libra could be a comparatively easy way to conduct business abroad, especially if a currency exchange would be involved. With Libra, there is no need to open bank accounts and deal with multiple authorities, which saves the company time and money. For individuals in crisis regions, Libra also offers many advantages, as only a phone and passport will be needed to use it. In areas with no state bank or no reliable financial system, citizens could benefit from Libra’s easy accessibility. It should also be relatively easy for family members in other countries to transfer money to their relatives in these areas. However, these aspects make centralised cryptocurrencies extremely vulnerable to use for money laundering and terrorism financing. Although Libra pledges to enforce compliance, there are many inherent risks. 2.4

Literature Gap

Evidently, there is abundant literature on money laundering and compliance issues. However, most research focuses on compliance measures and their enforcement, and usually examines these issues from a compliance perspective. Most researchers fail to consider the criminals’ perspective, despite the need for compliance officers to empathise with money launderers to be able to most effectively combat their activities. The comparatively new phenomenon of cryptocurrencies has already been the focus of money laundering studies. However, much of this literature is also limited to the prevention perspective. This paper’s purpose is to illustrate the issue of money laundering through cryptocurrencies from the perspectives of both perpetrators and prevention experts, so as to gain a comprehensive overview. To this end, concrete money laundering methods, as well as risks for offenders and companies, will be investigated and discussed.

3 Methodology As shown in the literature review, most prior studies of money laundering fail to discuss how criminals operate to circumvent compliance mechanisms. Due to this literature gap, no initial hypothesis could be formed. Instead, an explorative approach was selected. To gain a comprehensive overview of how cryptocurrencies can be

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utilised for money laundering purposes, interviews were conducted with both compliance experts and presumed money launderers.1 The objective was to analyse the issues from both perspectives. For the informal interviews, the first author met with 50 alleged money launderers. Due to possible penal consequences, criminals rarely agree to being recorded. However, accurate analysis of their statements necessitates some form of documentation, so their statements were transcribed based on memory after each interview. Although such minutes are less accurate than transcriptions, offenders’ perspectives could not otherwise have been included. To warrant the anonymity of informal interview partners, neither the conversations were recorded, nor their names were included in the memory minutes. This approach also ensured that interview partners were able to discuss the topic freely without fear of criminal prosecution. For the same reason, the interviewer only asked participants to discuss hypothetical situations, rather than actual experiences. The formal interviews were conducted mainly via video chat. Generally, face-toface conversations allow for more accurate data acquisition than phone conversations. However, due to busy schedules and geographic distances, personal interviews were not always possible. Thus, video chat was selected as a suitable alternative. The first author interviewed 70 prevention experts, and each conversation was recorded and subsequently transcribed anonymously. Thereafter, a qualitative content analysis was conducted, reducing the compliance officers’ statements to key statements, which were categorised and assessed through triangulation (Healy and Perry 2000; Mays and Pope 2000; Morse et al. 2002). Findings from the qualitative analysis were then used to design a questionnaire, which was distributed to 200 compliance experts. Based on their responses to the questionnaire, the following hypotheses were developed: 1. Compliance officers believe cryptocurrencies are suitable for money laundering purposes. 2. Compliance officers believe that the detection risks when laundering money through cryptocurrencies are comparatively low. 3. Compliance officers seldom encounter money laundering through cryptocurrencies. For the formal interviews, internationally operating compliance officers from multiple cultural backgrounds were approached. Nonetheless, it is possible that interviews with different individuals at different times or in other locations could have yielded different results (Morse et al. 2002). However, theoretical saturation was reached, as the statements of interviewees became repetitive. As their statements did

1

Ethical approval was obtained from the ethics committee, as the interviewed compliance experts attested, they had not committed any criminal offenses within the scope of their work discussed in the present study; with the alleged money launderers, hypothetical situations, not their personal experiences were discussed. Members of the ethics committee are BLaw Katharina Kuhn, MLaw Aniq Iselin, and BLaw Matthias Becker. Furthermore, all participants gave their informed consent to be cited anonymously in this study before its commencement. Formal interview partners gave their informed consent to be recorded and their statements be transcribed. Informal interview partners gave their informed consent for the memory-based, anonymous transcription of interviews.

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not vary significantly, a larger sample size would probably not have altered the findings dramatically, so they may be considered widely generalisable. Moreover, qualitative content analysis is always subject to certain limitations. Primarily, the analysis is influenced by the interviewer’s personal perspective. Further, as the informal interviews were not transcribed, there is a small risk that information could have been lost or misinterpreted.

4 Empirical Findings Generally, cryptocurrencies are extremely suitable for money laundering purposes, as they lack regulation and identification obligations. Although there are attempts to make cryptocurrencies more secure (such as Libra), their users need nothing more than a passport and mobile phone to use them. Therefore, money launderers could employ strawmen or acquire fake passports to access stablecoins and subsequently misappropriate them to launder illicit funds. According to estimates, more than USD 2.5 billion has been laundered through Bitcoin since 2009 (Canellis 2018). Cryptocurrencies are suitable for both the placement and layering of incriminated funds. 4.1

Concrete Steps

To place incriminated funds, the money launderer can invest a portion of them in cryptocurrency. Focusing here on decentralised cryptocurrencies, Internet access is required to obtain them. The money launderer needs to download a wallet, which is a software tool allowing users to send, receive, and store funds in the cryptocurrency’s network. Alternatively, they can purchase cryptocurrencies in person. For this method, the launderer needs to find a crypto ATM, retailer, or bank which exchanges cash deposits into cryptocurrency. When acquiring cryptocurrency in person, the launderer needs to employ a strawman. A third option is to acquire free cryptocurrency by playing online games, doing online jobs (e.g. completing surveys), or blogging about cryptocurrencies. After acquiring a certain currency, such as Bitcoin, the funds may be layered. During layering, incriminated bitcoins are transferred back and forth between different addresses. To transfer the coins, so-called “mixers” or “tumblers” are used. These services are fee-based and usually charge around one to three percent of the mixed currency. For this method, one wallet in the clearnet (the regular Internet) and at least two wallets in the darknet are needed. The darknet can be accessed via websites like “Tor”, which encode the user’s IP address so they remain anonymous. As the darknet is associated with many risks, the money launderer must be careful to select a trustworthy wallet provider. Initially, bitcoins are transferred from the clearnet wallet to one of the hidden darknet wallets. Every transfer constitutes a so-called “hop”. Multiple hops can be conducted, and each hop adds another disguising layer to the funds. After placing the coins in a darknet wallet, the launderer can begin to mix them. The mixer service automatically divides bitcoins and uses multiple transactions to assign them to different darknet addresses at random times, thus preventing transactions from being linked to

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one another. Thereafter, the complete amount is pooled again using another darknet wallet. When this process is complete, the coins are clean enough to be exchanged for other cryptocurrencies or fiat money. This adds another layer of deception. However, because mixers have multiple security gaps with respect to data protection, using this method entails severe risks for the money launderer. There are other methods which do not require using a mixer. One option is to utilise non-regulated crypto exchanges, which do not enforce know-your-customer (KYC) and AML protocols. By using these exchanges, money launderers may transfer their cryptocurrencies between multiple markets and exchange them for other currencies. Every time an exchange is conducted, another layer of deception is added, similarly to the hopping method. Thus, the launderer could exchange Bitcoin for Ethereum, and then Ethereum for Ripple. Subsequently, the coins may be transferred to an external wallet using other accounts in the launderer’s possession. For instance, a cryptocurrency could be exchanged for fiat money. However, fiat markets are rather rare among non-regulated exchanges. To exchange coins for fiat money, money launderers can turn to peer-to-peer markets. Turning to consider centralised cryptocurrencies like Libra, the relative ease of conducting a transnational transfer of funds makes them extremely vulnerable to money launderers too. For instance, a launderer could utilise a fake passport or a strawman’s passport to gain access to Libra. With access to multiple passports, they may create a number of accounts between which they transfer incriminated funds back and forth, with every transfer adding another layer of deception. After layering is complete, the funds may be exchanged back into fiat money. 4.2

Risks for the Money Launderer

Although cryptocurrencies are generally considered to be extremely anonymous, some sources argue that Bitcoin transactions may be utilised to identify the money launderer. Since blockchains are freely available and transparent, complete anonymity cannot be guaranteed, yet this is frequently assumed. The money launderer must also be aware of the high volatility of most decentralised cryptocurrencies. Due to this volatility, cryptocurrencies are not always suitable for money laundering purposes, as the launderer might have to accept high losses. Therefore, intelligent money launderers need to allow for a long investment period and should only invest amounts whose loss could be tolerated. Another option is the quick divestment of purchased cryptocurrencies to avoid possible losses. Another hazard is the dubious nature of many crypto exchanges and wallet providers. Money launderers must beware the dangers of the darknet, including viruses and hackers. Furthermore, the FATF frequently publishes new recommendations for dealing with cryptocurrencies. Although its suggestions are not binding, countries which do not comply with these regulations are frequently excluded from trade relations, as working with them is considered too risky.

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5 Discussion Crypto exchanges in countries with low AML standards have been found to receive up to 36 times more in cryptocurrencies from money launderers than those in nations with adequate laws. It is also estimated that 97% of laundered cryptocurrencies end up in nations with lax KYC/AML guidelines (Canellis 2018). Supporters of cryptocurrencies argue that the blockchain guarantees high levels of transparency. Companies such as Chainalysis identify illegal activities by analysing cryptocurrency blockchains. This supposedly improves KYC/AML efforts. However, while exchanges and wallet providers may block suspicious transactions, there is no way to investigate whether a newly created wallet receives payments for illegal purposes. The underlying reason is that this procedure would restrict legal companies. Money launderers abuse this principle by using mixers to continuously generate new wallet addresses (Kaminska 2019). Generally, both decentralised and centralised cryptocurrencies are highly suitable for money laundering purposes and entail a number of compliance risks. Whereas decentralised cryptocurrencies are not regulated at all, centralised currencies like Libra intend to follow AML/KYC guidelines. Nonetheless, there are methods that money launderers can utilise to circumvent these AML measures. Banks and financial services providers are advised to refrain from conducting business with other financial services providers in the field of cryptocurrencies. As cryptocurrencies are non-transparent and require a high degree of expertise, the cost of adequate compliance measures would be exorbitant and incommensurate with their potential benefits. Therefore, compliance officers should be extremely careful and scrutinise all transactions which could be linked to cryptocurrencies. In case of doubt, suspicious transactions should always be declined. Companies should refrain from conducting business with natural or juristic persons who might be trading cryptocurrencies or accepting them as payment. Moreover, companies and service providers are advised not to accept cryptocurrency as a form of payment, as their high volatility means prices are constantly changing. Conducting transactions with cryptocurrencies could jeopardise a company’s liquidity. As many companies have high running costs, using cryptocurrencies is highly risky. A sudden drop in the value of a cryptocurrency could cause the company to default on payments; if wages and invoices cannot be paid on time, the consequences could be fatal. Furthermore, conducting business with financial institutions which do not accept cryptocurrencies might prove to be difficult. In July 2018, the European Parliament published an update to its AML Directive: the so-called “AMLD5” will become effective in January 2020 at the latest. Thereafter, all crypto exchanges and wallet providers must follow strict KYC guidelines and register with local authorities. Moreover, they will need to monitor transactions and report them in case of doubt. In addition, national authorities such as tax authorities will be able to access information about crypto users (Krais 2018). In July 2019, the FATF published new guidelines for crypto exchanges around the world. These require virtual asset providers, such as providers of wallets, to hand over information about customers who transfer funds between companies. This information

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includes the sender’s name, account number or wallet, address or national identity number, birth date, and location, as well as the name of a possible beneficial owner. These standards are highly controversial, as they restrict consumers’ anonymity (Baydakoya and De 2019). However, as long as money launderers claim to be using their wallets for private purposes, they would not be obliged to register. Critics of AMLD5 claim that the new rules will not enhance transparency, as providers will choose to leave the market or operate in secret. In addition, transactions will likely be relocated to less regular exchanges outside the scope of AMLD5 (Acheson 2019).

6 Conclusion Cryptocurrencies entail a number of severe compliance risks. In particular, they are highly suitable for money laundering. Their lack of identification obligations and limited regulation makes them a perfect tool for intelligent criminals. Although they require some expertise, the needed resources are usually easily available. Some money laundering techniques using cryptocurrencies are comparatively risky, whereas others are easier to conduct. Regardless of whether a cryptocurrency is decentralised like Bitcoin or centralised like Libra, it is prone to misappropriation for criminal purposes. It should be acknowledged, however, that Libra’s centralisation makes it a little safer from a compliance perspective. From the consumer’s perspective, though, Libra entails many risks regarding data protection. Although crypto transactions always leave a digital trail in the blockchain, there are methods that criminals can use to ensure their anonymity. To prevent money laundering through cryptocurrencies, financial institutions, companies, and every individual dealing with cryptocurrencies should refrain from conducting a transaction in case of doubt. In particular, financial institutions and businesses should consider completely refraining from using cryptocurrencies. The associated risks and costs are much too high and substantially disproportionate to their potential benefits. Meanwhile, as new risk management methods are introduced to increase the transparency of cryptocurrencies, criminals could increasingly (and undesirably) turn to non-regulated cryptocurrencies. Nonetheless, the FATF and European Parliament’s new guidelines require crypto markets to implement AML/KYC measures similarly to other actors in the financial market.

References Acheson, N.: The hidden effects of crypto laundering rules (2019). https://www.coindesk.com/ the-hidden-effects-of-crypto-money-laundering-rules. Accessed 20 Sept 2019 Alexander, K.: The international anti-money-laundering regime: the role of the financial action task force. J. Money Laundering Control 4(3), 231–248 (2001) Alford, D.E.: Anti-money laundering regulations: a burden on financial institutions. NCJ Int. Com. Reg. 19, 437–468 (1993)

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Bagella, M., Busato, F., Argentiero, A.: Money laundering in a micro-founded dynamic model: simulations for the US and the EU-15 economies. Rev. Law Econ. 5(2), 879–902 (2009) Baydakoya, A., De, N.: All global crypto exchanges must now share customer data, FATF rules (2019). https://www.coindesk.com/fatf-crypto-travel-rule. Accessed 20 Sept 2019 Bloggeeks: Was ist eine Kryptowährung: Alles, was Sie wissen müssen! (2019). https:// blockgeeks.com/guides/de/was-ist-kryptowahrung/. Accessed 23 July 2019 Canellis, D.: Here’s how criminals use Bitcoin to launder dirty money (2018). https://thenextweb. com/hardfork/2018/11/26/bitcoin-money-laundering-2/. Accessed 20 Sept 2019 CoinMarketCap: Facebook Libra (2019). https://coinmarketcap.com/de/currencies/facebooklibra/. Accessed 20 Sept 2019 De Koker, L.: Money laundering control and suppression of financing of terrorism: some thoughts on the impact of customer due diligence measures on financial exclusion. J. Financ. Crime 13(1), 26–50 (2006) Doyle, T.: Cleaning up anti-money laundering strategies: current FATF tactics needlessly violate international law. Hous. J. Int. Law 24, 279–313 (2001) FATF: Virtual Currencies – Key definitions and potential AML/CFT risks (2014). http://www. fatf-gafi.org/media/fatf/documents/reports/Virtual-currency-key-definitions-and-potentialaml-cft-risks.pdf. Accessed 27 June 2019 Favarel-Garrigues, G., Godefroy, T., Lascoumes, P.: Sentinels in the banking industry private actors and the fight against money laundering in France. Br. J. Criminol. 48(1), 1–19 (2008) Frankenfield, J.: Bitcoin, Investopedia (2019). https://www.investopedia.com/terms/b/bitcoin.asp. Accessed 19 Sept 2019 Gaetke, E.R., Welling, S.N.: Money laundering and lawyers. Syracuse L Rev. 43, 1165–1245 (1992) Hampton, M.P., Levi, M.: Fast spinning into oblivion? Recent developments in moneylaundering policies and offshore finance centres. Third World Q. 20(3), 645–656 (1999) Harvey, J.: Compliance and reporting issues arising for financial institutions from money laundering regulations: a preliminary cost benefit study. J. Money Laundering Control 7(4), 333–346 (2004) Händel, K.: Blockchain Nodes – Definition und Funktionsweise von Nodes (2019). https://www. unternehmenswelt.de/blockchain-nodes-definition-und-funktionsweise-von-nodes. Accessed 10 Sept 2019 Healy, M., Perry, C.: Comprehensive criteria to judge validity and reliability of qualitative research within the realism paradigm. Qual. Mark. Res. Int. J. 3(3), 118–126 (2000) Johnson, J., Desmond Lim, Y.C.: Money laundering: has the financial action task force made a difference? J. Financ. Crime 10(1), 7–22 (2003) Kaaru, S.: European Central Bank exec slams Libra as ‘cartel-like’ (2019). https://coingeek.com/ european-central-bank-exec-slams-libra-as-cartel-like/. Accessed 13 Sept 2019 Kaminska, I.: Why money laundering risk is very real with crypto cards (2019). https:// ftalphaville.ft.com/2019/05/31/1559275247000/Why-money-laundering-risk-is-very-realwith-crypto-cards/. Accessed 24 July 2019 Krais, J.: EU: 5th EU Anti-Money Laundering Directive published (2018). https:// globalcompliancenews.com/eu-5th-anti-money-laundering-directive-published-20180716/. Accessed 20 Sept 2019 Levi, M., Gilmore, W.: Terrorist finance, money laundering and the rise and rise of mutual evaluation: a new paradigm for crime control? In: Financing Terrorism (S. 87–114). Springer, Netherlands (2002)

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Libra: Die Libra Association (2019a). https://libra.org/de-DE/association/?noredirect=de-DE. Accessed 13 Sept 2019 Libra: Vision (2019b). https://libra.org/de-DE/vision/. Accessed 13 Sept 2019 Lilley, P.: Dirty Dealing: The Untold Truth About Global Money Laundering, International Crime and Terrorism. Kogan Page Publishers, London (2003) Mays, N., Pope, C.: Assessing quality in qualitative research. BMJ: Br. Med. J. 320(7226), 50– 60 (2000) Morse, J.M., Barrett, M., Mayan, M., Olson, K., Spiers, J.: Verification strategies for establishing reliability and validity in qualitative research. Int. J. Qual. Methods 1(2), 13–22 (2002) Moser, M.: Switzerland: new exceptions to bank secrecy laws aimed at money laundering and organized crime. Case W. Res. J. Int. Law 27, 321–357 (1995) Perkel, W.: Money laundering and terrorism: informal value transfer systems. Am. Crim. L. Rev. 41, 183–211 (2004) Pieth, M.: Strafrechtsgeschichte. Helbing Lichtenhahn Verlag, Basel (2015) Schneider, F.: Money laundering and financial means of organised crime: some preliminary empirical findings. Glob. Bus. Econ. Rev. 10(3), 309–330 (2008) Sharman, J.C.: Power and discourse in policy diffusion: anti-money laundering in developing states. Int. Stud. Q. 52(3), 635–656 (2008) Takáts, E.: A theory of «crying wolf»: The economics of money laundering enforcement (No. 7-81), International Monetary Fund (2007) Teichmann, F., Sergi, B.S.: Compliance in Multinational Corporations – Business Risks in Bribery, Money Laundering, Terrorism Financing and Sanctions. Emerald, Bingley (2018) The Economist: “What is Libra?” (2019). https://www.economist.com/the-economist-explains/ 2019/07/12/what-is-libra. Accessed 13 Sept 2019 Vaithilingam, S., Nair, M.: Factors affecting money laundering: lesson for developing countries. J. Money Laundering Control 10(3), 352–366 (2007) Van Duyne, P.C.: Money-laundering: estimates in fog. J. Financ. Crime 2(1), 58–74 (1994) Vlcek, W.: A Leviathan rejuvenated: surveillance, money laundering, and the war on terror. Int. J. Polit. Cult. Soc. 20(1–4), 21–40 (2008) Walker, J.: How big is global money laundering? J. Money Laundering Control 3(1), 25–37 (1999)

Network Communications of the Scientific Community on the Issues of State Scientific and Technical Policy Formation in Modern Russia Dmitry Y. Znamensky1(&) 1

and Marina S. Kerre2

State University of Management, Moscow, Russia [email protected] 2 Moscow City University, Moscow, Russia [email protected]

Abstract. The article is devoted to the problem of scientific community representation in the process of state science and technology policy formation. The aim of the study is to determine the actual and potential role of social networks in the process of identifying the agenda of the state scientific and technical policy in modern Russia. This topic is actualized by the formed request of the scientific community, which is confirmed by expert surveys conducted with the participation of the authors. The main research methods are expert survey (absentee questionnaire) and content analysis of scientific social networks of specialists and communities of scientists in public social networks. The study is mainly focused on the capacity of specialized social networks to provide cooperative work of Russian scientists and to form a common position on the current and future scientific and technical policy of the state. Social networks are to contribute to such cooperative work. At the same time, the results of the content analysis indicate that the capacity is realized incompletely, which makes it urgent to search for new forms of interaction between the government and the scientific community in the process of forming and adjusting the agenda of the state scientific and technical policy. It seems promising to include specific technologies of network interaction of scientists in the strategic documents defining the concept of the policy of the Russian Federation in the field of science and technology. Keywords: Network communication
Social media Scientific and technical policy of the state JEL Code: I28


Scientific community



O38

1 Introduction The urgency of the problems of the national scientific and technological system development is not in doubt. This issue has been repeatedly raised both at the expert and at the state level. This is evidenced by regulatory and strategic documents issued by © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 512–518, 2020. https://doi.org/10.1007/978-3-030-39319-9_58

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the state authorities (for example, On the Strategy for Scientific and Technological Development of the Russian Federation: Decree of the President of the Russian Federation No. 642 of December 1, 2016) as well as the publications of some Russian researchers (Gallyamova 2017; Preobrazhensky 2009; Terebnev 2014). This raises the question about the publicity of the state scientific and technical policy, i.e. how much civil society institutions, including the scientific and university community, are involved in the processes of its development and implementation, as well as the search for new communication technologies between various actors in this area.

2 Methodology The author’s approach to the study is based on the understanding of public policy formed by domestic and foreign political scientists and considers it primarily as resulting from the functioning political system, which combines all the authorities’ decisions (Almond et al. 2002). Some researchers develop this understanding and consider public policy as a social process aimed at solving socially important problems, including the formation of working networks in which the state and civil society interact (Sungurov 2015). Therefore, the authors reasonably understand state policy not as a unilateral state, its bodies and officials’ actions, but as a result of interaction between the state, civil society institutions and other structures concerned (Znamensky 2016). A significant role in the methodological basis of the study is played by the theory of policy networks, which provides the following framework: (1) the theory is focused on the relationship between the state management structures, public and business organizations; (2) it considers a wide range of political problems along with purely management issues of state administration; (3) it acknowledges that the state with its institutions constitutes an important, but not the only actor in the production of political decisions; (4) special attention is paid not so much to political institutions as to the links and relations between them (Bӧrzel 1998; Rhodes and Marsh 1992); (5) it considers the problem of administrative efficiency not through the “goals-means”, but through the “goals-process” relation. The conclusion of the Dutch researcher R. Hoppe is considered important, as he notes that each area of public policy has its own network-policy, i.e. structured relations of information and communication, resources and its own characteristics of the relations of power and other actors in the field of public policy (Hoppe 2009; Hoppe et al. 2013). The idea of Russian political scientist L. Smorgunov seems also efficient, as he suggests, that the network political management should be complemented with features that reflect interactivity, social networks and new technologies of political participation (pure democracy, expert analysis, blogs, crowdsourcing, and others) (Smorgunov 2001). The study is based on the methods of expert survey and content analysis. Expert surveys were conducted in 2011, 2016 and 2018 to determine the extent to which representatives of academia (including universities) trust the current state scientific and technical policy and to identify the level of actual and desired expert

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participation in the formation of this policy, as well as to assess the participation of various social-political institutions in this process1. The sample consists of 200 experts, who are professors and researchers from 20 universities of various fields: classical universities, technical, humanitarian and economic-management universities. Among the experts surveyed, 25% are Doctors of Science, 61.7% are Candidates of Science, 13.3% do not have a scientific degree; 56.7% of respondents are men, 43.3% are women; young scientists (Candidates of Science under 35 and Doctors of Science under 40 years of age) constitute 31.7% of the sample. The use of content analysis is attributable to the need to study the most frequently discussed topics in scientific social networks and to determine the degree of attention paid in these networks to the issues of state scientific and technical policy. Specialized social networks for scientists (Academia.edu, ResearchGate, Scipeople, Social Science Research Network, Carnegie Mellon CS-STEM Network) and specialized scientific communities in public social networks (Vkontakte.ru, Facebook, Twitter) were taken as analysis objects. The concepts of “state scientific and technical policy”, “priority directions of science development”, “critical technologies”, “interests of the scientific community” were singled out as units of analysis.

3 Results Social networks are quite popular today and play an important role in the interaction between people and groups. This can be attributed to many social contacts transferred online to simplify and accelerate direct communication. As a result, modern social networks constitute a virtualized social environment in which a person establishes, expands and deepens social connections, forms a specific structure of relations, socializes, performs self-actualization, generates and consumes any information of interest through various communication channels in certain forms (Bezbogova 2017). This social environment includes almost all spheres of society: politics, science, sports, entertainment, etc. Based on the huge number of users, social networks can be not only global but also professional and narrowly focused. However, this narrowness does not guarantee the frequency and density of communication within the social network. The development of Internet communication has affected the scientific and technical sphere not only in the field subject study but also in the field of research organization, scientific and methodological, educational work and collaboration. In this regard, the results of expert surveys conducted by the authors in 2011 and 2016 among the representatives of the University community on participation in the processes of formation and implementation of the state scientific and technical policy are of interest. 1

Ethical approval was obtained from the ethics committee. Members of the ethics committee are Olesya A. Stroeva, Elena V. Sibirskaya and Anastasia A. Sozinova. Furthermore, all participants gave their informed consent to be cited anonymously in this study before its commencement. Interview partners also gave their informed consent to be recorded and their statements be transcribed.

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So, all participants of the study noted that scientists should take part in these processes in some form. The vast majority of respondents identified three forms of such participation: participation in the law-making process in the sphere of science and technology, participation in discussions on science and technology policy, and participation as experts or in the work of public councils under the Executive authorities. The idea that scientists should work directly in the authorities is not popular and was supported by less than 10% of respondents. It should be noted that compared to the level of the desired participation of representatives of the scientific community in the formation and implementation of the state scientific and technical policy, the degree of their actual participation is relatively low. The most active respondents participate in public discussions on science and technology policy (half of the respondents participate, about 15% of them would like to participate). Other forms of participation are less common. About 5% of experts participate as experts, as well as in the work of public councils under the Executive authorities, and about 25% do not currently participate, but would like to. None of the respondents participate in the development of law-making process on scientific policy, but some respondents would like to (Znamensky and Terekhina 2011). Thus, it seems possible to assert that the scientific community has formed a fundamental request for participation in the formation of the state scientific and technical policy in general and policy on the management of University science. However, this request has not been fully implemented. It seems reasonable to believe that it is possible to implement such a request through the activation of network communications between Russian scientists, including through existing and newly created specialized social networks. It should be noted that the social networks created for scientists are not like the services familiar to users. Thus, the feature of scientific social networks is involving the obligatory attachment of the scientific works list of each user (preferably not only a description but also the relevant texts) and coverage of scientific and technical events, journals and so on. These demands are directly related to the peculiarity of the work in science field: scientist should promote his or her publications as a virtualized profile in science, and attract attention to his or her research, increasing its importance and relevance, as well as participate in scientific life. The implementation of these factors in the functions and structure of social networks should be an important advantage for scientists. However, the results of researches (including surveys) indicate that specialized scientific social networks are not popular, especially when compared with global networks. For example, the most popular social networks for scientists are foreign ones, including Academia.edu (more than 50 million subscribers) and ResearchGate (more than 1 million subscribers), while Facebook has more than 1 billion users. At the same time while Academia.edu allows independent scientists to join, ResearchGate accepts scientists and University employees through corporate mail only, and all universities can provide it. There are also more specialized scientific social networks: for the Humanities and economic Sciences (SSRN) and for the technical Sciences (Carnegie Mellon CS-STEM Network). It should be noted that scientific social networks are designed not only for collaboration and work publishing (Scientometric services are more suitable for the latter),

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but also for science popularization and presentation of research results to the public at large (Kincaid 2011). Studies show that the discussion of the state scientific policy, what is happening in the scientific sphere, the latest news is uncharacteristic within foreign social networks. It seems that this is due to the purpose of these services: they are designed for the collaboration of scientists only and allow access to their articles. In case of Russian social networks for scientists, things are worse than abroad. Most specialized social networks for Russian scientists are quite small. The most active scientific social network is Science-community.org, designed for the CIS countries. Actually, its functions repeat not so much the classic multi-user social networks as Academia.edu and allows users to search for work and write a blog, but there is no discussion option: one can only leave comments under a certain blog publication. The latest interviews with scientists date back to 2016. (https://www.science-community. org/ru/interview 2018). If we consider another social network Scipeople, which is also designed for scientific interaction and at the same has the discussion option, we will see that there are few topics to discuss modern scientific problems, there are only five of them. However, the latest posts date back to 2017, 2016, 2015, 2014 and 2009, which indicates an extremely low engagement both in the social network and in the scientific discussions (http://scipeople.ru/groups/1/ 2018). Therefore social networks, especially in Russia, which are designed for scientists, are not popular with the target audience. Collaboration of scientists, especially University ones, is a rather complicated process: news about events and publications do not always reach the target audience, there is no Russian system for publishing preprints, data do not always fall into scientometric systems, which also affects the dissemination of research results. Aging personnel, challenges of international communication, low motivation an affect the work of scientists and their participation in public life, including issues related to the science management. However, social media tend to cover the problems of Russian science, especially in common social networks and services. Social media act today not only as conductors of news, but also as their generators. The functionality of the services allows them to quickly distribute information and receive a response in the form of comments, likes or reposts. Recently, the public shows interest to the achievements of science, so there are numerous platforms and services that place not only news about the latest achievements and events in science, but also present press releases and articles, interviews and other materials directly from scientists and for scientists. Portals like Nauka n + 1, PostNauka, Sci One, Elementy, Chrdk, Scientific and other have their pages in social networks and are develop quite rapidly, but they popularize science and convey its results to the interested people rather than discuss current problems of science or form a public response to these problems. The scientific media and pages presented on Twitter convey information to the user more than they are a consolidation tool. Nevertheless, there are several social media that are closest to the real problems of scientists: this is the Rambler project Indicator.ru and Telegram-channels “Evil teacher”, “Science policy” and “ Skolkovo Leaks”. However, despite the proximity to

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reality, these projects do not unite scientists and are not their representation, as, for example, The society of scientists, but rather discuss the policy pursued by the state.

4 Conclusions Thus, we can conclude that communication between scientists is poorly developed: social networks are designed to promote their own research or to study the experience of other colleagues rather to consolidate their socially significant interests. It seems that this is due to the lack of a clear position of the state in relation to the network interaction of scientists and, therefore, the lack of any generally accepted and officially recognized channel of network interaction between the authorities and the scientific community.

References Almond, G.A., Dalton, R.J., Powell, G.B., Strøm, K.: Comparative Politics Today. Aspekt Press (2002) Bezbogova, M.S.: Social networks as a factor of formation of modern youth’s social settings: Ph. D. theses (psychology): 19.00.05. State University of Management. Moscow (2017) Gallyamova, L.I.: Integration of academic science and higher school as a factor of intellectual potential of Russia and Asia-Pacific Region. Sci. J. Russ. Pac. 1(95), 35–48 (2017) Znamensky, D.Y., Terekhina, D.S.: State scientific and technical policy of the Russian Federation: the mechanisms of formation and evaluation of social expectations. Authorities 1, 18–23 (2011) Znamensky, D.Y.: Theoretical and methodological foundations of studying the state policy. Soc. Dyn. 3, 86–97 (2016) Preobrazhensky, B.G.: Interaction of higher school and state – the condition of effective development of scientific potential. Successes Mod. Nat. Sci. 6, 74–76 (2009) Smorgunov, L.V.: The network-based approach to politics and management. Polis. Polit. Stud. 3, 103–112 (2001) Sungurov, A.Y.: How political innovations appear: “thought factories” and other mediation tools. Political Encyclopedia (2015) Terebnev, L.V.: Scientific potential of higher school of management: definition, structure and research activities of students. Sci. Woks Russ. Pres. Acad. Natl. Econ. Public Adm. Pres. Russ. Fed. 5(17), 137–151 (2014) Bӧrzel, T.: Organizing Babylon. On the different conceptions of policy networks. Public Adm. 76(2), 253–273 (1998) Kincaid, J.: Academia.edu Raises $4.5 Million to Help Researchers Share Their Scholarly Papers. TechCrunch (2011) Jenkins-Smith, H.C., Sabatier, P.A.: The study of the public policy process. In: Jenkins-Smith, H. C., Sabatier, P.A. (eds.) Policy Change and Learning: An Advocacy Coalition Approach. Westview Press, Boulder (1993) Hoppe, R.: Scientific advice and public policy: expert advisers’ and policymakers’ discourses on boundary work. Poiesis Prax. 6(3–4), 235–263 (2009)

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Hoppe, R., Wesselink, A., Cairns, R.: Lost in the problem: the role of boundary organizations in the governance of climate change. Wiley Interdiscip. Rev.: Clim. Chang. 4(4), 283–300 (2013) Rhodes, R., Marsh, D.: Policy Network in British Politics. A Critique of Existing Approaches, Policy Network in British Government. Oxford (1992) Interview with scholars. Science-community.org. https://www.science-community.org/ru/ interview. Accessed 28 Feb 2018 Russian and World Science: “Discussion of the modern problems of science”, “Financing in science”, “Science in Russia”, “Russian academy of sciences”. Scipeople.ru. http://scipeople. ru/groups/1/. Accessed 28 Feb 2018

Science, Technology and Export – the EU Case Zuzana Kittová(&) and Dušan Steinhauser Faculty of Commerce, University of Economics in Bratislava, Bratislava, Slovak Republic {zuzana.kittova,dusan.steinhauser}@euba.sk

Abstract. The aim of the paper is to investigate influence of science and technology measured by selected statistical indicators on high-tech export of the EU member states. Theoretical, statistical and econometric methods were applied. Hypotheses were tested by assembling graphical analysis, pairwise and multiple regression analysis. The authors confirmed the assumption of direct relationship between high-tech export share on the total export as a dependent variable and count of patent applications to the EPO per million inhabitants or R&D expenditure as percentage of GDP as independent variables. Proportionality was low in both cases, however. The model points at space for seeking other independent variables to explain development of high-tech export. Direct relationship was not confirmed for the whole EU for the indicator of R&D personnel and researchers as % of total labour force on total employment. Keywords: Science


Technology
Export
European union

JEL Code: F14

1 Introduction The question on how scientific and technological progress affect economy has been addressed by numerous authors. In economic literature, the role of science and technology has been mostly understood in facilitating cost reduction, increasing production factors productivity and efficiency to generate economic growth [1, 2]. Moreover, conducting scientific and technical research is assumed to reduce volatility of output growth [3]. The economic environment, reversely, influences scientific and technical activity [4]. Already Schumpeter believed that inventions such as new technologies or materials are economically relevant only if they are commercially implemented [5]. Therefore, he made distinction between inventions and innovations. He considered an innovation to be an essential driver of competitiveness and economic dynamics. According to Schumpeter, innovation is a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one” [6]. Schumpeter’s concept of innovations was applied to the international trade by Posner [7]. He was among first authors who turned attention to influence of scientific and technological progress on the international trade. He elaborated the “imitation gap” theory to describe how technology progress affects commodity structure and dynamics of the international trade. Results of science and © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 519–534, 2020. https://doi.org/10.1007/978-3-030-39319-9_59

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technology progress, i.e. inventions, initiate production of new products. According to Posner, a country that introduced new products enjoys a monopoly for a certain time to produce these products and it exports them successfully. Other countries are forced to import these goods until time when they are able to produce them themselves. Since continuous scientific and technological progress ceaselessly generates new products, this factor of the international trade has a permanent character. A fundamental starting point for a post-Keynesian theory on growth in open economies was explained by Kaldor: “The main autonomous factor governing both the level and the rate of growth of effective demand of an industrial country is the external demand for its exports: and the main factor governing the latter is international competitiveness” [8]. Driving powers for increasing export performance and competitiveness of economies encompass various factors, such as technological and product innovation, labor costs, savings in environmental costs, depreciated currency or price dumping, quality of education system, quality of institutions and infrastructure etc. [9– 13]. However, to achieve a sustainable international competitiveness, it should be based on scientific and technological innovation [14]. The above considerations sum up to an assertion that science and technology influence how a country engages in international trade. In this regard, we focus on the influence of science and technology on country’s export. Effects of research and development spending on export of goods were examined e.g. by Bojnec and Fertő [15] on a sample of OECD countries using a gravity model. They found that R&D spending could contribute to overcome a negative effect of distance on export of goods, except for low technological intensity products. R&D spending is, according to their findings, positively associated with exports of goods, particularly for technologically intensive products. We assumed that high engagement of a country in science and technology should be reflected in the commodity structure of its export – having a dominant share of hightech products - as well as in improved international competitiveness. Export of hightech products (e.g. products with high intensity of R&D) reflects country’s ability to carry out research and development and to utilize results in global markets. Export of high-tech products thus represents an important competitiveness indicator in the knowledge-based economy [16]. At the same time, using the share of high-tech exports as a criterion for comparing countries per technology level can have limitations. The reason behind is production distribution among countries. If a country imports sophisticated components to add an incremental production operation and exports them subsequently, it may have high share of high-tech exports without performing technologically intensive activities [17]. We have already studied the relationship of science and technology on one side and of the export on the other side in our previous work focusing on the case of Slovakia [18]. Slovakia, as former communist country has undergone transformation from a centrally planned to a market economy. Therefore, we have also studied, whether this process was connected with scientific and technological progress and subsequent improvement of Slovak export structure. For Slovakia, we were able to confirm the

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relationship between the expenditure on R&D by business enterprise sector and hightech export. However, the growth of expenditure on R&D by corporations sector and subsequent increase of high-tech export was driven primarily by technologically advanced and export-orientated subsidiaries of multinational corporations. This finding goes in line with assertion of Remiche [19] that worldwide there are only few innovating countries with high concentration of multinational corporations generating majority of innovations and hence “holding keys to scientific and technical progress.” In this study, we extend our analysis to the EU member states. Our aim is to investigate influence of science and technology, measured by selected statistical indicators, on high-tech export of the EU member states. The role of science and technology is, in turn, crucial for these countries in order to be able to compete on global markets.

2 Methodology As the first step, we selected indicators that measurably describe engagement of the EU member states in science and technology progress. There are various sources of such indicators. Based on the review of suitability of indicators published by the Eurostat, the OECD and the World Bank Group (see Table 1) we opted for the Eurostat indicators presented in Table 2. Table 1. Science and technology indicators Science and technology indicators by the Eurostat

Science and technology indicators Science and technology by the OECD indicators by the World Bank Basic research expenditure R&D expenditure

R&D expenditure Government budget appropriations or outlays on R&D Total researchers Total researchers Total R&D personnel R&D personnel Human resources in science and technology Doctorate students in science and technology fields

Researchers in R&D Technicians in R&D

Scientific and technical journal articles (continued)

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Science and technology indicators by the Eurostat

Science and technology indicators Science and technology by the OECD indicators by the World Bank Patent applications Patent and high-tech patent Patent applications to the (according to the European Patent Office applications to/granted by (EPO) and filed under the Patent PCT + national the EPO applications) Patents granted by the United Cooperation Treaty (PTC) Trademark applications filed States patent and trademark at national or regional office by priority year intellectual property office Patent Co-operation Treaty (PCT) applications EU Trade Marks (applications and registrations) Community Designs (applications and registrations) Charges for the use of intellectual property (payments, receipts) Technological balance of payments International trade in R&DHigh-tech trade High-tech trade Venture capital investments intensive industries Employment in high- tech industries and knowledgeintensive services Source: Processed by authors from the Eurostat [20], World Bank Group [21] and OECD [22]

Main concepts for the R&D statistics provided by the Eurostat are given by the Frascati Manual [23]. Intramural R&D expenditures encompass expenditures for R&D performed within economy during a specific period, regardless the source of funds. “R&D personnel include all persons employed directly on R&D, as well as those providing direct services such as R&D managers, administrators, and clerical staff. Researchers are professionals engaged in the conception or creation of new knowledge, products, processes, methods and systems and also in the management of the projects concerned” [23]. Of course, the indicators selected by us have several limitations. For example, R&D expenditures may contribute to technical change, however, there are also other sources of technical change, such as learning-by-doing [24]. The drawback of using patents as an indicator is that not all innovations correspond to a patented invention and, at the same time, some patents correspond to invention with a near zero technological and economic value. We formulated the following 3 hypotheses: H1: The share of export of high technology products on total export will directly increase with increasing number of patent applications per million inhabitants, with three-year lag.

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H2: The share of export of high technology products on total export will directly increase with increasing intramural R&D expenditure expressed as a percentage of gross domestic product, with three-year lag. H3: The share of export of high technology products on total export will directly increase with increasing number of total R&D personnel and researchers expressed as a percentage of total employment, with three-year lag. The list of variables with descriptions is in Table 2 below. Table 2. Independent and dependent variables Variable 1 H_T_Exp_ofExp

Explanation

Share of export of high technology products on total exports [htec_si_exp4] (dependent variable; time series 2007–2018) 2 P_p_mill_c Number of patent applications to the EPO by priority year per million inhabitants [pat_ep_ntot] (independent variable; time series 2007–2017) 3 I_GERD_ofGDP Intramural R&D expenditure (GERD) per sectors of performance and source of funds as percentage of gross domestic product (GDP) [rd_e_gerdfund] (independent variable; time series 2007–2017) 4 R_D_per_and_res_ofEmpl Total R&D personnel and researchers per sectors of performance as % of total labour force and total employment, and by sex as percentage of total employment - numerator in full-time equivalent (FTE) [rd_p_perslf] (independent variable; time series 2007–2017) 5 Fraser_F_Trade_Int Freedom to Trade Internationally of The Fraser Institute Index of Economic Freedom (control independent variable; time series 2007–2016) Source: Eurostat [25] and The Fraser Institute [26]

In order to test the hypotheses, we created a panel database of 25 EU member states. However, we decided to exclude Cyprus, Malta and Luxembourg in the course of processing source data due to irregular trend development of the dependent variable (share of high-tech export on total export, see details in Sect. 3.2). The time series extended to years 2007–2018, even though observations for each year and country were not always available. We applied natural logarithm to the database (without summary statistics were all models in logarithmic form) in order to increase homogeneity of the set. In this way, the estimated coefficients can be interpreted as an elasticity expressed in percentage. The database was processed in the software GRETL and Microsoft EXCEL, methodology and results were interpreted using relevant literature [27–30]. We analysed our dataset using pairwise and multiple regression analysis, choosing from pooled ordinary least squares method, fixed-effects model or generalised least squares method (random-effects) on the basis of statistical tests. Due to the risk of autocorrelation and heteroskedasticity, we used robust standard errors (HAC).

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The GRETL application avails with integrated p-value evaluation in asterisk scale (* 90% probability; ** - 95% probability; *** - 99% probability). Table 3 contains descriptive statistics for 25 EU member states in absolute form. Table 3. Summary Statistics, using the observations 1:01–25:12 (missing values were skipped) Variable

Mean

Skewness Ex. kurtosis 10.776 0.93184 0.69983

Std. Dev. 5.8998

1 H_T_Exp_ofExp Share of hi-tec export on total export 2 P_p_mill_c 90.258 0.96438 −0.49390 99.928 Count of patents per mil. inhabitants 3 I_GERD_ofGDP 1.6216 0.58748 −0.75062 0.88125 % of GERD on GDP 4 R_D_per_and_res_ofEmpl 1.1822 0.43570 −0.51290 0.48949 % of R&D personnel on total employment 5 Fraser_F_Trade_Int 8.0850 0.10306 −0.61527 0.33689 Freedom to trade Fraser Source: Processed by authors from the Eurostat [25] and The Fraser Institute [26] Legend: 25:12–25 cross-sectional units, 12 years.

Missing obs. 0 25 25 36

50

3 Results Within this subchapter, we first, focus on the development of high-tech export share on total export for the EU and its member states. Next, we deal with relationships between selected indicators. 3.1

Trend Description of High-Tech Export Share on Total Export

We reviewed the development of this indicator since 2007 to 2018 for particular EU member states as well as of an average for the EU (see Table 4 and Fig. 1). The development of the average value since 2010 to 2013 was negatively influenced by the financial and debt crisis. Since 2014, the average value was increasing. As far as particular countries are concerned, the largest increase was marked by Ireland, Latvia, Poland, Romania, Slovakia and Czech Republic. Ireland is specific by reaching growth from a high initial level of the indicator. In 2018, Ireland had almost twice the value of the Czech Republic as Nr. 2. Latvia, Poland, Romania and Slovakia also reached remarkable growth, however, from low initial levels of the indicator. The strongest fall occurred for Luxembourg, followed by Malta, Finland, Hungary, Cyprus, Portugal, Denmark and Sweden. In other countries, the indicator either grew or changed at minimum. For Cyprus, the high-tech export share on the total export was fluctuating significantly. The development of the indicator for Luxembourg and Malta was irregular as well, showing at least double fall in comparison to other countries with falling trend of the indicator. We excluded therefore Cyprus, Luxembourg and Malta from further analyses.

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Table 4. Share of high-tech export on total export (in %) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Group EU (28)

16,1 15,4 17,1 16,1 15,4 15,7 15,3 15,6 17,0 17,8 17,8 17,9

Ireland

25,7 24,3 22,1 19,5 21,2 21,7 20,9 20,9 24,4 28,7 34,5 34,7

2

Malta

42,8 38,3 35,2 32,9 30,1 29,6 28,5 28,7 24,1 18,5 25,5 25,6

0

Netherlands

18,3 16,2 18,4 18,6 17,3 18,8 17,7 18,6 20,4 21,0 21,6 21,3

2

France

16,7 17,6 19,7 20,4 18,7 20,0 20,4 20,8 21,7 21,7 20,6 20,5

2

Czech Republic

2 14,1 14,1 15,2 16,1 16,4 16,1 15,1 15,3 15,5 15,0 16,1 17,8

United

2

Kingdom

16,8 15,4 19,0 17,7 16,4 17,4 15,5 15,6 16,7 18,4 18,1 16,7

Hungary

21,3 20,2 22,2 21,8 20,9 17,3 16,3 14,5 15,4 15,9 16,0 15,6

2

Germany

13,0 12,4 14,0 14,0 13,5 14,2 14,3 14,3 14,9 15,2 15,1 15,1

1

Austria

11,1 10,8 11,7 11,8 11,2 12,8 14,2 14,4 14,2 13,9 14,8 13,8

1

Estonia Sweden

7,8

7,5

6,9 10,4 14,8 14,1 14,9 16,3 15,5 15,6 12,0 11,5

2

13,3 13,2 14,6 14,5 13,8 12,8 13,0 12,9 13,5 13,4 11,9 11,3

1

Latvia

4,6

4,6

5,3

4,8

6,7

6,4

8,0

9,7 11,0 10,2 10,6 11,2

2

Belgium

6,6

6,8

8,8

8,4

7,7

8,6

8,7

9,6 10,2 10,0

1

5,0

5,2

5,9

6,6

6,6

8,2

Slovakia

9,8 10,3

9,6

9,9 10,0

9,7 10,5

9,6

2

Cyprus

14,6 19,1 20,1 19,3 14,8 11,7 18,1

5,2 10,9

6,9 10,2

9,5

0

Denmark

11,7 10,7 12,3

9,3

9,3

9,3

9,3

9,8 10,7 10,6

9,6

9,4

1

Poland

3,0

4,3

5,7

6,0

5,1

6,0

6,7

7,9

8,5

8,5

8,4

8,4

2

Romania

3,5

5,4

8,2

9,8

8,8

6,3

5,6

6,4

7,3

8,3

7,9

8,4

2

Croatia

6,5

6,7

7,6

7,0

5,8

7,2

7,9

6,6

7,1

9,7

9,2

8,1

2

Lithuania

7,3

6,5

5,8

6,0

5,6

5,8

5,8

6,6

7,6

7,8

8,1

7,9

2

Italy

6,0

5,9

6,8

6,5

6,4

6,4

6,6

6,7

7,0

7,1

7,6

7,8

1

Luxembourg 32,9 35,6 41,9 30,7 25,8 26,7 21,9 19,6 19,8 15,3

6,9

7,2

0

Finland

6,6

6,1

1

17,5 17,3 13,9 10,0

8,0

7,3

6,2

6,7

7,0

6,8

Bulgaria

3,5

3,6

4,6

4,1

3,7

3,8

4,0

3,9

4,4

5,1

5,4

5,9

2

Slovenia

4,6

5,2

5,5

5,3

5,3

5,2

5,5

5,4

5,9

5,7

5,6

5,8

1

Spain

4,2

4,2

4,8

4,8

4,8

5,0

5,4

5,2

5,5

5,8

5,7

5,5

1

Greece

4,2

4,9

7,7

5,6

4,6

3,2

2,7

3,7

4,6

5,0

4,3

4,5

1

Portugal

6,8

6,3

3,7

3,0

3,1

3,3

3,4

3,6

3,8

4,4

4,5

4,0

1

Source: Processed by authors from the Eurostat [26] Legend: Highlighted rows show countries with decrease of indicator.

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18.5 18.0 17.5 17.0 16.5 16.0 15.5 15.0 14.5 14.0 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Fig. 1. EU share of high-tech export on total export (in %). Source: Processed by authors from the Eurostat [25]

3.2

Relationship Analysis for the EU 25

l_H_T_Exp_ofExp

l_H_T_Exp_ofExp

The Fig. 2 below plots the observations of dependent and independent variables for the 25 EU member states (having excluded Cyprus, Luxembourg and Malta, see Sect. 3.1).

l_I_GERD_ofGDP_3 % of GERD on GDP

l_H_T_Exp_ofExp

l_H_T_Exp_ofExp

l_P_p_mill_c_3 Count of patents per mil. inhabitants

l_R_D_per_and_res_ofEmpl_3 % of R&D personnel on total employment

l_Fraser_F_Trade_Int_3 Freedom to trade Fraser

Fig. 2. Scatter plot between variables for EU 25 countries. Source: Processed by authors from the Eurostat [25] and The Fraser Institute [26]

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Table 5 shows the panel data regression analysis for the 25 EU countries. Following the Hausman test, we chose fixed-effects estimating method. First, we specified a model with all four independent variables (column 2 in Table 5). In this case, only P_p_mill_c (count of patents per mil. inhabitants) was statistically significant. Based on Fig. 2, we assumed that the variable R_D_per_and_res_ofEmpl (% of R&D personnel and researchers on total employment) with three-year lag has an insignificant relationship to the dependent variable. The variable Fraser_F_Trade_Int (freedom to trade Fraser with three-year lag) was insignificant too, but we preferred to keep the control variable in the model specification. For this reason, we omitted R_D_per_and_res_ofEmpl and changed the model specification (column 3 in Table 5). Although we achieved a significant estimation for P_p_mill_c and I_GERD_ofGDP, we diagnosed two statistical errors. Problem with heteroscedasticity and non-normality distribution of residuals could stem from the dataset heterogeneity. For this reason, we did not interpret results of Table 5. Table 5. Multiple regression analysis, panel data, for EU 25 countries Dep.: l_H_T_Exp_ofExp

Fixed-effects, using 215 obs.; HAC

Fixed-effects, using 225 obs.; HAC

const l_P_p_mill_c_3 l_I_GERD_ofGDP_3 l_R_D_per_and_res_ofEmpl_3 l_Fraser_F_Trade_Int_3 LSDV R-squared Durbin-Watson Hausman test Null hypothesis: GLS estimates are consistent Asymptotic test statistic Test for normality of residual Distribution free Wald test for heteroskedasticity Null hypothesis: the units have a common error variance

0,73 0,14 *** 0,18 0,33 0,45 0,95 0,65 0,0001 (p-value)

0,69 0,15 *** 0,34 *** 0,44 0,95 0,66 0,0003 (p-value)

5,75e−007 (p-value) 0 (p-value)

8,03e−007 (p-value) 0 (p-value)

Source: Processed by authors from the Eurostat [25] and The Fraser Institute [26]

In order to reduce the heterogeneity, we split the EU member states in 2 groups using the following procedure: The countries were sorted per variables 1 – 4 (dependent variable and 3 independent variables) in descending order. Comparing a position of each country in a particular sequence for each variable it became apparent that the EU member states can be divided in 2 groups of similar size: • Group 1 included 11 countries with higher rankings in the independent variables than in the dependent variable (Austria, Belgium, Denmark, Finland, Germany, Greece, Italy, Portugal, Slovenia, Spain and Sweden) • Group 2 included 14 countries, i.e. 13 countries with lower rankings in the independent variables than in the dependent variable (Croatia, Czech Republic, Estonia,

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France, Hungary, Ireland, Latvia, Lithuania, the Netherlands, Poland, Romania, Slovakia and United Kingdom) + Bulgaria which ranked lower for the variable P_p_mill_c (count of patents per million inhabitants). We performed our analyses using the above country groups. 3.3

Relationship Analysis – Member States in Group 1

l_H_T_Exp_ofExp

l_H_T_Exp_ofExp

Figure 3 below provides a scatter plot between the dependent variable and independent variables in a logarithmic form, with 3-year lag, for the group 1 of the EU member states. Using the observation method, a functional relationship between the dependent variable and independent variables P_p_mill_c (count of patents per mil. inhabitants) and I_GERD_ofGDP (% of GERD on GDP) was detected. The relationship with independent variable R_D_per_and_res_ofEmpl (% of R&D personnel on total employment) was only marginal. We tested dependency for these variables using multiple regression analysis.

l_I_GERD_ofGDP_3 % of GERD on GDP

l_H_T_Exp_ofExp

l_H_T_Exp_ofExp

l_P_p_mill_c_3 Count of patents per mil. inhabitants

l_R_D_per_and_res_ofEmpl_3 % of R&D personnel on total employment

l_Fraser_F_Trade_Int_3 Freedom to trade Fraser

Fig. 3. Scatter plot between variables for the group 1 of EU countries (11). Source: Processed by authors from the Eurostat [25] and The Fraser Institute [26]

Table 6 provides 2 specifications for the multiple regression analysis. It was necessary to choose a variant with higher statistical relevance. We first created a model with one dependent variable and 4 independent variables (column 2 in Table 6),

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however, this specification turned out little relevant. Only the variable P_p_mill_c (count of patents per mil. inhabitants) was estimated with 99% probability (3 asterisks). From this reason we decided to omit one independent variable while keeping the control variable completing the model (Fraser_F_Trade_Int, Freedom to trade - Fraser). The best option was to omit R_D_per_and_res_ofEmpl (% of R&D personnel and researchers on total employment). Respecting the result of Hausman statistics we had to apply the method of panel data analysis with fixed-effects (column 3 in Table 6). We remind again that due to suspected autocorrelation and heteroskedasticity we applied robust standard errors (HAC). An alternative specification of model without the control variable Fraser_F_Trade_Int but with two independent variables P_p_mill_c and I_GERD_ofGDP using fixed-effects method (without normal distribution of residuals) and according to Wald test with presence of heteroskedasticity estimated the variable P_p_mill_c with insignificant parameter 0,37 and I_GERD_ofGDP with value 0,36 ***. We found it more suitable to continue with the specification including the control variable. The results are in Table 6 column 3. Table 6. Multiple regression analysis, panel data, group 1 Dep.: l_H_T_Exp_ofExp

Random-effects (GLS), using 96 obs.; HAC

Fixed-effects, using 99 obs.; HAC

const l_P_p_mill_c_3 l_I_GERD_ofGDP_3 l_R_D_per_and_res_ofEmpl_3 l_Fraser_F_Trade_Int_3 LSDV R-squared Durbin-Watson Hausman test Null hypothesis: GLS estimates are consistent Asymptotic test statistic Test for normality of residual

1,32 * 0,24 *** −0,12 0,46 −0,21

−0,196 0,36 0,37 ***

Distribution free Wald test for heteroskedasticity Null hypothesis: the units have a common error variance

0,68 0,07 (p-value)

0,64 (p-value)

0,17 0,96 0,70 0,01 (p-value)

0,01 (p-value; Lilliefors * = 0,1) 1,89e−089 (p-value)

Source: Processed by authors from the Eurostat [25] and The Fraser Institute [26]

Further on we prepared a pairwise regression analysis between I_GERD_ofGDP and the dependent variable using random-effects (GLS). The estimated regression coefficient reached the value of 0.42 ***. Another variant of pairwise regression analysis with random-effects method using independent variable P_p_mill_c produced the regression coefficient at the level of 0.33 ***. Pairwise regression analysis between R_D_per_and_res_ofEmpl_3 and the dependent variable using random-effects

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(GLS) estimated the value of regression coefficient at 0.40 ** (96 obs.; p-value of test for normality of residual = 0,01). In result, we confirmed the hypothesis 2 on direct relationship between I_GERD_ofGDP as an independent variable and H_T_Exp_ofExp as a dependent variable on the basis of graphical analysis as well as results of pairwise and multiple regression analysis. Growth of I_GERD_ofGDP in 1% generates a growth of H_T_Exp_ofExp in approximately 0.3 to 0.4%. We confirmed also the hypothesis 1 on direct relationship between P_p_mill_c as an independent variable and H_T_Exp_ofExp as a dependent variable on the basis of graphical analysis and pairwise regression analysis in logarithmic form. With a growth of P_p_mill_c in 1%, a growth of H_T_Exp_ofExp in approximately 0.3% can be expected. In both cases, the growth of high-tech export share on total exports is predicted in lesser extent than is a growth in indicators GERD_ofGDP and P_p_mill_c. We did not confirm the hypothesis 3 on direct relationship between R_D_per_and_res_ofEmpl as an independent variable and H_T_Exp_ofExp as a dependent variable for the group 1 of the EU member states as it was not confirmed by the multiple regression analysis and the pairwise regression analysis produced only 95% probability (**) of the dependency. 3.4

Relationship Analysis – Member States in Group 2

On the basis of Fig. 4, a functional dependency can be expected again especially between P_p_mill_c (count of patents per mil. inhabitants) and H_T_Exp_ofExp (Share of high-tech export on total export), as well as between I_GERD_ofGDP (% of GERD on GDP) and H_T_Exp_ofExp. Confirmation of these relationships is presented in Table 6. We started again from a broader model specification (variant with 4 independent variables), however, turning out not statistically significant. According to Hausman statistics it was more beneficial to use fixed-effects model specified by 3 independent and 1 dependent variables. We preferred to retain the control variable. In order to retain ability to compare groups 1 and 2 of the EU member states, we omitted the variable R_D_per_and_res_ofEmpl also in group 2, despite the fact that on the basis of Fig. 3, a direct relationship with R_D_per_and_res_ofEmpl can be expected. However, it is less obvious than with varaibles GERD_ofGDP and P_p_mill_c. We still tested this relationship by the pairwise regression analysis, see below. In the group 2 we identified even lesser influence of variable P_p_mill_c than it was with the group 1. Growth of this variable in 1% generates 0.16% growth in high-tech export share on total export. As far as influence of I_GERD_ofGDP is concerned, it is similar to the one in the group 1 of the EU member states (0.36%), see Table 7 column 3. An alternative specification of model with one dependent variable and two independent variables P_p_mill_c and I_GERD_ofGDP using random-effects method and with a normal distribution of residuals would estimate the variable P_p_mill_c with parameter 0,17 *** and I_GERD_ofGDP 0,37 ***.

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l_H_T_Exp_ofExp

l_H_T_Exp_ofExp

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l_I_GERD_ofGDP_3

l_H_T_Exp_ofExp

l_H_T_Exp_ofExp

l_P_p_mill_c_3

l_R_D_per_and_res_ofEmpl_3

l_Fraser_F_Trade_Int_3

Fig. 4. Scatter plot between variables for the group 2 of countries (14). Source: Processed by authors from the Eurostat [25] and The Fraser Institute [26]

Table 7. Multiple regression analysis, panel data, group 2 Dep.: l_H_T_Exp_ofExp

Random-effects (GLS), using 119 obs.; HAC 0,52 0,14 *** 0,24 * 0,32 0,74 0,68 0,20 (p-value)

Random-effects (GLS), using 126 obs.; HAC 0,54 0,16 *** 0,36 ***

const l_P_p_mill_c_3 l_I_GERD_ofGDP_3 l_R_D_per_and_res_ofEmpl_3 l_Fraser_F_Trade_Int_3 0,67 Durbin-Watson 0,64 0,11 (p-value) Hausman test Null hypothesis: GLS estimates are consistent Asymptotic test statistic Test for normality of residual 0,26 (p-value) 0,10 (p-value) Source: Processed by authors from the Eurostat [25] and The Fraser Institute [26]

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We prepared the pairwise regression analyses also for the group 2 of the EU member states. For two independent variables P_p_mill_c and I_GERD_ofGDP we used fixed effects method. The advantage of this method is that GRETL application offers heteroskedasticity testing. The Wald test for heteroskedasticity identified presence of this error proving appropriateness of using HAC models. The pairwise regression coefficient for the analysis where P_p_mill_c was the independent variable reached the level of 0.20 *** (126 obs.; Wald test for heteroskedasticity with pvalue = 7.12058e−294; Durbin-Watson 0.64). In case of independent variable I_GERD_ofGDP, this coefficient reached value of 0.46 *** (126 obs.; Wald test for heteroskedasticity with p-value = 0; Durbin-Watson 0.56). In case of independent variable R_D_per_and_res_ofEmpl, the estimated regression coefficient was 0.70 *** (119 obs.; random-effects estimation HAC; p-value of test for normality of residual = 0.07). On the basis of graphical analysis, results of pairwise and multiple regression analysis in logarithmic form we can confirm hypotheses 1 and 2 on direct relationships of variables also for the group 2 of the EU member states. With a growth of variable P_p_mill_c in 1%, a growth of H_T_Exp_ofExp in approximately 0.1–0.2% can be expected. A growth of GERD_ofGDP in 1% generates a growth of H_T_Exp_ofExp in approximately 0.3–0.4%. The high-tech export growth is predicted in lesser extent than is a growth in indicators GERD_ofGDP and P_p_mill_c. We did not confirm the hypothesis 3 on direct relationship between R_D_per_and_res_ofEmpl as an independent variable and H_T_Exp_ofExp as a dependent variable for the group 2 of the EU member states as it was not confirmed by the multiple regression analysis despite the fact that the pairwise regression analysis produced 99% probability (***) of the dependency. We believe that the pairwise regression analysis has only complementary character.

4 Conclusions The aim of the paper was to investigate influence of science and technology measured by selected statistical indicators on high-tech export of the EU member states. We defined 3 hypotheses on dependency of high-tech export share on total export on 3 indicators of science and technology progress by a country. In order to reach significance of estimated parameters, it was necessary to split the EU countries in two groups. While this can be seen as a limitation of our approach, at the same time it points at a likely existence of further factors affecting the export of high-tech products, thus opening space for future investigations. Other limitations of our investigation lie in missing observations or in inclusion of years affected by the crisis in 2008 into our time series. We confirmed hypothesis 1 and 2 for both groups of countries asserting a growth of high-tech export share on total export with increase in count of patent applications and in R&D expenditure. However, proportionality was low in our findings. Normal distribution of residuals was not established for the group 1 of the EU member states (only Lilliefors test was positive), indicating higher heterogeneity of this group. This relates especially to estimation of the independent variable count of patent applications to the EPO per million inhabitants being not significant in multiple regression analysis of the group 1.

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We did not confirm the hypothesis 3 on growth of high-tech export on total export with increase in R&D personnel and researchers, as it was not confirmed by the multiple regression analysis. However, we cannot ultimately reject it since the graphical analysis and pairwise regression analysis on the group 2 of the EU member states indicated dependency between investigated variables. In this field, we suggest future investigation.

References 1. Stefan, G., Coca, O.: The impact of innovation and technical progress on the economy. In: Vision 2020: Innovation Management, Development Sustainability, and Competitive Economic Growth, 2016, vol. I–VII, Seville, pp. 497–506 (2016) 2. Çalişkan, H.K.: Technological change and economic growth. Procedia – Soc. Behav. Sci. 195, 649–654 (2015) 3. Tang, S.H.K.: Does scientific and technical research reduce macroeconomic volatility? Bull. Econ. Res. 70(1), E68–E88 (2018) 4. Khanlarzadeh, S.M.: Innovative processes as a factor of economic development. In: Economic and Social Development (Esd 2019): 37th International Scientific Conference on Economic and Social Development - Socio Economic Problems of Sustainable Development, Baku, pp. 444–450 (2019) 5. Schumpeter, J.A.: The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle, p. 244. Transaction Publishers, New Brunswick (1912) 6. Schumpeter, J.A.: Capitalism, Socialism and Democracy, 3rd edn, p. 460. George Allen and Unwin, London (1976) 7. Posner, M.V.: International trade and technical change. Oxford Econ. Pap. 13(3), 323–341 (1961) 8. Kaldor, N.: Conflicts in national economic objectives. Econ. J. 81(321), 1–16 (1971). In: Boggio, L., Barbieri, L.: International competitiveness in post-keynesian growth theory: controversies and empirical evidence. Camb. J. Econ. 41(1), 25–47 (2017) 9. Ružeková, V., Kašťáková, E.: Comparison of the Visegrad group and Baltic countries in terms of multi-criteria competitiveness indicators. Stud. Commercialia Bratislavensia 11(39), 91–106 (2018) 10. D’Aleo, V., Sergi, B.S.: Human factor: the competitive advantage driver of the EU’s logistics sector. Int. J. Prod. Res. 55(3), 642–655 (2017) 11. Stanickova, M., Melecky, L.: Factors determining driving forces of competitiveness in EU countries. In: Hradec Economic Days 2014: Economic Development and Management of Regions, Pt V. University Hradec Kralove, pp. 338–348 (2014) 12. Rusu, V.D., Roman, A.: An empirical analysis of factors affecting competitiveness of CEE countries. Econ. Res. -Ekonomska Istrazivanja 31(1), 2044–2059 (2018) 13. Gonda, V.: Determinants of economic growth and competitiveness: challenges and opportunities. Ekonomický časopis 60(1), 98–103 (2012) 14. Şener, S., Sarıdoğan, S.E.: The effects of science-technology-innovation on competitiveness and economic growth. Procedia – Soc. Behav. Sci. 24, 815–828 (2011) 15. Bojnec, Š., Fertő, I.: Research and development spending and export performance by the technological intensity of the products. J. Econ. 62(10), 1065–1080 (2014) 16. European Commission: Third European Report on Science & Technology Indicators (2003). https://cordis.europa.eu/pub/indicators/docs/3rd_report.pdf

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17. Gabrielová, H.: Konkurencieschopnosť a globálny hodnotový reťazec. Working Papers EÚ SAV (2008). http://ekonom.sav.sk/uploads/journals/WP10.pdf 18. Kittová, Z., Steinhauser, D.: Science, technology and export: Slovak Case. In: Central and Eastern Europe in the Changing Business Environment. Proceedings of 16th International Joint Conference: May 27, 2016, Prague and Bratislava (2016) 19. Remiche, B.: Technological revolution, globalisation and patent rights. Rev. Int. de Droit Economique 16(1), 83–124 (2002) 20. Eurostat: Science, Technology and Innovation Database (2019). http://ec.europa.eu/eurostat/ web/science-technology-innovation/data/database 21. World Bank Group: Indicators (2016). http://data.worldbank.org/indicator#topic-14 22. OECD: Main Science and Technology Indicators (2016). http://www.oecd.org/sti/msti.htm 23. OECD: Frascati Manual. Proposed standard practice for surveys of research and experimental development (2002). https://read.oecd-ilibrary.org/science-and-technology/ frascati-manual-2002_9789264199040-en#page93 24. OECD: Oslo Manual. The Measurement of Scientific and Technological Activities (1996). http://www.oecd.org/science/inno/2367614.pdf 25. Eurostat (2019). http://appsso.eurostat.ec.europa.eu/nui/setupDownloads.do 26. The Fraser Institute (2018). https://www.fraserinstitute.org/resource-file?nid=12378&fid= 10644 27. Lukáčiková, A.: GRETL vo výučbe panelových dát (GRETL in teaching of panel data). Využitie kvantitatívnych metód vo vedecko-výskumnej činnosti a v praxi. In: Proceedings of the Seminar, Čingov – Slovenský Raj, pp. 1–6 (2013) 28. Lukáčiková, A., Lukáčik, M., Szomolányi, K.: Úvod do ekonometrie s programom Gretl. Bratislava: Letra Edu, p. 345 (2018) 29. Lukáčik, M., Lukáčiková, A., Szomolányi, K.: Panelové dáta v programe Gretl. Bratislava (2011). http://www.fhi.sk/files/katedry/kove/veda-vyskum/prace/2011/Lukacik-LukacikovaSzomolanyi2011.pdf 30. Cottrell, A., Lucchetti, R.: Gretl User’s Guide (2019). http://gretl.sourceforge.net/gretl-help/ gretl-guide.pdf

Reducing Man-Made Threats by Adjusting Seismic Protection Mechanisms K. Baktygulov(&), B. S. Ordobayev, Dz. A. Ryspaev, A. Zh. Andashev, and A. M. Ghanyv Kyrgyz-Russian Slavic University After B.N. Yeltsin, Batken State University, Bishkek, Kyrgyzstan [email protected]

Abstract. Purpose: It has been found that seismic pendulums are not able to display destructive seismic wave impulses, thus it has been argued that currently the problem of reliable seismic protection of citizens and their homes has not yet been solved. This paper actually deals with finding a solution to this pressing problem. Design/methodology/approach: The authors describe a mechanism for mutual adaptation of shear waves and the top layer of soil, allowing waves to move in these lightly compacted layers, unable to withstand stretching and shear. Experimental evidence of the theory is presented. Findings: It has been found that extremely widespread occurrence of seismic damage consists in purely shear fractures of columns, as well as the appearance of diagonal cross-shaped cracks along the diagonal lines of separation walls and link beams, the stress level in which is a lot lower than in the most critical sections, or, what is most paradoxical, the appearance of diagonal cracks in some link beams only. One cannot grasp the nature of the appearance of such cracks in terms of the “vibration” doctrine. Originality/value: The main conclusion of this study is that it is impossible to obtain reliable information about the parameters of destructive seismic forces using pendulums only. This explains the cause of the failure of the antiresonance strategy for seismic protection of buildings. In order to achieve formal registration of destructive impulses, one should abandon conventional pendulumtype equipment and use state-of-the-art equipment that is able to accurately measure the actual ground velocity. The results obtained in such a way can lead to positive transformations in the field of seismic protection of buildings and structures. Keywords: Seismic
Wave
Pulse
Impulse
Ground
Upper layer thickness
Variations
Slice
Shift
Damaging buildings and columns JEL Codes: A13


C31
O31
O32
O33
O34
O35
O38

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 535–544, 2020. https://doi.org/10.1007/978-3-030-39319-9_60

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1 Introduction Earthquakes are high on the list of pther natural disasters according to their devastating consequences, and the number of victims of destructive impact on the living environment. Earthquakes cannot be prevented; however, their devastating consequences and the number of deaths can be decreased by means of creation of special scientifically grounded seismic safety measures, as well as by active and passive methods of seismic protection. It is common knowledge that the entire territory of Kyrgyzstan is located in the region with increased seismic activity. Therefore, for our country, the problem of reliable seismic protection of buildings and structures is highly relevant. In this regard, research studies on this topic have been carried out in recent years under the guidance of the Professor from MSUCE Smirnov, S.B. and his students. The analysis of seismic damage of buildings and structures has shown that seismic science still uses ordinary pendulums as seismic instruments and thus it cannot obtain sufficient amount of reliable information about the actual earthquake impulse action that destroys buildings in case of earthquakes and which is displayed in all patterns of damage of their columns and walls. The vibrations of seismic pendulums are interpreted as the earthquake ground motion, thus the seismic protection strategy is based on the protection of buildings from these vibrations. Seismic pendulums are not able to display destructive seismic wave impulses, thus it has been argued that currently the problem of reliable seismic protection of citizens and their homes has not yet been solved. This paper actually deals with finding a solution to this pressing problem.

2 Materials and Method Research and methodology issues of determining, measuring and managing technogenic issues have been studied in sufficient detail in papers of such scientists as Petrenko et al. (2018), Popkova (2019), Popkova et al. (2019), Popkova et al. (2018), Popkova and Parakhina (2019), Popkova and Sergi (2018), Popkova et al. (2019), Sergi et al. (2019), Sergi (2019). We rely on these works in our research.

3 Results Following the results of the study of unusual forms of damage of buildings in case of earthquakes, it was concluded that the buildings are first affected by a destructive wave process that shears the buildings and is manifested in the form of sharp impulse shocks (Smirnov (2008); Smirnov (2009a, b); “Soils and Foundations” (1996); Smirnov (1992); Smirnov (1994); Smirnov (2009a, b)). After that, wave impulse shear of top layers of soil causes the appearance of own shear vibrations of top layers of soil that are much less dangerous for buildings (Fig. 1). The surface soil column plays a critical role in these fundamentally different processes.

Reducing Man-Made Threats by Adjusting Seismic Protection Mechanisms

537

ì ñåê2

5g

ÒÎ Ë×ÅÊ

5g

0,3g 0,1 ñåê

0

0,3 ñåê

t

0,5 ñåê

0,3g

ì ñåê

(Ï ÅÐÈÎ Ä .Ò=0,8ñåê ; ×ÀÑÒÎ ÒÀ

=1,25 ãåðö )

5g

2,5 ì /ñåê

2,5 ì /ñåê

ÑÊÎ ÐÎ ÑÒÈ 0,1 ñåê

0

ì/ ñåê t

0,3 ñåê

0,05 ñåê

0,5 ñåê

(ì )

ÒÎ Ë×ÅÊ

0,6 ì /ñåê

Ï ÅÐÅÌ ÅÙ ÅÍ Èß

(Ì )

0,1ì 0,05ì 0 Âî ëí î âû å òî ë÷êè â âåðõí èõ ñëî ÿõ

0,3 ñåê

0,5 ñåê

t

0,05 ñåê 0,1 ñåê Ñî áñòâåí í û å ñäâèãî âû å êî ëåáàí èÿ ãðóí òà â âåðõí èõ ñëî ÿõ òî ëù è

0,1ì

Fig. 1. Parameters of seismic impacts and ground vibrations

We will demonstrate that the surface soil column 100–150 m deep is a powerful amplifier of the devastating effect of seismic waves when they pass through it at a fairly steep angle to the surface. A special case of this effect in the context of shear waves was described earlier in (Smirnov 2008; Smirnov 2009a, b). Moreover, here, for the first time, a detailed formulation of this effect is presented in the most general and severe setting. According to experimental data obtained in “Soils and Foundations” (1996), seismic waves passing through the surface soil column 100–150 m high with a large gradient of deformation moduli E and G reduce their phase velocity C approximately 10 times when passing through the most top, most yielding soil layers. In this regard, it is assumed that when braking, i.e. when ground velocity C decreases, the waves must necessarily actively increase the velocity of top layers of soil

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V, the value of which exactly determines the disruptive force of the wave impact on the structures. The relationship between the values of the phase C and the mass velocity V should be manifested when the seismic wave passes through any quasielastic medium, which intensively and smoothly reduces moduli E and G along the direction of wave motion, provided that the area F of the wave front is constant. In our situation, the consistency condition F is quite realistic if we consider that the height H of the surface soil column with heavy gradient of modules E and G is 100– 150 m, i.e. it is low compared to the total length of wave travel which is equal to tens of kilometers. The effect of accumulation of mass ground velocity V due to the decrease in phase wave velocity C follows directly from the law of conservation of momentum. For the longitudinal wave, it looks as follows: Frt ¼ mV ¼ const if m ¼ qFCt

ð1Þ

where: m is the weight of soil drawn by the moving wave in a time t; r is the compressive wave stress; q is the soil density; t is the duration of effect of force Fr. For the top layers and lower layers of the surface soil column, the law of conservation of momentum (1) looks as follows: Frt ¼ mH vH ¼ mb vb ¼ const or qH FCH tVH ¼ qb FCb tVb

ð2Þ

here: mH is the weight of the lower layer of soil; mB is the weight of the top layer of soil; vH is the ground velocity in the lower layers; vB is the ground velocity in the top layers of soil; PB is the density of the lower layer of soil; PH is the density of the top layer of soil; CH is the weight and phase velocity in the lower layer of soil; CB is the ground velocity in the top layer of soil; Using (2), we find the fundamental equations between the ground velocities in the top and the lower layers of soil in the surface soil column H deep: VB ¼ VH qH CH ðqB CB Þ1

ð3Þ

The same formula (3) can be obtained from the equilibrium condition of ground in the zone of action of the wave in the following form:

Reducing Man-Made Threats by Adjusting Seismic Protection Mechanisms

r ¼ rH ¼ rB ¼ const;

rH ¼ VH CH qH ¼ rB ¼ VB CB qB

539

ð4Þ

If it is remembered that ground velocity in the top layer of soil Vв doubles when the wave is reflected from the surface, then when calculating buildings for impulse wave action, velocity should be found using the following formula: VB ¼ 2VH qH CH ðqB CB Þ1

ð5Þ

Since CH =CB ¼ 10, a qH= qB ¼ 2, then it follows from (5) that the surface soil column can increase ground velocity V by 40 times ( VB ¼ 40VH ) when the seismic wave passes through it reducing its phase velocity C 10 times in the process. This is exactly what the reinforcing effect of the surface soil column consists in. Moreover, as a result of its action, the uppermost layers of soil during the same time t manages to accumulate about 20 times more destructive energy UB than the lower layers that absorbed energy UH . Total energy U ¼ mV2 , hence, with due consideration of (2, 3) we can obtain the following: UB= UH ¼ mB V2B ðmH V2H Þ1 ;

UB= UH ¼ CH qH =CB qB

ð6Þ

In this case, the wave force Fr passes the path SB = VBt, which is 20 times larger than its path SH ¼ VH t in the lower layers during t in the top layers of soil. All formulas (1–6) will be also correct for shear waves if we replace compressive qffiffiffiffiffiffiffiffiffiffiffiffiffiffi stresses r with shear stresses s, and replace longitudinal velocity C ¼ EðqÞ1 with qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi shear velocity C ¼ GðqÞ1 , where G is the soil shear modulus as above. The reinforcing effect of the surface soil column attenuates due to wave energy loss in case of inelastic wave deformations of soil in its top layers. The amount of these losses is proportional to the path length S traveled by the wave within the limits of lightly compacted non-elastic uppermost layer approximately 50 m thick. If the wave moves along the normal to the surface, then this path is minimal. Therefore, energy loss in this situation is minimum and is estimated to be about 20%. In the zones near the borders of the damage area that are located at a distance L from the epicenter, which exceeds the hypocenter depth HC , L [ HC , more than 5 times, the direct wave path from the hypocenter to the buildings along the non-elastic top layer increases more than 5 times. Therefore, their devastating effect is eliminated almost completely. As a result, only shear waves (Smirnov 2008; Smirnov 2009a, b), which cross the top layer almost normal to the ground surface, are able to shear buildings. They are generated by deep-earth longitudinal waves moving under the buildings at a depth of more than 100 m (Smirnov 2008; Smirnov 2009a, b). Judging by the mass form of seismic damage of buildings in the form of shear fracture of their columns, separation partitions and walls (Smirnov 1992; Smirnov 1994; Smirnov 2009a, b), shear waves must play a key role here, as they create the highest horizontal ground velocity which ensures this shear.

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In zones close to the hypocenter, where L  HC the shear of buildings is caused by longitudinal shear waves. In middle zones where HC \L\ 4HC the shear of buildings is caused both by longitudinal and shear waves which create significant horizontal components of ground velocity required for the shear fracture of columns and walls. Finally, in the far field, where L [ 4HC the seismic shear fracture of buildings can only be caused by shear waves (Smirnov 2008; Smirnov 2009a b). In the epicentral and middle zones, soil-compressing longitudinal waves intensively impact the foundation bases and thus significantly aggravate the devastating effect from shear waves, creating additional compression in columns and walls. The thing is that the combination of shear and compression is the most hazardous for the concrete strength. It appears that it is necessary to explain the reason for the fact that destructive shear + wave which carries shear stresses s and main tension stresses σ гл = τ of about 0.5 MPa (Smirnov 2008; Smirnov 2009a, b), can pass through the uppermost (Н < 50 m) lightly compacted soil layers, which are technically not able to withstand either the tension r+гл, or the shear s (even with high rates of loading). At a greater depth H > 50 m, soil compressed by vertical pressure P ¼ qH [ 1MPa and lateral pressure 0.2P, easily withstands wave extension, blocking it with static compression P from the weight of the soil. In addition, the soil itself can withstand shear in the amount s  0.5 MPa due to friction stresses.

sTP ¼ fjr p j [ s; Moreover, coefficient of friction f is close to 1. When the shear wave enters the uppermost lightly compacted layers, where H < 50 m, then it sharply changes the stress field in the soil ground, adapting it to itself. + The main tension stresses σ гл briefly create inclined rupture planes in the soil,

− which divide the soil into inclined strips compressed by the primary stresses σ гл These

strips are inclined at an angle p/4 to the surface away from the hypocenter. Their thickness is equal to several meters, their width is equal to 50 sin p/4 = 70 m, and their length may be equal to hundreds of meters. Shear waves will already be able to freely pass through these compressed strips, but in order to do this, they should be divided into two new waves - longitudinal wave and shear wave, which together create the reference horizontal ground velocity V. That said, the first longitudinal wave moves long the wavestrip with a velocity of qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi C1 ¼ EðqÞ1 : It creates ground velocity V1 ¼ 0; 71 V, stresses directed along the wavestrip, and compressive stresses

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541

r 1 ¼ qV1 C1 ; The second shear waves the velocity of which is equal to C2 ¼

qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi GðqÞ1

Wave C2 corresponds to shear stresses s2 = qV2C2 and ground velocity V2 ¼ 0; 71 V; that are directed perpendlcularly at right angles to the wavestrip. Apparently, when adding the inclined vectors V1 and V2 we will obtain a horizontal vector with reference value Vг. Stresses s2 in compressed strips can be withstood due to the friction stress sтp, where

τгр =f | Ϭ1 -| If f  1, we can find that stp  s2 In addition, the main tension stress r2þ ¼ s2 , which is created by a new shear wave and acts vertically, is extinguished by compressing the value 0.71 r 1 from the longitudinal wave which acts in the same place. þ It may be shown that 0.71 r 1  r2 , i.e. the tension in the soil disappears, since the total vertical stress in the group becomes compressing, although it is very low. But at the same time, a new intensive horizontal wave compression of the soil of total value   0; 71r þ r  appears, 1 2 where: r 2 ¼s As a result, the rupture planes close and two new waves again run through the compressed continuous medium, where now there is no extension and the reinforcing wave skin-effect is still created. Here, the stresses s2 are withstood by the soil due to the friction stresses sтp,    sTP ¼ f r 1 : The analysis of the most typical shear modes of destruction of columns and walls that was carried out in (Smirnov 1992; Smirnov 1994; Smirnov 2009a, b), allows us to claim that in case of earthquakes there are two fundamentally different processes - wave process and vibration process. The first process is externally manifested in the form of brief tremor. It is the main cause of seismic damage and cannot be registered by seismic pendulums; only the second, oscillatory process can be registered. In the first process, which is the most dangerous for buildings, shear waves cause one-sided shears of the surface soil column (Smirnov 2008; Smirnov 2009a, b), which are manifested in destructive impulses (tremor) with great accelerations and velocities.

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It is wave shears of the surface soil column that subsequently cause its own damped vibrations described by Clough and Penzien (1975). Their frequence x can be determined from the following formula: x2 ¼ rð0; 4 mÞ1 ; where: r is the counterreaction of the surface soil column when its top is shifted by one unit; m is its weight, the center of gravity of which is located at a distance of 0.4H from the bottom of the soil column. Here r ¼ FGðHÞ1 ;

m ¼ qHF;

ð7Þ

where: G is the effective modulus of shearing; F is the cross-section area of the soil column; H is its height; q is the average soil density. 

C 1 G With due consideration of (7) we find that x2 ¼ 0;4H , where Č is the 2  q ¼ 0;4H2

average velocity of shear waves in the soil column. Eventually we obtain the approximate formula for the occurrence frequency x and period T of shear vibrations of soil column: x¼

qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi 2; 5C ðH Þ1

ð8Þ

where: 2p H T ¼ pffiffiffiffiffiffiffi  ; 2; 5 C

sffiffiffiffi ¼ G C q

The duration of the period Т found for the real parameters of the surface soil column Н = 100 m and С = 500 m/s taken from “Soils and Foundations” (1996), is 0.8 s. Seismic pendulum-based instruments are aimed specifically at displaying harmonic vibrations of soil and are not technically capable of registering devastating wave impulses, cutting their acceleration peaks. Any vibrations of the foundation of equipment (whether that be soil, or, for example, vibroplatform) always give rise to the appearance of short-period local shear waves, which penetrate the seismic pendulum-based instruments and significantly affect the pattern of motion of their pendulums. This effect is not taken into account in any way (Drumia et al. 1990) when interpreting standard accelerograms and seismograms.

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Such an error leads to a significant underestimation of real accelerations, velocities and movements of ground. The substantiation for such results was provided experimentally in Kyrgyzstan by means of experiments that were carried out in accordance with the specifically developed program. It turned out that standard pendulum-based accelerometers and seismometers are not able to accurately display the parameters of vibrations of vibroplatform. Researchers have found that extremely widespread occurrence of seismic damage consists in purely shear fractures of columns, as well as the appearance of diagonal cross-shaped cracks along the diagonal lines of separation walls and link beams, the stress level in which is a lot lower than in the most critical sections, or, what is most paradoxical, the appearance of diagonal cracks in some link beams only. One cannot grasp the nature of the appearance of such cracks in terms of the “vibration” doctrine.

4 Conclusion The main conclusion of this study is that it is impossible to obtain reliable information about the parameters of destructive seismic forces using pendulums only. This explains the cause of the failure of the antiresonance strategy for seismic protection of buildings. In summary, we will point out that in order to achieve formal registration of destructive impulses, one should abandon conventional pendulum-type equipment and use state-of-the-art equipment that is able to accurately measure the actual ground velocity. The results obtained in such a way can lead to positive transformations in the field of seismic protection of buildings and structures.

References Smirnov, S.: Elastic recovery of the shorn soil column as a real cause of seismic shear fracture of buildings. Ob’yedinenny Nauchny Zh. Moscow 11, 57–60 (2008) Smirnov, S.: Seismic shears of buildings arc the result of output of soil thickness, displaced by abyssal seismic waves. Integr. Sci. J. Moscow Russ. 7, 64–68 (2009a) Soils and Foundations: Special issue of Geotechnical aspect of the January 17, 1995 Hyogo-Ken Nanbu Earthquake, Japanese Geotechnical Society, January 1996, p. 356 (1996) Smirnov, S.B.: The impact-wave concept of seismic damage of structures. Energeticheskoe Stroitelstvo 9, 70–72 (1992) Smirnov, S.: Discordances between seismic destruction and present calculation. Int. Civil Defense J. 1(6–7, 28–29), 46–47 (1994) Smirnov, S.: The shearing mechanism of seismic movements of ground and breakthrough experiments aimed at finding their actual parameters causing the wave shear fracture of columns and walls of buildings. Ob’yedinenny Nauchny Zh. Moscow 12, 51–55 (2009b) Clough, R.W., Penzien, J.: Dynamics of Structures, New-York, p. 320 (1975) Drumia, A.V., Shebalin, N.V., Sklodnev, N.N., Grafov, S.S., Oyzerman, V.I.: Earthquake in Carpathian Mountains in 1986. Chisinau, “Stiinta”, p. 334 (1990) Petrenko, E., Pritvorova, T., Dzhazykbaeva, B.: Sustainable developmet processes: service sector in post-industrial economy. J. Secur. Sustain. Issues 7(4), 781–791 (2018)

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Popkova, E.G.: Preconditions of formation and development of industry 4.0 in the conditions of knowledge economy. Stud. Syst. Decis. Control 169(1), 65–72 (2019) Popkova, E.G., Egorova, E.N., Popova, E., Pozdnyakova, U.A.: The model of state management of economy on the basis of the Internet of Things. Stud. Comput. Intell. 826(1), 1137–1144 (2019) Popkova, E.G., Morozova, I.A., Litvinova, T.N.: Transformational processes in the media system under industry conditions 4.0: future outlines and perspectives. Theor. Pract. Issues Journalism 7(1), 145–154 (2018). (reflections on the article by Alexander P. Sukhodolov, DSc. In Economics, Professor and Irina A. Kuznetsova, PhD in Engineering, Associate Professor “Designing the mass media as a homeostatic system by means of automation engineering: Basic concepts, structure, components”) Popkova, E.G., Parakhina, V.N.: Managing the global financial system on the basis of artificial intelligence: possibilities and limitations. Lect. Notes Netw. Syst. 57(1), 939–946 (2019) Popkova, E.G., Sergi, B.S. (eds.): Digital Economy: Complexity and Variety vs. Rationality. Springer, Heidelberg (2019) Popkova, E.G., Sergi, B.S.: Will industry 4.0 and other innovations impact russia’s development? In: Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development, pp. 51–68. Emerald Publishing Limited, Bingley (2018) Sergi, B.S., Popkova, E.G., Sozinova, A.A., Fetisova, O.V.: Modeling russian industrial, tech, and financial cooperation with the Asia-Pacific region. In: Sergi, B.S. (ed.) Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019) Sergi, B.S. (ed.): Tech, Smart Cities, and Regional Development in Contemporary Russia. Emerald Publishing Limited, Bingley (2019)

Revisiting the Transparency of Public Authorities and Local Self-governing Authorities (Using the Example of the Central Administrative Okrug of Moscow) Irina V. Milkina(&) , Alexander Yu Yakovlev, and Olga A. Petrina State University of Management, Moscow, Russian Federation [email protected], [email protected], [email protected]

Abstract. The present-day rate of introduction of digital technologies in the development of society leads to the need for the provision of relevant and timely information to citizens about all changes occurring within the territory of their residency, work, rest etc. At the same time, information about the activities of public authorities and local self-governing authorities is one of the most popular and important for city residents. This, in turn, sets the tasks for the authorities to provide access to information about their work. The research is aimed at analyzing transparency and accessibility of information about the activities of public authorities and local self-governing authorities in Moscow. According to the research results, the ranking of administrative boards and local selfgoverning authorities of the Central Administrative Okrug of Moscow according to the degree of information accessibility was made, and recommendations were given for improving information communication of the Moscow authorities. Keywords: Public management
Transparency
Information and communication technologies
Municipal management
Digital technology JEL Code: J38


L86

1 Introduction The current level of development of technologies and their continuous development lead to emergence and growth of information needs of society. Information about the activities of public authorities and local self-governing authorities is one of the most popular and important for city residents. This, in turn, confronts the latter with the tasks of providing access to information about their work. Despite the fact that much attention is paid to transparency of the bodies of state and municipal administration at the federal level (Kosarin 2017), the adequate level of transparency can by no means always be achieved in regions and municipal entities (Sirajdinov 2016). In order to understand the actual state of affairs in the denoted field, the authors studied transparency and accessibility of information about the activities of © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 545–553, 2020. https://doi.org/10.1007/978-3-030-39319-9_61

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public authorities and local self-governing authorities in the constituent entity of the Russian Federation that is the most advanced from the perspective of the information technology and other technologies - Moscow. The Central Administrative Okrug of the capital, consisting of 10 administrative-territorial entities where there are both public authorities and local self-governing authorities, is taken as an example.

2 Background and Methodology Research methodology is based on the analysis of provisions of Federal Law No. 8-FZ of 09.02.2009 “On providing access to information about the activities of public authorities and local self-governing authorities”, regulating the procedure and the content of delivery of information to public authorities and local self-governing authorities, and comparison of provisions of the Law against the real situation of information posting on official websites of public authorities and local self-governing authorities of Moscow. This research may be of interest to regional and municipal authorities and can be implemented at any management level. The basic principles of provision of access to information about the activities of public authorities and local self-governing authorities are as follows (Federal Law No. 8-FZ 2009): (1) transparency and accessibility of information posted; (2) authenticity and timeliness of delivery of this information; (3) freedom of search, acquisition, transfer and dissemination of information in any lawful manner; (4) observance of rights of citizens to privacy, personal or family secret, protection of their honor and business reputation (Frolikov and Yakovlev 2017), the right of companies to protect their business reputation in the delivery of information. There are 6 basic methods of provision of access to information about the activities of public authorities and local self-governing authorities (Fig. 1). Public information information about the activities of public authorities and local self-governing authorities is posted on the Internet (Federal Law No. 8-FZ 2009) in the form of open data. Presented information can be available to an unlimited range of persons.

3 Discussion and Results Now, we shall pass on to the analysis of observance of the principles of transparency and completeness of information posted by public authorities and local self-governing authorities (administrative boards and councils of municipal deputies) in the Central Administrative Okrug of Moscow on their official websites and in the Internet. The Central Administrative Okrug of Moscow consists of 10 districts: Arbat; Basmanny; Zamoskvorechye; Krasnoselsky; Meshchansky; Presnensky; Tagansky; Tverskoy; Khamovniki; Yakimanka, and 10 same-name municipal districts.

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Ways of providing access to information about the activities of public authorities and local selfgoverning authorities

Public declaration (publication) of information about their own activities in the media by public authorities and local self-governing authorities

Posting of information about activities of public authorities and local self -governing authorities on the Internet by public authorities and local self-governing authorities

Posting of information about their activities in the premises occupied by these authorities and in other places designated for these purposes, by public authorities and local selfgoverning authorities

Getting information users acquainted with information about the activities of public authorities and local selfgoverning authorities in the premises occupied by these authorities, as well as by means of library and archive funds

The presence of citizens (individuals), including representatives of organizations (legal entities), non -governmental organizations, public authorities and local self -governing authorities at the meetings of collegiate public authorities and local self-governing authorities

Provision of information about the activities of public authorities and local self-governing authorities to users upon their request

Fig. 1. Ways of providing access to information about the activities of public authorities and local self-governing authorities

Administrative boards of Moscow (hereinafter referred to as administrative boards) are territorial administrations of Moscow belonging to public authorities. Information about administrative boards is posted on the official web portal of the mayor of Moscow. Local self-government in Moscow is carried out in the territories of intraurban municipal entities (municipal districts). The structure of local self-governing authorities is as follows: (1) local representative self-governing authority – the Council of deputies of municipal district; (2) head of municipal entity - head of municipal district; (3) executive-administrative local self-governing authority – administration of of municipal district/administrative office of the Council of deputies. The analysis has revealed that information about the activities of local selfgoverning authorities of Moscow is posted on independent websites of municipal districts of Moscow. Websites of municipal districts in the Central Administrative Okrug are self-sufficient, are not tied to the official web portal of the Moscow Mayor (Territorial authorities 2018). Some websites of municipal districts (Arbat for example) can be accessed via section of the rebsite of the administrative board “Local government”.

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The content of presented information about the activities of public authorities and local self-governing authorities, regulated by Federal Law (Federal Law No. 8-FZ 2009) is shown in Fig. 2.

The content of information about the activities of public authorities and local self-governing authorities 1. General information about the activities of public authorities and local selfgoverning authorities 3. Information about the participation of public authorities and local self-governing authorities in the focused and other programs, international cooperation, including official texts of relevant international instruments of the Russian Federation, as well as about events held by public authorities and local selfgoverning authorities, including information about formal visits and about business trips of the heads and official delegations of public authorities and local self governing authorities 5. Information about the results of inspections carried out by public authorities, their territorial administrations,local self-governing authorities, lower organizations within the scope of their powers, as well as information about the results of inspections of public authorities,their regional offices,local self -governing authorities,and lower organizations 7. Statistical information about the law making activities of public authorities and local self-governing authorities 9. Information about public authorities and local self-governing authorities with applications of citizens (individuals), companies (legal entities), non-govermental organizations, public authorities and local self-governing authorities

2. Information about the law making activities of public authorities and local self governing authorities 4. Information about the status of protection of population and territories from emergencies and measures taken to ensure public safety, about anticipated and emersed emergencies,about techniques and methods used to protect the population from these emergencies, as well as other information that should be communicated by public authorities and local self-governing authorities to individuals and legal entities in accordance with Federal Laws and laws of constituent entities of the Russian Federation

6. Texts of formal speeches and statements by the heads and deputy heads of public authorities, its regional offices, local self-governing authorities

8. Staffing information about public authorities and local self-governing

10. Other information about the law making activities of public authorities and local self-governing authorities

Fig. 2. The content of information about the activities of public authorities and local selfgoverning authorities

The list of information about the activities of public authorities of constituent entities of the Russian Federation is directly approved in accordance with the procedure stipulated by the subordinate entities of the Federation (Federal Law No. 8-FZ 2009). There is no such regulatory act in Moscow however.

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However, if we refer to Federal Law No. 8-FZ of 09.02.2009 “On providing access to information about the activities of public authorities and local self-governing authorities”, we can define a list of information that should be available. Section 1 dedicated for general information about public authorities and local selfgoverning authorities, includes the following information: about the names and the structure of public authorities and local self-governing authorities, mailing address and e-mail address, phone numbers of directory-inquiry services; about powers of of public authorities and local self-governing authorities, their functions and tasks (including their subdivisions), the list of legislative and regulatory acts that enshrine their activities; about regional offices and representations of public authorities abroad, etc.; about lower organizations etc.; about heads of public authorities and local self-governing authorities, subdivisions, local government agencies and representations abroad, heads of lower organizations; about information systems, data pools, registers and registries maintained by public authorities and local self-governing authorities, lower organizations; about the mass media founded by public authorities and local self-governing authorities. Since no provision is made for the presence of local government agencies and representations abroad in the structure of administrative boards and local selfgoverning authorities of Moscow, and there are no lower organizations, the analysis of 5 items was carried out. Section 2 is dedicated for information about the law making activities of public authorities and local self-governing authorities. It is composed of the following: legislative and regulatory acts and municipal regulations (both amended in force and dormant); texts of draft legislative and regulatory acts; information about the procurement of goods, works, and services; administrative regulations, standards of public and municipal services; forms of appeals, applications and other documents; procedure for filing an appeal against legislative and regulatory acts (municipal legislative and regulatory acts) and other decrees adopted by public authorities and their territorial administrations. According to the analysis, there is no information about the procedure for filing an appeal against regulatory legal acts on websites of two administrative boards and on websites of eight local self-governing authorities of the Central Administrative Okrug of Moscow. The following information must be presented in Sections. 3–6: – Section 3 should contain information about the participation of public authorities and local self-governing authorities in the focused and other programs, international cooperation - this information is not available on websites of administrative boards of Meshchansky, Presnensky, and Tverskoy districts; – Section 4 is intended to collect information about the status of protection of population and territories from emergencies and measures taken to ensure public safety - relevant information on this Section is available in all administrative boards of the Central Administrative Okrug of Moscow; – Section 5 should contain information about the results of inspections carried out by public authorities, their territorial administrations, local self-governing authorities.

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This information is not available on websites of administrative boards of Arbat, Basmanny, and Krasnoselsky districts; – Section 6 is dedicated for texts of formal speeches and statements by the heads (deputies) of public authorities, their territorial administrations, local self-governing authorities - five administrative boards of the Central Administrative Okrug of Moscow have no information on this Section. As a rule, information about local self-governing authorities of the Central Administrative Okrug of Moscow is either missing or outdated in all four Sections. The exception is provided by information posted on websites of municipal districts: Zamoskvorechye, Krasnoselsky, Tverskoy. Section 7 is dedicated for statistical information about the law making activities of public authorities and local self-governing authorities. The following information is contained here: data and indicators characterizing the state and dynamics of development of various fields; allocated budgetary funds; information about benefits, debt restructuring, etc. Websites of administrative boards of Basmanny and Presnensky districts, as well as websites of municipal districts Arbat, Krasnoselsky, Khamovniki, Yakimanka contain no statistical information at all. At the same time, complete statistical information about the activities of local self-governing authorities is presented on the website of municipal district Presnensky. Section 8 deals with the staffing of public authorities and local self-governing authorities, where information about entry into public (municipal) service and about vacancies is published. The information on this Section is presented in its entirety only on websites of administrative boards of Basmanny and Zamoskvorechye districts, and there is no staffing information on the website of the administrative board of Presnensky District and the administrative board of municipal district Arbat. The last Section, Section 9, is dedicated for the issues of the work of public authorities and local self-governing authorities with appeals from citizens and organizations: procedure and duration; full names of persons who are in conference; contacts where reference information can be obtained; reviews of complaints, generalized information on the results of their consideration, measures taken. As for Section 9, this information is presented in its entirety only on websites of five administrative boards of the Central Administrative Okrug of Moscow. Websites of administrative boards of Khamovniki and Yakimanka districts as well as all ten websites of municipal districts of the Central Administrative Okrug of Moscow only contain information about the procedure and the hours of reception of citizens. Based on information available on websites, the ranking of administrative boards and local self-governing authorities of the Central Administrative Okrug of Moscow according to the degree of accessibility and transparency of information (Tables 1, 2). Points were given according to the number of Section paragraphs filled with information (26 points in total). The analysis has shown that information regulated by federal legislation is not fully presented by any administrative board of the Central Administrative Okrug of Moscow; in addition, accessibility of information of local self-governing authorities of the Central Administrative Okrug of Moscow is very poor

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Table 1. The ranking of administrative boards of the Central Administrative Okrug of Moscow according to the degree of transparency Administrative boards of the Central Administrative Okrug of Moscow

Sections, points Section 3

Section 4

Section 5

Section 6

Section 7

Section 8

Section 9

Total points

Rank

Section 2

Administrative 4 board of Zamoskvorechye district

5

1

1

1

1

2

5

3

23

1

Administrative board of Basmanny district

5

5

1

1

0

1

0

5

3

21

2

Administrative board of Krasnoselsky district

5

5

1

1

0

1

2

3

3

21

2

Administrative board of Arbat district

5

4

1

1

0

1

2

1

3

18

3

Administrative board of Tverskoy district

4

4

0

1

0

0

2

4

2

17

4

Administrative board of Yakimanka district

4

5

1

1

0

0

3

2

1

17

4

Administrative board of Meshchansky district

5

4

0

1

0

0

2

1

3

16

5

Administrative board of Tagansky district

4

5

1

1

0

1

1

1

2

16

5

Administrative board of Khamovniki district

4

6

1

1

0

0

1

1

1

15

6

Administrative board of Presnensky district

4

4

0

1

0

0

0

0

2

11

7

Section 1

Table 2. The ranking of local self-governing authorities according to the degree of transparency Municipal district

Section 2

Section 3

Section 4

Section 5

Section 6

Section 7

Section 8

Section 9

Total points

Rank

Section 1

Sections, points

Tverskoy

5

4

0

1

1

1

2

2

1

17

1

Tagansky

5

3

0

0

1

1

1

4

1

16

2

Presnensky

4

3

0

0

0

0

3

3

1

14

3

Basmanny

5

3

0

0

0

0

1

4

1

14

3

Zamoskvorechye 5

1

1

1

1

1

1

1

1

13

4

Meshchansky

5

1

0

1

0

0

1

4

1

13

4

Khamovniki

5

4

0

1

0

0

0

2

1

13

4

Krasnoselsky

4

1

0

1

1

1

0

2

1

11

5

Yakimanka

5

3

0

0

1

0

0

1

1

11

5

Arbat

5

2

0

0

0

1

0

0

1

9

6

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– the website of Tverskoy municipal district has the maximum number of points – 17 of 26, which amounts to as little as 65% of necessary information. The administrative board of Zamoskvorechye district has the most informative website (23 points – 88% of information accessibility). The administrative board of Presnensky District (11 points – 42% of information accessibility) and the administrative board of municipal district Arbat (9 points – 35% of information accessibility) have the least informative websites.

4 Conclusions The analysis allows drawing the following conclusions: – there is no unified information presentation system; – information is often outdated and presented sketchily; – there is no vital information about powers, staffing; this information is particularly poorly presented on websites of local self-governing authorities (websites of municipal districts); – the level of accessibility of information and transparency of local self-governing authorities is low. In the course of research, it has been found that there is no regulatory act in Moscow that would regulate the issues of information posting and define the list of information posted on the web portal of the Moscow Government and on websites of public authorities and local self-governing authorities. In 2010, the Government Decree of the City of Moscow No. 402-PP of 18.05.2010 “On the Draft Law of the City of Moscow “On providing access to information about the activities of public authorities of the city of Moscow and local self-governing authorities in Moscow”” (Decree of the Government of Moscow No. 702-PP 2014) was published; this law has never been adopted at the moment however. As for the informatization of the process of communication with citizens in 2014, a Decree of the Moscow Government No. 702-PP of 28.11.2014 “On the Unified Municipal Automated System to Support the Activities of the Public Government of Moscow” was also adopted. It states that the Unified Municipal Automated System to Support the Activities of the Public Government of Moscow (UMAS SAPGM) is a tool of interactive communication between the executive authorities of Moscow and the population of Moscow and provides an opportunity for posting of messages of users of the UMAS SAPGM on relevant topics (Decree of the Government of Moscow No. 402-PP 2010). Regulation on the Unified Municipal Automated System to Support the Activities of the Public Government of Moscow (UMAS SAPGM) defines the purpose, regulations on the use of the UMAS SAPGM, composition and powers of participants in information interaction (Milkina and Kosarin 2017) with the use of the UMAS SAPGM, as well as procedure for the processing of open data contained in it. However, the adoption of this resolution did not resolve the issue of unification of information about the activities of public authorities and local self-governing authorities in Moscow, which is one of the most urgent problems associated with the

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transparency in the field of state and municipal administration (Kosarin 2017), the solution of which will have direct effect on the effectiveness of the system of state and municipal administration (Zotov 2017), (Sirajdinov 2016). The current state of affairs with the transparency and accessibility of information about the activities of public authorities and local self-governing authorities in the Central Administrative Okrug of Moscow has shown that the state of affairs is nowhere near optimum even in the Central Administrative Okrug, where the most public authorities of the capital are situated, as well as legal entities engaged in the field of state-of-the-art information technologies. A solid step could be the adoption of a regulatory legal act in the city that would regulate the list of information necessary for posting (the relevant project is already available), as well as the definition of a public authority responsible for the monitoring of information posted.

References Decree of the Government of Moscow No. 702-PP of November 28, 2014 “On the unified city automated system for supporting the activities of the open Government of the City of Moscow” (2014). http://www.consultant.ru/. Accessed 20 November 2018 Decree of the Government of Moscow No. 402-PP of 18 May 2010 “On the draft law of the city of Moscow “On ensuring access to information on the activities of state bodies of the city of Moscow and local bodies of the city of Moscow”” (2010). http://www.consultant.ru/. Accessed 20 November 2018 Federal Law No. 8-FZ of February 09, 2009 (ed. December 28, 2017) “On ensuring access to information on the activities of state and local self-government bodies” (2009). http://www. consultant.ru/. Accessed 20 November 2018 Frolikov, P.A., Yakovlev, A.Y.: “Korruptsiya: sushchnost’ i klassifikatsiya” [Corruption: nature and classification]. Reformy v Rossii i problemy upravleniya - 2017. Materialy 32-y Vserossiyskoy nauchnoy konferentsii molodykh uchenykh [Reforms in Russia and problems of management - 2017. In: Proceedings of the 32nd all-Russian conference of young scientists], pp. 96–98 (2017). (In Russian) Kosarin, S.P.: “Information transparency in the sphere of state and municipal management”. Rol’ mestnogo samoupravleniya v razvitii gosudarstva na sovremennom etape. Materialy II Mezhdunarodnoy nauchno-prakticheskoy konferentsii [The role of local self-government in the development of the state at the present stage. In: Proceedings of the 2nd scientific-practical conference]. Moscow, State University of Management, 2017, pp. 165–167 (2017). (In Russian) Law of Moscow of June 28, 1995 (ed. September 20, 2017) “The Charter of the City of Moscow” (1995). http://www.consultant.ru/cons/cgi/. Accessed 20 November 2018 Milkina, I.V., Kosarin, S.P.: “Iskusstvennyy intellekt v sisteme upravleniya gorodom” [Artificial Intelligence in the city management system]. The Step into the Future: Artificial Intelligence in Digital Economy. In: Proceedings of the 1st international scientific conference. Moscow, State University of Management, 2017, pp. 258–264 (2017). (In Russian) Sirajdinov, RZh: The directions of increase of efficiency of municipal management. Municipal Acad. 4, 110–114 (2016). (in Russian) Territorial authorities (2018). https://www.mos.ru/authority/territory/ - Official portal of the Mayor of Moscow (in Russian). Accessed 20 November 2018 Zotov, V.B.: Modern information technology as a means of improving the performance of local authorities. Municipal Acad. (4), 8–20 (2017). (In Russian)

Family as a Factor of Social Inequality in the Context of the Modern Social Policy Victoria N. Vlasova1(&), Yury S. Bortsov2, Anna V. Aperyan2, Sergey I. Samygin1, and Petr S. Samygin1 1

Rostov State Medical University, Rostov-on-Don, Russia [email protected], [email protected] 2 Southern Federal University, Rostov-on-Don, Russia [email protected], [email protected]

Abstract. The chapter analyzes the resource capabilities of a family to act as a factor of social inequality. The purpose of the analysis is to show those who are most in need of social protection in the context of identifying the most vulnerable types of families. A typology has been implemented, as a result of which two main approaches have been identified, integrating various aspects of the established objective spectrum: resource and typological. Supporters of the resource approach explain the reproduction of social inequality through the prism of the amount of social resources that can be used by family members to achieve social status positions. The typological approach is based on a conceptual idea recognizing the presence of families in society that contribute to the reproduction of poverty. These traditionally include single-parent, rural and large families. These families have the lowest resource potential and need active social protection from the state. Keywords: Family
Family types Social status
Social inequality


Social resources
Social stratification


1 Introduction Historically, the family performed the function of transferring social status, since the social position of the social actor was not acquired, but prescribed. Each subject of social relations was located on the niche of social space occupied by his parents. In modern society, the family has ceased to be a social institution that determines the social position of the subject in an imperative manner. Nevertheless, its role in the system of social mechanisms that form the status positions of social actors remains significant. This is due to both the different social capabilities of parents to support the social trajectories of their grown children in the initial stages of the formation of their individual statuses, and the features of role communication and value orientations accepted in individual families. Thus, the realization of the status potential of the family in the designated quality from the institutional sphere, that is, the prescribed normativity, has moved into the private functioning space of small social groups with their own typological features. We assume that a sociological analysis of the types of families that have developed in modern Russian society contains the necessary and, at © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 554–564, 2020. https://doi.org/10.1007/978-3-030-39319-9_62

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the same time, poorly studied potential for identifying the possibilities of a family of one type or another to act as a factor contributing to the reproduction of social inequality. In this context, social policy takes on particular significance, the tasks of which are reduced to supporting the most vulnerable social actors. Therefore, the purpose of our research is to identify those types of families that need social support from the state.

2 Methodology The theoretical and methodological base of the research consists of the conceptual provisions of a sociological theory, revealing four basic concepts: “family”, “social inequality”, “social stratification” and “types of family”. Methodologically, the use of the concepts presented can be considered in the context of two different approaches: institutional (W. Wilson, T. Cole, C. Friedrich) and neo-institutional (D. North, D. Apter, B. Peters). The institutional approach is aimed at studying the actor in a social context [1]. Its social characteristics and peculiarities are analyzed as a subject socialized in a certain way, whose activity is within the rigid framework of norms, obligations, stereotypes, etc. The neoinstitutional approach is based on the fact that the actor makes independent decisions related to the expectations of usefulness, and consistent with the principles of rationalism and pragmatism. With this understanding, the social context can be viewed from the position of a restrictive framework only to the extent that the actor is consciously ready to choose them for himself, hoping to receive the desired utility from a perfect choice as a reward. The first approach, the institutional one, makes it possible to establish the value of the family as a factor of social inequality by using the concept of “social resources of the family”; the second, neo-institutional, makes it possible to assess the role of the family in the designated subject area, relying on the term “quality of family communication,” bearing in mind that, firstly, the peculiarities of interaction in the family may depend on its typological features; secondly, typological features can determine the individual resources of young people. Thus, we define the integrity of the two approaches within the framework of the stated problems, since they reflect the subjective and objective possibilities of the family in reproducing social inequality in the context of its typological characteristics.

3 Results The destruction of traditional social ties, the formalization of social relations, the introduction of an element of chaos and uncertainty into the life trajectories of young people who have received the rights, freedoms and opportunities to acquire social statuses that are not related to their parents, have become the social conditions that have made relevant the study of processes that form new relationships between family and society. One of the most important subject aspects in this context was the emergence of the theory of social mobility, developed by P. Sorokin. This sociologist was the first to introduce the subject space into sociology, within which the family begins to be studied

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as a factor in the reproduction of social inequality. In his work “Social and Cultural Mobility”, P. Sorokin defines the family as the most important channel of social circulation. The scientist considered the family as a mechanism for the transfer of prescribed statuses. This function was presented as a leading one. P. Sorokin suggested that the destruction of this channel of mobility in the future would lead to a weakening of the social value of the family and its gradual destruction [2]. The position of P. Sorokin was accepted by theorists of structural functionalism R. Merton, T. Parsons, N. Smelser, and others. Thus, T. Parsons considered the family as a mechanism for shaping the conditions necessary to maintain social order [3]. In this regard, the family played a leading role, as it carried out the translation of norms and values that form the stable social space within which transparent instruments that promote the flow of social mobility are created. In general, T. Parsons did not attach great importance to the family as a factor in the reproduction of social inequality, because in the structural-functional paradigm the personal qualities of social actors had a decisive role in achieving social status. The deepening crisis of the traditional family and its final collapse in the 70 s of the 20th century in Western countries led to a shift in the methodological paradigm in sociology and a decline from the holistic principles of structural functionalism, according to which the family was viewed as an instrumental part of the general system of maintaining social orderliness. New approaches are being formed in which sociologists are trying to understand new characteristics of a family placed in the space of privacy and the ability to individually select their own trajectories of the social movement, including those related to the processes of growing social stratification. The same qualitative changes as in the West occur in parallel in the Russian (Soviet) family, which is also experiencing the impact of social modernization. At the same time, in sociological theories applied to assess the role of the family in the reproduction of inequality, the idea persistently begins to grow that the complication of social systems leads to an increase not to the weakening but, on the contrary, to an increase in the role of the family in the reproduction of social inequality. At this time, in Western, and since the 90s of the 20th century, in the domestic sociology, the postmodernist paradigm began to play a prominent role. Among the theories of postmodernists concerning the problems of family and social inequality, a special place belongs to the concept of cultural capital, developed by P. Bourdieu. In the work “Forms of capital”, the sociologist identifies three varieties of capital: economic, cultural and social. All of them are interconnected, and mutually flow into each other. Therefore, their separate existence is positioned in the form of ideal types, created for the convenience of analysis. According to P. Bourdieu, the social capabilities of parents to transfer status to their children depend on the volume of these three types of capital that the family possesses. J. Coleman draws his attention to a large role of the family in the reproduction of social inequality. He introduces the concept of “social capital of the family”, by which he understands such a character of established communications between parents and children, in which there is a mutual exchange of social resources, the formation of value orientations, etc. This term will later be used by many familists, including Russian, who substantively study the role of the family in the processes of the formation of social stratification. This position is presented in the framework of the

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methodological platform developed by J. Coleman - the theory of rational choice [4]. The sociologist assesses the family from the position of a pragmatic utility from the interaction between its members, which is aimed at achieving the maximum benefit from what is happening in a small group of social exchanges. From this point of view, he is one of the first in sociology to conclude that it is necessary to evaluate different types of families as optimal or not optimal with regard to the possibility of achieving the maximum result for obtaining the greatest benefits, including when parents form social trajectories of their children in a social stratification space. The revival of Russian sociology and its inclusion in the orbit of international development of science objectively led to the emergence of theoretical and empirical developments in sociology of family, including the study of its role as a factor in the reproduction of social inequality. The attention of Russian scientists include various aspects of the problems in the specified subject plane. In the development of science, some stages can be distinguished that conciliatory to our topic have their own characteristics. Thus in the 90s many sociologists [5] noted the fact of the decline in the role of the family in building the contours of social stratification, which was explained by the emphasis in social activities on their own goals and opportunities for the younger generation, and the special role of the individual resources of a person. This was actualized, firstly, by the dissemination in the mass media of the values of the ideology of liberalism, orienting the subjects to active social activity; secondly, the transformation of the stratification system of the Russian society, which objectively led to the emergence of new niches on the upper floors of the social space, filled with people from lower strata. However, in studies after the year 2000, the family begins to take the first place among the factors affecting social mobility. N.E. Tikhonova indicates that the status of the parental family is currently at the top of the hierarchy in the respondents’ assessments according to sociological surveys conducted in recent years. In her opinion, this “testifies to the increasing intergenerational conservation of statuses in modern Russia, the closing of “lifts” of social mobility” [6]. This conclusion reflects not so much the growing role of the economic capital of the family, as the stagnation of the reproduction of new status opportunities in the Russian society, which is not enough to increase the speed of movement of social actors through the channels of social mobility. Here we see the specifics of the Russian variant of social stability, which in its end leads to the replacement of intergenerational mobility typical for the 90s of the last century by the intergenerational characteristic of the modern stage of social development [7]. O.I. Shkaratan and G.Ya. Yastrebov pay attention to the most important function of the family - to carry out primary socialization, including the orientation of children on their future professional status. In this context, sociologists focus on family duality. They point out that the family at the micro level, as a social group, plays a crucial role in shaping value orientations, needs and interests. However, at the macro level, being a social institution, it depends on the prevailing social values and stereotypes that have extra-familial channels of transmission to the mass consciousness. Possessing such a duality, the family realizes the function of a link between society and the individual, forming starting positions for socialization. In this regard, the authors insist on the decisive role of the origin of the social actor in the process of attaining social status, the nature of the education they receive and the area of residence. Applying these three

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variables, OI Shkaratan and G.Ya. Yastrebov drew attention to the fact that in most social dispositions there is continuity in the social position of parents and children, even in large cities, where objectively young generations have more opportunities. In other words, sociologists together with N.E. Tikhonova conclude that since the end of the “zero” years, a trend has been approved for the preservation of the social stratification of Russian society [8]. The result of this conservation can be called the strengthening of intra-generation mobility with a predominance not of vertical, but horizontal channels of movement of social statuses. Under conditions of partial conservation of social mobility channels, Russian sociologists identify various aspects of the problem that affect the ability to reproduce and modify social inequality, and point to quite certain kinds of reasons that influence the role of families in the distribution of social actors in the social stratification space. As a rule, in the works of domestic sociologists, where the issues of family and social inequality are substantively combined, the emphasis is made on three aspects: the social resources of the family, gender asymmetry, and the potential possibilities of various types of families. Most Russian sociologists, characterizing the role of the family in the reproduction of social inequality, explain it through the prism of the volume of social resources that can be used by family members to achieve social status positions. M.Yu. Bykov proves the thesis that the parental family throughout its life has an impact on the status characteristics of its children, which is caused by the constant preservation of the emotional connection between parents and children, which at some stage may be weakened but never torn. The scientist is also convinced of the growing role of the Russian family in the reproduction of inequality over the past one and a half decades. This position is justified through the concept of “social resources of the family” [9]. M.Yu. Bykov makes a typology of the most significant resources that form the stratification space of families on the poverty-wealth scale. It includes economic, qualification, social, power, cultural, personal and biological resources. The volume of the listed resources is directly proportional to the potential capacity of the family to form a social status [10]. To the same conclusion come TV Smirnova and O.V. Ponukalina, also noting the increasing role of the family in narrowing the width of the channels along which the lines of upward mobility in Russian society pass. The authors, explaining their thought, introduce the concept of “breakage” of basic social elevators. The result of this is an increase in the deficit of social opportunities, especially for young people who do not have a solid social status. This situation leads to a reduction in the role of youth personal resources for their use as tools for the formation of social status. As a result, it is the family that takes on the mission to solve the problem of ensuring the desired future: either in order to support social maneuvers while realizing the potential of their children, or, as the worst option, to provide conditions for biological survival [11]. N.P. Sidorova also assesses the family as a leading social factor that reproduces social inequality. Its main role is the connection between education and profession. If this connection is reflected in the minds of children in the emergence of a socially useful and subjectively perceived as significant result, then it acquires the quality of a decisive motivator for the reproduction of intra-generational social mobility. As a result, the profession of high and medium status parents becomes significant for further

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professional development of younger generations. Since the Russian version of stability includes stopping the growth of new vacancies in the labor market, to which elevators from lower social strata could be built, the result is the reproduction of poverty by families with not enough social resources to move to the upper strata [12]. A.V. Kurbatov and K.R. Amlaev offer a multifactorial explanation for the role of the family in the reproduction of social inequality. They point to such factors formed by parents as financial opportunities, the area (urban area) of residence, the closest social circle, the nature of the asked values, cultural interests, and the provision of educational opportunities. The authors assign a special role to the currently growing intergenerational solidarity, by which they understand the existence of close and regular ties between the parental family and the families of their grown children. Thanks to intergenerational solidarity, the emotional connection between parents and children does not cease throughout their lives, which is an essential condition for maintaining the already existing social inequality [13]. More narrowly, using only an economic approach, Yu.R. Khairullina and E.R. Nurullina study the nature of social inequality in the context of the role of the family. The authors note that the starting opportunities of children depend primarily on the economic resources of their parents. Their volume has a direct impact on the social trajectory of the movement of young generations [14]. At the same time, the role of the youth itself is not at all accepted by researchers as having any meaningful significance. Another subgroup of sociologists, adjacent to the above subject-oriented, can be combined around the concept of “family capital” introduced into the scientific circulation by J. Coleman. It usually means all types of social resources: economic, educational, cultural, which parents possess. Therefore, here we are dealing with a variety of the first, resource-based approach, but with a different level of theoretical generalization of the concept of “family resources.” So, V.V. Radaev writes about the totality of resources defined as family capital. The sociologist, following P. Bourdieu, attaches crucial importance to cultural capital, justifying this by the fact that the social resources he forms expand the potential possibilities of families in the system of established social ties, normative practices, value orientations, etc. This provides opportunities for a good education and access to supporting resources of extra-familial nature, which is especially important for subsequent social trajectories after receiving education [15]. I.F. Dementieva points out that not only the family is a factor in the reproduction of social inequality, but society itself through the institutionalization of inequality affects the family’s resource capacity, reducing health, educational activities and material wealth, which objectively leads to the preservation of stratification development indicators. All this together leads to a decrease in the quality of family capital [16]. Y.M. Roshchina notes that all varieties of family capital, each in accordance with its intended purpose, are focused on overcoming institutional barriers to the acquisition of social status for younger generations. Among these barriers, it indicates “the type of settlement, the type of school, and the health of a student” [17]. Their overcoming is connected, first of all, with the need to obtain a quality education as a decisive factor in the reproduction of social inequality. K.M. Mkrtchan writes about the role of parents in helping children receive highquality secondary and prestigious higher education. The sociologist draws attention to

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the direct link between the intellectual qualities and the nature of parents’ education, their common cultural capital with the educational trajectories that their children have. The analysis of empirical data conducted by the researcher showed the actual “inheritance” of the profession of parents who have higher education, even if such an inheritance does not provide a high status [18]. Yu.V. Ushkova also analyzes the problem of reproduction of social inequality through the concept of “family capital”, applying it in order to analyze the prospects for the implementation of the life plans of young people. From the sociologist’s point of view, “in different areas of life, the implementation of the life plans of young people is affected by various family capital resources: the professional success is more influenced by the amount of parents’ cultural and educational resources; the economic - by qualification and economic resources; territorial movement of young people is affected by acquired profession and economic status of the parental family” [19]. In the considered concepts, the authors proceed from the thesis of other scholars about narrowing or even preserving the channels of social mobility, resulting in an increasing role of the family in the reproduction of social inequality. In general, it can be noted that the structural approach is characterized by ignoring the role of social actors, in particular, young people, and their personal resources for achieving social status positions. At the same time, virtually all sociologists of this approach noted a narrowing of the channels of social mobility and the transfer the main functions of reproducing social inequality to the family.

4 Discussions The family is a factor in the reproduction of social inequality, because different types of families have different resource capabilities. The research results allow us to focus on the problem of identifying the types of families that are most in need of social protection. There is a discussion on this issue in Russian sociology. N.A. Levaya revealed the potential of social instability, highlighting its factors such as low levels of material wealth, value heterogeneity, the presence of a negative sociopsychological background in role interactions, low performance of children, and high level of offenses fixed by the bodies of the Ministry of Internal Affairs [20]. In studies of single-parent families by sociologists, great importance is attached to issues of socialization. Experts in their conceptual constructions repel from the theory of “role boundedness” of this type of family [21]. To fully socialize a child, the perception and evaluation of two gender roles is necessary. However, in single-parent families, there is no complete either male or female gender. As a result, there are socialization flaws, expressed, as experts indicate, in lower academic performance and health indicators, a higher frequency of offenses committed [22], etc. Other sociologists pay attention to the problems of the quality of communication in the single-parent family. It covers such issues as reduction of personal communication between parent and child, simplified leisure-time forms of spending free time, not requiring significant financial resources, increasing the level of conflicts between parent-child [23] and others.

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Most often, the single-parent family becomes the object of research by sociologists in terms of the vulnerability of its social status. According to statistics, the majority of single-parent families are maternal; therefore, their family capital is assessed as extremely low. In this regard, in the scientific discourse, the priority is a statement of the low level of material security, which makes this type of family dependent on social security funds allocated by the state, which, at the same time, are assessed by sociologists as insufficient to resolve all emerging financial issues [24]. Another type of family, which is usually considered by sociologists in the context of the reproduction of poverty, is rural. Salakhutdinova insists on the need to single out a rural family in the form of a specific object of social protection [25]. The reasoning of the scientist is to ensure that in rural areas there are objectively more complex conditions of social life that, given the significance of the results of the rural labor for the whole society, must be offset by fair redistribution of resources. S.G. Sheudzhen also emphasizes the low level of development of social infrastructure in the village, the high incidence of chronic diseases among children, lower educational opportunities compared to the city, more intensive work that absorbs free time and does not leave it for creativity and self-education, low level of material wealth [26]. E.A. Manukyan points to the existence of major problems in the system of social services for the rural population, arising from the insufficient funding of the relevant organizations responsible for implementing social protection for the population. This applies not only to older people, but also to those groups of working-age-related people who, for some reason, have temporarily lost their ability to engage in active and independent social activities. As a result, the younger generations are forced to stay with their parents, which significantly reduces their educational opportunities [27]. T.G. Bakhmanova and O.V. Amonova pay attention to the main contradiction inherent in almost all large families: they make the greatest contribution to the indicators of demographic reproduction, but at the same time, they have low economic opportunities, since according to statistics, most large families live under or in close proximity to the poverty line. Special attention is paid to the fact that in large families mothers rarely work, and all functions to ensure the financial situation of the family are transferred to the father [28]. O.N. Bezrukova examines the problems of unsatisfactory provision of housing for large families. Insecurity of the necessary quality of housing leads to many other unresolved issues: decline in performance, health, nutrition, etc. [29, 30]. Yu.B. Yepikhina analyzes “the effect of inequality in the provision of families with economic and cultural resources on the performance of schoolchildren on the example of large families” [31] and concludes that the economic resources of the family have a great influence on junior and secondary schoolchildren, cultural resources affect senior schoolchildren. For large families, there is a shortage of both economic and cultural resources [32], which leads to lower academic performance of children in comparison with middle-scale and small families.

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5 Conclusions As a result of the analysis of the concepts of foreign and domestic sociologists, presented on the subject of family research as a factor in the reproduction of social inequality, a typology was carried out, which resulted in two main approaches integrating various aspects of the established subject spectrum: resource and typological. Supporters of the resource approach explain the reproduction of social inequality through the prism of the amount of social resources that can be used by family members to achieve social status positions. The integrative concept for this is the term “family capital”, consisting of three types of resources: financial, human and social. The cognitive possibilities of the structural approach are limited to ignoring the role of social actors, in particular, young people, and their personal resources to achieve social status positions, which in conditions of narrowing social mobility channels leads to an unjustified overestimation of the value of formal characteristics in explaining the conditions of reproduction of social inequality. The typological approach is based on a conceptual setting related to the recognition in society of the presence of families of a certain quality that contribute to the reproduction of poverty. These traditionally include single-parent, rural and large families. Here, the attention of researchers is focused on the problems arising in local processes occurring in small groups of a certain type, not allowing going to the generalizations necessary to understand the general laws of the emerging social stratification and the role of the family in this process.

References 1. Vodenko, K.V., Tikhonovskova, S.A., Ivanchenko, O.S.: Trends and prospects of transformation of the social structure of the russian scientific community. Mediterr. J. Soc. Sci. 6(3), 313 (2016) 2. Vereshchagina, A., Samygin, S., Stanislavsky, P.: Family in the context of ensuring demographic security of Russian society: methodological research directions. Eur. J. Sci. Theol. 11(4), 53–63 (2015) 3. Astoyants, M.S., Kovalev, V.V., Davljatova, S.V., Shevchenko, O.N.: Family dysfunctions and ways of their overcoming by means of social work. Int. J. Environ. Sci. Educ. 11(7), 1451–1468 (2016) 4. Coleman, J.: Foundations of Social Theory. Harvard University Press, Cambridge (1990) 5. Vereshchagina, A.V., Samygin, S.I.: The crisis of the traditional family and the alternative development of the family institution in Russia: a theoretical analysis from the standpoint of a synergistic paradigm. Don. no. 3 (2014) 6. Tikhonova, N.E.: Stratification factors in modern Russia: dynamics of comparative significance. Sociol. Stud. 10(10), 26 (2014) 7. Gryshai, V., Gafiatulina, N., Kasyanov, V., Velikodnaya, I., Kosinov, S., Lyubetsky, N., Samygin, S.: Social health of youth in the context of migration processes in Russia: assessment of the threat to national security. In: Herald National Academy of Managerial staff of culture and arts, no 2. pp. 141–145 (2018). http://heraldnamsca.in.ua/index.php/ hnamsca/article/view/310

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8. Vodenko, K.V., Shvachkina, L.A., Rodionova, V.I.: Perspectives of development of the Russian national socioeconomic and political model. Contributions to Economics. No 9783319606958 (2017) 9. Emirbekova, Y.E., Narykov, N.V., Samygin, S.I., Samygin, P.S., Rachipa, A.V.: Power as a social phenomenon: the nature and importance in the construction of the All-Russian identity. Indian J. Sci. Technol. 9(5), 1–5 (2016) 10. Vereshchagina, A.V., Gafiatulina, N.Kh., Kumykov, A., Stepanov, O.V., Samygin, S.I.: Gender analysis of social health of students. Rev. Eur. Stud. 7(7), 223 (2015) 11. Litvinova, E., Gryshai, V., Yefimov, D., Samygin, S.I.: Society of consumption: risk management for health of the population in the field of ensuring the quality and safety of foodstuffs. Modern J. Lang. Teach. Methods 8(6), 37 (2018) 12. Kasyanov, V.V., Vlasova, V.N., Burmistrov, S.V., Latisheva, A.T., Kobysheva, L.I., Tikhonovskova, S.A., Samygin, S.I.: Personnel management of educational organizations in the context of social inertia as a phenomenon of systemic contradictions of social and economic development. Modern J. Lang. Teach. Methods. 8(10), 489–498 (2018) 13. Gafiatulina, N.K., Vorobyev, G.A., Imgrunt, S.I., Samygin, S.I., Latysheva, A.T., Ermakova, L.I., Kobysheva, L.I.: Social health of student youth in South Russia: analysis of the perception of socio-cultural risks. Modern J. Lang. Teach. Methods. 8(6), 29 (2018) 14. Shakbanova, M.M., Gafiatulina, N.Kh., Samygin, S.I., Chapurko, T.M., Levaya, N.A., Bineeva, N.K.: Youth of the South of Russia: Specifics of manifestation of ethnic identity (on the example of the Dagestan republic). Purusharta, vol. 10, no 2 (2018) 15. Kovalev, V.V., Bortsov, Y.S., Serikova, I.B., Lyausheva, S.A., Tenov, T.Z.: Public mind manipulation technologies as a mechanism against government and society dissociation. Man in India, vol. 96, no 10 (2016) 16. Chernous, V.V., Degtyarev, A.K., Lubsky, A.V., Posukhova, O.Y., Volkov, Y.G.: The lifestyle in the development of ideological policy. Mediterr. J. Soc. Sci. 6(5), 503 (2015) 17. Bedrik, A.V., Chernobrovkin, I.P., Lubskiy, A.V., Volkov, Y.G., Vyalykh, N.A.: Value Policy: Conceptual Interpretation of Research Practices. Indian J. Sci. Technol. 9(5), 87598 (2016) 18. Vodenko, K.V., Rodionova, V.I., Shvachkina, L.A., Shubina, M.M.: Russian national model for the regulation of social and economic activities: Research methodology and social reality. Quality Access Success 19, 2 (2018) 19. Ushkova, Y.V.: The influence of family capital on the implementation of the life plans of the younger generation. News of Tula State University. Humanitarian sciences, no 4 (2017) 20. Levaya, N.A.: Institute of incomplete (maternal) family (research of the potential of social instability)/Abstract for the degree of candidate of sociological sciences in specialty 22.00.04 - social structure, social institutions and processes, Rostov-on-Don (2015) 21. Nedelina, E.V.: The essential characteristics and educational opportunities of a complete and incomplete family. Almanac of modern science and education, no. 4–1 (2009) 22. Lelekov, V.A., Kosheleva, E.V.: Influence of the family on juvenile delinquency. Soc. Stud. 1 (2006) 23. Dementieva, I.F.: Social well-being in the family. Soc. Stud. 9 (2008) 24. Prokofieva, L.M.: Support for family, motherhood and childhood in modern Russia. Population 4 (2013) 25. Salakhutdinova, R.R.: Social assistance to rural families as a specific direction of social policy. Econ. Manag.l Sci. J. 1 (2018) 26. Vereshchagina, A.V., Samygin, S.I.: Regional specificity and measures of state regulation of the sphere of family and marriage relations in modern Russia. Humanitarian Southern Russia 2 (2015)

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Five Key Trends in the Global Architecture of the World Economy in the Conditions of Reducing Consequences of the Global Economic Crisis Petr V. Taranov(&), Elima A. Israilova, Lydia N. Roshchina, Alexander M. Basenko, and Sergei I. Samygin Rostov State University of Economics, Rostov-on-Don, Russia [email protected], [email protected] Abstract. This chapter discusses five key trends in the new architecture of the world economy under the conditions of reducing the consequences of the global economic crisis: reduced confidence in the global economic system; overheating of the US economy; lack of strategic changes in the formation of a new production and investment cycle; stagnation of global energy. The key trends of the new world economy architecture are the regionalization of world politics; deepening social stratification and atomization; disintegration of the global mainstream, restoration and regionalization of the ideological multi-vector; medium term deinstitutionalization of the global political and economic space; technological multi-vector. Keywords: Global economy
Globalization
Key trends of the new economic architecture
Consequences of the global economic crisis
Regionalization
Pauperization
Deinstitutionalization of the global economic space

1 Introduction The main feature of the last quarter of the 20th century was the intensification of the processes of globalization. The global economy is considered an important area for strengthening global interconnections between individual countries. This leads to a stronger integration of the global economy, which creates additional risks associated with the transfer of possible economic crises. The global economy today is in a post-crisis state, and this is quite obvious, since its apparent stability is provided by the increased inertia of moderate growth accumulated by the beginning of the 21st century and the comfort of the investment capitalism system, which reached the height of development by 2008 and, according to experts, even a little jolt can be quite enough to provoke a big collapse. The one and a half polar system of the world economy, in which the world has been for about 15 years, reflected an objective situation: the USA as the only world superpower and China as a significant but economically dependent power. However, the world economy system turned out to be incapable of development in the conditions of multi-vector change and the de-economization of global processes. The © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 565–573, 2020. https://doi.org/10.1007/978-3-030-39319-9_63

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consequences of the global economic crisis led not only to the redistribution of influence in the system of international relations, but also to the restructuring of its architecture. The next edition of the multipolar world does not deny the existence of two or three key economic centers. The post-crisis process “is accompanied by a change in the prevailing economic paradigm”, a “new economic doctrine”, a new mainstream in science is being formed (https://www.eg-online.ru/article/271810/). Financial crises in individual countries at the end of the last beginning this century clearly showed that deterioration in the balance of payments could cause a severe economic crisis with serious consequences at the time of its decline (Silvestrov 2009). The purpose of the chapter is to analyze five key trends in the global architecture of the world economy under the conditions of reducing consequences of the global economic crisis. What are the outlines of the problem? The world economic situation requires not only the redistribution of conditional shares of influence by key capitalist states (which, it is worth noting, was quite possible to do in the framework of existing institutions), but changing the basic architecture of the world capitalist system. This crisis cannot be attributed to the classic cyclical forms of the crisis of capitalism. On the one hand, it arose due to the formation of stable socio-political and military-political constraints of further expanding the space for levying basic rents, which, in turn, required a reduction in the social standard in the “first” world. On the other hand, with the impossibility of a further qualitative breakthrough in the development of industry associated with the lack of investment prospects acceptable to the established system of investment capitalism. Over the past years, a number of observers, including the Navy, have said that the US balance of payments is at the “unsupported” level (Beams 2008). Moreover, the significant drop in confidence in the American currency system, caused by this event, represents a serious risk for the global economy.

2 Research Object and Methods The purpose of this chapter is to reveal the five key trends in the architecture of the world economy under the conditions of the reducing consequences of the global economic crisis. In the work, the complex and comparative methods were used, allowing describing the formation of a new architecture of the global economy. The theoretical and methodological base of the research consists of conceptual provisions of the socio-economic and theory, revealing such notions as: global economy, key trends of the new economic architecture, and consequences of the global economic crisis.

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3 Research Results and Their Discussion In 2013–2017, as a result of reducing the effects of the global economic crisis, the transition from the dialogical processes of the development of the global economy to a more voluntaristic confrontational model gradually occurs. Such a model can also be seen in the behavior of European leaders in relation to Greece (for example, the conditions of the third aid package), to the Russian Federation (unilateral tightening of the energy impact conditions) and to China (toughening the position at trade negotiations and the actualization of the human rights theme took place somewhat earlier than the United States came to this). The widespread expectations of the consequences of the global economic crisis are an indicator of the socio-economic and socio-political ill health of the world economy and politics. At least because such expectations significantly limit investment activity, especially in case of medium-term investments. The inhibition of medium-term investment activity is the most visible manifestation of the obvious consequences of the economic crisis affecting the core of the modern global economy - an investment environment designed according to the principle of continuity of investment processes and their continuous expansion. The current situation is a reflection of the crisis of the US-controlled global financial system. What are the consequences of the global economic crisis? We believe that at least four consequences of the global economic crisis can be identified: a decline in confidence in the global economic system; overheating of the US economy; lack of strategic changes in the formation of a new production and investment cycle; stagnation of global energy. Let us consider each of the designated consequences. 1. Decline in confidence in the global economic system. This process can be explained on the one hand, by the anti-Russian propaganda, including the anti-Russian sanctions policy; on the other hand, it is connected with attempts to use its dominant position in the global economy with the main intention of achieving political goals. Sanctions policy is not a decisive factor in reducing the level of trust in the global financial system, because it demonstrates the high level of its controllability on the part of the United States. The risk of payment enclaves in which the US currency is supplanted, is ignored for the time being. The process of dedollarization depends on political decisions at the state level on the transition to dollarless mutual settlements (in both national currency and other equivalent), as a result of which regional enclaves arise with specific payment mechanisms. More important is the formation of sectorial enclaves - sectorial or commodity-free dollar spaces. Nevertheless, sectorial dedollarization is more complex. The real risk of such enclaves growing into something more significant arises when key agents of the world economy switch from replacing the dollar in payment transactions to replacing the dollar as the dominant investment instrument. However, for now, the source of declining confidence in the US currency is the growing debt burden on the global economy and the deficit in the US balance of payments.

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2. Overheating of the US economy. It is a well-known fact that the growth of the American economy is realized mainly through lending and an increase in public debt. The process of overheating of the US economy to create a situation of accelerated economic growth is inevitable. Nevertheless, a natural question arises: how long will the US economy be able to function in such conditions to create the necessary investment effect? As D. Yevstafyev emphasizes in his article “Russia against the backdrop of the global crisis: schedule for the day after tomorrow”, how long will it be possible “to overheat without provoking global or regional force majeure and squeezing free financial resources from the regions where they still exist: East Asia and Europe? (Evstafiev 2018). Overheating of the US economy is fraught with a decline in confidence in the US currency. 3. Global energy stagnation, overregulation of key regional markets. Despite hopes for the start of active reformatting of the energy sector in the global economy, no significant breakthroughs have occurred. The crisis of shale technology has become the quintessence of the current state of the energy sector. Its essence lies in large initial investments, significant short-term effect and medium-term fixation with insignificant shifts in the market compared to the stated and long-term preservation of negative profitability. It should be noted that the energy factor remains key in determining the pace of global development, primarily the rate of social globalization in the face of reducing the effects of the global economic crisis. An important role in global development is played by the ability of major consumers to impose politically motivated restrictions in the energy sector, which opens up great opportunities for political manipulation, but at the same time limited economic efficiency. 4. The absence of strategic changes in the formation of a new production and investment cycle in the real sector of the global economy. However, it should be noted that, despite the fact that the concept of “digital transformation” of the economy remains a globally significant direction of development, but according to V. Kolerova, it is no longer the center of investment activity. The digital economy is very far from industrial production issues, because it focuses on ensuring high efficiency in the previously established managerial and technological links (Kolerova 2018). Global infrastructure investments are becoming popular due to the lack of new large investments and pent-up demand in a number of countries (including the Russian Federation). The phenomenon of redundant infrastructural development, which has been observed in recent years, is directly related to this. So, in connection with all of the above, we consider five major and key trends that are likely to become the basis of the architecture of the new economic world after 2025–2027. The first key trend is regionalization of world politics. Even today, the economic outlook is in favor of increasing competitiveness. It will be based on the processes of economic and geo-economic competition that is emerging around nation states and their corporations. The key factor of competition in the new architecture of the world community will be the economic struggle. Moreover, not so much the struggle for resources or control of financial flows, as the struggle for a place in the

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new economic architecture, in which the main role will continue to play the relations associated with the extraction, monetization, distribution and reinvestment of different types of rent. In addition, this struggle will begin to unfold in a new, substantially changed economic and political format in the face of reducing the effects of the global economic crisis. The regionalization of trade is associated with the restructuring of logistics, which goes beyond the simple redistribution of trade flows. This process will be expressed in the formation of regional or trans regional spaces that are in competitive relations with each other, especially for those groups of goods where there are no truly unique technological solutions. And, as a result, a picture of the de-globalization of the real sector of the world economy is being drawn, which means the crisis state of the economy of the “global factories”, especially if the export economy in these countries is not supported by effective domestic demand and is oriented to a relatively small number of key markets (as a rule, the USA and the EU) with the ensuing social consequences. The global community, based on the principles of regionalization of the global economy, will inevitably increase the importance of regional trading blocs like the EAEU. The regionalization of the global economy will carry a number of significant risks for some countries, including Russia. The basis of these risks will be the multivector development of various macro-regions in economic and social (sociocultural) terms (Gafiatulina 2018). What kind of risks can there be? First, from the economic point of view, there is a risk of retraction of the Russian macro-regions into external centers of regionalization: obviously - the Far East, not entirely obviously, but not excluded - Europe. Secondly, from the political point of view, there is a threat of emergence of political and/or military-political processes, including the power struggle for key markets that cannot be controlled by the participation of the Russian state in global political institutions (primarily the UN). Thirdly, from the social point of view, the risk of asymmetry in the social standard is inevitable (Taranov et al. 2018), around which other social and then political asymmetries will further be built. Already in a number of regions, there are attempts to impose a lower quality standard on the food market than in the whole country (Litvinova et al. 2018). The second key risk is the deepening social stratification and atomization associated with the inhibition of catching-up social globalization, as well as the emergence of potentially dangerous consumption asymmetries and social standard (Shakhbanova et al. 2016). The new architecture of the world economy, especially at the initial stage of its formation, will be a world of very high social dynamism, when many key social groups of the modern global world can lose their influence. The tendency of separation of the middle class from property, which was laid in the period of globalization and the collapse of globally significant social groups, will continue. Already today, there is a crisis in the social organization of large urban agglomerations and the collapse of the

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so-called urban tribes that, in conditions of practically collapsing de-industrialization and total informatization of society, can lead to protest activity and the release of large masses of potentially explosive human capital (Shakbanova et al. 2018). In terms of reducing the effects of the global economic crisis, the social crisis of modern urbanism against the background of its indisputable technological advances is very indicative. In the post-industrial world community of “globalization of informatization”, where the development of urbanism was concentrated in post-industrial spaces, an effective form of existence and development of social relations was created, but in the absence of an economic base of new urbanism, it began to transform itself into its opposite. This reflected the dead-end socio-economic nature of the late postindustrial world space, commonly called “flat”. As a result, there is an accelerating trend of pauperization, which reflects the process of mass impoverishment of the able-bodied part of the population under capitalist exploitation, which caused the introduction of the term “working poverty” by sociologists (Gorshkov 2016). Against the background of mass pauperization of the population, there is a tendency of final registration of the precariat, especially among young people (Gafiatulina et al. 2017). It is known that precariat is a social class or stable social groups of workers with temporary part-time employment, which is permanent and sustainable. Precariat is characterized by unstable socio-economic situation, poor social security, separation of social status from owning and managing property. In our opinion, the fact of mass pauperization and consolidation of the precariat can be viewed as the end of classical capitalism. Here we can mention the modern French economist Thomas Piketty, who examines the processes of increasing pauperization, reveals a steady excess of the growth rate of return on capital in comparison with the rate of socio-economic growth. “Inequality,” according to Piketty, in his book “Capital in the 21st Century,” is an integral part of capitalism. The main law of capitalism is that return on capital must be higher than the rate of economic growth. Then capital owners get richer faster than others do, and capital growth exceeds the growth of wages. Further, “Western society is shifting towards the oligarchy. Capital is concentrated among the minority, and therefore the role of inheritance and family ties in the achievement of individual success is increasing”. On the contrary, the statement about the universal gains from economic growth is no longer true. Ownership of capital (including inherited wealth) at times increases the opportunity to improve personal well-being compared to labor income (including various kinds of fringe benefits - rewards, bonuses etc.). What does T. Piketty suggest as a reduction of the factors of deepening social stratification and atomization? First, to intensify the regulatory role of the state in the economy and strengthen its social responsibility. Secondly, to introduce a progressive income tax, allowing reducing property inequality. Third, to think about a global progressive wealth tax that prevents the growth of property inequality. Fourth, to monitor the distribution of wealth in the world and ensure transparency of financial capital flows, because their uncontrolled movement and concentration lead to the global financial and then full-scale economic crisis (http://9tv.co.il/news/2014/04/24/ 174059.html 2014). Further, the third key trend of the new architecture of the world economy is the disintegration of the global political, and in fact, the ideological mainstream, the

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restoration of the ideological multi-vector approach. Global liberalism, while maintaining relevance as a model of economic behavior, turned out to be completely unsuitable for the formation of a new socio-behavioral mainstream, corresponding to the space of retarding globalization. Economic regionalization already at this stage of social development began to lead to ideological regionalization with the formation of differently oriented ideological trends in various regions. The economic crisis and pauperization of the middle class in developed countries may accelerate the maturation of new political constructs, in which behavioral radicalism will eventually be banned by economic radicalism. The collapse of the global economic mainstream creates the danger of imposing certain countries, including Russia, the so-called phantoms of modernization, in other words, fictitious, information-manipulative modernization vectors, which take investment and organizational resources from the country, directing them to “worthless”, dead-end areas. The fourth key trend of the new architecture of the world economy is the collapse of international law, actively replaced by national socio-economic decisions, despite attempts by many countries, including Russia, to preserve at least the foundations of international law. The era of temporary coalitions, operating outside the long-term basis, as well as a period of local and regional wars for resources in order to achieve consistent socio-economic tactical goals, is coming. Hence the new “double standards” policy applied by the United States, which is also an indicator of the beginning of the collapse of international law. Finally, the technological multivectorness as well as the critical delay of the technological revolution could be regarded as the fifth key trend of the new architecture of the world economy. Digital technologies, apparently, can be considered the latest global technological mainstream. In the conditions of the critical delay of the technological revolution, it is impossible to maintain the old mechanism of withdrawal and redistribution of technological rent. Its private, local transformational changes are possible on the basis of new supporting technologies and the emergence of what can be regarded as engineering rents, i.e. additional economic income derived from complex, in many ways hybrid technological solutions. New digital engineering and more effective integration of previously created technologies as a whole is a promising direction of development, which proves the activity of Elon Musk in his space “business” and the production of hybrid cars (Evstafiev 2018). The Russian state is now following a similar path, offering “hybrid” engineering solutions in the nuclear power industry, when the basic technologies of the last century (1980s) receive a fundamentally higher level of efficiency due to the introduction of digital control and safety systems. This kind of approach from the standpoint of further technological development, of course, cannot be considered as a dead end, but fully stagnant. The disintegration of the technological mainstream, which signifies the actual single-vectorness of the investment flow into scientific and technical development, may lead to the resumption of technological competition. From the point of view of a

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short-term perspective, this is a destructive way, but from the point of view of a longterm perspective, it is the most positive vector of development. It is clear that the multi-vector investment in technology development allows us to move to a full division of labor and to a more balanced relationship in the collection of technological rent.

4 Conclusions Within the framework of this chapter, five key tendencies of the new architecture of the world economy are considered. – The first key trend is the formation of regional or trans-regional spaces that are in competitive relations with each other. De-globalization of the real sector of the world economy. The post-crisis state of the economy of “world factories” and “global assembly plants”. – The second key trend is associated with deepening social stratification and atomization, asymmetry of consumption and social standard. There is a pauperization of the population under capitalist exploitation and the final designation of the precariat. Separation of social status from owning and managing property. The end of classic capitalism. – The third key trend of the new architecture of the world economy is the disintegration of the global political, and in fact, the ideological mainstream, the restoration of the ideological multi-vector approach. The danger of imposing socalled modernization phantoms, fictitious information-manipulative vectors of modernization to some countries. – The fourth key tendency of the new architecture of the world economy is, in fact, the collapse of international law, characterized by the emergence of temporary coalitions, as well as the period of local and regional wars for resources. – The fifth key trend of the new architecture of the world economy is connected with the technological multi-vector nature and the critical delay of the technological revolution. Multi-vector investment in technology development contributes to the resumption of technological competition and the transition to a full division of labor and a more balanced relationship in the collection of technological rent. Summing up and formulate a system of measures to overcome the effects of the global economic crisis: – strengthening international jurisdiction in relation to all forms of sovereign jurisdictions, especially in terms of conducting independent financial policies and regulations; – strengthening the existing multilateral international economic organizations, primarily the IMF and the WTO; – creation of new global bodies for monitoring international transactions, primarily in the financial sphere;

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– expanding the practice of developing global accounting and reporting standards, investment, management quality, as well as the development of methods and insights for their implementation and control over their use; – economic regulation and pro-crisis management, focused on the emergence of new strong global economic players and changes in the structure of the global economy.

References Beams, N.: The World Economic Crisis: A Marxist Analysis. World Socialist Web Site, Oak Park (2008) Evstafiev, D.: Russia on the background of the global crisis: schedule for the day after tomorrow. Expert 44, 34–42 (2018) Electronic resource. https://www.eg-online.ru/article/271810 Electronic resource (2014). http://9tv.co.il/news/2014/04/24/174059.html Kolerova, V.: Digital bifurcation of plants still ahead. Expert 44, 24–26 (2018) Litvinova, E.V., Gryshai, V.N., Yefimov, D.A., Samygin, S.I.: Society of consumption: risk management for health of the population in the field of ensuring the quality and safety of foodstuffs. Mod. J. Lang. Teach. Methods 8(6), 50–60 (2018) Gafiatulina, N.Kh., Tarasenko, L.V., Samygin, S.I., Eliseeva, S.Yu.: Social health and perception of risks by students living in southern Russian regions (based on sociological questioning data obtained in Rostov-on-Don). Health Risk Anal. 2017(4), 66–75 (2017). (In Russian) Gafiatulina, N., Vorobyev, G.A., Imgrunt, S.T., Samygin, S.I., Latysheva, A.T., Ermakova, L., Kobysheva, L.I.: Social health of student youth in South Russia: analysis of the perception of socio-cultural risks. Mod. J. Lang. Teach. Methods 8(6), 32–41 (2018) Gorshkov, M.K.: Russian Society as it is (The Experience of Sociological Diagnostics). 496 p. (2016) Silvestrov, S.I.: The global economic crisis and the formation of a new architecture of the global economy. Finance: Theor. Pract. 3, 5–11 (2009) Shakhbanova, M.M., Gafiatulina, N., Vereshchagina, A.V., Samygin, S.I., Imgrunt, S.I.: Social and economic consequences of regional ethnic migration for national security and social health of the Russian youth. Soc. Sci. (Pak.) 11(16), 3886–3893 (2016) Shakbanova, M.M., Gafiatulina, N., Samygin, S.I., Chapurko, T.M., Levaya, N.A., Bineeva, N.K.: Youth of the South of Russia: specifics of manifestation of ethnic identity (on the example of the Dagestan republic. Purusharta 10(2), 111–119 (2018) Taranov, P.V., Basenko, A.M., Roshchina, L.N., Kulikova, I.V., Israilova, E.A., Samygin, S.I.: Crisis of the education system in Russia under the world economic crisis. Mod. J. Lang. Teach. Methods 8(7), 349–358 (2018)

Issues and Paths to Improve the Policy in the Higher Professional Education Within the Innovative Development of Modern Society Elena V. Susimenko(&) and Elena Y. Litvinenko Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia [email protected], [email protected]

Abstract. The chapter is dedicated to the topical Russian issue of improvement of public policy in the reformation of the higher professional education system in order to raise its quality and ensure the competitiveness of Russian professional staff on the domestic and international labor markets. The authors reveal and analyze the main system problems related to the improvement of education quality in Russian universities, studying in detail the particular points of this issue. We consider possible ways to raise the quality of education associated with Russia’s accession to the Bologna process and the transition to a two-stage model of education in Russian universities. The authors suppose that insufficient provision of education quality in higher education institutions of the mass segment is the main factor of the inconsistency of graduates’ training with the modern labor market demands. Particular attention is paid to the prospects for the development of creativity and innovative thinking using teaching methods used in higher education institutions. Keywords: Quality of education
Public policy
Labor market
Innovation
Professionalization
Creativity
Human capital

1 Introduction The modern period of life of global civilization can be reasonably called the era of knowledge and education. The modern economy (knowledge economy) can effectively and quite intensively function and develop only based on the active use of intellect-driven technologies and industries. In addition, the globalization process so tightly united the countries and their economies that any development and prosperity of socio-economic systems isn’t possible without their continuous convergence, mutual enrichment and trade exchange of various resources, which means the availability of a sufficient high-skilled staff (economists, managers, banking specialists) to manage these complicated processes. High technology and innovation economics need for their reproduction a practical training of employees able to work in intellect-driven industries. The processes of integration, globalization, and the internationalization of higher education also necessitate modern specialists to have general cultural and professional expertise related to © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 574–581, 2020. https://doi.org/10.1007/978-3-030-39319-9_64

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fluent knowledge of more that one foreign language within a multicultural environment (Susimenko and Litvinenko, 2015). In virtue of the above said, a country’s ability to maintain and strengthen its economic sovereignty and economic security in the modern world is determined by the quality of its human capital, which primarily depends on proper tasks against higher professional education. First of all, this is the task to improve the quality of education in Russian higher education institutions. The purpose of this chapter is to analyze different points of providing high-quality higher professional education in Russia. Ultimately, the resolution of this problem in the practical performance of the higher education system is the primary condition for maintaining the country’s economic and technological competitiveness in the near and distant future.

2 Materials and Methods Due to the relevance and importance, this issue arouses a continuous interest of Russian academic researchers, among whom we should mention Volkova (2014); Volodina (2012); Dyuzhikova (2010); Kupriyanov (2014); Stepanov et al. (2013). They examine it from different disciplinary standpoints. The writings by group of authors under the guidance of K.V. Vodenko, who study the specific features of public policy improvement policies in higher education with regard to socio-cultural and socio-economic peculiarities in their relationship (Vodenko et al. 2016; Vodenko et al. 2018; Vodenko et al. 2019), are of particular importance for this research. In this chapter, we try to substantiate the hypothesis of the strategic importance of reorientation of Russian higher professional education towards the development of students’ creative skills and abilities with the use of the socio-cultural approach, (Denisova et al. 2017; Vardanyan and Valuev, 2014).

3 Results The initial position of the Russian higher education system at the beginning of the reform period could not set proper tasks to recover the country’s economic and technological competitiveness. We have already had a substantial technological lag from the developed economies of the world, and it is the reason that Russian higher education focused on stability and built on the principles common to the industrial economy could not keep up with the accelerated rate of development of the postindustrial socio-economic systems. However, the first results of the education reforms in the 90s were not optimistic: the establishment of numerous branches of higher education institutions and commercial departments did not provide a substantial improvement in knowledge quality. On the contrary, the majority of graduates from higher education institutions of the mass segment are specialists only in diplomas, but in fact, they do not have the level of professional qualification and general culture required for adequate production activity at present.

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Despite the fact that Russian higher professional education also have an elite segment operating at a level meeting the requirements to the performance of modern socio-economic systems that depend both on the international labor market and on the local status of the labor market, the low efficiency of higher education institutions of the mass segment (the most demanded by young people from the middle class, as actually all provincial universities are in this segment with a few exceptions) is a severe obstacle to social and economic development. Since studies in capital higher education institutions, even on an unpaid basis, is often an onerous financial burden for young people from the middle class of the Russian periphery. Talented graduates of rural schools have to limit their educational strategy to studies at nearby higher education institutions, thereby losing the opportunity of further prospective employment and full use of their abilities for the country’s benefit. The low quality of education in the mass segment of Russian higher education institutions is a problem of strategic importance without exaggeration; the resolution hereof requires thoughtful and persistent reform. Importance of adequate quality assurance in education is increasing in this context. As we know, developed societies and economies purposefully and deliberately use their efforts to assure the quality of professional education. This reflects the general term “quality assurance” specifically introduced to denote these efforts (Volodin, 2012). A society seeking to compete with others on the global market successfully should not only pose a problem of improving the quality of professional education but also ensure it through a variety of processes and tools. This is evidenced by the definition of UNESCO experts: “quality assurance is a comprehensive term covering policies, processes, and measures, which maintain and develop the quality of higher education” (Campbell and Rozsnyai, 2002). Modern Russian higher professional education still faces the choice of such policies, processes, and measures. Apparently, the transition to the Bologna two-stage model of higher professional education arrangement divided into bachelor and master program became the primary step towards the internationally recognized quality of education. This fact allows advancing in resolution of two problems: firstly, to introduce an international educational standard into Russian education as a guiding one; secondly, to direct students and teachers at each of the stages towards specific criteria of the quality of knowledge acquired by students – general professional competences with theoretical and practical levels: “know; be able to; have (skills)” (Plaksiy, 2012; Stepanov, 2013). One of the advantages of the two-stage model of higher professional education is the dispersion of employment opportunities for graduates due to the difference in the volume of competencies acquired in the course of training in bachelor and master programs. Students who show interest and ability to research can initially intend to apply to master program, and the majority of practicians – at the earliest employment on the labor market. However, integration into the realities of the Bologna process brings not only advantages but also problems concerning the quality of education. Thus, for example, R.V. Kupriyanov points out a wide-spread situation when students change the educational path during the transition from bachelor to the master program. The change of specialty is permitted by law; however, by no means, each student can

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independently make up the gaps that occurred during the transition to the other master training program (Kupriyanov, 2014). On the other hand, the ability to quickly acquire a second specialty in the master program makes it possible to provide for students a multiple choice of an educational and professional strategy that broadens the range of suitable vacancies for future employment. At the same time, the Russian education system, although moved to a two-stage model, still operate in line with traditional requirements, not keeping up with the drastic changes in the labor market situation and the demands of the modern economy. Modern Russian universities of the mass segment are not able to give supplies in response to the demands of the modern labor market, even a domestic one. As S.A. Dyuzhikov notes, “modern Russian society suffers institutional clash between the educational services market which extensive development does not provide highquality professional education and the labor market overstretched by graduates with suspicious qualifications. Education is in demand of the labor market mainly as an official property of the labor force but not as the real knowledge, which is not often related to a diploma and is not always socially marketable” (Dyuzhikov, 2010). The stated imbalances indicate that the Russian system of higher professional education is dysfunctional in general, although some higher educational institutions, mainly the capital ones, have broken forward and provide high-quality modern knowledge. The emergence of the commercial sector in the higher education system did not lead to the expected breakthrough in quality. Even though the inclusion of economic competition mechanisms delivered some benefits, has made it possible to raise professors’ salaries and provide a more flexible response to the dynamic trends of the labor market, but it did not significantly improve the quality of the students’ competencies. Moreover, the commercial sector of higher education, primarily in peripheral higher education institutions, in many cases acquired actual intransparency for public control that led to the diffusion and consolidation of legal forms of market exchange and associated deviations in the professional behavior of faculty. Partly under the influence of these processes, illegal market relations have penetrated the public sector of educational services, which naturally contributed to a decrease in the quality of the students’ competencies. The dys functionality of the Russian higher education system is a systemic problem due to reformation difficulties should be overcome with the help of organizational measures currently taken by the government. Thus, at present, the Russian government is taking significant measures aimed at improving the quality of knowledge and practical competencies of graduates. The effectiveness of these measures depends primarily on the proper assessment of the quality of educational activities. Russian higher education system is traditionally assessed from the outside, i.e., through the indicator of institutional performance. Training quality assurance is implemented with the use of the tools, such as standardization of education based on Federal state educational standards, state licensing, certification and accreditation of higher education institutions. Over the past decade, a rating system has been widely used at all levels, allowing to enhance the efficiency of HR policy (Maslova, Maslova 2012). Nonetheless, such a system of education quality assessment, being more traditional and convenient in the context of the Russian daily life, is much different from the assessment adopted in European states (Gur’yanova, 2011). The researchers note that

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the criteria for the assessment of institutional performance implemented within public monitoring are often controversial and mainly account economic efficiency as a basis (Stepanov, 2013; Volkova et al. 2014). Along with that, the Russian practice of education quality assessment is aggravated by excessive bureaucratic requirements, the very mechanisms are onerous for institutions and professors, the accreditation and licensing procedures are becoming increasingly complicated, and the requirements for them are getting tighter (Stepanov, 2013). In general, summarizing the review of the researcher’s opinions, we can say that the model of education quality provision adopted in modern Russian combines unreasonable complex nature and over-bureaucratization with low efficiency and high labor costs. In contrast with the problem of quality assurance, another one of Russian higher education takes place in European countries and Russia. This is the problem of excessive professionalization of higher education and institutions. The priority focus on the needs of the labor market partly common, in our opinion, to the ideology of the Bologna process turns the university into an educational institution that quickly and efficiently trains specialists for production, but often to the detriment of the long-term goals of students’ personal development. With this, the higher education institution loses the traditionally important function of a cultural center participating in the process of socio-cultural reproduction of society through additional specific social adjustment within sciences and cultures, including the ethnocultural component (Denisova et al. 2017). Taking into account the fact that higher education institutions, foremost universities, in Russia have always performed an educating and culture-forming role, reducing their activity to accelerated training of professionals for a dynamically developing labor market will inevitably bring adverse effects for culture and society. Thus, the Russian system of higher education tackles a dilemma: to follow the path of severe professionalization or to maintain at least the elements of the traditional cultural role. The level of general culture, including the culture of thinking, of a university graduate is essential for the development of his/her professional qualities; the preservation of the social and reproductive functions of the higher education institution in this regard is an integral part of the objective on the improvement of education quality.

4 Discussion However, here we are talking about more than socio-cultural reproduction in the usual sense of the term. As it seems to us, the transition from the industrial paradigm of higher education to the post-industrial one, without which it is impossible to solve the urgent issues to overcome the technical and technological backwardness, should contain a systemic transformation. It should be noted here that one of the most critical components of the modern culture of thinking that is in demand within the growth of high technologies and scientific breakthroughs in socio-economic systems is its creativity, ability to produce and conceive technological and methodological innovations. The specific character of the modern labor market is its commitment to the search for specialists able to carry out professional activities in terms of the development of modern socio-economic systems,

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which put forward demands for independent, original thinking and solving difficult professional tasks (Engines of Economic Growth, 2003). The modern Russian higher education system traditionally focuses on the training of specialists who can use the ready-made learned algorithms of professional activity. In the conditions of a changing and dynamically developing modern world, such specialists are no longer always able to meet the requirements put forward. This style of training was established in the last century and was a product of industrial society, which needed a large number of specialists regardless of their adjustment to creative thinking and labor. Such style cannot correspond to modern demands, but a creative level of professionalism can be developed only in the conditions of the initial fundamental commitment of an educational institution to limited intellect-driven production of valuable human capital. To establish such universities or transform existing ones so that they can work in this direction is the most critical systemic challenge faced by Russian higher education. As we believe, a reorientation towards training that develops creativity cannot be achieved without replacing the socio-cultural paradigm of higher education in general with the one of post-industrialism culture, the semantic center hereof is a human person with a unique range of abilities and worldview understood as an end in itself and a terminal value of society. In other words, here we can talk about the socio-cultural modernization of the Russian of the higher professional education system, the change of its social goals and the main emphasise of socio-cultural reproduction. The training of young professionals with developed creative qualities suggests not only the stimulation of various creative abilities but also the development of a particular integral quality of a person that gives an opportunity of using a creative approach to production activity and social life. Such an integral quality should not be identified with outstanding natural creative abilities, which remain the property of a few virtuosos. The creativity that can be developed utilizing targeted efforts in the process of higher professional education is, first of all, the ability to effectively act in an uncertain situation, i.e., when dealing with a professional problem not to depend in own decisions on learned algorithms. We can say that the objective of ensuring the development of creative personal qualities is the crucial one of higher professional education within modern Russia. The price in the solution of this problem is the transformation of human potential, which is necessary to maintain the country’s competitiveness and to achieve the critical goals of social and cultural development. As the researchers note, the capitalization of human potential, its transformation into the human capital of the professional staff of an innovative country in an era of change is a comprehensive and challenging process, technologies and criteria hereof are understudied (Vardanyan and Valuev, 2014).

5 Conclusion The main result of our research is the substantiation that the primary task of reformation of Russian higher professional education should be its re-orientation to the strategy of training a creative-thinking and active specialist. The low performance of higher education institutions of the mass segment in this respect is a significant obstacle for the

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country to achieve a qualitatively different level of technological and economic competitiveness. As it seems to us, the quality of higher education can be improved due to further adherence to international requirements and quality standards, and Russia’s participation in the Bologna process. Nevertheless, the trend of higher education professionalization should be critically reconsidered toward the preservation of the function of cultural reproduction. Reformation of the higher professional education system in Russia should be focused on the three-pronged goal of development of students’ high-quality professional competences, common culture, and creativity in solving professional tasks. The research of specific technologies for the development of a creative personality in the higher professional education system, performance criteria of this process, the socio-cultural context and the institutional drivers of its successful implementation is one of the most urgent tasks of social and pedagogical sciences for modern Russian society. Acknowledgments. The research was performed within the grant of the President of the Russian Federation for state support for the leading scientific schools of the Russian Federation (NSh-2582.2020.6) «Public policy in the field of higher education and development of innovative potential of youth: economic and non-economic determinants and mechanisms in the conditions of regionalization of social space and the formation of industry 4.0».

References Campbell, C., Rozsnyai, C.: Quality assurance and the development of course programs. Papers on Higher Education Regional University Network on Governance and Management of Higher Education in South East Europe. UNESCO, Bucharest, p. 223 (2002) Denisova, G.S., Denisova, A.V., Litvinenko, E.I., Susimenko, E.V.: Linguistic and ethnocultural education in polyethnic regions of Southern Russia in the context of civil identity design: the experience of empirical study. Man in India 97(11), 543–562 (2017) Engines of Economic Growth. The Economic Impact of Boston Eight Research Universities on the Metropolitan Boston Area. Appleseed (2003) Vodenko, K.V.: Problems and perspectives of state regulation of system of education in the context of provision of Russia’s national security. Int. J. Educ. Manage. 33(3), 462–469 (2019) Vodenko, K.V., Bokachev, I.A., Levchenko, N.A., Rodionova, V.I., Shvachkina, L.A.: The specific features of a government control over higher education considering the interests of parties to the social and labour relations. Soc. Sci. 11(21), 5241–5246 (2016) Vodenko, K.V., Ponomaryov, P.A., Vergun, T.V., Zritneva, E.I., Volkova, L.A.: University as a center of regional social-economic and scientific-innovative development. Mod. J. Lang. Teach. Methods 8(3), 76–86 (2018) Susimenko, E., Litvinenko, E.: Socio-cultural factors contributing to the formation of the Russian technical university students’ bilingual strategies. Annales-Anali za Istrske in MediteranskeStudije - Series Historia et Sociologia 25(3), 469–476 (2015) Vardanyan, Y.V., Valuev, O.S.: Development of creativity in the training group as an innovative basis for the transformation of human potential. Siberian J. Life Sci. Agric. 11(1), 601–615 (2014)

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Volkova, A.A., Tarasevich, V.M., Tsatsulin, A.N.: System quality of educational services and staff training in terms of the global economy. News of St. Petersburg State Economic University, 6(90), 27–37 (2014) Volodin, A.A.: Standardization of higher professional education as a mechanism for the provision of its quality. The Emissia. Offline Letters. March 2012. http://www.emissia.org/ offline/2012/1761.htm Gur’yanova, T.N.: Engineering education in Germany: online teaching methods (on the example of the Technical University of Braunschweig). Bull. Kazan Technol. Univ. 11, 240–245 (2011) Dyuzhikov, S.A.: The modern Russian state on the market of educational services: experience of the system social and philosophical analysis. Extended abstract of Dr. Phil. (Eng.) Dissertation. Rostov-on-Don (2010) Kupriyanov, R.V.: Results and problems of the implementation of the Bologna Declaration in the Russian system of higher professional education. Bull. Kazan Technol. Univ. (2014). Public Education. Pedagogy Maslova, L.D.: Concerning the quality assessment systems of higher education. Int. Res. J. 3(3), 64–69 (2012) Plaksiy, S.I.: The Bologna process in Russia: pros and cons. knowledge. Understanding Proficiency. 1, 8–12 (2012) Stepanov, V.I.: Issues of the provision of higher education quality within the Bologna process. Bull Tomsk State Pedagogical Univ. 6(134), 27–32 (2013)

Neoliberal Trends in the Global Economy Elena S. Akopova1(&), Sergey V. Stadnik2, Lydia N. Roshchina1, Irina V. Kulikova1, and Inna V. Ukraintseva1 1

2

Rostov State University of Economics, Rostov-on-Don, Russia [email protected], [email protected] Armavir Institute of Mechanics and Technology (Branch), Kuban State Technological University, Armavir, Russia [email protected]

Abstract. The chapter discusses the phenomenon of neoliberalism, the history of the formation of the term “neoliberalism”, its connection with modern and classical liberalism. The focus is on the economic aspects of neoliberalism and the practice of the implementation of neoliberal principles in the economy. The chapter shows that the basic principles of the neoliberal economic model (increased competition, which is achieved by opening domestic markets for foreign investment and producers and reducing the role of the state in regulating the economy) lead to ambiguous results. The effect of the implementation of these principles depends on the state of the economy of the reforming country, the state of the relevant institutions and the political situation. There is no one true recipe for neoliberal reform, which should be taken into account by governments wishing to carry out such reforms. Keywords: Neoliberalism
Globalization Investment
Liberalism
State debt


State
Competition
Market


1 Introduction In recent decades, neoliberalism has been dominating in the global political economy. Neoliberalism is the ideological basis of globalization, above all, economic globalization. Neoliberalism largely revives the principles characteristic of classical liberalism of the 19th century with its inherent conviction in the omnipotence of the free market and its ability to resist the despotism of power, to realize the freedom of the individual, the formation of civil identity, to ensure the development of society (Shakbanova et al. 2018). In the framework of neoliberalism, these ideas acquire new life and global distribution. Neoliberalism refuses to believe in the beneficence of state regulation of the economy; neoliberal reform programs usually imply a reduction in state presence in the economy and other social institutions (Taranov et al. 2018). The task of the state in neoliberalism is, above all, the creation of a favorable environment for the functioning of market mechanisms (Akopova et al. 2017). For several decades, the implementation of neoliberal reform has been understood as the only path to economic growth and effective development. At the same time, neoliberalism has always been criticized, not only by intellectuals and representatives of leftist © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 582–592, 2020. https://doi.org/10.1007/978-3-030-39319-9_65

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ideological trends, but also by economists. This chapter discusses the economic aspect of neoliberalism, the basic neoliberal principles implemented in the course of neoliberal reform and critical comments related to the analysis of the results of the implementation of these principles.

2 Materials and Methods The term “neoliberalism” does not have an unambiguous interpretation. Often it is used in ideological rather than scientific debate and has negative connotations. Neoliberalism as a set of political and economic ideas is based on the recognition of the value of the free market and free competition, for which the state should create favorable conditions. Neoliberalism is characterized by the conviction that sustainable economic growth is the main means of achieving progressive social development, and the free market is the most effective mechanism for the distribution of resources. Neoliberalism proceeds from the fact that the main task of the state is to create a favorable environment for the development of a free competitive economy. Neoliberalism is different from modern liberalism, although both trends have common origins in classical liberalism of the 19th century, which is often associated with the ideas of Adam Smith. Classical liberalism was based on the principles of free market, free competition, non-interference of the state in economic processes, and understanding of the state as a “night watchman”. The market itself was conceived as a force capable of resisting the excessive power of the state and guaranteeing individual freedom. However, historically classical liberalism has generated a number of different ideological traditions. Modern liberalism is based on a socio-liberal tradition, which recognizes that the free market has certain disadvantages and can hinder individual freedom. The vices of society, which the free market exacerbates rather than overcomes —poverty and inequality, discrimination, ignorance could be limited by state intervention. Efforts in this direction began to be undertaken at the end of the 19th century laid the foundation for the modern social state, which by the middle of the 20th century implied a wide range of social programs and minimized many of the negative effects of free market forces. However, the social state required significant funds and large-scale state intervention in the regulation of social and economic life (Gafiatulina et al. 2016). By the 1970’s, the slowdown in economic growth and increased public debt forced some economists to advocate for the return of the principles of classical liberalism, it was this revived classical liberalism that became known as neoliberalism. Ideological roots for the revival of classical liberalism were contained in the works of Friedrich von Hayek, who argued that government interventionist measures aimed at redistributing wealth inevitably lead to totalitarianism (Hayek 1992), and in the works of Milton Friedman, who rejected the need for government fiscal policy as a means for the influence on the business cycle. Conservative parties in the UK and the USA enthusiastically received the views of Hayek and Friedman. The implementation of these ideas in politics is associated with the names of British Prime Minister Margaret Thatcher

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(1979–90) and US President Ronald Reagan (1981–89). Neoliberal reforms were carried out in several Latin American countries, for example, in Chile and Argentina. The impact of neoliberalism gradually increased and partially affected even the leftwing political forces. Therefore, in 1995, the Labor Party of Great Britain officially abandoned the idea of nationalizing the means of production. Neoliberal influences also affected the Democratic Party in the United States. In the 1990’s, as national economies became increasingly interdependent and researchers more often fixed the onset of the era of globalization, neoliberals more actively promoted free trade and free movement of international capital, limiting the interference of national states in regulating the economy, and therefore intensified discussions on limiting national sovereignty and even the disappearance of the state in the future. The conductors of the neoliberal course have become international organizations such as the IMF, the World Bank and several others. However, starting in 2007, the financial crisis and recession in the United States and Western Europe made some economists and political leaders take a more critical attitude towards the neoliberal principles of maximally free markets and “state restraint.” Neoliberalism was also subjected to active criticism from the intellectual community (Zizek et al.), but this criticism was not always of a balanced nature. More important is the analysis of the social consequences of economic globalization, undertaken in the works of (Beck 2001); (Bauman 2004); (Giddens 2004) et al. D. Stiglitz also made a critical analysis of the neoliberal model of globalization (Stiglitz 2003). At the same time, other researchers and economists remain adherents of the neoliberal principles, citing the successes achieved due to their implementation (Norberg 2007). This chapter considers neoliberalism as an economic program, without its political and cultural connotations. Although they are very important, they are a separate research problem. The theoretical framework for the study of the problem posed is the concepts of globalization and modernization, as well as the theoretical and empirical analysis of neoliberalism as a system of economic reform. The proliferation of the neoliberal model of the economy is the core of globalization processes. At the same time, the neoliberal economy is one of the most important products of modernity. Its distribution is considered as an ongoing process of modernization, going far beyond the limits of the space where this model first originated. However, it is necessary to take into account the point of view that is presented by I. Wallerstein - capitalism was initially formed as a system that is inclined to universalism, and not national isolation. In recent decades, this system has only completed its formation, which began several centuries ago. Wallerstein wrote, “The ideology of neoliberal globalization has been on horseback since the early 80s. In fact, it was not a new idea in the history of the modern world-system, although it declared itself to be. The idea that the governments of the world should get out of the way of organizing large, efficient enterprises in an attempt to dominate the world market, on the contrary, was very old. Moreover, the first conclusion for economic policy was that governments (all governments) should allow corporations to freely cross any borders with their goods and capital. The second conclusion was that governments (all governments) should abandon the role of the direct owners of these manufacturing enterprises, privatizing everything that is at their disposal. And, thirdly, governments, all

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governments, should minimize, if not eliminate, any kind of social support provided to the population. This is an old idea from time to time coming into fashion” (Wallerstein 2008). Neoliberalism as a particular ideology and practice is evaluated ambiguously, several basic approaches to its interpretation can be distinguished: (1) an approach that can be called apologetic. In its framework, neoliberalism is seen as an effective program for reforming societies that can provide the road to sustainable economic development, economic growth and prosperity; (2) critical approach, considering neoliberalism as a destructive system of ideas, the use of which for achieving economic growth is questionable; (3) a moderate, compromise approach, recognizing both the merits of neoliberalism and the negative effects that it can produce if neoliberal reforms are carried out without taking into account the specific situation - economic, social and political. This chapter is in line with the third approach, which involves not so much an ideological rejection of the principles of neoliberalism, but a study of the real results produced by neoliberal economic policies.

3 Results Neoliberalism turned out to be a peculiar ideology of globalization, which in itself does not have a pronounced ideological component and was a combination of processes, signifying the ever-increasing intensification of connections between human communities. In the modern era, the dominant form of society has become a nation-state, according to Beck, a kind of “container” containing “society”. The process of globalization is increasingly destroying the tightness of these containers and creates crises and sociocultural risks (Gafiatulina et al. 2018), at the same time stimulating the development of new social phenomena that require their own understanding. The process of globalization did not begin today, but only in the second half of the 20th–early 21st centuries it reached such an intensity that there are practically no selfsufficient societies left in the world, especially self-sufficient ones in economic terms. The main engine of globalization processes has been the economy, despite the fact that globalization has other aspects - political, cultural, social and even anthropological (Gafiatulina et al. 2018). The main components of economic globalization are the following processes: – The emergence and development of the main actors of the global economy transnational corporations (TNCs). TNCs have offices in different countries, the revenues of the largest of them are comparable to the budgets of individual national states. The share of world products produced within the framework of TNCs is constantly increasing. Due to the specifics of their activities and organizations, TNCs cannot be fully controlled by individual national states. – The emergence and development of international organizations designed to regulate the transnational economy, as well as to establish interaction between transnational economic actors and the governments of nation states. As the globalization processes intensify, the importance of these organizations increases, which leads to a

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certain narrowing of the functions of national states that are forced to coordinate their economic policies with the recommendations of these organizations. The intensification of the processes of internationalization of production, and not the exchange, as was the case earlier. This means that most types of products are manufactured in different countries. Internationalization of capital, which is reflected in the growth of international capital movement between countries, primarily in the form of direct investment (and foreign direct investment is growing faster than foreign trade and production), the internationalization of the stock market (Przhedetskaya et al. 2018). Globalization of human resources, growing labor migration - legal and illegal, which changes the situation on the labor market of individual national states (Madina et al. 2016; Vladimir et al. 2018). Globalization of the means of production and technology (Akopova 2017). Formation of a global division of labor.

The emerging global economy functions as a single system, which determines the existence of some common principles. Since the early 80s of the 20th century, the neoliberal model of the economy has been perceived as a universal model of an effective economic system, without the realization of which it is impossible to achieve economic growth and a high level of social welfare. A system of international organizational structures was formed; its task was to regulate the global economy and assist developing countries in carrying out economic reforms. These reforms led to both positive and rather contradictory results. One of the most frequently used examples of the effectiveness of the neoliberal economic model is Chile. In the early 80s of the 20th century reforms in Chile were viewed as an “economic miracle.” The model, once implemented in Chile, has now become practically universal and is spreading around the world, expressing the neoliberal essence of economic globalization. Argentina was another example of the implementation of neoliberal reforms. On March 24, 1976, a military government headed by General Jorge Rafael Vedelo came to power in Argentina. The government developed a reform program called the “National Reorganization Process”. The program was proposed by the Minister of Economy Jose Alfredo Martinez de Jos and was based on the ideas of M. Friedman. The program included the liberalization and opening of the economy, the privatization of large enterprises, state deregulation, reduction of government spending, attracting foreign investment. However, the results of these reforms were not clearly positive. “Indebtedness of only private firms in 1975–1980. Increased from 8.1 to 28.2 billion dollars, and sovereign debt increased by 35 billion dollars, while the size of the unrepatriated capital only in 1980 amounted to 6.7 billion dollars… The Argentine neoliberal experiment could not withdraw country from a protracted crisis, but only aggravated the situation: the inflation rate did not fall below 15% on average, while there was a drop in real incomes of the population and an increase in unemployment (…) the effects of the neoliberal experiment have not been overcome until now - inflation in 1989 was 3079% and in 2015 40% of the country’s population lives below the poverty line” (Antipov 2016, p. 8).

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Thus, the first examples of neoliberal reforming with the participation of transnational structures have already yielded mixed results. Nevertheless, the neoliberal principles of the organization of the economy became almost the basic principles of the organization of the global economy. The basic principles on which the neoliberal global economy is based are as follows. Firstly, this is increased competition, which is achieved by opening up domestic markets for foreign investment and producers. Secondly, reducing the role of the state in regulating the economy, implementing large-scale privatization and substantially limiting the ability of national governments to accumulate debt and manage the budget deficit. Since the early 80s of the 20th century there has seen an increasing global trend towards the proliferation of the neoliberal model. At the same time, the results of this are quite impressive, which makes it possible for the supporters of the globalization of the economy according to the neoliberal model to be proud of its achievements and to promote further spread. Thus, the Swedish economist Johan Norberg notes, “The scale of poverty is declining at a rapid pace. “Absolute poverty” is usually understood to mean Income less than a dollar a day per person. In 1820 - in terms of the exchange rate at the time this was the income of 85% of the world’s population. By 1950, this figure had dropped to 50%, and by the early 1980s, to 33%. Today, according to the World Bank, the share of the population living in absolute poverty in developing countries has almost halved, from 40% to 21%. This means that throughout 1981–2001, this figure dropped from 33 to 18%. At the same time, the achievements of the last twenty years are unprecedented not only in terms of percentages, but also in absolute numbers: for the first time in history, the total number of people living in extreme poverty has decreased by almost 400 million, while the world’s population over the same period increased by 1.5 billion. The reason for this result was economic growth. In countries and regions where welfare has increased most rapidly - East Asia, China, India, we see the best results in the fight against poverty. For example, in East Asia over the past two decades, the proportion of the population living in absolute poverty has decreased from 58 to 16% and in South Asia from 52 to 31% (Norberg 2007, 25–26). However, as a number of researchers note, the advantages of the neoliberal model are not as obvious as its unconditional supporters try to present. In particular, studying the consequences of opening up domestic markets for capital movements and government measures aimed at eliminating the budget deficit and reducing government debt, according to IMF experts, allow them to reveal three negative trends. The costs associated with increasing social inequality are increasing. As a result, the tension between the effect of economic growth and the problem of justice increases, which problematizes not only the economic program of neoliberalism, but also the values of this program. The growth of social inequality in itself becomes a threat to economic growth, even if we leave aside the moral aspects of the problem of inequality. Which also calls into question the unambiguously positive assessment of the effectiveness of the neoliberal program.

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Finally, the benefits of economic growth are noticeable when a small number of successful countries are considered, but with a broader intercountry perspective, these advantages become harder to identify. According to (Obstfeld 1998), “economic theory leaves no doubt as to the potential benefits” of liberalizing capital transactions and financial openness. This may allow the international capital market to direct resources in the most productive economic direction. Developing countries gain access to foreign investment, which allows developing the economy where there is no large capital. However, along with this there is a certain economic and social risk. According to Obsfeld, in the modern world this contradiction is inevitable, it is impossible to get rid of it. The link between financial openness and economic growth in reality turns out to be complex and rather controversial. On the one hand, foreign direct investment, which may also imply technology transfer or the inflow of “human capital”, really contributes to long-term economic growth. On the other hand, the influence of other types of capital, such as portfolio investment and banking operations, does not contribute to growth, at least not always, and does not provide an opportunity to effectively share risks with their external trading partners (Dell’Ariccia et al. 2008; Ostry et al. 2009). Researchers believe that the benefits from capital flows associated with growth and risk sharing depend on which type of flows prevail, but also on the nature and condition of the respective institutions and the political situation in the country. Thus, if the benefits of financial openness are often problematic, then the costs - in terms of increased economic instability and more crises that are frequent - seem more obvious. Another important aspect of the neoliberal model is to limit the presence of the state in the regulation of economic processes. One of the mechanisms for reducing the state is the privatization of some of its functions. Another mechanism involves limiting government spending by limiting the budget deficit and government debt. The history of recent decades contains many examples of introducing such restrictions - in particular, the 60 percent limit on GDP established for countries entering the euro zone. However, economic theory does not give clear recommendations on the optimal public debt. Some theories justify higher levels of debt; others come from a lower or even negative level. In some of its fiscal policy recommendations, the IMF was mainly concerned about the rate at which governments reduce deficits and debt levels—after increasing debt in advanced economies caused by the global financial crisis: moving too slowly could destabilize markets. On the other hand, the IMF also advocates debt repayment in the medium term for many advanced economies and emerging market countries, treating it as insurance against possible crises and shocks. In support of the idea of the need to repay debt in countries where the probability of a financial crisis is not very large, two arguments are usually given. First, although major adverse shocks, such as the Great Depression of the 1930s or the global financial crisis of the last decade, are rare, but they still happen, so it is useful to use quiet time to pay off debt. The second argument is based on the fact that high debt is bad for economic growth, and, therefore, in order to lay the foundation for growth, it is necessary to repay the debt.

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Many countries with developing economies, such as Southern Europe, have no choice but to participate in fiscal consolidation, because their markets will not allow them to continue borrowing. Nevertheless, the need to consolidate in some countries does not mean that all countries must follow this recipe. The likelihood of a debt crisis in countries that demonstrate a solid reputation in terms of financial responsibility (Mendoza and Ostry 2007) is quite low. Therefore, they have a certain freedom in making decisions not to raise taxes and not to reduce production costs with a high level of debt (Ostry et al. 2010; Ghosh et al. 2013). In countries with a long track record, the benefits of debt reduction in terms of insuring against a future fiscal crisis are surprisingly small. For example, a transition from a debt ratio of 120% of GDP to 100% of GDP over several years does little for a country in terms of reducing the risk of a crisis (Baldacci et al. 2011). However, even if the insurance indemnity is small, it may be justified in some cases. However, the price may be too high - much more than the benefit gained. The reason is that in order to achieve lower levels of debt, it is necessary to temporarily raise taxes or reduce production costs or both. The cost of raising taxes or reducing the costs needed to reduce debt can be much more than the reduced risk of a crisis caused by a reduction in debt (Ostry et al. 2015). Austerity policies not only entail social security costs, but also damage consumer demand and thereby worsen the employment and unemployment situation. The idea that consolidation could increase production and employment partly by increasing the confidence and investment of the private sector, was supported, in particular, by economist G. A. Alezina and former President of the European Central Bank J. Trichet. However, other researchers and analysts noted that in practice, fiscal consolidation was usually followed by a decline, rather than an expansion of production. On average, consolidation at 1% of GDP increases long-term unemployment by 0.6% and increases by 1.5% over five years the income inequality ratio (Ball et al. 2013). Thus, it can be concluded that the advantages of some strategies, which are an important part of the neoliberal model, are somewhat exaggerated. In the case of financial openness, foreign direct investment appears to have the expected positive effect. However, other types of investments do not produce economic growth, but they generate additional risks. In the case of fiscal consolidation, the short-term costs are underestimated, for example, in terms of production decline, welfare, and rising unemployment. Moreover, since financial openness and “state restriction” are associated with rising income inequality, an unfavorable feedback loop occurs. Increasing inequality caused by financial openness and austerity, in itself, can undermine the economic growth that the neoliberal model should stimulate. Many researchers today believe that there is strong evidence that growing inequality can significantly reduce the level and rate of economic growth (Ostry et al. 2014). The fact of economic damage caused by the growth of inequality suggests that politicians should pay more attention to the problem of equitable redistribution of income. In addition to redistribution, other measures can be used to mitigate the negative effects of inequality: for example, an increase in spending on education and training, which contributes to an increase in equality of opportunity. The budget consolidation strategies themselves, when they are deemed necessary, can be designed to minimize the damage for low-income groups. Fears that such a policy will

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necessarily hurt economic growth are unfounded (Ostry 2014) and have ideological rather than real economic prerequisites. However, the cause of the lack of efficiency of neoliberal reforms is not always just the reforms themselves. Other factors are also important for success, in particular, the state of the legal system and state institutions. So, Norberg notes, “… from 50 to 75% of citizens in developing countries work without legal protection, and about 80% of land plots and houses are not registered in the name of their current owners. (…) in countries where there is no effective system of property rights, the vast majority of the population owns assets, and has no right to fully dispose them. Deprived of official rights to their property, people cannot use it as a basis for expanding their activities, and this is how the Western world came to prosperity. In developing countries, only members of the elite have connections that allow them to engage in economic activity. Capitalism without property rights turns into capitalism for the elite. Millions of capable, enterprising people, potential entrepreneurs, do not have the opportunity to escape from poverty” (Norberg 2007, 81). Conducting neoliberal economic transformations in countries where ruling class is interested in personal enrichment more than in the development of society will certainly not lead to the effects that are expected from such reforms. Political, social and cultural factors are capable of distorting the process of neoliberal transformations. But this fact in itself calls into question one of the most important neoliberal ideas, going back to classical liberalism - the idea that the market will put everything in its place and ensure the development of society. For a free market, political conditions and cultural prerequisites are needed, without which reform will become a way of enriching the few at the expense of many. Thus, studies of the consequences of the implementation of neoliberal changes in the economy indicate the need for a more balanced and flexible approach to the neoliberal model and its application in different countries with different situations in the economy. This is realized, among other things, by those structures that are perhaps the main agents of promoting this model. For example, the former chief economist of the IMF, Olivier Blanchard, said in 2010 that «toda, in many countries with developed economies, reliable medium-term financial consolidation is needed, not a budget loop.” The IMF also recognizes that full liberalization of capital flows is not always the ultimate goal, and that further liberalization is more profitable and less risky in situations where countries have already reached a certain level of financial and institutional development. Chile’s pioneering experience in the field of neoliberalism was highly appreciated by Nobel laureate Friedman, but many economists today came to a more measured opinion. Thus, a professor at Columbia University and Nobel laureate Joseph Stiglitz believes that Chile “is an example of the success of combining markets with appropriate regulation” (2002). Stiglitz noted that in the early years of neoliberal reform in Chile, “control over capital inflows” was introduced. The experience of Chile, which is currently giving up control of capital, and the experience of other countries show that there are no universal recipes for economic growth for all countries and all situations. Politicians and institutions, such as the IMF, which advise them, should take into account the existing diverse experience, and not be guided only by ideological convictions.

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4 Conclusions Since the early 1980’s, the neoliberal model of the economy has been perceived as a universal model of an effective economic system, without the realization of which it is impossible to achieve economic growth and a high level of social welfare. A system of international organizational structures has been formed; its task is to regulate the global economy and assist developing countries in carrying out economic reforms. The basic principles on which the neoliberal global economy is based are as follows. Firstly, this is increased competition achieved by opening up domestic markets for foreign investment and producers. Secondly, reducing the role of the state in regulating the economy, implementing large-scale privatization and substantially limiting the ability of national governments to accumulate debt and manage the budget deficit. However, the implementation of these principles in practice does not always lead to the expected result in the form of sustainable economic growth and prosperity. The reasons for this are not only the shortcomings of the model itself, but rather the inadequate consideration of the environmental factors in which it is implemented. Currently, even among representatives of international organizations promoting the neoliberal model, it is recognized that there is no universal recipe for neoliberal reform, and the implementation of this process should be based on taking into account diverse historical experience and a sober assessment of the current situation in each particular case.

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Perspectives of Creativity of the Future Russian Society Yuriy G. Volkov1(&), Vagif D. Bayramov2, and Aleksei P. Sitnikov1 1

Institute of Sociology and Regional Studies, Southern Federal University, Rostov-on-Don, Russia [email protected], [email protected] 2 Moscow State Humanitarian and Economic University, Moscow, Russia [email protected]

Abstract. This chapter makes an attempt of sociological measuring of the potential of the future Russian society. Based on systemic analysis of the data of the sociological research, which characterize the educational, professional & qualification, and social & mobilization resources of various groups of Russian society, the authors come to the conclusion that Russian society has determined the main vectors of formation of the future, which are connected to the balance of tradition and innovation, and inclusion into the global globalization process in the context of cultural & historical and socio-political heritage of Russian society. Keywords: Sociology of the future future
Social projectivity


New social reality
Potential of the

1 Introduction At present, there is new social reality and this reality is taken for granted, regardless of the ideological and political positions (Csathó and Birkás 2018). At the same time, social reality is connected to various social and time orientations (Fukuyama 2018). Russian society has also a tendency of retroactivism, usage of the past experience, and, at the same time, hard-nosed realism and social projectivity. These tendencies – which are contradictory from the external point of view – could be evaluated in the context of the potential of the future Russian society, as a totality of objective and subjective opportunities for implementing the scenarios of the future and for selecting certain alternatives of development. Regarding the future Russian society, emphasis is made on various social projects – modernization, civilizational, and technocratic. At the same time, it is possible of say that these projects require coordination with the level of implementation. A shift in this direction envisages description and explanation of the level of readiness of Russian society for the future, the level of activity of social groups, and the images of the future that are popular in Russian society (Volkov 2016). In 1960’s–1970’s, the Western societies underwent changes which, from the technological point of view, could be determined as the information and computer revolution, and, on the other hand – as implementation of a dream about a post-industrial age (Gertler 2017). © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 593–600, 2020. https://doi.org/10.1007/978-3-030-39319-9_66

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It should be noted that the main obstacles for realization of the future of Russian society is that public consciousness uses the models of historical experience, connecting them to certain assessment categories; secondly, the ratio of the future, the past, and the present in minds of the Russians is different, as Russians are constantly told that Russia has a special path of development. According to the Russian scholar A.V. Tikhonov, transfer of the social problem into sociological problem is translation from practical language to scientific language. Any attempts of direct measuring of social phenomena with the help of surveys without sociological conceptualization of the research objects takes away sociological status from the obtained data (New ideas in sociology 2013). This is an important methodological problem, but what’s more important is how should we adequately study the potential of the future Russian society without limiting ourselves with formal criteria. Thus, Russian society, having passed the period of social transformations and learning the lessons of the crisis, uses the past experience in order to clearly see the future of Russian society. In the modern globalized society – with tough geo-political, economic, political, and military competition – only those who have a decent answer to the modern challenges, offer the world a new alternative of social development, and find new sources of social growth could survive (Starostin 2018). At the first glance, Russia – according to the natural and climatic conditions, geographical diversity, minerals, and territorial structure – is “doomed” for eternal existence. However, the problem consists in the following: if society experiences socio-economic, technological, and cultural & information underrun, it finds itself among Third World countries – the ones with a tendency for dissolution or disappearance. Without dramatization of the situation, it is possible to say that for Russian society an important issue which the resources of development could become a condition of confidence in the future and Russia’s entering the global community with the help of avoiding the repetition of the negative experience of external constraint or dictatorship.

2 Materials and Methods Noting the fact that democratic values and liberties are very important for Russians, it is necessary to say that for them democracy is a hope for government’s hearing the society and implementing the corresponding positive changes. In this essence, it is necessary to mention the words of U. Beck: postnational social reality is treated and viewed by the actors with all differences between them and coincides in the important aspect. This lead to understanding that transnational social spaces could lead to multiple conflicts and could be created behind people’s backs as a result of undesirable and debatable threats (Beck 2001). Speaking of the fact that society shows negative attitude towards excessive social inequalities and that most people are negative as to informal privileges and attempts of the public authorities’ representatives to create parallel worlds, it is necessary to mention the statement of Shkaratan (2012). There are difficulties with starting a business and with public service. At the same time, volunteer and socio-ecological movements and social chambers provide a stimulus for career for a lot of young initiative people, who later might become politicians and experienced entrepreneurs.

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This chapter is based on the ideas of N.V. Romanovsky, who notes that “interest to the future returns. Relevant data are obtained and thoughts regarding this trend in the world sociological publications are analyzed – in particular, the reaction to the French economist T. Piketty’s forecast until 2070’s” (Romanovskiy 2015). During analysis of the educational, professional & educational, and social & mobilization resource of various groups of Russian society the authors use the project and systemic methods, which allow for deeper analysis of the current changes in Russian society.

3 Results and Discussion For Russian society, modern times are a modal period for determining the future. In other words, Russians do not see the basis for the future in other periods of the Russian history. These periods are separated by time parameters from the future – unlike the present times, which precede the future. Russians treat the present as the basis of the future, as the present forms the potential of the future. Implementation of the future’s scenario depends on the Russians’ dreams of the future, and Russians’ efforts in this regard, and the difficulties they face. Another aspect of this process is how they see their life in the future. According to the answers of Russians, the leading role in evaluation of the current situation depends on the possibility of self-realization in a profession (Russian society and the challenges of time, vol. 1 2015). Potential of the future consists of two components and of treatment of the current situation: if it is treated positively, it is possible to think about plans for the future; if it is treated as bad or aggravating, the efforts are concentrated on the current needs. However, it is possible to state that Russian society has preconditions for emergence of the future in the intellectual & educational, professional, and social & mobilization aspects. For Russians, future is not social utopia but social reality. According to the authors, Russian society is divided into social altruists and social anarchists – i.e., those who support socially beneficial values and see their fate in the social life, and those who support anarchist settings and show a high level of individualism. In Russian society, the positions of social anarchists and altruists coincide in such important aspects as commonness of natural resources of the country (83%: 90%); competition that makes people work and offer new ideas (74%: 79%); equality of opportunities for manifesting the abilities of each human is more important than equality of revenues and life conditions (55%: 63%) (What do Russians dream about? 2012, 14). An important conclusion is made that despite various emphases in implementation of life strategies, both social anarchists and social altruists agree to live in a society that is oriented at the future. It is possible to state that a qualitative shift in the Russians’ dispositions took place in early 2000’s; casting aside the experience of adaptation to the changes of 1990’s, Russia’s population accepts the qualities that are necessary for creativity of the future: self-realization, perseverance in protection of rights, and equality of opportunities.

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The following question arises: which groups of the population show such position and with which personal and group potential do they connect the attitude towards the future? It is possible to say that in 2000’s the incomes and living standards of Russians grew and Russians left the stereotype of the Soviet happiness (dacha, apartment, and car), and that the society accumulated the resource of strength. Socially mobile and highly-educated groups of population are the ones who have the most objective evaluation of various aspects of their life and see the connection between their present and their future; for them, balance of interests of society and person is obvious and interesting work and self-realization are closely connected to social altruism. Based on the results of sociological research, attitude towards a crisis is differentiated depending on education and territorial factor. Thus, people with higher education show reduction of social well-being (for the type of population – 16.6%), but this may prove only the critical attitude towards the situation and increase of the need for self-mobilization. Eventually, sensible anxiety is a more powerful stimulus for understanding the future than inertia and narrowing the attitude to separate fragments of social life. It is concluded that for Russians evaluation of the situation in Russia is more important than the situation in their personal life (What do Russians dream about? 2012). Due to the fact that society accumulated a certain resource of durability and accepts social life despite its contradictions, the future will be the future without large commotions and conflicts. Most Russians want the future as a result of the situation of gradual improvement and, at the same time, the search for non-standard approaches to solving the current problems as increase of the level of implementation of the optimal scenarios (socially smart society, society of equal opportunities). M.K. Gorshkov states that for most Russians the fact that Russia still a world power is very important (33% of the respondents) (Gorshkov 2016). Though the situation in the country is treated critically by Russians, it’s very important that Russia remain one of the leading countries of the world, a rival of the USA. Such position might have been unrealistic, if one did not take into account the fact that evaluation of the situation in Russia is connected to certain economic and social difficulties, delays in social policy, and bad social management. At the same time, it is possible to say that the important aspect for most Russians at the personal level is living in the same way as others (58%) (Gorshkov 2016). It is a very important position for the perspectives of social well-being. As for the social macro-level, half of the Russians agree that it is difficult to live in the society that changes constantly (though it is interesting), and this position accounts for 68% of the respondents among the youth (Gorshkov 2016). Thus, there are objective conditions for constructing the future, and the fact that the most active groups of the population (e.g., youth) support the position of constant change, that Russians positively evaluate personal life, and that for Russian society on the whole Russia remains a strong state, which realizes its rights independently, is very important. The positions that are oriented at the future, of the Russian creative class, are implemented in the long-term life strategies; these strategies include not only personal interests but also evaluation of the possibility of formation of a fair society in Russia. 53% of the respondents think that society of freedom could be achieved; the second position belongs to ideals of justice – 32%, solidarity – 39%, social protection – 34%, and equality of all Russians before the law (Gorshkov 2016).

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In the context of the above it is possible to note that the category of social solidarity is especially interesting. Solidarity activity and practices are connected to the most effective mobilization method of formation of the future in Russia. Creative class has initiatives in various spheres of public life (Batabyal and Yoo 2016; Mellander and Florida 2018). The level of voluntary actions in social and socio-ecological policy grows. However, 70% of Russians do not think that comprehensive well-being – i.e., creation of happy society – is possible (Gorshkov 2016). Such skepticism is connected to the influence of social inequalities, large social disproportions, and the fact that Russians have become rationalistic in their expectations of the future. 20% of Russians think that sanctions will not influence all Russians, and a lot – or almost everything – depends on the state of internal affairs and the level of solution of internal problems (Russian society and the challenges of time, vol. 1 2015). This is caused not by isolationist dispositions but by historical experience of surviving in the most unfavorable conditions and by the fact that the sanction policy leads to greater uniting of Russian society. Nevertheless, the current conditions show the tendency of treating the Russia’s future only as a purely Russian civilizational project and as a model for development of the world on the whole. Russia has always been influencing the global situation, despite the difficulties of the post-Soviet period and the underrun in new spheres of economy. Russian society believes that Russia has a future and that Russia will not lose the positions of national sovereignty and dignity. The experience of certain post-Soviet countries, which are supported by the West, shows Russians that happiness could be built by their own hands, and that the countries of the West strive to preserve the mechanism of the existing economic disproportions and show interest in Russia only regarding its territories, resources, and the commodity market. In view of these facts, it is possible to say that the society has realistic intentions, which are connected to the fact that the leading role of the state (71% of the respondents) (What do Russians dream about? 2012) strengthens confidence in the future. The sphere of division of responsibility is created, in which Russians aim at building their own fate at the personal level, but they trust the government with the future of the country in the sphere of provision of law and order, security, and sovereignty. This is a very rational construction, as no initiative “from below” can change the value of the government institutes in creation of the future; society does not have to pay for mistakes of the politicians, and social initiative could acquire the anarchist character and contradict the idea of general well-being. In terms of social diagnostics, it is important for knowledge to lead to logical consequences: public authorities are defenseless without a diagnosis (Volkov 2015). For development and growth of social practices that are aimed at the future, public authorities should give a signal to the society in their interest in developing the connections between the society and the elite and including wide groups into discussion of these problems. So readiness should be converted into the real actions, and social dispositions should obtain a real character. Readiness for joint practices is peculiar for various groups of population as to national initiatives. However, there’s differentiation within this criterion – it is connected to the factors of education, resources of achievement, profession, and territorial factor. The number of people who are interested in social long-term planning of their life goals grew, but such preparedness at the personal level might not lead to the

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expected group effect. The more society feels the consequences of micro-activity and of realization of the fact that responsibility for the state of affairs lies not only with the public authorities but also with the population, the more positive is this tendency. It should be emphasized that participatory democracy is very important at the macrolevel. 55% of Russians compile plans for achieving their dreams and implement it step by step (What do Russians dream about? 2012). The number of those who hope for a wonder and good luck reduced (29%), but cooperative ties are rather weak: only 22% of Russians ask their friends and relatives to help in realization of their dreams (What do Russians dream about? 2012). However, a positive aspect is that only 10% do not do anything, and only 9% do not have a dream. Ideas of Russians of the desired vector of development and positioning of the country are based on the belief that Russia has to be a powerful state and has to influence the global processes (67%) and that Russia is a special civilization, which will never accept the Western way of life (75%) (Russian society and the challenges of time, vol. 1 2015). How does this position influence the potential of the future of Russian society? Firstly, it is possible to conclude that, based on the value orientations, Russians aim for group, not individual, future, and the future for them is impossible without a strong state – therefore, the society has the resources of devotion, self-limitation, and understanding of the situation’s complexity. Secondly, Russians value the absence of the need for blind copying of the Western experience. It is possible to state that Bulgaria, which became the member of the EU in 2008, found itself among the poorest countries of Europe; two million young Bulgarians with large potential work in other countries. In this closed situation, regress in the sphere of economy, education, and culture leads to large migration. In its turn, outflow of the most active and educated part of the society reproduces the situation of constant depression (Kashima et al. 2018). That’s why the fact that 64% of Russians believe in a special civilization path of Russia’s development is very positive. The society aims at creation of the Russian model of development and preservation of the Russian heritage, without full refusal from foreign experience. Orientation at the future is expressed in the fact that public life has the understanding that Russia’s future has its own logic and history and that the offered alternatives of the future cannot be easy and simple.

4 Conclusions It is possible to state that value of the future grows in dispositions and attitudes of Russians, that positions of instrumental activism are gradually giving way to realization of the importance of confidence in future, and that this value could acquire a status of the basic value of Russian society. While studying the subjective aspects of the potential of Russian society’s future, it should be noted that in the current conditions – when the feeling of social fanaticism decreases and the aspect of rationalization increases – it becomes clear that the share of traditionalists, which grew from 41% to 47%, and the share of modernists, which reduced from 27% to 21%, does not mean that Russia is in the age of new traditionalism (Gorshkov 2016). This is a consequence of refusal from illusions that market society and democracy could be easily created.

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Russian traditionalists and modernists support the mixed model of private business with preservation of the leading role with the state: loyalty to a special way of Russia’s development and immunity of the society against unwise reforms that might have destructive consequences for life and for the society on the whole. This position could be extended in the aspect that when protecting the value of rights and liberties, Russians support the government’s responsibility for security, order, and law – which is Russian society’s pride for cultural heritage. In view of these aspects, it is possible to say that dynamics of the values of the future in Russian society is converted into transition from instrumental activism to creative activism. Together with the mentioned phenomena and new trends in social attitudes – e.g., growth of social altruism – it is necessary to take into account that in no society of the world the share of socially active altruists exceeds 16% (Gorshkov 2016), so it is possible to expect that this group will become the core of the social changes. The most important thing is that Russians realize responsibility of the dialog between the elite and the society, belief in value and attitude to the state as the highest value, which is immensely important for supporting stability and order in Russian society and for coordination of efforts in the sphere of social planning. This is a very important aspect, which distinguishes Russians from the foreign standards, in which the important thing in finding the balance of primarily individual interests, and the state has to protect the society’s interests. This formulates envisages the formula of liberal individualism and trust in the fact that the state can mend and guarantee only that which is automatic functioning of market and democracy (Russian society and the challenges of time, vol. 1 2015). Thus, Russian society нis not a society that looks into the past. There is succession in development at the social macro-level and micro-level and understanding of the fact that the past, the present, and the future are combined in real life practices and that the future requires an initiative, based on the collective experience of the past and on the causes of rises of the Russians and dramatic historical periods that were experienced by the older generation of Russians. Based on this situation, it is possible to say that the subjective aspect of the future of Russians is peculiar for achievement of the point of constructivism in which the past and the present become involved in the work in the future, and that Russians gradually come to the understanding of social competence and the fact that neither of the past periods could be made a landmark for the future and it is impossible to build future without realizing the difficulties that Russian society experienced in its historical development.

References Beck, U.: What is Globalization? (2001) Volkov, Y.G.: Social diagnosis and sociological expertise (2015) Volkov, Y.G.: Sociology of the future: approaches, search, and problems. Humanitarian of the South of Russia 5, 14–30 (2016) Gorshkov, M.K.: Russian society as it is. V. 2 (2016) New ideas in sociology (2013) What do Russians dream about? (2012)

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Shkaratan, O.I.: Sociology of inequality: theory and reality (2012) Romanovskiy, N.V.: Future as a problem of contemporary sociology. Sociol. Stud. 11(11), 13– 22 (2015) Russian society and the challenges of time, vol. 1 (2015) Starostin, A.M.: Change of the paradigm in the modern global science: social and cognitive determinants. Caucasian Science Bridge, vol. 1, no. 1. pp. 27–35 (2018) Batabyal, A.A., Yoo, S.J.: A measurement issue regarding the link between a region’s creative infrastructure and its income. Reg. Sci. Inquiry. 10(3), 127–133 (2016) Csathó, Á., Birkás, B.: Early-life stressors, personality development, and fast life strategies: an evolutionary perspective on malevolent personality features. Front. Psychol. 9, 305 (2018) Fukuyama, F.: Identity: Contemporary Identity Politics and the Struggle for Recognition. Profile Books (2018) Gertler, B.: Privileged Access: Philosophical Accounts of Self-Knowledge. Routledge, New York (2017) Kashima, Y., Bratanova, B., Peters, K.: Social transmission and shared reality in cultural dynamics. Curr. Opin. Psychol. 23, 15–19 (2018) Mellander, C., Florida, R.: The rise of skills: human capital, the creative class, and regional development. In: Handbook of Regional Science, pp. 1–13 (2018)

Religious Orientations of Modern Youth and the National Policy Valery V. Kasyanov1(&), Natalia Yu. Belikova2, Dmitry V. Krotov3, Sergey I. Samygin3, and Sergey A. Merzakanov4 1

3

Kuban State University, Krasnodar, Russia [email protected] 2 Kuban State Technological University, Krasnodar, Russia [email protected] Rostov State University of Economics, Rostov-on-Don, Russia [email protected], [email protected] 4 Russian State Hydrometeorological University, Tuapse Branch, Tuapse, Russia [email protected]

Abstract. The chapter analyzes the religious attitudes and orientations of young people in secular societies. The chapter is based on empirical studies that show tendencies towards individualization and subjectivization of young people’s faith, its mainly subjectively oriented, rather than determined by external structures character, orientation of religious attitudes of young people towards psychological well-being, independent acquisition of the meaning and purpose of life. The chapter notes that such characteristics of youth religiosity make senseless attempts on the part of the state to impose certain religious standards and norms on young people. At the same time, the importance of religious education for the preservation of national traditions and the strengthening of collective identity is noted. Keywords: Religion
Religiosity
Youth
Subjective turn
Secularization Post-secularization
Islam
Christianity




1 Introduction In the era of post-secularism and the intensification of religion on a global scale, the problem of the religious attitudes of youth is of interest not only to researchers, but also to government policy. However, government policy should be based on a theoretical and empirical basis. Moreover, the religiosity of young people has become the object of scientists’ attention not so long ago. Interest in the study of religious attitudes, orientations and behavior of young people began to grow in the last decades of the twentieth century, although this problem had not previously attracted significant attention of researchers (Collins-Mayo 2012). The weak interest in this topic was, apparently, due to the dominant secularization paradigm in sociology and the social sciences in general. According to this paradigm, religion inevitably loses its position in the modernizing society, and, the more the © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 601–613, 2020. https://doi.org/10.1007/978-3-030-39319-9_67

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society has advanced along the path of modernization, the weaker is the position of religion (Ponomarev et al. 2015). Indeed, empirical studies in Western countries have confirmed that the level of religiosity of the younger generation is lower than that of older age cohorts. However, this concerned mainly traditional religiosity, connection with historical Christian confessions. The emergence of the phenomenon of new religious movements, which were predominantly youth-oriented, was one of the first signs that the belief in the irreligiousness of the worldview of modern youth should be reconsidered. Other factors contributing to the actualization of the study of youth religiosity are the growth of religious diversity, youth religious radicalism, changes in the religious landscape of secular societies as a result of migration processes, changes in the type of religiosity.

2 Materials and Methods The general changes in the religious situation in the second half of the twentieth century forced many researchers to question the prevailing paradigm of secularization accompanied by the emergence of a number of new theoretical approaches to the analysis of the role and place of religion in modern societies. Among these new approaches are the “new paradigm of the sociology of religion” proposed by R. Stark, the concept of post-secular society, proposed by J. Habermas, the concept of desecularization proposed by P. Berger. All of these concepts evaluated the validity of the “thesis of secularization” differently. Within the framework of the “new paradigm”, the reality of secularization was not denied, but this process itself lost its uniqueness, associated within the concept of secularization with modernization processes, since secularization was viewed as a stage in the historical dynamics of religion that took place not only within the framework of Western societies during the transition to modernity. Within the framework of Berger’s desecularization concept, the results of secularization were revised as the term “desecularization” itself suggests, but this radical approach evokes critical comments. Within the framework of the concept of post-secular society, the reality of secularization is not denied, but it is noted that societies that have experienced secularization find themselves in a new situation in relation to religion at the end of the 20th century. According to Habermas, “postsecularity” means, first of all, not the abolition of the results of secularization, but some changes in the public consciousness of secular societies regarding attitudes towards religion and the assessment of its future prospects. It seems that the concept of Habermas is closest to the sociocultural realities of secular societies in late 20th – early 21st centuries. It is within this concept that the main topic of this chapter will be considered. Studies of the religious orientations of young people should take into account empirical sociological research data, but there are certain problems here: there are not very many studies concerning young people, they are often tied only to specific societies or certain confessions, which makes it difficult to analyze the whole picture (Savchenko and Ustinkin 2016). Moreover, this situation is observed in both Russian and Western science (Collins-Mayo 2012). Nevertheless, some idea of the religiosity of young people can be obtained based on the available data. However, it is necessary to

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remember about the limitations of this data. In particular, the greatest difficulties are associated with empirical studies of so-called new or alternative spirituality, which is gaining popularity at the turn of the century. With an undoubted connection with religious issues, alternative spirituality is often not associated with religion by its adepts, which poses a peculiar problem of relating religion in the sense of “objective” (recorded by researchers on the basis of some universal features) - and “subjective” perception of religious or crypto-religious phenomena by those who are committed to various non-traditional forms of religiosity or crypto-religiosity. Young people are largely involved in these forms of activity, for which there are certain reasons. Alternative spirituality is associated with the problems of self-realization, and this problem is the most relevant for young people (Shakbanova et al. 2018). Compliance of some needs of young people with the character of modern non-traditional religiosity (Gafiatulina et al. 2018) allows using the theory of rational choice of religion, developed by R. Stark, as a theoretical basis. Interest in religious issues in general and religious attitudes of young people at the turn of the 20th – 21st centuries, is determined by a number of processes (Belikova 2014). Firstly, a change in the religious situation in the Western secular world, an increase in religious diversity. While adherence to traditional Christian societies is weakening, researchers record an increase in religious diversity, which also affects young people. This actualizes issues related to religious references, collective and individual identity, the importance of forms of religious participation in the life of young people (Vaskov et al. 2018), the role of religious institutions in social relations. Secondly, the growth of religious extremism necessitates the study of the causes of the radicalization of religiously-minded youth (Kasyanov et al. 2018a, b). Thirdly, along with religious diversity, in many modern societies there has been a rapid growth in the number of people, especially young people, who generally cannot identify themselves with any traditional religion (Chikaeva et al. 2019). Young people are increasingly finding alternative sources of spirituality - outside of Christian religious organizations. All this actualizes the problem of prerequisites and forms of religious conversion, requests that religion helps to satisfy. This chapter will attempt to analyze these problems. The chapter is based on Western studies, since there are almost no domestic studies on this subject. However, the Russian youth is not very different in lifestyle and thought from foreign peers (Gafiatulina et al. 2018). Their worldview is often influenced by the same phenomena of mass culture, they live in secular societies, and Russian society is more secular due to the specifics of the long-term policy of the Soviet state, the consequences of which will not be overcome for a long time.

3 Results Western societies differ in the degree of their religious diversity and the rate of change in the religiosity of different groups of the population. However, in Western Europe, there is a transition of generations from traditional (that is Christian) religious affiliation, faith and practice. On the basis of data from a European survey, Voas notes, “The

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oldest age cohort in each country outside of Scandinavia is more religious than the overall average estimated religiosity; the youngest cohort in every country outside of Greece and Poland and only slightly Italy and Ireland are less religious than the average. From the point of view of religiosity, young Italians are more like older Swedes than their grandfathers”. (Voas and Doebler 2011). Although the number of Christians in European societies is declining, the population of other religious groups, in particular Muslims, is growing, although not to the extent assumed. Representatives of other faiths are still in the minority. Evidence from existing studies suggests that young people are more likely to identify themselves with non-Christian religions than older people, although Christianity is still dominant. In addition, young people are more likely to declare their nonreligiousness. For example, an American Study of Religious Identity shows that while 15% of adults do not identify themselves with any religion, among 18–29 year olds 22%. (Kosmin 2009). A British study of social attitudes shows that 64% of people aged 18–24 years believe that they do not belong to any religion - compared to 50% of the general population (Lee 2012). The two main reasons for the growth of the non-Christian religious population in Western societies are migration and a relatively high birth rate among migrants and their confessions. Casanova emphasizes that, until recently, the majority of nonChristian immigrants to European countries were Muslims, and therefore Muslims constitute the largest group of non-Christian confessions (Casanova 2009). Davie’s study (Davit 2007) gives an idea of how the religious situation in Western Europe changed due to immigration patterns that reflect the specific situations of individual countries, especially in the second half of the 20th century. For example, Muslims, as well as Hindus and Sikhs from Pakistan, Bangladesh and India, had a noticeable impact on the religious landscape of Great Britain. While in France the Muslim influence was predominantly North African, and in Germany, the Muslims were mainly Turks or of Eastern European origin (former Yugoslavia). Immigration is also a major factor in increasing religious diversity in Australia and Canada (Hughes 2007). The fact that migration and birthrate (Kasyanov et al. 2018a, b) are the main reasons for the growth of the non-Christian religious population is important for two reasons. First, because it helps explain why, in comparison with Christians and nonreligious groups, the adherents of Islam are mostly young. Secondly, the growth primarily due to migration and birthrate suggests that few people, including young people, convert to Islam or other non-traditional for Europe religions. There are no reliable statistics on the conversion rate (religious circulation), however, according to some estimates, in the United Kingdom, for example, only about 4% of the Muslim population are converted. Frisina cites statistics on Italian Muslims, which shows that out of 1,250,000 Muslims in Italy, only about 10,000 are converts (Frisina 2010). In the US, the picture is somewhat different, but about 30–42% of all Muslims are African Americans who converted to Islam (Casanova 2009). These figures, related to the phenomenon of religious conversion, suggest that religious diversity in Europe, where Christianity has been a religious monopolist for centuries, can hardly stimulate the religious interest of young people, which is supposed, for example, in the theory of rational choice of religion. However, Europeans are beginning to adopt to the presence of new religious minorities, the phenomenon of religious diversity is becoming the

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topic of active discussions about assimilation and differences in multicultural societies. Often schools become places of collision of various models of religious behavior. In Britain, where about a third of public schools are religious, the vast majority of them are Christian. Therefore, many representatives of religious minorities argue that the principle of legal equality dictates the need for the emergence of a larger number of public schools representing other religious movements. At the same time, schools of all types, like other organizations in general, are becoming increasingly susceptible to the many religious needs and duties of their students and workers. Thus, some schools or organizations provide, for example, a halal menu, take into account religious diversity of students while arranging educational programs, provide appropriate spaces for prayer, etc. (Belikova 2013). The problem that attracts the most attention in European countries is the desire of some young Muslim women to wear hijab. Davie (Davit 2007) describes the “Foulard case” in the late 1980s in France, when three girls were sent home from school for wearing a Muslim headscarf. The rigid separation between religion and state in France meant that religion and religious symbols, including the hijab, were banned in public schools. However, Davy notes that, despite this prohibition, some Christian and Jewish symbols were considered permissible. This raised the question of the status of Islamic symbols compared to symbols of other confessions. In 2004, the French state unequivocally reaffirmed its secular position in the new law prohibiting the wearing of any religious symbols and the display of religious affiliation in the public and educational space. However, other European countries are more tolerant of external attributes of religiosity. Of course, not all minority youths practice their religion; non-religiousness exists among non-Christian youth as well as among Christian (Stetsura et al. 2000). However, those who are serious about their religion often face a suspicious attitude, and in some cases, racism, because of their belonging to a minority that has religious specificity. This is especially true for young Muslims (and those who are mistakenly considered Muslims) because of the intensification of Islamic radicalism and the established antiIslamic stereotypes of public consciousness. Therefore, young people who want to practice and gain faith should be particularly reflective about their religious and ethnic identity in Western society. For example, some qualitative studies show that young Muslims often practice the “de-ethnicization” of Islam (Frisina 2010). It means that young people strive to distinguish between Islamic cultural practices inherited from parents and grandparents— and what they themselves consider “genuine” or “pure” Islam. Minganti (Minganti 2010), using the example of Sweden, describes how young Muslim women confront accusations that Islam oppresses women. They reject certain Hadith as false or androcentric, and single out others that protect the interests of women. This approach is critical for institutionalized religious authorities. Instead, the focus is on individual authenticity, on what seems right to a believer and enables him to make sense of his life. Thus, the believer himself seeks to determine what is and what is not a religious truth. Frisina describes a similar approach to religion among young Italian Muslims who seek their own understanding of what Islam means to them. She writes, “Islam for these

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young people seems to be a spiritual resource that allows them to feel at peace with themselves and helps in difficult moments, and also becomes a source of ethical obligations and social responsibility” (Frisina 2010). Harris (Harris 2010) finds similar characteristics among young Christian pilgrims in Lourdes. She notes that pilgrims value personal spirituality, the impact of collective religious experience, and intense personal relationships with God and fellow believers, for which the pilgrimage provides certain opportunities. Also important was the help to other people on pilgrimages, especially to the sick and disabled. This gives the young pilgrims sense of purpose and meaningful existence. Taken together, these and other studies (Collins-Mayo et al. 2010) show that religious activity is attractive to young people, because it gives opportunity, firstly, to experience a sense of genuine and personal relationship with God, which is not limited to religious institutions. Secondly, it provides a sense of belonging to a community of like-minded people. Thirdly, it makes it possible to connect faith with real life, for example, in terms of ethical choice, civic activism, etc. (Gryshai et al. 2018). Each of these aspects of subjective spiritual participation - intimacy with God, belonging to a group of like-minded people, serving God - nourishes and strengthens the others. Sharing faith with others makes people more receptive to spiritual experience, as Durkheim noted. Developing faith through serving others probably reinforces the sense of belonging to a group and builds up social capital, while at the same time confirming the feeling that personal faith matters. This is typical, for example, of the charismatic evangelical communities, which are probably the most successful in the development of all these aspects of subjective spirituality among the youth. However, increasingly religiously active young people from different religious confessions find value in the selective use of traditional symbols and liturgical expression of faith as a means of enhancing personal spirituality. It is important to note that young people usually avoid denominational labels. An interesting example of modern youth spirituality, combining the traditional and non-traditional forms of religiosity, can be found in the Protestant community of Taize in France. This community attracts thousands of young people each year; they seek to participate in a particular form of worship and community life. The desire to experience the expressive religious (spiritual) community can be understood in connection with the “subjective turn” in modern culture (Tailor 1991). One of the characteristics of late modern society is that it gives priority to individualization and subjectivity. We are more and more free and even forced to choose our “way of thinking” and “way of life” (Gafiatulina et al. 2017). Young people, in particular, are faced with the obligation to find their own lives and professional paths in a deeply traumatized society (Gafiatulina et al. 2018) without focusing on the regulatory expectations that were available to their parents and grandparents. In the same way, the search for a partner, the creation of a family in Western societies (and not only Western ones) are no longer limited by the regulatory trajectory; everyone takes this freedom for granted. Marriage is an option (not necessarily the only one in a lifetime), as well as civic partnership or concubine (Gafiatulina et al. 2016). Leisure is also diverse and provides many opportunities to explore the interests and construct a personal identity through the strategy of consumption. Of course, not all young people have the same opportunities to take advantage of such choices and

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freedoms - this requires a certain degree of psychological stability, social and economic capital, as well as favorable circumstances. Nevertheless, everyone is expected to be constantly ready for independent personal choice in all spheres of life and activity (Madina et al. 2016). Given that young people have to make a choice, the question arises: on what basis it is carried out. Heelas and Woodhead suggest that instead of making choices according to the roles, responsibilities established by social structures and regulatory agreements, the focus is on targeting their subjective inner states and subjective experiences, unique needs, desires, opportunities, and “Relationships” (Heelas et al. 2005). Authenticity is of paramount importance in this context. In these circumstances, the attitude of young people towards religion is characterized by choices and subjective feelings: whether it is worth practicing religion at all or not is just a matter of personal choice. “Religiousness” in the sense of meeting the external requirements of religious organizations and authorities gives way to “spirituality” in terms of emotional interaction with a tradition or several traditions in such a way that this interaction gives a sense of personal satisfaction, reinforces a feeling of closeness with God and/or others (Belikova 2016). In this regard, Heelas and Woodhead distinguish between two types of life orientation: life as a debt, determined by external conditions; and “subjective life orientation”, which gives priority to “deep connections with a unique personal experience (Heelas et al. 2005). From this distinction it follows that one can speak of “life as a religion”, which is focused on the external “friend” - the “higher” authority of transcendental meaning, to which subjective life is subject. In comparison, it is possible to speak of a “subjective life spirituality”, which seeks to the deep truths found in the world and, very often, the Selfhood. Subjective life becomes the carrier of its own sacredness rather than subject to external definitions. Most of the New Age philosophy and new spirituality practices fall into the latter category. Since truth is determined by a person, and not by an external religious system, this opens up possibilities for choosing among religious and spiritual traditions, made on the basis of personal preferences. However, spirituality should not necessarily exist only outside religious institutions. Indeed, many religious people see themselves as acting spiritually, because they obey God and follow religious practices established by a particular religious organization. At the same time, another type of spirituality is “life as spirituality”, which can be identified as one that flourishes within the framework of a religious tradition, but at the same time emphasizes the subjective experiences and meanings of a free attitude to tradition. We can recall the above example of Muslim women with their own interpretation of Islamic heritage regarding the role and status of women. This spirituality implies a critical interaction with religious tradition, a personal commitment to accept and experience the consequences of a chosen faith. As a reward, an individual acquires a source and purpose for self-development, a source of semantic and emotional fullness of being. The transition from obedient, external authority-oriented religiosity, to the critically and emotionally involved spirituality implies that religion becomes a matter of consumption, rather than an obligation. This way of thinking became ubiquitous in the Western world, and especially for young people. Smith and Denton note this point of view among American youth, “For most teenagers, no one “must” do anything in life,

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including a duty towards religion. “Anything you want” is good, but if a person wants it” (Smith and Denton 2005). Mason found that most Australian teens think that choosing religious beliefs is good for people (Mason et al. 2010). Collins and Mayo find similar orientations among British youth (Collins-Mayo et al. 2010). The “subjective turn” influenced not only young people practicing this or that traditional religion, it even more influenced young people who identify themselves as non-religious or those who only nominally belong to this or that traditional confession most often due to family socialization. These young people certainly recognize their religious affiliation, faith, and practice as a personal choice, but this is not a choice that is of great importance to them and is the result of reflection, since religion does not matter much to them. Religion does not matter much for such young people - happiness, normal relations with family and friends are more important for them. Indeed, family and friends can be considered central referents of the “faith” in a broad sense - as a synonym for hope and the goal of life. Collins and Mayo call this the “immanent faith” of youth (CollinsMayo et al. 2010) From the point of the “subjective turn”, it can be noted that family relations and friends themselves are becoming more and more mobile and “subjectivized” in their essence. Collins and Mayo point out that the boundaries of the generations seem increasingly blurred, since the styles of raising children are becoming less clear and definite. Their research shows that young people often call a parent “their best friend”, and consider friends as a family (Collins-Mayo et al. 2010). Although religion is of secondary importance to non-religious and nominally religious young people, many of them still believe that God exists or that some religious or supernatural principles may be true. However, such beliefs, as a rule, are only selectively based on religious ideas inherited from the family and, in a broader sense, from cultural memory (which is largely Christian), and are more of an opinion character than a belief. Day (Day 2010) offers a useful distinction between faith as a propositional statement (the belief that God exists) and faith as a statement of faith (faith in God). The latter, as a rule, has implications for the development of a life strategy. Based on this scheme, it can be said that non-religious and nominally religious young people may believe that God exists, but to a greater degree, they believe in family and friends. Describing the community of religious beliefs among teenagers in the United States, Smith and Denton describe what they call “moralistic therapeutic deism” or MTD. MTD permeates various confessions and is characteristic of many young people. The implicit “credo” of the MAP is as follows: 1. There is the God who has created and ordered the world and watches human life on earth. 2. God wants people to be good and fair to each other; as most world religions teach. 3. The main goal of life is to be happy, to feel good. 4. God does not need to be particularly involved in life, except when God is needed to solve a particular problem. 5. Good people go to heaven after death.

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According to Smith and Denton (Smith and Denton 2005), MTD gives young people the opportunity to see religion in a positive way, like what is “good for them” because it provides a moral basis and has the ability to help people achieve happiness, security and normalization of relationship. Such a benevolent (if not indifferent) attitude to religion is also characteristic of British non-religious and nominally religious young people (Collins-Mayo et al. 2010). God, in accordance with the MTD, is reminiscent of the divine “space therapist”, his function is to help with solving problems and make people feel better, but otherwise not to burden them too much. The “subjectivization of faith” is evident here. An important problem, where subjective perception closely interacts with religious traditions, is the problem of death. Modern Western societies tend to be ambivalent about death. On the one hand, death is “hidden” in hospitals and hospices and is the concern of professionals. E. Giddens called it the “sequestration of experience.” As a result, most young people are virtually unaffected by this problem in their daily lives. On the other hand, modern culture is characterized by the charm and admiring death in videos, games, television programs, and cinema, which often attract the attention of young people. Themes of suicide, criminal violence, terror also affect young people. Young people, like older people, need meanings and symbols to cope with death, especially if they are not religious and cannot rely on tradition. Studies show that it is in thinking about death that young Britons, for example, were the most eclectic - their beliefs are based on ideas of ghosts, karma and reincarnation, as well as Heaven (Collins-Mayo et al. 2010). Increasingly, people of all ages, but especially young ones, try invented “rituals”, however, they often rely on traditional religious practices, such as the use of consecrated candles and prayers, although their theological significance is often not recognized (Lefebvre and Chakravarty 2010). Such rituals usually complement the more established ways of expressing grief, which include the traditional institutional forms of religion, thereby complementing them, but not completely replacing. The “subjective turn” of late modern culture, as Western studies show, has deeply affected religious youth, regardless of religious affiliation. However, the subjectivization of faith and religious practice raises the problem of the transfer of religious faith from generation to generation, because they are based on personal experience and do not have stable institutional mechanisms. In the world of subjective faith, religious communities and religious truths may become relativized and irrelevant. The fact that only a minority of young people in Western countries (as in Russia) go to church does not bode well for the long-term future of Christianity. Like the tendency to be wary of any attempts at external religious influence, manifested by both young people and adults, if this is observed in relation to their children. Parents often refrain from being too prescriptive with their children in matters of faith, preferring that they themselves decide this question. As a result, many young people grow up without knowing anything about their religious tradition. The weakening of the value of religious education in the family, using the example of Britain, is demonstrated by Voas and Crockett, who found that even if both parents

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are ordinary worshipers, the chance that their children will also become normal worshipers, is only 1 in 2 (46%). If only one parent regularly attends church, the chances are halved. If none of the parents attends church, the chance for children to become believers is very small (Voas and Crockett 2005). Although it may bother churches and other religious institutions, it does not seem to be a problem for adolescents and young people. Studies in England (Collins-Mayo et al. 2010), USA (Smith and Denton 2005), Australia (Mason et al. 2007), Finland (Niemela 2010) and other countries show that, in general, young people do not engage in an active spiritual search, and very few are seriously associated with the “new spirituality” in the form of paganism or the movement of the “new era”. Young people seem happy enough to manage the fragmented religious resources they have. At the same time, it is important to note that young people retain their faith, albeit in a shortened and subjective form. If you extrapolate the data to Russian society and Russian youth, you can make some assumptions about the possible directions of the policy of the Russian state regarding the preservation of traditional religions and the religious education of young people. On the one hand, the preservation of traditional religions is important for strengthening the collective identity and preserving the national cultural and historical heritage. On the other hand, one should not, apparently, rely on the fact that the introduction of the teaching of the foundations of religions to schools and universities will lead to any noticeable increase in the number of religious youth or to strengthen the influence of religious norms on its moral guidelines. In the era of “subjective turn”, young people tend to pass information about religion through the prism of their own interests and needs, selecting only what, in their opinion, contributes to psychological well-being. At the same time, acquaintance with the ritual and religious side of traditional confessions can provide young people with some material for reflection and building their own religious guidelines. Strengthening the authoritarian methods of imposing and promoting religion can rather discourage young people from religion and tradition, lead to an increase in cynicism and hypocrisy, than increasing the influence of traditional religions.

4 Conclusion Empirical studies of religious attitudes and practices of youth in Western societies intensified at the turn of the 20th and 21st centuries, and continue to be relevant. The reason for increasing research attention to the problem of religiosity of young people is primarily due to such factors as the growth of religious diversity, changes in the religious landscape of Western societies as a result of intensive migration, the spread of non-traditional forms of religiosity, religious radicalism. Studies show that the level of religiosity of young people is lower than that of the adult population, that among young people there are a large number of nominal believers and non-believers altogether - and the percentage is higher than among the population as a whole. At the same time, studies show that even nominally believers and non-religious young people retain a certain minimum of religious beliefs, although their perception of God is significantly different from the traditionally theological one. Studies also show such a phenomenon as a “subjective turn” in religiosity. It is

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manifested in the fact that the religiousness of young people is less and less determined from the outside - tradition, religious institutions or family, but becomes the result of their own choices, as a result of which they are often innovative in nature and can be oriented rather critically in relation to existing religious authorities. Moreover, this is characteristic not only of the religiosity of Christian youth, but also of young Muslims, who find themselves in Europe because of their parents’ immigration. The projection of European data on Russian society, where there are practically no qualitative studies of the religiosity of young people, allows us to draw some conclusions regarding the prospects of the state policy of the Russian Federation in the field of spiritual and moral education of young people.

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Russian Society: Demand for Self-cognition and Search for the Strategy of Development Yuriy G. Volkov(&) Institute of Sociology and Regional Studies, Southern Federal University, Rostov-on-Don, Russia [email protected]

Abstract. This chapter makes an attempt of consideration of formation of a demand for self-cognition of the Russian society in social attitudes of Russians. Based on studying the life strategies of Russians and the basic disposition settings, the author comes to the conclusion that, together with realization of the passing of a point of no return to the past and domination of actualism in everyday practices, the Russian society already has groups with orientation at long-term strategies. The author states that the life strategies of the studied groups have a tendency for creation of the future and determine the limits of social competence, characterized by striving for self-cognition of the Russian society and understanding of social processes and events in the context of the unity of the past, present, and future. Keywords: Russian sociology
The past, present, and future
Self-cognition
Life strategies

1 Introduction Since late 1990’s, the Russian sociology has had a tendency of increase of its status as social knowledge and its role in formation of public attitudes and development of the sphere of social management and planning. By that period there formed an understanding that the Russian society passed the point of no return to the future, a new social structure appeared, new social groups emerged, new social and political order was legitimized, and that in public attitude the adaptive setting and positions of social anarchism and archaization were giving way to the achievement settings, which were oriented at planning and implementation of life goals. Thus, confidence in the future became a personal and social capital. Dynamics of the observed social processes led the public attitudes to overcoming the traumatic social changes, which could be qualified as expectations of normal life. Thus, for Russian society the future becomes a social value – like wealth, power, prestige, and education. Moreover, confidence in the future leads to formation of barriers against possible future threats and risks and the logic of distrust is inevitable replaced by logic of trust – which is defined by P. Sztompka as systemic trust, trust to the existing social system and its participants (Sztompka 2005). New social realia – creative class, solidarity practices, and participatory democracy – determine the attention to sociology of the future and the desirable and real state of © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 614–622, 2020. https://doi.org/10.1007/978-3-030-39319-9_68

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the society (Mellander and Florida 2018). In the context of the processes that take place in Russian society, the future becomes a resource of individuals (Sanford 2017) and of social groups; attitude towards future and how future is seen in the life strategies and the hierarchy of life goals determine the configuration of public relations, which constantly change and move due to merging of the images of the future. This is proved by the fact that according to the studies of the creative class, the Russian creative class is based on adoption of creativity as rationality, self-confidence, and planning – which the traditional treatment of personality lacked (Volkov 2011).

2 Methods Acknowledging that the future determines the state of the innovative potential of Russian society and modernization of society is connected to formation of a comprehensive structure of consciousness and its transition to deeper levels of human’s regulation of his structure, where his consciousness tries to fly from the illusions of everyday delimitation (Naumova 1997), the need for the future means termination of the strategy of creation of parallel social world and the start of creation of simplified social niches. Thus, Shkaratan, when studying the issue of social inequalities, writes that the country has a large gap between the quality of human resources of the main social groups (Shkaratan 2012). Also, he notes certain positive aspects: firstly, higher level of human capital of the young generation as compared to the older generation’s human capital’s level which increases confidence in the past; secondly, though the structure of human capital and its reproduction cause worries, the Russian society contains the opportunities of organization of new social and civil life. In this context, the demand for future is clearer. Attitudes towards the future ensure inclusion of social connections into the system and influence further life path. It is possible to state that the need for acceptance of the future as a social reality is connected in Russian society not to movement into the imagined better future but to active creation of the future in the conditions of the present and accumulation of social resources for better and predictable future. The important social problems are evaluated from the position of the future and are connected to the model of future structure of society; the groups that are oriented at the future are peculiar for higher social optimism as compared to other groups of population, and confidence in the future is based not on social claims but is largely determined by social & professional and social & activism resources. Speaking of the desired future, it is necessary to note that growth of the market economy and element of democracy inevitable leas to the question “Which purposes do these innovations serve?” In this sense, a lot of Western theories failed – including the theories on objective regulation of the market and democracy as the best tool invented by humankind for managing a society. For Russians future is connected to such fundamental categories as national sovereignty and ability to conduct internal and foreign affairs independently, preserve cultural and civilization independence, and select the path of modernization. That’s why it becomes clear within the studied problems that the totality of problems that are connected to creative class, Russian modernization, and

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new practices of social participation is focused in the issue of the Russians’ image of the future. These tendencies do contain the potential of the future. On the whole, analysis of sociological data allows stating that the attempts of modernizing Russia in the recent century were not vain. Gorshkov (2016a, b) point out the growth of significance of the achievement values: pragmatism and economic rationality. However, society cannot be guided by purely rational value, of which Weber (2014) wrote, warning of the dangers of an iron cage of rationalization. The important aspects of social life are social emotions, positive attitudes, and expectations of better future, which mobilize society for social consolidation.

3 Results Orientation at past in the conditions of tough dynamics of changes means underdevelopment of a person, excessive conservatism, and refusal from initiative, personal independence, and the need for self-realization. It is possible to say that Russian society is divided into people of the future and people of the past – it is due not only to socially stigmatizing markers and decrease of the group of people who live in memories of the past. On the whole, Russian society overcame the syndrome of trauma, and the current crisis shows that the attitudes of Russians differ from attitudes of 1990’s, and people do not want to return into the past. They want to create a long-term comfort zone, despite the understanding of the fact that Russia is to face difficult times (59% of Russian society) (Russian society and the challenges of time, Vol. 2 2015b). It is possible to suppose that society has increased resource of strength, as compared to the previous period, when the attitudes of alarmism and anarchy dominated. At the same time, the edge between the Russians who feel anxiety and calmness is very moveable, and, thus, confidence in the future and attitude to the future are a delimiting aspect, creating a certain socio-psychological climate. As for living through difficult time, there’s a problem for most Russians. It is possible to say that for Russians the future is connected to realization of such problems as social inequality. It may seem that this problem is included into the actualism context, and most people of Russian society experience the negative influence of inequalities, as they destroy or reduce hopes for the better future. The situation is more complex: attitude towards social inequalities is largely determined by the fact what future of Russian society Russians see (Russian society and the challenges of time, Vol. 1 2015a). As most Russians support the idea of socially wise and socially organized society, the actualistic effect of social inequalities is reduced, and inequality is treated not as super radical and confiscation decisions, and overcoming of inequalities is not connected to confiscation actions by the government; based on the socially organized and socially wise society, it is necessary to overcome social inequality. In Russian society, creative class has unstructured positions, which are oriented at implementation of personal potential. Transition to the level of group self-realization is impossible yet. However, the creative class has that which is not yet accessible to the groups of population that implement the adaptive strategies. Constructing of the future thus becomes a guarantee of confidence in the present. Also, the need for reminding

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about oneself and constantly seek the services of government structures, according to Gorshkov (Gorshkov 2016a, b) is a sign of readiness for mobilization for joint activities. These strategies of creative class have a certain intellectual snobbery but are aimed at making social altruism a formula of social interaction. Thus, the creative class becomes a practical social group, requiring ideological legitimization. Russian society has reached the main agreement according to the formula “stability – order - law” and aims at changes and at making confidence in the future a social resource. It should be emphasized that, as the history of modern societies show, the group that acquires leadership in constructing of the future, determines the social trends. Recent history of 1960’s–1970’s shows that new leftists in the USA and Europe determined a form of social morality and led to promotion of a new generation of politicians, as well as a new shift in social and family values (Csathó and Birkás 2018; Robinson et al. 2016). However, these changes are not unambiguous, as they resulted in a new generation of politicians and appearance of arguable multiculturalism. As the French say, appearance of new lefties and passing of Charles de Gaulle marked the end of the age of the great France. However, construction of the future is the key to social success, and Russian society has already realized this. However, social attitudes require substantiation and understanding of complexity of the process of transition from adaptability to construction. Adaptation has no negative aspects in the sense that due to the resource of patience and durability of Russian, Russia lived through the difficult period of 1990’s, when, despite the destruction of old economic relations, the main bearers of life activities of the country still functioned. The first decade of the 21st century showed that intensive economic growth is effective and leads to socially important results if the society has the tendency for social design and understanding which times, achievements, and complexities could be expecting us in the near future. Probably, the main mistake of this period was that in the conditions of inflow of large financial resources was the specific development of the consumption sphere. Growth of living standards had a very important role, which cannot be denied. However, there were no investments into the future in economy, education, or culture (Shevchenko and Shtofer 2018). There was a policy of target programs, but their implementation was not accompanied by successful social and government control. It seemed that the programs were adopted for quick dismissal. In these conditions, it was important to acknowledge that managerial activities did not have strategic thinking and that the dominating actualism created obstacles on the path of the country’s transition to the model of “innovative development”. This is proved by the fact that most Russians preserved the actualistic intentions, though 30% of Russians stick to orientation in the future, while for others the interest in life is determined by the social micro-level and satisfaction of the current needs. On the other hand, based on sociological surveys, healthcare, protection of the environment, employment, human rights protection, and charity are very important for Russians in the hierarchy of the priorities of social participation (Russian society and the challenges of time 2015a, b). Such positions of Russians show that mass attitudes are peculiar for movement away from the consumer intentions to constructing settings and that health and wellbalanced sociological environment become the factors of social activity for Russians.

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It should be emphasized that Russian society entered a crisis period and, as was mentioned above, the resource of durability determines a lot – when the country will overcome the crisis and which resources it will have then. Here the important resources include not only material savings but also the level of social enthusiasm and readiness to evaluate the emerging difficulties and to determine the perspectives of the situation in Russia. An important aspect for Russians is that the attitude towards the situation in the country correlates with the feeling of aggression. Most of those who consider the situation in Russia to be normal are people who expect positive changes in the future, whole among those who are socially disoriented or have a feeling of jealousy and aggression most do not have trust to the government and social institutes. This shows that orientation at the future and confidence in the future are an important indicator of stabilization of social well-being, strengthening of social solidarity, and development of social practices. However, these attitudes have mass character but are manifested sporadically – i.e., are manifested by certain groups and in certain social states and emotional rises. “It is important that orientation at the future become a national trend and determine the scales and goals of social planning and the character of interaction of elites and the society” (Mironov 2018).

4 Discussion These priorities cannot be implemented automatically, for this requires more than just social consensus. For orientation at the future to become a tendency of social attitudes, for the social life to be characterized with a striving for increase of the resources of the future, and for the domination of the institutes of social development in the institutional system, there’s a need for a certain shift in social consciousness and development. Sociological thought, which records these attitudes, is behind the social trends and is limited by short-term forecasts. China is the leader in the global trend, as it has been increasing the economic and political power since later 1980’s (Gaydaev 2018). It is no wonder that the main topic of political discussions in the USA is the issue whether America is the global leader and whether there is any basis for this. 63% of young Americans do not feel any patriotism or pride for America and are not sure in their future (Coliva 2016). This discussion shows that while offering a project of new global structure to the world, the American political elite is actually disoriented in the future of its own country. American sociologist R. Florida, the author of the book “The Rise of the Creative Class. And How It’s Transforming Work, Leisure and Everyday Life” includes individuality and meritocracy among the qualities of the creative class and emphasizes their loyalty to diversity and openness (Florida 2011). The concept of the author has a clear trend of ideologization. As a matter of fact, Florida reproduces the myth of energetic people who populated and developed America and that the creative class showed loyalty to the traditional American values of individualism and preserves belief into the great mission of America. This is an important aspect for social consciousness, but the situation in the USA, which is peculiar for struggle between isolationists and globalists, shows that the USA became divided into two “Americas”: the one loyal to the liberal globalist values and

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the one that is based on the republic ideology of the second half of the 19th century (Starostin 2018). This situation could be very useful for Russian society in case of the problem of consolidating ideology. In view of the fact that Russia is not just a country but the whole cultural civilization with various natural & climatic and cultural & historical traditions, the unifying ideology could consist in the mission of the society with undisputable cultural and intellectual potential. This is emphasized by the fact that Russia has to preserve itself as a people and offer an alternative variant of the future, as compared to technocratic and fundamentalist versions (Volkov 2006). Images of the future, attitude towards the future, and confidence in the future are not just futuristic categories. In the modern conditions, their interpretation, understanding, and popularity in society become a powerful stimulus for influence on the social and entropic processes and allow, in view of the situation of social turbulence, building order and stability. Unlike the capitalistic civilization, Russia, despite the painful transition to new social relations, has not reached the utmost features of consumption and egoism. This shows a difference as compared to the European Union, which, despite the large historical project that is related to “Europe without borders and wars”, turned into the idea of a quiet house; confusion of Europeans before the problems of migration, reduction of economic production, local conflicts, and disproportions in development due to expansion of Europe shows that the European model of development is not a landmark for Russia. Of course, acknowledging the merits of the European civilization, mutual benefit of various contacts, and the fact that Russia is a part of Russia (though a different part), Russia has to have its own special path. This path does not consist in archaic ways. On the contrary, being a Eurasian country and a unique civilization, Russia cannot copy the existing ways of development but should use its own resources for creation of the image of its own future. In this context, attitudes in Russian society are aimed at ideological and conceptual substantiation. Russians’ attitude towards the scenarios of the Russia’s future show that 43% of Russians state that Russia requires stability, and reforms must have the evolutional character; and 64% of Russians think that restoration of power of Russia is impossible without strengthening of government (Gorshkov 2016a, b). This is an important aspect in understanding of the fact that Russia’s future is considered through the policy of changes, which takes into account the economic, social, and political consequences. The main hopes are set on strengthening of the government. This is connected not only to etatism of Russians and their belief into the state as the highest authority but also to the fact that government is Russia is to unify and consolidate social initiative and to support social projects. As was mentioned above, the Russian creative class is at the level of functional and positional trust, with setting of the foundations of network interaction; ideological choice must not be determined by short-term fashion for a certain positions. The expectations, which are shared by the society regarding the state, see the state as a field of social action. As compared to the American or European model of the future, where an ideological mantra is priority of human rights, individualism, and orientation at success, the Russian society has understanding that successful future of certain groups and certain individuals cannot be guaranteed and fully implemented without a strong state, which is to ensure security and order in the modern unstable world and to

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guarantee the feeling of personal and social security for Russians. American journalist Fareed Zakaria repeats a popular thesis of F. Fukuyama that America remains a very open country, which is to attract and delight the young generation (Zakaria 2009). Determining its future, Russian society – if we speak of referent social groups – aims at cooperation between the society and the state is constructing of the future. The peculiarities of the Russian identity consist in the fact that development of the quality of civil activity is impossible without positive creative participation of government structures – especially in the conditions of the existing situation, when the institute of presidency is the institute of trust in Russian society. Russians have trust to the president’s ability (and the state he governs) to ensure sustainable development of the country and its future (Zakaria 2009). It’s possible to agree that for Russian society the future is a result of coordination of assessments regarding the present. Russian society has already passed the devotion to the past. Without refusing the glorious historical ages, when three main cultural ideological orientation (liberal, Western, and Soviet) co-existed in consciousness of the population (Gorshkov 2016a, b), it is possible to state that Russians are already guided by the Russian logic. The Soviet period, despite its positive role, is a period to which a lot of people have a feeling of nostalgia – i.e., it was a great past, but there’s not need to return to it. 81% of Russians are oriented at personal well-being, which is a consequence of social anarchy of 1990’s and, to a certain degree, the influence of the liberal paradigm and unwise managerial decisions, which are aimed at erasure of the feeling of social paternalism and reduction of Russians’ trust to the official policy from the state. In this context, social and sociological thought has to substantiate the managerial decisions that are to be made, the balance between social expectations and the planned activities of government structures, and social institutes that deserve support in development, for ensuring the necessary balance of interests in Russian society.

5 Conclusions It is possible to say that Russians connect confidence in the future with various aspects of social life; the educational resource still has an important role for Russians. Having passed the experiment of liquidation of illiteracy in 1920’s, Russians became one of the most educated and reading nations of the world. It is no wonder that Russians are equally interests in the issues of healthcare, education, security, and socio-ecological environment, because this is a background at which expectations of the future are formed. However, it should be acknowledged that for the state to be only a tool of realization of interests of society and for the state to take into account the interests of individuals and social groups, it is necessary to acknowledge existence of the people and use the logic of the people as one community. In this sense, sociological knowledge has to develop the models of consensus and coordination of interests, as well as analysis of various forms of growth of Russian civil (socio-political) identity. It is possible to say that demand for the future envisages large and long-term work that is connected to satisfying the society’s need for self-cognition, social diagnostics, and sociological expertise. As of now, social and legal competence

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of Russians, as well as systemic awareness of the processes that take place in the country, is far from perfect. Very often, the ideas are implemented into the social consciousness that could provoke social opinion or distract from current problems; there’s a tendency of manipulating feelings and attitudes of certain groups – especially expectations regarding the future. However, Russian society does not yet have the middle class (according to the Western model), and sociologists are ready to treat this as an imperfection of the social structure and domination of the budget economy over the market economy. The Russian creative class is based on the tradition of intellectuality and most of the representatives of the creative class are connected to the budget sphere – i.e., teachers, doctors, culture workers – being a group of reproduction and preservation of the cultural and intellectual potential of Russian society; so it is possible to say that for Russian society confidence in the future is connected not to creation of socially smart and organized society, strong state, consolidated social agreement regarding the basic values, or strategic goals of development of the society. This shows the presence of hopes of wide masses. However, development of Russian society is determined by the fact that the tendency of growth and increase of the need for self-realization of Russians, as well as attitudes of social altruism, have not yet become the decisive actor of social feeling, but their direction is perspective, as it is connected to the future. The bearers of these attitudes see the future as a factor of constructing of the present and implementation of life strategies. This is proved by the fact that most Russians support the strategy of short-term and mid-term planning, but for them the feeling that expresses their personal attitude towards Russia is love, pride, and respect – which is very important (this position is supported by 45% of Russians) (Russian society and the challenges of time, Vol. 2 b). The main achievement of modern times is that social life had a certain shift and that the feeling of insult and shame, which were peculiar for 1990’s, go into the past (14%). A small segment of indifferent people (16%), which used to determine the social attitudes for a long time, does not have much influence now. Considering the dynamics of social attitudes, groups that are bearers of certain ideological and socio-emotional positions, and reasons of social attitudes outside of the context of the future and outside of the understanding of the fact that the future is created to living memory in the past and the opportunities of the present, it is possible to sat that the modus of the past has transformed into expectations of the future and that the past has become historical reality, while social life is aimed at projective reality (Gertler 2017). It should be emphasize that for in order to understand the future in Russian society it is necessary to do more than just record a perspective dynamics of social attitudes. In order to determine the authentic background of expectations of the future and not to become a hostage of the changing empiricism, it is necessary to determine the theoretical potential of Russian sociology, the methodological intentions that are realized in understanding of the of the future problems, and the potential contribution of sociology of the future in the context of social diagnosis and expertise of Russian society.

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References Weber, M.: Selected Works: The Protestant Ethic and the Spirit of Capitalism. Spb: Center for Humanitarian Initiatives; University Book, Moscow (2014). 656 p. Volkov, Y.G.: Identity and ideology: a view into the future, Moscow (2006) Volkov, Y.G.: Creativity: Historical Breakthrough of Russia. Socio-Humanitarian Knowledge, Moscow (2011) Gaydaev, O.S.: China-India rivalry in Eurasia: opportunities and risks for Russia. Caucasian Sci. Bridge 1(1), 140–151 (2018) Gorshkov, M.K.: Russian Society as It Is, vol. 1. Novy Khronograf, Moscow (2016a) Gorshkov, M.K.: Russian Society as It Is, vol. 2. Novy Khronograf, Moscow (2016b) Zakaria, F.: The Post-American World. Evropa, Moscow (2009) Mironov, A.V.: Education and the national security of Russia. Humanitarian S. Russ. (6) (2018) Naumova, N.F.: Human’s time. Sociol. J. 3, 159–176 (1997) Gorshkova, M.K., Petuhova, V.V.: Russian Society and the Challenges of Time, vol. 1. Ves Mir, Moscow (2015a) Gorshkova, M.K., Petuhova, V.V.: Russian Society and the Challenges of Time, vol. 2. Ves Mir, Moscow (2015b) Starostin, A.M.: The change of the paradigm in the modern global science: the social and cognitive determinants. Caucasian Sci. Bridge. 1(1), 27–35 (2018) Florida, R.: The Rise of the Creative Class. And How It’s Transforming Work, Leisure and Everyday Life, pp. 95–97. Klassika-XXI, Moscow (2011) Shevchenko, O.M., Shtofer, L.L.: The problem of economic security of the state in the conditions of global transformations: Zapad-Russia. Humanitarian S. Russ. (5) (2018) Shkaratan, O.I.: Sociology of Inequality: The Theory and Reality. National Research University “Higher School of Economics”, Moscow (2012) Sztompka, P.: Sociology, p. 329. Logos, Moscow (2005) Coliva, A.: The Varieties of Self-Knowledge, pp. 51–76. Palgrave Macmillan, London (2016) Csathó, Á., Birkás, B.: Early-life stressors, personality development, and fast life strategies: an evolutionary perspective on malevolent personality features. Front. Psychol. 9, 305 (2018) Gertler, B.: Privileged Access: Philosophical Accounts of Self-Knowledge. Routledge, London (2017) Haisch, T., Klöpper, C.: Location choices of the creative class: does tolerance make a difference? J. Urban Aff. 37(3), 233–254 (2015) Mellander, C., Florida, R.: The rise of skills: human capital, the creative class, and regional development. In: Fischer, M., Nijkamp, P. (eds.) Handbook of Regional Science, pp. 1–13. Springer, Heidelberg (2018) Robinson, S.A., Rickenbach, E.H., Lachman, M.E.: Self-regulatory strategies in daily life: selection, optimization, and compensation and everyday memory problems. Int. J. Behav. Dev. 40(2), 126–136 (2016) Sanford, N.: Self and Society: Social Change and Individual Development. Routledge, London (2017)

The Modern State and Forms of Implementation and Regulation of Civil Control Institution Olga S. Ivanchenko1(&), Natalya V. Koloskova2, Valeri V. Kasyanov3, and Alexander P. Bandurin4 1

4

Platov South-Russian State Polytechnic University (NPI), Novocherkassk, Russia [email protected] 2 Institute of Service and Entrepreneurship (Branch), Don State Technical University, Shakhty, Russia [email protected] 3 Kuban State University, Krasnodar, Russia [email protected] Kortunov Novocherkassk Engineering and Reclamation Institute (Branch), Don State Agrarian University, Novocherkassk, Russia [email protected]

Abstract. The chapter is devoted to the basic essential characteristics of civil control as the basis for the development of civil self-organisation. The key factor in development and formation of civil control is self-organisation – the ability of the population to social interaction at the level of coordination of socially significant goals. Practices of self-organisation are treated as forms and models of association of initiative citizens groups for the purpose of collective requirements expression – the messages about some problem conditions of activity of all the local community or of its considerable part. The indicators of living standards of population as a whole largely depend on civil activity and selforganisation. Keywords: Civil control Responsibility


Civil society
Self-organisation
Initiative


1 Introduction One of the priorities in formation of Russian civil society and the rule of law is development of mechanisms and tools of civil control. Among the elements of civil society, a special place is occupied by self-governing communities – associations, unions, public organizations and other associations. These organizations, reflecting the interests of different population groups, play an important role in development of democracy and implementation of civil control. Non-governmental organizations are engaged in lobbying and representation of interests of various social groups, providing them with ample opportunities to participate in the process of development and decision-making of public policy. They form public opinion and represent the sphere of © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 623–630, 2020. https://doi.org/10.1007/978-3-030-39319-9_69

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interaction between the interests of the individual, social groups and the state, supported by the processes of self-organization implemented in local government. The state is a part of the social political system and supports the normal activities of public organizations and other components of this system. This is reflected in granting of the constitutional citizens right to unite in public organizations and in creation of the necessary conditions for their successful activity, determination of legal status of some public organisations, protection of their activities, targeted financing of certain socially useful programs. All this contributes to stability of public life and establishing of true social democracy.

2 Materials and Methods In general the existing works about civil control can be divided into certain groups. To the first, the main group they can attribute the works of philosophical, sociological, theoretical aspects. They treat control as a broad social institution: a form of socialist democracy, the function of public administration, the function of the Soviet state, the form of involvement of workers in management, ensuring discipline and the rule of law in public and social activities (Chernogolovkin 1970; Afanasyev 1973; Lunev 1974). A number of domestic researchers consider control to be a form of democracy, an element of power relations revealing for the first time the dependence between the stages of management and the limits of control exercised by the people (Shakhnazarov 1974; Makarov 1975). The study of the history of the Soviet time public control brings great benefits, both in scientific terms and in terms of use of positive experience in organization and control accumulated over the years of Soviet power. The most numerous group consists of control function studies of specific state’s bodies, public organizations and citizens (Shorin 1981; Tagunov 1975; Studenikina 1974). There are serious works in which the question of public control in public administration is considered both on purpose, and along with consideration of general problems of public organisations management and activity (Malkov 1965). The modern domestic studies of civil control problems are focused on such issues as, the role of civil control in the mechanism of social systems self-organisation, the role of the individual in the system of civil control, the prospects of civil control in connection with development of information technology (Shcherbakova 2016; Yanitsky 2012; Goncharov 2010). There is a significant amount of foreign, primarily European scientific literature devoted to public control. At the same time, the most widely studied area among Western lawyers and political scientists is the problem of civil society and public control in the globalising world. It should be noted that Western society has a long history of development of institutions of democracy and civil society, so the problems posed by modern Western researchers often go beyond and far ahead of Russian ideas of social control development. For example, the priority studies are focused on specificity of information, organisational coordination and interaction of the figures and organizations of social control (Arato 2003; Valades 2006; Pleines 2005; Keane 2003).

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3 Results and Discussion Civil control mechanisms have a number of significant differences from authorities’ internal control mechanisms: – the effectiveness of civil control depends on degree of development of the civil society. Well developed civil society is the basis for reproduction and development of intellectual resources that mobilise the fight against destructive factors of the state and are able to prevent deviations of public policy from the interests of society, directing it to a more favourable path of development; – civil control is a social activity that does not involve material compensation, and therefore unites people on the basis of firmness of beliefs, high principles and moral standards; – civil control has the characteristics of an open system. The criterion of significance of any subject of civil control is public authority, which consists not just of words, but of specific deals of public importance. Unlike elected state authorities, subjects of civil control are not elected for any fixed term. Public authority is the result of a complex and usually lengthy process that of permanent character. Any subject of civil control, having abused his public power, immediately loses this power without any formal procedures, which excludes usurpation, since it is impossible to usurp the power that is held exclusively by the public authority. Elements of civil control are thus present in the civil control system itself. The civil society should be a catalyst for development of civil control and social activity of Russian citizens through involvement of representatives of executive and legislative authorities, business and the media in discussion of this problem and joint work on its solution. However, implementation of active and open involvement of public organizations in various forms of civil activity will depend on effective interaction and partnership dialogue with the authorities and, of course, the population’s activity in solving various problems. The population should not be indifferent to the events taking place in society. The basis of scientific study of the level of civil society development and the effectiveness of the civil (public) control are the sources of empirical information, which include the results of sociological research conducted by the authors in Rostov region (2018). The representativeness of research procedures is ensured by implementation of multi-stage quota sampling. The sample size of the study is 539 respondents. Development of constructive ideas is impossible without social and civil activity of the citizens, even in modern conditions of insufficiently developed legal culture and passivity and indifference of citizens. The stability and integrity of the social system largely depends on availability of a true opportunity for people and public associations to express and implement their ideas. A progressive idea may acquire a mass character when there is an opportunity to share it to the masses. Even if such an idea is not immediately supported by society, its public coverage will already promote public awareness and create prospects for its development.

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Small social groups and individuals, becoming repeaters of ideas of civil control, by modern information means are capable to awaken civil awareness of people in various regions of the planet with knowledge and activity. Representatives of civil society increasingly participate in public hearings; discuss strategies for development of the territory as equal subjects of state and social interaction. Public organisations make carry out examination of regulatory legal documents of executive and municipal authorities, act in publications and the media. This positive experience should be used to engage the civil sector in stimulating people’s activity. In the course of sociological research, the respondents, independently assessing their own civic activity, were divided almost equally: 51.5% consider themselves to be activists and 40.5% assess their position as passive. It should also be noted a large number of difficulties with the answer – 21.4%. If we consider the age structure of the respondents, the age of activists is from 23 to 35 years, the age of passive citizens is 45–55 years, the young people from 18 to 20 in most cases have not decided on their position and, accordingly, have difficulty with the answer. Most citizens do not feel personally responsible for what is happening in the country (44%) and only 28% consider themselves personally responsible. At the same time 44.2% associate the concept of “citizen” with active citizenship. According to the respondents, “citizenship” implies such qualities as responsibility (36.2%) and patriotism (34.1%). Civil activity, according to the population, is expressed in: voting in elections and referendums – 50.8%, participation in activities for improvement of the city – 36.4%, membership in a public organization – 30.2% (Fig. 1). The level of population involvement in activities of public organizations is extremely low, only 14.6% of the respondents participate in activities of public organizations. However, it should be noted that potential level of desire to participate in these activities is 28.3%, but the respondents have not yet found an acceptable form of participation (Table 1). The developed system of public associations is an integral element of civil society. They can be used to jointly solve common problems, meet and protect common needs and interests in politics, economy, culture, in all areas of public life. These organizations are independent of the state but able to influence the state institutions and protect them from unjustified interference in public life. There is a need for a dialogue between the authorities and society, where society should not wait for representatives of administrative bodies to create conditions for partnership. The active representatives of society should feel the need to create these conditions themselves, and this is precisely absent in our society. Civic engagement, civilian control is of a formal character. That is confirmed by the fact that 59.2% of residents do not know what they can do for society, taking part in public hearings. The desire to participate in public hearings expressed only 26.9% of respondents and 52.2% do not want to participate in public hearings being not interested in this issue. The concept of the rule of law and civil society presupposes that public associations are an important part of the state and act as a link between the state and the individual. The state is a part of the political system of society and supports the normal activities of public organisations and other components of this system. This is reflected in granting of the constitutional right of the citizens to unite in public organisations and in creation of the necessary conditions for their successful activity, determination of the

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ParƟcipate in acƟviƟes for improvement of the city Are members of public organisaƟons Are members of a poliƟcal party/movement Vote in elecƟons and referendums ParƟcipate in rallies, demonstraƟons, pickets Work (cooperate) in local authoriƟes Other 12%

8%

1%

21% 17%

29% 12% Fig. 1. Distribution of experts’ answers to the question “What, in your opinion, is the most frequently expressed kind of civil activity of the population?” (percentage of the number of respondents) (One hundred percent ratio is not maintained, as experts were offered to choose several answers at the same time.) Table 1. Involvement of the population in public initiatives Answer Yes, I participate in the activities of public organizations Yes, there is such a desire, but I have not yet find an acceptable form of participation I see no personal the benefit of such a participation These organisations are unlikely to benefit from my participation I’m not interested Hard to say

% of the number of respondents 14,6 28,3 27,87 9,9 9,1 10,2

legal status of some public organisations, protection of their activities, targeted financing of certain socially useful programs. All this contributes to the stability of public life, establishing the true democracy in society. The role of public associations in political development of our society is determined by the fact that they, as civil society institutions, constitute the natural foundation of

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political democracy. The state and public organizations are mutually connected and ensure each other’s development, including mutual control. An important indicator of the development of civil society is the level of social integration and self-organization. Social integration is the ability of society to coordinate the interaction of individuals and social groups. It depends on how society is able to cope with various problems. The basis of horizontal and vertical relations in society is trust. At the same time, it plays an important role in construction of group identity, in particular, in civil associations (social movements, parties, clubs, charitable organizations, etc.). The credibility of the institutions instead of total control and violence that is the basis of legitimating the power, generates tolerance and patience. Interpersonal trust allows the individual to be sufficiently clear about the consequences of his actions and responses of others. The lack of interpersonal trust deprives a person of the ability to act, leads to social disunity. Unfortunately, today threequarters of Russians (76%) express confidence that in relations with people one should be careful, and only 18% – that most people can be trusted. Therefore, Russians consider the bulk of their fellow citizens to be strangers, in relations with whom one should not be too open (Mersiyanova 2007). Civil control is a special structure in which society should become a partner of the state and not allow this institution to completely subordinate lives of the citizens. The tasks of civil control are to limit the self-will of the state and to formulate a system of sharing responsibility with it for the social situation through participation of public and civil associations and non-governmental organizations in solving social problems. At the same time, the society represents interests of the citizens and their ability to selforganise when cooperating with the state. The involvement of population in various social structures is an indicator that characterises development of the civil society (Abramova and Ponomarenko 2012). For implementation and formation of foundations of civil society, the activity of citizens, their readiness to independently seek solutions to problems and take responsibility should be a mandatory element. One of the main tasks of the authorities is to awaken social activity of citizens, to give them the opportunity to independently and under their own responsibility carry out their own initiatives to solve important and everyday issues of the local life. Today, we can say with particular confidence that the full comprehensive development of the territory is possible only on the basis of effective dialogue between the local authorities, organisations of the third sector and the business community. Therefore, the prior activity of the authorities is relationships with the residents, public organisations and the local business community. Public and civic passivity of our citizens is conditioned by the cultural and historical aspects: the transition from administrative-command control to a market economy has formed negative attitudes to the activity of public organisations; the conviction of impossibility to deal with bureaucracy, corruption authorities formed a passive attitude of socio-economic and political processes. Unethical behaviour of officials and the weakness of the legislative framework do not contribute to the development of public society and democratic principles in the state.

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4 Conclusion For development and implementation of civil control, it is necessary to use all available legal technologies and means—legal, technical, international political, highly technological and scientific. The scientific achievements in development of information technologies have created great opportunities for information accessibility, transparency, and openness, coordination of actions and exchange of experience. The wide dissemination of political information can have a significant effect. The maximum effect is achieved through combining different mechanisms. Thus, in order to exercise control over the authorities, it is important to use the official mechanisms of referendum, elections and recall of deputations, dissolution of elected authorities, appeals to administrative authorities, to the courts of general jurisdiction and constitutional courts, on the one hand, and personal civil actions, on the other. Information control should be exercised over the media, including through the Internet, and at the same time there should be held a constructive dialogue with the authorities within the framework of public associations and public councils. There is a need to make more active use of human rights commissions and ombudsmen at various levels, including the international ones. To increase the effectiveness of all these mechanisms, the organizational capabilities of public associations should be widely used. Civil control can be effective only when it is actively supported by the General public. The more civil activity shows the population, the less the authorities are prone to abuse, and vice versa, because, as we know, “The power corrupts, and absolute power corrupts absolutely” (Baranov 2008). It is important to realise that everyone is responsible not only for his own activities, but also for the activities of the Parliament, the government and foreign policy activities of the state. If the highest official of a state commits unlawful acts and abuses on behalf of the state, every passive citizen becomes an accomplice to these crimes. Ultimately, it is the citizens who will have to pay for these crimes. That has happened many times in the world’s history, and so is it now. A passive political position is unacceptable for a citizen, because if a citizen does not want to engage in politics, it will engage in him (Jacobson 2013).

References Afanasyev, V.G.: Nauchnoe upravlenie obshhestvom (Opyt sistemnogo issledovanija) [Scientific Management of Society (Experience of system research)], Moscow (1973). 384 p. Chernogolovkin, N.V.: Teorija funkcij socialisticheskogo gosudarstv [The Theory of Functions of Socialist States], Moscow (1970). 215 p. Lunev, A.E.: Teoreticheskie problemy gosudarstvennogo upravlenija [Theoretical Problems of Public Administration], Moscow (1974). 236 Shakhnazarov, G.H.: Socialisticheskaja demokratija. Nekotorye voprosy teorii [Socialist Democracy. Some Questions of Theory], Moscow (1974). 241 p. Makarov, B.M.: Narodnyj kontrol’: organy i pravovye formy dejatel’nosti [People’s Control: Bodies and Legal Forms of Activity], Moscow (1975). 151 p.

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Shorin, E.V.: Kontrol’ za dejatel’nost’ju organov gosudarstvennogo upravlenija v SSSR [Control over the Activities of Public Administration in the USSR], Moscow (1981). 301 p. Tagunov, E.N.: Narodnyj kontrol’ nad dejatel’nost’ju apparata upravlenija mestnyh Sovetov [People’s Control Over the Activities of the Administration of Local Councils], Minsk (1975). 251 Studenikina, M.S.: Gosudarstvennyj kontrol’ v sfere upravlenija. Problemy nadvedomstvennogo kontrolja [State’s Control in the Field of Management. Problems of Supra-departmental Control], Moscow (1974). 160 p. Malkov, V.V.: Obshhestvennyj kontrol’ v sovetskom gosudarstvennom upravlenii [Public Control in the Soviet State Administration], Moscow (1965). 195 Arato, A.: Grazhdanskoe obshhestvo i politicheskaja teorija [Civil Society and Political Theory], Moscow (2003). 231 Valades, D.: Kontrol’ nad vlast’ju [Control over Power], Moscow (2006). 189 Pleines, H.: Participation of civil society in new modes of governance, Bremen (2005). 235 Keane, J.: Global civil society, Cambridge (2003). 241 Mersiyanova, I.V.: Obshhestvennaja aktivnost’ naselenija i vosprijatie grazhdanami uslovij razvitija grazhdanskogo obshhestva [Public Activity of the Population and Citizens’ Perception of Conditions of Civil Society Development], Moscow (2007). 115 Abramova, I.E., Ponomarenko, T.V.: K voprosu o vzaimodejstvii grazhdanskogo obshhestva i samoupravlenija v sovremennoj Rossii. Problemy vzaimodejstvija grazhdanskogo obshhestva, gosudarstva i biznesa: opyt Rossii i Germanii. Kollektivnaja monografija [On the Interaction of Civil Society and Self-government in Modern Russia. Problems of Interaction of Civil Society, State and Business: the Experience of Russia and Germany]. Collective monograph, Rostov-on-Don, pp. 156–162 (2012). (in Russian) Shcherbakova, N.V.: Pravovaja ustanovka i social’naja aktivnost’ lichnosti [Legal Attitude and Social Activity of the Individual], Moscow (2016). 123 p. Yanitsky, O.N.: Grazhdanskie iniciativy i samodejatel’nost’ mass [Civic Initiative and the Initiative of the Masses], Moscow (2012). 236 p. Goncharov, A.A.: Grazhdanskij kontrol’ nad organami vlasti [Civil Control over Authorities]. Ves’ Mir, Moscow (2010). 224 Baranov, N.A.: Jevoljucija sovremennoj rossijskoj demokratii: tendencii i perspektivy [Evolution of Modern Russian Democracy: Trends and Prospects]. St. Petersburg (2008). 276 p. Jacobson, L.: Grazhdanskoe obshhestvo v modernizirujushhejsja Rossii: analiticheskij doklad [Civil Society in Modernising Russia: an Analytical Report], Moscow (2013). 231 p.

The Political and Administrative Elite in the Social Structure of the Russian Society Valery V. Kasyanov1(&), Irina V. Lipchanskaya2, Natalia N. Usataya3, Vladimir V. Palkin4, and Anna A. Kulikova5 1

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Kuban State University, Krasnodar, Russia [email protected] 2 Rostov State Economic University, Rostov-on-Don, Russia [email protected] 3 Rostov State Transport University, Rostov-on-Don, Russia [email protected] South-Russian Institute of Management, Russian Academy of National Economy and Public Administration, Rostov-on-Don, Russia [email protected] 5 Institute of Service and Entrepreneurship (Branch), Don State Technical University, Shakhty, Russia [email protected]

Abstract. The chapter is devoted to the socio-political understanding of the political and administrative elite in the social structure of society from the standpoint of the structural-functional approach. The relevance of the research topic is due to the need for a more specific concept of “political and administrative elite”, and studying the boundaries of the Russian political and administrative elite. The factors of determination and the principles of the formation of the Russian political and administrative elite are considered. Keywords: Political and administrative elite
Political elite
Bureaucratic elite
Social structure
Russian society
Interaction models
Value approach
Structural-functional approach

1 Introduction In the world and modern scientific community, there is an increase in genuine interest in the elites, first, in political, administrative, as well as their explication and the definition of boundaries. The relevance of the research on the political and administrative elite in the social structure of society is determined by the increased role and political importance of power groups, mechanisms and institutions for the formation of a managerial class, the principles and laws of the functioning of echelons of higher state power, and the role of the political and administrative elite in society. The elite formations, being the upper level of the social hierarchical structure, are an integral part of any society. They are one of the key factors that ensure all social dynamics. As Zhalsanova emphasizes in her dissertation research, “the potential of the political elite, inherent in its ability to relate reality to social development models and © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 631–641, 2020. https://doi.org/10.1007/978-3-030-39319-9_70

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its ability to use social resources, can contribute to further reforming our society and its exit from the crisis state. For this, it is necessary for elites to overcome their marginal state as quickly as possible” (Zhalsanova 2000). Socio-historical elitist attitudes explaining the processes occurring in the social structure of society during its development, up to the turn of the 19th–20th centuries, developed within the framework of philosophies and doctrines. By the end of the 19th century, an independent scientific direction began to emerge - elitology as a theoretical approach describing social inequality and the separation of society into groups in terms of the phenomenon of the uprising of the masses. The dynamic nature of the managerial elite, within the framework of the public service system, along with the constant complication of social relationships and interrelations, is a determining factor of institutional changes in the public administration sector. Currently, this process is characterized by the absence of strict nomenclature boundaries of managerial decisionmaking levels and branches of government, the emergence of a number of qualitatively new groups of political interests, ideological attitudes and beliefs, transformational changes in the system of goals and values (Vodenko et al. 2016) of various elite groups. Being a source of valuable information for Russian politicians, government officials (bureaucrats) effectively control the flow of information, and thereby influence the political decisions taken by the highest political elite. The problems of articulation and promotion of the interests of the bureaucracy, the political consequences of the growth of the administrative apparatus remain among the topical issues of modern political, sociological and other studies. Discussions and disputes about the political role of the bureaucracy, as a rule, concentrate on a small elite group of civil servants, which are officials of the highest category. In this study, as the administrative elite will be understood not the entire management apparatus, but only that part that is associated with the adoption of management decisions, for example, members of the cabinet of ministers and heads of departments.

2 Materials and Methods The theoretical and methodological basis for modern theories of elites was originally laid by Moska (1995), Pareto (1995) and Michels (1990). When identifying the elite in the structure of society, the researchers proceeded from the assumption that in the basis of all social relations lied political power from the side of political elite. This was the main difference between their views and the Marxist class theory, which proceeded from the promises of socio-economic determinism. As for the Russian research literature, the methodological basis of the elitological paradigm is connected with the opposition of the elite and egalitarian principles known in political and social philosophy. At the same time, the complexity of comparing and dividing the political and administrative elite in the social structure of Russian society lies not only in the fact that different approaches to the study of these status groups are highlighted, but also in the fact that there is no generally accepted approach to their interpretation and explication. The most used categories when describing the Russian

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political elite are: “the highest stratum or the ruling class” (Ignatov et al. 2005) “the ruling elite” (Bystrova and Duka 2008), “The ruling group” (Gaman-Golutvina 2006). So, Gaman-Golutvina considers the ruling elite “as an internally cohesive, constituting minority of society, a social group that is the subject of preparation and decisionmaking, or influencing the adoption or rejection of the most important strategic decisions and possessing the necessary resource potential” (Gaman-Golutvina 2006). Since one of the key categories is the political and administrative elite, let us look at the semantic interpretation of the original concept of “elite”. Etymologically, the concept of “elite”, being a political category, comes from French word “elite” (best, selective, elected) and is used to identify in the social structure of society an independent, small group of “chosen people” endowed with high social status, allowing to have a significant impact on certain aspects of social life or on all social activity of various groups of society (Shakbanova et al. 2018). The forefathers of the scientific category “elite” are G. Mosca and V. Pareto. Historically, the elite is the highest stratum in the hierarchical system of social structure, emerging as a result of the socio-political, socio-cultural and economic stratification of society. In order to deeply comprehend the essence of the content of the notion “political and administrative elite”, it is necessary to consider the approaches to the study of the political elite. In scientific sociopolitical practice, there are many approaches that can be divided into two groups - value and structural-functional. G. Moska is considered to be one of the first scientists who described the differentiation of elites and non-elites on a structural-functional basis (unlike the oligarchic principle of R. Michels).

3 Results Elite is considered to be those who occupy key positions in management, and have real power. The existence of the political and administrative elite is determined by the following factors: – Inequality of people (psychological, social, educational, economic), as well as unequal abilities and aspirations to participate in politics (Vaskov et al. 2018); – The law of the labor division, which requires professional managerial work, acting as a condition for its effectiveness; – High social significance of social labor and its corresponding regulation (Vodenko et al. 2017); – Political passivity of various segments of the population living in a risk society, the main vital interests of which usually lie outside the sphere of political and administrative management (Gafiatulina et al. 2018). These and many other factors determine the elitism of the political structures of society. The analysis of the basic provisions of political elitology, along with the generalization of the experience of the adaptation of elitology to Russian conditions, made it possible to formulate its fundamental principles presented in the works of Rostov scholars A.V. Ponedelkov and A.M. Starostin. Therefore, the main principles of the Russian political elitology are the following:

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– The principle of social and anthropological determination of elites, the factors of which are: anthropological inequality, professionalization of management activities, asymmetric separation of administrative and control functions in state and bureaucratic management. – The principle of civilizational experience and originality of elites. Thus, the peculiarity of political and administrative elites in the social structure of Russian society is determined by sociocultural and ideological orientations, and forms such basic elements as “society - state - world - spirituality - all-unity - conscience - justice”. Russian universals, of course, differ significantly from the Western orientations of “individual - civil society - right - market - progress - freedom - reason”. – The principle of circulation of elites, in accordance with which the development of Russian society is carried out through the alternation of various types of elites: the most authoritarian elites are replaced by the most democratic elites, prone to compromise. – The principle of oligarchization of elites, manifested in the fact that the formation of large-scale organizations inevitably leads to the oligarchization of certain segments of society and the formation of a political and administrative elite. The fact of oligarchization of elites is determined by the fact that the leadership of large organizations cannot be implemented on a parity basis by all members. – The principle of consolidating mechanisms in elitogenesis and the functioning of elites. The consolidating mechanisms include a common ideology, joint political interests, administrative technologies (Ponedelkov and Starostin 1998). What are the criteria for classifying the types of the modern administrative-political elite in the structure of Russian society? According to the latest political science dictionary, the most important criteria for classifying the types of administrative and political elites in the structure of Russian society include the following: – The degree of participation in the exercise of power, in accordance with which the ruling political elite is singled out (that is, the part of the political elite that is directly involved in the implementation of power, making the most important sociopolitical decisions) and the opposition elite, unable to directly exercise power. – The scope of authority, based on which, there are three levels of political and administrative elite. The first level is the highest political elite, the representatives of which have state power and occupy strategic government positions in the system of making political decisions significant to the state. The second (middle) level is the regional political elite; its representatives occupy positions in elected bodies of power and act as a kind of barometer of public opinion. The third level is exclusively the administrative elite, consisting of the highest stratum of civil servants managers (bureaucrats). The administrative elite is civil servants holding senior positions in ministries, departments and other government bodies. – The structure and nature of intra-elite ties and relationships, according to which it is customary to single out an integrated and disintegrated political and administrative elite. The former is characterized by a low level of conflict and competitiveness against the background of group cohesion. The second is characterized by

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confrontation over the distribution of power between different levels of elite groups (New Political Science Dictionary 2010). Political and administrative elites include top executives, managers and ideologists, representatives of various sectors of society, whose opinions enjoy great prestige. What are the functions of the political and administrative elite? Firstly, the elite plays an important role in determining the political will of a social group or class, in developing mechanisms for the realization of this will. Secondly, the elite must form the political goals of its group and its program documents. Thirdly, the political and administrative elite is the main reserve of leading cadres, the center of recruitment and placement of leaders in various sectors of political, state and municipal government. The functions of the ruling group in the Russian state and society belong to the ruling class. It is important to understand the fundamental differences between the elite and the ruling class, which originate from their essence. Therefore, if the political elite has access to power by the presence of material wealth, prestigious education, and professional politics, the ruling class gets wealth, various privileges and a high level of social status thanks to the possession of power. It exclusively controls the Russian society and thus differs from the dependent managed population (Vodenko et al. 2018). The system of recruitment into the structure of the political and administrative elite is based on the principle of “clientelism” (“award system” for loyalty to the “patron”). Political power endows the potential candidate to the political and administrative elite with privileges and social status. Today, within the highest echelons of state political power, Soviet client-patronage ties based verified personal devotion to a superior politician are preserved. It is enough to note that the majority of political henchmen of the president V.V. Putin for the key government posts came from St. Petersburg or worked in the KGB of the USSR. This indicates the preservation of continuity with the nomenclature rotation of the modern political and administrative elite, and argues in favor of the multi-source nature of elite formation. Thus, for example, a rotational personnel scheme has become typical: “the political elite - the administrative elite - the business elite”. This scheme reproduces the nomenclature scheme that existed earlier in the Soviet space, but in the reverse sequence: “the economic manager - the administrative worker - the political figure”. Such specificity of elite formation in Russian society due to increased circulation of elite increases the degree of their corporatism. From this, we can conclude that the current Russian political and administrative elite in the social structure of society is close to the nomenclature, in contrast to the Western type of elite. If we talk about the specifics of the activities of the Russian political and administrative elite, then we should pay attention to the fact that it continues to be guided by administrative methods in managing political and socio-economic processes. In the context of the study of the modern Russian political and administrative elite in the social structure of Russian society, it should be said about the monograph by A.V. Lifanov and A.I. Stepanov. The authors defend the thesis that it is not easy and possible to draw a clear line between the political and administrative elites, and to determine exactly where the political official’s activities end and the policy-free administration begins (Lifanov and Stepanov 2007). The administrative elite in the

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social structure of Russian society not only seeks to defend its corporate interests, partially reincarnating itself into the political elite, but also significantly weakens the power positions of the political elite. Such trends, on the one hand, contribute to a higher degree of cohesion and sustainability of the ruling elite as a whole, and on the other hand, the participation of government officials in the political decision-making process is dangerous by politicizing the civil service and bureaucrating the process of developing the country’s political course. In our opinion, the administrative elite is not the entire administrative apparatus, but only that part of it that is related to the adoption of management decisions, for example, members of the cabinet of ministers, and heads of departments. According to Kosorukov, the use of “an authoritarian management style and bureaucratic mechanisms and methods for implementing decisions taken, do not allow to hope for the solution of socio-economic problems on which the success of further reforms depends in all areas of society” (Kosorukov 2014). Within the framework of the functional approach to the interpretation of political and administrative elites, the interpretation of the domestic political scientist Kurginyan is of interest. In his opinion, the elite is a political community with such necessary qualities as a game resource and game reflection, the ability to quickly grasp the essence of a political game (this is an understanding of the political elite); the ability to possess the means and methods for conducting a political game (this is an understanding of the administrative elite). Gaming subjectivity, according to Kurginyan, is a serious factor for entry into the community of the elite. Moreover, the administrative elite can also be elite along with a political one, but at the same time, it is exposed to the risk of ceasing to fulfill its direct duties, deviating from control over the game resource in the direction of game reflection. Thus, in this interpretation of the political and administrative elites, presented by Kurginyan, there is an attempt to partially solve the problem of distinguishing between two types of elites: political and administrative (Kurginyan 2008). The above-mentioned Gaman-Golutvina, while analyzing the elite from the standpoint of structural functionalism, partly confirms the point of view of S.Ye. Kurginyan, arguing that the political and administrative elite in the social structure of Russian society is a community of people who make strategic political and managerial decisions (Gaman-Golutvina 2008). We believe that political and administrative elite in the social structure of society is a small group of people who, by virtue of their social position in state and bureaucratic organizations, are able to regularly and significantly influence the political decisions of the state, as well as those who have the organized ability to consistently solve topical social issues and political problems. The political and administrative elite in the social structure of society consists not only of prestigious and recognized leaders - leading politicians, senior administrative officials and major businessmen, but also of individuals who are leaders of public organizations, such as trade unions, public associations, political movements, clergy leaders and others. Two views on the political and administrative elite dichotomy can be identified. This dichotomy is associated with certain types of labor, which are the basis for the political behavior of non-elites and joining supporters of certain political positions.

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(1) The status attitude to power, peculiar to the workers, who either believe that for the daily execution of their work they do not need power, or they believe that in a relationship ruling - subservient they always belong to the second group. Considering that the bureaucratic tasks and the tasks of providing services cannot be realized without the ubiquitous but prudent and purposeful use of power, this working population is less inclined to regard the specific power actions from the point of view of the “right” of those who have the power to act appropriately. For them, the question is whether the use of power serves the goals and objectives of the organization. (2) Administrative attitude peculiar to administrative and office workers engaged in mental work, who see the exercise of power as an important and necessary means for the constant and effective implementation of their work tasks. Employees who share the administrative attitude to the authorities do not pay attention to the legitimacy of the status order that exists in society. Such workers believe that in any work environment, different people have a certain degree of power, and there is no other way in complex social contexts. The Russian political and administrative elite, like other communities, includes groups of individuals, and is a kind of hierarchical pyramid: officials at its top who are endowed with more power and significant influence than those at the bottom of the pyramid.

4 Discussion In his work “The Ruling Class” (1939), Moska noted that in any society there is a ruling minority (“political class” or elite) and a non-ruling majority subject to this minority (Moska 1994). The political elite, applying the imperious control mechanism, implements political functions in relation to the common population. Moska, not being solely limited with the framework of the structural-functional approach, emphasizes that the ruling minority, which has a decisive influence on the economic system, must have both material and moral superiority over the managed society. Namely, to carry certain personal qualities: not only aristocratic - the desire to pass on their own privileges by inheritance, but also democratic - to attract new members of the elite in the election process (Moska 1994). In the second half of the 19th century, relying on the structural-functional approach, the German researcher Eisenstadt proposed his own model of political and administrative elite dichotomy, taking into account three scenarios of interaction between the political and bureaucratic elite. At the same time, these scenarios were developed for three categories of societies: traditional, modernizing and transitional (Eisenstadt 1973). Each model of society is focused on certain political interests and goals. Thus, the traditional model of the administrative service is focused on maximizing the power positions (i.e., the political elite strives to fulfill the functions of bureaucratic officials); in the modernization model the administrative service is oriented towards the society (i.e., the bureaucratic elite is aimed at implementing the functions of the political elite); and in the transitional model, the administrative service seeks to satisfy its own

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interests (i.e., the bureaucratic elite - officials are limited to their own group interests, while the political elite does not fulfill or unfairly perform its direct functions) (Eisenstadt 1973). Following S.N. Eisenstadt, a few years later, other scientists – J.D. Aberbach, R.D. Putnam and B.A. Rockman, using the structural-functional approach, conducted an analysis with the aim of correlating administrative and political elites in the social structure of society and the state. They identified four models of interaction depending on the contribution made to the decision-making process: (1) an ideal model (the political elite rules, and the bureaucratic elite governs); (2) the real model (the political and administrative elite closely cooperate, jointly developing and making decisions, but at the same time fulfilling various functional responsibilities); (3) converging (or participation model) (political and administrative elite participate in decision-making); (4) hybrid model (the differences between the administrative and political elites practically cease to exist) (Aberbach et al. 1981). The Russian elitology has its own approach – a polycentric one, having connection with the structural-functional approach, emphasizing the diversity of models and functions of interaction between the elites. At the same time, one part of the Russian elitological scientific and expert community proceeds from the institutional identification of Russian elites; the other part, relying on functional role-playing positions, identifies them as defective elites and anti-elites. Wherein, many authors conclude that the elite-forming process of creating the political and administrative elite is still far from its completion. According to Ponedelkov and Starostin, the analysis of civilizational, sociopolitical and economic specifics of the development of Russian society shows that for the Russian post-Soviet reality, unlike the Western states, the program-targeted method of political management by the elite, turns out to be the most adequate one, “allowing to preserve state integrity and identity in the circumstances of geopolitical and geographical-climatological realities” (Ponedelkov and Starostin 2006). In subsequent collective studies, from the point of view of Ponedelkov, Starostin and Shvets, a more “representative” is the position on the incompleteness of the processes of institutionalization of elitogenesis, designating Russian elites as protoelite communities. A more adequate model in this case would still be the polycentric model of elites in the complex Russian society” (Ponedelkov et al. 2013). It is important to identify the boundaries between the political and administrative elites. So, Rudoy, Ponedelkov, Starostin, Shvets in a collective article focus on the notion of “elite identity”, which contains a sense of being chosen and belonging to the politico-administrative layer, as well as responsibility for the policies implemented and awareness of its purpose at all levels: local, regional, national. This internal selfreflection of the political and administrative elite is of great importance for the ruling elites in various activities: socio-cultural, economic, scientific, and religious. Here, the nodal meaning belongs to the awareness of their identity and their own distinction, their qualitatively new capabilities and mission, determined by their social position. Such a

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feeling can be typical for any representative rooted in the elite layer (Rudoy et al. 2010). Comprehending the way the politicians and administrators determine their social role-playing positions, allows solving the problem of the extent to which they correspond to the classical non-political style of behavior. Moreover, this degree is often the subject of discussion in practical activities and in the scientific community. In addition, it is possible to clarify the question of the role of politicians, in particular, whether they act for the common social benefit or are oriented in their behavior towards the satisfaction of particular or narrow individual-power interests. Ponedelkov and Zmiyak define the political and administrative elite as the social and managerial layer of top state administration, and “a necessary condition for raising the level of the power elite is the legitimate way of its formation by the free will of all citizens” (Ponedelkov and Zmiyak 2008). Referring to the hierarchy both in the political and in the administrative elites, Mikhailova identifies the political or administrative model of accountability that characterizes the public sector, and the accountability model typical of the private or non-profit sector, but the so-called “hybrid mode” of accountability applies to networks, incorporating the specifics of the accountability models of the state and nonstate sectors. In the traditional management model, policies are largely excluded from the solution of specific tasks, shifting them to administrative bodies (Mikhaylova 2013). According to Kupryashin, the accountability of the elite also depends on differences in the formation and functioning of the political and administrative elite. These differences are related to the degree of its formal and actual politicization, the level of social capital, the approach of its representatives to their professional duties, as well as the personal motivators of their professional activities (Kupryashin 2014).

5 Conclusions As the analysis of the scientific political heritage has shown, the Russian elite-forming process of creating the political-administrative elite is still far from its completion. Domestic authors pay attention to the nomenclature origin of the modern elite and the multi-source nature of elite formation. The problem of approaches to the study of political and administrative elites, proposed in these studies, is based, in our opinion, on not entirely successful attempt of conceptual, analytical and essential division of the political elite and bureaucracy in the framework of political and administrative dichotomy. The models of interaction between the political and administrative elites presented in the chapter are very close to modern reality, and all the authors point to the complex interaction of bureaucratic and political elite interests.

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References Aberbach, J.D., Putnam, R.D., Rockman, B.A.: Bureaucrats and Politicians in Western Democracies. Harvard University Press, Cambridge/London (1981) Bystrov, A.S., Duka, A.V.: Russian regional elites: innovative potential in the context of globalization. Globalization in Russian Society, Eliseev. SPb. (2008) Eisenstadt, S.N.: Tradition, Change and Modernity, pp. 47–72. Wiley, New York (1973) Gaman-Golutvina, O.V.: Russia’s Political Elite: Milestones of Historical Evolution, 446 p. (2006) Gaman-Golutvina, O.V.: Elites and empires. The role of elites in changing paradigms of the socio-economic development of Russia. Mater. Sci. Semin. 2(16), 37–49 (1991, 2000, 2008). http://rusrand.ru/files/13/07/24/130724111837_Seminar_gos_upr_2%2816%29.pdf Ignatov, V.G., Ponedelkov, A.V., Starostin, A.M.: Administrative and political elites of Russia: methodological and phenomenological aspects of research. State and municipal government. Scientific notes of SKAGS, pp. 36–60 (2005) Kosorukov, A.A.: Legal and political aspects of management. State Adm. Electron. Messenger 2014(47), 299–317 (2014) Kurginyan, S.E.: The role of elites in changing paradigms of socio-economic development of Russia/Materials of a scientific seminar. In: Yakunin, M. (ed.) Scientific Expert, vol. 2, no. 16, pp. 10–36 (2008). http://rusrand.ru/files/13/07/24/130724111837_Seminar_gos_upr_2% 2816%29 Kupryashin, G.L.: Accountability as a property of the political network. In: State Administration: The Russian Federation in the Modern World. Materials XII International Conference, 29–31 May 2014. Infra-M (2014) Lifanov, A.V., Stepanov, A.I.: The political elite of the liberal-democratic type: the structuralfunctional model, 269 p. Novosibirsk State University, Novosibirsk (2007) Vaskov, M., Rezvanov, A., Kasyanov, V., Samygin, S., Gafiatulina, N., Zagutin, D., Scherbakova, L.: Valofue Orientations of Russian Youth in the System of Managing the Moral Security of Society. Herald National Academy of Managerial staff of culture and arts, no 2, pp. 134–140 (2018) Michels, R.: Sociology of a political party in a democracy. Dialogue, no 3, pp. 55–60 (1990) Mikhailova, O.V.: State capacity to manage network alliances. State administration. Electronic messenger, no. 38, pp. 144–152 (2013). http://e-journal.spa.msu.ru/uploads/vestnik/2013/ vipusk__38._ijun_2013_g._/pravovie_i_polititcheskie_aspekti_upravlenija/mikhailova.pdf Mosca, G.: The ruling class/trans. by T.N. Samsonova. Sociological studies, no 10, pp. 187–198 (1994). http://heraldnamsca.in.ua/index.php/hnamsca/article/view/309 Moska, G.: Elements of political science. Sociological studies, no 8, pp. 130–139 (1995) Natalya, Kh., Gafiatulina, G.A., Vorobyev, S.I. Imgrunt, S.I., Samygin, A.T., Latysheva, L.I., Ermakova, L.I.K.: Social health of student youth in south russia: analysis of the perception of socio-cultural risks. Mod. J. Lang. Teach. Methods 8(6), 32–41 (2018) Pareto, V.: On the application of sociological theories. Sociological studies. no. 10 (1995). no. 1 (1996) Ponedelkov, A.V., Starostin, A.M.: Introduction to political elitology, Rostov-on-Don, pp. 17–28 (1998) Ponedelkov, A.V., Starostin, A.M., Shvets, L.G.: Modern elitology: cognitive discourse. Hum. S. Russ. 4, 33–47 (2013) Ponedelkov, A.V., Starostin, A.M.: Post-Soviet evolution of regional and local administrative and political elites of Russia. Pro Nunc. Modern political processes, pp. 69–85 (2006)

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Ponedelkov, A.V., Zmiyak, S.S.: The elite of science - about the elites of Russia. Power, no 3. p. 96 (2008) Rudoy, V.V., Ponedelkov, A.V., Starostin, A.M., Shvets, L.G.: Political elites of modern Russia: ideology, values, identity of modern Russian political elites. Scienceology (2) (2010). http:// naukovedenie.ru/sbornik1/3-3.pdf Samusevich, A.V.: The relation of political and administrative elite: to the question of concepts. Bull. Volga Reg. Inst. Adm. 18(3), 122–129 (2018) Shakbanova, M.M., Gafiatulina, NKh, Samygin, S.I., Chapurko, T.M., Levaya, N.A., Bineeva, N.K.: Youth of the South of Russia: specifics of manifestation of ethnic identity (on the example of the Dagestan republic. Purusharta 10(2), 111–119 (2018) Shentyakova, A.V.: Trends in the formation of the federal political and administrative elite in the Russian Federation. Political Analysis, no 9, pp. 123–133 (2009) Pogorely, D.E., Feschenko, V.Yu., Filippov, K.V. (eds.): The latest political science dictionary, Rostov-on-Don, 318 p. (2010) Vodenko, K.V., Tikhonovskova, S.A., Ivanchenko, O.S.: Trends and prospects of transformation of the social structure of the Russian scientific community. Mediterr. J. Soc. Sci. 6(3) (2016) Vodenko, K.V., Shvachkina, L.A., Rodionova, V.I.: Perspectives of Development of the Russian National Socioeconomic and Political Model. Contributions to Economics, no. 9783319606958 (2017) Vodenko, K.V., Rodionova V.I., Shvachkina L.A., Shubina M.M.: Russian national model for the regulation of social and economic activities: research methodology and social reality. Qual. – Access Success 19, 2 (2018) Zhalsanova, V.G.: The political elite in the social structure of society in transition: on the materials of the Republic of Buryatia: author. Cand. Soc. Sci. Ulan-Ude (2000)

Factor of the Center in the Disintegration and Integration Trends of the Non-institutional Political Process Fatima A. Shebzukhova(&) and Ahmat A. Ebzeev Karachay-Cherkess Republican Institute of Professional Development of Educational Workers, Karachay-Cherkessia, Russia [email protected], [email protected]

Abstract. This article solves the problem of identifying the institutional factors of Russian foreign and domestic policy in the Caucasus in connection with the ethno-political challenges of the modern era. The need to consider this issue arose in connection with the close interrelatedness of the problems of domestic and foreign policy in the North Caucasus region. Keywords: Disintegration
Integration
Non-institutionalized political process
The North Caucasus
Russia
Hepolitics
Geostrategy

The foreign policy course in the Caucasus region is determined by the foreign policy interests of such political entities as the United States and the European Union, their geostrategic ambitions. One of the results of such a policy is the active use of forceful methods of suppressing the opposition from the ethno-clan regimes of a number of constituent entities of the Russian Federation in the North Caucasus. The need for political reintegration of the North Caucasus is based on the realization that the Caucasian peoples are “doomed to live together”. The demagogic efforts that are being carried out “from above” at the level of state (republican) bureaucracies to activate declarative integration have not played a significant role in any processes in the Caucasus and they do not reflect the genuine aspirations of the regional elites. Separatism based on the Pan-Caucasus idea, being popular (after the Sukhumi forum of national movements in 1989) was expressed in the creation of the Assembly of Mountain Peoples of the Caucasus. Then it was reformed into the Confederation of Mountain Peoples of the Caucasus. The final name of the organization is the Confederation of the Peoples of the Caucasus (Fedorov 2001). Members and supporters of the Confederation of Peoples of the Caucasus in the fall of 1991 announced the resumption of the process of forming the sovereign statehood of the Caucasian mountain peoples. At the same time, they declared their organization the legal successor of the independent North Caucasian Republic (which was formed in 1918). In this case, we are talking about the Mountain Republic, which was formed under the patronage of Germany and the Ottoman Empire during the First World War and with an official declaration of secession from Russia. Such an idea did not appeal to the Karachai-Balkarian national movement, which was set up to interact with the Russian center, which acted as the guarantor of the world. © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 642–647, 2020. https://doi.org/10.1007/978-3-030-39319-9_71

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It is possible to prevent future attempts of escalation of interethnic conflicts in the North Caucasus by means of economic cooperation and cooperation and development of transport networks. As political scientists note, now the main obstacle to this is that “modern foreign policy thinking has absorbed the principles that were established in Europe in the XVII–XIX centuries. This is largely due to the fact that “the Russian elite is characterized by the interpretation of national interests as the interests of the state (and in practice, of the state bureaucracy), and not society” (Fedorov 1991–2000. p. 43). The political scientist F. Shellov-Kovedyaev recalls: “all the experience of the twentieth century indicates that pragmatism in politics should be understood in the sense of following the interests of private citizens, including those united in private business structures, into private corporations.” So in foreign geopolitics, it is not necessary for Russia to consider the EuroAtlantic integration of the region as a political or even ideological project “initiated and carried out by the West” contrary to its goals (Simonia 1996). In political journalism, there is often a banal statement that “the Caucasus remains Russian because of two things. Firstly, because of the huge money poured there. Nobody will refuse a freebie… Secondly, the Caucasian peoples do not like each other, as a rule, more than they do not like Russians.” However, under the conditions of the global order formation, much will depend on the subjective factor - the strategy and flexible tactics of the Russian Federation in ethnopolitics, the approaches to the formation of which we are trying to outline in this paper. In our opinion, the most vulnerable points of this policy are most clearly manifested in the analysis of conflict situations. The close connection of theoretical conflictology with its practical applications in the conditions of modern Russian transformations is also an important reason for the transfer of conflictological research from the “country” level to the “regional” (Avksentyev et al. 2008). This is justified by the fact that “social tension and the conflicts provoked by it, resulting in sharp confrontations, especially with the use of armed violence, make it difficult to carry out socio-economic and political transformations…” (Stepanov 2005). Firstly, even if they are not directly involved in conflict actions. Secondly, the relationship of scientists with government and other administrative structures in the regions can have both positive and negative effects, which is determined by the specifics of the region, the level of democratic transformations in it, and the mono- or multi-ethnic composition of the population. Thirdly, it was fairly stable scientific ties between regional communities of conflictologists, restored by the middle of the first decade of the 21st century after the period of disintegration of regional scientific communities caused by financial problems (Avksentiev et al. 2008). The geostrategic significance of this approach is also obvious: politicians armed with cultural, ethnographic and ethnological knowledge could make arguments acceptable in any given situation, when taking into account the territorial claims of one or another ethnic group, correlating these claims with the geostrategy of Russia. This research area is relatively young, institutionalized somewhere in the late 1980s. But it was the regionalological approach that became one of the main ones in its

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formation. “The formation of regional conflictology has been going on since the second half of the 1990s, when some industry-specific conflictologies—economic, ethnic, psychological, political, and others—have already taken shape” (Avksentiev et al. 2008). As one of the most significant conflict-generating factors in the 1990 s, the authors cite the close relationship of the historical context with the peculiarity of the South Russian region—multi-ethnicity. According to their justifiable opinion, “the coincidence of historicity and multi-ethnicity as a manifestation of the concrete historical features of the South of Russia had a significant impact on the conflictogenic background of this region in the 1990s” (Avksentiev et al. 2008). In such multiethnic communities as the South of Russia, the economic aspect acquires an ethnic and/or ethno-confessional coloring, which often seems to people to be paramount. This strengthens the conflict-generating potential of the ethnosocial stratification of political-geographical territorial entities” (Avksentiev et al. 2008). “Immersion in ethnicity,” according to experts, “is often accompanied by a desire to merge ethnic and political units, which ultimately leads to interethnic conflicts and separatism” (Avksentiev et al. 2008). Dagestani researchers made interesting observations on this subject: “The situation in the North Caucasus is exacerbated by the insecurity of the rights of the indigenous population and corruption in the system of local self-government and in the field of regulation of land relations… In the conditions of the North Caucasus, private interests often lead to group conflicts that acquire an interethnic character. If the situation is not managed, local land conflicts develop into more serious clashes, which are often associated with the use of violence” (Avksentiev et al. 2008). Expert O. M. Tsvetkov is convinced: “the republics of the North Caucasus will continue to slide into a “gray”, weakly permeable for the Federal government “zone” with the growing formation of alternative to the all-Russian social, spiritual, ideological, political and other dominants. The formation of the internal Russian “abroad” (Chechnya, Dagestan, Ingushetia, some areas of the KCR) will also continue (underlined by the author)” (Avksentiev et al. 2008). As for the Karachay-Cherkess Republic, according to our observations, this statement is fundamentally false. O.M. Tsvetkov is right in that the problem of separatism will again become aggravated, “when the current “contract” of federal and North Caucasian elites is exhausted, when income from the sale of natural resources is reduced, and if by that time the basis for “civic values, the Russian nation, which includes the North Caucasians”. Attempts by the United States to further strengthen its own positions in the Caucasus will help maintain a high internal potential for conflict in the South of Russia, fueling it from the outside by provoking controlled conflicts” (Avksentiev et al. 2008). Europe is also concerned about this. Back in 2005, after a newspaper article by R. Khatuyev (West Caucasus Analytical Center) in the Republic of Karachay-Cherkessia, the case of denial of Muslims to travel to Europe, including residents of KarachayCherkessia, was widely discussed (Khatuev 2005). According to the participants of the expert survey conducted by the author of the dissertation, the real Russian ethnopolitics in the region is based on the gradation of local ethnic groups, among which stand out “faithful stronghold” (Ossetians), “especially trusted” (Kabardians), “generally loyal” (Dagestanis), and “unreliable” (all the nations deported by Stalin), etc.

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According to R. Khatuev, this opinion misses another obvious thing: the national movements of almost all North Caucasian peoples have access to the Euro-Atlantic “axis” of the United States-Turkey/Jordan. One group-the national movements of the Adygs (Adyghe, Kabardian, Circassian) and Abazin – comes to the “axis” both through the multi-million Diaspora in Turkey and Jordan, and through friendly Abkhazia. The second group – national movements of Turkic-speaking Karachay-Balkars, Kumyk, Nogai are connected with Turkey, including and through the Diaspora, in terms of ethno-cultural (kinship of peoples), and their national movements-in the political (the idea of pan-Turkism). The third group – Vainakh national movements-are integrated into the “axis” both through their Diaspora in Turkey and Jordan, and through Georgia, an Alliance with which (taking into account its anti-Russian nature) a significant part of the Vainakh ethnic elite is oriented. In this case, the resources of the vast Muslim world become very attractive. The conversion of some of the North Caucasians to their “Muslim roots” and their choice of a “course to the Islamic South” is inevitable due to the disappointment of both the “Islamophobic” Russia and the “Islamophobic” West. But this North Caucasians have already “passed” in the 19th century-an attempt to create an Imamate and, as a result, a protracted Caucasian war. The government of the Karachay-Cherkess Republic last conducted a study of the confessional situation in 2005, and only a statistical one. But this also suggests that, contrary to the position of R. Khatuev, the Islamic factor in Karachay-Cherkessia is not as strong as in other Muslim republics. According to the data provided to us by the Committee on Religious Affairs of the Karachay-Cherkess Republic in 2005, 185 religious associations of 15 different religious faiths, trends and interpretations functioned in the republic. Of these, 142 local religious organizations registered with the Office of the Federal Registration Service for the Karachay-Cherkess Republic, 1 centralized religious organization registered with the Ministry of Justice of the Russian Federation, 42 act as religious groups (including 2 in the form of public organizations). There are 117 Islamic associations in the republic. Of these, 103 local religious organizations, 1 centralized—the Spiritual Administration of Muslims of KarachayCherkessia and Stavropol, 13 religious groups. All Muslim communities are part of the Spiritual Directorate of Muslims of Karachay-Cherkessia and Stavropol Territory (headed by I. Berdiev). The Spiritual Administration of Muslims of Karachay-Cherkessia and Stavropol takes an important place among public institutions that have a real impact on the sociopolitical situation in the North Caucasus region. In addition to Muslims, on the territory of the Karachay-Cherkess Republic in 2005, there were 21 associations of the Russian Orthodox Church. 20 of them were registered and had the rights of a legal entity. In the city of Cherkessk, the capital of the republic, the Orthodox Lyceum named after Sergius of Radonezh continues to function. All churches were part of the Karachay-Cherkess deanery (led by V.V. Korneev). This year, with the support of the President of the Karachay-Cherkess Republic, domes were bought and hoisted for St. Nicholas Cathedral in Cherkessk, 2 million rubles were allocated for construction, and 14 pilgrims were sent on a pilgrimage to Jerusalem. In addition to the Lutheran church, which unites the local Germans, there are several more religious communities formed on ethnic and religious grounds. Jews

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created a Jewish community, and Armenians registered the Armenian Apostolic Church. There are also figures from the Krsna Consciousness Society. In the 1990s, the Reiki teachings spread in the republic under the guise of wellness practice. At the same time, a small community of “Keepers of the Flame” was formed (their teachings are somewhat close to the religious concepts of Roerich and Blavatsky). According to some manifestations, it can be assumed that there are also satanic societies in the republic. The work of state bodies in the religious sphere is largely determined by the program of interaction with religious organizations, which was announced in October 2003 by the President of the Karachay-Cherkess Republic. Monitoring the state of the religious situation in the republic is carried out by a system of state and law enforcement agencies. There is support for close contacts with the Office of the Ministry of Justice of the Russian Federation for the Karachay-Cherkess Republic, the Prosecutor’s Office of the Karachay-Cherkess Republic, and law enforcement agencies. There is an active interaction with the Spiritual Administration of Muslims of Karachay-Cherkessia and Stavropol, the Stavropol Diocesan Administration, the Karachay-Cherkess Deanery, and the leadership of other religious associations. The practice of meetings of 30 employees of the Ministry of Internal Affairs of Karachay-Cherkessia with the Muslim clergy, as well as the Office of the Federal Registration Service for Karachay-Cherkessia was established. The quantitative aspect of the religious situation is as follows (Table 1):

Table 1. The number of religious associations in the KCR Religious association names 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Sunni Russian Orthodox Church Evangelical Christianity Pentecostalism Jehovah’s Witnesses The International Society for Krishna Consciousness The Seventh-day Adventists Church The Evangelical Lutheran Church Jews The Armenian Apostolic Church the Catacomb Church The Watchman’s Church Flame keepers Reiki The Satanists TOTAL

Number of associations 104 20 8 3 2 2

Association groups 13 1 5 8 5 1

Total 117 21 13 11 7 3

1 1 1 1 0 0 0 0 0 143

2 0 0 0 3 1 1 1 1 42

3 1 1 1 3 1 1 1 1 185

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The study of institutional factors of Russian domestic and foreign policy in the Caucasus allows the author to propose a number of conclusions. Russia should strive to preserve the multi-vector geostrategic reality. The North and South Caucasus have been economically and socioculturally integrated into Russia for more than two centuries. These ties between the breakaway republics and Russia have significantly weakened in the post-Soviet period (the decline in the level of knowledge and role of the Russian language among new generations, and with it, cultural influence), but they persist in the republics that became part of the Russian Federation. In the North Caucasus, the conflict situation is characterized by the unity of economic, ethno-political and ethno-cultural factors, which for a long time supports social tension in the region. Islam and Christianity are factors in the region’s inclusion in global political processes. Religious institutions in the region operate only within the framework defined by Russian legislation, and do not seek to participate in any geopolitical transformations on their own.

References Avksentiev, V.A., Gritsenko, G.D., Dmitriev, A.V.: Regional conflictology: concepts and Russian practice, pp. 49–50 (2008) Adiev, A., Ryabtsev, O., Khochuev, M.: Soil for conflicts. Ekspert Yug, no. 25, p. 34, 27 October–2 November 2008 Yu, L.: This is a failure. Novaya Gazeta, 14th February (2005) Mamaladze, T.: The assistants of the secret services. Silent Congress of the Confederation of the peoples of the Caucasus, Izvestia, 28 August (1996) Simonia, N.A.: The catch-up development of the non-West versus western development model. World Economy and International Relations, no. 12, p. 6 (1996) Stepanov, E.I.: Theoretical and methodological problems of studying globalization and regionalization as conflictogenic factors of the modern transformation of Russian society. Socialnye konflikty v kontekste processov globalizacii i regionalizacii, pp. 38–39 (2005) Yu, F.: The crisis of Russian foreign policy: conceptual aspect. Pro et Contra, vol. 6, no. 1–2 (2001). “Vneshnyaya politika Rossii: 1991–2000”, p. 43 Khatuev, R.: Caucasian matrix. Vesti gor 11/22/18/18

Disintegration Vector of the Non-institutional Political Process Fatima Shebzukhova(&) and Ahmat Ebzeev Karachay-Cherkess Republican Institute of Professional Development of Educational Workers, Cherkessk, Russia [email protected], [email protected]

Abstract. The article discusses the disintegration vector of the noninstitutionalized political process on the example of the North Caucasus. The processes of disintegration of the political space are traced, which are traced at different levels, in particular - at the interregional and intraregional. Keywords: Disintegration
Political space
Non-institutionalized political process
State
Separatism
North Caucasus

The collapse of the Soviet Union and the Communist system, as well as the discredit of the internationalism ideas, had a destructive impact on the processes щa the North Caucasus, as it led to the disintegrating society. Disintegration processes in the multiethnic society of the North Caucasus, due to its geopolitical importance, are manifested in the form of ethnopolitical hierarchization. Endogamous and exogamous delegitimization of the leading elites plays here an important role. The attempt to relaunch the integration process happens because the experience accumulated during a long period of peaceful coexistence of ethnic groups, based on their common geoeconomic and geopolitical goals is becoming relevant. Only the so-called “vulture effect” can prevent this process (Bozzo and Ragionieri 1993). The business, political, and secular elite played an obviously provocative role in the interethnic conflict. In the period of stabilization of the ethno-political situation, the business elite surprisingly performs the function of integration, and intellectuals, on the contrary, perform the function of maintaining confrontational moods and hide behind the national idea. The political elite, because of its high position, tries to support peace initiatives and political stability, which guarantee it a leading position. In the study of processes of disintegration in the North Caucasus, one should not forget also such factors as economic difficulties of the transition period; the social problems that lead to radicalization; activity flow of migrants (including returning to the region); the decline of confidence in national and international institutions, because of their inability to contribute effectively to the settlement of regional conflicts. Political integration in the Caucasus has not ended, and to be precise has reached a deadlock. Two threats are resulted: the escalation of new inter-ethnic conflicts and the weakening mechanism of mediation and cooperation in inter-ethnic institutions.

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 648–653, 2020. https://doi.org/10.1007/978-3-030-39319-9_72

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Economic dependence and connection with the Federal center, as well as moral and symbolic ties with Russia, which is gaining influence in the international arena, act as a deterrent to stability at the present stage of history. It is necessary to pay attention to one important circumstance. The role of the Caucasus is defined by Russian scientists as a geopolitical constant, as an element of transforming configurations of geopolitics. For example, associate member of the Russian Academy of Sciences (RAS) Y. Zhdanov defines the Caucasus as the “solar plexus of Eurasia” (Zhdanov 1999). The region is also vividly evaluated in the political journalism: “the Caucasus is the keystone of the Russian Empire. Pull it out – everything will fall” (Latynina 2005). But the Russian academics emphasize that the state has not any “Caucasian policy”. There are some phrases like “Russia does not yet have a clear and distinct policy towards the region” (Kobalia 2001), “Moscow does not have a clear policy in the South Caucasus direction” (Khachaturov 2001), etc. According to many political scientists dealing with the problems of the region, the motivation of the main subjects of the geopolitical field is dominated by energy interest. Thus, A. Swarants, considering the issue of “oil and gas of the Caspian Sea in the US geostrategy”, believes that interest of Washington and its activation is related to the interest in energy resources. The North Caucasus should not be an integral part of the Russian state. His attention is focused on the role of the Islamic factor, or rather the Muslim population and the diversity of Muslim peoples, which are an obstacle in the aspirations of Americans to Russian oil (Swarants 1998). American politicians and economists indicate interest in the energy resources of the Caucasus. A striking example is the opinion of A. Cohen, who considers the Caucasus as “a geostrategic region” in which the interests of the West, Russia and the countries of the Muslim world (Turkey and Iran) are presented. And the reason is the huge amount of energy resources of the Caspian Sea, along the way and Kazakhstan, as well as transportation through the territory of the Caucasus to the world market of these resources, increases the role of this region (Cohen 1998). After September 11, 2002, the West noted the emergence of the “September 11 syndrome”, which formed a stereotype among Western politicians that there is “Islam terror”, which poses a global threat to humanity and leads to a clash of two civilizations: the Arab world and the West. This point of view was formulated by J. Fischer is a German politician and analyst. In fairness, it should be noted that Y. Fischer voiced the views of a large part of the Western political elite (Fischer 2003). In 1989, Russian ethnologist V. Tishkov suggested that the peoples of Russia historically lagged the peoples of the West in matters of national self-determination and ethnic statehood. In the West this question remained in the past (Tishkov 1989). A little later, the monograph of political scientist K. Hajiyev “Geopolitics of the Caucasus” was published (Hajiyev 2001), in which he also notes these historical features, and concludes that “many threats to Russia’s national security” including the Caucasus, “come from Russia itself”. Here, Hajiyev dwells on the “Islam factor”. He also touched upon the creation of a network of clandestine military camps in the KarachayCherkessia and Kabardino-Balkaria regions by the Saudis in the 90s, although the author’s references to some “knowledgeable people” are doubtful (Hajiyev 2001). As we have already mentioned, in the North Caucasus, the internal driving forces represented by the intellectuals contributed to the disintegration in the political,

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economic and social space. According to A. Kustarev, it was the intellectuals that invented nationalism and the concept of “nation”. He writes that the status of intellectuals in society is always ambiguous and questionable. It is able to take revenges with offenders by escalating tensions. It tends to moralize and make values the object of confrontation. Often military people lean toward peace more than writers. Kustarev gives an example of the relationship between Palestinian writers and the Israeli military (Kustarev 2004). Ideologies, which act as the “trigger” in the wars of the Caucasus are born among the humanitarian intellectuals. For example, the leader of the Circassian national movement, Doctor of Economics B. Akbashev expressed “scientific grounds” for the partition of the Republic during the “electoral crisis” of 1999–2000 in KarachayCherkessia. Let us recall the clashes between Abkhazians and Georgians, which began by “accidental” publication in Newspapers of the thoughts of V. Ardzinba and Z. Gamsakhurdia about the language in which the stone inscriptions of local monuments were made. V. Malakhov said: “the distance between the war of historians and philologists and the real war has disappeared” (Malakhov and Tishkov 2001). In the North Caucasus region, the business elite was an aid to the intellectuals and performed a stimulating function in the activation of national movements. For example, in 1999, at the elections of the head of the Karachay-Cherkessia, businessman S. Derev was one of the candidates, he was supported by the leaders of the Circassian national movement headed by Professor B. Akbashev, whose team included Candidates of Sciences H. Khatukaeva, A. Kardanov, R. Temirov, etc. the President of Russia after several major scandals in the elections of the heads of the republics of the North Caucasus was forced to take the initiative to abolish the electability of heads and appoint heads by the President. We have to mention one more fact of political integration, the bureaucracy. The revenues of the bureaucracy mainly consist of state rackets, which includes taxes, customs duties, natural resource rent, and foreign aid. Russia suffers losses from the corruption component in the bureaucracy, which are comparable to the size of the expenditure part of the budget (Gorny 2003). The young local bureaucracy contributes to the exacerbation of conflicts and the situation is difficult to control. In such cases, the bureaucracy acts in concert with the national movement. For example, at the beginning of perestroika, when they chose the state structure of the former Karachay-Cherkess region, which was separated from the Stavropol region, the idea of organizing a separate Karachay Republic was proposed. Many political scientists do not take into account the politicization of the clergy in the North Caucasus, its active inclusion in the political segment of the political elite. A struggle arose between the role of the clergy and state power structures in the struggle for spiritual and political leadership, as well as between official and unofficial religious leaders within the religious community. When analyzing the causes of extremism, it is not necessary to dwell on social and cultural causes. One important reason is the mental factor, which lies in both the social and psychological sphere. E. Satanovsky on this occasion wrote: “revolutions and wars, including world wars, as a rule, are a consequence of someone’s inferiority complex and inability to get what desired in a civilized way” (Satanovsky 2001). Culture as a

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factor of integration is now evaluated correctly and therefore is reflected in state documents. This is stated in such an important document as the “Russian National Security Strategy until 2020”. It recognizes the role of culture in national security as paramount. Culture, according to the authors of this document, revives and preserves cultural and moral values, promotes spiritual unity of the multinational people of the Russian Federation, as well as supports the international image of Russia as a country with rich traditions and modern developing culture and a high level of patriotism (Russian National Security Strategy until 2020). It is necessary to reveal the structures of social consciousness that determine the course of ethnic groups in the North Caucasus region, as well as the consciousness of the elite of these groups calling for national self-determination. Ethnic identity manifests itself in several aspects: – space-time, along the lines of “blood and soil”. – political aspect, which means the presence of national statehood; – religious aspect, which is determined by religious denomination. The main sign of identity in the region is the language, which confirms the blood or historical relationship. Language acts as the basis of various ethnopolitical alliances or as a demarcation. For example, in the first presidential elections in KarachayCherkessia in 1999, there was a division of the electorate according to the language: Karachay and Nogai as the one group and Abazin and Circassians as the other. According to some scholars, language as an ethnographic factor in political and ideological practice will only increase. So, L. Ionin wrote that the nation is connected, first of all, by the language for which people are ready to die. Political scientist A. Skakov argues that if some peoples of the North Caucasus want to preserve their national identity, they must possess certain lands, which in case of loss will lead to an internal crisis, which will manifest itself in a sense. In addition to the above factors, determining the manifestation of national identity is statehood. According to A. Nazaretyan, each national community should go through the period of formation of national ideology, as it was in the XIX century in Europe. All the signs of the state must take shape. After the process of motivation, ethnic groups will be able to fully integrate into the process of globalization. These changes have led to the fact that ethnic interests in the preservation of language or traditions can be ensured through the guarantee of the civil rights of the indigenous population and through self-government. Such views are held by V. Tishkov. For example, any ethnic community in the United States can publish magazines or Newspapers in its native language (Op. cit, p. 18). A relatively new and relevant direction for the study of disintegration in the region is the emergence of new subcultures and the expansion of the social base that existed before. Some subcultures are extreme and protest society as a whole or certain social phenomena. Several subcultures are closed and seek to isolate their representatives from society (Subculture http://in-culture.ru/). At the same time, due to the high level of traditionalism in the region, the development of subcultures for a long time significantly lagged other Russian regions. However, during the last decade, subculture processes have developed significantly in the region. Conducted in July 2009 by the marketing agency “Pilot” (Krasnodar) methods of quantitative and expert surveys study

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of youth subcultures in the Krasnodar region allowed to draw a conclusion about the high popularity of subcultures in the youth environment. So, on a question “Are there in your settlement groups of youth that unite on interests, values, a manner to behave, a manner to dress?” 82% of respondents answered positively, only 5% answered negatively, and 13% found it difficult to answer (Remmler 2009). 62% of respondents stated the presence of representatives of socially dangerous subcultures in their settlement (Remmler 2009)1. It is significant that the process of subculture development, primarily among young people, are intensified in the North Caucasus. During the study of political disintegration in the North Caucasus, the author came to some conclusions. The key disintegrating political factors in the region are: the absence of a purposeful ethno-political strategy of the Federal center, providing for the integration of the region into the Russian political space; underestimation of the so-called subjective, that is related to the sphere of spiritual culture motives of important actors of ethnopolitical processes; high conflict potential of the desire to dominate ethnic elites in the subjects of the Russian Federation. The disintegration processes in the North Caucasus are influenced primarily by domestic and regional factors. The analysis of disintegration processes should also take into account the following factors: the economic difficulties of the transition period; social problems that lead to radicalization of public sentiment; the activity of the flow of migrants (including those returning to the region); the decline in confidence in Russian and international institutions due to their inability to effectively contribute to the settlement of regional conflicts. Ethnic identity in the region has a high disintegration potential because of the number of characteristics: – importance of spatial-temporal perception of society along the lines of “blood and soil”, where the identity of “blood” is defined through belonging to a race, ethnic group and then kindred peoples, and identity on the “ground” through the belonging to a certain territory; – incompleteness of state identity because of the lack of sovereign national statehood; – the relevance of religious identity as a component of ethnic identity (belonging to a denomination, perceived in the mass consciousness as an attribute of ethnicity).

References Bozzo, L., Ragionieri, R.: Regional security in the Balkans and the role of Turkey: an Italian perspective. In: The Southeast European Yearbook 1992. Hellenic Foundation for Defense and Foreign Policy, Athens, pp. 11–41 (1993) Hajiyev, K.: Geopolitics of the Caucasus, Moscow, p. 47 (2001)

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Remmler 2009, p. 75.

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Gorny, M.: Prevention of corruption: what can society do, p. 5. Norma, St. Perersburg (2003) Zhdanov, Y.: Solar Plexus of Eurasia. Rostov on Don (1999) Kobalia, V.: Russia slammed the door to salvation. In: Nezavisimaya Gazeta, no. 34, 24 February 2001 Cohen, A.: Conflicts in the Caucasus threaten us interests. In: Rossiyskaya Gazeta, 28 November 1998 Kustarev, A.: Bets and players. Politicheskiy Zhurnal 34(37), 5 (2004) Latynina, Y.: It is a failure. In: Novaya Gazeta, 14 February 2005 Malakhov, V., Tishkov, V.: Political anthropology (review). Pro et Contra. 5(3), 274 (2001) Remmler, V.: Results of sociological research “Youth subcultures of the Krasnodar region”. Youth of Krasnodar Region: spiritual and moral state. Krasnodar, p. 65 (2009) Svarants, A.: Oil and gas of the Caspian sea in the US geostrategy. In: Nezavisimaya Gazeta, 11 December 1998 Satanovsky, E.: Ghost came out of the desert. In: Nezavisimaya Gazeta, 20 November 2001 Russian National Security Strategy until (2020) Tishkov, V.: Did we miss the twentieth century…?. In: Perestroika and national problems Khachaturov, K.: On own scenario. In: Nezavisimaya Gazeta, 24, 10 February 2001 Fisher, T.: New world order for the XXI century. In: Nezavisimaya Gazeta, 23 December 2003 Appendix to the magazine “Novoye Vremya”, p. 5, December 1989 Presidential decree No. 537 of 12.05.2009 Subculture. http://in-culture.ru

Economic and Legal Regulation of AI

Legal Models for Activities on the Exploration and Utilization of Space Resources: Towards the “Space-2030” Agenda Denis Gugunskiy(&), Irina Chernykh, and Albert Khairutdinov RUDN University, Moscow, Russia {gugunskiy-da,chernykh-ia}@rudn.ru, [email protected]

Abstract. After the adoption of “The 2030 Agenda for Sustainable Development” by the UN General Assembly in 2015, the UN Committee on the Use of Outer Space for Peaceful Purposes included in its agenda an item on the development of the Space-2030 plan. It highlighted one of the most important issues that requires increased attention from the world community - regulation of the research, development and use of space resources. The existing legal regime of outer space and celestial bodies is based on the principles laid down in the 60–70s of the last century, and in many aspects it does not meet the modern needs of the community. Based on the analysis of the modern international legal regime of outer space and celestial bodies, the article identifies the legal problems that arise when considering the issue of mining on the Moon and other celestial bodies. Keywords: International space law
Space law framework in space
Policy of space mining


Off-earth mining
Legal

JEL Code: K330

1 Introduction On September 25, 2015, in the framework of the plenary session of the United Nations General Assembly, the final document of the United Nations Development Summit for the post-2015 period was adopted “Transforming our world: the 2030 Agenda for Sustainable Development” (A/RES/70/1 2015). This document is a roadmap for addressing global problems by all states and developing social environment, economy, environment and other major areas. For the first time, the world leaders committed themselves to undertake joint actions for the sustainable development of all mankind, declaring 17 sustainable development goals (SDGs) and 169 related tasks that are complex and indivisible (Abashidze 2016). The General Assembly resolution also established an obligation to systematically follow up and review the implementation of this Agenda over the next 15 years, as well as promote transparent and accountable scaling-up of appropriate public-private cooperation to exploit the contribution to be made by a wide range of data, including earth observation and geospatial information, while ensuring national ownership in © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 657–664, 2020. https://doi.org/10.1007/978-3-030-39319-9_73

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supporting and tracking progress. The role of Earth observation and geolocation (provided by global navigation satellite systems) is recognized by the UN in supporting the achievement of the SDGs, however, it is worth noting that the role of outer space in achieving the SDGs is not limited to this (ST/SPACE/71 2018). It is important to emphasize that space technologies are relevant for each and every goal mentioned in the 2015 Resolution from poverty reduction (forecasting natural disasters and improving the coordination of the subsequent provision of assistance, mapping of human settlements and their access to basic services) to combating climate change (climate change monitoring, weather forecast, search and rescue activities, etc.). Considering the importance of achieving the SDGs and the impact of space technology on the life of mankind, the UN Committee on the Peaceful Uses of Outer Space (COPUOS or Committee) included in its agenda an item on the development of the Space-2030 plan aimed at strengthening and enhancing the contribution of space activities and space technologies, including one of the most promising and new areas regulation of the activities on exploration, development and use of space resources.

2 Methodology International legal regulation of space activities at present stage is a very difficult issue due to the fact that international space law is in a state of stagnation in the classical understanding of the development of law: Since 1979, not a single international treaty has been adopted in the field of regulating space activities1. International space law was developed based on “soft law” (also called “non-treaty agreements” or “non-legally binding instruments”) - a new form of relationship that is not legally binding. Taking into account the peculiarities of modern space law, the following general logical cognition methods were used to solve the scientific problems facing the authors: analysis, synthesis, concretization, deduction, analogy and modeling.

3 “Space2030” Agenda Fifty years after the first United Nations Conference on the Exploration and Peaceful Uses of Outer Space (UNISPACE), the international community discussed the progress achieved and outlined the future work of the Committee in the field of global space governance at the UNISPACE + 50 high-level meeting (A/AC.105/C.2/L.307). As part of the activities, innovative strategies have always been proposed and historical documents have been adopted relating, in particular, to the protection of the space environment and the access of developing countries to space science and its associated benefits. UNISPACE + 50 is a starting point for developing a new approach to space policy, and stresses the importance of the “Cosmos 2030” agenda, which will be one of the engines of development ensuring that all members of the international community 1

Five international treaties have been adopted for international legal regulation of space activities, the last of which, the Agreement Governing the Activities of States on the Moon and Other Celestial Bodies (hereinafter referred to as the Moon Treaty) was concluded on December 18, 1979.

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can equally enjoy the potential of astronautics, and will contribute to the implementation of the 2030 Sustainable Development Agenda (A/AC.105/2019/WG2030/L.1 2019). The Space-2030 Agenda is a comprehensive, forward-looking strategy aimed at consolidating and strengthening the contribution of space activities and space technologies to the implementation of global programs and addressing issues of ensuring long-term sustainable development in the interests of all mankind. The strategic vision of the Space-2030 project implies the implementation of a group of tasks related to one of the previously mentioned topics: space economy, space society, space accessibility and space diplomacy (A/AC.105/2019/CRP.15 2019). According to this strategy, the Committee and its subcommittees should continue to demonstrate their relevance, address new challenges and opportunities, such as the long-term sustainability of space activities, combating space debris, as well as new topics such as space resources, space traffic management, planetary defense and space security.

4 The International Legal Regime for the Use of the Natural Resources of Celestial Bodies Over the period 1957–1966, the basic principles governing the activities of states in outer space were laid, and from 1967 to 1979 all major treaties relating to the regulation of space activities were adopted. Article II of the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies of January 27, 1967 (hereinafter referred to as the Outer Space Treaty) states: “outer space, including the Moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means”. States are not allowed to extend their sovereign rights to outer space and, therefore, they cannot claim property rights with respect to outer space or its parts (Jakhu 2017). If we analyze the state of outer space more than 40 years after the entry into force of the Outer Space Treaty, it is easy to say that the principle of nonappropriation made it possible to ensure the safe and orderly development of space activities (Tronchetti 2009). At the time of development of the basic principles of international space law, the exploitation of space resources was considered impracticable. Therefore, these principles do not contain any specific reference to the exploitation of space resources; nevertheless, they can be interpreted, at least indirectly, as also related to the use of outer space (Lee 2012; Schrunk 2007). For example, since it will be largely analyzed later, it can be argued that the term “use” contained in such principles embodies the term “exploitation” and, therefore, the exploitation of space resources is one of the forms of use (Tronchetti 2009).

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5 Responsibility of States for Activities in Outer Space of Legal Entities Under Their Jurisdiction Article VI of the Outer Space Treaty deals with international responsibility for activities in outer space. The first and second sentences refer to activities at the national level, while the third sentence refers to activities carried out by international organizations. The first sentence of Article VI states that States Parties to the Treaty shall bear international responsibility for national activities in outer space. There can be three different focuses in interpretation of the term “activities in outer space”: the definition of “activity” that takes place in outer space and where exactly this “outer space” is located. The place of activity should be outer space. At the same time, there is no internationally recognized or uniform understanding of where such space begins. The issue of delimitation of airspace and outer space remains controversial (Gerhard 2009). Article VII of the Outer Space Treaty establishes comprehensive international liability for damage resulted from the launch of an object into outer space. The combined effect of Articles VI and VII is to ensure that states are simultaneously responsible for their national space activities and for the damage that may be caused by other states or their citizens, in particular, as a result of launching a space object, organizing a launch or otherwise providing objects or a place for a launch. Article VII establishes objective liability (Kerrest 2009), or liability without fault, of the launching state for all types of launch activities, both public and private, the indispensable condition of which is causing damage.

6 The US 2015 Commercial Space Launch Competitiveness Act The US Commercial Space Launch Competitiveness Act (hereinafter referred to as the US 2015 Law) was considered by the Senate and the House of Representatives and adopted by Congress in 2015. The Law covers a range of issues related to the introduction of changes and amendments to existing provisions on insurance, licensing and liability of persons involved in space activities. The law also aims to support and stimulate the private space sector of the United States involved in remote sensing activities, taking into account the need to protect US national interests and to maintain the leadership of the private sector in this area. The law is related to amending the management of commercial space and emphasizes the main functions of this management, such as: creating conditions for economic growth and technological development of the US space private sector (commerce), coordination of issues and actions in the field of trade related to space activities with the help of the Department of Commerce, etc. According to this document, a space resource is a non-living resource located in outer space that includes water and minerals; while an asteroid resource is a space resource found on or inside the asteroid.

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Regarding the rights of US citizens to space resources and the use of asteroid resources, the law explicitly states that a US citizen has the right to any received asteroid resource or space body, from which the rights to possess, dispose, transport, use and sell arise. It is emphasized that such rights are based on the current legislation and international obligations of the US. Also, this law states that adopting this regulatory act the United States does not proclaim sovereignty, exclusive rights, jurisdiction, or ownership of any celestial body. The US 2015 Law was followed by the American Space Commerce Free Enterprise Act project introduced in 2017. The essence of this act is that citizens of the United States and non-governmental organizations will be able to obtain authorization for the operation of artificial objects launched from Earth and space objects transported on them. When applying for the issuance of such permit, the applicant should provide for measures to reduce the contamination of outer space. Any person in accordance with this bill may use any remote sensing system without permission.

7 The Law of Luxembourg on the Exploration and Use of Space Resources in 2017 Luxembourg became the second state to determine its priority in the use of outer space by developing the resources of celestial bodies. In November 2016, a draft law on the exploration and use of space resources was submitted to the Parliament for consideration. The initial draft of the Law of Luxembourg clearly traced the similarities with the US 2015 Law (De Man 2017), including the reference in Article 1 to the possibility of assigning space resources in accordance with international law. However, after receiving numerous comments from the Council of State of Luxembourg, the reference to international law in Art. 1 was deleted in its entirety. And Art. 2 was supplemented by the provision that carrying out of activities on development of the resources of celestial bodies indicated in Art. 1, must comply with the conditions for authorizing such activities and with the international obligations of Luxembourg’s. Despite this, in the opinion of some international lawyers, the approved wording looks rather vague and confirms the opinion expressed towards the US 2015 Law that such national acts contradict the established principles of international space law - Art. II of the Outer Space Treaty of 1967 prohibiting the “national appropriation of outer space, including the Moon and other celestial bodies” and Art. VI obliging states to supervise the activities of their non-governmental entities.

8 Activities of the Hague Space Resources Governance Working Group The International Hague Space Resources Governance Working Group emerged from the results of a round table on space resources, convened on December 1, 2014 by the Hague Institute of Global Justice. This group was created to discuss problems and solutions related to the lack of legal regulation of space resources found on asteroids and other celestial bodies.

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The draft key provisions for the development of an international system for regulating activities related to space resources are advisory in their form and contain numerous references to the need for the space resources governance model to comply with current international space law and its underlying principles. It has been repeatedly emphasized that the system should be designed in such way that “space resources” should be used exclusively for peaceful purposes, and activities should be carried out for the benefit and in the interests of all mankind, regardless of economic and scientific development (Inshakova 2019), and does not undermine affect other types of space activities. Of particular interest is a rather controversial provision that states and intergovernmental organizations should be given the right (taking into account the principle of non-appropriation established by Article II of the Outer Space Treaty) to create a “safety zone” around the places where space resources are being developed in order to restrict the possible adverse effect from the activity itself, and negative intervention in it. On the one hand, it is noted that, in accordance with the applicable rules of international law, such safety zone should not impede the free access of personnel, vehicles and equipment of other governmental, intergovernmental and non-governmental organizations engaged in space activities. On the other hand, it is indicated that a state or intergovernmental organization may authorize the restriction of such access for a certain period of time, subject to the timely notification of the public indicating the reasons for such a restriction.

9 Conclusions It can be expected that the US 2015 Space Act will stimulate national discussions in several states on the development and adoption of national legal mechanisms that provide the regulatory framework for activities related to the exploitation of natural resources. However, as current practice shows, many space powers do not have a specific legislative and regulatory framework established at the national level to solve problems inherent in space activities aimed at the exploitation of natural resources in outer space. Compliance of national law with international law, and especially the Outer Space Treaty and the Moon Treaty, is likely to become a key issue for discussion over the next several years, especially in the context of extraterrestrial resource extraction. Taking into account the current trends, Japan and the United Arab Emirates are also thinking of taking the path of the aforementioned countries, which, in our opinion, forms unfavorable national practices conditioned by commercial interests and national policies. In 2017, negotiations were already held between Japan and Luxembourg regarding the need to develop a multilateral international treaty on the research and use of space resources. In this case, it is worth noting the authoritative opinion of international lawyer Vereschetin that “Right takes precedence over policy. State policy should be conducted within its borders and comply with the requirements of applicable international law. […] The provisions of the national space policy should be verified against the requirements of law, and not vice versa. Developed in order to serve the interests of the

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international community, the right cannot be reduced to the level of an adherent to the changing policies of one or several members of this community” (Vereschetin 2010). In this regard, it is advisable to consider the opposite point of view regarding the development of the resources of celestial bodies. The activities of the Hague Space Resources Governance Working Group on the draft provisions, taking into account international legal experience, the specifics of regulated space activities, as well as strategic, economic and technical realities at the time of project development, is an important starting point for resolving emerging and already existing issues of the research and use of space resources. A few years will pass before the actual capacity building and resource extraction activities of the entire Earth, however, under the new “Space 2030” roadmap it is important for states and the international community as a whole to consider and take forward-looking measures at both the international and national levels. Acknowledgement. The article is published in framework of the Russian Foundation for Basic Research project “BRICS and the Peaceful Uses of Outer Space” 17-03-00427.

References Abashidze, A.K., Solntsev, A.M., Kiseleva, E.V., Koneva, A.E., Kruglov, D.A.: Achievement of sustainable development goals (2016–2030): international legal dimension. Indian J. Sci. Technol. 9(37), 1–9 (2016) American Space Commerce Free Enterprise Act, H. R. 2809, The Congress.gov. https://www. congress.gov/bill/115th-congress/house-bill/2809. Accessed 20 June 2019 De Man, P.: Luxembourg law on space resources rests on contentious relationship with international framework. Working Paper No. 189, pp. 1–16 (2017) European Global Navigation Satellite System and Copernicus: Supporting the Sustainable Development Goals. Building Blocks Towards the 2030 Agenda. United Nations, Vienna (2018). ST/SPACE/71. http://www.unoosa.org/res/oosadoc/data/documents/2018/stspace/ stspace71_0_html/st_space_71E.pdf Freeland, S.: The role of “soft law” in public international law and its relevance to the international legal regulation of outer space. In: Marboe, I. (ed.) Soft Law in Outer Space. The Function of Non-binding Norms in International Space Law, pp. 9–19. Böhlau, Vienna (2012) Gerhard, M.: Article VI. In: Hobe, S., Schmidt-Tedd, B., Schrogl, K.-U. (eds.) Cologne Commentary on Space Law, vol. 1, pp. 103–125 (2009) Inshakova, A.O., Goncharov, A.I.: Innovation as an integral condition for the development of modern foreign trade turnover of energy resources and its legal regulation. In: Oleg, V., Inshakov, A., Inshakova, O., Popkovain, E. (eds.) Energy Sector: A Systemic Analysis of Economy, Foreign Trade and Legal Regulations. Springer, Cham (2019) Jakhu, R.S., Pelton, J.N., Nyampong, Y.O.M.: Space Mining and Its Regulation. Springer, Switzerland (2017) Kerrest, A., Smith, L.J.: Article VII. In: Hobe, S., Schmidt-Tedd, B., Schrogl, K.-U. (eds.) Cologne Commentary on Space Law, vol. 1, pp. 126–145 (2009) Lee, R.J.: Law and Regulation of Commercial Mining of Minerals in Outer Space. Springer, Berlin (2012)

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Loi du 20 juillet 2017 sur l’exploration et l’utilisation des ressources de l’espace (2017). http:// data.legilux.public.lu/eli/etat/leg/loi/2017/07/20/a674/jo. Accessed 20 June 2019 Schrunk, D., Sharpe, B., Cooper, B.L., Thangavelu, M.: The Moon: Resources, Future Development and Settlement. Springer, Berlin (2007) Tronchetti, F.: The Exploitation of Natural Resources of the Moon and Other Celestial Bodies. A Proposal for a Legal Regime. Martinus Nijhoff Publishers, Leiden (2009) U.S. Commercial Space Launch Competitiveness Act (dated November 25, 2015) Public Law No: 114-90 (2015), the Congress.gov. https://www.congress.gov/bill/115th-congress/housebill/2809/actions. Accessed 18 June 2019 UN Doc.: Draft structure of a “Space2030” agenda and implementation plan (revised) (2019), Legal Subcommittee, Committee on the Peaceful Uses of Outer Space. A/AC.105/C.2/L.307. https://undocs.org/ru/A/AC.105/C.2/L.307. Accessed 23 June 2019 UN Doc.: Revised Zero draft of the “Space2030” Agenda and implementation plan Working paper submitted by the Bureau of the Working Group on the “Space2030” Agenda (dated June 19, 2019), A/AC.105/2019/CRP.15 (2019), UN Office for Outer Space Affairs. http:// www.unoosa.org/res/oosadoc/data/documents/2019/aac_1052019crp/aac_1052019crp_15_0_ html/AC105_2019_CRP15E.pdf. Accessed 23 June 2019 UN General Assembly Resolution A/RES/70/1 of 25 September 2015. https://www.un.org/ga/ search/view_doc.asp?symbol=A/RES/70/1&Lang=E. Accessed 23 June 2019 Vereschetin, V.S.: Space law in the general legal field (community and features). J. Int. Law, N1. Original in Russian: Bepeщeтин B.C. Кocмичecкoe пpaвo в oбщeм пpaвoвoм пoлe (oбщнocть и ocoбeннocти). Meждyнapoднoe пpaвo, 2010, №. 1 (2010)

Digital Rights as a New Object of Civil Rights: Issues of Substantive and Procedural Law Ekaterina P. Rusakova(&), Evgenia E. Frolova, and Anna I. Gorbacheva RUDN University, Moscow, Russian Federation [email protected], [email protected], [email protected]

Abstract. The fourth industrial revolution in the world involving the transition from mechanical and analog electronic technology to digital electronics has a significant impact on the legal systems of all countries of the world, including Russia. Today, relations the subject of which is cryptoactives and relations that related with other objects of the digital world, are becoming more common. Since the legal status of digital objects is not defined in the legislation, these relations are associated with high risks. In this regard new legal acts designed to legalize and regulate new relations were drafted in Russia. Despite many disagreements one of them - «On digital rights» (hereinafter – «Digital rights law») became the law. The decisive significance of this act is seen in the fact that it expands the list of existing objects of civil rights, supplementing it with “digital rights”, which are a legal equivalent of the term “token”. The purpose of this study is to analyze the legal status of “digital rights”, the adequacy and completeness of their legal regulation in the light of the adoption of the new Law. A separate aspect of the study is the identification of procedural problems that may arise in resolving disputes related to digital rights. The key problem is that the legal status of digital rights does not have logical completeness due to the inconsistency in the concept construction of the Digital rights law. In addition, many issues related to the proof of ownership of digital assets, the imposition of a penalty on them, the implementation of liability measures provided for by the Civil Code of the Russian Federation (hereinafter – «Civil Code»), as well as consumer legislation. Keywords: Digital rights
Tokens
Blockchain contract
Cryptocurrency
Cryptoactive


Dispute resolution
Smart

1 Introduction In Russia, as in most other foreign countries, we can observe the rapid implementation of digital technologies in people’s lives. Today, as a result of the digital transformation, new types of social relations are emerging that are forming about special objects, in particular, tokens. The active development of these relations is determined primarily by their investment attractiveness (Frolova et al. 2018). © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 665–673, 2020. https://doi.org/10.1007/978-3-030-39319-9_74

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However, the lack of legal regulation of the token definition and other related concepts has led to the uncertainty of social relations, the subject of which are tokens. Persons cannot foresee the legal consequences of their actions, as a result of which one of the main general principles of law is violated - the principle of legal certainty (Dudin et al. 2016). In order to incorporate digitalized relations into the legal environment, three bills were introduced into the State Duma: Bill No. 419059-7 “On Digital Financial Assets”, Bill No. 424632-7 “On Alternative Ways to Attract Investments” (hereinafter referred to as the crowdfunding bill) Bill No. 424632-7 “On digital rights”. Today, after numerous revisions, only the Digital right law received a positive assessment and was signed by the President of the Russian Federation, which will enter into force on October 1, 2019. It is worth noting that the original and the final editions of the Digital rights law drastically differ. Moreover, not only certain provisions of the draft law were reworked, but the concept of understanding digital rights was changed as a whole. The explanatory note to the Digital rights law states that the law aims to establish a legal basis so that the legislator could further regulate the market of new economic relations objects existing in the information and telecommunications network (commonly referred to as “tokens”, “cryptocurrency”, etc.), and also provide conditions for the execution of transactions in the digital environment. That is, the Digital rights law is essentially a framework and establishes only the basic provisions, which will be further detailed by other laws. This article contains a critical analysis of digital rights as a legal category through the prism of the Digital rights law and also identifies the main problems of legal regulation in the aspect of substantive and procedural law arising due to incorporation of a new civil rights object into the Russian legal system (Inshakova et al. 2018).

2 Methodology The theoretical and methodological basis of the study is a dialectical approach to the knowledge of social processes and socio-legal phenomena. The objectives of the work also determine the application of the following general scientific methods: methods of analysis and synthesis, induction and deduction, comparison, modeling are used, firstly, to analyze the adequacy of the legal transformation of the digital environment objects, secondly, to compare the current edition of the Digital rights law with the original edition, thirdly, to model possible problematic situations that may arise during the dispute resolution. Features of the study object - civil relations associated with the use of digital assets involve the use of private science methods, in particular, the formally dogmatic method is used to analyze the signs of such concepts as “digital law”, “smart contract”, “digital rights holder”.

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3 Results 3.1

Legal Status of «Digital Rights»

There is no clear understanding of the legal nature of tokens in foreign countries where attempts to regulate relations connected with tokens are being made (Rusakova et al. 2018). In technical terms, tokens are countable units of a system. However, despite the general basis, their functionality differs, as a result of which several groups of tokens can be distinguished. The classification developed by the American Securities and Exchange Commission (SEC) and the Swiss Financial Markets Supervision Service (FINMA) seems logically justified. Both organizations divide tokens into the following categories: “Investment (Security) tokens” - give the right to receive basic assets, dividends, as well as the right to interest payments. Its economic function is similar to stocks, bonds, or derivatives. • “Investment (Security) tokens” - give the right to receive basic assets, dividends, as well as the right to interest payments. Its economic function is similar to stocks, bonds, or derivatives. • “Utility tokens” - give access to the goods and services provided by the project. • “True” cryptocurrency (real cryptocurrencies) or “payment tokens” - this type of token has its own blockchain and is often viewed as a means of payment (Legal Information Portal «Zakon Ru» 2019). Since the differentiation of the economic function directly affects the legal nature of each type of token, it is logical to conclude that each group should have its own legal regime. For example, the use of the legal regime of securities is justified for investment tokens, however, this regime is unacceptable for turnover of service and payment tokens. Digital rights law introduce Art. 141.1, which enshrines the basic definition of the concept of “digital law”, which is a legal equivalent of the term “token”, to the Civil Code1. According to the legislative definition, digital rights are rights from obligations and other rights, the content and executive conditions of which are determined in accordance with the rules of the information system that meets the statutory criteria. The conclusion that the tokens are not an independent entity, but are the same rights that they certify. Thus, it can be concluded that, within the context of the Digital rights law, the function of tokens is purely certifying, that is, this definition covers only “utility” tokens certifying rights to the works and services provided within the project. However, there is a contradiction in the Digital rights law. The absence of own content as a specific of a token in the light of the concept on the basis of which the final version of the Digital rights law was developed is not clearly traced in other provisions regulating digital rights. In particular, Art. 128 of the Civil Code, which establishes the 1

The term “token” has now been used in the IT-lexicon to denote ciphers, the possession of which gives certain possibilities in the network, however, originally, the token was characterized as a device for identification, therefore the concept of “digital right” that meets the traditions of Russian law was introduced into the Digital rights law.

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system of objects of civil rights, was supplemented with new object - digital rights, which are considered as a type of property rights. The inclusion of digital rights in this system allows to talk about a certain degree of their independence, despite the fact that upon the meaning of Art. 141.1 of the Civil Code they do not have its content. It can be assumed that this contradiction arose as a result of an attempt to implement different concepts in the process of developing a bill. In the original version of the Digital right law, digital law was defined as a “digital code” certifying the rights to certain objects of civil rights registered in the decentralized registry. That is, the token was not identified with civil rights, which it certifies, but had its own content. Digital rights “closed” the token-certified rights. The advantage of this definition is that it took into account such a specific of the blockchain as distribution. In addition, the reference to the rules of the information system as a source of the legal content of digital rights is not entirely logical. The rules of an information system in their true meaning are a technical “document” and are not a set of legal rules. In this regard, the operation of investment platforms will be difficult, since, according to the Digital rights law, it is not clear which documents can be determined as the “rules of the information system” defining the legal properties of tokens. 3.2

Circulability of Digital Rights

Due to the provisions of the Digital rights law, digital rights can be alienated without the consent of the issuer (for example, a platform), they are subject to the provisions on the sale and purchase, they can be mortgaged, bequeathed and they can be penalized. It should be noted that the possibility of transferring digital rights without the consent of the issuer will exclude additional difficulties in organizing the secondary circulation of digital rights and adapt it to current market practices (Legal Information Portal «Pravo Ru» 2019). Digital rights law also establishes notion of «digital rights holder» - a person who, in accordance with the rules of the information system, has the opportunity to dispose of this right. (Otherwise may be provided by law). Exercising, disposal, including transfer, pledge, encumbrance of a digital right by other means or restriction of disposal of digital rights are possible only in the information system without referring to a third party. As follows from the definition, the ability to dispose of digital rights, which identifies person as their owner, is determined according to the rules of the information system. At the same time, the Digital rights law does not establish the rules for the circulation of digital rights within the information system, shifting this issue to special regulation. The ability to dispose of, in turn, has two sides: actual and legal. Based on the wording, it is impossible to determine whether it implies a legal ability to dispose of (defined as the legal validity of transactions with objects) or actual. As it is known, the “illegal owner” can “actually dispose of” the property. The question arises – is it possible to consider a person who wrongfully seized digital rights as their owner? Wordings of the Digital rights law allow to give a positive answer to this question. As mentioned above, according to the concept of the Digital rights law, an information

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system protocol is both a set of algorithms on the basis of which the system functions, and a set of legal rules, respectively, the ability to dispose of covers both actual and legal aspects. This wording also implies that the creator of the information system and the issuer are one person. Since the third-party issuer is a third party, the exercise of digital rights regarding to this third party is impossible pursuant to law meaning. In this part the law contradicts the concept of a crowdfunding bill, which allows third parties to use the investment platform for the issue of tokens and to commit to them. The exercise of rights arising from such tokens is obviously possible only by referring to a third partyissuer. According to current version of the law, digital owners and issuers must be linked by the relations not certified by digital rights. In addition, upon the meaning of the above wording, the creator of the information system and the issuer are one person. In turn, the third-party issuer is a third party. Thus, to date, the legal status, which, in turn, does not have logical completeness, received only “utility” tokens. 3.3

Legal Status of Cryptocurrency

The original version of the Digital rights law contained the concept of “digital money”, but later it was withdrawn. Digital money was determined as a set of electronic data (a digital code or designation) created in a decentralized information system and used by users of the system to make payments, which does not certify the right to any object of civil rights. The emerging court practice, in principle, designated the legal status of a cryptocurrency, namely, it defined the cryptocurrency as “other property”, which in principle solved the problem of its legal qualification. As an example, it is relevant to cite the widely discussed case involving the inclusion of cryptocurrency in the competitive mass. In the course of supporting a citizen bankruptcy procedure, the arbitration manager discovered the property in the form of bitcoins on the debtor’s cryptocurrency wallet. The debtor did not deny the fact that the cryptocurrency wallet belongs to him. Moreover, he personally provided a notarized protocol of inspection of the web page on the Internet, to the court. The court of first instance refused to satisfy the claims, citing the lack of legislative regulation of these assets (Determination of the Commercial Court of the city of Moscow 2018). However the appellate court supported the arguments of the arbitration manager concerning the not exhaustive list of civil rights objects, enshrined in Art. 128 of the Civil Code, as well as the economic essence of bitcoin, through which it is possible to carry out various financial transactions by a barter method, and has recognized the cryptocurrency as “other property” (Resolution of the Ninth Commercial Court of Appeal 2018). The adoption by the Plenum of the Supreme Court of an amendment to its Ruling on practice in legalization of income dated 2015 should be considered as an important event. As provided by this amendment, revenues converted from virtual assets are prohibited to launder (Resolution of the Ninth Commercial Court of Appeal 2018). The money converted from virtual assets - cryptocurrency acquired as a result of the commission of crimes must be considered now as the subject of the crimes under Art.

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174 and 174.1 of the Criminal Code of the Russian Federation on criminal income legalization. Thus, there is a departure from the definition of cryptocurrency as a monetary surrogate, that is, an object prohibited for circulation. However, payments with cryptocurrency remain prohibited. 3.4

Cryptoactive Assets Dispute Resolution

A lot of questions raise due to the dispute resolution process, the subject of which are tokens. For example, in bankruptcy cases, the problem of proving of cryptoassets possession by debtor is essential. The absence of a controlling center in the cryptocurrency system, the anonymity of cryptocurrency users do not allow to determine the person who owns the crypto wallet located on the Internet. In the bankruptcy case, which was discussed above, the debtor did not deny that he owns the crypto wallet and even presented the evidence of this fact. However, how will the situation be resolved if a person denies the fact that he owns cryptoactive assets? In such a situation, it seems necessary to apply for interim measures in the form of seizing the debtor’s computer equipment or tracking the IP address to which the wallet is attached. Secondly, the implementation of the process of enforcement of cryptoproperty is a problem. If a person does not voluntarily provide the account key in order to gain access to the assets, it will not be possible to obtain the key otherwise, because the blockchain system does not have an administrator (central registry holder) who would be able to freely change the registry, as takes place in the case of non-documentary securities. According to the basic principle of enforcement proceedings, the claimant has the right to decide whether to execute the court’s verdict by oneself by contacting the registrar directly or initiate enforcement proceedings in the authorized structural unit of the Federal Bailiff Service (FBP) when applying for non-documentary securities. In both cases, the registrar shall directly write off. If there the subject of the foreclosure is cryptoactives, such a registrar is absent. Direct debiting can be done either by the claimant himself or by the bailiff, but only after receiving the key from the debtor. That is, the possibility of foreclosure in this case directly depends on the will of the debtor himself (Dudin, Zasko, Frolova, Pavlova, Rusakova 2018). The next problem is related to the sale of property in the form of cryptocurrency within the framework of the bankruptcy cases resolution, since the mechanism for selling a virtual asset is not specified anywhere. It appears that the implementation procedure will be carried out in accordance with the Federal Law “On Insolvency (Bankruptcy)” of October 26, 2002 N 127-ФЗ (hereinafter - the Insolvency Law) by analogy with the assignment of the debtor’s claim rights. After the cryptocurrency gets into the bankruptcy estate, the manager will develop a regulation on the conditions and terms of sale of the property and independently assess the value of the cryptocurrency, focusing on the current exchange rate. Then the cryptocurrency, along with other property of the bankrupt, will be implemented by the manager at a special auction (Chumakov 2019).

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If, for some reason, the property cannot be sold, then under bankruptcy law such objects can be transferred to the creditors in the order of compensation. Even if the debtor tries to prevent this, the financial manager has the right to bring the bankrupt to justice for concealing property. The factual recognition of cryptocurrency as “other property” was carried out essentially in bankruptcy or criminal cases. So in dispute resolution process a problem concerning the possibility of applying the norms of the Civil Code, as well as the provisions of the Law of the Russian Federation of February 7, 1992 No 2300-1 “On Consumer Protection” (hereinafter – ZOZPP) to civil relations the subject of which are cryptoactives may arise. For example, in one of the cases, the claimant tried to recover damages, penalties, compensation for non-pecuniary damage, as well as a fine from the server owner for improper fulfillment of the obligation to provide services for the transfer of cryptocurrency into rubles, as a result of which the amount was not fully transferred to the claimant (Decision of the district court of the Ryazan region 2017). The court indicated that due to the lack of legal regulation of payments made in “virtual currency”, as well as the lack of legal regulation of online trading sites, bitcoin exchanges, all transactions with bitcoins are transferred by their owners at their own risk. Thus, the claimant, by agreeing to the terms and conditions of the provision of the electronic currency exchange services, assumed the risk of incurring any financial loss and/or damage that could have been caused to him as a result of a delay or inability to make electronic transfers. Since the presence of cryptocurrencies outside the legal field does not provide the opportunity for the claimant to implement the legal mechanisms for imposing on the defendant responsibility in the form of the payment of a penalty, compensation for moral damage and the penalty provided for by the ZOZPP, the claim was denied. It seems that such an argument may in the future be relevant for the refusal to impose responsibility on the basis of the norms of the Civil Code. Thus, cryptocurrency in fact have received the legal status of “other property” primarily to prevent the withdrawal of funds in bankruptcy, as well as money laundering or tax evasion. However, to ensure the stability of the turnover of virtual assets in civilian circulation, recognition alone is not enough. A more detailed regulation of a new civil rights object is necessary, taking into account the specific properties of the blockchain.

4 Findings The above study allows us to assess the degree of efficiency of the introduction of new civil rights objects in legal system of Russia, to identify important positive and negative points caused by the adoption of new Digital rights law, as well as to identify problem areas in relations with the use of digital assets that are still unregulated. First of all, it is worth noting that the Digital rights law has a positive effect. Due to its framework nature, Digital rights law is the legal basis for the subsequent regulation of relations connected with the use of tokens. The advantage is seen in the fact that the legislator is on the path of recognizing and legalizing new digital objects.

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Among the negative aspects, it is worth noting that the Digital right law does not contain specific elements of cryptoregulation, the provisions do not take into account “decentralization” as the principle of functioning of the blockchain (Kalinina, Inshakova, Goncharov 2019). After processing the original version, the Digital rights law became acceptable only for the regulation of relations developing within the framework of a centralized information system, which essentially deprives the meaning of its adoption. Digital rights have not received a certain status. The digital rights introduced by their nature are as close as possible to non-documentary securities, which casts doubt on their necessity as such. Cryptocurrency remains without legislative regulation. Court practice develops along the way of its qualification as a “property”. Despite the presence of positive law enforcement practice, there are many gaps in the procedural issues related to obtaining access to digital assets, as well as the process of their implementation. There are many controversial issues related to the proof of ownership of digital assets, the imposition of a penalty on them, the implementation of liability measures provided for by the Civil Code, as well as consumer legislation. Additionally, cryptocurrency in fact have received the legal status of “other property” primarily to prevent the withdrawal of funds in bankruptcy, as well as money laundering or tax evasion. However, to ensure the stability of the turnover of virtual assets in civilian circulation, recognition alone is not enough. A more detailed regulation of a new civil rights object is necessary, taking into account the specific properties of the blockchain. Acknowledgements. The publication has been prepared with the support of the «RUDN University Program 5–100».

References Bill No. 424632 -7 «On digital rights» (2019). https://sozd.duma.gov.ru/bill/424632-7. Accessed 23 Apr 2019 Chumakov, A.: «Digital rights under the Civil Code of the Russian Federation - do we need such rights?» (2019). https://zakon.ru/blog/2019/3/27/cifrovye_prava_po_gk_rf_-_nuzhny_li_ nam_takie_prava. Accessed 24 Apr 2019 Decision of the district court of the Ryazan region dated 26 April 2017. https://sudact.ru/regular/ doc/qlE6zawJCy6l/. Accessed 29 Apr 2019 Determination of the Commercial Court of the city of Moscow of 07.09.2018 on the completion of the sale of property of a citizen and the release of a citizen from the performance of obligations (2019). http://kad.arbitr.ru/PdfDocument/3e155cd1-6bce-478a-bb76-1146d2e61a 4a/fbc7c350-cf95-4bb9-8d28-2ea7d7b9415b/A40-124668-2017_20180907_Opredelenie.pdf. Accessed 29 Apr 2019 Dudin, M.N., Frolova, E.E., Lubenets, N.A., Sekerin, V.D., Bank, S.V., Gorokhova, A.E.: Methodology of analysis and assessment of risks of the operation and development of industrial enterprises. Qual. Access Success 17(153), 53–59 (2019a). https://elibrary.ru/item. asp?id=26553567. Accessed 20 Apr 2019 Dudin, M.N., Zasko, V.N., Frolova, E.E., Pavlova, N.G., Rusakova, E.P.: Mitigation of cyber risks in the field of electronic payments: organizational and legal measures. J. Adv. Res.

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Law Econ. 9(1), 78–88 (2019b). https://elibrary.ru/item.asp?id=35790637. Accessed 22 Apr 2019 Frolova, E.E., Polyakova, T.A., Dudin, M.N., Rusakova, E.P., Kucherenko, P.A.: Information security of Russia in the digital economy: the economic and legal aspects. J. Adv. Res. Law Econ. 9(1), 89–95 (2018). https://elibrary.ru/item.asp?id=35790834. Accessed 22 Apr 2019 Inshakova, A., Goncharov, A., Kazachenok, O.: The imperatives of financial policy in the sphere of the digital economy: impacts on increasing investment activity and tax potential of Russian regions. In: Proceedings of the International Scientific Conference «Competitive, Sustainable and Secure Development of the Regional Economy: Response to Global Challenges» (CSSDRE 2018), pp. 337–342, Atlantis Press, Amsterdam (2018) Kalinina, A.E., Inshakova, A.O., Goncharov, A.I.: Polysubject jurisdictional blockchain: electronic registration of facts to reduce economic conflicts. In: Popkova, E. (eds) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Studies in Computational Intelligence, vol. 826, pp. 205–213. Springer, Cham Legal Information Portal « =Pravo Ru =» (2019). https://pravo.ru/news/209650/. Accessed 24 Apr 2019 Resolution of the Ninth Commercial Court of Appeal dated 15.05.2018 on the abolition of the definition of first instance and the satisfaction of the requirements of the arbitration manager (2019). http://kad.arbitr.ru/PdfDocument/3e155cd1-6bce-478a-bb76-1146d2e61a4a/58af451 a-bfa3-4723-ab0d-d149aafecd88/A40-124668-2017_20180515_Postanovlenie_apelljacionno j_instancii.pdf. Accessed 29 Apr 2019 Resolution of the Plenum of the Supreme Court of the Russian Federation On Amending the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 32 dated July 7, 2015 “On judicial practice in cases of legalization (laundering) of money or other property acquired by criminal means, and on the acquisition or sale of property knowingly obtained by criminal means” (2019). https://www.vsrf.ru/documents/own/27620/. Accessed 29 Apr 2019 Rusakova, E.P., Barulina V.P., Gorbacheva A.I.: Problems of ensuring the confidentiality of personal data in the context of the implementation of the campaign to create “smart” cities in China: drawbacks of the Cyber Security Law. J. Soc. Polit. Sci. (5) (2019). https://elibrary.ru/ item.asp?id=36409653. Accessed 25 Apr 2019 The law “On digital rights” will not work without the law “On digital financial assets” - experts explain (2019), Legal Information Portal «Zakon Ru» (2019). https://forklog.com/zakon-otsifrovyh-pravah-ne-budet-rabotat-bez-zakona-o-tsifrovyh-finansovyh-aktivah-obyasnyayut-e ksperty/. Accessed 25 Apr 2019

Alternative Energy in the Conditions of Cross-border Environmental Risks and Nanotechnology: The Geography of Economic and Legal Development Agnessa O. Inshakova1(&) , Elena I. Inshakova1 , Alexander E. Epifanov1, and Azamat M. Shadzhe2 1

Volgograd State University, Volgograd, Russia {gimchp,inshakovaei,epifanov}@volsu.ru, [email protected] 2 Adygeya State University, Maikop, Russia [email protected]

Abstract. The economic and legal development of society in recent decades is subject to the two bright trends of cross-border nature: first, these are the parallel processes of globalization and expansion of international integration relations – both global and regional ones – erasing the geographically defined boundaries of state jurisdiction, and secondly, it is the formation of the innovative type of economy – the knowledge economy, which is based on intellectual resources and high technology, including nanotechnology. Despite the progressive effects of these trends on the economy and competitiveness of the state, the list of possible negative consequences, unfortunately, inevitably includes serious environmental risks, which, in turn, significantly complicate the implementation of the concept of sustainable economic development. Meanwhile, the same nanotechnology activity can simultaneously act as a source of environmental risks, as well as an instrument for their neutralization or at least minimization. Thus, one of the ways to reduce cross-border environmental risks can be the use of nanotechnology developments in the production sector, for example, in the electrical industry including an alternative one. In this regard, the paper discusses the latest nanotechnology developments, which are overseen by AO “RUSNANO” (hereinafter – RUSNANO) and the Fund of Infrastructural and Educational Programs (FIOP), aimed at preventing and minimizing the effects of environmental harm, contributing to the economy of natural resources and efficient utilization of industrial waste. The recommendations on streamlining the state system of organizational, financial, legislative and infrastructural measures for nanotechnology development of the alternative energy sector are formulated. Keywords: Renewable energy
Alternative energy
Nanotechnology
Cross-border production
Environmental risks
Environmental harm
Economic and legal regulation
Environmental legislation JEL Code: F 15
K 32
К 13
L 94
O 33
Q 20
Q 32
Q 41
Q 42
Q 48

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 674–685, 2020. https://doi.org/10.1007/978-3-030-39319-9_75

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1 Materials The materials of the research were the provisions of the international and domestic legal acts, the statistical data and information of the official websites of the state and licensed international and national organizations, integration associations and unions, as well as authoritative opinions of modern Russian and foreign doctrine in the field of civil, business, environmental and private international law. The negative consequences caused by transboundary environmental damage in the regions of the European continent were studied on the basis of materials presented in the Atlas of Cesium Deposition on Europe after the Chernobyl Accident/Luxembourg: Office for Official Publications of the European Communities, 1998. The methods of waste disposal in relation to the territories of developing countries, the data on the world’s largest landfills, including those located in the city of Lagos in Nigeria were analyzed thanks to the materials of the Basel Convention Coordinating Centre for the Africa Region in Nigeria, BCCC Africa (Assessing Import of Used Electrical and Electronic Equipment into Nigeria. Person-in-the-Port Project/E-text. Access mode: https://collections.unu.edu/eserv/UNU:6349/PiP_Report.pdf) and the United Nations University (United Nations University/E-text. Access mode: https://www.un.org/ru/ sections/general/un-and-sustainability/index.html). The indicators of renewable energy capacity, including the total capacity, the capacity of non-hydro renewable energy sources, the cost of renewable energy, as well as the information on the status of investments in this industry were studied thanks to the data published in 2018 by the Renewable Energy Policy Network for the 21st Century (REN21) in the Renewables Global Status Report (Renewables 2018 Global Status Report/E-text. Access mode: http://www.ren21.net/gsr-2018/). The international legal regulation of restrictions on the transit of hazardous wastes from developed to developing countries, the rules on the ban of the import of radioactive and other hazardous wastes, dumping and incineration of hazardous wastes in the oceans and inland waters of the African continent were studied on the basis of the provisions of the international instruments, primarily, such conventions as: the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (1989) the Bamako Convention on the Ban of the Import into Africa and the Control of Transboundary Movement and Management of Hazardous Wastes Within Africa (1991) the Protocol on Liability and Compensation for Damage Resulting from Transboundary Movements of Hazardous Wastes and Their Disposal (1999) the Stockholm Convention on Persistent Organic Pollutants (2002), etc. The prerequisites and consequences of increasing the volume and geographical coverage of natural resources consumption, the aggravation of the problem of industrial and household waste disposal in the production conditions were studied by the example of the research works (Yakovleva 2018). The impact of the development and introduction of knowledge-based technologies in the production sector on the stability of economic growth, as well as the technological and infocommunication potential of modern socio-economic relations and the effectiveness of its implementation by the economic entities were studied through the scientific works (Inshakova et al. 2018).

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The study of global challenges and long-term trends of innovative development in the field of renewable energy, as well as the reasons for the decline in the importance of fossil fuels was carried out with the help of the scientific works (Proskuryakova and Ermolenko 2017). The development prospects for modern energy sector, especially the alternative one, taking into account the development and use of nanotechnology and nanomaterials as catalysts for innovative modernization of the economy, the creation of powerful internal and external impulses and the effects of its development, stimulating sustainable growth not only in the energy sector, but also in the national economy as a whole were studied on the example of the scientific works (Inshakova et al. 2019). The nanotechnology developments in the aspect of priority areas of the production sector, the creation of a renewable energy cluster and energy efficiency were studied on the basis of projects of RUSNANO Corporation in the field of solar and wind energy, biofuels, energy storage systems (Nanotechnology Clusters Created by RUSNANO. Renewable Energy and Energy Efficiency./E-text. Access mode: http://www.rusnano. com/projects/energy).

2 Methods The general scientific framework methodology of the paper consists of the methods of historical materialism, cognition, synthesis, generalization, logical and statistical analysis, as well as the formal-logical, dialectical, and system-structural methods. The sources of statistical data were as follows: the data of the Coordinating Centre of the Basel Convention for the African Region in Nigeria, the United Nations University, the Renewables Global Status Report published by the Renewable Energy Policy Network for the 21st Century (REN21), the official website of the Corporation RUSNANO, and etc. The main specific scientific method is the method of comparative law analysis, which made it possible to implement the scientific development of normative and legal acts included in the system of the international legal regulation and compare them with the provisions of the current Russian legislation in the field of energy, corporate and environmental relations, including those complicated by a foreign element. Other methods of specific scientific character were also used: the formal-legal method, the assessment principle of legal processes, etc.

3 Introduction We can state with confidence that the social development of the last decades has reached an unprecedented new qualitative level, in our opinion, thanks to the two main trends that characterize it: (1) globalization and international economic integration and (2) high-tech economic activity. Thus, the activities of the international organizations, various integration associations and regional unions are aimed at the liberalization of inter-country relations and the movement of all factors of production. The interstate communication in the sphere

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of production in the context of globalization of the world economy involves the free cross-border movement of financial and human resources, the expansion of world economic relations, the freedom of creating and functioning transnational corporations (international holdings, conglomerates, concerns, etc.). The integration processes in the economy lead to the inevitable expansion of the possible geographical location of the production factors of one industrial process. Thus, the administrative center of the entire system of enterprises can be located in the United States, the development department – in Japan, the raw material base – in Russia, the assembly shop – in China, trade offices – in the European Union and waste disposal can be carried out in the Philippines. The economists around the world note the positive aspects of the globalization of production processes for consumers, since the international production cooperation generated by these processes allows ensuring the best value for money. However, there are also negative consequences of the processes under consideration, which should not be forgotten, and which require timely prevention or at least minimization. First of all, we are talking about the environmental risks and environmental harm associated with their occurrence. The geographic growth of production and the complexity of specialization and production processes through the introduction of new technologies enhance the extensive nature of production activities. These processes are often accompanied by the increase in the volume and geographical coverage of consumption of natural resources, the exacerbation of the problem of industrial and domestic waste management, especially in the context of the production removal or export of waste to developing countries (Yakovleva 2018). People handle natural resources rapaciously, consuming more and more, and in the case of exhaustion of resources in one region go to production in another. Waste recycling is handled with blasé attitude, often by taking garbage to developing countries where it is not recycled at all. This naturally leads to the environmental harm. At the same time, the occurrence of negative consequences for the environment is increasingly becoming cross-border. The consequences of the damage caused may arise in the territory under the jurisdiction of third states (a striking example is the spread of the radiation cloud in some regions of the European continent, particularly in Austria, Belarus, Great Britain, Germany, Greece, Italy, Norway, Poland, Romania, Slovakia, Slovenia, Finland, the Czech Republic, Switzerland and Sweden, the total area of contaminated territories is about 207,5 km2) (Atlas of Cesium Deposition on Europe after the Chernobyl Accident/ Luxembourg: Office for Official Publications of the European Communities, 1998). In practice, sometimes there are situations when it is difficult or impossible to prove the causal relationship between an environmental disaster and a subsequent human disease. The reduction of the environmental harm in the modern conditions is contributed by the introduction of high technologies in the manufacturing sector. It is safe to say that the stability of economic growth becomes directly dependent on the technological and infocommunication potential of socio-economic relations and the effectiveness of its implementation by economic entities (Inshakova et al. 2018). The focus of attention of production participants is the development and use of available functional mechanisms that allow increasing production at the same level of costs by increasing the productivity of the production factors that contribute to the economic growth through the production of new products and fundamentally new types of synthetic raw materials

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that have no analogues in the natural materials, as well as increasing the competitiveness of the company or its individual goods and services. With the development of scientific and technological progress, another major legal challenge is the transboundary movement of electronic waste for disposal. Every year worldwide millions of technical devices become obsolete mentally and physically, break down and are discarded. The cheapest method of disposal is associated with garbage collection in the territory of developing countries. One of the largest landfills in the world is located in the city of Lagos, Nigeria. The joint efforts of Basel Convention Coordinating Centre for the Africa Region in Nigeria (BCCC Africa) and the United Nations University (UNU) found that of the 66 000 tons of garbage located here more than 93% were delivered from Europe (Assessing Import of Used Electrical and Electronic Equipment into Nigeria. Person-in-the-Port Project/E-text. Access mode: https://collections.unu.edu/eserv/UNU:6349/PiP_Report.pdf). From a legal point of view, such cargo is designated in the accompanying documents as used equipment, working and still suitable for use or processing; in some cases it is issued as humanitarian aid. The water crafts, in which the deadly debris is delivered to Nigeria, are not checked. In this connection, in one of third world countries it is easy to find equipment that is officially sent to other countries, for example, to Australia. It is obvious that such frauds have become possible with the sanction of the leadership of both states, which have informal agreements of a political nature, as well as due to the corruption component. There are several waste processing plants in Nigeria, but the volume of imported garbage is ten times higher than their production capacity. Moreover, recycling is carried out in a primitive way – garbage is burned. Unfortunately, similar landfills for electronic waste disposal exist in the countries such as Ghana, the Philippines, Somalia, Bangladesh, Kenya, and Guinea. From a legal point of view, the international legislation provides for restrictions on the shipment of hazardous wastes from developed countries to developing ones. In particular, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, 1989, the Bamako Convention on the Ban of the Import into Africa and the Control of Transboundary Movement and Management of Hazardous Wastes within Africa, 1991, the Protocol on Liability and Compensation for Damage resulting from Transboundary Movements of Hazardous Wastes and Their Disposal, 1999, the Stockholm Convention on Persistent Organic Pollutants, 2002, and other international instruments that expressly prohibit the import of radioactive and other hazardous wastes and the dumping of hazardous wastes and their incineration in the oceans and inland waters of the African continent, are currently in force. The above-mentioned conventions also impose certain obligations on the leadership of African states aimed at improving the environmental situation. However, this problem cannot be solved by the legal restrictions alone, as it requires the latest technological base that provides not only the elimination of negative consequences of environmental, social and economic nature, but also the prevention of damage in the form of: – loss of life or personal injury; – loss of or damage to property;

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– loss of income directly arising from the economic interests related to any use of the environment, incurred as a result of significant damage to the environment, taking into account savings and costs; – costs of measures of reinstatement of the impaired environment, limited to the costs of measures actually taken or to be taken; – costs of preventive measures, including any loss or damage caused by such measures (Protocol on Liability and Compensation for Damage Resulting from Transboundary Movements of Hazardous Wastes and their Disposal 1999/E-text. Access mode: http://www.un.org/ru/documents/decl_conv/conventions/basel_ protocol.shtml, art. 2) Such a new technological base is necessary, in particular, for the development of renewable energy sources as a means of preventing the exhaustion of conventional fossil energy resources. In 2018 the international network of renewable energy policy in the XXI century (REN21) presented the Global Report on the situation in the field of renewable energy (Atlas of Cesium Deposition on Europe after the Chernobyl Accident, 1998.). According to the report, the capacity of renewable energy sources increased by 9%. The total capacity of renewable energy sources for 2007–2017 more than doubled and the capacity of non-hydro renewable energy sources increased sixfold. At the same time, the cost of renewable electricity continues to decline and in some cases is much lower than the cost of conventional or nuclear electricity. The disappointing information about the reduction of almost a quarter of investments in this industry is called as a strategic error in the report, because the investors could get much more for their money, according to the Executive Secretary of REN21 Christine Lins (Ren21 Presented a Global Report on Renewable Energy/E-text. Access mode: http://csrjournal. com/25171-ren21-predstavila-globalnyj-doklad-o-polozhenii-v-oblasti-vozobnovlyae myx-istochnikov-energii.html). The largest investors are China, Europe and the United States, which account for almost 75% of all investments in renewable energy and fuel. In the market there are also new players, supporters of the use of 100% renewable energy. More than 130 leading global corporations, including from the developing countries (Burkina Faso, Chile, Egypt, Ghana, India, Japan, Mexico, Namibia, Thailand) joined the RE100 initiative. In 2017 the scientists of ISIEZ NIU VSHE L.N. Proskuryakova and G. V. Ermolenko conducted a study of global challenges and long-term trends of innovative development in the field of renewable energy. As a result of the study, it was concluded that the importance of fossil fuels should always be reduced due to the following reasons: (1) the exhaustion of conventional hydrocarbon reserves in the foreseeable 50–100 years; (2) high capital costs and the cost of developing unconventional hydrocarbon reserves; 3) the reduction of growth rates of demand and prices for hydrocarbons; 4) changes in the structure of the world fuel and energy balance, in particular, the reduction of oil intensity of the world economy; 5) the stricter environmental legislation and the high contribution of hydrocarbon production, processing and use to the climate change and environmental pollution.

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At the same time, renewable energy sources should come to the fore, which, according to the researchers, have a number of advantages: (1) zero cost of renewable energy resources, the reduction of prices for technologies and equipment; (2) the development of a new high-tech industry, the creation of new jobs; (3) improving energy security through the diversification of fuel and energy balance, the access to a permanent low-cost source of autonomous energy supply; (4) economically feasible solutions for the supply of electricity and heat to the remote regions, including the Far North; (5) the low contribution of renewable energy generation to the climate change and environmental pollution (Proskuryakova and Ermolenko 2017). Many experts associate the prospects for developing modern power industry, especially the alternative one, with the use of nanotechnology and nanomaterials, given the strategic importance of nanotechnology as a catalyst for the innovative modernization of the economy, the creation of powerful internal and external impulses and the effects of its development, stimulating sustainable growth not only in the energy sector, but also in the national economy as a whole. Nanotechnologies contribute to the creation of new opportunities for the use of renewable energy sources and make a significant contribution to the production and conservation of energy. The main directions of effective use of nanotechnology in the energy sector are: – the use of renewable sources (solar panels, thermoelectric devices, fuel cells); – the energy storage (rechargeable batteries and supercapacitors, hydrogen tanks); – the reduction of material consumption (e.g. the creation of lighter and/or stronger structural materials or the increase of their activity); – the use of alternative (more common) materials (for example, the replacement of rare earth elements with nanostructured metal oxides during catalysis) (Nanotechnology in the Energy Market in 2015//Rossijskije nanotekhnologiji, Volume 4, 2009); (Inshakova et al. 2019). In the Russian Federation, nanotechnology is one of the priority areas of the production sector. The renewable energy and energy efficiency cluster includes 9 RUSNANO projects in the field of solar and wind energy, biofuels, the energy storage systems. The revenue of the cluster in 2017 amounted to 7.7 billion rubles. Within the cluster, the industrial production of solar panels and solar power plants was created from scratch, the production of wind power plants and waste processing plants is being created. To date, the serial production of ultra-high-strength, high-conductive nanostructured wires used for scientific, industrial applications, high-speed rail transport, shipbuilding, aviation, space technology, and electronics has been established. The consumers of these wires are not only Russian but also foreign companies, in particular, the National Laboratory of High Magnetic Fields (USA) and Rossendorf Research Center (Germany). In addition, the thermoelectric devices for cooling and generating electricity based on CERATOM ceramic-free technology are already produced, which are used in the

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field of power generation, gas distribution, laser technology, telecommunications and air conditioning. Also, with the support of RUSNANO, the thermoelectric micromodules based on the Peltier effect are produced, designed for local heat removal and maintaining the thermal regime necessary for the effective operation of lasers, highpower LEDs, highly sensitive photodetectors, the elements of high-performance integrated circuits and microprocessors, as well as biomedical devices. High-capacity supercapacitors for vehicles with hybrid engines, energy storage systems for various types of transport, starting diesel engines and stabilizing the mains voltage, backup power sources are under development. This development will increase the service life of the systems combined with traditional batteries by 2–3 times compared to standard batteries. The company Nescap has developed the innovative technology of activating carbon with the formation of subnanometric pores which allows achieving a greater surface of the contact of the electrode with the electrolyte (Nanotechnology Clusters Created by RUSNANO. Renewable Energy and Energy Efficiency/E-text. Access mode: http://www.rusnano.com/projects/energy). In the process of formation there are 5 more ROSNANO clusters, which should be created within 10 years, including 2 clusters in the energy sector (conventional and alternative) and 1 cluster for solid waste processing (Five New Clusters in the Field of Nanotechnology will be created in Russia by 2027//ITMO. NEWS, 2017). – the cluster “Industrial energy storage”; the leading enterprises of the cluster: the plant OOO “Liotech” (Novosibirsk, Russia), producing lithium-ion batteries using nanostructured cathode material lithium-iron phosphate; “OCSiAl Russia” (Novosibirsk, Russia), specializing in the production of single-walled carbon nanotubes whose unique characteristics qualitatively increased the strength and conductivity of materials (polymer composites, rubbers, metals, etc.). Along with the reduction of almost 5 times the price compared to comparable analogues, it provides a way of bringing the production of carbon nanotubes to the industrial level and using widely in the energy, automobile manufacturing, electronics, construction, medicine, etc. The machining workstation “Graphetron 50” with a capacity of about 50 tons of carbon nanotubes per year is planned to be put into operation on the basis of “OCSiAl” in 2019, with that the world market is expected to be about 4 thousand tons by 2020; – the cluster “Wind Power”, created with the participation of the state corporation “Rosatom” and “RUSNANO”; focused on the production of basic components (blades) for wind farms (on the production base of the company “Aerokompozit”, Ulyanovsk), the construction of wind farms, the production of wind energy, including for export. The fund for the development of wind energy (the amount of the fund is 30 billion rubles) newly created by “RUSNANO” and the Finnish energy company “Fortum” is expected to help to attract investment in the implementation of this project (up to 70 billion rubles). The first wholesale wind power plant built by the corporation “Fortum” was put into operation in Ulyanovsk in January, 2018; there will have been built a few wind farms more together with “ROSNANO” by 2022; – the cluster “Solid waste processing” (in the field of “energy from waste”, EfW) fully funded by “RUSNANO”; it is planned to create 5 enterprises using thermal

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liquidation, plasma gasification and other innovative technologies of waste processing; the basis of the cluster will be created by the plants in the Moscow region and Tatarstan, built by “RUSNANO” in collaboration with the Japanese-Swiss TNC “Hitachi Zosen Inova AG” and the state corporation “Rostekh”. The comprehensive development of the nanotechnology clusters already created and being created by “RUSNANO” will allow increasing the value of the market of investment and final goods of the Russian nanoindustry to almost 4.4 trillion rubles by 2027 (3.7 times compared to 2016), and the volume of investments – up to 87 billion rubles (i.e., almost 4 times) (Five New Clusters in the Field of Nanotechnology will be created in Russia by 2027//ITMO NEWS, 2017). Unfortunately, at the moment the use of nanotechnology in alternative energy can’t eliminate by 100% the environmental damage caused by renewable energy sources. According to H. Sterling Burnett, the hydropower facilities are an obstacle to the migration of salmon and other fish species and destroy river ecosystems; the wind turbines (especially located in the compact territory of the wind parks) are unsafe for birds and bats, leading to mechanical damage not only due to the impact of the blades, but also due to the difference in barometric pressure (Wildlife Impacts from Renewable Energy Sources/E-text. Access mode: http://myelectro.com.ua/99-analiticheskie-stati/ 174-vred-nanosimyj-dikoj-prirode-vozobnovlyaemymi-istochnikami-energii). Solar panels are also unsafe for the nature, because turtles, birds and insects die due to the high temperature generated under the solar cells, as well as the concentrated sunlight of the tower power plants. These same destructive factors can cause transboundary harm to human beings and property. As a consequence, the question of the legal regulation of legal relations arising from the infliction of harm comes to the fore both in international and national law. Based on the analysis of the set of existing rules of international law, the types of incidents that fall within the scope of international treaties do not cover “normal operations”, that is, in the absence of industrial accidents the environmental and property damage as well as physical harm remain outside the law. In addition, the subject of the legal regulation of international treaties is limited to conventional energy sources: oil, gas, nuclear energy. The international acts in the field of renewable energy sources are limited to bilateral agreements on the construction and operation of hydropower facilities. In this regard, there is a natural need for the conflict regulation of legal relations arising from the damage caused by alternative energy sources. We believe that in these cases similarly with the liabilities from any harm caused by conventional energy sources, it is necessary to apply the choice of law binding lex loci delicti commissi. Since the domestic law of individual countries often gives different answers to the question of the burden of proof of the injurer’s fault, the responsibility for the case, the meaning of the victim’s fault and other questions of this kind of obligation, the law of the state in whose territory the harm was caused should apply for the convenience of all parties to the tort obligation.

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4 Conclusion The most significant effects of the implementation of nanotechnology projects in the field of alternative energy in the short and medium term which are significant for the Russian economy as a whole will be: – strengthening the energy security of the country by increasing the use of renewable energy sources with the depletion of conventional ones; – improving the efficiency of electricity generation by improving the technology of production and conversion of energy obtained from alternative sources, increasing the amount of energy converted into electricity, reducing the duration of the relevant processes; – reducing the cost of production of electric energy obtained from renewable sources, due to: reducing the consumption of materials used and improving their efficiency if nanomaterials applied (with greater efficiency in terms of “price – quality”); reducing production costs; – developing and applying the innovative systems for accumulation and storage of produced electricity, as well as new energy saving technologies; – increasing on this basis the economic efficiency of the alternative energy sector; – reducing prices in the wholesale energy market due to the growth of alternative energy supply, which meets the interests of consumers; – reducing as a result of the use of innovative technologies for the production of alternative energy the negative impact of conventional sources (air pollution, greenhouse effect, etc.) on the environment and costs of neutralizing such a negative impact; – obtaining the economic advantages by the country as a leader in the development of new technologies in this area, ensuring an equal position in the market of high-tech energy products and services with a limited range of participants, as well as the participation in the creation of global mechanisms for obtaining and redistributing rents from the monopoly on unique knowledge and high technology (Inshakova 2014). Of course, for the effective operation of the system of introducing science-intensive technologies in production, it is impossible to do without the state support. The administrative bodies of the state must necessarily carry out the organizational measures aimed at liberalizing and de-monopolizing the electricity market with the mandatory reduction of the state’s share in grid and generating companies. The freedom to create individual and cooperative generating and network facilities should be based primarily on the competitive domestic market for scientific and technological developments, which should be supported through the public-private partnerships. The financial intervention of the state should be expressed in the establishment of tax benefits per unit of power produced by renewable energy, as well as the establishment of a preferential tax regime for the sale of renewable electricity. In addition, subsidies, grants, various forms of public investment and public lending should be combined with the broad involvement of private capital, insurance and other funds.

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The legal regulation also needs to be reformed. First of all, it concerns the establishment of national standards for intelligent active-adaptive networks in accordance with the International Electrotechnical Commission standards and the reform of technical supervision and regulation. In addition, it is necessary to legislatively determine the procedure for independent financial and economic assessment of the validity of the tariff regulation procedure for renewable energy. Perhaps, at the subsequent stages of the alternative energy development, it will be possible to gradually diversify the activities of fuel and energy companies (including oil and gas) by introducing the technologies for converting solar, wind energy and energy biomass into electric energy. In this case, the renewal of the infrastructure will largely fall on the shoulders of the state. It should be noted that the progress in the field of renewable energy is impossible without the support of the population and the public demand for environmental and energy-efficient technologies: the growth of its share to achieve the network parity in different world countries is provided under the influence of civil society.

References Inshakova, A.O., Frolov, D.P., Davydova, M.L., Marushchak, I.V.: Institutional factors of evolution and strategic development of general purpose technologies. Espacios 39(1), 5 (2018) Assessing Import of Used Electrical and Electronic Equipment into Nigeria. Person-in-the-Port Project (E-text). https://collections.unu.edu/eserv/UNU:6349/PiP_Report.pdf Atlas of Cesium Deposition on Europe after the Chernobyl Accident. Office for Official Publications of the European Communities, Luxembourg, 71 p. (1998) Inshakova, E., Inshakova, A., Ryzhenkov, A.: Standardization and certification in nanoindustry of the Russian Federation: economic and legal aspects in the context of neoindustrialization. In: Advances in Economics, Business and Management Research (series). Proceedings of the Volgograd State University International Scientific Conference “Competitive, Sustainable and Safe Development of the Regional Economy” (CSSDRE 2019). Atlantis Press, June 2019 Five New Clusters in the Field of Nanotechnology will be created in Russia by 2027. ITMO NEWS, 5 June 2017 (E-text). http://news.ifmo.ru/ru/startups_and_business/initiative/ news/6716/. The title from the screen Inshakova, E.I.: Development of alternative power industry based on nanotechnologies: forecast effects for russian economy. Sci. J. VolSU. Glob. Econ. Syst. 28(5), 80–89 (2014) Nanotechnology Clusters Created by RUSNANO. Renewable Energy and Energy Efficiency (Etext). http://www.rusnano.com/projects/energy Nanotechnology in the Energy Market in 2015. Rossijskije nanotekhnologiji, vol. 4, no. 11–12, pp. 20–22 (2009) Proskuryakova, L., Ermolenko, G.: Renewable energy 2030: global challenges and long-term trends in innovation development. National Research University Higher School of Economics. HSE, Moscow (2017) Protocol on Liability and Compensation for Damage Resulting from Transboundary Movements of Hazardous Wastes and their Disposal (E-text) (1999). http://www.un.org/ru/documents/ decl_conv/conventions/basel_protocol.shtml Renewables 2018 Global Status Report (E-text). http://www.ren21.net/gsr-2018/

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Ren21 Presented a Global Report on Renewable Energy (E-text). http://csrjournal.com/25171ren21-predstavila-globalnyj-doklad-o-polozhenii-v-oblasti-vozobnovlyaemyx-istochnikovenergii.html Wildlife Impacts from Renewable Energy Sources (E-text) http://myelectro.com.ua/99analiticheskie-stati/174-vred-nanosimyj-dikoj-prirode-vozobnovlyaemymi-istochnikamienergii Yakovleva, O.A.: Environmental entrepreneurship (legal aspect). Leg. Concept 17(2), 134–138 (2018)

Formation of a Legal Model of Realizing the Interests and Protecting the Rights of Economic Entities Under the Economy Digitalization Alexander E. Epifanov1(&), Sergey N. Bratanovsky2, and Marine Z. Abesalashvili3 1

2

Volgograd Institute of Management – a Branch of RANEPA, Volgograd, Russian Federation [email protected], [email protected] Plekhanov Russian University of Economics, Moscow, Russia [email protected] 3 Adyghe State University, Maikop, Russia [email protected]

Abstract. The paper reveals the main content of a legal model of realizing the interests and protecting the rights of economic entities under the economy digitalization. The study used the general scientific dialectical method, as well as the methods of formal logic: description, comparison, classification, analysis and synthesis. The authors analyze the most important normative documents in this area and identify the practice and trends of their implementation. The scientific approaches to determining the optimal balance of interaction between the government and business in the protection of fair competition, prevention of violations of the rights and legitimate interests of entrepreneurs are analyzed. The authors stress the importance of the development of interaction between the individuals and legal entities engaged in business activities in the digital format, the active introduction of the blockchain technology and smart contacts in the work of heads of the state and municipal authorities, which are entrusted with control and supervisory functions in the field of economy, the creation and organization of support of the unified system of normative reference information for the regulatory bodies engaged in bringing the subjects of economic activity to administrative responsibility. In addition, the paper substantiates the importance of eliminating the administrative barriers by universal digitalization of licensing procedures, state registration and mandatory certification. Keywords: Digital Economy
Public administration
Rights and freedoms of legal entities and individual entrepreneurs
Powers
Blockchain
Regulatory functions
Fair competition

The methodological framework for the study is the tested general scientific and special methods of cognition. The general scientific dialectical method made it possible to consider the legal regulation of the protection of the entrepreneurs’ interests in terms of the variability of © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 686–692, 2020. https://doi.org/10.1007/978-3-030-39319-9_76

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regulation, to justify the advantages and disadvantages of different conceptual approaches to solving important problems, to demonstrate the dynamic changes in management relations in the system of executive authorities, depending on the set of internal and external factors affecting it, as well as the circumstances contributing to the transformation of the management process. The methods of formal logic – description, comparison, classification, analysis and synthesis, as well as others – allowed characterizing the system of measures aimed at the realization of the rights and legitimate interests of the legal entities and individual entrepreneurs, its individual links based on their specific regulatory support. Through the use of these scientific methods in the paper it became possible to reveal a number of defects in the legislation and make proposals for their elimination. The digital transformation of the public administration work and, as a consequence, the transition to a digital format of interaction between business and government is now very relevant. The new information technologies introduced in the process of obtaining public services by the legal entities and individual entrepreneurs, on the one hand, allow simplifying the document flow, and on the other hand, - to bring to a new level the means and methods of achieving the joint goals of subjects and objects of the public administration system as a whole. The numerous scientists recognize that the future belongs to artificial intelligence, which by the gradual introduction into the most important sectors, such as health, trade, culture, education, finance, defense, will allow the most efficient use of available resources, reduce the energy costs for the implementation of priority state projects. A new trend in the development of the domestic legal system is the adoption of regulations on the digitalization of the economy. On December 24, 2018, the Presidium of the Presidential Council for Strategic Development and National Projects approved the Passport of the national program “Digital Economy of the Russian Federation” (Protocol No.16). This document is widely devoted to such an important aspect as the implementation of the rights and legitimate interests of entrepreneurs in the implementation of their various transactions and performance of obligations under them. As part of implementing the main directions of commercial activity digitalization, the system of integration of Rospatent’s departmental systems, the system of IP protection, the simplification of its registration, and the access security have been set up; the services for the publication of public information on the activities of enterprises and organizations using the intellectual property objects have been developed. It should be noted that this document broadly considers the transfer of exclusive and non-exclusive rights to inventions, utility models, the use of service marks and trademarks, reflects various aspects of interaction with foreign organizations on the basis of the existing international agreements1. In paragraph 1.4 special attention is paid to the economic support of the domestic companies engaged in the manufacture of cable and telecommunication equipment. Among the measures of support are the reduction of customs duties on the components,

1

Alexander E. Epifanov, Sergey N. Bratanovsky, Ekaterina N. Vasilyeva. Integrated Arrangement of Communication in the Russian Federation: The Information and Legal Aspect. Volgograd, Russia, 2019.Р.101-107.

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whose production is missing in the territory of the Russian Federation, as well as preferential loans and subsidies to buyers of such products. As part of the program activities, GLONASS technologies have been further developed, the mechanisms for the transfer of coordinate and time information have been adjusted, the monitoring and control systems have been improved, and the numerous tools have been formed to simplify the use of the system by small and medium-sized businesses. The main objects of the transport infrastructure are covered by the public communication networks that allow wireless transmission of voice and data (par. 1.45). At the same time, the regulatory acts regulating the use of these technologies have been adopted at the level of the federal and regional authorities. Assessing the role of digitalization in the commercial structures, we note that it is an important stage of social development. However, the palm in these matters is taken by the state management and the law enforcement agencies, which are designed to coordinate and protect the entities legally engaged in business activities against illegal encroachments. At the same time, the government agencies’ intervention in the implementation of digitalization processes is predictable. Predictability is due to the fact that, firstly, at the present stage of development of the state apparatus, neither federal nor departmental regulations determine the optimal balance of the ratio of documents that must be stored in paper and (or) in electronic form and provided so by the commercial entities. Such a circumstance requires the legal specification and organizational optimization in order to ensure maximum safety of the documents and instant access to them. The second factor that has a direct impact on the development of digitalization is the high regulatory overregulation of almost all aspects of public life. In this regard, there is a need to simplify the passage of numerous administrative procedures, decision-making and recording the management actions in electronic form. In the literature it is suggested that digitalization was not originally intended to support the management processes in the state. It was conceived and actively implemented for commercial purposes. Digitalization has generated both specific products and specific markets where such products can be sold. Initially, commercial activity in this area was generally outside the scope of the legal regulation; many issues are not covered by the legislation today. Subsequently, however, as a result of enormous progress in this area, the state could no longer ignore the ever-increasing digital achievements and gradually began to adopt them2. An important milestone in the transfer of the mechanism of interaction between the government and entrepreneurs in the new digital format is the practical implementation of Decree of the President of the Russian Federation of May 9, 2017 No. 203 “On the Strategy of Development of the Information Society in the Russian Federation for 2017–2030”, which in par. 19 emphasizes the importance of ensuring the unity of the state regulation, centralized monitoring and the management of functioning the information infrastructure of the Russian Federation at the level of the information systems

2

The Basics of Cybernetics. The Theory of Cybernetic Systems. Textbook for higher education / Under the editorship of Professor K. A. Pupkov. M.: Higher school, 1976. 408 p.

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and data processing centers, as well as at the level of the communication networks, ensuring step-by-step transition of the state bodies and local governments, individuals and legal entities to the use of e-government infrastructure included in the information infrastructure of the Russian Federation. This allows us to solve numerous problems in the field of protection of fair competition, the development of new types of business activities on the Internet, etc. Further in this paragraph the Strategy prescribes to provide the use of the Russian crypto algorithms and means of encryption at the electronic interaction of the federal executive authorities, the public authorities of the Russian Federation subjects, the state off-budget funds, the local governments among themselves as well as with the citizens and organizations, and carry out the coordinated actions directed on connecting the objects to the information infrastructure of the Russian Federation. In general, it should be noted that these regulations have set new benchmarks in the formation of conceptual bases of business and government interaction, elaborated and multiply developed the protection of the rights and freedoms of commercial entities. It should be further noted that Federal Law No. 294-FZ of December 26, 2008 “On Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Exercise of State Control (Supervision) and Municipal Control”, which has gone through a long history of formation and modernization, today contains a comprehensive approach to the protection of the rights and legitimate interests of persons engaged in entrepreneurial activity. This normative act in Art. 8.1 fixes that for the purpose of preventing crimes and petty offenses the public authorities carry out a complex of actions in the field of state registration, licensing, reorganization and liquidation of legal entities on the official Internet sites for each type of state control (supervision), municipal control, provide the placement of lists of the regulatory legal acts containing obligatory requirements, and also provisions establishing responsibility for various violations and the order of their application, carry out the informing of the legal entities and individual entrepreneurs on the legality of business activities. These bodies provide regular generalization of the practice of state control (supervision), municipal control and official publication of the generalizations including the most common cases of violations of mandatory requirements, as well as the recommendations to be adopted by individual entrepreneurs and legal entities in order to prevent such violations. The municipal authorities carrying out control and supervisory functions issue warnings about the inadmissibility of violations of the law, as well as the mandatory requirements that are enshrined in the municipal legal acts. According to Art. 21 of the specified law when carrying out inspections the head, other official or the authorized representative of a legal entity, the individual entrepreneur, his/her authorized representative have the right: – to receive from the state control (supervision) body, the municipal control body and their officials the information that relates to the subject of inspections and whose provision is provided by this federal law; – to directly be present at carrying out inspections, give explanations on the questions relating to the subject of inspections; – to get acquainted with the documents and (or) information received by the state control (supervision) bodies, municipal control bodies within the framework of

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interdepartmental information interaction from other state bodies, local selfgovernment bodies or organizations subordinated to the state bodies or local selfgovernment bodies, at whose disposal these documents and (or) information, etc. are. In order to streamline the regulatory activities, the comprehensive protection of the rights and legitimate interests of entrepreneurs, fixing the results of inspections, Unified Register of Inspections was created, which is Unified Federal State Information System. The Prosecutor General’s office is the operator of the unified register of inspections. The rules of formation and maintenance of the Unified Register, in turn, are approved by the Government of the Russian Federation. The analyzed federal law establishes the right of the legal entities and individual entrepreneurs to appeal against both the actions and omissions to act of officials of the municipal or state control (supervision) bodies in case of their non-compliance with the law3. The damage caused to a business entity as a result of poorly conducted on-site or documentary inspections is subject to compensation in compliance with a court order. When analyzing the practice of implementing the norms of the above federal law and the ongoing digitalization of the economy and public administration in this country, we should pay attention to a number of problems. Unfortunately, the activities of the heads of the regulatory bodies due to the imperfection of some legal acts regulating their activities, allows administrative discretion in making decisions on bringing the legal entities and individual entrepreneurs to the statutory liability. In our opinion, in this case, it is expedient to introduce the blockchain and smart-contact technologies in the activities of all those heads that are responsible for the performance of these functions, which contribute to the strict fixation of management decisions and actions and to the exclusion of their falsification. In this aspect, it is important to adopt at the level of the Government of the Russian Federation the guidelines for the introduction of these digital technologies in the internal activities of the regulatory agencies. In our opinion, the mentioned provisions of the legislation are detached from reality and are not synchronized with all interested state bodies. First, to date, no joint coordination documents of the Prosecutor’s Office and the Ministry of Internal Affairs on digitalization in the field of reception, registration, permission and records of crime and petty offense reports of in the economic sphere have been adopted. This will not allow us to fully implement these strategic positions. Secondly, to date, the unified database of digital data on the work of the regulatory authorities and prosecutors has not been created and, in this regard, the mechanism of access to it by the interested persons is not clear. Thirdly, the normative legal acts related to the digitalization of the domestic economy repeatedly mention the primary information in the exercise of

3

Agnessa O. Inshakova, Marina S. Uskova, Vladimira V. Dolinskaya, Evgenia E. Frolova. Dynamics of the Legislative Development of Public-Private Partnership in the Sphere of Agricultural Insurance in Russia and the US // Revista Espacios. – 2018. –Vol. 39 (June 28). – P. 11.

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powers to protect the rights and interests of entrepreneurs; however, its nature, sources and methods of obtaining remain undisclosed in the regulations4. At the same time, in order to achieve the optimal result the mechanism of evaluating the effectiveness of control and supervisory activities is also subject to digital transformation. The effectiveness of achieving the goals of digital transformation of the regulatory agencies is determined by the quality of implementing the system of key measures aimed at the inadmissibility of unjustified interference in business activities, as well as the comprehensive protection of bona fide entrepreneurs. In order to create a unified secure digital platform to ensure the electronic interaction of the regulatory authorities and prosecutors at all levels among themselves in the implementation of control and supervisory activities, it is necessary to implement the following measures: the implementation of comprehensive optimization of the departmental and interdepartmental processes of supervisory activities with a view to their digital transformation; the development of a balanced system of quality criteria for the activities of the law enforcement agencies and an automated system for their evaluation; the preparation of scientific and methodological, regulatory support and the software and technology infrastructure to implement the possibility of remote inspections; the introduction of legally significant electronic document management and integration with the system of the interdepartmental electronic document management (MEDO) of the unified interdepartmental digital online platform for the interaction of heads of all levels of the law enforcement and other government agencies, prosecutors, investigators, inquiry officers to work with a unified electronic case; the implementation of unified interaction of the existing and developed information systems of the regulatory authorities with the unified data warehouse, providing the possibility of end-to-end integrated analytical processing of the accumulated data; the integration of the information and telecommunication infrastructure of the Prosecutor’s Office with the domestic digital platforms, including in the implementation of supervisory activities, ensuring the formation of a unified trusted environment for working with data; the elimination of administrative barriers by universal digitalization of licensing procedures, state registration and mandatory certification, the creation and organization of maintenance of the unified system of the regulatory reference information for the regulatory bodies bringing the subjects of economic activity to administrative responsibility. From our point of view, the normative consolidation and practical implementation of these provisions will contribute to the rapid development of business relations in all areas and prevent the use of illegal methods of influence on businessmen. In addition, the detailed electronic recording of all inspection activities will exclude the vicious practice of conducting duplicate inspections, issuing the certificates and documents not provided for by the current legislation, prevent the violation of the terms of inspections,

4

Bratanovsky S. N., Lebedeva M. M. Special Legal Regimes of Information. Monograph. Saratov, 2012.P. 93.

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exclude the conduct of substantive inspections by the state and municipal authorities that do not have specific powers in the inspected area5. See: Sagymbekova A. S. The Digital Economy: Concept, Prospects, Development Trends in Russia. Theory, Practice, Innovations. 2018. No. 4. P. 48

References The Russian Federation Constitution: Adopted by popular vote on 12 December 1993 (as amended). Ros. gaz. 25 December 1993; Legislative Corpus of the Russian Federation, no. 31, Art. 4398 (2014) “On State Protection”: Federal Law of 27 May 1996 No. 57-FZ. Legislative Corpus of the Russian Federation, no. 22, Art. 2594 (1996) “On State Registration of Rights to Real Estate and Transactions with it”: Federal Law of 21 July 1997 No. 122-FZ. Legislative Corpus of the Russian Federation, no. 30, Art. 3594 (1997) “On Combating Corruption”: Federal Law of 25 December 2008 No.273-FZ. Legislative Corpus of the Russian Federation, no. 52 (part I), Art. 6228 (2008), no. 1 (part I), Art. 7 (2018) “On Protection of the Rights of Legal Entities and Individual Entrepreneurs in the Implementation of State Control (Supervision) and Municipal Control”: Federal Law of 26 December 2008 No. 294-FZ. Legislative Corpus of the Russian Federation, no. 52 (part I), Art. 6249 (2008) “On Organization of State and Municipal Services”: Federal Law of 27 July 2010 No. 210-FZ. Legislative Corpus of the Russian Federation, no.31, Art. 4179 (2010) Passport of the national program “Digital Economy of the Russian Federation” (app. by the Presidium of the Presidential Council for Strategic Development and National Projects, Protocol no. 16 of 24 Dec 2018). Access from the legal reference system “KonsultantPlus” “On the Strategy of Development of the Information Society in the Russian Federation for 2017 – 2030”. Decree of the President of the Russian Federation from 09.05.2017 g. no. 203 Legislative Corpus of the Russian Federation, no. 20, Art. 2901 (2017) Epifanov, A.E., Bratanovsky, S.N., Vasilyeva, E.N.: Integrated arrangement of communication in the russian federation: the information and legal aspect, pp. 101–107, Volgograd, Russia (2019) Bratanovsky, S.N., Lebedeva, M.M.: Special Legal Regimes of Information, p. 93. Monograph, Saratov (2012) Inshakova, A.O., Uskova, M.S., Dolinskaya, V.V., Frolova, E.E.: Dynamics of the legislative development of public-private partnership in the sphere of agricultural insurance in Russia and the US. Rev. Espac. 39, 11 (2018) Pupkov, K.A. (ed.): The Basics of Cybernetics. The Theory of Cybernetic Systems. Textbook for higher education. Higher school, Moscow (1976). 408 p Sagymbekova, A.S.: The digital economy: concept, prospects, development trends in Russia. Theory Pract. Innov. no. 4 (2018)

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Intellectual Property Exchange as a Platform for Exclusive Copyright Transfer by Means of Smart Contracts Agnessa O. Inshakova1(&) , Tatiana V. Deryugina2 and Evgenij Y. Malikov3

,

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Volgograd State University, Volgograd, Russia [email protected] Kikot Moscow University of the Ministry of Internal Affairs of Russia, Moscow, Russia [email protected] 3 Volgograd Institute of Humanities, Volgograd, Russia [email protected]

Abstract. Considerable changes in social relations determined by the development of new Internet technologies have prompted research into issues related to the institution and operation of intellectual property exchanges, as well as their application as platforms for exclusive copyright rights transfer by means of smart contracts. The paper describes intellectual property exchange alternatives operating on different IT platforms in Russia and abroad. It lists positive and negative sides in using different technologies in exchange operation. The authors conclude that it is necessary to create distributed ledgers and apply smart contracts as a basis for exchange operation. The paper also indicates the need to establish an international intellectual property exchange. By studying transactions performed at intellectual property exchanges and comparing them with license agreements, it has become possible to identify the legal nature of open licenses which form legal relationships between the copyright holder and the user. It is indicated that a smart contract is an optimal legal tool for executing legal relationships with the purpose of transferring exclusive rights for scientific, literary and artistic works. The paper considers positive and negative trends in using smart contracts for executing legal relationships at intellectual property exchanges. It also identifies problems related to copyright legalization and prioritization of rights. It also contains a scientific discussion on whether a state system of intellectual property registers and intellectual property exchanges can coexist. It is concluded that a complex regulatory mechanism is advisable for legal relationships which appear as a result of registration in state registers and at intellectual property exchanges. By considering academic sources dedicated to the legal principles of blockchain technology operation, it has become possible to identify blockchain types and formulate bullet points substantiating the need to use the blockchain technology with a few authorized users in order to establish an intellectual property exchange, where the authorized users are the signatory states to an international intellectual property exchange treaty. © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 693–705, 2020. https://doi.org/10.1007/978-3-030-39319-9_77

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A. O. Inshakova et al. The paper studies the legal nature of smart contracts as vehicles for exclusive copyright rights transfer. A scientific discussion is given regarding the smart contract concept, and its essential characteristics are pointed out. Comparison with similar contracts is made. Some basic conceptual principles are formulated for the purpose of creating a framework for legal regulation of using smart contract at an intellectual property exchange. Keywords: Intellectual property exchange
Smart contract
Smart contract indications
Blockchain technology
Intellectual property
Open license
Legal nature of contract
Right holder
User
The Internet
Use of copyright items
Intellectual activity JEL Code: К10


К11
К12
K15
К24

1 Materials The issue of legal regulation of intellectual property exchange operation in the Russian Federation is new and does not have an established legal regulation system. However, there are a number of fundamental acts which create a legal basis for the establishment and operation of intellectual property exchanges. Some of those which should be noted are the Constitution of the Russian Federation, the Civil Code of the Russian Federation, Federal Law No. 149-FL of 27 July 2006 (as amended on 23.04.2018) ‘About Information, Information Technologies and Information Security’, Resolution of the Russian Federation government ‘On the Approval of User Identification Rules on the Internet Telecommunication Network by Instant Messaging Service Providers’. etc. Great importance is attached to the development of civil transactions using Internetbased technologies in policy documents such as RF Presidential Edict No. 203 of 9 May 2017 ‘On the Information Society Development Strategy in the Russian Federation for 2017–2030’ and the ‘Digital Economy of the Russian Federation’ program. The draft RF Presidential Edict ‘On the Establishment of the Russian Intellectual Property Center as an NGO-Government Organization’ is dedicated to the issues of regulating relationships at intellectual property exchanges. Federal Law No. 34-FL of 18 March 2019 ‘On Introducing Changes to the First Part, the Second Part and Article 1124 of the Third Part of the Civil Code of the Russian Federation’ and Draft Federal Law No. 419090-7 ‘On Alternative Methods of Investment Promotion (Crowdfunding)’ provide a legal framework for regulating relationships mediated by smart contracts. In conducting the present research, of significant importance are international acts, including, in particular, but not limited to, the Paris Convention for the Protection of Industrial Property (concluded in Paris on 20.03.1883) (as amended on 02.10.1979) and the Eurasian Patent Convention (concluded in Moscow on 09.09.1994). Works of Russian and foreign scientists have provided a scientific basis for the research. The general theoretic framework for conducting the study was provided by research papers dedicated to intellectual property rights and their digitization written by Novoselova (2017), Dozortseva (2003), Gavrilov (2016), Szabo (1994), and other authors.

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The issues of establishment and operation of intellectual property exchanges are considered in works by Nagrodskaya (2017), Nazarova, Krichevskij and others. Issues related to the use of smart contracts when transferring intellectual property items from the right holder to the user are considered in works by Amuial et al. (2016), Zakirova (2018), Savelyeva (2017), Volos (2018), Szczerbowski, Gromova (2018), Skvortsova and others. When developing suggestions aimed at the creation of a legal framework for the operation of intellectual property exchanges using the blockchain technology, works by Kharitonova (2018), Ruzakova, Grin (2017), Thompson, Allaby, Hancock, Vaizey and others were analyzed.

2 Methods In conducting research and formulating scientific conclusions and suggestions aimed at establishing legal principles for the regulation of intellectual property exchange activities and using smart contracts to transfer scientific, literary and artistic works to users, the authors used the universal dialectic materialism method, general scientific methods – logical, systemic and functional, and private-law methods – comparative law and technical legal.

3 Introduction The intensive development of modern technologies facilitates the emergence of new social relationships necessitating the creation of a legal framework capable of regulating the altered relations. However, it is unacceptable to introduce changes to the existing legislative system without conducting scientific research which allows identifying these relations, define their legal nature and formulate new legal regulation concepts. One of the issues requiring thorough scientific elaboration is the issue of a fundamental change in the approach to the legal regulation of relationships relevant to the transfer of exclusive copyright rights. The emergence of blockchain technologies and blockchain-based smart contracts gives rise to unlimited possibilities in developing circulation of intellectual property items, enhancing competitiveness and entering the international market. However, it is necessary to solve a number of interrelated and interdependent legal tasks, which should include the development of a legal framework for the operation of intellectual property exchanges, definition of basic tools ensuring their operability, definition of legal means making it possible to ensure the transfer of exclusive rights via intellectual property exchanges, substantiation of the use of smart contracts as a legal means, substantiation of their legal nature, identification of essential properties; formulating legal regulation principles aimed, inter alia, at the creation of parity between the existing public system of state registers and intellectual property exchange databases.

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Establishing intellectual property exchanges will create a legal and technical framework for relationships between the right holder and the user of scientific, literary and artistic works, increase transparency and efficiency of intellectual property item management, optimize the process of entering into contractual relationships, and improve the royalty payment process by eliminating subjectivity, etc. According to one of the authors of the intellectual property exchange project, a right holder may not only place their intellectual property item at such an exchange and quote a price, but also hold an auction for the right to use the item (Belokopytova 2016). Intellectual property exchanges can be considered from two perspectives. The first one is related to granting users access to scientific, literary and artistic works making sure that it is impossible for third parties to use them. The second one refers to placing and keeping scientific, literary and artistic works without any third party being able to use them. In this case, the intellectual property exchange acts as a guarantor validating copyright rights. The exchange status is similar to that of a register holder, except for the fact that a register records all basic data allowing copyrighted item identification, whereas an intellectual property exchange also has the right to access the item itself, though it is done for the purpose of safekeeping of the copyrighted item. It should be noted that neither register records nor exchange database records establish title, but they certify the existence and ownership of an intellectual property item. It is possible to use an intellectual property exchange as an integrated system by combining the register holder function and that of a platform granting the right to use intellectual property items. By their legal nature, transactions performed at intellectual property exchanges should be classified as open licenses. Thus, an exchange makes information on open license conditions available to the public, indicates necessary actions in order to be granted the license to use the work; the licensee does not conclude any unique contract with the licensor but joins the existing conditions (accession contract); the subject of the contract is the right to use a scientific, literary or artistic work; the contract may be either gratuitous (as assumed) or non-gratuitous; the contract is a fixed-term agreement (the effective period shall be specified in the contract, or else it shall remain valid for five years, except for computer software and databases where the effective period is commensurate with the exclusive right period). Normally, but not necessarily, the contract does not place any geographic limitations for the use of a scientific, literary or artistic work. Different approaches are suggested in scientific literature and existing practice looking to determine the most effective legal remedies to safeguard works, protect copyright holders’ rights, and put intellectual property items into civil circulation via intellectual property exchanges. Dedicated intellectual property rights registers and smart contracts are most frequently named as the most popular remedies mediating the creation of legal relationships between the copyright holder and the user.

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4 Registers, Blockchain Technology and Smart Contracts as Tools Enabling the Operation of an Intellectual Property Exchange in the International Market In the legal doctrine, an opinion has been expressed that the most effective means for authors to exercise their exclusive rights is provided by a system of registers accumulating results of intellectual activity (Nagrodskaya 2017). The creators of Mediachain Attribution Engine, whose operation is based on the blockchain technology, which allows tracing the movement of a work of art from the author to the user due to a special tag, say that this is not purely a copyright register, but a database, which is undisputed (Nazarov). Based on the Creative Commons open license, Ascribe, a company from France, has developed its own project of interaction between intellectual property right proprietors. It has a single URL which contains the copyrighted work download link, license information and metadata. This information is stored in a cloud (Creative Commons France experiments with Ascribe to Support Copyright through the Blockchain). Of interest is the online platform of the International Intellectual Property Exchange (Saint-Petersburg, http://www.ip-maris.com/), which allows using intellectual property items located there for civil circulation. Assuming that the copyright holder is interested in earning an income from their intellectual property item, such a platform looks attractive, because it allows placing both the copyrighted item itself and information on the copyright holder, including the expected financial reward. The only downside here is that it is possible to enter into civil law relationships only with those proprietors who have placed their items on the online platform. In the broad sense of the word, the idea of an intellectual property exchange is about tagging any scientific, literary or artistic work at the stage of its creation, so that any access to it can be recorded and considered as its use. The Ministry of Communication and Mass Media of Russia promotes its own project related to copyright protection in the conditions of transition to the digital economy. Thus, the Draft RF Presidential Edict ‘On the Establishment of the Russian Intellectual Property Center as an NGO-Government Organization’ points out that it is necessary to develop software and hardware solutions for the purpose of the intellectual property market development and export capacity building. However, there is no indication of specific technologies being offered to implement this idea (President’s decree draft 2019). According to A. Krichevsky, the Russian Center of Intellectual Property can operate on the IPChain platform (Krichevsky). It is envisaged that the center will provide users with information on the status of items, their cost, involvement in litigation, transaction record, etc. Thus, the Russian platform is intended to operate as an information source mostly. Despite the goal declared in the Draft RF Presidential Edict, the above system will not promote the intellectual property market or provide any copyright protection mechanisms against bad-faith users, unlike its foreign counterparts. As such, this kind of system has been developed by the Russian Union of Right Holders (http://rp-union.ru/), which keeps a register of individuals and legal entities

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(right holders) and registers of intellectual property items. This register’s function is to record a proprietor’s copyright. It is not possible to gain direct access to the author of a work (or their inheritors) via this register, or use a scientific, literary or artistic work legally because it is not available there, etc. The Russian Register of Trade Designations operates in a similar way (http://www.reestrko.ru/index.php?mode=all_tm). However, although there is a negative attitude expressed in scientific literature regarding the existence of such registers (e.g. E.P. Gavrilov points out that registration in such registers may validate neither authorship nor the applicant’s priority in establishing a copyrighted item (Gavrilov 2016) and by authorities (e.g. Rospatent points out that such registration contradicts the applicable legislation (Information letter of Rospatent 2009)), there is also a positive effect, because the information contained in such registers may serve as evidence in case of copyright disputes. Scientific, literary and artistic works are made available for use by the All-Russian Intellectual Property Organization. As such, the platform does not use either the blockchain technology or smart contracts, so contracts are executed by filling in application forms and contracts posted on the website (http://rosvois.ru/contract/). No direct access to a copyrighted item is possible. The downsides of accessing these registers are (1) the need to know exactly the identification data of a copyright item and (2) having to go through the procedure of application, acceptance, etc. In other words, these systems use an outdated document image recognition technology based on keyword and hashtag search, which does not lead to a successful result in case of a hashtag input error. Moreover, there is a system of smart contracts which has been created and is presently being developed, when direct access to a scientific, literary or artistic work allows parties to enter into legal relationships automatically. Smart contracts are based on a program code with the following underlying formula: if a certain condition is fulfilled, a certain consequence will ensue. A smart contract is defined in scientific literature as a programmed contract inserted into a computer protocol, which will be performed automatically without any participation of the parties to a legal relationship (Fedorov 2018), or as a program code which ensures self-performance and autonomy of contract conditions if certain events occur (Savelyev 2016). The doctrine contains a discussion as to whether it is possible to recognize a smart contract as a self-standing contract type or it should be treated as one part (condition) of a contract regarding its performance. E.A. Gromova considers smart contracts to be a method of contract performance (Gromova 2018). D.I. Skvortsov treats smart contracts as a contract execution method (Skvortsov). A number of scholars believe that they are either a method to ensure performance of obligations or a contract form (Dyadkin et al. 2018). Savelyev (2016), Boyarkin (Boyarkin) and others classify smart contracts as a separate contract type. The legal essence of a smart contract is that it is a conditional deal based on the following principle: if a certain condition is fulfilled, a certain contract-specified consequence will ensue (e.g. if the user fails to pay a fee for using a scientific, literary or artistic work on time, access to that work will be terminated automatically (without any action of the parties). However, unlike standard conditional deals, a smart contract will have a considerable number of conditions and no fewer consequences, i.e. it is a

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computer algorithm, to use a technical language. Notably, IT specialists define a smart contract as software located in a blockchain database (Lauslahti, Mattila, Seppala). Another essential feature of smart contracts which we have mentioned earlier is the ability to trigger consequences for certain behavior without any participation of the parties, because their behavior algorithm taking into account all possible variations is imbedded into the software.

5 Positive and Negative Trends in the Use of Smart Contracts in the Transfer of Exclusive Rights The blockchain technology has been used in various areas of global economy. According to current forecasts, 10% of global product will have been based on this technology by 2027 (Deep Shift 2015). A smart contract is one of the means which allow automatic performance of a contract in a blockchain register. Some positive aspects of using smart contracts have been formulated in scientific literature. These include a lower financial cost of establishing legal relationships, simplified performance control, lower non-performance risks, etc. (Amuial et al. 2016); a high level of security and resistance to manipulations on the part of certain parties (Zakirov 2018). The smart contract ‘forefather’ N. Szabo points out that its positive feature is that it can operate without an intermediary (Szabo 1994), when parties enter into relationships bypassing brokers, insurance companies, banks, etc. A smart contract can be used to protect author’s and inventor’s rights and use an intellectual property work legally. Comparing the application of smart contract features with other available technologies, a number of authors point out other positive aspects, such as information integrity (information cannot be lost or excluded); possibility to ensure security by means of merged mining; having a single security protocol; minimizing human influence on data processing due to the use of smart contracts (Ruzakova, Grin 2017). By using smart contracts, it is possible to monitor the situation online rather than conduct control checks after an intellectual property item has been used. Introducing smart contracts to intellectual property relationships will make it possible to bypass a cumbersome system of social interaction to perform collective management of rights and right holders. For instance, the current situation is that a collective management organization concludes licensing contracts with right holders, collect royalty fees from users, concludes royalty fee contracts (if a copyrighted item can be used without its author’s consent), etc. (Resolution Of The Plenum Of The Supreme Court 2019). In case of smart contracts, all of these functions are performed by pressing one button. Although the use of the blockchain technology and smart contracts at intellectual property exchanges brings all kinds of benefits, there is a problem of entering data in state registers (if such registers are envisaged by law; for example, a patent for invention, a utility model and designs must be registered in accordance with clause 2 of article 1246 of the Civil Code of Russia (hereinafter – CC of Russia)) (Federal Law 2006).

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In scientific literature, two methods creating intellectual property rights can be found: the fact of creation of a work (when it is not required to perform a legalization procedure via state registers) and the fact of official recognition (via a registration system) (Dozortsev 2003). Therefore, as L. Novoselova correctly points out, the exclusive right transfer by performing a transaction based on the blockchain technology will not be legally effective if legalization of the intellectual property work is required (Novoselova 2017). It means that it is necessary to address the issue of interaction with public registers legislatively. Moreover, on cannot but agree with Yu.S. Kharitonova’s point of view that the considerable amount of time required to register inventions, trademarks, etc., and the high cost and complexity of the patenting procedure necessitate right holders to postpone the legal procedure until they are confident of commercial success (Kharitonova). This fact points to the need to reform the state procedure for intellectual property legalization whilst working towards intellectual property exchange development. If such a holistic solution is provided, it will definitely improve competitiveness of Russian intellectual property works in the global marketplace. Unifying the above procedures may provide a good basis for developing the civil circulation of intellectual property works. This approach also makes it possible to resolve the issue of priority related to the time of intellectual property item registration. Otherwise, the time lag between the registration of intellectual property at an intellectual property exchange and in the state register will lead to the item being legally unprotected for a period of time. Most authors researching the intellectual property legalization issues point to the need to use the blockchain technology for register formation (Savelyev 2017; Ruzakova, Grin 2017). However, a few authors believe that using the blockchain technology for keeping state registers is impossible because only an authorized state agency (Rospatent) is entitled to perform expert evaluation prior to registration of a work, and, consequently, the blockchain technology cannot be used when other users are not entitled to this function (Kharitonova 2018). In our opinion, an alternative approach should be taken to resolve this problem. The purpose of introducing a state patent system was dictated, first and foremost, by the interests of the state which were to obtain new technologies and by right holders’ interests who acquired legal protection of their intellectual property. International acts mention countering unfair competition as yet another goal (The Paris Convention for the Protection of Industrial Property 1883). As such, the expert examination includes (art. 1386, CC of Russia) determining novelty, inventive step, commercial utility (art. 1359, CC of Russia), etc. Considering the experience of the International Intellectual Property Exchange, it should be noted that the review of the intellectual property item under study includes the investment potential of the project, which is a top-priority characteristic for such items as an invention, utility model, trademark, etc. As for the invention step mentioned in the law, the purpose of its evaluation is not clear either for the right holder or for the party intending to use it in the future. Only novelty is of principal importance. However, the novelty priority issue can be successfully resolved by the blockchain technology. Moreover, this technology will be the most successful in identifying overlaps of trademarks by comparing them with existing counterparts, which will, in other words, determine the authorship priority.

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It is absolutely clear that such a system should be international in character. It should be noted that the existing international acts, such as the Eurasian Patent Convention (concluded in Moscow on 09.09.1994), the Paris Convention for the Protection of Industrial Property (concluded in Paris on 20.03.1883) and the Patent Law Treaty (signed in Geneva on 01.06.2000) are also applicable in case of the registration system changeover to the blockchain technology. In addressing legal regulation issues related to the application of the blockchain technology to form intellectual property rights databases (intellectual property exchanges), various blockhain kinds should be considered. Depending on the availability of free access to a blockchain, the following types are identified: an open blockhain, which does not impose any access restriction on its users (Thompson); a closed blockchain (access is granted to certain users only) (Allaby); and an exclusive blockchain, which can be structured as an open or closed type, but only certain individuals are entitled to enter and alter information (Thompson). Depending on whether it is possible to alter a blockchain, the following types are singled out: uncontrolled blockchains (which can be altered by any user) and controlled blockchains, in which alterations are made by a few authorized users or by one authorized user (Hancock, Vasy). Since an intellectual property exchange should be international in character, we believe that it is necessary to use a blockchain with a few authorized users in its design, where the authorized parties are the states which have joined an international intellectual property exchange treaty. Thus, using open controlled blockchains with a limited number of authorized parties is the optimal option for the operation of an intellectual property exchange. Among the drawbacks of smart contracts which mediate the transfer of the right to use a scientific, literary or artistic work to a user, which can be found in scientific literature, are the impossibility to alter the contract and contracting party anonymity (Volos 2018). The issue of anonymity on the Internet is currently given sufficient attention at the legislative level. In particular, the Rules of User Identification on the Internet by instant message service providers were adopted in May 2019 by Russian Federation Government Decree No. 1279 of 27 October 2018 (Russian Federation Government Decree, 2018), which attempted to resolve the user authentication and identification issues based on the radiotelephony service subscriber number. Not only does it allow establishing the user’s ownership of the number, but also the fact that this particular user has used it. Thus, the anonymity issue for persons entering into civil relationships by means of smart contracts is becoming a thing of the past. There obviously remains unresolved the issue of using the number which does not belong to the user to access the Internet, but from the standpoint of intellectual property legal relationships aimed at acquiring the right to use an intellectual property item, the personality of the party (user) is not of principal importance, which means that it is not expedient to establish any further more stringent identification requirements in the area of intellectual property rights. As far as the right holder’s identity is concerned, it is established permanently from the time of data entry into the intellectual property exchange database. The fact that a smart contract aimed at acquiring intellectual property rights is an accession contract is not a hindrance either. The author determines the conditions for

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exercising their rights from the beginning while making the decision to grant the right to use their work, invention, etc. After reviewing these conditions, the user may either accept them (if they meet the user’s requirements) or reject them (if they do not meet the requirements). Consequently, in case of intellectual property legal relationships, a smart contract is a combination of two legal acts: a quotation (offer to conclude a contract) and a licensing agreement. The specific feature of smart contracts which make them different from other contracts is that these two legal acts represent a single juridical fact, because acceptance of the offer does not lead only to contract execution but also to its automatic performance. As such, the author placing the offer to conclude a contract for the use of their work via a smart contract has the intention of both concluding the contract and performing it. The user has the concurring intention in respect of concluding the contract and performing it if the user decides to conclude the contract, but does not have the concurring intention if the user refuses to conclude the contract after reviewing its conditions. Foreign sources point out another negative side to using smart contracts, i.e. the complexity of enforcing consequences of invalid deals (Szczerbowski). However, the arguments put forward to corroborate this premise can be equally applied to conventional contracts concluded by drawing up a single document signed by the parties. Whereas when both the contract execution procedure is observed and the content of the contract is in full compliance with the law (Mekki), the contracting party does not forfeit the ability to protect its right by initiating a court proceeding and presenting evidence that the party did not intend to conclude the contract, or the law was circumvented (art. 10, CC of Russia).

6 Conclusion The research conducted allows making the following conclusions: 1. It is necessary to reform the state procedure for legalization of intellectual property works, along with resolving the issue of developing intellectual property exchanges to increase competitiveness of Russian intellectual property items. If the issue is resolved holistically, substantive positive results are certain to be attained. 2. The idea behind the intellectual property exchange in its broad sense is to tag any artistic, literary and scientific work when it is created, so that any access to it is recorded and can be considered as its use. The intellectual property exchange operation should be international in character. 3. In order to establish an intellectual property exchange, it is necessary to use the blockchain technology with a few authorized users, where the authorized parties are the states which have joined an international property exchange treaty. Thus, the optimal option for the operation of an intellectual property exchange is using open uncontrolled blockchains with a limited number of persons capable of entering and altering data. 4. In constructing a model of legal regulation of relationships between the right holder and the user, the form-based regulation principle shall be discarded: it is not advisable to adopt separate legal acts dedicated to smart contracts, but it is

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necessary to be guided by the content of legal relationships that occur and build a legal regulation system on their basis, or use mechanisms which have already been created by legislators. In doing so, it is necessary to formulate the basic concept of the smart contract in the first part of the Civil Code of Russia, to ensure conceptual stability and law enforcement uniformity. A smart contract is a combination of two legal acts: a quotation (offer to conclude a contract) and a licensing agreement. The specific feature of a smart contract which makes it different from other contracts is that these two legal acts represent a single juridical fact, because acceptance of the offer does not lead only to contract execution but also to its automatic performance. The legal essence of a smart contract is that it is a conditional deal based on the following principle: if a certain condition is fulfilled, a certain contract-specified consequence will ensue. However, unlike standard conditional deals, a smart contract will have a considerable number of conditions and no fewer consequences. Another essential feature of smart contracts is the ability to trigger consequences for certain behavior without any participation of the parties, because their behavior algorithm taking into account all possible variations is imbedded into the software and can exist in a blockchain information system. Any attempt to create intermediate infrastructural elements between the right holder and the user should be strictly prohibited by law, because otherwise the main advantage of a smart contract will be lost. It is necessary to alter expert evaluation criteria for such intellectual property items as inventions, utility models, trademarks, etc. Investment potential and novelty should become a priority.

Acknowledgments. The reported study was funded by RFBR according to the research project No. 18-29-16132.

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Federal Law: Civil Code of the Russian Federation (part four) (approved by the Federation Council on December 08, 2006 no. 230-FL) (2006). (in Russian) Volos, A.A.: Smart contracts and civil law principles. Rossijskaya Yustitsia 12, 5–7 (2018) Gavrilov, E.: The format of an audiovisual work and some aspects of intellectual property rights. Khoziaystvo i Pravo 3, 64–79 (2016) Gromova, E.A.: Smart contracts in Russia: an attempt to determine legal essence. Pravo i Tsifrovaya Ekonomika 2, 34–37 (2018) Patent Law Treaty: Complete with patent law treaty instruction, agreed applications … Signed in Geneva on 1 June 2000 (2000) Dozortsev, V.A.: Intellectual property rights. Concept. System. Codification tasks: a collection of articles, Moscow, no. 234 (2003) Dyadkin, D.S., Usoltsev, Yu.M., Usoltseva, N.A.: Smart contracts in Russia: legislative regulation issues. Univers. Econ. Jurisprud. Electron. J. 5(50) (2018). http://7universum.com/ ru/economy/archive/item/5806. Accessed 03 Mar 2019 Zakirov, R.F.: Using modern IT technologies as a means to achieve basic judiciary tasks. Vestnik grazhdanskogo protsessa 1, 211–219 (2018) Krichevsky, A.: Copyright of Russian companies on the Internet may be protected by the blockchain technology. https://coinspot.io/law/russia_sng/zashhitu-avtorskih-prav-rossijskihkompanij-v-seti-mogut-perevesti-na-blokchejn/. Accessed 13 May 2019 Information letter of Rospatent: On registration of trade designations, of January 30, 2009 (2009). (in Russian) Lauslahti, K., Mattila, J., Seppala, T.: Smart Contracts - How will Blockchain Technology Affect Contractual Practices. https://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-68.pdf. Accessed 18 May 2019 Mekki, M.: Blockchain: l’exemple des smart contracts. Entre innovation et precaution. https:// www.mekki.fr/files/sites/37/2018/05/Smart-contracts.pdf. дaтa oбpaщeния 19 May 2019 Nagrodskaya, V.B.: On the issue of compatibility of free (open) licenses and using the in the blockchain technology. Inf. Syst. 11, 39–55 (2017). Copyright and Allied Rights Nazarov, V.: Mediachain Labs to launch blockchain based content tagging system. https:// coinspot.io/company/mediachain-labs-zapuskaet-osnovannuyu-na-blokchejne-sistemumarkirovki-kontenta/. Accessed 13 May 2019 Novoselova, L.: Tokenization of civil law objects. Khozyaystvo i Pravo 12, 29–44 (2017) The Paris Convention for the Protection of Industrial Property: Concluded in Paris on 20 March 1883 (as amended on 02.10.1979) Publication N 201(R). Geneva: World Intellectual Property Organization, 1990 Applying the blockchain technology to systematize results of intellectual activity. Perm Univ. News Bull. Law Sci. 4, 508–520 (1983) Ruzakova, O.A., Grin, E.S.: Application of blockchain technology to systematization of the results of intellectual activity. Bull. Perm U. Jurisprud. 4, 508–520 (2017) Savelyev, A.I.: Contract law 2.0: smart contracts as the beginning of the end of classic contract law. Civ. Law News Bull. 3, 32–60 (2016) Savelyev, A.I.: Some legal aspects of using smart contracts and blockchain technology under the Russian law. Zakon 5, 94–117 (2017) Skvortsov, D.I.: Smart contracts in the contract law system of the Russian Federation. https:// icoreview.ru/smart-kontrakty-v-sisteme-dogovornogo-prava-rossijskoj-federacii/ Order of the Government of the Russian Federation: On the Approval of User Identification Rules on the Internet Telecommunication Network by Instant Messaging Service Providers of October 27, 2018, no. 1279 (2018). (in Russian) President’s Decree: On the Establishment of the Russian Intellectual Property Center as an NGOGovernment Organization. Federal portal of draft regulatory legal acts (draft 2019). https:// www.garant.ru/products/ipo/prime/doc/56692654/. Accessed 13 May 2019. (in Russian)

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Resolution of the Plenum of the Supreme Court of Russia: On the application of the fourth part of the Civil Code of the Russian Federation of April 23, 2019, no. 10 (2019). (in Russian) Amuial, S., Dewey, J.N., Seul, J.: The Blockchain. A Guide for Legal and Business Professionals. Thomson Reuters, Toronto (2016) Szabo, N.: Smart contracts in Essays on Smart Contracts, Commercial Controls and Security (1994). http://szabo.best.vwh.net/smart.contracts.html. Accessed 28 Feb 2019 Szczerbowski, J.J.: Place of Smart Contracts in Civil Law. A Few Comments on Form and Interpretation. https://www.researchgate.net/publication/322231850_Place_of_Smart_ Contracts_in_Civil_Law_A_Few_Comments_on_Form_and_Interpretation. Accessed 19 May 2019 Thompson, C.: The difference between a Private, Public & Consortium Blockchain. A Simple Explanation for Dummies. http://www.blockchaindailynews.com/The-difference-between-aPrivate-Public-Consortium-Blockchain_a24681.html. Accessed 15 May 2019 Kharitonova, Yu.S.: The legal effect of recording intellectual property rights by means of the blockchain technology. Pravo i Ekonomika 1, 15–21 (2018) Hancock, M., Vaizey, E.: Distributed ledger technology: beyond blockchain. https://mpdblog.ru/ wp-content/uploads/2017/07/bitkoin-tekhnologia-raspredelennogo.pdf Fedorov, D.V.: Tokens, cryptocurrency and smart contracts in domestic bills from the perspective of foreign experience. Bull. Civ. Law. 2, 30–74 (2018)

State Marketing: The Foreign Countries Experience in the Use of the Satisfaction with State Programs Methods Viktorya A. Bondarenko1(&), Innessa N. Efremenko1, Anna A. Manjula1, and Marusya Smokova2 1

Rostov State University of Economics, Rostov-on-Don, Russia [email protected], [email protected], [email protected] 2 Centre for International Affairs Erasmus, D.A. Tsenov Academy of Economics, Svishtov, Bulgaria [email protected]

Abstract. Purpose. The article is aimed at the study of possible prospects for the implementation of effective methods of satisfaction with public services in Russia based on the foreign countries experience analysis. Under the population satisfaction, authors mean business community representatives as a part of civil society. Structure/Methodology/Approach. In modern conditions, the success of the socio-economic system development depends on the complementary efforts of the state, business and population involved in the solution of the challenges. Such involvement is carried out within state marketing, where the guiding role is the system of public administration; business and the population contribute to the achievement of goals, sharing the overall direction of change and, at the same time, pursuing their own interests. In this regard, it is necessary to study the satisfaction of civil society representatives with the quality of public services provided to them, which predetermined the need to analyze successful practices in foreign countries. Results. The necessity of the introduction of constantly operating monitoring of the satisfaction by services provided by the public administration system was substantiated. Such evaluation should be carried out within the management system, the business community and civil society, it makes it possible to identify the real situation, attitude and involvement of all three parties into the socioeconomic development within state marketing. Practical implications. In practice, it is the formation and implementation of a mechanism functions of which are to monitor the degree of the population and business satisfaction with public services provided to them. This approach is aimed at involving business and the population in the management decisions implementation. Originality/value. Within the creation of state marketing interaction focused on the successful socio-economic development in the cooperation of the management system, business community and the population, the satisfaction of all participants in this process acquires a leading role that implies the need for its permanent evaluation and updating the obtained data.

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 706–715, 2020. https://doi.org/10.1007/978-3-030-39319-9_78

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Keywords: State marketing
Management system
Satisfaction with services
Evaluation model
Consumer satisfaction index

1 Introduction In the current situation, the successful socio-economic system development is possible within state marketing with mutually beneficial joint and unidirectional actions aimed at common interests of the three main parties, such as: the government, population and civil society. It is the business community and the population involvement that allows to count on the support of management initiatives and their implementation. In this formulation of the issue, the satisfaction of the population is very important, thus, there actualized the population satisfaction with state programs. According to the researchers, there are successful variations in the evaluation of satisfaction with state administration that are subject to the validation in developed and developing countries (Volkov 2014). It seems that existing and tested evaluation models can be used with varying degrees of adaptation in Russia for the validation of satisfaction with the management system.

2 Materials and Methods The relevance of investigations on marketing and the evaluation of satisfaction provided to the population by the services were investigated by various authors and presented in their works (Volkov 2014; Zhuravleva 2016; Novatorov 2000; Fadeeva 2012; Predvoditeleva et al. 2005; Parasuraman et al. 1985). The specificity of approaches to the satisfaction with public services implemented in different countries is presented in works (Giannoccaro et al. 2008; Fornell 2001; Miller et al. 2000; Manolitzas 2010; Ramseook 2010; Van Ryzin 2004; Yong Shen et al. 2011). Nevertheless, despite the high level of these investigations, it is necessary to substantiate them taking into account the Russian specifics. The basis of this study methods is the analytical review of methods of the evaluation of the people’s satisfaction with services provided by the state used in a number of foreign countries, in terms of focusing within state marketing on the management system, business and population interests cooperation, as well as the analysis of how state structures are provided with modern information and communication infrastructure to carry out the appropriate evaluation (Bruno 2018; Qerimi et al. 2015).

3 Discussion The basis of one of the variants of the public administration system evaluation models (in fact, the quality of public services) is the well-known model of “quality of service” by Berry L., Zeithaml V., Parasuraman A., called as SERVQUAL (Parasuraman et al. 1985). This model was adapted to the domestic conditions by Novatorov (2000). This technique is also often called as the Gap-model because it considers growing

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discrepancies between customer expectations and employees providing services; the discrepancy between standards and real requirements; the gap in reality between the desired service and provided; the service mismatch actually received by the consumer, to the service initially he/she expected that it is noted in a number of works (Predvoditeleva et al. 2005; Fadeeva 2012). In countries such as Greece, Italy, Mauritius and China, this method is used as the basis for the public administration quality evaluation. However, the evaluation scales differ from each other. In Mauritius, for example, evaluation is based on criteria such as: “wealth, reliability, security and empathy” (Giannoccaro et al. 2008). The validation of consumers’ perception and the evaluation initially expected by them is carried out, then the difference between these values is determined. In Italy, the evaluation is also based on the basic SERVQUAL technique, but evaluated factors are divided into the following groups (Fig. 1).

The main groups of factors to be evaluated in Italy in the validation of the public satisfaction with the actions of state bodies

The measurement of the relations

clarity for consumers of the received information; attitude of the staff, staff politeness

The measurement of organizational and technical conditions

relevance, operability of provided services; regularity, no queue; working time

The measurement of the enviroment

Clear wording in the service, the convenience of the provided services placement, the queue regulation

Fig. 1. The main groups of factors to be evaluated in Italy in the validation of the public satisfaction with state bodies work (Fornell 2001; Volkov 2014)

Investigating the problem, consumers evaluate the public administration system, as a whole, and the special departments work. Evaluations are divided on a multiplechoice scale: “not important at all; low importance; medium importance; important enough; very important” (Known 2010). In China, for example, much attention is paid to the civil servants competence, their ability to learning, improving professional skills. Thus, education services general qualities (real quality, the cost of tuition, the desire for quality improvement) and satisfaction with the service work are the subject to the validation (the justice of the system, transparency of processes) (Miller et al. 2000). The model used in Greece is based on the following evaluation criteria (Fig. 2). Accordingly, citizens evaluate the management system image, personnel features of the staff involved in the management system and the multiplicity and quality of provided services. Despite a number of differences in the content of the models presented in the above countries, the general feature is that citizens evaluate the management system quality,

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The public satisfaction (consumers) staff evaluation (person, providing the service): communication skills responsibility professional knowledge and competences

services evaluation: product line timeout efficiency of service provision

The overall positive image evaluation (based on external and internal components): infrastructure, accessibility, convenience of location

Fig. 2. Criteria for evaluating the public satisfaction with the public administration system in Greece (Manolitzas 2010)

but the opinion of key stakeholders is not the subject to the validation and such an evaluation is, in principle, possible at the end of a certain service cycle. It should be noted that an approach that allows to receive the evaluation permanently, that is, also in the process of providing services, would be of particular value. There is another popular technique (Customer Satisfaction Index (CSI)), which is the basis for modeling the evaluation of the services quality provided by government agencies, used in a number of countries. This approach is most developed in the United States (Fornell 2001). Within this model development, actions are associated with the perceived service quality and customer satisfaction (satisfaction level), that also depends on the specific actions of customers (complaints) and reactions to them (Oliver 1997). According to experts, in the United States to evaluate the management system quality “in the field” there are actively practiced research of citizens’ satisfaction with the service quality and response to their questions and wishes (Ramseook 2010). Such studies are carried out regularly in most cities of the United States, which makes it possible to monitor the situation, to make forecasts and necessary adjustments. However, in this model, evaluating the quality of public administration, mainly, the competence of employees and the process of providing services are the subject to validation. A comprehensive comparison of the full satisfaction of the population with the services work by analogy with complex models of the consumer satisfaction used in evaluation of their satisfaction with private organizations commercial services is not wholly carried out. Supplemented from a methodological point of view and practical application, the variant of this model proposed by V. Razin includes estimates of the services themselves, the overall quality perceived by consumers, as well as their views about the satisfaction degree and behavioral reactions in the general structured field. The model is built by this researcher on the example of New York, in which he introduces the criteria of trust in the authorities and the desire to stay in this metropolis (Van Ryzin 2004). This model visualization in the variant of adaptation to the evaluation of public satisfaction with the services provided by governmental agencies is shown in Fig. 3. In this model, the quality of services perceived by consumers is, in fact, evaluated by consumers in relation to each service separately. The evaluation is possible after the services use, that requires regular research and measurement of results.

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The desire to live in the megapolis

Police service Fire service Libraries

Quality

satisfaction

Places of public recreation Trust in goverment

Road infrastructure Public transport

Consumer expectations

Underground public transport Waste collection

Fig. 3. The adapted model Customer Satisfaction Index to the evaluation of public satisfaction with the services provided by governmental agencies on the example of New York (Van Ryzin 2004; Volkov 2014)

For example in Canada government carries out self-evaluation on a number of criteria: the economy sustainability; the sustainability in the environmental situation; the social development of society; the development of institutions to improve governance. There have to be registered 39 indicators on categories highlighted above, distributed in 257 parameters (Van Ryen 2014). This approach is rather interesting because it has the visualization, namely, colour reflection of the public authority work quality. Thus, the green colour indicates the high quality and, therefore, satisfaction. The yellow colour indicates that it needs to be improved, the red colour shows the unsatisfactory level. All of these indicators are the subject to the evaluation within such monitoring and, in the case of the lower evaluation of at least one parameter, the entire evaluation criterion will be reflected in the version of this lower evaluation, which will require correction of its work. Agencies, which got on the monitoring results in such a “red zone” must necessarily carry out work on improving the services quality and pass the appropriate certification within a certain period of time. The difficulty in using this evaluation tool is that elements of the public administration evaluate themselves, this information is communicated to consumers, but consumers themselves do not take part in the evaluation implementation. As with other evaluation options, it is possible to monitor the situation only after the service delivery process has been completed. There are other examples of the public administration quality validation. In Korea, for example, a technique for evaluating ongoing reforms and development programmes has been implemented. The technique is based on the application of the New Customer Satisfaction Index (Yong Sheng et al. 2011). The index assesses three main groups, namely the population (civil society), public administration actors and developers. The method consists in conducting a survey. Based on the obtained results, the expectations and real impressions of the three groups representatives are compared. Stages of the

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reforms life cycle with their evaluation as a public service to business and the population are not taken into account in this case. The positive aspect is that the technique allows to evaluate and compare satisfaction with the reform of various spheres of economic and social life of society.

The reform and / or programme content

The reform and/or program implementation process

The reform and / or program results

The satisfaction with reforms Evaluation (0.7)

Overall satisfaction index (0,3)

New satisfaction index

Fig. 4. The working principle visualization of the Korean new consumer satisfaction index (Yong Shen et al. 2011; Volkov 2014)

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The positive aspect also includes the fact that thanks to the validation and monitoring process a feedback system is built. It makes it possible to improve the quality of the reform processes and public administration system work as a whole. However, we point out that the disadvantage of the described technique is the lack of the business represantatives opinion on the reforms and their quality and direction. The visualization of this evaluation technique is shown in Fig. 4. The above-mentioned methods, with their appropriate refinement, can be used in Russian conditions, adjusted for the shortcomings identified in them and, possibly, complement each other.

4 Results Currently in Russia the method called “the program integral evaluation calculation” has been spread and applied for the ongoing program evaluation (Zacepin 2019). In this technique, absolute and relative indicators of its effectiveness are the subject to accounting and monitoring. Direct, indirect, economic, social, budgetary efficiency is also determined; the corresponding coefficient growth is calculated. In Russian reality, the stakeholder surveys validation is not provided, namely, calculations and evaluation are carried out by the authorities without representatives of the business community and population. In the evaluation current version, government customers responsible for the implementation of a specific target program answer 48 questions in the affirmative or negative. There are variations in answers wording, reflecting the relationship manifestation degree (for example, “to a large extent”, “to a small extent”). An important advantage is taking into account stages of the program life cycle, namely its beginning (targets delivery, task planning, hypothesis evaluation, a marketing strategy creation, its implementation principles approval, management and control of the work). It is important to point out that, according to the researchers, the starting point for the program development and implementation is the diagnosis of real problems or problems with high probability to be manifested (Volkov 2014). There are monitored such phases as the problems determination and selection, the specific action plan development, the program implementation and the phase closure with summarizing. This model development visualization is shown in Fig. 5. It is important to point out that the approach described above is interesting itself, but it is advisable to take into account views of all participants in state marketing, namely: representatives of the management system, business community and the population. In this case, the evaluation will be unbiased, reflecting the views of all stakeholders.

State Marketing: The Foreign Countries Experience

Problem selection

Program design

Programme delivery

713

Closing the program

A new index of satisfaction with the program

Total satisfaction with program elements

Satisfaction with the whole program in general

General satisfaction with the public administration system

Fig. 5. Visualization of the model for the government programs quality evaluation in Russia (Volkov 2014)

We also note that the introduction of such models of consumer opinion research implies the need for the proper information and communication infrastructure development, for this reason, it is useful to present analytical data characterizing this issue in Russia (Fig. 6).

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89.1 OrganizaƟons using global informaƟon networks, %

89.6 89

88.3 OrganizaƟons using e-mail, %

87.6 84

61.1 OrganizaƟons using local data networks, %

62.3 63.5

50.6 OrganizaƟons using servers, %

50.8 50.8

92.1 OrganizaƟons using personal computers, %

92.4 92.3 0

2017

10 2016

20

30

40

50

60

70

80

90

100

2015

Fig. 6. Dynamics of the information and communication infrastructure development in the organizations in Russia in 2015–2017, % (Russian Statistical Yearbook 2018)

5 Conclusions In general, there is positive dynamics of the information and communication infrastructure development in Russia and it is possible to use this infrastructure as a basis for the satisfaction with the system of public administration methods implementation within state marketing programs in the regions. Moreover, in public administration, social security and administration work, the use of advanced information and communication technologies occupies a share presence in the range from 87 to 97.2% (Russian Statistical Yearbook 2018). This analytical data presents the possibility to implement constantly operating systems of the satisfaction with services rendered by public administration monitoring. Such evaluation should be carried out within the management system, business community and civil society, which will allow to identify the real situation, attitude and involvement of all three parties in the issues of the socio-economic development within state marketing.

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References Fadeeva, N.V.: Methodology for evaluating the services quality. Vestn. TGTU 18(2), 484–489 (2012) Fornell, Claes ACSI Commentary: Special Report on Government Services (2001). http://www. tyeacsi.org/got-key.html. Accessed 02 Mar 2019 Giannoccaro, R., et al.: Measuring citizen satisfaction with aspects of public services from a local authority and determining trier impotence: a case study. Public Organ. Rev. 8, 1–15 (2008) Known, Sang, Y.: Regulatory Reform Satisfaction Survey: Method and Result, Istanbul. Turkey (2010) Miller, T.I., Kobayashi, M.M.: City Surveys: How to do Them, How to Use Them, What They Mean. 2nd ed. Washington, DC: International City. Country Management Association (2000) Manolitzas, P., et al.: Evaluating the public sector in greece: the case of citizens service centers. In: Proceeding the European Conference on Information Management and Evaluation (2010) Novatorov, E.V.: The conceptual and methodological basis of marketing research quality in services. In: Novatorov, E.V.(ed.) Marketing and Marketing Researches in Russia, vol. 29, no. 5, pp. 4–13 (2000) Richard, L.O.: Satisfaction: A Behavioral Perspective on the Consumer. Irwin McGraw Hill, Boston (1997) Parasuraman, A.A.: Conceptual model of service quality and its implications for future research. J. Mark. 49(4), 41–50 (1985) Predvoditeleva, M.D.: Approaches to the service quality management: focus on the consumer. Manag. Russ. Abroad 2, 90–100 (2005) Qerim, Q., Sergi, B.S.: Development and social development in the global context. Int. J. Bus. Glob. 14(4), 383–407 (2015) Ramseook Munhurrun, P., et al.: Service quality in the public service. Int. J. Manag. Mark. Res. 3(1), 37–50 (2010) Russian Statistical Yearbook. Statistical Cillection/Rosstat. Moscow, p. 464 (2018). 694 p Sergi, B.S. (ed.) Exploring the Future of Russia’s Economy and Markets: Towards Sustainable Economic Development. Bingley, UK: Emerald Publishing (2018) Van Ryzin, G.G.: Drivers and consequence of citizen satisfaction: an application of the American customer satisfaction index model to New York City. Public Adm. Rev. 64(3), 331–341 (2004) Volkov, D.K.: The foreign experience analysis and the development of technique for evaluating the satisfaction with government programs in Russia. Pract. Mark. 211(9), 17–22 (2014) Shen, Y., Wang, X.: Citizen satisfaction with educational services: the marketing implications of public administration. Int. J. China Mark. 2(1), 77–91 (2011) Zacepin, B.V.: Domestic Tradition Targeted Program Planning: Experience and Prospects (2019). http://government.fiztex.ru/darpa/darpa-articles/a_4u5pd.html. Accessed 02 Mar 2019 Zhuravleva, I.V.: State Marketing as an innovative component of public administration. In: Proceedings of the Conference Actual Conceptions of the Development of Humanities and Natural Sciences: economic, social, philosophical, political, legal aspects. Novosibirsk, pp. 43–48, 27 June 2016

The Common Trends in the Financial Sector of Integration Process: The Securities Market and Single Market of Financial Services Olga M. Mescheryakova(&)

and Julia J. Novak

RUDN University, Moscow, Russia [email protected], [email protected]

Abstract. Purpose: The organizational and legal forms of regulation of the financial sector in an integration association are of paramount importance for the successful development of not only the sphere under consideration, but also for the integration process as a whole, and therefore, the author of this Article considers the research of the common factors of development and establishment of the single market of financial services as well as the securities market of the European Union, which nowadays, despite the recurring political and institutional crises are rightfully believed to be the integration association with the highest amount of delegated authority, as the primary purpose of this study. Design/Methodology/Approach: The methodological basis of the research presented in this Article is a combination of both general scientific methods and methods exclusively used by the legal science. Due to the peculiarities of the subject of this research, the method of historicism, the dialectical method, as well as the comparative legal method and the method of system analysis shall be given the highest priority in this very Article. Findings: The author’s position grounded in the presented Article is based on a thorough analysis of the legislation, as well as an analysis of a significant range of scientific opinions on the issues under consideration. In accordance with the thorough analysis of legal norms based on the above listed methods of scientific knowledge, this very Article presents a differentiation of trends in the development of the single financial services market within the European Union, as well as the securities market as integration further develops. The Article also covers the most important aspects of the decision-making process in the area at issue. Originality/Value: As a result of the research carried out and presented in this Article, the significance of choosing the right mechanisms for regulating a single financial services market, ways of enshrining the norms under consideration in the European Union law and creating a flexible and mobile mechanism allowing to respond to changes arising from the further development of the integration process. The Article also formulated the conclusion that the integration process, which does not include financial aspects, cannot be considered as having reached the highest stage of its development. Keywords: Single market of financial services of the European Union
The securities market
The European Union
Financial sphere of the integration process
The integration law
The integration process
Financial policy of the European Union © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 716–724, 2020. https://doi.org/10.1007/978-3-030-39319-9_79

The Common Trends in the Financial Sector of Integration Process JEL Code: R01

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R 58
К 10
N14

1 Introduction The financial sphere within the European integration process is one of the most difficult. The reason for this circumstance is the fact that it is largely subject to the influence of occasionally appearing global economic and financial crises, and is also greatly dependent on the financial problems that arise in the Member States of the European Union. Furthermore, in this area, many issues are resolved not at the European level, but at the national level. Therefore, financial problems, arising in the European Union from time to time and at the present stage almost permanently, are largely caused by the processes occurring in its Member States, some of which, as is well known, are nowadays on the verge of the sovereign default. The sphere under consideration is one of the most difficult in the integration process, since it is very “sovereignty-consuming” because of the importance of “not so much the text as its context” (Sauron 2008), which influences the voting process when adopting the norms of integration law. Indeed, the well-known thesis on autonomy, as well as on the special nature of the law of the European Union, was approved by the Court of Justice of the European Union (hereinafter referred as “the EU Court of Justice”) and further developed at the doctrinal level, however, some representatives of the European school of integration law doubt its legitimacy, believing that “there is no necessary legal framework for that” (Droit international 2000). As H. Prant has noted in his Article in the German newspaper Sueddeutschezeitung, in the midst of the financial crisis that began in 2008, “the financial policy of the European Union affects the “constitutional foundations of national statehood” (Sueddeutschezeitung, May 13, 2019). In this regard, the functions of the European Union’s institutions in this area, enshrined in the sources of law of the European Union, are of paramount importance, which in itself is the basis for the effective functioning of any integration community (Jemeljanova et al. 2017). However, the functions of the main institutions of the European Union are enshrined in the founding treaties, and that in itself complicates the process of making changes, since such changes can only be made by adopting the next audit agreement. This is due to the fact that the influence of supporters of Europe as the union of European nations, as opposed to federalists, prevailed when the texts of the founding treaties were adopted (Favret 2018). In this context, the Summit of the European Union, held in December 2011, when the European Union was in deep crisis, is indicative. It was this Summit that demonstrated that the complicated procedure for amending the founding treaties makes it possible to block the decisions of the European Council on a significant tightening of control by the European Union’s institutions over budget discipline in the EU Member States, since its implementation requires the expansion of the functions of the EU institutions (Mescheryakova 2012). However, as it will be shown below, the European Union has a rather flexible legal mechanism, which allows, by empowering the authorities of the so-called “third level”, to respond to those crisis situations that periodically arise in the process of developing and deepening integration. The analysis of the organizational and legal mechanism of the financial sphere to which this Article

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is devoted clearly demonstrates the role played by the second and third level authorities in creating a flexible legal mechanism allowing integration to develop and smooth over contradictions arising during its development.

2 Methods While working on the research of the chosen subject, the author analyzed the norms of the primary legislation of the European Union concerning the functions of the institutions of the European Union, as well as the functioning of the financial sphere, special norms in the considered sphere, along with the practice of the institutions of the European Union. The methodological basis of the research carried out in the Article is the general scientific dialectic method of scientific knowledge. During working on that part of the research, which affects the institutional aspect, the comparative historical and the formal legal methods of cognition of legal reality, as well as the systemstructural and the comparative methods were applied. In order to study the regulatory foundations of the European Union, the formal legal research method was applied, which allows revealing the content of the considered norms with all the nuances, contradictions, and gaps in their content. The comparative legal method of scientific knowledge was applied for the purpose to identify the characteristics of the formation and development of the considered area in the process of deepening integration. This research also applied modern post-classical methods that are used in legal science. These methods primarily include the constructive method, which revealed the principles of the legal mechanism underlying the European Union’s single financial services market, as well as the method of anthropocentrism, which identified the role of the institutional system of the European Union in the implementation of norms affecting the subject under consideration of this very research.

3 Results and Discussion The European Union combines both “positive” and “negative” integration, therefore, the further development of integration is accompanied by a steady improvement in the level of “positive” integration (Kashkin 2017). To a large extent, this was facilitated by the deepening of cooperation of the Member States of the European Union in the financial sphere, expressed in the creation of the fairly well-functioning single financial services market, which definitely will require further reform of the entire institutional system of the European Union. The financial services market plays a primary role in ensuring sustainable economic growth, both within an individual State and at the level of the integration community as a whole. Financial service, according to the Federal Law “On Protection of Competition in the Financial Services Market” No. 135-FL dated June 23, 1999, is a special activity related to the involvement and use of funds of legal entities and individuals (Federal Law 1999). Consequently, the implementation of banking operations and transactions together with the provision of services on the securities market and insurance services, the conclusion of agreements on the financial leasing and trust management of funds or

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securities, and other financial services are considered as the financial services. The most important document in the sphere of legal regulation of services in the European Union is the Directive No. 2006/123 on services in the internal market (Directive 123/EC 2006). The Directives of the Member States are to be applied (by adopting an implementing legal act) on the basis of the rules of the internal market, enshrined in the treaties, in particular, taking into account the principle of freedom of movement of services (Barnard 2007). Naturally, even on the basis of the above mentioned definition of financial services, it becomes obvious that regulation at the integration level of this area is extremely complex and requires a flexible legal mechanism considering the sovereigntyconsuming of the designated area due to the characteristics of representative democracy in the European Union (Weydert and Beroud 1997). Therefore, two trends in the development of the financial services market in the European integration process should be mentioned as the fundamental: the desire of the Union to ensure sustainable growth by improving the mechanism for regulating the financial services market and protection at the Union level against the negative consequences of global financial crises (Inshakova et al. 2018). Both tendencies appeared at the turn of the twenty-first century and were intensified by the financial crisis that began in 2008, because it was during this period of time that an understanding came that the combatting the negative consequences of the crisis was ineffective only through measures taken at the national level. In 1999, the first action program of the European Union was developed. It was the action plan submitted by the European Commission in the area of forming the single financial services market, which was not published in the Official Journal of the European Union (Commission Communication 1999). This policy document assumed, first of all, consistency and coordination of all activities in the securities market and financial services (Partsch 2009). The favorable economic situation for the European Union from 1999 to 2008 contributed to the rapid development and deepening of these trends in the financial sector, showed the effectiveness of the single euro currency introduced during this period of time (Lannoo and Levin 2004). Therefore, it is during this period of time that the European Union relied on the development of the stock market, carried out on the basis of the principles laid down by the so-called Lamfalussy Report (Sousi 2002). The Lamfalussy reform was aimed at the development of such a crucial sector in the European integration law as the securities market. The reform also extended to related aspects, such as banking and insurance. It should be noted here that at this stage of development of the financial sector in the European Union, despite the introduction of the single currency, the euro, there was still a significant bias towards national regulation in relation to the supranational in the mechanism of legal regulation of the financial sector. However, when the global crisis of 2008 hit, it became obvious that measures taken at the Union level seemed more effective for the euro zone Member Countries. Consequently, in order to centralize banking supervision in the euro area, the Banking Union was created in 2012 (Banking Union 2014). At the end of 2014, the so-called Single Supervisory Mechanism (SSM) began to organize within the framework of the above mentioned Banking Union. The implementation of the principles of this supervisory mechanism is based on their strict coordination with the rules of the

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single internal market of the European Union, which, in turn, further contributed to the establishment and development of the single market of financial services in the European Union, and also significantly increased the efficiency of banking activities. The second trend in the development of the financial services market in the European Union, which began to take shape during the favorable period of its activity, was developed precisely in connection with the financial crisis that began in 2008 and became a serious test for the renewed European Union, and, above all, for the euro area. Adverse factors related to the crisis appeared in 2009, when it was impossible to further long-term financial development planning due to the negative impact of the crisis, which affected primarily the countries of Central and Southern Europe. During this period of time, it was decided to move to a large-scale system of anti-crisis management measures, as well as to search for new “growth points”, including within the framework of multispeed or so-called “flexible” integration (Babynina 2010). During this period of time, the European Union was making significant efforts to improve the organizational and legal forms of regulation of the financial sector towards strengthening the supranational element. It was during this period (in 2011) that the above-mentioned Summit of the European Union took place, at which then British Prime Minister D. Cameron clearly stated his position on the protection of the United Kingdom’s national sovereignty, thereby imposing a veto on expanding the functions of the EU institutions in monitoring the situation with deficit of national budgets of the Member States. Consequently, in a crisis, the previously used Lamfalussy procedure was replaced by the so-called Larosière procedure. The essence of the Larosière’s procedure consisted in the permanency of the European Union’s approaches to the organizational and legal principles of regulating the financial and supervisory spheres, however, in view of the difficulties in making decisions on changing the functions of the EU institutions enshrined in the founding treaties, the role of the EU bodies related to the “second” and “third” levels. The main body of the second level in the financial sphere is the Committee of European Securities Regulators, which included national representatives at the level of the relevant national regulators. The major task of this body is to adopt an agreed position that satisfies all the participating States (Commission Decision, 6 June 2001). At the second level, the European Securities Committee was also established, whose major task is to prepare analytical reports for the European Commission (Speech of Jonathan Hill, 6 November 2014). The bodies of the second level adopt acts subject to the powers that are enshrined in the framework acts of the first level of the European Parliament and the Council of the European Union. In order to expand the functions of the “third level” bodies, the most important of which in the considered area is the European Securities and Markets Authority, no changes are required to the Lisbon Treaty (Conac and Caillat 2010). Other bodies that are important for regulating the area under consideration are the European Insurance and Occupational Pensions Authority and the European Banking Authority, which were also affected by the Larosière reform. Thus, the European Union has once again shown that the flexibility of the legal mechanism of integration is the key to its successful functioning even in crisis and post-crisis periods. In this case, the “flexibility” of the legal mechanism was ensured by the fact that the precedent in the system of sources of law of the European Union plays a significant role, and the judgments of the EU Court of Justice, if I may say so, “fill in

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the gaps in the law” by virtue of the function of the EU Court of Justice to interpret the norms of the European Union law. The Judgement of the European Court of Justice No. C-270/12 dated January 22 of 2014 (Case C-270/12 2014) has the essential importance for the subject studied in this Article. In the mentioned Judgement, the EU Court of Justice, at the request of the United Kingdom, considered the powers of the European Securities and Markets Authority (Regulation (EU) No. 1095/2010 2010). The claimant, represented by the United Kingdom of Great Britain and Northern Ireland, questioned the legitimacy of certain powers of the European Securities and Markets Authority, arguing, in particular, that the powers granted to this Authority to act at its discretion is not consistent with the principle of delegation of authority that underlies the functioning of the entire system bodies of the European Union. The claimant questioned the Regulation of the European Parliament and of the Council No. 236/2012 dated March 14, 2012 (Article 28) that the European Securities and Markets Authority has the right to request information on short selling and credit default swaps (Regulation EU 2012). In its claim to repeal this rule, the claimant relies on the fact that it contradicts the founding treaties of the European Union, since they do not provide for delegation of such broad powers to a separate EU body, defined as a general measure of influence that, in the claimant’s opinion, cannot be entrusted to a third level body. In this case, the claimant refers to Article 114 of the Treaty on the Functioning of the European Union (Kashkin 2013), which is the legal basis for Article 28 of the Regulation of the European Parliament and of the Council No. 236/2012 dated March 14, 2012. The claimant asserts that the above-mentioned norms of Article 28 of the said Regulations of the European Parliament and of the Council, which are addressed to financial institutions, cannot be considered as a measure for the harmonization of legislation provided for by Article 114 of the Treaty on the Functioning of the European Union, and on this basis cancel the decisions of national authorities. This provision, expressed by the claimant represented by the United Kingdom of Great Britain and Northern Ireland, was supported by N. Jääskinen, the Advocate General in the EU Court of Justice (Opinion of Advocate General 2013). The EU Court of Justice rejected the claimant’s arguments, stating in its Judgement on this case the provision that Article 28 of the mentioned Regulation does not provide the European Securities and Markets Authority with any autonomous powers that would go beyond its competence. However, the EU Court of Justice emphasized that the measure enshrined in Article 28 to repeal the national norm in the framework of measures to harmonize the legislations of the EU Member States is applied only in the event of serious cross-border threats to the financial system of the European Union or national financial markets (Regulation EU 2012). During the period under consideration, the above-mentioned Banking Union and the Capital Markets Union as well as the Single Resolution Mechanism, established for the management of problem banks, were rapidly becoming established in the European Union. All of this, undoubtedly, indicates that the European Union, under the most difficult conditions caused by the pre-default situation of the economies of some Member States, nevertheless pursued the policy aimed at further development of the economic and monetary union created in more favorable conditions corresponding to the period 2000–2008 (EU Banking Union 2014).

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In the same period of development of the financial sphere of the European Union, the processing of the most important Directive in the sphere of legal regulation of financial markets was completed – the Directives of the European Parliament and of the Council No. 2004/39/EC on markets in financial instruments and related Regulation (EU) No. 600/2014 on markets in financial instruments (Jairath 2005). The reform of the legal regulation in the sphere of supervision in this area was also carried out in the same period. Consequently, reforming the financial services market in the European Union was delayed for a decade and was carried out consistently on the basis of the proposals of Lamfalussy and then Larosière (Kasyanov 2013), which, in turn, was a kind of strength test in crisis conditions of the flexible legal mechanism the foundations for which were laid down in previous decades. A comparative analysis of the development algorithm of the financial sector of the European Union during the pre-crisis and crisis periods demonstrates that the legal mechanism for regulating the financial sector in the European integration process is quite flexible, which allows integration to develop successfully. After all, even in the midst of the most severe economic crisis and the reluctance of some Member States to legitimize the anti-crisis decisions on introducing amendments and additions to the founding treaties, the European Union has approved that the flexibility of its legal mechanism makes it possible to resist the negative consequences associated with changes in external conditions.

4 Conclusions The legal phenomenon considered by the author in this very research, which is characterized by a three-level system of bodies of the European Union, arises from the fact that it provides the flexibility of the legal mechanism of integration within the European Union. That is because a flexible legal mechanism is necessary for the successful development of integration in such a sovereignty-consuming area as the financial one. The founding treaties, as well as auditing treaties that make amendments to the founding treaties, are subject to ratification by all Member States without any exception. Consequently, it is the three-level system of bodies of the European Union that makes its legal mechanism so flexible that it allows, without changing the fundamental principles of the legal system, to continue the ongoing development of integration even in crisis conditions, empowering the third level authorities. In addition, the EU Member States can both do not ratify the treaty and make the corresponding non-proliferation reservation to one or another norm on them. This condition allows resorting to the format of different-rate integration. In the financial sphere of the European integration process, the mentioned public law characteristics, which define the essence of the legal mechanism of the European Union, allowed for a relatively short period of time, featured by different external conditions, to strengthen the EU economic and monetary union and to establish not only the stable securities market, but also the single market of financial services of the European Union. Consequently, in order to maintain the balance of interests of the Member States, which today are very diverse in terms of the level of their economic

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development, it is necessary to further strengthen the existing system of bodies and institutions which are based on a flexible legal mechanism relied on the multi-level structure.

References Inshakova, A.O., Goncharov, A.I., Kazachenok, S.Y.: Legal regulation of the syndicated lending: banking innovations in contemporary Russia. In: Popkova, E., Ostrovskaya, V. (eds.) Perspectives on the Use of New Information and Communication Technology (ICT) in the Modern Economy, pp. 368–377. Springer, Cham (2018) Babynina, L.: Flexible integration within the EU: classification and problems of institutionalization. Mirovaya Economica I Mezhdunarodnye otnosheniya (World Econ. Int. Relat.) (6), 31–37 (2010) Banking Union: Relevant European Council Conclusions (2014). http://www.consilium.europa. eu. Accessed 27 May 2019 Barnard, C.: The Substantive Law of the EU. The Four Freedoms, 2nd edn, p. 404. Oxford University Press, Oxford (2007) Case C-270/12 Grand Chamber: United Kingdom of Great Britain and Northern Ireland v. European Parliament and Council of the European Union. Judgment of 22 January (2014). http://curia.europa.eu/juris/document/document.jsf?text=&docid=146621&pageIndex= 0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=297283. Accessed 27 May 2019 Commission Communication: 11 May entitled “Implementing the Framework for Financial Markets: Action Plan” (1999). http://www.consilium.europa.eu. Accessed 27 May 2019 Commission Decision: 6 June (2001/527/EC) establishing the Committee of European Securities Regulators. Off. J. Eur. Union L 191, 43–44 (2001) Directive 2006/123/EC: 12 December on Services in the Internal Market. Off. J. L 376, 36–68 (2006) Conac, P.-H., Caillat, V.: Du cesr à l’esma: le Rubicon est franchi. Bull. Joly Bourse (6), 500 (2010) Droit international et droit communautaire: Colloque de Bordeaux, pp. 22–23. A. Pedone, Paris (2000) European Commission: EU Banking Union Fit for Service: Council appoints permanent members of the Single Resolution Board and adopts the methodology for banks’ contributions to the resolutions funds: Press release (Brussels, 19 December) (2014). http://europa.eu/rapid/ press-release_IP-14-2784_en.htm. Accessed 27 May 2019 Favret, J.-M.: L’essentiel de l’Union Européenne: Ses institutions et son droit, Paris, pp. 21–24 (2018) Federal Law of the Russian Federation: On Protection of Competition in the Financial Services Market, no. 135-FL dated June 23, 1999. SCS Consultant Plus (1999) Jairath, A.: The impact of the market in financial instruments directive (MiFID). J. Invest. Compliance 6(3), 50–51 (2005) Jemeljanova, N., Kartashkin, V., Mescheryakova, O., Smbatyan, A.: Institutional aspects of integration in the EEU: problems and prospects. J. Adv. Res. Law Econ. 8(3), 843–848 (2017) Kashkin, S.Y.: Formation of science of integration law and the interests of Russia in the globalizing world. Yuridicheskaya nauka (Legal sci.) (5), 8–15 (2017) Kasyanov, R.A.: European experience of legal regulation of financial markets and the possibility of its implementation in Russia. Vestnik (Bull.) Mgimo Bull. 4(31), 267–274 (2013)

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Lannoo, K., Levin, M.: Securities Market Regulation in the EU: Everything You Always Wanted to Know about the Lamfalussy Procedure: CEPS Research Report in Finance and Banking, no. 33. Centre for European Policy Studies, Brussels (2004). https://www.ceps.eu/system/ files/book/l182.pdf. Accessed 27 May 2019 Mescheryakova, O.M.: The financial policy of the European Union and the Federal Constitutional Court of Germany. Pravovaya Initsiativa (Legal Initiative) (2) (2012). http:// www.49e.ru/ru/node/256. Accessed 27 May 2019 Opinion of Advocate General in Case C-270/12 UK v. EP and CEU (2013). Delivered on 12 September. http://curia.europa.eu/juris/document/document.jsf?text=&docid=140965&page Index=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=298952. Accessed 20 May 2019 Partsch, Ph.-E.: Droit Bancaire et Financier Européen, p. 52. Larcier, Bruxelles (2009) Regulation (EU) No. 1095/2010 of the European Parliament and of the Council: 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No. 716/2009/EC. Off. J. Eur. Union L 331 (2010). https:// eur-lex.europa.eu/oj/direct-access.html. Accessed 27 May 2019 Regulation (EU) No. 236/2012 of the European Parliament and of the Council: 14 March on short selling and certain aspects of credit default swaps. Off. J. Eur. Union L 86 (2012). https://eur-lex.europa.eu/oj/direct-access.html. Accessed 27 May 2019 Sauron, J.-L.: Comprendre le Traite de Lisbonne, Paris, p. 9 (2008) Sousi, B.: L’approche Lamfalussy, une douce pour l’harmonisation? Recueil Dalloz (Cahier droit des affaires) (178), 3322–3323 (2002) Kashkin, S.Y.: Treaty on the Functioning of the European Union. European Union: Fundamental Acts as amended by the Lisbon Treaty with commentaries M., Infra-M, pp. 265–267 (2013) Weydert, J., Beroud, S.: Le devenir de l’Europe, Paris, p. 121 (1997)

Cryptocurrency, Taxation and International Law: Contemporary Aspects N. N. Emelianova(&) and A. A. Dementyev RUDN University, Moscow, Russia {emelianova-nn,dementyev-aa}@rudn.ru

Abstract. The article analyzes the legal framework for taxes and other problems deriving from the digitalization of economic, including the use of cryptocurrencies. The authors postulate the necessity of legal framework in such a modern challenge to international cooperation between states. The most interesting work, from the lawmakers’ point of view, took place in the European Union and the Eurasian Economic Union. The authors conclude that many European and Asian countries have in their national law some provisions related to the use and taxation of cryptocurrencies. The level of development of such regulation varies from state to state. One of the conclusions was the establishment of the fact that the EU today is one of the avant-gardes in the international community for using cryptocurrencies. Another important conclusion is that in the territory of the EAEU this process is only at the very beginning of its inception, although some countries have gone far enough to create a legal framework for the use of cryptocurrency. As part of a study on the taxation aspects, the authors set themselves the goal of understanding the current problems in this area. Methods The methodological basis of the study involves a combination of general scientific (dialectical, historical, inductive, deductive, analytical, synthetic) and private scientific methods (formal-legal, comparative-legal, interpretative, statistical, procedural and dynamic). Keywords: Cryptocurrency


Blockchain
Taxation
EU
EAEU

1 Introduction Since the advent of cryptocurrency has been more than 10 years. During this time, they have experienced both ups and downs, but the main thing that remains indisputable is that cryptocurrencies built on the Blockchain technology new existing reality (IMF 2016). And this reality requires the development of a full-fledged legal regulation, starting at the international level. One of the first issues to be resolved is the issue of taxation (Perugini and Dal Checco 2015). At the present stage, it is possible to talk about the use of cryptocurrencies in the context of digitalization of the economy, both national and global, where a narrower aspect, is the question of taxation of cyber-currency and digital commerce.

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 725–731, 2020. https://doi.org/10.1007/978-3-030-39319-9_80

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In turn, e-commerce is a vast topic, which has not yet been systematically studied in Russia - discussions on taxes and the digital economy while boiling down to two particular issues. First, it is the taxation of the cryptocurrency business; secondly, the tax aspects of the work of Internet sites related to e-commerce. However, no comprehensive attempts have been made to find a systematic approach to the taxation of the digital economy as a thriving business that can provide a budget with a new source of income.

2 Results According to the information we have, the rest of the EAEU countries also do not try to settle the taxation of the digital economy in an integrated way but are busy trying to create separate legal norms relating to certain aspects of e-commerce and not solving the problem as a whole. It is worth noting, however, that this is characteristic not only of the EAEU but also of the whole world. In this regard, it is useful to consider the experience of the European Union member states in the matter of legal regulation of cryptocurrencies, including its taxation. By analyzing the national legislation of the EU, it can be concluded that until about 2014–2015, such legal regulation of cryptocurrency did not exist in any of them, even though such commerce appeared as early as 2008 (Savelyev 2016). However, the absence of special regulations did not mean the lack of some general rules. For example, in England, cryptocurrencies were subject to a value-added tax of 10–20%, as they were recognized as vouchers. The situation was until 2014 when cryptocurrencies had received the status of the conventional means of payments and VAT has been removed. The UK government has focused on regulating the activities of cryptocurrency exchanges, primarily to prevent the use of the latter for illegal purposes such as money laundering or finance terrorism. The UK, like most EU member states, is increasing funding in the field of studying distributed registry technologies (which underlies cryptocurrencies) to maximize the use of such technologies while minimizing the negative consequences. For the UK, these issues are particularly relevant, as, among the crown lands and overseas territories, a sufficient number have the status of offshore zones and provide substantial tax breaks, including cryptocurrency exchanges. A rather interesting example is Sweden. There, cryptocurrencies were equated to “currencies” in 2013. The tax legislation of this country considers cryptocurrencies or rather the income derived from the issuance of such currencies, as a “hobby”. As a general rule, such income is not subject to VAT. However, there is a reservation saying about the receipt of such income for professional purposes. In this case, the appropriate tax will be imposed on these revenues. The strictest legislation in this area is German law. On the one hand, as in Sweden, cryptocurrencies were recognized as a means of payment in 2013. However, commercial use of cryptocurrency is possible only, firstly, when obtaining a special permit and, secondly, to obtain such permission, the subject must meet several criteria:

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it should have a promising business plan; highly skilled workers; be subject of strict reporting requirements; the share capital must be at least 750,000 euros.

The European Union is currently doing a great job on legalizing cryptocurrencies and operations with them. This kind of work has been going on in the EU for about ten years. The first of these steps was the decision of the European Court of Justice, which spoke of the need to abolish VAT in respect of operations with cryptocurrencies. This decision, in its essence, equated cryptocurrencies with the traditional currency for taxation (CCN). Also, a special forum for working on cryptocurrency issues has been launched. EU like the many countries across the world making steps against using of cryptocurrencies in criminal schemes. Firstly in money laundering and financing of terrorist’s activities (Opinion of the European Central Bank of 12 October 2016). Against this background, given the scale of the work being carried out in the EU, it also seems necessary to analyze the situation in the EAEU member states. In our opinion, Belarus has advanced the furthest along the way. In the Republic of Belarus, Decree No. 8 of the President of the Republic of Belarus “On the Development of the Digital Economy” legalized the use of cryptocurrencies, designating them as a universal medium of exchange. At the same time, operations with cryptocurrencies are exempt from taxation until January 1, 2023, provided that such transactions are carried out by residents of the High-Tech Park (a kind of crypto-offshore). In the Republic of Kazakhstan, the legal status of cryptocurrency at the end of 2018 has not been determined, although the prospects are rather exciting. The Republic of Armenia has a draft law “On Digital Technologies” which provides for the right to engage in mining, and the relevant operations will be exempt from tax until the end of 2028 (if the law is adopted on time). There is also the position of the Central Bank of the Republic of Armenia that the cryptocurrency is not electronic money. In addition to the position of the Central Bank, no acts have been adopted so far in this area. The Republic of Kyrgyzstan, has no general regulatory no tax regulation of cryptocurrency, although there is a report entitled “The Legal Status of the BlockChain Technology in Kyrgyzstan” which refers to the prospects for using cryptocurrency in this republic. In the Russian Federation, on May 22, 2018, two draft laws were passed in the first reading, which, among other things, regulate the cryptocurrency (draft federal law No. 424632-7 “On Amendments to Parts One, Two and Four of the Civil Code of the Russian Federation”), also non-regulatory acts were issued by the Ministry of Finance: October 13, 2017, No. 03-04-05/66994 (operations with Bitcoins are subject to taxation), May 17, 2018, No. 03-04-07/33234 (defining the specifics of tax base regulation during operations with cryptocurrency). In the spring of 2019, amendments to the Russian Civil Code were adopted, whereas a bill on digital assets was under consideration. The draft law should regulate the issue, registration, and circulation of digital assets, which are digital rights issued

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using the blockchain, including liabilities and other rights, including monetary claims, and rights on digital issuing securities. Only legal entities and individual entrepreneurs, including foreign organizations and individuals, can emit the listed assets within a certain information system. Operators of such systems, the Central Bank will make a special register. Buying and selling digital assets and exchanging them for tokens of another type can only be done through credit organizations or stock exchanges. At the same time, the Central Bank of the Russian Federation plans to restrict the purchase of crypto active assets for unqualified investors by its bylaw. According to the Bank of Russia, inexperienced investors will be able to invest in the purchase of cryptocurrencies no more than 600,000 rubles per year (Inshakova et al. 2018). However, to date, this bill is subject to considerable criticism from both the Government and members of the public. It is easy to understand, comparing the current situation in the EAEU member states, that at the moment in the Republic of Belarus the most favorable conditions for taxation of operations related to cryptocurrency in the entire territory of the EAEU have been created. However, these conditions apply to a minimal circle of people - mainly to residents of the High-Tech Park, which is not enough to say about an utterly favorable tax regime. Besides, in all these acts of the mentioned EAEU member countries, the emphasis is on the taxation of the so-called “miners,” i.e., entrepreneurs carrying out emission of cryptocurrency. It is the same as the taxation of the money printing house of Russia (GOZNAK) or the imposition tax on the Central Bank of the Russian Federation, as the subjects that produce and bring into circulation cash rubles. Both examples are nonsense! From our point of view, the problems of the admissibility of cryptocurrencies as a means of payment, are in particular: • whether taxpayers can fulfill their obligations to the budget by transferring cryptocurrency, for example, to the treasury; • tax control or taxation when participants in economic relations make transactions with cryptocurrency instead of fiat currency in bank accounts. Unfortunately, these are undoubtedly essential questions in Russia and in the EAEU countries still, remain unanswered. Also, the developers of laws on the regulation of cryptocurrency are under constant pressure from the tax authorities, who fear that cryptocurrencies and transactions with its help will be used by unscrupulous persons to evade tax control and conceal the tax base. Of course, this possibility is present, and it should not be underestimated. However, on the other hand, the probability of using crypto assets against the interests of tax authorities should not be perceived as a sufficient basis for restricting the rights of individuals to access and use crypto assets for doing business. The right of citizens of the Russian Federation to engage in entrepreneurial activities is enshrined in the Constitution of the Russian Federation. Therefore, by itself, it cannot be limited solely to simplify or cheapen tax control. The “prophylactic bans” of the whole business with crypto assets, in general, seem to us meaningless.

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Trade on the Internet, and in this context, the “Google tax,” plays a significant role in the digital economy. According to the Federal Tax Service, as of 2018, about 150 of the largest foreign organizations voluntarily started registering as VAT payers, and according to the results of 2017, revenues of this tax are estimated at 9.4 billion rubles. At the same time, this amount does not exhausts the possibilities of tax administration in the sphere of interest to us. Globally, the e-commerce market, for example, in the B2B sector (business contracts with entrepreneurs) in 2017 is estimated at $ 7.66 trillion, and in the B2C sector (deals between entrepreneurs and consumers) at 2.143 trillion dollars. In Russia, the volume of e-commerce at the end of 2017 was estimated at 1.1 trillion rubles, although it these volumes will grow to 5–7 trillion in the foreseeable future. If tax authorities use the old structures that are not optimized for the conditions of the digital economy, the treasury will lose very significant tax revenues: they simply cannot tax the corresponding operations. It is not always possible to say that sites registered outside the Russian Federation do not receive income from its territory. For example, in the first half of 2017, Russians spent up to 178 billion rubles on Internet purchases from China (52% of the cost of all online purchases). At the same time, these operations, due to gaps and omissions in tax legislation, are currently only partially levied on Russian taxes. Even in the case of taxation, the realization of such a taxpayer’s right as a reconciliation of settlements, provided for in paragraph 5.1, will be in question. Art. 21 of the Russian Tax Code. In this area, technical difficulties may arise in the interaction of foreign companies and Russian tax authorities. Thanks to the “Google tax” design, such purchases can only be subject to VAT, and also, a part of the income is brought in import customs duties (although a significant part of the parcels from China does not fall under these duties). At the same time, the opportunity to impose taxes on companies supplying such many goods to Russia and earning huge sums is completely overlooked. For example, if we simply assumed that the profit of Chinese companies amount to 90 billion rubles (or even 45 billion, if half of the costs we attribute to expenses to calculate the income tax), the Russian budget could earn from 9 to 18 billion rubles. And this is only for parcels, not counting the purchase of digital content. In the context of the above, we can return to the EU experience. Because of the problems outlined above, the EU member states are introducing new types of taxes under various names, such as “sales tax”, to tax digital companies, like non-resident taxpayers. As an example, the EU has proposed a short-term and long-term solution for taxing the digital economy through a two-stage project. As a short-term solution, it is proposed to introduce a fixed 3% tax on digital services on the turnover of these companies as of January 1, 2020. However, the EU cannot establish a compromise even at a rate of 3% among member countries, since the application of the proposed income tax turns it into an income tax. Since this tax is not a type of tax applied to net profit, its application to revenue requires companies to pay it, even if they incur losses.

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Besides, since the 3% tax will not be considered a tax paid abroad, a non-resident taxpayer may be in a situation where he will not be able to deduct it from his corporate tax liability in the country of his tax residency. However, in our opinion, there is a legal tool that would allow to achieve the above goal. it is an institute of digital (electronic) representation proposed by the OECD in 2018. It formulates three factors that form a digital representation: the factor of income received, the factor of digital presence (for example, a local domain name or a specific payment method), the factor of the number of users. Accordingly, on the websites of China, you can extend the actions of the digital (electronic) representation and tax it. At the same time, we believe that there is a need of a unified approach of all the EAEU member states, because within the framework of the Republic of Belarus or the Russian Federation alone these issues cannot be resolved. In this regard, it is required to create an act of the EAEU level, which would fix the concept of taxation of cryptocurrencies and operations with them, other transactions in the framework of e-commerce, etc. At the same time, there is no longer any time to prepare a detailed, detailed act: it is necessary now to create a stable legal basis so that, firstly, speeding up the race for the possibility of locating IT business on its territory, and secondly, not much limit the sovereign tax rights of the EAEU member states. In our opinion, it is required to adopt an analogue of the EU directive (European Central Bank 2012), an act that would create a conceptual framework for regulating the tax aspects of e-commerce, would indicate goals for national regulators, but at the same time retain the widest possible discretion of the legislators of the EEU member states.

3 Conclusion/Recommendations Based on the above, we can draw the following conclusions. The development of e-commerce provides many opportunities for economic growth of the countries participating in the EAEU. At the same time, it is necessary to create a regulatory framework for regulating the tax aspects of e-commerce, to ensure the flow of funds to the budgets of the EAEU member countries. Important in this aspect is a careful analysis of existing approaches to creating a legal framework for the regulation of these issues, for example in the European Union. At the moment, the regulatory framework for the taxation of e-commerce and the digital economy as a whole in the Republic of Belarus is best developed, and it is possible that the Russian Federation will soon create the corresponding regulatory framework. However, it is necessary to create a unified supranational legal act similar to EU directives in functions, which would set forth the conceptual framework and ultimate goals to which the EEU member states should strive.

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References CSU: Financial Constraints to Combat Terrorism Includes Call for Bitcoin Framework, official site of CCN. https://www.cryptocoinsnews.com/csu-financial-constraints-to-combat-terrorismincludes-bitcoin-framework-proposal/. Accessed 15 June 2019 Digital Transformation in Government and Blockchain Technology, speech delivered by Minister for Cabinet Office Matt Hancock at D Digital Catapult, Kings Cross, London on the 26th April 2016. https://www.gov.uk/government/speeches/digital-transformation-in-government-andblockchain-technology. Accessed 12 June 2019 Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (Text with EEA relevance). https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=156114623 6972&uri=CELEX:32015L2366. Accessed 12 June 2019 Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the Taking Up, Pursuit and Prudential Supervision of the Business of Electronic Money Institutions, Amending Directives 2005/60/EC and 2006/48/EC and Repealing Directive 2000/46/EC, 2009 O.J. (L 267) 7. https://eur-lex.europa.eu/legal-content/EN/TXT/?qid= 1561146362009&uri=CELEX:32009L0110. Accessed 12 June 2019 European Central Bank: Virtual Currency Schemes, October 2012. https://www.ecb.europa.eu/ pub/pdf/other/virtualcurrencyschemes201210en.pdf. Accessed 12 June 2019 FATF: Virtual Currencies Key Definitions and Potential AML/CFT Risks, FATF report, p. 4, June 2014 IMF: Virtual Currencies and Beyond: Initial Considerations, IMF Staff Discussion Note – SDN/16/03, January 2016 Inshakova, A., Goncharov, A., Kazachenok, O.: The imperatives of financial policy in the sphere of the digital economy: impacts on increasing investment activity and tax potential of Russian regions. In: Proceedings of the International Scientific Conference «Competitive, Sustainable and Secure Development of the Regional Economy: Response to Global Challenges» (CSSDRE 2018), pp. 337–342. Atlantis Press, Amsterdam (2018) Bearman, J., Hanuka, T.: The Rise and Fall of Silk Road. Wired, January 2015. www.wired.com/ 2015/04/silk-road-1/. Accessed 15 June 2019 Opinion of the European Central Bank of 12 October 2016 on a proposal for a directive of the European Parliament and of the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directive 2009/101/EC, (CON/2016/49) Perugini, M.L., Dal Checco, P.: Smart Contracts: A Preliminary Evaluation, December 2015. https://ssrn.com/abstract=2729548. Accessed 15 June 2019 Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directive 2009/101/EC - 2016/0208 (COD) Savelyev, A.: Contract Law 2.0: «Smart» Contracts as the Beginning of the End of Classic Contract Law, Higher School of Economics Research Paper No. WP BRP 71/LAW/2016 (2016) Fargo, S.: Blockchain Apparatus Launches a New Trusted Will System. InsideBitcoins, 9 April 2015. insidebitcoins.com/news/blockchain-apparatus-launches-a-new-trusted-will-system/ 31516. Accessed 15 June 2019

The Constitutional Dimension of the Environmental Security of the Russian Federation: Problems and Perspectives N. Yu. Molchakov(&) Moscow State Institute of International Relations, Moscow, Russia [email protected]

Abstract. One of the major areas of activity of the modern State is its function of ensuring the environmental security. The modern States include in their fundamental laws detailed articles containing constitutional regulation of issues related to the protection of the environment and the protection of environmental human rights, and also declare their commitment to the sustainable development goals. At the same time, the 1993 Constitution of the Russian Federation does not go beyond simple listing the certain environmental rights, including the right to a favorable environment, as well as securing the obligation to preserve nature and the environment. These constitutional norms are developed in environmental legislation, however, it has a number of significant shortcomings as defined in this very Article. In particular, the author points to the priority of economic interest over environmental in the relevant legal acts, as well as the limited application of such procedures as environmental expertize and environmental impact assessment. Meanwhile, the law enforcement practice does not seek to overcome the considered defects in environmental legislation. The author emphasizes that the Russian Federation needs a comprehensive reform of environmental legislation, which should also, among other things, affect the Constitution of the Russian Federation. In particular, the fundamental law should clarify the environmental function of the Russian State, as well as expand the list of environmental human rights. In addition, the implementation of such reform should include not only the improvement of federal and regional legislation, but also a whole range of legislative and organizational measures to implement the provisions of international treaties in the field of the environmental security to which Russia is already or will become a Party in the foreseeable future. Methods The research is based on the comprehensive analysis of the 1993 Constitution of the Russian Federation, national environmental legislation and court practice in the context of international treaties in the sphere of environmental protection. The author applies general and private scientific methods. In particular, for the analysis of the above-mentioned legal documents the legal-dogmatic method is used. The doctrinal positions in this research is considered by the application of the critical assessment method.

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 732–738, 2020. https://doi.org/10.1007/978-3-030-39319-9_81

The Constitutional Dimension of the Environmental Security of the Russian Federation Keywords: Environmental security
Environmental protection
Environmental human rights
Constitutional bases of environmental security Environmental legislation

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JEL Code: K32

1 Introduction Among the numerous activities of the modern State, the most important is the function of ensuring environmental security. Various Russian authors consider this term differently, however, the most meaningful is the definition given by D.S. Velieva, one of the leading Russian experts in the field of environmental law. According to her position, environmental security is “the state of protection of the environment and the vital interests of an individual, society and the State from the possible negative impact of economic and other activities, emergencies caused by natural disasters and technological accidents, their consequences, as well as the guarantee of environmental rights and legitimate interests of the individuals and legal entities” (Velieva 2011). Such an approach to the definition of the phenomenon under consideration seems to us the most successful due to several circumstances. First, it reflects all the activities of the State, on the one hand, in the field of environmental protection, and on the other hand, emphasizes the importance of constitutional enshrinement of environmental human rights, as well as the creation of legal guarantees of such rights. Secondly, this approach, in our opinion, fully corresponds to the well-known goals of sustainable development in the field of environmental protection, defined in Section IV of the 2000 United Nations Millennium Declaration, as well as the 2002 Environmental Doctrine of the Russian Federation. Speaking about the constitutional foundations of the environmental security of the Russian Federation, as well as the population living within its territory, we must pay attention, on the one hand, to the constitutional obligation of the State to take appropriate measures to protect the environment, and on the other hand, to the problem of the constitutional enshrinement of the environmental human rights. In other words, we are talking about the obligation of the State to implement into its legal system the main international standards in the field of environmental protection, as well as to improve the relevant legislation in this area, especially relating to combating climate change. As a result of actions undertaken by the State, an effective system of guaranteeing human rights in the field of interaction with the environment should be established in the Russian Federation. Unfortunately, nowadays, as the scientists rightly state, “in Russia, the issues of combating climate change are not adequately reflected in the legislation. These problems are mainly settled at the level of political statements and through introduction of environmental technologies” (Solntsev 2018). The guarantees existing in Russia on the realization of the right to a favorable environment, enshrined in Article 42 of the 1993 Constitution, especially with regard to the compliance of environmental legislation with the constitutional provisions, raise a number of questions. In this research we will consider only some of the shortcomings of the Russian environmental legislation, which, in fact, do not allow to achieve the objectives arising

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from the international legal obligations of the Russian Federation in the field of environmental protection and the guarantee of environmental human rights, as well as from the provisions of its Constitution.

2 Results The protection of the environment and the protection of the environmental human rights are regulated in the Russian Federation by numerous legislative acts. Thus, the 1993 Constitution of the Russian Federation in its Article 42 establishes the right of everyone “to favorable environment, reliable information about its state and for a restitution of damage inflicted on his health and property by ecological transgressions”. At the same time, the list of environmental human rights guaranteed in the Russian Federation cannot be limited solely to this constitutional provision. Additions to it can be found in a number of federal laws. For instance, this is the Federal Law No. 7-FZ “On Environmental Protection” dated January 10, 2002, and the Federal Law No. 96FZ “On Protection of Atmosphere” dated May 4, 1999. However, provisions of other Articles of the 1993 Constitution of the Russian Federation are also directly or indirectly related to the issues of environmental protection and protection of the environmental human rights. For example, Article 41 enshrines the right to health, which obviously cannot be fulfilled in adverse environmental conditions. No less important is the provision contained in paragraph 2 of Article 36 and Article 58. The first of them establishes a requirement for the implementation of environmental management exclusively in such a way that it cannot cause damage to the environment. The norm of the second of these Articles contains a concise statement that “everyone shall be obliged to preserve nature and the environment”. At the same time, given the development of contemporary international environmental law, the implementation of the provisions of the relevant international treaties becomes crucial for the development of the Russian national legislation. In this way, Russia ratified the 1992 United Nations Framework Convention on Climate Change and the 1997 Kyoto Protocol, however, bringing the national legislation, and most importantly its practice, into conformity with the provisions of these international treaties, remains a pressing issue. The 1993 Constitution of the Russian Federation “does not sufficiently define the place of the environmental function among other functions of the State” (Sobol 1999). It does not receive due specification in the environmental legislation. This circumstance creates a number of problems, including from the point of achieving the goals that are defined in the Environmental Doctrine of the Russian Federation. For example, the term “favorable environment” contained in the Constitution of the Russian Federation is not revealed in the Russian legislation, which gives rise to “an unjustifiably narrow understanding of this term in practice” (Bogolyubov 2011). Thus, the ecological function of the Russian Federation needs legislative clarification, which in its turn will allow “to develop methods for its implementation, mechanisms for the activities of state authorities, and environmental protection officials” (Nazarova 2007).

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At the same time, the law enforcement practice that has developed around the above-mentioned legislative acts often contradicts relevant constitutional provisions and knows many examples when the actions of state bodies or officials seriously violated human rights. This is especially true to the practice prevailing around the Federal Law No. 174-FZ “On Environmental Expertise” dated November 23, 1995, and affects either the constitutional right to a favorable environment, or the right to information about the state of the environment. In particular, such principles of ecological expertise as the principle of presumption of potential environmental hazard, the principle of independence of ecological expertise, the principle of publicity and consideration of public opinion, as well as the principles of environmental protection enshrined in the 2002 Federal Law “On Environmental Protection” (for example, the principle of participation of citizens, public associations and non-profit organizations in solving problems of environmental protection or the principle of ensuring the reduction of negative impacts of economic and other activities on the environment) are subjects to violation. However, in the Russian reality, there are cases when a negative conclusion of environmental impact assessment does not affect the construction or operation of economic objects that threaten the environment. One of the paradigmatic illustrations of this is the decision of the Cherepovetsk City Court, upheld by higher authorities, to refuse to satisfy the claim of environmental public organizations against the beginning of design and exploration work necessary for the construction of the gas processing plant (while there is a negative conclusion of the state environmental impact assessment), based on that the relevant acts of the city authorities “are preliminary and insignificant in their actions”. As a result, this factory was built. In general, an analysis of judicial practice, as rightly pointed out in the Doctrine, demonstrates that “often in cases where the executive authorities or city-forming enterprises act as defendant, the courts make decisions in their favor, despite obvious violations of the law” (Yastrebov 2007). In this context, it is necessary to point out that the current state of affairs is not only the result of law enforcement practice, but also a consequence of the fact that “in current Russian legislation, economic interests overwhelm environmental interests” (Bogolyubov 2011), as evidenced by the legislatively established reduction of the role of state environmental expertize and, therefore, environmental impact assessment. Such an approach undoubtedly distinguishes Russia from most European countries, the legislation of which pays serious attention to the application of this institution (Vylegzhanina 2005). At the same time, however, it is impossible to go into the other extreme, justifying the absolute priority of environmental interest over economic. It is necessary to achieve a certain balance between them, which should combine, on the one hand, the mechanism for implementing strict environmental requirements, and on the other hand, take into account the real socio-economic possibilities of the particular State for its implementation (Kukushkina 2002). It seems that today a number of federal laws need changes, especially in the context of climate changes taking place throughout the modern world. Thus, for example, the 2002 Federal Law “On Environmental Protection” says nothing about the problem of climate change, which is why the Doctrine gives a fair opinion regarding the enshrining in it of the principle of the legal protection of climate, which is found in modern

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environmental law researches (Ryzhenkov 2018). The Federal Law No. 4528-I “On Refugees” dated February 19, 1993, needs to be supplemented, since it does not take into account the possibility of granting refugee status to a person who was forced to leave the country of his domicile due to climate change or a serious environmental disaster. Finally, the Russian Federation need to bring the national legislation in compliance with the international treaties in the field of environmental protection. Certain positive steps have been taken in this direction, although, indeed, in the very foreseeable future serious work remains to be done related to the ratification by the Russian Federation of the 2015 Paris Agreement regulating measures to reduce carbon dioxide in the atmosphere since 2020. In addition, it should be noted that the implementation of the provisions of international environmental law in the Russian legal system should be comprehensive and relate to relations concerning environmental protection, natural resource management, environmental security and compliance with the environmental human rights (Boklan and Kopylov 2014). It is also important to point out that the adoption of appropriate changes in the national legislation should be limited not only to language identical to those contained in international treaties, but also to create such mechanisms that would contribute to the maximum achievement of the objectives of such agreements. In other words, one cannot but agree with those researchers who believe that they express the idea of “implementing the norms of international law into the national system through complex measures: law-making and organizational-executive” (Zinnatullin and Safin 2012). However, in the context under consideration, it is important to note that the Russian Federation is not, for example, a Party to the 1998 Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (the 1998 Aarhus Convention), implementation of the provisions of which would create an additional guarantee for the fulfillment of the right to receive reliable information about the environment, and would also contribute to strengthening the environmental component in the economic relations and increase environmental awareness of the population (Dudykina 2018). At this moment, however, the perspective of this international treaty has not yet been appraised in Russia. It seems to us that the development of the Russian environmental legislation should pursue a number of goals, the necessity to achieve which is emphasized in the Environmental Doctrine of the Russian Federation. First, it is very important to eradicate the contradictions between the federal and regional environmental legislation in the field of environmental protection (the latter, by virtue of Article 72 of the Constitution of the Russian Federation, is under the joint jurisdiction of the Federation and its subjects). Nowadays, unfortunately, it can be stated that “regional legislation cannot be considered fully compliant with the principles of federalism, both in terms of encountered inconsistencies with regional legislation, and due to duplication of federal norms or its inertia (the failure to take own normative act in the absence of the federal one which is really necessary for the regions)” (Vasilyeva 2007). It seems that the Federation and its subjects should take a more responsible approach to the adoption of relevant acts in the field of environmental protection, pursuing, in the first place, the goals approved in the Environmental Doctrine of the Russian Federation.

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Secondly, the Russian environmental legislation should strive to maximize the use of progressive international experience, in particular, to improve such procedures as environmental assessment or environmental impact assessment. In addition, the mechanism of responsibility for the environmental offenses needs to be improved, which will undoubtedly be a guarantee of the realization of the constitutional right to compensation for damage caused by such offenses. Thirdly, we should note the influence on the Russian legislation that has international law in general and international environmental law in particular, as mentioned above. It seems necessary in this context to note the “greening” of the 1950 European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR), as well as the practice of the European Court of Human Rights (ECtHR) in the field of protection of environmental rights. Thus, for example, in the case of Ledyaev and others v. Russia, the ECtHR found a violation of Article 8 of the ECHR, noting “the lack of measures taken by the State: the set targets for reducing emissions have not been achieved, the researches and the sanctions had no effect, and there was no meaningful environmental policy” (Trudova and Yakovlev 2008). Thus, we can state the existence of international guarantees of the environmental human rights.

3 Conclusion/Recommendations The analysis carried out in this research showed that today the ecological function of the Russian Federation needs considerable clarification. First, there is an obvious need to expand the constitutional regulation of issues related to the protection of the environment and the protection of environmental human rights, which in turn reflects the general trend observed in many constitutional acts of the modern world. Secondly, the State should strive to implement into the Russian legal system the maximum number of international treaties in the field of environmental protection, while taking appropriate organizational measures for their implementation, which will assist to resolve not only national, but global environmental problems. Thirdly, both federal and regional legislation in the field of environmental protection requires changes. At the same time, the Russian Federation should strive to maximize the use of foreign experience to improve its environmental legislation. The implementation of these innovations in practice largely depends on changes in the environmental culture of the population, as well as the refusal to recognize the priority of economic interests over environmental ones. This process can continue for a long time; however, without making appropriate amendments to current legislation, it will be impossible to achieve those goals that are defined in the Ecological Doctrine of the Russian Federation and international documents on sustainable development.

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References Bogolyubov, S.A.: Law and unified state environmental policy. J. Russ. Law 3, 5–8 (2011) Boklan, D.S., Kopylov, M.N.: The interaction of international environmental and international economic law as branches of the international law system. Moscow J. Int. Law 3, 171–191 (2014) Dudykina, I.P.: The Aarhus convention: Russian and foreign doctrinal assessments. Moscow J. Int. Law 4, 96–109 (2018) Kukushkina, A.V.: The concept of sustainable development (environmental, economic and social aspects). Moscow J. Int. Law 1, 52–60 (2002) Nazarova, I.S.: Ecological rights of the person: constitutional and legal dimension. Const. Municipal Law 9, 10–13 (2007) Ryzhenkov, A.Ya.: On the issue of doctrinal principles of environmental law (as in the case of the principle of climate protection). Bull. (Vestnik) Volgograd Inst. Bus. Bus. Educ. Law 1, 164–168 (2018) Sobol, I.A.: Law. Ecology. Urbanization, St. Petersburg (1999) Solntsev, A.M.: Climate change: the international legal dimension. Moscow J. Int. Law 1, 60–78 (2018) Trudova, O.V., Yakovlev, E.Yu.: Problems of judicial protection of the environmental rights of the Russian citizens at the international level. Moscow J. Int. Law 3, 21–41 (2008) Vasilyeva, I.M.: Conceptual issues of improving environmental policy and environmental legislation. Environ. Law 2, 8–19 (2007) Velieva, D.S.: Ecological Security in Russia: Constitutional and Legal Research, Povolzhsky Institute of Management named after P.A. Stolypin, Saratov (2011) Vylegzhanina, E.E.: International legal development of the procedure for assessing the impact of economic activity on the environment. Environ. Law 3, 35–41 (2005) Yastrebov, A.E.: Actual problems of judicial protection of the constitutional environmental rights of citizens. Const. Municipal Law 12, 17–21 (2007) Zinnatullin, Z.F., Safin, Z.F.: Domestic acts of the Russian Federation on environmental protection. In: Valeev, R.M. (ed.) International Environmental Law, pp. 623–637. Statut, Moscow (2012)

Artificial Intelligence System for Predicting the Price of the SIU8 Basic Asset of the SI-9.18 Option in the “Long Straddle” Strategy Nikolai Lomakin1(&) , Alexey Petrukhin1, Anna Shokhnekh2, Oksana Gavrilova3, and Olga Golodova4 1

3

Volgograd State Technical University, Volgograd, Russian Federation [email protected], [email protected] 2 Volgograd State Social and Pedagogical University, Volgograd, Russian Federation [email protected] Volzhsky Polytechnical Institute Branch VSTU, Volzhsky, Russian Federation [email protected] 4 Volgograd State University, Volgograd, Russian Federation [email protected]

Abstract. The features of the “long straddle” option strategy for the Si-9.18 option that was chosen as an object of the research on the Moscow MOEX stock exchange have been investigated. The underlying asset of the Si-9.18 option is a futures SiU8 contract for the US dollar on a 15-min timeframe. The theoretical foundations of option pricing using the Cox-Ross-Rubinstein model have been considered. Based on the Russian Deductor platform, the Kohonen map neural network has been developed to obtain a forecast for the price of the option base asset. There has been suggested and proven a hypothesis that the neural network makes it possible to obtain a price forecast for the SiU8 base asset of a synthetic option in the “long straddle” strategy. Since this option strategy is aimed at making a profit from an intensive movement and increase in volatility, the use of the developed artificial intelligence system based on the “long straddle” strategy will reduce risks and ensure its hedging. The relevance of the study lies in the fact that in the conditions of increase in volatility and risks in conducting trading operations, the application of the predicted values of the neural network that uses the changing parameters of the “option board” is of great practical importance. The study used options (PUT and CALL) taken from the Si-9.18 “option board” of the QUIK trading platform. According to the calculated data of the neural network, the STRIKE_OUT rate was 0.485875706214689 with a STRIKE_ERR of 2.3096796705%. Keywords: “Long straddle” Volatility
AI system


Si-9.18 price option
Base asset
Strategy


JEL Code: G32

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 739–746, 2020. https://doi.org/10.1007/978-3-030-39319-9_82

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1 Introduction The relevance of the study is that due to the increasing volatility of the SiU8 futures contract price in the exchange market, risks increase when conducting exchange trading operations, therefore the use of predictive values of the neural network based on the options board parameters is of great practical relevance. The use of artificial intelligence systems (AIS) is important to hedge against risk by predicting the price of an option, the basic asset of which is SiU8. There has been suggested and proven a hypothesis that the neural network allows getting a forecast of the synthetic options price in the “long straddle” strategy with the SiU8 base asset. An option is known to be a financial derivative, i.e., a time-bound contract between a seller and a buyer that gives the right (but it is not an obligation) to buy or sell a certain security at a price specified in the contract.

2 Methodology For the study, the “Kohonen self-organizing map” neural network was used. The Kohonen self-organizing map is a unsupervised learning neural network that performs the task of visualization and clustering. The idea of the network was proposed by T. Kohonen, a Finnish scientist. A neural network is a method of projecting multidimensional space into a space with a lower dimension (mostly, two-dimensional) and is also used to solve problems of modeling, forecasting, identifying sets of independent features and searching patterns in large data arrays (Kohonen 2019). In order to forecast the price of a financial instrument, neural networks that make it possible to obtain accurate predicted values based on processing of Big Data are successfully used. Many options strategies are known to be based on synthetic options. Artificial intelligence systems are widely applied in all areas of scientific research. For example, Damjan K. used new technologies with an emphasis on writing mathematical texts, mathematical and didactic recommendations to provide an adequate technical basis for conceptual ideas (Damjan 2008). Vitaly J. and Ozira Pecunia investigated the peculiarities of the Russian financial market, considering the problems associated with the financial sector of the Russian economy and beyond its borders in modern conditions (Vitaly and Ozira 2006). Braunschweig B. conducted research on the application of artificial intelligence in the oil sector (Braunschweig 2006). Neural networks enable solving risk management problems. The concept of financial risk is known to be a multifaceted and complex category; therefore, it is important to identify a combination of factors that determine its size and dynamics. Many authors’ works are devoted to this issue. So, for example, Lomakin N., Grishankin A. and Maksimova O. considered the stock market trading with company securities as a tool to reduce financial risks (Lomakin et al. 2013). According to Petrukhin A.V., solution of the architecture issues regarding the exchange robot for work in the QUIK trading terminal environment (Petrukhin 2015) is very important in the AI-systems process. The conducted study made it possible to establish that the changes on the option board in trading can serve as a tool for predicting the behavior of the underlying asset

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price. This is clearly observed because the options board reflects the traders’ expectations, representing supply and demand. With an extent of probability, one can expect movements in underlying asset prices in the direction of the nearest strikes, where there are the largest number of Call and Put options (Fig. 1).

Fig. 1. Option board Si-9.18 on MOEX

The analysis showed the bulk of Call options being concentrated on a strike of 65,000 RUB, while Put options being on a strike of 6,400 RUB. There was a pattern registered that indicated the direction of a possible change in the base asset price, depending on the Ask price at which the seller is willing to sell and the Bid price that the buyer is willing to pay (Table 1). Table 1. The Bid and Ask locations on the Si-9.18 options board according to the Kohonen map neural network Call_Bid Call_Ask Strike 1000 1015 68000 1067 1204 67750 1174 1203 67500 1272 1382 67250* 1377 1425 67000 0 0 66750 * Strike option price

Put_Bid 1577 1420 1270 1128 995 870

Put_Ask 1565 1347 1316 1192 983 810

Strike_OUT 0.5528 0.4972 0.4915 0.4858 0.4802 0.4745

If one compares the neural network developed with those proposed earlier, one can note fundamental differences. So, for example, the program “Neural Network is a perception for forecasting the USD/RUB price” proposed by Lomakin N.I. used the

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parameters of Japanese candles (opening and closing prices, minimum and maximum prices) as input factors on the 15-min timeframe and received a certificate of registration (Lomakin et al. 2018). It seems appropriate to compare the proposed neural network modeled with discrete values of asset prices and discrete trading time with the so-called Cox-Ross-Rubinstein model. The latter is an option pricing algorithm that was developed to take into account factors that are not considered in the Black-Scholes model (Vasilevsky 2012). The cost of a European buyer option is calculated as a ratio between the yield expectation and the option period: MC CT ¼
½nT  ¼ 1 þ ni

P½nT  k¼0

  max Co uk d ½nTk ; 0 Ck½nT ð1  pðnÞÞ½nTk
½nT  1 þ ni

ð1Þ

In order to simplify the calculation, one should use the theorem on parity between the European options of the buyer and the seller, where the considered options are related by correlation: PT þ CT þ So ¼

X ð1 þ ni Þ½nT

ð2Þ

It is also worth noting that the rational value of the American call option coincides with the rational value of the similar European buyer’s option. To forecast the price of a financial option instrument, neural networks are successfully used; the issues of valuation of an option are becoming an important direction for increasing the evaluation performance in the context of market uncertainty. The AI model proposed is distinguished by simplicity from the fuzzy neural network algorithms proposed by K. Kosevich and V. Belov (Kosevich and Belov 2009).

3 Results The Russian Deductor platform helped develop the Kohonen map neural network to obtain a forecast for the price of the option base asset. The features of the option strategy “long straddle” for the Si-9.18 option that was selected as an object of the research on the Moscow MOEX exchange have been investigated. The Si-9.18 option base asset is the SiU8 US dollar futures contract on a 15-min timeframe. The theoretical foundations of option pricing on the Cox-Ross-Rubinstein model have been considered. The study used options (PUT and CALL) taken from the Si-9.18 “options board” of the QUIK trading platform. According to the calculated data of the neural network, the STRIKE_OUT rate was 0.485875706214689 with the STRIKE_ERR of 2.309679 6705%. At the same time, the predicted value of the option strike price was Ppred = 67719.44 RUB at actual Pact = 67392 RUB.

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In order to predict the price of an option using an artificial intelligence system, the Long Straddle was selected. The long-straddle is a very interesting strategy that can be profitable even when the trader finds it difficult to choose a direction. This option strategy is aimed at making profit from a strong movement and increase in volatility. The trend price movements are the most favorable environment for a trader who bought a straddle (Fig. 2).

Fig. 2. Chart for the SiU8 base asset (futures contract) and “option smile” is a strategy of “long straddle” option Si-9.18

Among well-known option pricing models, the Black-Scholes model and some others are the most popular. To develop an AI forecasting system for the price of a synthetic option, initial data were taken on the MOEX (Moscow Exchange) using the QUIK terminal for the SiU8 futures contract option, the timeframe being 15 min (Fig. 3).

Fig. 3. The SiU8 chart in the QUIK trading terminal

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To hedge a dollar futures contract deal, options (PUT and CALL) were used from the Si-9.18 options board table (Fig. 4).

Fig. 4. The Si-9.18 option board

Since there is a risk of getting negative margin in the course of stock trading with the US dollar futures contract SiU8, this requires deal hedging by a synthetic option. We used the “Long straddle” for the Si-9.18 option using an option strategies constructor in the QUIK terminal (Fig. 5).

Fig. 5. Synthetic “long straddle” option

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The initial data obtained were processed by the neural network (Table 2).

Table 2. Results of data processing by the neural network

Kohonen neural network was formed using the Deductor platform. The data obtained were presented as a Kohonen map (Fig. 6).

Fig. 6. Kohonen map in the deductor terminal

At the time of the study, the SiU8 base asset price was 67392 RUB and was located in the Si-9.18 option strike with a value of 67250 RUB, that is, at the level when the option was in-the-money, and the purchase/resale operations were possible. According to the neural network data calculated, the STRIKE_OUT rate was 0.485875706214689 with the STRIKE_ERR of 2.3096796705%. This allowed us to obtain the value of the SiU8 option base asset price predicted. The forecast value of the option strike price made Ppred = 67719.44 rubles at actual Pact = 67392 rubles. It should be noted that the actual price on the next 15-min timeframe was 67534.44 rubles. So, a neural network for obtaining a forecast for the price of a synthetic option in the “long straddle” strategy with the SiU8base asset was successfully formed.

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4 Conclusions Based on the above, we can draw the following conclusions. Firstly, the use of artificial intelligence systems has broad prospects; therefore, research on the “long straddle” option strategy is of great importance. Secondly, a hypothesis that a neural network allows getting a forecast of the synthetic options price in the “long straddle” strategy with the SiU8 base asset was suggested and proven. Acknowledgments. We acknowledge the support of the Russian Foundation for Basic Research (project no. 18-010-01210 – A).

References Kohonen self-organizing map (2019). https://ru.wikipedia.org/wiki/. Accessed 13 Sept 2019 Damjan, K.: (e-)mind thinking with e-Um, Blaž Zmazek. J. Syst. Cybern. Inform. 6(2), 56–59 (2008) Vitaly, J., Ozira, P.: Russian financial sector: adjustment and management. Revista de la Facultad de Ciencias Económicas y Empresariales 3, 163–187 (2006). https://doi.org/10.18002/pec. v0i3.731 Braunschweig, B.L.: Artificial intelligence in the petroleum world. Oil Gas Sci. Technol. 45(5), 683–698 (2006). https://doi.org/10.2516/ogst:1990043. Une enquête sur les applications de l’Intelligence Artificielle dans le monde pétrolier Lomakin, N., Grishankin, A., Maksimova, O.: Exchange operations with the company’s securities as a tool to reduce financial risks. The interaction between enterprises and universities: science, personnel and innovation: Coll. of reports of IX interregional scientificpractical conf., Volzhsky, 18–19 April 2013, 1 CD-ROM, pp. 174–177. VPI (branch) VSTU, Volgograd (2013) Petrukhin, A.V.: The architecture of a stock robot to work in the environment of the QUIK trading terminal. Izvestiya VSTU 2(157), 138–141 (2015) Models for estimating the value of options and their development. http://xn–80aab4adyw.xn– p1ai/%D0%9C%D0%BE%D. Accessed 11 Sept 2018 Basegroup Advanced analytics without programming. https://basegroup.ru/deductor/description. Accessed 13 Sept 2019 Lomakin, N., Kopylov, A., Lomakina, A., Lomakin, I., Gorbunova, A., Maximova, O., Moskovtsev, A., Sazonov, S., Drobotova, O., Lukyanov, G.: Certificate of registration of a computer program No 2018611017 dated January 22 2018. Russian Federation. Neural Network is a perceptron for price forecast USD/RUB/VSTU (2018) Vasilevsky, A., Gavrish, Yu., Karachun, I.: Stochastic methods for estimating the fair value of stock options: BSM and CRR. Vestnik Belorussian Banks Assoc. 15, 24–27 (2012) Kosevich, C., Belov, V.: Using the neural network apparatus for forecasting on the options market. Economics 11(60), 353–357 (2009)

AI for Assessing Financial Risk Conditioned by the Time-Series Volatility Using the GARCH-Method Nikolai I. Lomakin1(&) , Alexey V. Petrukhin1, Anna V. Shokhnekh2, Victoria S. Telyatnikova2, and Yaroslava V. Meshcheryakova3 1

3

Volgograd State Technical University, Volgograd, Russian Federation [email protected], [email protected] 2 Volgograd State Social and Pedagogical University, Volgograd, Russian Federation [email protected], [email protected] Department of Economics, Plekhanov Russian University of Economic, Volgograd, Russian Federation [email protected]

Abstract. The theoretical foundations of the GARCH-model to be applied for calculating financial risk have been considered. The article discusses the AI neural network for assessing financial risk conditioned by the time series volatility using the GARH method in order to reduce it during exchange trading. There has been suggested and proven a hypothesis that the Kohonen map neural network enables forecasting the extent of loss on price volatility of the SiU8 futures contract, as well as forecasting the price of a financial instrument, which is important for successful trading. The relevance is due to the fact that in the conditions of a “turbulent” economy, an increase in the price volatility of the USD futures contract is observed on the exchange market, with the application of artificial intelligence systems being important for forecasting financial risk by the AI GARCH model. Assessing the extent of loss on financial volatility risk is of great importance in the contest of market uncertainty. The dynamics of changes in assets is known to have periods of high and low volatility. The neural networks that make it possible to predict the loss both on the risk of volatility and the SiU8 futures contract prices have been successfully developed. Keywords: GARCH-method
Neural network
Financial risk SiU8
Kohonen map
Forecast
Heteroscedasticity


Volatility


JEL Code: G32

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1 Introduction The relevance of the study is that due to the increasing volatility of the SiU8 futures contract price on the exchange market, risks increase when conducting exchange trading operations, therefore the use of predictive values of the neural network based on the options board parameters has great practical significance. The use of artificial intelligence systems (AIS) is important to hedge against risk by predicting the price of an option, the basic asset of which is SiU8. In the article, there has been suggested and proven a hypothesis that the Kohonen map neural network enables forecasting the extent of loss on volatility as well as forecasting the price of the SiU8 futures contract, which is important for successful trading.

2 Methodology Using the Russian Deductor platform (Basegroup, Russia), the Kohonen neural network has been developed, which allowed forecasting the extent of loss on price volatility of the SiU8 futures contract using the GARCH model (Basegroup 2019). The relevance is due to the fact that in the conditions of a “turbulent” economy, an increase in the price volatility of the USD futures contract on the exchange market is observed, with the artificial intelligence systems being important to forecast financial risk using the AI GARCH model. In the work presented, there has been suggested and proven a hypothesis that the Kohonen map neural network enables forecasting the extent of loss on volatility as well as forecasting the price of the SiU8 futures contract. Assessing the extent of loss on financial risk caused by volatility is important in a market uncertainty. The dynamics of changes in assets is known to have both periods of both high and low volatility. In turn, high volatility does not occur suddenly, it is usually preceded by somewhat stronger changes than usual ones. This process is called conditional autoregression heteroscedasticity. The models “explaining” this behavior are Autoregressive Conditional Heteroscedastic (ARCH) Models. The theoretical foundations of the GARCH-model for calculating financial risk have been considered (VAR 2019). The main advantage of the GARCH-models is their inherent property of rapid response to various kinds of changes taking place in the market and the property of equally quick recovering from the wild fluctuations. Nowadays there are more than 300 various modifications of GARCH models (Autoregressive 2019).

3 Results To develop the AI GARCH program for a financial time series risk assessment model, the initial data on the SiU8 US dollar futures contract was taken on the MOEX exchange using the QUIK terminal and processed in XL (Fig. 1).

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Fig. 1. Graph of the SiU8 closing price on the 15-min timeframe

A review of literature has shown that works of many Western and Russian researchers were devoted to this problem. So, for example, Lomakin N.I., Grishankin A.I. and Maksimova O.N. considered the exchange transactions as a tool to reduce financial risks (Lomakin et al. 2013). In order to determine the extent of loss resulting from the volatility of the SiU8 futures contract price, the GARCH model was used (Fig. 2).

Fig. 2. Calculation of the GARCH model parameters for SiU8

The closing price of the US dollar futures contract was taken on the daily timeframe. The VaR calculation presented was built on the standard volatility GARCH (1,1) model calculated by the parametric method. The VaR calculating based on the GARCH (1,1) model means that the standard risk indicator expressed with a sample standard deviation (the clean root meansquare (RMS) deviation) and used in the calculation of “value at risk” was then replaced. For the GARCH model calculations, the investexcel.net service was used (GARCH 2019).

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When using the actual values of the SiU8 price and the actual risk parameters of the GARCH model, a Kohonen map neural network was generated in order to predict the risk of financial losses for the SiU8 using the GARCH. The initial data is presented in Table 1. Table 1. Initial data (ClosePrice, GARCH and GARCH (prog))

Kohonen’s neural networks are a class of neural networks whose main element is the Kohonen layer. The Kohonen layer consists of adaptive linear combiners (“linear formal neurons”) (Kohonen 2019). As a rule, the output signals of the Kohonen layer are processed according to the rule “Winner-take-all,” i.e., the maximum signal turns into a single signal, the rest of them become zero (Fig. 3).

Fig. 3. Kohonen map for risk prediction using the GARCH model

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The “what-if” function allowed forecasting values of the absolute values of possible financial losses (Fig. 4).

Fig. 4. The “what-if” function with the Kohonen map in the Deductor platform

Since there is a risk of a negative margin in the course of stock trading with the SiU8 US dollar futures contract, the use of the neural networks developed is important because it allows forecasting both financial losses and asset prices, which is important to support the management decision on carrying out the upcoming transaction. So, obtaining predicted loss values is of practical importance (Table 2). Table 2. The GARCH and GARCHprognos predicted values of financial losses calculated by a neural network

At the time of the study, the last price of the SiU8 base asset was 68,134 RUB, with the value of losses calculated on the basis of the GARCH model being 683.8166 RUB and GARCHprogn = 580.7322.

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Autoregressive conditional heteroscedasticity (ARCH) is a model used in econometrics for analyzing time series (primarily financial), where conditional variance of a series depends on the past values of the series, past values of these dispersions and other factors. These models were designed to “explain” clustering of volatility in financial markets, when periods of high volatility last for some time and are replaced by periods of low volatility, the average (long-term, unconditional) volatility being considered relatively stable. According to James D. Hamilton and Raoul Susmel, the ARCH models often reflect the high volatility of stocks and give relatively low forecast (James and Raul 1994). Bing Cheng and P.M. Robinson examined the behavior of the price in the presence of a long-term dependence between the time series of statistical data on average parameters, which is important in particular in stock trading (Bing and Robinson 1994). Studies conducted by Richard Blundell and Richard D. Smith show that obtaining of assessment and output in simultaneous limited dependent variables or simultaneous qualitative dependent variable models is important (Blundell and Smith 1994). According to John Danielsson, it seems appropriate to apply the stochastic volatility model to assess the daily asset price dynamics (Danielsson 1994). The study revealed that the GARCH parameter that determined the extent of financial loss resulted from changing volatility and can be an important input parameter of the Kohonen map neural network for predicting the SiU8 futures contract price on a daily timeframe (Table 3). Table 3. A fragment of the initial parameters for forecasting the SiU8 price with GARCH

In order to forecast the SiU8 futures contract price, a Kohonen map was generated that made it possible to obtain predicted values on the daily timeframe (Fig. 5).

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Fig. 5. Kohonen map that allows obtaining the predicted values of the SiU8 price

We used the “what-if” function and obtained predicted values of the price calculated by the neural network (Fig. 6).

Fig. 6. The “what-if” function to obtain the predicted values of the SiU8 price

According to the calculated data of the neural network, the predicted value of the SiU8 price Ppred = 67,011 RUB was obtained. It should be noted that at the same time the actual price amounted to 67,208 RUB. That is, the deviation from the actual value was 197 rubles, or 0.2931%. The Kohonen map neural network to obtain a forecast for the SiU8 futures contract price has been successfully formed. The effectiveness of the predictive capabilities of the neural network is striking in its high prediction accuracy (Fig. 7).

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Fig. 7. Effectiveness of the predictive capabilities of the neural network

The accuracy of the forecast is clear in Table 4. Table 4. Forecast accuracy

The studies show the maximum error not exceeding 0,66732072%, which indicates a high accuracy of the forecast. For the research, the Kohonen self-organizing map neural network was used. Kohonen self-organizing map is an unsupervised learning neural network that performs the task of visualization and clustering. The idea of the network was proposed by T. Kohonen, a Finnish scientist. A neural network is a method of projecting multidimensional space into a space with a lower dimension (mostly, two-dimensional) and is used to solve problems of modeling, forecasting, identifying sets of independent features and searching patterns in large data arrays. In order to predict the price of a financial instrument, neural networks are successfully used and make it possible to obtain accurate predicted values based on the processing of big data. Artificial intelligence systems are widely used in all fields of scientific research. For example, neural networks provide ample opportunities for risk reduction during stock exchange operations. If we compare the developed neural network with those proposed earlier, we can note some fundamental differences. So, for example, the program “Neural Network is a perception for forecasting the USD/RUB price” proposed by Lomakin N.I. used the parameters of Japanese candles (opening and closing prices, minimum and maximum prices) as input factors on the 15-min timeframe and received a certificate of registration (Lomakin et al. 2018).

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4 Conclusions Based on the above, we can draw the following conclusions. First, forecasting the loss on the financial instrument volatility risk is important in terms of analyzing time series in exchange trading. Secondly, the Kohonen map neural network to obtain a forecast of the extent of loss on the SiU8 futures contract price volatility has been successfully formed and can be used to support management decision-making in the process of conducting transactions on the exchange. Thirdly, an artificial intelligence system has been developed and uses data from the GARCH model as one of the input parameters, which enables making highly accurate predictions of the SiU8 futures contract price. The research study showed that the forecast error does not exceed 0.66732072%. Acknowledgments. The article was funded by the Russian Foundation for Basic Research “Cognitive approach to theoretical and methodological foundations of strategic development of small businesses in the digital economy system taking drift risks into account” No. 18-010-01210 - A.

References Basegroup Advanced analytics without programming. https://basegroup.ru/deductor/description. Accessed 13 Sept 2019 VAR calculation based on GARCH model (1,1). http://abnsecurities.blogspot.com/2018/02/vargarch11.html. Accessed 13 Sept 2019 Autoregressive conditional heteroscedasticity. https://ru.wikipedia.org/wiki/. Accessed 12 Sept 2019 Lomakin, N.I., Grishankin, A.I., Maksimova, O.N.: Exchange operations with the company’s securities as a tool to reduce financial risks. In: The Interaction Between Enterprises and Universities: Science, Personnel and Innovation: Coll. of Reports of IX Interregional Scientific-Practical Conference, Volzhsky, 18–19 April 2013, VPI (branch) VSTU, Volgograd, 1 CD-ROM, pp. 174–177 (2013) GARCH(1,1) Analysis. http://investexcel.net. Accessed 10 Sept 2019 Kohonen self-organizing map (2019). https://ru.wikipedia.org/wiki/. Accessed 10 Sept 2019 James, D., Raul, S.: Autoregressive conditional heteroskedasticity and changes in regime. J. Econom. 64(1–2), 307–333 (1994) Bing, C., Robinson, P.: Semiparametric estimation from time series with long-range dependence. J. Econom. 64(1–2), 335–353 (1994) Blundell, R., Smith, R.: Coherency and estimation in simultaneous models with censored or qualitative dependent variables. J. Econom. 64(1–2), 355–373 (1994) Danielsson, J.: Stochastic volatility in asset prices estimation with simulated maximum likelihood. J. Econom. 64(1–2), 375–400 (1994) Lomakin, N., Kopylov, A., Lomakina, A., Lomakin, I., Gorbunova, A., Maximov, O., Moskovtsev, A., Sazonov, S., Drobotova, O., Lukyanov, G.: Certificate of registration of a computer program, no. 2018611017, dated January 22, 2018. Russian Federation. Neural Network is a perceptron for price forecast USD/RUB/VSTU (2018)

Immature Digital Expertise of the Educational Institution’s Managerial Staff as HR Risk to Education Development Elena Mitrofanova1, Aleksandra Mitrofanova1, and Vladimir Tarasenko2(&) 1

2

State University of Management, Moscow, Russian Federation [email protected], [email protected] Orenburg State Pedagogical University, Orenburg, Russian Federation [email protected]

Abstract. The article presents the findings of the research on the impact immature digital expertise of the educational institution’s managerial staff on the results of education development. The term “HR risks in the education development” has been clarified as situations of a potential hazard that have a direct or indirect negative impact on the development (digitalization) of education, which occurrence is associated with real uncertainty caused by the inefficient HR management system and HR performance. The term “digital expertise of the managerial staff of an educational institution” is defined as an integrative personal quality expressed in the ability and willingness of the managerial staff of an educational institution to design and/or apply digital systems and technologies to achieve development (digitalization) of education and educational institution. The main criteria for the digital expertise of the educational institution’s managerial staff are their abilities and willingness to provide: (1) the continuous development of the digital competency of the teaching and managerial staff of the educational institution; (2) designing a graduate’s expertise model that meets the requirements of the digital economy; (3) introduction and application of digital systems and technologies in the fulfillment of educational programs; (4) adoption and employment of digital systems and technologies in the management of the educational process and educational institution. The regular relationships between immature digital expertise of the educational institution’s managerial staff and the results of the education development (digitalization) have been substantiated. The findings can be useful in designing a system for management of education development and a system for the development of an educational institution’s managerial staff. In the course of the research, we have applied statistical methods, questioning, interviewing, observation, analysis of management activity results, and factor analysis. Keywords: HR (human resource) risk
Educational institution
Education development
Digitalization
Managerial staff
Digital expertise JEL Classification Codes: M12


M53

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 756–765, 2020. https://doi.org/10.1007/978-3-030-39319-9_84

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1 Introduction Modern international educational policy is aimed at the development of education as an indispensable condition for the sustainable economic, social and environmental evolvement of the individual, state and society. According to the United Nations General Assembly Declaration “Transforming Our World: the 2030 Agenda for Sustainable Development” as of September 25, 2015, a growing number of people with demanded skills for employment and professional activities should become one of the results of education development. As some scholars suppose, digital skills (digital expertise) has become the most demanded in the modern information society (Castells 2000; Gilster 1997; Naisbitt 2003). At the same time, research findings of the Boston Consulting Group (BCG) show that more than 80% of Russian specialists don’t have sufficient digital skills and don’t ready for the role to be played the future. As a consequence, according to research carried out by the International Telecommunication Union (ITU), Russia occupies is only 45th in the ranking of countries on the development of ICT, which is significantly lower than the positions of countries with developed and developing digital economies. Facing modern challenges (trends) of the digitalization of society and the economy, Russian have elaborated several strategic documents that enhance the leading role of education in developing information society, establishing a national digital economy, ensuring national interests and pursuing national priorities: • Strategy for the Development of the Information Society in the Russian Federation for 2017–2030; • The doctrine of Information Security in the Russian Federation; Program “Digital Economy of the Russian Federation”; • The State Program of the Russian Federation “Development of Education” for 2018–2025; • Priority Educational Project “Modern Digital Educational Environment in the Russian Federation”; • Priority Educational Project “Digital School”, etc. In the abovementioned strategic documents, digitalization is considered as a direction of development of Russian education, including the digitalization of the educational process and the educational product, the digitalization of educational conditions and educational institution’s management.

2 Methodology The theoretical and practical importance of the search for factors that have an impact on the development/digitalization of education brought to the fore the purpose of our study, i.e. to describe the influence of developed digital expertise of the managerial staff of the educational institution on the results of education evolvement. The authors of the study believe that key driver of the development/digitalization of education is the managerial staff of the educational institution with the up-to-date digital expertise

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(Mitrofanova and Tarasenko 2017); immature digital expertise of the managerial staff is HR risk to the education development. In accordance with the goal and hypothesis, we set objectives of the study: (1) to clarify the term and place of HR risks in the risk system of education development; (2) to define the term, set criteria and estimate the state of the digital expertise of educational institution’s managerial staff; (3) to reveal natural relationships between immature digital expertise of educational institution’s managerial staff and the results of the education development. In the course of the research, we have applied statistical methods, questioning, interviewing, observation, analysis of management activity results, and factor analysis.

3 Findings In modern literature, the term “risk” is defined as a potential hazard; situational feature of the activity manifested in the uncertain outcome and likely adverse consequences in the event of failure (Babosov 2009); possible (probable) occurrence of some adverse event, which entails various kinds of organizational losses and limitations, failure to achieve the desired goal (Mitrofanova 2013; Kaplan and Mikes 2012). In accordance with the purpose and objectives of this study, we defined risk as situations of a potential hazard that have a direct or indirect negative impact on the development (digitalization) of education. In the academic literature, there is an extensive list of risk classifications depending on various features. In this paper, we have applied the classification of risk types proposed by Professor of Harvard Business School R. Kaplan (Kaplan and Mikes 2012): 1. Avoidable risks are internal risks arising within the organizational system that can be controlled and mitigated/eliminated (risks of mistaken or inappropriate actions, as well as interruptions in routine operations). 2. Strategic risks are calculated risks related to the development strategy to earn additional gain (benefit). 3. External risks are risks outside of the organizational system, that cannot be controlled or managed (social, technological, economic and geopolitical). In R. Kaplan’s opinion, avoidable risks are the most controllable; suitable methods of their mitigation are to monitor erroneous operations and bring employees’ decisions and actions in line with desired standards (Kaplan and Mikes 2012). We should note that R. Kaplan emphasized HR risks when describing avoidable risks. In HR management theory, HR risks include two main risk groups: (1) HR risks and (2) HR management risks (Kapustina 2008; Mitrofanova 2013; Kuznetsova and Nikitenko 2016). The theoretical analysis of terms “risks” and “HR risks” enabled the authors of the study to define HR risks to the education development as situations of the potential hazard that have direct or indirect negative impact on the development

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(digitalization) of education, which occurrence is associated with real uncertainty caused by inefficient HR management system and HR performance. Following the plan of the study, we explored the impact of mature digital expertise of the educational institution’s managerial staff on the results of the education development (digitalization). The term “digital expertise” have appeared fairly recently, therefore this fact explains the unavailability of the well-established definition. Along with the term “digital expertise”, coordinate terms such as “digital literacy”, “computer competence/literacy”, “information and communication expertise”, “technological expertise” or IT expertise/literacy”, etc. are used in academic literature. P. Gilster, the author of a monograph on digital literacy, thinks that the term “digital literacy” means the ability to critically use and understand the information received by us via computer from a wide range of sources (Gilster 1997). Detailing this explanation, Alan Martin defines digital literacy as the ability (goals, awareness) of particular persons to use digital devices and tools in a specific way to manage, identify, access, estimate, integrate, summarize and analyze digital resources; to communicate with other people, as well as to build systems of new knowledge for constructive social actions to be performed in the context of specific life situations (Martin and Madigan 2006). According to the definition proposed by the International ICT Literacy Panel, information and communication/digital expertise is the ability to use digital technologies, communication tools and/or networks to access, manage, integrate, estimate, produce, and transmit information with observance of ethical and legal rules to successfully live and work in a knowledge-driven society.” In the Russian academic literature, digital expertise is understood as the individual’s ability to confidently, efficiently, critically and safely choose and apply digital technologies in when he performs different types of activities, as well as his willingness to perform such activity (Soldatova et al. 2013); dynamic system of personal qualities expressed in knowledge, skills, beliefs, and values (responsibility) associated with the use of digital devices and technologies (Lomasko 2015). A theoretical analysis of the academic literature made it possible to clarify the meaning of “digital expertise”: this is an integrative personal quality (a combination of knowledge, skills, experience and value attitude to the subject-matter of activity) expressed in his ability and willingness to design and/or apply digital systems and technologies to achieve personal and professional goals. Thus, the digital expertise of the managerial staff of an educational institution can be defined as an integrative personal quality expressed in the ability and willingness of managerial staff to design and/or apply digital systems and technologies to achieve the development (digitalization) of education and educational institution. The main criteria for the digital expertise of the managerial staff should include their ability and willingness to provide for: • continuous development of digital expertise of the teaching and managerial staff of the educational institution; • designing a graduate’s expertise model that meets the requirements of the digital economy; • introduction and application of digital systems and technologies in the fulfillment of educational programs;

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• adoption and application of digital systems and technologies in the management of the educational process and educational institution. Mature expertise is exhibited in activities (Kibanov 2016; Ilomäkiet et al. 2011; Simonova et al. 2016). We have been analyzed products (results) of managerial activity in terms of the above criteria to assess the maturity of the digital expertise of the educational institution’s managerial staff. Statistical data of the Ministry of Education of the Russian Federation served as the source base of the study. An analysis of the data showed that the managerial staff of educational institutions provides for system training on additional professional programs. For example, 1,521.4 thousand people of teaching staff and 169.5 thousand people of managerial staff of educational institutions have completed advanced training and professional retraining programs during the academic year of 2016–2017 (Table 1). Table 1. The proportion of educational staff trained in additional professional programs during the academic year of 2016–2017, percent Designation of the large group of specialty (training program)

Total number trained for the reporting period:

The proportion of educational staff trained in additional professional programs Managerial Teaching staff staff 169,515 people 1,521.435 per 100% people per 100% 50.4 74.1 14.6 2.2 2.3 1 1.9 0.1 1.7 3

Education and Pedagogical Sciences Economics and Management Technogenic Safety and Environmental Engineering Electric and Heat Power Engineering Computer and Information Sciences; Computer Science and Computer Engineering; Information Security; Electronics, Radio Engineering and Communication Systems Law 0.7 Preventative Medicine 0.6 Psychological Sciences 0.5 [Drawn up by the authors on the back of research data]

0.3 2 1

The most popular training programs were represented by large groups of specialties (training programs) such as (1) “Education and Pedagogical Sciences” and (2) “Economics and Management”. To develop digital expertise educational staff have passed training programs within large groups of specialties: (1) Computer and Information Sciences, (2) Computer Science and Computer Engineering, (3) Information Security, (4) Electronics, Radio Engineering, and Communication Systems. At the same time, the demand for these programs is extremely low, which indicates the low need of managerial and pedagogical staff in the development of digital expertise; hence, non-

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application of an integrated approach to the development of digital expertise of managerial and pedagogical staff within formal and non-formal education (obviously, as well as within informal education), which is recognized by authors of the study as HR risk to education development. A theoretical analysis of state requirements for basic general education programs allowed concluding that the invariant educational results of the Russian general education system graduates show the qualification requirements of the digital economy. The key role in the development of students’ digital skills is attributed to compulsory subjects “Economics” and “Computer Science”. In turn, the effective development of economic and digital skills of students is provided by teaching staff with up-to-date professional (economic and digital) expertise as well as content-intensive subjects. One of the effective methods of subject intensification is an arrangement of industry-specific training, the decision on which is taken by the managerial staff of the educational institution with regard to educational needs of students, their parents (legal representatives) and according to the mission and capabilities of the educational institution. An analysis of the data presented in Fig. 1 shows the prevalence of classrooms and students of social-economic training programs, which makes it possible to develop higher social and economic skills demanded by modern society. At the same time, the informationtechnology training program is represented by a much lower proportion of corresponding classrooms and students, which is the obstacle to the training of staff for the digital society and economy. The low proportion of classrooms and students of the information-technology training program is acknowledged by the authors of the study as a consequence of HR risk to education development, i.e. immature digital expertise of the educational institution’s managerial staff manifested in inefficient: (1) arrangement of career guidance for students of information technology training program, and (2) provision of educational institution with pedagogical staff and resources required for teaching within information technology training program.

20 18 16 14 12 10 8 6 4 2 0

18 15

15

15.8

5.2 Proportion of classrooms by training program

15.4

16.2

5.6

Proportion of students by training program

Information-technology program

Physico-mathematical program

Socio-humanitarian program

Socio-economic program

Fig. 1. Demand for the information technology training program in the structure of industryspecific instruction of general educational institutions, percent (Drawn up by the authors on the back of research data)

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Following the plan of the study, we have investigated the adoption and application of digital systems and technologies in the course of educational programs’ accomplishment. The data presented in Fig. 2 indicate that the managerial staff of educational institution provided the fulfillment of educational programs using e-learning only for 13.5% of students; using distance learning technologies – for 2.5% of students; using a network learning – for 1.8% of students.

Percentage of students trained in network programs, percent Percentage of students trained in e-learning programs, percent Percentage of students trained in programs using distance learning technologies, percent

2.5

13.5

1.8

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Fig. 2. The proportion of students training in educational programs using modern information technologies (Drawn up by the authors on the back of research data)

The authors of the study have an opinion that the low figure of adoption and application of digital systems and technologies in the course of educational programs’ accomplishment unveils the unwillingness and/or inability of the prevailing number of the managerial staff of educational institution provide the digitalization of the education, which is also an HR risk to the development of education. Digitalization trends also cover the management of the educational institution’s library fund. However, only about 1.5% of electronic publications annually arrive at the library funds of educational institutions (Fig. 3).

1.3

1.6

Printed publications Electronic publications 98.7

2014

98.4 2017

Fig. 3. Annual arrivals in the library fund of educational institutions by the form of educational publications, percent (Drawn up by the authors on the back of research data)

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As authors of the study suppose, the low share of the library stock update by electronic publications reveals the unwillingness and/or inability of the prevailing number of the managerial staff of the educational institution to provide digitalization of the conditions required for the accomplishment of educational programs. Shows of this HR risk to the development of education limit the opportunities for staff training for the digital society and economy. At the final stage of the studying the criteria for the development of digital expertise of an educational institution’s managerial staff, we have estimated the introduction and the use of digital systems and technologies in the management of the learning process and educational institution. The data presented in Fig. 4 prove the insufficient ability and willingness of a big proportion of the educational institution’s managerial staff to introduce and apply digital systems and technologies in the management of the educational process and organization. Only in 62% of an educational institution, managerial staff provided the introduction and application of digital educational resources in the learning process.

Special software for solving management tasks

31

Electronic Document Workflow Systems

45

Content-Filtering Internet Access Tools

92

Electronic journal, electronic diary

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Fig. 4. The share of educational institutions that have introduced digital systems and tools, percent (Drawn up by the authors on the back of research data)

Introduction and use of electronic document workflow along with special software to solve managerial tasks are provided by managerial staff in less than half of educational institutions. In the opinion of authors, the manifestation of this HR risk to the development of education limits the efficiency and performance of managing the learning process and the educational institution. The analysis of the research findings shows that the issue of developing the digital expertise of the educational institution’s managerial staff as a condition for the development (digitalization) of education is still persistent in the Russian education system. In turn, immature digital expertise of the managerial staff is exhibited in their inability and unwillingness to design and/or apply digital systems and technologies in personal and professional activities, which is a significant HR risk to the development of education,

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economy, and society as a whole. This conclusion is supported by the finding made by D. Naisbitt that modern digital technologies facilitate the management of the information society only to the extent that its members know how to use them (Naisbitt 2003).

4 Conclusions The study on the impact of immature digital expertise of the educational institution’s managerial staff on the results of the education development allowed the authors: 1. Clarify the term and place of HR risks in the risk system of education development. HR risks to the development of education are understood as situations of a potential hazard that have a direct or indirect negative impact on the development (digitalization) of education, which occurrence is associated with real uncertainty caused by the inefficient HR management system and HR performance. HR risks to the development of education are of key importance in the risk management system for education development. 2. To define the term, set criteria and estimate the state of the digital expertise of educational institution’s managerial staff. The digital expertise of the managerial staff of an educational institution is defined as an integrative personal quality expressed in the ability and willingness of managerial staff to design and/or apply digital systems and technologies to achieve the development (digitalization) of education and educational institution. The main criteria for the digital expertise of the educational institution’s managerial staff are their abilities and willingness to provide: (1) the continuous development of the digital competency of the teaching and managerial staff of the educational institution; (2) designing a graduate’s expertise model that meets the requirements of the digital economy; (3) introduction and application of digital systems and technologies in the fulfillment of educational programs; (4) adoption and employment of digital systems and technologies in the management of the educational process and educational institution. 3. To reveal natural relationships between immature digital expertise of educational institution’s managerial staff and the results of the development (digitalization) of education. In this regard, the immature digital expertise of the educational institution’s managerial staff is recognized as an HR risk to the development of education. In the authors’ opinion, the findings can be useful in designing a system for the management of education development and a system for the development of an educational institution’s managerial staff.

References Babosov, E.M.: Sociology. Encyclopedic Dictionary. Librocom, Moscow (2009). 480 p. Kapustina, N.V.: HR management risks. Educ. Econ. 4, 139–142 (2008) Kibanov, A.Ya., Mitrofanova, E.A., Konovalova, V.G., Chulanova, O.L.: The Concept of Competency-Based Approach in HR Management: Monograph. INFRA-M, Moscow (2016). 156 p.

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Lomasko, P.S., Simonova, A.L.: Fundamental principles of developing professional ICTexpertise of teaching staff in the context of smart education. Bull. Tomsk State Pedag. Univ. 7(160), 78–84 (2015) Mitrofanova, A.E.: Socio-economic content and structure of HR risks in the organization. Electron. J. Bull. Moscow State Reg. Univ. 2, 1–7 (2013). https://evestnik-mgou.ru/ru/ Articles/View/317. Accessed 11 Nov 2018 Mitrofanova, A.E.: The concept of HR risk management in working with the organization’s staff. Competence 3(104), 40–45 (2013) Castells, M.: Information Age: Economy, Culture, Society. Higher School of Economics, Moscow (2000). 608 p. Gilster, P.: Digital Literacy. Wiley Computer Publishing, New York (1997). 276 p. Ilomäki, L., Kantosalo, A., Lakkala, M.: What is digital competence? In: Linked Portal. European Schoolnet, Brussels. http://linked.eun.org/web/guest/in-depth3. Accessed 11 Nov 2018 Kaplan, R.S., Mikes, A.: Managing risks: a new framework. Harv. Bus. Rev. 90(6), 48–60 (2012). Boston Kuznetsova, M.E., Nikitenko, E.A.: Risk management during the organization’s staff training. In: Proceedings of the 11th International Research and Practice Conference, Munich, Germany, 6–7 April, vol. 1, pp. 195–199 Martin, A., Madigan, D.: Digital Literacies for Learning. Facet Publishing London, London (2006). 500 p. Mitrofanova, E.A., Tarasenko, V.V.: Integrated strategy of differentiated development of the educational institution managerial staff. In: International Conference on Research Paradigms Transformation in Social Sciences. The European Proceedings of Social & Behavioral Sciences: Future Academy, vol. 35, pp. 1347–1355 (2017) Naisbitt, J.: Megatrends. AST, Moscow (2003). 380 p. Simonova, M.V., Ilyukhina, L.A., Romantsev, G.M., Zeer, E.F., Khamatnurov, F.T.: Approaches to monitoring of competences and qualifications. IEJME Math. Educ. 11(7), 2745–2760 (2016) Soldatova, G.U., Nestik, T.A., Rasskazova, E.I., Zotova, E.Yu.: Digital Competence of Adolescents and Parents. Results of the All-Russian Study, vol. 144, p. 4. Foundation for Internet Development, Moscow (2013)

Digital Profile: Special Aspects of Legal Regulation Mingiyan N. Fedotov1(&), Alexander V. Sukhinin2, Oksana A. Kovalenko3, Viktoriya M. Romadikova2, and Olga N. Kuznetsova4 1

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LLC Teta Legal, Volgograd, Russia [email protected] 2 FSAEI of HE “Kalmyk State University”, Elista, The Republic of Kalmykia, Russian Federation [email protected], [email protected] Volzhsky Institute of Economy, Pedagogy and Law, Volzhsky, Russia [email protected] 4 FSAEI of HE “A.A. Ezhevsky Irkutsk State Agrarian University”, Irkutsk Oblast, Russia [email protected]

Abstract. Subject Matter/Topic. Today, the issues of legal regulation of interaction in the digital environment come to the fore because of increasingly frequent cases of work in the online environment, a large number of services received remotely, increasingly frequent cases of information leakage and fraudulent hacking of information servers of various companies. The trends of transfer to the digital format in modern society necessitate elaboration of multiple issues of mutual relationship of citizens and institutions in various real-life situations (education, healthcare, social care, employment, etc.). The key problems are associated with the need of identifying a person in the digital environment and storing his/her personal data, identifying a legal entity and lawfulness of its legal status. The state authorities have been dealing with these issues over the past few years. Thus, the Ministry of Digital Development of the Russian Federation is currently finalizing legislation on relevant laws and regulations, supplementing it with articles about the digital profile, procedure for identification and authentication of individuals, developing mechanisms for the interaction of individuals and legal entities in the digital infrastructure. The ongoing processes of approval of official documents and elimination of legal issues have been the subject of study in this scientific paper. Goal/Problems. The goal of this research study is the theoretical justification of ongoing processes, the search for practical methods of promotion and improvement of the efficiency of interaction of business entities, government institutions and a citizen in the digital environment. In accordance with this goal, the following problems have been formulated and consistently solved in this paper: to study the ongoing processes of digitization of social milieu, to identify the key problems of interaction in the digital environment, give consideration to particular qualities of an individual forming the digital profile, to analyze changes in the legal regulation of the digital interaction.

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 766–777, 2020. https://doi.org/10.1007/978-3-030-39319-9_85

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Methodology. The study is conducted with the use of methods of regulatory analysis of ongoing changes in legislation, statistical data analysis, logical analysis method, data systematization, method of comparison, analogy and systematization. Results. In order to ensure the most effective and efficient interaction of citizens and government institutions in the digital environment, conditions for the formation of a digital profile of individuals and legal entities are established, which will allow solving many issues remotely. The paper identifies a list of problems, the solution of which will ensure the promotion of digital technologies into economic and social space. Conclusions/Significance. The value of this paper consists in the fact that it focuses on the key problems of digitization of Russian society, the main planned activities to modernize the existing online services. Keywords: Digital profile
Legal regulation
Online service
Identification
Authentication JEL Code: K10


K24
K38
O33

1 Introduction Information (or digital) revolution 4.0. occurs in all spheres of public life. A new information society is formed, where information is distributed almost instantly in the virtual environment of the Internet which defying state boundaries, where active interaction is carried out at all levels of communication, where the private becomes the public and easily accessible. Every second, using a smartphone, tablet, laptop or other gadget, a citizen leaves his/her digital footprints on the network, thus becoming a participant in the exchange of a wide variety of information about himself/herself and his/her status, condition, intentions and desires. This information is of high value both for commercial use and for using it by the governing bodies, as well as for criminal purposes. Information about citizens is collected with their consent, when they want to use the network services or they themselves provide information about themselves, including data which can be used for commercial and other purposes for the convenience of surfing in cyberspace. This can happen without the consent of a citizen, when the abovementioned data is entered in databases from various sources in a lawful and unlawful manner. In addition, they can be used for commercial and other purposes, but the use of this data to the detriment of network users, in violation of their right to privacy, especially dangerous. The right to privacy is entrenched in Article 12 of the Universal Declaration of Human Rights of 1948, on the basis of which the UN operates; it is included as a fundamental right in the Constitution of more than 150 countries of the world, including in the Constitution of the Russian Federation. International Covenant on Civil and Political Rights of 1966 entrenches the right to privacy, including the right to protection of the law from encroachments upon privacy in Article 17.

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In accordance with Article 23 of the Constitution of the Russian Federation, the right to privacy, personal and family privacy, protection of honor and reputation, privacy of correspondence, privacy of telephone conversations, postal, telegraph and other communications is considered to be the most significant fundamental human and civil rights in the Russian Federation. Moreover, according to Article 24 of the Constitution of the Russian Federation, collection, storage, use and distribution of information about private life of a person without his/her consent is prohibited. Nevertheless, due to peculiarities of development of information technologies, time rate of changes occurring in the information environment, legal regulation in this field takes up a catch-up attitude when the technical and hardware capabilities for accumulating digital information about users already exist, and legal standards governing this aspect of human activity have not yet been formalized and put into effect. As a result, a whole layer of public relations falls outside the regulatory activity of legal standards and fails to ensure proper level of protection of rights and freedoms of an individual. Nevertheless, legal regulation is gradually adapting to the dynamic nature of informational transformation, as evidenced by the markedly accelerated formation of a regulatory environment defining the legal status of the digital profile of an Internet user, proper procedures for recording, transmitting, using information constituting the essence of a digital profile. As of today, the digital profile as a legal institution exists only in the form of a Draft Law, government concept and certain subordinate legal acts. Nevertheless, by the end of 2019, the Government of the Russian Federation intends to put into effect the service of a digital profile of individuals and legal entities, for which reason a proactive study of this legal institution that has not yet been put into effect is one of the so far few attempts to comprehend its content, form and place in the legal system of the Russian Federation, impact on fundamental human rights, including the right to privacy.

2 Materials and Methods The methodological basis of this research is composed of the most recent theoretical and applied works dealing with the issues of the formation of information economy in contemporary Russia, the problems of formation of a system of interaction between different structures in the digital environment and electronic transmission of information. Such works include (Fedotova et al. 2018), (Fedotova et al. 2019), (Kovajenkov et al. 2019), (Popkova et al. 2019), (Inshakov et al. 2019), (Gontar et al. 2019), (Rogachev and Gontar 2018), (Bogoviz et al. 2018), (Dobrolyubova 2017), (Bogdanovskaya 2011). A notable feature of existing publications on the topic under study is the choice of the Internet economy rather than the information economy as the subject of study, which accordingly determines the emphasis on the process – the availability and effectiveness of Internet tools – while in this study we are more interested in the result – successful use of these tools for the formation of information economy. There are no research papers dealing with the issues of identification and authentication of an individual in the digital environment, hence we will consider the theoretical foundation

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of this research poorly elaborated and understudied. In this regard, this research will allow us to develop and systematize the existing visions of the implementation of new changes in legislation. The research methodology in this Chapter covers the method of comparative analysis which is used by the authors to compare the values of informatization of economic and social system of Russia; in addition, a method of graphical analysis and regulatory analysis, is given. Nevertheless, despite the abundance of publications on similar topics, the issues of legal regulation of informatization processes in Russian society and development of directions of modernization of the system of electronic interaction of the citizen and the state in such a model are currently understudied in point of fact.

3 Results According to the definition given by the TechTarget corporation which is a leader in the field of data management service, digital profile is a set of data that include personal characteristics, behavior, affiliations, connections and interactions of an individual on the Internet (individual that exists online). Digital profiling is a process of collection and analysis of information about an individual on the Internet. Within the framework of the Federal Project “Digital infrastructure” of the National Program “Digital Economy of the Russian Federation” approved by the Presidium of the Council under the President of the Russian Federation for the Strategic Development and National Projects on 24.12.2018, digital profile is defined as a platform for the information exchange between the state, its citizens, as well as commercial and non-commercial organizations, including with consent of a citizen. On March 29, 2019, the Presidium of the Government Committee for the digital development, the use of information technologies to improve the quality of living and the business environment approved the Concept and architecture of a digital profile UIAS 2.0 (hereinafter referred to as the Concept) within the framework of the National Program “Digital Economy of the Russian Federation”. This is a comprehensive, wellelaborated document that contains not only the general concept of a digital profile, but also defines in detail the technical, organizational, legal and other activities necessary for the implementation of a digital profile up to the deadlines for the necessary activities, expected results, as well as persons responsible for carrying out of these activities of state authorities and organizations. According to the abovementioned Concept, the digital profile of an individual is a set of digital records about a citizen contained in information systems of state authorities and organizations. The digital profile of an individual is based on: – register record containing relevant and verified information about a citizen; – distributed data structure containing links to data that is stored in relevant public registers; – the ability to manage digital consents issued by a citizen to processing of his/her personal data obtained from the digital profile by means of consent management service (Fig. 1).

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Register record Contains relevant and verified information about a citizen Sources: URV, UIAS and other SIS

Consent management service

Distributed data structure Contains links to data that is stored in relevant public registers

Ensures management of digital consents to processing of personal data

Fig. 1. Basic characteristics of the digital profile infrastructure of an individual.

Digital profile of a legal entity (and an individual) is a set of digital records about a legal entity contained in information systems of state authorities and organizations. This being said, the structure of the digital profile of a legal entity also includes a record in the register based on the Unified State Register of Legal Entities (USRLE) or Unified State Register of Private Entrepreneurs, distributed structure of data about a legal entity contained in other public registers and informational registries of organizations, and consent management service. A peculiar feature of the digital profile of a legal entity consists in the presence of references to digital profiles of individuals authorized to manage the digital profile of a legal entity (Fig. 2). In addition, the Concept provides for the goals of creation of a digital profile. Such goals include: – providing opportunities for citizens to control the transmission and processing of their data (digital consent management) contained in the digital profile (including the data in the SIS that can be accessed via links); – ensuring the possibility of using, with the consent of a citizen, the data contained in the digital profile (including the data in the SIS that can be accessed via links) by organizations for the provision of various services; – ensuring convenient, transparent and secure data exchange between participants in information exchange; – building of trust between the participants of data exchange; – ensuring prompt and secure data collection from state information systems; – developing digital financial, state and other services. The Concept defines the principles of a digital profile as follows:

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Digital Profile of a legal entity Created on the basis of OGRN – primary state registration number juridical of legal entities and TIN (for private entrepreneurs)

Digital Profile of a legal entity

Structure of Digital Profile of a legal entity Is similar to the profile of an individual. Differs by types of information that is typical for a legal entity.

Containsa link to digital profiles of individuals with certain powers to manage the digital profile of a legal entity

Fig. 2. Basic characteristics of the digital profile of a legal entity

– free disposition by an individual of access to private data stored in state information systems (hereinafter referred to as SIS); – mandatory consent of an individual for the use and transmission of data from his digital profile, if data transmission without consent is not provided for in the legislation of the Russian Federation; – independence of an individual in managing the process of granting and revoking consent; – mandatory identification and authentication of an individual for the provision of digital consent to access the data from his/her digital profile by means of basic digital signature or encrypted and certified digital signature; – direct access to data contained in the digital profile in case of its storage in the information systems of a digital profile or to links to the sources of data in SIS with the use of identifiers; – responsibility of personal data operators dealing with personal data processing with the use of the infrastructure of a digital profile is established in accordance with the legislation of the Russian Federation; – technological identifier of UIAS - UIASID as a way of linking multiple identifiers in various information systems; – data exchange in a secure environment and reduction of operating expenses for the collection, verification and updating of SIS data – digital profile as a place to store the most in-demand data and SIS as a place to store other information; – voluntary connection of commercial organizations to the infrastructure of a digital profile, unless otherwise provided for by the legislation of the Russian Federation (Fig. 3).

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Storage of indemand data and maintenance of register of links

Digital profile stores the most indemand information. Other information is available through the registry of links to records in the SIS. Data should be managed with the use of digital consents. Data management requires identification and electronic signature.

Maintenance of digital consent register

Maintenance of identifier register

Identifiers determine the belonging of data in the SIS to a particular object. All state identifiers are linked to each other by an end-to-end technology identifier (ECID ID).

Provision of identification

Fig. 3. Principles of creation of the digital profile

According to the concept, the platform of a digital profile is intended to provide access to data about an individual or a legal entity contained in the state information systems, via the web portal of public services gosuslugi.ru. In March of 2019, the Ministry of Digital Development, Communications and Mass Media of the Russian Federation submitted to discussion the Draft Law “Concerning the Introduction of Amendments to Certain Legislative Acts (Regarding the Identification and Authentication)”, in accordance with which it is suggested to supplement Federal Law No. 149-FZ of July 27, 2006 “On Information, Informational Technologies and the Protection Of Information” with Article 14.3. “Digital profile” and Article 14.4. “Personal identification and authentication procedure”, which defines the concept of a digital profile and the infrastructure of a digital profile, identification and authentication technique, the use of information contained in the digital profile. In addition, the Draft Law defines the identifier as a unique designation of information about a person required to identify such a person through the use of technical and (or) technological methods, as well as personal identification and authentication procedure. The same Draft Law was introduced on July 05, 2019 under No. 747513-7 (hereinafter referred to as the Draft Law) in the State Duma of the Russian Federation by the members of the Council of Federation of the Federal Assembly of the Russian Federation Kravchenko, V.L., Glebova, L.N., and Ponomarev, M.N. This Draft Law was adopted by the Government of the Russian Federation during its Meeting on June 28, 2019. In accordance with Paragraph 1 of Article 1 of the Draft Law, the identifier shall be understood to mean a unique designation of information about a person required to identify such a person through the use of technical and (or) technological methods. In accordance with Paragraph 3 of Article 1 of the Draft Law, digital profile shall be understood to mean “a set of information about individuals and legal entities contained

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in information systems of state authorities and organizations exercising certain public powers pursuant to Federal Laws, as well as in the unified identification and authentication system”. As is seen from definitions above, digital profile shall mean a set of data/information about an individual or legal entity (personal data), contained in state information systems (SIS) and information systems of organizations. The tentative list of information on individuals and legal entities to be included in the digital profile is presented in Supplement to the Regulation on the realization of an experiment to improve the quality and consistency of data contained in public information resources approved by the Decree of the Government of the Russian Federation No. 710 of June 3, 2019: – last name, first name, patronymic, gender, date and place of birth of a citizen of the Russian Federation specified in the passport; – Insurance Number of Individual Ledger Account, Taxpayer Identification Number, information about passport details of a citizen of the Russian Federation, including series and number of passport, date of its issuance, name and code of a branch which issued passport, information about series and number of foreign passport, about an authority which issued foreign passport, date of its issue and termination; – information about citizenship, including dual citizenship of a citizen of the Russian Federation, about registration at the place of residence or stay, about the history of the issue of passport and the reasons for invalidity, – information about the driver’s license, including the country of issue, series, number, date of issue and date of termination, the authority that issued the driver’s license, permitted categories of driving, state vehicle registration plates, information about vehicle registration certificates of a citizen of the Russian Federation, including series and numbers of certificates, categories of vehicles, vehicle identification numbers (VIN), vehicle chassis numbers, vehicle body numbers, vehicle makes, vehicle models, year of manufacture of vehicles; – information contained in the Cadastral Register and Register of estate in real property as part of the Unified State Register of Real Property relating to citizens of the Russian Federation - individuals: type of the item of immovable property; cadastral number of the item of immovable property; information about termination of the item of immovable property; type of proprietary right (title liens or encumbrances), registration number and date of state registration of right (restrictions or encumbrances); information about a person for whom the right to the item of immovable property is registered (in favor of whom title liens or encumbrances of the item of immovable property are established), including last name, first name, middle name, date of birth, insurance number of an individual personal account, passport data (including historical data); address of the item of immovable property etc. In accordance with Part 3 of Article 1 of the Draft Law, the concept of the infrastructure of a digital profile is introduced - a set of information systems in a unified identification and authentication system providing access to the digital profile. The infrastructure of a digital profile is established with a view to exchanging information in electronic form between individuals, legal entities, state authorities, and local self-

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governing authorities. Therefore, the infrastructure of a digital profile can be treated as a platform for exchange of information about an individual or a legal entity (personal data exchange platform). The Draft Law also introduces a personal identification and authentication procedure, both with the use of a basic identity card, and with the use of either one or more identifiers allowing for reliable determination of the corresponding individual or legal entity. The abovementioned identification and authentication can be performed on the basis of information obtained from credit institutions, communications providers, including mobile telephone communications providers, operators of state information systems and other organizations complying with the requirements defined by the Government of the Russian Federation. In addition, the Draft Law amends Federal Law No. 152-FZ 27.07.2006 “On personal data”, Federal Law No. 126-FZ of July 7, 2003 “On communication”, Federal Law No. 323-FZ of November 21, 2011 “On the Fundamentals of Public Health Protection in the Russian Federation” specifically pertaining to the establishment of the infrastructure of a digital profile. It should be emphasized that the initiators of the Draft Law indicated in the Explanatory Note to the Draft Law that the adoption and implementation of the Federal Law “Concerning the Introduction of Amendments to Certain Legislative Acts (Regarding the Clarification of Identification and Authentication Procedures)” will not require revocation, suspension, amendment or adoption of federal laws. Meanwhile, as has been mentioned above, the Draft Law amends various federal laws, including Federal Laws “On Information, Information Technologies, and Information Protection”, “On Personal Data”, “On Communications”, “On the Fundamentals of Public Health Protection in the Russian Federation”. Moreover, as follows from the Concept, the creation of a digital profile will require introduction of amendments to a number of federal laws and regulatory legal acts, including the aforementioned Federal Laws “On Information, Information Technologies, and Information Protection”, “On Personal Data”, as well as Federal Law No. 210-FZ of 27.07.2010 “Concerning the management of the provision of public and municipal services”. It appears that Federal Law No. 482-FZ of 12.31.2017 “Concerning the Introduction of Amendments to Certain Legislative Acts of the Russian Federation” regarding the collection, storage, processing and use of biometric data of citizens of the Russian Federation must be amended as well. Immediately after the promulgation of the Draft Law, experts expressed different opinions about the need to introduce the institution of a digital profile, about the associated risks. In particular, some experts pointed to the “unfinished” nature of the Draft Law, including issues associated with the use of encrypted and certified digital signature when consenting to the processing of personal data, as well as indicating the rate of response of state authorities in the interagency electronic interaction system (IEIS) 15 s from the moment on which query was sent - in Article 1 of the Draft Law. Other experts pointed out the risks of violation of the regime of protection of personal data of citizens, since officials may have access to the specified sensitive information, or the citizens will themselves provide information about themselves, including verification tools, to scammers, because of their gullibility.

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The Draft Law was subjected to fair criticism by an independent expert, a leading researcher at the Center for Public Administration Technologies at the Institute of Applied Economic Research of RANEPA under the President of the Russian Federation A.A. Efremov. On March 30, 2019, he sent his Opinion based on the results of an independent anti-corruption examination to the address of the Government of the Russian Federation, in which he pointed out the weaknesses of legal drafting methodology, an excessive number of blanket rules with links to by-laws, the presence of regulatory conflicts and the uncertainty of the terminology used in the Draft Law. In turn, we also point out that the Draft Law has not been properly elaborated in terms of developing common standards for the exchange of information between government bodies and other owners of registers, to the use of biometric identification and authentication systems, to the issues of cross-border exchange of information between the owners of registers and information systems beyond the boundaries of the Russian Federation, including as part of integration projects of the EEU and the Customs Union. In addition, it should be noted that there is an almost absent elaboration of confidentiality measures of personal data composing the digital profile of an individual and a legal entity, as well as penalties for operators for the operational disorders of a digital profile. The Government of the Russian Federation issued a Decree No. 710 of June 3, 2019 to adopt the realization of an experiment to improve the quality and consistency of data contained in public information resources from July 1, 2019 till March 31, 2020. The experiment is aimed at ensuring the quality and consistency of data contained in public information resources involved in the experiment, in the amount determined for the experiment, through: (a) the formation and testing in the framework of federal state information system “Unified identification and authentication system in the infrastructure providing information technology interaction of information systems that are used for the provision of public and municipal services in electronic form” (UIAS) of the infrastructure providing access for citizens to information and documents owned by state authorities and local self-governing authorities that are used for the provision of public and municipal services, the performance of state and municipal functions, and to information generated as a result of their provision and performance and contained in state and municipal information systems, as well as access for the organizations to the necessary information about a citizen, Including on the initiative or with the consent of a citizen; (b) the formation and testing of tools of information technology and methodological support of data management processes for managing data contained in public information resources, including by creating and supporting the functioning of information technology elements of the national data management system, as well as their interaction with information systems of state authorities. In addition, the Decree of the Government of the Russian Federation No. 710 specified participants in the experiment for the creation and implementation of a digital profile (Fig. 4).

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State authorities

Ministry of Digital Development, Telecommunications and Mass Media of the Russian Federation Ministry of Economic Development of the Russian Federation Ministry of the Interior of the Russian Federation Federal Service for State Registration, Cadastre and Cartography Federal Treasury The Federal Tax Service Ministry of Finance of the Russian Federation Ministry of Justice of the Russian Federation Ministry of Defense of the Russian Federation Judicial Department at the Armed

Banks and insurance companies

PJSC Sberbank PJSC VTB Bank JSC Tinkoff Bank PJSC ROSBANK PJSC SKB-Bank PJSC Sovkombank PJSC Promsvyazbank PJSC Post Bank JSC Raiffeisenbank JSC QIWI Bank PJSC AKB AbsolutBank JSC Russian Standard Bank JSC Alfa Bank PJSC MTS Bank PJSC Russian Agricultural Bank PJSC Bank FC Otkrytie JSC Ak Bars

Other participants

Central Bank of the Russian Federation Central Election Commission of the Russian Federation Pension Fund of the Russian Federation ANO "Analytical Center under the Government of the Russian Federation" FSBI Research Institute "Voskhod" PJSC Rostelecom citizens

Fig. 4. The list of participants in the experiment for the creation and implementation of a digital profile.

According to the abovementioned Decree, the Government of the Russian Federation entrusted the Ministry of Digital Development of the Russian Federation, PJSC Rostelekom and the Central bank of Russian Federation with a task to ensure putting the infrastructure of a digital profile into experimental operation and subsequent management of operation of the infrastructure of a digital profile until December 6, 2019. Similar tasks were given to other participants in this experiment.

4 Conclusion In conclusion, we shall note that it should be borne in mind that the scale of the adoption of digital technologies today is constantly expanding and extending to all important areas of public life. The issues of legal regulation of relationships in the digital environment become relevant as new opportunities and services accessible to the people online appear. We shall define the main list of problems. The issues of ensuring the security of data stored on the services of digital platforms take center stage. Security means the confidentiality of personal information about an individual, the absence of the possibility of unauthorized use of this information for criminal purposes. In this context, the responsibility should rest with the service operator, which determines the level of security, data transmission and storage. The issues of legal regulation of situations with adequate identification and authentication of a person in the digital environment, issues of creating identifiers that will be individual and personal for each citizen, come second. In this case, citizens themselves must treat their own personal identifiers responsibly, ensure their safety and refrain from informing other persons about their content. The issues of the formation and creation of a digital infrastructure for servicing online services of various government institutions come third. In this context, the state

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must establish departments responsible for the continuous operation and data security. Such aspects should be spelled out and elaborated at the legislative level.

References Explanatory note to the proposal concerning the implementation of a new direction of program “Digital Economy of the Russian Federation”. https://iotas.ru/files/documents/Пояснит.записка%20eAGRO%20fin%20000.pdf. Accessed 28 June 2019 Bogoviz, A.V., Osipov, V.S., Zeldner, A.G., Rozhkova, N.K., Titova, O.V.: Stages of development of information economy in modern Russia. In: Sukhodolov, A.P., Popkova, E. G., Litvinova, T.N. (eds.) Models of Modern Information Economy, pp. 115–122. Emerald Publishing Group, Bingley (2018) Bogdanovskaya, I.Y.: The concept of electronic state: legal aspects. In: Information Society and Social State, pp. 45–55. Institute of State and Law of the Russian Academy of Sciences, U Nikitskikh Vorot Publishing House, Moscow (2011) Dobrolyubova, E.I.: Improving the legal regulation of the information support for public administration. Gosudarstvennaya Vlast i Mestnoe Samoupravlenie 2, 24–28 (2017) Fedotova, G.V., Chugumbaev, R.R., Chugumbaeva, N.N., Sukhinin, A.V., Kuzmina, E.V.: Increase of economic security of internet systems of credit organizations. In: Popkova, E. (ed.) The Future of the Global Financial System: Downfall or Harmony, vol. 57, pp. 922–931. Springer, Cham (2018) Inshakov, O.V., Bogachkova, L.Y., Popkova, E.G.: The transformation of the global energy markets and the problem of ensuring the sustainability of their development. In: Inshakov, O. V., Inshakova, A.O., Popkova, E.G. (eds.) Energy Sector: A Systemic Analysis of Economy, Foreign Trade and Legal Regulations. Lecture Notes in Networks and Systems (LNNS), vol. 44, pp. 135–148. Springer, Cham (2019). https://link.springer.com/book/10.1007/978-3-31990966-0 Fedotova, G.V., Il’yasov, R.Kh., Gontar, A.A., Ksenda, V.M.: The strategy of provision of tax security of the state in the conditions of information economy. In: Gashenko, I.V., Zima, Yu. S., Davidyan, A.V. (eds.) Optimization of the Taxation System: Preconditions, Tendencies and Perspectives. Studies in Systems, Decision and Control, pp. 217–228. Springer, Cham (2019). https://www.springer.com/us/book/9783030015138 Kovazhenkov, M.A., Fedotova, G.V., Kulikova, N.N., Sultanova, M.K., Mandrik, N.V.: Search for new economic solutions of the problem of food security. In: Popkova, E.G. (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Studies in Computational Intelligence, vol. 826, pp. 1011–1022. Springer, Cham (2019) Gontar, A.A., Lomakin, N.I., Gorbacheva, A.S., Chekrygina, T.A., Tokareva, E.V.: Methods of data intellectual analysis in assessment of economic security level. In: Popkova, E.G. (ed.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Studies in Computational Intelligence, vol. 826, pp. 455–464. Springer, Cham (2019) Popkova, E.G., Inshakov, O.V., Bogoviz, A.V.: Regulatory mechanisms of energy conservation in sustainable economic development. In: Inshakov, O.V., Inshakova, A.O., Popkova, E.G. (eds.) Energy Sector: A Systemic Analysis of Economy, Foreign Trade and Legal Regulations. Lecture Notes in Networks and Systems (LNNS), vol. 44, pp. 107–118. Springer, Cham (2019). https://link.springer.com/book/10.1007/978-3-319-90966-0 Rogachev, A.F., Gontar, A.A.: The basic methods for assessing the parameters of the system of economic security of commercial banks. Mod. Econ. Success 4, 102–107 (2018)

Educational Environment in the Information Society as an Efficient Indicator of the Provision of High Level of Design Solutions and Technologies Nelya A. Gluzman1(&), Evgenia V. Zhelnina1, Snezhana V. Yavon2, Tatyana N. Ivanova1, Galina V. Akhmetzhanova1, and Natalia B. Gorbacheva1 1

2

Federal State Budget Educational Institution of Higher Education, Togliatti State University, Togliatti, Samara Region, Russia [email protected], [email protected], [email protected], [email protected] Federal State Budget Educational Institution of Higher Education, Volga Region State University of Service, Togliatti, Samara Region, Russia [email protected]

Abstract. The issues of provision of high level of informatization of education emerge full blown for the modern educational environment in a climate of information society; high level of informatization involves the acquisition of the necessary competencies by teachers, their ability to introduce electronic learning resources into educational practice, communicate on the Internet, manage the information and cognitive activities of students and integrate information and communication technologies (ICT) in the scope of education. A contemporary elementary school teacher is a carrier of methodological, humanitarian, ethnopedagogical, legal, communicative and information culture. Against this background, there is a growing need for elementary teachers who are able to create and use ICT, provide educational services and regulate transformation processes with the use of pedagogical tools, taking into account the features of the modern educational computer-oriented environment of elementary school. The paper is aimed at substantiating the theoretical and methodological background to the development of information culture of prospective elementary school teachers, describing the procedure of development and experimental verification of the effectiveness of the structural and functional model for the development of information culture of prospective elementary school teachers in higher education. The methodological framework of the issues under consideration is composed of provisions of the cognitive theory; basic laws of the dialectic (the transition of quantitative changes to qualitative growth of a personality); philosopheme on the relationship of the general, the special, and the single; the principle of the relationship of phenomena and processes in society, science and education; psychological and pedagogical theories of culturological, axiological, epistemological, personal activity, praxeological, competencebased, and systemic approaches; psychological and pedagogical theories of improvement and self-improvement of professional strengths of a person, the relationship of qualitative and quantitative parameters of processes and © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 778–791, 2020. https://doi.org/10.1007/978-3-030-39319-9_86

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phenomena in the education system, their systemic analysis and model building; common didactic and specific principles of the training of elementary school teachers. The authors have analyzed the scope and the structure of development of information culture of prospective elementary school teachers, characterized its criteria, indicators and levels of formedness. The concept of information culture of prospective elementary school teachers has been put forward at the methodological, theoretical and methodological levels. Organizational and pedagogical conditions of systemic development of information culture of prospective elementary school teachers have been identified, theoretically substantiated and implemented. A structural and functional model of development of information culture of prospective elementary school teachers has been developed and experimentally tested. Educational and methodological support for the development of information culture of prospective elementary school teachers has been proposed. It is expedient to use the main research results for the expansion of theoretical and methodical foundations of solution of a problem of professional training of prospective elementary school teachers for further professional activity, as well as for developing comprehensive programs for the development of information infrastructure for teaching disciplines focused on systemic development of information culture of a higher education specialist. Keywords: Innovation studies
Information culture
Prospective elementary school teachers
Information and communication technologies
Educational process
Structural and functional model

The methodological framework of the issues under consideration is composed of provisions of the cognitive theory; basic laws of the dialectic (the transition of quantitative changes to qualitative growth of a personality); philosopheme on the relationship of the general, the special, and the single; the principle of the relationship of phenomena and processes in society, science and education; psychological and pedagogical theories of culturological, axiological, epistemological, personal activity, praxeological, competence-based, and systemic approaches; psychological and pedagogical theories of improvement and self-improvement of professional strengths of a person, the relationship of qualitative and quantitative parameters of processes and phenomena in the education system, their systemic analysis and model building; common didactic and specific principles of the training of elementary school teachers. The rapid development of information technologies causes changes in the content and organization of labor, in requirements to the level of formedness of personal qualities of school graduates who must be able to think critically, have system knowledge, have teamwork skills, and manage dynamic processes. The young generation of people should be able to provide a high level of design solutions and technologies, create a reliable scientific basis for solving the urgent problems of education, economy, and environmental protection. The foregoing focuses on the need to develop education on the basis of new progressive concepts; introduction of modern information and communication technologies (ICT) and scientific and methodological achievements in the teaching process; training a new generation of teaching staff, starting from an elementary school teacher.

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Modern elementary school cannot remain uninvolved in educational informatization processes. Elementary school, as an important and indispensable stage in the education of each personality, is concerned with all global trends and innovations: competency building approach, personality-oriented learning, variability, informatization, integration etc. Such trends include, inter alia, the increase in the level of information culture of prospective elementary school teachers. Modern realia prove that the professional activities of elementary school teachers lack professionalism in terms of the use of ICT, which is indicated by the low level of their information culture, hence, significant gaps in their professional training. The problems of creation and high-quality management of informational educational environment in universities, accumulating not only communication, computer, organizational resources, but also the intellectual and cultural potential of teachers and students, have not yet been solved. Knowledge of the norms and rules of interpersonal interaction in the informational educational environment, ability to handle modern electronic learning resources and use ICT, knowledge of information ethics, behavior – these and other indicators determine the information culture of prospective elementary school teachers, which is the basis for the successful implementation of their professional competence. The mission of higher education is to find and implement new approaches to professional training of prospective teachers for the systemic development of their information culture. All of the above actualizes the objective need for the improvement of quality of the process of informatization of pedagogic education: improvement of methodology and strategy for the selection of educational scope, methods and forms corresponding to the problems of professional activity of a prospective elementary school teacher; design and implementation of scientific and methodological teaching systems aimed at developing the intellectual potential of students, the formation of information and computer literacy, activity, tolerance, flexibility, partitive thinking, information reflection and responsibility; creation and use of ICT, providing the functions of collection, elaboration, accumulation, storage and transmission of information. The object of the study of the professional culture of prospective teachers consists in various aspects of teaching activities: professional competence (Masyukova [1]), professionalism (Gluzman [2, 3]), pedagogical creativity (Vinogradov, Galichenko, Posokhova [4]), pedagogical culture (Kolmogorova [5]). The implementation of modern information and communication technologies in education is a priority direction for the development of education, hence the information culture must become a constituent element of socialization, give students and teachers an internal impetus to development (Knyazeva, Manukhov, Shcheveleva [6], Privalov, Romanov [7]). Consideration of a set of issues associated with the use of modern ICT in the teaching process, didactic and psychological aspects of the use of information technologies in education, problems of formation of information culture as a systemic personal quality of a pupil and a teacher are reflected in publications by Alexandrov, Ivaniushina, Simanovsky [8], Borisova [9], Voronina Artem’eva [10], Gushchin [11], Kamenkova, Surikova [12], Laptev, Noskova [13], Privalov, Bogatyreva, Romanov, Kormakova et al. [14]. The results of research of these authors bear evidence to the fact that the implementation of ICT predetermines the extension of the scope of elementary education, develops a personality by stimulating the cognitive

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activity of a schoolchild, promotes the intensification of the teaching process, training of specialists who are able to work in a climate of information society, and put the knowledge gained into practice. Within the framework of the identified problem, the issues associated with the development of a scientifically founded computer-oriented primary school education system require further solution, taking into account the ideas of the humanitarization of education and the requirements of differentiation of education. The elimination of the contradiction between the pedagogical potential of the use of ICT for the development of personal qualities of students and real-life pedagogical practice is a socially significant problem, which determines the relevance of the presented research. Foreign scientists are also looking for efficient ways of introduction of electronic learning resources into the scope of modern formal education. Thus, it is legally acceptable to consider the point of view of Wen, Zhang and Yu [15] that information technologies has become a kind of background information culture of society due to the rapid social development, and the use of information technologies in the teaching process became the main direction of reforming of the education system throughout the world. The authors put forward various approaches to the comprehension of the essence and structure of information and communication technologies. Thus, given the use of information and communication technologies (ICT) and computers as synonymous concepts, Elen, Clarebout, Stassens, Sarfo, Louw and Pöysä-Tarhonen [16] conducted a “word association” study of words “computer” and “ICT” in five countries (Belgium, Finland, Germany, Ghana, and South Africa). As a result, it was concluded that the term “computer” has a technical valence, ICT has a broader and communicationoriented valence. The means of innovative technologies, computer software and Internet resources are aimed at forming a creative intellectually and socially developed personality in the educational process. Since modern electronic learning resources can transmit information in the Internet, as pointed out by Geng and Tian [17], and the information is displayed using various methods and is conveniently saved, these characteristics must be rationally integrated in the achievement of goals, principles and methods for obtaining all educational levels. The use of these technologies in the educational process will establish additional conditions and will cause the emergence of new goals and educational content update, will allow achieving significantly greater results of the teaching activities, provide for each pupil and student the formation and development of their own informational abilities (Ruthven and Hennessy [18]). Modern information technologies allow developing systemic scientific thinking, constructive visual thinking, spatial and associative thinking, variability of thinking and a sense of new, imagination, creative abilities. According to Huang, Huang and Wu [19], Digital Game-Based Learning (DGBL) is treated as a smart learning strategy to increase students’ motivation and interest in many disciplines. This study uses the DGBL model with the use of the diagnostic mechanism strategy for a course on mathematics of elementary school in order to study the impact of teaching methods on the level of anxiety of a junior schoolchild, learning motivation, learning satisfaction from the perspective of attention, relevance, and trust. It has been proved that communication with computer causes a keen interest in children, first as a game activity,

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and then as teaching activities. This interest forms the basis of such important structures as cognitive motivation, arbitrary memory and attention, as it is these qualities that ensure a high level of cognitive development and creativity of students. Depending on the age of students and the technologies used, the computer can act as an opponent in the game, be a storyteller, a tutor, an examiner. The publication “Educational Game Design for Online Education” (Moreno-Ger, Burgos, Sierra and Fernández-Manjón [20]) analyzes some of the relevant requirements for developing educational games in online education, and proposes a general a game development method that includes adaptation and evaluation functions that are aimed at developing various mental functions, such as visual and auditory perception, attention, memory, verbal reasoning etc. The issue of feasibility of using computer games in primary school education is addressed in the studies of Klawe [21]. Results obtained bear evidence to the fact that computer games can be very efficient in educating children. However, the researcher emphasizes that the degree of efficiency depends on many factors, including details of software design, expectations of teachers and students, the level of integration with other school specials, as well as gender differences with regard to the types of games that boys (games that require visual/spatial representations) and girls (games requiring solution of problems, quantitative calculations and graph interpretation) prefer to play (Lowrie and Jorgensen [22]). An important role in the presented study was played by academic papers revealing the essence of electronic textbooks, especially in connection with the rapid development of mobile learning terminals such as Apple and iPad series, and Android models (Zhong and Yuzhen [23], Kim, Dinu and Chung [24]). The research results provide serious grounds for educational reform on the introduction of digital textbooks using mobile learning terminals in official school settings. According to Hwang, Sung, Hung, Huang and Tsai [25], the need for the use of electronic learning resources must be considered through the prism of individual needs of pupils for education, development of their cognitive processes, without which human activity is impossible. Learning styles were recognized as an important factor affecting the academic performance of students. It was found in experimental studies that a personal educational computer game not only promotes learning motivation, but also improves the educational achievements of students. Without doubt, modern elementary school needs a teacher who is capable of creative search for creative ways in professional activity, works in a new format and is competitive. A teacher today must be not only psychologically but also technically prepared for designing and using information technologies in his/her professional activity. From this point of view, the results of a long-term study by Polly [26], in which the author observed the introduction of educational technologies by the three elementary school teachers, are especially noteworthy. Inductive qualitative analyses showed that the use of technologies of participants was focused on such technologies as: presentations, the use of potential of the interactive whiteboard, computer technologies. Studies have shown that elementary school teachers try to integrate computer technologies into teaching to the greatest possible extent, which confirms their didactic significance.

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The subject of our study also provides for the analysis of some foreign studies that are directly associated with the professional training of prospective elementary school teachers and their teaching technologies. These are publications by Drijvers, Kieran and Mariotti [27] with a justification of the theoretical foundations that are used in scientific and technical research in the mathematical education and suggestions of theoretical prerequisites for improvements of professional teacher training; Bennison and Goos [28], which reports on a large-scale study of professional development experience of Queensland High School teachers associated with the use of digital technologies for the efficient education of students and pupils; Zeqiri and Luma [29], the authors of which study the impact of multimedia educational software on the successful acquisition of IT skills by prospective elementary and intermediate school teachers with a view to using computer technologies in the teaching process and in professional activities; Bétrancourt [30] with the disclosure of the methodological potential of computer animation for visualizing dynamic time-related phenomena (for example, biological processes, physical phenomena, mechanical appliances, historical development), which can be effective in teaching students and in the possible use of skills acquired by them in pedagogical practice. Researchers Drijvers, Doorman, Boon, Reed and Gravemeijer [31] claim that a professional teacher will always look for more rational technological and didactic educational opportunities when choosing between electronic learning resources and pedagogical interactivity. The analysis of foreign studies regarding the development of information culture of elementary school teachers makes it possible to claim that the problems of training and retraining of teachers in terms of the use of electronic learning resources in formal education are as follows: lack of awareness about their use in the teaching process; lack of purposeful formation of necessary competencies, ability to handle electronic learning resources and creation of conditions for their daily use in the educational process; teachers’ doubt about the fact that electronic learning resources expand their professional capabilities. The research was conducted at the premises of higher educational institutions of the Yevpatoria Institute for Social Sciences and Humanities and Pedagogic Academy (Yalta), branches of FSAEI of HE “V.I. Vernadsky Crimean Federal University” (2012–2017). The total sample size of research subjects was 410 people. The research was conducted on condition of informed consent. The first experimental group (EG) included the students of Yevpatoria Institute for Social Sciences of the Branch of FSAEI of HE “V.I. Vernadsky Crimean Federal University” – 150 persons; the second control group (CG) included students of the Humanitarian and Pedagogical Academy (Yalta) of the Branch of FSAEI of HE “V.I. Vernadsky Crimean Federal University” – 140 persons. The experimental work at the summing-up stage of a pedagogical experiment involved the selection and use of a set of diagnostic procedures and methods to identify the low levels of development of information culture of prospective elementary school teachers by certain criteria in CG and EG. Subsequent to the results of this stage, it was found that high level was diagnosed in 1.3% of students in the experimental group and 1.9% in the control group. 17.8% of prospective maths teachers from the experimental group and 18.1% of prospective maths teachers from the control group demonstrated optimum level. 46.8% of students in the experimental group and 46.3% of students in

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the control group demonstrated the basic level of formedness of the basic professionality. The initial level was recorded in 34% of students in the experimental group and 33.7% of students in the control group (Table 1). Table 1. General characteristics of levels of development of information culture of prospective elementary school teachers at the summing-up stage of the experiment Groups of students

Levels

EG

High Optimum Basic Low High Optimum Basic Low

CG

Components Motivational abs. % 3 2.0 37 24.7 62 41.1 48 32.2 3 2,4 35 25.0 61 43.8 41 28.8

Intellectual abs. % 1 0.7 25 16.4 80 53.1 44 29.8 2 1.2 24 16.9 73 52,4 41 29.5

Professional abs. % 2 1.1 21 13.8 73 48.4 54 36.7 2 1.4 19 13.3 69 49.3 50 36.0

Behavioral abs. % 2 1.6 25 16.4 67 44.4 56 37.6 4 2.6 24 17.1 56 39.8 56 40.5

It serves as the basis for the assertion that the studied groups of students are distinguished by qualitative uniformity and insignificance of differences in quantitative indicators, and low level is the dominating level of development of information culture. Low-level respondents demonstrated insufficient knowledge of information sources, knowledge of techniques of the search for relevant information, and more focused on the difficulties in its creative application in solving specific professional problems. Computer skills of such prospective elementary school teachers are still at the formative stage, they lack experience of informational communication and have not developed any clear pattern of behavior in the information environment yet. This indicates a lack of information and computer literacy of the analyzed group of the subjects. At the same time, 36% of prospective elementary school teachers have demonstrated good knowledge of various information sources, knowledge of information search methods, consciously forming their information queries, which proves the ability of this part of experiment participants to evaluate their own actions and the actions of their colleagues in the information environment, mastery in the discussion of information communication. Only about 8% of respondents have demonstrated excellent knowledge of information sources, meaningful use of acquired knowledge and skills in educational activities. The quantitative and qualitative analyses of obtained diagnostic data became the basis for planning and carrying out a formative stage of experiment. Several organizational and methodological measures were envisaged at the formative stage of the pedagogical experiment, in particular, the introduction of the structural and functional development model which contains four interrelated blocks (goal-oriented, conceptual strategic, meaningful technologic, diagnostical effective),

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which influence the gradual increase in the level of development of information culture of prospective elementary school teachers. The structural elements of the model for the development of information culture of prospective elementary school teachers are as follows: social procurement which is regulated by the requirements of the modern information environment; the goal of development of information culture of prospective elementary school teachers consisting in the need to develop information culture of prospective elementary school teachers by means of Internet technologies; common didactic and specific principles of development of information culture of prospective elementary school teachers; methodological approaches to the systemic development of information culture of prospective elementary school teachers; a number of problems that need to be solved in the process of systemic development of information culture of prospective elementary school teachers; the scope of professional training the implementation of which is determined by the plans of study, working programs of higher educational establishments; forms, methods (problem, explanatory illustrative, reproductive and research) and innovation technologies and tools for the systemic development of information culture of prospective elementary school teachers; organizational and pedagogical conditions; stages of systemic development of information culture; the range of criteria determining the levels (high, optimum, basic, low) development of information culture of prospective elementary school teachers; the result of systemic development of information culture of prospective elementary school teachers which consists in the achievement of the positive dynamics of development of information culture of prospective elementary school teachers. The model was developed on the basis of the analysis of professional activity of elementary school teachers and the forecast for the development of social and pedagogical sector. The motivational component (value-conscious criterion) of information culture of prospective elementary school teachers has been developed in the process of supplementing the content of fundamental and vocational subjects (“Pedagogy”, “Psychology”, “History of Pedagogy”, “Sociology”, “Ethics”, “Aesthetics”, “Educational and pedagogic technologies”, “Pedagogical excellence”, “Ethnic Education”) material that reveals certain aspects of information culture of an elementary school teacher. Student activity was achieved through the implementation of interactive and multimedia teaching technologies. The authors have discovered the effectiveness of problem discussions, disputes, debates over the problems of information culture of a teacher, the solution of vocationally-orientated problems, the implementation of projects with the use of web-quest technology, tasks with elements of scientific research activity. The development of the intelligent component (cognitive-praxeological criterion) of development of information culture of prospective elementary school teachers required improvement of the plans of study, thematical update of content of subjects, inclusion of syllabus “Information aspect of professional training of prospective elementary school teachers” in the programs of their professional training. Certain events have been organized for the development of the behavioral component (motivationalreflexive criterion) of development of information culture of prospective elementary school teachers, the pedagogical value of which consisted not only in the identification of motives, needs, interest, desire to increase personal level of information culture, but also in the formation of information behavior, tolerance, responsibility, critical

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thinking, development of information world view, pedagogical reflection. The main forms and methods were interactive lectures, group and individual interviews, seminarworkshops, such as: domain-specific lecture “Internet content – the manipulation of consciousness”, polemic lecture “Electronic citizen or information degradation”, presentation lecture “Web communication and etiquette”; discussions “From information society to knowledge society”, “Moral ideology of information society”, “Safer Internet for children and parents”, “Internet addiction”, “The influence of social networks on the education of adolescents”; class discussions “Internet with a human face”, “Flame. Reasons and methods for its elimination”; “Cyber bullying in a childish environment”; debates “The role of information technologies in society”; role play “The Trial of the Internet. The Internet: Global Good or Evil”; Socratic conversation “Netuket – netiquette”. Within the framework of the development of the professional component (professionally adaptive criterion) of information culture, it is planned to involve prospective elementary school teachers in research activities, promote their active participation in scientific conferences, tutorial workshops, masterclasses, research projects, various types of practical activities. The solution of these problems was facilitated by the use of various types of practical activities and a set of conventional and innovative teaching forms, methods and technologies (Press conference classes “Modern Internet – work, education, self-education and leisure”; student conference “The youth forms information society”; projects “Information culture of a teacher”, “Informational essence of morality” etc. The ICT was introduced against the background of systematic monitoring, registration of results of activity of students, analysis and adjustment of development of information culture.

1 Research Results The generalization of results of the formative stage of the pilot work allowed us to record the dynamics of positive changes in the development of information culture of prospective elementary school teachers (Table 2). Table 2. Changes in indicators of levels of development of information culture of prospective elementary school teachers for students from control group and experimental group (% of the total number) Level of development of information culture

Group of students CG (140)

EG (150)

Stage of experiment

High Optimum Basic Low Statistics of T criteria

Summing-up К %

Control К %

3 25 65 47

4 27 72 37

1.9 18.1 46.3 33.7

Summing-up К %

2.9 2 1.3 19.5 27 17.8 51.0 70 46.8 26.6 51 34 T1 = 0.28087996 T2 = 12.09858548

Control К % 12 49 60 29

8.3 32.8 39.8 19.1

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It has been found that significant changes with a positive growth trend by levels of development of information culture of prospective elementary school teachers can be observed in the experimental group. A comparative analysis allowed concluding that the development of components of information culture of prospective elementary school teachers at high and optimum levels in the experimental group increased by 7% and 15.0% respectively (in the control group - by 1.0% and 1.4% respectively). Thus, the reliability of the results of the experimental work and the structural and functional model of development of systemic development of information culture, hence, established organizational and pedagogical conditions and syllabus, is the basis for the conclusion that the goal of the research has been achieved, the stated objectives have been gained, and the hypothesis has been confirmed.

2 Discussion and Conclusion The following results have been obtained from the theoretical and experimental study of the phenomenon of development of information culture of prospective elementary school teachers: The analysis of scientific-methodological approaches to the training of prospective elementary school teachers has shown that the issues of development of information culture of teachers and the use of electronic learning resources that require the development of a training method, an authors’ curriculum that would reflect a personal vision of teaching educational material in elementary grades, are understudied. It has been found that the problem of informatization of elementary school, introduction of modern electronic learning resources on educational subjects in its educational process requires the development of theoretical and methodological foundations for their design by prospective teachers. A theoretical analysis of philosophical, psychological and pedagogical literature on the problem of development of information culture of prospective elementary school teachers has proved the multiaspect nature, multifacetedness and professional significance of this phenomenon, the presence of diverse, often conflicting viewpoints on the interpretation of its essence, scope, instrumental foundations and techniques, the ambiguity of their scientific interpretation. Given the interdisciplinary level, various approaches (culturological, axiological, epistemological, personality-activity, praxeological, competence-based, systemic) that mark the relations in the study of the problem, allow us to define the scientific phenomenon “information culture of prospective elementary school teachers” as an integrated set of personal and pragmatist components; and the development of information culture – as a systemic process of gradual transition from one level to another which stipulates qualitative transformations in components of information culture promoting balance between the personal needs of an individual, the requirements of professional activity and the challenges of the modern information environment. The information culture of prospective elementary school teachers has been interpreted from the perspective of theory and methodology as an integrative manycomponent professional and personal quality which is a part of professional culture, ensures effective interaction in the modern information environment and society,

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ensures successful use of ICT and their instruments in teaching activities. As a complex multifunctional structure, information culture contains components (motivational, intellectual, professional, behavioral) that are characterized by continuous dynamic development and interaction. Organizational and pedagogical conditions have been established to increase the level of systemic development of information culture of prospective elementary school teachers (strengthening motivation of prospective elementary school teachers to use Internet technologies, creation of information educational environment in higher educational establishments to ensure systemic development of information culture; transformation of the scope of professional training of prospective elementary school teachers based on the introduction of the educational complex “Informational aspect of professional training of prospective teachers”, the use of ICT in the process of development of information culture of prospective elementary school teachers; improvement of project activities of prospective elementary school teachers), which form the basis for the construction of the structural and functional development model of the process of development of information culture of prospective elementary school teachers. The model of development of information culture of prospective elementary school teachers contains four interrelated blocks (goal-oriented, conceptual strategic, meaningful technologic, diagnostical effective) that influence the gradual increase in the level of systemic development of information culture of prospective elementary school teachers. It has been experimentally proved that the implementation of the developed structural and functional model of development of information culture of prospective elementary school teachers positively influenced the effectiveness of forming the foundations of professionalism of students of the experimental group. The changes in the level-sensitive characteristics of the formation of the basics of professionalism of prospective teachers of mathematics proves that positive changes occurred in the experimental group and were significantly higher than those in the control group, namely: the number of students with high level of formedness of phenomenon of interest increased by 7.0%; the number of students with optimum level of formedness of phenomenon of interest increased by 15.0%, respectively, the number of students with basic level of formedness of phenomenon of interest decreased by 7.0%, and the number of students with initial level of formedness of phenomenon of interest decreased by 14.9%. Results obtained can be explained by the efficiency of the developed structural and functional development model, hence, established organizational and pedagogical conditions, as well as the syllabus. This made it possible to ensure the acquisition of the information knowledge system by the students, set of knowledge and skills with regard to the use of ICT, and contributed to the awareness of professional and pedagogical actions focused on the development of professional and personal qualities, the ability to reflect on their own information activity. The research reflects modern complex innovative processes in higher education and does not exhaust all potential problems that still need to be addressed. Taking this into consideration, the prospects for further scientific inquiry related to the exploration of possibilities of using key positions of the concept and methodology of development of information culture of prospective elementary school teachers in the process of

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professional training of students in other majors, as well as at the stage of extended education and professional self-improvement developed in the research.

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Improvement of Legal Groundwork for the Online Dispute Resolution System Teimur E. Zul’fugarzade1(&) , Madina A. Tsirina2 and Olga I. Semykina2

,

1

2

Plekhanov Russian University of Economics, Moscow, Russia [email protected] Institute of Legislation and Comparative Law under the Government of the Russian Federation, Moscow, Russia [email protected], [email protected]

Abstract. This paper deals with the study of main directions and conceptual approaches in the field of legal groundwork for the electronic dispute resolution system, aiming for ensuring the proper protection of rights of individuals and legal entities under current conditions of digitization of economic relations. Special attention is paid to the analysis of innovative approaches in the civil and criminal fields of dispute resolution, the degree of their adaptivity to the contemporary needs of digital society, including the trends of decentralization, digital neutrality and provision of cybersecurity. The authors carried out a comparative analysis of regulatory legal acts of states with a high level of economic development. The main conclusions that were drawn following the results of the presentation of materials in this paper can be presented in a structured fashion as follows:

• globally, primarily in a number of the largest economies of the world, particularly those that are part of the G7, not only in arbitration courts, but also in state courts, there are trends aimed at optimization of procedures for the resolution of disputes (legal conflicts), including by means of the implementation of legitimate judicial innovative Internet technologies by the parties, the progressive and steady development of which significantly affects the development of the practice of world and national tribunals, which are also based on the highly active use of alternative mechanisms in the form of remote electronic technologies that were called remote communication technologies; • in many CIS member states, the engineering of a smart model of justice is gradually and nicely projected onto public law institutions, primarily criminal law, and has not yet touched on all types of legal proceedings by means of which justice is rendered, usually being adapted in the procedures of resolution of economic and civil disputes; • as of today, Russia is at the stage of development of fundamental principles of the concept of online dispute resolution so that such form of dispute resolution became an everyday routine, both in Russian practice and in relationship between Russia and its foreign contracting parties, which intrinsically requires taking actions that were suggested by the authors and © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 792–800, 2020. https://doi.org/10.1007/978-3-030-39319-9_87

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are aimed at improvement of legal groundwork for a legal dispute resolution mechanism considered in the paper so as to make such form accessible to interested parties beyond domestic practice in the soonest possible time. Keywords: Law
Court
Justice
Internet
Online
Resolution
Dispute resolution
Electronic
Digital economy
Alternative
Mechanism
Cybernetic
Support
Security

1 Introduction Modern realia and prospects for the development of the digital economy are accompanied by the increasing coverage in terms of the use of blockchain and hashgraph technologies, as well as the introduction of remotely concluded smart contracts, primarily aimed at increasing and intensifying civil transactions, steady development of the sharing economy institute, which is a model of simplification of mutual relationship of participants of economic activity, objectively cause the increase in the number of disputes arising between the participants which must also be resolved not only within the framework of conventional approaches to justice, but also through the use of innovative technologies that contribute to quality unification and acceleration of the procedures of collection and verification of evidence, as well as the adoption and execution of judgments aimed at protection of rights of individuals and legal entities, their protected legislative interests, benefits and freedoms. Even today, in a number of industrially developed countries of the world, for example, United States, Canada, particular member states of the European Union, South Korea, Japan, Indonesia and others, not only in arbitration courts, but also in state courts, there are trends aimed at optimization of procedures for the resolution of disputes (legal conflicts), including by means of the implementation of legitimate judicial innovative Internet technologies by the parties (cybertechnologies), the progressive and steady development of which significantly affects the development of the practice of world and national tribunals, which are also based on the highly active use of alternative mechanisms in the form of remote electronic technologies that were called remote communication technologies (RCT) (Galkovskaya 2017). In this regard, as has been noted above, there is an exponential increase in the total number of primarily civil transactions that are settled remotely, which in turn contributes to the formation of the need in their participants, if there is such a need, which is by no means uncommon, for the resolution of disputes originating from them, including by means of the abovementioned alternative mechanisms, namely electronic means, not only not requiring the direct interaction of the parties, but also, equally important, allowing to render justice for the reasonable amount of time, while reducing transport, housing, etc. costs of visiting office benches in court and collecting evidence being mainly digitalized, which allows obtaining information about it to appropriate persons who have officially obtained appropriate access, from virtually any electronic computer gadget.

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2 Methodology This paper presents a comparative analysis of standards regulating the issues of informatization and digitization in the states that are included in the G7, CIS, as well in the Russian judiciary system. This analysis made it possible to establish that the concept of information policy of judiciary system of 16.11.2001 (Resolution of Judicial Council of the Russian Federation “Concerning the concept of information policy of judiciary system”, 16.11.2001 No. 60) was in point of fact the first entitling document that regulated the informatization of public justice (information justice, cyberenforcement of justice) in the Russian Federation; it became the basis, in the first place, for the “elaboration of consistent approaches of representatives of all branches of judicial power… when managing and interacting with the mass media, as well as regulating and improving the work with information resources in circulation of the judiciary system of the Russian Federation”. Subsequently, the main provisions of the legal groundwork for the informatization of activity of the judicial authorities of Russia were formalized in the regulatory documents of the Government of the Russian Federation adopting the Federal Target Programs for the period of 2002–2006, 2007–2012 etc. At present, there is an ongoing Federal Target Program “Development of the Judicial System of Russia for 2013–2020” (approved by the Decree of the Government of the Russian Federation No. 1406 of 12/27/2012 (Legislation Bulletin of the Russian Federation. 2013. No. 1. Article 13), which is primarily aimed at improving quality, efficiency, accessibility and openness of justice in the Russian Federation. As of today, a reliable regulatory framework has been created in the Russian Federation in the process of the consistent implementation of the program under consideration, which includes, in the first place, Federal Law No. 262-FZ of December 22, 2008 “Concerning the provision of access to information on the activity of courts in the Russian Federation” (Legislation Bulletin of the Russian Federation, 2008. No. 52 (Part 1), Article 6217) and Federal Law No. 220-FZ of 23.06.2016 “Concerning the Introduction of Amendments to Certain Legislative Acts of the Russian Federation Regarding the Use of Electronic Documents in the Activity of Judicial Authorities” (Legislation Bulletin of the Russian Federation, 2016. No. 26 (Part I). Article 3889), as well as the Order of Justice Department under the Supreme Court of the Russian Federation No. 197 of 16.09.2010 “On approval of the Regulation on the management and procedure for ensuring the functioning of complexes of automation facilities of the State Automated System of the Russian Federation “Pravosudie” [“Justice”] (LICS “KonsultantPlius” 2019). Besides, more than two years ago, the state automated system (SAS) “Pravosudie” [“Justice”] was put into operation, successfully providing informational, technical and technological support for judicial procedure in Russia.

3 Results Modern procedural legislation of the Russian Federation regulates the following main features of digitalized enforcement of justice:

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– filing the statements of claim, as well as statements, complaints, petitions and other documents signed by digital signature in court in the form of an electronic document; – documents obtained by electronic communication, including via the Internet, as well as documents signed by digital signature in accordance with the procedure established by law, are allowed as written evidence in civil, arbitration and administrative processes. From 01.01.2017, the amendments to Article 474.1 of the Criminal Procedure Code of the Russian Federation came into effect (Legislation Bulletin of the Russian Federation, 2001. No. 52 (Part 1), Article 4921), according to which electronic documents may be used in criminal proceedings along with documents on physical media; – participants in the arbitration process, as well as public authorities, local selfgoverning authorities, other bodies and organizations in the civil procedure, may be notified by the court of the time and the place of the court session or of the performance of certain proceedings only by posting relevant information on the official website of the court on the Internet if the court has evidence that the said persons have been duly notified of the time and the place of the first court hearing. At the same time, the possibility of notifying process participants by means of SMS messages is considered; – the session of the court may be broadcast with the permission of court via the mass media, including through the use of electronic mass-communication tools. This fact is registered in the transcript of a court session, which can also be compiled using hardware and software (audio recordings, video recordings); – along with the mandatory execution of a court decision in hard copy, it is also possible to execute such a decision in the form of an electronic document (except for a decision containing information constituting a secret protected by federal law, affecting state security, the rights and legal interests of minors, decisions on cases of crimes against sexual integrity and sexual freedom of an individual). This being said, the enforcement order, together with a copy of the court order for the execution of which the enforcement order has been issued, may be sent by the court for execution in the form of an electronic document, signed by enhanced encrypted and certified digital signature of a judge. Information on enforcement proceedings with regard to an individual and a legal entity can be obtained at web portal “Gosuslugi” [Public Services] etc. Thus, the activation of information support is required, first of all, in the criminal process, but this should happen simultaneously with the improvement of cyberinformational enforcement of justice in all directions of procedural legislation of the Russian Federation. At the same time, the question about the possibility of subsequent resolution of judicial disputes without the participation of a judge, in other words, through the use of computer programs only (cyberjustice, cybercourt) is still very important. We see it fit to point out the following services among the most well-known services providing the informational component of the court’s activity: the Public Access to CourtElectronic Records (PACER) electronic service operating in the United States and allowing users to receive information about lawsuits from federal appellate, district and arbitration courts in real time; platform for online submission of documents

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to the Electronic Filing System (Singapore) providing the operation of electronic register and the general electronic document management system of the Supreme Court and subordinate courts of Singapore. Digital transformation which permeated the crossindustry processes on the platform of integration associations of the EEU and the CIS in general, and in the legal systems of their member states in particular, resulted not only in digital transformations of the economy, but was also introduced in the field of the seemingly “conservative” ecosystem of justice. Trend objectives in the development of a smart model of justice in the national legal systems of member states of the EEU on regulating the movement of digital assets and the system of regulatory “sandboxes”, digital commerce and digitization of services, turnover and protection of personal data are outlined in certain regulatory documents of the EEU. In particular, the vital need for improvement of the right of the EEU in the tideway of digital transformation and information security is outlined in the methodological documents of the Eurasian Economic Commission on harmonization and description of general processes within the framework of the EEU (Decision of the Board of the Eurasian Economic Commission “On the methodology of analysis, optimization, harmonization and description of general processes within the framework of the Eurasian Economic Union”, No. 9 of June 9, 2015), in the Protocol on Information Technologies and Information Interaction under the EEU (Treaty on the Eurasian Economic Union, May 29, 2014) and in the Digital Agenda of the EEU until 2025 (Decision of the Supreme Eurasian Economic Council “On the main directions for the implementation of the Digital Agenda of the Eurasian Economic Union until 2025”, No. 12 of October 11, 2017). The centrifugal force in ensuring the integration development of the legislation of the CIS member states, including similar trajectories of digital transformation, consists in the activity of the Inter-Parliamentary Assembly of the Commonwealth of Independent States (IPA of the CIS). Regulatory policy of the IPA of the CIS, the “core” of which is comprised of strategies, model legislative acts and guidelines in the field of information and communication technologies (ICT) acting as a “testing ground” for testing innovations in legal science and practice (Shamszoda 2019). The task of support from the IPA of the CIS in terms of systemic analysis, forecasting and comparison with global trends of economic situation in terms of the use of ICT in the legal systems of the CIS member states, as well as development of proposals to harmonize the national legislation of these countries, is imposed on the Base Institution in the field of ICT – JSC “Natsionalny Infokommunikatsionny Kholding “Zerde” (Decision of the Council of CIS State Leaders” On assigning the status of the back-up organization of the member states of the Commonwealth of Independent States providing methodological as well as organizational and technical support in the field of information telecommunication technology to the JSC “Natsionalny Infokommunikatsionny Kholding “Zerde” (the Republic of Kazakhstan)”, of November 21, 2014). The successful development of automated management of judicial procedure at the national level objectively predetermined the development of such systems at the international level, which took on enormous significance in the implementation of international e-commerce with the use of alternative judicial procedures ADR and ODR. Thus, in particular, in 2010 UNCITRAL initiated creation of the Third working group for the development of draft regulations for the settlement of “low-cost and

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large-volume” disputes arising during the implementation of e-commerce in B2B (business for business) and B2C (business for consumers) sectors (Official Records of the General Assembly. 65th Session. Supplement No. 17 (A/65/17), para. 257. New York, 2010) (hereinafter referred to as Rules), being non-regulatory. If EU documents establish minimum legal standards for all types of alternative dispute resolution methods and create an online dispute resolution platform, then UNCITRAL is developing a special set of procedural rules for using such a platform. In order to simplify the resolution of disputes with the participation of consumers in May 2013, two documents were adopted within the European Union: the EU Directive “On alternative resolution of disputes with the participation of consumers” (Directive 2013/11/EU of the European Parliament and Parliament and of the Council of 21 May 2013 on alternative dispute settlement for consumer disputes and amending Regulation (EU) No. 2006/2004 and Directive 2009/22/EC) and Regulation (EU) No. 524/2013 of the European Parliament and Council of 21.05.2013 “On the online settlement of disputes with the participation of consumers” (Regulation (EU) No. 524/2013 of the European Parliament and of the Council of May 21, 2013 on Online Dispute Settlement for Consumer Disputes and Amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on Consumer ODR) (hereinafter referred to as Regulation). Please note that online dispute settlement implies that the parties to the dispute can control the procedure for its consideration, and also involving an intermediary in the process (a neutral person acting as the administrator of the technological platform), who technically facilitates dispute resolution, in addition to the mediator (Tsirina 2019). Since the fourth party can occasionally act as a neutral mediator by implementing negotiation automation procedures during the online dispute settlement procedures, it will often play the role of a neutral third party to assist in finding options for an agreement (Avdyev 2015). By analogy with ODR, the possibility of conducting an online trial was first provided for by the rules of the arbitration court at Gazprom in 2010 in the Russian Federation. Five years later, in 2015, the digitalized platform “Arbitration-online RAA” was implemented, which was created specially for the online resolution and settlement of disputes under the Russian Arbitration Association.

4 Conclusion Russia is currently at the stage of development of fundamental principles of the ODRS (online dispute resolution or settlement system) concept, so that such form of dispute resolution became an everyday routine, both in Russian practice and in relationship between Russia and its foreign contracting parties. In order to form and ensure effective operation of the institution of online dispute settlement in Russia, it is necessary to develop the procedure for its gradual implementation. The main directions of creation of the online dispute settlement mechanism should include: – creating conditions to increase the level of confidence of participants in economic turnover to online dispute settlement mechanisms;

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– conducting pilot projects at the federal and local levels to implement such mechanisms and, based on their results, research on the expediency and feasibility of distribution of such mechanisms in various fields; public dissemination of information on the progress and results of such projects, including via electronic channels to enhance recognition of these dispute settlement methods and promotion of interest of potential participants of disputes in their use; – definition of the range of legal instruments used for the online dispute settlement (access to the system of targeted processing of “big data”; provision of protected access to “electronic chambers”; the use of algorithms of automated online settlement of simple disputes of the same type etc.) (Tsirina 2019); – providing the parties to the dispute the freedom of choice of the dispute settlement method, which involves differentiating the limits of the use of online dispute settlement system and elimination of absolutization of procedures of consideration of disputes in arbitration courts, including commercial arbitration (provide the parties to the dispute the possibility to variate conditions of transition to stages of online dispute settlement: negotiations both with the use of online dispute settlement platform and face-to-face meetings, or the use of online broadcasting). In the framework of the implementation of these directions, it is necessary to preserve such benefits of alternative dispute resolution as confidentiality, protection of participants’ data, proper qualification, independence and impartiality of third parties who assist the parties in dispute settlement etc. Another important aspect in the range of relations under consideration is the observance of ethical principles and rules. The concept of ethical conduct can be implemented in the course of administration of online dispute settlement procedure. In our opinion, based on the above models, the digitalized support (including legal) of judicial procedure in the Russian Federation will be further developed in the following main directions: – ensuring information security (cybersecurity) of vulnerabilities caused by technical features of transmission of personal or other data, as well as the need for its protection from unauthorized access. – simplification (facilitation) of access for persons participating in the case to court proceedings (using video conference communication – by analogy with the criminal process, when there is a retrial of cases of persons serving sentences of imprisonment, as well as filing of electronic complaints and petitions of participants in legal proceedings); – large-scale introduction of digital technologies in the procedures of the adoption of such judicial decisions as, in the first place, the issuance of writs in cases of violation of traffic rules, when considering certain (“common” or “simple”) categories of criminal cases etc. The introduction of such procedures is impossible without the formation of a common information space of already-existing, yet operating somewhat individually, modular electronic platforms (official websites of courts) inside the judicial system of the Russian Federation as a unified and integral judicial system. Such an approach implies the need for assuring compatibility of various software products and databases,

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while at the same time providing a limited mode of access for external users to information on the activities of Russian courts, including posting of all judicial acts in the public domain, while simultaneously depersonalizing decisions in certain categories of cases. In addition, optimization of the existing system of interagency electronic interaction of all state authorities, including judicial, and local self-governing authorities, will be required, which will allow quickly responding to court decisions of such databases as, first of all, containing information about acts of civil status, notarial acts, unified state registers of real property, legal entities, self-employed entrepreneurs etc. The implementation of innovative digital technologies in the judiciary system will make it possible to ensure proper protection of rights of individuals and legal entities, will provide citizens with the right to information, and will allow using such resources, including in the educational process; further development of civil society institutions in general.

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Decision of the Board of the Eurasian Economic Commission No. 9 of June 9, 2015. On the methodology of analysis, optimization, harmonization and description of general processes within the framework of the Eurasian Economic Union. http://www.eaeunion.org/. Accessed 24 June 2019 Decision of the Council of CIS State Leaders of November 21, 2014. On assigning the status of the back-up organization of the member states of the Commonwealth of Independent States providing methodological as well as organizational and technical support in the field of information telecommunication technology to the JSC “Natsionalny Infokommunikatsionny Kholding “Zerde” (the Republic of Kazakhstan)”. https://www.zerde.gov.kz/upload/iblock/ 025/bazovaya_organizaciya_reshenie.pdf. Accessed 25 June 2019 The Criminal Procedure Code of the Russian Federation No. 174-FZ of 18.12.2001. Legis. Bull. Russ. Fed. 52(Part 1), 4921 (2001) Federal Law No. 262-FZ of 22.12.2008. On the provision of access to information on the activity of courts in the Russian Federation. Legis. Bull. Russ. Fed. 52(Part 1), 6217 (2008) Federal Law No. 220-FZ of 23.06.2016. Concerning the introduction of amendments to certain legislative acts of the Russian Federation regarding the use of electronic documents in the activity of judicial authorities. Legis. Bull. Russ. Fed 26(Ч. I), 3889 (2016) Tsirina, M.A.: Main directions of creation of the electronic system of alternative dispute resolution mechanisms. Administrativnoe Pravo i Protsess 4, 53–56 (2019) Tsirina, M.A.: Issues of legal regulation of dispute resolution in the field of e-commerce (issues of online settlement of conflicts). In: Semilyutina, N.G., Ternovaya, O.A. (eds.) Legal Regulation of e-Commerce in Foreign Countries. A Monograph, vol. 201, pp. 180–280. The Institute of Legislation and Comparative Law, Moscow (2019) Shamszoda, A.S.: The use of the model legislative acts and recommendations of the InterParliamentary Assembly of the Commonwealth of Independent States in the lawmaking activity of the Parliament of the Republic of Tajikistan. Bull. IPA CIS 1, 43–47 (2019)

Tendencies of Legal Regulation of Civil and Competitive Relations in the Sphere of the Digital Economy Ksenia V. Vasilyeva(&), Vladimir V. Popov, and Irina A. Strelnikova State University of Management, Moscow, Russia [email protected], [email protected], [email protected]

Abstract. The authors analyze implementation of the Strategy of development of the information society, determine the recent changes in the exiting civil & legal and anti-monopoly regulation of relations in the sphere of the digital economy, and present suggestions for improving the law in this spheres for the purpose of optimal normative legal regulation of the digital economy. Keywords: Digital economy
Online deal currency
Information
Digital platform


Digital financial assets
Crypto

1 Introduction As is noted in scientific literature (Aliev and Solovykh 2018), (Vaypan 2018), the digital economy could be defined as a system of economic relations in which data in the digital form are the key factor of production in all its spheres. For the purpose of implementation of the Strategy of development of the information society in the Russian Federation for 2017–2030, adopted by the Decree of the President of the Russian Federation dated May 9, 2017, No. 203 “Regarding the Strategy of development of the information society in the Russian Federation for 2017– 2030”, and the program “Digital economy of the Russian Federation” was adopted by the Decree of the Government of the Russian Federation dated July 28, 2017, No. 1632-r (Vaypan 2017). This program is aimed at creation of conditions for development of the knowledge society in the Russian Federation, increase of well-being and quality of life of citizens by raising the availability and quality of goods and services that are manufactured in the digital economy with the usage of the modern digital technologies, increase of the level of awareness and digital literacy, and improvement of accessibility and quality of state services for citizens and security within country and abroad (Bykov 2018). The program focuses on development of five basic directions, one of which is normative and legal regulation. As is known, law is the basic regulator of economy and any public relations; thus, effective work of all spheres of the digital economy requires effective legal regulation. According to a road map that was compiled by managing the development of the digital economy, implementation of the primary measures for improving the legal © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 801–806, 2020. https://doi.org/10.1007/978-3-030-39319-9_88

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regulation for the purpose of development of the digital economy, cancellation of the key legal limitations for development of the digital economy, and determination of the basic legal notions and institutes that are necessary for development of the digital economy was planned (Sharandina 2018). For the purpose of implementing the concept of improvement of legal regulation, the following tasks were set: (1) formation of favorable legal conditions for collection, storing, and processing of data, including with the usage of new technologies, under the condition of protection of rights and legal interests of subjects and owners that ensure the possibility of quick development of the basic mechanisms of the digital economy; (2) implementing the tools of stimulation of development of the digital economy in turnover of the results of intellectual activities; (3) improving anti-monopoly law according to the needs of the digital economy; (4) improving legal regulation for the purpose of implementation and usage of innovative technologies in the financial market; (5) improving legal regulation in the sphere of protection of consumer rights in the conditions of the digital economy; (6) formation of legal conditions for using technologies of decentralized registers and certification of rights, including conducting a legal experiment in this sphere; (7) determining new rules of collection of reports, including statistical information, which excludes repeated information and envisages the methods of its remote receipt and provision of the society and state’s need for the data in real time; (8) offers for formation of conditions for stimulating the development of the digital economy. These tasks are solved with the help of adoption of the following normative legal acts: 1. Federal Law dated July 3, 2016, No. 291-FZ “Regarding introduction of changes in the Aviation Code of the Russian Federation”, which established the notion “unmanned air vehicle” and “unmanned aviation system”. 2. Federal Law dated December 31, 2017, No. 504-FZ “Regarding introduction of changes into Federal Law ‘Regarding the contractual system in the sphere of purchase of goods, works, and services for provision of state and municipal needs”, which supplemented it with paragraph 4.1. “Conclusion of contract as a result of online procedure”. 3. Federal Law dated December 31, 2017, No. 482-FZ “Regarding introduction of changes into certain legislative acts of the Russian Federation”, which supplemented Federal Law dated July 27, 2006, No. 149-FZ “Regarding information, information technologies, and protection of information” with article 14.1 “Application of information technologies for identification of citizens of the Russian Federation”. 4. Federal Law dated June 29, 2018 No. 173-FZ “Regarding introduction of changes into certain legislative acts of the Russian Federation”, according to which the objects of concession agreements and agreements on public-private partnership could be objects of information technologies (including computer programs, data

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bases, and information systems) or objects of information technologies and technical means of provision of functioning of the objects of information technologies (including centers of data processing). 5. Decree of the Government of the Russian Federation dated June 27, 2018 No. 738 “Regarding adoption of the Rules for the Single state register for acts of civil status”, which established the order for the Single state register for acts of civil status and access to it. However, a lot of issues are not reflected in the law and require deeper specification. Thus, for the purpose of transition to the next stage of the road map, planned for 2020, which task is implementing the concept of mid-term measures for improving legal regulation for development of the digital economy – as a result of which the relations emerging in the digital economy will be regulated and a mechanism of regulation of new relations will be created – it seems expedient to introduce changes into the existing law (Andreev 2018), (Surova and Bezdelov 2018).

2 Methodology For developing the offers on improvement of the Russian law for the purpose of legal regulation of economic relations with the usage of digital technologies the authors use analysis, synthesis, induction, deduction, formal & legal, and rather-legal methods.

3 Ways of Improving the Law In the sphere of civil law, it is expedient to perform the following measures: (1) Adopting the electronic form of a deal and change part 1 of Article 158 of the Civil Code of the Russian Federation “Form of deals” – “1. Deals are concluded orally, in the written form (simply or notarial), or electronic form”. (2) During formation of the digital environment of trust, there’s a need for normative and legal provision of the possibility of identification and authentication of subjects (primarily, individuals) with any technically possible method. It should be reflected in civil law, as part 2 of Article 160 of the Civil Code of the Russian Federation envisages the usage of another analog of own signature, but states that this is allowed in the case and order envisaged by the law, other legal acts, or agreements of the parties, without specifying these cases. These cases, not envisaged by the law, could include: 1. Online biometric signature, which is an electronic analog of own signature. This signature is put by the individual on a material carrier with the usage of special equipment (graphic tablet). 2. Mobile electronic signature. 3. Subscriber’s number of the customer – individual, who uses the services of transportable radio and telephone communications. 4. E-mail.

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If the object is identified and performs legally significant actions, his will for these actions should be conformed – until the opposite is proved. (3) Including into the law the notion of digital offer and acceptance; supplementing Article 435 of the Civil Code of the Russian Federation and Article 438 of the Civil Code of the Russian Federation with a references to this and put part 1 of Article 433 of the Civil Code of the Russian Federation “Moment of conclusion of the deal” in the following edition: “1. Agreement is deemed concluded in the moment of the person who has sent the offer receiving its acceptance, including digital acceptance”. (4) Expanding the list of the objects of civil law, adding two new categories of objects in the form of information and digital financial assets (including crypto-currency); Article 128 of the Civil Code of the Russian Federation “Objects of civil rights” should be put in the following edition: “The objects of civil rights include items, including cash and securities, other property, including non-cash money, book-entry securities, digital financial assets, property rights; results of works and provision of services; protected results of intellectual activities and equaled means of individualization (intellectual property); information; non-material goods”. (5) In the sphere of law on intellectual property, it seems expedient to simplify the form of agreements on transfer of exclusive rights for the purpose of simplifying the procedure and their transfer into the digital form. For this, it is expedient to put part 2 of Article 1234 of the Civil Code of the Russian Federation “Agreement on the alienation of the exclusive right” in the following edition: “2. Agreement on the alienation of the exclusive right is concluded in the written form or another form, except for oral. Non-compliance with the written form does not cause the loss of the agreement’s effect”. Also, it is necessary to put part 2 of Article 1235 of the Civil Code of the Russian Federation “License agreement” in the following edition: “2. License agreement is concluded in the written form, if other is not provided by this Code. Non-compliance with the written form does not cause the loss of effect of the license agreement”. Ways of improving the law on competition protection. In view of the studied topic, it is necessary to consider the regulation of competing relations in “digital” market and note the following. In March 2018, the Federal Antimonopoly Service of the Russian Federation sent to the Government (for further transfer to the State Duma) and offered for public discussion the project of the Federal Law “Regarding introduction of changes into the Federal Law ‘Regarding protection of competition’, which is known in the world of business as “Fifth anti-monopoly package” (hereinafter - Project) (Ivanov 2018). The main provisions of the Project that regulate the general rues of turnover of goods (works and services) with the usage of digital technologies are brought down to the following.

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1. The definition of digital platform is put in the Law on protection of competition, in the following form: “infrastructure that is put on Internet and that is used for organization and provision of interaction of sellers and buyers”; 2. The order of acknowledgment of a subject who possesses a digital platform and occupies the dominating position in the market is determined; this order is different from the general order that is established by the Law on protection of competition for economic subjects: “Position of an economic subject who possesses a digital platform could be deemed dominating if such digital platform has a share of more than 35% in the market of interchangeable services, provided with the usage of digital platforms, connected to provision of interaction of economic subjects-sellers and buyers, and network effects, based on the number of users of the digital platform, allow such economic subject to influence the general terms of turnover of product in the corresponding commodity market and/or remove from the commodity market other economic subjects, and (or) make the access to this commodity market difficult for other economic subjects. Position of the economic subject that possesses a digital platform or several similar (interchangeable) digital platforms, the revenues from which activities do not exceed RUB 400 million for the last calendar year, shall not be deemed dominating”. 3. The notion of network effect is introduced: “dependence of product’s consumer value from the number of consumers of the same group (direct network effect) or change of the product’s value for one group of consumers with reduction or increase of the number of consumers in another group (direct network effect)”. This notion is also necessary for determining the dominating position of the subject (group of persons) in the market: the Project suggests that “during analyzing the state of competition in the commodity market (commodity markets), in which interaction of sellers and buyers is organized and ensured with the help of digital platforms, the anti-monopoly body also establishes the presence of network effects and evaluates their influence on the possibility of an economic subject’s performing the decisive influence on the general conditions of the product’s turnover in the corresponding commodity market, and (or) eliminating other economic subjects from this market, and (or) making the access to this commodity market difficult for other economic subjects, including by means of the significant number of the deals that are concluded via such digital platforms”. The Project received a resolution of the Ministry of economic development of the Russian Federation dated September 18, 2018, No. 26742-SSh/D26i. I was negative altogether and stated that the Project required deep transformation. It seems possible to agree with the criticism of the Project; it is brought down to uncertainty of new criteria and terms. The notions of digital platform, network effect, buyer, infrastructure of interaction of seller and buyer, and possession of digital platform are not elaborated properly with the usage of economic and legal terms. The notion of interchangeable service is not defined at all (Mukhin 2016). Also, it seems inexpedient to have separate legal regulation of “digital markets”, while digital technologies are only means for conducting trade (if trade is treated in a

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wide sense, as a paid exchange of any object for money) – promotion of the object of trade from seller to final buyer and payment of the object’s price by the final buyer. Also, the necessity of legal regulation of trade with application of digital technologies with final purpose of provision of free competition in such trade is beyond any doubt (Solovykh 2018). However, the mechanism of legal regulation should include additional norms of the Law on protection of competition and other normative legal acts – that general rules of paid exchange of tradable objects also cover the trade with application of digital technologies.

References Aliev, V.M., Solovykh, N.N.: Digital economy put use before the necessity to solve the problem of provision of digital sovereignty. Secur. Bus. 3, 18–22 (2018) Vaypan, V.A.: Legal regulation of the digital economy. Entrepreneurial law. Appl. Law Bus. 1, 12–17 (2018) Vaypan, V.A.: Foundations of legal regulation of the digital economy. Law Econ. 11, 5–18 (2017) Bykov, A.Y.: Law of the Digital Economy: Certain Economic and Political Risks. Prospekt, Moscow (2018). 24 p. Sharandina, N.L.: Digital economy as the top-priority national goal of development of Russian Federation: a legal aspect. Financ. Law. 9, 15–19 (2018) Andreev, V.K.: Regarding the notion of digital rights and their tradability. J. Entrep. Corp. Law 2, 38–41 (2018) Surova, N.Y., Bezdelov, S.A.: New technologies for economy of the future: rating of projects and mechanisms of regulation in the sphere of the digital economy. Bull. Acad. 1, 5–9 (2018) Ivanov, A.Y.: Control over monopolization in the conditions of the digital economy: first part of discussion on the Fifth anti-monopoly package. Law 2, 106–119 (2018) Mukhin, V.: “Digital” economy of the future. Inf. Bull. “Express Account.” Electron. J. 47, 11– 13 (2016) Solovykh, N.N.: Digital economy dictates the necessity for skilled personnel with new competencies. Russ. Investig. 5, 64–68 (2018)

Legal Regulation of E-Commerce and Other Entrepreneurial Activities Conducted with Digital Technologies Tigran T. Aliev1(&) and Inessa V. Bit-Shabo2 1

2

Institute of World Civilization, Moscow, Russia [email protected] Russian State University of Justice, Moscow, Russia [email protected]

Abstract. The purpose of the work is to perform a complex analysis of the problems of legal regulation of e-commerce and other entrepreneurial activities that are conducted with application of digital technologies. The issues of detailed legal regulation of remote trade have acquired large importance. It is necessary to establish - at the legislative level – the rights and obligations of the subjects of legal relations in the sphere of remote trade, as well as specific features of their protection. In the Russian Federation, the global problem in this sphere is the absence of the unified normative legal act that would regulate public relations that are connected to e-commerce and other entrepreneurial activities that are conducted with the help of digital technologies. Absence of the unity of opinions and legislative establishment of the category “e-commerce” complicates the process of understanding and research of this category – due to the problems of theoretical and practical character. We also study a circle of issues related to provision of protection of consumer rights в e-commerce and determine their influence on society and the level of risk. Attention should be paid to development of the mechanisms of regulation of e-commerce and other entrepreneurial activities that are conducted with application of digital technologies, which will influence the effectiveness of work of this sphere. It is necessary to adopt the law “Regarding e-commerce” – due to dynamic development of the institute of e-commerce and the society’s needs. Keywords: E-commerce
Online trade
Electronic signature
Remote trade
Digital technologies
Electronic deals JEL Code: K150

1 Materials The topic of legal regulation of e-commerce and other entrepreneurial activities that are conducted with application of digital technologies is studied on the basis of a complex of sources. The main document of the topic of e-commerce is the UNCITRAL Model law on e-commerce, adopted on May 28 – June 14, 1996 in New York at the 29th session of UNCITRAL. Here we also study the current law of the Russian Federation © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 807–813, 2020. https://doi.org/10.1007/978-3-030-39319-9_89

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in the sphere of e-commerce (Federal Law dated 28.12.2009 No. 381-FZ “On the foundations of state regulation of trade activities in the Russian Federation”; Decree of the Government of the Russian Federation dated 27.09.2007 No. 612 “On adoption of the rules of selling goods in the remote way” Draft of Federal law No. 47432-3 “On ecommerce”. The scientific basis of this article is formed based on the works of foreign and Russian scholars (A.O. Inshakova, E.G. Popkova, E.G. Klimchenya, and A.A. Korolev).

2 Methodology The authors use general scientific methods: generalization, induction, deduction, analysis, synthesis, empirical description, and classification. The research also uses comparative & legal, structural & functional, statistical, and mathematical methods

3 Introduction E-commerce is becoming more popular in the Russian Federation. Conclusion of buysell agreements on Internet is replacing traditional trade. The issue of legal regulation of e-commerce appeared due to informatization of society – namely, transition of the Russian Federation to the post-industrial society. The sphere of e-commerce becomes more perspective and is one of the most dynamic parts of the Russian economy. Remote trade has a lot of factors for the companies that conduct it. In the Russian Federation, e-commerce is a relatively new institute – which causes a range of problems. Recent years were peculiar for a range of measures aimed at support for ecommerce and development of the normative legal acts regulating the sphere of ecommerce and protection of consumer rights. However, this sphere is still vulnerable and less elaborated, as most of the scholars consider only the economic aspect of ecommerce, while legal regulation remains without proper attention (Inshakova et al. 2019). An important component of the Russian e-commerce could be foreign experience on this issue, as remote trade is conducted around the world – also requiring the corresponding regulation. The issue of remote international trade requires a lot of attention, as it is necessary to create the unified norms for all states – otherwise, this field of legal regulation will be “dead” – i.e., it will be impossible to observe the requirements of trade in different states, which will lead to a lot of problems in legal regulation of e-commerce.

4 The Modern Problems of E-Commerce in Russia The sphere of e-commerce in Russia requires a wider and more ordered legal regulation. It is necessary to pay proper attention to development of the mechanisms of regulation of e-commerce and other entrepreneurial activities, conducted with

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application of digital technologies, which could increase the effectiveness of work of this sphere and reduce the existing risks. At the international level, for regulation of the issues of e-commerce, the Resolution of the UN General Assembly No. A/51/628 dated December 16, 1996 adopted the UNCITRAL Model law on e-commerce (UNCITRAL Model law on e-commerce, 1998). This document established the fact of conclusion of deals on Internet, which number is constantly increasing – which, in its turn, causes the necessity for legal regulation of e-commerce. Development and formation of e-commerce at the international arena were also stimulated by Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’). This Directive establishes requirements on regulation of certain aspects of e-commerce and participation of the EU members in implementation and support for e-commerce. Thus, the field of e-commerce is problematic not only in the legislature of the Russian Federation but also at the international arena, which requires precise and effective regulation from the state. The category “e-commerce” does not have an official legislative definition. This is caused by the fact that legal relations in this sphere develop dynamically and it is difficult to cover this sphere with one definition. However, this does not exclude the treatment of this definition in other various sources, scholars’ works, and international reports. Absence of the generally acknowledged definition at the legislative level complicates the understanding of the essence of e-commerce by citizens, which leads to problems of application of certain legislative norms in this sphere. Let us study certain definitions of the category “e-commerce” – by Russian scholars and foreign representatives. Foreign authors consider the category “e-commerce” more from the practical side. However, American economics David Cosier was the first to provide a definition of ecommerce. He sees the basis of e-commerce as the structure of traditional trade and thinks that usage of electronic networks makes it flexible (Cosier 1999). Certain scholars see e-commerce as a part of online commerce (Kobelev 2008), (Goldovsky 2001). Another point of view supports equality of the notions of electronic trade and ecommerce. For example Klimchenya (2004) defines e-commerce as a part of online business, and electronic business – as a part of e-commerce. Thus, it is possible to conclude that one cannot generalize all the definitions – due to the fact that the sphere of e-commerce is in constant movement and increases the dynamics of its development. Absence of unity of opinions and legislative establishment of the category “e-commerce” complicates the process of understanding and research of this category, which leads to emergence of the problems of the theoretical and practical problem (Korolev 2016). In the Russian Federation, the global problem of e-commerce is absence of the unified normative legal act that regulates public relations that are connected to e-commerce. Of course, there are laws that regulate legal relations in the sphere of e-commerce, but it is necessary to adopt a systematized and ordered federal law in this sphere. Adoption of this law will help to determine the necessary directions of work in the sphere of e-commerce and determine the existing gaps in the

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law. Also, the existing normative basis is in different normative sources, which complicates the process of the search and understanding of all processes in the sphere of ecommerce (Inshakova and Popkova 2017). Possibility of correct understanding of e-commerce should be aimed at citizens of the Russian Federation, as people perform a lot of deals on Internet without a correct idea of an electronic deal, its consequences, and protection of their rights in case of their violation on Internet. Also, the level of protection of citizens in the sphere of remote trade is low, and there are a lot of problems in this sphere. The institute of protection of consumer rights in traditional trade does not fully perform its functions; the situation is worse in ecommerce. The circle of issues regarding the protection of consumer rights in ecommerce is still unsolved. For example, when concluding a consumer agreement on Internet, the buyer selects the necessary product, adds it to the “basket”, then provides his personal data and shipment information, and finally performs the payment. In other words, the buyer concludes a consumer agreement of the prepared form, which is generated automatically – based on the web-site’s assortment. In this situation, a requirement of providing the name of the seller and his address would be expedient. If this is not provided at the legislative level, it would be difficult to prove the connection between the web-site and seller during protection of consumer rights, as the consumer’s complaint will be proved only by information that could be found on the Internet store’s web-site. Most owners of web-sites on Internet are not owners of servers, as this is dealt with by specialized organizations, which have the necessary equipment and provide the corresponding services. Thus, a problem of void information on the product’s seller, provided on the web-site, arises – and the buyer does not have a possibility to protect his rights and interests, as there’s no one he could address with return of the product that does not match the description. These legal relations have a problem of jurisdiction, which is manifested in application of the national law on protection of rights or its certain provisions regarding the relations connected to remote trade of foreign Internet stores. Apart from the absence of the unified normative legal act on e-commerce, there are also other important problems of this sphere.

5 Legal Regulation of Online Deals In Russia, confirmation of a deal requires an agreement of the corresponding form – regardless of the fact whether the deal was performed in Internet or traditionally. In practice, the deals concluded in Internet cause certain complications, as a certain volume of electronic contractual agreements is regulated by the common norms of civil law, in part of conclusion of the deals. At the same time, the normative legal acts in the sphere of e-commerce have insufficient legal establishment – i.e., the existing number of laws that are aimed at deals on Internet cannot fully regulate these activities (Decree of the Government of the Russian Federation dated September 27, 2007, No. 612). According to the Civil Code of the Russian Federation, the form of a deal shall be written if the deal is concluded either between legal entities or between individuals, for

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the sum that exceeds RUB 10,000. The form of electronic deal is not regulated by law – thus, the general provisions of the form of a deal are used. Therefore, electronic deal has to have a written form. Based on the above, the conditions for observation of the written form of a deal are as follows: (1) Document that expresses and confirms the will of the parties; (2) The document has to be signed by the parties. These conditions shall be applied to an electronic deal, as there are no individual provisions regarding this aspect. However, it is impossible to apply the written form of a deal in the initial form, so these conditions are observed with certain changes. Firstly, when concluding a deal in Internet, an electronic document, containing all necessary provisions, shall be concluded. According to paragraph 11.1 of Article 2 of the Federal law “On information, information technologies, and protection of information” (Federal law No. 149-FZ, 31.07.2006, No. 31): “electronic document means documented information presented in electronic form, that is, in a form which is fit for human perception with the use of computers, as well as for transmittance via information telecommunication networks or for processing in information systems”. As a result, electronic document is an exception from the general provisions on conclusion of deals. Secondly, the condition of signature also has its specifics. An electronic deal should be confirmed by electronic signature. Based on paragraph 1 of Article 2 of Federal law “On electronic signature”, “electronic signature - information in electronic form, which is attached to the other information in electronic form (signed information) or any other manner associated with information and which is used to determine the person signer information”. Advantages of using an electronic signature during conclusion of deals consist in difficulty of forging such signature, due to a PIN code that protects the signature from forging. Another positive characteristic of such signature is convenience and speed of usage; also, this method allows saving money for preparation, shipment, and storing of documents and slows increasing confidentiality and reducing the time for moving the documents. A large disadvantage of using electronic signatures is high price for electronic signature; not everyone can afford it, and it some cases electronic signature is a mandatory tern; another disadvantage is that most company managers receive electronic signature for their name, but they do not conclude deals themselves but copy the signature for their subordinates (Federal Law dated 06.04.2011, No. 63-FZ). As a result, the deals signed by such signature have full legal power, and the manager bears responsibility for the documents and actions performed with the electronic signature. Thus, the risk of unlawful actions by subordinates increases, which could lead to unfavorable consequences. It is necessary to note the impossibility of observation the notarial form of a deal during e-commerce. Conclusion and registration of a deal by notary’s signature is not possible, as notaries work only with written deals. Another problem is protection of personal data of users and the obligation to store and process personal data of Russian citizens only on the territory of the Russian Federation, according to Federal law “On personal data”, which complicates buy-sell of goods in foreign Internet stores (Federal Law dated 27.07.2006, No. 152-FZ).

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6 Results As a result of consideration of the existing problems in legal regulation of e-commerce and other entrepreneurial activities, it is possible to make the following conclusions. Absence of the unified systematized law on e-commerce causes the following: – the existing volume of the normative legal basis in the sphere of e-commerce is not sufficiently informative; – the sphere of e-commerce in the Russian Federation is – directly or indirectly – regulated by a large number of laws, which creates chaos and hinders the full and comprehensive understanding of legal regulation of e-commerce; – legal position of the participants is not equal – traditional trade is regulated by direct normative acts, while the same normative acts cover the sphere of e-commerce. The problem is that the normative acts related to traditional trade cannot be fully applied to e-commerce. The necessity for adoption of the law “On e-commerce” is predetermined by dynamic development of the institute of e-commerce. It should be noted that the draft law was introduced into the State Duma in 2000, but it was declined under the pretense of mismatch with the society’s needs (Draft of Federal law No. 47432-3). As of now, it is very important that such law be adopted – for dynamic development of the sphere, establishment of rights and obligations of participants of these legal relations, and establishment of the specific features of their protection.

7 Conclusions The issues of legal regulation of remote trade are becoming very important. The revenues from buy-sell of goods with the help of digital technologies have grown significantly, and it is possible to suggest that in the future e-commerce will have the dominating position as compared to other forms of traditional trade. So legal regulation of e-commerce is very important and requires detailed research in theory and practice. It is necessary to regulate the issue of taxation of remote trade subjects. Also, it is necessary to regulate the activities of information intermediaries – i.e., providers – as they are the ones providing Internet access. They have to bear certain obligations on regulation and limitation of access and provision of security of information.

References UNCITRAL Model law on e-commerce (Adopted on May 28–June 14, 1996 in New York at the 29th session of UNCITRAL). United Nations Commission on International Trade Law 1996, vol. XXVII. United Nations, New York (1998) Federal Law dated 27.07.2006 No. 152-FZ (edition dated 31.12.2017) “On personal data”. Collection of laws of the Russian Federation, no. 31 (1 p.), p. 3451, 31 July 2006

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Federal Law dated 06.04.2011 No. 63-FZ (edition dated 23.06.2016) “On electronic signature” (with supplements dated 31.12.2017). Collection of laws of the Russian Federation, no. 15, p. 2036, 11 March 2011 Decree of the Government of the Russian Federation dated 27.09.2007, No. 612 (edition dated 04.10.2012) “On adoption of the rules of selling goods in the remote way”. Collection of laws of the Russian Federation, no. 41, p. 4894, 08 October 2007 Draft of Federal law No. 47432-3 “On e-commerce” (edition dated 12.01.2001). http://base. consultant.ru/cons/cgi/online.cgi?req=doc;base=PRJ;n=7839 Goldovsky, I.: Security of Payments in Internet. Piter, SPb. (2001) Inshakova, A.O., Popkova, E.G.: Overcoming the uncertainty of the institutional environment as a legal tool of the global crisis management. Legal Concept, no. 3, pp. 148–152 (2017) Klimchenya, L.S.: E-Commerce: Study Guide. Vysshaya Shkola, Moscow (2004) Korolev, A.A.: Legal problems of e-commerce in the Russian Federation. Sci. Thought Online J. no. 11, 49–53 (2016) Cosier, D.: E-commerce. Translated from English. Trade and Publishing House “Russian editorial”, Moscow (1999) Amor, D.: The E-business. Evolution and/or Revolution. Williams, Moscow (2001) Inshakova, E.I., Ryzhenkov, A.Y., Inshakova, A.O.: Neo-industrialization of the russian economy: technological and digital development. In: Popkova, E.G. (eds.) Ubiquitous Computing and the Internet of Things: Prerequisites for the Development of ICT. Studies in Computational Intelligence, vol. 826, pp. 239–250. Springer, Cham (2019)

Rural Territories in Spatial Development of a Region Tatiana T. Avdeeva(&), Tatiana G. Lavrova, and Dmitry V. Urmanov Kuban State University, Krasnodar, Russia [email protected], [email protected], [email protected]

Abstract. The purpose of the research is to determine the essential differences and interconnection between the categories of spatial development and spatial inequality, their measuring, and means of overcoming in the conditions of growth of territorial competition in the markets of investments, labor, and capital (R11, R12). Determining the opportunities for development of rural territories is based on the idea that each territorial entity is a subject of competition and could create competitive advantages by means of combination of external and internal sources of development. Overcoming the inequality of development of territories is considered within the search for own “windows of opportunities” (R11, R12). Rural territories are considered as elements of a region’s spatial system, interconnected with adjacent territories based on exchange of the results of economic activities. Forming local economic spaces, they create intra-regional economic areas (R11, R12). The authors study the factors that influence the differences in the level of socio-economic development of rural territories (R13) and determine the trends that are peculiar for economic and social development of rural territories in a region’s space. The authors show the growing significance of the factors of the “second nature” from the point of view of opportunities of future development (R13). The authors also determine the necessity for changing the approaches from tough leveling by means of external sources to formation of a “window of opportunities” for development by means of internal sources (R28). Local growth poles are determined, and the cores of the 1st, 2nd, and 3rd order as to the level of influence on the surrounding territories are determined (R12). The necessity for formation of institutes of joint management of socio-economic development of rural territories is substantiated (R58). The research object is rural territories of Krasnodar Krai. Keywords: Rural development
Growth poles
“Windows of opportunities”
Trends of inequality
Institutes of development

Rural territories of Russia are still in a crisis – which is shown by the growing processes of depopulation of rural population and increase of the gap between the level of development of cities and villages. Since 2009, the population of rural territories decreased by 500,000 people, and since 2000 – by 1.9 million people. The dominating part of rural population (87%) lives in rural settlements up to 10,000 people. The gap between the living standards of rural and urban population is very large: the level of © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 814–828, 2020. https://doi.org/10.1007/978-3-030-39319-9_90

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unemployment on rural territories – 8% (city – 4.3%); share of rural population with incomes below the subsistence level – 20% (city – 11.2%); more than 67% of the housing fund in rural areas do not have all necessary facilities (city – 20.9%); provision with services of healthcare and education is also very low on rural territories. Only 53% of local roads and 43.1% of regional roads conform to the normative requirements; more than half of the population have broadband Internet (79.5% – city) (State program, 2019). The problems of development of rural territories belong to the group of survival problems, which were peculiar for 1990’s and appeared again after 2014. The current measures of state support do not achieve their goals – due to large scale and complexity of the problems and due to limited resources. Also, there is no professional consensus in understanding the sources of development of rural territories. Some scholars see the opportunities in overcoming the inequality, poverty, and unemployment by means of external support for large agricultural manufacturers (exogenous model of rural development). Other scholars acknowledge the inequality of development as objective reality and consider the opportunities of activation of market relations, connected to search of the directions of development of rural economy that are less dependent on external capital (endogenous model of rural development). The real practice shows the necessity for serious studies of the tendencies of spatial development of rural territories and determination of importance of the problems of inequality at the level of inter-regional and intra-regional comparisons. Conclusions of well-known experts that “differences of regions as to the level of development, especially in large countries, could be larger that differences between countries”, are true for inter-regional and intra-regional comparisons in the context of the problems of development (Zubarevich 2010). All this causes a special interest to search for the means of overcoming the crisis situations. Without intra-regional studies it is impossible to assess the specifics of the socioeconomic situation in development of rural territories in a certain regions and the level of their inequality. Together with the typical problems of the most rural territories of Russia, each region has its own “windows of opportunities”, which depends on the usage of combinations of the existing and inclusion of new factors of development – demographic, natural, economic, and socio-cultural. The existing stereotypes, which compare development of rural territories with development of rural economy, go to the past. At the same time, the sphere of development of the national, regional, and local policy is dominated by the specialized approach, which orients rural territories at support from the state. It becomes important to search for the possibilities of various options for development of rural territories (Mantino 2010). Based on application of the modern theories and concepts of spatial development, it is possible to determine the following tasks of the research: – determining differences in the space of development of rural territories at the interregional level and within the same region; – measuring these differences and the level of intra-regional inequality within certain groups of territories (or main economic areas); – determining the trends of economic and social development of rural territories in region’s space;

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– determining the regional and local policy that takes into account intra-regional inequality; – obtaining external support for own sources of development for transition from solving the problem of survival to development of rural territories and rural communities.

1 Approaches to Studying Spatial Development One of the most popular approaches to studying the problems of spatial inequality is presented within the theory of central peripheral, or polarized, development by D. Fridman. The theory “center-periphery” states that economic grows is concentrated only in cities. Also, four stages of formation of growth centers are distinguished (the core of economic growth) in region: (1) presence of a large number of local cores, which have small influence on the surrounding territories; (2) appearance of the most powerful core, which forms the growth pole and influences the large periphery; (3) development of several more cores, which leads to emergence of the poly-centric structure of growth poles; (4) merger of cores into an urban structure with a strong periphery (Kusnetsova 2015). In this model, rural territories are peripheral or semi-peripheral – under the influence of cities. On the other hand, rural territories could be the places of formation of the local centers of development. These could be small towns or rural settlements, which are administrative or economic centers of rural municipal districts. This approach shows that centers of the different levels attract resources (human, financial, and natural). Their concentration creates opportunities for innovative changes in centers, which is followed by diffusion of innovations on the periphery. The speed of their dissemination depends on the presence and strength of barriers on the path of innovations. There’s a zone of semi-periphery between the centers and periphery, which could intercept the center’s functions. This model works at all levels – from large agglomerations to regional and local centers (Zubarevich, p. 9). The theory of growth poles was further developed in the works on axes of development (P. Potier). The central idea is that territories located between the growth poles and ensuring transport connection receive additional growth impulses due to increase of cargo flows, dissemination of innovations, and development of infrastructure. That’s why they turn into axes (corridors) of development, which determine – together with growth poles – the spatial foundation of economic growth of a large region or country (Philippov, p. 88). Some scholars consider regional economic growth as a process of causal connections, in which profits are distributed between the regions that are already in a favorable position. Any distribution of state resources between regions, which aims at increase of national economic growth, will increase regional inequality. Market forces and state investments also rather increase inequality in economic development of regions (Philippov, pp. 88–89).

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The founder of “new economic geography” P. Krugman systematized the competitive advantages of territories, distinguishing two groups of factors: factors of “first nature” and factors of “second nature” (Krugman 1991). The “first nature” factors include provision with natural resources (minerals, land, etc.) and geographical position, including trans-border position on the paths of global trade, which reduces transport expenditures and simplifies translation of innovations. These advantages exist regardless of humans’ activities. The “second nature” factors include advantages that are created by human and society’s activities: agglomeration effect (high density of population in cities, which saves the scale), human capital, institutes that stimulate the improvement of the entrepreneurial climate, mobility of population, and dissemination of innovations, etc. All these factors influence the development of Russia’s regions. Most of Russia’s regions also have important “first nature” factors. An example is Krasnodar Krai, which has good geographical position, natural and recreation potential, and developed infrastructure. As to the number of population, Krasnodar Krai is ranked the 3rd among the subjects of the Russian Federation, after Moscow and Moscow Oblast. According to the Federal State Statistics Service, it constitutes 5,648,254 in 2019. However, as to such indicators of competitiveness as development of human capital, Krasnodar Krai is ranked 17th in Russia, development of innovations – 18th, labor efficiency – 23rd, education – 55th, and number of doctors per 10,000 people – 62nd (Strategy 2019). Factors of the “second nature” become more important from the point of view of opportunities of future development. The basic trend is increase of their significance due to growth of investments into human, development of infrastructure, and modernization of institutes. From the point of view of economic growth, inequalities grow in spatial development: business invests in regions that have competitive advantages, trying to reduce the expenditures. The priority of investments into “strong” regions raises the level of polarization of the economic space. The same tendencies are peculiar for intra-regional processes. Growth of region’s competitiveness is ensured by means of large agglomerations, increasing the underrun in development of rural territories from cities. Thus, for example, Krasnodar Krai is among top-10 regions that formed more than 50% of GRP (52.1%) of Russia. In recent five years, it was ranked 5th–6th as to the volume of gross regional product in Russia. In 2018, GRP of Krasnodar Krai constituted RUB 2.396 trillion. However, as to the volume of gross regional product per capita it is ranked 36th. As to the volume of investments, Krasnodar Krai is also ranked high. As to the level of investments per capita it is ranked 35th. Rural territories have a low level of investments as compared to cities, which explains their underrun and inequality in development. As to the main per capita indicators of socio-economic development, out of thirty-seven municipal districts only one has a position above average, ten districts belong to the group “municipal entities with medium level of development, twenty-one – to the group “municipal entities with the level of development below average”, and five – to the group “with low level of development” – i.e., 70% of rural districts in Krasnodar Krai have the level of development that is below average and low (Integrated assessment 2018). Thus, active growth of the region in the country’s economy does not stimulate the convergence of territories within the region.

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2 External Positions of Krasnodar Krai Krasnodar Krai belongs to the regions with high share of rural population. With the share of 26% on average for Russia in Krasnodar Krai, the share of rural population constitutes 45.3%. While in the period between population censuses - 2002–2010 – the share of rural population of Krasnodar Krai did not change, recently in decreased from 47.5% in 2011 to 45.3% in 2018. The reason was reduction of migration inflow of population, as well as outflow of rural population to the cities of Krasnodar Krai. However, the value of this indicator exceeds the average level for the Southern Federal District (37.1%). In the conditions of aggravation of ecological problems, the natural potential of region’s rural territories could be viewed as an important factor of growth of its competitiveness by means of development of non-agricultural types of activities. Krasnodar Krai is attractive for living and recreation due to favorable climate, good location, recreation areas, opportunities for business and employment, developed social and transport infrastructure, etc. The demographic situation in Krasnodar Krai is peculiar for growth of the total number of population, which is caused primarily by migration growth. The period 2013–2014 was peculiar for natural growth of population – caused by natural birth rate, implementation of measures for increase of the quality of medical services, and increase of lifespan. However, since 2017 Krasnodar Krai has been peculiar for natural decrease of population, caused by reduction of natural birth rate and increase of death rate, as well as general reduction of the level of life of population. Most of municipal districts of Krasnodar Krai, which are primarily rural are peculiar for natural decrease of population against the background of reduction of birth rate and reduction of the level of life and living standards of the rural population, which is not compensated by the migration inflow. In 2018, coefficient of natural growth/decrease of urban and rural population of Krasnodar Krai (per 1,000 people) constituted +3.1 and −5.9, accordingly. Even with growing density of population of Krasnodar Krai (74.83 people per sq. km in 2019 as compared to 73 people per sq. km in previous years) by means of inflow of population into cities, the inequality in the system of settlement and spatial development of rural territories of the region grows. Thus, there’s a need for more thorough research of the tendencies of intra-regional differences and determination of the level of their inequality. The main method is economic zoning, which allows for comparison between groups of territories that form the region’s foundation.

3 Intra-regional Differences of Rural Territories and “Windows of Opportunities” Rural territories are studied as components of a region’s spatial system. They are included in their interconnection with adjacent territories based on geographical proximity, specifics of land use, sectorial cooperation, transport infrastructure, and system of settlement. Based on these interconnections in the region, local economic areas form. At present, in Krasnodar Krai – for the purpose of determining the possibilities of rational organization of territories and in view of obtaining the largest spatial effect – all municipal entities are grouped into seven economic areas: Northern economic area (NEA), Eastern economic area (EEA), Central economic area (CEA),

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Submontane economic area (SEA), Black Sea economic area (BEA), Krasnodar city agglomeration, and Sochi city agglomeration. Economic zoning was first performed in the course of development of the Strategy of socio-economic development of Krasnodar Krai until 2030 by experts of the consortium of Leontyev Center-AV Group and was legislatively established in the documents of territorial planning (Strategy 2019). The main goals of zoning and distinguishing the parts of territories focus on the search for opportunities for development by means: – intensification of development of sectorial cooperation; – concentration of economic subjects in the local economic area for the purpose of increase of competitiveness and possibility of formation of the zone brand; – possibility of building independent economic ties with adjacent municipal entities and regions at the level of an economic area of Krasnodar Krai. It should be noted that each of the seven areas has rural territories. One area – Krasnodar city agglomeration – includes two rural districts of Krasnodar Krai that are adjacent to the core of the agglomeration – city of Krasnodar and two trans-border regions of the Republic of Adygea. They develop as peripheral areas under the influence of the core of the growing agglomeration. Sochi agglomeration has 89 rural communities. Black Sea area has two municipal districts – Tuapse district and Temryuk district. Rural territories of Tuapse district specialize in seaside tourism. Development of Temryuk district is determined primarily by geo-political factors. Thus, four economic areas – Northern, Eastern, Central, and Submontane – are the most typical rural territories of Krasnodar Krai. They have qualities of rural areas (as to system of settlement, employment of population, types of economic activities, etc.), though each of them have cities – local cores of development. Most of them appeared out of villages, and they preserve a lot of features of rural way of living. Positions of cities as to the level of influence on the surrounding settlements are different in economic areas and form a hierarchy of three levels. These are cores of the 1st, 2nd, and 3rd orders. The centers of development include also six large rural communities – local capitals of districts, which, as to concentration of population and economic activities, are compatible with small towns (Table 1). Table 1. Local centers of development in the economic areas of Krasnodar Krai. Economic area of the region NEA

Cores of development of Cores of development of 2nd order 1st order – Eysk

CEA

Timashevsk

EEA SEA

Armavir Belorechensk

Korenovsk, Ust-Labinsk, Slavyansk-on-Kuban, Krymsk Tikhoretsk, Kropotkin –

Cores of development of 3rd order Starominskaya, Kushchevskaya, Leningradskaya, and Pavlovskaya Vyselki, Primorko-Akhtarsk, Abinsk Gulkevichi Labinsk

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Four economic areas include 33 out of 37 municipal districts of Krasnodar Krai. Most of them are characterized by agrarian and agro-industrial specialization, and some have a multi-sectorial structure of economy. A lot of them have potential opportunities for development of the tourist sector. According to the quantity of population and natural, geographical, and demographical conditions, there are significant differences between all four areas (Table 2). Table 2. Municipal districts of Krasnodar Krai in economic areas. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

NEA – 8 MO Eysky Kanevsky Krylovsky Ksushchevsky Leningradsky Pavlovsky Starominsky Shcherbinovsky

CEA – 11 MO Abinsky Bryukhovetsky Vyselkovsky Kalininsky Korenovsky Krasnoarmeysky Krymsky Prim.-Akhtarsky Vlavyansky Timashevsky Ust-Labinsky

EEA – 9 MO Beloglinsky Gulkevichsky Kavkazsky Kurganinsky Novokubansky Novopokrovsky Tbilissky Tikhoretsky Uspensky

SEA – 5 MO Apsheronsky Belorechensky Labinsky Mostovsky Otradnensky

4 Territorial Differences The territory of the four area accounts for 77.4% of the territory of Krasnodar Krai, with 51.5% of the population. Central economic area (CEA) is the largest as to the area; it concentrates more than 30% of population of the four areas (34.5% in 2018), and Central and Eastern economic areas account for 65.7% of the population. The population density here is also higher (Table 3). Table 3. Characteristics of area and number of the population of economic areas. Economic area of the region

Area of the territory, sq. km, including NEA 13,894 CEA 18,875 EEA 13,859 SEA 11,961 Total 58,589 a Data based on the agrarian

Share in total area of the territories of four areas, % 23.7 32.2 23.7 20.4 100 census of 2016.

Total population, thousand people, 2018 546.1 993.8 902.0 440.9 2,882.8

Density of population, people per 1 sq. km

Number of rural communities, 2015a

39.3 53.7 65.1 36.7 48.7

279 435 318 245 1,277

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According to the criteria of classification of the OECD, which take into account the differences between rural territories as to the share of rural population and define them as “mostly rural (territories with more than 50% of population living in rural settlements), “predominantly rural” (15–50% of population), and “mostly urban” – 15% of rural population. In view of the conditions of Krasnodar Krai, it is possible to conclude that all rural territories in the four economic areas belong to the category “mostly rural” (Table 4), with 50% of population residing in rural communities. As the data show, all four areas are peculiar for reduction of the share of rural population in the total number of population from 66.5% in 2002 to 62.5% in 2017.

Table 4. Tendencies of distribution of rural population in economic areas. Economic Total population, area of the thousand people region

Share of rural population, %

2002 2010 2017 2002 NEA 567.1 555.6 546.4 84.7 CEA 989.6 985 993.8 65.3 EEA 895.2 870.1 902.0 57.7 SEA 440.2 442.5 440.9 58.2 Total: 2892.1 2853.2 2883.1 66.5 a Data based on the agrarian census of 2016.

2010 84.8 65.3 58.6 56.5 66.3

2017 83.2 56.5 58.4 50.1 62.5

Share of population in communities with population over 5,000 people 2002 2010 2017 65.1 65.0 64.7 52.7 52.1 56.9 44.0 45.0 46.8 38.3 40.5 33.6 50.0 50.6 50.5

Number of settlements that disappeared

2015a 12 30 15 16 73

Northern and Submontane areas are peculiar for more dispersed population, as compared to Central area. Central area has the largest number of communities. More than half of the rural population of Northern and Central economic areas are concentrated in large communities with more than 5,000 people. There’s also an opposite tendency – reduction of the number of small communities. According to the 2015 census – more than 30 communities.

5 Demographic Changes The demographic situation in economic areas is ambiguous. Thus, in 2002–2018, two economic areas (NEA and EEA) of Krasnodar Krai showed reduction of the total population by 2–3%, while CEA showed growth by 6.7% (Fig. 1).

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NEA

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Linear NEA

Linear CEA

Linear EEA

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1200 1000 800

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Fig. 1. Dynamics of change of the number of population for four economic areas of Krasnodar Krai.

All areas are peculiar for natural decrease of population; NEA shows the highest level of natural decrease of population. In all areas, natural decrease of population exceeds the average level for Krasnodar Krai (Table 5). Table 5. Dynamics of natural decrease of population in economic areas (growth/decrease (±) per 1,000 people) Economic area of the region NEA CEA EEA SEA On average for Krasnodar Krai

2002 −6.2 −6.3 −7.1 −6.8 −5.4

2010 −3.7 −2.4 −2.6 −1.2 −1.3

2014 −2.8 −1.6 −1.9 −0.2 +0.6

2017 −4.5 −3.1 −3.2 −2.6 −0.5

The most favorable period – from the point of view of demographic situation – was 2014, when Krasnodar Krai showed natural growth of population. However, this growth was due to cities, while rural municipal entities showed natural decrease of population.

6 Migration Processes Krasnodar Krai differs from other regions due to high inflow of migrants. However, the migration inflow has been decreasing recently in all four areas. There are also intraregional differences in the migration situation: two areas – EEA and SEA – are peculiar for outflow of migrants exceeding the inflow. Besides, in two areas – NEA and EEA – migration does not compensate for natural decline of population (Fig. 2). Within each area, there are communities that are attractive for migrants. These are usually large cities with population above 5,000. Most migrants live in CEA, which is explained by proximity to the regional capital and favorable conditions of life activities.

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7 Social Differences Differentiation of migration inflow/outflow is connected to the opportunities of employment, living conditions, and accessibility of socially important services in the sphere of healthcare, education, etc. in rural areas.

CEA

SEA

EEA

2015

217972 1971 2016

-1205 -1312 161832

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Fig. 2. Dynamics of migration of population in economic areas of Krasnodar Krai.

There’s large imbalance between urban and rural territories as to the level of monthly average wages; level of population’s buying capacity, and provision id population with medical services (number of doctors per 10,000 people); share of poor population (share of population with income below the subsistence level) (Table 6). Table 6. Indicators of quality of life for economic areas, 2017. Economic area of the region

Monthly average accrued wages, RUB

NEA CEA EEA SEA Total for Krasnodar Krai

25,884 27,690 26,284 24,900 30,363

Number of doctors per 10,000 people 22.7 24.6 27.4 25.7 42.8

Level of development of consumer market, RUB

Buyer’s capacity of population, coefficient

118,074.0 115,235.8 107,189.6 98,072.9 246,285.7

1.46 1.52 2.71 1.22 3.3

Share of population with incomes below the subsistence level, % average value 17.7 15.0 17.9 16.8 15.6

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At the same time, the data for wages do not reflect the situation in full, as this indicator is taken into account only for large and medium companies. The differences as to the level of buyer’s capacity of population, which are measured as ratio of per capita incomes to the value of the subsistence level, are more peculiar. On the whole, for most social indicators rural territories are below the average values for the region by 1.5–2 times. Higher value of average krai indicators is ensured by means of cities that have objects of the social sphere and higher incomes of the residents. Underrun of rural territories as to the level of development from life in cities is usually associated with the peripheral and geographical remoteness from urbanized centers of economic activities and with their underrun in the technical, social and cultural aspects. This imbalance could be overcome based on development of modernized agricultural companies, which lead to reduction of employment, and development of small business, especially in the sphere of non-agricultural types of economic activities.

8 Dynamics of the Number of Agricultural Organizations and Changes in the Structure of Employment of Rural Population Analysis of dynamics of the number of agricultural organizations for the studied economic areas of Krasnodar Krai shows that in the ten-year period (2006–2016 – between two agricultural censuses) there was reduction of the number of large and medium organizations, as well as family farms, with a slight growth of the number of small organizations. However, there was large growth of the number of individual entrepreneurs in all economic areas - from 2.6 in NEA to 7.5 times in EEA. Evaluation of dynamics of the employed in these organizational and legal forms also shows a large reduction of this indicator for large and medium organizations and family farms: NEA and EEA were peculiar for reduction of the number of employees of agricultural organizations by two times, and CEA and SEA – by 1.5 times. However, there was growth of employment in small organizations by 20–40%, and in the segment of individual entrepreneurship – by 3–8 times, depending on the region’s economic area (Fig. 3). It should be also noted that the share of all employed in the structure of population in able-bodied age is still at a low level. According to expert evaluations, in rural areas of the region the level of informal employment constitutes 25–35%. In the segment of small organizations and individual entrepreneurship (not only agrarian specialization) there is high level of unofficial employment and hidden unemployment (South shadow 2019). The main reasons of the existing situation in the sphere of employment are high expenditures of organizations (tax, credit, infrastructural, etc.), including for employment. Thus, the existing family economic forms (primarily, family farms) do not desire to bear additional expenditures for its official accounting and development.

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Fig. 3. Dynamics of the number of the employed in agricultural organizations.

The structure of area of lands of agricultural organizations as to the property forms for 2006–2016 was also changed. There was reduction of the area of land of medium and large organizations from 27% in CEA to 50% in SEA. In the segment of family farms in Northern, Eastern, and Submontane areas the changes were unsubstantial. Growth of the area of land in the segment of family farms was observed in CEA – by more than 35%. Areas of lands of small organizations and individual organizations increased a lot (Fig. 4).

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Fig. 4. Area of lands of agricultural organizations, thousand hectares.

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The processes of transformation in the activities of agricultural organizations – in particular, reduction of large and medium companies – could be partially explained by their transition into small economic forms due to usage of better tax conditions for small business. On the other hand, as a result of modernization of large productions, a lot of employees are fired; for them, individual entrepreneurship and private households ensure the possibility of employment and obtaining income. According to experts, selfemployment in the sector of micro companies will be expanding and will include more than 50% of economically active population of the country (Patsiorkovski 2019). Dynamics of structural shifts in economy of rural territories are very unequal. Scholars from Kuban State University conducted studies of changes in the structure of economy of rural territories of Krasnodar Krai for the last ten years (Avdeeva 2018). Due to limited volume of this paper, only the most important conclusions will be provided here. The existing sectorial priorities were distinguished in each rural economic area. For example, in NEA, which has the highest share of rural population (83.2%), four out of eight municipalities have the resource specialization – agrarian production. They are behind other region as to the level of development and inter-municipal ties. Priorities of the future are determined by development of the spheres of processing in the structure of the agro-industrial complex, as well as development of the furl & energy, sanatorium & resort, and tourist complexes. Windows of opportunities in development of this area are connected to active usage of renewable sources of energy, complex development of communal infrastructure, and development of the resort area of the Sea of Azov. Priorities in CEA are determined by the spheres of the agro-industrial complex, trade & logistics complex, and complex of the sectors of industry. Out of 11 regions only 2 have resource specialization. Two regions are industry-oriented – Krymsky and Abinsky. However, Krymsky district in 2006–2016 showed unfavorable tendencies of structural changes in favor of agricultural production, though the district has serious advantages in the sphere of wine-making, tourism, etc. Abinsky district has more active changes in favor of the tourist sector. Windows of opportunities of development of CEA are determined by achievement of the new quality of the environment of rural settlements, which are favorable fir life, and creation of jobs in small cities as local centers of rural districts, which will allow reducing the outflow of population to the regional center. Among the districts of EEA only four districts have a multi-sectorial economy, two – agro-industrial, and two – resource specialization. Commonness of specialization is defined by the agro-industrial complex, the complex of the spheres of industry, and the trade & transport & logistics complex. Opportunities of development of the area are connected to formation of the developing system of settlement around the cities that are centers of industrial production – Armavir, Kropotkin, and Tikhoretsk – and strengthening of trans-border ties with Stavropol Krai. Strategic priorities of the future could be implemented based on high provision of the modern and innovative engineering infrastructure, which is necessary for support and growth of industry on the territory of EEA. In SEA, commonness of specialization is defined by development of the complex of spheres of industry and the AIC. Three out of five districts are industry-oriented, one

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has resource specialization, and one has agro-industrial specialization. Also, there are clear shifts in favor of development of resort and tourist complex. This area could become a territory with multi-sectorial economy and developed tourist and recreational complex, formed based on unique landscapes and the historical system of settlement. For Krasnodar Krai, the resort and recreation complex is one of the key priorities in the Strategy of development of region until 2030. Inequality of development of economic areas is manifested in distribution of investments. More than 50% of total investments of all four areas are concentrated in CEA (52.5%), which is peculiar for their wider diversification. Investments in all areas are used for development of the AIC, but there are shifts in favor of the spheres of industry and tourism. Thus, investments offer for development of tourism in SEA are higher than for the AIC (by 1.14 times). Thus, windows of opportunities of the four rural areas are connected to development of the AIC an complex of spheres of industry and tourism.

9 Conclusions 1. Spatial inequality appears as an objective result of concentration of competitive advantages in certain territories and their absence or deficit in other territories. Dynamics of inequality of rural territories of Krasnodar Krai have similarities in the general Russian context and specific differences. Overcoming the inequality is considered within the approach of formation of a “window of opportunity” in solving the problem of development of rural territories. 2. Rural territories, as elements of the region’s spatial system, are considered in interconnection with adjacent territories, based on which economic areas are formed – Northern, Eastern, Central, and Submontane. Each area has its own resource basis and windows of opportunities by means of local cores of development, which could influence the periphery. 3. Differences in the systems of settlement and quantitative structure of human resources of rural territories influence the spatial trends of economic development. Northern and Submontane areas are peculiar for a lower number of population and higher dispersion of settlement, as compared to Central area. Resource specialization in development of territories is more vivid here. Central zone has the highest number of communities. The tendencies of industrial development increase. The common tendency is growth of concentration of population in settlements with more than 5,000 people with reduction of the number of small communities. This increases the imbalance of developing and stagnating settlements. 4. Comparison of the trends of socio-economic inequality of rural territories shows the underrun of rural territories as to living standards from cities (most of social indicators are lower by 1.5–2 times than the average indicators for Krasnodar Krai). The underrun of rural territories is usually associated with peripheral nature and geographical remoteness from urbanized centers of economic activities. Overcoming of this balance is possible based on development of modernized agricultural companies, which cause reduction of employment, and development of small business, especially in the sphere of non-agricultural types of economic activities.

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5. Opportunities of future development of rural territories are connected to determination and usage of internal sources of development – especially, of the sources of the “2nd order”. They include the advantages created by human and society’s activities: agglomeration effect (high density of population in cities, which allows saving on the scale), human capital, institutes that stimulate the improvement of the entrepreneurial climate, mobility of population, dissemination of innovations, etc. The basic trend is increase of their significance due to growth of investments into human, development of infrastructure, and modernization of institutes. 6. Commonness, interconnection, interdependence, and specific features of rural territories create preconditions for development of more active exchange of various goods and services and ensure creation of independent economic ties with adjacent municipal entities and regions. This explains the necessity for formation of institutes of joint management of socio-economic development at the level of economic areas. The organizational structures could be agency of rural development of or council of the economic area. Acknowledgments. The research was performed with financial support from the Russian Fund for Fundamental Research, grant No. 18-410-230020\18 “Inter-sectorial interconnections in a multi-level system of management of development of rural territories” (2018–2020). The paper was supported by the Russian Found for Fundamental Research, grant No. 18-410-230020\19 «Intersectoral Relations in a Multilevel Rural Development Management System» (2018-2019).

References Krugman, P.R.: Geography and Trade. MIT Press, Cambridge (1991). http://citeseerx.ist.psu.edu/ viewdoc/download?. Accessed 19 July 2019 Avdeeva, T.T., Skripal, I.A.: Interaction of Urban and Rural Territories in Region’s Economic Space: Monograph. Kuban State University, Krasnodar (2018) State program “Complex development of rural territories” for 2020–2025, adopted by the Government dated 31 May 2019, no. 696. http://www.consultant.ru/. Accessed 21 July 2019 Zubarevich, N.V.: Regions of Russia: Inequality, Crisis and Modernization. Independent Institute of Social Politics, Moscow (2010) Complex evaluation of the socio-economic position of city districts and municipal districts of Krasnodar Krai in 2014–2019. https://economy.krasnodar.ru/. Accessed 27 July 2019 Kuznetsova, O.V.: Economic development of regions. The theoretical and practical aspects of state regulation, 6th edn. URSS (2015) Mantino, F.: Rural development in Europe. Politics, institutes and main players since 1970’s until now. Translated from Italian by I. Khramova. B-g (2010) Patsiorkovsky, V.V.: Nature and content of self-employment. http://rusrand.ru/tv/lections/. Accessed 19 July 2019 Socio-economic position of city districts and municipal districts of Krasnodar Krai: Statistical collection. Krasnodarstat, Krasnodar (2018) Strategy of socio-economic development of Krasnodar Krai until 2030. https://economy. krasnodar.ru/. Accessed 17 July 2019 South Shadow: more than 30% of population works in the shadow economy of Kuban. https:// kuban.rbc.ru/krasnodar/20/04/2017. Accessed 20 July 2019

Information Technologies in the Management of Technical Processes of Agricultural Enterprises Marina Oreshina(&), Anna Badina, and Mariya Belousova State University of Management, Moscow, Russian Federation [email protected], [email protected], [email protected]

Abstract. This paper presents modern methods of developing systems for control and monitoring of process parameters with the use of hardware and software tools NI and “Internet of things” technology. The use of modern automation systems allows agricultural enterprises to withstand severe competition using more flexible technologies, increasing the speed of product entry into the market, product quality, and enterprise efficiency. Keywords: Automated systems for management of process parameters of production
Information technologies
Cloud servers
Communication protocols
WEB-technologies JEL Code: C19

1 Introduction In the development of modern systems for control and monitoring of process parameters, it is necessary to take into account the requirements dictated by the modernity and stipulated by the use of information technologies and web technologies, as well as hardware facilities that are able to ensure their operation. The efficiency of industrial equipment under development and its subsequent successful operation largely depends on the formation of the system of collection, processing and monitoring of a set of operating parameters of methods for their implementation as well as the form in which results are presented.

2 Methodology From this perspective, the use of “Smart enterprise” technology seems promising. This technology is a multi-level system that includes sensors and controllers installed on units and components of industrial facilities, means of transmission of collected data and their visualization, powerful analytical tools for interpreting received information that are implemented on the basis of cloud servers.

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3 Results It is proposed to consider the system of control and monitoring of process parameters using the advanced developments of National Instruments, both in the field of software and hardware, which greatly simplify the implementation of command feedback control without the use of low-level development tools. Current NI developments make it possible to create the reliable system architecture which conforms to severe requirements for the design of management systems. The data that is obtained by means of NI, is transmitted over secure protocols to cloud servers and is used by users as and when necessary. Currently, there are many cloud services that make it possible to implement projects based on the “Internet of things”, providing their platforms. Most common cloud services include PTC Thingworx, IBM Bluemix, and Microsoft Azure. In an experimental study of various technological processes, it is also necessary to solve the problems of detection, registration, and classification of signals the parameters of which are known approximately only. The subject-matter of our research is the creation and optimization of the automated system of pressure and deformation control in the implementation of various technological processes. Within the scope of this objective, it is expedient to use universal flexible software tools and reconfigurable hardware solutions with extensive communication capabilities (Oreshina and Semenov 2010). Experience has proven that under current conditions of constantly complicating newly created automation tools, increasing number and ranges of measured parameters of the monitored process, severization of requirements for measurement accuracy and their operating speed, and processing of large arrays of statistical information, NI equipment established itself as a leading choice. The proposed system is comprised of three functional blocks. The first block is laboratory facilities equipped with NI hardware that are used to generate and send data to the network. The second block is a personal station which serves as a proxy between the server side of the system represented by cloud services on the Internet, and the test bench. The station receives and interprets data from the National Instruments equipment using the DAQmx data acquisition driver. If the equipment allows structuring and uploading data to the Internet without a proxy, then the second block in the system is absent. The software that was developed by LabView, structures the information obtained and sends it via communication channel to the cloud service which serves as MQTT broker and web server for the client application. MQTT is a network protocol that allows reducing the traffic volume and increase the rate of information exchange when working with multiple data sources and a multiuser remote interaction system on the basis of cloud solutions. The third block is the cloud service which processes the data obtained and saves them in the relevant section for further use by the customers. Users who are requesting data from the web server, initiate the data transfer process between the web server and the relevant section in the cloud storage, receive relevant data from the laboratory bench in their web browser, which are then used to analyze the operation of the manufacturing equipment.

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The basic requirements for the developed ACS can be formulated as follows: control over process parameters in real time, remote control of the process under study (using WEB technologies), quick access to the actual parameters of the process, visual presentation of results, the ability to connect to various equipment that controls and monitors the process parameters. In the development of the ACS, it is expedient to consider its mathematical model. In this situation, the model of the developed automated control system is thought of as a set of analytical dependences we have proposed; these dependences allow identifying the interrelation between input and output parameters in the form of easy-to-use mathematical equations. In addition, this set makes it possible to form a transition operator reflecting the mechanism for changing the status of the ACS under the action of internal and external disturbances. This model is based on basic consistent patterns of the theory of sets and mathematical approaches. Measured parameters of the processes under study in this model of the ACS are presented in the form of a serially ordered set D ¼ hT; X; Y; S; c; ni;

ð1Þ

where T is the set of moments in time in which the ACS can be observed; X, Y are the set of input and output signals respectively; S is the set of statuses of the ACS under consideration; c is the transition operator reflecting the mechanism for changing the status of the ACS under the action of internal and external disturbances; n is the exit operator describing the mechanism of formation of the output signal as a response of the ACS to internal and external disturbances (Oreshina and Semenov 2010). Measured parameters are considered observable in a state sðtÞ 2 S on a set of moments in time T ¼ fsg at the input action xðtÞ 2 X. This means that a certain change in the vector of the status of the ACS corresponds to any change in the output vector yðtÞ 2 Y at fixed vector xðtÞ 2 X, namely yðt1 Þ 6¼ yðt2 Þ ) sðt1 Þ 6¼ sðt2 Þ;

8 t1 ; t2 2 T:

ð2Þ

As a result, output variables are used as indicators of the observed current status of the ACS (Eremenko et al. 2015). With the use of hardware and software tools of solution of the measurement problem, the values of the measured random quantity [***] are determined. This being said, the measurement is presented as a specific information process resulting in the acquisition of quantitative information about measured physical quantities – measurement information. When determining the value of the observed physical quantity, the measurement result is presented by means of virtual equipment in the form of analytical relation [***] known as the basic metrology equation, where [***] is the current value of the measured random variable [***]; y0 is the value of the variable that has been taken as

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an example; [***] is the ratio between the value of the measured variable to the value of the variable of the specimen. No matter how accurate and perfect the means and methods of measurement are, and no matter how carefully the measurements as such are carried out, their result is always found with some error and differs from the true value of the measured physical quantity, therefore, “*” symbol was introduced in the designations of measured values of physical quantity. In such a way, gross errors (blunders) that significantly exceed the measurements expected under the given conditions are detected and excluded from consideration. Thus, the proposed mathematical model allows determining the change in measured parameters depending on input parameters of signals, and assuming the plant status on the basis of modern information technologies. We shall examine the pressure control process under various technical processes with the use of the system we have developed. Block diagram of pressure monitoring and control software is shown in Fig. 1. Analog signals from primary pressure transducers enter the DAQ-board – a multifunctional data collection device where the data is converted into the digital code, filtered from noise and transformed into values corresponding to the selected units of measurement.

Fig. 1. Block diagram of developed pressure monitoring and control software

Next, the signal is input into a computer in digitalized form, where it is averaged over a given time interval using the LabVIEW software environment, displayed on the monitor of the virtual oscillograph, and compared with critical values. The use of the virtual oscillograph allows monitoring the pressure change over time. Current pressure values in a definite time are recorded in separate files which do not require to run LabVIEW to view them. If the current value of signal achieves the set

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limits, then the signal lamps light up on the monitor screen and the signal enters the analog output. The signal then enters a regulator device, a pump for example. We shall give consideration to the temperature monitoring and measurement process (for example, during the food freezing process) using the system we developed. Signals from primary pressure transducers enter the data acquisition board, where they are converted into a digital code, filtered from noise and transformed into values corresponding to the selected units of measurement. Next, the signal is input into a computer in digitalized form, where, depending on the number of thermal converters used, a specific monitoring and data analysis subprogram is selected. The measured values are displayed on the front panel by means of the virtual oscillograph and in the form of the data array. Data obtained are recorded in the file which means the archive of measured values is created. Further, the data analysis is carried out: the arithmetic mean number of sample values, the maximum and the minimum temperature values etc. are determined. Once again, we shall dwell on the merits of the ACS that were developed on the basis of virtual equipment. Using LabVIEW graphical programming environment allows quickly creating virtual equipment with comprehensive possibilities for analysis and user-friendly interface. The use of NI DAQ devices allows changing the ways of connecting sensors to measurement circuits in a fast and safe way. With the use of DAQ devices, it is only necessary to fill in the gaps in special graphs to determine the input signal by specifying its name and description, the type of converter used, as well as required scales and units of measurement. This being said, the name of the channel will correspond to the measured physical quantity with all conversion processes defined for the user. Such configuration of channel allows saving time and does not require any additional information.

4 Conclusion The developed ACS can be used both during scientific experiments and in industrial conditions, which enables the operator to receive up-to-date information about the progress of processes, reduces the probability of defective products, hence, improves the quality of products and reduces production costs.

References Eremenko, V.T., Minaev, V.A., Oreshina, M.N.: Theory of Information and Information Processes: A Textbook for Higher Educational Establishments. State University – Educational Research and Manufacturing Complex, Oryol (2015). 443 p. Eremenko, V.T., Lachinov, S.Y., Tret’yakov, O.V.: Methodological, Technological and SocioCultural Aspects of Computer Sciences. ORAGS Publishing House, Oryol (2007). 188 p. Minaev, V.A., Fisun, A.P., Skryl’, S.V., et al.: Conceptual Framework: A Textbook. Computer Sciences, vol. 1. Maroseyka Publishing House, Moscow (2008). 464 p. In 2 volumes. 2nd edition – enlarged

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Minaev, V.A., Fisun, A.P., Skryl’, S.V., et al.: Means and Systems of Data Processing: A Textbook. Computer Sciences, vol. 2. Maroseyka Publishing House, Moscow (2008). 544 p. In 2 volumes. 2nd edition – enlarged Kartashevsky, V.G., Semyonov, S.N.: Mobile Communication Networks. ECO-TRENDZ Publishing House, Moscow (2001). 299 p. Nielsen, M., Chang, I.: Quantum Computing and Quantum Information. Mir Publishing House, Moscow (2006). 824 p. Oreshina, M.N., Semenov, G.V.: Information technology in the management of dispersion, freezing and vacuum dehydration processes. Khranenie i Pererabotka Selkhozsyr’ya, no. 6, pp. 58–60 (2010) Kholevo, A.S.: Introduction to the Quantum Information Theory. Moscow Center for Continuing Mathematical Education, Moscow (2002) Kofler, E.: Decision making under linear partial information. In: Proceedings of the European Congress EUFIT, Aachen (1995) Kofler, E.: Linear partial informational with applications. In: Proceedings of ISFL 1997 (International Symposium on Fuzzy Logic), Zurich, pp. 235–239 (1997)

Developing a Construct and a Scale for Measuring the Internet-Store’s Web Usability Oksana Yuldasheva1(&), Dmitry Martsulevich1, Mavlit Ahtyamov2, and Veronika Shubaeva1 1

2

Saint-Petersburg State University of Economics, Saint-Petersburg, Russian Federation {yuldasheva.o,shubaeva.v}@unecon.ru, [email protected] South Ural State University, Chelyabinsk, Russian Federation [email protected]

Abstract. The article deals with the problems of design of usability with a view to developing the construct and the scale for assessing the web usability of online stores. The authors carry out the retrospective analysis of the essence of the usability, identifying approaches to the consideration of the usability as an element of ergonomics and human engineering, formation of the web usability as an individual discipline, and, at the present stage, as a customer experience management tool. While analyzing the existing web usability assessment methods, the authors demonstrate the lack of a versatile approach and the insubstantiality of existing scales. The article presents the results of an empirical study for developing a scale for assessing the web usability of the online store from the perspective of support for holistic customer experience during the online shopping. Research methodology includes the use of existing scales for assessing the usability, the method of open card sorting, surveys of experts and experienced online buyers, carrying out of the cluster analysis and the factor analysis of polling data. Following the research results, the authors proposed using an original construct and proved the reliability of the scale for assessing the web usability of an online store, which is comprised of five elements: simplicity of perception, navigation and search; buyer decision-making convenience; visual perception of the interface; feedback and technical quality of the website. Scale is a universal tool for assessing the web usability of the online store. Keywords: Customer experience
Internet-store’s value communications
Web-usability
Web-usability’s scale


Digital

JEL Code: M31

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 835–844, 2020. https://doi.org/10.1007/978-3-030-39319-9_92

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1 Introduction The transition of the major share of social and business communications to the digital environment requires creating efficient digital communication tools, in particular, websites with high level of usability ensuring customer satisfaction. The online store represents the add-on value of service involving the sale of goods/services to the consumer, which is manifested in the user-friendly website interface convenient for the consumer. Communication interface of the website ensures the shopping process with minimum transaction expenses - monetary (money) and non-monetary (time, energy). Since the online store is intangible in nature and is in actual fact a virtual representation of the company and its value proposition to the consumer, communication interface of the website, its usability plays a crucial role in ensuring customer satisfaction from the moment of purchase and achieving the perfect customer experience as a consequence of interaction with the company. Website usability not only reduces transaction expenses of the consumer for purchase, but also reduces the perceived risks associated with distrust in the supplier. The problem in the assessment of the usability consists in the absence of versatile approaches and domination of heuristic rules and methodologies in the design of website. This being said, there are no approaches to the assessment of the usability adapted for Russian online stores. Within the scope of this research, the authors set the goal to develop the construct and the scale for assessing the usability of the website of the online store, adapted for the Russian Internet market.

2 Evolution of the Web-Usability’s Nature: Theoretical Background The retrospective analysis of approaches to the development of perception of the usability refers us to ergonomics and human engineering, where usability was considered as an indispensable element of any product ensuring the simplicity of its use in consumption. Recognizing the enormous contribution of the North American school of thought to the development of the concept of “usability”, one should emphasize the important role of Soviet scientists who implemented human engineering in the field of man-machine interaction (Lomov 1963; Kostin et al. 2013). This being said, the main goals of ergonomics were the provision of security and the growth of labor productivity, as well as conditions for the harmonious development of the personality. In fact, ergonomic design as the main tool of ergonomics and human engineering became the basis for the development of the usability discipline. Web usability as a separate discipline has started taking shape in the 90s of the last century in connection with the computerization of society (Nielsen 1993). The development of the discipline was built upon a set of heuristic rules based on the expert opinion rather than on in-depth consumer studies. A further digital transformation of society is responsible for the perception of web usability in the context of customer experience as its main part in the process of the customer’s shopping journey. Web usability as part of customer experience should

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support the customer at the pre-purchase stage, during the shopping process, as well as during the post-purchase period. Thus, GOST R ISO 9241-210-2016 describes “user experience” as “user experiences arising from the use and/or future use of products, system or service”. The vigorous growth of communication channels has set the task to consider holistic customer experience as a result of its interaction with the company, its brand, products or employees at all common points in both online and offline environments (Lemon and Verhoef 2016). In this regard, the focus of usability has shifted from development of ergonomic design of website to the design of information spaces at the intersection of digital, social, network and mobile consumer interactions (Resmini and Rosati 2011). Thus, the modern web usability concept is developed as part of the concept of holistic customer experience, representing one of its tools. In this study, web usability is considered as a set of consumer properties of the website of the online store providing the consumer with the simplicity of its use and the completeness of information to reduce customer’s uncertainty, and, consequently, all types of expenditures connected with shopping (both monetary and non-monetary). In other words, web usability is one of the elements of the customer value of an online store which in turn is the element of value of service involving the sale of goods to the consumer.

3 Methodology of the Web-Usability’s Construct and Scale Development There are many studies in the literature dealing with the assessment of the usability of websites (Bagozzi 2011; Blut 2016; Christophersen and Konradt 2012; Parasuraman et al. 2005; Belousova and Chichkanov 2015; and etc.). Moreover, there are also nonformalized and formalized software solutions containing the scales for assessing the usability – for example, QUIS 7.0. - Questionnaire for User Interaction Satisfaction; PUEU - Perceived Usefulness and Ease of Use, WAMMI - Website Analysis and Measurement Inventory (Kirakowski and Claridge 1998); ACSW - assessment of customer satisfaction from the website (Dyagterenko 2012) etc. Detailed analysis of scales for assessing the usability allowed drawing the following conclusions: • the presence of a wide variety of usability components from one research to another, which requires clarification of its construct; • prevalence (especially in Russian-language papers) of expert estimates, as well as rules based on experience of programmers, not on the assessment of the usability by the consumers; • the existing foreign scales for assessing the usability cannot be used without significant adaptation and need proof of their reliability for the Russian-speaking environment; • Russian-language methods are somewhat one-sided and cannot assess usability in an integrated manner. Thus, in the ACSW scale for assessing the usability

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(Dyagterenko 2012), the focus is on user satisfaction research. Scale proposed by Goryachkin, B.S. is focused on assessing the efficient display of information on a monitor screen (Goryachkin 2014). In this regard, a goal of developing the author’s scale for assessing the usability was set. The methods used for development of the scale were based on the works by Malhotra (1999) and Churchill (1979). 3.1

Formation of the List of Approvals

Within the scope of the first stage, the entire array of available statements in the analyzed scales (questionnaires) of both foreign and Russian researchers was collected. As a result, 244 statements were obtained. 16 statements were discarded as recurrent. During the reverse conversion process, the list of statements was reduced to 195 items. Further, the open card grouping method was applied, which allows structuring information by groups, which may be factors or elements of the usability construct. During the card sorting, 15 advanced users determined the groups to which the usability statements may refer. Testing was performed using the online service Usabilitest (usabilitest.com). As a result, six to ten groups were created. Testing results were processed using hierarchical cluster analysis in IBM SPSS Statistics 22, which yielded nine clusters combining statements related to the same aspect of website usability: visual design of website, completeness of information, website maintenance, content structure, efficiency search, simplicity of use, simplicity of purchase, website functionality, ease of navigation. Nine clusters contained 123 statements. 3.2

Expert Survey for the Selection of Statements1

An expert survey was used for the selection of final statements. 42 companies specializing in website design, and 8 individual experts keeping popular blogs about usability testing, were invited to participate in the expert survey. As a result, 9 experts came forward (21% of respondents). The experts tested the statements within the clusters, noting those that should be included in the final questionnaire. In order to form the final questionnaire, a decision was taken to include approvals that were noted by at least 3 experts. As a result, 76 statements were received that were included in the usability testing scale. 19 out of 76 statements were additionally added by experts in the “optional answer” box. 3.3

The Survey of Individual Users and the Factor Analysis of Data

In order to test the scale for assessing the usability, a survey of individual Internet users was conducted (who made an online purchase at least 1 month ago). The statements in

1

Ethical approval was obtained from the ethics committee. Members of the ethics committee are Ulyana Pozdnyakova, Aidarbek Giyazov and Ivan Milenkovic. Furthermore, all participants gave their informed consent to be cited anonymously in this study before its commencement. Interview partners also gave their informed consent to be recorded and their statements be transcribed.

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the questionnaire were randomly mixed and grouped into six items on each page. Respondents were asked to recall their latest online shopping experience, evaluating the proposed statements on a 5-point Likert scale. The sample was just over four hundred respondents (n = 402), of which 31% were men and 69% were women. The factor analysis of polling data was carried out in the standard IBM SPSS Statistics 22 package. Subscale reliability was assessed using the measure of internal consistency of Cronbach’s a. The items with a low squared multiple coefficient of correlation were discarded. The values of the indicator of subscale reliability were within the range of 0.816–0.924. 22 statements were discarded from the questionnaire. A subsequent KMO (Kaiser-Meyer-Olkin) test showed acceptable adequacy of sample (0.939). Bartlett’s sphericity criterion showed a statistically-valid result (significance p = 0,000). The subsequent factor analysis of data was carried out using the prime component method (varimax method). Items, the factor loading of which is less than 0.45 or those having significant factor loading of more than per factor, were eliminated from the analysis. The factor analysis allows identifying 5 components (67.1% of the explained variance). 3.4

Interpretation of Factors

The factor analysis reduced the number of factors to five, changing their original architectural design. We shall consider the final factors. Factor 1. Simplicity of perception, navigation and search. The results have shown that user-friendly navigation, easy search for goods, convenient structure of information on the website and its organization can be combined into a single factor. Indeed, consumers perceive these sub-factors as a single factor, because together they make it convenient and quick to obtain information about desired products. Many experts have emphasized this fact in the process of statement grouping and testing. Factor 2: Convenience of purchase making. Shopping convenience includes statements describing perfect compatibility with the website of the online store: ease of registration, obtaining complete information about product, payment methods, delivery options, service and warranties. In other words, communication interface and completeness of information reduce the shopping risks at the purchase stage, and also save time. It should be noted that the factor “Simplicity of perception, navigation and search” is related to the pre-purchase stage of customer behavior, and the factor “shopping convenience” is related to the purchase stage. In fact, it is these two factors that reflect the primary usability function as the provision of simplicity of the process of information search and purchase of goods. Factor 3: Technical web-quality. This factor includes assessment of the technical operation of the website: page loading speed, absence of technical issues with the user etc. This factor supports the buyer throughout the entire buyer decision process. Technical issues arising at any stage of decision-making may lead to the rejection of purchase.

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Factor 4: Feedback. Feedback allows reducing the risk of purchase in an online store. The ability to contact representatives of the online store and additionally consult them in many ways (by phone, by e-mail) at all purchase stages greatly simplifies the buyer’s decisionmaking, creates a comfortable of trust in the store, reduces uncertainty due to the receipt of additional information via personal (not public) communication channel. Factor 5: Visual perception of interface. This factor included only statements that refer to visual elements of website, its styling. This factor is especially important at the pre-purchase stage, when the consumer is dealing with the appearance of an online store website for the first time. In order to demonstrate the reliability of the 5-factor scale for assessing the web usability of an online store, the Cronbach’s a index was calculated for each factor (Table 1). Table 1. Reliability coefficients of the scale for assessing the usability Factors

Cronbach’s a

Simplicity of perception, navigation and search Convenience of purchase making Visual perception of interface Feedback Technical website quality

AVE

0.967

Composite reliability 0.964

0.833 0.919 0.902 0.835

0.907 0.957 0.939 0.947

0.550 0.882 0.836 0.819

0.640

As a result, the authors obtained the final scale with high reliability results: Simplicity of perception, navigation and search (15 statements, Cronbach’s a = 0.967); convenience of purchase making (8 statements, a = 0.833); visual perception of interface (3 statements, a = 0.902); feedback (3 statements, a = 0.902); technical website quality (4 statements, a = 0.835).

4 Web-Usability Scale: Results The construct and the scale for assessing the web usability of an online store (Table 2) has been substantiated based on the research results. As a result, the proposed scale for assessing the web usability is comprised of 5 elements and contains 33 statements.

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Table 2. The scale for measuring the internet-store’s web-usability Usability construct Simplicity of perception, navigation and search

Convenience of purchase making

Visual perception of interface

Feedback

Technical website quality

Statements This online store is easy to use for the first time The search bar in this online store is easy to use The structure of this online store is simple and user-friendly The names of categories of the catalog are meaningful It is easy for me to find the information I need It is easy for me to navigate through sections and pages It is easy for me to understand in which section of the catalog I should look for a particular product The products in the catalog are grouped logically I found the desired product where I expected it to be It was easy for me to find the desired products I easily managed to find the desired product in the catalog The search function allowed me to quickly find the desired product The information in the online store is well structured Various sections of the online store are well interconnected Products sorting and ordering functions are very convenient It was easy for me to create a user account in this online store I received complete product information that helped me make a decision It was easy for me to add the product to the cart I received full information about the terms of payment I received full information about the shipping costs This online store is very convenient for making a purchase This online store provides full information about the terms of delivery I received full information about after-sale service and warranties This online store is visually attractive I like how this online store looks This online store uses a range of colors that are restful to the eyes It was easy for me to give and receive feedback in this online store All contact information is available on the website of the online store One can easily get in contact with a store representative online The online store responds quickly to my actions The online store runs fast enough There were no technical problems during the visit to this online store The pages are loaded fairly quickly in this online store

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The interpretation of results obtained provides an opportunity to clarify the suitability of the construct and the scale for assessing the usability considered within the customer experience management concept (Fig. 1). Technical website quality

Simplicity of perception, navigation and search

Convenience of purchase making

Pre-purchase experience

Current purchase experience

Visual perception of interface

Post-purchase experience

Feedback

Fig. 1. Web usability construct as ongoing support for holistic customer experience

As can be seen from Fig. 1, the usability construct, comprised of five elements (Simplicity of perception, navigation, Convenience of purchase making, Visual perception of interface, Feedback, Technical website quality) provides ongoing support for the process of acquisition of customer experience, covering three stages of this process: pre-purchase stage, purchase process stage, and post-purchase stage. The simplicity of perception, navigation and search enables the customer to successfully pass the pre-purchase stage related to the search for information about the product, its properties, range, etc. This is the stage where the customer can get acquainted with the company and its products, where it is very important to quickly and conveniently find information about the desired product, to assess the degree of its conformity to your requirements and preferences. At the purchase stage, the most important thing is to reduce the shopping risks associated with the possible nondelivery of goods and the possible loss of money and time. Hence, the usability element “shopping convenience” provides full information about delivery, payment methods, warranties etc. The customer support of the website should ensure the running efficiency throughout the entire shopping journey. Feedback is the most important thing at the purchase stage and the post-purchase stage, especially if delivery is delayed or the buyer alters the parameters of the order. As for the visual perception of the website, it is the most important thing at the pre-purchase stage, since it ensures the concentration of the buyer’s attention in accordance with the AIDA model.

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5 Conclusion Within the scope of this research, a construct and a scale for assessing the web usability of an online store were developed based on the customer experience management concept. The shopping experience is comprised of three stages (pre-purchase stage, purchase stage, and post-purchase stage) and a set of points of contact between the customer and the company, its products and personnel. It seems that the website is one of the online experience management tools. The website usability ensures efficient interaction between the consumer and the virtual representative of the company (website) and directly affects the customer experience. In the course of this research, we managed to prove that web usability provides continuous support for the online shopping experience, since it helps a consumer to reduce uncertainty and costs throughout the shopping journey. Thus, “Simplicity of perception, navigation” and “Visual perception of interface” provide customer support at the pre-purchase stage, “Convenience of purchase making” - at the purchase stage, the usability element called “Feedback” helps the buyer at the purchase stage and the post-purchase stage, and the usability element called “Technical website quality” helps the buyer throughout the entire online shopping. The proposed scale has a high level of reliability that was demonstrated through the example of the Russian market, which allows us to recommend its use as a tool for assessing the usability efficiency as a counter to observing heuristic rules only. The authors have already tested this scale on two online stores, but this experience should be further expanded to enable complete acceptance of the proposed scale as universal.

References Bagozzi, R.P.: Measurement and meaning in information systems and organizational research: methodological and philosophical foundations. MIS Q. 35(2), 261–292 (2011) Belousova, V.U., Chichkanov, N.U.: Mobile marketing in Russia: user’s stimulus to adaptation. Foresight 9(3), 26–39 (2015) Blut, M.: E-service quality: development of a hierarchical model. J. Retail. 92(4), 500–517 (2016) Christophersen, T., Konradt, U.: Development and validation of a formative and a reflective measure for the assessment of online store usability. Behav. Inf. Technol. 31(9), 839–857 (2012) Churchill, G.A.: A paradigm for developing better measures of marketing constructs. J. Mark. Res. 16(1), 64–73 (1979) Dyagterenko, I.A.: Ergonomic estimation of user’s satisfaction of the software’s interface in internet, Ph.D. thesis, Moscow State University (2012). 188 p. Goryachkin, B.S.: The measuring scale of the ergonomics of reflection information methods. Science and education: scientific edition of MGTU, no. 5, pp. 155–161 (2014) Kostin, A.N., Satin, A.N., Golikov, U.Y.: National engineering phycology and usability: real and imaginary priorities. Phycol. J. 34(4), 109–112 (2013)

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Lemon, K.N., Verhoef, P.C.: Understanding customer experience throughout the customer journey. J. Mark. AMA/MSI Spec. Issue 80, 69–96 (2016) Lomov, B.F.: The Man and Technics: Essays in Engineering Psychology, p. 256. LGU, Leningrad (1963) Malhotra, N.K.: Marketing Research: An Applied Orientation. Prentice Hall, Upper Saddle River (1999) Nielsen, J.: Usability Engineering. Academic Press, Inc., Harcourt Brace & Company, San Diego (1993) Parasuraman, A., Zeithaml, V.A., Malhotra, A.: E-S-QUAL: a multiple-item scale for assessing electronic service quality. J. Serv. Res. 7(3), 213–233 (2005) Resmini, A., Rosati, L.: Pervasive Information Architecture: Designing Cross-Channel User Experience, p. 250. Morgan Kaufmann, Burlington (2011)

Forecasting of the Development of Fixed-Line Broadband Internet Boris A. Anikin(&) and Oleg B. Anikin State University of Management, Moscow, Russian Federation [email protected], [email protected]

Abstract. The paper suggests using an approach that is based on the logistic function developed by Pierre François Verhulst that was used for the forecasting of the development of fixed-line broadband Internet. As is known, there are various quantities that characterize, for example, the number of users of some service or good, have definite limits at the approach to which the rate of growth of quantity under consideration slows down. The share of fixed-line broadband Internet users in Russia was chosen as such quantity for forecasting. Therefore, this research is aimed at developing a model that is based on Verhulst’s equation, to forecast the share of fixed-line broadband Internet users in Russia in 2018–2025. The methodology of this research is comprised of the following stages: selection of predicted value; selection of the saturation index value, start value and the number of indices used for forecasting; calculation of values required to compile a system of equations; forming a system of equations and solving it; calculation of sought variables; building a diagrammatical predictability model and formulating conclusions. The use of Verhulst’s equation for the forecasting of various quantities is yet another option of the search of possible scenarios of development of individual companies, organizations, sectors and countries. Keywords: Forecasting
Fixed-line broadband Internet
Verhulst’s equation
Logistic function JEL Code: C530

1 Introduction Various quantities in various fields of activity have certain growth limits. Such quantities may include: the number of computers in the country (world); the number of cars in the country (world); the number of families with TVs in the country (world); the number of fixed-line communication users in the country (world) etc. (Parsons 2018; Gevorkyan et al. 2018; He et al. 2018; Anikin and Anikin 2017). In order to make a forecast in this research, the authors selected the share of fixedline broadband Internet users in Russia and used logistic function proposed by Pierre François Verhulst. (Miao et al. 2017; Puripat and Sarikavanij 2018; Miskinis and Vasiliauskiene 2017).

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 845–851, 2020. https://doi.org/10.1007/978-3-030-39319-9_93

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In this research, we intended to reply to the question about how the share of fixedline broadband Internet users in Russia will change in 2018–2025? The research is aimed at developing a model based on Verhulst’s equation to make a forecast of the share of fixed-line broadband Internet users in Russia in 2018–2025.

2 Methodology In order to make our forecast, we used the following equation developed by Pierre François Verhulst: Y ¼ A= 1 þ 10a þ bx





þ C,

ð1Þ

where Y is the value of function, A is the difference between the higher and lower limits, x is the sequence number of the time interval under consideration, C is the value starting from which function starts increasing, a, b are indicators that impact the pattern of change of function. Methodology used is comprised of the following stages: 1. Selection of predicted value. 2. Selection of the saturation index value, start value and the number of indices used for forecasting. 3. Calculation of values required to compile a system of equations. 4. Forming a system of equations and solving it. 5. Calculation of sought variables. 6. Building a diagrammatical predictability model and formulating conclusions. We shall start with the selection of value for forecasting. 1. At the initial stage, we select an indicator characterizing the state of the Internet in the country. Such an indicator is the share of fixed-line broadband Internet users in Russia in 2002–2017 (see Table 1). (International Telecommunication Union (ITU) 2018). Table 1. The share of fixed-line broadband Internet users in Russia, % Years The share of fixed-line broadband Internet users in Russia, % x 2002 0.01 1 2003 0.24 2 2004 0.47 3 2005 1.11 4 2006 2.02 5 (continued)

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Table 1. (continued) Years The share of fixed-line broadband Internet users in Russia, % x 2007 3.42 6 2008 6.49 7 2009 9.02 8 2010 10.97 9 2011 12.31 10 2012 14.59 11 2013 16.54 12 2014 17.36 13 2015 18.68 14 2016 19.12 15 2017 21.44 16 Source: (International Telecommunication Union (ITU) 2018).

2. We adopt the convention that C = 0, n = 16, A = 35%. 3. We perform data calculation for the system of equations (see Table 2). Table 2. Data calculation for the system of equations A x Y x2 A/Y A/Y − 1 = Z lg Z 35 1 0.01 1 4619.84 4618.84 3.66 35 2 0.24 4 147.54 146.54 2.17 35 3 0.47 9 74.69 73.69 1.87 35 4 1.11 16 31.63 30.63 1.49 35 5 2.02 25 17.30 16.30 1.21 35 6 3.42 36 10.23 9.23 0.96 35 7 6.49 49 5.40 4.40 0.64 35 8 9.02 64 3.88 2.88 0.46 35 9 10.97 81 3.19 2.19 0.34 35 10 12.31 100 2.84 1.84 0.27 35 11 14.59 121 2.40 1.40 0.15 35 12 16.54 144 2.12 1.12 0.05 35 13 17.36 169 2.02 1.02 0.01 35 14 18.68 196 1.87 0.87 −0.06 35 15 19.12 225 1.83 0.83 −0.08 35 16 21.44 256 1.63 0.63 −0.20 136 1496 12.93

x lg Z 3.66 4.33 5.60 5.94 6.06 5.79 4.50 3.68 3.07 2.66 1.60 0.57 0.09 −0.82 −1.21 −3.18 42.35

4. Using the data from the calculation performed, we make a system of Eq. (2) and solve it:

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16a þ 136b ¼ 12; 93 136a þ 1496b ¼ 42; 35

ð2Þ

We multiply the first equation by 8.5 and obtain the following: 136a + 1156b = 109,93 We transpose 1156b to the right member of equation and obtain: 136a = 109,93 − 1156b We substitute 136a into the second equation and obtain the following: 109,93 − 1156b + 1496b = 42,35 Therefore, we obtain the following: 340b = −67,58 b = −0,2 We substitute b: 16a + 136 * (−0, 2) = 12,93 We obtain the following: 16a = 39,96 a = 2, 5 5. We substitute data obtained into Eq. (1): Y = 35/(1 + 102,5 − 0,2x) and calculate the target values (see Table 3). Table 3. Calculation of Yx values A

a

b

x

lg Z = a + bx Y

35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35

2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50

−0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20 −0.20

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

2.30 2.10 1.90 1.70 1.50 1.31 1.11 0.91 0.71 0.51 0.31 0.11 −0.09 −0.28 −0.48 −0.68 −0.88 −1.08 −1.28 −1.48 −1.68 −1.87 −2.07 −2.27

Z = A/Y − 1 Z + 1

0.17 199.05 0.28 125.95 0.43 79.70 0.68 50.43 1.06 31.91 1.65 20.19 2.54 12.78 3.85 8.09 5.72 5.12 8.26 3.24 11.48 2.05 15.24 1.30 19.23 0.82 23.04 0.52 26.35 0.33 28.98 0.21 30.93 0.13 32.31 0.08 33.25 0.05 33.87 0.03 34.28 0.02 34.54 0.01 34.71 0.01 34.81 0.01

200.05 126.95 80.70 51.43 32.91 21.19 13.78 9.09 6.12 4.24 3.05 2.30 1.82 1.52 1.33 1.21 1.13 1.08 1.05 1.03 1.02 1.01 1.01 1.01

yx = A/(Z + 1) 0.17 0.28 0.43 0.68 1.06 1.65 2.54 3.85 5.72 8.26 11.48 15.24 19.23 23.04 26.35 28.98 30.93 32.31 33.25 33.87 34.28 34.54 34.71 34.81

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6. We construct a graph on the basis of data obtained (see Fig. 1) and draw conclusions.

40.00

Share of fixed-line broadband Internet users in the country, %

35.00

30.00

25.00

20.00

15.00

10.00

5.00

0.00

Years Доля пользователей фиксированного широкополосного интернета в стране, % Расчетная доля пользователей фиксированного широкополосного интернета в стране, % Share of fixed-line broadband Internet users in the country, % Estimated share of fixed-line broadband Internet users in the country, %

Fig. 1. Share of fixed-line broadband Internet users in the Russian Federation, % Source: (International Telecommunication Union (ITU) 2018).

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3 Results Based on the proposed approach, the determination of the limiting value of the share of fixed-line broadband Internet users will be definitive in the forecasting process. (Anikin 2012a, b, c; Anikin et al. 2017). As can be seen from Fig. 1 and calculation, in 2025, the share of fixed-line broadband Internet users in the Russian Federation may amount to 34.8%.

4 Conclusions The method of forecasting of the share of fixed-line broadband Internet users in Russia that is brought to your notice provides the necessary basis for decision-making and the development of medium-term and long-term development strategies for companies, organizations, sectors and the country as a whole. (Zhao and Hu 2018; Anikin 2012a, b, c; Anikin and Anikin 2012; Anikin 2018; Anikin et al. 2018).

References Anikin, O.B., Anikin, B.A.: World-class intelligent support systems. In: Proceedings of the 1st International Research-to-Practice Conference “A Step into the Future: Artificial Intelligence and the Digital Economy”, Moscow, Russia, 2017, no. 2, pp. 54–58. The State University of Management (2017) Anikin, B.A., Anikin, O.B.: Logistic components of world economic crises. University Bulletin (The State University of Management), no. 5, pp. 98–102 (2012) Anikin, B.A., Anikin, O.B., et al.: Logistics Workshop: A Study Guide, 2 edn. INFRA-M Publishing House, Moscow (2017). Enlarged, under the editorship of Anikin, B.A Anikin, O.B.: Strategies for the development of telecommunications companies. Marketing 3, 86–94 (2008) Anikin, O.B.: Development of mobile communication services in the Russian Federation at the end of the XX - beginning of the XXI century. University Bulletin (The State University of Management), vol. 1, no. 13-1, pp. 5–9 (2012a) Anikin, O.B.: Current trends in the development of document communication and investment metrics of the development of telecommunications in the Russian Federation. University Bulletin (The State University of Management), vol. 1, no. 8, pp. 9–12 (2012b) Anikin, O.B.: Socioeconomic indicators of the development of landline telephone communications in Russia. University Bulletin (The State University of Management), vol. 1, no. 7, pp. 53–59 (2012c) Anikin, O.B., Anikin, B.A., Grishin, V.N.: The Concept of Creating Products and World-Class Achievements. INFRA-M Publishing House, Moscow (2018) Gevorkyan, M.N., Demidova, A.V., Velieva, T.R., Korol’kova, A.V., Kulyabov, D.S., Sevast’yanov, L.A.: Implementing a method for stochastization of one-step processes in a computer algebra system. Program. Comput. Softw. 44(2), 86–93 (2018) He, J.P., Jiang, Z.X., Zhao, C., Peng, Z.Q., Shi, Y.Q.: Cloud-Verhulst hybrid prediction model for dam deformation under uncertain conditions. Water Sci. Eng. 11(1), 61–67 (2018)

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International Telecommunication Union (ITU): Country ICT data (until 2017). Fixed-broadband subscriptions (2018). https://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx. Accessed 16 Nov 2018 Miao, S.J., Hao, X., Guo, X.L., Wang, Z.M., Liang, M.C.: Displacement and landslide forecast based on an improved version of Saito’s method together with the Verhulst-Grey model. Arab. J. Geosci. 10(3), 53 (2017) Miskinis, P., Vasiliauskiene, V.: The analytical solutions of the harvesting Verhulst’s evolution equation. Ecol. Model. 360, 189–193 (2017) Parsons, T.L.: Invasion probabilities, hitting times, and some fluctuation theory for the stochastic logistic process. J. Math. Biol. 77(4), 1193–1231 (2018) Puripat, C., Sarikavanij, S.: The comparison of grey system and the Verhulst model for rainfall and water in Dam prediction. Adv. Meteorol. (2018). 7169130, 11 p. Zhao, Z.D., Hu, C.Z.: Grey prediction models for the standard limit of vehicle noise. Proc. Inst. Mech. Eng. Part D J. Autom. Eng. 232(7), 973–979 (2018)

The Modern Technetronic Society and Computer Crimes Dmitry A. Lipinsky1(&), Aleksandra A. Musatkina1, and Konstantin N. Evdokimov2 1

2

Togliatti State University, Togliatti, Russia [email protected], [email protected] Irkutsk Law Institute Affiliated with the Academy of the General Prosecutor’s Office of the Russian Federation, Irkutsk, Russian Federation [email protected]

Abstract. The purpose of the work is to study the place and role of human as a subject of law in the conditions of the modern technetronic society and cyber crimes. The authors use rather-legal and formally legal methods, analyze statistical data on the state of cyber crimes, and use the method of observation and analysis of the facts of social reality. The authors analyze information relations and role of various subjects in their functioning. Special attention is paid to domestic and international regulation of information relations and information crimes and new threats to humans in the modern world. Various methods of performing computer crimes are studied. The authors come to the conclusion that modern information relations are not controlled by human, society, and state – due to their social latent nature, technical difficulty, and multi-aspect character. For proper regulation of the role of a human in the modern information society, it is offered to adopt the UN Convention that would contain the main rules of the global information security. Keywords: State and legal regulation
Information society
Information relations
Internet crimes
Information crimes
Cyber crimes
Computer crimes
Technetronic crimes

The modern society is technetronic in its essence, as it is characterized by quick development and wide usage in public relations of the results of information, communication, quantum, biological, cognitive, space, robototronics, and other technologies and application of the means of creation, storing, accumulation, processing, and transfer of large volumes of various types of information. Information relations cover almost all significant spheres of society’s life: science, education, culture, industry, financial and banking sector, energy sphere, transport, etc. Information and telecommunication networks united millions of people, allowing for social communication regardless of the geographical factor and state borders. According to the international analytical agency “We Are Social” and the largest SMM platform “Hootsuite”, the number of Internet users reached 4.021 billion in 2018, which is by 7% higher as compared to 2017. The audience of social networks in 2018 constituted 3.196 billion—plus 13% to the 2017 level. In 2018, 5.135 people used mobile phones – which was by 4% higher than in 2017 [1]. Most of mobile phones have Internet connection and are the means of social communication. © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 852–857, 2020. https://doi.org/10.1007/978-3-030-39319-9_94

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As information relations are an important and large segment of public life, this sphere requires the state and legal regulation and close attention from controlling bodies of public authorities. The international principle of creation of information society and development of information relations are defined by the Okinawa Charter on Global Information Society (2000), declaration “Formation of information society – a global task in a new millennium” (2003), and Tunis Declaration and Plan of Action (2005). In its turn, the Decree of the President of the Russian Federation dated May 9, No. 203 adopted the “Strategy of development of information society in the Russian Federation for 2017–2030”. This Strategy is based on such key notions as “secure software and service”, “industrial Internet”, “Internet of Things”, “information society”, “information space”, “infrastructure of e-government”, “critical information infrastructure of the Russian Federation”, “National e-library”, “cloud calculations”, “processing of large arrays of data”, “knowledge society”, “objects of critical information infrastructure”, “communication networks of a new generation”, “technologically independent software provision and service”, and “eco-system of the digital economy”. One of the main threats to the modern information society, which endangers the possibility of its further safe existence and development, is information crimes (computer crimes, cybercrimes, Internet crimes, crimes in the sphere of hi-tech, etc.), which deals colossal damage to rights and legal interests of person, society, and state. Decree of the President of the Russian Federation dated December 5, 2016 No. 646 adopted the “Doctrine of information security of the Russian Federation”, in which information sphere is defined as a totality of information, objects of informatization, information systems, web-sites in Internet, communications networks, information technologies, subjects which activities are connected to formation and processing of information, development and usage of the above technologies, provision of information security, and totality of the mechanisms of regulation of the corresponding public relations. Despite the state measures on provision of information security and protection of information relations from various external and internal threats, the situation is still critical. Thus, Vladimir Putin, during his speech at the FSB said that there were more than 24 million cyber-attacks on official web-sites and information systems of Russian authorities in 2015. The authorities stopped the work of more than 1,600 web-sites, which activities dealt damage to security of Russia [2]. According to the Office of the Prosecutor General of the Russian Federation, the number of crimes in the sphere of information and telecommunication technologies grew from 65,949 to 90,587 in 2017, and their share in the number of all registered crimes in Russia constituted 4.4% [3]. Deputy Minister of Internal Affairs Igor Zubov said that in 2018 there were 40,000 registered crimes in the sphere of IT in Russia, most of which were performed in the banking sphere [4]. According to the results of joint research of the Fund of development of Internet initiatives and international companies Group-IB and Microsoft, the damage to the

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Russian economy from cybercrimes in 2015 exceeded RUB 200 billion, which was 0.25% of the Russia’s GDP [5]. In 2017, damage to the global economy from cyber-attacks – according to Sberbank – exceeded USD 1 trillion [6]. In 2017, Irkutsk Law Institute Affiliated with the Academy of the General Prosecutor’s Office of the Russian Federation conducted a survey of 2 groups of respondents: experts (209 prosecutors) and computer users (239 undergraduates of legal colleges of Irkutsk). The question “Do you think that computer crimes are not fully controlled by law enforcement and civil society (AI, computer viruses, spy computer programs, etc.)?” was answered positively by 82.8% of prosecutors and 76.2% of computer users. Thus, it is possible to conclude that the modern information relations are not fully controlled by human, society, and state – due to their latent nature, technical complexity, and multi-aspect character. This conclusion is based on the following facts and arguments: 1. The modern society is information society – it depends on IT technologies: computers, information and communication networks, computer devices, the Internet of Things, and other means of creation, storing, processing, and transfer of computer information. However, most people do not have a clear idea of the principles and methods of their work and do not have special technical knowledge and skills of computer programming, network administration, and protection of computer information, determination of crimes, and determination of illegal content. That’s why “information” illiteracy of population, absence of individual and public culture of “information security”, latent character of computer crimes, and technical complexity of their determination lead to weak control over information relations by society and individuals. 2. Latent character of computer crimes and complexity of their investigation by law enforcement led to decrease of the number of criminal cases that are sent to the court. According to the Main Information and Analysis Center with the Ministry of Internal Affairs of the Russian Federation, out of criminal cases on crimes envisaged by Article 273 of the Criminal Code of the Russian Federation the following numbers should be considered: 914 criminal cases (out of 1066) were investigated and set to court with criminal indictment in 2010; 558 (out of 754) in 2011; 664 (out of 953) in 2012; 575 (out of 764) in 2013; 344 out of 655 in 2014; 369 out of 1056 in 2015; 299 out of 1124 in 2016; 281 out of 1192 in 2017 [7]. Thus, the official statistics show that up to 75% of criminal cases are terminated at the stage of preliminary investigation. Analysis of the court practice for criminal cases on crimes in the sphere of computer information allows for the conclusion that in most cases only inexperienced computer criminals are brought to responsibility, while professional hackers remain out of the field of attention of law enforcement agencies – which conforms the theory of the uncontrolled character of computer crimes. 3. Professional computer criminals create a “network” technocracy, which is not controlled by the state, but influences the society and its institutes (Anonymous, WikiLeaks, Chaos Computer Club, LulzSec, etc.).

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4. Within so called “information wars”, a symbiosis of criminal computer technocracy with state special services takes place – for cyber espionage, cyber sabotage, cyber blackmail, and other computer crimes for the purpose of political, economic, and financial pressure on the critical infrastructure of rival states (China, USA, Russia, EU, North Korea, etc.). Thus, computer criminals are hired and perform the “state orders” of intelligence services, which are “secret” for society – and, therefore, uncontrolled. 5. Further evolution of IT-technologies led to development of new quantum computers and successful results in the sphere of AI. Studies are conducted by the principles of secrecy and conspiracy. Application of these technologies by the military, intelligence services, and state officials for unlawful purposes also created the conditions of absence of control over computer crimes by the institutes of civil society and the state. Also, further uncontrolled development of AI could lead to irreversible consequences for human civilization. 6. According to the experts in the sphere of anti-virus protection and computer security (Kaspersky, Symantec, etc.) [8–10], while in the past the virus computer programs were created individually or together with other virus makers, now computer viruses are created by whole families and are modeled not by human but by special computer programs – “generators”. This process becomes fully automatized and is performed without human participation – which also confirms our scientific theory of uncontrolled technetronic crimes. Virus makers that created malicious computer programs-generators know the only the main course of the initial malicious computer program, without any knowledge of all functional qualities of the main program’s modifications and knowledge on destruction of the created computer viruses. This leads to the latter’s coming out of the society’s control and emergence of global computer epidemics, which deal a large material loss to society (computer viruses Brain, CIH, Melissa, Blaster, Sasser, Zotob, Storm Worm, Conficker, Mariposa, Zeus, Bredolab, TDSS, etc.) An example of this is the case with a Taiwan student Chen Ing-hau, who created a computer virus CIH, or Chernobyl (Virus.Win9x.CIH), in June 1998, disseminating it in Internet. On April 1999, on the 13th anniversary of the Chernobyl disaster, the virus activated and destroyed data on hard drives of 500,000 infected computers around the world, dealing the USD 20–80-million damage. As Chen Ing-hau did not know how to stop the virus and was afraid of punishment, he wrote official apologies to the citizens of China which computers were attacked [11]. 7. Transition from the global information and telecommunication network “Internet”, controlled by the state and society, to anonymous information networks and systems of instant transfer of messages (messengers) also accelerated the process of computer crimes’ going out of control of society and state.

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At present, computer criminals use anonymous networks (Tor, Freenet, Zeronet, Virtual Private Network, etc.) and messengers (Brosix, Wickr, Jabber, etc.) for performing unlawful actions (selling drugs, weapons, and child porn; prostitution, selling stolen information, illegal gambling; terrorism, extremist activities; money laundering, etc.). On July 3, 2017, the Decision of the Leninsky District Court of Saransk (Republic of Mordovia) – for the crimes envisaged by part 2 Article 210, part 3 Article 30, etc. of the Criminal Code of the Russian Federation – sentenced P. A. Pinchuk to imprisonment for size years in a correctional colony of strict regime, with a fine of RUB 30,000. The course established that P. A. Pinchuk, as a member of criminal group, sold drugs on the territory of Republic of Mordovia in 2015, using Internet and messengers Brosix, Wickr, and Jabber. The assets received from selling drugs (bitcoins were exchanged for Russian rubles via online Internet stock exchange and then transferred to impersonal “Qiwi” purse, and then – to the account in KS Bank) were used by P. A. Pinchuk for personal purposes [12]. 8. The financial foundation of modern crimes has been forming by means of crypto currencies (Bitcoin, Litecoin, Ethereum, etc.), which are anonymous payment means and methods of money laundering. State authorities do not control the turnover of crypto currencies – due to complexity of their digital nature, anonymous character of creation, usage, and dissemination; absence of unified international rules of turnover of crypto currencies in the financial, tax, banking, and commercial spheres. However, “bitcoin”, as a payment means, is acknowledged in the USA, Japan, Singapore, Thailand, and the EU (crypto currencies are prohibited in Russia), which stimulates the development of uncontrolled information relations in the commercial and financial spheres [13, pp. 36–39]. Concluding the above, it is possible to state that effective state control over development of information relations and fighting the modern computer crimes requires a complex of political, legal, technical, and other measures. It is offered to adopt the UN Convention that would contain the main rules of the global information security. The project of such convention was offered by Russia in 2011. It is necessary to make the Federal Agency on Technical Regulating and Metrology have a register of permitted computer programs. Also, the Federal law dated July 27, 2006, No. 149-FZ “On information, information technologies, and information protection”, Administrative Offences Code of the Russian Federation, and the Criminal Code of the Russian Federation should have the norms envisaging that usage and dissemination of computer programs that are not registered by the Federal Agency on Technical Regulating and Metrology shall lead to legal responsibility (for legal entities—administrative responsibility, for individuals—criminal responsibility). Besides, it is necessary to adopt strict state and public control over all scientific developments in the sphere of AI, creating a council with the President of the Russian Federation; computer should not make independent decisions, it should be a consultant during human’s managerial decisions [14, pp. 62–63].

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References 1. Official web-site of WebCanape-digital: Internet 2017–2018 in the world and Russia: statistics and trends [E-source]. https://www.web-canape.ru/business/internet-2017-2018-vmire-i-v-rossii-statistika-i-trendy/. Accessed 27 June 2019 2. Speech of Vladimir Putin at the FSB [E-source]. http://пyтин.ru-an.info/нoвocти/ выcтyплeниe-влaдимиpa-пyтинa-нa-кoллeгии-фcб-poccии/. Accessed 27.Nov.2018 3. Office of the Prosecutor General spoke of growth of the number of cyber crimes in Russia [E-source]. https://russian.rt.com/russia/news/545081-genprokuratura-rasskazala-o-rostechisla-kiberprestupleniy. Accessed 27 July 2019 4. Official web-site of RT: The Ministry of Internal Affairs told about the level of cyber crimes in Russia since the beginning of the year [E-source]. https://russian.rt.com/russia/news/ 533810-mvd-kiberprestupleniya-rossiya. Accessed 27 Dec 2018 5. Official web-site RIA Novosti: Damage to the Russian economy from cyber crimes exceeded RUB 200 billion [E-source]. http://ria.ru/economy/20160413/1409855094.html#ixzz45j CApNtn. Accessed 27 June 2019 6. Web-site “Expert online”. National cyber war in progress [E-source]. http://expert.ru/expert/ 2017/05/idet-kibervojna-narodnaya/. Accessed 27 July 2019 7. Official web-site of the Ministry of Internal Affairs of the Russian Federation. Information on crimes in the sphere of telecommunications and computer information (F-615 V.1.) Crimes in the sphere of computer information (F-491 V.1.) Collected volume for Russia for January–December 2010–2017 [E-source]. http://mvd.ru . Accessed 7 July 2019 8. Kaspersky security bulletin 2016: statistics [E-source]. https://press.kaspersky.com/files/ 2016/12/KASPERSKY_SECURITY_BULLETIN_2016_cтaтиcтикa.pdf 9. Report of Symantec (Internet Security Threat Report. April 2017. Volume 22) on security threats in Internet for 2016. [E-source]. http://book.itep.ru/depository/surveys/ISTR22_ Main-FINAL-APR24.pdf. Accessed 27 June 2018 10. Interview of Natalia Kasperskaya to TV Channel Russia 24. “Mnenie”: global cyber war [Esource]. youtube.com. 27 July, 2015. https://yandex.ru/video/search?p=1&filmId=16857534 384968030677&text=интepвью%20нaтaльи%20кacпepcкoй%20вecти%20в%202015%20 гoдy&noreask=1&path=wizard&reqid=1497359146781708-1159535954307261580830983 8-vla1-2180-V. Accessed 11 June 2019 11. Web-site “Kaspersky Laboratory”: Description of virus virus.win9x.cih on the web-site of Kaspersky Laboratory [E-source]. https://threats.kaspersky.com/ru/threat/Virus.Win9x.CIH. Accessed 11 Dec 2018 12. Criminal Case No. 1-125/2017: Archieve of the Leninsky District Court of Saransk (Republic of Mordovia) for 2017 13. Evdokimov, K. N.: Technetronic crimes (private theory). Russian Judge, no. 4, pp. 35–39 (2018) 14. Evdokimov, K. N.: New threats to information security of Russia: from computer crimes to technetronic crimes (private scientific theory): The main directions of the Russian national policy in the sphere of provision of national security. Materials of the international scientific and practical conference. Edited by E.M. Yakimova, pp. 57–65 (2018)

Financial Behavior of Russian Retired Persons Daria V. Moiseeva1(&) and Nadezhda V. Dulina2 1

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

Abstract. Over the last ten years, Russia has paid much attention to improving the financial literacy of its population. The strategy of improving the financial literacy of the population in the Russian Federation for 2017–2023, adopted by the Government of our country in 2017, citizens, who are pensioners and at the pre-pension age, are allocated to the target group. These actions are the necessity to develop effective measures of improving financial literacy of the population have actualized the study of financial behavior and financial literacy of elderly people. The aim of the study is to reveal peculiarities of modern Russian pensioners’ financial behavior. The paper presents a review of foreign and Russian scientists’ studies on selected topics. On its basis the conclusion is made that research interest in the financial behavior of retirees is weak, and the most interesting directions of research have been formulated. The empirical base of the work is the materials of the All-Russian research “Monitoring of financial behavior” and the regional pilot study “Financial behavior of Russian pensioners”. The identification of peculiarities of financial behavior among pensioners, on the materials of the All-Russian study, has been carried out by correlating the answers to the questions of the two groups: “pensioners” and “non-pensioners”. Comparative analysis has allowed us to describe significant differences. Regional study has given an opportunity to make up characteristics of financial behavior of retirees living in Volgograd. It is concluded that Russian pensioners are not a homogeneous group in terms of financial activity, literacy and are significantly differentiated due to the models of financial behavior. This situation is important to consider when developing programs that will improve financial literacy of the population. In order to provide effective inclusion of retirees into educational programs to improve financial literacy, it is necessary to ensure that such programs are targeted. Such a task requires sociological research that will lead to better understanding of the specifics of financial behavior of Russian pensioners, explore the channels for obtaining financial information, and provide conditions when regional features are taken into account. Keywords: Financial behavior
Pensioners
Financial literacy people
Savings behavior
Credit behavior
Financial activity


Elderly

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 858–871, 2020. https://doi.org/10.1007/978-3-030-39319-9_95

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1 Introduction A new round of pension reform in 2018 initiated a large-scale public discussion of the delaying the retirement issue. One of the most pressing issues scaring any working person on their retiring is how to live on his or her retirement benefit. Retirement is accompanied by a significant decrease in income, which requires considerable financial discipline from pensioners, the ability to carry out financial planning. A dramatic increase in the complexity of financial products and the high level of digitalization of the banking sector, and the economy as a whole, is becoming a serious barrier to the modern pensioners’ active participation in financial life and it is becoming the field of the financial fraudsters’ activity, which, taking advantage of the low level of pensioners’ financial literacy, are easily involving them in the activities of financial pyramids and so on. New knowledge acquisition about the personal Finance management, mastering new financial skills in modern conditions is becoming a prerequisite for the pensioners’ financial well-being and financial security. In 2017, the Government of the Russian Federation adopted the “Strategy for improving financial literacy of the population in the Russian Federation for 2017–2023” [1], within which citizens, who are pensioners and at the pre-pension age, are allocated to the target group that have difficulties in fulfilling and protecting their rights for financial education. The extensive work on increasing the level of financial literacy of elderly people started in 2011 within the beginning of the project “Promotion of financial literacy of the population and development of financial education in the Russian Federation” [2] is now being continued. To ensure the effectiveness and targeting of such projects, sociological support is necessary. At the first stage, it will help to get an idea of the financial behavior of modern Russian pensioners and the level of their financial literacy, at the next stage – to assess the extent of the impact, to identify changes that have occurred. Nevertheless, on having studied open access sources of information (the database of Russian science citation index, Scopus, RSL, sites analytical centers FOM, VCIOM, NAFI, Ministry of Finance etc.) we can conclude that there is weak research interest in the subject. The aim of the study is to reveal peculiarities of modern Russian pensioners’ financial behavior. To achieve this goal it was necessary to solve the following tasks: (1) a review of foreign and Russian scientists’ studies on the problems of retirees’ financial behavior and financial literacy; (2) comparative analysis of the data of sociological studies of financial behavior of the population (all-Russian and regional). The empirical base of the work is the materials of two investigations: (1) the All-Russian research “Monitoring of financial behavior”, access to the data set obtained through a Joint economic and social data archive of Higher school of Economics (2) the regional pilot study “Financial behavior of Russian pensioners” carried out by the authors.

2 Literature Review Retirees’ financial behavior does not often become an object/subject of sociological research. As a rule, these are studies aimed at studying the financial behavior of the population, and pensioners are considered as one of the social groups [3–7]. Among the foreign works available to the authors, the most interesting are the following ones:

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(1) Lusardi, Mitchell, Curto [8], using the General financial literacy index, we assessed the financial development (sophistication) of the American population over the age of 50. The results show that many elderly respondents are not financially advanced: they do not understand the essential aspects of risk diversification, asset valuation, portfolio selection and investment fees. The least financially literate are women, people with low levels of education, “non-whites” and people over 75 years of age. The researchers, taking into account the fact that pensioners increasingly have to take responsibility for the financial security of their pension, come to the conclusion that such a low level of knowledge can have serious and negative consequences for both pensioners and the country’s economy as a whole; (2) Adam, Boadu, Frimpong [9] within their study examine the impact of financial literacy, financial behavior, family support (as another source of income), number of dependents, and planning of retirement financial well-being of pensioners in the capital of Ghana, Cape coast. The results show that financial literacy, retirement planning and family support have a significant impact on the financial well-being of pensioners. More importantly, the impact of family support and pension planning on the financial well-being of pensioners is stronger than the impact of financial literacy. The results showed that it is necessary to develop programmes aimed at improving financial literacy and awareness of the need for pension planning. In their subsequent work [10] they paid attention to the study of gender inequality in financial literacy among pensioners on the materials of the same study. Scientists have found that elderly men have a higher level of financial literacy and more developed skills in math. On the basis of the study, they have given recommendations to solve the problem of gender inequality in financial literacy of Ghanaians; (3) The purpose of the research of Hira and Mugenda [11] was to identify the differences in factors that predict financial satisfaction of the retirees and those that are not retired, as well as the definition of financial beliefs and behaviors of “pensioners” and “non-pensioners”. On studying financial satisfaction, the authors included such aspects as: (1) regular cash savings, (2) the level of current debt, (3) the current financial situation of the family, (4) the ability to achieve long-term financial goals, (5) the ability to respond to financial emergencies, (6) capital management skills. Scientists note that, despite the lower average income of pensioners, their current financial situation satisfies more of them than those that are not retired. The researchers draw our attention to the importance of selfassessment of financial well-being, as well as the study of factors affecting selfesteem and self-assessment strategies. On retirees’ financial counseling and financial education, they invoke to consider the self-esteem of the clients and their financial beliefs (subjective factors) and not just concentrate on the objective factors, such as income, debt, savings, etc. T. K. Hira and O. M. Mugenda suggest that retirees are more concerned about the possibility of deteriorating their health status in future and connected with it cost increases, rather than focusing on financial issues. An important result of their work was the justification of the need

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to take into account the differences in financial beliefs and behavior of pensioners and “non-pensioners” in the development of educational programs on the management of Finance and financial counseling. Foreign scientists raise the issues that are relevant to the practice of Russian studies of the financial behavior of pensioners in their works. They allow to point out both common research areas of the object and the specific for Russia ones. Considering Russian scientists’ experience, we once again emphasize the very small representation of the designated field on the one hand, and the increased attention of the state to this problem, on the other. Resolution of March 31, 2017 No. 372 of the state program “Social support of citizens” was supplemented by the sub-program “Elder people”, the objectives of which are designated “organization of timely and full provision of social support measures to citizens of the elder people and ensuring access of citizens of the elder generation to information resources” [12]. The website of Rosstat now has a section “elderly people”, containing information on demographic indicators, retirement benefits of elderly citizens and measures for their social support, etc. [13]. Some problems of the financial behavior of Russian pensioners are discussed in the works of Kozyreva, Smirnov, Rzhanitsyna, Anshukova, Mosina, Lezhnina, Starikova [3, 14–20]. One of the most accessible and significant to date is the study “Financial behavior of elder people in Russia in the context of digitalization” [21], the materials of which were presented on June 15, 2018 in the Federation Council at the meeting of the Council for the development of social innovations of the RF subjects [22]. This study is a case study-a combination of Desk research, expert interviews, quantitative survey, hall test and focus groups. It gives a detailed description of the financial behavior of older people and offers recommendations on the organization of effective work with older people in banks. The study was carried out at the junction of marketing and sociology, but is more focused on solving marketing problems. Methods and Results. The number of pensioners in Russia is steadily growing and as of January 1, 2017 it amounted to 36,685 thousand people [23], including in the Volgograd region – 682,881 thousand people [24]. Decisions concerning one quarter of the country’s population must be well thought out and justified. Let us get to the results of research. As mentioned above, this paper will present an analysis of the financial behavior of Russian pensioners based on two studies. Let’s start presenting the results with the data of the all-Russian survey “Monitoring of financial behavior” is an allRussian survey of the population representing the adult (over 18 years) population of the Russian Federation by sex, age, labor status (employment) and type of settlement in which the respondent lives, as well as individual Federal districts of the Russian Federation. Total sample size – 1629 people, the sampling error is 3.4%, the time of the survey – 01.10.2014–30.11.2014, The proportion of respondents who indicated that they are currently pensioners, 29.2% (475 people), their composition by sex and marital status is presented in the Table 1.

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Table 1. Composition of pensioners and “non-pensioners” by sex and marital status, %%. Are you a retiree at Sex of the Marital status of the respondent the moment? respondent Male Female Married Single Divorced Living together Yes, I am 9.3 19.9 16.6 2.0 3.1 0.7 No, I am not 36.2 34.6 42.5 17.9 5.9 3.1 Total 45.5 54.5 59.1 19.9 9.0 3.8

Total Widowed 6.7 1.5 8.2

29.2 70.8 100

In the sample representing the adults (over 18 years) population of the Russian Federation, the proportion of men among pensioners is twice less than that of women (9.3% and 19.9%, respectively). Most retirees (16.6% from 29.2%) are married, proportion of the widowed was 6.7%. Now we will consider the statistically significant differences in financial behavior between pensioners and people who are not yet receiving a pension. Pensioners are more inclined to savings: about half of them (51.2%) have savings, while among the “non-pensioners” answered affirmatively to the question of the availability of savings only 36.0% (Fig. 1). Have savings

Haven’t savings

59,5% Total 40,5%

64,0% Non-pensioners 36,0%

48,8% Pensioners 51,2%

0%

10%

20%

30%

40%

50%

60%

70%

The response rate in the group,%

Fig. 1. Distribution of answers to the question: “Tell me, please, does your family now have savings?” among pensioners and “non-pensioners”, %%

The tendency to preserve savings among pensioners is much more common: 41.9% of them would prefer to keep savings and only 19.2% would rather spend on large

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purchases, among “non-pensioners” the share of answers to the same question is 23.9% and 36.4%, respectively. Estimates of the minimal amount of money in rubles, which can be called savings, do not differ significantly between the two study groups: the average and the fashion practically coincide, but the median for pensioners is two times lower (Table 2). Table 2. Estimation of average values of the minimum amount of savings, “normal” and “real” income, rubles. Indicator Minimum amount of savings: Please tell me, what is the minimum amount of money in rubles, in your opinion, can be called savings? Ratio of the indicator for “non-pensioners” and pensioners “Normal” income: What do you think should be the size of the total income in rubles of your family per month to your family lived normally? Ratio of the indicator for “non-pensioners” and pensioners “Real income”: What was the total income for the last month received by all your family members living with you, excluding taxes? Ratio of the indicator for “non-pensioners” and pensioners

Yes, I am No, I am not

Yes, I am No, I am not

Yes, I am No, I am not

Mean

Median

Mode

151,282

50,000

100,000

168,350

100,000

100,000

1.1

2.0

1.0

57,355

40,000

50,000

79,269

60,000

50,000

1.4

1.5

1.0

30,362

22,501

20,000

44,572

35,001

35,001

1,5

1,6

1,8

Analysis of the data presented in the Table 2, clearly demonstrates that the income of pensioners below the income of people who do not receive a pension. With retirement income decreases and this is legitimate even for working pensioners. The gap between the median value of “real” income is 1.6 times, the gap is even higher (1.8 times). According to the estimates of pensioners, they need less money for normal existence than “non-pensioners”: the average and the median are 1.4–1.5 times, but the most frequently indicated value in both groups is the same. The decrease in income has a sharp impact on the financial situation of pensioners: difficulties with buying clothes are twice as common (Fig. 2).

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Non-pensioners 2,2% 2,1%

Difficult to answer No money problems, if desired, could buy an expensive car, cottage, country house or apartment

1,1% 1,3%

We can buy everything with the money earned, except for such expensive things as a car, cottage, country house or apartment

12,7% 7,2%

We earn on food, clothes and can afford to buy a TV, refrigerator or washing machine

38,8% 32,0%

We earn money for food and clothes, but it would be difficult to buy a TV, a fridge or a washing machine

36,5% 39,4%

Earn money for food, but serious problems with buying clothes

6,4% 14,9% 2,3% 3,2%

Barely enough for food 0%

5%

10% 15% 20% 25% 30% 35% 40% 45% The response rate in the group, %

Fig. 2. Assessment of the financial situation of “non-pensioners” and pensioners

The decline in income cannot but affect financial behavior: financial activity is markedly reduced (Table 3). Table 3. Financial activity of pensioners and “non-pensioners”, % respondents in group Financial services

Consumer credit Mortgage loan Car loan Plastic card for salary, pension, scholarship, etc. Plastic debit card issued by you personally Credit card issued by you personally Term Deposit in the Bank (Deposit for a certain period, at interest) Current account, “demand Deposit” None of the above

Are you a retiree at the moment? Yes, No, I I am am not 18.4 24.5 1.3 2.9 1.9 5.2 36.4 53.0

Ratio of the indicator for “nonpensioners” and pensioners

6.1 1.6 3.3 16.6

7.8

12.4

4.6

5.0 18.1

12.8 10.5

7.8 −7.6

17.1 27.9

9.5 22.1

−7.6 −5.8

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For most types of financial services, “non-pensioners”: are more active, except for deposits, which is consistent with the differences described above. Using loans among pensioners found in 1,8 times less than among the “non-pensioners” (Fig. 3). Have savings

Haven’t savings

59,5% Total

40,5%

64,0% Non-pensioners 36,0%

48,8% Pensioners 51,2%

0%

10%

20%

30%

40%

50%

60%

70%

The response rate in the group,%

Fig. 3. Distribution of answers to the question: «Have you (members of your household) had to buy anything on credit or take out a loan for the purchase of any durable goods, purchase of an apartment, cottage, payment for treatment, education and the like for the last three years?» among “pensioners” and “non-pensioners”, %%

In terms of financial management in everyday life, pensioners are financially more disciplined: the practice of strict written accounting of household income and expenditure is 1.5 times more common among them (15.3 and 10.6%, respectively). Pensioners are more likely than “non-pensioners” to draw up a financial plan for the use of their income (62.1% and 48.7%, respectively) and to adhere to it (56.4% and 45.3%, respectively). The majority of respondents in both study groups have financial planning horizons within one year (74.5% and 70.6% respectively). But the presence of longterm financial goals is noted only by 27.4% of pensioners against 55.7% of “nonpensioners”. And among the pensioners who noted the presence of long – term financial goals, 36.8% indicated that they would like to buy an apartment, 26.3% – to pay for the education of children or adult family members, 20.6% – to form savings for retirement, 11.4% - construction/repair of the house (among the “non-pensioners” these answers are 57.9%, 27.3%, 9.3% and 4.2%, respectively). Lack of financial goals in the most frequently and pensioners, and “non-pensioners” explain very little income (of 37.8% and 40.1% of the respondents respectively). And such a reason as the lack of need to achieve something like that, because all long-term financial goals have already

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been achieved, among pensioners is twice as common (31.4% and 17.4%, respectively). Financial literacy of pensioners is lower than “non-pensioners”: for all questions aimed at assessing financial awareness and knowledge of financial mathematics, the proportion of correct answers among pensioners is the same. Thus, with retirement incomes of Russians are reduced and the financial situation deteriorates sharply. This is accompanied by an increase in financial discipline and the development of a propensity to save, the formation of such financial strategies is necessary for survival. Other types of financial activity are less common among pensioners than among “non-pensioners”, which is also explained by the reduction in income. It is important to note that pensioners are differentiated by the level of financial activity, but in this sample it is difficult to draw meaningful conclusions on their differentiation and explain the reasons (except for the extinction of the life cycle) is not possible. In this case, studies are required in which pensioners are defined as the object of the study, and their financial behavior – the subject. In autumn 2017, in Volgograd, the authors carried out a pilot regional study “Financial behavior of Russian pensioners”, consisting of a survey (n = 138) and a series of in-depth interviews (n = 10). The study was focused on the development of tools and formulation of hypotheses for further research. 138 people took part in the survey, including 33% of men and 67% of women, aged 55–60 – 30%, 60–65 – 29%, 65–70 – 30%, 75+ – 9%. Half of the surveyed pensioners indicated that they have additional sources of income, except for the state pension, and mainly continue to work. Estimates of their financial situation in Volgograd pensioners slightly higher than in the all-Russian array (see Figs. 2 and 4).

2

Difficult to answer Money is not enough even for food and basic necessities

1

Barely enough money from the retirement until retirement

14

The most necessary money is enough, but buying clothes and shoes is difficult

20

Money, mostly enough, but have difficulty buying durable goods

33 20

It is difficult only to buy expensive things 7

Currently, the family can almost anything not to deny 0

5

10

15

20

25

30

35

Share of respondents, %

Fig. 4. The evaluation of financial situation of pensioners in Volgograd.

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During in-depth interviews, those pensioners who continue to work being on retirement, has announced that with the retirement their financial situation has improved. “Of course. We have already given education to our children, they are married, there are only two of us left and our expenses became lower, although we help our grandchildren. … Of course, it became easier” (female, 59 years). “I would say it is averagely good. We have all we need. Even if we want something more, we can buy it. I started getting my retirement benefit, my financial situation has changed …I already know that I can save some more money, and even if I save the amount of money that I want to I will still have money. Yes, it has changed. I’m more free to choose. Changed for the better” (female, 55 years). Thus, we can assume that the financial situation actually worsens with the end of employment, and not with retirement. “We have to work and what shall I do with such a retirement benefit? Well, while I am not so ill and my health is not so bad, why not earn some money” (female, 59). On developing financial literacy programs, it is necessary to pay attention to the importance of creating a reserve “for a rainy day” before retiring and finishing work. 51% of the surveyed pensioners indicated the existence of the practice of accounting for income and expenses, while only one pensioner was able to clearly describe this practice in the course of a qualitative study: “I write it down. Well, I have a special notebook. As a rule, in the evening, after a working day I buy, come home, look at the checks, compare. To foresee how I spend my money. Is it possible to save somewhere without buying something. Yes, and many people began doing it (to keep records). I have a friend of mine and a good friend, she even in addition to accounting every day makes a note with what she needs to buy in the shop in order not to buy something that she doesn’t need to. She accounts even more that I do. (female, 55 years). More often pensioners describe the practice of accounting as a thought process. Most pensioners (60%) spend money on current needs, and what remains is postponed, 47% note that there is no financial planning in their household, live “from salary to salary”, among those who noted that there are financial plans, the horizons of financial planning are mainly limited to one year (40% of pensioners). Pensioners living in Volgograd have a negative attitude to the financial situation in our country, they believe that it is unfavorable for the creation of savings and for applying for loans. In case of large material costs, the vast majority of pensions (70%) will try to accumulate and use their own funds, and one third is focused on borrowing from individuals and/or banks. There is a group of pensioners actively using loans: 27% indicated that they have a consumer loan, 9% – a car loan and 1% - a mortgage loan. In an interview, pensioners also describe the existing loans: “we have a loan, we bought a house, so it turned out…took a washing machine on credit, as there was a good offer of 8.3% for three years-Yes, so sparing, I go pay 600 rubles” (male, 64 years). The differentiation of pensioners by the level of financial activity is also demonstrated by the answers to the question about having plastic card: 75% of the respondents indicated that they have a plastic card and 21% that they don’t have any plastic card and they do not plan to get it. Half of pensioners (51%) indicated that they have no savings, the main reason for the lack of savings they consider the lack of money. Those who, noted the availability

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of savings, believe, that live they on them will be able not more two months. The main goals of savings are “rainy day”, treatment and “just in case”. On carrying out in-depth interviews, we have studied the attitude of Volgograd pensioners to the project to improve financial literacy and their desire to participate in it. The obtained answers can be divided into two groups: (1) approval, desire to participate (“I think that yes…I would be interested, here on payments, on credits, … I don’t know how to explain, but it would be interesting to me.” (female, 55); “partly…I’m willing to read, listen, view online…should be leaflets in the bank” (female, 62); “Why not…Where there are some fees. Even in the pension Fund, for example, we could one day, once a month come and listen about innovations, new offers and what we need to expect” (female, 59); 2) full refusal (“no, not particularly want to participate, I am not so good at getting information, I don’t want to go anywhere” (female, 74); “probably not, I have no resources, and they will give something for the future, and what they can tell me there. Now, if I had the Moscow retirement benifit…” (male, 64); “I am so busy with family problems, and what is more – I don’t care, when I was 50, I would have probably participated” (female, 71); “I am personally won’t, not interested” (male, 61). Among those who are ready to participate, Sberbank, the Pension Fund, Universities are indicated as potential organizers of educational programs. We would like to highlight the concerns of one of the pensioners about the effectiveness of financial literacy programs: “if financial literacy is done for Moscow and a little bit for St. Petersburg, which is a little more victorious, and to project it here in the region, then it is pointless to go there. And to count how much I spend on sausage, I do not buy it…my friend gets a retirement benefit of 8,600 and you think she needs to go there to increase literacy? Look, in Barnaul, if you go there, if you take into account Moscow retirement benefits…100% of these activities will be implemented without taking into account the real needs of the pension, especially if it was developed and lowered from Moscow” (male, 64).

3 Results and Discussion One of the important factors that largely determines all the financial behavior of pensioners is the decrease in income at retirement. The comparative analysis of the practices of financial behavior of pensioners and “non-pensioners” clearly demonstrates the following features: (1) the tendency to savings among pensioners is much higher; (2) pensioners are less financially active, the only exception is the use of deposits; (3) elder people are more financially disciplined; (4) the level of financial literacy (selfassessment and tests on financial awareness and knowledge in financial mathematics) of pensioners is lower. It is important to emphasize that pensioners are highly differentiated in terms of financial activity and financial behaviour. This fact requires further study. At the level of the regional study, the opinions of pensioners on the possibility of their participation in financial literacy programs became a valuable point. There is a

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request for such programs among pensioners, some of them are ready to participate. In our opinion, in order to avoid involving pensioners in fraudulent schemes, educational activities should be carried out on the basis of state organizations that are not financially interested in increasing the range of financial services used by pensioners (e.g., libraries, branches of the Pension Fund of Russia, social protection centers, etc.). The most successful example is the creation and launch of the Federal portal on financial literacy (вaшифинaнcы.pф), but it has its limitations, the level of information literacy of pensioners is also not high. Thus, in order to achieve the goals outlined in the Strategy for improving financial literacy of the population in the Russian Federation for 2017–2023, it is important to attract a wide range of specialists to discuss controversial issues and develop effective solutions.

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Conclusion

Hence, Artificial Intelligence is an outstanding phenomenon of modernity. Its anthropogenic (technogenic) nature and social origin are not opposed to each other, but are in harmony with each other. Nevertheless, the contradictoriness of these characteristics is inevitable, and it raises barriers on the way to the socialization of Artificial Intelligence. Social barriers are associated not so much with unreadiness as with the reluctance of modern human society to perceive Artificial Intelligence as its new constituent/entity. This causes the problem of machine inclusion (openness to machines) of the modern social environment. Besides, a high differentiation of social barriers should be pointed out. Thus, modern managers demonstrate high readiness to manage Artificial Intelligence and use it for business management. In a similar way, public officials are interested in transferring part of their powers and responsibilities to Artificial Intelligence. People—consumers of goods and services in digital markets—as well as employees of enterprises of Industry 4.0, who are forced to use Artificial Intelligence in their professional activity, express much less positive attitude toward Artificial Intelligence due to concerns that they lack necessary competencies. Moreover, workers who are selected for redundancy due to automation, as well as those who end up being controlled by Artificial Intelligence, express purely protest moods. The models of communication of Artificial Intelligence both with machines and humans, as well as recommendations on social adaptation to Industry 4.0 described in our book, will help in eliminating or at least reducing these barriers. Business and managerial barriers consist in the underdevelopment of models of the organization of entrepreneurship on the basis of Artificial Intelligence. Existing individual proposals regarding the automation of business processes are deficient for the mass introduction of Artificial Intelligence into the business environment due to the lack of a common vision. The situation is complicated due to the unsolved problem of digital (information, cyber) security, the aspects of which include the protection of data, personal information and interests of beneficiaries. Recommendations on modernizing entrepreneurship, corporate and public © Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 873–874, 2020. https://doi.org/10.1007/978-3-030-39319-9

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administration on the basis of Artificial Intelligence, contained in this book, allow eliminating economic barriers on the way to its socialization. Legal barriers represent the uncertainty of legal capacity and competence with regard to Artificial Intelligence. In accordance with current legislation, Artificial Intelligence as such cannot act as a legal entity and therefore legislation can only protect the rights of people interacting with it. However, if we talk about the prospects for the formation of a machine “society,” opportunities for which are created on the basis of machine communications via the Internet of Things (IoT), then there will probably be a need to expand the legal framework of the digital economy and include new legal entities in it—technological devices (machines) equipped with Artificial Intelligence. We have discussed these prospects in our book. In conclusion, it should be recognized that the topics of the socialization of Artificial Intelligence has just started being explored and are still poorly studied. Our book has shed light on the most obvious, and hence, superficial issues, effectively pointing out the existence of more serious, profound issues, raising even more serious barriers on the way to socialization of Artificial Intelligence. In particular, yet another—educational—barrier on the way to the socialization of Artificial Intelligence has taken shape. Machine learning, which is too focused on technical laboratories, is inefficient. The mystery of a human mind is not nearly cracked thus far. Disclosure of the nature of Artificial Intelligence requires multidisciplinary researches on Artificial Intelligence at the interface of pedagogical, technical, psychological sciences on a common, still emerging philosophical basis (based on knowledge engineering). This determines prospects for the further study of opportunities for the socialization of Artificial Intelligence, and we hope that our book will serve as a scientific foundation for it.

Author Index

A Abesalashvili, Marine Z., 686 Ahtyamov, Mavlit, 835 Akhmetzhanova, Galina V., 778 Akopova, Elena S., 582 Alekhina, Tatiana A., 468 Alexandrova, Anna Y., 167 Aliev, Tigran T., 807 Alieva, Aminat H., 374 Aliyeva, Natalia Z., 156, 162 Andashev, A. Zh., 535 Anikin, Boris A., 845 Anikin, Oleg B., 845 Antonova, Natalia V., 60 Aperyan, Anna V., 554 Atoyan, Snezhana V., 394 Avdeeva, Tatiana T., 814 B Backsanskij, Oleg E., 228 Badina, Anna, 829 Baktygulov, K., 535 Balashova, Elena S., 131 Bandurin, Alexander P., 623 Banis, P. A., 319 Basenko, Alexander M., 565 Bayramov, Vagif D., 593 Belikova, Natalia Yu., 601 Belousova, Mariya, 829 Belova, Olga, 50 Bermus, Aleksandr G., 256 Bit-Shabo, Inessa V., 807 Bondarenko, Viktorya A., 706 Bondin, Viktor I., 237 Bortsov, Yury S., 554

Borzenko, Kseniya V., 192 Bratanovsky, Sergey N., 686 Bryleva, Elena A., 411 Bukhtoyarova, Marina V., 394 Buletova, Natalia E., 384 Burdovskaya, Elena Yu., 201 Burlakov, Vyacheslav V., 374 Buryakova, Olga S., 162 C Chebbi, Tarek, 435 Chernykh, Irina, 657 Chernykh, Sergey S., 221, 248 D Degtyareva, Viktoriya V., 13 Dementyev, A. A., 725 Dergacheva, Elena A., 228 Deryugina, Tatiana V., 693 Deryugina, Tatyana V., 444 Dubinina, Irina I., 36 Dulina, Nadezhda V., 858 Dumanskaya, Lidiya, 417 Dumanskiy, Sergey, 417 Dybina, Olga V., 267 Dzyurdzya, Olesya A., 374 E Ebzeev, Ahmat, 648 Ebzeev, Ahmat A., 215, 642 Efremenko, Innessa N., 706 Emelianova, N. N., 725 Enkova, Ekaterina E., 139 Epifanov, Alexander E., 674, 686 Erdakova, Victoria P., 104

© Springer Nature Switzerland AG 2020 E. G. Popkova and B. S. Sergi (Eds.): ISC Conference - Volgograd 2020, AISC 1100, pp. 875–878, 2020. https://doi.org/10.1007/978-3-030-39319-9

876 Ermakova, Elena P., 76 Ershova, Inna V., 139 Eryomina, Natalia, 325 Evdokimov, Konstantin N., 852 F Falker, Marie-Christin, 478, 490, 500 Fedotov, Mingiyan N., 766 Fedotova, Gilyan V., 88, 374, 384 Frolova, Evgenia E., 76, 665 G Gagarin, Aleksey G., 306 Galkina, Aleksandra, 3 Gavrilova, Oksana, 739 Gerasimov, Maxim V., 237 Ghanyv, A. M., 535 Gluzman, Nelya A., 778 Golenok, Svetlana G., 411 Golikov, Vyacheslav V., 331 Golodova, Olga, 739 Golovetsky, Nikolay Y., 404 Gorbacheva, Anna I., 665 Gorbacheva, Natalia B., 778 Gracheva, Olga, 454 Grudzinsky, Alexandr O., 424 Gugunskiy, Denis, 657 Gulyaeva, Evgenia V., 36 Gureev, Pavel M., 13 I Ilyashevich, M. V., 319 Ilyasov, Ruslan H., 384 Ilyina, Larisa A., 345 Ilyina, Natalia A., 338 Inshakova, Agnessa O., 444, 674, 693 Inshakova, Elena I., 444, 674 Isaeva, Irina, 3 Israilova, Elima A., 565 Ivanchenko, Olga S., 623 Ivanov, Igor, 50 Ivanova, Tatyana N., 778 Ivushkina, Elena B., 156 K Kamyshansky, Vladimir P., 359 Kanke, Alla, 417 Karpova, Inna V., 468 Kasyanov, Valeri V., 248, 623 Kasyanov, Valery V., 601, 631 Kerre, Marina S., 512 Ketko, Natalia V., 306 Khairutdinov, Albert, 657

Author Index Kikavets, Vitaly V., 28 Kitsay, Yuliana A., 352 Kittová, Zuzana, 519 Kochubey, Tamara A., 184 Kolmykova, Marina A., 123 Kolomiets, Evgeniy A., 359 Koloskova, Natalya V., 623 Komissarova, Natalia, 3 Kompaneeva, Liudmila G., 36 Konobeeva, Elena E., 295 Konobeeva, Oksana E., 295 Kotlyarova, Victoria V., 256 Kovalenko, Oksana A., 766 Kozhanova, Anastasia V., 111 Kravchenko, Elena N., 374 Kripakova, Dina R., 359 Krotov, Dmitry V., 601 Krylov, Vladimir K., 148 Kuklev, Sergey E., 345 Kulikova, Anna A., 631 Kulikova, Irina V., 582 Kulueva, Chinara R., 338 Kurbanov, Timur K., 384 Kuzmina, Tatyana I., 88 Kuznetsova, Olga N., 766 L Labadze, Olesya E., 221 Lavrova, Tatiana G., 814 Lifanov, Platon A., 338 Lipchanskaya, Irina V., 631 Lipinsky, Dmitry A., 411, 852 Litvinenko, Elena Y., 574 Litvyak, Roman K., 221 Lomakin, Nikolai, 365, 739 Lomakin, Nikolai I., 747 Lopukhin, Yaroslav, 325 Luk’yanova, Tat’yana, 50 Lyapina, Innara R., 295 Lyubetsky, Nikolay P., 237 M Malikov, Evgenij Y., 693 Mandrik, Natalia V., 88 Manjula, Anna A., 706 Martsulevich, Dmitry, 835 Matukhin, Pavel, 3, 454 Maximova, Olga, 365 Merzakanov, Sergey A., 601 Mescheryakova, Olga M., 716 Meshcheryakova, Yaroslava V., 747 Milkina, Irina V., 545 Mitrofanova, Aleksandra, 756

Author Index Mitrofanova, Elena, 756 Moiseeva, Daria V., 858 Molchakov, N. Yu., 732 Morozova, Nelli I., 156, 162 Musatkina, Aleksandra A., 411, 852 Muzykant, Elizaveta V., 201 Muzykant, Valerii L., 201 Myshko, Fyodor G., 167 N Novak, Julia J., 716 O Olimpiev, Anatoly Y., 167 Ordobayev, B. S., 535 Oreshina, Marina, 829 Osipov, Vladimir S., 272 P Paliy, Irina G., 248 Palkin, Vladimir V., 631 Panasenkova, Tatiana V., 192 Parshikova, Galina Yu., 394 Petrenko, Elena S., 331 Petrina, Olga A., 545 Petrukhin, Alexey, 365, 739 Petrukhin, Alexey V., 747 Petrukhina, Nataljya V., 228 Plakhova, Liubov V., 468 Pokrovskiy, Nikolay V., 468 Poliakova, Valentina V., 98 Polianina, Alla K., 424 Polusmakova, Natalia S., 404 Popkova, Nataljya V., 228 Popov, Vladimir V., 801 Prokhorova, Inna S., 13 Protopopova, Olga V., 76 Provorotova, Elena, 3 Przhedetskaya, Natalia V., 192, 352 Przhedetsky, Yuri V., 192 Putilo, Natalia V., 60 R Reikhanova, Irina V., 345 Revzon, Oksana A., 98 Rizzo, Rosalba, 172 Romadikova, Viktoriya M., 766 Romashov, Roman A., 411 Roshchina, Lydia N., 565, 582 Rudenko, Evgenia Y., 359 Rusakova, Ekaterina P., 665 Ryspaev, Dz. A., 535

877 S Samorodova, Irina A., 365 Samorukov, Anatoly A., 123 Samygin, Petr S., 554 Samygin, Sergei I., 565 Samygin, Sergey I., 237, 554, 601 Sarycheva, Ekaterina, 454 Sarycheva, Natal’ya, 454 Savastenko, Roman A., 201 Saveleva, Nelli A., 104 Saychenko, Olga A., 131 Schalohyan, Sergey I., 237 Schislyaeva, Elena R., 131 Seliverstova, Nadezhda I., 123 Semykina, Olga I., 792 Serebryakova, Alla A., 338 Serova, Olga A., 331 Shadzhe, Azamat M., 674 Sharipova, Sabina R., 131 Shebzukhova, Fatima, 648 Shebzukhova, Fatima A., 215, 642 Shishkova, Anastasia V., 21 Shlemina, Irina V., 228 Shlykova, Olga V., 201 Shokhnekh, Anna, 365, 739 Shokhnekh, Anna V., 747 Shubaeva, Veronika, 835 Sibirskaya, Elena V., 295 Sigidov, Yuriy I., 88 Silaev, Alexander A., 394 Simonov, Aleksey B., 306 Simonova, Evgenia V., 468 Sitnikov, Aleksei P., 593 Sitnikova, Svetlana E., 404 Skachkova, Yu. A., 463 Skeeter, Natalia N., 306 Smokova, Marusya, 706 Stadnik, Sergey V., 582 Starovoytova, Irina E., 21, 210 Steinhauser, Dušan, 519 Stolyarov, Nikita O., 331 Strelnikova, Irina A., 801 Strichko, Anna V., 248 Stroeva, Olesya A., 295 Sukhinin, Alexander V., 766 Sumbatyan, Sona L., 98 Susimenko, Elena V., 574 T Taranov, Petr V., 565 Tarasenko, Olga A., 139 Tarasenko, Vladimir, 756

878 Teichmann, Fabian, 478, 490, 500 Telyatnikova, Victoria S., 747 Tikhonovskova, Svetlana S., 248 Tislenkova, Irina A., 306 Titova, Elena, 454 Trachenko, Marina B., 111 Trofimova, Elena V., 139 Tsaregradskaya, Yulia K., 28 Tsirina, Madina A., 792 Tyurina, Yulia G., 123 U Ugriumov, Evgeniy S., 104 Ukraintseva, Inna V., 582 Ulanova, Ekaterina S., 111 Urmanov, Dmitry V., 814 Usataya, Natalia N., 631 Ushamirskaya, Galina F., 88 V Varlamov, Arthur V., 352 Vasenev, Sergey L., 156 Vasilyeva, Ksenia V., 801

Author Index Vlasova, Victoria N., 554 Vodenko, Konstantin V., 221 Volkov, Yuriy G., 593, 614 Volkova, Natalia S., 60 Y Yakovlev, Alexander Yu, 545 Yakushkina, Tatyana A., 384 Yatsenko, Oksana Y., 210 Yavon, Snezhana V., 778 Yudina, Tatiana A., 104 Yuldasheva, Oksana, 835 Z Zabaznova, Tatiana A., 352 Zakharov, Aleksandr A., 345 Zakharov, Mikhail Iu., 21 Zazulina, Evgeniya V., 221 Zhelnina, Evgenia V., 778 Zhilkin, Oleg N., 148 Zhilkina, Anna N., 148 Znamensky, Dmitry Y., 512 Zul’fugarzade, Teimur E., 792