Ecological Footprint of the Modern Economy and the Ways to Reduce It: The Role of Leading Technologies and Responsible Innovations (Advances in Science, Technology & Innovation) 3031497104, 9783031497100
This book is devoted to the systems rethinking of the role of the leading digital technologies and circular innovations
126 23 11MB
English Pages 498 [448] Year 2024
Introduction: Opportunities for Advanced Technology and Responsible Innovation in Reducing the Ecological Footprint of Today’s Economy
Contents
Ecological Footprint of Today’s Economy; Green Innovations and ESG Practices to Reduce It
1 Research of International Standards of Green Economy
Abstract
1 Introduction
2 Materials and Methods
3 Results
4 Discussion
5 Conclusion
Acknowledgements
References
2 Investment Cooperation Between the EU and the EAEU Countries in Building a “Green Economy” (Case of the EBRD’s Activities in Armenia)
Abstract
1 Introduction
2 Materials and Method
3 Results
3.1 “ENA—Modernization of Distribution Network” (2017)
3.2 “Masrik-1 Solar Power Plant” (2019)
3.3 “ZCMC Bond Participation” (2019)
3.4 “GCF GEFF Regional—GEFF Armenia—ACBA Bank” (2021)
4 Conclusion
Acknowledgements
References
3 Data Mining Efficiency in the ESG Indexes Verbalization Analysis (on the Example of the MSCI Site)
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
4 Marketing Technologies for Transforming the Management of ESG-Oriented Organization in the Digital Economy
Abstract
1 Introduction
2 Methodology
3 Results
4 Discussion
5 Conclusion
Acknowledgements
References
5 Green Economy as a Factor in the Transformation of Environmentally Oriented Management
Abstract
1 Introduction
2 Materials and Methods
3 Results
4 Discussion
5 Conclusion
References
6 The Prospects for Improving Green Innovation Ability of National Economic and Technological Park in the Yellow River Basin of China
Abstract
1 Introduction
2 Research Methods
3 Samples, Data Sources, and Selection
4 Results
4.1 Innovative Efficiency Measurement and Evaluation
4.2 Spatial Distribution of Green Innovation Efficiency Analysis
5 Conclusion
References
7 Green Agenda in Labor Legislation
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
8 ESG Principles in the Practice of Building an Economic Security Strategy in the Region
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
9 Potential for Implementing ESG Principles in Cement Production
Abstract
1 Introduction
2 Materials and Method
3 Results
3.1 Analysis of the Level of Greenhouse Gas Emissions
3.2 Alternative Fuel (AT)
3.3 Analysis of Energy Efficiency
3.4 The Main Directions of Reducing the Carbon Intensity of Cement
4 Conclusion
References
10 Corporate Governance in the ESG Context: A New Understanding of Sustainability
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
11 Innovative Development of Modern Organizations, New Economy and ESG Transformation
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
12 ESG Transformation of the Regional Space
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
13 ESG Agenda in the Educational Process of a University
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
14 Carbon Emission Tax or Carbon Emission Market: Which Is Better?
Abstract
1 Introduction
2 Methodology
3 Results
3.1 How the Carbon Emission Market Runs, Its Advantages, and Challenges
3.2 How the Carbon Emission Tax Runs, Its Advantages, and Challenges
3.3 Dual Carbon Reduction Model: Carbon Tax Plus ETS and Its Effects
4 Conclusion
References
15 Transformation of ESG Ecosystem and Approaches to Non-financial Reporting Regulation
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusions and Recommendations
References
16 Stimulation as a Factor of the Effectiveness of the Integration of ESG Principles into Economic Practice
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
17 Development Prospects and Current Problems of the Kyrgyz Republic’s Energy Sector
Abstract
1 Introduction
2 Materials and Methods
3 Results
4 Conclusion
References
Responsible Innovation in the Digital Economy and Advanced Technology to Reduce the Ecological Footprint of Today’s Economy
18 Application of Digital Technologies for Ranking Loan Borrowers
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
19 Digital Definition of Optimal Inventory Management
Abstract
1 Introduction
2 Methodology
3 Results
3.1 Controllability of the Mathematical Model
3.2 Optimal Control
4 Conclusion
References
20 Application of Text Analysis and Ensemble Algorithms in Forecasting Companies Bankruptcy
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
21 Achievements and Problems of the Development of the Digital Economy in China
Abstract
1 Introduction
2 Materials and Method
2.1 Current State of the Digital Economy of China
2.2 Manufacturing, Data, and Digital Services
2.3 Chinese Digital Economy Measurement
3 Results
3.1 China Digital Achievements
3.2 Major Problems in the Development of China’s Digital Economy
4 Conclusion
References
22 Managing the Creation of Promising Products Based on the Selection of Intellectual Property Objects in the New Economic Conditions
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
23 Value of Transformation: Business-Driven or Technology-Driven?
Abstract
1 Introduction
2 Methodology
2.1 What is Industry 4.0?
2.2 Business Models
2.3 Business Models in Industry 4.0-Related Areas
3 Results and Discussion
4 Conclusion
References
24 The Role of Intra-corporate Control in Ensuring the Technological Sovereignty of the Russian Economy
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
25 Methodological Recommendations on the Implementation of the Methodology for Managing Digital Transformation of Industrial Company to Ensure Breakthrough Technological Development
Abstract
1 Introduction
2 Methodology
3 Results
3.1 Approaches to the Practical Implementation of the Methodology for Managing Digital Transformation of Organizations at the Mesolevel
3.2 Approaches to the Practical Implementation of the Methodology for Managing Digital Transformation of Organizations at the State Level
4 Conclusion
Acknowledgements
References
26 Implementation of a Database on Solar Resources for the Design of PV Solar Technologies
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
27 Digital Twin of the Zoological Collection of the Republic of Kazakhstan
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
28 Digital Model of the Influence of Various Environmental Factors on Plant Biomass
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
29 Digital Determination of the Thermal Conductivity of a Square Bar by Reduction to a System of Integral Equations
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
Acknowledgements
References
30 Development of Blockchain Platforms for Tokenization of Real Assets
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
31 The Main Approaches to Using Digital Twins in Banking
Abstract
1 Introduction
2 Materials and Method
3 Results
3.1 Development of Digital Process Twins, Bank, and Branch
3.2 Development of Digital Twins of a Client—An Individual
3.3 Development of Digital Twins of the Client (Legal Entity)
4 Conclusion
Acknowledgements
References
32 Development of a Functional Component Model for a Data System Concept to Assess Innovative Investment Projects for Designing Import-Substituting Products in the Context of Digital Transformation
Abstract
1 Introduction
2 Methodology
2.1 Designing a Functional Component Model for a Data System Concept
3 Results
4 Conclusion
References
33 Transforming Communication Flows Between Organizations and Their Publics in the Context of Emerging Web 3.0
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
34 Trends in the Development of E-commerce in Enterprises
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
35 Effectiveness of Digital Marketing Technologies in Commercial Banks
Abstract
1 Introduction
2 Materials and Methods
3 Results
4 Conclusions
References
36 Digital Technology in Courts as a Tool for Smart Regulation: Opportunities and Risks
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
Acknowledgements
References
37 Current Trends in the Development of the Financial and Credit System in the Context of Digitalization
Abstract
1 Introduction
2 Materials and Methods
3 Results
4 Discussion
5 Conclusion
References
Institutional Framework for Responsible Innovation in Society, Business, and the Country: A Contribution to Reducing the Ecological Footprint of the Economy
38 Analysis of the Methods of Intellectual Property Management in Innovation Ecosystems
Abstract
1 Introduction
2 Methods
3 Results
4 Discussion
5 Conclusion
References
39 Overview of Technological Forecasting and Assessment of the Life Cycle Results of the Technological Innovation Market
Abstract
1 Introduction
2 Theoretical Provisions
3 Methodology
4 Results
5 Conclusion
References
40 Digital Transformation of Marketing Activities as a Factor in the Development of International Trade
Abstract
1 Introduction
2 Materials and Method
3 Discussion
4 Results
5 Conclusion
References
41 Developing a Theory of Tax Revenue Mobilization Using Social Media and Documentary Sources
Abstract
1 Introduction
2 Literature Review
3 Methodology
3.1 Data
3.2 Data Collection
3.3 Data Analysis
4 Findings
4.1 What Are the Determinants of Tax Revenue Mobilization?
4.2 How Do the Identified Determinants Influence Tax Revenue Mobilization?
4.3 Why Do the Determinants Influence Tax Revenue Mobilization?
4.4 When, Where, and for Whom Do the Determinants Influence Tax Revenue Mobilization?
5 Discussion
6 Conclusion
7 Recommendations
References
42 Methodology for Assessing the Competitiveness of Metal-Cutting Tools
Abstract
1 Introduction
2 Materials and Methods
2.1 Stage One: Formation of the Group of Experts
2.2 Step Two: Determination of the Size of the Product to Be Evaluated and the Grade of the Material to Be Processed
2.3 Step Three: Formation of a Group of Competing Products
2.4 Step Four: Determination of Indicators for Assessing the Products’ Competitiveness
2.5 Stage Five: Deriving the Formula for Calculating the Indicator “Total Material Removed by the Cutter Per Life Cycle”
2.6 Stage Six: Conducting Test Trials of Selected Product Samples
2.7 Stage Seven: Calculation of the Data Obtained During the Test
2.8 Stage Eight: Analysis of the Obtained Data
2.9 Stage Nine: Calculation of the Resulting Competitiveness Indicator
2.10 Stage Ten: Final Analysis of the Results
3 Results
4 Conclusion
References
43 Modeling the Motivation of Top Management of the Governing Structures of the Regions Using Logistic Regression
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
Acknowledgements
References
44 The Use of Artificial Intelligence in Teaching Foreign Languages
Abstract
1 Introduction
2 Method
3 Results
4 Conclusion
References
45 Does Understanding the Sustainable Development Concept Affect the Leaders’ Innovative Competencies?
Abstract
1 Introduction
2 Literature Review
3 Materials and Methods
4 Results
5 Discussion
6 Conclusion
References
46 HR Ecosystem Development as a Driver of Increasing Management Sustainability
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Discussion
5 Conclusion
Acknowledgements
References
47 Problems of Human Resource Management of the Innovation Economy
Abstract
1 Introduction
2 Materials and Methods
3 Results
4 Conclusion
References
48 Digital Platforms of Educational Services: Problems and Development Prospects
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Discussion
5 Conclusion
References
49 Characteristics of the Identity of Pregnant Women in the Context of an Approach to Socially Responsible Parenthood
Abstract
1 Introduction
2 Methodology
3 Methodology
4 Results
5 Discussion
6 Conclusion
References
50 Theoretical and Methodological Foundations of Interaction Between Family and School as a High Social Responsibility in Child Development
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
51 Implementation of the Concept of Sustainable Development in the Activities of Transnational Corporations
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
52 The Comparative Analysis as a Tool for Evaluating the Effectiveness of Economic Sectors
Abstract
1 Introduction
2 Methodology and Methods
3 Data Availability
4 Results and Discussion
4.1 The Entry Stage into the Comparative Analysis of Crop Production
4.2 The Main Stage of the Comparative Analysis of Crop Production
4.3 The Exit Stage from the Comparative Analysis
5 Conclusions
References
53 Impact of Government Support on Oilseeds Production
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
54 Digital Aspects of Analytics and the Effectiveness of Standard Communication Channels of Companies
Abstract
1 Introduction
2 Materials and Methods
3 Results
4 Discussion
5 Conclusions
References
55 Regionalisms as a Result of Cultural and Ethnic Contacts of Turkic-Speaking Peoples
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
56 Status and Personality Conditioning the Language Portrait of Politicians
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
57 Psychological Conditions for the Development of Student’s Personal Resources in the Educational Environment
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
58 Improvement of the Personnel Innovation Activity Management System Based on the Principles of Social Orientation
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
International Experience in Reducing Ecological Footprints at the Level of Regional and National Economies and Groups of Countries
59 Prospects for Developing Public–Private Partnerships in Regions with Limited Potential for Self-development
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
60 Contemporary Approaches to Managing Investment Flows in the Regional Economy
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
61 Management Innovation and Economic Development of Chinese Universities in the Information Age
Abstract
1 Introduction
2 Methods
3 Results
4 Discussion
5 Conclusion
References
62 Online Education in BRICS Countries: New Opportunities for Post-pandemic Development
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusions
References
63 Risks of Socio-economic Uncertainty for the Well-Being of the Population: The Experience of Developed and Developing Countries
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusions
References
64 Current Trends in the Regional Economic Systems Development: Key Determinants of Economic Growth
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
Acknowledgements
References
65 Digital Development of Russian Regions: Prospects and Contradictions in a Period of Turbulence
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusions
References
66 Effect of Relational Capital, Structural Capital, and Human Capital on the Performance of Insurance Brokers in Zambia
Abstract
1 Introduction
2 Theoretical Literature Review
3 Empirical Literature Review
3.1 Relational Capital
3.2 Structural Capital
3.3 Human Capital
4 Methodology
5 Results and Discussion
5.1 Hypothesis 1—Human Capital
5.2 Hypothesis 2—Structural Capital
5.3 Hypothesis 3—Relational Capital
6 Conclusion and Recommendations
References
67 Analysis of Climate Conditions of the Batken Region
Abstract
1 Introduction
2 Research Methods
3 Results and Discussion
4 Conclusion
References
68 The Constructs of Short-Term Consumer Credit from the Perspective of Merchants and Employers as Key Stakeholders in Zambia
Abstract
1 Introduction
2 Literature Review
2.1 Money, Capital, and the Credit System
2.2 The Zambian and Developing World Context
3 Review of Similar Studies and Critique
4 Lessons Learnt
5 Methodology
5.1 Qualitative Study Overview
5.2 Employers
5.3 Merchants
6 Results
7 Conclusion
References
69 Methodological Aspects of Budgetary Monitoring of the Implementation of National Projects in the Regions of Russia
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
70 Organizational and Economic Mechanisms of Sustainable Development of Industry in the Kyrgyz Republic
Abstract
1 Introduction
2 Literature Review
3 Method
4 Results
5 Discussion
6 Conclusion
References
71 Comparing the Agricultural Sectors of the EAEU Countries Through the Sustainability Index
Abstract
1 Introduction
2 Theory
3 Materials and Method
4 Results and Discussion
5 Conclusion
References
72 Correlation of Educational and Labor Migration of the Population of Russia
Abstract
1 Introduction
2 Methodology
3 Results
4 Discussion
5 Conclusion
References
73 Pandemic and Sanctions: A Study of Economic Shocks in the Russian Economy
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusions
References
74 Current Challenges in the Development of the Kyrgyz Republic: Modernization of the Economy and the Financial Sector
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
75 Impact of Money Supply on Inflation in Uzbekistan—VAR Approach
Abstract
1 Introduction
2 Literature Review
3 Methodology
4 Results
5 Conclusion and Recommendations
References
76 Directions of Trade Relations of Uzbekistan with the Countries of Central Asia
Abstract
1 Introduction
2 Materials and Method
3 Results
4 Conclusion
References
77 Ensuring the Sustainable Development of Russian Regions: The Practice of New Times
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusions
References
78 Modern Principles of Management of the Russian Political Leadership
Abstract
1 Introduction
2 Methodology
3 Results
4 Conclusion
References
Ecological Footprint of the Economy on the Threshold of the Fifth Industrial Revolution: The Challenges of Advanced Technology and Responsible Innovation (Conclusion)
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Advances in Science, Technology & Innovation IEREK Interdisciplinary Series for Sustainable Development
Bruno S. Sergi · Elena G. Popkova · Anna A. Ostrovskaya · Alexander A. Chursin · Yulia V. Ragulina Editors
Ecological Footprint of the Modern Economy and the Ways to Reduce It The Role of Leading Technologies and Responsible Innovations
Advances in Science, Technology & Innovation IEREK Interdisciplinary Series for Sustainable Development Editorial Board Anna Laura Pisello, Department of Engineering, University of Perugia, Italy Dean Hawkes, University of Cambridge, Cambridge, UK Hocine Bougdah, University for the Creative Arts, Farnham, UK Federica Rosso, Sapienza University of Rome, Rome, Italy Hassan Abdalla, University of East London, London, UK Sofia-Natalia Boemi, Aristotle University of Thessaloniki, Greece Nabil Mohareb, Faculty of Architecture—Design and Built Environment, Beirut Arab University, Beirut, Lebanon Saleh Mesbah Elkaffas, Arab Academy for Science, Technology and Maritime Transport, Cairo, Egypt Emmanuel Bozonnet, University of La Rochelle, La Rochelle, France Gloria Pignatta, University of Perugia, Italy Yasser Mahgoub, Qatar University, Qatar Luciano De Bonis, University of Molise, Italy Stella Kostopoulou, Regional and Tourism Development, University of Thessaloniki, Thessaloniki, Greece Biswajeet Pradhan, Faculty of Engineering and IT, University of Technology Sydney, Sydney, Australia Md. Abdul Mannan, Universiti Malaysia Sarawak, Malaysia Chaham Alalouch, Sultan Qaboos University, Muscat, Oman Iman O. Gawad, Helwan University, Helwan, Egypt Anand Nayyar
, Graduate School, Duy Tan University, Da Nang, Vietnam
Series Editor Mourad Amer, International Experts for Research Enrichment and Knowledge Exchange (IEREK), Cairo, Egypt
Advances in Science, Technology & Innovation (ASTI) is a series of peer-reviewed books based on important emerging research that redefines the current disciplinary boundaries in science, technology and innovation (STI) in order to develop integrated concepts for sustainable development. It not only discusses the progress made towards securing more resources, allocating smarter solutions, and rebalancing the relationship between nature and people, but also provides in-depth insights from comprehensive research that addresses the 17 sustainable development goals (SDGs) as set out by the UN for 2030. The series draws on the best research papers from various IEREK and other international conferences to promote the creation and development of viable solutions for a sustainable future and a positive societal transformation with the help of integrated and innovative science-based approaches. Including interdisciplinary contributions, it presents innovative approaches and highlights how they can best support both economic and sustainable development, through better use of data, more effective institutions, and global, local and individual action, for the welfare of all societies. The series particularly features conceptual and empirical contributions from various interrelated fields of science, technology and innovation, with an emphasis on digital transformation, that focus on providing practical solutions to ensure food, water and energy security to achieve the SDGs. It also presents new case studies offering concrete examples of how to resolve sustainable urbanization and environmental issues in different regions of the world. The series is intended for professionals in research and teaching, consultancies and industry, and government and international organizations. Published in collaboration with IEREK, the Springer ASTI series will acquaint readers with essential new studies in STI for sustainable development. ASTI series has now been accepted for Scopus (September 2020). All content published in this series will start appearing on the Scopus site in early 2021.
Bruno S. Sergi • Elena G. Popkova • Anna A. Ostrovskaya • Alexander A. Chursin Yulia V. Ragulina
•
Editors
Ecological Footprint of the Modern Economy and the Ways to Reduce It The Role of Leading Technologies and Responsible Innovations
123
Editors Bruno S. Sergi University of Messina Messina, Italy
Elena G. Popkova Armenian State University of Economics Yerevan, Armenia
Anna A. Ostrovskaya RUDN University Moscow, Russia
Alexander A. Chursin RUDN University Moscow, Russia
Yulia V. Ragulina RUDN University Moscow, Russia
ISSN 2522-8714 ISSN 2522-8722 (electronic) Advances in Science, Technology & Innovation IEREK Interdisciplinary Series for Sustainable Development ISBN 978-3-031-49710-0 ISBN 978-3-031-49711-7 (eBook) https://doi.org/10.1007/978-3-031-49711-7 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 This work is subject to copyright. All rights are solely and exclusively licensed 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 Paper in this product is recyclable.
Introduction: Opportunities for Advanced Technology and Responsible Innovation in Reducing the Ecological Footprint of Today’s Economy
The ecological footprint of the economy embodies the environmental costs of economic growth: the consumption of resources and energy, as well as the production and consumption waste. In the twenty-first century, the economy’s ecological footprint has reached a critical level and needs to be significantly reduced to maintain a healthy environment and preserve the natural heritage for future generations. Initiatives to reduce the economy’s carbon footprint are being implemented globally as climate change issues are keenly felt worldwide. Decades of industrialization, recently replaced by Neoindustrialization 4.0, have led to a serious decline in biodiversity. This has caused a surge in zoonotic diseases, emphasizing the need to protect ecosystems. The scale of environmental pollution from waste is so great that species have begun to adapt to their new habitat. Genetic mutations pose risks to public health. Advanced technology and responsible innovation help maintain the achieved economic growth rate while reducing the economy’s ecological footprint. The advanced technology of the digital economy was developing and spreading during the Fourth Industrial Revolution. Advanced technology makes it possible to automate business processes, thereby increasing their environmental friendliness through greater transparency, accountability, and intelligent support for environmental decision-making. Responsible innovations are innovative applications of corporate environmental responsibility, such as environmental management, environmental marketing, ESG investments, green jobs, and green value chains. First, opportunities for advanced technology and responsible innovation in reducing the ecological footprint of today’s economy include improving environmental monitoring. For example, the Internet of Things (IoT) and ubiquitous computing (UC) make it possible to control natural resource consumption accurately. Green workplaces stimulate environmental innovation, responsibility, and discipline of employees. Environmental taxes and quotas on resource consumption and production waste, including carbon emissions, make optimizing the use of natural resources possible. Green value chains encourage the collective adoption of advanced technology and responsible innovation by all participants. Second, circular business practices are developed. Digitalization makes it possible to systemically integrate responsible innovations into all stages of the value chain. The reuse of raw materials in recycling makes it possible to reduce the cost of production, strengthening its price competitiveness. The transition to renewable energy supports decarbonization. Clean energy is available. Nevertheless, using clean energy may be associated with additional costs that can be reduced through advanced technology. Additionally, responsible innovations in marketing and finance help attract green investments and stimulate demand for products with improved environmental properties. Digital marketing helps generate consistently high demand for products produced by circular plants using renewable energy among responsible communities in sustainable territories. Third, the energy efficiency of production facilities is improved. Advanced technology has improved energy properties. The digital competition supports introducing energy innovations,
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Introduction: Opportunities for Advanced Technology and Responsible Innovation …
making them more attractive to investors. In addition to enhancing digital competitiveness, businesses adopting advanced technologies improve their energy efficiency. The one-time capital cost of implementing advanced technology provides long-term financial benefits through increased sales and reduced energy costs. Advanced technology also provides enhanced control over energy consumption, preventing leakage and wasteful use of energy resources. In the fuel and energy complex, it helps reduce the risks of environmental disasters due to gas leaks, oil spills, etc. Fourth, a climate-neutral economy is ensured. Responsible innovation in the area of climate change contributes to the climate adaptation of businesses and the achievement of a carbon-neutral economy. Responsible innovation enables the development of sustainable areas in harmony with ecosystems, particularly in smart regions with automated environmental controls. Advanced technology and responsible innovation also support the adaptation of industries to climate change and the translation of successful experiences. It is possible to create sectoral environmental clusters, green innovation networks, ecological technoparks, environmental public-private partnership projects, and special economic zones in sustainable areas to conduct environmental R&D jointly, support the creation of green jobs, and introduce climate innovation among their participants. Fifth, corporate environmental reporting as part of the documentation in the field of sustainable development is improved. Advanced technology makes it possible to automatically collect big data for corporate environmental monitoring and generate corporate sustainability reports based on it. Responsible innovation creates opportunities and incentives to increase the transparency, detail, and openness of this reporting to all stakeholders. In the information society, digital environmental reporting plays an important role in investment and consumer decisions. Advanced technology also simplifies environmental quality certification and eco-labeling of products. Moreover, responsible innovations make biodegradable product packaging available. This supports the development of environmental culture in responsible communities and the combination of digital and green competition. This book aims to systemically reflect the issues noted, comprehensively address and accurately measure the ecological footprint of today’s economy, and highlight the potential of advanced technology and responsible innovation in reducing it. The scientific novelty of this book and its contribution to the literature lies in the fact that it systemically reflects the environmental properties of advanced technologies and environmental innovations from the perspective of their contribution to reducing the ecological footprint of the economy. The book’s novelty lies in the fact that it discusses in detail the international experience of applying advanced technology and responsible innovation to reduce the economy’s ecological footprint. In particular, the book reflects the experience of the BRICS countries, the Eurasian Economic Union (EAEU), Zambia, and Russian regions. This makes the book particularly useful for reducing the ecological footprint of the economies in developing countries, whose experience is the least studied in the existing literature, representing a gap that this book aims to fill. The practical relevance of the book stems from the fact that it details specific advanced technologies—digital models and digital twins, ensemble algorithms, solar databases, blockchain platforms, data systems for evaluating innovative investment projects, Web 3.0, and responsible innovations in intra-corporate environmental control, e-commerce, digital marketing, and smart government regulation. With this, the book has formed the guiding manual for achieving technological advancement in implementing a green economic growth model. The book is logically divided into four parts. The first part identifies and measures the ecological footprint of today’s economy and identifies key green innovations and ESG practices to reduce it. The second part details responsible innovations in the digital economy and advanced technology to reduce the ecological footprint of today’s economy. The third part outlined the institutional framework for responsible innovation in society, business, and government, as well as its contribution to reducing the economy’s ecological footprint.
Introduction: Opportunities for Advanced Technology and Responsible Innovation …
vii
The book concludes with the fourth part, which presents international experience in reducing ecological footprints at the level of regional and national economies, as well as groups of countries. The book is intended for scholars engaged in studying the issues of innovative development of the economy. Scholars will find a comprehensive scientific look at the possibilities of advanced technology and responsible innovation in reducing the economy’s ecological footprint. The green perspective of digitalization presented in the book opens up a wide field for further scientific research. The book may also be of interest to practicing experts. Business representatives will find ready-to-use application solutions for improving the environmental attributes of products, combating climate change, and implementing corporate environmental responsibility programs based on cutting-edge technology and responsible innovation. For public authorities, the book provides scientific and methodological recommendations for improving state environmental regulation and reducing the ecological footprint of today’s economy through stimulating the use of advanced technologies and responsible innovation by business entities. Bruno S. Sergi Elena G. Popkova Anna A. Ostrovskaya Alexander A. Chursin Yulia V. Ragulina
Contents
Ecological Footprint of Today’s Economy; Green Innovations and ESG Practices to Reduce It Research of International Standards of Green Economy . . . . . . . . . . . . . . . . . . . . Svetlana E. Sobenina, Sergey S. Murtuzaliev, and Svetlana Yu. Murtuzalieva Investment Cooperation Between the EU and the EAEU Countries in Building a “Green Economy” (Case of the EBRD’s Activities in Armenia) . . . . . . . . . . . . . Ludmila L. Razumnova and Natalia P. Savina Data Mining Efficiency in the ESG Indexes Verbalization Analysis (on the Example of the MSCI Site) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oxana V. Goncharova, Svetlana A. Khaleeva, Natalia A. Ladonina, Igor D. Eremeev, and Varvara V. Fioktistova
3
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Marketing Technologies for Transforming the Management of ESG-Oriented Organization in the Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nikita V. Matveev, Elena I. Lazareva, and Aram A. Gevorgyan
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Green Economy as a Factor in the Transformation of Environmentally Oriented Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elena I. Lazareva and Lei Liu
23
The Prospects for Improving Green Innovation Ability of National Economic and Technological Park in the Yellow River Basin of China . . . . . . . . . . . . . . . . . Wenjun Li, Evgeniya Roshchina, Ziqiang Zhao, and Yanyan Zhang
29
Green Agenda in Labor Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Olga I. Ostrovskaya, Olga V. Balandina, Roman V. Komisaruk, and Alina B. Veshkurova ESG Principles in the Practice of Building an Economic Security Strategy in the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yuri N. Lapygin, Kirill S. Karaman, Ruslan K. Talov, Elena V. Romanovskaya, and Natalia S. Andryashina Potential for Implementing ESG Principles in Cement Production . . . . . . . . . . . . Sergei D. Tsymbalov, Victor P. Kuznetsov, Anna S. Moseva, Elena V. Romanovskaya, and Natalia S. Andryashina Corporate Governance in the ESG Context: A New Understanding of Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Svetlana N. Kuznetsova, Victor P. Kuznetsov, Zhanna V. Smirnova, Natalia S. Andryashina, and Elena V. Romanovskaya
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Innovative Development of Modern Organizations, New Economy and ESG Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Anzhela M. Salogub, Marina V. Chistova, Nina V. Demina, and Olga I. Natkho
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ESG Transformation of the Regional Space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tatiana V. Koteikina
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ESG Agenda in the Educational Process of a University . . . . . . . . . . . . . . . . . . . . Irina M. Akopyants, Karina Y. Vartanova, Anna V. Kiseleva, Irine N. Mikhailovskaya, and Irina V. Patsora
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Carbon Emission Tax or Carbon Emission Market: Which Is Better? . . . . . . . . . Elena B. Zavyalova and Jiacheng Li
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Transformation of ESG Ecosystem and Approaches to Non-financial Reporting Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Svetlana I. Puchkova and Ekaterina D. Marina Stimulation as a Factor of the Effectiveness of the Integration of ESG Principles into Economic Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mikhail Yu. Dneprov, Ekaterina V. Efimova, Sofiya G. Kilinkarova, and Irina V. Shevchenko Development Prospects and Current Problems of the Kyrgyz Republic’s Energy Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhandaraly Sadyraliev, Ainagul T. Mamyralieva, and Nurbek K. Musakulov
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Responsible Innovation in the Digital Economy and Advanced Technology to Reduce the Ecological Footprint of Today’s Economy Application of Digital Technologies for Ranking Loan Borrowers . . . . . . . . . . . . . 105 Almas M. Kalimoldayev, Aigerim T. Mazakova, Akyltay D. Burgegulov, Aigerim A. Sametova, and Daryn K. Mukhayev Digital Definition of Optimal Inventory Management . . . . . . . . . . . . . . . . . . . . . . 111 Almas M. Kalimoldayev, Aigerim T. Mazakova, Sholpan A. Jomartova, Talgat Zh. Mazakov, and Gulzat Z. Ziyatbekova Application of Text Analysis and Ensemble Algorithms in Forecasting Companies Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Pavel A. Drogovoz and Alexandr R. Nevredinov Achievements and Problems of the Development of the Digital Economy in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Vladimir A. Ermakov and Lu Chen Managing the Creation of Promising Products Based on the Selection of Intellectual Property Objects in the New Economic Conditions . . . . . . . . . . . . . 127 Sergey V. Nazyuta and Anna A. Ostrovskaya Value of Transformation: Business-Driven or Technology-Driven? . . . . . . . . . . . . 133 Nkirote B. Gitonga The Role of Intra-corporate Control in Ensuring the Technological Sovereignty of the Russian Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Anna V. Bodyako, Tatiana M. Rogulenko, Tatiana L. Zaytseva, Svetlana V. Ponomareva, and Marina V. Krayushkina
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Methodological Recommendations on the Implementation of the Methodology for Managing Digital Transformation of Industrial Company to Ensure Breakthrough Technological Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Tatiana V. Kokuytseva, Maksim M. Kharlamov, and Oksana P. Ovchinnikova Implementation of a Database on Solar Resources for the Design of PV Solar Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Maksat N. Kalimoldayev, Assel A. Abdildayeva, and Zhazira U. Shermantayeva Digital Twin of the Zoological Collection of the Republic of Kazakhstan . . . . . . . 157 Maksat N. Kalimoldayev, Roman V. Yaschenko, Aigerim T. Mazakova, Talgat Zh. Mazakov, and Gulzat Z. Ziyatbekova Digital Model of the Influence of Various Environmental Factors on Plant Biomass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Aigerim T. Mazakova, Chingiz Nurzhanov, Talgat Zh. Mazakov, Sholpan A. Jomartova, and Akyltai D. Burgegulov Digital Determination of the Thermal Conductivity of a Square Bar by Reduction to a System of Integral Equations . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Aigerim T. Mazakova, Sholpan A. Jomartova, Talgat Zh. Mazakov, Gulzat Z. Ziyatbekova, and Kalamkas B. Begaliyeva Development of Blockchain Platforms for Tokenization of Real Assets . . . . . . . . . 173 Pavel A. Drogovoz, Nataliya A. Kashevarova, and Irina S. Starikova The Main Approaches to Using Digital Twins in Banking . . . . . . . . . . . . . . . . . . . 179 Alexander A. Chursin, Vladimir A. Ermakov, Maksat N. Kalimoldayev, and Almas M. Kalimoldayev Development of a Functional Component Model for a Data System Concept to Assess Innovative Investment Projects for Designing Import-Substituting Products in the Context of Digital Transformation . . . . . . . . . . . . . . . . . . . . . . . . 185 Alexey D. Linkov Transforming Communication Flows Between Organizations and Their Publics in the Context of Emerging Web 3.0 . . . . . . . . . . . . . . . . . . . . 191 Irina S. Miller, Irina A. Gereikhanova, Anna S. Konstantinova, Lubov N. Pereyashkina, and Anastasia N. Udotova Trends in the Development of E-commerce in Enterprises . . . . . . . . . . . . . . . . . . 197 Zhanna V. Smirnova, Mariia V. Mochalina, Svetlana N. Kuznetsova, Elena P. Kozlova, and Ekaterina P. Garina Effectiveness of Digital Marketing Technologies in Commercial Banks . . . . . . . . . 201 Laylo T. Abdukhalilova Digital Technology in Courts as a Tool for Smart Regulation: Opportunities and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Marina Yu. Kozlova and Marina L. Davydova Current Trends in the Development of the Financial and Credit System in the Context of Digitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Ainura K. Askarova, Umut M. Abdyldaeva, Elnura I. Murzalieva, Darygul Sh. Zholboldueva, and Gulchekhra B. Abdyrakhmanova
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Institutional Framework for Responsible Innovation in Society, Business, and the Country: A Contribution to Reducing the Ecological Footprint of the Economy Analysis of the Methods of Intellectual Property Management in Innovation Ecosystems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Nataliya A. Kashevarova Overview of Technological Forecasting and Assessment of the Life Cycle Results of the Technological Innovation Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Vladimir A. Shiboldenkov Digital Transformation of Marketing Activities as a Factor in the Development of International Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Alexander A. Voronov, Tatyana S. Popova, Irina A. Shumakova, and Elena N. Danilevskaya Developing a Theory of Tax Revenue Mobilization Using Social Media and Documentary Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 Lubinda Haabazoka and Byrne Kaulu Methodology for Assessing the Competitiveness of Metal-Cutting Tools . . . . . . . . 251 Vlada V. Kolocheva and Nikita V. Boridko Modeling the Motivation of Top Management of the Governing Structures of the Regions Using Logistic Regression . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 Sergey N. Yashin, Egor V. Koshelev, Dmitrii A. Sukhanov, Ekaterina P. Garina, and Elena P. Kozlova The Use of Artificial Intelligence in Teaching Foreign Languages . . . . . . . . . . . . . 261 Marina L. Gruzdeva, Natalia Kh. Frolova, Zhanna V. Smirnova, Sergey D. Tsymbalov, and Alexander P. Garin Does Understanding the Sustainable Development Concept Affect the Leaders’ Innovative Competencies? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 Yinan Dong and Elena I. Lazareva HR Ecosystem Development as a Driver of Increasing Management Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 Elena I. Lazareva, Julia V. Gavrilova, Nina Szczygiel, and Dmitry A. Shevchenko Problems of Human Resource Management of the Innovation Economy . . . . . . . . 279 Natalya I. Khosroeva, Larisa G. Mamsurova, Irina Kh. Kuchieva, Aida Sh. Begieva, and Zarina Kh. Bekmurzaeva Digital Platforms of Educational Services: Problems and Development Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 Zhanna V. Smirnova, Elena G. Skachkova, Evgeny A. Semakhin, Elena V. Romanovskaya, and Natalia S. Andryashina Characteristics of the Identity of Pregnant Women in the Context of an Approach to Socially Responsible Parenthood . . . . . . . . . . . . . . . . . . . . . . . 289 Irina A. Kolinichenko and Svetlana A. Nikulina Theoretical and Methodological Foundations of Interaction Between Family and School as a High Social Responsibility in Child Development . . . . . . . . . . . . 295 Elena N. Pristupa, Natalia A. Zaikina, Angela V. Babayan, Anna I. Shcherbina, and Olga S. Eremina
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Implementation of the Concept of Sustainable Development in the Activities of Transnational Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 Elena A. Soloveva, Irina B. Andish, Maria A. Dyakonova, Olga V. Yefimova, and Denis A. Mirgorod The Comparative Analysis as a Tool for Evaluating the Effectiveness of Economic Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307 Tatiana V. Baibakova, Anastasia A. Sozinova, Aleksandr A. Voronov, Irina A. Shumakova, and Elena A. Fursova Impact of Government Support on Oilseeds Production . . . . . . . . . . . . . . . . . . . . 313 Artem V. Lukomets Digital Aspects of Analytics and the Effectiveness of Standard Communication Channels of Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 Oleg L. Lyamzin and Anna I. Skurikhina Regionalisms as a Result of Cultural and Ethnic Contacts of Turkic-Speaking Peoples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325 Siuita R. Abdykadyrova, Toichubek B. Kabylov, Sabyrkul Sh. Kalygulova, Khulkharai T. Abdurakhmanova, and Dinara A. Salieva Status and Personality Conditioning the Language Portrait of Politicians . . . . . . . 331 Valentina F. Belova, Galina A. Lebedenko, Ainabat E. Mirzakhanova, Natalia V. Papka, and Natalia S. Shavkun Psychological Conditions for the Development of Student’s Personal Resources in the Educational Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 Svetlana V. Khrebina, Mariyam M. Erkenova, Maxim V. Khrebin, Rimma G. Zvereva, and Iana A. Kharchenko Improvement of the Personnel Innovation Activity Management System Based on the Principles of Social Orientation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 Alla G. Zinchenko, Elena L. Neznahina, Sergei B. Sorokin, Dmitrii A. Kornilov, and Elena V. Kornilova International Experience in Reducing Ecological Footprints at the Level of Regional and National Economies and Groups of Countries Prospects for Developing Public–Private Partnerships in Regions with Limited Potential for Self-development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 Zhanna A. Zakharova, Maxim V. Suraev, Zoya I. Bakhur, and Vyacheslav Fomin Contemporary Approaches to Managing Investment Flows in the Regional Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359 Elena A. Bratukhina, Eleonora V. Nagovitsyna, and Dmitry S. Tusin Management Innovation and Economic Development of Chinese Universities in the Information Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Yanyan Zhang, Elena I. Lazareva, Elena A. Repina, Wenjun Li, and Ziqiang Zhao Online Education in BRICS Countries: New Opportunities for Post-pandemic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 Sergey V. Ponomarev, Ekaterina E. Mirgorod, Anna F. Beilina, Alexandra A. Chudaeva, and Artur A. Maksaev
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Risks of Socio-economic Uncertainty for the Well-Being of the Population: The Experience of Developed and Developing Countries . . . . . . . . . . . . . . . . . . . . 379 Ekaterina V. Lisova, Maryna V. Andryiashka, Natalia V. Ruzhanskaya, Olga V. Shugaeva, and Nadezhda V. Klimovskikh Current Trends in the Regional Economic Systems Development: Key Determinants of Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387 Marina E. Buyanova, Irina S. Averina, and Elena Yu. Horuzhaya Digital Development of Russian Regions: Prospects and Contradictions in a Period of Turbulence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 Nadezhda V. Pilipchuk, Zhanna A. Aksenova, Svetlana V. Lupacheva, Olga M. Markova, and Ruslan M. Tamov Effect of Relational Capital, Structural Capital, and Human Capital on the Performance of Insurance Brokers in Zambia . . . . . . . . . . . . . . . . . . . . . . 399 Maikisa Ilukena, Taonaziso Chowa, and Lubinda Haabazoka Analysis of Climate Conditions of the Batken Region . . . . . . . . . . . . . . . . . . . . . . 405 Idirisbek G. Kenzhaev, Oskonbai U. Dilishatov, Bakhtyiar U. Khasanov, Zhahnbolot Zh. Tursunbaev, and Bakytbek E. Kudaiberdiev The Constructs of Short-Term Consumer Credit from the Perspective of Merchants and Employers as Key Stakeholders in Zambia . . . . . . . . . . . . . . . . 411 Henry L. Chikweti, Lubinda Haabazoka, and Jackson Phiri Methodological Aspects of Budgetary Monitoring of the Implementation of National Projects in the Regions of Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 Nadezhda I. Yashina, Svetlana N. Kuznetsova, Elena P. Kozlova, Ekaterina P. Garina, and Evgeniy Yu. Denisov Organizational and Economic Mechanisms of Sustainable Development of Industry in the Kyrgyz Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 Svetlana V. Zatravina, Mukaddas A. Dzhorobaeva, Aizhamal A. Bekturganova, Kubanych K. Toktorov, and Guras D. Zhaparov Comparing the Agricultural Sectors of the EAEU Countries Through the Sustainability Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431 Irina B. Mukambaeva, Nelli I. Akylbekova, Nurbek J. Mukambaev, Ermeka J. Lailieva, and Inna E. Nam Correlation of Educational and Labor Migration of the Population of Russia . . . . . 437 Tatiana Yu. Sinyuk, Mikhail A. Surzhikov, Natalia G. Kazimirova, Tatiana V. Voronina, and Natalia V. Mishina Pandemic and Sanctions: A Study of Economic Shocks in the Russian Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445 Ekaterina A. Isaeva, Elena S. Materova, Gulnaz F. Galieva, Elvira A. Gatina, and Tatyana G. Sobolevskaya Current Challenges in the Development of the Kyrgyz Republic: Modernization of the Economy and the Financial Sector . . . . . . . . . . . . . . . . . . . 453 Sergei R. Semenov, Kalybek Zh . Abdykadyrov, and Aizada J. Otorchieva Impact of Money Supply on Inflation in Uzbekistan—VAR Approach . . . . . . . . . 459 Aktam U. Burkhanov, Mohichekhra T. Kurbonbekova, and Bunyod Usmonov
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Directions of Trade Relations of Uzbekistan with the Countries of Central Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465 Mehri Kh. Vokhidova and Alomatkhan R. Abdullaeva Ensuring the Sustainable Development of Russian Regions: The Practice of New Times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469 Elena S. Materova, Igor V. Petrov, Nadezhda V. Pilipchuk, Sergey V. Ponomarev, and Irina N. Shvetsova Modern Principles of Management of the Russian Political Leadership . . . . . . . . 477 Rodion A. Kandyba, Denis A. Mirgorod, Elena A. Shabanova, Stanislav I. Sergeev, and Irina M. Vilgonenko Ecological Footprint of the Economy on the Threshold of the Fifth Industrial Revolution: The Challenges of Advanced Technology and Responsible Innovation (Conclusion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
Ecological Footprint of Today’s Economy; Green Innovations and ESG Practices to Reduce It
Research of International Standards of Green Economy Svetlana E. Sobenina , Sergey S. Murtuzaliev , and Svetlana Yu. Murtuzalieva
Abstract
1
Responsible attitude of a person to the resources of the Earth aims to find a reasonable compromise between the growth of well-being and the preservation of natural resources. Standards of the green economy help achieving green growth. Study examine efficiency of measures taken and challenges to developing the green economy. The research has shown that many agreements between different countries contribute to the popularization of the green economy worldwide. However, some countries are reluctant to change their economy to fit the green standards. United efforts of countries and international organizations should make the transition to a green economy for most economies a painless and profitable experience. Paper concludes that economic development is accompanied by a continuous increase in production and consumption. The potential of the energy sector, primarily renewable electricity, as well as energy conservation and energy efficiency, is huge. International institutions can contribute to developing a green economy by following the principles of unity and consistency. Keywords
Green economy Green growth Carbon emissions Energy sector Renewable energy sources European Green Deal International organization
Introduction
Green growth strategies focus on providing a sustainable basis for realizing the potential of natural resources. This potential includes providing critical life-supporting conditions, which is what the green economy considers. The natural transition of humankind to alternative energy at this stage is impossible without external influence. The key factor that can restrain the growth of hydrocarbon consumption and meet the increasing demand for electricity from renewable sources is the state and supranational impact. By increasing the tax burden on the raw material, the country can launch the process of replacing raw energy. There is a need for a transition to green technologies, the environment will already be irreparably damaged primarily with international organizations such as the WTO, OECD, UN, OSCE, and others. The difficulty of green transition explains traditional energy sources that are currently more profitable, although they are more toxic than alternative ones. Governments are afraid of declining competitiveness due to the transition to alternative energy sources. The issue of switching to alternative sources has been raised since the founding of the UN, designed to prevent global catastrophes and neutralize the influence of particular countries on the world order to gain an advantage. This causes a dilemma of individual advantage of the country for the preservation of ecology on the planet.
JEL Classification
M4
K8
S. E. Sobenina Plekhanov Russian University of Economics, Moscow, Russia S. S. Murtuzaliev S. Yu.Murtuzalieva (&) RUDN University, Moscow, Russia e-mail: [email protected]
2
Materials and Methods
The agreements adopted by international organizations equally impose obligations and restrictions on the parties to the agreement. Responsibilities are imposed on all parties to the agreement equally, and the benefits of introducing these responsibilities are clear.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_1
3
4
S. E. Sobenina et al.
The most significant international agreements that contribute to use of green means and methods in manufacturing industry, transport, and fuel and energy complex are presented in Dzhakupova et al. (2018). A distinctive feature of the UN Framework Convention was the principle of universal responsibility of countries. Convention was adopted but have not reached the post-industrial stage and to strengthen the responsibility of developed countries that have already caused damage to the environment.
3
also should promote the use of renewable fuels in transport industry. To reduce harmful emissions and lower energy costs it is necessary to reduce energy consumption. The transition to a green economy also implies a change in the tax system, namely the provision of legal incentives for a “green transition” (European Commission, n.d.). Thus, according to the project, it is planned to reduce tax rates on heating and transport services to mitigate the social consequences of switching to alternative energy sources.
Results 4
The successful European “Green Course” laid the foundation for these transformational changes. Primarily, the Commission took measures to promote the growth of the market of cars with zero or minimum emissions into the atmosphere. The Commission also proposes to charge for carbon emissions for the aviation sector, which has so far been an exception to transport subject to an emissions tax. In addition to the tax, the Commission proposes promoting the use of environmentally friendly aviation fuel, namely, to oblige aircraft to use environmentally friendly mixed fuel for all departures from EU airports. As for marine sector, it is proposed to extend carbon charges as well. Technologies change value chains in many sectors, especially in energy, transport and construction, contributing to the creation of stable and high-paying jobs across Europe, that might dramatically decrease unemployment rate. Increased use of renewable energy and the electrification of economy are to contribute to the creations of many jobs in these sectors. Improved energy efficiency and increased use of environmentally friendly fuels might affect many industries what will consequently require more highly qualificated labor force. Due to the fact that the transition to cleaner energy sources can lead to an increase in production cost, to maintain the competitiveness of products produced by the EU and prevent unfair competition from abroad, it is planned to introduce a carbon tax on the territory of the EU for those companies importing to the EU goods whose countries of origin have less stringent climate rules. It also proposes a policy which strengthen trade between companies with environmental initiatives by lowering the priority of companies without environmental initiatives in tender procedures. The next direction of modernization is the repair of buildings. Building repairs are designed to save energy by protecting against extreme heat or cold (EURACTIV.com. 2022). The program includes repairs of residential buildings and public buildings, such as offices or shopping centers. It
Discussion
To determine which international organizations have expertise in a particular sector, consider the number of programs used by organizations in some sectors. Figure 1 shows the number of programs implemented by the organization within the sector, regardless of the number of regions in which it is implemented. UNEP implements almost 70% of all general economic programs. The programs implemented by this organization are aimed at preserving biodiversity and developing cooperation between countries. According to Fig. 1, it can also be seen that each industry is regulated by several international organizations at once. The least regulated sectors of the economy are tourism and education. Currently, only one project is being implemented in the educational sphere, and two projects are being implemented in the tourism sector. The target sector for green economy development programs is the energy sector. Currently, 21 programs are focused on it. Approximately 45% of them are implemented by UNECE. The remaining programs implemented in the energy sector are almost evenly distributed among the five organizations. Half of all energy sector programs are implemented not on the scale of a single country but in the entire region at once, in particular in the Caucasus, Eastern Europe, and Central Asia. Many programs implemented in the energy sector directly affect the energy sector. The most widespread and rapidly developing types of “green” energy are currently the following: • Hydropower is based on the most widely used type of renewable energy, which accounts for 54% of all generating capacities in the world operating on these sources. China is currently the leader in the production of hydroelectric power; • Wind energy production. New composite materials technological advances have contributed to increasing the service life and reducing the cost of wind turbines. As a
Research of International Standards of Green Economy Fig. 1 Number of programs implemented by international organizations in some sectors, 2017. Source Compiled by the authors based on OECD (2017)
5
35 30 25 20 15 10 5 0
UNDP
UNEP
result, for example, onshore wind power generates about 10% of all energy in the UK and is the most economical alternative energy option for it. Offshore wind farms supply electricity to about 4.5 million households in this country; • Solar energy is the fastest-growing type of green energy. United Arab Emirates produce electricity in an amount sufficient to reduce the carbon footprint equivalent to the effect of eliminating 200 thousand cars; • Bioenergy is the fourth largest type of “green” energy. It is based on traditional biomass sources innovative use, such as agricultural by-products and household waste. China, the UK, and India are the current leaders in bioenergy production. Brazil, Germany, the USA, and Sweden are also actively developing these technologies; • Geothermal energy. Iceland is the largest producer of geothermal electricity in the world. Notable positions in this area are occupied by Indonesia, Italy, Mexico, the Philippines, and the USA (Earth ORG 2021). The main trends of the green economy in 2022 are as follows: (1) Activation of developments in the field of green hydrogen. Green hydrogen is a fuel obtained by the electrolysis of water. The transition to this fuel type makes it possible to provide the most environmentally friendly energy production chain. However, the technologies of hydrogen extraction and storage have not yet been fully developed, and their significant disadvantage is the great need for clean fresh water. The products are very expensive (from $4 to $6 per kg).
OECD
ITU
GGKP
WIPO
OSCE
ILO
UNECE
Although, as technology improves, the competitiveness of environmentally friendly hydrogen increases in cost. Australia, Chile, the European Union, Germany, Japan, Saudi Arabia, and the USA have already committed to making significant investments in its production (Columbia Climate School 2021). The growing interest in “green” hydrogen as opposed to traditional energy raises the question of the feasibility of using an extensive gas infrastructure. For example, according to Bloomberg, switching to hydrogen fuel may make American gas pipelines with a total length of three million miles (or 4.8 million km) unnecessary. The new US administration is already demonstrating a critical attitude towards large pipeline construction projects. Hydrogen technologies also threaten the interests of Gazprom, the largest supplier of natural gas in the EU. Some companies are already thinking about organizing the production of hydrogen and ammonia next to wind farms (Eurostat 2022); (2) Improvement of advanced bioenergy technologies using organic waste from landfills and reservoirs, agricultural waste, etc. as an energy source. Heat, liquid, or gaseous biofuels (ethanol, biogas, biodiesel, etc.) are obtained through thermochemical or biochemical reactions of biomass processing. Due to the expansion of the scale of such industries, emissions of the third category of harmfulness are reduced (US Environmental Protection Agency (EPA) 2022); (3) Increasing interest in geothermal energy, which can become the most reliable renewable energy. At a depth below the freezing level of the soil (two to three meters from the ground surface), the temperature remains
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constant throughout the year and is approximately equal to the average annual outdoor temperature. This can be used as an energy source to generate electricity or heat, heating or cooling the building. It is considered to be one of the most efficient energy sources.
create projects for sustainable environmental development. Therefore, it is important for states to plan the implementation of green projects according to the cost of implementation in financial, labor, and other resources and green projects of other countries.
Nevertheless, traditional (fossil) energy sources currently play a dominant role in the global energy balance and individual countries. Fossil fuels can be easily transported from one country to another. This market is highly profitable. On the contrary, the cost of more environmentally friendly (or alternative) energy sources is falling due to large-scale investments in innovative technologies (Pichai 2018). However, it is unlikely that the green energy wave will displace all oil and gas producers in the coming years. A certain decline in demand for fossil energy resources in the 2020 “COVID” year is the result of force majeure, and it is incorrect to consider it as a trend. Moreover, the pandemic unexpectedly showed the world community a probable future without hydrocarbons—without flights on airplanes and trips by car. As it turned out, humanity cannot live without oil and gas yet. According to the OPEC World Oil Outlook report published in 2021, the oil will remain the main fuel in the global energy balance until 2045. By 2025, against the global economic recovery after the coronavirus pandemic, this figure may grow to 31%. As of 2020, the share of RES was 2.5% of the total energy balance. By 2045, it can increase up to 10%. The demand for oil over the same period will increase by 12% (Katkov 2021).
Acknowledgements The study was carried out on the topic: “Development of mechanisms for adaptation to international standards of the “green economy” of Russian export industries” within the framework of a grant from the Federal State Budgetary Educational Institution of Higher Education “PRUE named after. G.V. Plekhanov”.
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Conclusion
Economic development is accompanied by a continuous increase in production and consumption. The potential of the energy sector, primarily renewable electricity, as well as energy conservation and energy efficiency, is huge. International institutions can contribute to developing a green economy by following the principles of unity and consistency. In world practice, there are a large number of instruments and institutions that distribute resources and
References Columbia Climate School (2021, January 7) Why we need green hydrogen. Retrieved from https://news.climate.columbia.edu/2021/ 01/07/need-green-hydrogen/. Accessed 23 May 2022 Dzhakupova IB, Bozhbanov AZh, Sharifkanova GN (2018) Ecology and sustainable development: training manual. Almaty, Kazakhstan Earth ORG (2021, March 10) Top 5 fastest-growing renewable energy sources around the world. Retrieved from https://earth.org/fastestgrowing-renewable-energy-sources/. Accessed 23 May 2022 EURACTIV.com (2022, February 11) Widespread support for EU social climate fund in European Parliament by Kira Taylor. Retrieved from https://www.euractiv.com/section/energy-environment/news/ widespread-support-for-eu-social-climate-fund-in-european-parliament/. Accessed 23 May 2022 European Commission (n.d.) Delivering the European Green Deal. Retrieved from https://commission.europa.eu/strategy-and-policy/ priorities-2019-2024/european-green-deal/delivering-europeangreen-deal_en. Accessed 23 May 2022 Eurostat (2022) EU imports of energy products—recent developments. Retrieved from https://ec.europa.eu/eurostat/statistics-explained/index. php?title=EU_imports_of_energy_products_-_recent_developments. Accessed 23 May 2022 Katkov M (2021, September 29) Oil will remain the main fuel until 2045. Vedomosti. Retrieved from https://www.vedomosti.ru/ business/articles/2021/09/28/888816-neft-ostanetsya. Accessed 23 May 2022 OECD (2017) Green growth indicators 2017. OECD Publishing, Paris. https://doi.org/10.1787/9789264268586-en Pichai G (2018, February 22) A basic difference between traditional and green energy sources. About Smart Cities. Retrieved from https://www.aboutsmartcities.com/difference-traditional-greenenergy-sources-2/. Accessed 23 May 2022 US Environmental Protection Agency (EPA) (2022) Scope 3 inventory guidance. Retrieved from https://www.epa.gov/climateleadership/ scope-3-inventory-guidance. Accessed 23 May 2022
Investment Cooperation Between the EU and the EAEU Countries in Building a “Green Economy” (Case of the EBRD’s Activities in Armenia) Ludmila L. Razumnova
and Natalia P. Savina
Abstract
JEL Classification
The research focuses on the activities of the European Bank for Reconstruction and Development (EBRD) on the territory of Armenia as one of the member countries of the Eurasian Economic Union Integration Association (EAEU). The research aims to identify trends and features in the field of financing green economy projects and their impact on the country’s energy potential and sustainable development. The research is based on the analysis of the EBRD database, a comparison of expert opinions, and current data on the implementation of funded projects. In particular, it is revealed that many projects are implemented with the involvement of funds from third international financial organizations, integrated into broader national development programs of relevant industries and sectors, etc. There is sufficient evidence that in recent years, cooperation between the EBRD and Armenia has increasingly focused on supporting projects aimed at maintaining sustainable development, including such areas as urban and industrial infrastructure, energy conservation, renewable energy, etc. It is revealed that the EBRD’s financing contributes to the accelerated modernization of energy companies’ capacities, creating incentives for the introduction of renewable energy sources, improving the efficiency of resource use, decarbonization, and maintaining the financial stability of national companies.
F15
Keywords
EBRD EU EAEU Armenia Green economy Energy efficiency RES Decarbonization
L. L. Razumnova (&) N. P. Savina Plekhanov Russian University of Economics, Moscow, Russia e-mail: [email protected] N. P. Savina e-mail: [email protected]
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Q42
P48
Introduction
The European Bank for Reconstruction and Development (EBRD) was one of the first international and regional financial institutions (between IMF, the World Bank Group, the Inter-American Development Bank, the African Development Bank, and the Nordic Investment Bank) to focus their efforts on increasing energy efficiency. Back in 1994, the EBRD established specialized energy efficiency divisions. The EBRD has been implementing the Sustainable Energy Initiative (SEI) since 2006. Between 2006–2012, the EBRD invested approximately 11 billion euros under the SEI in more than 620 projects, which accounted for 20%– 30% of the bank’s total operations. Simultaneously, Russia accounted for the largest share of funding—22%, while the countries of Eastern Europe and the Caucasus—21%, South-Eastern Europe—20%, and Central Europe and the Baltic States—17% (Evdokimov 2013, p. 133). To create additional tools for improving the efficiency of financing, in 2016, the Bank’s Board of Directors launched the Concept of Green Economy Transition (CGET), which provides for an investment increase in environmental protection up to 40% of the total amount of EBRD funding by 2020 (Bondarenko et al. 2019). It involves expanding existing activities aimed at supporting energy efficiency and renewable energy projects, financing sustainable energy, and introducing innovations in environmental finance and software products (Tanaka 2020). One of the mechanisms for introducing innovative climate technologies is the activity of the Finance and Technology Transfer Center for Climate Change (FINTECC). Currently, of all the EAEU countries, the activity of the FINTECC includes only cooperation with Kazakhstan.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_2
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L. L. Razumnova and N. P. Savina
Nowadays, the EBRD has become a leader in climate change financing. It plans to become a majority green bank by 2025. The response of the EBRD to COVID-19 remains to help countries achieve green, inclusive, and sustainable economic recovery. From the end of 2022, all investment activities of the EBRD will be consistent with the goals and commitments of the bank’s partner countries adopted under the Paris Climate Agreement. Armenia’s energy sector is characterized by a shortage of its own energy resources and small electricity production at existing nuclear and hydroelectric power plants, making it highly dependent on Russian energy supplies. The planned launch of the single EAEU electricity market by 2025 can significantly increase electricity consumption in Armenia. It is estimated that between 2018–2040, the demand may increase by 50%–74% while the capacity of hydropower and renewable energy will grow slightly—by 0.1 GW and 0.3 GW, respectively; gas demand will increase by 28.5–35.2% depending on the possibility of purchasing gas at Russian prices. Oil products demand will grow by 7–17% (EBRD 2021a, b, c, d). In this context, it is apparent that Armenia is facing an acute problem of increasing the use of its own resource potential efficiency for energy production. It is also interesting to study the experience of its cooperation with the EBRD in the field of financing green technologies from the point of view of implementing joint sustainable industrial projects.
2
Materials and Method
The research was conducted based on the official information provided by different websites, including the International Energy Agency (IEA), the EBRD, and the Eurasian Economic Commission, as well as Russian and foreign secondary sources presented in open-access information and analytical sites, specialized scientific journals, and expert opinions of Armenian business representatives. The analysis of the collected information was carried out from the point of view of the implementation of EBRD’s financing mechanisms within the framework of the Concept of Green Economy Transition (Bondarenko et al. 2019) using the methods of systematization and grouping of data and comparison of expert opinions and generalization. According to the studies conducted by I. A. Bondarenko and others on the EBRD’s activities in the EAEU countries, including Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan, in 2015–2016, the bank implemented a large number of projects in green economy, energy saving, corporate governance quality, and road infrastructure within the Strategic and Capital Framework 2016–2020, which showed
the expansion of the scope of traditional banking activities and interest in global institutional projects (Bondarenko et al. 2019). In all the EAEU countries, the EBRD provided loans in three main areas: • Improving economic sustainability. • Regional and global economy. • Solving global and regional problems, including combating climate change and improving energy security. In 2021, the largest number of active projects in the EAEU in terms of both quantity and volume of financing was implemented in Kazakhstan—128 projects worth 2648 million euros. Russia implemented 65 projects worth 1035 million euros, of which 25% are in the field of sustainable infrastructure construction. As for the other countries, Belarus implemented 67 projects worth 930 million euros, Kyrgyzstan—67 projects worth 150 million euros, and Armenia—58 projects worth 400 million euros (EBRD 2021c). According to the IEA, Armenia’s energy demand exceeds 3 million tons of oil equivalent. In 2019, it amounted to about 3.40 million tons of oil equivalent. Natural gas dominates the energy balance—63%; renewable energy accounts for 8.8%. Although Armenia does not produce fossil fuels, it covers 24% of its energy needs from domestic production, mainly from nuclear and hydropower. The structure of electricity production by the source is more diversified. In 2019, it was also dominated by natural gas (40%). A smaller share accounted for hydroelectric power (31%) and nuclear power (29%). In the Caucasus region, Armenia is the only country producing nuclear power (IEA 2021; Statistical Committee of the Republic of Armeni 2022). As a member of the EAEU, Armenia participates in the building of a common energy market (oil, gas, electricity, etc.), which was created under the unique conditions, especially in relation to the electricity market and the maintenance of national energy security (Gibadullin and Bortalevich 2016; Vinokurov 2008). Its creation will provide the participating countries with an increase in internal network capacity and optimize the utilization of generating capacity (Baykov 2012; Sopilko 2019). Armenia should build a strategy for the electric power industry development primarily based on its own sources (construction of small and medium-sized hydroelectric power plants, RES, and nuclear power plants), as well as by increasing gas supplies from Iran. Simultaneously, Armenia is aware that there will be risks of disruptions in the energy resources supply from Russia and Iran in the future. Moreover, there may be risks associated with the operation of an outdated nuclear reactor and monopoly energy suppliers, as well as difficulties in implementing market reforms (Sopilko
Investment Cooperation Between the EU and the EAEU Countries …
et al. 2020). In this context, the market development of renewable energy sources, including wind and solar energy, and the transition to energy saving technologies by means of external and internal financing are essential for the Armenian economy.
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• Participation in the bonds of the Zangezur coppermolybdenum plant (2019)—“ZCMC Bond Participation.” • EBRD loan under the Green Economy Financing Program (GEFF) with the participation of ACBA Bank and ACBA Leasing (2021)—“GCF GEFF Regional —GEFF Armenia-ACBA Bank.”
Results
According to the analysis of the EBRD’s projects, cooperation between the EU and Armenia in the field of green energy is one of the most successful areas of its investment activities in the EAEU countries. The bank is a leading institutional investor in the country. It made the promotion of energy efficiency one of its main activities. Since the beginning of its work in Armenia in 1992 and until 2019, the EBRD has invested 1.36 billion euros. About 90% of the investments are made in the private sector (EBRD 2021; Seldon.News 2019). Between 2015 and 2021 the EBRD implemented 200 projects in Armenia with total investments amounting to 1,887 million euros, of which 1,146 million euros are total disbursements, 83% of which have been invested in the private sector. Currently, the number of active projects is 59 worth of 415 million euros. Operating assets amount to 2.98 million euros, with equity accounting for 17% of the portfolio. The portfolio composition is characterized by the largest share of sustainable infrastructure projects (46%); 44% are in the financial sector, and 10% are in the industry, trade, and agribusiness (EBRD 2021a). As can be seen from Table 1, the number of projects in the field of infrastructure and energy development has increased significantly over the past five years. Thus, only in the first half of 2021, out of seven projects in this area, five projects financed with the participation of private Armswissbank and ACBA bank relate to the support programs of green economy and small and medium-sized enterprises (SMEs) development. One loan was issued in the transport sector (“VISP—Armenian Air Navigation”) and one in the energy sector (“GrCF2 W2-ENA Investment Program”). Among all these projects, only one, in the field of navigation, is a loan provided to the state. The remaining loans are provided to private companies. Among the projects of the EBRD that are being implemented on the territory of Armenia between 2017–2021 (Table 1), we will highlight the following four projects in the field of green economy: • Modernization of the “Electric Networks of Armenia” (2017)—“ENA-Modernization of Distribution Network.” • Construction of the Masrik-1 Solar Power Plant (2019) —“Masrik-1 Solar Power Plant.”
3.1 “ENA—Modernization of Distribution Network” (2017) The project “ENA—Modernization of Distribution Network” is a loan of $80 million for the modernization of Armenia’s outdated energy infrastructure, including the reconstruction and modernization of lines and substations, replacement of outdated equipment, expansion of the automated electricity metering system and connection of new users, installation of a new automatic control system, etc. As a result of its implementation, the company managed to reduce electricity losses from 13.5 to 6.8–6.9%, including by improving the efficiency of the personnel remuneration system. The completion of the second phase of the program (a loan approved in September 2021 by the EBRD and the Asian Development Bank in the amount of $105 million) will digitalize the distribution network and the efficiency of electricity use and improve the reliability of power supply. The company’s ten-year modernization program worth $726 million will be completed by 2027 (Avanesov 2021).
3.2 “Masrik-1 Solar Power Plant” (2019) “Masrik-1 Solar Power Plant” project will receive a long-term loan in the amount of up to $35.4 million from the EBRD, the International Finance Corporation (IFC), and the European Union Neighborhood Investment Platform (NIP) for the construction of the Masrik-1 photovoltaic power plant with a capacity of 55 MW (Gegharkunik province). The construction of Masrik-1 is being carried out by the consortium Photowatio Renewable Ventures B.V. from the Netherlands with Spanish roots and the Spanish company FSL Solar SL. In 2024, the solar power plant will be put into operation and will start supplying electricity to more than 20 thousand homes, with a conditional reduction in carbon dioxide emissions of more than 40,000 tons per year. By 2030, Armenia plans to build more large and small solar power stations, including Aig-1, with a capacity of 200 MW for $174 million, which will be built by Masdar company from the UAE. It has the necessary experience in 40 countries worldwide. It is also planned to construct Aig—2 (Kotayk province). As part of the renewable energy
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L. L. Razumnova and N. P. Savina
Table 1 EBRD projects in Armenia, 2017–2021 Date
Project name
Sector
Public/ private
Status
1.
May 18, 2017
ENA—Modernization of Distribution Network
Energy
Private
Repaying
2.
May 17, 2019
Masrik-1 Solar Power Plant
Energy
Private
Disbursing
3.
August 16, 2019
Meghri BCP Modernization
Transport
Public
Signed
4.
November 14, 2019
ZCMC Bond Participation
Natural resources
Private
Signed
5.
January 20, 2020
Converse Bank MSME Loan
Financial institutions
Private
Disbursing
6.
January 20, 2020
Converse Bank WiB Loan
Financial institutions
Private
Disbursing
7.
February 17, 2020
GrCF2 W2—Yerevan Bus Project
Municipal and environmental infrastructure
State
Signed
8.
May 13, 2020
RF—ENA Resilience Loan
Energy
Private
Complete
9.
May 18, 2020
RF—InecoBank
Financial institutions
Private
Complete
10.
July 23, 2020
Resilience Framework: ACBA bank
Financial institutions
Private
Repaying
11.
December 22, 2020
GCF GEFF Regional—GEFF Armenia II—Inecobank
Financial institutions
Private
Disbursing
12.
April 30, 2021
FIF—ACBA SME Competitiveness Loan
Financial institutions
Private
Disbursing
13.
April 30, 2021
GCF GEFF Regional—GEFF Armenia—ACBA Bank
Financial institutions
Private
Disbursing
14.
June 11, 2021
GrCF2 W2—ENA Investment Program
Energy
Private
Disbursing
15.
June 11, 2021
VISP—Armenian Air Navigation
Transport
State
Concept Reviewed
16.
June 29, 2021
FIF—EaP SMEC —InecoBank
Financial institutions
Private
Signed
17.
June 30, 2021
FIF—EaP SMEC—ArmSwissBank
Financial institutions
Private
Disbursing
18.
June 30, 2021
GCF GEFF Regional—GEFF Armenia—Armswissbank
Financial institutions
Private
Disbursing
19.
November 8, 2021
FIF —EaP SMEC—Armeconombank
Financial institutions
Private
Approved
20.
December 14, 2021
FIF—Ameriabank SME Loan
Financial institutions
Private
In exploratory, pending final review
21.
December 14, 2021
FIF—EaP SMEC—Ameriabank
Financial institutions
Private
In exploratory, pending final review
22.
December 14, 2021
FIF—EaP WiB—Ameriabank WiB loan II
Financial institutions
Private
In exploratory, pending final review
Source Compiled by the authors based on the EBRD Armenia data (EBRD 2021a)
development program, they expect to build solar power plants with a capacity of up to 110 MW in various regions of Armenia. In two surveyed areas, Spanish company Aries Engineering and Systems presented feasibility studies for constructing solar power stations (Masrik-2 project). Small solar power plants and autonomous power stations will also be built. By 2025, the total capacity of solar power plants in the country may reach about 500 MW, or more than 10% of the country’s electricity generation capacity; it will increase to 1000 MW by 2030 (ROSATOM Western Europe 2021). Armenia also has favorable conditions for wind farms, as wind speed is 8.5 m per second. The first networked wind farm with a capacity of 2.64 MW was built in 2005 at the expense of an Iranian grant. By 2040, wind capacity may
increase to 500 MW. Armenia aims to meet 26% of domestic demand from renewable energy sources by 2025 (ROSATOM Western Europe 2021).
3.3 “ZCMC Bond Participation” (2019) “The ZCMC Bond Participation” project involves the EBRD’s participation in securing $11 million bonds of the Zangezur Copper-Molybdenum Combine (ZCMC). It aims to improve energy efficiency and reduce CO2 emissions. This project provides additional liquidity in the debt capital market of the largest Armenian mining company, which operates the greatest copper-molybdenum mine in the South
Investment Cooperation Between the EU and the EAEU Countries …
Caucasus region. The company’s shareholders are officially German Cronimet Mining (60%), Yerevan Pure Iron Plant OJSC (15%), Armenian Molybdenum Production LLC (12.5%), and Zangezur LLC Mining (12.5%) (Kulaev 2021). A secondary effect of the project is the replacement of diesel trucks with electric ones, which leads to a reduction in greenhouse gas emissions (EBRD 2019).
3.4 “GCF GEFF Regional—GEFF Armenia—ACBA Bank” (2021) “The GCF GEFF Regional—GEFF Armenia—ACBA Bank” project involves providing a loan to one of the largest private banks in Armenia, ACBA bank, in the amount of up to $5 million within the framework of the GCF GEFF Regional Structure in Armenia: 75%—will come from EBRD and 25%—from the Green Climate Fund (GCF) for investing in technologies and services to climate change mitigation and adaptation, with a particular focus on promoting renewable energy, energy efficiency, and climate-resilient technologies (solar photovoltaic, solar thermal, geothermal heat pumps, and biogas technologies) (EBRD 2021b). Nowadays, the GEFF program is represented in 26 countries worldwide, where it cooperates with 140 local financial institutions. The investment portfolio of the program is 4 billion euros. A special feature of the program is that the owners of businesses and photovoltaic power plants can return up to 20% after plants construction (AMI Armenian News 2019).
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Conclusion
Currently, the issues of choosing a strategy for building a low-carbon economy and prospects for decarbonizing economic sectors and creating favorable conditions for building a green economy are on the agenda of all the EAEU countries. However, these countries are heterogeneous in terms of the structure of energy balance and the level of energy consumption, which leads to the fact that national development strategies differ significantly and cannot have fully coordinated goals (Eurasian Economic Commission 2021). The example of Armenia shows that this country, which does not have large hydrocarbon reserves, has better conditions for building a green economy than other EAEU countries. An analysis of the EBRD’s projects implemented in Armenia reveals general trends in external financing processes: • More and more projects are green investments that involve increasing the company’s social responsibility and respect for natural resources.
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• Many projects are implemented by means of funds from three international financial organizations and are integrated into broader government programs. • The projects are mostly medium-term. Nevertheless, they are implemented within the framework of stable and long-term cooperation between the EBRD and its Armenian partners and can be extended. • The lending of the EBRD contributes to the development of capital markets, liquid funds, and public financing, thereby supporting the sustainable development of the financial system. • Some projects have been negatively affected by the political instability characteristic of Armenia in recent years. Without developing a national energy security doctrine that ensures the achievement of national interests in the domestic and foreign markets, the introduction of green technologies will not be able to guarantee a balanced and sustainable energy consumption system. Therefore, we should strive to ensure that the national strategies of all members of the EAEU are based on common principles that support maximum efficiency of functioning of individual national energy markets. More active work in this area is necessary in connection with the need for effective recovery of economic growth during the pandemic and with the growing influence of green transformation of the leading countries of the world, including the EU Green Deal, on third countries. According to Tigran Avinyan, Deputy Chairman of the Annual Meeting of the EBRD Board of Governors, the EBRD has played a prominent role in building knowledge and capacity to design and implement reforms, promote structural change, and create a more favorable investment climate (EBRD 2021d). Simultaneously, the developing energy crisis in Europe has shown that the energy transition plan implemented in the EU by phasing out hydrocarbons is chaotic, contains many uncertainties and risks (regarding the structure and volume of investment in mining, the growth rate of transition to RES, ongoing institutional policies, etc.) and can develop according to an unpredictable scenario (Razumnova 2021). It follows that strategies for achieving carbon neutrality developed by the most advanced countries and organizations may lose all meaning without active international cooperation in this area. Acknowledgements The study was prepared in order to carry out scientific and practical development on the topic: “Development of mechanisms for adaptation to European standards of the ‘green economy’ of Russian export industries,” financed from the funds of the Plekhanov Russian University of Economics, Order No. 56 of January 25, 2022.
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References AMI Armenian News (2019, May 14) The boom of “green investments” in Armenia: the GEFF program will provide a total of $20 million. Retrieved from https://newsarmenia.am/news/economy/ bum-zelenykh-investitsiy-v-armenii-programma-geff-predostavit-20mln/. Accessed 7 Jan 2022 Avanesov A (2021, September 22) The company Electric Networks of Armenia is starting to implement the second stage of modernization of the electric grid economy. Retrieved from https://finport.am/full_ news.php?id=44724&lang=2. Accessed 11 Jan 2022 Baykov AA (2012) Comparative integration. Experience and Patterns of Integration in the United Europe and Asia Pacific. Aspect Press, Moscow Bondarenko IA, Vandina OG, Charakhchyan KK, Mukuchyan RR (2019) Effectiveness of the EBRD strategies in the Eurasian Economic Union countries. Int J New Technol Eng 8(3):716–721. https://doi.org/10.35940/ijrte.C3972.098319 EBRD (2019) ZCMC bond participation. Retrieved from https://www. ebrd.com/work-with-us/projects/psd/51289.html. Accessed 10 Jan 022 EBRD (2021a) Armenia data. Retrieved from https://www.ebrd.com/ where-we-are/armenia-data.html. Accessed 10 Dec 2021 EBRD (2021b) GCF GEFF regional fund —GEFF Armenia—ACBA Bank. Retrieved from https://www.ebrd.com/work-with-us/projects/ psd/52442.html. Accessed 11 Jan 2022 EBRD (2021c) Russia data. Retrieved from https://www.ebrd.com/ where-we-are/russia/data.html. Accessed 15 Dec 2022 EBRD (2021d) Tigran Avinyan’s speech at the thirtieth anniversary meeting of the European Bank for Reconstruction and Development in 2021. Retrieved from https://www.ebrd.com/documents/osg/ armenia-english.pdf. Accessed 30 Jan 2022 Eurasian Economic Commission (2021, April 21) The prospects for the development of the “green” economy in the EAEU and in the world were discussed by experts at the thematic session of the EEC. Retrieved from https://eec.eaeunion.org/en/comission/department/ dep_makroec_pol/events/rankings2021/. Accessed 8 Jan 2022 Evdokimov EM (2013) EBRD activities in the field of sustainable energy. MGIMO Rev Int Rel 5(32):131–138. https://doi.org/10. 24833/2071-8160-2013-5-32-131-138 Gibadullin AA, Bortalevich SI (2016) Formation of the common electric energy market of the Eurasian Economic Union: Prospects and problems. Energy Tatarstan 2(42):9–13 IEA (2021) Armenia energy profile. Retrieved from https://www.iea. org/reports/armenia-energy-profile. Accessed 10 Jan 2022
L. L. Razumnova and N. P. Savina Kulaev A (2021, July 19) Zangezur plant in Armenia was at the forefront of processes in Transcaucasia. Krasnaya Vesna. Retrieved from https://rossaprimavera.ru/article/bb9b6c2a. Accessed 1 Jan 2022 Razumnova LL (2021) The green deal of the European Union: Russia’s interests. In: Proceedings of the international conference on scientific research of the SCO countries: synergy and integration. Part 2: reports in English, Beijing, China, pp 14–27. https://doi.org/ 10.34660/INF.2021.76.41.002 ROSATOM Western Europe (2021, May 14) Green square: what the future of Armenia’s energy looks like. Retrieved from https:// www.rosatom-easteurope.com/journalist/news/zelenyy-kvadrat-kakvyglyadit-budushchee-energetiki-armenii/. Accessed 5 Jan 2022 Seldon.News (2019, September 30) Armenia’s electric networks will receive a third tranche of up to $15 million from the EBRD for the modernization of distribution networks. Retrieved from https:// news.myseldon.com/ru/news/index/216878840. Accessed 5 Jan 2022 Sopilko NYu (2019) Prospects for the formation of a common electric power market of the states of the Eurasian Economic Union. In: Economic mechanisms and managerial technologies for industrial development: a collection of scientific papers of the International Scientific and Technical Symposium “Economic mechanisms and managerial technologies for industrial development” of the International Kosyginsky Forum “Modern problems of engineering sciences”, Moscow, Russia, pp 221–224 Sopilko NYu (2020) Energy cooperation in the context of economic integration of the EAEU states (Synopsis of Dissertation of Doctor of Economic Sciences). Plekhanov Russian University of Economics, Moscow, Russia. Retrieved from http://ords.rea.ru/wpcontent/uploads/2020/03/Sopilko_avt.pdf. Accessed 22 Jan 2022 Sopilko NYu, Myasnikova OYu, Bondarchuk NV, Navrotskaia NA, Migaleva TE (2020) Analysis and prospects for the development of regional energy integration of the Eurasian Economic Union countries. Int J Energy Econ Policy 10(5):13–20. https://doi.org/ 10.32479/ijeep.9806 Statistical Committee of the Republic of Armenia (2022, February 14) Energy balance of the Republic of Armenia [Press Release]. Armstat, Yerevan, Armenia. Retrieved from https://www.armstat. am/file/doc/99528958.pdf. Accessed 10 Mar 2022 Tanaka J (2020) “Green”: the EBRD transition concept. Retrieved from https://www.ebrd.com/transition/green.html. Accessed 7 Jan 2022 Vinokurov EYu (2008) The common electric power market of the CIS as an instrument of economic development and regional integration. Euras Econ Integr 1:54–74
Data Mining Efficiency in the ESG Indexes Verbalization Analysis (on the Example of the MSCI Site) Oxana V. Goncharova , Svetlana A. Khaleeva , Natalia A. Ladonina , Igor D. Eremeev , and Varvara V. Fioktistova
Abstract
JEL Classification
The authors consider the efficiency of the data mining method for analyzing the verbalization specifics of the ESG indexes on the example of business documentation and correspondence of MSCI Inc. as one of the best-known global suppliers of ESG and climate products. The relevance of the research is due to its interdisciplinarity and testing of new methods for large text corpora analysis. Text mining implies methods for obtaining new information from the flow of texts or large text data and involves compilation, organization, and analysis of large collections of documents to extract the necessary information and detect previously unknown links between texts. A threestep automatic selection to determine the most widespread lexical patterns when analyzing the verbalization of the ESG indexes demonstrates that these steps, namely text segmentation, n-gram detection, and category labeling, are related to each other. The scientific novelty of this research is determined by the flexibility of the proposed analysis model because it can be used as an open-source tool, i.e., the approach presented herein can be extended to many other types of texts and languages.
C15
Keywords
ESG indexes Data mining Bag of words
Verbalization
O. V. Goncharova S. A. Khaleeva (&) Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected] O. V. Goncharova e-mail: [email protected] N. A. Ladonina North Caucasus Mining and Metallurgical Institute (State Technological University), Vladikavkaz, Russia I. D. Eremeev V. V. Fioktistova Russian State Agrarian University – Moscow Timiryazev Agricultural Academy, Moscow, Russia
N-gram
1
C45
C61
Q01
Q51
Introduction
Nowadays, science is definitely aimed at some streamlined arrangement of the accumulated over the past centuries knowledge that invariably pushes many researchers to look for new methods of analysis within the framework of various concepts and paradigms. As for text analysis, linguistics has traditionally been attracted by the search for a variety of morphological, syntactic, stylistic, semantic, pragmatic, and other characteristics by means of various tools, theoretical justifications, argumentation, generalizations, functional areas, etc. Text mining, as one of the new methods, is a rather complex process involving the search for new textual features by automatically extracting information from various written resources. We are currently witnessing rapid technology development that results from the increase in the information capacity, which most certainly requires new methods of automated and intelligent data processing, as well as new ways to find out and identify implicit patterns. In this regard, it seems essential to improve the reliability of systems and the flexibility of their response to non-obvious changes. However, in the entire array of data, a human can extract only a minor part of useful data. Therefore, data mining as a method of scientific investigation can increase the amount of knowledge gained and help reveal implicit patterns. Data mining is the process of discovering previously unknown, non-trivial, practically useful, and interpretable knowledge in raw data that is necessary to make decisions in various human activities. The essence of this method is to identify implicit, objective, and useful patterns in a large array of data (Frawley et al. 1992).
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_3
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Data mining is not a technology; it is rather a process of finding patterns, deviations, relationships, and trends based on mathematical and statistical algorithms. It is used to solve several tasks, including recognition, classification, or diagnosis of a situation, a phenomenon, an object, or a process with the justification of the decisions taken; predicting situations, phenomena, processes, or states in accordance with the dynamic data samples; running a cluster analysis and data structure research; identifying essential features and descriptions; finding empirical patterns of various types; construction of the analytical descriptions of sets of objects; finding non-standard or critical cases, and reference images descriptions formation. Several works are devoted to the intelligent text analysis and automatic classification and clustering methods development, most of which are based on a vector model of knowledge representation and on the use of semantic networks, including the works by Deerwester et al. (1990) and Landauer (2003) on indexing by latent semantic analysis, U. M. Fayyad and G. Piatetsky-Shapiro on knowledge discovery in databases (Dai et al. 2004; Fayyad et al. 1996), Salton (1989) on the knowledge representation vector model, Djellali (2013) on text clustering models, and Miller and Fellbaum (1991) on the semantic database. The specific features and perspectives of data mining concepts and techniques are studied in the research by Abrukov et al. (2013), Ball (2013), Berzal and Matín (2002), Boire (2014), Esfahani et al. (2019), Sumathy and Chidambaram (2013), and others. Research into the use of machine learning is now growing rapidly. Text classification algorithms based on traditional methods do not provide sufficient analysis of semantic and lexicographic relationships of terms. Thus, data mining is extremely efficient and relevant in various scientific fields, including linguistics, because it opens up apparent prospects in the search for new tools and methods of discourse analysis.
2
Materials and Method
The research aims to prove the efficiency of data mining in analyzing large arrays of text data on ESG topics. We tried to identify specifics of the ESG indexes verbalization in the business documentation and correspondence of MSCI Inc. as one of the best-known global suppliers in stocks, bonds, real estate indices, multi-asset portfolio analysis tools, and ESG and climate products. With this purpose, the authors compiled a corpus of texts from the MSCI site of 80,000 words and analyzed the verbal representation of environmental, social, and corporate governance aspects by means of text data mining. Before building a model and using machine learning algorithms, it is necessary to present the text corpus as a
feature vector. A commonly used model in natural language processing is the bag of words (BOW) model. First, a collection of all different words is created, where each word is assigned a value (starting from 0). Then the dictionary can be used to construct d-dimensional feature vectors for individual documents, where the dimension is equal to the number of different words in the dictionary (d = |V|). After constructing a vector model of words, we need to extract n-grams. In the n-gram model, a token can be defined as a sequence of n-elements. Given a sequence of n − 1 words, the n-gram model predicts the most likely word that can follow this sequence. When n = 1, the probability of the word wi appearing in the ith position does not depend on the previous words, and the sentence is a sequence of independent words. When n = 2, the probability of the word wi appearing in the ith position is associated only with the previous word wi − 1, etc. The n-gram model is constructed by calculating how often word sequences occur in a corpus of texts, and then estimating probabilities. The n-gram is supposed to be evaluated using TF-IDF. Total frequency (TF) is the n-gram frequency coefficient or unit weight in the text, expressing the importance of the word in the text, IDF is the inverse frequency coefficient or unit weight in neutral texts. A weight is assigned to each n-gram using TF-IDF. Next to distributing the n-grams by weights, it is supposed to find a list of keywords that verbalize ESG indexes. After preprocessing the text corpus, we analyzed it in Python using the scikit-learn, pandas, and nltk libraries for subsequent text classification. We used the “k-nearest neighbors” method. Nearest neighbor classifiers determine the k-nearest neighbors of the test point and calculate the number of points belonging to each class. The class with the largest number of points is considered relevant. To calculate the nearest neighbors, the distance from the new data point to all other training data points is used. The number of nearest neighbors (j) is supposed to be established by trying different values of j on the training data. As a result, the value of j will be used, at which the highest accuracy is achieved on the training data. To implement the method, the KNeighborsClassifier from the scikit-learn Python library was used.
3
Results
The main objective of this research is to prove the efficiency of data mining in the ESG indexes verbalization analysis. The solution to the task required using new methods and approaches mentioned above. We have identified several key characteristics of the experimental texts. The data was preprocessed with the use of the regular expressions package available in Python, then only alphanumeric characters (TF-IDF, Word2Vec, etc.) were saved from them.
Data Mining Efficiency in the ESG Indexes Verbalization Analysis …
15
Table 1 The most frequently used words in the categories “environment,” “social,” and “governance” “Environment”
“Social”
“Governance”
Emissions/emission
312
Sustainability/sustainable/sustained
256
Climate
200
Green/greenhouse
191
Global/globally
165
Carbon
149
Environment/environmental/ environmentally
143
Rating
719
Information
311
Disclosure
302
Risk
234
Question
178
Governance 2000 1500 1000 500 0
Social
Environment
Fig. 1 Spider diagram of the most frequent sequences of N-grams in the corpus. Source Calculated and built by the authors
Opinion
145
Invest/investable/investment/investor
569
Company
321
‘Disclosure,’ ‘requirements’
81
Finance/financed/financial/financing
305
‘Climate,’ ‘related’
71
Market
190
‘Rating,’ ‘providers’
60
Regulation/regulations/regulatory
159
‘Risks,’ ‘opportunities’
59
Standard
144
‘Exposure,’ ‘draft’
59
Management/manager
142
‘Credit,’ ‘ratings’
56
‘Credit,’ ‘rating’
44
‘Climate,’ ‘change’
43
‘Related,’ ‘risks’
41
‘Climate,’ ‘impact’
41
‘Factors,’ ‘credit’
40
‘Products,’ ‘services’
37
‘Scope,’ ‘emissions’
36
‘Benchmark,’ ‘administrator’
35
‘Climate,’ ‘related,’ ‘risks’
35
Source Compiled by the authors
The text corpus was built up by means of BoW—sentences were represented by the appearance or absence of a word in a given sentence. First, a corpus of words was formed containing all the words used; the appearance of the word was marked as 1, and the absence of the word was marked as 0. Thus, we identified the most frequent words from the three basic categories “Environment,” “Social,” and “Governance” (Table 1). Visualization of the obtained quantitative results allowed us to establish that the language units involved in the verbalization of the ESG indexes in the text corpus for the category “Environment” are in lower priority positions compared to the categories “Social” and “Governance.” Besides, the number of lexical units included in the semantic category of “Social” equals to similar indicators of “Governance.” The visualization results are shown in Fig. 1. As we have already noted, TF-IDF and BoW are based on words. The N-gram is a solution for BoW, for ignoring a sequence of words, predicting the next word, and typos. Bigrams, trigrams, and N-grams are continuous sequences of tokens. Table 2 shows the most frequent sequences of Ngrams found as a result of the text corpus analysis made in Python nltk. Next, we organized the obtained results in the most frequent sequences of N-grams in the corpus in the form of a
Table 2 The most frequent sequences of N-grams in the corpus
‘Environmental,’ ‘social’
34
‘Climate,’ ‘change’
34
‘Green,’ ‘bond’
33
‘Impact,’ ‘sector’
32
‘Rating,’ ‘provider’
32
‘Factors,’ ‘credit,’ ‘ratings’
32
‘Financial,’ ‘products’
31
Source Compiled by the authors
spider diagram, which allowed us to visualize the estimated level of their recurrence. The results of the visualization are performed in Fig. 2. At this stage, it becomes obvious that the N-grams of the semantic category “Governance” are quantitatively superior to the indicators of the categories “Social” and “Environment.”
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Fig. 2 Spider diagram of the most frequent sequences of Ngrams in the corpus. Source Calculated and built by the authors
'disclosure', 'requirements' 'financial', 'products' 90 'climate', 'related' 80 'factors', 'credit', 'rangs' 'rang', 'providers' 70 'rang', 'provider' 'risks', 'opportunies' 60 50 40 'impact', 'sector' 'exposure', 'dra' 30 20 'green', 'bond' 'credit', 'rangs' 10 0 'climate', 'change' 'environmental', 'social' 'climate', 'related', 'risks'
'credit', 'rang' 'climate', 'change' 'related', 'risks'
'benchmark', 'administrator' 'climate', 'impact' 'scope', 'emissions' 'factors', 'credit' 'products', 'services'
4
Conclusion
In this paper, we have presented research on how text corpora data mining can contribute to linguistics. We employed a three-step automatic selection to determine the most widespread lexical patterns when analyzing the verbalization of the ESG indexes. The results demonstrate that these steps, namely text segmentation, n-gram detection, and category labeling, are related to each other. The present study concludes that the ESG indexes in the semantic preference were verbalized within three semantic categories, namely: “Governance,” “Social,” and “Environment.” The result also indicated that the category node had several collocation words that were strongly associated with a particular meaning. In conclusion, we feel that the application of computational resources to the text corpora analysis will have a profound effect on the direction of linguistic research.
References Abrukov VS, Abrukov SV, Smirnov AV, Karlovich EV (2013) Data mining for scientific research. In: Proceedings of the NANOSOLAR2013: conference of nanostructured materials and converting devices, Cheboksary, Russia. https://doi.org/10.13140/2.1.4664.0962 Ball P (2013) Text mining uncovers British reserve and US emotion. Nature. https://doi.org/10.1038/nature.2013.12642 Berzal F, Matín N (2002) Data mining: concepts and techniques by Jiawei Han and Micheline Kamber. ACM SIGMOD Rec 31(2):66– 68. https://doi.org/10.1145/565117.565130
Boire R (2014) Text mining: the new data mining frontier. In: Data mining for managers. Palgrave Macmillan, New York, pp 221–227. https://doi.org/10.1057/9781137406194_29 Dai H, Srikant R, Zhang C (eds) (2004) Advances in knowledge discovery and data mining. Springer, Berlin. https://doi.org/10.1007/ b97861 Deerwester S, Dumais ST, Furnas GW, Landauer TK, Harshman R (1990) Indexing by latent semantic analysis. JASIS41(6):391–407. https://doi.org/10.1002/(SICI)1097-4571(199009)41:63.0.CO;2-9 Djellali Ch (2013) Enhancing text clustering model based on truncated singular value decomposition, fuzzy art and cross validation. In: Proceedings of the ASONAM’13: international conference on advances in social networks analysis and mining. Association for Computing Machinery, New York, pp 1078–1083. https://doi.org/ 10.1145/2492517.2500317 Esfahani H, Tavasoli K, Jabbarzadeh A (2019) Big data and social media: a scientometrics analysis. Int J Data Network Sci 3:145–164. https://doi.org/10.5267/j.ijdns.2019.2.007 Fayyad UM, Piatetsky-Shapiro G, Smyth P (1996) From data mining to knowledge discovery in databases. AI Mag 17:37–54. Retrieved from https://www.csd.uwo.ca/*xling/cs435/fayyad.pdf. Accessed 10 Jan 2023 Frawley WJ, Piatetsky-Shapiro G, Matheus CJ (1992) Knowledge discovery in databases: an overview. AI Mag 13:57–70 Landauer TK (2003) Automatic essay assessment. Assess Educ Principles Policy Practice 10(3):295–308. https://doi.org/10.1080/ 0969594032000148154 Miller GA, Fellbaum CD (1991) Semantic networks of English. Cognition 41(1–3):197–229. https://doi.org/10.1016/0010-0277(91) 90036-4 Salton G (1989) Automatic text processing: the transformation, analysis, and retrieval of information by computer. AddisonWesley, Reading. https://doi.org/10.5860/choice.27-0351 Sumathy KL, Chidambaram M (2013) Text mining: concepts, applications, tools and issues—an overview. Int J Compu Appl 80(4): 29–32. https://doi.org/10.5120/13851-1685
Marketing Technologies for Transforming the Management of ESG-Oriented Organization in the Digital Economy Nikita V. Matveev , Elena I. Lazareva , and Aram A. Gevorgyan
Abstract
Keywords
The value system of society can be characterized as largely dependent on the management of the marketing system of organizations when the preferences are often the result of the marketers’ efforts. This situation can be used for socially useful purposes, bringing to society the values of sustainable development in the form of ESG principles with the help of marketing technologies. The research presents a systematization of approaches to the integration of ESG principles into the value system of society through marketing tools to transform the organizations’ management. The research aims to develop the principles of managing the organization’s marketing system aimed at integrating ESG goals into society’s value system. The main methodology of the research is the innovation-cyclical paradigm of sustainable development, the basis for the implementation of which is supposed to be based on the organization’s activity aimed at realizing its economic interests and maintaining balance with social interests. The research result determines the list of elements of scientific novelty and its practical significance. The research result is the model developed by the authors combining the tasks of marketing management in the transformation of the society’s value system, approaches to integrating ESG principles into its activities, and digital tools. The developed model covers the identified gaps in the management of the organization’s marketing system and its impact on the values of society. Moreover, it forms a practical basis for integrating ESG principles in the activities in the digital economy.
Marketing management technologies Sustainable development ESG-oriented transformation Social values system Digital economy
N. V. Matveev (&) E. I. Lazareva A. A. Gevorgyan Southern Federal University, Rostov-On-Don, Russia e-mail: [email protected] A. A. Gevorgyan e-mail: [email protected]
JEL Classification
D69 M37
1
D91 E71 L20 L21 L23 M30 M31 O20 O21 O33 O35 Q01 Q51
Introduction
The analysis of the value orientations of society makes it possible to state that the scale of values in many aspects was created as a result of marketing efforts of organizations and countries in previous historical periods. Marketing management technologies serve as the most effective tool for conveying to public opinion the postulates needed by organizations up to the formation of demand for goods and services. The implementation of ESG principles directly related to the ideas of humanism, ecology, and reasonable consumption is impossible without forming a clear understanding of their importance and benefits among people, which can be conveyed using marketing technologies built in accordance with a clear management system. The issues of creating needs and adjusting the existing value system using marketing management tools have been dealt with by many researchers at various times, including M. Gossen, F. Ziesemeer, J. C. Sanclemente-Téllez, A. Kelleci, S. Srivetbodee, B. Igel, and others (Gossen et al. 2019; Kelleci 2022; Sanclemente-Téllez 2017; Srivetbodee et al. 2017). However, despite the progressive nature of the science of marketing management, the following remained out of the field of view of most researchers:
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_4
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• Digitalization aspect, the use of information, and digital transformation products; • ESG-oriented transformation of organization management using marketing technologies; • The ethical aspect in the context of socially useful postulates integration into the social values system of the organization. Marketing management activities based on ESG principles can be attributed to one of the methods of increasing the economic profit of the organization in the long term. They can also be called socially important, indicating the research’s relevance. The scientific novelty of the research consists in the development of an algorithm for two-way communication between organizational activities, consumer behavior, and mass culture with its further integration into the value system of society, as well as the marketing management system of the organization of ESG principles with parallel integration into the company’s activities and the society’s value system. The research results have additional value because the system submitted by the authors considers the interests of all economic entities and provides the rationalization of the organization’s activities, achieving optimal economic and image results in conditions of limited resources. The research results can serve as a basis for developing marketing policy measures aimed at the organization’s sustainable development in the digital economy.
2
Methodology
The research aims to systematize the methodological approaches and develop specific digital tools to facilitate the integration of ESG principles in the organization’s marketing management. This goal is achieved on the methodological basis of the innovative cyclic paradigm of sustainable development, the realization of which is based on the organization’s management considering the realization of its economic interests and the observance of social interests (Lazareva et al. 2023b). The solution to the research tasks was also based on the following conceptual and methodological grounds (Lazareva 2018): • Resource concept of reproduction of anthropologicalenvironmental capital as a condition for increasing the organization’s competitiveness in the context of innovative digital transformation; • The concept of increment of human potential, understood from the position of expansion of possibilities of people to choose the field of activity as a way of increasing productivity;
• The concept of subjective perception of well-being considered from the position of determining the degree of satisfaction of an individual with his or her place in the organization, including the position held, the level of authority, and wages. Additionally, considering the complex systemic nature of the model developed by the authors, an important place in the methodology took the system analysis, which makes it possible to form a comprehensive relationship of parameters characterizing an organization’s activities and approaches to its management based on ESG principles.
3
Results
Considering that the vectors of development of companies are determined by their management, there is the existence of a direct relationship between the organization of management activities and compliance with ESG principles in terms of corporate governance and the interaction of the organization with the external world. ESG principles should be understood as an approach to the organization of activity realized based on a responsible attitude to the environment, social responsibility of the company, and support of high standards of corporate management. Characteristics of ESG-oriented management require the allocation of social, economic, and environmental parameters, the triune development of which ensures the organization’s compliance with the sustainability principles (Egorova et al. 2022; Weston and Nnadi 2021). Consideration of marketing technologies as a tool of diffusion of ESG principles in society is realized through economic impact on consumers. Parallel to this process, the offer of goods and services also includes a sociopsychological component, which is reflected in the process of consumer decision-making about the purchase, comprising rational (measurable) and subjective-emotional factors. As a tool to integrate ESG principles into the activities of the organization and in the system of social values of society, marketing management should include measures to adjust consumer behavior and comply with the conditions of innovative digital transformation of the economy. In the conditions of digitalization, marketing acquires the role of social management technology used by the subject of economic activity to transform the system of values of society (the result of the aggregation of social values accepted in a social group, individual needs, and moral qualities) in accordance with its goals. The methods of marketing management act as a counterbalance to other social technologies, considering the demands of all sides of economic processes and transmitting aspects of the value space to individual consumers (Ptukha 2019).
Marketing Technologies for Transforming the Management …
19
Society’s values Innovative Digital Transformation
Commercial purposes Organization
Image goals
Marketing managem ent
Consumer ontology
Social values 7P Moral qualities
Marketing activities
ESG principles
Culture
Fashion
I n d i v i d u a l n e e d s
C o n s u m e r b e h a v i o r
Worldview
Worldview
Worldview
Mass culture
Society’s value system
Worldview
Worldview
Fig. 1 Influence of organizations on society’s value system through marketing management technologies. Source Developed and compiled by the authors
Mass culture forms consumer behavior with the subsequent creation of mass values. A two-way relationship is established when segments of mass culture, using marketing management tools, form the society’s values that have a reverse effect on the production process (Fig. 1). Reference groups, to whose way of life a number of individuals are trying to get closer by consuming similar goods, are the instrument of influencing consumer behavior in mass culture. A situation is developing in which a culture of imitation is replacing traditional needs with values imposed from “outside.” Fashion also influences the value system of society, forcing people from different social groups to show demand for certain products, goods, or services (Koller et al. 2019). The process of shaping society’s values also correlates with the innovative activities of organizations. The supply of innovative benefits, including those related to digitalization, is at the core of the emergence of new needs. The given set of factors determining the formation of consumer behavior and mass culture can be extrapolated to the algorithm of decision-making by the management of organizations from the strategic perspective and in terms of operational activities. The final commercial value of an organization’s offer includes a set of value characteristics of three components of the offer: • Product (service)—its rational and subjective-emotional value;
• Personnel—in the part of interaction with consumers and communicating to them the value of the product (service); • Organization and its business reputation (Lazareva et al. 2023a). Marketing actions that run counter to the system of views accepted in society can cause an effect opposite to the organization’s goals because marketing, shaping the system of social values of society, is also a social technology dependent on mass culture. Despite the significant acceleration due to digitalization and the processes occurring within society that force the management of organizations to respond quickly to the changing reality, the formation of a system of organizational values, taking into account ESG principles, should be clear and consistent, solving the following tasks: • Formation of the enterprise’s organizational structure by implementing corporate governance standards that ensures the maintenance of two-way communication between structural units, the organization, and society; • Resolution of contradictions between ESG principles, achieving a synergistic effect of the results of their implementation; • Ensuring the satisfaction of the economic needs of the organization from a strategic perspective. The process of integrating ESG principles in the management of the organization under the conditions of
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N. V. Matveev et al.
digitalization must consider several parameters of organizational activities, including the following: • The scope of the organization’s activities, the volume of resources consumed, and the volume of output determining the degree of its social responsibility; • Transparency of the business model visible in electronic databases (governmental and self-regulatory) (Federal Tax Service of Russia 2022; Nostroy, n.d.); • Legal status of business; • Economic and social importance of the company’s activities for the country or region (Laptev et al. 2022); • Environmental friendliness and protection and the automation of the management process to monitor the degree of environmental sustainability and optimize resource consumption; • Smart-management, providing time-saving, increasing the efficiency, reducing the weight of the subjectivity factor, and increasing the transparency of the decisions made; • Personnel policy (from organizational structure to methods of stimulating efficiency) (Pomering 2017). The set of tasks facing the organization’s management aimed at transforming mass culture and the system of social values; their parametric characteristics can be represented in the form of a schematic system (Fig. 2).
4
Discussion
In the context of digital expansion, data and information are becoming a new type of strategic resources of organizations. This fact simplifies the process of integrating ESG principles into the organization’s communication system. Nevertheless, it also complicates the process of their perception by consumers and staff.
O r g a n i z a t i o n
Ecological compatibility Scale
The systematization of approaches to the integration of ESG principles into the management system of the organization of the digital era has shown that its methodological basis is formed by the innovation-cyclical paradigm of sustainable development, the resource concept of reproduction of anthropological and ecological capital, the system methodology of dual management, the paradigm of gravitational forces of management, and the concept of a double shift of the management paradigm (Adizes 2017; Egorova et al. 2022; Garaedagi 2010; Lazareva et al. 2023b; O’Reilly 2017). An important place in the process of ESG-oriented transformation of the management system should be occupied by digital parametric characteristics associated with transforming the value system of the organization or society in the digital economy. Determining the place of these parameters in the management hierarchy, together with the characteristics of the set of components of the contemporary management paradigm of the digital era, refers to the issues of further research.
5
Conclusion
The results obtained during the research and the presence of specific digital tools in them allow us to talk about the achievement of its goal and the presence of practical relevance factors. Organizations can use them as basic recommendations, with a further adaptation of the proposed system to the specifics of the company’s field of activity. The research provided unambiguous answers to questions about the significance and practical benefits of ESG principles for organizations and confirmed the hypothesis that their implementation in management is potentially capable of bringing a positive ethical aspect to society and its value system, as well as for improving the economic performance of the organization by forming a positive image in the eyes of counterparties.
Big data
Environmental
Electronic databases Social
Ec. and social significance Org.-legal form
Management automation
Marketing activities
Society’s value system
Governance
HR policy
Fig. 2 Integration of ESG principles in the system of social values using digital marketing management tools. Source Developed and compiled by the authors
Marketing Technologies for Transforming the Management … Acknowledgements The study was carried out within the framework of the project “Digital Atlas of Political and Socio-economic Threats and Risks of Development of the South Russian Border Area: National and Regional Context” (“Digital South”) within the framework of the Strategic Academic Leadership Program “Priority 2030” No. SP-14-22-06.
References Adizes I (2017, February 16) At the threshold of the management revolution. Big Ideas. Retrieved from https://big-i.ru/management/ upravlenie-izmeneniyami/a18761/. Accessed 17 Nov 2022 Egorova AA, Grishunin SV, Karminsky AM (2022) The impact of ESG factors on the performance of information technology companies. Procedia Comput Sci 199:339–345. https://doi.org/10. 1016/j.procs.2022.01.041 Federal Tax Service of Russia (2022) Transparent business. Check yourself and the counterparty. Retrieved from https://pb.nalog.ru/. Accessed 11 Nov 2022 Garaedagi J (2010) System thinking: how to manage chaos and complex processes. Platform for modeling business architecture. Grevtsov Buks, Minsk Gossen M, Ziesemer F, Schrader U (2019) Why and how commercial marketing should promote sufficient consumption: a systematic literature review. J Macromark 39(3):252–269. https://doi.org/10. 1177/0276146719866238 Kelleci A (2022) Four-stage model of value creation for sustainabilityoriented marketing: en route to participatory marketing. J Macromark 42(1):5–11. https://doi.org/10.1177/02761467211049668 Koller T, Nuttall R, Henisz W (2019, November 14) Five ways that ESG creates value. McKinsey Quarterly. Retrieved from https:// www.mckinsey.com/capabilities/strategy-and-corporate-finance/ourinsights/five-ways-that-esg-creates-value/. Accessed 5 Nov 2022 Laptev VA, Chucha SYu, Feyzrakhmanova DR (2022) Digital transformation of modern corporation management tools: the current state and development paths. Law Enforce Rev 6(1):229– 244. https://doi.org/10.52468/2542-1514.2022.6(1).229-244 Lazareva EI (2018) Human and natural capital reproductive function in the economy of sustainable innovative development: ways of
21 installation into the system of strategic management. J Econ Regul 9 (4):124–133. https://doi.org/10.17835/2078-5429.2018.9.4.124-133 Lazareva EI, Karaycheva OV, Haoming D (2023) ESG-oriented model for assessing the quality of company management in a sustainable economy. In: Lazareva EI, Murzin AD, Rivza BA, Ostrovskaya VN (eds) Innovative trends in international business and sustainable management. Springer, Singapore, pp 123–130. https://doi.org/ 10.1007/978-981-19-4005-7_14 Lazareva EI, Rivza BA, Gavrilova JV (2023) The sustainability formula: a human-centered strategy for managing economic trends in the context of ESG transformation. In: Lazareva EI, Murzin AD, Rivza BA, Ostrovskaya VN (eds) Innovative trends in international business and sustainable management. Springer, Singapore, pp 3–12. https://doi.org/10.1007/978-981-19-4005-7_1 Nostroy (n.d.) SRO registry. Retrieved from https://reestr.nostroy.ru/. Accessed 17 Nov 2022 O’Reilly T (2017) WTF?: What’s the future and why it’s up to us. HarperCollins Publishers, New York Pomering A (2017) Marketing for sustainability: extending the conceptualisation of the marketing mix to drive value for individuals and society at large. Australas Mark J 25(2):157–165. https:// doi.org/10.1016/j.ausmj.2017.04.011 Ptukha A (2019) Value-based marketing management methodology (value methodology). In: Berezin IS (eds) Marketing in Russia, 2019. School Press, Moscow, Russia, pp 117–131 Sanclemente-Téllez JC (2017) Marketing and corporate social responsibility (CSR). Moving between broadening the concept of marketing and social factors as a marketing strategy. Span J Market ESIC 21(1):4–25. https://doi.org/10.1016/j.sjme.2017.05.001 Srivetbodee S, Igel B, Kraisornsuthasinee S (2017) Creating social value through social enterprise marketing: case studies from Thailand’s food-focused social entrepreneurs. J Social Entrepreneurship 8(2):201–224. https://doi.org/10.1080/19420676. 2017.1371630 Weston P, Nnadi M (2021) Evaluation of strategic and financial variables of corporate sustainability and ESG policies on corporate finance performance. J Sustain Finance Invest. https://doi.org/10. 1080/20430795.2021.1883984
Green Economy as a Factor in the Transformation of Environmentally Oriented Management Elena I. Lazareva
and Lei Liu
Abstract
Keywords
Over the past few decades, the rapid development of the economy has led to an unprecedented increase in natural resources and energy consumption, as well as the amount of waste polluting the biosphere, has led to a sharp exacerbation of environmental problems that negatively affect the quality of life of the population and limit the long-term competitiveness of economic entities. Under these conditions, the development of a green economy becomes an inevitable trend. With all sectors of the economy and society affected by new technologies, the green economy is highly volatile, uncertain, complex, and ambiguous. The research aims to clarify the essence of the green economy and develop principles of environmentally oriented management transformation, contributing to green growth. The basic methodology of the research is the innovation-cyclical paradigm of sustainable development, the implementation of which is supposed to be based on management principles aimed at balancing economic, social, and environmental interests. The result of the research, which determines the list of elements of scientific novelty and its practical importance, is a step-by-step scheme based on the analysis of several national economies, which combines the tasks of management in the field of environmentally oriented transformation. The developed scheme covers the identified gaps in the study of the environmentally oriented transformation of management and forms a ready-made practical framework for the integration of ESG principles, which increases its relevance and practical value.
Green economy Environmentally oriented management transformation Sustainable development ESG principles Management principles
E. I. Lazareva (&) L. Liu Southern Federal University, Rostov-On-Don, Russia e-mail: [email protected] L. Liu Xinyang Agriculture and Forestry University, Xinyang, China e-mail: [email protected]
JEL Classification
J24
1
C54
O15
M54
Introduction
The development of the world economy has been going through more than two centuries since the Industrial Revolution, but the demand for energy consumption in human society has never stopped growing. While the world economy has made remarkable achievements, it has also paid a heavy price, especially in the excessive consumption of nonrenewable resources and wanton destruction of the ecological nature. The World Resources Institute has collected data from 186 countries and regions worldwide. Statistics show that the total global greenhouse gas emissions increased from 33.8 billion tons in 1990 to 48.9 billion tons in 2014, an increase of 45%. In 2014, carbon dioxide accounted for 77% of greenhouse gas emissions. The emission sources mainly come from fossil fuels and industrial production, with specific distribution: industrial production (73%), agriculture (6%), waste (11%), forestry (6%), and land use change (4%) (Caibin 2018). The impact of climate emergency has intensified the fight for land, food, water, and other resources, deepened social and economic contradictions, and increasingly caused large-scale displacement. According to the World Bank estimates, if no action is taken, more than 140 million people in sub-Saharan Africa, Latin America, and South Asia will be forced to migrate within their regions by 2050 (World Bank 2018).
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_5
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E. I. Lazareva and L. Liu
It is the consensus of all humankind that we should not only develop the economy but also pay attention to protecting the environment. After re-examining environmental protection issues, we urgently need to find a new economic development model to maintain long-term economic development in the face of climate change. To maintain the sustainability of natural resources, an affordable economic system within the Earth’s ecosystem should be established to replace the traditional non-sustainable brown economic model of resource-driven economic development (Rodríguez-Espíndola et al. 2022). The green economy is a historical process. The term green economy can be traced back to 1989 when the famous British economist Pearce first proposed the philosophy of “green economy” in his “Blueprint for a Green Economy.” Pearce pointed out that a green economy is an economic form that can achieve sustainable development. He advocated starting from the current ecological conditions and establishing a new economic model to meet the conditions that the natural economy and human beings can afford (Pearce et al. 1989). In 2008, the happened of the US financial meltdown accelerated the transformation of the economic operation mode of various countries. In the same year, the green economy and new green agreements initiated by the UNEP have been launched worldwide. It released the report “Towards a Green Economy—various ways to achieve sustainable development and eradicate poverty” in 2011, which further clarified the connotation of green economy and defines green economy as an economic model that can significantly reduce and resolve ecological environmental risks while improving human welfare and social equity (UNEP 2011). The 2012 Rio + Summit took the
green economy as the global political agenda, emphasized that it is an important means to achieve sustainable economic growth, and injected new impetus into the philosophy of sustainable development (Chu 2012). Since then, the green economy has attracted worldwide attention. An overview of important developments in the green economy is shown in Fig. 1. Developing a green economy has become a necessary way to balance economic, social, and ecological factors in regional management and achieve sustainable development (Anopchenko et al. 2021). OECD proposed a green growth strategy under the framework of economic greening transformation, that is, to promote economic growth and development while ensuring that natural assets can continue providing various resources and environmental services for human well-being (Egorova et al. 2015). The World Resources Institute (WRI) believes that a green economy is a form of sustainable economic development characterized by sustainable economic, environmental, and social welfare. Jiang Jinhe pointed out that the green economy transformation requires that economic development ensures stable economic growth and conforms to the sustainable use of ecological resources (Jiang 2022). Despite scientific research is expanding and deepening intensively in the field of green economy and green management development, many issues of the organization of the process of environmentally oriented management transformation require further research. The scientific novelty of this research consists of the development (based on the analysis of a number of national economies dynamics) of a scheme, which combines the management tasks in the field of green transformation. The
Presentation of the concept The term green economy was first coined by Pierce a British economist in the “Blueprint for a Green Economy”
Green New Deal UNEP launched the Green New Deal in the world, advocating the development of the green economy to enlarge internal demand, increase employment, and fuel economic growth
Green Growth Manifesto OECD formulates green growth strategy within a framework of economy, environment, society, technology, and development
Sublimation of concept UNEP further clarifies the connotation of green economy in the report “Towards a Green Economy”
Set off a green economy climax Rio+ Summit proposed a new idea of the green economy in the sense of calling for the transformation of the economic paradigm
1989
2008
2009
2011
2012
Fig. 1 Timeline of green economy development. Source Developed and compiled by the authors
Green Economy as a Factor in the Transformation …
developed scheme forms a practical basis for integrating ESG principles in economic trends management, which increases its relevance and practical value.
2
Materials and Methods
The achievement of the research goal (to clarify the essence of a green economy and the development of principles of environmentally oriented management transformation, contributing to green growth) is carried out on the methodological basis of sustainable development innovation— cyclical paradigm, considering the realization of economic benefits and the compliance with environmental and social interests (Lazareva et al. 2023). The solution to the research problems was also based on the conceptual foundations of system analysis and the resource concept of anthropoecological capital reproduction as a condition for increasing the economy’s competitiveness (Lazareva 2018). The research is based largely on the analysis of the green economic policy of the USA, China, the UK, Germany, Japan, and Russia, as well as the degree of the greening of these countries’ national economies as an effect of its implementation.
3
Results
The authors believe that the green economy is a kind of economic activity that, within the scope of sustainable development, through the guidance of the government and the regulatory role of the market, takes environmental protection and energy conservation as the premise, guarantees social welfare and social equity, and promotes economic efficiency. It is a new economic form that organically integrates the economy, society, and the environment. The common cause of many environmental, social, and economic crises is the improper overall allocation of capital. After the US financial crisis, countries worldwide have taken green social and economic management as an effective way to promote sustainable development and economic transformation (Egorova et al. 2015). Released by UNEP, the report “Towards a Green Economy” pointed out that if countries worldwide could invest 2% of their GDP every year in ten key areas (e.g., agriculture, energy, and construction), they would strongly promote economic growth, increase employment, and help eradicate poverty. It is necessary to attach importance to the value of natural capital and increase investment in natural capital and projects to improve energy and resource efficiency, making green economy construction the engine of stable growth and structural adjustment (World Bank 2018). The following
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mainly introduces the green economic policies and implementation effects of the USA, China, the UK, Germany, Japan, and Russia. The USA is in the leading position in the world in the green economy development. When Obama signed the economic stimulus plan with the development of new energy as the important content, he has vigorously pursued the new green deal. In 2009, the US Clean Energy Security Act was introduced, which promotes the R&D and utilization of renewable energy and low-pollution energy, effectively reducing the use of traditional energy and greenhouse gas emissions. The new green deal of the USA can be said to be a systematic project, which can be subdivided into energy saving and efficiency enhancement, development of new energy, coping with climate change, and other aspects. Developing new energy sources is at the heart of America’s the Green New Deal. The total green investment related to the development of new energy has exceeded $40 billion. In terms of energy conservation, it is mainly about automobile energy conservation. Relying on its strong scientific and technological innovation ability, according to the new standard, the fuel consumption of newly produced passenger cars and light trucks in the USA would not exceed 6.62 L per hundred kilometers by 2016. Although the total energy consumption in the USA has been growing, per capita energy consumption has generally declined year by year since 2000, which is mainly attributed to the increasing energy efficiency of buildings and household appliances, the upgrading of power plant technology, and the reduction of high energy consumption production activities. In 2020, per capita energy consumption in the USA was projected to drop to the lowest level since 1965. In terms of finance, many large American banks have begun practicing the principle of green loans and increasing credit support for green environmental protection projects. In 2020, the USA was to issue a total of $51.1 billion of green bonds, making it the largest issuer of green bonds in the world (Liu 2022). In general, the green economy model of the USA is a comprehensive economic recovery plan led by the reform of the energy structure, which has created a number of new industries, increased domestic employment demand, and realized the transformation of the country from a consumer society to a productive one (Lin and Zhou 2022). As the world's largest developing country, China has a population of 1.4 billion. Therefore, China has been facing how to develop its economy and improve the quality of life in an increasingly scarce environment of resources. It is an inevitable choice for China to vigorously promote industrial transformation and upgrade, develop green industries, and take an environment-friendly green development path. In 2016, “green” was included in the “new development concept” for the first time in the “13th Five-Year Plan.” In 2021, the “Double carbon” strategic goal will be included in
26
China’s 14th Five-Year Plan, demonstrating that state leaders and the government attach great importance to developing the green economy. From the implementation effect of a series of Green New Deals, the National Energy Administration disclosed that China’s new energy power generation will exceed 1 trillion kWh for the first time in 2021, up by 32.97% year-on-year, accounting for 13.8% of the country’s electricity consumption in the same period. According to the 2021 Global Offshore Wind Power Report, the world’s newly added offshore wind capacity in 2021 will be about 13.4 GW, with the largest contribution coming from China. It can be predicted that the green economy will be an important driver of China’s socioeconomic development. UK is the first country in world to put the goal of achieving net zero emissions into law. It has always been supported by a low-carbon economy, with low-carbon technology leading the world (Griffin and Hammond 2021). It has made the great achievement of reducing carbon dioxide emissions by 40% since 1990 while generating 2/3 of the economic growth. In 2020, the British Prime Minister put forward the green new deal of the “Ten Point Plan for Britain’s Green Industrial Revolution,” which spent 12 billion pounds on green industries such as clean energy, transportation, nature, and innovative technology, aiming to promote the UK to eliminate the factors leading to climate change by 2050. Specifically, the country plans to stop selling new gasoline and diesel vehicles by 2030 and take new measures to promote the country to become the world leader in carbon capture. This plan will bring up to 250,000 jobs. Additionally, Britain’s green financial policy is an important starting point for its green economy transformation. It has introduced several global incentive and regulatory policies, which have made up the huge financing gap of the green industry and effectively guaranteed the capital demand for green industry development. Germany is the most active country in the world in implementing energy transformation. It achieved a “carbon peak” as early as 1990. In May 2021, Germany passed legislation to achieve the zero-emission target of “carbon neutrality” by 2045. German ecological tax is an important economic lever and policy tool for the German government to develop a green economy. The German government has formally collected ecological tax since April 1999, mainly on gasoline, diesel, fuel oil, natural gas, and electricity. At the beginning of the implementation of the ecological tax, the public was dissatisfied. However, it finally achieved the effect of reducing energy consumption and optimizing the energy structure. German Federal Environment Agency statistical disclosure, from 1990 to 2020, the intensity of greenhouse gas emissions in Germany continued to decline, with the total emissions falling from 1.249 billion tons to 739 million tons, a decrease of 40.83% (Chen et al. 2019).
E. I. Lazareva and L. Liu
Additionally, the German government mainly transfers public funds by increasing investment in environmental protection technology innovation and large-scale green government procurement. It also encourages private investment and establishes environmental protection and innovation funds by raising private funds as backup support for enterprises. Through the above ways, the German government has provided the continuous impetus for developing a green economy. Japan is a country with poor natural resources. Under the dual pressure of energy shortage and environmental pollution, it has always been exploring a new mode of green economic transformation with low-carbon economy as the starting point. In April 2009, Japan released a new green policy called Green Economy and Social Change, which aims at improving Japan’s “green economy” by implementing measures such as reducing greenhouse gas emissions (Hanlan 2019). Japan’s green economy development model has gradually progressed from point to surface. Many successful cases, such as the “Yudu Model” and “Cyclic Society Model,” have emerged, which have improved the benefits of green economy transformation and consolidated the satisfaction of the people with the green economy. In October 2020, Japan announced the goal of achieving carbon neutrality by 2050. To this end, it released the Green Growth Strategy, which defined a roadmap in 14 areas. It will achieve net zero carbon emissions and create nearly $2 trillion of green economic growth every year by 2050. Moreover, the country set the goal of replacing gasoline vehicles with electric vehicles by 2035. Compared to Japan, Russia is rich in natural resources, especially fossil fuels. However, its huge export and domestic consumption are not enough to support economic development in the long run. Russia clearly understands this and has made certain efforts to protect the environment, improve energy utilization, master new technologies, develop new energy, and transform into a green economy development model. In 2009, the Russian government formulated and adopted the Energy Strategy of the Russian Federation by 2030, which defined the specific objectives and supporting policies for the application of new energy. By 2030, the demand for natural gas in Russia’s energy structure will fall below 50%, while the demand for renewable energy will rise to 13%–14%. In 2013, the All Russia Environmental Protection Congress adopted the Declaration on the Principles of Implementing Green Economy in Russia, which shows the country’s determination to adopt an eco-friendly economic growth path. In 2018, the President of the Russian Federation signed the Presidential Decree on State Goals and Strategic Development Tasks of the Russian Federation until 2024, emphasizing that the pollution emissions of the most polluted cities should be reduced by at least 20% by 2024 (Matraeva et al. 2019).
Green Economy as a Factor in the Transformation …
According to the Russian State Statistics Agency Statistics, Russia’s environmental protection expenditure reached 871.9 billion rubles in 2019, an increase of nearly 21% over the 720.9 billion rubles in 2018. Russia has actively launched a green new deal. Moreover, it has constantly made practical efforts to transform into a green economy in many fields, such as agricultural development, green finance, and green transportation. By reviewing green economy development in the world’s major economies, we can find the following: • The attitude of national leaders in dealing with environmental protection issues and the guidance of implementing the green new deals play a vital role in developing a green economy; • The development and application of new energy is the main way to realize the transformation of green economy; • New technology and green investment determine the efficiency and effect of green economy implementation. The analysis of the green economic policy makes it possible to propose a scheme that combines management objectives in the field of environmentally oriented transformation: • Finding a balance between the benefits of economic growth based on existing infrastructure and the creation of Science and technology innovation industry, as well as the accelerated introduction of environmentally friendly technologies in various sectors (green industrial production, green energy, green construction, and green transport); • Development of new green and digital technologies, which are the basis of the sixth technological mode; • Development of new sources and models of economic growth that will significantly reduce the excessive environmental intensity and the scale of the anthropogenic impact; • Encouraging green economic growth through programs and projects aimed at reducing negative environmental externalities; • Development of instruments of state environmental-economic regulation and green finance; • Changing consumption patterns, including by implementing educational programs and introducing eco-labeling systems for goods.
4
Discussion
To achieve green economic recovery in the post-epidemic era, it is necessary to develop a high-quality green economy, which is an important factor in transforming management to
27
society and the environment. Regions with rich natural resources and regions with poor resources can reach a consensus on issues such as protecting the Earth’s environment, maintaining social stability, and improving social welfare, demonstrating the importance of a green economy. From the current development of green economy in major economies in the world, developing new energy and improving energy utilization efficiency has become the core of green economic transformation. This is inseparable from technical support for scientific and technological innovation and financial support for green investment. In the long run, the training of green economic talents cannot be ignored.
5
Conclusion
The results obtained during the research allow us to talk about its practical relevance. We should realize the importance of the green economy and develop it. The transformation of the green economy is not a long-term task. In different periods of economic development, the development strategy should be dynamically adjusted according to the regional resources, society, environment, and other conditions. The economy should be greened in a planned and step-by-step way to provide more green miracles for the world (Ali et al. 2021).
References Ali EB, Anufriev VP, Amfo B (2021) Green economy implementation in Ghana as a road map for a sustainable development drive: a review. Sci Afr 12:e00756. https://doi.org/10.1016/j.sciaf.2021.e00756 Anopchenko TYu, Lazareva EI, Murzin AD, Revunov RV, Roshchina EV (2021) Diversification of regulatory powers in social, environmental, and economic relations as a factor for stimulating regional development. In: Bogoviz AV (eds) The challenge of sustainability in agricultural systems. Springer, Cham, pp 561–570. https://doi.org/10.1007/978-3-030-72110-7_62 Caibin F (2018) Greenhouse gas emission peak time. Energy Rev 3:13–15 Chen C, Xue B, Cai G, Thomas H, Stückrad S (2019) Comparing the energy transitions in Germany and China: synergies and recommendations. Energy Rep 5:1249–1260. https://doi.org/10.1016/j. egyr.2019.08.087 Chu D (2012) New ideas and trends of green economy viewed from “Rio+20.” Chin Popul 22(9):1–6 Egorova M, Pluzhnic M, Glik P (2015). Global trends of “Green” economy development as a factor for improvement of economical and social prosperity. Procedia Social Behav Sci 166:194–198. https://doi.org/10.1016/j.sbspro.2014.12.509 Griffin PW, Hammond GP (2021) The prospects for ‘green steel’ making in a net-zero economy: a UK perspective. Global Transit 3:72–86. https://doi.org/10.1016/j.glt.2021.03.001 Hanlan Z (2019) The development of green economy in Japan. Knowl Econ 22:40–41 Jiang J (2022) Research on the evaluation and driving factors of China’s green economy transformation. J Beijing Univ Technol 22(3):123–141
28 Lazareva EI (2018) Reproductive function of human and natural capital in the economy of sustainable-innovative development: ways of installation in the system of strategic management. J Econ Regul 9 (4):124–133. https://doi.org/10.17835/2078-5429.2018.9.4.124-133 Lazareva EI, Rivza BA, Gavrilova JV (2023) The sustainability formula: a human-centered strategy for managing economic trends in the context of ESG-transformation. In: Lazareva EI, Murzin AD, Rivza BA, Ostrovskaya VN (eds) Innovative trends in international business and sustainable management. Springer, Singapore, pp 3– 12. https://doi.org/10.1007/978-981-19-4005-7_1 Lin B, Zhou Y (2022) Measuring the green economic growth in China: Influencing factors and policy perspectives. Energy 241:122518. https://doi.org/10.1016/j.energy.2021.122518 Liu X (2022) The enlightenment of American green economy on the high quality development of Shanghai. Green Econ Technol Ind 22 (10):301–306 Matraeva L, Solodukha P, Erokhin S, Babenko M (2019) Improvement of Russian energy efficiency strategy within the framework of “green economy” concept (based on the analysis of experience of
E. I. Lazareva and L. Liu foreign countries). Energy Policy 125:478–486. https://doi.org/10. 1016/j.enpol.2018.10.049 Pearce D, Markandya A, Barbiere B (1989) Blueprint for a green economy. Earthscan Publications Ltd., London Rodríguez-Espíndola O, Cuevas-Romo A, Chowdhury S, Díaz-Acevedo N, Albores P, Despoudi S et al (2022). The role of circular economy principles and sustainable-oriented innovation to enhance social, economic and environmental performance: evidence from Mexican SMEs. Int J Prod Econ 248:108495.https://doi.org/10. 1016/j.ijpe.2022.108495 UNEP (2011) Towards a green economy: pathways to sustainable development and poverty eradication—a synthesis for policy makers. Retrieved from https://sustainabledevelopment.un.org/ content/documents/126GER_synthesis_en.pdf. Accessed 10 Dec 2022 World Bank (2018, March 19) Groundswell: preparing for internal climate migration. Retrieved from https://www.worldbank.org/en/ news/infographic/2018/03/19/groundswell—preparing-for-internalclimate-migration. Accessed 10 Dec 2022
The Prospects for Improving Green Innovation Ability of National Economic and Technological Park in the Yellow River Basin of China Wenjun Li , Evgeniya Roshchina , Ziqiang Zhao , and Yanyan Zhang
Abstract
1
The sustainable innovation capability of the National Economic and Technological Park in the Yellow River basin is crucial to the ecological environment protection and high-quality regional development of the Yellow River Basin. The research aims to solve the problem of uneven, inadequate, and insignificant growth of green innovation capacity in national high-technological zones in the Yellow River Basin. The authors used the Boston matrix and RAM model for the research on the efficiency of green innovation. The authors proposed innovative resource allocation of the national high-technological zones of the Yellow River basin, the creation of the innovation collaborative development mechanism of the whole basin, and differentiated ways to increase the potential of green innovation capacity according to the high-technological zones at different development stages in the middle, east, and west regions of the basin. Keywords
China Yellow River High-technological zone technologies Innovation capability JEL Classification
O32
W. Li (&) E. Roshchina Z. Zhao Y. Zhang Southern Federal University, Rostov-On-Don, Russia e-mail: [email protected] E. Roshchina e-mail: [email protected] Z. Zhao e-mail: [email protected]
Green
Introduction
China National Economic and Technological Park refers to the special location environment established in a region of China to promote the development of the regional economy and industry. Among them, National High-technological Industrial Development Zone is an important economic policy and institutional arrangement implemented based on local policies after China’s reform and opening up. They are demonstration zones for innovation-driven development and pilot zones for high-quality development (Tan and Zhang 2018). The biggest weakness in the Yellow River basin is insufficient high-quality development (Ren and Li 2018; The Central Committee of the Communist Party of China and the State Council 2021). Due to historical and institutional reasons, various problems arise, including uneven, inadequate, and not outstanding green innovation growth, which hinders high-quality development (Li et al. 2019). Promoting the green innovation capacity of the national high-technological zones can promote the high-quality development of national high-technological zones at the Yellow River basin (Rosenburg 2002). The study of the existing literature revealed relatively little research on the green innovation ability of national high-technological zones in the Yellow River basin. The research object is the high-technological zone of the Yellow River basin. The research indicators are green development, degree of habitability, industrial carbon emissions, and “three-waste” pollutants, which reflect the green development value of the high-technological zone (Liu et al. 2019). The research aims to propose ways to improve the green innovation capability of high-technological zones at different stages and promote the high-quality development of green innovation capabilities in high-technological zones.
E. Roshchina Don State Technical University, Rostov-on-Don, Russia © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_6
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Research Methods
h ¼ 1 max
First, the selected data indicators were analyzed using the more realistic RAM model (Hansen and Birknshaw 2007) and a network RAM model proposed by Aidaetal (Liu et al. 2021). The specific performance is as follows: h ¼ 1 max
k X k¼1
k
w
"
1 1 1 þ þ mk nk Ik
MK X skmj m¼1
Rkm
þ
NK X sknj n¼1
Rkn
þ
IK X skij i¼1
Rki
!# ;
where • J—the national high-technological zone. • K—the green innovation stage (the number of stages divided) of each national high-technological zone. • j—the high-technological zone j. • k—the k stage of green innovation in the national high-technological zone. • M—the number of input element types. • N—the desired number of output types. • I—the number of types of undesired outputs. • h—the efficiency value of the high-technological zone j in the whole green innovation process. • k—the weight of the cross-sectional observations of each smallest decision unit achieving maximum relative efficiency when the model achieves the optimal solution. The efficiency values for stage k can be obtained by deduction:
Fig. 1 Efficiency matrix of “green knowledge innovation— the transformation of green innovation achievements” in the national high-technological zone of the Yellow River basin. Source Compiled by the authors based on Boston matrix thought (Wang et al. 2021)
k X k¼1
" k
w
MK NK X 1 1 1 X skmj sknj þ þ þ mk nk Ik m¼1 Rkm R n¼1 kn !# I K X skij þ ; k ¼ 1; 2; . . .k: R i¼1 ki
Combining the above two formulas, we can calculate the comprehensive efficiency of green innovation in our researched object and the efficiency value of each stage. Second, based on scholars’ research on the construction of the efficiency matrix of “green knowledge innovation – the transformation of green innovation achievements” in the western national high-technological zone of Boston matrix thought (Wang et al. 2021), the difference in green innovation efficiency of the national high-technological zone in the Yellow River basin is analyzed (Fig. 1). Analyzing this efficiency portfolio, we can divide the sustainable green innovation behavior of the national high-technological zone in the Yellow River basin into four models: 1. In the I quadrant, the two stages of green knowledge innovation and green innovation achievement transformation have performed well. 2. The II quadrant shows low-green knowledge innovation and high transformation of green innovation achievements. Thus, the sustainable innovation output under this model has insufficient stamina.
The Prospects for Improving Green Innovation Ability …
31
3. In the III quadrant, we can observe a low rate of green knowledge innovation and a low conversion rate of green innovation achievements, which shows the early stage of development. 4. The IV quadrant shows a high green knowledge innovation rate and a low conversion rate of green innovation achievements. Although the conversion rate is low, the high knowledge innovation rate has laid the foundation for future value output.
3
Samples, Data Sources, and Selection
The authors rely on the research results of existing scholars on the evaluation indicators of the science and technology parks’ innovation ability in recent years (Liu and Li 2016; Qing 2014). The sample data in this research come from the China Torch Statistical Yearbook, the China Statistical Yearbook, and the Patent Database of the China Intellectual Property Office. By searching the above yearbook and patent database, 45 national high-technological zones along the Yellow River basin from 2015 to 2019 were collected and selected as research samples (Ministry of Science and Technology of the People’s Republic of China 2019). Following the principles of science, effectiveness, and data availability (Lai and Shyu 2005), the authors selected Table 1 as the research index.
Table 1 Two-stage green innovation input–output indicators of high-technological zones in western countries for high-quality development
4
Results
4.1 Innovative Efficiency Measurement and Evaluation Using the RAM model and the obtained index data, the authors obtained the calculation results by using MATLAB software (Table 2). According to the green innovation comprehensive efficiency, the average green innovation comprehensive efficiency of in the central and western regions of researched geographical object is slightly less than 0.5, which shows that it is still at a low level. Judging from the efficiency values of green knowledge innovation and the green innovation achievements’ transformation in the high-technological zones in the Yellow River basin reflected in the phased efficiency values, the average efficiency of the western national high-technological zones in the green knowledge innovation stage is high. The average efficiency values in the transformation stage of green innovation achievements in the central and eastern regions, especially in the eastern region, are relatively high in transforming green innovation achievements and knowledge innovation. Its Boston matrix graph is as follows (Fig. 2). From the Boston matrix, we can conclude that high-technological zones like Baiyin and Qinghai are in the initial stage of development. Such high-technological zones as Xianyang, Weinan, and Yulin are in the growth stage.
Stage
Input
Expected output
Unexpected Output
Stage 1: Green knowledge innovation stage
R&D full-time personnel equivalent
Number of patent applications
–
R&D expenditure
Number of patent applications
Total energy consumption
Number of invention patents granted
The introduction of digestion and absorption cost stock Stage 2: Transformation of green innovation achievements
Number of patents applications
Green product sales revenue
Number of green invention patents
Total Green Space Rate (GIR)
Number of invention patents granted
Total number of hospitals at all levels in the park (NH) Total number of schools and hospitals in the park
The output of industrial “three wastes”
Industry emits the most carbon dioxide
Note Stage one represents the expected output of phase 1. Source Developed and compiled by the authors
0.496 0.562
Green innovation achievement transformation stage
The comprehensive efficiency
0.766 0.498
The comprehensive efficiency
Green knowledge innovation stage
0.582
Green innovation achievement transformation stage
0.677 0.675
The comprehensive efficiency
Green knowledge innovation stage
0.674
Green innovation achievement transformation stage
0.720 0.648
Green knowledge innovation stage
The comprehensive efficiency
0.748
0.842
0.867
0.854
0.913
1.000
0.709
0.718
0.734
0.617
0.683
0.833
0.641
0.601
0.659
Qingdao
0.701 0.757
0.284
0.183
0.573
0.621
0.695
0.764
0.815
0.889
0.820
1.000
0.459
0.824
0.757
0.720
Zaozhuang
0.230
0.226
0.415
0.249
0.216
0.334
0.140
0.077
0.257
0.150
0.072
1.000
1.000
0.533
Zibo
Comprehensive efficiency and phased efficiency estimation results Source Calculated and developed by the authors
2019
2018
2017
0.666
Green innovation achievement transformation stage
0.801
The comprehensive efficiency 0.744
0.724
Green innovation achievement transformation stage
Green knowledge innovation stage
0.950
Green knowledge innovation stage
2015
2016
Jinan
National high-technological zone
1.000
0.271
0.095
1.000
0.479
0.163
1.000
1.000
0.533
1.000
0.722
0.652
1.000
0.866
0.554
Yellow River delta
Table 2 2015–2019 Yellow River basin national high-technological green innovation zones
0.142
0.109
0.125
0.299
0.172
0.298
0.777
0.285
0.073
0.340
0.113
0.045
0.214
0.157
0.152
Yantai
0.963
0.986
0.941
0.857
0.847
0.946
0.874
0.820
0.816
0.746
0.683
0.680
0.462
0.522
0.902
Jining
0.935
0.816
1.000
0.730
0.291
0.074
0.511
0.322
0.156
1.000
0.222
0.203
0.215
0.098
0.048
Taian
0.460
0.598
0.404
0.813
0.416
0.176
0.337
0.267
0.140
0.256
0.238
0.093
0.354
0.132
0.003
Weihai
0.476
0.192
0.439
0.460
0.598
0.404
0.813
0.416
0.176
0.337
0.267
0.140
0.256
0.238
0.093
Laiwu
0.594
0.551
0.531
0.763
0.248
0.007
0.481
0.271
0.113
0.228
0.138
0.046
0.932
0.649
0.088
Linyi
0.746
0.771
0.909
0.495
0.522
0.592
0.781
0.703
0.776
0.751
0.560
0.698
0.868
0.874
0.950
Dezhou
0.495
0.486
0.445
0.916
0.742
0.837
0.753
0.790
0.871
0.782
0.679
0.913
0.775
0.732
1.000
Zhengzhou
0.200
0.326
0.204
0.538
0.657
0.510
0.656
0.369
0.676
0.452
0.182
0.417
0.437
0.568
0.384
Luoyang
0.243
0.144
0.103
0.044
0.480
0.248
0.113
0.637
0.690
0.992
0.893
0.863
0.687
0.686
0.864
Pingdingshan
32 W. Li et al.
The Prospects for Improving Green Innovation Ability …
33
Fig. 2 Classification matrix of the two-stage green innovation model in the national high-technological zone of the Yellow River basin. Source Developed and compiled by the authors
Such high-technological zones as Neijiang and Chengdu are in the development stage. In turn, such high-technological zones as Jinan, Yantai, Xi’an, Leshan, and Panzhihua have developed to a relatively mature stage.
4.2 Spatial Distribution of Green Innovation Efficiency Analysis According to the analysis, western national hightechnological zones stay in the low-green knowledge innovation and low-green achievement transformation areas. The spatial distribution of green innovation efficiency varies greatly. The innovation efficiency between regions is uneven. The eastern region’s transformation rate is generally higher. The central region is higher than that in the west. The indicators, which are connected with efficiency of the research, transformation, and development in the western region, are low.
5
Conclusion
To sum up, the national high-technological zone in the Yellow River basin should be divided into four stages: (1) initial stage, (2) development stage, (3) growth stage, and (4) maturity stage. Different improvement paths are proposed with green innovation capabilities at four different stages. First, for the early stage, such as Qinghai High-technological Zone, we will actively establish logistics transportation and digital
platforms and communicate and coordinate development with other regions. Second, according to characteristics, it is necessary to actively transform mature zones green innovation achievements and build green innovation infrastructure to promote green knowledge innovation. Third, for the growth stage, it is vital to transform green knowledge innovation achievements, formulate institutional mechanisms, and integrate the concept of sustainable green innovation and development into the whole development process (Wei 2018). Fourth, for the mature stage, it is necessary to enhance green innovation driving capacity and radiation role and strive to develop into a world-class high-technological zone. Additionally, the national high-technological zone should rationally allocate resources based on its own resources, regional environment, economic conditions, etc., to achieve planned investment, improve development, and increase competitiveness (Doreen et al. 1992). Finally, it is necessary to establish a coordinated development mechanism. The eastern region should take the lead in developing and strengthening the radiation role. Other regions should transfer developed industries in the east, creating characteristic industries.
References Doreen M, Quintas P, Wield D (1992) High tech fantasies: science parks in society, science and space. Routledge, London Hansen MT, Birknshaw J (2007) The innovation value chain. Harv Bus Rev 85(6):121–142
34 Lai H-C, Shyu JZ (2005) A comparison of innovation capacity at science parks across the Taiwan strait: the case of Zhangjiang high-technological park and Hsinchu science-based industrial park. Technovation 25(7):805–813. https://doi.org/10.1016/j.technovation. 2003.11.004 Liu M, Li S (2016) Research on innovation efficiency of high-technological development zones in China based on three-stage DEA model. Manage Rev 1:42–52 Liu S, Zhang S, Zhu H (2019) National innovation driving force measurement and its high-quality economic development effect quantitative and technical economic research. Technol Econ 36(4):3–23 Liu H, Zhao Z, Ma J (2021) Coupling test variation of regional high-quality development measurement and innovation driving effect. Technol Econ 40(9):1–13 Li Q, Wang W, Xiao R (2019) Analysis of green innovation efficiency and loss sources of Chinese enterprises under technological heterogeneity. Sci Res Manage 10:1–16 Ministry of Science and Technology of the People’s Republic of China (2019) Statistical analysis of innovation and development of national high-technological zones in 2019. Retrieved from https:// www.safea.gov.cn/kjbgz/202106/P020210630511409158817.pdf. Accessed 18 Jan 2023
W. Li et al. Qing F (2014) Re-estimation of technology efficiency of China’s regional high-technological industry by stripping environmental factors: Based on the three-stage DEA model. J Ind Econ 4:94–102 Ren B, Li Y (2018) Determinants of the quality of productivity in high-quality economic development and their improvement path. Econ Perspect 7:27–34 Rosenburg D (2002) Cloning silicon valley: the next generation high tech hotspots. Pearson, London Tan J, Zhang J (2018) Are national high-technological zones driving the growth of urban total factor productivity? A “quasi-natural experiment” analysis based on 277 cities. Econ Manage Stud 9:75–90 The Central Committee of the Communist Party of China and the State Council (2021) Outline of the planning for ecological protection and high-quality development of the Yellow River basin. Retrieved from http://www.gov.cn//zhengce/2021-10/08/content_5641438. htm. Accessed 8 Nov 2022 Wang H, Zhang M, Liu Y (2021) Science and technology finance: theory and empirical analysis. Science Press Wei C (2018) Path selection for the transformation and development of high-technological zones. Social Science Review 10:43–46
Green Agenda in Labor Legislation Olga I. Ostrovskaya, Olga V. Balandina, Roman V. Komisaruk, and Alina B. Veshkurova
Abstract
JEL Classification
The main production task in the twenty-first century, proclaimed by the UN, is to create a green economy and, consequently, green jobs. This will make it possible to achieve increased energy efficiency and reduce the harmful impact on the environment. The company’s main goals include ensuring decent and safe working conditions by switching to harmless and green production, achieving gender and social equality in the workplace, and ensuring the safety of workers. The authors of the research conduct a study and a comparative regulatory framework legal analysis of regulating relations between employer, the state, and employees, for compliance with the possibility of introducing the best available technologies into the production processes of economic entities. Additionally, authors explore possibility of changing some national regulations to improve regulation effectiveness in terms of creating and developing green jobs.
F01
Keywords
Green Workplaces Green labor legislation Green economy Sustainable development Ethical business CSR Sustainable production
O. I. Ostrovskaya (&) R. V. Komisaruk Moscow Polytechnic University, Moscow, Russia e-mail: [email protected] R. V. Komisaruk e-mail: [email protected] O. V. Balandina Modern Art Institute, Moscow, Russia e-mail: [email protected] A. B. Veshkurova Financial University Under the Government of the Russian Federation, Moscow, Russia e-mail: [email protected]
1
O20
Introduction
It has now become apparent that the model of the consumer economy needs a serious transformation. Moreover, transformational processes are already underway. The question of which economic model will replace the consumer economy remains open. Nowadays, new technologies have become widespread; the digital era has come. Some processes are rapidly gaining speed and are beginning to affect all areas of society. People find themselves in a new reality and do not have time to adapt to it. In the twentieth century, economic activity was focused on the rapid pace of economic growth and the unchanging nature of a person. In turn, in current conditions, along with economic goals, it is important to ensure the sustainability of organizations and the preservation of people as biosocial species. Noticeable results of digitalization can be recorded. Automation was associated with the replacement of predictable physical actions of a person. Digitalization makes it possible to copy intellectual abilities. Automation need for mass personnel training. In turn, digitalization led to the release of a considerable number of employees and the inability of some to master new professions sufficiently and move on to cognitive work. This is also a change in perceptions of reality and the perception of personality and norm (the concept of “digital personality” appears; deviance becomes the norm). Well-known companies presented the results of their projects for public use: Google and Tesla presented mobility for people with disabilities and uncrewed vehicles; Russian KAMAZ and Cognitive Pilot presented a drone and agricultural robots. Within a short time, humanity received drones and robots that involve minimal human involvement
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_7
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O. I. Ostrovskaya et al.
(e.g., in production management, transport, office, etc.) or exclude this participation at all. Machines already influence our behavior and interaction. We cannot always distinguish between those who model human conversation—a human or an AI-based bot (UNEP 2011). According to “United Nations Framework Convention on Climate Change,” another significant feature of the green economy is “a significant reduction in environmental risks” (UN 1992). In other words, under the green economy, it seems possible to understand a type of economy in which there is a low level of carbon emissions and an efficient use of resources considering the needs of all members of society. The main difference between green investments from the classical definition of investments is that the ultimate goal of green investments is not to obtain an exclusive economic effect but to increase the efficiency of using the resources and reduce pollution by releasing carbon compounds into the atmosphere. The formation of green investments should be carried out primarily by making changes to the regulatory framework of the Sana, for example, by establishing certain tax breaks on the part of the state for private business; capitalization and a sufficient level of liquidity should be maintained by the public and private sectors. The creation of conditions for forming green investments will make it possible to direct the effect of their implementation to meet the needs of the poorest countries.
2
Methodology
Officially announced and enshrined the problems related to climate change, which enhances the natural greenhouse effect, Policy Document at the UN level may have an adverse impact on natural ecosystems and humanity. Simultaneously, this is not the only Policy Document at the UN level that focuses on the problems of the need to build common approaches and principles in preserving and improving the human environment (UN 1992). The question is how to react to these revolutionary processes. On the one hand, we can note positive aspects (e.g., reducing labor budgets). For example, the risk of disasters associated with the presence and unpredictability of the human factor is reduced. In companies, routine processes are transferred to chatbots, and employees are engaged in ambitious tasks. For several centuries, anthropocentrism prevailed in the minds and in reality, which has now lost its primacy to techno- and cosmocentrism, where the importance of spiritual, social, and cultural factors in the formation of a human being as a generic being decreases. A person turns into a peripheral device of a gadget; a person’s behavior is determined by technology.
The starting point in this issue at the international level should be considered the “Declaration of the UN Conference on the Human Environment” adopted in 1977 (UN 1972). In the near future, we will be acutely aware of the ethical problems of interaction with robots and the lack of a human-oriented and humanistic approach to developing and applying AI technologies. The vector of responsibility is changing; it is becoming apparent who is responsible for the final result: the engineer who designed the robot, the operator who presses the button, or the one who makes the decision. Some steps in this direction are being taken in Russia. Many managers spoke about the social responsibility of companies at the largest Russian conference on artificial intelligence AI Journey organized by Sber in November 2022. Currently, the Code of Ethics in the field of AI has been adopted by about 30 companies and organizations, including Sber, Yandex, MTS, Cognitive Pilot, VK, Gazprom, and others. The prospect is that a person will often have to interact with machines as if they were people. In this interaction, people’s limitations in attention and kindness directed at another person may manifest, while bots can spend almost unlimited resources on building relationships. A logical continuation of the work toward the need to protect the human environment was the discussion on the need to set specific goals and objectives to address the threats hanging over humanity, in particular, the adoption of the “70/1 Transforming our world: The 2030 Agenda for Sustainable Development” (UN General Assembly 2015). All goals outlined in this document directly or indirectly mediate and create the foundation for creating green jobs through which it is possible to achieve these goals (UN, n. d.). For example, the first goal, which is to eradicate poverty, can be achieved by ensuring decent wages, as well as the goal of eliminating hunger. Such goals as ensuring a healthy lifestyle and ensuring accessibility to water resources can also be achieved by creating safe working conditions for employees, which provides green jobs. Of particular interest is SDG 9, aimed at taking urgent measures respond to climate change in the UN countries. To combat climate change and global warming, developed countries have created a Green Climate Fund. Nevertheless, there are currently some problems associated with the effective use and expenditure of this fund, which is primarily expressed in the intensity of the use of the fund. Additionally, insufficient attention is paid to such target groups as women and youth when forming the fund’s target programs. “Trade and Environment in the Multilateral System” consolidated the term green economy in it. CO2 rise in the atmosphere by 130% in 30 years (International Energy Agency 2008) will lead to total environmental changes because the air temperature will increase by at least 6 °C (IPCC 2007).
Green Agenda in Labor Legislation
The onset of these consequences carries risks of reducing the total GDP of developing countries from 5 to 10% per year, according to various sources (Stern 2007). As a full and legitimate member of the UN, RF began implementing the amending national legislation of green economy in 2009. The country adopted Federal law “On energy conservation and energy efficiency” (November 23, 2009), which is a fundamental law in the field of the green economy (Russian Federation 2009). Additionally, the law introduces the concept of energy class as a special characteristic of products and ranks it depending on energy efficiency. Simultaneously, the Russian Federation pays special attention to issues related to renewable energy. Particularly, this is evidenced by the adoption of several federal regulatory legal acts. The federal law aims to develop biotechnologies that make it possible to obtain energy from renewable sources of raw materials. However, this almost does not prevent the consistent development of this area, which is expressed in a fairly wide range of regulatory legal acts adopted at various levels in recent years. Building a green economy is certainly impossible without creating green jobs. Several international organizations have developed and are implementing joint activities called “Green Workplaces” (International Labour Organization (ILO) 2023). Additionally, it will enable millions of people to overcome poverty and achieve improved livelihoods, which is consistent with one of the goals of the Paris Agreement, which emphasizes countries’ commitment to a fair transition and the creation of decent employment and green jobs. According to the report, despite the loss of some jobs (mainly in the oil industry), this will be offset by the creation of new jobs (UN, n.d.). Due to high uncertainty and turbulence of the external environment and an increase in stress, many large Russian companies are considering taking care of the health and developing corporate health-saving programs. The corporate employee health promotion program is understood as a program implemented by the employer, which includes a set of organizational, preventive, wellness, preserving and strengthening employees’ health and improving their efficiency and quality of life by forming a healthy lifestyle and behavior that reduces the risks to their professional health. The introduction of corporate employee health promotion programs allows the employer to preserve the health of employees in the organization (company) and improve the organization’s image. According to WHO’s “Healthy Workplaces: A Model for Action,” a healthy workplace is a certain space on the territory in which there is a direct interaction of managers and employees in the field of occupational safety, health, and the
37
safety of the latter, which certainly positively affects the quality of workplaces (Russell 2009). Among the professional fields of activity in which it is possible to create “green” jobs, it seems possible to include almost all existing and promising specialties and crafts. To create a certain alloy of metals, it is necessary to burn an energy carrier, which may call into question the production’s environmental friendliness. There is an objective question related to creating green jobs and how green jobs differ from regular jobs. Accordingly, one of the tasks to be solved will be the provision of the newly born population of the Earth with decent employment, considering gender equality, personal freedom, safe work for the employee, and decent wages. Simultaneously, we should not forget that when creating green jobs, the main emphasis in their creation should be given to their safety for the environment and the employee because, one way or another, an employee is a direct component of the environment. There are plenty of examples where countries place considerable emphasis on creating green jobs in the field of waste processing. Simultaneously, the technological process used in, for example, waste collection, sorting, and recycling (especially in developing countries) does not always correspond to proper environmental friendliness, innovation, and safety for the employee. Main problems that nations face when creating green jobs include the use of child labor, inadequate wages for employee qualifications, pension and social security, and other forms of labor discrimination. Thus, to determine the quality of green jobs, it is necessary to comply with several conditions and compliance of green jobs with certain criteria. The first criterion is the salary, which should be at least not lower than the salary for ordinary jobs. The second important criterion is compliance with labor protection legislation, which is also mandatory on the part of the employer and the employee. Additionally, it is necessary to ensure the possibility and freedom of workers’ associations for the collective defense of their labor rights before the employer and the state. Thus, the “color” of workplaces should not affect the working conditions for employees (UNEP 2011).
3
Results
In Russia, as well as in other countries, green jobs are planned to be created considering the redistribution from the hydrocarbon sector. In Russia, the energy program until 2040 assumes four stages: two of them are related to energy efficiency and modernization of the oil and gas sector.
38
In addition to renewable energy systems (RES), the program also includes the development of nuclear energy, the study of ways to use spent radioactive fuel and waste, hydrogen energy, creation of power grids, energy-saving technology, and heat transportation systems. According to the WHO, implementing workplace wellness programs results in a 25–30% reduction in medical and absenteeism costs over approximately 3.6 years. The average return on investment is $5.81 for every US dollar (Bhiri et al. 2015). An increase in the welfare of employees by 13.5% led to a reduction in medical expenses per employee by an average of 5.2% annually. The stock prices of companies recognized for investing in employee health increased by 325% compared to the average S&P 500 stock price increase of 2 times. Health promotion programs for workers are present to varying degrees in many countries. Such economic growth in India will also lead to the creation of a considerable number of jobs in the corporate industry. This will increase demand for workplace wellness solutions and medical benefits for employees to reduce companies’ healthcare costs. Since most of the workforce in India is made up of young people and suppose: • Detailed information about the possible health risks that the organization is currently exposed to. • Launch and management of appropriate wellness initiatives to address gaps and reduce health risks to a minimum. • Regular medical examinations of employees as preventive care. China’s rapid development, growth, and modernization amaze the imagination. Although many countries have made significant progress in reducing smoking rates and promoting a ban on smoking, China still has a high percentage of smokers, especially among men. Chinese employers foresee financial benefits and returns from these programs due to deeper involvement and retention of staff. In reality, one must think about filling his or her free time as soon as the four-day working week becomes widespread. Currently, there are only individual experiments in some countries. The first experiments in the companies “Roundpay Metal Finishers” and “Wildbit” showed that a shortened working week affects the reduction of social and utility costs. However, it has little to do with changes in labor productivity. A step toward reducing the number of working days and working hours was taken at the New Zealand company “Perpetual Guardian” in 2018. In this experiment, the amount of working time of a five-day period was 37.5 h, but
O. I. Ostrovskaya et al.
in the case of a four-day period, this indicator was already 30 h. During the experiment, 240 employees were transferred to a four-day week with full pay. Despite the difficulties associated with shortening the working week, many countries still decided to switch to a four-day working week. Scandinavia and the Nordic countries are most active in this issue: the Netherlands works only 29.3 h a week, Denmark—32.4 h, Norway—33.8 h, Germany—34.3 h, and Switzerland—34.4 h. A national-scale experiment is being conducted in Spain. The government has worked out financial assistance and legal and organizational details of a project to transfer enterprises to a four-day working week. As part of the tests, assistance will be offered to those companies that voluntarily transfer staff to a 32-h week with salary retention. The business will act as an interested party in the issue of reducing the working week if a four-day working week turns out to be more effective than a five-day week. Especially, convincing for employers is the fact that a reduction in working hours is associated with increased efficiency and productivity. There is a pilot program launched in April by the non-profit organization “4 Day Week,” which attracted 38 North American and more than 50 British companies to experiment with the introduction of a four-day working week. Research has shown that a four-day working week increases productivity and revenue. As part of the experiment, employers transferred employees to a 35-h week without losing wages. No one noticed a decrease in productivity. The results showed the following: • Participants rated the experience gained by 9 points out of 10 in terms of productivity and effectiveness. • The companies’ revenue grew by 38% year on year. • Employees reported reduced burnout and improved physical and mental health. • According to the experiment results, no company wanted to return to the traditional five-day schedule. The study is being completed in the UK. It involves 70 companies and 3.3 thousand employees. The results of this study are to be published in February 2023. Similar experiments conducted in other countries confirm the effectiveness of the four-day working week. For example, a study in the UAE conducted in early 2022 showed that 70% of employees began to work more efficiently, and the number of absenteeism decreased by 55%. In the country, the number of working days was reduced from five to 4.5 days—on Friday, work ended at noon. In Russia, quite active discussions of the four-day working week continue with the participation of FNPR and legislative bodies. The reduction of the working week
Green Agenda in Labor Legislation
from 40 to 36 h was discussed in 2021. At the end of March 2022, the Deputy Head of the Federation of Independent Trade Unions, Alexander Shershukov, proposed reducing the working week from five to four days to preserve jobs in the face of sanctions and economic instability. Most employers are in no hurry to switch to a four-day working week. Currently, it is reduced only in 1% of companies; another 2% introduced it earlier but returned to the usual mode. This follows from the results of a survey conducted on October 11–24, 2022, by the SuperJob job search service, which was attended by 1 thousand HR managers and 1.6 thousand representatives of the economically active population from all districts of Russia (RBC Daily 2022). Supporters of the transition to a four-day working week are promoting this idea to stabilize the situation in the labor market. They believe that this will lead to positive social processes, including the reduced growth of unemployment and the increased labor mobility. With competent approach to this strategy implementation, it can really have a positive impact on the economy in the long term. Opponents do not believe in the possibility of such a reform in Russia. Their argument is relatively weak—the mentality of a Russian person not used to taking work seriously. Thus, we can say that there is simply no argumentation.
4
Conclusion
As noted above, creating a green economy and, consequently, green jobs entail a revision of labor legislation in terms of assessing working conditions. First, this is due to the fact that workers’ health protection and environmental protection are simultaneously ensured. Currently, reducing working hours is more a decision of individual employers rather than a state task. Considering all advantages and disadvantages, companies can switch to it in the near future without waiting for a global decision at the federal level. Meanwhile, only 6% of companies discussed the possibility of switching to a shorter working week. However, 2% considered this transition acceptable and 4% did not. It should be noted that 88% of employers do not think about this topic at all. Simultaneously, introducing a four-day working week is supported by almost every second Russian (48%); among the respondents under the age of 34, the level of support reaches 61%. The introduction of a four-day working week is supported by almost every second Russian (48%); among the respondents under the age of 34, the level of support reaches 61%. There are many advantages of working on a reduced schedule. Studies have also shown that reducing the length
39
of the working day increases the level of happiness of employees—they feel more energetic and have more free time to pursue their interests outside of work. The opportunity to work less will help people find meaning not only in work but also in non-work activities, raising children, interacting with the community, and charity. Moreover, people will be able to receive training that allows them to contribute in some new way to solving large-scale problems in society. For example, the “Todogood” social change platform has implemented 180 pro bono projects in Russia over four years, which involved 2000 professionals who applied their talent and experience in solving strategic tasks in the social sector. In this sector, everyone can do something more than in the workplace and see the real result of their labor. Time will tell whether the participation of many employees in social projects will be successful. In fact, rethinking this debate with the needs of work in mind rather than the needs of employers is crucial to embark on a path to a healthier and more sustainable world in which workers will thrive. When discussing the possibility of a shortened working week, most employers focus on the possible increase in employees’ productivity and not on giving them more free time to do what they like. In addition to increasing free time, there are many more arguments in favor of reducing the working week, which do not rest on the issue of productivity. A recent report entitled “Environmental limits of work” says that we need to drastically reduce working hours not to exceed two degrees of global warming. For example, the UK should switch to a nine-hour working week; Sweden should switch to a 12-h working week (Joly and Hurst 2023). Reducing the working week will also allow for evenly distributed paid and unpaid work (e.g., caring for children or the elderly) among the population, which will reduce inequality. Nevertheless, in many of these examples, productivity improvement remains in the first place.
References Bhiri S, Maatoug J, Zammit N, Msakni Z, Harrabi I, Amimi S et al (2015) A 3-year workplace-based intervention program to control noncommunicable disease risk factors in Sousse, Tunisia. J Occup Environ Med 57(7):72–77. https://doi.org/10.1097/JOM.00000000 00000500 International Energy Agency (2008) Energy technology perspectives 2008: scenarios and strategies to 2050. OECD Publishing, Paris. https://doi.org/10.1787/9789264041431-en International Labour Organization (ILO) (2023) The value of essential work. World Employment and Social Outlook 2023. ILO Office, Geneva, Switzerland. Retrieved from https://www.ilo.org/ digitalguides/en-gb/story/weso2023-key-workers#home. Accessed 15 Jan 2023
40 IPCC (2007) Climate change 2007: synthesis report. Contribution of working groups I, II and III to the fourth assessment report of the intergovernmental panel on climate change. IPCC, Geneva, Switzerland. Retrieved from https://www.ipcc.ch/site/assets/ uploads/2018/02/ar4_syr_full_report.pdf. Accessed 22 Jan 2023 Joly J, Hurst L (2023, February 15) Four-day week: which countries have embraced it and how’s it going so far. Euronews. Retrieved from https://www.euronews.com/next/2022/12/19/the-four-dayweek-which-countries-have-embraced-it-and-how-s-it-going-so-far. Accessed 23 Feb 2023 RBC Daily (2022, October 26) Only 3% of employers have introduced a four-day working week. Retrieved from www.rbc.ru/rbcfreenews/ 635870c69a7947f2fbc0e7f5. Accessed 9 Jan 2023 Russell N (2009) Workplace health: a literature review for NZWell@Work. Retrieved from https://www.funding4sport.co.uk/downloads/ well-at-work-workplace-wellness.pdf. Accessed 15 Jan 2023 Russian Federation (2009) Federal law “On energy conservation and energy efficiency” (November 23, 2009 No. 261-FZ). Moscow, Russia. Retrieved from http://www.consultant.ru/document/cons_ doc_LAW_93978/. Accessed 15 Jan 2023 Stern N (2007) The economics of climate change: the Stern review. Cambridge University Press, Cambridge UN (n.d.) Green jobs: the only way to go. Retrieved from https://www. un.org/ru/climatechange/climate-solutions/green-jobs. Accessed 15 Jan 2023
O. I. Ostrovskaya et al. UN (n.d.) The 2030 agenda for sustainable development. Retrieved from https://www.un.org/sustainabledevelopment/developmentagenda/. Accessed 22 Jan 2023 UN (1972) Declaration of the UN conference on the human environment. Accepted on 16 June 1972. Stockholm, Sweden. Retrieved from https://www.un.org/ru/documents/decl_conv/declarations/ declarathenv.shtml. Accessed 28 Jan 2023 UN (1992) United Nations framework convention on climate change. Accepted on 9 May 1992. Rio de Janeiro, Brazil. Retrieved from https://www.un.org/ru/documents/decl_conv/conventions/climate_ framework_conv.shtml. Accessed 28 Jan 2023 UN General Assembly (2015) Resolution “70/1 Transforming our world: the 2030 agenda for sustainable development”. Accepted on 25 Sept 2015. UN, New York, NY. Retrieved from https://www.un. org/en/development/desa/population/migration/generalassembly/docs/ globalcompact/A_RES_70_1_E.pdf. Accessed 28 Jan 2023 UNEP (2011) Towards a green economy: Pathways to sustainable development and poverty eradication—a synthesis for policy makers. Retrieved from https://wedocs.unep.org/bitstream/handle/ 20.500.11822/32245/TGESR.pdf?sequence=1&isAllowed. Accessed 15 Jan 2023
ESG Principles in the Practice of Building an Economic Security Strategy in the Region Yuri N. Lapygin , Kirill S. Karaman , Ruslan K. Talov , Elena V. Romanovskaya , and Natalia S. Andryashina
management, and economic security. In particular, the classic strategic analysis of external and internal environmental factors is supplemented with new directions focused on environmental aspects and analysis of the state of society. A new aspect of ensuring economic security in the municipality is shown in terms of building a development strategy based on the formation of an ecosystem in which the development goals of business, government, and the municipality’s population are agreed upon.
Abstract
The research aims to determine the possibility of applying ESG principles in the process of forming a development strategy for contemporary Russian municipalities and regions from the standpoint of the ecosystem approach. The procedures for considering the main issues of applying the ESG principles include analyzing the content of the development strategies of contemporary Russian municipalities in one of the typical regions of the Central Federal District—the municipalities of the Vladimir Region. Along with the analysis, the authors applied the methods of graphical modeling and selection of the Pareto area in the analysis results. The elements of economic security contained in the development strategies of municipalities are determined using the method of content analysis. The provisions and principles of the ecosystem approach were used when adapting the ESG principles in relation to aspects of the economic security strategy of municipalities. The research results prove the feasibility of using ESG principles as tools that ensure the sustainable development of contemporary Russian regions and municipalities based on an ecosystem approach in the process of forming a strategy for the development of socio-economic systems, which makes it possible to fill the strategy with projects and programs in terms of ensuring the region’s economic security. The results’ novelty lies in constructing a configurator, which is based on a combination of such categories as ESG principles, sustainable development, ecosystem approach, strategic
Y. N. Lapygin K. S. Karaman R. K. Talov Vladimir Branch of RANEPA, Vladimir, Russia E. V. Romanovskaya (&) N. S. Andryashina Minin Nizhny Novgorod State Pedagogical University, Nizhny Novgorod, Russia e-mail: [email protected] N. S. Andryashina e-mail: [email protected]
Keywords
Strategy Economic security Ecosystem Municipality Region Principles Sustainable development JEL Classification
H56
1
J28
K32
R11
R41
R58
Introduction
The strategic development of socio-economic systems provides a competitive advantage in the process of their development. As social ecosystems, the region and municipalities are a localized set of hierarchically unrelated actors interacting in a coordinated manner with each other and the external environment in the process of creating value on the principles of combining cooperation and competition, ensuring their joint sustainable development. The concept of sustainable development provides for ensuring economic growth and meeting the needs of the population through the balanced development of ESG. The sustainable development tool is the ESG principle, which ensures economic efficiency.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_8
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In the same areas of activity, aspects of the economic security of socio-economic systems are manifested: environmental security (environmental pollution), social security (health protection and working conditions), and managerial security (corruption and qualification components). As a working hypothesis, the thesis is put forward that the strategically sustainable development of ecosystems can be based on ESG principles, the implementation of which ensures, among other things, the economic security of the region and its municipalities. Testing the hypothesis of ensuring the economic security of municipalities is the purpose of the study.
2
Materials and Method
The methodological basis for the strategic management of socio-economic systems was laid by the works of such foreign researchers as Hamel and Prahalad (2002), Mintzberg et al. (2001), Osarenkhoe (2010), Veilleux et al. (2012); as well as Russian authors, including Gaponenko (2001), Lapygin (2018), Risina and Chicherina (2021). The characteristic of sustainable development is given in scientific publications by Avezov (2020), Sumudu (2019), Tretyakova et al. (2018), Van Holt and Whelan (2021), Vladyka et al. (2022), Zhilina and Ignatiev (2021). The ecosystem approach and the principles of its implementation are presented in the works of such Russian authors as Fadeikina and Malina (2021), Karpinskaya (2018), Kleiner (2018), and publications of foreign authors, including Fukuda and Watanabe (2008), Jacobides et al. (2015), Moore (1996). ESG principles are covered to a lesser extent. However, as a statement of individual questions, attention should be paid to the publications of Amel-Zadeh and Serafeim (2017), Kurnosova (2022), Lysov (2022), Nikishin (2022), and Zakhmatov (2022). Economic security at the level of municipalities has not been practically studied. Nevertheless, separate approaches to identifying challenges, threats, and risks in relation to socio-economic systems as a whole are reflected in the works of Abalkin (1994), Buchwald (2020), Filatova (2017), Ivanov (2019), Kurepina (2020), and Zatevakhina (2021). As an independent concept, sustainable development arose in response to the need to preserve the environment against the background of the economic growth of socio-economic systems. The relevance of giving the economy an environmental component is also due to the Sustainable Development Goals for 2016–2030 adopted by the UN, aimed, among other things, at increasing trust between business entities and the population. Additionally, the formation of relations between the population and business based on the ecosystem approach at the municipality level
allows the population and business to be involved in effective cooperation to improve the environment and preserve it. The desire to ensure a balanced development of ESG regions and municipalities is the content of the concept of sustainable development. Sustainable development opens up new opportunities for replenishing local budgets. It also forms a social culture of the population focused on environmental conservation. One of the tools for implementing the sustainable development concept is the system of ESG principles containing all the same areas of sustainable development: ecology, society, and management of economic relations. The essence of ESG principles is manifested in the ability to manage assets (resources, innovations) not to destroy the environment and to ensure economic and social security. With this approach, achieving economic growth in the present period and ensuring a successful future are possible. The focus on social justice and the preservation of the environment are constantly in the field of view of domestic management. In terms of the quality of managing relations in socio-economic systems, there are many problems in terms of the implementation of ESG principles. Additionally, the new models of behavior within the framework of the ESG principles in some aspects are ahead of environmental legislation, as the researchers note. However, the need to implement ESG principles is not due to the fashion for new management forms. It is caused by the desire to look good in the eyes of potential investors and loyal customers, as well as to develop the brand and reputation of business entities and municipalities in which the business operates. In this regard, the assessment of business success is determined by concern for society and the environment, not only in terms of ensuring environmental and labor safety but also the economic security of business and society. The noted security is ensured by anticipating and preventing threats, as well as by reducing environmental, social, and management risks and identifying and implementing the opportunities provided by the external environment. At the level of municipalities, the effects of implementing ESG principles are manifested not only in the rational management of emissions into the atmosphere and waste but also in water use and the transition to alternative energy sources. These aspects strengthen the economic security of municipalities. How are they presented in the development strategies of these municipalities?
3
Results
Issues of local importance related to the powers of municipalities make it possible to develop solutions in terms of combating corruption, ensuring the health of the population
ESG Principles in the Practice of Building an Economic Security Strategy in the Region
of the municipality, preserving the environment, combating terrorism, and preventing losses in the budget of the municipality. If we compare the characteristics of the regions of the Central Federal District (CFD), as the most developed district of the country, we can determine a typical region of the CFD according to the aggregate indicators related to municipalities. Thus, in terms of the totality of the characteristics of the regions considered in relation to the data on municipalities, the Vladimir Region takes the ninth place on average among 16 subjects of the Central Federal District (from 4 to 15 places). Additionally, the municipalities of the noted region have 20 years of experience in the formation and implementation of their development strategies. Long before the law on strategic planning was published in Russia, some municipalities of the Vladimir Region developed strategies for their development within the framework of the “Small Towns of Russia” program. Then (in 2003), all other municipalities of the region developed these strategies within the framework of the Eurasia Foundation project. Therefore, the municipalities of the Vladimir Region are representative in terms of the analysis of their strategies in terms of the typicality of the CFD region and in terms of the content of the strategies themselves. The results of the content analysis of the development strategies of municipalities in the Vladimir Region are shown in Fig. 1 and indicate that the economic security strategy is not built systemically and contains only individual elements of security in various functional areas of municipalities. A frequently repeated position of security is the socio-ecological component, reflected in the development Fig. 1 Distribution of aspects of economic security. Source Compiled by the authors
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strategies of the Vladimir region. To a lesser extent, there is an orientation toward corporate governance and sustainable development. ESG principles ensure the sustainable development of business structures; these tools increase investment attractiveness and sustainable development. Within the considered categories, a generalized strategy for economic security in the development of municipalities could look like this: “Creating conditions for sustainable development based on the ecosystem approach and ESG principles that ensure partnership between government, business, and the local community aimed at implementing the environmental and social security of the municipal education.” The need for an ecosystem approach is due to the following. The ecosystem of the municipality includes the population, the environment, and business structures located on the municipality’s territory. The need to formulate general goals for the development of the municipality as an ecosystem encourages the population to agree on the goals of their development and the goals of the development of the ecosystem by arguing their position and in terms of adjusting their mental models regarding the prospects for their development as part of the ecosystem. In an ecosystem, the population cooperates with each other because the division of labor provides greater efficiency of activity and simultaneously competes with each other in terms of the distribution of resource flows entering the municipality. The interdependence of the population is manifested not only in relations with each other but also in relation to living and inanimate nature as a subsystem of the municipality’s ecosystem. 0
2
4
6
8
10
Entrepreneurship Food National Economic Technogenic Energy Ecological Safe environment (including educational) Public Fire department Road transport Livelihoods, residence Water safety Informational Water supply and sanitation military security Labor safety Industrial Number of municipalities whose strategies mention one or another type of security
12
14
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Interdependence and cooperation (up to the creation of municipal clusters, for example, for the collection, processing, and production of products based on household and industrial waste) are present in the municipality. Additionally, the involvement in solving the municipality’s problems, the alignment of development goals, the need to participate in changes, and horizontal links between business and municipal government correspond to the ecosystem’s characteristics. In the municipal ecosystem, the population’s well-being, as well as the co-evolution of the municipality, the population, and business structures, provides a synergy that determines the sustainability of economic development and strengthens the system’s economic security. Additionally, from the standpoint of the institutional approach, the formation of a municipality in terms of ecosystems will reduce transaction costs associated with management.
4
Conclusion
Thus, the working hypothesis is proven. It is shown that a municipality focused on ESG principles is attractive to investors and has a competitive advantage in terms of attracting all types of resources (i.e., material, informational, human, financial, and energy) necessary for sustainable development and ensuring the economic security of the society of the municipality. If an ESG-focused business ensures its sustainable development, then the municipality on whose territory the business structures are located can also develop sustainably, guided by these principles. This approach contributes to forming a municipal ecosystem in which economic security is ensured as part of the ecosystem development strategy. Considering that the development strategy of municipalities is often based on the results of a SWOT analysis, in which the internal environment is analyzed in terms of management functions and the transformation of resources into finished products (services), from the standpoint of ESG principles, SWOT analysis can be carried out in the plane: ecology, society, and management. That is, the traditional analysis of the internal environment can be supplemented with an analysis of the ecology and social environment of the municipality.
References Abalkin LI (1994) Economic security of Russia: threats and their reflection. Voprosy Ekonomiki [quest Econ] 12:4–16 Amel-Zadeh A, Serafeim G (2017) Why and how investors use ESG information: evidence from a global survey. Harvard Business School Working Paper No. 17–079. Retrieved from http://nrs.harvard.edu/ urn-3:HUL.InstRepos:30838135. Accessed 28 Jan 2023
Avezov AKh (2020) Modern concepts of sustainable development of the region and methodological approaches to assessment of its level. Vestnik PITTU named after Academician M.S. Osimi 1(14): 104–120 Buchwald EM (2020) System of economic security concepts: regional level. Econ Secur 3(1):63–78. https://doi.org/10.18334/ecsec.3.1. 110122 Fadeikina NV, Malina SS (2021) Development of theoretical ideas on the category “ecosystem” and “innovation system.” Invest Innov 2:103–111 Filatova IV (2017) Challenges and threats to economic security in the framework of the implementation of the economic security strategy of the Russian Federation until 2030. Vestnik of Moscow Univ Ministry Inter Affairs Russia 6:263–266 Fukuda K, Watanabe C (2008) Japanese and US perspectives on the National Innovation Ecosystem. Technol Soc 30(1):49–63 Gaponenko AL (2001) Strategy of socio-economic development: country, region, city: a textbook. Publishing House of the RAGS, Moscow Hamel G, Prahalad CK (2002) Competing for the future. Creating the markets of tomorrow (Transl. from English). Olimp-Business, Moscow (Original work published 1994) Ivanov EA (2019) Modern challenges and threats to the economic security of the Russian Federation. Econ Secur 2(1):13–21. https:// doi.org/10.18334/ecsec.2.1.100617 Jacobides MG, Cennamo C, Gawer A (2015) Industries, ecosystems, platforms, and architectures: rethinking our strategy constructs at the aggregate level. Working Paper. London Business School, London, UK. Retrieved from https://www2.uwe.ac.uk/faculties/ BBS/BUS/Research/CENTIENT/ESRC%20seminar%204%20-% 20UWE,%20Bristol/Michael%20G%20Jacobides.pdf. Accessed 21 Feb 2021 Karpinskaya VA (2018) Ecosystem as a unit of economic analysis. In: Kleiner GB (ed) Systemic problems of domestic mesoeconomics, microeconomics, enterprise economics: proceedings of the second conference of the Department of Modeling of Production Facilities and Complexes of CEMI RAS. Central Economics and Mathematics Institute of the Russian Academy of Sciences, Moscow, Russia, pp 125–141 Kleiner GB (2018) Socio-economic ecosystems in the light of the system paradigm. In: Kleiner GB, Shchepetova SE (eds) System analysis in economics—2018: proceedings of the V International scientific and practical conference. Prometheus, Moscow, pp 5–14. https://doi.org/10.33278/SAE-2018.rus.005-014 Kurepina NL (2020) Comparative analysis and evaluation of economic security of regional development. Econ Secur 3(2):207–218. https:// doi.org/10.18334/ecsec.3.2.110272 Kurnosova TI (2022) Domestic and foreign experience of using ESG principles in designing oil and gas business development strategy. J Econ Entrepreneurship Law 12(1):387–410. https://doi.org/10. 18334/epp.12.1.114058 Lapygin YuN (2018) Strategic management. Infra-M, Moscow Lysov EL (2022) ESG principles and trends in assessing the investment potential of Russian regions. Sci 21st Century Curr Trends Develop 2–1:12–17. https://doi.org/10.46554/ScienceXXI-2022.10-2.1-pp. 12 Mintzberg H, Quinn JB, Ghoshal S (2001) The strategy process: concepts, contexts, cases (Transl. from English; Yu. N. Kapturevsky Ed.). Peter, St. Petersburg (Original work published 1996) Moore J (1996) The Death of competition: leadership and strategy in the age of business ecosystems. Harper Business, New York Nikishin VD (2022) Reputational security and media security of companies and projects in the context of sustainable development goals and ESG principles. Actual Probl Russ Law 17(9):73–82. https://doi.org/10.17803/1994-1471.2022.142.9.073-082
ESG Principles in the Practice of Building an Economic Security Strategy in the Region Osarenkhoe AA (2010) Study of inter-firm dynamics between competition and cooperation. A coopetition strategy. J Database Market Customer Strategy Manage 17(3):201–221 Risin IE, Chicherina AS (2021) Modern concepts of territorial planning development as a theoretical basis for the development of a large city strategy. Region Syst Econ Manage 3(54):21–25 Sumudu A (2019) From “our common future” to sustainable development goals: evolution of sustainable development under international law. Wisconsin Int Law J 36(2):215–246. Retrieved from https://wilj.law.wisc.edu/wp-content/uploads/sites/1270/2020/01/ 36.2_215-246_Atapattu.pdf. Accessed 28 Jan 2023 Tretyakova EA, Mirolubova TV, Myslyakova YuG, Shamova EA (2018) Methodical approach to the complex assessment of the sustainable region development in the condition of greening the economy. J Appl Econ Res 17(4):651–669. https://doi.org/10. 15826/vestnik.2018.17.4.029
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Van Holt T, Whelan T (2021) Research frontiers in the era of embedding sustainability: bringing social and environmental systems to the forefront. J Sustain Res 3(2):e210010. https://doi.org/10. 20900/jsr20210010 Veilleux S, Haskell N, Pons F (2012) Going global: how smaller enterprises benefit from strategic alliances. J Bus Strateg 33(5):22– 31. https://doi.org/10.1108/02756661211282768 Vladyka MV, Serebrova TV, Tikunov VI (2022) Regional mechanism for sustainable development. Fundam Res 10–1:32–36 Zakhmatov DYu (2022) International practices of supporting ESG principles of sustainable development. Innov Develop Econ 3–4 (69–70):108–120.https://doi.org/10.51832/2223798420223-4108 Zatevakhina AV (2021) Economic interests in the system of national security: Sustainable development and “green” transition. Asterion, St. Petersburg. https://doi.org/10.53115/9785001881261 Zhilina NN, Ignatiev VG (2021) Sustainable development of the region and green economy. Econ Manage Probl Sol 5(11):99–102
Potential for Implementing ESG Principles in Cement Production Sergei D. Tsymbalov , Victor P. Kuznetsov , Anna S. Moseva, Elena V. Romanovskaya , and Natalia S. Andryashina
Abstract
1
The research provides information about the globalization of the implementation of ESG principles to achieve sustainable development goals, including combating global warming. In Russia, a general legislative base has been created for the state management of the processes of decarbonization of manufactured products. The authors describe the achieved level of accounting for greenhouse gases (GHG) and the mechanism for motivating enterprises to reduce their emissions. The data characterizing the Russian cement industry as a major GHG emitter are presented. It is shown that the specific consumption of fuel equivalent for the production of one ton of cement clinker lies within a wide range for different plants, which indicates a significant potential for increasing the energy efficiency of production and, accordingly, reducing GHG emissions. The authors consider the main directions for improving the energy efficiency of cement production and reducing its carbon intensity and cost. Moreover, the authors provide indicative quantitative estimates of the effectiveness of the measures proposed for implementation. Keywords
ESG principles Greenhouse gases (GHG) Energy efficiency Portland cement clinker Carbon reporting JEL Classification
O30
O32
S. D. Tsymbalov V. P. Kuznetsov A. S. Moseva E. V. Romanovskaya (&) N. S. Andryashina Minin Nizhny Novgorod State Pedagogical University, Nizhny Novgorod, Russia e-mail: [email protected] N. S. Andryashina e-mail: [email protected]
Introduction
ESG principles were actively developed at the beginning of the twenty-first century. These principles are primarily used to organize the fight against global warming. Since 2000, the Carbon Disclosure Project (CDP) has been accumulating information from major global companies on GHG emissions. The CDP electronic carbon reporting database is the largest in the world. It contains the most comprehensive information on corporate emissions and corporate climate change strategies. Annual reports of companies, including Russian ones, are published along with a description of corporate strategies in the field of climate change. The publication of reports verified by an internationally accredited body allows companies to demonstrate the effectiveness of emission control and reduction measures. This information can significantly impact investment decisions for companies that are major emitters of greenhouse gases. Of the Russian companies that regularly submit climate reports to the CDP and have been assigned a C rating, we can note the Arkhangelsk Pulp and Paper Mill, Rusal, PJSC Gazprom, and JSC Polymetal. It is expected that banks will be the drivers of the ESG transformation of the Russian economy through the lending conditions offered to enterprises (Bik 2021). Advanced economies have set a goal of achieving carbon neutrality by 2050.
2
Materials and Method
A set of measures to achieve the targets of the Low-Carbon Development Strategy of Russia. There is still no consensus among the scientific community about the causes of global warming. However, global processes for decarbonizing production processes and the transition to a “green” economy have become a reality. In 2005, the provisions of the Kyoto Protocol came into force, aimed at reducing GHG emissions by industrial enterprises
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_9
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of developed countries by at least 5% in 2008–2012 compared to 1990. In accordance with the Paris Agreement, which entered into force in 2016, it is necessary to concentrate efforts on keeping global temperatures below 2 °C compared to pre-industrial levels. In the context of the energy crisis, the EU countries are abandoning the accelerated course of transition to carbon neutrality. In turn, Russia supports the course of implementing the provisions of the Paris Agreement. The Strategy for Social and Economic Development of the Russian Federation (Strategy) with low GHG emissions until 2050 was approved in 2021 (Government of the Russian Federation 2021b). The strategy provides for state support for the implementation of projects for introducing, replicating, and scaling low- and carbon-free technologies and stimulating the use of secondary energy resources. By 2050, it is planned to achieve a reduction in GHG emissions by 60% from the level of 2019 and by 80% from the level of 1990, as well as to achieve carbon neutrality by 2060. To implement the provisions of the Strategy, Federal law No. 296-FZ “On limiting greenhouse gas emissions” (Russian Federation 2021) provides for state accounting of GHG emissions, setting targets and supporting activities to reduce emissions and increase GHG absorption. State accounting is carried out in the form of maintaining a GHG register, which is a state information system. Mandatory reporting is set for companies with GHG emissions over 150 thousand tons per year from 2023; from January 1, 2025—for companies with 50 thousand tons per year in CO2-equivalent.
3
3.1 Analysis of the Level of Greenhouse Gas Emissions According to the Federal State Statistics Service of the Russian Federation (Rosstat) (Federal State Statistics Service of the Russian Federation 2022), the total amount of GHG emissions into the atmosphere in 2020 amounted to 2050.4 million tons. The main emitters are energy enterprises, enterprises for producing mineral materials, agricultural enterprises, and waste. Figure 1 shows the contribution of each of them in CO2 equivalent. Cement production is a large-capacity and energyintensive sector. Its share in GHG emissions by enterprises producing mineral materials is 57.2% or 138.3 million tons (European Commission 2013), which is 6.7% of the total anthropogenic GHG emissions of Russian enterprises. The global level of emissions from cement plants reaches 8% (Khusainova and Batrakova 2022). The main mass of GHG is released during the firing of the clinker mixture in tubular rotary kilns from fuel combustion, thermal decomposition of carbonates used in the charge (limestone, marl, etc.), and, to a lesser extent, the carbon contained in the raw mixture. The fuel is natural gas, coal, and shale (Guz et al. 2022). In most cases, direct specific GHG emissions in cement production at Russian plants are in the range of 0.8–1.0 t CO2/t of clinker. According to the European Commission (Romanovskaya et al. 2022), CO2 emissions are 0.9–1.0 t/t of gray clinker with a calorific fuel value of 3500–5000 MJ/t of clinker. Figure 2 shows the ratio of fuel types used by Russian cement plants.
Results
During 2022, the Government of the Russian Federation has developed several by-laws aimed at organizing work on accounting for GHG emissions and trading in carbon units. Particularly, the methodology for quantifying GHG emissions was updated (Ministry of Natural Resources of the Russian Federation 2022). Criteria have been established for referring to regulated organizations in terms of GHG emissions (Government of the Russian Federation 2022a). The rules for submitting and verifying reports on GHG emissions and maintaining a register of GHG emissions have been approved (Government of the Russian Federation 2022d). An assessment of the fulfillment of targets for the reduction of GHG emissions (Government of the Republic of Moldova 2022) and the implementation of climate projects (Government of the Russian Federation 2022c), the rules for creating and maintaining a register of carbon units and conducting operations with carbon units (Government of the Russian Federation 2022b) were adopted. Currently, an experiment is being carried out on the territory of the Sakhalin Region to limit GHG emissions. The experiment’s results are expected to be extended to other regions.
3.2 Alternative Fuel (AT) To reduce the consumption of fossil fuels abroad, the use of AT of RDF type (Refuse Derived Fuel) made from municipal and industrial waste has become widespread in cement plants. As practice shows, its share in the fuel balance of an enterprise can reach 50% or more. The experience of production and use of RDF at the Breitsamer Enstorgung Recycling GmbH cement plant in Germany is particularly interesting. Two production lines are used in the work: • The first line is for sorting mixed waste (industrial and municipal); • The second line is for the production of RDF from pre-sorted and shredded municipal waste, containing mainly paper, cardboard, and plastic film. On the first line, the waste is crushed after manual sorting; after trapping metals with magnets, the flow is separated into non-combustible components and waste suitable for the production of RDF. By varying the waste composition from
Potential for Implementing ESG Principles in Cement Production Fig. 1 GHG emissions in 2020, million tons. Source Compiled by the authors
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Greenhouse gas emissions, 2020, millions of tons 94.4 116.6
241.7
1597.7
Energy
Production of mineral materials
Structure of used fuel, % Coal
Natural gas
Slates
1% 11%
88% Fig. 2 Structure of used fuel, %. Source Compiled by the authors
both lines, three types of fuels are produced, differing in caloric content. In cement production, fuel with a calorific value of more than 20 kJ/kg with a particle size of less than 30 mm is used. From 20 to 25 thousand tons per year of RDF are produced from 40 thousand tons of mixed waste annually. Cement production using alternative fuels is at an early stage in Russia. One of the first ATs began to use enterprises with the participation of foreign capital. LafargeHolcim, which has four cement plants in its assets in Russia, has
Agricultural enterprises
Wastes
developed a strategy for using various types of waste, including tires, used oils, solvents, plastic, animal meal, RDF, sewage treatment plant sludge, etc. (Khusainova and Batrakova 2022). In 2016, Limited Liability Company (LLC) Petersburgcement, together with Avtopark No. 1 Spetstrans JSC, developed the first Russian project for the use of RDF for cement production. It was intended to replace 100% of the natural gas fed to the calciner with an RDF called “Topal,” as well as up to 45% of the natural gas at the main burner. Unfortunately, the project did not receive proper development. One of the successful projects using AT is the experience of Serebryansky Cement Plant LLC. Over the past five years, the company has been using biofuels manufactured by JSC Mosvodokanal according to certified specifications. It is also known that the same biofuel is successfully used at the Limited Liability Company (LLC) HeidelbergCement Rus cement plant in the Tula Region. Nevertheless, its consumption is limited by the production capacity of JSC Mosvodokanal. Biofuels are obtained from the digested sludge from municipal sewage. After drying the sludge and reducing the humidity from 70 to 4–10%, it can be used as an AT in cement plants. The operation of the furnace using biofuel has shown that it is possible to reduce the consumption of hard coal by 15,000 t/year and, accordingly, CO2 emissions into the atmosphere by 36,000 t/year (Biryulin and Fomin 2018). Nowadays, the Serebryansky Cement Plant is implementing a project to convert the kiln to use natural gas instead of coal; a unit for feeding RDF to the calciner is being designed. Thus, the enterprise expands the range of fuels for industrial use and achieves cost and GHG emission reductions.
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In 2021, the Ministry of Industry and Trade developed the industry program “Use of alternative fuels from waste in industrial production for 2022–2030” (Ministry of Industry and Trade of the Russian Federation 2022). Within the framework of this program, 33 cement enterprises are planning to implement pilot projects on the use of AT in their production processes. Based on data provided by cement industry enterprises, the potential volume of AT consumption in the Russian Federation may be 3 million tons annually; it is projected to reach 1.8 million tons annually by 2025.
Metrology 2022). With such large-scale production, the goal is to increase energy efficiency to reduce the carbon intensity of products. The most effective measures for this are as follows:
3.3 Analysis of Energy Efficiency
Reducing the specific heat consumption for firing the clinker mixture is one of the best available technologies. A set of technical measures is known to improve the energy efficiency of production (Federal Agency on Technical Regulating and Metrology 2022). The following is recommended for newly built and modernized enterprises:
The low energy efficiency of Russian cement plants is the most pressing technological problem. Energy consumption reaches 6000 MJ/t of clinker. In turn, this indicator at foreign plants lies within the range of 3500–5000 MJ/t of clinker. As a result, there is a decrease in competitiveness and a high cost of cement. Depending on the technology used (dry, combined, or wet), the specific fuel consumption lies in a wide range from 103 to 380 kg of standard fuel (kg of reference fuel) per 1 ton of clinker. This indicates significant reserves for increasing the energy efficiency of production and, accordingly, reducing GHG emissions. From 2010 to 2020, there was a positive trend in reducing fuel consumption for the technology—the average specific consumption for firing 1 ton of clinker in Russia decreased from 193 to 141 kg (Federal Agency on Technical Regulating and Metrology 2022). Plants operating by the wet method consumed an average of 205.2 kg of reference fuel per ton of clinker. Plants operating by the dry method consumed 117.3 kg of reference fuel per ton of clinker. Plants operating by the combined method consumed 147.6 kg of reference fuel per ton of clinker. In total, cement plants in Russia spent 8.3 million tons of reference fuel for technological purposes in 2021 (CENEF-XXI LLC 2022).
• The reduction of the specific consumption of fuel and natural carbonate raw materials due to an increase in technogenic waste in the raw material mixture; • The use of natural gas instead of coal and certain types of nuclear fuel; • The use of hydrogen in the long term instead of carbon-containing fuels.
• Optimum kiln system with set parameters by optimizing the control system; • Automation of technological processes; • Advanced systems for homogenization, dosing and supply of materials and fuel to the furnace.
3.4 The Main Directions of Reducing the Carbon Intensity of Cement
It is possible to optimize the number of stages of the cyclone heat exchanger with the characteristics of the raw materials used. Recovery of excess heat from the kiln system helps to reduce heat loss. A positive effect is the use of high-calorie fuel, minimization of atmospheric air leakage. Since 2008, plants using the dry method of production have been designed and built in Russia. Simultaneously, the consumption of standard fuel for clinker burning is reduced by almost two times compared to the wet method. The implementation of the listed and other technical solutions will make it possible to achieve the energy indicators given in Table 1. The Decree of the Government of the Russian Federation (Government of the Russian Federation 2021a) establishes the criteria for referring to green projects (taxonomy of green projects), namely
Cement production in Russia amounted to 60.1 million tons in 2021 (Federal Agency on Technical Regulating and
1. Compliance with indicators of resource and energy efficiency according to the information and technical
Table 1 Technological indicators
Technological indicator
Value, MJ/t
Value, kg of reference fuel/t of clinker
– For dry production plants
3000–4120
100–140
– For wet production plants
5400–6450
185–220
– For combined production plants
3950–4540
135–155
Specific heat consumption for clinker firing:
Source Compiled by the authors
Potential for Implementing ESG Principles in Cement Production
reference book on the best available technologies “Cement Production” (Federal Agency on Technical Regulating and Metrology 2022); 2. Carbon intensity for gray clinker is less than 0.766 t CO2/t clinker; 3. Compliance with one or both additional criteria: • The use of the dry or combined method of production; • The replacement of 10% or more of natural raw materials with waste from various industries. Preferential financing of “green” projects is planned to be carried out through VEB.RF. Let us make an approximate quantitative assessment of the possibility of reducing GHG emissions in cement production. The following can be considered eligible projects: 1. Replacement of process fuel. Calculations show that the greatest effect in reducing CO2 emissions is the transfer of technology to the use of natural gas instead of coal. In the structure of GHG emissions from the coal-fired operation, about 36% is formed due to fuel combustion. When switching to gas, for example, a plant with a capacity of 1.8 million tons of cement per year reduces CO2 emissions by 15% from 0.804 to 0.684 tons of CO2 / ton of clinker. Due to the reduction of pipeline natural gas supplies to the EU countries, the gasification of regions of the Russian Federation has accelerated. According to the Program of PJSC Gazprom for 2021– 2025, more than 3000 boiler houses and enterprises will be connected to gas supply systems. With the transfer of all Russian cement plants to use natural gas instead of coal, emissions will be reduced compared to 2021 by: 8:3 mln tce 0:11 ð2:71:59Þ ¼ 1013430 t CO2 ;
where 8.3 mln tce 0.11 2.7 and 1.59
the consumption of standard fuel by Russian cement plants in 2021; the Share of Coal in the Total Balance of Consumed Fuel; the CO2 emission coefficients for coal and natural gas, respectively.
In the future, when industrial hydrogen production is established in Russia, it will be possible to use it in cement production. In this case, specific GHG emissions during the firing of the clinker mixture will be due only to the process of calcination of carbonate charge materials.
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2. The transfer of plants from wet technology to dry technology makes it possible to reduce the consumption of fuel spent on the evaporation of moisture in wet technology, which reduces GHG emissions by 15–17%. 3. The replacement of a part of natural carbonate materials in the raw mix for clinker production with human-made waste. There are two wet technology plants in Russia using nepheline sludge from alumina production. The amount of sludge introduced into the mixture depends on the content of total alkalis (R2O) in it. With a content of R2O equal to 2.48%, the specific consumption of sludge is 412 kg/t of clinker, limestone—837 kg/t of clinker. At R2O equal to 1.7%, the specific consumption of sludge increases to 499 kg/t of clinker with a decrease in limestone consumption to 718 kg/t of clinker. Thus, to increase the share of waste in the charge, it is necessary to increase the efficiency of washing the sludge from alkalis. When calculating the production of one million tons of clinker per year, the reduction in CO2 emissions from a decrease in R2O by 0.78% will be as follows: ð0:837 0:718Þ 1;000;000 0:44 ¼ 52;360 t CO2 =year or 0.052 kg CO2/t clinker. The cost of clinker is reduced by about 60 rubles/t. For enterprises operating on dry technology, it is advisable to use industrial waste and materials from waste as human-made additives to reduce the consumption of natural carbonates. As a rule, this leads to a decrease in the specific heat consumption for firing 1 ton of Portland cement clinker and an increase in the productivity of the rotary kiln.
4
Conclusion
The EU countries have set themselves the goal of achieving carbon neutrality by 2050. In the Russian Federation, strategic plans provide for the achievement of this goal by 2060. Increasing the sustainable development of the economy is carried out in the course of implementing the principles of ESG. Russian export-oriented companies cooperate with international companies that carry out financial regulation of greenhouse gas emissions. For large GHG emitters, mandatory reporting has been established since 2023, which is verified by the authorized body, and the indicators are entered in the state register of carbon units. The mechanism for trading in carbon units is being worked out as part of the Sakhalin experiment and will be expanded in the near future. Thus, improving the energy efficiency of Russian enterprises
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and, as a result, reducing the carbon intensity of manufactured products are becoming the most important criteria in assessing the competitiveness of products. An analysis of the performance of cement plants shows that there is significant potential to reduce the carbon intensity of cement.
References Bik SI (2021) ESG transformation: Enterprises need to urgently plan for change. Ecol Prod 8:94–105 Biryulin SS, Fomin NN (2018) Experience of using solid biofuels at the Serebryansky Cement Plant. Cement Appl 6:40–41 CENEF-XXI LLC (2022) Report “Assessment of carbon intensity (benchmarking) of non-metallic mineral products (cement, glass) in the Russian Federation”, Moscow, Russia European Commission (2013) Best available techniques (BAT) reference document for the production of cement, lime and magnesium oxide (Industrial Emissions Directive 2010/75/EU Integrated Pollution Prevention and Control). Publications Office of the European Union, Luxembourg. https://doi.org/10.2788/12850-11 Federal Agency on Technical Regulating and Metrology (2022) Information and technical guide on the best available technologies: TIS 6-2022 “Cement production”. Rosstandart, Moscow Federal State Statistics Service of the Russian Federation (2022) Environmental protection in Russia 2022: statistical collection. Rosstat, Moscow Government of the Republic of Moldova (2022) Decree “On approval of the rules for assessing the achievement of targets for reducing greenhouse gas emissions and on amending paragraphs “a” p.p. “b” clause 5 of the Regulations on the Government Commission for Economic Development and Integration”, 24 Mar 2022, No. 449, Kishinev, Moldova Government of the Russian Federation (2021a) Decree “On approval of the criteria for sustainable (including green) development in the Russian Federation and requirements for the verification system (including green) development in the Russian Federation”, 21 Sept 2021, No. 1587, Moscow, Russia Government of the Russian Federation (2021b) Decree “On the strategy for the social and economic development of the Russian Federation
S. D. Tsymbalov et al. with low greenhouse gas emissions until 2050”, 29 Oct 2021, No. 3052-r, Moscow, Russia Government of the Russian Federation (2022a) Decree “On approval of the rules for the submission and verification of greenhouse gas emission reports, the rules for creating and maintaining a greenhouse gas emissions register and on amendments to certain acts of the Government of the Russian Federation”, 20 April 2022, No. 707, Moscow, Russia Government of the Russian Federation (2022b) Decree “On approval of the rules for creating and maintaining a register of carbon units, as well as carrying out operations with carbon units in the register of carbon units”, 30 April 2022, No. 790, Moscow, Russia Government of the Russian Federation (2022c) Decree “On approval of the rules for verification of the results of the implementation of climate projects”, 24 Mar 2022, No. 455, Moscow, Russia Government of the Russian Federation (2022d) Decree “On the criteria for classifying legal entities and individual entrepreneurs as regulated organizations”, 14 Mar 2022, No. 355, Moscow, Russia Guz VA, Vysotsky EV, Chernikov AV (2022) Russian cement industry in 2021. Cement and its applications, 1. Retrieved from https:// jcement.ru/magazine/vypusk-1-2022/rossiyskaya-tsementnayapromyshlennost-v-2021-godu/. Accessed 28 Jan 2023 Khusainova KA, Batrakova GM (2022) Assessment of carbon dioxide emissions from cement plants in the Ural region. In: Ryabov VG (ed) Chemistry. ecology. Urbanistics: materials of the scientific-practical conference (with international participation). Perm, Russia, pp 127–130 Ministry of Industry and Trade of the Russian Federation (2022) Industry program “Use of alternative fuels from waste in industrial production for 2022–2030”, 28 Dec 2022, No. 16042p-P11, Moscow, Russia Ministry of Natural Resources of the Russian Federation (2022) Order “On approval of methods for quantifying the volume of greenhouse gas emissions and removals of greenhouse gases”, 27 May 2022, No. 371, Moscow, Russia Romanovskaya AA, Nakhutin AI, Ginzburg VA, Grbar VA, Imshennik EV, Karaban RT et al (2022) National report on the inventory of anthropogenic emissions from sources and removals by sinks of greenhouse gases not regulated by the Montreal Protocol for 1990– 2020 (Part 1). Roshydromet and Yu. A. Izrael Institute of Global Climate and Ecology, Moscow, Russia Russian Federation (2021) Federal Law “On limiting greenhouse gas emissions”, 2 July 2021, No. 296-FZ, Moscow, Russia
Corporate Governance in the ESG Context: A New Understanding of Sustainability Svetlana N. Kuznetsova , Victor P. Kuznetsov , Zhanna V. Smirnova , Natalia S. Andryashina , and Elena V. Romanovskaya
the needs of the present enables future generations to meet the needs. In the ESG context, corporate site management addresses the roles and responsibilities of residents in today’s environmental, social, and economic challenges, sets comprehensive goals, and applies new principles for industrial site management. The goal is to increase profits and create value for stakeholders, including them in decision-making processes.
Abstract
The authors consider the issue of corporate governance of industrial parks in the context of ESG. The authors point out that industrial parks include ESG aspects in their activities and manage the impact on the environmental and social components. Little attention is paid to management aspects that are crucial for parks with an ESG agenda and the effectiveness of environmental and social projects. The research aims to form a new understanding of sustainable corporate governance and determine the importance of the concept for the effective management of industrial sites. During the research, the authors identified the areas of mutual development of digital and ESG transformation: the formation of digital solutions for the environmental aspect of ESG activities, the creation of a management system and developing expertise, the development of ESG practices within companies, the increase in digital solutions for ESG by industrial parks, the methodology for evaluating the effects of implementing digital solutions for ESG. The research considers that sectoral industrial parks can become the basis for corporate governance. The ESG includes measures to assess environmental, social, and governance performance, which determines the amount of investment. Industrial parks are undergoing a structural transformation; sustainable development issues are becoming strategic. Sustainable development that meets S. N. Kuznetsova V. P. Kuznetsov Z. V. Smirnova N. S. Andryashina E. V. Romanovskaya (&) Minin Nizhny Novgorod State Pedagogical University, Nizhny Novgorod, Russia e-mail: [email protected] S. N. Kuznetsova e-mail: [email protected] Z. V. Smirnova e-mail: [email protected] N. S. Andryashina e-mail: [email protected]
Keywords
Environmental governance Social governance Corporate governance Sustainable development Metascientific approach JEL Classification
L5
1
O1
N6
Introduction
The occupancy of industrial parks has increased since their inception by a record 10% and amounted to 65%. The total area of industrial parks in Russia has increased by 2.5 times, while the area of occupied areas has increased by 3.1 times. Annual growth averages 18.5% in the number of residents and 19.7% in the number of jobs. Preliminary data for this year indicate that the trend is continuing: the number of residents increased to 4025 (+527) in 2021; the annual increase in the number of jobs amounted to more than 35 thousand people in industrial parks (Allais et al. 2017). In the context of deepening economic risks for industrial parks, the key task is to preserve the business and create the foundations for further development and growth, which is associated with ESG factors and ensuring sustainability (Andryashina 2014). Factors play an important role in preserving production, jobs, supply chains, and further sustainable development.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_10
53
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S. N. Kuznetsova et al.
The main areas of development that will increase the synergy between digital and ESG transformation are as follows (Cardoni et al. 2020): • The lack of digital solutions in the ESG aspects of activity. • Potential in the direction of digitalization, created using advanced analytics technologies, artificial intelligence, the Internet of Things, blockchain, and robotization. • The lack of fundamental competencies of management companies. • Digital tools are scaled up, and digital solutions are unified to achieve the goals of ESG and market distribution. Due to the lack of established methods and models for assessing the economic effect of implementing digital projects in the field of ESG, difficulties arise in attracting domestic investment (Cardoni et al. 2021).
2
Materials and Method
Let us consider the degree of scientific development of the problem. Many authors studied corporate governance in the context of ESG, including T. Ahsan, R. Allais, S. Arduini, M. Boersma, M. Cano-Rubio, A. Cardoni, S. Claessens, T. Clarke, B. Cuozzo, K. M. Eisenhardt, J. Elkington, R. Freeman, H. Fujii, A. S. Garcia, I.-M. García-Sánchez, I. Ioannou, S. Kirkerud, E. Kiseleva, A. Klettner, A. Kolk, I. Kottasova, R. Lombardi, S. Managi, A. Marrone, W. Mendes-Da-Silva, W. Nozawa, R. J. Orsato, M. A. Qureshi, N. Raimo, T. Reyes, L. Roucoules, G. Serafeim, A. Shleifer, S. Terzani, K. Theresa, R. Trequattrini, R. W. Vishny, F. Vitolla, J. Xie, and M. Yagi. Such an aspect of the problem as sustainable development, considered in the study, is studied sufficiently. Currently, the scientific literature does not widely consider the problem of overcoming the negative effects of the crisis and increasing the resilience of the Russian economy and society (Claessens 2006). The ESG concept of industrial parks characterizes the principles of sustainable development and digitalization (Corporate Transparency Research Portal 2021). The creation of digital twins (a prototype of real production assets and technologies) is based on collecting and analyzing big data or an environmental monitoring system. It is necessary to develop scenarios for the separate collection and processing of waste using video analytics, geopositioning, data collection, and storage and analysis technologies (computer vision, predictive analytics, and artificial intelligence systems) (Egorova 2014). The introduction of sustainable development principles in industrial parks provides advantages when it comes to
attracting investors and achieving long-term goals (Eisenhardt 1989). To ensure sustainable development, it is necessary to implement a number of measures to optimize production processes through the preservation and development of human resources in industrial parks. These measures are ensured through responsible production and consumption, resource conservation, the circular economy, as well as the preservation of employment and jobs (Elkington 2006). It is possible to attract investments while respecting the rights of employees, social insurance issues, labor organization, and corporate culture. There is a growing popularity of virtual induction training for new employees in LMS. It is necessary to introduce various IT solutions to increase industrial safety: video analytics, portable devices for employees, and technology help to follow the concept of zero injuries (Freeman 1984). To maintain effective interaction between investors and the residents of the industrial park, it is important to build a corporate ecosystem and combine management processes into a single interconnected chain (Garcia et al. 2017). The digital corporate platform implemented in industrial parks will make it possible to obtain a synergistic effect, connect information received from residents, carry out remote monitoring, and ensure transparency of corporate governance and all business processes for investors. ERP, BPM, and MES solutions, as well as the latest digital tools, make it possible to manage risks and increase transparency, the efficiency of businesses, and production processes (García-Sánchez et al. 2020). Industrial parks develop social infrastructure in the adjacent territories for employees of park enterprises, which is an essential factor in attracting qualified personnel (Garina 2014). The environmental policy of the enterprise and the organization of comfortable working conditions are ensured by creating green jobs (The L’Oréal Sustainability Program «Sharing Beauty with All»). A necessary factor in maintaining efficient work and normal production activities is the creation of comfortable and safe working conditions and a condition for following the principles of ESG and achieving sustainable development goals (Ioannou and Serafeim 2019). When building a system for organizing a comfortable work process and labor safety, there is a potential for introducing and implementing environmental policy (Klettner et al. 2014). The introduction of the ESG concept into the policy of industrial parks is necessary after determining the prospects and opportunities and considering weaknesses and possible threats (Table 1). It is necessary to analyze opportunities and threats in the process of the ESG transition for further qualitative transformation and sustainable business growth.
Corporate Governance in the ESG Context: A New Understanding of Sustainability Table 1 SWOT analysis of ESG implementation
55
Strengths • Compliance with the ESG concept • Increasing loyalty • Entering the international market • Development of measures to improve ESG processes
Weaknesses • Lack of qualified personne • Financial expenses • Difficulties in using resources • Lack of practical measures to implement the principles of ESG
Opportunities • Employee training • Involvement in ESG policy development • Impact on the public
Threats • Differences of Russian legislation • Insufficient information support • Lack of associations for standardization and certification
Source Compiled by the authors
Industrial parks have set the following tasks: • • • •
To organize industry ESG standards. To develop a regulatory framework. To form tools for conducting a regular public dialogue. To support import substitution and integration of ESG parameters. • To deepen the tools for cascading priority areas at the regional level. • To integrate tasks and indicators of federal projects into the system of ESG metrics. • To form a new system of metrics and ratings (Kolk 2008). ESG transformation is a matter of staying competitive and attracting foreign investment. To improve the efficiency of work on ESG, industrial parks review priorities and developed strategies. The importance of the domestic market for responsible financing is growing. A taxonomy of sustainable projects has been introduced, and the practice of issuing green financial instruments and providing state support in developing corporate governance, such as building a supply chain and cybersecurity, is applied (Kottasova 2014). The eco-industrial park is a specialized industrial site that will process municipal solid waste into recyclable materials and produce new goods from it. Corporate governance should be planned considering basic trends to develop industrial parks (Lombardi et al. 2019).
3
Results
Eco-industrial parks are a form of organization of naturaltechnogenic complexes. Production is carried out in a closed system similar to natural ecosystems. The implementation of this approach makes it possible to use natural resources efficiently and reduces costs within and between residents. The approach is possible only for residents whose production processes correlate with each other. The
minimization of resource use is achieved through technological innovation, recycling of materials, substituting materials, and finding alternatives to product recycling through exchange relationships with other residents. The use of renewable energy sources is carried out by eco-parks. These measures increase the energy efficiency of eco-parks, reduce the negative impact on the environment (Mironov and Blaginin 2017). Sustainable industrial parks are eco-parks in which the concepts of industrial ecology are implemented based on the principles of energy efficiency, low-waste production, and industrial symbiosis, as a result of which, along with environmental goals, economic goals are achieved (Mironov 2018). The state will finance the construction of eight pilot eco-industrial parks in the Krasnodar, Primorsky, and Stavropol Territories, as well as in the Leningrad, Moscow, Nizhny Novgorod, Novosibirsk, and Chelyabinsk Regions. Residents of eco-industrial parks will process more than 850 thousand tons of waste per year. The construction of infrastructure facilities for eco-industrial parks is envisaged as part of the federal project “Circular Economy,” the task of which is to provide a 25% increase in the use of secondary resources in agriculture, up to 20% in construction, and up to 15% in the industry by 2024. For example, let us consider an eco-industrial park in the Nizhny Novgorod Region (Table 2). More than 900 million rubles have been allocated from the federal budget for these purposes. In 2024, according to the plans, the facilities should already be built. By 2030, eco-industrial parks will create 11,346 new jobs. The residents of the parks will be enterprises for the processing of tires, plastic, chemical, and other waste. New jobs will be created at the enterprises; production of demanded products will be mastered (Mironov and Dubrovsky 2018). The cost of the project in the Nizhny Novgorod region will be 1.4 billion rubles. Of this amount, 124.2 million rubles are to be provided in 2022, 487.6 million in 2023, and 790.2 million in 2024. The project is financed entirely from the federal budget.
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S. N. Kuznetsova et al.
Table 2 Eco-industrial park in the Nizhny Novgorod Region
The estimated cost of the capital construction object
1,402,060.1
124,214.8
487,607.6
790,237.7
Including design and survey work
138,016.4
124,214.8
13,801.6
–
The total amount of the subsidy provided for the implementation of the investment project
1,402,060.1
124,214.8
487,607.6
790,237.7
Including design and survey work at the expense of the federal budget
138,016.4
124,214.8
13,801.6
–
Source Compiled by the authors
An area of 18 hectares is provided for a technopark in the Nizhny Novgorod Region. The capacity of waste disposal facilities should be at least 154.5 thousand tons per year. In conditions of increased competition for attracting investments, management companies need to introduce these factors and respond to global economic challenges: changing value chains, Industry 4.0, and imperatives of sustainable development (Qureshi et al. 2020). Forming a model of an infrastructure site aimed at achieving sustainable development goals is an essential mechanism. The Nizhny Novgorod technopark is located on the territory of the industrial zone of the Zarya plant in Dzerzhinsk. This technopark provides tax revenues, the creation of additional jobs, opportunities for the growth of specialized specialists, and a reduced burden on the region’s ecology. In 2022, SIBUR-Kstovo connected the first closed-type flare system in the region, which excludes smoky combustion during the disposal of hydrocarbon production residues. Following ESG strategies, industrial parks can bring their products to the international level.
4
Conclusion
The concept of ESG was born as a result of regulatory and market shifts. The integration of ESG factors suggests a new approach to doing business and investing in industrial parks. In the ESG concept, the environmental factor associated with climate change and environmental pollution has a more important place (Shleifer and Vishny 1997). The ESG paradigm, tuned to interact with various stakeholders, considering their interests, implies not a decrease in business profitability but a transition from a short-term perspective to long-term business behavior and increasing competitiveness (World Economic Forum 2020). The influx of capital into ESG projects comes with its own risks: greenwashing, ESG bubbles, and financial disruption. In this regard, legislators and financial regulators in many countries are developing and implementing ESG regulation (Xie et al. 2019). The main objectives of ESG regulation are systematization, accounting for ESG factors in
investment activities, and increasing business transparency. The regulations are based on standards and guidelines issued by internationally recognized developers. The ESG regulation trend is gaining momentum and will continue over the next decade (Zagidullin et al. 2007).
References Allais R, Roucoules L, Reyes T (2017) Governance maturity grid: A transition method for integrating sustainability into companies. J Clean Prod 140(Part 1):213–226. https://doi.org/10.1016/j.jclepro. 2016.02.069 Andryashina NS (2014) Modern approaches to create a new product in engineering. Vestnik Minin Univ 1(5) Cardoni A, Kiseleva E, Lombardi R (2020) A sustainable governance model to prevent corporate corruption: integrating anticorruption practices, corporate strategy and business processes. Bus Strateg Environ 29(3):1173–1185. https://doi.org/10.1002/bse.2424 Cardoni A, Kiseleva E, Arduini S, Terzani S (2021) From sustainable value to shareholder value: the impact of sustainable governance and anti-corruption programs on market valuation. https://doi.org/ 10.1002/bse.3328 Claessens S (2006) Corporate governance and development. World Bank Res Observ 21(1):91–122. https://doi.org/10.1093/wbro/ lkj004 Corporate Transparency Research Portal (2021) Da-Strategy, UNIPG, & Russian Regional Network on . Retrieved from http:// corptransparency.ru/conferences. Accessed 28 Jan 2023 Egorova AO (2014) Analysis of strategic planning at engineering enterprises of the Russian Federation. Vestnik Minin Univ 1(5) Eisenhardt KM (1989) Agency theory: an assessment and review. Acad Manage Rev 14(1):57–74. Retrieved from http://www.jstor.org/ stable/258191. Accessed 28 Jan 2023 Elkington J (2006) Governance for sustainability. Corp Govern Int Rev 14(6):522–529. https://doi.org/10.1111/j.1467-8683.2006.00527.x Freeman RE (1984) Strategic management: a stakeholder approach. Cambridge University Press, Cambridge García-Sánchez I-M, Raimo N, Marrone A, Vitolla F (2020) How does integrated reporting change in light of COVID-19? A revisiting of the content of the integrated reports. Sustainability 12(18):7605. https://doi.org/10.3390/su12187605 Garcia AS, Mendes-Da-Silva W, Orsato RJ (2017) Sensitive industries produce better ESG performance: evidence from emerging markets. J Clean Prod 150:135–147. https://doi.org/10.1016/j.jclepro.2017. 02.180 Garina EP (2014) Business decision on the establishment of product in industry. Bull Minin Univ 1(5):2 Ioannou I, Serafeim G (2019) Corporate sustainability: a strategy? Harvard Business School: Accounting & Management Unit, Research Paper Series. https://doi.org/10.2139/ssrn.3312191
Corporate Governance in the ESG Context: A New Understanding of Sustainability Klettner A, Clarke T, Boersma M (2014) The governance of corporate sustainability: empirical insights into the development, leadership and implementation of responsible business strategy. J Bus Ethics 122(1):145–165. https://doi.org/10.1007/s10551-013-1750-y Kolk A (2008) Sustainability, accountability and corporate governance: exploring multinationals’ reporting practices. Bus Strateg Environ 17(1):1–15. https://doi.org/10.1002/bse.511 Kottasova I (2014, December 3) World’s most corrupt industries. CNN Money. Retrieved from https://money.cnn.com/2014/12/02/news/ bribery-foreign-corruption/index.html. Accessed 28 Jan 2023 Lombardi R, Trequattrini R, Cuozzo B, Cano-Rubio M (2019) Corporate corruption prevention, sustainable governance and legislation: first exploratory evidence from the Italian scenario. J Clean Prod 217:666–675. https://doi.org/10.1016/j.jclepro.2019.01.214 Mironov DS (2018) Institutional and transformational factors in the development of industrial parks in the Sverdlovsk region. Theor Appl Econ 4:75–89 Mironov DS, Blaginin VA (2017) Mechanisms of state support in the formation and development of polysectoral industrial park structures. Mod Sci Thought 3:117–126 Mironov DS, Dubrovsky VZ (2018) Institutional conditions and factors behind choosing industrial park for innovative business development. Upravlenets [The Manager] 9(6):33–52
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Qureshi MA, Kirkerud S, Theresa K, Ahsan T (2020) The impact of sustainability (environmental, social, and governance) disclosure and board diversity on firm value: the moderating role of industry sensitivity. Bus Strateg Environ 29(3):1199–1214. https://doi.org/ 10.1002/bse.2427 Shleifer A, Vishny RW (1997) A survey of corporate governance. J Financ 52(2):737–783. https://doi.org/10.2307/2329497 World Economic Forum (2020, January 22) Toward common metrics and consistent reporting of sustainable value creation. Geneva, Switzerland. Retrieved from https://www3.weforum.org/docs/ WEF_IBC_ESG_Metrics_Discussion_Paper.pdf. Accessed 28 Jan 2023 Xie J, Nozawa W, Yagi M, Fujii H, Managi S (2019) Do environmental, social, and governance activities improve corporate financial performance? Bus Strateg Environ 28(2):286–300. https:// doi.org/10.1002/bse.2224 Zagidullin ZhK, Galushkin SV, Flamer MG (2007) Business and society: corporate integration. In: Alekseev OB, Genisaretsky OI (eds) Corporality and development: collection of works on the philosophy of corporate development (Issue 2). Europe, Moscow, Russia, pp 22–138
Innovative Development of Modern Organizations, New Economy and ESG Transformation Anzhela M. Salogub , Marina V. Chistova , Nina V. Demina , and Olga I. Natkho
resource management, taking into account the value system of Generation Z, new approaches to cooperation between large businesses, independent inventors (startups) and education (science) and self-reproduction of the conditions of innovation by the organization.
Abstract
Purpose: Processes, such as increased competition, acceleration of the processes of change and social time compression lead to a reduction of invariants in management activities. The tools of classical management are becoming increasingly irrelevant. Factors that were insignificant earlier come to the fore. This article is devoted to the analysis and theoretical substantiation of the actual problems of organization management and personnel management in the conditions of the latest trends in the economy and society. Design/Methodology/ Approach: General scientific methods of research and generalization of approaches to organization management and personnel management are applied. The discourse is based on the analysis of scientific publications in the field of goals and actions of social management and sustainable development in the context of the ESG paradigm. The research concept and its implementation are based on the theory of human capital, the theory of creativity and creative class and the concept of innovation management. Findings: The conditions of innovative development of a modern organization are determined, the value orientations of employees and companies, taking into account the trends of the new economy and ESG transformation are analyzed. The tools of personnel management in small innovative firms are proposed. The necessity of searching for new forms of cooperation between science (education), corporations and startups in order to increase their own competitiveness and create a fair business environment is substantiated. Originality/Value: The problems of improving the management efficiency of modern organizations in the new economy and on the basis of a sustainable development strategy can be solved, including through the use of personnel innovations in human A. M. Salogub M. V. Chistova (&) N. V. Demina O. I. Natkho Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected]
Keywords
ESG principles Innovation Startup Creative staff Sustainable development Extraformal relations Justice JEL Classification
D20
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D24
D25
G34
M14
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Introduction
For the first time, the ESG principles were formulated by the former Secretary-General of the United Nations (UN) Annan, who believed that large global companies should include these principles in their business strategies, especially in those parts of them that relate to combating climate change. Business undergoing ESG transformation must meet the standards of moral economics in three categories: • Society’s request for social responsibility; • Increased attention to environmental problems; • Transparent business management. In order to manage a social organization with maximum efficiency and effectiveness, it is not enough for a modern manager to possess managerial competencies. This is essential for him to know and understand the deep socioeconomic trends, as well as to have a good idea of the direction in which modern society is developing (Gorbunov 1999).
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_11
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Modern society is completely different from any of the previously existing ones in the history of humankind (at least in the history known to us). It is a socioeconomic organism that has achieved relatively high quality and subjectivity. On the one hand, the society has stepped significantly forward in comparison with the previous stages of social development. If the twentieth century was the century of discoveries, the twenty-first century is rightly called the century of digital transformation of society, economy and business (Panfilova and Kiseleva 2021).
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Materials and Method
The world-renowned economist Schumpeter noted that it is young creative entrepreneurs who are the most dangerous people for the existing economic model, as they create competition in the field of knowledge, transfer competition to the sphere of production, thereby disturbing the equilibrium state of any economy. According to Schumpeter, the whole multitude of individuals can be divided into: • Innovators who track the evolution of the knowledge system and on this basis design, develop and implement new technologies and products, create new or modernize old companies or influence changes in the institutional structure of the economy (Schumpeter 2008); • Conservatives who are indifferent to the evolution of knowledge, use existing technologies, produce “goods”, act within the framework of established firms and strive for the stability of social institutions. An innovator is an imaginative (creative, in this case, we will use these concepts as interchangeable terms) person who seeks to realize himself in a new business, social action, product, technology, etc. This refers to people who, first of all, are able not only (so much) to generate original, author’s ideas and concepts, but to become their implementers. As many researchers note, it is the problem of implementing new ideas for Russia that remains historically a weak point (Gorbunov 1999). Based on this, it can definitely be argued that today the task of creating a favorable innovation environment in Russia is coming to the fore, which will make it possible to translate the results of scientific and technological achievements into effective products, technologies, etc. Harvard Business School researchers, relying on their own and third-party observations, came to the conclusion that enterprising innovators have three distinctive features: the ability to thrive in conditions of uncertainty, a passionate
desire to create and own their own projects and a special persuasive power in creating a team of like-minded people (Butler et al. 2023). The opinion of experts is relevant and it is confirmed by key demographic trends in the world: the nature of competition for personnel will change significantly taking into account the aging of the population and the entry into the labor market of young employees of Generation Z. Generation Z (born in 1997 and younger) are young digital nomads who freely navigate and understand all digital technologies, “live” and work in the virtual world, preferring virtual to living communication. They are more individualistic, impatient, value freedom and entertainment, focus on solving short-term tasks and are focused on consumption. Representatives of Generation Z, unlike previous generations, tend to consider regular change of organizations as the only possible way of self-realization. Generation Z especially dreams of launching its own project—a community, a movement, a show or some kind of startup. The desire to start their own business was demonstrated by 66% of millennial respondents in a survey conducted by specialists from Bentley University (Heymans and Tolkien 2019). The relationship between the organization and the employees of Generation Z should be designed more like an “alliance”, consisting of a kind of “watch”, each of which lasts from two to four years (the same study by Bentley University claims that only 16% of millennials are confident that they will remain in the current company in ten years (Heymans and Tolkien 2019). The meaning and content of the social contract between the organization and employees is changing.
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Results
In the new economy, innovation is extremely important and has a dual nature. Most frequently, innovations are understood as the development and implementation of not only innovative products and services, but also the creation of new methodologies for managing systems, processes and people. This means that innovations in modern realities can be considered simultaneously as a goal, a process, a means and a result (Korgova et al. 2017). Since it is the creativity of the staff that contributes to the emergence of innovative ideas in the organization, managers of effective companies use various tools and methods to form a creative organizational environment and climate in order for the necessary processes to take place and lead to a successful result in the form of socially significant products. A characteristic feature of the innovative breakthrough of the world economy has become the rapid growth of small
Innovative Development of Modern Organizations …
and medium-sized enterprises, which are focused on the search for innovative ideas, their development, implementation and “start-up” production. The catalyst for the growth of such companies, as well as various sectors of the economy, has become the defense policy of the state, which contributes through various mechanisms to the diffusion of new knowledge, know-how of ideas into civilian industries. Constant communication in the process of cooperation in the external environment has contributed to the emergence of startups in holding common events, mutual participation or other mutually beneficial forms of cooperation between stakeholders. The term “startup” first entered business practice in 1939 in the USA. Stanford University students Packard and Hewlett created their own innovative project at that time and called it a startup (from the English verb start-up—to start, to launch) (Shkarupelaya 2014). Historically, the first and most complete definition of the concept of “startup” was given by Blank, an entrepreneur and professor at Stanford, Berkeley and Imperial College. According to him, it is “a temporary organization created to find a business model that is repeatable and scalable” (Butler et al. 2023). Creating a new enterprise—be it a technology startup, a small business or a project in a large company—is always fraught with risks. As evidenced by the business statistics of Sh. Gosha from Harvard Business School, 75% of startups inevitably fail. Analyzing the causes of the death of many startups, in addition to the high level of failure, one of the main ones should be indicated—a limited number of people who are ready to take risks associated with the creation or operation of a startup. A startup is created by an entrepreneur leader and a trained and motivated team. Innovative productivity and the commercial result of a startup’s activity are associated with the effective use of its human resources. When choosing the methods of personnel management of a startup, it is necessary to comprehend the opinion of experts that startups are not reduced copies of large companies, startups imply other methods and style of social management. Firstly, the quality and structure of organizational relations of a startup can take the form of an informal organization, as one of the varieties of social self-organization. The concept of non-formal organization was introduced into scientific circulation by the American sociologist Dubin, although without a special theoretical analysis. Non-formal organization means a system of connections, relationships and activities spontaneously developed by the members of this structure, aimed at solving organizational tasks in ways different from those formally prescribed (Prigozhin 2020). Often, a formal organization considers creative entrepreneurs as a marginal group, because they, in
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turn, strive to achieve organizational goals by innovative, unusual, unrecognized, and possibly not approved by the formal structure means. Sociologist Prigozhin, relying on his own scientific observations and research, identified important features of this phenomenon, such as the spontaneity of origin, functioning and development in parallel with the formal organization, the “business” content of relations in case of coincidence (divergence) with the goals of the formal organization (the main feature) (Prigozhin 2020). In the case of an administrative decision to create a startup as a temporary stage of the team’s work on a project within the existing management structure, it should be remembered that the activities of such innovative projects are associated with a high degree of risk. High individual productivity in relation to the task is required from the participants, not all the values and elements of the new culture and the format of the startup structure will be gladly accepted by all the team members, the specific working conditions in such a structure do not satisfy all employees. Secondly, changes in HR functions. Automation and the emergence of “super-professions” are becoming new challenges for HR practice. The closest concept to a “super-profession” is a universal specialist. One of the most noticeable trends in the HR field is the transition from project thinking to product thinking. Most startups do not involve the participation of a large number of employees, quite the opposite—they have a very limited number of members, which means that each team member must have universal abilities, and, first of all, demonstrate personalized and unique experience in increasing the value of the product provided. There is a great demand for employees who are able to play roles beyond their core qualifications. Within a startup, the idea of training a “well-played team” is developing due to “cross-pollination” with new knowledge or the development of new competencies, rather than recruiting new people. This is quite understandable—the extra formal relations of a startup presuppose a system of connections based on psychological compatibility combined with high productivity and functionality of each team member in relation to the development of an innovative idea. In startups, the share of the involvement of HR specialists is changing. Most personnel processes are automated, but not at the expense of the quality of the team: it is important not to miss a genius. Thirdly, the system of stimulation and motivation of startup participants. Here comes to the fore the ability of the startup founder to create an effective motivation system for team members. And if initially the leader can motivate the members of his team with a personal resource, designated by sociologists and psychologists with charisma, then as the project develops, this becomes insufficient. Therefore, the project manager should conduct a study of the motivational
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structure of each startup participant in order to have the opportunity to develop incentive tools that are effective for each team member. The motivation to participate in a startup is radically different from the traditional compensation systems adopted in the hierarchical structure of large companies, which stimulate only career growth. The skills possessed by a startup resident are increasingly tied to his remuneration, as well as to the opportunities for his development and self-learning. It should be noted that innovators and conservatives, as economic entities, have divergent economic interests. Innovators are less rational than conservatives, because their behavior generates a state of uncertainty that excludes the possibility of rational behavior. They consciously go to the imbalance, while conservatives are trying to preserve this state (Schumpeter 2008). Continuing this thought, innovators really maximize profits (because they strive for super profits from innovations), while conservatives try to maintain the achieved level. Startups are focused on entrepreneurial income. The team leaders (representatives of Generation Z), in principle, have a different motivation. Fourth, innovative culture and creative and innovative environment. Discussing the creation of an innovative environment, practical experience in startups allows experts to conclude that the culture within an organization is how an employee behaves when no one is looking at him or controlling him (Salogub 2021). Professor Pisano in his research presents the characteristics of innovative culture with their paradoxical but important counterweights: • Tolerance for failure, but intolerance for incompetence; • Willingness to experiment, but in combination with extreme discipline; • Cooperation, but related to individual responsibility; • Freedom of speech, but in combination with honesty and frankness; • Transparent structure, but combined with strong leadership (Pisano 2020). Fifth, a new management paradigm (innovative management methodology). At the beginning of the twentieth century, the ideas of democracy in production, dreams of humanizing the science of management in the future were expressed by G. Gantt, a representative of classical management and a follower of the theory of scientific management Taylor (Korgova and Salogub 2021). The ideas of the classics of management have become the theoretical basis of many humanistic areas of management. The ESG concept defines a new style of social management.
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The dominance of the system over the individual is replaced by collaboration, inclusion, equality and justice. The “leader-subordinate” power scheme is being replaced by the new leadership model “primacy in partnership”. The idea becomes more important than the hierarchy. A new approach is being incorporated into the startup’s practice— microtasking. Each expert receives his “portion” of microtasks that have equal weight and value (several tasks per specialist) (Rogova 2021). In such a collaboration, the inventive process flourishes, the atmosphere of cooperation and the system of collective responsibility are developed, expressing in principle “this is our common cause” (Salogub 2022). It is necessary to realize the fact that the innovativeness of a startup’s relationship structure is guaranteed precisely by the structure of ownership relations, which means that developers and implementers of know-how ideas are simultaneously owners of conditions, labor results and production (Gorbunov 1999). It is necessary to accept as an axiom that only the owner of his ideas and the conditions for their implementation is able to win a “place in the sun” for his idea, overcome the distrust of the formal system toward it, will not be afraid to make mistakes, since he evaluates himself critically, will study hard and engage in self-education. In this format of socioeconomic relations, each participant of an innovative organization (startup) can easily and simply realize/evaluate his own contribution and the contribution of all other team members to the overall result of work (Gorbunov 1999). This means to be sure that both the conditions of production and the results of labor will be distributed in accordance with the labor contribution of each member of the team. When a searching process is completed, the company (investor) acquires a startup product at a contractual or market price, regardless of whether the startup is part of a large company or acts as a free agent. Russian scientists (for example, Milner) have developed a model of leading Russian corporations, which includes both private and state-owned companies. According to this model, large companies, first of all, should have a powerful research sector in their structure, which generally increases the innovative receptivity of the organization. For such companies, total creativity becomes the basis of activity (Milner 2010), the creativity of employees is a liquid asset. It is beneficial for corporations to cooperate with educational institutions in order to replenish the personnel reserve, preserve the continuity of generations and labor dynasties and ensure the unity of applied and fundamental research in their own interests. Secondly, corporations should be closely related to startups, venture businesses, small innovative firms, i.e., create an ecosystem, such a practice has evolved in the world for a
Innovative Development of Modern Organizations …
long time. Large customers outsource to innovative communities those types of work that are uneconomic for them. Most startups become a source of flow of creative ideas and innovations to generate new value in symbiosis with a large company. Thirdly, the foundation of such cooperation is moral (ethical) standards and values. The mission of a responsible business is to produce socially significant/useful products/services, to make people’s lives and society as a whole better. Spirituality of commercial activity sets clear guidelines for extracting honest profit (instead of predatory, unpromising profit). In Russian conditions, such a market symbiosis (BEAC, MTS, Yandex, PMCs Wagner Center and a number of military space corporations) is extremely beneficial and useful to all stakeholders. On the one hand, the joint use of technologies, laboratories, premises and equipment allows all participants of the market symbiosis to achieve their goals faster and at lower cost, and, on the other hand, small enterprises receive from large business a kind of “protection” from numerous bureaucratic barriers and pressure of the main business. Innovation processes, according to the prominent Soviet scientist Kondratiev, are wave-like in nature, the duration of each innovation cycle lasts on average 50–57 years. Kondratiev believed that only the stimulation of radical, technical and technological discoveries and breakthrough innovations would overcome the next recession in cyclical crises. A key role in the transformation of ideas, technologies and society belongs to social innovators, especially enterprising leaders. It is obvious that a “critical mass” of people with an innovative way of thinking and behavior, with a steady need to “do something better than it was done yesterday” should be formed in the organization (Kravchenko 2011). Generation Z does not consider a career as one of the basic values and is not ready to work more than 50 h a week, but is willing to work in a leadership team. Young people do not seek to tie themselves down to a long-term social contract with organizations, but prefer a project-based approach in the new economy. New entrepreneurs do not want to do business like previous generations, they want to make the world better and fairer.
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• Consider spiritual and moral values and high ethical standards of behavior in the business environment as the basis of commercial activity; • Perceive innovation as an instrument of fair competition; • Create conditions for innovative development of the organization; • Introduce elements of an innovative culture into the organization; • Form talent marketplaces (markets), help to find and unite with each other employees within the same company or different spheres with internal career opportunities; • Create an opportunity for innovators to establish their own project, team and startup; • Introduce promising design technologies for work teams (startups); • Grant the right to inventors to become the full owner of ideas and conditions for their implementation; • Ensure full transparency of all business processes in the organization, including financial statements, primarily accessible only to the company’s top management; • Highly appreciate employees focused on mastering roles that go beyond their core qualifications; • Give entrepreneurial leaders with complete freedom, autonomy and the right to make mistakes, while rewarding innovative initiatives, even in the absence of commercial effect; • Develop inclusive benefits of receiving rewards and value diversity in the workforce. The role of innovative young businesses (startups) is to create ideal growth conditions for the economic growth of the country (Shkarupelaya 2014). Startups stimulate innovation sensitivity for big business. Corporations, because of their huge scale, react harder to consumer demands and market signals. However, corporations strive for a stable and higher rate of return. Innovators also dream of maximizing profits (because they strive for super profits from innovations). This cooperation is based on common economic interests. It is believed that there is no competition of goods, products or services. There is a competition of management models that makes it possible to create a fair business environment. We are speaking about the economy of the future, the moral economy.
Conclusion References
The main task of a modern organization is to create an environment in which every employee knows that his lifestyle is respected, he can freely express himself, show individuality and be himself, without fear of judgment because of prejudice or stereotypes. Russian companies follow in line with global trends:
Butler T, Blank S, Zalman W (2023) Entrepreneurship and startups. Harvard business review: 10 best articles. Alpina Publisher, Moscow Gorbunov AP (1999) Fundamentals of social management. Publishing House “Caucasian Health Resort”, Pyatigorsk
64 Heymans JRR, Tolkien TG (2019) New power: what forces rule the world—and how to make them work for us. Alpina Publisher, Moscow Korgova MA, Salogub AM (2021) History of managerial thought: a textbook for academic bachelors. 2nd edn. Yurayt, Moscow Korgova MA, Salogub AM, Demina NV, Demir KH, Mheidze LR, Pogosyan SG, Kipa AA, Prudnikova YuV, Semenova EH (2017). In: Korgova MA (ed) Actual problems of personnel management and modern organizations. RUSAINS, Moscow Kravchenko AI (2011) History of management. KNORUS, Moscow Milner BZ (2010) Innovative development: economics, intellectual resources, knowledge management. SIC INFRA-M, Moscow Panfilova AP, Kiseleva LS (2021) Innovative management in human resource management. Yurayt, Moscow Pisano G (2020) Creative construction: a systematic approach to innovations in large companies. Alpina Publisher, Moscow Prigozhin AI (2020) Sociology of organizations. Lenand, Moscow
A. M. Salogub et al. Rogova MI (2021) Modern trends in personnel management in engineering startup companies. In: Collection of articles of the 15th international scientific and practical conference “modern management: problems and prospects” (Saint Petersburg, 2021). St. Petersburg State University of Economics, St. Petersburg, pp 725–728 Salogub AM (2021) Systemic approach to creative personnel management—an effective path to innovation. Power Manag East Russ 2 (95):103–113 Salogub AM (2022) Creativity and crisis—new resources of a commercial organization in the context of digital transformation. Power Gov East Russ 2(99):126–137 Schumpeter JA (2008) Theory of economic development. Capitalism, socialism and democracy. Eksmo, Moscow Shkarupelaya M (2014) Startup as an element of innovative activity. Current Issues Innov Econ 7:190–192
ESG Transformation of the Regional Space Tatiana V. Koteikina
Abstract
JEL Classification
Over the past decade, in Russia, as well as in the world economy as a whole, an economic model of the “new normality” is being actively formed, the constituent elements of which are decarbonization, the introduction of environmental standards, and digitalization (Industry 4.0). The article is devoted to the problems of “new normality” model regarding the ecological aspects. The author presents a retrospective view on ESG transformation, the necessity of which is substantiated. The paper considers spatial aspect of ESG transformation, in which ESG transformation (global, national, and local) is defined as balance of system-forming elements (economic, social, and environmental subsystems). Taking into account the results of the ESG ranking, the fragmentary nature of the ESG transformation of the regional space of Russia is demonstrated, which is caused by the influence of “second nature” factors and the presence in the region of large companies entering foreign markets and actively implementing the principles of sustainable development. The author suggests tools to accelerate the pace of ESG transformation, overcome the fragmentation of the regional space, and create additional incentives for the integration of the ESG agenda into the economic activities of regions distributed by levels of public authority.
E01 O47
Keywords
“New normality” Sustainable development ESG transformation Regional space Fragmentation
T. V. Koteikina (&) Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected]
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F43
Q01
Q15
O32
O38
Q56
O43
Introduction
Natural disasters of recent decades (extreme heat, floods and droughts caused by climate change) have a huge negative impact on all processes of human activity. So, climate agenda occupies central place in the economic policy of a number of world powers. In particular, the EU’s climate reforms are estimated at $7.6 billion (Yakovlev and Kabir 2018). An economic model of “new normality” or “new reality” is being formed in the world (“newnormal”) (Krugman 2017), the characteristic features of which are decarbonization, the introduction of environmental standards, and Industry 4.0 digitalization. The key global trend is the strengthening of ecological, social, and managerial responsibility of business (ESG), the transition from the concept of maximizing the market value of business to the concept of a balance of interests of all stakeholders (Dovbiy et al. 2022). However, the ESG transformation encompasses not only the corporate level, but also all levels of the economic space. Over the past decade, Russia has been actively implementing sustainable development mechanisms. Federal authorities are forming an institutional environment for the transformation of ESG. The “turn of the country to the east” in 2022 in the face of unprecedented sanctions pressure has only increased the relevance of the ESG agenda, as a number of key strategic partners of Russia, in particular China and India (“carbon balance”). ESG agenda implementation and the change of the Russian economy to the “new normality” pattern require the active involvement corporate sector.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_12
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Methodology
The concept of ESG transformation and “sustainable development” are researched by Meadows et al. (2004), who in their research focused on issues related to reducing the amount of waste (Our common future 1989). Russian scientists interpret sustainable development more broadly, defining it as socioeconomic stability and continuous progress of society (Granberg et al. 2002). The idea of sustainable development was also developed in the works of a number of Russian scientists: Gubaidullina (2000), Kiseleva (2008), Losev (2001), etc. Sustainable development problems at the corporate level with a focus on the need to achieve environmental sustainability is described in the work (Aguilera et al. 2021). Most foreign researchers of ESG transformation proceed from the fact that the interests of environmental conservation prevail over other components of ESG (the effect of carbonation on the development of economic systems) (Ilkhan et al. 2020) and view it mainly through the prism of the implementation of investment decisions (Chelawat and Trivedi 2013) and social responsibility of business (Oehmke and Opp 2020). The Russian literature also pays considerable attention to the methodology of ESG management. The works of Altukhova (2021a, 2021b, 2022), Nikonets and Popova (2022) are devoted to the issues of “green” financing. The sectoral features of ESG transformation are analyzed by Morozov and Morozova (2022), Rezvanov (2022), and Seleznev et al. (2022). Zamyatina and Tishkov study methodological tools for managing regions and corporations, taking into account ESG factors (2022). Barseghyan et al. conduct a dynamic ESG-cluster (2022). However, it should be noted that most researchers focus on studying the corporate level. The issues of methodology of ESG transformation research of spatial systems are partially disclosed.
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Results
In the spatial aspect, ESG transformation (global, national, and local) characterizes the balance of the system-forming elements of space (economic, social, and environmental subsystems), which is ensured through decarbonization, the introduction of environmental standards, digitalization, and artificial intelligence. Despite the rather active position of the federal center regarding the implementation of the ESG agenda, the regional space of Russia is very heterogeneous according to ESG criteria. According to the ESG ranking conducted by the National Rating Agency in December 2022, the gap between the leading region (Moscow, ESG index = 0.781)
and the outsider region (Republic of Khakassia, ESG index = 0.380) is more than two times. The indicators, systematized by three blocks, were used to compile the ranking. The first block “Ecological Space of the region” (E—Environmental) includes 14 indicators divided into three groups—environmental impact (E1), climate change (E2) and resource use (E3). The indicators of group E1 include gross emissions of contaminants into the atmosphere and specific emissions of contaminants into the atmosphere. The indicators of group E2 include the costs of protecting atmospheric air and preventing climate change, and the frequency of emergencies. Group E3 is represented by such indicators as water intake from natural sources, specific water abstraction from natural sources, circulating water use, and energy intensity of GRP. The second block “Social space” (S) consists of two groups integrating 17 indicators. The indicators of the first group “population” (S1) include the following: population size, number of births per 1000 population, number of deaths per 1000 population, life expectancy, migration population growth. Human capital (S2) includes such indicators as unemployment rate, the average wage, the average size of pensions assigned, residential buildings per 1000 population, the area of emergency housing, the availability of doctors per 1000 population, coverage educational programs of higher education, the density of hard surface motor roads, and the value of human capital development. Block G (governance) includes indicators (14 indicators) characterizing sustainable development policy (G1) and indicators reflecting the quality of sustainable development management (G2). The first group (G1) is represented mainly by qualitative indicators such as the integration of sustainable development policy into strategy, climate change risks included in the strategy, an environmental protection strategy, a program or measures to preserve biodiversity, a program or measures to improve energy efficiency, the program for the separate collection of household waste, and the program for recycling and disposal of waste, policy on interaction with indigenous peoples. The second group (G2) includes both qualitative and quantitative indicators: the level of PPP development, environmental protection expenditures, investments in fixed assets, GRP per capita, budget security, a section on the website of the regional executive authority dedicated to sustainable development and ESG transformation of the region, carbon polygons. According to the integral value of the ESG index, as well as the values obtained for each block of indicators, all regions are classified into five groups. The first group of ESG-advanced regions includes 19 regions of Russia with an ESG index range from 0.781 to 0.604, the second (ESG developed)—16 regions with a range from 0.600 to 0.552, the third (ESG moderate)—15 regions with an ESG index range from 0.543 to 0.504, the fourth (ESG developing)—20
ESG Transformation of the Regional Space
67
regions with an ESG index range from 0.493 to 0.450, and the fifth (initial ESG)—15 regions with an ESG index range from 0.422 to 0.380 (Russian Federation National). It is noteworthy that the group of advanced ESG regions includes regions based on large companies implementing ESG principles that have a considerable impact on the sustainable development of territories in close partnership with public authorities (Table 1). In the outsider regions in terms of ESG (the Republics of Dagestan, Ingushetia, Karelia, Khakassia, and the Pskov Region), there are practically no companies integrating the principles of sustainable development and ESG factors into their activities. The index of the “E” gap is 4.3 times, which indicates the high heterogeneity of the ecological space of Russia. The group of advanced ESG regions in block “E” includes regions from almost all federal districts (with the exception of the North Caucasus). A similar conclusion can be drawn regarding the initial group, which includes both the southern regions (Crimea, Dagestan, Kalmykia, etc.) and the northern territories of Russia (Komi, Karelia, etc.). According to the “S” block the “metropolitan” factor contributes to the migration inflow of the population. In advanced ESG regions, high expenditures on human capital development are noted—151,605 million rubles (for comparison: in developed regions—58,571 million rubles, moderate—62,578 million rubles, developing—42,198 million rubles, and initial—30,273 million rubles) (Russian Federation National). There is a clear dominance in the “S” block by the regions in which large socially oriented businesses are widely represented (Moscow, St. Petersburg, Belgorod, the
Table 1 Representation of companies implementing ESG principles in the leading regions of ESG transformation
Tyumen and Moscow regions, the Krasnodar region, and Tatarstan). The last place in this block is shared by Karelia and Khakassia with a value of 0.176. Thus, the heterogeneity of the social space is even higher than the ecological one. The outsiders of the “G” management block ranking are two parts of the North Caucasus—Ingushetia (0.269) and Dagestan (0.286). The gap between leaders and outsiders is 3.5 times. In general, we can say that the institutional environment that promotes ESG transformation has been formed (Table 2). Along with criteria characterizing sustainable development policy (G1), the management block includes economic indicators (G2) to ensure further ESG transformation. The analysis of economic indicators suggests a low level of resource availability of the regions. Eight regions received the maximum rating (1.0), and four regions received a zero rating. The three leaders in terms of PPP development include the Moscow Region (79.8 points), Moscow (61.2), and the Republic of Karelia (35.1). Twenty regions have an integral score in the range from 10 to 24.5 (i.e., 10–24.5% of the maximum). The integral score of the other regions of Russia is less than 10 (Rating of Russian Regions by the Level of PPP Development 2021). It should be noted that the high correlation between the speed of ESG transformation attracts attention (Russian Federation National). A similar situation is observed for GRP per capita. In ESG-advanced regions, GRP per capita (683,845 rubles) is 1.4 times higher than in developed regions (491,961 rubles), in moderate regions—1.7 times (412,845 rubles), in
№
Region
ESG index
Companies present in the region and implementing ESG principles
1
Moscow
0,781
PJSC NK Rosneft, PJSC Gazprom, PJSC Sberbank, PJSC Lukoil, JSC Russian Railways, PJSC MMC Norilsk Nickel, AFK Sistema, JSC RUSAL, X5 Group, PJSC Enel Russia, PJSC MTS, JSK Inter RAO, PJSC VimpelCom, SC Rosatom, SUEK, PJSC Credit Bank of Moscow, PJSC Aeroflot—Russian Airlines, PJSC FGC UES, PJSC RusHydro, PJSC Rosseti, PhosAgro, PAO NOVATEK, PJSC PIK Group of Companies and others
2
The Republic of Tatarstan
0,769
PJSC SIBUR-Holding, PJSC Tatneft named after V. D. Shashin, KAMAZ PTC, JSC Quadra—Energy Generation, PJSC AК BARS Bank, Nizhnekamskneftekhim Group, PJSC Kazanorgsintez, JSC TAIF-NK, PJSC Nizhnekamskshina
3
The Tyumen region
0,723
PJSC SIBUR-Holding, PJSC Surgutneftegaz, PJSC UTair Airline
4
The Belgorod region
0,702
OEMK (part of JSC Metalloinvest Holding Company)
5
St. Petersburg
0,683
PLC Polymetal, PJSC Rostelecom, LSR Group, Sveza Group, O’KEY, Lenta (hypermarket chain), Bank Saint Petersburg, Ilim Group, The Bank of Russia, LLC Baltika Breweries
Source Compiled by the author based on (ESG 2021; Russian Federation National)
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T. V. Koteikina
Table 2 Number of regions whose documents integrate the principles of ESG transformation Number of regions ESG transformation integration into the strategy
80
Environmental protection
84
Biodiversity conservation measures
74
Energy efficiency measures
75
Waste
78
Climate risks are taken into account in regional strategies
24
Source Compiled by the author based on (Russian Federation National)
developing regions—2 times (341,216 rubles), and in primary regions—2.1 times (325,660 rubles) (Russian Federation National). ESG-advanced regions are 1.5 times ahead of other regions in terms of budget security.
4
Conclusion
The nature of the ESG transformation of the regional space of Russia is fragmentary. At the same time, the level of ESG transformation does not depend on factors of the “first nature”, but is completely determined by factors of the “second nature” (first of all, quality of management, and inclusion). ESG transformation is proceeding at a faster pace in the Urals. Thus, in the Ural Federal District, out of six regions, four regions (the Tyumen and the Sverdlovsk Regions) are in the group of “advanced”. The North Caucasus is characterized by the dominance of small business forms that do not have the resources and incentives for ESG transformation. For the purpose of the accelerating the pace of ESG transformation and overcome the fragmentation of the regional space, it is necessary to form additional incentives for the integration of the ESG agenda into the activities of the regions. The following tools should be highlighted as effective and contributing to the intensification of the ESG transformation process in lagging regions: • At the federal level: (1) consideration of ESG criteria when granting subsidies and budget loans to regions; (2) “green” financing driving force of ESG transformation will be Russian banks that encourage borrowers to implement “green” projects in their regions; • At the levels of regions and municipalities: (1) strategic planning model (municipality ESG model); (2) improvement of informing business about the best practices of ESG transformation process.
References Aguilera RV, Aragon-Correa J, Marano V, Tashman P (2021) The corporate governance of environmental sustainability: a review and a proposal for a more comprehensive study. J Manag 47:1468–1497 Altukhova EV (2021a) Participation of commercial banks in ESG transformation. Financ Life 4:87–90 Altukhova EV (2021) Stock market as a catalyst for ESG transformation. Bus Adm Manag 1(4):111–117. https://doi.org/10.33983/ 2075-1826-2021-4-111-117 Altukhova EV (2022) Financial strategy of the bank in the conditions of ESG transformation. Financ Econ 3:123–128 Barseghyan NV, Kudryavtseva SS, Sopin VF (2022) Methodological foundations for assessing the differentiation of the sustainability of the development of the best available technologies at the meso-level. Izvestiya Samara Sci Center Russ Acad Sci 24, 6(110): 127–134 Chelawat H, Trivedi IV (2013) Ethical finance: trends and emerging problems for research. Int J Bus Ethics Emerg Econ 2(2). https:// www.researchgate.net/publication/313967677_Ethical_Finance_ Trends_and_Emerging_Issues_for_Research. Data Accessed: 19 Feb 2023 Dovbiy IP, Kobylyakova VV, Minkin AA (2022) ESG transition: significance for sustainable development and economic security of regions. In: Proceedings of the scientific and practical international conference “economic and legal problems of ensuring economic security” (Yekaterinburg, 2022). Yekaterinburg: Ural State University of Economics, pp 13–20 ESG ranking of Russian companies RAEX-Europe (2021) Rating agency “Analytics”. https://raex-a.ru/rankingtable/ESG_ranking_ companies/16/09/2021. Data Accessed: 10 Feb 2023 Granberg AG, Danilova-Danilyan VI, Tsikanova MM, Shokhoeva ES (2002) Strategy and problems of sustainable development of Russia in the XXI century. Ekonomika, Moscow Gubaidullina TN (2000) Sustainable development of the ecological and economic system: Issues of theory and methodology. Extended abstract of Doctor’s thesis. Financial and Economic Institute, Kazan Ilkhan E, Sautner Z, Vilkov G (2020) Carbon tail risk. Rev Financ Stud (forthcoming) 34(3):777–799. https://doi.org/10.2139/ssrn.3204420 . Data Accessed: 28 Jan 2023 Kiseleva NN (2008) Sustainable development of the socio-economic system of the region: research methodology, models, management. Extended abstract of Doctor’s thesis. Southern Federal University, Rostov-on-Don Krugman P (2017) On economic arrogance. New York Times. https:// www.nytimes.com/2017/02/20/opinion/on-economic-arrogance. html. Data Accessed: 24 Jan 2023 Losev KS (2001) Environmental problems and prospects of sustainable development of Russia in the XXI century. Kosmosinform, Moscow Meadows D, Randers J, Meadows D (2004) Limits of growth. Update for 30 years. Chelsea Green Publishing, Vermont Morozov MA, Morozova NS (2022) ESG-transformation of tourism and hotel industry enterprises. Serv Russ Abroad 16, 2(99):86–93 Nikonets OE, Popova KA (2022) “Green” financing and ESG-transformation of the economy. Manag Acc 2–3:528–538 Oehmke M, Opp MM (2020) Theory of socially responsible investments. Research paper of the Swedish Financial House, 20–2. file:/// C:/Users/Windows%208/Downloads/SSRN-id3467644.pdf. Data Accessed: 19 Feb 2023 Our common future (1989) Report of the international commission on environment and development (ICED). Progress, Moscow Ranking of sustainability of development and integration of ESG criteria in the activities of the subjects of the Russian Federation National. Rating Agency. https://www.ra-national.ru/renkingi/
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69 Yakovlev IA, Kabir LS (2018) The mechanism of financing “green” investments as an element of the national strategy for financing sustainable development. Financ J 3(43):9–20. https://doi.org/10. 31107/2075-1990-2018-3-9-20 Zamyatina MF, Tishkov SV (2022) ESG-factors in Russian business and regional strategies and their role in regional innovative development. Issues Innov Econ 12(1):501–518. https://doi.org/ 10.18334/vinec.12.1.114369
ESG Agenda in the Educational Process of a University Irina M. Akopyants , Karina Y. Vartanova , Anna V. Kiseleva , Irine N. Mikhailovskaya , and Irina V. Patsora
Abstract
JEL Classification
In today’s world, sustainable development has become an important factor in many areas of business and government. ESG agenda is an effective element of environmental and social risk management. It plays a significant role in the management concept to ensure competitiveness among potential investors. The research is devoted to studying the conditions and processes for integrating the ESG agenda into the educational activities of Russian higher educational institutions as public organizations that adhere to the principles of sustainable development. The specific features of the ESG principles in the educational process of a university are aimed at developing standards within environmental, social, and governance categories. The ecological principle is focused on the percentage of an institution’s attention given to the environment. The social principle demonstrates the company’s attitude toward its employees, customers, and partners. The governance principle affects the quality of the management policy, focused on a favorable atmosphere in the institution and business relations with the staff. The research focuses on certain conditions necessary for the sustainable development of an educational institution and a new look at the importance of all the criteria of the ESG principles. Social, environmental, and governance criteria are essential in the educational process for an educational institution as a sector of educational services.
I20
Keywords
ESG agenda ESG principles ESG integration Sustainable development Educational process
I. M. Akopyants K. Y. Vartanova A. V. Kiseleva I. N. Mikhailovskaya (&) I. V. Patsora Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected]
1
Introduction
Implementing the environmental, social, and governance (ESG) principle is a forward-looking approach to state management that balances the interests of protecting the environment, improving the quality of life and human resources, increasing the efficiency of partnership, and accelerating economic growth. The main goals of the sustainable development of an organization include the principles of ESG management. The principle of a responsible attitude to the environment is focused on natural resources by reducing waste, increasing balanced consumption, paying attention to climate change, and protecting ecosystems. The principle of social responsibility guarantees a high quality of services for consumers, the implementation of socially significant voluntary initiatives, the introduction of social innovations, the creation of favorable working conditions and human resources, and the supplement of social and labor guarantees. The principle of effective governance is associated with management optimization alongside with transparent reporting on sustainable development, responsibility, innovation, and technological development of the organization. The Decade of Action has been announced at the international level. In Russia, there is a Decade of Science and Technology supported through ESG principles widespread in all areas of industry, services, and consumption up to 2030/2031. First, intensive social progress and a high level of consumer consciousness meet the need to integrate ESG principles into a partnership to improve the level and quality of life. Second, in conditions of instability, economic crises, and uncertainty in the social environment, it is necessary to
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_13
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integrate ESG principles into business practices because ESG principles can increase economic sustainability. Third, high technologies widen the opportunities for implementing ESG principles into practice, as well as for state, business, and public control of the process and results of compliance with these principles. Numerous examples of ESG principles successfully applied in social organizations demonstrate social responsibility and development in today’s society. Sustained development is understood as the constant growth of the national economy that meets the needs of people to create long-term values for future generations (OECD 2001). To assess sustainability, regions and local communities use an assessment scale according to three main ESG criteria: environmental impact, certain actions to solve social problems, and the company’s effective management. For example, if any project can have a strong polluting impact on nature, it will not receive investments or will be reformed in the way of decreasing the polluting impact. Nowadays, all business projects are viewed by specialists through the prism of ESG principles as the investors are ready to deal with reliable projects focused on ESG principles (Fleming et al. 2013). In the twentieth century, the ideas of social responsibility were eventually transformed into the concept of sustainable development; that is why environmental, social, and management ESG investments have become very popular in the twenty-first century (Nazarenko and Smyslova 2021; Wren and Bedeian 2008). The desire of companies to achieve these goals becomes an integral element of their policies, due to which a market for “sustained investments” aims to promote and strengthen the important role of financial markets, which solve environmental and social problems and work out socially oriented projects.
2
Methodology
For the development of society, students of universities must get scientific knowledge and professional skills that they can use in their practice. This is another component of contemporary higher education that ensures the quality of education as a continuous process of the university’s pursuit of progress, which implies the importance of combining the educational process with science and research (Azaryeva et al. 2006, 2010). In today’s society, a university acquires the status of a participant in economic relations due to transforming knowledge into technologies and real innovative products. In the nearest future, the government of the Russian Federation will approve national development goals, including the growth of the country’s population, people’s income, and state economic policy.
ESG standards of Russian companies have already quite widely included such components as ecology, corporate governance, and social responsibility within the constructive relationships with the state. In this regard, institutions and organizations base their programs and strategies on ESG principles. Many experts note that integrating the ESG agenda into the educational process of a university is based on a long-term strategy focused on the transformations and the achievement of critical goals (Panasyuk and Tretyakova 2018; Turner and Yolcu 2013). The rapid development of ESG practices helps draw attention to such important topics as human rights, the quality of the urban environment, and the digital background. The technological and business experience of universities in ecosystem formation emphasizes that collective innovative activities are the academic and economic components of the educational environment. The university becomes socially responsible and cares for the region’s socioeconomic development. It is open and constantly expands partnerships. Social and environmental projects are successfully initiated and implemented under the condition of high quality and efficiency of management; environmental and socioeconomic development results directly affect the external assessment of the quality of management. Companies have increasingly begun to implement ESG principles in their corporate management, focusing on such components as “environment,” “social policy,” and “corporate governance.” Following the ESG principles is a company development strategy that provides transparency in management and concern for the environment and the people the company comes into contact with. Environmental, social, and corporate governance (ESG) is a forward-looking approach to management that balances the interests of protecting the environment, improving the quality of life and the use of human power, increasing the efficiency of entrepreneurship, and accelerating economic growth. As a rule, ESG principles become the basis for the company’s sustainable development. The priority tasks also include the following: 1. To create a comfortable environment for employees and respond to the demands of society; 2. To take measures to reduce the impact on nature; 3. To ensure the high quality of corporate governance. Companies are aware that such actions create a high reputation and shape their image in the eyes of potential investors and consumers. As part of the ecological direction, thematic lectures on research works about the relationship between people and
ESG Agenda in the Educational Process of a University
nature through technology are held in laboratories of ecological and technological history. The central topics based on environmental protection are the development of specially protected natural areas, the conservation of forests, the minimization of pollution, and the increase in energy efficiency through the expansion of restored energy. The “environmental” aspect requires companies to evaluate their business model and key performance indicators on such environmental issues as the use and protection of natural resources, protection of biological diversity and ecosystems, and depletion of natural resources. This part includes everything related to the environment. Companies can think about introducing employees to eco-culture as in the separate waste collection, waste-free production, etc. The company is also assessed based on the “social component,” which provides conditions for implementing labor processes, health protection, and labor safety. This principle concerns the company’s communication with its employees, customers, and investors (Little 1996). ESG measures include health insurance benefits, personnel training, and development for further career growth. The component “corporate governance” is being explored in a number of company discussion forums and seminars on social governance research issues that explore effective ways to manage relationships and enhance a company’s reputation when working with employees, customers, and communities. The management criteria in the ESG principles consider the company’s long-term strategies, external audit, internal control, and cybersecurity (Rabello et al. 2018; Wilson 1990; Wren and Bedeian 2008). The principle of high quality and efficiency of corporate governance is associated with the maintenance of detailed and transparent corporate reporting (on the financial position, sustainable development, corporate responsibility, innovation, and technological development) with the optimization of the work of the enterprise management and interaction with investors.
3
Results
Contemporary educational institutions are educational and research centers with technological platforms for developing business innovations. Russian universities should prove their results and ensure local authorities that they regularly achieve their main goals and meet the needs of students and society. Strategic development, innovative management, and regional interaction help students develop and implement their interesting ideas into social projects at the level of government and local authorities in the real sector of economic policy. Nowadays, within the framework of the federal project “Platform of university technological entrepreneurial
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partnership,” as well as the state program “Scientific and technological development of the Russian Federation,” universities are constantly implementing acceleration programs to support project teams and student initiatives aimed at inventing innovative products. The programs for project teams aim to develop complex competencies in the field of technological entrepreneurial partnership to build up future business projects. As part of the project “Platform for university technological entrepreneurial partnership,” the acceleration program “Growth point” is designed for graduate students. The program participants get real experience in creating business projects correlated with the regional industry. Students take part in different quests developed in conjunction with the hh.ru platform, a job search service, as well as such projects as “Your Move” and “I am a Professional,” which provide an opportunity to acquire communicative and social competencies. All projects are aimed at personal, professional, and social development. The voluntary activity of young people is a special form of their attitude toward the world. The younger generation willingly spends time, shares personal resources for the sake of social goals, and contributes to the formation of value orientations and social experience. Voluntary centers situated at the universities hold meetings to prepare volunteers for global events. The main purpose of meetings is to share the experience with the younger generation and develop an active social position and self-realization of young people. Participating in such acceleration programs as “Management of innovations and social transformations,” “Quantum leap,” and “Growth point,” students are guided by highly qualified supervisors who provide economic and legal support for the project with the marketing promotion of innovative ideas. They develop and implement start-up projects in the field of education, tourism, social environment, and human resources development in the framework of supporting project teams and student initiatives within innovative products. Students start new social projects, participate in various activities set by partners, and develop a new model of student self-government. Representatives of business communities, municipal and regional authorities, and different social organizations are the experts of these projects. As a rule, such projects start at a university and become part of a socially responsible business aimed at productive collaboration with consumers in the future. The main purpose of the programs is to provide students with knowledge, skills, and experience in the field of technological partnership. An undoubted advantage of participating in the acceleration programs for students is the interaction with representatives of the business community, which can contribute to the successful employment of students in the future.
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It is very important for students to succeed in their future careers. Since these projects are carried out under the dual supervision of representatives of an educational institution and representatives of business communities, students undoubtedly see the result of their project work in the industry. An educational institution tries to build a systemic and balanced work within the scientific, research, and practiceoriented activities of students and their supervisors, ensuring that all innovative projects will be active and successful. Students get a unique opportunity to embody their ideas, realize how these ideas work in the real sector of the economy, and how these ideas can be implemented practically when students apply their professional competencies in municipal administration and management. Nowadays, the sustainable development agenda is fully adapted to educational institutions and integrated into the prolific practice of grant funding for successful projects, start-up projects, and a wide range of student competitions. Universities begin to intrude master’s degree programs in the educational process, as well as the programs of additional education for ESG specialists. Based on introducing the ESG agenda into the educational process, universities are now interested in exploring new ways of working out environmental protection projects, making up business plans, and paying attention to social risk management. These programs contribute to the analysis of the best practices in the field of sustainable development and additional financial support for promising projects. It is necessary to strengthen this kind of support to be able to develop initiatives in conducting research work within the ESG agenda to train professional competencies and develop technical skills. Simultaneously, the successful integration of ESG principles into practice is well-built up in financial models and economic tools, comprehending the best practices and technological frames for successful leadership. In a word, following the ESG agenda in the educational process is determined by a significant number of motives, including the development of human values and profitable partnerships. ESG agenda correlates with the key goals of the educational process and allows for creating conditions for increasing social mobility and ensuring personal and professional self-realization. The autonomous non-profit organization “Russia is the country of opportunities” has certain experience in training participants for social projects and competitions, as well as active young people and government officials, bringing together more than 20 projects, including all-Russian Student Olympiad “I am a professional,” competition of managers “Leaders of Russia,” international competition “My first business,” all-Russian project “Career time,” all-Russian competition “Masters of hospitality,” all-Russian competition “Best social project of the year,” and Russian national award “Student of the year.”
I. M. Akopyants et al.
The experience of implementing the ESG agenda in the educational process directly relates to the issues of social and educational projects, innovative and entrepreneurial interaction formats, an adaptation of specialists, and building career tracks. The concept of sustainable development, the paradigm of assessing risks and opportunities associated with climate change, environmental protection, evaluation of human rights, and solving social problems determine the economic and financial agenda in the future (Stankevich 2021). Additionally, the ESG principles are focused on active interaction and consider the stakeholders’ opinions, including business results and effective and equal dialogue to avoid such misunderstandings in the business environment as distancing shareholders from long-term business prospects, the pursuit of well-known productive managers who do not always solve strategic problems well, a decrease in the quality of social guarantees for personnel, etc. Nowadays, environmental, social, and corporate governance issues within the framework of the ESG agenda turn out to be key factors for ensuring the goals of sustainable development of society, the achievement of which involves educational programs for middle and top managers. For the active implementation of the sustainable development agenda, educational institutions fulfill the educational and scientific missions in the field of innovation and technology; they take part in the state program “Priority 2030,” which provides research work on the problems of the ESG agenda in the educational process of a university. This project forms sustainable development centers in the country based on leading universities and scientific and research institutes. Representatives of leading Russian universities and business and expert communities are invited to participate in the event. They deal with the problems of agriculture, the integrated development of the smaller regions of the Russian Federation, the questions of interaction with various international organizations, the development of joint programs, and promising research work in the field of innovative techniques with such key topics for discussion as the educational and scientific missions of universities in the ESG agenda. According to the results of surveys conducted among the youth, one of the key criteria for choosing an employer is the commitment of a company or corporation to social responsibility principles. ESG specialists receive qualifications not only in the areas of management, economics, and law but also in such areas as architecture, design, and media. They possess the characteristics required to succeed in a career in sustainable development, such as a commitment to human values and ethics, the ability to critically approach the consequences of decisions, the desire to learn steadily, the willingness to adopt the best international experience, and the ability to assess new trends and adjust them.
ESG Agenda in the Educational Process of a University
4
Conclusion
Implementing ESG principles on a systemic basis improves the quality of education in an educational institution. Due to the fact that a mature management team initiates ESG business transformation, it becomes necessary to train change leaders—transformation leaders working in the sustainable development paradigm. Universities should monitor the achievement of the set goals and the compliance with the needs of students and society, guided by the following principles: 1. The values and interests of their development; 2. The interests of international economic cooperation; 3. The acceleration of the ESG agenda, because the reduction of the negative impact on climate and the environment creates a thrifty economy; 4. The growth of companies’ responsibility for data reliability in the ESG sphere. A necessary step in the further development of the agenda is the inclusion of small and medium enterprises in the ESG agenda. The main factors for the growth of the involvement of small and medium enterprises in this aspect are as follows: • The interest of investors in companies with a strong ESG profile; • The development of a responsible consumption model; • Savings on operating costs; • Attracting talented employees; • The opportunity to participate in the remarkable events of large companies. Simultaneously, limited financial resources, the lack of human power, non-obligatory ESG certification for small companies, and unobvious returns of financial investments in ESG serve as barriers (Khmeleva 2013). Thus, they provide not only opportunities for obtaining a rating score but also practical solutions for various areas of the ESG agenda. In a contemporary dynamic society, it is necessary to be a highly qualified professional in a certain area. It is also important to understand, accept, and promote ESG principles. It is important to use educational business projects in developing leadership because the project method allows outstanding professionals to demonstrate their knowledge
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and show the ability to develop specific business decisions based on their experience. As part of a comprehensive program for integrating ESG agenda into educational practices, leadership development is facilitated by a corporate culture that encourages equal opportunity, values diversity, and provides mutual respect.
References Azaryeva VV, Gorlenko OA, Grigoriev VM, Kruglov VI, Prokopov NI, Sobolev VS, Yashchenko VV (eds) (2006) Brief terminological dictionary in the field of quality management of higher and secondary vocational education. SPbGETU “LETI”, St. Petersburg Azaryeva VV, Kruglov VI, Puzankov DV, Sobolev VS, Stepanov IV, Stepanov SA, Yashchenko VV (2010) Methodology for assessing the quality systems of educational institutions. Baltiyar LLC, St. Petersburg Fleming P, Roberts J, Garsten C (2013) In search of corporate social responsibility: Introduction to special issue. Organization 20(3): 337–348. https://doi.org/10.1177/13505084134795 Khmeleva GA (2013) Human capital as a condition for the formation of the region’s innovative economy. SAGMU Publishing House, Samara Little P (1996) Communication in business, 2nd edn. Western Printing Services Ltd., London Nazarenko VS (2021) Sustainable development goals in strategic planning at the national and regional level. In: Smyslova OYu (eds) Strategizing regional development in the new economic realities: materials of the All-Russian economic online forum with international participation. Derzhavinsky Publishing House, Tambov, pp 160–166 OECD (2001) Corporate responsibility: private initiatives and public goals. OECD Publications, Paris. Retrieved from https://www.oecd. org/daf/inv/corporateresponsibility/35315900.pdf. Accessed 6 Jan 2023 Panasyuk VP, Tretyakova NV (2018) The quality of education: innovative trends and management. Russian State Vocational Pedagogical University, Ekaterinburg. Retrieved from http://elar. rsvpu.ru/978-5-8050-0635-8. Accessed 18 Dec 2022 Rabello RCC, Nairn K, Anderson V (2018) Rethinking corporate social responsibility in capitalist neoliberal times. In: Redefining corporate social responsibility. Emerald Publishing Limited, Bingley, pp 27– 41. https://doi.org/10.1108/S2043-052320180000013005 Stankevich GV (2021) Risks and vulnerabilities in education as priority areas of educational policy. Mod Sci Innov 4(36):222–229. https:// doi.org/10.37493/2307-910X.2021.4.27 Turner D, Yolcu H (2013) Neo-liberal educational reforms: a critical analysis. Routledge, New York. https://doi.org/10.4324/97802030 67758 Wilson J (1990) Politically speaking. Blackwell, Oxford Wren DA, Bedeian AG (2008) The evolution of management thought, 6th edn. Wiley, Hoboken
Carbon Emission Tax or Carbon Emission Market: Which Is Better? Elena B. Zavyalova
and Jiacheng Li
Abstract
1
This research outlines the similarities and differences between the carbon tax mechanism and the carbon market mechanism to discuss their advantages and limitations. The carbon market mechanism has apparent advantages, including low cost, flexibility, cross-industry, and cross-territory. In turn, the carbon tax mechanism has the apparent advantage of low management costs. Some major carbon-emitting countries have piloted or implemented the carbon market mechanism. Based on the characteristics of the carbon market and carbon tax, it is more reliable to adopt carbon market policy and carbon tax policy. Specifically, the carbon market should be the main mechanism to stimulate more channels to actively reduce carbon emissions, while the carbon tax policy can be complimentary to “punish” those enterprises that are late in meeting the emission standards and cover the industries that the carbon market does not.
In June 1992, the Rio Summit established the principle of “common but differentiated responsibilities” for the international community on environment and development (United Nation 1992). In December 1997, Kyoto Protocol, for the first time in human history, limited the greenhouse gas emissions in the form of regulations and methods, such as “emissions trading” and “group approach” (United Nation 2012). Then, the Paris Agreement was agreed upon by 196 Parties at the Conference of the Parties (COP) of the 2015 UNCCC and established a “ratchet” mechanism of “no regression” for all countries to curb global warming (United Nation 2022). These climate conferences, which were widely attended and agreed upon by almost all countries around the world, provided sufficient legitimacy for the carbon tax system and carbon trading system that are popular today.
Keywords
Carbon emission trading Emission trading scheme (ETS) Carbon tax Carbon tax plus ETS Greenhouse effect Non-carbon greenhouse gases Carbon emission market JEL Classification
E62
F18
F64
F65
G18
H25
H32
2
Introduction
Methodology
This research mainly adopts modeling analysis, literature analysis, and case study methods. The research is based on carbon pricing data from IMF and World Bank. According to this data, countries around the world have mainly implemented carbon pricing to curb global warming, which includes the carbon tax, emission trading scheme (ETS), and carbon tax plus ETS (Black et al. 2022; The World Bank 2022a). More than twenty years have passed since the Nordic countries first implemented the carbon tax in the 1990s. Before the major carbon-emitting countries have established various carbon reduction regimes, it is now time to discuss which of these models has the best impact on reducing carbon emissions.
E. B. Zavyalova (&) J. Li MGIMO University, Moscow, Russia e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_14
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E. B. Zavyalova and J. Li
Results
3.1 How the Carbon Emission Market Runs, Its Advantages, and Challenges After the final goal for curbing the temperature rise has been set (Olivier et al. 2017), greenhouse gas emission has become a limited right, and the carbon market provides the platform to trade this right to stimulate more channels to reduce the total emission (United Nations 2015). According to an International Emissions Trading Association (IETA) survey, 88% of respondents saw carbon markets as an effective policy instrument (IETA 2016). Generally, the whole operation of carbon emissions trading can be divided into several processes: 1. All emitters must report their carbon emission amounts to the regulatory authorities centrally. In this process, there will be a third party to verify and submit a verification report to the regulatory department to check the accuracy of the data declared by the emitter. 2. After the regulatory department (usually the local government) collects the total amount of emissions from all emission units in the region, the total amount of emissions in the region is finally determined by considering the emissions of different industries and different regions. 3. The next step is to determine the emissions of each emission body. There are generally three ways of quota allocation that can help determine the reasonable emission value of the unit: the industry benchmark method, the historical intensity method of the final determined value, and the historical total emission method. This indicator should be less than in previous years to incentivize emission subjects to take management or technical means to reduce emissions. 4. The next stage is the stage of free trade. When the total amount of emission reduction of emission subjects exceeds the given target, they can sell the amount of their extra emission reduction in a limited time. If the total emission reduction target cannot be met for some reason, they can buy the carbon emission credits sold by others in the market. 5. The last stage is compliance liquidation or clearing. The competent authority will check whether each emitter has reached the emission target by reducing emissions by itself or by purchasing. Some emitters may improve their emission efficiency by technical means, reduce emissions by strengthening company management, or purchase carbon credits directly in the carbon market. Some emitters may exceed their emission reduction targets; they can sell over-emitted tons through the
carbon market to make a profit, which greatly stimulates the initiative of each emitter. In short, companies that fail to meet their emission targets must buy carbon credits in the carbon market or suffer considerable economic fines. The companies that exceed the reduction target will reap additional profits from the sale of carbon credits (Burke et al. 2021). Here are two models to facilitate us in understanding the operation logic of the carbon emission trading market. Suppose there are two companies A and B. In the first case, the total amount is controlled, and there is no trading market, which means their carbon emissions cannot be traded. The quota for both companies this year is 50 ton. In fact, both companies actually emitted 40 ton this year after technique and management efforts. The emission reduction cost of company A is $1000 per ton and the emission reduction of company B is $2000 per ton of emission reduction. In this case, the total cost emission reduction of both companies is $30,000. Now, let us look at the second case. There are companies A and B in this market, both of which have an emission allowance of 40 ton this year. However, both companies actually need to emit 50 ton. The cost of emission reduction in company A is $1000 per ton. After efforts, company A reduced 20 ton; the actual cost of emission reduction is $20,000. The cost of emission reduction in company B is $2000 per ton. Thus, this year, company B decided not to make efforts on emission reduction by itself but directly bought 10 ton of carbon emission rights from company A, which spent $5000. Because company B did not reduce its own emissions, this company does not have its own abatement costs; it just spent $5000 to buy ten tons. Company A spent $20,000 to reduce emissions but earned $5000 from company B. The actual cost for company A is $15,000. Thus, these two companies actually spent a total of $20,000 on carbon emissions, which is $10,000 less than in the first case. In this case, it is easy to see that the carbon market has apparent advantages of low cost. In the same situation, the consequences caused by the presence or absence of the carbon emissions trading market are quite different. In the second case, the overall reduction in emissions is achieved in the same way, and the total cost of reduction for the total is reduced. The carbon market also has the effect of crossing-region to deduct the total emission. In these two cases, companies A and B can be replaced with countries A and B or industries A and B. EU ETS is an example of this mechanism logic. The European Union ETS has begun working in all EU and the EEA-EFTA countries since 2005. In the EU, it limited emissions from around 10,000 installations in the power sector and industrial industry, as well as airplanes, traveling within and in between these countries. To add, it has also
Carbon Emission Tax or Carbon Emission Market: Which Is Better?
covered around 40% of the EU’s greenhouse gas emissions (European Commission 2021b; European Environment Agency 2022). In the total carbon market system design, the market is generally designed to ensure that the total amount of carbon emissions in the region is reduced. With this institutional arrangement, the total emission reduction cost of that market can be controlled, and the total emissions quantity can achieve the desired effect. In addition to the advantages of flexibility, market incentives, cross-region, and cross-industry, the carbon trading market may suffer from unreasonable trading prices and limited participants because of its market-based operation. The price of carbon equivalents in the market is primarily determined by supply and demand. Thus, if too many units of carbon emissions are sold in the market, the price per unit is too low. When few are available for sale, the price per unit will likely be too high. The price is only reasonable when the supply is reasonable. The carbon market may also be subject to manipulation by speculators as in any other market, which means that it is equally important to regulate the market. Implementing the carbon market may also encounter the problem of low motivation of carbon emission units to participate. In other words, when companies do not cooperate or are not motivated to participate in the carbon market, the carbon market will not have the desired effect. This problem will also affect the construction of the whole market. The capability of carbon market managers is also considered here, mainly in terms of guiding enterprises to join the carbon market to reduce carbon gradually in some good ways. For example, to run a healthy carbon market, China, as the biggest emitting economy, adopted the approach of piloting certain places or industries since 2011 (Swartz 2016) to accumulate enough experience and then started to cover the whole country and multiple fields with the carbon market since 2021 (International Carbon Action Partnership 2022).
3.2 How the Carbon Emission Tax Runs, Its Advantages, and Challenges The carbon tax aims to reduce fossil fuel consumption and CO2 emissions by taxing fossil fuel products such as coal, oil, and natural gas in proportion to their carbon content. First, unlike mechanisms to reduce greenhouse gas emissions based on market competition, the carbon tax mechanism can rely directly on the existing tax system and requires relatively small additional administrative costs to achieve the goal. Second, the coverage of the carbon tax is wide. It can cover small and micro enterprises or even individuals with fewer emissions. Third, when implementing the carbon tax,
79
the government can use the tax revenue to redistribute and promote low-carbon transition, etc. The problems of the carbon tax are mainly the difficulty of accurately planning emission reduction effects and the great resistance from high-emission enterprises because of the difficulties in technology, capital, or management. The carbon tax mainly targets industries that use many fossil fuels and emit greenhouse gases such as carbon dioxide, coal power, steel, petrochemicals, non-ferrous metals, building materials, chemicals, transportation, etc. (Elgouacem et al. 2019). It can be said that the coverage is still very wide. The implementation of the carbon tax will undoubtedly increase the production cost of enterprises, forcing them to choose more low-carbon alternatives or low-carbon production methods. The most recent concern is the carbon tariff, which is a kind of carbon tax, mainly for import and export goods. The European Commission recently announced the Carbon Border Adjustment Mechanism (CBAM), which will formally impose the carbon tariff on some goods imported into the EU starting in 2026 (European Commission 2021a). The essence of the carbon tariff is a trade measure. The future carbon accounting rules and carbon tariff setting rules will definitely become a new hot spot in global trade rule-making. The tax on carbon dioxide emissions should not be the same for different industries because the cost of emissions is different for different industries. Even in the same industry, the cost of emissions and emission reduction is not the same. For example, in the same energy industry, coal-made-energy emissions are the highest, but photovoltaic and wind power are close to zero emission; natural gas carbon emissions are basically in the middle. Currently, there are still some discussions on carbon tax; only a few main emitting countries have applied a pure carbon tax mechanism. The carbon tax can be diversified. It can be different for different industries and enterprises with different carbon intensity sections. Generally speaking, enterprises and consumers think that since the carbon tax is levied, it will definitely make the cost of enterprises rise. There is actually some misunderstanding here. Enterprises certainly do not like the carbon tax, but they will certainly like carbon subsidies. If the carbon emission level of enterprises is above the industry average, the carbon tax should be levied; if the emission level of enterprises is around the industry average, no tax will be levied. If the emission level of enterprises is below the industry average, they will receive economic subsidies. Basically, the carbon emission level of the enterprise determines whether the enterprise will be taxed or given carbon subsidies to gain economic benefits. People need to understand that carbon taxes and carbon subsidies are the same tools. In fact, the carbon tax should start at the energy source and give society an expectation that the state will
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gradually increase the tax rate to guide the current investment. After the carbon tax is levied, the price of electricity produced by fossil energy will be increased. Thus, investors will find those investment projects that are not necessarily profitable at the moment (e.g., wind power, photovoltaic, and hydroelectric storage plants) to have a profitable future. After these investment projects are painted up today, they can return the capital and profits in the next ten, twenty, or thirty years. Most of the money levied from carbon emissions can be returned to the places where the carbon is produced, such as coal, oil, and gas production areas. The logic is simple: this money will lead them to transform their industries.
GHG emissions covered by the EU ETS are not subject to the carbon tax. France is not the only country that uses carbon tax and carbon trading. Iceland, Denmark, Sweden, and other Nordic countries are using carbon tax and carbon trading to regulate different sources of emissions in different industries. In Sweden, the carbon tax mechanism was implemented in 1991. Nevertheless, the effect was not obvious due to the great resistance from enterprises. However, after Sweden joined the EU ETS around 2005, the annual per capita carbon emission and the total annual emission dropped significantly (The World Bank 2022b). The above cases and data can greatly illustrate the effectiveness of the dual model of ETS and carbon tax.
3.3 Dual Carbon Reduction Model: Carbon Tax Plus ETS and Its Effects
4
Carbon market mechanisms and carbon tax systems are not opposed to each other. They can simultaneously exist as a complement to each other. For example, the national carbon market in China has been running since 2021. However, this market currently only covers the energy industry till now (The State Council of China 2021); it is expected to cover eight major industries that account for 70% of the country’s total carbon emissions before 2030 (Columbia University 2019) and the major cities and provinces in the country. Thus, the carbon tax system can be used as a supplement in industries and regions that are not covered by the national carbon market. The database from the University of Oxford has compiled countries’ fossil CO2 emission profiles over time based on data provided by the Global Carbon Project (Ritchie and Roser 2021). Taking data from Oxford University’s Our World in Data database, we classify the carbon reduction mechanisms adopted by the world’s major emitters into four groups: “Under consideration or planned,” “Carbon tax,” “ETS,” and “Carbon tax and ETS.” After setting aside the factors of global production capacity decline caused by the COVID-19 pandemic and local economic crisis, it is found that only the reduction group of France, Canada, Spain, and Mexico, who adopted carbon tax and ETS together, achieved excellent and significant performance in the indicators of CO2 emission per capita, annual CO2 emission, the year-on-year change in CO2 emission, and other indicators (Ritchie and Roser 2021). The countries that adopted only carbon tax and ETS performed acceptably fine in these indicators (Ritchie and Roser 2021). The last group (“Under consideration or planned”) had almost no effect on carbon reduction (Ritchie and Roser 2021). In France, the carbon tax is levied on fossil energy sources. It exists in parallel with EU ETS; the sources of
Conclusion
Based on these characteristics of the carbon market and carbon tax, as well as their respective advantages and disadvantages, it is more reliable to adopt carbon market policy and carbon tax policy simultaneously. Specifically, the carbon market should be the main mechanism to stimulate more participants from different regions and industries to actively reduce carbon emissions as much as possible. In turn, the carbon tax policy can punish those enterprises that are late in meeting the emission standards or put pressure on companies that are not included in the carbon market system to make the transition. These two mechanisms complement each other in terms of system and support each other in terms of the carbon price, which can cover all carbon emitters to the largest extent. Based on controlling the total carbon emission of the whole region, it can realize industrial transformation, form a certain degree of economic benefits for the covered area, and reduce greenhouse gas emissions to the greatest strength.
References Black S, Parry I, Zhunussova K (2022, July 21) More countries are pricing carbon, but emissions are still too cheap. IMF blog. Retrieved from https://www.imf.org/en/Blogs/Articles/2022/07/21/ blog-more-countries-are-pricing-carbon-but-emissions-are-still-toocheap. Accessed 18 Jan 2023 Burke J, Fankhauser S, Kazaglis A, Kessler L, Khandelwal N, O’Boyle P, Owen A (2021) Policy brief distributional impacts of a carbon tax in the UK. London School of Economics, London. Retrieved from https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2020/ 03/Distributional-impacts-of-a-UK-carbon-tax_Policy-brief-1.pdf. Accessed 11 Nov 2022 Columbia University (2019) Guide to Chinese climate policy: emissions trading. Retrieved from https://chineseclimatepolicy. energypolicy.columbia.edu/en/emissions-trading. Accessed 18 Sept 2022 Elgouacem A, Halland H, Botta E, Singh G (2019) Issue paper for GGSD forum: the fiscal implications of the low-carbon transition.
Carbon Emission Tax or Carbon Emission Market: Which Is Better? OECD, Paris. Retrieved from https://www.oecd.org/greengrowth/ GGSD_Forum%20Paper_Fiscal%20Implications.pdf. Accessed 17 Dec 2022 European Commission (2021, July 14) Carbon border adjustment mechanism: questions and answers. Retrieved from https://ec.europa. eu/commission/presscorner/detail/en/qanda_21_3661. Accessed 23 Dec 2022 European Commission (2021) EU emissions trading system (EU ETS). Retrieved from https://climate.ec.europa.eu/eu-action/eu-emissionstrading-system-eu-ets_en. Accessed 14 Dec 2022 European Environment Agency (2022) TERM: greenhouse gas. Retrieved from https://www.eea.europa.eu/help/glossary/eea-glossary/greenhousegas. Accessed 26 Nov 2022 IETA (2016) IETA’s annual GHG market sentiment survey. Retrieved from https://www.ieta.org/resources/Resources/GHG_Market_ Sentiment_Survey/IETA%20GHG%20Sentiment%20Survey% 202016.pdf. Accessed 23 Nov 2022 International Carbon Action Partnership (2022) China national ETS. Retrieved from https://icapcarbonaction.com/system/files/ets_pdfs/ icap-etsmap-factsheet-55.pdf. Accessed 25 Dec 2022 Olivier JGJ, Schure KM, Peters JAHW (2017) Trends in global CO2 and total greenhouse gas emissions: 2017 report. PBL Netherlands Environmental Assessment Agency, Hague. Retrieved from https:// www.pbl.nl/sites/default/files/downloads/pbl-2017-trends-in-globalco2-and-total-greenhouse-gas-emissons-2017-report_2674.pdf. Accessed 26 Nov 2022 Ritchie H, Roser M (2021) China: CO2 country profile. Our world in data. Retrieved from https://ourworldindata.org/co2/country/china? country=BRA*IDN*VNM*PAK*TUR. Accessed 21 Jan 2023 Swartz J (2016) China’s national emissions trading system: implications for carbon markets and trade. Retrieved from https://www.ieta.
81 org/resources/China/Chinas_National_ETS_Implications_for_Carbon_ Markets_and_Trade_ICTSD_March2016_Jeff_Swartz.pdf. Accessed 16 Dec 2022 The State Council of China (2021, July 14) China’s national carbon market to start trading in July. Xinhua. Retrieved from http:// english.www.gov.cn/statecouncil/ministries/202107/14/content_ WS60ee7927c6d0df57f98dcd91.html. Accessed 14 Sept 2022 The World Bank (2022a) Carbon pricing dashboard. Retrieved from https://carbonpricingdashboard.worldbank.org/map_data. Accessed 18 Jan 2023 The World Bank (2022b) CO2 emissions (metric tons per capita)— Sweden. Retrieved from https://data.worldbank.org/indicator/EN. ATM.CO2E.PC?locations=SE. Accessed 21 Jan 2023 United Nation (1992) United nations conference on environment and development (Rio de Janeiro, Brazil, 3–14 June 1992). Retrieved from https://www.un.org/en/conferences/environment/rio1992. Accessed 15 May 2022 United Nation (2012) The Kyoto protocol background (adopted an amendment to the Kyoto Protocol by decision 1/CMP.8). Doha, Qatar. Retrieved from https://unfccc.int/process/the-kyoto-protocol/ the-doha-amendment. Accessed 13 May 2022 United Nation (2022) What is the Paris agreement? Retrieved from https://unfccc.int/process-and-meetings/the-paris-agreement/theparis-agreement. Accessed 14 May 2022 United Nations (2015) The Paris agreement (adopted by UN climate change conference (COP21) on December 12, 2015). Paris, France. Retrieved from https://www.un.org/en/climatechange/parisagreement. Accessed 23 Nov 2022
Transformation of ESG Ecosystem and Approaches to Non-financial Reporting Regulation Svetlana I. Puchkova
and Ekaterina D. Marina
Abstract
Keywords
Today’s complex and turbulent macroeconomic environment necessitates the revision of traditional tactics of a company’s value management in the context of social and environmental business responsibility. The emerging trend toward engaging an increasing number of actors interested in transparent and accountable ESG metrics entails the transition from heterogeneous perspectives toward shaping the sustainability ecosystem. The non-financial reporting agenda is on an upward trend, especially in the EU, demonstrating the evolving sustainable metrics reporting regulation. The research aims to describe the components of the sustainable related ecosystem, assess the effectiveness of sustainable standards as an integral part thereof, and leverage the industry-based approaches of reporting development in the oil and gas industry combating sustainable challenges. The research methodology is based on scientific generalization and statistical and comparative analysis of comprehensive reporting regulation implemented by the EU framework and reporting practices of world oil and gas companies attaining carbon neutrality. The research shows that the ESG ecosystem is becoming more dynamic, mature, and complicated due to the diversification of actors forming the architecture of ESG strategic models. Standards setters play a crucial role in forming the global baseline of non-financial reporting, which enables the assessment of companies’ strategic positioning regarding sustainable issues. The oil and gas industry exemplifies the effective integration of ESG reporting standards and recommendations. The convergence of the efforts of key sustainability actors may benefit the effective global reporting alignment.
Sustainable development Non-financial reporting Reporting standards Oil and gas sector Stakeholders
S. I. Puchkova E. D. Marina (&) MGIMO University, Moscow, Russia e-mail: [email protected] S. I. Puchkova e-mail: [email protected]
JEL Classification
F23 Q58
1
G30
K20
L21
M14
M48
Q01
Q56
Introduction
Promoting responsible practices that benefit business and society and contribute to environmental, social, and governance development is commonly featured on the strategic planning agendas of world companies eager to be sustainable. Given the observed transformation of global economic processes, the need for economic actors to ensure sustainability and increase the attractiveness of their investment activities is becoming urgent. Increasingly complex business processes justify the need for a shift in traditional thinking about business performance measurement. The financial statements cannot show the reasons for the discrepancy between the company’s accounting value and the market value. Nowadays, the agenda includes not only the economic indicators measuring the company’s performance but also the assessment of the external effects of economic activity. Disclosure of current and forward-looking business information has become a prerequisite for undertaking trading, borrowing, or lending activities and investment projects. One of the most important elements of ESG infrastructure is the formation of a set of reporting documents that include transparent information about the company. The developed system of non-financial reports includes various in-depth disclosure documents, including corporate social responsibility report (CSR reporting), sustainability report (SDG reporting), greenhouse gas emissions report (GHG reporting),
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_15
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S. I. Puchkova and E. D. Marina
and integrated report (IR) that combines financial and non-financial disclosure and other forms (Turzo et al. 2022). Stakeholder Relationship Management (SRM) is essential for implementing the concept of sustainable development (Idowu 2021). It becomes important for the stakeholders to understand the diverse aspects of the company’s operations, including the strategic vision and the prospects for creating the company’s value in the short, medium, and long term. The expansion of the concept of corporate social responsibility led to the establishment of systems to standardize and regulate the preparation of non-financial reporting (Zavyalova et al. 2020). Over the past few decades, several standards and recommendations were prepared under the auspices of international and intergovernmental organizations. The majority of these initiatives are voluntary and include the commitment to the common sustainable principles, including regular reporting and ESG metrics disclosure. Therefore, companies are at crossroads, struggling to find regulatory documents that can be relevant to them. The oil and gas industry stands out as one of the most environmentally challenging sectors of the economy (Starikova and Shamanina 2021). The industry is forced to improve its social performance due to public pressure on environmental protection and social welfare (Doni et al. 2021). On average, companies in these sectors have higher ESG risks than companies from other industries, as Sustainalytics estimated (Sustainalytics 2022). Despite the common criticism of oil and gas companies, the demand for oil is on an upward trend, for example, by 0.3 mb/d for OECD countries, according to the OPEC forecasts (OPEC 2023). The investment in oil and gas projects continues to expand. It is worth examining the expertise of oil and gas companies in publishing non-financial reports and assessing their experience in complying with generally accepted international regulatory initiatives. The forming ESG ecosystem provides information on the infrastructure for sustainable development. Various platforms promote sustainable development goals, bringing together all actors of the ESG ecosystem. Non-financial reporting is the universal language of conversation among all actors in the ESG ecosystem. Understanding stakeholders, identifying material aspects, building effective governance, and providing transparent reporting and disclosure align with today’s global agenda and are incorporated into the strategic planning of companies that have chosen the sustainability path.
2
Methodology
Over the past decade, there has been a heightened focus not only on historical data on the economic activity of companies but also on stakeholders’ expectations concerning the involvement of companies in the ESG agenda.
The methodological basis for this publication was the scientific research in the field of sustainability management of oil and gas companies. The authors included the world’s top 20 oil and gas companies in the sample and ranked them in descending order of revenue for 2022. The authors used scientific generalization, methods of statistical, cause-and-effect, and comparative analysis as their research methods. The data source for assessing the applicability of sustainability regulations was non-financial reports of the world’s leading oil and gas companies, as well as data from Forbes. In conducting the analysis, the authors identified international initiatives to promote sustainable development applicable to the oil and gas industry with the generalization of the main trends that are peculiar to certain jurisdictions. The process of developing non-financial reporting directly relates to the level of information openness and transparency of the organizations’ operations. Information openness allows stakeholders to familiarize themselves freely with various aspects of the company.
3
Results
More companies are incorporating sustainability goals into their perimeter of attention. Market requirements for non-financial disclosure of activities of public companies, such as environmental protection, social responsibility, and smart governance have led to the need for sustainability reporting to complement traditional financial reporting. Leaders among companies seeking to move toward carbon neutrality include companies from the oil and gas sector that are actively implementing decarbonization strategies and producing sustainability reports voluntarily. This research analyzed non-financial reports of the world’s largest oil and gas companies according to the Forbes Global 2000 Ranking. It is noteworthy that across the 20 world leaders in the oil and gas industry, 30% are European companies, 25% are Asian ones, and 20% of the companies are located in North America. The oil and gas industry is traditionally the world’s largest sector; even the share of supermajors is 7% of the overall revenue of the Global 2000 companies of the 2022 selection. Big Oil companies are incorporating the concept of sustainable development into their strategic planning vision and expanding conventional financial reporting by including non-financial data. The level of openness and transparency of oil and gas companies’ data is high. Non-financial reporting approaches vary across jurisdictions. Nevertheless, the results of implementing ESG policies in accounting practices are reflected in sustainability reports or in the annual integrated reports. The companies’ websites contain special sections on the sustainability policy and reporting basis.
Transformation of ESG Ecosystem and Approaches …
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Non-financial reporting made by Europe’s leading oil and gas companies has a unified structure and content, presenting a comprehensive management vision from strategy to governance, risk, sustainability, and current performance. Unlike European companies, the US companies do not generate a single, integrated report, instead separating reports by area. Russian companies issue an annual report containing all key sections of integrated reporting, as well as a sustainability report. The general principles and elements of non-financial reports of oil and gas companies contain interrelated information on the strategy, corporate governance principles, risk assessments, key performance results and management assessment, and the key sustainability and environmental principles (Table 1). The analysis of non-financial statements of oil and gas leaders shows the main groups of initiatives that companies focus on when preparing sustainable reporting. All non-financial reports of 2021 were made in accordance with
the Global Reporting Initiative (GRI), which remains the fundamental framework for sustainable metrics reflection. Given the fact that reporting for 2022 should be done in accordance with GRI 2021 standards, such oil and gas companies as Sinopec, Rosneft, and ConocoPhillips have already considered the methodology of GRI 11 Oil and Gas Sector (version 2021). In addition to the GRI standards, the reporting methodologies also consider the industry topics of the SASB standards, covering five sustainability areas. However, the relevance of these standards may be reviewed in the short run due to the emergence of prototype IFRS Sustainability standards of the ISSB foundation (IFRS n.d.). Almost all companies cover climate-related financial issues based on TCFD recommendations. A distinctive feature of non-financial reporting made by oil and gas companies, as opposed to other sectors, is the reflection of the International Petroleum Industry Environmental Conservation Association (IPIECA) recommendations. Adherence to the UN
Table 1 Information on non-financial standards and principles applied by oil and gas companies No.
Company
Country
Sales ($ billions)
Reporting standards and principles GRI
SASB
TCFD
IPIECA
1
Saudi Arabian Oil Company (Saudi Aramco)
Saudi Arabia
400
√
2
China Petroleum and Chemical Corporation
China
385
√
3
PetroChina
China
380
√
√
√
4
Exxon Mobil
USA
281
√
√
√
√
5
Shell
Netherlands
262
√
√
√
6
Total
France
185
√
√
√
7
BP
UK
158
√
√
8
Chevron
USA
156
√
√
9
Lukoil
Russia
125
√
10
Gazprom
Russia
117
√
11
Rosneft
Russia
111
12
Eni
Italy
91
13
Equinor
Norway
88
√
14
Reliance Industries
India
87
15
Petroleo Brasileiro
Brazil
16
ENGIE
France
17
Oil and Natural Gas Corporation
India
66
√
18
ConocoPhillips
USA
46
√
19
CNOOC
Hong Kong
38
√
20
Enbridge
Canada
38
√
CDP
UN global compact
WEF
√ √
√
√ √
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
84
√
√
√
√
√
√
68
√
√
√
Total the world’s largest oil and gas companies (2022)
3166
Total global 2000 (2022)
47,600
√
√
√
√ √
√
√
√
√
√
√
√ √ √
Source Compiled by the authors based on BP (2022); CDP (2022), Chevron (2021), Limited (2021), Philips (2022), Enbridge (2021), Engie (2021), Eni (2021), Equinor (2021), ExxonMobil (2022), Gazprom (2021), Lukoil Group (2021), Murphy et al. (2022), Oil and Natural Gas (2022), Petrobras (2021), PetroChina (2021), Reliance Industries Limited (2022), Rosneft Oil Company (2021), Aramco (2021), Shell plc (2021), Sinopec (2021), TotalEnergies (2022))
86
Global Compact is reflected within the sustainability reports of companies that are recognized as members of this initiative and reveal a commitment to principles for responsible business (UN Global Compact 2022). CDP approaches are not often applied by oil and gas companies but still remain a part of a global corporate carbon reporting system (CDP 2022). More oil and gas companies are adopting WEF Stakeholder Capitalism metrics contributing to value creation (World Economic Forum 2020). The example of the oil and gas industry shows that companies are forced to rely on a wide range of guidelines when preparing non-financial reports. It is a vivid illustration of the necessary international steps toward creating a system to reflect objective, transparent, and representative information. The non-financial statements of Asian companies are based on mandatory stock exchange requirements in addition to generally accepted framework standards. The EU has the most coherent regulatory architecture for non-financial reporting, with a multi-tiered implementation of the framework in national accounting and reporting systems. In the long term, the EU standards currently being developed by EFRAG could complement and enlarge the comprehensive GRI standards (2022). As stakeholder engagement intensifies and the list of individuals included in priority and key sources of company-relevant information on impacts expands, the ESG ecosystem evolves and transforms. When analyzing the 2021 sustainability reports of oil and gas companies, the authors identified the main stakeholder groups that help companies to identify the relevant topics when forming the materiality matrix. Disclosure of stakeholder engagement reflects the level of development of companies’ stakeholder management systems. Nevertheless, some oil and gas companies do not provide detailed information about the groups of stakeholders and do not designate a separate section in the non-financial statements relating to the stakeholders’ engagement. Organizations that incorporate stakeholder demands into their development strategy put themselves in a better position to achieve their organizational goals (Freeman et al. 2021). Non-financial statements of the Big Oil companies compile the groups of key stakeholders that are usually categorized depending on the degree of influence and interest in the organization’s activities. Thanks to the stakeholders’ mapping and analysis, companies are eager to broaden their horizons in measuring their impacts. According to Table 2, the main stakeholder groups that can be positively or negatively affected by the oil and gas organization include those listed in the GRI standard 101. However, not all analyzed companies engage with trade unions; that depends on the jurisdiction in which they do business. Some companies identify shareholders as key
S. I. Puchkova and E. D. Marina
stakeholders, together with investors and other financial market players. However, several large companies do not identify shareholders, local communities, or NGOs among their stakeholders. In addition to those listed in the standard, stakeholders may also include public and academic organizations, the media, and foreign regulators of energy markets. The focus of the management team on stakeholder engagement is in line with the global trend toward humancenteredness principles. In developing the ESG ecosystem, it is essential to evaluate the involvement of actors in the sustainable development infrastructure at the regional and international levels. It is becoming apparent that non-financial reporting plays a fundamental role in ESG architecture. Institutions that act as regulators of the non-financial reporting process become the drivers of the ecosystem contours and trends, acting as a bridge for all the market actors.
4
Conclusions and Recommendations
Advancing the concept of sustainable development among oil and gas companies is a key challenge for various international organizations and foundations. The focus has shifted toward the need to reflect comprehensive financial and sustainable information that forms the basis of non-financial reporting. The practice of non-financial reporting developed in many global jurisdictions. However, there are distinctive features in the completeness and degree of elaboration of the legal and regulatory framework. The global professional community has developed several initiatives that include standards, recommendations, and concepts to guide economic entities. Simultaneously, the imperative nature of such initiatives varies depending on the country of application. The increasing complexity of corporate reporting and its transformation from financial reporting to a multidisciplinary integrated report covering all key aspects of the company’s operations (its strategy, management, risk assessment, sustainability issues, climate and social responsibility, and other pressing questions) raises high demands on the process and methodology of such reporting. Companies have the ambitious task of identifying the data source, unifying the methodology, building the information collection process, and automating the new lines of reporting—non-financial indicators, as well as ensuring their logical interrelationship. Sustainability disclosure is becoming increasingly important because stakeholders focus not only on a company’s financial performance but also on its ability to be sustainable. The introduction of requirements for mandatory disclosure of non-financial information dictates the need to reflect the material information related to sustainable development accurately (Vukovic et al. 2020).
Saudi Arabian oil company (Saudi Aramco)
China Petroleum and Chemical Corporation
PetroChina
Exxon Mobil
Shell
Total
BP
Chevron
Lukoil
Gazprom
Rosneft
Eni
Equinor
Reliance Industries
Petroleo Brasileiro
ENGIE
Oil and Natural Gas Corporation
ConocoPhillips
CNOOC
Enbridge
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Governments
NGOs
Shareholders
Suppliers \business partners
√ √
√
√
√
√ √
√
√
√ √
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Groups of stakeholders are not stated. The main shareholder is the government
Employees
Groups of stakeholders
Customers
√
√
√
√
√
√
√
Trade associations
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Local communities
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Investors
√
√
√
√
√
√
√
Academic institutions/ scientific communities
√
√
√
√
Media
√
√
Foreign regulators of energy markets
Source Compiled by the authors based on BP (2022); CDP (2022), Chevron (2021), Limited (2021), Philips (2022), Enbridge (2021), Engie (2021), Eni (2021), Equinor (2021), ExxonMobil (2022), Gazprom (2021), Lukoil Group (2021), Murphy et al. (2022), Oil and Natural Gas (2022), Petrobras (2021), PetroChina (2021), Reliance Industries Limited (2022), Rosneft Oil Company (2021), Aramco (2021), Shell plc (2021), Sinopec (2021), TotalEnergies (2022)
Company
No.
Table 2 Groups of stakeholders nominated by oil and gas companies
Transformation of ESG Ecosystem and Approaches … 87
88
Oil and gas companies publish non-financial reports in accordance with the generally accepted systems of standards and initiatives. Considering that the organizations vary in scope and coverage of sustainability reports, it is vital to combine efforts underway by various regulators toward harmonizing reporting requirements. As companies are searching for effective approaches to integrating ESG into investment analysis and decision-making, they should make stakeholder engagement their priority. Oil and gas companies distinguish stakeholder groups and interact with them with varying degrees of engagement and scope of impact assessment. Following the pattern of those companies that provide non-financial reporting fairly well aligned with the standards, it would be advisable to highlight sections in non-financial reporting on stakeholder engagement in the process of mapping out topics that are material to the company. Such actions, as well as the disclosure of the main modes of interaction with them, could contribute to greater openness and transparency in the eyes of key actors in the ESG ecosystem. An essential step toward the convergence of the ESG approaches would be the creation of sectoral ecosystems that will allow best practices to be shared by bringing in new resources and knowledge that are not at first sight relevant to the industry. A consortium of industry leaders can serve as a platform for developing common approaches to socially responsible development and methodologies. In order to achieve the goal of building professional expertise, the development and implementation of advanced technological solutions, including digital data transfers, will be required. ESG integration may contribute to risk reduction and serve as a guide for comparing proprietary approaches with those of other industry leaders and identifying preferred methods.
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S. I. Puchkova and E. D. Marina Doni F, Corvino A, Martini SB (2021) Corporate governance model, stakeholder engagement and social issues evidence from European oil and gas industry. Soc Responsib J 18(3):636–662. https://doi. org/10.1108/SRJ-08-2020-0336 Enbridge (2021) Sustainability report 2021. Calgary, Canada. Retrieved from https://www.enbridge.com/sustainabilityreport. Accessed 18 Jan 2023 Engie (2021) Integrated report 2021. Paris: France. Retrieved from https://www.engie.com/sites/default/files/assets/documents/2021-05/ RI-Engie2021-ENG-vdef.pdf. Accessed 18 Jan 2023 Eni (2021) Eni for 2021: sustainability report. Rome, Italy. Retrieved from https://www.eni.com/assets/documents/eng/just-transition/ 2021/eni-for-2021-just-transition-eng.pdf. Accessed 18 Jan 2023 Equinor (2021) Sustainability report 2021. Stavanger, Norway. Retrieved from https://cdn.equinor.com/files/h61q9gi9/global/d44ff 2e9498e7d9cee9e88c4f01e6c4135c7a2f8.pdf?sustainaiblity-report2021-equinor.pdf. Accessed 18 Jan 2023 ExxonMobil (2022) Sustainability report 2021. Irving, TX. Retrieved from https://corporate.exxonmobil.com/-/media/global/ files/sustainability-report/publication/exxonmobil-sustainabilityreport.pdf. Accessed 18 Jan 2023 Freeman RE, Dmytriyev SD, Phillips RA (2021) Stakeholder theory and the resource-based view of the firm. J Manag 47(7):1757–1770. https://doi.org/10.1177/0149206321993576 Gazprom (2021) Gazprom group’s sustainability report. St. Petersburg, Russia. Retrieved from https://sustainability.gazpromreport.ru/ fileadmin/f/2021/sustainability-report-en-2021.pdf. Accessed 18 Jan 2023 GRI (2022) GRI annual report 2021. Retrieved from https://www. globalreporting.org/about-gri/mission-history/gri-s-own-reports//. Accessed 18 Jan 2023 Idowu SO (ed) (2021) Current global practices of corporate social responsibility. In the era of sustainable development goals. Springer, Cham. https://doi.org/10.1007/978-3-030-68386-3 IFRS (n.d.) General sustainability-related disclosures. Retrieved from https://www.ifrs.org/projects/work-plan/general-sustainabilityrelated-disclosures/. Accessed 15 Dec 2022 Lukoil Group (2021) Sustainability report 2021. Moscow, Russia. Retrieved from https://www.lukoil.com/FileSystem/9/592422.pdf/. Accessed 18 Jan 2023 Murphy A, Contreras I (eds) (2022, May 12). The global 2000 rating. Forbes. Retrieved from https://www.forbes.com/lists/global2000/? sh=5b8cc3635ac. Accessed 18 Jan 2023 Oil and Natural Gas Corporation (2022) Sustainability report 2021. Dehradun, India. Retrieved from https://ongcindia.com/web/eng/ sustainability/sustainability-reports. Accessed 18 Jan 2023 OPEC (2023) Monthly oil market report. Retrieved from https://momr. opec.org/pdf-download/. Accessed 18 Jan 2023 Petrobras (2021) Sustainability report 2021. Rio de Janeiro, Brazil. Retrieved from https://sustentabilidade.petrobras.com.br/documents/ 42532/0/2021%20SUSTAINABILITY%20REPORT/343f2b9c-8bb b-ef73-0cb9-b797fad3f896. Accessed 18 Jan 2023 PetroChina (2021) 2021 Environmental, social and governance report. Beijing, China. Retrieved from http://www.petrochina.com.cn/ptr/ xhtml/images/2021esgen.pdf. Accessed 18 Jan 2023 Reliance Industries Limited (2022) Integrated annual report 2021– 2022. Mumbai, India. Retrieved from https://www.ril.com/ar202122/pdf/RIL_Integrated%20Annual%20Report%202022_06.08.2022_ Web_Final_10MB.pdf. Accessed 18 Jan 2023 Rosneft Oil Company (2021) Sustainability report 2021. Moscow, Russia. Retrieved from https://www.rosneft.com/upload/site2/ document_file/Rosneft_CSR2021_ENG.pdf. Accessed 18 Jan 2023 Saudi Aramco (2021) Saudi Aramco sustainability report 2021. Dhahran, Saudi Arabia. Retrieved from https://www.aramco.com/-/ media/downloads/sustainability-report/saudi-aramco-sustainability-
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89 Turzo T, Marzi G, Favino C, Terzani S (2022) Non-financial reporting research and practice: lessons from the last decade. J Clean Prod 345:131154. https://doi.org/10.1016/j.jclepro.2022.131154 UN Global Compact (n.d.) The ten principles of the UN global compact. Retrieved from https://www.unglobalcompact.org/whatis-gc/mission/principles. Accessed 15 Dec 2022 Vukovic R, Vukić NM, Sesar D (2020) Non-financial reporting as part of sustainability. J Acc Manag 10(1):41–58. Retrieved from https:// hrcak.srce.hr/file/355805. Accessed 18 Jan 2023 World Economic Forum (2020, September 22) Measuring stakeholder capitalism: towards common metrics and consistent reporting of sustainable value creation. Retrieved from https://www.weforum. org/reports/measuring-stakeholder-capitalism-towards-commonmetrics-and-consistent-reporting-of-sustainable-value-creation. Accessed 15 Dec 2022 Zavyalova E, Lee JS, Ostrovskaya E (2020) Corporate social responsibility. In: Dementieva A, Zavyalova E (eds) Corporate governance in Russia: Quo vadis? De Gruyter, Berlin, pp 173–187. https://doi. org/10.1515/9783110695816-016
Stimulation as a Factor of the Effectiveness of the Integration of ESG Principles into Economic Practice Mikhail Yu. Dneprov , Ekaterina V. Efimova , Sofiya G. Kilinkarova , and Irina V. Shevchenko
Abstract
Keywords
The paper analyzes the risks and contradictions arising in the process of integrating ESG principles into economic practice, which reduce the effectiveness of activities aimed at achieving sustainable development goals. The contradictions of economic interests of subjects of economic relations directly and indirectly related to the implementation of the ESG agenda are systematized, which, in particular, include: contradictions between the interests of developed and developing countries; contradictions between current interests and long-term sustainable development goals that arise both for the state and business; contradictions around the ESG agenda regarding the reproductive aspect; as well as the contradictions associated with each of the three ESG factors. The article reveals the mechanism and functional features of stimulation of economic entities directly involved in the implementation of the sustainable development agenda. The role of traditional values and the concept of best available techniques (BAT) in ensuring the sustainability of the ESG rating system is shown. It is recommended to take into account that specific methods of stimulation depend on the nature of contradictions of economic interests. In the context of subjective contradictions, the task of stimulation is to prevent them or eliminate the factors that led to them. In the case of the manifestation of objective contradictions, inevitable by their nature, the stimulation consists in focusing on the harmonization of the economic interests of their participants and finding a compromise in the process of their implementation.
ESG Available technologies Stimulation Traditional values Sustainable development Economic interests
M. Yu.Dneprov (&) E. V. Efimova S. G. Kilinkarova I. V. Shevchenko Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected] E. V. Efimova e-mail: efi[email protected]
JEL Classification
Q56
1
Q57
M14
M16
E58
Introduction
In recent decades, there has been an intensification of the process of forming rating indicators reflecting the impact of the activities of economic entities of all forms of ownership on sustainable development, which means compliance with a number of social, environmental, and managerial criteria. If at the end of the XX and the beginning of the XXI centuries this set of requirements were disparate, and numerous structures and institutions were created in almost all countries to assess the relevant elements of sustainable development, create mechanisms of stimulation aimed at their improvement, as well as subsequent monitoring of their implementation, today all this diversity of institutional forms is subject to a fairly rapid process of centralization and unification within the framework of the ESG agenda. At the same time, each letter of this abbreviation denotes one of the ESG factors: environmental friendliness, social responsibility, and quality of management, respectively (Zakharova et al. 2022). The active involvement of business structures and government agencies in the transformation of ESG is achieved mainly through various ESG ratings or rankings created primarily by large financial organizations, previously known for compiling similar financial stability ratings, for example, MSCI or S&P Global. In Russia, such rating agencies as Expert RA, SGM, ACRA, National Rating Agency, RAEX, etc. are known (Gershkovich 2009). Companies and
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_16
91
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organizations are interested in participating in the ratings for the reason that this, especially if they demonstrate relatively high indicators, becomes an additional opportunity to attract investment, since many investors who do not have complete information, such companies and their securities seem to be quite reliable and stable in the long term. Thus, it is assumed that the result of the ESG transformation should be a gradual strengthening of the relationship between changes in the social and natural environment, on the one hand, and the results of economic activity, on the other. Due to the fact that the evaluation of most investment decisions will be based not only on financial calculations of the payback period and net discounted value, but also include the efforts of the company or the authors of a particular project to comply with the current ideas of society about the impact of their economic processes on the environment, as well as on working conditions and other aspects of the social agenda, such as, for example, security of personal data, absence of corruption, etc., it will be possible to preserve the living conditions on the planet for future generations at the current or even higher level. In Russia, the processes related to the integration of ESG principles in recent years have been almost as active as in other developed economies, despite some skepticism caused by the lack of full access to international lending and investment markets, including ESG funds of Western countries after 2014. However, given that, on the one hand, the problems of environmental protection and social responsibility of business are global in nature, and, on the other, domestic business is experiencing a growing need for investment in new conditions, expectations have not been realized that the events associated with the geopolitical crisis of 2022 may lead to the termination of ESG transformation processes within the country. In this regard, it was only noted that the social component was brought to the fore instead of the environmental one (Tarasova 2022). However, it should be taken into account that despite the absolute priority of the sustainable development goals and the declared lack of alternative to the widespread implementation of ESG principles, ESG transformation processes can be accompanied by certain risks and negative side effects (Safronov 2022). First of all, a certain set of problems is associated with the rating form for assessing the compliance of certain corporate structures, processes, or territories with ESG criteria, since the specific choice of these criteria is always quite subjective, and, to a greater or lesser extent, reflects the interests of the structure that forms a certain rating. In this sense, this situation is not much different from the one that developed at a certain stage with credit ratings. And although the latter have much less scope for subjective interpretations compared to ESG ratings, nevertheless, they are also periodically used as a tool of competitive or political struggle. In addition, in a macroeconomic sense, due to the
M. Yu. Dneprov et al.
fact that ESG ratings, on the one hand, cover almost all industries and, on the other, penetrate into various aspects of the activities of economic entities, become a powerful non-market mechanism of economic regulation. At the same time, this mechanism, being truly independent, due to any internal structural imperfections, can lead to a significant imbalance of market self-regulation and, as a result, a decrease in overall economic efficiency. In order to avoid these problems, as well as to neutralize them in cases where they have already manifested themselves, in our opinion, it is necessary to take into account the full range of economic interests that are formed around this process, and to promote their coordinated implementation of any measures related to the integration of ESG principles. The purpose of this study, therefore, is to reveal the mechanism and forms of stimulation of economic entities that are directly involved in the processes of integrating ESG principles into economic practice.
2
Methodology
Within the framework of this study, stimulation, in accordance with the concept of Gershkovich (2009), is considered as a form of economic policy aimed at the realization of their economic interests by economic entities. This process includes awareness of identical interests and subsequent coordination of divergent interests of various subjects of economic activity, which is necessary to resolve their inherent objective and subjective contradictions. Specific forms of incentives in this case may manifest themselves in pricing, tax rates, wage systems and its conditions, financial and credit tools, etc. (Gershkovich 2009, pp. 169–171). Economic interests in this case are understood as the expressed need to meet the needs caused by the economic relations that have developed in the society under consideration (Gershkovich 2009, pp. 19–38). Among the variety of different aspects inherent in economic interests arising in the process of integrating ESG principles into economic activity, it is necessary to pay special attention to their diversity, system structure, and inconsistency. Diversity means that both private and public economic interests are characteristic of this sphere of economic relations, and a large number of forms and varieties can be found within each of these types. Examples here are the interests of individual firms, companies and other business structures, the interests of investors, the interests of financial organizations, the interests of states, regions, and other territorial entities, etc. In addition to diversity in subjects, which is the main source of inconsistency in economic relations, interests may differ on a temporary basis, for example, they may be current or prospective, and also depend on the place occupied by the bearer of interest in the system of established
Stimulation as a Factor of the Effectiveness of the Integration …
economic relations. For example, the structure of interests of private portfolio investors focused on short-term investments, of course, will differ significantly from the interests of large pension funds engaged in long-term financing of large projects. The system structure is manifested in the fact that these and other forms and varieties of economic interests are interrelated and form a rather complex multi-level system, in the connections between the elements of which various dependencies and priorities can be distinguished. At the same time, the system of economic interests arising around the ESG transformation processes inevitably forms the integrity and constant interaction of the interests forming it. These interests can, in turn, combine into certain subsystems of economic interests. Moreover, the system itself can be represented as a subsystem of a more general system of economic interests covering the entire world market. The inconsistency is connected with the fact that the economic interests of the participants in the process of integrating ESG principles into the practice of management, which form the system, almost never coincide, and therefore are mutually and internally contradictory. The nature of these contradictions may not be directly related to the problems of sustainable development, and can be determined, for example, by sectoral or historical aspects. The most common reason for contradictions of economic interests, including those related to the ESG agenda, is a single source of resources necessary for their implementation. Such, for example, are the contradictions between the interests of developing and developed countries, arising mainly due to the fact that the ESG agenda formed in developed countries is usually adapted to their capabilities and does not take into account the obvious fact that the economy of developing countries simply does not allow them to comply with certain ESG criteria. As a result, the ESG agenda is often viewed by developing countries as an attempt by strong economies to hold down their development, depriving them of hope for “catch-up” growth, in order to maintain a satisfactory status quo. In addition, contradictions of economic interests often arise owing to the fact that long-term interests related to achieving the fundamental goals of sustainable development are in constant conflict with numerous current interests of states and business structures, which, one way or another, are forced to solve urgent problems, often by any available means possible. To analyze and systematize contradictions of various nature and forms, the works of Bobylev et al. (2022), Katz (2020), Safronov (2022), Tarasova (2022), Tretyakova (2022), Vostrikova and Meshkova (2020), Zaitseva (2022), Zakharova et al. (2022) were used. Thus, in order to successfully implement ESG integration processes and achieve the goals for which they were conceived, it is necessary for all their participants to be aware of
93
both their economic interests and the nature of contradictions arising in their economic relations with various counterparties. It is the stimulation that is directly related to the identification and awareness of the essence of the economic interests of economic entities, as well as the contradictions that arise during the integration of ESG principles into economic practice.
3
Results
Among the wide variety of contradictions of economic interests that are formed in the process of ESG transformation and related transformations in the system of economic relations, it is necessary to identify the most significant, that is, those that can have the most significant impact on the effectiveness of the integration of ESG principles. First of all, in our opinion, attention is drawn to the fact that, due to its nature, the ESG agenda forms a group of contradictions in the reproductive aspect, primarily between the stages of production and distribution. Since at a certain stage, the excessive concern of business entities in obtaining competitive advantages and other preferences resulting from formal compliance with ESG criteria, one way or another begins to divert financial and, most importantly, managerial resources from the main goals of economic activity. Another significant group of contradictions, already mentioned above, is related to the possibility of using ESG tools with a powerful potential for administrative and economic regulation to achieve narrow conjunctural tasks that are disconnected from the sustainable development goals for which this tool was created. In particular, initially, the main function of ESG ratings was to summarize information about ESG risks for the convenience of investors and other interested parties when making investment and business decisions. However, today’s methodology for compiling ESG ratings, including Russian ones, in many cases does not provide an unambiguous assessment of ESG risk, reflecting fundamentally different aspects (Tretiakova 2022). If we consider individual ESG factors, then the most acute contradictions in the environmental component are connected today, first of all, with the problems of climate change and ensuring carbon neutrality, in the social one— with fundamentally different, depending on the regions of the world, views on the basic value foundations that determine social relations, and in the management component— between the traditional goals of the efficiency of the main activity of the company, that is, the increase in equity or financial effectiveness on the one hand, and its reputational and ethical policy, on the other. In addition, there is a group of contradictions characteristic of Russia itself, which is under unprecedented pressure from Western countries. One of the indirect results of the
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sanctions was a number of decisions of state bodies, which gave significant relief to the affected companies, including in the field of ecology. Also, companies in a number of industries have been able to reduce public reporting, which, of course, complicates the preparation of independent assessments of their activities in terms of ESG criteria (Vostrikova and Meshkova 2020). The presented list of contradictions characteristic of the subsystem of economic interests formed in connection with the integration of ESG principles into economic practice, of course, is far from complete, but it gives a general idea of the risks and concerns arising in this process. We will remind that the idea of rolling back the ESG agenda was actively discussed in Russia during 2022, which, of course, was due to a sharp turn in the geopolitical vector, and was argued mainly on the basis of the alarmization of the above threats. However, in the end, the largest players, primarily exporters and banks, continued to follow the ESG principles and proved that they are in demand and contribute to the sustainability of business structures. At the same time, there was no concrete answer to the question of which components of ESG factors should be considered harmful to the Russian economy or public life. Based on this, the search for ways to resolve these contradictions and coordinate the corresponding economic interests becomes relevant. First of all, in this regard, it should be noted that in order to reduce the overall inconsistency in the system of economic interests under consideration, it is necessary to eliminate the divergence in the ESG ratings themselves, formed, as it was noted, by various agencies, and therefore not always coinciding, but in some aspects directly contradicting each other in content. Moreover, even the ratings of the same agency often demonstrate the variability of the methodology, constantly changing the set of parameters or their weight coefficients. Such disharmony undoubtedly reduces the effectiveness of the financial component of the sustainable development agenda, and therefore the Bank of Russia encourages agencies to work on comparability, simplicity for potential users and transparency of ESG ratings. To do this, it is proposed to unify their content, determine the necessary minimum of ESG factors and their weights, and also introduce a single scale used by all rating agencies (Zaitseva 2022). From our point of view, such unification is really necessary, because of the fact that it significantly reduces the transaction costs of both users of ESG ratings and their figurants. In addition, uniformity and transparency of reporting significantly smooth out the above-mentioned reproductive aspect of contradictions of economic interests. However, at the same time, the unification of ESG ratings creates risks of strengthening another group of contradictions associated with the concentration of tools intended for sustainable development in the hands of a certain regulatory
M. Yu. Dneprov et al.
body. In addition to the fact that the regulatory impact on the relevant sphere of economic relations may be excessive and lead to destructive deformation of the market mechanism, in such a situation, the potential damage from any possible imperfections in the structure of ESG factors criteria increases significantly. In such a situation, in order for the ESG standards system to remain sustainable, it is necessary to find an additional point of support for it, external to the body that unifies ESG ratings, which in the case we are considering is the Bank of Russia, and independent of it. In our opinion, traditional values in the interpretation given in the Decree of the President of the Russian Federation No. 809 of 09.11.2022 “On the approval of the Foundations of State Policy for the preservation and strengthening of traditional Russian spiritual and moral values” (Decree of the President of the Russian Federation of November 2022) are well suited for the role of such a reference point. Above-mentioned decree contains, among other things, a concretized list of such values. The fact that traditional values, one way or another, have social and environmental aspects, as well as categories such as justice and creative work, which are directly related to the managerial ESG factor, makes it possible to evaluate any definition included in the ESG rating from the point of view of its compliance with traditional values and thus, to prevent the introduction of components that contradict them into the stimulating tools of sustainable development. On the basis of traditional values, the process of unification of ESG principles at the international level may also take place in the future, if there is a need to form an independent ESG agenda within such structures as BRICS, SCO, or the EAEU. Another possibility of ensuring the sustainability of the ESG rating system is associated with the concept of the best available technologies (BAT) developed in recent decades, which in the Russian Federation plays a central role in assessing the resource, environmental and social effectiveness of corporate and public investments. In this case, the ESG agenda can be considered as a form of non-financial evaluation of investment projects, taking into account the requirements of the BAT (Bobylev et al. 2022). In parallel with the elimination of common reasons for contradictions, stimulation can also be aimed at resolving individual, local contradictions of economic interests that exist and re-arise in their system. At the same time, it should be borne in mind that the ways of resolving contradictions of economic interests, which are based on the public need for sustainable development, depend on their nature. With the subjective nature of contradictions, for example, in situations related to methodological imperfections in the formation of the structure of ESG ratings, the task of stimulation becomes, first of all, their prevention, and in case of their manifestation—the elimination of miscalculations and mistakes in economic policy and economic practice. As for the
Stimulation as a Factor of the Effectiveness of the Integration …
objective contradictions that cannot be eliminated, an example of which is the above-mentioned contradiction between the interests of developed and developing countries, manifested, among other things, in relation to the ESG agenda, they can be resolved on the basis of coordination of divergent economic interests of their participants, manifested as a search for compromise in the process of their implementation.
4
Conclusion
The ESG principles, despite the existence of the contradictions we have considered, are increasingly being integrated into reproductive and financial relations both at the international and regional levels every year. There is no doubt that this trend will grow in the future, transforming economic relations and their corresponding interests, contributing to the sustainable development of countries and territories. At the same time, as it shown in the article, the effectiveness of ESG principles in economic practice is largely determined by the understanding of the system of economic interests emerging around the issues of sustainable development, their awareness by the subjects of economic activity, the nature of contradictions arising in it, their harmonization and resolution. Stimulation, contributing to these processes, makes it possible to accelerate the realization of the interests of the state and society, investors and business structures, financial organizations, foundations, and other economic entities affected by the integration of ESG principles into economic practice. Obviously, this article does not cover the entire range of problems, risks and contradictions arising in the complex, and multifaceted process of ESG transformation. However, we believe that examples and general principles of stimulation aimed at understanding and subsequent harmonization of the interests of various economic entities necessary to resolve contradictions between them, in some cases allow us to eliminate factors hindering the realization of these
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interests, and thus bring the achievement of the sustainable development goals closer.
References Decree of the President of the Russian Federation (2022) No. 809 On the approval of the fundamentals of the state policy for the preservation and strengthening of traditional Russian spiritual and moral values. Official Internet portal of legal information. http:// publication.pravo.gov.ru/Document/View/0001202211090019. Data Accessed 12 Feb 2023 Bobylev SN, Volosatova AA, Skobelev DO (2022) Environmental social governance and best available techniques: assessing investment efficiency. Econ Sustain Dev 52(4):12–19. https://doi.org/ 10.37124/20799136_2022_4_52_12 Gershkovich BYA (2009) Economic interests, incentives and motives (selected). PSLU, Pyatigorsk Katz E (2020) ESG: from hype to trend. Banking Rev 255(4–5):50–52. https://bosfera.ru/bo/esg-ot-haypa-k-trendu. Data Accessed: 12 Feb 2023 Safronov SB (2022) ESG factors—risks and opportunities. Mod Manag Technol 97(1). https://sovman.ru/article/9709/. Data Accessed: 12 Feb 2023 Tarasova NV (2022) Prospects of ESG strategy in the banking sector: threats to economic security. Manag Acc 8(2):266–273. https://doi. org/10.25806/uu8-22022266-273 Tretiakova EA (2022) Russian ESG analytics: current condition and key issues. In: Proceedings of the fourth national (All-Russian) scientific and practical conference “integrated development of territorial systems and increasing the efficiency of regional governance in conditions of economy digitalization”. Orel: Oryol State University named after I.S. Turgenev, pp 253–261 Vostrikova EO, Meshkova AP (2020) ESG criteria in investment: foreign and Russian experience. Financ J 12(4):117–129. https:// doi.org/10.31107/2075-1990-2020-4-117-129 Zaitseva DI (2022) Improvement of state mechanisms of regulation of the ESG-sphere in Russia. Collection of works of All-Russian scientific and practical conference with foreign participation “Digital transformation of economic systems: problems and prospects (ECOPROM 2022)”, pp 277–280. https://doi.org/10. 18720/IEP/2021.4/81 Zakharova TI, Ivanov AA, Posvolsky NK, Sadykova KV, Styurina DE (2022) Relevance of the ESG agenda in Russian companies. Transp Bus Russ 5:37–40. https://doi.org/10.52375/20728689_2022_5_37
Development Prospects and Current Problems of the Kyrgyz Republic’s Energy Sector Zhandaraly Sadyraliev , Ainagul T. Mamyralieva , and Nurbek K. Musakulov
Abstract
Keywords
The energy sector is the basis of the economy of the Kyrgyz Republic. It performs budget-forming and system-forming functions, contributes to the vital activity of all branches of the national economy and the population, and determines the main parameters of the country’s socio-economic development and its economic security. The effectiveness of developing energy issues and energy allows Kyrgyzstan to ensure its reliable security and energy independence. The country’s economic growth and its regions are directly related to the further development of the fuel and energy sector. Applied use of research materials is that the conclusions contained in it can be used in the formation of policy for the strategic development of the country’s fuel and energy complex (FEC). The essence of the strategic task of the FEC is to select new innovative directions that would ensure its sustainable development and serve as the foundation for improving the efficiency of operations and reducing the energy intensity of the gross domestic product. Simultaneously, a leading direction is the fulfillment of the strategic tasks of the energy sector of Kyrgyzstan based on the use of an alternative type of energy and advanced technologies in the process of decarbonization and the introduction of advanced digital technologies in the industry. The country’s FEC is highly important in developing its economy, necessitating a deep study of the problems existing in the industry to determine the prospects for its development, which determines the relevance of the research topic.
Fuel and energy sector Fuel and energy resources Energy efficiency Energy saving Alternative energy Renewable energy sources Energy security
Z. Sadyraliev A. T. Mamyralieva (&) N. K. Musakulov Jalal-Abad State University named after B. Osmonov, Jalal-Abad, Kyrgyzstan e-mail: [email protected]
JEL Classification
Q4
1
Introduction
Kyrgyzstan has a huge and diverse potential for energy resources, the main place among which belongs to hydropower resources, coal, gas, oil, uranium, and some types of non-traditional energy sources. Simultaneously, the level of utilization of these resources is still low. Thus, hydropower resources are used only at the level of 1%; renewable resources are used at the level of 8%, including the use of the hydropower capacity of small rivers (3%). The above indicates the insufficient use of the potential of the country’s fuel and energy complex. This is also indicated by the fact that the share of energy import’s balance is equal to 25%, which has a considerable negative impact on the security of their supply in Kyrgyzstan, making it dependent on imports. The result of this dependence is the outflow of foreign exchange funds from the country, the deterioration of the financial condition of its economy, an increase in the deficit of the balance sheet, an increase in the production cost, and a decrease in the competitiveness of manufactured products in Kyrgyzstan. The problems of this complex in the country, as a leading sector of the national economy, are studied by many researchers, including domestic (Sydykov, Kasymova, Ishenalieva, Baetov, Arkhangelskaya, and Sadyraliev) and foreign authors (Lapaeva, Inevatova, Dedeeva, and Kirillov). The works of the above scientists analyze current trends in the advancement of the industry in the world, determine
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_17
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the main characteristics of the resource support for the fuel and energy complex of the Kyrgyz Republic and the Russian Federation, and identify the features of the development of industries related to the energy sector, with the addition of such components as load forecast, expansion of generation systems, transmission and distribution, heating sector, regional market, energy efficiency, fuel, etc. The authors also used materials from Country Development Strategy (2009–2011) (Review 2015).
2
Materials and Methods
The energy sector is one of the priority areas of the economy of Kyrgyzstan. The electricity generated by the country’s hydroelectric power station (HPS) as an important component of the national economy, compared to the energy generated by thermal power plants, is several times cheaper. Hydropower of the country is about 78% of the installed generating capacity, and about 93% of the annual gross domestic electricity generation comes from hydroelectric power plants (Ministry of Energy of the Kyrgyz Republic 2022). Table 1 lists the main operating power plants in the Kyrgyz Republic and the annual electricity generation. Knowing the risks associated with climate change and global warming, as well as efforts to develop a greener economy to preserve the environment and all lives, many industrialized countries are phasing out their old and new expensive thermal power plants that burn oil and coal, switching to electricity generation technologies that are sustainable in the long term (Ministry of Energy of the Kyrgyz Republic 2022). The urgent problems of the energy sector of the internal economy of Kyrgyzstan include the following ones.
The energy system of the Kyrgyz Republic still experiences a high level of electricity losses, though they have been reduced in recent years. Technical losses arise due to dissipation in the components of the electrical system, where theft of electricity and insolvency of electricity bills by consumers become sources of non-technical losses. According to the analysis, losses in the electricity transmission system decreased from 14% in 2000 to 6% in 2019. Losses in the distribution system are much higher, although they have decreased from 18% in 2013 to 14% in 2019 (The World Bank 2021). Currently, transmission and distribution losses (technical and non-technical) in the Kyrgyz Republic are significantly higher than in neighboring countries, about 20% in 2017, according to the country’s electricity balance, while losses tend to decrease about 3% per year (Kasymova 2014). Existing assets tend to be worn out due to long life and poor maintenance. Most assets are over 25 years old and have already reached their technical and economic life. Moreover, 40% of high-voltage/medium-voltage (HV/MV) transformers have a service life of more than 30 years, and 14% have more than 40 years. Some transformers have been in operation for 60 years, which can affect network reliability and power quality if proper maintenance programs are not followed (Ministry of Energy of the Kyrgyz Republic 2022). Because electricity tariffs are subsidized and located below generation costs, energy companies lack the funds to maintain existing assets and rehabilitate/replace degraded ones properly. The GDP’s energy intensity remains high in the Kyrgyz Republic. To reduce it, it is necessary to introduce innovative energy-saving technologies into the industry and thus increase its energy efficiency. The residential sector (36%), the transport sector (26%), and the industrial sector (20%) were the largest energy-intensive sectors in terms of primary energy consumption in 2014 (International Energy Charter
Table 1 Annual electricity generation by power plants of the Kyrgyz Republic Power station
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
Toktogul
GWh
4748
6079
5749
5046
4853
3732
4089
5782
5804
Kurpsaiskaya
GWh
2769
3488
3506
3266
3483
2847
2793
3561
3472
Tashkumyrskaya
GWh
1746
2079
2121
1994
2082
1753
1797
2005
2048
Shamaldysai
GWh
820
944
1052
1008
1093
925
948
1044
1082
Uch-Kurganskaya
GWh
827
992
960
874
972
872
884
998
990
Atbashinskaya
GWh
147
153
145
142
107
145
154
151
147
Kambarata HPS 2
GWh
13
395
486
600
571
606
581
399
559
Small HPSs
GWh
217
186
167
173
142
182
211
226
214
Bishkek CHP-1
GWh
787
828
969
894
1254
1906
1598
1212
1371
Osh CHP
GWh
0
0
1
2
0
0
0
0
0
Total
GWh
11,857
14,958
14,989
13,826
14,415
12,786
12,844
15,152
15,473
Total HPS
% of in general
95%
96%
95%
95%
92%
87%
89%
93%
93%
Source Developed by the authors based on Ministry of Energy of the Kyrgyz Republic (2022)
Development Prospects and Current Problems …
2018). Electricity consumption per household is extremely high, which is mainly due to the continued theft of electrical energy, the increase in electricity consumption for heating during the cold seasons, and the use of electricity instead of gas and coal in everyday life for water heating and cooking. Nowadays, the total energy consumption in the Kyrgyz Republic remains moderate due to the relatively underdeveloped industrial sector and amounts to 460 kW/h per subscriber; in Romania, this figure is 150 kW/h, in Russia— 200 kW/h, in Kazakhstan—210 kW/h, and in Germany— 250 kW/h. Central heating is around 19% of the total civil population. The country has about 1.4 million residential buildings, 1.1 million of which are private houses. The main source of fuel is coal. Houses have a high specific heat demand due to insufficient thermal insulation (especially in basements and roofs), poor window conditions, insufficient maintenance of apartment buildings, and insufficient compliance with building codes. Individual heating systems are a major problem. Coal-fired stoves and boilers are inefficient and create pollution. In turn, inefficient electric heaters misuse electricity, destabilize the power grid, and increase the frequency of power outages. As for the heating sector, due to the cold climate of the Kyrgyz Republic, the availability and reliability of heating and hot water systems strongly impact the population’s well-being and the quality of public services. Heat production and distribution assets are generally in poor condition due to aging and lack of funds for repairs, resulting in poor quality services. In recent years, this situation has led to an increase in the use of electricity in winter for heating, which has put a strain on generating plants and the transmission network and made it very difficult to balance winter electricity demand with domestic generation. According to government policy for 2015–2017, potential energy savings are estimated at 20–25% of electricity consumption and 15% of heating demand. A further study estimated the total technical potential for energy efficiency (EE) at 2.7 million tons of coal equivalent or 48% of total primary energy supply (TPES), indicating that there is still huge potential for improving the energy system (Ministry of Energy of the Kyrgyz Republic 2022). The area of electric vehicles (EVs) can also bring several benefits: energy efficiency, greenhouse gas (GHG) emissions, and industrial economic development which are the main benefits worth mentioning. The mentioned sector’s emission in the country is 28%. The percentage rises to about 35% if only CO2 emissions from fossil fuel combustion are considered, making the transport sector the largest emitting segment of the national economy. Additionally, in Bishkek, as in other large cities of the country, transport accounts for 75% of all emits. Another subject for the implementation of the best EE practices is street lighting.
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The Law of the Kyrgyz Republic “On renewable energy sources” (RES), adopted in 2008, provides a framework for developing the RES sector in the Kyrgyz Republic because it covers the most important aspects, from regulation to incentives. The “Energy Sector Review 2018” assumes a potential of 490 GWh of solar and 44 GWh of wind power, which equates to 490 MW of solar and a total of 44 MW of wind energy (The World Bank 2021). The current strategy (Review 2015) appears to be largely based on the assumption that, except for large HPS, non-traditional energy technologies, such as solar and wind power, can play only a secondary role in the future energy system of Kyrgyzstan. Moreover, the authorities’ goal of increasing domestic use and export capacity of coal is inconsistent with the Paris Agreement, to which the Kyrgyz Republic has acceded. Current Feed-in Tariffs (FTs) related to RES are set at 2.9 KGS/kWh (about 0.042 $/kWh), regardless of technology (solar, hydro, biomass, wind, or geothermal) (Baetov and Arkhangelskaya 2018). This amount is below the global average normalized cost of electricity from utility-scale renewable energy technologies in 2019. Probably, the current FTs will not generate any investments in solar and wind energy in the Kyrgyz Republic. Additionally, retail rates are too low to support the development of the photovoltaic energy (PV) market. The Kyrgyz Republic will significantly benefit from adopting a policy to support energy-efficient technologies in the housing sector to reduce environmental pollution and save money (Baetov and Arkhangelskaya 2018; Dmitrievsky et al. 2016). Nowadays, the costs of energy companies exceed the tariffs for electricity and heat. Efforts are required to bring tariffs up to cost recovery levels. Revenues from electricity exports and industrial customers are used to subsidize the tariffs set for urban and rural residential customers. According to the World Bank (The World Bank 2021), tariffs for households, which are below 700 kWh per month, are too low, while consumers consuming above 700 kWh/month and non-residential consumers pay tariffs above the cost of the service (127 and 175%). With such tariffs, the energy sector risks increasing its deficit even more. Electricity tariffs should be adjusted according to changes in household income and inflation, trends in global oil and gas prices, and supporting business without a dramatic increase. The reform should include a mechanism to protect vulnerable households. In accordance with low tariffs, the economic benefit of EE investment is not viable, making it difficult for companies to profit from EE equipment. This potentially leads to the high cost or even unavailability or high cost of EE equipment (Kasymova 2014, 2017; Kasymova et al. 2017). Without tariff changes in the electricity sector, the shortfall will exceed 12 billion soms by 2025 (approximately $150 million), assuming that no capital expenditures are invested in
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new facilities. The total debt of energy enterprises is 103.3 billion soms. Since 2015, the amount of debt has remained virtually unchanged in relation to GDP—18% (18% of GDP in 2018, 17% of GDP in 2019) (The World Bank 2021). There seems to be a lack of awareness, knowledge, and information about energy efficiency among politicians, consumers, and industry. Because there is no strict EE policy enforced by government authorities, consumers are unaware of the implications. Paying the real cost of electricity can allow more consumers to install a renewable energy source (RES) system for their consumption. For this purpose, a clear tariff policy must be defined; tariffs must be regularly reviewed and adjusted (e.g., annually). Thus, investors and consumers will be able to make better plans. It is essential to be very transparent about the real cost of the power system to avoid distrust from the public in the event of a tariff increase. The Kyrgyz Republic must create a favorable business environment with tariffs covering operating and capital costs to attract investors providing management and investment beyond the capacity of the public sector—organizational and financial. Simplification of procedures and reducing barriers for small and medium producers of renewable energy connected to the grid would also increase the share of private investors. It is possible to define a threshold of a few MW below which licenses are not required. Consultants of the master plan for the integrated development of the energy sector of the Kyrgyz Republic for 2020–2040 consider energy security to be one of the main problems in the country’s energy sector, covering physical, economic, and environmental aspects (Kasymova 2017; Kirillov and Solomonov 2016). Energy security provides information about the concept of sustainability, energy independence, and sustainability of the energy system. Due to the collapse of the Soviet Union, the newly independent states have prioritized energy independence and the security of their national energy systems, placing too many restrictions on chain cross-border cooperation in terms of power sharing and maximizing benefits for neighboring countries. For example, cutbacks in natural gas supplies forced the Kyrgyz Republic to reduce combined heat and power generation to meet winter demand, leading to severe energy crises, which also affected water management. The lack of energy security has led to unsatisfied demand for energy, especially in winter.
3
Results
For 2020 to 2040, the main directions of innovative development of the fuel and energy complex cover the following components: From an economic point of view, ADB
consultants have estimated investment costs (CAPEX) for a new transmission infrastructure system, which is proposed for the energy system of the Kyrgyz Republic, including investment costs for the development of AC overhead lines and related substations, transformers and appropriate substation extensions, and reactive power compensation equipment (Ministry of Energy of the Kyrgyz Republic 2022). The total cost of the new transmission infrastructure proposed by the consultant for coverage during the study period is approximately $890 million. This cost is to be added to the price, which has already envisaged by the power supply company (PSC) for the transmission expansion plan for 2021–2025, about $157.2 million. Thus, the total cost of the transmission expansion plan for 2021–2040 is about $1.05 billion (Ministry of Energy of the Kyrgyz Republic 2022). Table 2 lists the electricity generation projects considered in the recommended concept for 2040, which will ensure energy security in the country. From Table 2, the authors can conclude that the potential of small rivers and watercourses can be used to solve the energy shortage problem. Nowadays, there is an opportunity to restore eight such objects. However, the resuscitation of each of them requires funds ranging from $4.2 million to $31.4 million (Table 2). Thus, there are no funds to finance these facilities in the republic. Due to insufficient funding and the lack of the required investment volume, the level and pace of promising developments are decreasing, which causes a violation of the country’s energy security. The implementation of the tasks of the Concept for the Development of the Fuel and Energy Complex of the Kyrgyz Republic for the period 2020–2040 will allow the country to take the measures necessary to use its innovative and resource potential more effectively. According to the above scenarios for developing the country’s fuel and energy complex, a decrease in the energy intensity of GDP by 44– 53% is expected in 2030. It is also necessary to consider the possibilities of such alternative types of energy as ground-based wind energy, solar photovoltaic, and renewable energy sources. These measures will ensure an increase in the growth rate of electricity production by 119% by 2020, 140% by 2025, and 246% by 2030 or bring production to 16.7, 23.8, and 27 billion KW per hour, meeting the needs of the country’s national economy by 119%, 140%, and 166% in 2020, 2025, and 2030, respectively (Kasymova 2017; Lapaeva et al. 2019). Simultaneously, the indices of production growth rates over consumption rates will be 0.9 in 2020, 1.11 in 2025, and 1.48 in 2030, which indicates the possibility of providing a capacity reserve in the country’s energy system of up to 48% (i.e., the reserves of the named system will exceed the threshold value by 1.15) (Kasymova et al. 2020; Sydykov 2010).
Development Prospects and Current Problems … Table 2 Power generation projects proposed in the expansion plan
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Power plant category
No.
Project
KHPS
1
Kambarata HPS-1
1.860
2032
2.916
SHPS
2
Kirovskaya SHPS
25
2022
22.9
3
Karakul SHPS
18
2023
26.7
4
Ortho-Tokoy SHPS
21
2025
31.4
5
Tortkul SHPS
3
2030
4.2
6
Papanskaya SHPS
20
2030
33.2
7
Sokuluk SHPS-5
1.5
2036
4.2
8
Oi-Alminskaya SHPS-2
7.7
2036
23.2
PE
UCG
Installed capacity (MW)
Commissioning date
Total CAPEX ($ million)
9
PE stage 1
50
2025
46.25
10
PE stage 2
100
2026
91
11
PE stage 3
150
2027
134.25
12
PE stage 4
200
2028
176
13
PE stage 5
170
2029
147.05
14
Bishkek CHP-2 with UCG
2 240
2026
480
Total
3106.2
4136
Source Developed by the authors based on Ministry of Energy of the Kyrgyz Republic (2022)
The indices of the ratio of the growth rate of electricity production over the growth rate of its consumption will increase and amount to 1.1 in 2025 and 1.31 in 2030, which increases the level of provision of the basic reserve of electric power capacity of the country’s energy system by 30%. This allows the authors to conclude that the growing rates of electricity consumption in the country’s regions will be fully covered by domestic production by 2030, which removes the existing risks in ensuring energy security (Kasymova 2017; Lapaeva 2018). The construction of small thermal power plants (TPP) in remote mountainous regions of the country with the introduction of advanced technologies for burning coal with minimal emissions of harmful pollutants makes it possible to ensure the reliability of energy supply in them while the growth rate of their share in the total energy balance of the republic will be 5.4% (Musakulov and Makhmudova 2013; Sadyraliyev 2018; Sadyraliyev and Zulpukarov 2018).
4
Conclusion
The authors identified some problems in the development of the country’s economy based on the analysis of the current state of the fuel and energy complex in Kyrgyzstan. Significant among them is the high-energy intensity of the emerging gross domestic product of the country, the share of which, in the author’s opinion, can only be reduced by introducing energy-saving technologies into production. The levels and pace of promising developments are also at a low level due to their insufficient funding. The state must have a
direct impact to attract the necessary investments, strategically increasing the industry’s investment attractiveness. It is inevitable to reduce the burden on the environment received from the activities of the fuel and energy complex based on design examination and, considering this requirement, build new enterprises of the fuel and energy complex with the choice of a place for their construction that meets environmental requirements. Increasing the economic, technological, and environmental efficiency of the fuel and energy complex, expanding the use of natural gas in the social sphere and the economy, and reducing the energy intensity of the gross domestic product based on contemporary innovative technologies also contribute to solving the problems identified in the research. It is also necessary to consider the possibilities of such alternative types of energy as ground-based wind energy, solar photovoltaic, and renewable energy sources. The formation of the potential necessary for the country’s development will be facilitated by introducing innovative technologies in the production of energy, increasing the energy efficiency of production, and developing an energy-saving policy for the country.
References Baetov BI, Arkhangelskaya AV (2018) Energy issues in developing “green economy” of Kyrgyz Republic. J Legal Econ Stud 1:156– 159 Dmitrievsky AN, Martynov VG, Abukova LA, Eremin NA (2016) Digitalization and intellectualization of oil and gas fields. Autom IT Oil Gas Field 2(24):13–19
102 International Energy Charter (2018) In-depth review of the energy efficiency policy of the Kyrgyz Republic. Retrieved from https:// www.energycharter.org/fileadmin/DocumentsMedia/IDEER/IDEERKyrgyzstanEN2018.pdf. Accessed 30 Mar 2023 Kasymova VM (2014) Energy policy. Energy security and energy efficiency of the Kyrgyz Republic. Barakelde Publishing House, Bishkek Kasymova VM (2017) Strategic priorities of energy policy and the concept of development of the fuel and energy complex of the Kyrgyz Republic in the medium and long term. Barakelde Publishing House, Bishkek Kasymova VM, Arkhangelskaya AV, Kurzhumbaeva RB (2017) Scientific foundations of the concept of the state energy policy and the strategy for the development of the fuel and energy complex of the Kyrgyz Republic until 2030. Barakelde Publishing House, Bishkek Kasymova VM, Ishenalieva AA, Abdykadyrova VU (2020) Time to reform energy industry governance. Reforma 4(88):17–23 Kirillov VN, Solomonov AP (2016) The role and strategic priorities of Russia in the world oil and gas markets in the current conditions of globalization of the world energy. Econ Sci 4(137):109–115. Retrieved from https://ecsn.ru/wp-content/uploads/201604_109.pdf. Accessed 30 Mar 2023 Kyrgyzstan Review (2015) Country development strategy (2009– 2011). Retrieved from http://rus.gateway.kg/strategii-razvitiya/ strategiya-razvitiya-strany-2009-2011/. Accessed 30 Mar 2023 Lapaeva OF (2018) Innovations in the fuel and energy complex of Russia. J Econ Entrepreneurship 12(101):1227–1229
Z. Sadyraliev et al. Lapaeva OF, Inevatova OA, Dedeeva SA (2019) Modern problems and prospects of development of fuel and energy complex. J Int Econ Aff 9(3):2129–2142. https://doi.org/10.18334/eo.9.3.40815 Ministry of Energy of the Kyrgyz Republic (2022) Final report of the master plan for complex development of the energy sector of the Kyrgyz Republic. Retrieved from https://minenergo.gov.kg/ media/uploads/2022/12/07/mp-kr-finalreport-rev5_v2_en_website_ hQEeGIO.pdf. Accessed 12 Feb 2023 Musakulov NK, Makhmudova G (2013) The sustainable development strategy of Kyrgyzstan is the basis for the development and activities of the state. Bull Jalal-Abad State Univ 1(27):384–386 Sadyraliyev ZH (2018) Influence of ecological conditions on the quality of life of the population in Kyrgyzstan. Bull Perm Nat Res Polytech Univ Soc Econ Sci 4:350–362. https://doi.org/10.15593/ 2224-9354/2018.4.29 Sadyraliyev ZH, Zulpukarov A (2018) Main directions of the region s economic Jalal-Abad region developing in the conditions of development of Kyrgyz Republic. Bull Jalal-Abad State Univ B Osmonov 3(38):78–83 Sydykov BK (2010) Fuel and energy policy of the Kyrgyz Republic: problems and development prospects. Bull Kyrgyz-Russ Slavic Univ B Yeltsin 10(10):81–83 The World Bank (2021) The state of the energy sector of the Kyrgyz Republic. Retrieved from https://thedocs.worldbank.org/en/doc/ e7554f9bcd89602914f8d86c8fadd19a-0080012021/original/TheState-of-the-Kyrgyz-Energy-Sector-June-2021.pdf. Accessed 17 Mar 2023
Responsible Innovation in the Digital Economy and Advanced Technology to Reduce the Ecological Footprint of Today’s Economy
Application of Digital Technologies for Ranking Loan Borrowers Almas M. Kalimoldayev , Aigerim T. Mazakova , Akyltay D. Burgegulov , Aigerim A. Sametova , and Daryn K. Mukhayev
Abstract
Keywords
The research aims to study the effective management of distressed assets through the introduction of digital twins, which makes it possible to automate the work of bank managers and reduce the risks of repayment of loans to banks of the Republic of Kazakhstan. Compared with other countries, the banks of Kazakhstan show a high level of indicators of overdue and doubtful debts on loan portfolios. Using digital twins reduces subjectivity in employee work and corruption in bank activities. In today’s conditions, experience and intuition cannot always provide the choice of the best solution. Thus, systems related to automating the decision-making process (the choice of optimal borrowers) that best meets its individual social and economic characteristics are of particular interest. The widespread use of digital technologists is to automate these processes. For banks, it is a tool with which they can make optimal decisions (not to conduct natural experiments). Decision-making in different areas of activity is very similar. Therefore, a universal method of supporting decision-making is needed, corresponding to the natural course of human thinking. The task is solved using the hierarchy analysis method. A program for ranking applicants for loans has been developed, which places the results of numerical calculations in a result file. The results of numerical calculations are displayed in the form of tables.
Loans (AHP) bank
A. M. Kalimoldayev (&) A. T. Mazakova A. D. Burgegulov A. A. Sametova D. K. Mukhayev Al-Farabi Kazakh National University, Almaty, Kazakhstan e-mail: [email protected]
Risks Assets Analytic Hierarchy Process Loan repayment Loan portfolio Second-tier
JEL Classification
M21
1
Z33
Introduction
The research and application of advanced technologies of project management of distressed assets in the banks of Kazakhstan are relevant because the project approach to distressed assets is still not used or implemented as separate elements without a standardization process in most Kazakhstani banks. In addition, there is a lack of a project approach to study bank distressed asset management, and an objective need for the development of systematic research in this direction. The relevance of the issue and its practical significance determine the choice of the topic, purposes, and objectives for this research. Developing a project approach to manage problem assets for banks participating in the investment process of the real sector of the economy will reduce the rate of delinquency and non-performing loans and optimize lending of the entity as a major component of the future. The problems of effective management of overdue debts are highlighted in research by Western economists. Many of them emphasize the role of the country’s central bank in forming the methodological foundations for managing problem assets in the activities of commercial banks. Nevertheless, there is a shortage of theoretical aspects on implementing project approaches for managing distressed assets (Kiryanov 2009; Rose 1995).
A. D. Burgegulov e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_18
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General issues of bad debt management in Kazakhstani banks were covered in the works of Kazakhstani economists (Dzhandosova 2012; Kaldybaev 2012; Lisak 2013). Appreciating the contribution of Kazakhstani and foreign authors to the theory and practice of managing problem assets of banks, we should note that many theoretical and applied aspects of managing problem assets remain insufficiently developed, and some positions remain debatable. Despite the urgent need to introduce project approaches to bank debt management (not to mention bad debt), it must be recognized that the theoretical and practical development of these issues is completely absent (Portny 2005). The problem of lending to the real sector of the economy and project management of distressed assets of creditor banks of economic entities also turned out to be beyond the attention of Kazakhstani scientists. The lack of Kazakhstani developments in building a system for managing problematic assets of banks participating in the investment process in the real sector of the economy determined the choice of the research topic, its relevance, and the definition of its purpose and objectives. Crises in the banking sector may be accompanied by an increase in mutual non-payments of borrowers and a total drop in payment discipline. In such circumstances, commercial banks should change the current lending policy and conditions for all types of borrowers. The issue of changing lending conditions is especially relevant for corporate clients, where the refusal of high-risk loans will be a forced and necessary measure to reduce credit risk. However, the establishment of restrictions and measures to reduce credit risks in lending to business and industrial companies will not contribute to the recovery of the entire banking sector and the economy. Lending is the main activity that provides the main item of income for second-tier banks (Republic of Kazakhstan 1996). Additionally, lending operations are the riskiest type of banking activity. Credit transactions using a credit risk management policy aim to minimize these risks using a thorough analysis of credit risk factors. Thus, throughout the entire period of activities, banks continue to be exposed to various risks, for example, credit risk, liquidity risk, market risk, operational risk, and others. The most common risk is credit risk, which results in bad loans. Poor risk management, in particular, the unjustified concentration of loan portfolios, leads to a significant deterioration in the quality of the loan portfolio.
2
Methodology
The loan portfolio of second-tier banks is the totality of all loans that the bank has provided to all its borrowers to generate income over a certain period (Bibikova and Dubova 2019). The varieties of consumer loans are as follows:
(1) By the intended purpose: • No-purpose loans (for urgent needs, credit cards); • Purpose loans (mortgage loans, car loans, educational loans, etc.) (2) By type of retail borrower: • Loans to all segments of the population; • Loans provided to certain social groups of the population (working pensioners, students, individual entrepreneurs, young families, etc.). (3) By the term of consideration of the loan application: • Loans granted on a general basis; • Express loans. (4) By the method of assessing creditworthiness: • Method of expert assessments; • Scoring method. • Antiwriting method (Alexandrov 2010). One of the most significant risks for banks is credit risk. It is realized in the form of default or refusal of the borrower to fulfill his or her obligations, which is expressed in the delay in repayment of the principal debt or interest on the loan, as well as non-repayment of the loan. As a consequence of the realization of credit risk, problem loans appear regardless of external economic conditions. Crisis phenomena affect only the probability of problem loans and lead to their growth. At the current stage, the tendency of banks to use complex methods of managing problem loans in developed countries is beginning to take on a massive nature. In an unstable economy, banking institutions are increasingly focusing on managing distressed loans to minimize the risks of default (Alexandrov 2010). This research examines the possibility of using the Analytic Hierarchy Process (AHP) to assess the borrowers’ ability to meet the parameters of creditworthiness (loan recovery in second-tier banks). The risk distribution of retail borrowers can be determined by creditworthiness factors. This classification makes it possible to assess the risk of non-payment and select factors that affect creditworthiness. These factors are as follows: (a) By importance: (1) primary—the client’s financial condition and personal factor; (2) secondary—security, regional factors, and credit history. (b) By the nature of manifestation: (1) qualitative—moral character and credit history; (2) quantitative—income received, tuition fees, age, number of employees, etc. (c) By the direction of assessment: (1) current—income level and family composition; (2) predictive—stability of employment, demand for the profession, and prospects for changing the family. (d) By the source of information for evaluation: (1) objective—income, place of residence, age, etc.; (2) subjective—moral character and business reputation.
Application of Digital Technologies for Ranking Loan Borrowers
107
(e) By area of origin: (1) external—inflation, exchange rate, and other macroeconomic factors; (2) internal— everything else (Saaty 1993). The Analytic Hierarchy Process is based on fairly simple elements evaluated by the Analytical Hierarchy Process scale in the form of expert judgments. After that, the relative degree of their mutual influence in the hierarchy is found based on the processing of expert assessments (Saaty 1993). The results are processed in the hierarchy analysis method based on the matrix analysis method using several preference assessment procedures based on a special scale. The deviation from consistency is called the consistency index (CI) (1): CI ¼
jðk max nÞj : ð n 1Þ
ð1Þ
Using the simulation method, estimates of the random index (RI) were revealed in the process of estimating the threshold value of the inconsistency of judgments for matrices of size from 1 to 15. RI is the consistency index for generated random variables on a scale from 1 to 9 of a positive inversely symmetric matrix. Table 3 shows the average values of the random index. The hierarchy analysis method uses the following gradation of significance for odd degrees: 1st degree—equal significance, 3rd degree—weak significance, 5th degree— strong significance, 7th degree—very strong significance, 9th degree—absolute significance. The values of even degrees are defined as intermediate values between the two nearest odd propositions. The mean of consistency for a pairwise comparison matrix depends on its order.
3
Results
Let us consider the problem of choosing the optimal borrower. Second-tier banks need to rank four borrowers of loans based on the following factors:
obtained in relation to other criteria: “amount of overdue loans”—9, “amount of existing loans”—5, “availability of a job”—7, “total cash income of the family”—4, and “composition of the family”—6. The value of the vector of priorities of the factor “duration of overdue loans” is (0.444, 0.027, 0.1, 0.049, 0.152, and 0.228). Evaluation of the consistency (EC) of experts’ opinions: k max ¼ ð2:04 0:444Þ þ ð31:00 0:027Þ þ ð11:53 0:100Þ þ ð20:33 0:049Þ þ ð7:92 0:152Þ þ ð5:18 0:228Þ ¼ 6:27; CI ¼ jkmax nÞj=ðn 1Þ ¼ j6:277 6Þj=ð6 1Þ ¼ 0:055; EC ¼ CI=RI ¼ 0:055=1:24 ¼ 0:045:
Denote by letters A, B, C, and D the identifiers of the four borrowers. Identification of priorities by factors. According to the examination, for the factor “Duration of overdue loans,” the following estimates of the preference matrix were obtained: 0
1 7 B 1=7 1 A1 ¼ @ 2 8 1=8 1=2
1=2 1=8 1 1=9
1 8 2C 9A 1
and priority vector: 0
1 0:355 B 0:067 C B1 ¼ @ ; 0:534 A 0:044 k max ¼ 4:076; CI ¼ 0:025; EC ¼ 0:028: According to the examination, for the factor “Amount of overdue loans,” the following estimates of the preference matrix were obtained: 0
1 4 B 1=4 1 A2 ¼ @ 6 9 1 14
1 1=6 1 1=9 1=4 C 1 6 A 1=6 1
and priority vector: 1. 2. 3. 4. 5. 6.
The duration of overdue loans (days); The amount of overdue loans (tenge); The amount of existing loans; Availability of a job (yes, no); Total family income (tenge); Family composition (pcs).
The calculations are shown below. For the factor “duration of overdue loans,” according to the examination, the following estimates of importance were
0
1 0:143 B 0:046 C B2 ¼ @ ; 0:669 A 0:143 k max ¼ 4:151; CI ¼ 0:050; EC ¼ 0:056: According to the examination, for the factor “Amount of existing loans,” the following estimates of the preference matrix were obtained:
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0
1 1=5 1 B 5 A3 ¼ @ 1=3 1=7 7 3
3 7 1 9
1 1=7 1=3 C 1=9 A 1
k max ¼ 4:051; CI ¼ 0:017; EC ¼ 0:019: According to the examination, for the factor “Family composition,” the following estimates of the preference matrix were obtained:
and priority vector: 0
0
1 1=5 1 B 5 A6 ¼ @ 1=3 1=7 7 3
1
0:143 B 0:046 C B3 ¼ @ ; 0:669 A 0:143 k max ¼ 4:157; CI ¼ 0:052; EC ¼ 0:058:
1 5 B 1=5 1 A4 ¼ @ 5 9 5 9
1 1=5 1=5 1=9 1=9 C 1 1=9 A 9 1
and priority vector: 0
1 0:143 B 0:046 C B4 ¼ @ ; 0:669 A 0:143 k max ¼ 4:312; CI ¼ 0:104; EC ¼ 0:115: According to the examination, for the factor “Total family income,” the following estimates of the preference matrix were obtained: 0
1 5 B 1=5 1 A5 ¼ @ 1=7 1=3 1 5
7 3 1 7
1 1 1=5 C 1=7 A 1
and priority vector: 0
1 0:424 B 0:103 C B5 ¼ @ ; 0:050 A 0:424
1 1=7 1=3 C 1=9 A 1
and priority vector: 0
1 0:085 B 0:290 C B6 ¼ @ ; 0:042 A 0:528
According to the examination, for the factor “Job availability,” the following estimates of the preference matrix were obtained: 0
3 7 1 9
k max ¼ 4:157; CI ¼ 0:052; EC ¼ 0:058: To make the final decision on the choice of the borrower, it is necessary to enter values vectors of priorities for each factor in the final table developed and obtained by the authors and determine the global priority (Table 1). The global priority is calculated by summing the products of the criterion significance by the criterion priority vector for each borrower (Saaty and Kearns 1991). Table 1 shows the final results for the selection of borrowers. Comparing the values, we find the rating of borrowers. The rating is directly proportional to the value of the global priority vector. In this task, the fourth borrower had the highest priority.
4
Conclusion
Considering the urgent need to introduce technologies and methods of project management into banking practice, as well as the complete absence of domestic scientific developments in this direction, for the first time, the authors analyzed theoretical aspects and the possibility of the practical application of methods to analyze analyzing hierarchies in the management of problematic assets of
Table 1 Global priority calculation Priority vectors
Global priority (GP)
Duration of overdue loans
Amount of overdue loans
Amount of existing loans
Availability of a job (yes, no):
Total family income
Family composition
A
0.355
0.143
0.085
0.109
0.424
0.085
0.259
B
0.067
0.046
0.290
0.046
0.103
0.290
0.144
C
0.534
0.669
0.042
0.423
0.050
0.042
0.297
D
0.044
0.143
0.582
0.423
0.424
0.582
0.299
Source by Author
Application of Digital Technologies for Ranking Loan Borrowers
Kazakhstan banks financing the real sector of the economy. The authors developed a mathematical model for ranking borrowers. The program “Hierarchy Analysis Method” has been developed and proposed, which allows ranking borrowers according to certain creditworthiness parameters. The theoretical significance of this study is to develop a theoretical basis for assessing the creditworthiness of borrowers. Practical relevance of the research lies in the high proportion of inoperative credits in the Republic of Kazakhstan, especially among enterprises of the real sector of the economy, which makes it necessary to introduce an organizational and technological complex of methodological, software, and information tools of the loan issuance management system into banking. This work has developed a set of practical project management tools for problem assets of second-tier banks of the Republic of Kazakhstan lending into the real economy and individual entrepreneurs. A promising direction is the use of interval mathematics to study new mathematical models for assessing the creditworthiness of individual entrepreneurs and entire enterprises (Issimov et al. 2018; Mazakov et al. 2021; Sokil et al. 2019; Svyd et al. 2019).
References Alexandrov AY (2010) Management of the commercial bank’s bad loans portfolio (synopsis of dissertation of candidate of economic sciences). St. Petersburg State University of Economics, St. Petersburg Bibikova EA, Dubova SE (2019) Credit portfolio of a commercial bank. Flinta, Moscow
109 Dzhandosova ZK (2012) Availability of loans for small and medium-sized businesses. Trends and prospects for lending to SBS. Banks Kaz 8:51–55 Issimov N, Mazakov T, Mamyrbayev O, Ziyatbekova G (2018) Application of fuzzy and interval analysis to the study of the prediction and control model of the epidemiologic situation. J Theor Appl Inf Technol 96(14):4358–4368. Retrieved from http://www. jatit.org/volumes/Vol96No14/3Vol96No14.pdf. Accessed 25 Nov 2022 Kaldybaev EK (2012) Credit policy of banks in the Republic of Kazakhstan. Banks Kaz 12:24–28 Kiryanov M (2009) Foreign experience of working with troubled banks. Banking 1:66–68 Lisak BI (2013) Modern methods of organizing work with problem loans of banks. Banks Kaz 1:8–16 Mazakov T, Wójcik W, Jomartova SH, Karymsakova N, Ziyatbekova G, Tursynbai A (2021) The stability interval of the set of linear system. INTL J Electron Telecommun 67(2):155–161. https:// doi.org/10.24425/ijet.2021.135958 Portny SE (2005) Project management for dummies. Dialectics, Moscow Republic of Kazakhstan (1996) The law “on banks and banking activities in the Republic of Kazakhstan” (dated August 31, 1996 No. 2444, as amended and supplemented as of January 1, 2017). Astana, Kazakhstan Rose P (1995) Banking management. Delo, Moscow Saaty TL (1993) Making decisions. Hierarchy analysis method (Vachnadze RG Transl. from English). Radio and Communication, Moscow Saaty TL, Kearns KP (1991) Analytical planning: the organization of systems (Vachnadze RG Transl. from English). Radio and Communication, Moscow Sokil BI, Senyk AP, Sokil MB, Andrukhiv AI, Kovtonyuk MM, Gromaszek K, Ziyatbekova G, Turgynbekov Y (2019) Mathematical models of dynamics of friable media and analytical methods of their research. Przeglad Elektrotechniczny 95(4):74–78. https://doi. org/10.15199/48.2019.04.13 Svyd IV, Obod AI, Zavolodko GE, Melnychuk IM, Wójcik W, Orazalieva S, Ziyatbekova G (2019) Assessment of information support quality by “friend or foe” identification systems. Przeglad Elektrotechniczny 95(4):127–131. https://doi.org/10.15199/48. 2019.04.22
Digital Definition of Optimal Inventory Management Almas M. Kalimoldayev , Aigerim T. Mazakova , Sholpan A. Jomartova , Talgat Zh. Mazakov , and Gulzat Z. Ziyatbekova
Abstract
1
The research focuses on the mathematical modeling of the digital twin of the practical problem of inventory management. Today’s production requires the coordinated work of all departments. Failure of even one section leads to unplanned losses. To avoid failure, manufacturers try to create stocks of components, accessories, etc., because stockpiling causes less damage than disrupting the rhythmic work of the entire production. Simultaneously, the storage of safety stocks leads to additional costs and increases the price of the final product. The shortage (deficit) of raw materials and inconsistency in joint work with suppliers can lead to a halt in production. Excess stocks and their shortages affect the final price of goods produced. Therefore, it is necessary to use mathematical modeling to optimize normative estimates of reserve volume. The analysis of the works shows that, when studying the problem of inventory management, new sections of mathematical science are not effectively used: in particular, interval mathematics in modeling dynamic processes, decision theory, etc. Keywords
Stocks Logistics Suppliers Management Optimality criterion Functionality Hamiltonian Ordinary differential equations (ODE) JEL Classification
C51
C65
D24
A. M. Kalimoldayev A. T. Mazakova S. A. Jomartova T. Zh. Mazakov G. Z. Ziyatbekova (&) Al-Farabi Kazakh National University, Almaty, Kazakhstan e-mail: [email protected]
Introduction
The problem of digital inventory management has been and remains relevant (Anikin 2002; Gadzhinsky 2002; Lototskyi and Mandel 1991; Ryzhikov 2001; Wight 1978). One of the best books on inventory theory is the monograph by Hanssmann, which is a fairly detailed and systemic guide to the problems and methods of inventory management theory. As is known, reserves of material resources are necessary for a continuous and rhythmic reproduction process. There are many reasons for causing inconsistencies in time and space between the needs for certain objects and their presence at every given moment, for example, seasonal fluctuations in production and demand rhythms, fluctuations in demand under the influence of random factors, miscalculations in planning, etc. Therefore, the creation and storage of stocks are cheaper because, in the absence of stocks, it becomes necessary to have large reserves of production capacity, labor resources, and raw materials. However, the presence of large stocks can lead to the fact that their moral and material values will plummet or disappear. Therefore, the problem of the most effective planning and regulation of supplies and stocks needs urgent study. The “theory of inventory management” is used by mathematicians and economists to solve this problem (Bulinskaya 1965). Of particular interest are the systems associated with the automation of the process of selecting the optimal suppliers. The widespread use of digital technologies makes it possible to automate these processes and give the enterprise a tool for making the best objective decision. The current state of science and technology makes it possible to predict the necessary need for manufactured products, considering seasonal demand. Mathematical methods and computers are the most powerful tool for identifying and analyzing economic patterns, time series, and trends, synthesizing optimal solutions in all circulation areas. The modeling of inventory management processes will allow, bypassing expensive field experiments, the most
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_19
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The final state is fixed and is represented as
economical way to assess the possible consequences of various administrative decisions in advance.
2
xðt 1 Þ ¼ x1
ð7Þ
or mobile (satisfying some conditions)
Methodology
The research aims to find the optimal strategy for managing the quantity of goods in stock. Mathematical modeling will be carried out using the apparatus of ordinary differential equations. Let us introduce the notation: x (t) is the number of goods in the warehouse at time t; u (t)—management measures to ensure the required amount of goods in the warehouse. The warehouse management process can be represented as follows:
n X
cij xj ðt1 Þ di ; i ¼ 1; k
ð8Þ
j¼1
Two cases of determining the final moment of time are considered t1 : (1) fixed and (2) variable, satisfying the given requirements. To assess the system’s quality, the following criterion (functionality) can be used: t1 Z
ð1Þ
J ¼ ½u ðtÞR0 uðtÞ þ ðxðtÞ gðtÞÞ R1 ðxðtÞ gðtÞÞdt ð9Þ
where A (t) is an n n-matrix, B (t) is an n m-matrix, x (t) is an n-vector of the system state, u (t) is an m-vector of control, and g(t) is a given n-vector of action. Equations of the form (1) represent a multi-product model of the inventory management system (n—products). Controls are limited:
In functional (9), R0 is the positive-definite m mmatrix, and R1 is the non-negative-definite n n-matrix. The time in functional (9) is fixed. When studying the proposed mathematical model, the following problems arise:
x_ ¼ AðtÞ x þ BðtÞ u gðtÞ;
0 ui ðtÞ uimax ;
i ¼ 1; m;
t 2 ½t0 ; t1 :
ð2Þ
The non-negativity condition is imposed on g (t): gðtÞ 0; t 2 ½t0 ; t1 :
ð3Þ
Conditions (3) also have a completely understandable meaning: the expected demand cannot take a negative value (the complete absence of demand at time t is equivalent to zero, i.e., gðtÞ ¼ 0). Storage capacity is subject to restrictions: n X
ai xi ðtÞ C; t 2 ½t0 ; t1 :
ð4Þ
i¼1
Any storage space has a natural restriction. In the proposed model, this limitation is characterized by parameters C and ai ; i ¼ 1; n. The coefficient ai corresponds to the volume occupied by a unit of the ith product at the storage. In addition to condition (4), restrictions are imposed on the quantity of goods xi ðtÞ 0; i ¼ 1; n; t 2 ½t0 ; t1 :
ð5Þ
Constraint (5) also has a quite natural meaning: the available (sold from the warehouse) product cannot have a negative value. The initial state of the system is assumed to be known xðt0 Þ ¼ x0 :
ð6Þ
t0
• Problem A (controllability): determine whether there are controls that ensure the transfer of system (1) from (6) and (7) under constraints (2). • Problem B (optimal control): whether to find a control that takes system (1) from (6) to (7) and delivers a minimum to functional (9). • Problem C (software implementation): on relational Database Management System (DBMS), develop software that allows solving practical problems.
3
Results
3.1 Controllability of the Mathematical Model The formulated problem A can be given the following physical (economic) interpretation. The elements of the matrix A (t) determine the proportion of goods that have become unusable and acquire the values 0 aij 1; i ¼ 1; n; j ¼ 1; n. Elements of the matrix B (t): bij ; i ¼ 1; n; j ¼ 1; m determine the quantity of the ith product from the jth supplier. The controls uij ; i ¼ 1; n; j ¼ 1; m determine the share of the ith product purchased from the jth supplier and satisfy the constraints (2). The relationship between the quantity of goods in stock and the quantity of goods purchased from suppliers is
Digital Definition of Optimal Inventory Management
113
described by the usual differential equations (1). The final moment of time satisfies the condition: t1 [ t0 :
x i ðt Þ ¼
x_ ¼ AðtÞ x:
ð11Þ 1
We introduce the notation Uðt; sÞ ¼ hðtÞ h ðsÞ; then the solution of Eq. (11) can be rewritten in the following form:
Uij ðt; t0 Þxj ðt0 Þ
n t X Z
j¼1
ð10Þ
Based on the above conditions, it is necessary to answer the question: “Considering the goods available at the time t0 in the stock (condition (6)), do the suppliers of the goods (elements of the matrix B (t)) have enough of them to provide the required quantity by the time t1 ?”. This practical problem can be formalized as the following mathematical problem: determine whether there are controls that ensure the transfer of system (1) from (6) to (7) under constraints (2). Considering the expected demand, the required quantity of goods must satisfy conditions (7)–(8). All mathematical methods used imply the accuracy of the representation of the original data. However, in real technical systems, physical parameters (features) are measured with some error. Additionally, errors in arithmetic calculations on a computer can also lead to inconsistency in the resulting models. To take these features into account, a new direction of computational mathematics can be used—interval analysis (Kalmykov et al. 1986; Shokin 1986). The ideas of interval analysis are of practical interest. However, their implementation faces great difficulties. During the research, it turned out that traditional methods cannot simply be transferred to interval numbers. In this regard, many publications have appeared in which various numerical methods are reviewed in the framework of interval data. Such a revision was given by Dobronets and Shaydurov (1990). New methods of mathematical modeling, simulation, and optimization of processes in engineering sciences with a special focus on the problems of regulation and management are described by Dombrovsky and Chausova (2001), who propose using the apparatus of interval mathematics to stock management models. The considered system is described by a dynamic network, the nodes of which represent the size of the managed reserves, and the arcs represent the directions and volume of replenishment and redistribution of stocks, as well as the demand at the nodes of the network. When applying interval mathematics, researchers experience difficulties in solving cumbersome interval equations (Bairbekova et al. 2016; Jomartova et al. 2014). Let hðtÞ be the fundamental matrix of solutions of the following system:
n X
þ
n t X Z j¼1 t0
Uij ðt; sÞ
j¼1 t0
m X
Uij ðt; sÞgj ðsÞds þ
bjl ðsÞujl ðsÞ ds; i ¼ 1; n
l¼1
ð12Þ It has the following notation: y1i ¼
n X
Uij ðt1 ; t0 Þxj ðt0 Þ
j¼1
n t X Z1 j¼1 t0
Uij ðt1 ; sÞgj ðsÞ ds; i ¼ 1; n
z1 ¼ x 1 y 1 : The controllability problem under conditions (2) and (7) is reduced to solving the system of integral equations: z1i ¼
n t X Z1 j¼1 t0
Uij ðt1 ; sÞ
m X bjl ðsÞujl ðsÞ ds; i ¼ 1; n:
ð13Þ
l¼1
In the case of constraint (8), the controllability problem is reduced to the existence of a solution to the system of integral inequalities ! n n t m X X X Z1 cij y1j þ Uij ðt1 ; sÞ bjl ðsÞujl ðsÞ ds di ; i j¼1 t0
j¼1
l¼1
¼ 1; k ð14Þ satisfying condition (2). Let us apply the methods of interval analysis to solve the integral equations (13) and (14). With a step h [ 0, we divide the segment t1 t0 into N parts. We reduce the integral equation (13) to the following form: h
m X N X
fij ðkÞ uij ðkÞ ¼ z1i ; i ¼ 1; n;
ð15Þ
j¼1 k¼1
where uij ðkÞ is the control at time kh. Denote by fi ¼ ðfi ; 0Þ the interval centered at fi and radius 0, v ¼ ð0; LÞ—the interval from L to L (Bairbekova et al. 2016). From this, it can be seen that the set ( ) t1 Z t0
f ðsÞ vðsÞ dsjvðtÞ 2 ðL; LÞ; 8t 2 ½t0 ; t1
ð16Þ
t1
coincides with the interval y2 ¼ R f ðsÞ v ds, t0
In (16), all calculations are carried out according to the rules of interval analysis (Jomartova and Mazakov 2012).
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A. M. Kalimoldayev et al.
This proves the following theorem.
U2k ¼ Mk3
Theorem 1 For system (1)–(8) to be controllable, it is necessary and sufficient that the interval vector y2 includes the vector y1 . For numerical modeling, a program was written in Pascal that implements the calculations of the proposed criterion and uses the interval calculation library (Mazakov et al. 2005, 2020; Sokil et al. 2019). Numerical calculations on model problems have shown the constructability of the controllability criterion. The theoretical results obtained in the subsection make it possible to answer the question: “Is it possible for suppliers to satisfy the demand for goods?” With a positive answer, the following task can be set: choosing the optimal strategy for purchasing goods from suppliers.
3.2 Optimal Control Let the inventory management system (multi-product model of n—products) be described by the system of Eq. (1). The controls are subject to restrictions (2). Conditions (phase constraints) (4) are imposed on the storage capacity. The quantity of goods satisfies condition (5). To assess the quality of the system, the following criteria (functional) (9) can be used. The set of admissible controls is denoted as follows: U ¼ u0 ui ðtÞ uimax ; i ¼ 1; m; t 2 ½t0 ; t1 : From a mathematical point of view, problem B is the problem of finding the optimal bounded control of a system with fixed (7) or moving (8) ends and phase constraints (4)– (5). In this formulation, the problem of optimal control has not yet found a universal method for solving it. For a practical solution to the problem of optimal inventory control, we use the method of penalty functions and the gradient method. To consider constraints (4)–(5), we apply the method of penalty functions (Vasiliev 1980): U1k ¼ Mk1
t1 Z
"
t0
þ Mk2
maxf n t X Z1 i¼1 t0
n X
!
#2
ai xi ðtÞ C ; 0g dt
i¼1
ð17Þ
½maxfxi ðtÞ; 0g2 dt:
To consider restrictions on the end of the trajectory (7), we introduce the penalty function. To consider the end constraints (7), we introduce the following function:
n X
½xðt1 Þ x1 Þ2 :
ð18Þ
i¼1
Let us build a new functionality: t1 Z
Jk ¼ fu ðtÞR0 uðtÞ þ ðxðtÞ gðtÞÞ R1 ðxðtÞ gðtÞÞ t0
þ Mk1 ½maxf
n X
! ai xi ðtÞ C ; 0g2
i¼1
ð19Þ
2
þ Mk2 ½maxfxi ðtÞ; 0g gdt n X ½xðt1 Þ x1 Þ2 þ Mk3 i¼1
Positive sequences fMk1 g; fMk2 g; fMk3 g in (19) should tend to infinity. Let us reduce the original problem B to a series of optimal control problems with a free right end and bounded control. For this purpose, we compose the Hamiltonian function: Hk ¼ u ðtÞR0 uðtÞ þ ðxðtÞ gðtÞÞ R1 ðxðtÞ gðtÞÞ ! n X ai xi ðtÞ C ; 0g2 þ Mk2 ½maxfxi ðtÞ; 0g2 þ Mk1 ½maxf i¼1
þ ðAðtÞxðtÞ þ BðtÞuðtÞ gðtÞÞ wk
Below is an algorithm for solving the studied problem: Step 1. Assign a zero value to the variable k: k ¼ 0: Step 2. At kth iteration, we define the optimal control 8 0 if R1 < 0 Bwk \0 uk ¼ R1 ð20Þ Bwk if 0 R1 0 0 Bwk umax : umax if R1 Bw [ u max k 0 where wk —solution of the following ODE system:
wk ¼ AðtÞ wk 2R1 ðxk ðtÞ gðtÞÞ þ 2Mk1 ½maxf
n X
!
ai xki ðtÞ C ; 0g þ
ð21Þ
i¼1
þ Mk2 ½maxfxki ðtÞ; 0g with boundary condition wk ðt1 Þ ¼ 2Mk3
n X ½xk ðt1 Þ x1 Þ: i¼1
and xk —solution of system (1)–(6). Step 3. Let us find the value of the Jk , with the xk and uk found. Step 4. If the jJk Jk1 j e is met, we go to step 5. Otherwise, we increase k (k ¼ k þ 1) by one and go to step 2, where it denotes the required calculation accuracy.
Digital Definition of Optimal Inventory Management
Step 5. The pair (xk , uk ) constitutes the optimal solution and the optimal control. The effectiveness of the proposed procedure has been tested on practical problems. Based on the theoretical studies obtained in the previous chapter, an automated workplace “Warehouse” was developed, which was implemented for accounting and optimization of warehouse operations in the trading house “Ak Orda” Atyrau, as well as in OJSC “Atyrau” (there are certificates of implementation). A feature of the workstation is its development based on the Visual FoxPro DBMS (Omelchenko 2003). The workstation can run on a PC of the IBM 286 class and higher (i.e., it is not burdensome).
4
Conclusion
The following results were obtained in the section: 1. Based on interval analysis and mathematical control theory, the controllability problem was solved. 2. Based on the mathematical theory of optimal control, the problem of optimal order was solved. 3. Based on the method of penalty functions and numerical methods of solving extreme problems for the proposed mathematical model of inventory management, an algorithm for finding the optimal solution was developed. During the research, new results were obtained regarding the mathematical modeling of inventory management systems. This is a mathematical model of inventory management with a limitation on the warehouse’s volume and management; it is considered for the first time in this form. The scientific results obtained using interval mathematics and hierarchy analysis methods, such as the controllability criterion and the optimal solution of the proposed inventory management model, are new and relevant.
References Anikin BA (2002) Logistics: textbook. INFRA-M, Moscow
115 Bairbekova G, Mazakov T, Djomartova S, Nugmanova S (2016) Interval arithmetic in calculations. Open Eng 6(1):259–263. https:// doi.org/10.1515/eng-2016-0036 Bulinskaya EV (1965) Some problems of optimal inventory management. Steklov Mathematical Institute, Moscow Dobronets BS, Shaydurov VV (1990) Bilateral numerical methods. Nauka, Novosibirsk Dombrovsky VV, Chausova EV (2001) Dynamic network inventory management model with interval demand uncertainty. Comput Technol 6:271–274 Gadzhinsky AM (2002) Logistics: textbook. ICC Marketing, Moscow Hanssmann F (1966) Application of mathematical methods in the management of production and stocks (Transl. from English). Progress, Moscow (Original work published 1962) Jomartova S, Mazakov T (2012) Application of interval analysis in the research of organizational control systems. In: Proceedings of the 6th international conference on soft computing and intelligent systems (SCIS), and the 13th international symposium on advanced intelligence systems (ISIS). Kobe, Japan, pp 244–247. https://doi. org/10.1109/SCIS-ISIS.2012.6505140 Jomartova SHA, Mazakov TZh, Karymsakova NT, Zhaydarova AM (2014) Comparison of two interval arithmetic. Appl Math Sci 8(72): 3593–3598. https://doi.org/10.12988/ams.2014.44301 Kalmykov SA, Shokin YuI, Yuldashev ZKH (1986) Methods of interval analysis. Nauka, Novosibirsk Lototskyi VA, Mandel AS (1991) Models and methods of inventory management. Nauka, Moscow Mazakov TZH, Jomartova SHA, Ospanova MK (2005) Library of interval mathematics procedures. In: Proceedings of the 1st international scientific and practical conference “informatization of society”. Almaty, Kazakhstan, pp 160–162 Mazakov TZH, Kisala P, Jomartova SHA, Ziyatbekova GZ, Karymsakova NT (2020) Mathematical modeling forecasting of consequences of damage breakthrough. News Nat Acad Sci Repub Kaz Ser Geol Tech Sci 5(443):116–124. https://doi.org/10.32014/2020. 2518-170X.111 Omelchenko LN (2003) Visual foxpro 8: tutorial. BHV-Petersburg, St. Petersburg Ryzhikov YUI (2001) Queue theory and inventory management: tutorial. Peter, St. Petersburg Shokin YuI (1986) Interval analysis. Nauka, Novosibirsk Sokil BI, Senyk AP, Sokil MB, Andrukhiv AI, Kovtonyuk MM, Gromaszek K, Ziyatbekova G, Turgynbekov Y (2019) Mathematical models of dynamics of friable media and analytical methods of their research. Przeglad Elektrotechniczny 95(4):76–80. https://doi. org/10.15199/48.2019.04.13 Vasiliev FP (1980) Numerical methods for solving extreme problems 2. Nauka, Moscow Wight OW (1978) Production and inventory management in the computer age (Transl. from English). Progress, Moscow (Original work published 1974)
Application of Text Analysis and Ensemble Algorithms in Forecasting Companies Bankruptcy Pavel A. Drogovoz
and Alexandr R. Nevredinov
Abstract
JEL Classification
The article explores methods of textual analysis applied by companies, particularly the analysis that uses compiled dictionaries and is based on machine learning that uses marked-up texts. The authors describe why companies can apply textual analysis. As one of the main directions, the authors consider bankruptcy forecasting, namely the existing methods and practices of its application by companies using machine learning methods, as well as methods of implementing these methods. The paper investigates such a superstructure for machine learning as ensemble algorithms. The authors describe the types of ensemble algorithms and the advantage of using them by comparing single classifier models and ensembles of different types trained on the same data. Additionally, the authors investigate the usefulness of using a non-financial indicator in a bankruptcy prediction model by comparing the accuracy results of two trained sets of models: one using only financial indicators and one including a calculated economic policy uncertainty (EPU) index obtained through textual analysis using dictionaries. The research results show a strong increase in accuracy from adding a non-financial index to the bankruptcy prediction model and the advantage of complex ensemble models. The research novelty lies in the use of advanced ensemble algorithms combining different machine learning models and in the use of a multi-country EPU index to demonstrate the benefits of advanced machine learning methods and the positive effect of using a form of textual analysis in predictive models.
C02
Keywords
Machine learning Ensemble algorithms EPU Bankruptcy Stacking Bagging Text analysis P. A. Drogovoz A. R. Nevredinov (&) Bauman Moscow State Technical University, Moscow, Russia e-mail: [email protected]
1
C15
G17
F60
Introduction
Nowadays, companies exist in a highly competitive environment with globalization and digital transformation of the economy (often talking about the transition to economy 4.0 (Drogovoz et al. 2021)). Therefore, they have to constantly look for ways to improve their competitiveness. Since the second half of the twentieth century, one of the most researched areas has been analyzing the failure and bankruptcy of certain companies (Kumar and Ravi 2007). Much of this research boils down to predicting the bankruptcy of companies based on the analysis of their condition, decisions, the external environment, and other factors. From a practical standpoint, the issue has interested auditors, consultants, banks, and national governments (O’Leary 1998). As a result, various methods for determining the stability of companies began to appear, operating with accounting and, sometimes, market data (Atman 1968; Beaver 1966). However, it became clear that it was necessary to search for other internal and external indicators to explain the bankruptcy of companies. As a result, external macroeconomic factors (e.g., GDP and exchange rate volatility), the influence of which on bankruptcy has been proved by many studies (Bollen et al. 2011; Jabeur 2017; Sarikov and Kuprianov 2020), were supplemented with non-financial data. An important source of non-financial data is textual analysis. A vast amount of textual information is published every day. The Internet is becoming the main media channel. Companies make extensive reports on their activities to attract investors. This amount of information can be analyzed using computer algorithms. In general understanding, there are two methods of analyzing textual information: the use of dictionaries and the use of machine learning.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_20
117
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When dictionaries are used, lists of words with a certain coloring are compiled. The most common type is sentimental dictionaries that determine the positivity and negativity of a text (Fedorova et al. 2020b; Kotelnikov et al. 2016), which is of interest to companies because the reaction of even one consumer can have a serious impact on the success of a product in today’s world (Goleman 2009). In addition to being of interest to researchers, this kind of analysis is important to monitoring and analysis systems and advertising platforms. The development of integrated web platforms makes it possible to monitor mass media, social media, and various groups in social networks to analyze a particular business, determine user preferences, and find out the reactions of users to various products (Persi 2019). However, in addition to tonal analysis, which makes it possible to highlight people’s attitudes, there are other areas that allow one to extract meaningful indicators for the company from arrays of texts. For example, the Economic Policy Uncertainty Index (EPU) is calculated based on the frequency of certain words in the most popular news publications in the country (Baker et al. 2016). The index reflects changes in economic uncertainty related to politics. Modifications of the index that use social networks (e.g., Twitter) as a source of information have also been proposed; the index is meaningful, which indicates its applicability as a source of information (Renault et al. 2021). We can also give an example of the analysis of company reports to determine the index of disclosure of non-financial information. Studies prove that disclosing such information increases the company’s investment attractiveness and, as a result, makes it more reliable (Fedorova et al. 2020a). Another method of textual analysis is the application of machine learning (ML) (Tarasov 2015), which uses marked samples of texts, where such methods can show very high efficiency (e.g., Opinion Mining). Their main advantage is the ability to analyze the text semantically and pick up on the differences arising from the construction of the sentence in natural language (e.g., due to the use of “not” particles) (Irsoy and Cardie 2014). This requires the presentation of the text in a convenient numerical form. For this purpose, embedding matrices are used, which are also a type of machine learning algorithm. The best known is the word2vec algorithm (Mikolov et al. 2013). Relatively recently, transformer networks (e.g., BERT), which make it possible to analyze complex language relationships and represent text as a matrix of vectors, have also appeared. As a rule, recurrent neural networks (RNN), proposed in 1990 (Elman 1990), or their advanced version, long short-term memory (LSTM), solving the problem of gradient decay in long texts, are used to perform the specific analysis (Hochreiter and Schmidhuber 1997). Applying this approach to the analysis of companies can be related to the possibility of using texts directly in the
P. A. Drogovoz and A. R. Nevredinov
analysis to predict bankruptcies. Within the US market, a form of Management Discussion and Analysis (MD&A) can be used, which is a brief self-analysis of the company’s state. The textual analysis demonstrates its consistency in determining the meanings of such texts and shows its ability to predict bankruptcy (Mai et al. 2018). Unfortunately, such convenient texts are rarely available, and machine learning algorithms still struggle to extract complex meanings from texts. More often, they are used as a reliable implementation of a sentimental analysis algorithm or as a tool to analyze the data already converted into numerical form (e.g., EPU indices in addition to financial performance indicators). Various machine learning algorithms have become a broad research topic in terms of bankruptcy prediction tools. Foundational academic research assesses bankruptcy using statistical methods (discriminant analysis and logistic regression) and sophisticated machine learning models, such as the artificial neural network or support vector machine. Advanced models have long been used to predict the bankruptcy of firms (Qu et al. 2019). Studies conclude that machine learning shows an average of 10% higher accuracy than traditional methods (Barboza et al. 2017). A new round of development for machine learning algorithms is ensemble algorithms, which include boosting and bagging ensembles (Qu et al. 2019), as well as stacking ensembles, which are not yet fully understood but can already show better results (Liang et al. 2020). Such algorithms are already implemented in some machine learning algorithms; for example, random forest is an ensemble of decision trees. Thus, textual analysis makes it possible to improve the accuracy of bankruptcy prediction models. Machine learning methods are the obligatory approximator of a real market model that is capable of using non-financial information; improving the accuracy and reliability of models is the main goal of scientific research. A study on bankruptcy prediction can be given as an example of the effectiveness of applying the results of textual analysis in predictive models and increasing the accuracy of the models themselves through ensembles (Fedorova et al. 2022).
2
Methodology
To demonstrate the advantage of using the non-financial EPU indicator, it should be included in the model. However, scientific research (Fedorova et al. 2022) shows that the original index (can be found at https://www.policyuncertainty.com/) does not have high predictive efficiency, but it is possible to calculate its alternative based on the social network Twitter. Such studies have been done before only for Englishlanguage sources (Fedorova et al. 2020a). Studies confirm
Application of Text Analysis and Ensemble Algorithms …
that the audience of social networks (e.g., Twitter) is very responsive to various events worldwide and can even predict changes in macroeconomic indicators (Bollen et al. 2011). The authors used data from several countries because a large amount of data on the bankruptcy of companies is required to increase the reliability of the model, which also makes it possible to analyze companies with a variety of annual EPUs of different countries (Yu et al. 2017). Only the countries of the European region were chosen, which is closer to the nature of culture in a large economy and, consequently, provides a sufficient amount of data. Specifically, the sample includes four countries: France, Italy, Russia, and Spain from 2014 to 2019. The data is derived from the Amadeus database and contains a wide range of accounting-related indicators. Additionally, important external indicators (e.g., real GDP, unemployment, and import and export performance of countries) are included, which can also affect the profitability of companies (Dzikevičius and Šaranda 2016). The final set of variables formed based on several scientific works (Amendola et al. 2015; Dakovic et al. 2010; Jardin 2015) is a classic set of indicators for such forecasting. The final sample was balanced by randomly removing stable companies (the number of bankrupts is less than 1%) and standardized. The corresponding EPU indicator is added for each data instance. To compare the effectiveness of machine learning algorithms, several separate classifiers were used at once, which were usually shown in the bankruptcy prediction task: support vector machine (SVM), logistic regression (LR), and artificial neural network (ANN). Additionally, random forest (RF) and XGBoost are used, which are ensemble models. The authors apply these methods individually and as part of ensembles. Ensemble algorithms aim to combine multiple classifiers into an ensemble to produce a more accurate classifier (Barboza et al. 2017). This increases the robustness to incomplete data, reduces the noise associated with the presence of noise in the training sample and the stochastic nature of the algorithm tuning, and determines the expectation of the difference between the true response and the model response, which characterizes the ability to approximate the target function. There are three methods of constructing an ensemble, of which the authors will apply bagging and stacking: • Bagging (or “bootstrap aggregating”) uses a set of independent models, usually using different fragments of the training sample to produce more diverse models. The final ensemble response is determined by averaging the response of all models. This method is implemented in random forests. Research proves that bagging allows
119
getting better results than the application of individual models (Choi et al. 2018). • Stacking (or stacked generalization) (Wolpert 1992) works in a similar way to bagging. However, instead of simply determining the average result, it uses another model, forming a two-level classification (Tsai and Hsu 2013). The second-level classifier, often called a metamodel, receives the responses from the first level and determines the response of the entire ensemble. This allows for greater nonlinearity, which is a key difference from bagging. This method also does a better job of using heterogeneous models as first-level classifiers. On the other hand, due to the increased complexity, the trained model may be even less accurate than individual basic classifiers. This paper will analyze only the ratio of models without EPU and with the inclusion of a calculated Twitter-based EPU to shorten the parsing and facilitate the analysis of the results. The use of single classifiers and bagging and stacking ensembles is also dismantled. Let us consider the stages of the research. In the first stage, a dataset for two EPU variants is prepared. In the second stage, the efficiency of individual basic classifiers is analyzed, using ROC (AUC) as the metric. For training, 70% of the original sample is separated, and 30% is used only for verification. In the third stage, bagging ensembles are used, assembling models from homogeneous students who achieved the highest accuracy in the previous stage (in this case, ANN and RF). A mixed model from all types of models is also used. Each ensemble will consist of five basic classifiers. To increase validity, each model is trained on a random subsample collected from 70% of the training sample, and 30% is used for the test only. To obtain the AUC, the model’s responses are queried in probabilistic form, and their average is calculated. In the fourth step, we build stacking ensembles. It is important to keep in mind that the first-level classifier and the metamodel require different data to learn so that the metamodel learns from the responses of the underlying classifiers that work with data they do not know. Thus, 70% of the training sample is divided into two equal (35%) parts of the original data. When the training of the base classifiers is completed, 35% of the data for training is loaded into the predictive mode, thus generating tables of five pairs of class probabilities for each instance of the loaded sample. The metamodel is trained on these probabilities (Jia et al. 2021). The ensemble’s response is the metamodel response, for which the AUC is calculated. To obtain an ensemble response, a data instance is loaded into first-level classifiers that generate probabilistic responses fed to the input of the finished metamodel.
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3
P. A. Drogovoz and A. R. Nevredinov
Results
Let us consider the simulation results obtained in the research paper. For convenience in comparing the accuracy and approximation abilities of the models, the AUC of the test sample and the training sample, as well as their mean and weighted mean, is presented (since 70% of the original sample was used for the training sample and 30% for the test sample, it may be reasonable to estimate this result as well). Full tables of research results can be found in the Data Availability section. The first result was an increase in the AUC of the models when using EPU, which is not observed in all models. Thus, SVM was a poor approximator for this model. In contrast, neural networks and random forests show better results. Moreover, the second type of model is already an ensemble in itself. Nevertheless, for completeness of the research results, it is applied further, forming a two-stage ensemble. The results of the next step, related to the construction of begging ensembles, also confirm the positive effect of EPU application on the accuracy of the models, although not always significant, which is expected due to the logic of this ensemble. The main result is an overall improvement in model accuracy, which confirms the effectiveness of the ensemble and the poor results of heterogeneous ensemble models, the averaging of which seriously degrades the AUC. Let us move on to the analysis of the efficiency of stacking ensembles. Models with different variants of the metamodel are constructed for each variant of the set of first-level classifiers. From the results, it was concluded that ANN is not the best first-level classifier because none of its results were the best. On the other hand, random forests (RF) show unexpectedly high predictive ability, even giving perfect accuracies (AUC equal to 1) when applied to familiar data used in training. Let us compare the results of all three tables. The highest accuracy for the entire sample by the weighted mean for the baseline of 0.9727 increased to 0.9746 when the bagging ensemble was applied and 0.97836 when the stacking ensemble was applied. For the test sample, the maximum AUC value increased from a baseline of 0.92813 to 0.93277 (bagging) and 0.93355 (stacking). This shows the possibility of steadily improving predictive accuracy with ensemble algorithms. However, the results of the stacking ensemble are less stable, confirming the problems of the complexity of building such models, which require more careful checking and tuning. However, the higher AUC obtained proves the ability of this type of ensemble to build a more accurate classifier than other machine learning methods can provide. We can also say that the use of non-financial indicators, in particular the EPU index based on textual analysis, can
improve the accuracy of models, which suggests the need to apply indicators other than financial ones in forecasting.
4
Conclusion
Thus, based on the studies reviewed, we can conclude about the impact of various non-financial indicators on the company’s stability. Textual analysis can serve as an important source of information for businesses (e.g., when planning advertising campaigns, targeting, or getting feedback from the audience by monitoring social networks) and as a source of information for forecasting, as demonstrated with the Economic Policy Uncertainty Index (EPU). In other words, businesses should consider such factors when forecasting the condition of companies. Those interested in evaluating companies should assess the company’s financial performance and market indicators (like GDP and import/export levels) and similar non-financial data, analyzing sentiment through sentiment analysis, dictionaries, or machine learning techniques. On the technical side, a comparison of single machine learning models and ensemble algorithms shows a small increase in prediction accuracy, especially when comparing single models and stacking ensembles. As we struggle for every percentage of model accuracy to improve the reliability of the analyses, we can conclude the usefulness of using ensemble algorithms in any machine learning models where possible. In the transition to Industry 4.0, these facts must be considered when building decision support systems (Proletarsky et al. 2020). Data Availability A visual diagram showing the main steps of the research is available at https://figshare.com/ with the identifier https://doi.org/https://doi.org/ 10.6084/m9.figshare.22300186.v1. Table showing the simulation results for single classifiers is available at https://figshare.com/ with the identifier https://doi.org/https:// doi.org/10.6084/m9.figshare.22309375.v1. Table showing the simulation results for bagging ensembles is available at https://figshare.com/ with the identifier https://doi.org/ https://doi.org/10.6084/m9.figshare.22309468.v1. Table showing simulation results for stacking ensembles is available at https://figshare.com/ with the identifier https://doi.org/https://doi.org/ 10.6084/m9.figshare.22309480.v1.
References Amendola A, Restaino M, Sensini L (2015) An analysis of the determinants of financial distress in Italy: a competing risks approach. Int Rev Econ Financ 37:33–41. https://doi.org/10.1016/ j.iref.2014.10.012 Atman EI (1968) Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. J Financ 23(4):589–609
Application of Text Analysis and Ensemble Algorithms … Baker SR, Bloom N, Davis SJ (2016) Measuring economic policy uncertainty. Q J Econ 131(4):1593–1636. https://doi.org/10.3386/ w21633 Barboza F, Kimura H, Altman E (2017) Machine learning models and bankruptcy prediction. Expert Syst Appl 83:405–417. https://doi. org/10.1016/j.eswa.2017.04.006 Beaver WH (1966) Financial ratios as predictors of failure. J Account Res 4:71–111. https://doi.org/10.2307/2490171 Bollen J, Mao H, Zeng X (2011) Twitter mood predicts the stock market. J Comput Sci 2(1):1–8. https://doi.org/10.1016/j.jocs.2010. 12.007 Choi H, Son H, Kim C (2018) Predicting financial distress of contractors in the construction industry using ensemble learning. Expert Syst Appl 110:1–10. https://doi.org/10.1016/j.eswa.2018.05. 026 Dakovic R, Czado C, Berg D (2010) Bankruptcy prediction in Norway: a comparison study. Appl Econ Lett 17(17):1739–1746. https://doi. org/10.1080/13504850903299594 Drogovoz PA, Kashevarova NA, Dadonov VA, Sadovskaya TG, Trusevich MK (2021) Industry 4.0 in Russia: digital transformation of economic sectors. In: Müller JM, Kazantsev N (eds) Industry 4.0 in SMEs across the globe: drivers, barriers, and opportunities. CRC Press, Boca Raton, pp 195–211. https://doi.org/10.1201/978100 3165880-15 Du Jardin P (2015) Bankruptcy prediction using terminal failure processes. Eur J Oper Res 242(1):286–303. https://doi.org/10.1016/ j.ejor.2014.09.059 Dzikevičius A, Šaranda S (2016) Establishing a set of macroeconomic factors explaining variation over time of performance in business sectors. Bus Theory Pract 17(2):159–166. https://doi.org/10.3846/ btp.2016.629 Elman J (1990) Finding structure in time. Cogn Sci 14(2):179–211. https://doi.org/10.1207/s15516709cog1402_1 Fedorova EA, Khrustova LE, Demin IS (2020a) Completeness of non-financial disclosure by Russian companies: the influence on investment attractiveness. Russ Manag J 18(1):51–72. https://doi. org/10.21638/spbu18.2020.103 Fedorova E, Afanasyev D, Demin I, Lazarev A, Nersesyan R, Pyltsin IV (2020b) Development of a tonal-thematic dictionary EcSentiThemeLex for the analysis of economic texts in Russian. J Appl Inf 6(15):58–77. https://doi.org/10.37791/2687-0649-202015-6-58-77 Fedorova E, Drogovoz P, Nevredinov A, Kazinina P, Qitan C (2022) Impact of MD&A sentiment on corporate investment in developing economies: Chinese evidence. Asian Rev Account 30(4):513–539. https://doi.org/10.1108/ARA-08-2021-0151 Goleman D (2009) Ecological intelligence: how knowing the hidden impacts of what we buy can change everything. Random House, New York Hochreiter S, Schmidhuber J (1997) Long short-term memory. Neural Comput 9(8):1735–1780. https://doi.org/10.1162/neco.1997.9.8. 1735 Irsoy O, Cardie C (2014) Opinion mining with deep recurrent neural networks. In: Proceedings of the EMNLP 2014: conference on empirical methods in natural language processing. Doha, Qatar, pp 720–728 Jabeur SB (2017) Bankruptcy prediction using partial least squares logistic regression. J Retail Consum Serv 36:197–202. https://doi. org/10.1016/j.jretconser.2017.02.005
121 Jia R, Lv Y, Wang G, Carranza E, Chen Y, Wei C, Zhang Z (2021) A stacking methodology of machine learning for 3D geological modeling with geological-geophysical datasets, Laochang Sn camp, Gejiu (China). Comput Geosci 151:104754. https://doi.org/10.1016/ j.cageo.2021.104754 Kotelnikov EV, Bushmeleva NA, Razova EV, Peskisheva TA, Pletneva MV (2016) Manually created sentiment lexicons: research and development. In: Computational linguistics and intellectual technologies: proceedings of the international conference “Dialogue 2016”. Russian State University for the Humanities, Moscow, Russia, pp 300–313 Kumar PR, Ravi V (2007) Bankruptcy prediction in banks and firms via statistical and intelligent techniques—a review. Eur J Oper Res 180 (1):1–28. https://doi.org/10.1016/j.ejor.2006.08.043 Liang D, Tsai C-F, Lu H-Y, Chang L-S (2020) Combining corporate governance indicators with stacking ensembles for financial distress prediction. J Bus Res 120:137–146. https://doi.org/10.1016/j. jbusres.2020.07.052 Mai F, Tian S, Lee C, Ma L (2018) Deep learning models for bankruptcy prediction using textual disclosures. Eur J Oper Res 274 (2):743–758. https://doi.org/10.1016/j.ejor.2018.10.024 Mikolov T, Sutskever I, Chen K, Corrado G, Dean J (2013) Distributed representations of words and phrases and their compositionality. https://doi.org/10.48550/arXiv.1310.4546 O’Leary DE (1998) Using neural networks to predict corporate failure. Intell Syst Acc Fin Manag 7(3):187–197 Persi U (2019) Sentiment analysis: the main theoretical prerequisites and some empirical application. Przegląd Rusycystyczny [Russ Stud Rev] 169(1):80–91. https://doi.org/10.31261/pr.7726 Proletarsky A, Berezkin D, Popov A, Terekhov V, Skvortsova M (2020) Decision support system to prevent crisis situations in the socio-political sphere. In: Kravets A, Bolshakov A, Shcherbakov M (eds) Cyber-physical systems: industry 4.0 challenges. Springer, Cham, pp 301–314. https://doi.org/10.1007/978-3-030-32648-7_24 Qu Y, Quan P, Lei M, Shi Y (2019) Review of bankruptcy prediction using machine learning and deep learning techniques. Procedia Comput Sci 162:895–899. https://doi.org/10.1016/j.procs.2019.12. 065 Renault T, Baker SR, Bloom N, Davis S (2021) Twitter-based uncertainty indices. Economic policy uncertainty. Retrieved from https://www.policyuncertainty.com/twitter_uncert.html. Accessed 17 Aug 2022 Sarikov B, Kuprianov A (2020) The effect of monetary policy on corporate bankruptcies: evidence from the United States. Appl Econ 52(47):5158–5168. https://doi.org/10.1080/00036846.2020.1757612 Tarasov DS (2015) Deep recurrent neural networks for multiple language aspect-based sentiment analysis of user reviews. In: Computational linguistics and intellectual technologies: proceedings of annual international conference “dialogue 2015”. Russian State University for the Humanities, Moscow, pp 65–74 Tsai C-F, Hsu Y-F (2013) A meta-learning framework for bankruptcy prediction. J Forecast 32(2):167–179. https://doi.org/10.1002/for. 1264 Wolpert DH (1992) Stacked generalization. Neural Netw 5(2):241–259. https://doi.org/10.1016/S0893-6080(05)80023-1 Yu H, Fang L, Du D, Yan P (2017) How EPU drives long-term industry beta. Financ Res Lett 22:249–258. https://doi.org/10.1016/ j.frl.2017.05.012
Achievements and Problems of the Development of the Digital Economy in China Vladimir A. Ermakov
and Lu Chen
Abstract
1
Paper illustrates digital economy’s current condition as well as its positive impact of the in China and discusses possible opportunities for Chinese citizens. Although the total degree of economic digitization is still significantly low compared to that in developed countries, it is already substantial in a number of regions and industries, especially in coastal regions that are heavily dependent on e-commerce. Due to these developments, productivity growth has risen, with varying implications on employment across industries. Therefore, as the Chinese economy ages, digitization continues to transform it through increasing efficiency and future growth. The government is crucial in leveraging the advantages of digitalization while reducing associated concerns, such as potential financial problems, privacy invasion, and labor disruption. The research discovers and evaluates major problems, for instance enterprises' internalization insufficient degree, poor security system, expensive creation of digital systems, the lack of “digital” talents. Keywords
Digital economy Advantages and problems of digital economy Information technology Data security Innovation JEL Classification
O10
O31
V. A. Ermakov (&) L. Chen RUDN University, Moscow, Russia e-mail: [email protected]
Introduction
The economy that is built on digital computer technology is known as the “digital economy,” which is also frequently referred to as doing business through online markets. It is also referred to as the web economy, the new economy, or the Internet economy. All industries are seeking digital transformation because of China’s recent expansion of digital technology. The academic study of the digital economy is currently concentrated on strategies for fostering technology innovation and digital development as a means of attaining long-term technological benefits. Compared to South Korea and Japan, where digital economies represent from 8 to 10% of GDP, China’s digital economy makes up only about 6% of the global GDP. While digitally transformed businesses made up $13.5 trillion of the global nominal GDP in 2018, they are expected to make up $53.3 trillion by 2023, or more than half of the nominal GDP of all advanced nations with a significant digital component (Zhang and Chen 2019). The digital economy currently makes up around 30% of GDP, according to the broad definition based on the CAICT, compared to 59% in the USA, 46% in Japan, and only about 20% in Brazil, India, and South Africa.
2
Materials and Method
2.1 Current State of the Digital Economy of China The digital economy data show that in 2018, in China it was around 6% of the GDP, compared to 7% in the USA, 8% in Japan, and 10% in Korea. Additionally, China has some digital advantages. For example, 40% of global e-commerce deals originate in China, which is more than Germany, France, Japan, the UK,
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_21
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and the USA put together. China’s mobile payments had a transaction value of $790 billion in 2016, which was 11 times greater than the next-largest market, the USA. China generally lags behind the USA regarding artificial intelligence (AI) but excels in certain areas like facial recognition. The broad online activity that results from this variety of digital activity provides enormous data that can be utilized to train AI systems.
2.2 Manufacturing, Data, and Digital Services Most of China’s economy is based on digital services like cloud computing, artificial intelligence, blockchain, and data analytics, which provide valuable information about supply chains, business insights and digital payments, alongside the online provision of expert services, education, retail, healthcare, and other industries (Wu 2022). The value added is largely provided by industries like automobiles and digital services, which are also those with the fiercest rivalry. Up to 30% of car manufacturers’ income is expected to come from services by 2030, according to McKinsey. The expansion of China’s use of digital services in manufacturing is a component of a larger effort by the country to advance manufacturing, which also includes taking the lead globally in the usage of robots, where China owns one-third of the world’s supply, more than twice as many as the USA. The supply of 5G gear is also heavily dominated by Chinese businesses, which will have an impact on the expansion of data services. According to the facts, most of the critical 5G patents are held by Huawei. These inventions also offer high-speed connectivity to the network’s edge, lowering latency and boosting speed. As a result, the Internet of Things (IoT) and edge computing are made possible, as well as a variety of new services, products, and ventures like autonomous delivery systems and augmented reality.
V. A. Ermakov and L. Chen
built from secondary data, where network effects produce winner-take-all results (Zhang et al. 2021). Digital economic infrastructure sub-index component, which is essential for the regional growth and economic infrastructure development. Large number of corporate websites and Internet bandwidth access ports provides an explanation for the Internet port growth level. The interprovincial digital economy’s industrial scale, business landscape, and level of investment are essentially measured by the sub-index component of the digital economy (Zhang et al. 2021). There is no single index that can accurately describe the amount of industrial digitization.
3
Results
3.1 China Digital Achievements Based on network infrastructure, China’s Digital Economy development indicates 38% of the GDP, or 2 trillion yuan, which was spent on this (Pang 2022). The digital economy is growing at a rate of 6%, which is more than three times faster than the GDP. Regarding regions, the digital economies of 13 provinces and cities, including Guangdong, Jiangsu, Shandong, Zhejiang, and Shanghai, have exceeded 1 trillion yuan, and Beijing and Shanghai’s digital economies together account for more than 50% of GDP. In 2020, China made great historic achievements in completing the building of a generally moderately rich society that has started a fresh journey toward excellent economic development. It is also crucial to pay attention to and fully investigate the crucial role played by the digital technology in achieving first-rate economic progression.
3.2 Major Problems in the Development of China’s Digital Economy 2.3 Chinese Digital Economy Measurement By 2023, 30 billion devices are expected to be connected to the Internet, with half of those connections being made between machines, including homes, cars, and connected factories. Since 5G and related know-hows increase the ability of corporates to gather data from things in real-time, analyze the data, and build business solutions along supply chains, they will also impact the development of global value chains and the function of digital skills. Chinese digital services’ growth will be impacted by 5G (Meltzer 2020). Chinese businesses will have an advantage over their rivals in establishing new data-driven business models that 5G will provide with prospects to get to market first, in part because China is quickly installing 5G. These three indicators are
International competitiveness of Chinese digital platforms still lags behind that of the top digital power companies in the world. China currently lacks a good number of sizable digital economy companies that are competitive internationally. Chinese digital companies have not developed internationally to the same extent as the global digital titans. Additionally, the overseas market is still developing slowly for Chinese digital firms, which has a negative impact on their revenue from outside. The majority of Chinese digital businesses are industry leaders at home struggling to adapt abroad. This circumstance is due to a variety of factors. First, the domestic and foreign market environment, success requirements, and competition modes are very different; the survival rules of the domestic market are very different from
Achievements and Problems of the Development …
the international market, and the business mode adapted to the domestic market cannot meet the requirements of internationalization. Furthermore, Chinese digital enterprises lack international experience. Some digital economy companies have found that the market is growing very slowly when they try to transfer the operating model that works in China directly to other developing countries. However, when entering developed markets such as Europe, America, and Japan, it is faced with the embarrassing situation that the thinking set and business habits formed based on local Chinese culture are not suitable for the mature and standardized business environment in developed countries (Zhang and Zhou 2022). China has been more forgiving of its regulatory principles. On the other hand, as its scope grows, the informal institutional setting is starting to impede its advancement. First, there are no laws or regulations that are guaranteed to apply to the digital economy in China. For instance, the legal framework needs to be established on the governance guidelines for blockchain technology, the access threshold for sensitive industries, and ethical concerns. The absence of laws on data rights confirmation leads to the failure of some digital businesses. Second is the lack of institutional arrangements related to the digital economy. The country has yet to establish a unified and standardized data collection, management, and standardization system. Data security review has not yet set up a sound system and data protection. It is easy to provide a “hotbed” for excessive corporate and personal information and data collection, use, and illegal disclosure and harm the interests of consumers. Third, there are still many deficiencies in the development of data processing standards, quality standards, and application standards in China. Data standards and norms are imperfect, and data market trading rules are not unified. Fourth, the traditional regulatory system and social governance system have been deeply affected, and the regulatory concept is relatively backward. The digital foundation of businesses is still relatively weak. The foundation and application capacity of industrial integration development is insufficient. SME data asset accumulation, resource application, and capital application are insufficient, making it challenging to realize the industry’s digital transformation. This is due to variances in the degree of digital application among various firms. From a business standpoint, the entire digital economy industrial chain does not have a high degree of business synergy. There are some barriers to its “intelligent” improvement. There is an imbalance in digital infrastructure construction in China. China had 904 million Internet users as of March 2020, with 71.8% living in cities and 28.2% in rural areas (Shen 2020). The digital split between urban and rural areas is caused by several factors, including economic factors and a lack of advanced digital infrastructure in rural
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areas. Guangdong, Jiangsu, and Zhejiang provinces built far more 5G base stations by 2020 than the six central provinces and western regions combined (Xinjiang, Ningxia, and Xizang). Rural digitization is severely hampered by the fact that the network coverage is still mostly 4G, is not comprehensive, and has a subpar network signal. There is a lack of digital talents. The vast talent gap in the digital sector is a roadblock to the expansion of the digital economy because it has slowed down the reorganization of digital resources. First, there are not enough high-caliber talent recruiters. According to the 2020 Annual Report on the Development of Global Digital Talent, European cities are more appealing to digital talent globally, while China is less so. A strong flow of digital talent goes to New York, Singapore, the San Francisco Bay Area, and the United Arab Emirates. Second, there are not enough people working in the digital sector. The digital sector in China is still in its exploratory phase. Tencent statistics show that there is a skill gap in China’s information industry. The vast skill gap in the digital industry has slowed down the restructuring of digital resources, and the acute talent shortage in the sector has emerged as a barrier. First, it is difficult to get top-notch employees. The San Francisco Bay Area, New York, Singapore, and the United Arab Emirates are more desirable locations for digital talent than China, according to the 2020 Annual Report on the Development of Global Digital Talent (Wang 2022). European cities are more attractive to digital talent overall. Second, there are not enough workers in the digital industry. China’s digital sector is still in its exploratory phase. Tencent statistics show that China’s information industry has a talent gap.
4
Conclusion
The digital technology will help the Chinese economy move up the global value chain. China’s world-leading ability to accumulate big data will effectively facilitate technological innovation and economic transformation and help China gain an advantageous position in international competition. It will also give China valuable participation in the setting of international standards around the world. The digital technology is consistent with high-quality development. It will gradually grow stronger and give a strong boost.
References Meltzer JP (2020) China’s digital service trade and data governance: how should the United States respond? Global China. Retrieved from https://www.brookings.edu/articles/chinas-digital-servicestrade-and-data-governance-how-should-the-united-states-respond/. Accessed 22 Dec 2022
126 Pang I (2022 Nov 28) China’s digital economy: divided but growing. ING. Retrieved from https://think.ing.com/articles/china-digitaleconomy-divided-but-growing. Accessed 3 Jan 2023 Shen X (2020 April 28) China now has over 900 million internet users thanks to the pandemic. Abacus. Retrieved from https://www.scmp. com/abacus/news-bites/article/3081911/china-now-has-over-900million-internet-users-thanks-pandemic. Accessed 11 Jan 2023 Wang Z (2022 Nov 13) The trend of global digital talents. Pekingnology. Retrieved from https://www.pekingnology.com/p/the-trend-ofglobal-digital-talents. Accessed 12 Jan 2023 Wu Y (2022, Aug 11) Understanding China’s digital economy: policies, opportunities, and challenges. China Briefing. Retrieved from https://www.china-briefing.com/news/understanding-chinasdigital-economy-policies-opportunities-and-challenges/. Accessed 15 Dec 2022
V. A. Ermakov and L. Chen Zhang C, Zhou W (2022) New direction of sustainable urbanization: the impact of digital technologies and policies on China’s in Situ urbanization. Buildings 12(7):882. https://doi.org/10.3390/buildings 12070882 Zhang L, Chen S (2019) China’s digital economy: Opportunities and risks. IMF Working Paper No. 2019/016. Retrieved from https:// www.imf.org/-/media/Files/Publications/WP/2019/wp1916.ashx. Accessed 11 Dec 2022 Zhang W, Zhao S, Wan X, Yao Y (2021) Study on the effect of digital economy on high-quality economic development in China. PLoS ONE 16(9):e0257365. https://doi.org/10.1371/journal.pone. 025736509/202
Managing the Creation of Promising Products Based on the Selection of Intellectual Property Objects in the New Economic Conditions Sergey V. Nazyuta
and Anna A. Ostrovskaya
Abstract
Keywords
The research focuses on selecting intellectual property objects to create new promising products. The discussed issue is relevant in the current geopolitical conditions when the Russian economy finds itself under the influence of economic and political sanctions. The sanctions policy implemented by the countries of the European Union, the USA, and others puts Russian industrial enterprises before the challenge of a significant increase in the production of knowledge-intensive products, including machine and machine-building products, microelectronics, medical equipment, and products of daily demand, in a short time. Through state policy, the Government of the Russian Federation takes active measures for import substitution and import independence, contributing to the achievement by Russian high-tech enterprises of the trajectory of advanced development and creation of radically new, highly competitive products based on promising objects of intellectual activity. The authors propose the algorithm for this process. The proposed algorithm is based on the application of graph theory and the construction of a tree of goals for the selection of the object of intellectual property. The essence of the algorithm for making decisions on the creation of promising products is the initial formation of a data bank of objects, their ranking, and the choice of the object of intellectual property, which has the maximum impact on the level of the final competitiveness of the final product.
Intellectual property objects Selection model Algorithm Competitiveness Import substitution
S. V. Nazyuta A. A. Ostrovskaya (&) RUDN University, Moscow, Russia e-mail: [email protected] S. V. Nazyuta e-mail: [email protected]
JEL Classification
O32
1
O14
C15
C53
Introduction
The current development of the Russian economy and the restrictions arising at this stage due to sanctions dictate the need to solve problems associated with import substitution, the increase of product competitiveness, and the rational use of all existing resources. In recent years, Russia, receiving large revenues from the sale of energy resources, has followed the path of purchasing many types of advanced household appliances, equipment, and components at the expense of imports, as evidenced by the following statistics: (1) During 2017–2021, imports of large home appliances increased by 43%, while their production grew only by 18% over the same period (BusinesSstat 2023). (2) The largest international companies—manufacturers of home appliances with localized plants in Russia closed in spring 2022 (4 of 5 plants) (Daily 2022). 3) The share of imported components in the machine tool industry in Russia is 20–40%; they can be promptly replaced by domestic ones. (4) The share of the Russian fleet consists of imported aircraft by more than 70%, even though there are Soviet designs and new Russian ones (Akopova 2022). (5) Dependence on imports in final consumption is highest (more than 50%) in textiles, pharmaceuticals, electrical equipment, cars, and computers. In paper, chemical and
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_22
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metal products, the level of dependence varies from 30 to 50%. The situation is similar in electronics, textiles, and equipment for the oil and gas industry, where the share of imports reaches 50% (Akopova 2022). (6) Russia’s largest import dependence on the EU and the USA is on machinery and equipment (40%), medicines (34.5%), cars (28.3%), and rubber and plastic products (24.6%) (Koshik 2022). Additionally, the ongoing sanctions’ policy of the EU and the USA has led to the fact that a considerable number of major companies in various industries, including those related to information technology and equipment, have left the Russian market. Thus, SAP, Oracle, Dell, and HP announced a halt in sales in Russia. IBM CEO Arvind Krishna announced the complete, albeit temporary, termination of all IBM operations in Russia (CNews 2022). SAP, a German software developer for the corporate segment, has decided to completely stop cooperation with Russian customers, even under existing contracts (Chebakova 2022). The European division of the Indian steel company Tata Steel announced the termination of cooperation with Russia (RIA News 2022). If this process continues for a long time, this can lead to a shortage of certain goods and services. The Government of the Russian Federation is taking measures to level out the effect of sanctions, with particular attention paid to countermeasures aimed at developing knowledge-intensive production. In particular, there is an anti-sanctions plan, which includes measures in the following areas: • Deferral of tax payments (in force for organizations operating under the simplified taxation system) and reduced tax rate (for companies in the IT industry). • Moratorium on tax audits. • Direct business support in the form of concessional lending (IT sector and backbone enterprises), deferrals of obligations on subsidies and loans, and others. A special focus is given to import substitution in industry. The key state instruments in this area are specialized state programs and decrees of the Government of the Russian Federation and bills passed since 2014; the number of the latter has increased significantly since the spring of 2022. These instruments are aimed mainly at supporting mechanical engineering, pharmaceuticals, machine tools, microelectronics, and other industries where the share of imported products is significant. These instruments of state regulation are also aimed at stimulating the domestic market, which, in turn, should help intensify import substitution. However, in today’s conditions, the growth rate of new promising products, based on existing conditions, does not
S. V. Nazyuta and A. A. Ostrovskaya
fully meet the needs of industry for the implementation of all areas of Russia’s economic development.
2
Methodology
In our opinion, to solve the indicated issues, it is necessary to pay particular attention to creating progressive intellectual property objects (IP objects), the use of which in the development of devices, equipment, and production means could significantly increase their competitiveness, replace imported products, and increase national economic security and technological independence. It is important to note that the process of creating IP objects is closely linked to the transfer of technology and the acquisition of knowledge from the global information space. Nowadays, the retrieval and processing of information are performed using technologies based on big data processing and AI algorithms. It is carried out to develop promising products with sustainable competitive advantages created using advanced IP objects. Thus, there is a task of selecting the IP objects from the perspective of assessing their potential contribution to the final product’s competitiveness. Figure 1 shows a flowchart of the creation and evaluation of IP objects. The data is extracted from the information space, and then, a block of the necessary information is allocated to form the IP object. Next, the competencies for creating the IP object by the organization are assessed. Based on this assessment, a block for forming the IP object is created. After the construction, the IP object is evaluated. An important issue in selecting IP objects is their ranking to determine the level of importance of each object in the final products. For this task, we propose using the method of the goal tree. The key idea is presenting the project for the manufacturing of the product as the main goal. The tasks aimed at achieving this goal will be sub-targets; in our case, these are IP objects. In turn, sub-targets can be broken down into even smaller sub-targets. Thus, we get a tree of targets consisting of interrelated IP objects. To formalize it, this process is presented in Table 1. where ij
I j
the set of vertices of the graph, which denote IP objects. rank coefficients of IP objects. sequential number of IP objects.
As part of ranking IP objects, the coefficient i is significant because it indicates the role of a particular IP object or IP objects that constitute it in the production of final products. It is assumed that the maximum rank is 1. The use of the method of graphs seems to be simple and clear in matters of assessing the impact of IP objects on the
Managing the Creation of Promising Products …
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To solve the problem of assessing the impact of IP objects on the competitiveness of the final product, the authors propose using the model of selection of IP objects to ensure increased competitiveness, developed by Nazuta et al. (2018). Using the appropriate methodology algorithm and its final formula, the object (or the number of objects) that contributes most to the competitiveness of the products created on its basis is determined:
Global information space / Information space of industries
Working with the information space and getting information
k:
Processing of data obtained to solve the targets
k Tm Fm Q
Selection of progressive solutions
Formation of IP objects based on the obtained knowledge
3 Evaluation of the IP objects formed Fig. 1 Flowchart of the creation and implementation of the IP objects. Source Developed by the authors
Table 1 Way of numbering the IP objects tree
Object K1.2 Object K1.3
sequential number of an IP object. characteristics of an IP object. aggregate scenario conditions of uncertainty. competitiveness of the products created based on an IP object.
This approach can be used in the design of analytical software systems to support decision-making to improve the organization’s competitiveness based on the continuous development and replenishment of the data bank of the results of intellectual activity, the effective organization of work with the IP object. Moreover, the approach can be used to create promising, radically new products based on these analytical software systems to ensure the formation of sustainable competitive advantages.
Assessment of the organization’s competence in creating an IP
Object K1.1
i¼1;:::;m
where
Selection of progressive solutions
Object K0.1
Q ¼ arg max fQðT1 ; F1 Þ; :::; QðTi ; Fi Þ 2; . . .; QðTm ; Fm Þg
K2.1
K3.1
K2.2
K3.2
K2.3
K3.3
K2.4
K3.4
K2.5
K3.5
K2.6
K3.6
Source Developed by the authors
final product. The results of this method can form the basis of a databank of IP objects, which will greatly accelerate the evaluation process. Once the data bank is formed, the most promising and progressive solutions in terms of the possibility of applying for the formation of IP objects are selected.
Results
The conducted studies allow us to form an algorithm for decision-making on creating promising products, which will be demanded in the market, developed based on IP objects, that are selected and ranked using the methodological approaches and models proposed above. The algorithm is shown in Fig. 2. Based on the algorithm shown in Fig. 2, it is possible to formulate several recommendations to form the technical and economic shape of new promising products: (1) The formation of the technical and economic shape of new promising products is based on the study of competitors’ products on the market, forecasting the development of science, engineering, and technology, and forming radically new products, as well as based on the formed microenvironment of the organization, which will ensure the creation of the product according to its technical and economic shape. (2) The creation of promising new products, surpassing the characteristics of competitors’ products in the future, should be based on the development of the advanced
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S. V. Nazyuta and A. A. Ostrovskaya
Making a decision to create promising products
Study of current products presented by competitors in the market and determination of their technical and economic characteristics
Formation of the innovative microenvironment of the organization (including technologies and competencies) to create the shape of promising products
Building a forecast of future market needs using information methods and technologies
Assessment of intellectual and innovative potential necessary to form the shape of promising products
Assessment and selection of the organization’s IP objects to create promising products superior to competitors’ products
Ye s
Forming the shape of promising products
No
Search for technologies and competencies in the global information space, development of IP objects
Implementation of measures to manage competitiveness in the creation of the shape of promising products
Competitiveness assessment and forecasting
Yes
Creation of an image of promising products with high competitive advantages, with the prospect of market dominance / creation of new needs and markets
No
Improving the appearance of promising products Fig. 2 Decision-making algorithm to create promising products. Source Developed by the authors
Managing competitiveness by “weak signals”
Managing the Creation of Promising Products …
intellectual property, the selection, ranking, and evaluation of which should be made using the methods of economic and mathematical modeling and graph theory. (3) It is necessary to implement measures to manage competitiveness in the formation of the shape of promising products using artificial intelligence for automated collection and analysis of data from public information sources and industry analytical reviews on the state of the markets, development of competencies, and the emergence of new technologies that can be used to improve the technical and economic characteristics of the shape of a promising new product. (4) Competitiveness management at the stage of formation of the technical and economic appearance of advanced products is carried out with the use of the developed tool—an economic-mathematical model that makes it possible to carry out a dynamic assessment. If, as a result of calculating the indicators according to the model, the indicator is at an insufficient level, the organization should reconsider the technical and economic appearance of the product and make changes. (5) Once the shape of promising products has been created, systemic management of competitiveness “by weak signals” is necessary. A detailed algorithm for this tool is described by Chursin and Makarov (2015). The essence is that the analysis of market conditions and the emergence of more advanced products, which threaten future products of losing market share, is carried out at all stages of the life cycle of promising products. In the case of such threats, it is necessary to adjust the appearance of promising products, considering the existing potential, and go to the algorithm’s beginning.
4
Conclusion
The research studies the current economic situation in the industry of the Russian Federation after the introduction of economic sanctions in February 2022–June 2022, highlighting the key areas and measures taken by the
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Government of the Russian Federation to offset the effects of sanctions. The authors proposed an approach to the use of graph theory and the formation of the tree of objectives in the analysis and ranking of intellectual property objects and the model of selection of intellectual property, as well as an algorithm for decision-making in the creation of promising products with sustainable competitive advantages to ensure the implementation of import substitution policy and national technological security and independence.
References Akopova E (2022 April 22) The Russians were told in which areas the dependence on imports is strongest. Econ Inf Agency “Prime”. Retrieved from https://1prime.ru/exclusive/20220422/836730596. html. Accessed 17 Jan 2023 BusinesSstat (n.d.) Analysis of the market of large household appliances in Russia in 2017–2021, forecast for 2022–2026. Retrieved from https://businesstat.ru/images/demo/large_home_ appliances_russia_demo_businesstat.pdf. Accessed 10 Jan 2023 Chebakova D (2022 Mar 3) SAP announced the termination of cooperation with Russian companies. RBC Daily. Retrieved from https://www.rbc.ru/technology_and_media/03/03/2022/622074b79 a7947777f0a6bb9. Accessed 13 Jan 2023 Chursin A, Makarov Y (2015) Management of competitiveness: Theory and practice. Springer, Cham, Switzerland. https://doi.org/10.1007/ 978-3-319-16244-7 CNews (2022 Mar 6) IBM is leaving Russia. Hundreds of its Russian employees are under threat of dismissal. Retrieved from https:// www.cnews.ru/news/top/2022-03-06_rossiya_ostalas_bez_ibmpod. Accessed 17 Jan 2023 Koshik P (2022 April 21) Experts told how much the Russian economy depends on “unfriendly” countries. Chip—Gadgets Technol. Retrieved from https://ichip.ru/novosti/eksperty-rasskazali-naskolkosilno-rossijskaya-ekonomika-zavisit-ot-nedruzhestvennyh-stran787572. Accessed 13 Jan 2023 Nazuta SV, Yudin AV, Grosheva PY (2018) Method for the selection of intellectual property objects for increasing competitiveness. Int J Pure Appl Math 119(16):3845–3849. Retrieved from https:// acadpubl.eu/hub/2018-119-16/2/403.pdf. Accessed 17 Jan 2023 RBC Daily (2022 Mar 31) For 2017–2021, the production of large household appliances in Russia increased by 18%: from 10.1 to 12.0 million pcs. Retrieved from https://marketing.rbc.ru/articles/13390. Accessed 17 Jan 2023 RIA News (2022 April 20) The European daughter of Tata steel stops doing business with Russia. Retrieved from https://ria.ru/20220420/ biznes-1784575143.html. Accessed 13 Jan 2023
Value of Transformation: Business-Driven or Technology-Driven? Nkirote B. Gitonga
traditional focus solely on products. Meanwhile, the expertization pattern represents a fusion of the product-process-centric business model, encompassing consultative services and multi-faceted platforms.
Abstract
We are at the cusp of a significant technology-driven transformation of most, if not all, industries. Research and development processes have evolved because of data and technology. R&D work is now moving toward AI and machine learning methods. The operational processes are changing as well. Data can be leveraged to fine-tune and accelerate future processes. Predictability from data has improved results that are almost always accrescent. However, the real economy is still far from digital maturity. We have only truly started to leverage digital transformation in a few processes of the value chain, and with limited investment, product commercialization has not delivered the expected results. The majority of scholarly investigations have concentrated on the technological facets of the fourth industrial revolution (Industry 4.0), primarily revolving around advancements in products and processes. Surprisingly scant attention has been given to the realm of business model innovation, despite its potential to yield greater success compared to conventional product or process-centric innovations. In light of this, a pivotal inquiry arises: What indeed constitutes the principal impetus behind the value derived from the profound shift toward digital transformation? What are the advantages or disadvantages of focusing on technology as the end goal as opposed to a tool? This paper intends to review business models fitting into the Industry 4.0 paradigm and the main patterns they identify with. Integration patterns introduce novel elements to business models by incorporating fresh processes and seamlessly melding segments of the supply chain. In contrast, servitization patterns spark innovation by synergizing services and products, departing from the
N. B. Gitonga (&) RUDN University, Moscow, Russia e-mail: [email protected]; ; [email protected]; ; [email protected]
Keywords
Business models Internet of Things Industry 4.0 Value transformation Digital transformation JEL Classification
R01
1
O14
O36
M21
L17
L26
Introduction
The discourse surrounding propelling traditional sectors into the realm of digital transformation's possibilities and obstacles is a recurrent theme among both industry professionals and researchers on a global scale. Government endeavors have made robust efforts to foster the merging of established industrial manufacturing with cutting-edge technologies like the Internet of Things (IoT). These initiatives aimed at revitalizing digital tardiness stem from the recognition that manufacturing domains serve as the bedrock of numerous economies. For instance, Russia’s industrial sector, responsible for over 30% of the GDP, stands as the primary employer for a substantial portion of the nation's workforce. Not all industries begin the digital transformation journey simultaneously, and the pace at which transformation takes place is not equal. This is despite the fact that we have expectations of digital integration, and these keep leveling out across industries. We no longer compare service levels within industries but rather benchmark all their digital aptnesses against the most digitally advanced, regardless of sector.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_23
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N. B. Gitonga
Table 1 DQ evaluates four major outcomes Digital quotient Strategy
Organization
Culture
Capabilities
• Visionary, long-term focus • Intertwined with the corporate strategy • Placed at the core of addressing customer requirements
• Duties and obligations • Skill and leadership • Effective oversight and performance indicators • Investment in digital evolution
• • • • •
• • • •
Disposition toward risk Speed and adaptability Iterative experimentation Internal cooperation External approach
Interconnectedness Content Customer experience Data informed decision-making • Automation • IT systems’ structure
Source Compiled by the author based on (Fox et al. 2016)
The digital quotient (DQ) resulted from an in-depth study that appraised 18 practices related to digital strategy, digital capabilities, and digital culture to understand key digital challenges and maturity levels in large organizations worldwide (Table 1; Fig. 1). The measure of these variables results in an indicator of the DQ that provides stakeholders with insight into the level of digital maturity of an organization. While the growing significance of the economic aspects within Industry 4.0 has garnered increasing attention, prevailing research has predominantly fixated on its technological ramifications (Burmeister et al. 2015). Conversely, only a limited number of broader studies indicate that enterprises grapple with effectively capitalizing on new
technologies in the absence of well-suited business models (Posselt et al. 2013). The significance of future triumph extends beyond mere product and process innovations, encompassing the pivotal role played by business model innovations. Evidently, those who innovate their business models exhibit superior success compared to those solely engaged in product or process innovation (Weking et al. 2019). The inflexibility of a business model can swiftly precipitate a company's downfall when confronted with shifting economic conditions. The exploration of business model innovation within the realm of Industry 4.0 remains underexplored. There exists a dearth of literature elucidating how emerging technologies
Fig. 1 DQ score by industry out of 100. Source Compiled by the author based on Fox et al. 2016
Digital Maturity per Sector
Tourism Media Telecom Retail banking Retail distribution Automobile High tech Assembly
Health Oil & gas Public sector
Chemicals & agriculture
Value of Transformation: Business-Driven …
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impact established models. Nonetheless, this revolution is marked by numerous advancements that warrant consideration of the prospect and even necessity of overhauling prevailing models (Kagermann et al. 2013). As a result, manufacturers find themselves uncertain about the potential configurations of novel models under the umbrella of Industry 4.0 (Bock and Wiener 2017) and the methods to adapt conventional models for these new revolutions. Businesses encounter difficulties in innovating their models due to an inadequate comprehension of their existing business frameworks, which in turn impedes their ability to discern when and how modifications are warranted. Thus, the prevailing approach leans toward trial and error, with a conspicuous absence of a systematic guiding framework. Enter business model patterns—a validated method for systematically and efficiently innovating business models. These patterns encapsulate recurring foundational elements of a model, abstractly documenting the logic behind the model's structure, and often emerging through the course of business model innovation processes (Sarvari et al. 2019). A substantial proportion of model innovations essentially involves the recombination of pre-existing patterns. A fundamental inquiry arises: What constitutes the business model patterns pertinent to Industry 4.0? Taxonomies have notably aided researchers in dissecting, organizing, and comprehending intricate domains through abstract or analytically derived categorizations. In doing so, they lend support to the identification of patterns by elucidating the common and distinctive underpinnings of various business models (Bock and Wiener 2017). Recent research endeavors have culminated in the development of taxonomies and patterns tailored to Industry 4.0-related sectors.
(Oesterreich and Teuteberg 2016), while others perceive it as a novel phase or paradigm in industrial production (Kagermann et al. 2013), emphasizing the transformative outcome. Industry 4.0 encompasses the digital metamorphosis from a process-oriented viewpoint and introduces a fresh manufacturing paradigm from an outcome-focused stance, particularly for established sectors. The terminology “Industrial Internet of Things” (IoT) frequently serves as the overarching descriptor for Industry 4.0, encapsulating its application within industrial settings by interlinking devices within a factory context. IoT introduces a novel manufacturing landscape characterized by real-time interaction among intelligent machinery, objects, and individuals. Acting as pivotal catalysts in the evolution of Industry 4.0 are Cyber-Physical Systems (CPSs), intelligent factories, and the Internet of Things. CPSs embody intricate platforms amalgamating tangible components, embedded sensors, and digital parameters, seamlessly merging physical and virtual constituents to an indistinguishable extent. Smart objects, which establish real-time connections within the IoT and relay information to data repositories, are integral components of this landscape. These objects possess the capability to autonomously make decisions and execute actions based on the input they receive. When assimilated into manufacturing, they facilitate intelligent processes, products, machinery, systems, and manufacturing facilities (Hermann et al. 2016). The concept of a smart factory embodies a production site’s resources autonomously interacting and exchanging information, initiating, and overseeing subsequent steps, and propelling the production cycle forward.
2
2.2 Business Models
Methodology
From the digital quotient indicator study, we find ourselves between a rock and a hard place, asking why the same industries receiving massive amounts of investment seem to be still lagging on the digital maturity scales. Why are digitization investments not yielding the expected organizational change? Granted, we must increase technology investments significantly and continually in the real economy sectors. It is more important to execute a much more focused digital transformation strategy.
2.1 What is Industry 4.0? Amidst a plethora of interpretations, Industry 4.0 is characterized in various ways—some define it as the progressive automation and digitization of the manufacturing sector
A business model’s essence lies within its four fundamental components: the value proposition, market segments, value chain structure, and value capture mechanisms, all interconnected in the enterprise architecture (Foss and Saebi 2017). Business model innovation entails driving progressive changes in a company’s business model. In the context of transitioning from a traditional business model to an Industry 4.0 business model, business model innovation recognizes the business model as a distinct source of innovation, separate from product, service, or process modifications. It encompasses significant alterations to key facets of the firm’s business model or the way they are interconnected. The innovation process facilitates more radical transformations; for instance, within the context of Industry 4.0, innovation involves deliberate and substantial changes leading to entirely new business models.
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To effectively support systematic and efficient business model innovations, practitioners employ business model patterns as a well-established approach. These patterns serve to describe and analyze Industry 4.0 models that arise from business model innovations geared toward Industry 4.0. A business model pattern abstractly captures the core elements of a recurring model design challenge and its corresponding solution, which can be applied across various firms and industries. These patterns offer a systemic and efficient framework throughout all stages of the business model innovation process. For instance, they aid firms in comprehending and defining their own enterprise models and the prevailing industry logic. Furthermore, these patterns serve as a source of inspiration, allowing firms to transfer successful patterns from other companies and industries into their own business models.
2.3 Business Models in Industry 4.0-Related Areas Despite the absence of ample research on models for Industry 4.0, business models for some Industry 4.0-related topics have been well explored. They include open innovation, product service systems, crowdsourcing, and mass customization. They are linked to the business models in the fourth revolution because they are all enabled and supported by the same main technical enablers of Industry 4.0. Open Innovation and Crowdsourcing In response to the challenges posed by a globalized economy, heightened competition, escalating research and development expenses, and shorter product lifecycles, businesses find themselves compelled to pivot from closed innovation to open innovation strategies. This strategic shift entails a transformation from conventional models to open paradigms characterized by the active solicitation and utilization of external concepts for internal application or the licensing of internal technologies and concepts to external entities. Crowdsourcing, a pivotal facet of innovative models, entails delegating tasks that were previously undertaken by in-house personnel to an extensive, undefined network of individuals. This particular facet of innovative modeling imparts a transformative influence on the traditional business model, prompting a shift in the role of the consumer or customer from a passive purchaser to a value co-creator, and even a significant partner. Internet of Things The Internet of Things (IoT) stands as a foundational technical catalyst for revolutionary business models. Within
N. B. Gitonga
these models, the value proposition assumes a paramount role, particularly within the industrial context (Kiel et al. 2017). A novel value proposition may encompass a comprehensive solution that resolves consumer predicaments, thereby altering relationships, primary partnerships, and principal resources. These models intricately involve customers in the product engineering and design process. Product Service Systems (PSSs) The service dimension inherent in product-service systems is profoundly reliant on data harvested from Cyber-Physical Systems (CPS), IoT, and intelligent factories (Basirati et al. 2019). These systems epitomize a fusion of tangible products and intangible services meticulously tailored to fulfill distinct customer requirements. Innovations within PSS models are especially prevalent among manufacturing enterprises that seek heightened customer engagement (e.g., pharmaceuticals and energy sectors), more consistent revenue streams, and enhanced resource allocation. The transition from mere product vendors to customer-centric problem solvers or solution providers empowers firms to deliver novel customer value by mitigating risks and enhancing operational efficiency or asset effectiveness. Such business models can adopt a product-oriented, user-centric, or outcome-focused approach. Mass Customization Mass customization entails the creation of uniquely personalized goods for a broad market, achieving cost-efficiency akin to standardized products. At its core, mass customization acknowledges the distinctiveness of each consumer, synergizing the merits of mass production and artisanal craftsmanship. Technological infrastructure facilitating seamless interaction with customers and suppliers is typically imperative for successful mass customization implementation. The transition from conventional mass production to customization significantly impacts business models, necessitating heightened coordination between demand and supply, and mandating the establishment of standardized information exchange protocols between organizations. This evolution of linear supply chains into digitally interconnected value networks culminates in reduced transactional costs and accelerated time-to-market cycles.
3
Results and Discussion
Thus, for us to know what we should choose, we must look forward to what we want. What does the future of commercial success look like? What Industry 4.0 business model fits the picture of the result (Fig. 2)?
Value of Transformation: Business-Driven …
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Fig. 2 Industry 4.0 success outlook. Source Compiled by the author
INTEGRATED ECOSYSTEM • Industry + Investor + Supplier + Consumer + Policy-maker
FASTER INNOVATION TOLLOUTS • Data + Software + Production
PHASED LAUNCHES • Local --> Global
COMMERCIAL
CONSUMER CENTRICITY
SUCCESS
• Value + Consumer
Industry 4.0
HYBRID REPRESENTATION • Trsusted partners+ Account Segmentation
OMNI-CHANNEL • Data + Software + AI
FEEDBACK LOOP + N=1 • Each consumer is unique
For a long time, integrated ecosystems focused only on the investor and suppliers and an indirect outreach to consumers. However, the involvement of consumers and policymakers is important; commercialization has to evolve from investor focus to consumer and policymaker focus. We must rethink commercial operations on the business and technology end to cope. How does the industry prepare for this new reality and set us up for consistent commercial success as we invest in technology? What philosophies do we adopt when we look at what is important to the business that seems odd with what the technology wants to focus on? There are three areas where there is a disconnect between business and technology (Fig. 3). Thus, the three areas where there is a disconnect between business and technology are as follows: • Local versus global: Traditionally, enterprises have been accustomed to operating on a local scale to ensure swift implementation and expansion. This approach grants individual regional leaders the autonomy to shape strategies as they see fit, a practice that appears logical. However, technology platforms are only efficient if deployed globally through a business. Having a different technology investment for every country or region is a sure-shot recipe for failure, considering people skills, economies of scale, and learning curves. Businesses should take global deployment but have local
BUSINESS
TECHNOLOGY
Local
Global
Process
Data
Decision
Analytics
Fig. 3 Business model versus technology model. Source Compiled by the author
configurations allowing autonomy to local markets. Technology skills should also be consistently onboarded. • Process versus data: To a large extent, businesses want more consistent error-free execution every time, which is driven by a process. It does not understand the data they have or what value the data can provide. On the other hand, technology has moved leaps and bounds ahead in leveraging the data; it just does not do it in sync with the businesses. Companies invest in digitizing processes and not in data, which can create new processes and change how business is done. It is useful to understand data
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requirements to ensure that it is procured and break down data silos through interconnected systems. • Decision focus versus analytics: Business only cares about making a decision and getting stuff done because the cost of not making a decision is higher. For the business, making a decision is better than trying to make the most optimal one. On the other hand, technology has been increasingly moving more on the analytics side, but whether it has really changed the speed and efficiency of our business decisions is still an open question. We have been doing process automation for a long time, and it has brought more consistency to execution; data are really transforming the business. While research and development have embraced data-driven business, the commercial side is still behind. Data make new innovative processes possible; think about smart devices and how the delivery process is being transformed by the data collected. The future of business lies in moving technology investments from process-centric to data-centric in the entire value change. Technology platforms have advanced to a point where one does not really need to compromise between local and global. Global platforms are important because they allow one to share the learnings from the local data and share best practices from every corner of the world; they help to drive global success. However, process configurations in each market can be local, allowing them to retain control and speed of execution, and giving independence and autonomy of execution to local businesses. For most places (e.g., Europe), this is highly critical. Global analytics and execution have to be seamlessly married to deliver insights at the point of decision. The goal of all technology investments has to be usable analytics. The challenge we face is that analytics is almost treated as a separate back-office discipline and the right insights are not available when decisions have to be made. Even after millions of dollars in investments in analytics platforms, people’s gut-driven decisions still rule because delaying the decision by requesting the analytics and waiting for results can be very expensive. Consider the case of Shell as an illustrative example. The prevailing shifts that define the Industry 4.0 era revolve around digitalization and the imperative of transitioning to sustainable energy sources. For a considerable span of time, Shell has been at the forefront of pioneering digital technologies. The company serves as a compelling embodiment of a decentralized, data-centric, and digitally transformative business model that holds the potential to shape the trajectory toward digital maturity on a comprehensive scale.
N. B. Gitonga
The challenge at hand encompassed devising a large-scale global framework, fortified with a machine learning model, adept at aligning with distinct local market prerequisites. The pivotal realization has emerged from the wealth of data inherent within the company’s existing operations, presenting a substantial opportunity for overhauling the firm’s operational landscape. The endeavor was underscored by the urgency to establish innovative avenues for sustainable profitability. The ultimate aim was an unwavering commitment to achieving a state of pure carbon neutrality. The contemporary energy industry stands amidst a profound metamorphosis. Failure to acclimate to the demands of this energy transition, which fundamentally involves augmenting energy consumption through sustainable sources, not only jeopardizes a company’s social license to operate but also undermines the bedrock economics of its business operations. The proposed resolution involved standardizing methodologies and harmonizing elements such as data structures, platforms, tools, and operational protocols across diverse business domains. Through the prism of digitalization, an array of improvements materialized, including process enhancements, cost curtailments, heightened production capacities, and expanded customer profitability. Shell harnessed the prowess of Artificial Intelligence (AI) to optimize various facets, such as refining inventory demand forecasts, mitigating product and raw material wastage, and minimizing idle periods of heavy machinery. Augmented Reality (AR), robotics, and digital twin technologies were judiciously applied to curtail the necessity for physical travel. By leveraging AI, Shell effectively introduced eco-friendly energy solutions to its clientele. The outcome has materialized in the form of an Open Innovation solution, which serves as a conduit for soliciting external input and insights. Strategic collaborations with cross-industry partners stand as a cornerstone strategy, aimed at fostering skill synergies, delivering competitive and cost-effective technologies, and actively participating in the broader energy transition toward low-carbon economies. The larger ecosystem, encapsulated within the Open AI Energy Initiative (Shell Petroleum Company 2022), encompasses an array of AI solutions that collectively fuel the digital transformation of the entire energy sector. This holistic approach not only facilitates technological sovereignty but also acts as a catalyst for informed policymaking. The culmination of a triumphant Industry 4.0 integrated business model permits companies to seamlessly integrate the Internet of Things (IoT), Cyber-Physical Systems (CPSs), and intelligent power plants, thereby ushering in an era of unparalleled operational synergy and efficiency.
Value of Transformation: Business-Driven …
4
Conclusion
A progressive approach to the transformation of economic life requires that investment can be enlisted in the service of the productive agenda of society. The ultimate goal is to get ready for the consumer segment. In this case, one of the key questions is always where to start or what to change. However, a shift in investment priorities is imperative. The sector must recalibrate its transformative business models, placing greater emphasis on data-centric approaches. This entails directing investments toward global platforms that seamlessly cater to local contexts while delivering critical insights precisely when decisions are made. It is necessary to invest in technology, seamlessly connecting them with an appropriate business model that embodies the people skills needed for Industry 4.0. No technology investment will deliver sustained value until people leverage that technology in the right way. A data platform and people form the foundation to move toward commercial value in the future. It is necessary to use business models with a focus on technology. When it comes to the economy as a whole, where we have scarce resources (i.e., capital to invest in technology), the debate becomes about ownership in the context of poor transformation. This is why the production system can only fund itself through the retained and reinvested earnings of private firms. In the case of the rapidly growing Industry 4.0, continued finance that does not account for the business model shifts will continue to have an investment that is indifferent to the real economy and becomes destructive in moments of crisis. “A mediocre technology pursued within a great business model may be more valuable than a great technology exploited via a mediocre business model” (Chesbrough 2010).
References Basirati MR, Weking J, Hermes S, Böhm M, Krcmar H (2019) IoT as PSS enabler: exploring opportunities for conceptualization and implementation. In: PACIS 2019 proceedings, 133. Retrieved from https://aisel.aisnet.org/pacis2019/133. Accessed 10 Nov 2022 Bock M, Wiener M (2017) Towards a taxonomy of digital business models—conceptual dimensions and empirical illustrations. In:
139 ICIS 2017 proceedings, 19. Retrieved from https://aisel.aisnet.org/ icis2017/Strategy/Presentations/19. Accessed 15 Oct 2022 Burmeister C, Lüttgens D, Piller F (2015) Business model innovation for industrie 4.0: why the ‘industrial internet’ mandates a new perspective. SSRN Electr J. https://doi.org/10.2139/ssrn.2571033 Chesbrough H (2010) Business model innovation: opportunities and barriers. Long Range Plan 43(2–3):354–363. https://doi.org/10. 1016/j.lrp.2009.07.010 Foss N, Saebi T (2017) Business models and business model innovation: between wicked and paradigmatic problems. Long Range Plan 51(1):9–21. https://doi.org/10.1016/j.lrp.2017.07.006 Fox B, Paley A, Prevost M, Subramanian N (2016 Nov 23) Closing the digital gap in pharma. McKinsey & Company. Retrieved from https://mckinsey.com/industries/life-sciences/our-insights/closingthe-digital-gap-in-pharma. Accessed 10 Nov 2022 Hermann M, Pentek T, Otto B (2016) Design principles for industrie 4.0 scenarios. In: Proceedings of the HICSS 2016: 49th Hawaii international conference on system sciences. Kauai, Hawaii, pp 3928–3937. https://doi.org/10.1109/HICSS.2016.488 Kagermann H, Wahlster W, Helbig J (2013) Securing the future of German manufacturing industry: recommendations for implementing the strategic initiative industries 4.0. Final report of the industry 4.0 working group (Blasco J, Galloway H Transl. from German). Frankfurt am Main, Germany: Federal Ministry of Education and Research. Retrieved from https://www.acatech.de/wp-content/ uploads/2018/03/Final_report__Industrie_4.0_accessible.pdf. Accessed 15 Oct 2022 Kiel D, Arnold C, Müller J, Voigt K-I (2017) Sustainable industrial value creation: benefits and challenges of Industry 4.0. Int J Innov Manage 21(08):1740015. https://doi.org/10.1142/S1363919617400151 Oesterreich TD, Teuteberg F (2016) Understanding the implications of digitisation and automation in the context of Industry 4.0: a triangulation approach and elements of a research agenda for the construction industry. Comput Ind 83:121–139. https://doi.org/10. 1016/j.compind.2016.09.006 Posselt T, Abdelkafi N, Makhotin S (2013) Business model innovations for electric mobility—what can be learned from existing business model patterns? Int J Innov Manag 17(01):1–41. https://doi.org/10. 1142/S1363919613400033 Sarvari P, Ustundag A, Cevikcan E, Kaya I, Cebi S (2019) Technology roadmap for Industry 4.0. In: Industry 4.0: managing the digital transformation. Cham, Springer, pp 95–103. Retrieved from https:// doi.org/10.1007/978-3-319-57870-5_5. Accessed 15 Oct 2022 Shell Petroleum Company (n.d.) The digital transformation of Shell. Retrieved from https://www.shell.com/energy-and-innovation/ digitalisation/digital-transformation/enterprise-ai.html. Accessed 15 Oct 2022 Weking J, Hermes S, Böttcher TP, Hein A (2019) Does business model matter for start-up success? a quantitative analysis. In: Proceedings of the ECIS 2019: 27th European conference on information systems. Stockholm & Uppsala, Sweden, June 8–14, 2019. Retrieved from https://aisel.aisnet.org/ecis2019_rip/77. Accessed 15 Oct 2022
The Role of Intra-corporate Control in Ensuring the Technological Sovereignty of the Russian Economy Anna V. Bodyako , Tatiana M. Rogulenko , Tatiana L. Zaytseva , Svetlana V. Ponomareva , and Marina V. Krayushkina
development strategies and determining the relevant tactics for the implementation of variant forecasts. The research reveals new tools of intra-corporate control analysis (foresight, collaboration of control functions), the use of which can strengthen the links of elements of control-analytical procedures carried out based on the parity of interests of the state and corporate controlanalytical services. Currently, one of the main interests is to ensure the technological sovereignty of companies, the region, and the country.
Abstract
For many decades, intra-corporate control has served as a guardian of company assets and an analytical tool to identify the ability of assets to bring the expected economic benefits to the owners. The research substantiates the need to strengthen the role of intra-corporate control (ICC) as a comprehensive tool for identifying unrealized financial, property, and technical and technological potential of an economic entity. Until recently, this role of the ICC has not been as active as it should be based on theories of risk-return ratios, cash flows, portfolio investments, optimal capital structure, theories of cyclical development, industrialization, and stratification, and institutional theory. The research proves that control and analytical algorithms, when applied comprehensively, can provide managers of large companies with relevant information, which can serve as the basis for more successfully forming economic and technological
Keywords
A. V. Bodyako T. M. Rogulenko (&) RUDN University, Moscow, Russia e-mail: [email protected] T. M. Rogulenko State University of Management, Moscow, Russia T. M. Rogulenko T. L. Zaytseva National University of Oil and Gas “Gubkin University”, Moscow, Russia S. V. Ponomareva Saint Petersburg State University of Economics, St. Petersburg, Russia M. V. Krayushkina Institute of International Law and Economics Named after A.S. Griboedov, Moscow, Russia
JEL Classification
R01
1 A. V. Bodyako Financial University Under the Government of the Russian Federation, Moscow, Russia e-mail: [email protected]
Intra-corporate control Collaboration of control functions Islandization Foresight Coordination
F22
F63
J15
J61
Introduction
Geopolitical cataclysms have radically changed the principles and methods of economic strategizing of Russian companies; there was a need to deepen control and analytical studies of all components of the property potential for their ability to withstand foreign political threats. The most urgent task was to assess the technical and technological potential of companies, identifying in it the share of foreign financial and real capital (machinery, equipment, technology, etc.). An example of a change in the principles and methods of economic strategizing of Russian companies can be the so-called foresight, a methodology that has replaced futurological forecasts. Foresight is a technology and format of communication that allows a certain circle of stakeholders with the power to agree on the contour of future development, formalizing the arrangements in an interstate
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_24
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agreement. The conceptual foundations of this methodology were formulated in 2010 by the developers D. Peskov (Special Representative of the President of Russia on Digital and Technological Development), P. Luksha (founder of the Global Education Futures initiative), and D. Sudakov (Head of the project “Atlas of New Professions”). According to the developers, we are in for an infinitely uncertain future. Nowadays, there are many different modifications of foresight. The “Atlas of New Professions” is based on the Rapid Foresight methodology. This methodology is a tool for predicting and shaping the future, making it possible to obtain accurate predictions in a short period and bring people together to realize their visions of it. The core of this concept is a worldview when members of society, understanding their identity, make every effort to strengthen the sovereignty of the country through the development of science and technology and the increase of personal responsibility for the advanced development of their company, the region where this company is located, and the country. Consequently, the Rapid Foresight concept is based on the understanding that the future is variable and depends directly on the efforts made. In this concept, an important role is played by assessing events with low probability but a high potential impact on the future of the studied area. In today’s digitalized world, Rapid Foresight (RF) is a global research project uniting the thoughts and aspirations of the participants. Building Rapid Foresight is much more complicated than the long-known brainstorming sessions, as breakthrough technologies are born out of the exchange of thoughts and ideas, and there are problems of “seeding” them. The main problem is the relentless control of the secret services of states over the safety of their scientific and technological achievements. Nevertheless, the technological autarky to which the Russian leadership aspires is a temporary phenomenon because it is impossible, at least for the next twenty years, to create national projects to produce everything in one country. This is also impeded by the fact that Russian academic and university science lags behind the level of advanced industrial countries due to its almost complete isolation from the orders of manufacturing corporations and the negligible share of budget funding. These facts are apparent, but acknowledging them does not mean that they are preserved. All societies develop in a spiral, although with varying degrees of speed and “height of the step.” Nevertheless, the world is becoming increasingly technological, and this quality is growing yearly. Therefore, the extent to which society will be backward or developed depends on this objective process and the efforts of national leaders to bring the national economy to the level of civilized, technologically advanced economic systems.
A. V. Bodyako et al.
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Methodology
The need to strengthen the role of intra-corporate control analysis as a comprehensive tool to identify the unrealized financial, property, and technical and technological potential of an economic entity is emphasized by many researchers (Bodiako et al. 2022, 2021a, 2021b; Bodyako et al. 2019; Zhilkina et al. 2022). Simultaneously, despite the high level of elaboration of the problem, it has not been sufficiently studied in relation to the need to ensure technological sovereignty of the Russian economy, which requires research at the theoretical and empirical level—in particular, practical solutions to ensure high flexibility of control and its role in ensuring technological sovereignty. The interpretation of the concepts of technological sovereignty, islandization, and their interpretations, as well as the justification of the need for the country’s technological sovereignty, is revealed in the works (Blog “My Financial Advisor”. 2022; Digital Russia 2022). Simultaneously, despite the deep elaboration of theoretical provisions of the problem, its empirical disclosure is only at the initial level. In particular, published scientific papers (Blog “As-Print”. 2017; Fedorishcheva 2022) cite the root causes of Russia’s technological lag at the global level, namely underfunding and weak support of innovators by venture capital funds. Important measures to strengthen state support for companies taking active efforts to technologically renovate their own production are highlighted. These measures are as follows: • Development of the equity financing mechanism. • Increasing the responsibility of company management for budget subsidies for the development of science and technology. Collaboration of efforts of state and corporate economic actors to solve the problem of the maximum possible technological sovereignty of the country can weaken this problem and eventually eliminate it. Operational monitoring of trends in scientific, technical, and technological re-equipment of the material base of Russian companies will make it possible to assess the situation and formulate measures to accelerate this process. Ultimately, the technological sovereignty of a country is the guarantor of its economic security. During the research, the authors highlighted new tools of intra-corporate control (foresight, collaboration of control functions), the use of which can strengthen the links of elements of control-analytical procedures carried out based on parity of interests of the state and corporate control services in the interests of islandization of national economies.
The Role of Intra-corporate Control in Ensuring the Technological …
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Results
Global scientific and business communities realized the threats of globalization, increasing the economic dependence of countries on each other and deepening the dominance of the USA and other industrial leaders in world markets, which caused the change from globalization to the islandization of national economies. It is believed that the term islandization was coined by modern Russian technologists and is now gradually entering circulation. This term refers to the concept of strengthening the independence of the national economy from external influences of unfriendly countries. The strategy of the so-called “technological island” stipulates the activation of all resource components of the potential of the national economy; a special role is given to technological advancement. The main goal of islandization is primarily to ensure the country’s economic security and preserve its national identity. Russian scientists believe that islandization should help Russia and other countries that are technologically dependent on the USA, the UK, and Japan to ensure economic independence and security. Beginning in 2022, Russia embarked on a strategy of technological sovereignty (Blog “My Financial Advisor” 2022). On May 26, 2022, at the form of the party “United Russia,” D. Medvedev proposed a new name for import substitution—“technological sovereignty” or “technological independence” (Lisitsyna 2022). In the scientific community, this concept has come to be known as the “technological sovereignty of the economy” of Russia (TSE). Based on the above, TSE can be defined as the concentration of joint efforts of representatives of the legislative and executive powers, the business community, and representatives of academic and university science to bring the Russian economy to the forefront of contemporary science and technology through sound financial control over the expenditure of budgetary and private financial resources, eliminating bureaucracy in innovation processes, eliminating corruption, and increasing the personal responsibility of each participant in the national TSE project for violating the terms of collective bargaining agreements. Since innovative projects are created by applied science and tested by manufacturing companies, most of which have their own research centers, laboratories, and universities, the role of control analysis of such projects should not only become more significant than today; it should be multiplied by placing this activity directly under the responsibility of financial and technical directors of the company. These decision-makers should be equally responsible for innovative projects from idea to implementation. These projects
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should be supervised by representatives of ministries or agencies, who also act as supervisors capable of evaluating the project in terms of quality, cost, and operational efficiency. If budgetary resources (subsidies, subventions, etc.) are used to develop corporate innovation projects, control must be particularly thorough. If the innovative project fails, the funds must be returned to the state treasury with appropriate consequences for the guilty parties. The disadvantage of the system of state regulation of industry transition to an innovative way of development is not only the inert management style in most companies, especially with state participation but also the very form of project financing, i.e., program-targeted financing. There are many programs, but the level of technologization of the Russian economy is much lower, even compared to the former Soviet countries (e.g., Kazakhstan and Belarus). According to the authors of this research, intra-corporate control should develop in line with the concept of foresight, when the global problems and domestic issues of technologization of production processes for the production of competitive products are solved. Thus, intra-corporate control can acquire the status of a system responsible for compliance with accounting laws and the targeted use of financial resources allocated to innovative projects from all sources. Undoubtedly, greater responsibility should be assigned to the auditors of the Accounts Chamber of Russia, whose activities are focused on auditing the targeted use of budget allocations by all budget administrators; this activity only partially concerns the intra-corporate procedure for financing innovation. Internal controllers and representatives of ministries, departments, the Accounts Chamber, and other subjects of control should pay particular attention to the issues of venture capital financing. These funds are currently spent uncontrollably; producers are penalized for unrealized investments by venture capital companies. All over the world, venture investment is a low-margin business, unlike in Russia. Thus, Russian manufacturers are not active in the development of innovative projects, especially since this process is extremely bureaucratic. The poor functioning of the system of internal corporate financial control is also observed in the so-called “institutions of development.” We do not have to go far to find an example, such as the state corporation RUSNANO, where budgetary funds were spent uncontrollably while no breakthrough technologies were practically created. Most Russian IT companies experience difficulties in finding investors for ready-made software products because the amount of internal financial reserves for implementation work is limited.
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Conclusion
The principles and numerical and purely procedural tools of the intra-corporate control in most Russian companies are tuned to the audit of accounting (financial and tax reporting). The established practice shows that this activity is turning into a routine audit. As is known, the Law on JSCs provides for the formation of revision commissions in complexly structured companies whose activities focus on compliance with financial, budgetary, credit, and accounting laws. On this basis, we can argue that the current conditions of economic development of companies necessitate a change in the mission of intra-corporate control. This type of control should become exploratory in nature; its mission, together with technical and economic analysis, is to identify the company’s needs for innovation and help find investors for projects. In principle, as practice shows, the search for investors is not as difficult as the conditions imposed on startups. Here is just one example of the practices of a software company. Evidence shows that an investor was found fairly quickly, not even one. The company had a working product, which was sold. The potential was good, and the company began negotiations. The company wanted to sell a 10–30% stake in the LLC at the appraised values (which was agreed upon with the investor) and spend part of the money on the development of new modules, part of the money to promote the program, and part of the money for operating expenses— office rent, wages of the project manager, accountant, etc. We wanted to keep 100% control of the project, making all strategic decisions only by majority vote. The investors indicated (all said the same thing) that the company was a startup; it could not pay a salary and needed no office. According to investors, young entrepreneurs had to work in a factory, shop, or warehouse during the day and work on their project at home in the evenings, nights, or weekends. Unfortunately, Russian venture capital companies have a purely speculative strategy. Statistics say that 42% of startup ideas are not really needed in the market. Another 30% die simply because there is no desire and not enough persistence to bring things to some logical conclusion (to the stage of a normal working product) (Blog “As-Print” 2017). In the authors’ opinion, this situation is due to the lack of control by government agencies over the venture capital business, which, according to SPARK publications, involves many industry and federal officials. The adoption of two laws under the same No. 259-FZ in 2019 and 2020 (Russian Federation 2019, 2020) has become triggers for the development of crowdfunding and crowd investing, while, unfortunately, they are not available to every business. Nevertheless, large and promising startups can use the services of platforms like Boomstarter,
StartTrack, and OneStart. The function of contacting them can be delegated to the head of the company’s innovation department of the intra-corporate control having the innovation project. To fulfill the innovative mission in the companies, it is necessary to restructure the system of intra-corporate control, separating from it a link that specializes in the control of production and technical capacity and its financial support. For this purpose, managers specializing in financial matters, engineers, programmers, lawyers, and appraisers must be included in the group of controllers. If there is a shortage of such specialists in the company, it is recommended to attract outsourcers, not at the expense of company resources but under the guarantees of the government agencies that oversee innovation in sectors of the Russian economy. The article “interest-free subsidies for innovative projects” should be effectively implemented in the federal budget. Reduced loan rates should be offered by banking structures, in particular VTB, which plays the role of a development institution. The procedural issues of such state patronage must also be reasonable and extremely loyal, along with increased responsibility on both sides. Perhaps, in the future, the head of a department (sector) of intra-corporate control can play the role of an innovative mentor, helping strengthen the technological sovereignty of the Russian economy. In the meantime, the government has been instructed until December 15, 2022, to develop and approve a Concept of Technological Development for the period up to 2030, which includes the following: • The goals of technological development, mechanisms of their achievement, and quantitative indicators that characterize their achievement. • Challenges of technological development and mechanisms of their solution. • The main stages of achieving technological development goals. • Determination of persons responsible for the achievement of technological development goals. • Support measures for innovative development institutions to implement the concept. • Active involvement of private business in the implementation of the concept and mechanisms to stimulate such participation. • The amount and sources of funding for the activities included in the Concept of Technological Development. The government needs to identify a responsible institution for innovative development (Digital Russia 2022). It would be advisable to introduce state and corporate control over the innovative technologization of industries into the mechanisms of achieving the goals of this Concept. The
The Role of Intra-corporate Control in Ensuring the Technological …
definition of the institution of innovative development should be accompanied not by the development of notorious road maps but by the adoption of the Federal law “On financial control,” the need for which has been discussed for more than five years. A separate article of this law should be an article title, for example, “Collaboration of the control function of government and corporate services.” Unfortunately, there is no such law as part of the draft federal laws that the Government and the State Duma are tasked with drafting. The norm of this article should apply to government contracts, the procedures of which, for the most part, are not transparent and corrupt. According to experts, to receive funding under a state contract, the contractor must open a personal account in the Office of the Federal Treasury (UFK). The difference between this account and a standard settlement account in a credit institution is that the company cannot use the money at its own discretion—the purpose of payments is strictly limited. The funds in the treasury account are budgetary and do not belong to the contractor; the contractor only disposes of them. After controlling the correctness of the grounds of all payment documents, the Federal Treasury Department itself transfers money to counterparties (Fedorishcheva 2022). It would seem that control is ensured, but practice shows a significant number of violations of this requirement. The reason is the formality of control, as well as the fact that applicants for state contracts are not duly responsible for the misuse of allocated funding. The purpose of fulfilling the conditions of the state contract is not spelled out in the studied provisions on the intra-corporate control of companies. According to the rules, not all costs can be paid for the advance on the state contract. The list of bans is specified in item 20 of the order of the Ministry of Finance of December 17, 2021, No. 214n (Ministry of Finance of the Russian Federation 2021). In some cases, the customer company prescribes in the contract a closed list of cost items, the funding of which can go to the amount of the advance. The vast majority of these items are advance coverage of material costs only. According to the controllers of the Accounts Chamber of Russia, companies authorized to participate in government contracts use at best more than 12% to cover management costs; about 2% of advances are not supported by documents to purchase material resources for projects (Lipsitz 2012). According to the norm of the law, during the control of payment orders for payment for materials, the Federal Treasury Department is obliged to request confirming documents that the materials or products
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purchased under the contract correspond to the names prescribed in the information on operations. It is necessary to attach a certified copy of the estimate to orders for payment of material costs.
References Blog “As-Print” (May 1, 2017) The “bitter’ truth about venture investors. Retrieved from https://spark.ru/startup/as-print-2-5/blog/ 29230/gorkaya-pravda-o-venchurnih-investorah?ysclid=la9zuuesfk 106382109/. Accessed 14 Oct 2022 Blog My Financial Advisor (June 17, 2022) Islandization of the Russian economy: are we waiting for USSR 2.0 or something better? Retrieved from https://vc.ru/finance/444209-ostrovizaciyarossiyskoy-ekonomiki. Accessed 14 Oct 2022 Bodiako AV, Ponomareva SV, Rogulenko TM, Melnik MV, Gorlov VV (2021a) Professional and qualification potential of the digital society: Indicative evaluation and systemic management. Int J Sociol Soc Policy 41(1–2):50–61. https://doi.org/10.1108/ IJSSP-03-2020-0081 Bodiako AV, Ponomareva SV, Rogulenko TM, Orlov EV, Smolyakov OA (2021b) Accounting, control, and analytical support for production strategic management. Acad Strateg Manag J 20 (4):1–8 Bodiako AV, Ponomareva SV, Rogulenko TM, Krupnov YA, Kemkhashvili TA (2022) Training of the digital workforce from today’s youth: individualization versus standardization. In: Popkova EG, Sergi BS (eds) Digital education in Russia and Central Asia. Singapore, Springer, pp 259–265. https://doi.org/10.1007/ 978-981-16-9069-3_27 Bodyako AV, Bulyga RP, Ponomareva SV, Rogulenko TM (2019) Determination of economically sound criteria to assess the effectiveness of control processes. Int J Rec Technol Eng 8(2):4101– 4109. https://doi.org/10.35940/ijrte.B3070.078219 Digital Russia (2022, Sept 5) The President signed instructions on the development of technological sovereignty of the Russian Federation. Retrieved from https://d-russia.ru/prezident-podpisalporuchenija-po-razvitiju-tehnologicheskogo-suvereniteta-rf.html? ysclid=la9zx6vxpp731146346. Accessed 14 Oct 2022 Fedorishcheva E (2022) The order of interaction with the treasury on state contracts. FinanDirect 10. Retrieved from https://e.fd.ru/ 993052. Accessed 14 Oct 2022 Lipsitz IV (2012) How the state budget is formed and spent. In: Economics basic course: textbook for grades 10–11 (15th ed.). Moscow, Russia: Vita-Press. Retrieved from https://be5.biz/ ekonomika/e020/30.html?ysclid=laa0wastcx308020672. Accessed 14 Oct 2022 Lisitsyna M (2022, May 26) Medvedev proposed a new name for import substitution. RBC Daily. Retrieved from https://www.rbc.ru/ politics/26/05/2022/628fa9b49a7947dbd44f440b. Accessed 14 Oct 2022 Ministry of Finance of the Russian Federation (2021) Order procedure for the execution by territorial bodies of the federal treasury to authorize operations with funds of participants of treasury support (December 17, 2021 No. 214n). Moscow, Russia: Legal Reference System “ConsultantPlus.” Retrieved from https://www.consultant. ru/document/cons_doc_LAW_405138/9ddf6d7911b13fc8d06086699 ee770debd0f3ba2/. Accessed 14 Oct 2022
146 Russian Federation (2019) Federal law “on attracting investment through investment platforms and on amendments to certain legislative acts of the Russian Federation” (August 2, 2019 No. 259-FZ, as amended July 14, 2022). Moscow, Russia: Legal Reference System “ConsultantPlus.” Retrieved from https://www. consultant.ru/document/cons_doc_LAW_330652/. Accessed 14 Oct 2022 Russian Federation (2020) Federal law “On digital financial assets, digital currency and on amendments to certain legislative acts of the
A. V. Bodyako et al. Russian Federation” (July 31, 2020 No. 259-FZ, as amended July 14, 2022). Moscow, Russia: Legal Reference System “ConsultantPlus.” Retrieved from https://www.consultant.ru/document/ cons_doc_LAW_358753/. Accessed 14 Oct 2022 Zhilkina AN, Karp MV, Bodiako AV, Smagulova SM, Rogulenko TM, Ponomareva SV (2022) Socially-oriented approach to financial risk management as the basis of support for the SDGs in entrepreneurship. Risks 10(2):42. https://doi.org/10.3390/risks10020042
Methodological Recommendations on the Implementation of the Methodology for Managing Digital Transformation of Industrial Company to Ensure Breakthrough Technological Development Tatiana V. Kokuytseva , Maksim M. Kharlamov , and Oksana P. Ovchinnikova Abstract
JEL Classification
Nowadays, many companies face the problem of improving management efficiency. Apparently, it is impossible to solve this problem using traditional tools in today’s environment. Companies implement digital transformation. Nevertheless, not all companies succeed, which leads to their frustration with digital transformation. Hence, the research aims to develop methodological recommendations for implementing the methodology of digital transformation management of an industrial company to ensure the improvement of its management efficiency. During the research, the authors used the method of analysis of scientific works of Russian and foreign scholars, the method of induction and deduction, and the method of analogy and generalizations. The authors formulated recommendations for implementing a methodology for managing the company’s digital transformation at three levels: company, industry, and country. The presented scientific results have scientific novelty and theoretical and practical significance because they contribute to the development of management theory and can be used in practical activities.
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Keywords
Management Effectiveness
Digital transformation Methodology Industrial company Recommendations
T. V. Kokuytseva (&) M. M. Kharlamov O. P. Ovchinnikova RUDN University, Moscow, Russia e-mail: [email protected] M. M. Kharlamov e-mail: [email protected] O. P. Ovchinnikova e-mail: [email protected]
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Introduction
The very concept of digital transformation is relatively recent. This is probably the reason why there is currently no unified scientific conceptual platform for managing digital transformation. There are only some works by authors in the periodical press (Ermolovskaya 2018; Smirnov 2018; Voynova and Titova 2018). The issues of digital transformation of industry and its methodological foundations from the perspective of sectoral, process, and technological approaches are considered in the work of Akberdina and Piankova. They substantiated the fundamental scientific hypothesis of the possibility of integrating these three approaches and forming an industrial ecosystem based on the platform organization of industrial production (Akberdina and Pyankova 2021). Akberdina and Piankova identify two types of digital industrial platforms and conclude that Russian enterprises are only approaching the formation of the second type. The main task today is “the development of an ecosystem of digital platforms, which, on the one hand, strengthen and activate the business, and, on the other hand, provide information infrastructure” because “the degree of development of high-tech industries is determined primarily by the level of digitalization, automation, and networking” (Akberdina 2020), which leads to the establishment of the relevant scientific task in the framework of this research. The study of foreign scientific works shows that foreign scientists are somewhat further advanced than Russian scientists in the field of digitalization of the economy and industry. Thus, the earliest works include, for example, the monograph by Boyer 2004, in which the author brings a fresh perspective to the definition of the digital transformation in which we live.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_25
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The work by Horlacher and Hess 2016 is interesting in terms of studying the issues related to the transformation of human resources in the era of digitalization. This work studies the issues related to forming new positions—executive of digital transformation. The authors use a research methodology based on the descriptions of managerial tasks, as well as the role of these executives; there are case studies in various industries. The opportunities and threats posed by digital adoption in companies whose success was established in the pre-digital economy are examined by Sebastian et al. 2017. They look at the experiences of 25 companies that are making digital transformations and highlight two digital strategies: customer engagement and digitized solutions that enable digital transformation. The monograph by Uhl and Gollenia is devoted to the complex digitalization of enterprises that are employees of SAP. They describe a digital capabilities platform that includes innovation management, change management, IT excellence, customer orientation, effective knowledge worker, and operational excellence (Uhl and Gollenia 2016). Approaches to systemic analysis and identification of digital business models for executives in traditional industries to more effectively handle the digital transformation of their industrial enterprises are presented by Remane et al. 2017. The definition of digital transformation and a structured approach with phases, actions, and results are presented in a scientific paper by Schallmo et al. from Ulm College of Applied Sciences (Germany) (Schallmo et al. 2017). The relationship between digital transformation and competitiveness is addressed in the works of Bartholomae 2018; Kartajaya et al. 2019; Oprescu and Eleodor 2014. In addition to the works mentioned above, we studied the works of such scientists as Carolis et al. 2017; Goerzig and Bauernhansl 2018; Gölzer and Fritzsche 2017; Hong 2017; Kohli and Johnson 2011; Li 2020; Mathrani et al. 2013; Piccinini et al. 2015; Remane et al. 2017. There are currently no systemic studies concerning the management of the digital transformation of industrial enterprises, in particular, from the position of providing a breakthrough technological development of industrial enterprises. Considering the above, the scientific problem discussed in this research is relevant and generally undisclosed. Discussion of the problems and variables of the problem associated with the choice of the optimal approach to ensure breakthrough technological development of industrial enterprises, the lack of development of methodological approaches, as well as the scientific relevance of the problems raised led to the choice of the research topic and the statement of the scientific problem and the task.
T. V. Kokuytseva et al.
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Methodology
The research aims to develop a multi-level system of methodological recommendations for implementing the methodology of digital transformation management of the industrial enterprise to ensure breakthrough technological development. The methodology of digital transformation management of the industrial enterprise is considered from the perspective of the methodological approach developed by Novikov and Novikov. According to these researchers, “the methodology considers the organization of activity… To organize activity is to arrange it into a coherent system with clearly defined characteristics, a logical structure, and a process for its implementation—a temporal structure” (Novikov and Novikov 2007). To achieve this goal, the authors use the methods of system analysis and synthesis to analyze the approaches to the management of digital transformation covered in the works of Russian and foreign scholars. Using the method of induction, this research has built a system of methodological recommendations—from the enterprise level to the state level.
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Results
The analysis of scientific papers made it possible to formulate methodological recommendations for implementing the methodology of digital transformation management of an industrial company. Let us take a closer look at them. Methodological recommendations for implementing the methodology for managing the company’s digital transformation are those activities that can be implemented at the company level to improve the effectiveness of managing the processes of digital transformation. They include the following: (1) Definition of the company’s strategic development goals and a preliminary expert assessment of the possibility of achieving these goals within a given time frame, using the available tools, management mechanisms, and the current business model, considering the market dynamics; (2) Analysis of the conditions of digital transformation based on their evaluation. If the analysis concludes that there is an average level of digital transformation conditions, it is advisable to proceed to the next step; (3) Adaptation of the best foreign practices: • Management of digital innovations based on networking of specialized research centers; cooperation with universities;
Methodological Recommendations on the Implementation …
(4)
(5)
(6)
(7)
• Implementation of digital solutions at all stages of the product life cycle: from the birth of an idea to the marketing of the product to the customer; • Risk management through risk assessment, risk control at all stages of the product life cycle through the automation of production, the use of big data analysis technologies, and artificial intelligence; • Large-scale investment of R&D activities. Investing in promising R&D developments (artificial intelligence, cloud technologies, 5G, etc.); • Contemporary approaches to human resource management; • Effective human resource management: talent management and stimulation of their innovative activity by creating their innovation infrastructure, including campuses, innovation labs, and digital platforms; • Economic evaluation of the introduction of digital technology. Determination of financial and human capabilities of the company to apply digital technologies in economic processes, including assessment of economic resources necessary to ensure a given volume of production at the desired level of digitalization of the organization and assessment of the necessary resources with the amount of human and financial resources for implementing digital technologies in economic processes; Selection of priority areas for digitalization. The choice of priority areas for digitalization can be carried out using a game theory approach by solving a multi-criteria optimization problem with a certain set of constraints (time, financial, and human resources) and considering the impact of internal and external risks; Identification of bottlenecks in the company from the position of readiness for digital transformation to develop a plan to strengthen them even at the preparatory stage and create conditions to meet the challenges of digital transformation and achieve the strategic goals of the organization’s development; Building a contemporary human resource management system with basic and highly specialized (managerial or other professionals) digital competencies. Digitalization does not mean reducing the role of people. It means a qualitative change in the requirements for labor functions and, consequently, the professional competencies of employees. Routine processes certainly require automation to reduce the human factor (errors) and increase the speed of their implementation at a relatively low cost to the organization. Simultaneously, the role of the intellectual and creative component of a person is increasing. No automated system based on artificial intelligence can fully replace people yet. Thus, the demand for workers to work in high-tech jobs will persist even as organizations transform digitally;
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(8) Building a digital transformation management system is a mechanism for monitoring the processes of digital transformation and its impact on the key performance indicators of the organization. The output parameters of the system enable management to make economically sound decisions and promptly respond to significant deviations in the dynamics of economic performance, adjusting the development strategy. The approaches to the practical implementation of the methodology for managing digital transformation described above can be used at the organization level, but organizations operate in the macroenvironment, interacting with each other and forming integration associations (holdings, corporations, etc.) and the industry as a whole.
3.1 Approaches to the Practical Implementation of the Methodology for Managing Digital Transformation of Organizations at the Mesolevel The formation of a contemporary macroenvironment at the industry level contributes to a more effective digital transformation of organizations. The key approaches to creating conditions for the effective implementation of the developed methodology at the industry level are as follows. First, it is advisable to create a unified digital platform at the industry level. The need to create a unified digital (information-analytical) platform for industrial enterprises is justified by two reasons. The first reason is that it is impossible to manage anything without assessing the current state and defining a target vision. The second reason is to carry out preventive management of digital transformation, which will prevent the onset of crisis phenomena and quickly identify weak signals about possible negative scenarios in the development of organizations. The third reason is related to the fact that industrial enterprises carry out an enormous amount of work each year on the formation of annual reporting for classic indicators and new ones (often without clear methodological guidelines for their calculation). It takes time and, consequently, requires a significant number of employees and financial resources. Considering that the annual bonus of top management depends on the fulfillment of key performance indicators, the result is that ministries, agencies, and state corporations do not always see the real situation of organizations. Thus, creating a single information-analytical platform would increase reporting transparency, ensure continuous monitoring of private and integrated indicators, accelerate reporting processes, reduce paperwork, and save money. The creation of a unified information and analytical platform is an effective tool for managing organizations in
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integrated structures, which will improve the efficiency of management decision-making in real time, which is especially important in today’s dynamic conditions of macroeconomic development. Second, it is necessary to build predictive scenarios for the development of industries, considering the assessment of the readiness of organizations for digital transformation and the dynamics of their digital maturity. Digital transformation is a driver of organizational competitiveness. However, the time lag between its beginning and the first economic results can be significant: it takes time to restructure business processes, train and search for personnel of the appropriate level of qualification and digital competencies, and transform the mindset of the organization’s management and employees (organizational resistance can only be overcome through implementation and development of an appropriate digital corporate culture, demonstrating its benefits to the employees). Third, integration associations (large holdings and corporations) and ministries should help create demand for digital innovation. For this purpose, they must begin to create a digital industry environment, including the formation of organizational and technical infrastructure and the system of development of digital competencies of industry employees. The latter is expedient through the following tools: • Expansion of interaction between sectoral management bodies, industrial organizations, and educational institutions based on the creation, renovation, and advanced development of basic departments. Systemic transformation of approaches to personnel training in the industry’s interests, career development and motivation of employees, and remuneration system based on the best world practices will promote an inflow of talented and promising young people to enterprises capable of increasing the competitiveness of the industry. Moreover, it will improve the country’s position in world rankings and strengthen national security; • Creation and development of corporate (industry) professional development centers for employees of different levels so that programs of additional professional education are developed with the direct participation of highly qualified practitioners and persons involved in developing regulatory legal acts. These programs should consider the real needs of organizations and specific categories of people attending them. Thus, if the system of professional development is built at the level of organizations, providing transparent career paths with key performance indicators, measures for the transition to the next level (grade), and measures for personnel evaluation, the industry corporate training centers will be effective
T. V. Kokuytseva et al.
tools to build professional and digital competencies that contribute to economic growth and development of organizations.
3.2 Approaches to the Practical Implementation of the Methodology for Managing Digital Transformation of Organizations at the State Level The first approach is to provide state support to industrial enterprises on their way to digital transformation. Normative legal acts should be working. That is why, there should be seminars for organizations with state support, where their representatives could get answers to questions, exchange opinions, and make suggestions for their improvement. In developing such support measures, it is crucial to consider the opinion of government organizations, private businesses, and the scientific community. The second approach is that government support, including financial support, is required to ensure the integration of the enterprise’s systems. Such integration will make it possible to create a management system for organizations at the industry level, quickly obtain statistical data from organizations, process and analyze these data, and prepare standardized reporting forms, which will reduce paperwork and related costs for salaries, consumables, overheads, etc. The third approach is to support the development of cooperation between industrial enterprises, specialized universities, scientific institutions, and businesses within the country and with the outside world. World experience proves that the “closed” model of development inherent in domestic state-owned enterprises is effective only under conditions of strict control and a completely different paradigm of economic and socio-cultural development than today.
4
Conclusion
The implementation of the described approaches will help increase the efficiency of their activities by respectively reducing costs (automation of routine operations and reducing the wage fund, reducing the cost of pilot production, etc.), increasing income due to increased labor productivity, reducing the time from the origin of the idea of a new product to its launch on the market (“Time to Market”), increasing its competitiveness in the market, etc. As shown by global experience, the digital transformation of organizations also reduces the need for their own production assets.
Methodological Recommendations on the Implementation …
Therefore, organizations will be able to enter the development of new business areas faster and at a lower cost, using service models. Effective management of the digital transformation will contribute, first, to increasing the speed of interaction between the organization (industry), society as a generator of demand, the state as a regulator, and universities as producers of highly skilled human resources. Nowadays, the digital transformation that allows organizations and industries to move to new management principles and approaches by accelerating the interaction of key state actors contributes to the economic efficiency of the state as a large organizational and economic system. Second, improving the economic efficiency and performance of organizations of industries contributes to the growth of budget revenues of the state at the expense of increasing organizations’ revenues and, consequently, increasing its budgetary efficiency. Simultaneously, digital transformation contributes to the creation of new high-tech jobs (and, therefore, high-paying jobs), as well as the creation of the demand for highly qualified personnel from universities. As a result, the social task of the state to improve the population’s living standards is also solved. To summarize, we can conclude that the implementation of the methodology for managing digital transformation will help improve the economic, fiscal, and social efficiency of the country. Acknowledgements The reported study was funded by RFBR, project number 20-010-00257.
References Akberdina VV (2020) Digital platforms as a mechanism for transforming industry. In: Bagirova AP (ed) Strategies for the development of social communities, institutions, and territories: proceedings of the VI international scientific and practical conference. Yekaterinburg, Russia, Ural Federal University, pp 194–199 Akberdina VV, Pyankova SG (2021) Digital transformation of industry: Methodological aspects. Sci Works Free Econ Soc Russia 227(1):292–313. https://doi.org/10.38197/2072-2060-2021-227-1292-313 Bartholomae FW (2018) Digital transformation, international competition and specialization. CESifo Forum 19(4):23–28. Retrieved from https://www.cesifo.org/DocDL/CESifo-Forum-2018-4bartholomae-digitalisation-december.pdf. Accessed 10 Nov 2022 Boyer R (2004) The future of economic growth: as new becomes old. Edward Elgar Publishing, Cheltenham, UK De Carolis A, Macchi M, Negri E, Terzi S (2017) A maturity model for assessing the digital readiness of manufacturing companies. IFIP Adv Inf Commun Technol 513:13–20
151 Ermolovskaya OY (2018) Digital transformation in sectors of the economy: evaluation and prospects. Econ Manage Prob Solutions 4 (4):73–76 Goerzig D, Bauernhansl T (2018) Enterprise architectures for the digital transformation in small and medium-sized enterprises. Proc CIRP 67:540–545. https://doi.org/10.1016/j.procir.2017.12.257 Gölzer P, Fritzsche A (2017) Data-driven operations management: organisational implications of the digital transformation in industrial practice. Prod Plan Control 28(16):1332–1343. https://doi.org/10. 1080/09537287.2017.1375148 Hong Y (2017) Networking China: the digital transformation of the Chinese economy. University of Illinois Press, Urbana, IL Horlacher A, Hess T (2016) What does a chief digital officer do? managerial tasks and roles of a new C-level position in the context of digital transformation. In: Proceedings of the HICSS 2016: 49th Hawaii international conference on system sciences. Kauai, Hawaii, pp 5126–5135. https://doi.org/10.1109/HICSS.2016.634 Kartajaya H, Kotler P, Huan HD (2019) Asian competitors: Marketing for competitiveness in the age of digital consumers. World Scientific Publishing, Singapore Kohli R, Johnson S (2011) Digital transformation in latecomer industries: CIO and CEO leadership lessons from Encana oil & gas (USA) Inc. MIS Quart Exec 10(4):3. Retrieved from https:// aisel.aisnet.org/misqe/vol10/iss4/3. Accessed 10 Nov 2022 Li F (2020) The digital transformation of business models in the creative industries: a holistic framework and emerging trends. Technovation 92–93:102012 Mathrani S, Mathrani A, Viehland D (2013) Using enterprise systems to realize digital business strategies. J Enterp Inf Manag 26(4):363– 386. https://doi.org/10.1108/JEIM-01-2012-0003 Novikov AM, Novikov DA (2007) Methodology. Moscow, Russia, Sinteg Oprescu G, Eleodor D (2014) The impact of the digital economy’s development on competition. Quality—Access Success 15:9–20 Piccinini E, Hanelt A, Gregory RW, Kolbe LM (2015) Transforming industrial business: the impact of digital transformation on automotive organizations. In: Proceedings of the ICIS 2015: international conference on information systems: exploring the information frontier. Fort Worth, TX: AIS. Retrieved from https://aisel.aisnet.org/icis2015/proceedings/GeneralIS/5. Accessed 10 Nov 2022 Remane G, Hanelt A, Nickerson RC, Kolbe LM (2017) Discovering digital business models in traditional industries. J Bus Strateg 38 (2):41–51. https://doi.org/10.1108/JBS-10-2016-0127 Schallmo D, Williams CA, Boardman L (2017) Digital transformation of business models-best practice, enablers, and roadmap. Int J Innov Manag 21(8):1740014. https://doi.org/10.1142/S136391961740014X Sebastian IM, Ross JW, Beath C, Mocker M, Moloney KG, Fonstad, NO (2017) How big old companies navigate digital transformation. Mis Quart Exec 16(3):6. Available at: Retrieved from https://aisel. aisnet.org/misqe/vol16/iss3/6. Accessed 10 Nov 2022 Smirnov EN (2018) Evolution of innovative development and prerequisite of digitalization and digital transformations of the world economy. Voprosy Innovatsionnoy Ekonomiki [russian J Innov Econ] 8(4):553–564. https://doi.org/10.18334/vinec.8.4.39696 Uhl A, Gollenia LA (eds) (2016) Digital enterprise transformation: A business-driven approach to leveraging innovative IT. London, UK; New York. Routledge, NY Voynova KT, Titova OV (2018) The impact of digital transformation on economic development. Central Sci Bull 3(10):90–91
Implementation of a Database on Solar Resources for the Design of PV Solar Technologies Maksat N. Kalimoldayev , Assel A. Abdildayeva , and Zhazira U. Shermantayeva
Abstract
Keywords
The theme “Energy of the Future,” presented by Kazakhstan at EXPO-2107, is one of the most relevant and globally significant for modernity, concerning the whole world—the sustainable use of energy. The issues of developing renewable non-traditional energy sources have largely been considered in scientific and technical programs of different countries. Particularly, such countries as the USA, Japan, Israel, and Germany work on these energy sources at the level of long-term national programs. As for the possibility of using solar energy in Kazakhstan, it is a country in Central Asia with great potential for solar energy. Solar energy resources in the country remain stable and suitable due to favorable climatic conditions. The research develops a method of logical planning of the database model of solar systems of Southern Kazakhstan based on a computer program. A logical model based on the system model obtained with the operation of the relational data model consists of relational model relationships. Table “Columns” represents the information necessary. A database computer program will make it possible to develop a solar power plant, which is planned to be built in the future.
Innovation Research Scientific and technical Scientific Technical Technology Relational model Weather station Meteorological control
M. N. Kalimoldayev A. A. Abdildayeva Z. U. Shermantayeva (&) Institute of Information and Computational Technologies, Almaty, Kazakhstan e-mail: [email protected] M. N. Kalimoldayev e-mail: [email protected] A. A. Abdildayeva e-mail: [email protected] M. N. Kalimoldayev A. A. Abdildayeva Z. U. Shermantayeva Al-Farabi Kazakh National University, Almaty, Kazakhstan
JEL Classifications
O3
1
O31
O32
O300
O390
Introduction
The availability and accuracy of information about the concentrations of solar radiation entering a certain zone are very important for simulating and producing a solar power plant, as well as for calculations to determine the amount of energy generated by these stations. Various sources of information are used to obtain this data. Weather stations are one of the main sources of ground measurements. There is a network of weather stations in Kazakhstan that have been monitoring climate parameters for a long time. According to the data given, the concentrations of solar radiation energy entering the territory of Kazakhstan on the Earth’s surface ranges from 4000 to 7000 MJ/m2 with an intensity of 700–800 W/m2. Such calculations were carried out by many authors, considering the distinctive climatic property of places of solar installation. There are meteorological stations (actinometric stations) that monitor solar radiation in the regions of Kazakhstan. However, the network of such stations does not cover the entire territory of Kazakhstan. In this regard, such calculations were carried out using actinometric data close to the data obtained at hydrometeorological stations located near settlements where solar installations are built. At one time, about 14 weather stations were operating on the territory of Southern Kazakhstan, carrying out daily meteorological observations.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_26
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The information received for each control period: 0 h 30 min, 6 h 30 min, 12 h 30 min, 15 h 30 min, and 18 h 30 min for each station, according to the average time of day (direct radiation, total radiation, wind speed, ambient temperature, etc.) was processed at meteorological stations. These meteorological data are necessary for building solar stations in the future. Nevertheless, this does not provide much opportunity to create an inventory of solar resources based on the values of accumulated solar radiation resources in each region, because the number of weather stations accumulating actinometric databases was very small. The methodology for assessing the resources of solar energy entering the inclined surface of a solar installation is a report of paramount importance. The considered project of the logical model of the meteorological database at the first stage was prepared based on the database of the solar resource. The technology of the computer program reflecting and processing it was developed in the software system Adobe Flash. The database computer program is executed in several steps. The map obtained at each step logically appears in order on the image. The first step of the database computer program of the solar resource of Southern Kazakhstan is its opening page. The second step shows an image of a map of the territory of Kazakhstan divided into regions. In the next step, it shows the location of weather stations located on the map of the South Kazakhstan region and the locations of settlements where solar stations will be built in the future. The next step of the computer program shows the meteorological data of the locality (Turkestan) selected as the research subject (the intensity of solar radiation entering the horizontal surface, wind speed, and ambient temperature). In connection with the above, it is possible to conduct research to determine the climatic characteristics of solar-wind energy resources and the use of solar-wind power plants for the selected region, as well as to prepare a new type of solar station project.
2
Methodology
In the work of the following authors, we see that the most important parameter considered when installing PV solar radiation technology is the assessment of solar resources by analyzing and predicting the spatiotemporal propagation of solar radiation, Chang et al. 2011; Choi et al. 2011; Han et al. 2010; Kappagantu et al. 2015; Lapin 2020; Maronchuk et al. 2019; Richardson et al. 2019; Shulga et al. 2016; Sorokin 2021; Zhuraeva et al. 2018, as well as in articles controlling output tracking for highly ordered nonlinear systems with time-varying delays Alimhan et al. 2018; Alimhan et al. 2021.
The Republic of Kazakhstan has excellent potential for the use of solar energy; the level of solar radiation by districts of the Republic is shown in Durcheva et al. (2010); Dvornikov and Dzhienbayev 2010; Kim et al. 2019; Tokmoldin 2010. The technology of using solar energy is currently rapidly developing in the world. In 2017, the total amount of electricity produced by solar power plants connected to electric grids increased to 99.1 GW.
3
Results
The first step of the database computer program of the solar resource of Southern Kazakhstan is its opening page. The second step shows the location of weather stations on the map of the South Kazakhstan region and the locations of settlements where solar stations will be built in the future. In the next step, the computer program presents meteorological data on the locality (Turkestan) selected as the research subject (the intensity of solar radiation entering the horizontal surface, wind speed, and ambient temperature). In connection with the above, it is possible to conduct research to determine the climatic characteristics of solar-wind energy resources and the use of solar-wind power plants for the selected region, as well as to prepare a new type of solar station project. Thus, comparing the indicators of satellite and meteorological systems, we calculate the average correction factor. Since the difference is observed between the data of the weather station and NASA, we determine the coefficient of difference. The greatest difference is observed in the warm half of the year (i.e., from May to September). Thus, we determine the average coefficient for these months, leaving the rest of the details the same. Using this coefficient, changing the data based on satellite observations, it is possible to create a database for any locality of the South Kazakhstan region. For Southern Kazakhstan, the method of collecting data on solar resources and the technology of creating databases is based on the NASA SSE program. To eliminate the shortcomings of meteorological and actinometric measurements, remote (satellite) methods and mathematical modeling are currently widely used, which can provide a detailed array of data when assessing solar and wind energy. Many opportunities open up with the creation of the NASA European Space Agency (NASA ESA) database and its public access. The NASA SSE (Surface meteorology and Solar Energy) database is based on satellite and manure measurements from July 1, 1983 to June 30, 2005. The information database calculates the value of monthly cloudless radiation relations, as well as other actinometric and synoptic data coming into the aircraft, directed in
Implementation of a Database on Solar Resources …
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different configurations, together with the use of different The next section is “Parameters for sizing battery or other weather modifications. energy-storage systems,” and “Parameters for gauge batterThe peculiarities of the climatic zones of the globe are ies or other energy-saving systems.” considered, including the characteristics of the back reflecThe first heading is called “minimum available insolation of radiation (albedo) of the surface layer of the Earth, tion,” which provides information on the minimum available the state of clouds, atmospheric pollution by aerosols, etc. insolation volume during the day. The calculated values of solar radiation are interpolated into The second topic, “Horizontal surface deficits below a grid of 1° 1° around the globe (calculations were carried expected values occurring over a consecutive daytime period out on a grid of 2.5° 2.5°). The data array is structured by (kWh/m2),” is the amount of deficit of expected values that possible consumers (photovoltaic panels, solar collectors, occur on a horizontal surface during the day (kW/m2). energy, and thermal battery systems). The third indicator shows “information about the equivBy running the NASA SSE space system program, we alent number of sunless days during the month.” In this can get a list of tables (minimum, maximum, and average) section, one can get the following information: with the heading “Scattered radiation on a horizontal surface,” which contains the parameters of the scattered radia- 1. Air temperature at the height of 10 m; tion incident on a horizontal surface. 2. The daily air temperature range at the height of 10 m; When we use the term “direct normal radiation,” we get 3. Cooling at temperatures above 18°; the parameters of direct normal radiation (minimum, maxi- 4. Heating at a temperature below 18°; mum, and average). 5. Arctic warming days below 10°; In the section “Insolation in 3-h intervals” in the list of the 6. Arctic warming days below 0°; second table, we define the parameters of insolation with 3-h 7. The temperature of the Earth’s surface; intervals. 8. Earth’s daily temperature; In the section “insolation clearness index,” we get 9. Frosty days; detailed information about the accuracy index of insolation. 10. The freezing point at the height of 10 m. The following section is “Solar Geometry,” which includes the color of the sun, daylight saving time, the cosine Solar energy has a drawback: it depends on the state of of the zenith angle, the cosine of the zenith angle between the atmosphere, the time of the day, and the year. Solar east and noon, the hourly angle of the lunar sunset, the power does not work at night without a storage device such maximum angle of the sun relative to the west, the hour as a battery. Cloudy weather can make the technology relative to the horizon, the angles of the sun, and the hour unreliable during the day. Solar technologies are also very angles of the azimuth of the sun. expensive and require a lot of space to collect solar energy Direct normal radiation and diffuse radiation incident on a efficiently. Solar power systems work best in warm climates sloping surface are not calculated when the clarity index is with mild or short winters. less than 0.3 or higher than 0.8. Despite the shortcomings, over the past decade, solar The average monthly radiative radiation on an equatori- energy production has increased by 20% per year, thanks to ally inclined surface is OPT ANG 38.4 (values of the lower production prices and increased efficiency of the panels specified parameters in the radiation on equator-pointed themselves. Currently, Japan, Germany, and the USA are titled surfaces section). Additionally distinguish: considered advanced markets for solar panels. The leading countries of the world are focusing on the alternative gener1. Minimum radiation on equator-pointed titled surfaces ation of solar electricity. However, with one caveat, it currently needs considerable state support. It is provided with the Minimum radiation incident on a surface is located most favorable conditions for intensive development. obliquely to the equator (kW/m2/day). 2. Maximum radiation on equator-pointed titled surfaces.
4
Conclusion
The maximum radiation incident on a surface is located obliquely to the equator (kW/m2/day). The data in this section are used when carrying out work on the calculation of mobile solar panels.
The research implements the methodology of creating a natural modification of the information base according to the weather resources for the purpose of midday areas of Kazakhstan in the database of computer projects. The natural form,
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a relational form based on ideological modification derived from the relational modification of information, consists of a system of connections. Any column in the table is considered a component of information. The computer project of this information base makes it possible to form plans for weather stations, which will be created in the future. Thus, using the NASA SSE database, we have created a database for the South Kazakhstan region consisting of 24 points. Each point is a locality. The received data is recorded in the appendices. Using the types of modern data sources listed above, it should be borne in mind that it is necessary to make a comparative adjustment of the data with the databases of weather stations in Kazakhstan. As a result of such comparisons, along with the value of the possibility of the district, it is possible to identify the basis in the process of embedding elements of this potential in the map. Of great importance is the comparative adjustment of data related to the latitude of the territory of Kazakhstan.
References Alimhan K, Otsuka N, Kalimoldayev MN, Tasbolat N (2018) Practical output tracking for a class of uncertain nonlinear time-delay systems via state feedback. MATEC Web of Conf 189:10027. https://doi. org/10.1051/matecconf/201818910027 Alimhan K, Tasbolatuly N, Yerdenova A (2021) Global output tracking control for high-order non-linear systems with time-varying delays. J Theor Appl Inf Technol 99(13):3337–3352. Retrieved from https://jatit.org/volumes/Vol99No13/21Vol99No13.pdf. Accessed 18 Dec 2022 Chang K-C, Lin W-M, Lee T-S, Chang K-M (2011) Subsidy programs on diffusion of solar water heaters: Taiwan’s experience. Energy Policy 39(2):563–567. https://doi.org/10.1016/j.enpol.2010.10.021 Choi Y, Rayl J, Tammineedi C, Brownson JR (2011) PV analyst: coupling ArcGIS with TRNSYS to assess distributed photovoltaic potential in urban areas. Sol Energy 85(11):2924–2939. https://doi. org/10.1016/j.solener.2011.08.034
M. N. Kalimoldayev et al. Durcheva MB, Urazov KA, Kenzhaliev BK, Beisembayeva GJ (2010) Thin-film photocells based on chalcogenides. Energy Fuel Resour 1:52–54 Dvornikov VA, Dzhienbayev NN (2010) The state and prospects of using photovoltaic power plants in Kazakhstan. Energy Fuel Resour 2:33–35 Han J, Mol APJ, Lu Y (2010) Solar water heater in China: a new day is coming. (Solar water heaters in China: The beginning of a new day). Energy Policy 38(1):383–391. https://doi.org/10.1016/j.enpol. 2009.09.029 Kappagantu R, Arul Daniel S, Venkatesh M (2015) Analysis of rooftop solar PV system implementation barrier in Puducherry smart grid pilot project. Proc Technol 21:490–497. https://doi.org/10.1016/j. protcy.2015.10.033 Kim S-M, Oh M, Park H-D (2019) Analysis and Prioritization of the floating photovoltaic system potential for reservoirs in Korea. Appl Sci 9(3):395. https://doi.org/10.3390/app9030395 Lapin RD (2020) A new look at solar energy. Young Sci 6(296):39–41. Retrieved from https://moluch.ru/archive/296/67106. Accessed 18 Dec 2022 Maronchuk II, Sanikovich DD, Mironchuk VI (2019) Solar cells: current state and development prospects. In: ENERGETIKA. Proceedings of CIS higher education institutions and power engineering associations 62(2):105–123. https://doi.org/10.21122/ 1029-7448-2019-62-2-105-123 Richardson W, Cañadillas D, Moncada A, Guerrero-Lemus R, Shephard L, Vega-Avila R, Krishnaswami H (2019) Validation of all-sky imager technology and solar irradiance forecasting at three locations: NREL, San Antonio, Texas, and the Canary Islands. Spain Appl Sci 9(4):684. https://doi.org/10.3390/app9040684 Shulga KS, Astapova YO, Astapov AE (2016) Hybrid solar collectors. Young Sci 17(121):101–105. Retrieved from https://moluch.ru/ archive/121/33554. Accessed 18 Dec 2022 Sorokin AS (2021) Design and planning of a solar power plant. Young Sci 4(346):35–38. Retrieved from https://moluch.ru/archive/346/ 77788. Accessed 18 Dec 2022 Tokmoldin SZ (2010) Development of solar photoenergy in the Republic of Kazakhstan. Energy Fuel Resour 1:43–51 Zhuraeva ZI, Shoguchkarov SK, Zhumabaev BK (2018) Analysis of the main indicators of various designs of photovoltaic batteries during operation in a hot climate. In: Materials of the scientific-practical conference “Modern problems of semiconductor physics and the development of renewable energy sources”. Andijan, Uzbekistan, pp 220–223
Digital Twin of the Zoological Collection of the Republic of Kazakhstan Maksat N. Kalimoldayev , Roman V. Yaschenko , Aigerim T. Mazakova , Talgat Zh. Mazakov , and Gulzat Z. Ziyatbekova
Abstract
Keywords
The article discusses a study on the creation of an electronic database for the preservation of zoological collections of the Institute of Zoology of the Ministry of Science and Higher Education of Kazakhstan. Based on MySQL, the authors developed an electronic database with a convenient interface for entering data from the National Zoological Collection of the Republic of Kazakhstan. The electronic database created includes an information and search system. It can more reliably form a virtual scientific animal collection. This electronic database is intended for zoologists and other professionals who need zoological information. Creating a database and databank of national scientific zoological collections that can be used for scientific, educational, and applied purposes; accounting; condition monitoring and long-term preservation of the national single zoological collection; and management of valuable zoological collection materials. The National Zoo Science Collection is the most important source of information for research in various areas of biology. It is the basis for conducting scientific research on animal phylogeny and molecular genetics and is the document that confirms the correctness of the zoological studies conducted. To solve this problem of both theoretical and practical importances, an inventory of specimens showing the diversity of species has taken on special significance.
Databases collection
M. N. Kalimoldayev Institute of Information and Computational Technologies, Almaty, Kazakhstan R. V. Yaschenko Institute of Zoology of the CS MES RK, Almaty, Kazakhstan e-mail: [email protected] A. T. Mazakova T. Zh.Mazakov G. Z. Ziyatbekova (&) Al-Farabi Kazakh National University, Almaty, Kazakhstan e-mail: [email protected]
Biological systematics Zoological Interface Database management system
JEL code
C61
1
C65
O44
Introduction
Recently, research in genetics and biological activities as the biological information stored in the database increases. A similar rapid growth of information has occurred in the field of zoology. However, the development of databases in this area has never been considered. This paper describes the electronic database of the zoological collection of the National Research Institute of Zoology. Museum collections are large, and the current way of processing information involves using electronic storage for big data. Simultaneously, quick access to such data and standardized input of information is possible. The convenience of such data storage lies in the fact that they can be associated with the electronic storage of photographs or have access to three-dimensional models of objects (Beck 2018; Kalyakin et al. 2017; Lobanov et al. 2002; Papastefanou et al. 2016; Scott et al. 2019; Smirnov et al. 2001). Several works consider the requirements for zoological electronic databases (Lobanov et al. 1994; Turkmenova 2016). The main requirement is that the database management system should enable zoologists of different profiles to work simultaneously. These can be specialists in vertebrates, insects, fish, marine and freshwater invertebrates, etc. The problem in creating such a database system will be in standardizing the registration of data on animal funds, designing labels, organizing collections, describing the specimens, presenting generalized data, and distributing
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_27
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entire taxa. At present, this problem has not been solved, and there are no examples of its satisfactory solution yet. Creating a database about the Zoological Collection in the Republic of Kazakhstan is an urgent task within the framework of the International [“Convention on Biological Diversity” (United Nations 1992)] and National state strategic and program documents of the Republic of Kazakhstan [“Development strategy of Kazakhstan 2050” (Official website of the President of the Republic of Kazakhstan 2012)], State program “Digital Kazakhstan” [December 12, 2017 No. 827 (Government of the Republic of Kazakhstan 2017)], State program of education and science of Kazakhstan 2020–2025 (Government of the Republic of Kazakhstan 2019), and the message of the President of our Republic “The third modernization of Kazakhstan: Global competition in the world” President of the Republic of Kazakhstan 2017)]. Additionally, the creation of a national zoological collection will ensure the implementation of national legislation and increase the scientific and technical potential of the state and its global image through the conservation and development of zoological collection funds. The collection of zoological scientific collections in Kazakhstan is a very important source of information covering various areas of biological research. The creation and development of a national electronic database on the zoological scientific collection of the Republic of Kazakhstan is an urgent task, which is designed to improve the quality and accessibility of collections for scientific and educational purposes, as well as to provide an opportunity to replenish the collection with fresh materials, including the creation of an appropriate web portal for public use. The developed zoological database will be used to record, monitor the condition, and ensure the long-term preservation of the unified national zoological collection, as well as to manage valuable zoological collection materials. Using specialized geoinformation systems creates conditions for the compact collection, storage, processing, and distribution of zoological data. Moreover, it contributes to a qualitatively new understanding of ecological processes. All possible cases of environmental geoinformation technologies show the relevance of conducting numerous research works on the development of methods of creating the above-mentioned systems and the field of their application. The prepared electronic database includes a wide range of informationanalytical systems. It can also provide further development of the virtual scientific zoological collection. The created electronic database is intended to serve zoologists and others in the field who need zoological information. The National Zoo Science Collection is the most important source of information for research in various areas of biology. It is a basis for scientific research on the systematics and molecular genetics of animals and a documented
M. N. Kalimoldayev et al.
confirmation of the correctness of performed faunistic works. When solving this theoretically and practically important problem, the inventory of samples of species diversity acquires special urgency. In this regard, it is necessary to assess the current state of the zoological scientific collections of Kazakhstan, stored mainly in the collection fund of the Institute of Zoology. The Institute of Zoology has a zoological collection with more than 715 thousand specimens of vertebrate and invertebrate animals. The created database on zoological collection will make it possible to conduct a quantitative and qualitative analysis of taxonomic diversity and monitor invertebrate and vertebrate animals of Kazakhstan. Moreover, it will make it possible to revise species definitions of collection materials based on the latest scientific advances in zoological systematics. Based on contemporary accounting and analysis of the state of collection funds, it is possible to assess the sufficiency of these funds to reflect the diversity of the country’s fauna and refine the species definitions of collection materials in accordance with recent changes in the systematics of invertebrates and vertebrates. This is necessary to comply with the current world level of development of zoological science.
2
Methodology
The program was implemented on the Visual Studio platform in the C# programming language with a connection to the database on the web application phpMyAdmin in the query language MySQL. PhpMyAdmin is an open-source web application written in PHP that provides a web interface for managing MySQL databases. This application is a handy tool with which one can manage the MySQL server without entering commands. The GUI makes it possible to run SQL commands to create, edit, and view tables from the database. PhpMyAdmin makes it possible to connect to the database and administer the MySQL server. It is a flexible and easy way to manage databases. One of the advantages of this application is that it works on any operating system that supports a web browser. Most web developers prefer this application because it allows managing the MySQL database management system (DBMS) without directly entering SQL commands (Mazurkevich and Elovoy 2004; Sokolov et al. 1997). Microsoft Visual Studio is Microsoft’s premier product for creating software. The integrated development environment allows one to create console applications, games, and applications with a graphical interface, including those that support Windows Forms technology. Web services can be created in native and managed code for all platforms supported by Windows, Windows Mobile, Windows. CE, .NET
Digital Twin of the Zoological Collection of the Republic of Kazakhstan
Framework, Xbox, Windows Phone.NET Compact Framework, and Silverlight (Welling and Thomson 2012). In our work, we used Visual Studio to create a web application. Using phpMyAdmin, we created the main project database zoology, in which five tables were created: Users, Positions, Fundament, Departments, and Classes. The table “Users” includes several fields: last name, first name, and patronymic of the user, the number of departments in which the user works, the number of positions the user occupies, and login and password for further login into the program. The table “Positions” stores the numbers and names of positions and their rights to read, write, and change. The table “Departments” contains the numbers and names of the departments where the user works. This can be the administrator, the management, or a lab assistant. The table “Classes” contains basic descriptive information about the samples, for example, kingdom, species, genus, subspecies, etc. The table “Fundament” is the main table. It contains 63 parameters, among which there are sample numbers, its location, in what species it was found, and how it is stored. This table also has fields that contain links for photos and videos.
3
Results
We created a user interface for filling, searching, and changing information related to the database. It is also possible to import data from an Excel file into the database. The internal database of the zoological collection contains a complete set of information on the storage units; its filling is controlled by collection curators. A system based on the entry of a login and password is provided to authorize user access and separate access rights to the various functionalities of the system according to user authority. The ability to maintain a log of user actions is implemented to protect against unauthorized actions of users in the system. The data entry system provides the possibility of including media files (images—animal pictures) and audio files (birdsong, etc.). When entering data, the system provides the possibility of selecting information from the appropriate list, which ensures the correctness of the set of repetitive information. Data that supports the findings of the study is available at https://figshare.com/ with ID https:// figshare.com/articles/figure/Data_entry_window_jpg/ 21786893. To quickly find the required information, the corresponding window is developed. After finding, the found information is provided in the form of a screen form. Currently, the database contains more than 1000 records. The software is tested on this data.
4
159
Conclusion
An electronic database with a convenient interface for entering data from the National Zoological Collection of the Republic of Kazakhstan was developed based on MySQL. The developed electronic database contains an information retrieval system. It will provide further formation of the virtual scientific zoological collection. The electronic database is intended for zoologists and specialists of other profiles who need zoological information. The technology under development can be used (after appropriate adaptation) for a wider application. In particular, it can be used to build a virtual museum of biological exhibits of species distributed in Kazakhstan. The positive economic effect lies in the fact that expensive equipment is not required to obtain information from the zoological collection. Social effects are expressed in terms of the breadth of relevant information available from electronic databases. The created database on zoological collection will allow for conducting a quantitative and qualitative analysis of taxonomic diversity and monitoring of invertebrate and vertebrate animals of Kazakhstan, as well as revising species definitions of collection materials based on the latest scientific advances in zoological systematics. Based on contemporary accounting and analysis of the state of collection funds, it is possible to assess the sufficiency of these funds to reflect the diversity of the country’s fauna and refine the species definitions of collection materials in accordance with recent changes in the systematics of invertebrates and vertebrates. Possibilities of application of mathematical modeling and interval mathematics for further analytical processing of the available information from the electronic database are of certain interest (Jomartova et al. 2014; Mayo 2010; Mazakov et al. 2021; Mazakova et al. 2022). The work is executed at the expense of the programtargeted financing of scientific researches for 2021– 2022 years under the project IRN OR11465437 “Development of the national electronic data bank on the scientific zoological collection of the Republic of Kazakhstan, ensuring their effective use in science and education.”
References Beck LA (ed) (2018) Zoological collections of Germany: the animal kingdom in its amazing plenty at museums and universities. Cham, Switzerland, Springer. https://doi.org/10.1007/978-3-319-44321-8 Government of the Republic of Kazakhstan (2017) Decree on approval of the state program “Digital Kazakhstan” (December 12, 2017 No. 827. Retrieved from https://adilet.zan.kz/rus/docs/ P1700000827. Accessed 10 May 2022 Government of the Republic of Kazakhstan (2019) Decree “on approval of the state program of education and science of Kazakhstan for 2020–2025” (December 27, 2019 No. 988).
160 Retrieved from https://adilet.zan.kz/rus/docs/P1900000988. Accessed 10 May 2022 Jomartova SH, Mazakov T, Zhaydarova A, Karymsakova N (2014) Comparison of two interval arithmetic. Appl Math Sci 8(72):3593– 3598. Retrieved from http://www.m-hikari.com/ams/ams-2014/ ams-69-72-2014/karymsakovaAMS69-72-2014.pdf. Accessed 25 May 2022 Kalyakin MV, Voltzit OV, Morkovin AA, Moskalenko VN (2017) Digital databases in Zoological Museum of Moscow state university. Proc Kola Sci Center RAS 8(6–5):36–44 Lobanov A, Sokolov E, Smirnov I (1994) ZOOINT—An integrated system for zoological data bases. In: Proceedings of the ADBIS’94: international workshop on advances in databases and information systems. Moscow, Russia, pp 270–271 Lobanov AL, Smirnov IS, Dianov MB, Alimov AF, Kireychuk AG, Krivokhatsky VA (2002) Russian zoological databases on the Internet. In: Proceedings of the all-Russian scientific conference “scientific service on the internet”. Moscow, Russia, Moscow University Press, pp 51–53 Mayo J (2010) Microsoft visual studio 2010: a beginner’s guide. St. Petersburg, Russia: BHV-Petersburg Mazakov T, Wójcik W, Jomartova SH, Karymsakova N, Ziyatbekova G, Tursynbai A (2021) The stability interval of the set of linear system. INTL J Electr Telecommun67(2):155–161. https:// doi.org/10.24425/ijet.2021.135958 Mazakova A, Jomartova S, Mazakov T, Shormanov T, Amirkhanov B (2022) Controllability of an unmanned aerial vehicle. In: Proceedings of the EnergyCon: IEEE 7th international energy conference. Riga, Latvia, pp 1–5. https://doi.org/10.1109/ENERGYCON53164. 2022.9830244 Mazurkevich AM, Elovoy DS (2004) PHP: A programmer’s handbook. New Knowledge Publishing, Minsk, Belarus
M. N. Kalimoldayev et al. Official website of the President of the Republic of Kazakhstan (2012) Development strategy of Kazakhstan 2050. Retrieved from https:// www.akorda.kz/en/official_documents/strategies_and_programs. Accessed 14 May 2022 Papastefanou G, Legakis A, Shogolev I (2016) The avian collection of the zoological museum of the university of athens (ZMUA). Biodiv Data J 4(1):e10598. https://doi.org/10.3897/BDJ.4.e10598 President of the Republic of Kazakhstan. (2017, January 31). Presidential message “The third modernization of Kazakhstan: Global competition in the world.” Retrieved from https://adilet.zan. kz/rus/docs/K1700002017. Accessed 18 May 2022 Scott B, Baker E, Woodburn M, Vincent S, Hardy H, Smith VS (2019) The natural history museum data portal. Database. https://doi.org/ 10.1093/database/baz038 Smirnov IS, Lobanov AL, Dianov MB, Golikov AA, Alimov AF (2001) Zoological virtual museums: present and future. In: Proceedings of the all-Russian scientific conference “scientific service on the internet”. Moscow, Russia, Moscow University Press, pp 22–24 Sokolov EP, Smirnov IS, Lobanov AL (1997) ZOOINT integrated system for maintaining and using zoological databases. Proc Zool Inst RAS 269:136–144 Turkmenova AI (2016) Insects of the database of the Zoological Museum of the IERiZH from the territory of Bashkiria. Mater Flora Fauna Repub Bashkortostan 13:93–105 United Nations (1992) Convention on biological diversity (Treaty series) (June 5, 1992). Rio De Janeiro, Brazil. Retrieved from https://www.cbd.int/doc/legal/cbd-en.pdf. Accessed 15 May 2022 Welling L, Thomson L (2012) PHP and MySQL Web Development (4th ed). Williams Publishing. (Original work published 2008)
Digital Model of the Influence of Various Environmental Factors on Plant Biomass Aigerim T. Mazakova , Chingiz Nurzhanov , Talgat Zh. Mazakov , Sholpan A. Jomartova , and Akyltai D. Burgegulov
Abstract
Keywords
The paper focuses on the development of a program for constructing a digital twin of a mathematical model based on the processing of experimental data on toxic soil pollution. The use of digital models makes it possible to reduce the material and time costs for conducting full-scale experiments. Using the self-organization method, the authors obtained mathematical models of biomass depending on environmental factors. Using the method of self-organization, the authors obtained mathematical dependences of biomass dynamics on climatic factors and parameters of natural pollution. The research develops a universal software module based on the method of self-organization using retrospective data represented by time series. The program developed by the authors can be used in biology, agrochemistry, sociology, and other areas. Models built using the method of group consideration of arguments are superior in their predictive properties to regression models. When studying the initial data, mathematical equations are determined that describe the relationship between biomass and significant factors. When applying the method of self-organization, the model type is not predetermined. The type of polynomial nonlinearity is determined by the absolute error criterion.
Identification Heuristics Pollutants Environment Regression equation Selection Time series Toxic elements
A. T. Mazakova (&) C. Nurzhanov T. Zh.Mazakov S. A. Jomartova A. D. Burgegulov Al-Farabi Kazakh National University, Almaty, Kazakhstan e-mail: [email protected] C. Nurzhanov e-mail: [email protected] T. Zh.Mazakov e-mail: [email protected] S. A. Jomartova e-mail: [email protected]
JEL Classifications
O13
1
Q24
Q26
Q52
Introduction
The current development of the agrochemical industry has made it possible to increase crop yields. However, their widespread use has led to soil and water pollution. A variety of agrochemical plant protection products requires the development of new methods for assessing the effectiveness of their use and predicting negative consequences. The development of the agrochemical industry requires increasingly more control of soil pollution with harmful substances. Therefore, the problem of soil purification by reducing the content of heavy metals has become urgent. Temperature, humidity, acidity, and photosynthetic active radiation and precipitation are considered factors influencing the process of self-purification of contaminated lands. Statistical data on these factors are presented in the form of time series. It is necessary to conduct an ecological assessment of the environment when studying the degree of soil pollution. Currently, the use of mathematical modeling and computer technologies provides operational monitoring of the environmental situation. The application of mathematical modeling is most effective in the biological sphere (Grinin et al. 2003), agricultural (Behrendt et al. 1995; Chebotareva 2011; Dyakonov 2005; Grinin et al. 2003; Guryanova et al. 2014; Hinsinger
A. D. Burgegulov e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_28
161
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A. T. Mazakova et al.
et al. 2008), and agrochemical spheres (Chebotareva 2011; Grinin et al. 2003; Korostina et al. 2009). The issues of studying the distribution of pollutants in nature are especially topical (Dyakonov 2005; Kamalu et al. 2017). Atmospheric precipitation, air temperature, moisture evaporation in the soil, and photosynthetically active radiation were studied as factors influencing soil self-purification (Rosnovsky 2007; Schmidt and Kulikov 2006; Thoma et al. 2003). With the help of the self-organization program, the authors estimated the dependence of the biomass of miscanthus (the studied plant) and obtained mathematical models of its dependence on the above factors. Numerical calculations show that the most significant factors affecting the biomass of miscanthus are precipitation, evaporation of soil moisture, and solar activity. The results obtained make it possible to calculate the rate of (cleaning up) soil pollution with the help of plants.
2
Methodology
The method of group accounting of arguments (MGAA) is included in the family of self-organizing algorithms (Ivakhnenko 1981). MGAA is based on the principle of multi-row construction of regression models with a successive selection of the best of them. This synthesis and selection are carried out with increasing complexity; it is impossible to predict in advance what final form the generalized polynomial will have. MGAA performs a multi-row selection from the set of received models. In the method of accounting for group arguments, pairwise combinations of initial parameters are preliminarily selected (Mazakova et al. 2022). Further, quadratic equations of the decisive functions are compiled from them. The coefficients of the decisive functions are determined based on retrospective data by reduction to a system of linear algebraic equations. Further, from the resulting set of decision functions, the best ones are selected according to the criterion of minimal error (Anufriev et al. 2005; Behrendt et al. 1995). The partial decision functions selected at the i-th step (row) are used as initial parameters for the (i + 1)-th row. The multi-row process of building mathematical models ends when the results deteriorate, that is, with an increase in the minimum synthesis error criterion. The method of group consideration of arguments is effective in solving problems of classification, prediction, and signal and image processing. Let the initial data X be represented as a matrix of order n * m, where n is the number of observations and m is the
number of parameters. Modeled variable data is represented as an n-vector Y. It is necessary to build a mathematical model that expresses the dependence of Y on independent variables X. The following is a description of the self-organization method. Suppose the object is described by the following equation: y ¼ f ðx1 ; x2 ; . . .; xn Þ
ð1Þ
Let us introduce the following notation: z0i ¼ xi ; i ¼ 1; n:
ð2Þ
Using the self-organization method, we replace Eq. (1) with several series of particular descriptions: • Formula (3) that represents the first row is available at https:// figshare.com/ with ID https://figshare.com/articles/figure/Formula_3_PNG/21864369; where k ¼ n nðn þ 1Þ=2 z11 ¼ a12 z01 þ b12 z02 þ c12 z01 z02 ; z12 ¼ a13 z01 þ b13 z03 þ c13 z01 z03 ; ; z1k ¼ a1k z0n1 þ b1k z0n þ c1k z0n1 z0n
ð3Þ
• Formula (4) that represents the second row is available at https://figshare.com/ with ID https://figshare.com/articles/ figure/Formula_4_PNG/21864471, etc. z21 ¼ a21 z11 þ b21 z12 þ c21 z11 z12 ; z22 ¼ a23 z11 þ b23 z13 þ c23 z11 z13 ; ; z2k ¼ a2k z1n1 þ b2k z1n þ c2k z1n1 z1n
ð4Þ
In the general case, for the i-th row, the iterative process can be written as follows: i1 zij ¼ aij zi1 þ bij zi1 zi1 l m þ cij zl m :
ð5Þ
Formula (5) shows that each series depends only on two variables. The coefficients on the right side of Eq. (2) are easily calculated using the least squares method. The application of formula (5) ensures the construction of a model of the required complexity because the degree of the polynomial doubles at each iteration (construction of a new series). Any continuous function on a given interval can be approximated with the required accuracy by a polynomial of a certain degree (Guryanova et al. 2014).
Digital Model of the Influence of Various Environmental …
163
Application of the above theorem ensures the adequacy of the resulting model. Formula (5) makes it possible to apply the method of self-organization even with a small amount of experimental data, which is impossible with regression analysis. The criterion for selecting parameters is the minimization of the functional: F¼
M X t¼1
2 yt y0t ;
ð6Þ
where yt —the value of the reductive parameter at time t; y0t —is the predicted value of the reductive parameter at time t.
3
Results
We apply the algorithm proposed above for constructing a mathematical model that determines the relationship between the biomass volume of the Miscanthus giganteus plant and the following four indicators: 1. 2. 3. 4.
• Temperature—min = 0.0, max = 38.16, average = 5.727; • Precipitation—min = 6.57, max = 111.05, average = 21.284. As a result of calculations by formula (3) for the first row of selection, the following error values were obtained for the first six equations of the model, ordered by the magnitude of the increase in the value of the absolute error criterion (6): d11 ¼ 16:364; d12 ¼ 16:579; d13 ¼ 16:688; d14 ¼ 16:979; d15 ¼ 17:346; d16 ¼ 17:398:
ð7Þ
We choose the first four models of the first row of selection. Formula (7) is available at https://figshare.com/ with ID https://figshare.com/articles/figure/Formula_7_PNG/ 21864489. Let us apply the obtained Eq. (7) to construct the second selection series. This resulted in the following errors: d21 ¼ 14:686; d22 ¼ 14:749; d23 ¼ 15:326; d24 ¼ 15:833; d25 ¼ 16:115; d26 ¼ 16:364:
ð8Þ
Let us write out the first four best models. Formula (8) is available at https://figshare.com/ with ID https://figshare. com/articles/figure/Formula_8_PNG/21864558. Let us apply the obtained Eq. (8) to construct the third series of selection. This resulted in the following errors:
photosynthetic radiation activity (PAR); soil moisture evaporation (Pe); temperature (temperature); precipitation.
Initial data are partially presented in Table 1. The initial data is characterized by the following limit values:
d31 ¼ 11:524; d32 ¼ 11:713; d33 ¼ 11:816;
• Miscanthus—min = 1.05, max = 1264.565, average = 544.797; • Par—min = 0.01, max = 4.817, average = 2.338; • Pe—min = 1.5, max = 14.07, average = 7.825;
Let us write out the first four best models. Formula (9) is available at https://figshare.com/ with ID https://figshare. com/articles/figure/Formula_9_PNG/21864585.
Table 1 Numerical values used for mathematical modeling
d34 ¼ 12:570; d25 ¼ 12:626; d26 ¼ 13:048:
ð9Þ
No.
Miscanthus
PAR
Pe
Temperature
Precipitation
1
1.050
8.360
2.408
15.520
0.270
2
2.592
7.324
3.545
17.040
7.140
3
3.535
3.542
2.192
14.000
5.160
4
7.235
9.690
2.875
14.030
4.130
5
12.355
11.754
4.599
14.510
3.080
6
17.211
10.048
4.087
13.520
3.130
7
23.308
11.258
4.817
13.570
0.530
8
25.219
3.254
0.040
18.500
29.040
9
29.037
6.260
2.370
18.050
28.955
10
35.456
9.444
3.022
6.570
28.960
…
…
…
…
…
…
100
1264.565
6.684
2.104
22.560
0.000
Source Compiled by the authors
164
A. T. Mazakova et al.
Let us apply the obtained Eq. (9) to construct the fourth selection series. This resulted in the following errors:
Substituting expressions (14) into Formula (8), we obtain the following:
d41 ¼ 11:524; d42 ¼ 12:520; d43 ¼ 12:835;
z23 ¼ 1:92 x1 þ 0:819 x4 1:39 x1 x4 þ 0:996 x2 1:70 x1 x2 ð4:17 x1 þ 3:88 x4 6:58 x1 x4 Þ ð0:792 x1 þ 0:760 x2 1:30 x1 x2 Þ;
d44 ¼ 13:879; d45 ¼ 14:723; d43 ¼ 14:851:
ð10Þ
Let us write out the first four best models. Formula (10) is available at https://figshare.com/ with ID https://figshare. com/articles/figure/Formula_10_PNG/21864642. Let us apply the obtained Eq. (9) to construct the fifth selection series. This resulted in the following errors: d51 ¼ 11:524; d52 ¼ 14:272; d53 ¼ 14:328; d54 ¼ 14:799; d55 ¼ 14:950; d53 ¼ 15:434:
ð11Þ
Let us write out the first four best models. Formula (11) is available at https://figshare.com/ with ID https://figshare. com/articles/figure/Formula_11_PNG/21864669. In view of the fact that the results of the fifth selection did not improve the results of the fourth row, we stopped the iterative process. Denote by rij the i-th best model obtained on the j-th series of selection. Let us sort all the best models obtained in five rows of selection: r31 ¼ 11:524; r32 ¼ 11:524; r33 ¼ 11:524; r34 ¼ 11:713: ð12Þ
z24 ¼ 1:59 x1 þ 0:675 x3 1:34 x1 x3 þ 0:844 x2 1:44 x1 x2 ð1:61 x1 þ 1:53 x3 3:04 x1 x3 Þ ð0:792 x1 þ 0:760 x2 1:30 x1 x2 Þ;
ð15Þ Substituting expressions (15) into Formula (13), we obtain the final equation in the initial variables: y ¼ 3; 16 x1 þ 0; 641 x4 1; 09 x1 x4 þ 1:66 x2 2:83 x1 x2 0:783 ð4:17 x1 þ 3:88 x4 6:58 x1 x4 Þ ð0:792 x1 þ 0:760 x2 1:30 x1 x2 Þ þ 0:703 x3 1:40 x1 x3 1:04 ð1:61 x1 þ 1:53 x3 3:04 x1 x3 Þ ð0:792 x1 þ 0:760 x2 1:30 x1 x2 Þ ð2:15 x1 þ 0:917 x4 1:56 x1 x4 þ 1:12 x2 1:90 x1 x2 1:12 ð4:17 x1 þ 3:88 x4 6:58 x1 x4 Þ ð0:792 x1 þ 0:760 x2 1:30 x1 x2 ÞÞ ð1:59 x1 þ 0:675 x3 1:34 x1 x3 þ 0:844 x2 1:44 x1 x2 Þð1:61 x1 þ 1:53 x3 3:04 x1 x3 Þ ð0:792 x1 þ 0:760 x2 1:30 x1 x2 ÞÞ
It follows from Eq. (10) that the model is essentially nonlinear, and air temperature can be ignored from all parameters used.
Equation (12) shows that the best model was obtained on the third row, and it has the following form: Y ¼ 0:783 z23 þ 1:042 z24 1:120 z23 z24 :
ð13Þ
Let us present the results obtained in the original notation. For this purpose, we use a program written in the MATLAB language (Anufriev et al. 2005; Dyakonov 2005). The data representing the text of the shown program is available at https://figshare.com/ with the ID https://figshare.com/ articles/figure/The_text_of_the_program_in_the_Matlab_ language_jpg/21864000. Let us rewrite Eq. (7) in the original variables. Formula (14) is available at https://figshare.com/ with ID https://figshare.com/articles/figure/Formula_14_PNG/21864681. z11 ¼ 0:691 x1 þ 0:643 x4 1:085 x1 x4 ; z12 ¼ 0:689 x1 þ 0:655 x3 1:019 x1 x3 ; z13 ¼ 0:792 x1 þ 0:760 x2 1:295 x1 x2 ; z14 ¼ 0:717 x2 þ 0:851 x3 1:351 x2 x3 ;
ð14Þ
4
Conclusion
In this research, the authors developed a program for constructing a mathematical model for calculating the influence of agrochemical and climatic factors on the absorption of toxic elements by a plant from contaminated soil. In the self-organization method, the choice of the structure and essential factors of mathematical models is carried out automatically according to experimental data. Unlike regression analysis, the self-organization method makes it possible to build mathematical models of a given complexity and accuracy for various economic, social, and biological processes. The practical value of the developed software lies in its versatility and the possibility of its application for building a mathematical model of any natural phenomena represented by time series.
Digital Model of the Influence of Various Environmental …
References Anufriev IE, Smirnov AB, Smirnova EN (2005) Matlab 7. St. Petersburg, Russia, BHV-Petersburg Behrendt H, Bruggemann R, Morgenstern M (1995) Numerical and analytical model of pesticide root uptake model comparison and sensitivities. Chemosphere 30(10):1905–1920. https://doi.org/10. 1016/0045-6535(95)00072-G Chebotareva EV (2011) Mathematical models of changes in concentration of oil under the influence of sorbents and microorganisms in polluted soils. Vestnik TSPU 4(26):47–50 Dyakonov, V. P. (2005). Matlab 6.0/6.1/6.5/6.5 + SP1 + Simulink 5/5. Processing of signals and images. Moscow, Russia: SOLON-Press. Grinin AS, Orekhov NA, Novikov VN (2003) Mathematical modeling in ecology. Moscow, Russia, UNITY-Dana Guryanova KN, Alekseeva UA, Boyarshinov VV (2014) Mathematical analysis: textbook. Publishing House of the Ural Federal University, Yekaterinburg, Russia Hinsinger P, Bravin MN, Devau N, Gerard F, Le Cadre E, Jaillard B (2008) Soil-root-microbe interactions in the rhizosphere—a key to understanding and predicting nutrient bioavailability to plants. J Soil Sci Plant Nutr 8(SI):39–47. https://doi.org/10.4067/S071827912008000400008
165 Ivakhnenko AG (1981) Inductive method of self-organization of models of complex systems. Naukova Dumka, Kyiv, USSR Kamalu CIO, Okere PC, Egbufor UC, Nwandikom GI, Obijiaku JC, Asomugha CC (2017) Modeling and optimization of phytoremediation kinetics of metals in soil by a plant hyperacumulator. Am J Eng Res 6(11):196–207 Korostina OA, Kuyukina MS, Ivshina IB, Kostina LV, Osipenko MA, Nyashin YI (2009) Modelling of the filtration processes for heavy metal salt solutions and biosurfactant in soil. Russian J Biomech 13 (3):32–43 Mazakova A, Jomartova S, Mazakov T, Shormanov T, Amirkhanov B (2022) Controllability of an unmanned aerial vehicle. In: Proceedings of the EnergyCon: IEEE 7th international energy conference. Riga, Latvia, pp 1–5. https://doi.org/10.1109/ENERGYCON53164. 2022.9830244 Rosnovsky IN (2007) System analysis and mathematical modeling of processes in soils. Publishing House of Tomsk University, Tomsk, Russia Schmidt YuD, Kulikov VE (2006) Modeling the productivity of agricultural crops. Vestnik TSEU 1(37):73–82 Thoma GJ, Lam TB, Wolf DC (2003) A mathematical model of phytoremediation for petroleum-contaminated soil: Model Development. Int J Phytorem 5(1):41–55. https://doi.org/10.1080/ 16226510390856466
Digital Determination of the Thermal Conductivity of a Square Bar by Reduction to a System of Integral Equations Aigerim T. Mazakova , Sholpan A. Jomartova , Talgat Zh. Mazakov , Gulzat Z. Ziyatbekova , and Kalamkas B. Begaliyeva
Abstract
Digital twin method was used, which significantly reduces the cost of materials and time compared to full-scale experiments. The object under study is a three-dimensional body with a square section. The effect of point temperature and surface heat transfer on the rod is also taken into account. Under the assumptions made, the solution of the heat conduction equation described by a partial differential equation is reduced. Numerical algorithms are proposed, and its convergence is proved. As a result, a special program was developed. Table and one-dimensional graphs allow you to analyze the dynamics of temperature changes over time. This approach, using digital models and numerical calculations, greatly facilitates the process of studying the thermophysical properties of an object, providing reliable results for further analysis and interpretation. Keywords
Temperature Integral Equation MatLab Convergence Rod
Thermophysics
JEL Classifications
C650
1
Introduction
Temperature distribution inside the body is associated with the process of heat distribution and the direction of its flow (Dede et al. 2020). At different points of the body, the temperature can be different and depends on time, which is described by the equation T = T(x, y, z, t). In the works of E. A. T. Mazakova (&) S. A. Jomartova T. Zh.Mazakov G. Z. Ziyatbekova K. B. Begaliyeva Al-Farabi Kazakh National University, Almaty, Kazakhstan e-mail: [email protected]
M. Dede, Yu. V. Kuzmin Zika, Schmalenberg, and H. Iizuk, new results were presented, which includes a biquadratic Laplacian with a regularization coefficient in the heat equation (Amrit et al. 2021; Anufriev et al. 2005). The authors constructed an approximate solution using the quasi-transformation method. An error estimate for the constructed approximate solution was also obtained (Dyakonov 2005). In another work related to an ill-posed problem with inverse time (Jaffe et al. 2021; Karpovich et al. 2015; Mazakov et al. 2021). All these studies allow to develop more accurate methods and algorithms for solving problems of heat transfer and the thermophysical state of materials and organisms.
2
Methodology
Let us state the problem: Scs = l1 l1 . Build a global Cartesian coordinate system Oxyz. 2 @T @ T @2T @2T ¼ a2 þ þ ; ð1Þ @t @x2 @y2 @z2 where a2 —the coefficient of thermal diffusivity. t0 t t1 —the period. x, y, z are space variables 0 y; z l1 , 0 x l2 . xc , yc ; zc —the center of the rod: xc ¼ l2 =2, yc ¼ l1 =2; zc ¼ l1 =2: l1 —width and height of the rod. l2 —rod length. D—parallelepiped f0 y; z l1 ; 0 x l2 g, Г—border D. Q ¼ fx; y; z; tjðx; y; zÞ 2 D; t 2 ½t0 ; t1 g: The partial differential Eq. (1) is the basis for describing heat transfer in a solid, also known as the transient heat equation. It reflects the law of conservation of energy for an isochoric (constant volume) heat transfer process. This equation establishes an important relationship between temperature changes at various points in a solid and
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_29
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their changes with time. This assumption allows us to simplify the model and focus on key aspects of the heat transfer process. This means that at certain points on the rod, the effect of a heat or cold source is taken into account. To find a unique solution to the heat equation and fully describe the heat transfer process, it is necessary to supplement the equation with initial and boundary conditions. Boundary conditions define the conditions on its surface, such as setting the temperature at the ends of the rod or determining the heat flux through its surface. This integrated approach to thermal conductivity modeling provides a unique solution and more accurate results for the analysis and prediction of thermal processes in various systems and materials. Initial condition: Tjt¼0 ¼ qðM Þ; qM ¼ ðx; y; zÞ 2 D:
ð2Þ
Boundary conditions: @T j ¼ 0; T ð0; yc ; zc ; tÞ ¼ q: @n C
3
ð3Þ
The solution of the equation T(x, y, z, t) must satisfy the conditions and ensure agreement. Due to the complexity of the phenomena under consideration, the analytical solution of partial differential equations is often very laborious. This makes it possible to carry out calculations and obtain a numerical solution. The use of numerical solution methods is a widely used and effective approach for studying complex heat transfer processes, as they provide sufficiently accurate results even if the analytical solution is difficult. Such numerical methods are actively used in scientific and engineering research, which makes it possible to effectively solve real problems of heat transfer and analyze the behavior of materials and systems under various conditions. Development of a computational algorithm. We write the following difference-differential approximation of Eq. (2) (Dyakonov 2005): dTi;j;k Ti þ 1;j;k 2Ti;j;k þ Ti1;j;k ¼ a2 dt Dx2 Ti;j þ 1;k 2Ti;j;k þ Ti;j1;k Ti;j;k þ 1 2Ti;j;k þ Ti;j;k1 ; þ þ Dy2 Dz2
ð4Þ
nxyz ¼ nx ny nz:
T1;j;k ðt0 Þ ¼ qi;j;k ; i ¼ 1; nx; j ¼ 1; ny; k ¼ 1; nz
ð5Þ
Boundary conditions (3): dT1;j;k dTnx;j;k dTi;ny;k dTi;j;1 dTi;j;nz dTi;1;k ¼ 0; ¼ 0; ¼ 0; ¼ 0; ¼ 0; ¼ 0; dt dt dt dt dt dt i ¼ 1; nx; j ¼ 1; ny; k ¼ 1; nz:
ð6Þ Introduce a vector x of dimension nxyz and a matrix A of dimension nxyz nxyz. We define the elements of the vector x as follows: xp ðtÞ ¼ Ti;j;k ðtÞ; p ¼ ði 1Þ ny nz þ ðj 1Þ nz þ nz: i ¼ 1; nx; j ¼ 1; ny; k ¼ 1; nz: ð7Þ
Results
t 2 ½t0 ; t1 , i ¼ 2; nx 1, j ¼ 2; ny 1,k ¼ 2; nz 1, Dx ¼ l1 =nx, Dy ¼ l1 =ny, Dz ¼ l2 =nz,
Initial conditions (2) take the following form:
The elements of matrix A are determined through the coefficients from (4). The original problem (2)–(4) is reduced to the following Cauchy problem for a system of linear ordinary differential equations: dx ¼ Ax; xðt0 Þ ¼ x0 ; t 2 ½t0 ; t1 : dt
ð8Þ
Since the conditions of the Cauchy theorem are satisfied for the system of differential Eq. (8), there is a unique solution xðtÞ 2 C 1 ½t0 ; t1 for any initial states x0 . The solution to Eq. (8) can be represented as follows: x ð t Þ ¼ x ð 0Þ þ
ZT
AxðsÞds; t 2 ½t0 ; t1 :
ð9Þ
0
Equation (9) is a particular case (Nurdaulet et al. 2018): Zt
yðtÞ ¼ f ðtÞ þ l K ðt; sÞyðsÞds;
ð10Þ
0
where: yðtÞ ¼ xðtÞ; f ðtÞ ¼ xð0Þ; K ðt; sÞ ¼ A; l ¼ 1:
ð11Þ
Theorem 1 Equation (10) has a unique continuous solution for any initial states x0 . This solution can be found by the formula xðtÞ ¼ E þ At þ 12 A2 t2 . . . þ k!1 Ak tk þ . . . f ðtÞ. Proof Because matrix A and the vector of initial conditions matrix X0 are constant, all conditions of Theorem 7.1 (Sikovsky 2013) are satisfied.
Digital Determination of the Thermal Conductivity …
169
For Eq. (10), we denote the Volterra operator by
x ðt Þ ¼
t
Qy ¼ R K ðt; sÞyðsÞds. 0
We define the iterated kernel of the Volterra operator: n
Rt
Q y ¼ Kn ðt; sÞyðsÞds, 0
t
Kn ðt; sÞ ¼ R K ðt; sÞKn1 ðs; sÞds, s
Rðt; sÞ ¼
1 X
Kn ðs; sÞ:
1 1 E þ At þ A2 t2 . . . þ Ak tk þ . . . f ðtÞ: ð13Þ 2 k!
This implies the validity of the theorem’s assertion. For sufficiently large k, the quantity k!1 Ak tk becomes small, and (13) can be rewritten as follows: ! r X 1 kk A t f ðtÞ; t 2 ½0; T : ð14Þ x ðt Þ ¼ E þ k! k¼1
n¼1
Let M ¼
sup jK ðt; sÞj k Ak. Then for repeated
0 t;s T
nuclei, it is true. jKn ðt; sÞj
M n ðt sÞn : ðn 1Þ!
Theorem 2 For any e 0, there exists a number r such that for all 1 k [ r Ak T k e: k!
Then, the solution of Eq. (10) takes the following form: y ðt Þ ¼ f ðt Þ þ
Zt
Rðt; sÞf ðsÞds:
ð12Þ
0
We substitute xðsÞ instead of yðsÞ in (12). Hence, due to the independence of matrix A from time, we obtain the following:
Proof We introduce the notation c ¼ AT, ck ¼ k!1 ck . Con1 P ck þ 1 ck sider the series 1 þ k! . Let us calculate q ¼ lim c ¼ lim c k!1 k þ 1
k!1
k
= 0. Because q 1, the constructed series is con-
vergent. For any e 0, there is a number r such that for all c k [ r kcþ 1 q þ e. k
Fig. 1 Temperature distribution in the center of the rod. Source Compiled by the authors
k¼1
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Fig. 2 Temperature propagation along the rod center (with a shift of one step from the origin). Source Compiled by the authors
Then r þc 1 e or r ¼ ce (integer part of division), which implies the validity of the theorem’s assertion. Thus, the performance of numerical calculations and the presentation of the results in the form of graphs made it possible to study in more detail the dynamics of temperature changes in the studied rod and obtain useful conclusions for analysis and decision-making in various technical and scientific applications (Figs. 1 and 2).
4
allows you to work with uncertainty and errors in the data, which can be important in the analysis of real systems and the influence of various parameters on the results. This opens up new possibilities for more accurate and reliable studies of the thermal conductivity of rods and other systems. Thus, the conducted study is a successful step in the study of heat transfer processes in square bars, and the proposed use of interval mathematics represents a promising direction for further research in this area (Sokil et al. 2019; Visaria and Jain 2020; Voronenko et al. 2014).
Conclusion
Heat conduction equation study for a square rod was successfully performed using the developed algorithm. Numerical calculations’ results obtained using this algorithm confirm the agreement with the experimental data. Additionally, the results of numerical calculations were saved in text files, which provide a convenient way to store and process the obtained data. For additional visualization and analysis of the results, a program was developed in the MatLab programming language, which allows onedimensional images of temperature dynamics to be built. In the future, for a deeper study of the heat equation, the use of interval mathematics was proposed. Interval mathematics
Acknowledgements The work was carried out within the framework of the grant project AP19678157 “Development of a hardware-software complex for monitoring the state of the filling level of a reservoir”.
References Amrit J, Nemchenko K, Vikhtinskaya T (2021) Effect of diffuse phonon boundary scattering on heat flow. J Appl Phys 129 (8):085105. https://doi.org/10.1063/5.0036935 Anufriev IE, Smirnov AB, Smirnova EN (2005) Matlab 7. St. Petersburg, Russia, BHV-Petersburg Dede EM, Ziqi Y, Schmalenberg P, Iizuka H (2020) Thermal metamaterials for radiative plus conductive heat flow control. Appl Phys Lett116(19):191902. https://doi.org/10.1063/5.0007574
Digital Determination of the Thermal Conductivity … Dyakonov VP (2005) Matlab 6.0/6.1/6.5/6.5+SP1+Simulink 5/5. In: Processing of signals and images. Moscow, Russia, SOLON-Press Jaffe GR, Brar VW, Lagally MG, Eriksson MA (2021) A simple numerical method for evaluating heat dissipation from curved wires with periodic applied heating. Appl Phys Lett 119(16):163501. https://doi.org/10.1063/5.0059648 Karpovich DS, Susha ON, Korovkina NP, Kobrinets VP (2015) The analytical and numerical methods of solving the thermal conductivity equation. Proc BSTU. Phys Math Sci Inf 6:122–127 Mazakov T, Wójcik W, Jomartova SH, Karymsakova N, Ziyatbekova G, Tursynbai A (2021) The stability interval of the set of linear system. INTL J Electr Telecommun 67(2):155–161. https:// doi.org/10.24425/ijet.2021.135958 Nurdaulet I, Talgat M, Orken M, Ziyatbekova G (2018) Application of fuzzy and interval analysis to the study of the prediction and control
171 model of the epidemiologic situation. J Theor Appl Inf Technol 96 (14):4358–4368 Sikovsky DF (2013) Methods of computational thermal physics: Tutorial. Novosibirsk State University, Novosibirsk, Russia Sokil BI, Senyk AP, Sokil MB, Andrukhiv AI, Kovtonyuk MM, Gromaszek K, Ziyatbekova G, Turgynbekov Y (2019) Mathematical models of dynamics of friable media and analytical methods of their research. Przeglad Elektrotechniczny 95(4):74–78. https://doi. org/10.15199/48.2019.04.13 Visaria D, Jain A (2020) Machine-learning-assisted space-transformation accelerates discovery of high thermal conductivity alloys. Appl Phys Lett 117(20):202107. https://doi.org/10.1063/5.0028241 Voronenko BA, Krysin AG, Pelenko VV, Tsuranov OA (2014) Analytical description of the process of non-stationary heat conduction: Training manual. ITMO University, St. Petersburg, Russia
Development of Blockchain Platforms for Tokenization of Real Assets Pavel A. Drogovoz , Nataliya A. Kashevarova , and Irina S. Starikova
Abstract
1
Blockchain technology opens up a wide area for innovative solutions in different areas that can potentially change entire sectors of the economy. The main advantages of blockchain implementation are the exclusion of intermediaries from many operations, the confidentiality of information, and the high speed of transactions. Nowadays, projects for the tokenization of various types of assets are being implemented around the world. A popular solution for developing enterprise blockchain systems is the Hyperledger Fabric platform, which is an open-source project of the non-profit technology consortium Linux Foundation. The study of existing cases is of undoubted importance for the further development of the practice of applying the blockchain. Thus, this research aims to analyze the capabilities of the Hyperledger Fabric platform and the blockchain projects created on its basis for the industry. The research considers cases of the extractive industry: Norilsk Nickel’s Atomyze platform and Circulor’s project in Rwanda. Keywords
Blockchain Distributed ledger Smart contract asset tokenization Hyperledger Fabric
JEL Classifications
O30
L23
P. A. Drogovoz N. A. Kashevarova (&) I. S. Starikova Bauman Moscow State Technical University, Moscow, Russia e-mail: [email protected]
Real
Introduction
Distributed ledger technology can potentially change many aspects of people’s lives and entire sectors of the economy. The key features of the blockchain make it possible to radically transform different business processes (Konstantinidis et al. 2018; Shiboldenkov 2022; Viriyasitavat and Hoonsopon 2019). The main business tasks that can be solved using the blockchain are as follows: • Confirming the authenticity of goods and preventing counterfeit products from being sold; • Ensuring transparency and security in financial transactions; • Resolving disputes in case of non-compliance with the terms of contracts. The main advantages of blockchain implementation are the exclusion of intermediaries from many operations, the confidentiality of information, and the high speed of transactions (Maslennikova and Brom 2020). Nowadays, there are projects to implement blockchain in various business areas. A popular solution for developing enterprise blockchain systems is the Hyperledger Fabric platform, which is an open-source project of the Linux Foundation, a non-profit technology consortium led by IBM, that offers a modular blockchain environment and is an unofficial standard for enterprise blockchain platforms (Androulaki et al. 2018). The study of existing cases is of undoubted importance for the further development of the practice of applying the blockchain. This research aims to analyze the capabilities of the Hyperledger Fabric platform and blockchain projects created on its basis for the industry.
P. A. Drogovoz e-mail: [email protected] I. S. Starikova e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_30
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Materials and Method
The research method applied in this research is the method of analyzing practical business cases related to the use of the Hyperledger Fabric platform for the tokenization of real assets.
3
Results
The main feature of Hyperledger Fabric is its focus on corporate applications. In this regard, the platform was developed considering the need to ensure the high speed of transactions and their low cost. Another important aspect was the identification of all stakeholders interacting with the company. As noted by Androulaki et al., other important advantages of Hyperledger Fabric are fault tolerance, flexibility, scalability, and privacy (IBM 2018). Flexibility lies in the fact that the platform has a modular architecture, which makes it possible to support plug-in components. Thus, the pluggable architecture allows blockchain projects to be efficiently adapted to the industry needs of enterprises compared to the solution, which is suitable for any business. Hyperledger Fabric can also scale up to more than twenty thousand transactions per second (Gorenflo et al. 2020).
The platform’s architecture supports sensitive data, giving all participants more privacy than they would get on a public blockchain because any user can join on a public blockchain. Hyperledger Fabric is built on a permissioned blockchain that allows any user to join the system only after verifying their identity. To confirm the identity, personal data does not need to be sent to the developers because this procedure is handled by a third-party company independent of the developers. Thus, the allowed blockchain knows only that the verification has been passed and no personal data is present in the system. Thus, the user is provided with complete anonymity and security of personal data. Disclosure of information by the verification center can only occur at the request of state authorities. Another advantage of the Hyperledger Fabric platform is its community support (Andola et al. 2019). For example, many patents related to the development and use of Hyperledger Fabric are registered by various companies, including IBM, Pure Storage, American Express Travel Related Services Company, Salesforce, Oracle, and Alibaba. Figure 1 presents the dynamics of patents and patent families according to Google Patents, in the name of which appears Hyperledger Fabric. According to Fig. 1, with the overall decrease in the number of patents related to Hyperledger Fabric, the number of Chinese patents does not decrease.
1056
1100 1000 900 785
800 700
555
600 500 400
321
305
300 200 100
186 142
270
279
269 158
152
37
4
0 2017
2018 US Patents
2019 China Patents
Fig. 1 Dynamics of patent activity. Source Compiled by the authors
2020 Total Patents
2021
305
Development of Blockchain Platforms for Tokenization …
Hyperledger Fabric is used in production by the following largest companies: • Tech Mahindra, which uses the platform for the digital transformation of the land registry of Abu Dhabi; • Honeywell Aerospace, which creates an online marketplace for used aircraft parts based on the project; • Walmart, which brought transparency to the food supply chain with the help of the platform (Foundation 2020a). Hyperledger Fabric has strong backing from corporate giants. The functioning of the Hyperledger Fabric platform is based on the work of smart contracts and the registry. The blockchain registry is required to store facts about the current and former state of business objects or smart contracts. In turn, it determines the logic according to which the registry is updated with new facts. Smart contracts describe the business processes of a particular company that needs to be automated using self-executing agreements between the parties to transactions; their final representation is lines of code. Hyperledger Fabric is the first distributed ledger technology platform to support smart contracts written in general-purpose programming languages such as Java, Go, and Node.js instead of using domain-specific languages (DSLs). This means that the majority of developers in various enterprises can develop smart contracts now. They will not need additional time to learn a new programming language. The company will not need to spend money on training DSL employees. Speaking specifically about the Hyperledger Fabric project, it would be more correct to call smart contracts a chain code because chain code, in most cases, describes and handles the business logic agreed upon by the participants involved in the transaction. Thus, it can be seen as a smart contract. Chain code is program code written using general-purpose programming languages to implement the required interfaces. Registry changes made by a particular chain code are limited solely to that chain code and are not directly available to any other chain code. However, there are exceptions. For example, if the system has the necessary permission, the chain code can call another chain code to access its state. It should be noted that the development of chain code by the enterprise can be a rather long process with high time and operational costs for testing changes. Before starting to work with transactions, the company must define a common set of all contracts that describe the general terms, data, rules, and processes in implementing transactions. Together, these contracts form the business model of enterprise that governs all relationships between the parties conducting transactions.
175
Hyperledger Fabric has no built-in native cryptocurrency (e.g., Ethereum). The abandonment of the use of cryptocurrencies eliminates the possibility of carrying out serious attacks on the platform. The absence of cryptographic currency mining operations means that the project can be deployed in a company with approximately the same operating costs as any other distributed system. The executive director of the Linux Foundation, Brian Behlendorf, notes that in this way the consortium avoids the political problems associated with the need to support digital currency (Baliga et al. 2018). Thus, the Hyperledger Fabric platform is an open-source project focused on accelerating the development of cross-industry blockchain technologies, particularly in industrial sectors. PJSC MMC Norilsk Nickel, the world’s largest producer of high-quality palladium and nickel, has become a pioneer among Russian companies in creating blockchain projects based on Hyperledger Fabric. In June 2019, the press service of Norilsk Nickel announced that Norilsk Nickel (Nornickel) had joined the global blockchain project Hyperledger (Nornickel 2019). The main goal of the company has been creating new tools and technologies based on the Hyperledger Fabric platform. Thanks to this, it will be possible to develop open distributed registries for organizing a digital mineral exchange further. Collaborating with the Linux Foundation consortium, Nornickel has improved the existing technology in such a way that it would be possible to create efficient and high-speed public blockchains. The development was based on the use of Byzantine Fault Tolerant (BFT) consensus. For consensus protocol to be reliable and secure, it must be failover. Byzantine fault tolerance is the property of a system to withstand failures that may occur due to the so-called Byzantine general’s problem. The task of the Byzantine generals is to strategize how to behave when some of the nodes in the network act dishonestly or do not function at all. In the absence of Byzantine fault tolerance in the blockchain, the peer node (network node in which all subscribers act as a client and as a server at the same time; that is, each subscriber, as a client, can send requests to other subscribers and, as a server, can process requests from other subscribers) can transmit and publish incorrect transactions, which leads to complete lack of blockchain reliability. The choice of this particular consensus is justified by the fact that it is currently one of the most efficient and fastest consensuses for public blockchain projects. At the beginning of 2020, Nornickel introduced the Atomyze platform based on the Hyperledge blockchain. This platform provides transparent and fast online trading opportunities for companies in the commodity sector. The main idea of Atomyze is to tokenize products manufactured by Nornickel and, in the future, other industrial
176
enterprises. Tokenization is the process of replacing real (material) objects with digital counterparts. Freni et al. define the process of tokenization as the digitization of the value of an object (Freni et al. 2020). In other words, tokenization is the process of replacing the asset’s value with a token that reflects this value. Tokens backed by palladium, cobalt, and copper were issued during the test phase (Nornickel 2020b). The partners of Nornickel (e.g., Trafigura, Traxys, and Umicore) also received access to the Atomyze platform. In February 2020, the Central Bank of the Russian Federation approved the blockchain project of Nornickel after testing it in the regulatory sandbox (Nornickel 2020a). The regulatory sandbox of the Central Bank of the Russian Federation is a special platform for modeling the processes of new financial technologies in an isolated environment that requires changes in the country’s legal regulation for further implementation in the financial sector. However, for the full-scale operation of the platform in Russia, the authorities must legally allow the use of digital assets. The Central Bank of the Russian Federation recognized the possibility of using this blockchain platform in Russia in July 2020 after the adoption and entry into force of the Federal Law “On digital financial assets.” According to Vladimir Potanin, President of MMC Norilsk Nickel, the main advantage of using the Atomyze project for Norilsk Nickel is the promotion of metals (Nornickel 2020b). This will be achieved through the company’s transition to digital ways of doing business. Another benefit is that the Atomyze platform is hosted on the IBM Cloud, which ensures data security and protection against internal and external threats to the network. Other advantages of the platform for business owners are the simplification of the bidding procedure, the acceleration of transaction processing, and the reduction of transaction costs. For issuers, the use of the platform implies the possibility of attracting financing on more favorable terms and increasing the liquidity of assets. Thus, the main advantage of implementing a blockchain platform for business is the ability to increase its efficiency. Rwanda is the world’s largest exporter of tantalum, a rare mineral used to make capacitors, which are parts of electronic devices. However, there were cases when tantalum was illegally imported from the Congo, where it was mined with the exploitation of child and slave labor. Therefore, tantalum is considered a conflict mineral (minerals mined in conditions of armed conflicts and violations of human rights, the sale of which is used to finance military conflicts). Due to the assignment of this status to tantalum, Rwanda has faced problems due to regulatory agreements adopted in the world and aimed at limiting the illegal side of the trade. That is why Rwanda turned to blockchain to provide transparent tracking of the movement of tantalum from the mine, where it is mined, to the delivery of electronic devices
P. A. Drogovoz et al.
with tantalum capacitors to consumers (Guggenberger et al. 2021; Hyperledger Foundation 2020). For example, the government teamed up with London-based startup Circulor, which specializes in tracking minerals to ensure the legal origin of resources, which offers a supply chain tracking solution built on the Hyperledger Fabric platform. To solve this problem, Circulor wanted to implement a tamper-proof blockchain to use is as a secure repository for all data. The main criterion was the fact that this blockchain should be easy to use for anyone with a smartphone. Circulor has created several unique features, such as a face recognition system, to ensure this condition. After each scan, the information is written to the blockchain and stored there. Thus, Circulor has created a system that tracks the movement of tantalum, from its extraction and transportation to its processing. The databases are hosted in cloud solutions from Oracle Cloud and Amazon Web Services. Let us consider how the finished product is obtained from tantalum. First, tantalum is turned into powder from gray pebbles. Next, it is processed into capacitors, which are glued to printed circuit boards. In turn, printed circuit boards are used in smartphones, laptops, etc. Thus, the life cycle of tantalum consists of six stages: 1. 2. 3. 4. 5. 6.
Extraction of tantalum in Rwanda; Processing in Macedonia; Manufactured in the USA; Shipping from the USA; Final assembly in China; Distribution to consumers.
At each stage, Circulor tracks the movement of tantalum using smart contracts—protocols. The Circulor protocol is a family of smart contracts that connect one stage of the supply chain to the next. In the first step, every worker, who enters the mine or sells a sack of ore, must take a photograph and scan their ID with a smartphone. These photographs must match the image that was originally uploaded to Circulor’s facial recognition system. This ensures that tantalum is mined only by authorized employees. That is, children and enslaved people can no longer be used as illegal free or cheap labor. Further, a tamper-proof QR code or NFC tag is attached to each bag of ore. Using GPS, the tags show where the bag is moving from. The tags are scanned as the bags are sent to the next stage. In the second step, the powdered ore is sealed into trackable containers that are scanned by smartphone each time they are loaded or unloaded from ships or trucks. In the next stage, the purified mineral is delivered to the manufacturer, who makes capacitors from it. Finished batches of capacitors are tagged with GPS beacons or RFID tags that can also be used to trace products downstream. Marked batches of capacitors are scanned by smartphones
Development of Blockchain Platforms for Tokenization …
throughout the entire time of delivery of the cargo from the USA to China. Tantalum capacitors are glued onto printed circuit boards used in the final product. Each product receives its unique serial number. Third-party logistics companies certify the origin of the constituent components of the product recorded on the blockchain. In the last stage, the finished products are delivered to points of sale worldwide. The consumer can also use the serial number to track the materials that went into the purchased product. This tantalum traceability process will allow major electronics manufacturers (e.g., Apple or HP) to have all the evidence they need to report to regulators and label their products “conflict-free.” In 2018, the system ran smoothly at three mines in Rwanda and a refinery in Macedonia. The tantalum tracking operation involves several hundred transactions per day. After some time, as more mines have Internet access, Circulor plans to achieve several thousand transactions per day, which is fully in line with the capabilities of the Hyperledger Fabric platform. The main benefit for Rwanda from the implementation of Hyperledger Fabric is the fact that it can now freely trade tantalum. Rwanda also knows that it is a proven and conflict-free ore (Foundation 2020b). The solution to the problem based on Hyperledger Fabric helped the whole country to continue developing its economy.
4
Conclusion
After analyzing the Hyperledger Fabric platform and considering its practical application using two examples, the authors can conclude that the permitted blockchain provides several advantages for large businesses. For example, the project structure ensures high security and performance of corporate systems. Moreover, it provides flexible tools for managing system access, information confidentiality, and implementing business logic (Kirbaç 2021). Another important advantage of the Hyperledger Fabric platform is its scalability. Additionally, the considered enterprise blockchain platform is modular, which means that Hyperledger Fabric has been designed to adapt to the various tasks of companies from a wide variety of business sectors.
References Andola N, Gogoi M, Venkatesan S, Verma S (2019) Vulnerabilities on hyperledger fabric. Pervasive Mob Comput 59:101050. https://doi. org/10.1016/j.pmcj.2019.101050 Androulaki E, Barger A, Bortnikov V, Cachin C, Christidis K, De Caro A, Yellick J (2018) Hyperledger fabric: a distributed operating
177 system for permissioned blockchains. In: Proceedings of the EuroSys ‘18: 13th EuroSys conference. New York, NY: Association for Computing Machinery, pp 1–15. https://doi.org/10.1145/ 3190508.3190538 Baliga A, Solanki N, Verekar S, Pednekar A, Kamat P, Chatterjee S (2018) Performance characterization of Hyperledger fabric. In: Proceedings of the CVCBT ‘18: crypto valley conference on blockchain technology. Zug, Switzerland, pp 65–74. https://doi.org/ 10.1109/CVCBT.2018.00013 Freni P, Ferro E, Moncada R (2020) Tokenization and blockchain tokens classification: a morphological framework. In: ISCC 2020: IEEE symposium on computers and communications. Rennes, France, pp 1–6. https://doi.org/10.1109/ISCC50000.2020.9219709 Gorenflo C, Lee S, Golab L, Keshav S (2020) FastFabric: Scaling Hyperledger Fabric to 20 000 transactions per second. Int J Network Manage 30(5):e2099. https://doi.org/10.1002/nem.2099 Guggenberger T, Sedlmeir J, Fridgen G, Luckow A (2021) An in-depth investigation of performance characteristics of Hyperledger Fabric. Retrieved from https://arxiv.org/abs/2102.07731. Accessed 18 Aug 2022 Hyperledger Foundation (2020) Case studies. Retrieved from https:// www.hyperledger.org/learn/case-studies. Accessed 18 Aug 2022 Hyperledger Foundation (2020) Circulor achieves first-ever mine-to-manufacturer traceability of a conflict mineral with Hyperledger Fabric. Retrieved from https://www.hyperledger.org/learn/ publications/tantalum-case-study. Accessed 18 Aug 2022 IBM (2018) What is hyperledger fabric? Retrieved from https://www. ibm.com/topics/hyperledger. Accessed 18 Aug 2022 Kirbaç G (2021) Evaluation study of using blockchain technology in supply chain management processes. J Abant Soc Sci 21(3):835– 855. https://doi.org/10.11616/asbi.956777 Konstantinidis I, Siaminos G, Timplalexis C, Zervas P, Peristeras V, Decker S (2018) Blockchain for business applications: a systematic literature review. In: Abramowicz W, Paschke A (eds) Business information systems. Cham, Switzerland, Springer. pp 384–399. https://doi.org/10.1007/978-3-319-93931-5_28 Maslennikova Y, Brom A (2020) Development of a production structure based on digital capacity building. In: Proceedings of the ICCMA ‘20: 8th international conference on control, mechatronics and automation. Moscow, Russia, pp 38–41. https://doi.org/10. 1109/ICCMA51325.2020.9301585 Nornickel (2019, June 18) Nornickel has joined the global blockchain initiative Hyperledger. Retrieved from https://www.nornickel.com/ news-and-media/press-releases-and-news/nornickel-has-joined-theglobal-blockchain-initiative-hyperledger-/. Accessed 18 Aug 2022 Nornickel (2020, February 17) The Central Bank approved the pilot blockchain project of Nornickel. Retrieved from https://www. nornickel.ru/news-and-media/press-releases-and-news/tsentrobankodobril-pilotnyy-blokcheyn-proekt-nornikelya/. Accessed 18 Aug 2022 Nornickel (2020, February 25) Nornickel become first issuer on tokenization platform Atomyze. Retrieved from https://www. nornickel.com/news-and-media/press-releases-and-news/nornickelto-become-first-issuer-on-tokenisation-platform-atomyze/. Accessed 18 Aug 2022 Shiboldenkov VA (2022) Review of economic and mathematical modeling tools for the innovation diffusion process. AIP Conf Proc 2383:070002. https://doi.org/10.1063/5.0074533 Viriyasitavat W, Hoonsopon D (2019) Blockchain characteristics and consensus in modern business processes. J Ind Inf Integr 13:32–39. https://doi.org/10.1016/j.jii.2018.07.004
The Main Approaches to Using Digital Twins in Banking Alexander A. Chursin , Vladimir A. Ermakov , Maksat N. Kalimoldayev , and Almas M. Kalimoldayev
Abstract
JEL Codes
Research relevance is significantly increasing. Sanctions from the collective West are changing the main instruments in the banking sector related to interbank settlements and transactions. The largest Russian banks are under sanctions due to the special military operation. Several largest backbone Russian banks are disconnecting from the international system of electronic interbank financial settlements SWIFT. Banks are tasked with improving and modernizing the main banking instruments for Kazakhstan. This situation should lead to greater use of digital technologies and elimination of technological dependence in conducting basic banking operations. Restrictions also gave motivation for advancement of digital banking in Russia and Kazakhstan. Banking digital twins will soon become extremely necessary and effective. As copies of the real-world, DT may provide informed decision-making based on the real interaction of complex systems. They may present detail-based information instead of just educated assumptions. That is what makes them such a powerful weapon in the arsenal of any business.
G21
Keywords
Digital twin Banks Digital technologies
Financial sector
Digitalization
A. A. Chursin V. A. Ermakov RUDN University, Moscow, Russia e-mail: [email protected] V. A. Ermakov e-mail: [email protected] M. N. Kalimoldayev Institute of Information and Computational Technologies, Almaty, Kazakhstan e-mail: [email protected] A. M. Kalimoldayev (&) Al-Farabi Kazakh National University, Almaty, Kazakhstan e-mail: [email protected]
1
O30
O33
O34
Introduction
Currently, several trends in the world are changing traditional approaches: • Customer expectations and behavior transformation: speed, seamlessness, convenience, and the ability to receive a service remotely are already becoming basic needs; • Development of ecosystems based on technology companies and financial institutions; • Customer-centric provision of services and creation and development of mechanisms for data exchange and analysis, including using open APIs; • Widespread penetration of technologies into the financial market and the economy, including digitalization of interaction between market participants, government agencies, and regulators; • Tightening the regulation of cryptocurrencies and the development of digital currencies of central banks; • Increasing the importance of operational and information security risks. • Let us consider the major stages of digitalization (Table 1). As stated by financial market members survey in 2021, the most hopeful technologies utilized in the process of digitalization of services are mobile technologies (73% of respondents), open APIs (64%), artificial intelligence and machine learning (64%), cloud technologies (58%), and chatbots (54%) (Central Bank of the Russian Federation 2021). These technologies help personalize financial institutions.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_31
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180 Table 1 Main stages of the banking sector digitalization
A. A. Chursin et al. Name of technology
Application
Development
Digital channels
The emergence of a network of ATMs, mobile banking, and chatbots
Building a new ecosystem where the user is at the center
Digital products
Contactless payments, virtual payments, and big data
The availability of advanced technologies makes it possible to create E2E products designed to meet the financial needs of the consumer around the clock
A full cycle of information services is being implemented
Modernization of traditional products and their digitization. Digital cards. Digital banks
Bank integration into the global Internet space
Creating a “digital brain”
Digital audit in all segments of the economy
It allows an organization to have a better understanding of its capabilities in a particular industry
Source Compiled by the authors based on (Borkova et al. 2019)
According to 2020 data, 87% of banking clients in Russia use digital channels, and 30% of Russians plan to reduce the number of visits to bank branches or completely abandon them (Central Bank of the Russian Federation 2021). In 2021, Kazakhstan entered the rating of the Global Fintech Index 2021 and took 13th place among the countries of the Asia–Pacific region (PLUS World 2021). Digital financial technologies are actively used in Kazakhstan. Almost all banks have created ecosystems that enter digital non-financial services; new financial services from IT and telecom companies are functioning. In 2021, the e-commerce market in Kazakhstan amounted to 1 trillion tenges ($213 million), which is 75% more compared to 2020. Non-cash payments amounted to 67%. In the last five years, this figure has increased 26 times. There have been significant changes in digital payment channels. For example, the share of POS-terminal payments decreased from 63 to 17%. On the contrary, online payments increased from 22 to 83%; 86% of the country’s population actively uses online banking. Kazakhstan banks offer contactless payments with QR codes to their customers. In 2021, the indicator of this operation amounted to 192.8 million transactions, with a total amount of 1.3 trillion tenges (Batishcheva 2022). Non-cash transactions via the Internet and mobile devices have increased significantly over the past three years. Kazakh banks are already becoming IT companies. Currently, about 12 million users are registered in remote banking. Nearly 30% of these users conduct regular banking transactions. In 2021, more than 460 thousand non-cash transactions were carried out through digital banking; 70% of financial transactions of corporates are carried out by online banking. These indicators confirm a significant positive jump in digital banking services in Kazakhstan. Currently, Open API standards and Open Banking infrastructure are being developed. Bank of Russia defines financial technologies (fintech) and identifies ways of
providing financial services on the base of innovative solutions: robotization, blockchain, biometrics, cloud technologies, tokenization, etc. Digital areas: • SupTech. Supervisory Technology (SupTech) is a technology used by regulators. Regulatory Technology (RegTech) is a technology used by financial institutions to improve the efficiency; • Experimental legal regimes; • Information security.
2
Materials and Method
In foreign banks, digital twin technology refers to constructing a virtual twin. Digital twin technology concept is to use a twin to model real conditions and search possible options (North 2021). According to Grieves, “Under ideal conditions, all the information that can be obtained from a product can be obtained from its digital twin.” (Merriman 2021). Obeying the general laws of evolution, the digital twin technology developed under the impact of convergence processes (involving new technologies) and divergence processes (application of technology to diverse user groups and different industries) (Fig. 1). In international banking practice, digital twins are used quite actively. The main areas of application are as follows: 1. Organization of digital twins of the client organization, an organization’s neural system and uses its corporate memory to learn from new experiences. 2. Optimal combination of channels for new interaction before being introduced into the physical world.
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Divergence
Convergence VR/AR CAD, CAM, CAE, PLM
Digital twin
DT details DT product
IoT DT of the system
Cloud Technologies
DT system of the system
Blockchain
Fig. 1 Processes of divergence and convergence that determine the concept of DT development. Source Compiled by the authors based on (Prokhorov et al. 2020, p. 24)
3. Risk management: the possibility of risk modeling can be used. Similarly, new threats can be assessed quickly and efficiently by modeling a bank’s network and security capabilities. 4. Climate change can besides lead to credit risk. 5. Creation of digital twins of clients (individuals) who assist in financial transactions, remind them about the payment schedule, and perform other auxiliary functions based on AI. 6. The creation of digital twins of a legal entity is possible in cooperation with the client and the level of digitalization at the enterprise. In many industries, twins of products, processes, and enterprises are created. At this level, it is possible to endow the twin with the initial banking information to assist in conducting operations. It is possible to lay down elements of risk management and signaling threats. Foreign banks use technologies not yet common in the Russia and Kazakhstan. It is necessary to resolve the issue of applying progressive foreign methods to the practice of Russian and Kazakh banks (Tadviser 2023). In Kazakhstan, investing in digital twins, many businesses are experiencing problems with the return on investment. From 35 to 65% of these investments are not justified. Some companies complain about unnecessary duplication of information infrastructure and outdated tools for working with data, leading to confusion, and not allowing adequate analysis. Others talk about the discrepancy between the digital and functional maturity of the business. Even with data on hand, these companies cannot use it due to underdeveloped business processes. In the future, this problem can be solved with a competent approach to the digital twin. Philipp Kotler cited marketing and innovation as key drivers of entrepreneurial success. These are areas that a supervisor should follow to be competitive. These areas will give the greatest returns in the short term.
Digital twins are an innovation and a marketing tool. If one can create a copy of his or her client and make conclusions from the behavior of other clients, he or she will be able to tell what they may need in the future and stimulate clients with perspective proposals and open opportunities (Nasila 2023). The digital twin is useful for additional sales (it can become a driver of innovation, indicating the route in which the bank’s client company should follow to improve this twin) and for the client it represents.
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Results
3.1 Development of Digital Process Twins, Bank, and Branch RAMAX Group launched the SIMBA product line, which is an evolution of Process Mining technology for simulating business process scenarios. The solution is the next step toward building a digital transformation environment and creating your own Digital Twin of Organization (DTO). Using SIMBA, any bank will be able to optimize one or several business processes and build a digital environment to increase business profitability. Fundamentally, there are two groups of business processes in financial organizations where technology is most actively used. The first group is all frontal business processes related to customer service. The second group is back-office processes. The digital twin provides a business model of the bank’s functioning. This reduces the time and cost of implementing organizational changes and risks associated with digital transformation and eliminates the need for experiments. SIMBA from RAMAX Group makes it possible to set the parameters of planned changes in efficiency (step duration, working time spread, change in the course of the process), get an automatically calculated result of changes considering all the nuances, and see which indicators most affect the bank’s efficiency (PLUS World 2020).
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Alfa Bank collected information on 900 parameters when choosing the location of the branch, creating a digital twin of the branch. Many factors were considered: population density, traffic flows, age characteristics of potential customers, transport accessibility, etc. Conducting an extensive digitalization program, the bank does not refuse physical communication with the client, actively implementing new tools such as identification of the client when entering the branch via a cell phone, instant loading of the client profile on the screen of a branch employee, the ability to find out through the application about the number of customers in the branch, and much more (Alfa-Bank 2023).
3.2 Development of Digital Twins of a Client—An Individual The most promising area to be implemented in Russia is DT of a person in terms of modeling his or her purchasing behavior and the distribution of material resources, including personal finances and borrowed funds. In the work of PwC, the authors position their solution as the use of digital twin (DT) to develop financial recommendations to clients, considering the influence of social, demographic, behavioral, financial, and medical factors on customer preferences. Using DT technology, asset managers and insurance companies have more opportunities to change according to certain events in the customer’s life. DT can help find optimized, personalized money management strategies for customers. The authors of the development note that their financial service fully corresponds to the scheme of the digital twin: to model the behavior of individual policyholders, data from several publicly available and private sources were combined—millions of rows of records and more than 4000 social and demographic, behavioral, financial, and medical factors distributed over time. Based on this data, an idea of the financial profiles and needs of customers is built. This DT is continually updated as more information becomes available about the customer and is updated as information becomes available. It is quite possible that this project is more consistent with the scheme of using digital shadows and big data technology. However, without knowing the set of algorithms by which the solution is built, it is not always possible to attribute the project to one or another class. Moreover, the same solution can be attributed to a big data class project, an AI class project, an IoT class, and a DT because these components can be present in one solution. Some banks are testing with forming digital family units to study different lending outcomes. This facilitates banks to predict risk factors when lending to probable customers. The digital twin could also aid to predict customer behavior in the event of unexpected fluctuations in the market, which
A. A. Chursin et al.
helps the bank gain insight into whether a potential customer can handle unexpected changes in the market and safely recover the unpaid amount. Client relationship management is becoming more and more combined as customer beliefs and requirements are continually changing. Russian banks (e.g., Promsvyazbank, Avangard, Ak-Bars, etc.) joined the digital profile service. The service allows citizens to apply for loans remotely, without visiting the branch and confirming income with documents: clients can provide all necessary information to the bank from their digital profile. Currently, the digital profile service combines 30 types of information about a citizen: passport data, taxpayer identification number, insurance individual account number, driver’s license, address, phone number, and others. It is vital that one can access this information only with the client’s consent, which is stored in the unified register of consent. In Kazakhstan, digital documents became available on external platforms due to the integration of National Information Technologies JSC with Kaspi.kz and Halyk Bank JSC. Currently, the Digital Documents service contains 18 documents (identity cards, driver’s licenses, vaccination passports, PCR tests, birth certificates, etc.), which are actively used by about 10 million citizens. To use the service, the client should have a verified account. Additionally, the seamless integration of the bank with the portal of public services will make it possible to update information quickly: customers will not need to notify the bank about a change of documents, expiration of the passport, change of residence, etc. A digital profile or document is the first stage in creating a client’s twin. Using the examples of Sberbank, Kaspi Bank, and Halyk Bank, we can talk about the positive experience of creating a digital twin. All financial information available with clients’ consent, digital traces of clients in the ecosystem, data on the digital profile of a citizen, analysis of customer communications with bank employees, data on a mobile application, and voice assistants is used. Building each customer’s data-driven digital twin helps increase the company’s profits and customer satisfaction because each of them acquires an individual image with unique features that make it possible to build personalized communications and recommendations. Advanced machine learning and data processing technologies, gradient boosting algorithms, and neural networks are used for data analysis; SOTA machine learning methods are being actively implemented (e.g., GPT-3, MeLES, etc.) (Smirnov 2022).
3.3 Development of Digital Twins of the Client (Legal Entity) In today’s conditions, the design of the bank’s client organization a digital twin comes to the fore, which can be
The Main Approaches to Using Digital Twins in Banking
created. In Kazakhstan, Tech Hub of the Astana International Financial Center is actively developing and improving fintech ecosystems. AIFC Tech Hub, together with the IIDF, with the support of the international payment system Mastercard, announced the launch of the First Fintech Accelerator for second-level banks. The goal set by the project’s initiators is to build a long-term partnership between banks of Kazakhstan, startups, and mature technology companies. In 2021, Altyn Bank, Eurasian Bank, and Freedom Finance Bank became participating banks of the program. Banks constantly need to analyze and audit the financial client’s position, that is, in fact, in digital audit and creating a virtual twin of the client. The experience of the well-known Russian software developer NVA-Center in creating a digital audit is noteworthy (NVA-Center 2023). The company has developed a software product that makes it possible to facilitate the inspector’s work and identify those key points and formulations in regulations that lead to violations and, accordingly, serve as a basis for their clarification or revision. The created information system is significantly different from most analogs. Thanks to the applied algorithms for processing text information, the information basis is qualitatively changing. Program provides a systemic external audit data, which can form the ground for achieving proper management solutions. In the future, it is possible to achieve such a level of organization of automated verification of all areas of management and production work that will make it possible, practically without the multi-day exhausting work of the auditor or verifier with a large number of paper documents, to detect violations or deviations from the established rules at any facility and at any time with the formulation of solution options for their choice by an authorized person.
4
Conclusion
Banking digital twins will soon become extremely necessary and effective. As copies of the real-world, DT may provide informed decision-making based on the real interaction of complex systems. They may present detail-based information instead of just educated assumptions. That is what makes them such a powerful weapon in the arsenal of any business. It remains possible to stimulate innovation, reduce costs, and minimize risk by developing new uses for digital twins and other digital technologies. It is time for research and experimentation. The possibility of creating digital twins using data from cloud platforms and data science has been democratized. How can we describe a digital twin? Simply put, it is a copy of one’s business, a digital double, an exact copy. Is it
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useful? Since DT considers different variables, it is probable to create numerous results and continue to operate them by changing the variables, as in a spreadsheet. A digital twin can audit a business and give unexpected ideas about it. Acknowledgements The research has been supported by the Russian Foundation for Basic Research (Project No. 20-010-00788\20).
References Alfa-Bank (n.d.) Paperless bank. Retrieved from https://alfabank.ru/ about/sustainability/paperlessbank/. Accessed 12 Apr 2023 Batishcheva T (2022) The electronic payment boom is ending and moving from being a financial trend to becoming a normal consumer practice. Forbes Kazakhstan. Retrieved from https:// forbes.kz/finances/finance/bremya_plastika_1644777177/. Accessed 12 Apr 2023 Borkova EA, Osipova KA, Svetlovidova EV, Frolova EV (2019) Digitalization of economy on the example of banking system. J Creat Econ 13(6):1153–1162. https://doi.org/10.18334/ce.13.6.40734 Central Bank of the Russian Federation (2021) Draft of the main digitalization of the financial market for the period 2022–2024. Bank of Russia, Moscow. Retrieved from http://www.cbr.ru/ content/document/file/131360/oncfr_2022-2024.pdf. Accessed 12 Apr 2023 Merriman N (2021) Digital twins for banks: developing your digital nervous system. Avanade Insights. Retrieved from https://www. avanade.com/en/blogs/avanade-insights/banking/digital-twins-forbanks. Accessed 12 Apr 2023 Nasila M [Blog] (n.d.) With digital twin technology, the financial sector can reimagine itself for an uncertain globalized future. CIO Talk Network. Retrieved from https://www.ciotalknetwork.com/withdigital-twin-technology-the-financial-sector-can-reimagine-itselffor-an-uncertain-globalized-future/. Accessed 12 Apr 2023 North R (2021) Digital twin technology and its power to birth a new era in banking. Retrieved from https://www.enterpriseedges.com/ digital-twin-technology-banking-sector. Accessed 12 Apr 2023 NVA-Center (n.d.) PC “KONTA” module “audit”: automated analysis software for control and audit of the organization [PowerPoint Presentation]. Retrieved from https://nvacenter.ru/media/filer_ public/d3/05/d3053f1d-bcb4-470f-9489-24fa8c57a6cc/nva_audit_ va4_glavnaia.pdf. Accessed 12 Apr 2023 PLUS World (2020) Process mining in banks is an important element of digital transformation. Retrieved from https://plusworld.ru/ articles/4647/?sphrase_id=30889. Accessed 12 Apr 2023 PLUS World (2021) Global fintech trends in Kazakhstan. https:// plusworld.ru/journal/2021/plus-6-2021/globalnye-finteh-trendy-vkazahstane/. Accessed 12 Apr 2023 Prokhorov A, Lysachev M, Borovkov A (2020) Digital twin. Analysis, trends, world experience. Corporate edition, 1st edn. Alliansprint LLC, Moscow. Retrieved from https://dfnc.ru/wp-content/uploads/2020/09/ Kniga-TSfirovoj-dvojnik.pdf. Accessed 12 Apr 2023 Smirnov N (2022) “Sber”: a digital twin of the client to create a better client experience. Director of Information Services. Retrieved from https://cio.osp.ru/articles/090322-Sber-tsifrovoy-dvoynik-klienta-dlyasozdaniya-luchshego-klientskogo-opyta. Accessed 12 Apr 2023 Tadviser (2023) Digital twin of organization, DTO. Retrieved from https://www.tadviser.ru/index.php/Cтaтья:Цифpoвoй_двoйник_ (Digital_Twin_of_Organization,_DTO). Accessed 12 Apr 2023
Development of a Functional Component Model for a Data System Concept to Assess Innovative Investment Projects for Designing Import-Substituting Products in the Context of Digital Transformation Alexey D. Linkov
Abstract
1
The research focuses on developing a comprehensive data analysis system to assess innovative investment projects for designing new products. As a rule, innovative investment projects involve digital technologies. Therefore, a well-developed decision-support infrastructure should be in place to ensure an efficient design process, which is essential for innovative products, so that all data necessary to implement the project are stored in a single digital environment where a data bank is one of its central elements. The author designs a system concept to assess innovative investment projects for developing importsubstituting products, which encompasses a structure for diverse subsystems to communicate within the single data infrastructure. The functional component model is built upon these components integrated into a single system and communicating with the existing systems operated by the company. The author also gives practical recommendations on adapting such a system to assess innovative investment projects for designing import-substituting products for a certain company. Keywords
Data system System concept Innovative investment project Import substitution Digital transformation JEL Codes
O310
O320
Introduction
It is essential to speed up import substitution processes in the current economic environment. Pursuant to the government program for industrial development and competitive recovery, Russian economic sectors are supposed to progressively assimilate advanced technologies for producing substitutes for imported products. Until recently, there has been a tendency to disregard the fact that the manufacturing process for such products often involves imported equipment, foreign components, and foreign expertise. However, the increasingly volatile financial and economic situation is becoming even worse in the current geopolitical context. This offers new challenges to Russian companies and sets priorities for ensuring import independence. In this respect, theoretical and practical procedures for assessing innovative investment projects have to be developed to make it possible to achieve import substitution goals efficiently and within short timeframes. Therefore, a comprehensive data analysis system has to be designed to assess innovative investment projects for developing new products. Below, the author will describe a concept for such a system.
2
Methodology
The research is based on the principles of unity of historical and logical methods, methods of comparison and ranking, graphical modeling of studied processes, system analysis, scientific abstraction, statistical methods of data processing, and economic and mathematical modeling.
2.1 Designing a Functional Component Model for a Data System Concept A. D. Linkov (&) JSC Russian Space Systems, Moscow, Russia e-mail: [email protected]
A data bank is one of the central elements for such a system. It helps organize and structure information regarding costs,
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_32
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technical and economic characteristics of a product to be developed, the macroeconomic environment of an ongoing project and project planning targets, etc. The input data are integrated into the single database structure so that it can be further used to perform necessary calculations based on the decision-support methods and policies applied while implementing projects for developing import substitutes. The data bank performs standard IT tasks associated with data input, storage, and structuring. The data bank model is implemented as software written in a high-level programming language and intended for storing, arranging, and structuring project data at various stages of its life cycle so that these data can be further processed using designated software. In our case, the input data may include textual and numeric information regarding technical and economic features of import substitutes to be developed, as well as other project parameters related to its financial viability and feasibility, etc. These data can be used for analyzing and predicting the economic results of the project. We take structured information as input, ensuring that its format is suitable for further application. Such information may include rates of competitiveness, estimated competitive prices, estimated reasonable cost of machines and systems supplied by contractors and competitive capacity loss risks, etc., as well as protocols to validate such estimations (Chursin 2012). High-tech companies are using advanced Product Lifecycle Management (PLM) systems to manage product life cycles. With a PLM system introduced, databases and directories must be created so that project teams can refer to them while implementing R&D projects, arranging production facilities, or manufacturing goods. PLM databases and directories can be either general or specific. In fact, both types can be used to achieve the PLM goals. The one we are developing is a specific database intended for assessing import substitution investment projects (Novikas 2013). We need an advanced decision-support infrastructure to ensure that innovative investment projects are properly implemented. To achieve this, we have to efficiently arrange the related engineering processes so that any information that may be necessary for project implementation is available in the single virtual environment for designers, technicians, and managers to communicate and work together under the ongoing project while monitoring product technical and economic feasibility (Danilyuk et al. 2014). At each stage of work, a designer creates an element linked to the system of the product’s technical and economic parameters, as well as to its modules and subsystems. The single data infrastructure is essential since the design is undergoing
A. D. Linkov
continuous modifications to comply with new requirements, incorporate new ideas or approbations, etc. The system database establishes an association link between a standard product test structure and a detailed package of documents presented in the form of a digital prototype. Therefore, the system database creates a powerful tool for project implementation that helps upgrade and monitor the project outputs in operation, i.e., at different stages of their life cycle. With advanced digital technologies available and a single data infrastructure in place, paperless data interchange should be ensured to make project implementation as effective as possible. A concept of the system for assessing import substitution projects embodies a structure for various subsystems to communicate within the single data infrastructure with the above-described database at its core (Linkov et al. 2021a). Being part of the integrated digital platform, the system ensures effective project implementation at any stage of the project life cycle and helps meet its key targets as specified in the project summary, specifications, business plans, and other design documents (Nikonov 2020). The integrated digital platform receives information about a new project for developing import substitutes as input and analyzes whether a successful result can be expected with due regard to import independence challenges while controlling competitive capacity based on previous experience and information about the best international solutions, effective tools, management practices, business procedures, etc. available in the public domain (Nesterov 2018). As output, the platform gives recommendations as to what actions will be the most efficient to take to achieve market leadership for the product to be developed, which is the key project target. The main elements mentioned above communicate within the system through the database, which is the key component of the integrated digital platform. The database provides information for managing product development and production and ensures that these procedures are implemented through intelligent tools while introducing algorithms for all systems integrated into the digital platform to communicate so that the project can be implemented as efficiently as possible. The described patterns can be modified to comply with specific project targets. However, the underlying idea is that the traditional analysis methods are supported with artificial intelligence techniques to reduce human errors in decision-making. We will describe below each stage for designing a technical and economic concept of the system to assess innovative investment projects to develop import substitutes.
Development of a Functional Component Model for a Data System …
Stage 1. Determine procedures to build the system. We recommend that the following features should be considered when establishing procedures to develop the system concept and functions: lean production, target cost design contracts, etc. (Chursin et al. 2020), as well as target rates of competitive capacity so that the products to be developed have competitive advantages at the market (Artyakov et al. 2014; Glukhova 2009). To ensure that import substitutes are competitive, we need to introduce automated solutions into data gathering, processing, and analysis for decision-making purposes during project implementation. This is also essential for planning the competitive capacity of the products at every stage of their life cycle.
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• Estimating market advantages of rival products. • Determining product features affecting its competitive capacity in one way or another. • Determining an estimated competitive price for the product to succeed in the market. • Planning works with due regard to the project targets and goals. • Determining resources needed at various stages of the life cycle. • Assessing risks for the competitive capacity to get lower. • Assessing the impact that new innovative technologies might have on the product’s competitive capacity. • Cost-cutting within the life cycle. Stage 4. System decomposition into functionally complete subsystems (components).
Stage 2. Identify domain-specific tasks for the system. Being affected by numerous internal and external factors, competitive capacity is continuously changing at all stages of the product life cycle. Therefore, it is essential to manage project implementation, keeping in mind various factors and risks capable of reducing the product’s competitive capacity (Panyagina 2013). To achieve the competitive target, we need to find efficient management solutions supported by data analysis systems specifically intended for managing procedures to design innovative products (Chursin et al. 2016). Keeping in mind our goal to ensure high competitive capacity, we use the following principle as a guide for developing a concept for the data analysis system that will be applied to assess innovative investment projects. As early as at the design phase, the system should calculate the competitive capacity of the resulting product and give recommendations regarding the technical and economic parameters of the project or project outputs as specified in the concept. Stage 3. List tasks (functions) to be performed by the system. When listing functions to be performed by the system for assessing innovative investment projects focused on designing import substitutes, we keep in mind our ultimate goal. To ensure that the project assessment is as effective as possible, the key tasks the system handles should include the following economic challenges: • Assessing potential demand for the product being developed that companies and communities might have by estimating potential output on a year-to-year basis. This approach helps make production plans and estimate units of output that can be produced and sold each year.
We arrange the system’s basic components keeping in mind its key tasks. The system components or subsystems are tools to accomplish the system’s tasks. The functional component model is built upon these components integrated into the single system and communicating with the existing systems operated by the company. Stage 5. Determine a concept for the subsystems mentioned above. Determine their input and output parameters and algorithms. Define models and methods to implement the subsystems. At this stage, we develop algorithms for each subsystem based on the corresponding methods and models (Linkov 2022; Linkov et al. 2021a; Nesterov 2018). Algorithms for the subsystems built at Stage 4 include procedures and regulations adopted by the company implementing the project. Such procedures and regulations describe the corresponding methods in the format applicable for building a software concept. Stage 6. Finalize the functional component model of the system’s technical and economic concept for assessing innovative investment projects focused on designing import-substituting products. This is the final stage for developing the functional component model of the system’s technical and economic concept for assessing innovative investment projects focused on designing import-substituting products. It comes down to defining relations between individual subsystems of the system under development and integrating them into the company’s existing systems and the continuously evolving database.
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A. D. Linkov
Fig. 1 Visualized functional component model of the system’s technical and economic concept. Source Designed by the author
Figure 1 shows a visualized functional component model of the system’s technical and economic concept integrated into the company’s existing systems.
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• Effective project planning that involves assessing risks of competitive capacity loss and estimating the impact that advanced technologies might have on competitive capacity given its possible variations at different stages of the life cycle (Linkov et al. 2021b; Sobchenko 2011).
Results
Therefore, the system specifications should comply with the above-mentioned goals and include the client’s requests regarding its interface, lead time, necessary functions (which can be either enlarged or reduced on a case-by-case basis), number of users, costs of the information unavailable in the public domain, and other factors. The above-mentioned specifications should be compiled while estimating costs to develop, launch, and operate the system. Below are the system’s advantages relevant to the practical assessment of innovative investment projects for designing import-substituting products: • Automated estimation of the project parameters, including competitive capacity of the products under development. • Effective project planning and effective cost management to provide for efficient resource allocation.
Before implementing the system for a certain company, it seems reasonable to make its virtual model (a digital twin) to simulate communication of its components under specific circumstances and with respect to the company’s existing IT systems. As soon as the digital twin is available, the engineers will be able to assess the system in operation and upgrade it if necessary.
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Conclusion
The proposed system (in the form of its functional component model) is a tool to manage innovative investment projects for developing import-substituting products. The author proposes the functional component model for the system to assess innovative investment projects for developing import-substituting products, where the system is presented as a set of subsystems (modules) performing
Development of a Functional Component Model for a Data System …
various decision-support tasks to ensure a proper assessment of investment projects so that the best one can be picked up. IT systems, if properly designed and operated, ensure that decision-makers have access to data, knowledge, and analytical and simulated models to analyze and find a solution to weakly structured and unstructured problems that have to be handled when developing innovative products and managing the corresponding projects.
References Artyakov VV, Chursin AA, Rusinov AA (2014) Modeling project management stability of high-tech industries enterprise. Bus Law 6:121–124. Retrieved from https://cyberleninka.ru/article/n/ modelirovanie-ustoychivosti-upravleniya-proektami-predpriyatiynaukoemkih-otrasley-promyshlennosti. Accessed 20 Apr 2022 Chursin AA (2012) Theoretical framework for managing competitive capacity. Teopия и пpaктикa. Spektr, Moscow Chursin AA, Okatiev NA, Grosheva PY (2016) Approaches to assessment of the efficiency of financial and economic tools of resource management for innovative development of high-tech enterprises. Bus Law 6:60–62. Retrieved from https://cyberleninka. ru/article/n/podhody-k-otsenke-effektivnosti-finansovo-ekonomicheskihinstrumentov-resursnogo-obespecheniya-innovatsionnogo-razvitiya. Accessed 20 Apr 2022 Chursin AA, Pleshakov SD, Linkov AD (2020) Mathematical modeling of products at a preset value. Econ Manag Probl Solut 7(1):23–29 Danilyuk AY, Chursin RA, Ostrovskaya AA (2014) On the question of some aspects of assessment of projects efficiency in high-tech
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industries. Bus Law 4:48–151. Retrieved from https://cyberleninka. ru/article/n/k-voprosu-o-nekotoryh-aspektah-otsenki-effektivnostiproektov-realizuemyh-v-naukoemkih-otraslyah-promyshlennosti. Accessed 20 Apr 2022 Glukhova LV (2009) Procedures to manage innovations at companies. Innovatika 4:196–200 Linkov AD (2022) Algorithm for the examination of potentially innovative import-substituting products in large projects. Horiz Econ 2(68):31–37 Linkov AD, Ozhiganov EN, Chursin AA (2021a) The relationship of sociotechnical and technological aspects of the introduction and application of business intelligence systems. Econ Manag Issues Solut 5(12):30–35 Linkov AD, Soloviev AM, Yudin AV, Myakishev YuD (2021b) Methodology for assessing the impact of innovative technologies on the competitiveness of products. Horiz Econ 4(63):5–11 Nesterov EA (2018) An organizational end economic mechanism to manage an advanced development of Russian high-tech space corporations. Dissertation of Candidate of Economic Sciences. RUDN University, Moscow, Russia Nikonov VV (2020) Investment project efficiency assessment. Young Sci 19(309):231–234 Novikas RY (2013) Methods to assess an innovation level of a product (services). Bull Kazan Univ Technol 16(14):257–259 Panyagina EA (2013) Reservation as a method of control over financial risks of the organization. Top Issues Hum Nat Sci 1:114–119. Retrieved from https://cyberleninka.ru/article/n/rezervirovanie-kakmetod-upravleniya-finansovymi-riskami-organizatsii-1. Accessed 20 Apr 2022 Sobchenko NV (2011) Complex technique of the estimation of economic stability of enterprises on the basis of innovative activity. Polythemat Online Sci J Kuban State Agrar Univ 67(03):163–172
Transforming Communication Flows Between Organizations and Their Publics in the Context of Emerging Web 3.0 Irina S. Miller , Irina A. Gereikhanova , Anna S. Konstantinova , Lubov N. Pereyashkina , and Anastasia N. Udotova
control over the organization’s information flows and the decentralized architecture of the growing Web 3.0; and (5) “PR-ideological”—competition between the manipulative model and the model of two-way symmetrical communication.
Abstract
The research aims to analyze the nature of the changes occurring in public relations due to the emergence of Web 3.0 as a new information technology reality. The research uses systemic and structural–functional approaches, retrospective analysis, and analytical methods. The ubiquity of Web 3.0 technologies and the powerful PR campaign regarding the lack of alternatives to the broad adoption of ESG goals for positive reputation and success of organizations somehow conflict with traditional business goals. The shift of dominance toward the public and the weak controllability of emerging communication channels and schemes that sometimes simply remove the organization from communication on its account require transforming the practices of interaction between organizations and their public. Based on the analysis of changes in marketing, ESG, PR, and Web 3.0 practices, the authors identified significant contradictions for organizations: (1) economic and ideological—between the idea that business is responsible only to its shareholders and the idea that business has a broad responsibility to society or a multitude of stakeholders; (2) economic—between business interests to maximize profits for shareholders and the inevitable additional costs of implementing the ESG agenda; (3) technical and ideological—related to the incompatibility between the “control paradigm” over communication flows and the “democratization of communication” paradigm; (4) technological—between the need for the existing hierarchical centralized communication structure for full I. S. Miller (&) I. A. Gereikhanova A. S. Konstantinova L. N. Pereyashkina Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected] I. A. Gereikhanova e-mail: [email protected] A. N. Udotova LLC “Personnel-Service”, Pyatigorsk State University, Pyatigorsk, Russia
Keywords
Business economics Marketing Innovation Technology Communication flows Web 3.0 JEL Codes
M30
1
O31
O33
Introduction
The decentralized nature of Web 3.0 should hypothetically increase the role of the public and particular publics in communications with and about the organization, predetermining the need for the organization to have a fully symmetrical dialogue with its increasingly diverse and judgmentally independent stakeholders. A long-standing debate remains open as to whether businesses should have more meaningful goals rather than focus on maximizing profits or whether such goals will never be taken seriously by organizations, leaving the ideas of environmental, social, and corporate responsibility in the realm of imitative and declaratory activity.
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Methodology
To determine the nature of changes occurring in public relations due to the emergence of Web 3.0, the authors analyzed and compared the evolution of concepts of interaction between business and society, changes in marketing,
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_33
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PR models, segmentation of publics, and the transformation of the web technologies of the Internet. The concepts of interaction between business and society were analyzed in the works of Bowen (1953), Freeman (1984), Friedman (1970), Porter and Kramer (2011), and Post et al. (2002). Changes in the marketing practices of companies are reflected in the research of Kotler (2011) and Kotler et al. (2018). The “progressivist” paradigm of the evolution of PR activities, the four “models of PR,” and the “situational theory of the public” were developed by Grunig and Hunt (1984) and Grunig et al. (2002). The “progressivist” concept of PR was also criticized, including by Olasky (1987). D. Philips and Ph. Young proposed creating a new PR (Philips and Young 2009). The transformation of web technologies of the Internet is reflected in the works of Amaral and Phillips (2009), Botasheva et al. (2019, 2022), Castells (2007), Miller and Gereykhanova (2022), and Sevignani (2022). Rawlins (2006) and Tam et al. (2023) analyzed the publics and stakeholders and indicated the characteristics of their segmentation. J.-N. Kim presented the situational problem-solving theory (Kim 2006) and refined it with Kim and Grunig (2011). W. Tao, C. Hong, W. S. Tsai, and B. Yook introduced additional psychological variables into the original STOPS model (Tao et al. 2020). This research applied systemic and structural–functional approaches, retrospective analysis, and analytical methods. A retrospective analysis was used to identify changes in the activities of organizations. The systematic approach allowed the authors to consider a set of factors affecting the organization in the emergence of Web 3.0. The structural–functional approach made it possible to identify the key subjects of interaction and identify the main directions and nature of communication between the business and the public.
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Results
Back in the middle twentieth century, G. Bowen, in his work “Social responsibilities of the businessman,” formulated the concept of corporate social responsibility (CSR) as a policy of the business that undertakes to consider the interests of society in its activities (Bowen 1953). It was criticized by M. Friedman, who, within the framework of the neoclassical position, believed that the main purpose of the private company was to use resources in activities leading to the maximization of profits while respecting the basic rules of civil society enshrined in the laws and ethical principles (Friedman 1970). Somewhat later, in his “Strategic management: A stakeholder approach,” speaking of the company’s fiduciary duty to put its own needs first, R. E. Freeman expressed the opposite position, consisting in the need for the company to consider the interests of its shareholders and the many actors
involved in its activities (i.e., employees, customers, local communities, etc.) (Freeman 1984). Following this theory, J. Post, L. Preston, and S. Sachs argued that companies should apply the principles of social, environmental, and managerial responsibility regardless of the costs involved (Post et al. 2002). However, other authors (e.g., M. E. Porter and M. R. Kramer) suggested that the concept of shared value, focusing on the links between social and economic progress, can trigger the next wave of global growth. According to these authors, private companies should primarily focus on maximizing profits while adhering to the principles of social and environmental responsibility and corporate governance (Porter and Kramer 2011). The marketing practices of companies have also seen an evolution. For example, the choice of brand in Marketing 1.0 depended on its functional criteria. In Marketing 2.0, it is already depended on emotional criteria. The next stage was the addition of a third dimension, namely the fulfillment by companies of their social obligations, which marked the emergence of Marketing 3.0, conditioned by the preferences of the consumers of goods and services by the companies that care about them and solve economic, social, political, and environmental problems. Consumer preferences are increasingly formed under the influence of word of mouth and the ability of consumers to share information through emails, blogs, and social networks. The publication of positive and negative reviews has made the functioning of companies as transparent as possible (Kotler 2011, pp. 133–134). The transformation of communication flows between organizations and their publics has led to a significant shift in focus from product orientation (1.0) to customer orientation (2.0) and public concerns (3.0). P. Kotler envisions the next stage in the development of “Marketing 4.0,” considering the convergence of offline and online business worlds and customers (Kotler et al. 2018). This concept focuses on the increasing importance of offline contacts in times of the digital economy boom in the online world. Brands must use flexible and adaptive styles to accommodate rapidly changing technological developments while necessarily maintaining their authentic character. Commitment to identity and authenticity in one’s messages is becoming a particularly valuable asset in an increasingly transparent world. Marketing 4.0 is a balance between machines (M2M) and people (H2H) (Kotler et al. 2018), requiring a balance between the use of machines and devices with human contact to enhance customer interaction. Changes in the marketing practices of companies have also affected the goals of communication between organizations and their publics. In 1984, J. E. Grunig and T. Hunt, American researchers in the field of PR, put forward a “progressivist” paradigm of the evolution of PR activity, proposing four PR models: “press-agency,” “public
Transforming Communication Flows Between Organizations …
information,” “bilateral asymmetrical,” and “bilateral symmetrical.” The conceptual basis for the models, making each model unique, was the purpose of communication: advocacy, dissemination of information, scientific persuasion, and mutual understanding (Grunig and Hunt 1984). Structurally, the models were differentiated by the composition of the subjects, the presence and nature of feedback, and research activities. Developing their concept, J. E. Grunig and co-authors conclude that the two-way symmetrical model of PR, based on which the “theory of excellence” is developed, is ethical and effective, which makes it a necessary guide for organizations in building communication links with the public (Grunig et al. 2002). M. N. Olasky was one of the critics of the “progressivist” concept (Olasky 1987). He challenged the popular and generally accepted thesis in the history of PR that corporations can better serve the interests of society by devoting more time to building relationships with their public, professional self-improvement, and training in PR technologies. According to the scholar, “apologists for ‘bigger and better’ public relations have one problem: PR’s reputation seems to be getting worse instead of getting better” (Olasky 1987, p. 1). Negative reviews of PR practices are based on the fact that PR is always a half-truth, widely using terminology designed to distort and obscure the real essence of phenomena. According to M. N. Olasky, the reasons for the inaccuracy of the “progressivist” PR model lie in the fact that the real goals of large corporations have been misunderstood for more than a century. As M. N. Olasky notes, PR leaders of many corporations have been busy “working to kill independent business by promoting collaboration between big business and the state” (Olasky 1987, p. 2), as well as supporting the introduction of economic regulation designed to eliminate small competitors and guarantee their own profits. In this regard, M. N. Olasky writes that many early PR practices, unlike those implemented by corporate professionals, appealed not to the public good but to private interest; instead of introducing state regulation, they focused on limiting the country’s ability to interfere in the competition of private interests directly. This position was more honest because there was no need to manipulate public opinion to pass off a corporate desire as some sort of public good (Olasky 1987, pp. 3–4). D. Philips and Ph. Young suggested that a new PR can be created because the old one ignores the impact of stakeholders on each other regarding the organization and its competitors (Philips and Young 2009). The promise of Grunig’s “dialogue model” in the new environment is due to the transformation of Web 2.0 to Web 3.0, which is paradigmatically based on data decentralization, depriving IT corporations of monopoly control over information flow, changing the requirements for privacy of user data and transparency of policies for their use
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(World Wide Web Foundation 2023). Web 3.0 is generating new approaches in areas as diverse as information (open data), politics (open government) (Botasheva et al. 2019), business and investment (open access) (Miller and Gereykhanova 2022), and education and culture (free culture) (Botasheva et al. 2022). The technical and institutional features of the Web 3.0 device make it possible to shift the balance toward audiences, making them a “strength” and encouraging organizations to apply a dialogical model of public communication. Under the influence of digital media, there is a diversification of public communication. Digital media allow for “mass self-communication” (Castells 2007), which blends mass and interpersonal communication, providing individuals with an organic connection to the public of common interest, which mixes mass and interpersonal communication, allowing individuals to “organically” connect with public of common interest (Sevignani 2022). There is a merger of “unprofessional” communication and PR. B. Amaral and D. Phillips of the University of Lisbon investigated the process of relationship formation on the Internet (Amaral and Phillips 2009). They studied a huge array of blog posts and found that relationships are formed based on a relationship of values. People and organizations that share similar values to others will naturally converge online. Additionally, Internet technology has eliminated disruptions in organizational communication and in the entire value chain of commerce. Researchers have concluded that the context in which an organization can thrive is rapidly shifting from its ability to create traditional public relations to its ability to do so in the online world, mostly through third parties that are beyond its control. Exploring the role of information in economic decision-making, J. E. Grunig asks why people communicate and under what circumstances they are most likely to engage in communication. A “situational theory of publics” (STP) emerges based on the factors that determine the types of communication in the decision-making process under conditions of incomplete information (Grunig and Hunt 1984). Publics can be understood as subsets of multiple stakeholders—any individuals or organizations that affect or are affected by a particular organization (Tam et al. 2023). The difference between the publics and stakeholders is that publics are stakeholders segmented based on certain common characteristics (Rawlins 2006). In this case, the theoretical and practical tasks of STP are the detection and segmentation of the public based on situational factors that motivate individuals to act as the organization’s allies or opponents. STP proceeds from the hypothesis that it is a problem that determines the processes of the emergence of publics and shapes these publics, which emerge where
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“there is a group of people” who (1) faced the same problem, (2) realized the existence of this problem, and (3) organized to do something about it (Grunig and Hunt 1984, p. 145). J. E. Grunig identifies four theoretically possible categories of groups: 1. The first group (no condition is fulfilled)—nonpublic. 2. The second group (the group is not aware of the problem, which is objectively present as a consequence of the organization’s activities)—latent public. 3. The third group (the problem is recognized)—aware public. 4. The fourth group (all three conditions are satisfied)— active public (Grunig and Hunt 1984, p. 145). Although STP cannot predict what specific judgments and attitudes toward the organization will be characteristic of certain publics, this theory makes it possible to predict the probability that a particular public will have any attitudes toward the situation at all. Because of this, STP makes it possible to focus the organization’s resources on communicating with those audiences that are most likely to have an impact on it and apply the communication strategies that will be most effective with specific types of audiences. In 2006, J.-N. Kim presented his own situational theory of problem-solving (STOPS), an extended and generalized version of STP (Kim 2006, p. 4). In contrast to numerous alternative theories of communication, which proceeded from the understanding of communication as a process of influencing the sender of a message on the recipient to change the attitudes and behavior of the latter, STOPS and STP believed that communication is an activity of people, focused on coping with life situations or problems (Tam et al. 2023). STOPS sees the receipt of information as one element of a broader communication process regarding the problem, which also includes the selection and transmission of information (Kim 2006). STOPS was further refined by J. E. Grunig and J.-N. Kim in 2011 and differed from STP in the number of variables and their internal content (Kim and Grunig 2011). Another group of scholars analyzed the applicability of STOPS to such high-profile sociopolitical issues as “controversial” issues. They concluded that the sets of “hot” and “controversial” issues are not identical. “Controversial” issues necessarily imply high social polarization and the presence of a large distance between opposing positions (ideological conflict, party struggle, etc.) (Tao et al. 2020). Communication on such issues (e.g., gun trafficking, abortion, or immigration policy) between publics with sharply divergent opinions may inadvertently lead to the formation of “echo chambers” that limit the possibilities for further dialogue. Publics may choose an avoidance strategy to
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participate in the communication. Publics may also be so disoriented by the oversaturated and contradictory flow of information that they prefer to “turn it off” completely, even at the risk of not participating in communication processes that are important to them personally. In this regard, W. Tao and colleagues found it necessary to introduce additional psychological variables into the original STOPS model, the construct of “disengagement from CAPS,” within which they identified two additional types of communicative behavior: active information avoiding and passive information omitting (Tao et al. 2020). At one time, J. E. Grunig’s works became landmark texts for PR theorists and practitioners, stimulating them to change their positions on the issue of extensive use of such tools as propaganda and persuasion. As it seems, the dynamics and content of the digitalization of PR only reinforce the emphasis placed by the “model of excellence” on the “public” as an equal participant in communication. Social and technical factors determine the growing role of audiences and the need to carefully assess and consider their interests and influence on the organization.
4
Conclusion
Summarizing the above, it is necessary to highlight the essential features of the situation emerging for the organization at the intersection of heterogeneous, diverse, but interrelated phenomena—marketing, PR, ESG, and Web 3.0. There is an economic and ideological contradiction between the idea that businesses are responsible only to their shareholders and the idea that businesses have a broad responsibility to society or multiple stakeholders. In turn, it is based on the economic contradiction between the business interests to maximize profits for shareholders and the inevitable additional costs of implementing the ESG agenda. The technical and ideological contradiction is associated with the incompatibility between the “control paradigm” of communication flows and the “democratization of communication” paradigm. In turn, it is based on the technological contradiction between the need for the existing hierarchical centralized communication structure for complete control over the organization’s information flows and the decentralized architecture of the growing Web 3.0, which makes it possible to completely eliminate the organization from the processes of interaction between stakeholders about it. The “PR-ideological” contradiction is formulated as a competition between the “primitive” but easy-to-apply manipulative model and the “progressive” but extremely resource-consuming model of two-way symmetrical communication. It seems logical to assume that the next stage will be a shift of dominance toward the public and even “dictate” its
Transforming Communication Flows Between Organizations …
conditions to organizations. This thesis is confirmed, by the significant increase in the “culture of cancellation,” a contemporary form of ostracism in media space. Nevertheless, it is still debatable whether values will be “authored” by the publics themselves or whether we will witness nothing more than a more complex communication scheme between organizations and stakeholders, in which the former will first form certain values in the latter and then “strive” to conform to them. CSR and then ESG principles are, at first glance, the involvement of organizations in solving public problems, the concern of business for the public. However, given the fact that companies put all their costs into the cost of products and services, it turns out that the settlement of socially significant tasks is entirely paid for by consumers. Nowadays, part of the state’s function in providing public goods is delegated to organizations, which, in turn, use this to increase their attractiveness and, ultimately, stimulate sales, which is the main task of marketing. Initially, people bought goods to meet their physiological needs (i.e., food, warmth, etc.). In turn, as saturation increased, marketing of goods started to be used to provide social needs (i.e., recognition, prestige, status) and, finally, solve social problems. The solution to problems (i.e., environmental pollution, social inequality, poverty, etc.), much of which was provoked by the business itself by artificially creating excess demand to increase profits, now falls on the buyers. In today’s world, the idea of buying goods and services is being formulated and popularized not from a selfish standpoint but out of considerations of altruism.
References Amaral B, Phillips D (2009) A proof of concept for automated discourse analysis in support of identification of relationship building in blogs. Retrieved from https://www.academia.edu/ 465376/A_proof_of_concept_for_automated_discourse_analysis_ in_support_of_identification_of_relationship_building_in_blogs. Accessed 2 Oct 2022 Botasheva AK, Miller IS, Rumachik IA (2019) The theory of chaos in political analysis: the third paradigm in the age of globalization. In: Popkova E, Ostrovskaya V (eds) Perspectives on the use of new information and communication technology (ICT) in the modern economy. Springer, Cham, pp 585–592. https://doi.org/10.1007/ 978-3-319-90835-9_68 Botasheva AK, Anufrienko SV, Alkhazova MH, Konstantinova AS, Ezdekova LB (2022) The digital phase of the sociopolitical development of society: basic characteristics of digital media as information and communication technologies of a new generation. In Popkova EG, Sergi BS (eds) Digital education in Russia and Central Asia. Springer, Singapore, pp 69–77. https://doi.org/ 10.1007/978-981-16-9069-3_8
195 Bowen H (1953) Social responsibilities of the businessman. Harper and Row, New York Castells M (2007) Communication, power and counter-power in the network society. Int J Commun 1(1):238–266 Freeman RE (1984) Strategic management: a stakeholder approach. Pitman, Boston Friedman MA (1970) A Friedman doctrine: the social responsibility of business is to increase its profits. N Y times Mag 13:32–33 Grunig JE, Hunt T (1984) Managing public relations. Holt, Rinehart and Winston, New York Grunig JE, Dozier DM, Grunig JE (2002) Models of public relations. In: Excellent public relations and effective organizations: a study of communication management in three countries. Lawrence Erlbaum Associates, Mahwah, pp 306–383 Kim J-N (2006) Communicant activeness, cognitive entrepreneurship, and a situational theory of problem solving. Unpublished dissertation. University of Maryland, College Park,MD Kim J-N, Grunig JE (2011) Problem solving and communicative action: a situational theory of problem solving. J Commun 61 (1):120–149. https://doi.org/10.1111/j.1460-2466.2010.01529.x Kotler P (2011) Reinventing marketing to manage the environmental imperative. J Mark 75:132–135 Kotler P, Kartajaya H, Setiawan I (2018) Marketing 4.0: when online meets offline, style meets substance, and machine-to-machine meets human-to-human. Retrieved from https://www.marketingjournal. org/marketing-4-0-when-online-meets-offline-style-meetssubstance-and-machine-to-machine-meets-human-to-human-philipkotler-hermawan-kartajaya-iwan-setiawan/. Accessed 5 Feb 2023 Miller IS, Gereykhanova IA (2022) Specifics of PR activities in startups. In: Popkova EG, Sergi BS (eds) Digital education in Russia and Central Asia. Springer, Singapore, pp 105–113. https:// doi.org/10.1007/978-981-16-9069-3_12 Olasky MN (1987) Corporate public relations. Routledge, New York Philips D, Young P (2009) Online public relations: a practical guide to developing an online strategy in the world of social media. Kogan Page, London Porter ME, Kramer MR (2011) The big idea: creating shared value. How to reinvent capitalism—and unleash a wave of innovation and growth. Harv Bus Rev 89(1–2):62–77 Post J, Preston L, Sachs S (2002) Redefining the corporation: Stakeholder management and organizational wealth. Stanford University Press, Palo Alto Rawlins BL (2006) Prioritizing stakeholders for public relations. Institute for Public Relations. Retrieved from https://instituteforpr. org//wp-content/uploads/2006_Stakeholders_1.pdf. Accessed 12 Oct 2022 Sevignani S (2022) Digital transformations and the ideological formation of the public sphere: hegemonic, populist, or popular communication? Theory Cult Soc 39(4):91–109. https://doi.org/10. 1177/02632764221103516 Tam L, Kim J-N, Lee H (2023) The situational theory of problem solving (STOPS): past, present, and future. In: Pompper D, Place KR, Weaver CK (eds) The Routledge companion to public relations. Routledge, London, pp 115–124. https://doi.org/10.4324/ 9781003131700-11 Tao W, Hong C, Tsai WS, Yook B (2020) Publics’ communication on controversial sociopolitical issues: extending the situational theory of problem solving. J Appl Commun Res 49(1):44–65. https://doi. org/10.1080/00909882.2020.1849770 World Wide Web Foundation (n.d.) History of the web. Retrieved from https://webfoundation.org/about/vision/history-of-the-web/. Accessed 1 Feb 2023
Trends in the Development of E-commerce in Enterprises Zhanna V. Smirnova , Mariia V. Mochalina , Svetlana N. Kuznetsova , Elena P. Kozlova , and Ekaterina P. Garina
Abstract
JEL Codes
This research discusses the development of e-commerce in commercial enterprises. The authors consider the trends in the development of e-commerce, which can be noted as advanced information technology that affects the economic situation of entrepreneurial activity with a reduction in the cost of business operations. The author substantiates the principles and methods of interaction between enterprises and Internet technologies for selling their goods or services. The relevance of the chosen research topic, characterized by the development of e-commerce, is determined. The research object is the improvement of e-commerce in Russia. As part of the research, the authors analyzed data on the use of e-commerce by the population, according to a study conducted by the Public Opinion Foundation. The authors analyzed the main aspects of the development of e-commerce, which is based on the use of advanced information technologies. The result of Internet products in online trading is analyzed. The practice of using Internet technologies in commercial organizations is substantiated. Based on the research results, the authors drew a reasonable conclusion that e-commerce in all countries is currently at the peak of its development, the Internet is absorbing the world, and e-commerce occupies a stable position as a new form of the market economy.
R11
Keywords
Internet technologies E-commerce Commercial organization Computer programs Services Z. V. Smirnova (&) M. V. Mochalina S. N. Kuznetsova E. P. Kozlova E. P. Garina Minin Nizhny Novgorod State Pedagogical University, Nizhny Novgorod, Russia e-mail: [email protected] S. N. Kuznetsova e-mail: [email protected]
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Introduction
Nowadays, society can hardly imagine itself without information technologies, which are used in almost all types of human activities. E-commerce has entered our life. The main characteristics of such trade on the part of the buyer and seller are that one can purchase any product through the Internet using computer programs. The subject of e-commerce can be the sale of real estate, the provision of services, a banking product, etc. Internet networks increasingly evolve, using technology to sell goods and services. Additionally, this technology covers more trading companies and citizens. Many small businesses now operate solely on online sales, thereby facilitating the collaboration of people and reducing the cost of renting premises. E-commerce in the economy is currently becoming an objective reality. The tools for using e-commerce are commercial, government, and other structures that are interested in such a service. E-commerce is the sale of goods and services through an electronic network, as well as information support for data processing and automation of office functions (Andryashina et al. 2022; Evdokimov and Belozubenko 2015; Garin et al. 2022; Kuznetsov et al. 2020; Mizikovsky et al. 2022).
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Methodology
The relevance of the chosen research topic is characterized by the development of e-commerce, which has reached a high level of growth and continues to increase its pace in development and improvement.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_34
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The research object is the improvement of e-commerce in Russia. Considering the trends in the development of e-commerce, it can be noted that advanced information technologies directly affect the economic situation of entrepreneurial activity with a reduction in the cost of conducting business transactions. The first stores using Internet technologies appeared in the 1990s. Nowadays, the technology of electronic stores is completely different. There are different telecommunications systems, different formats for transmitting information, and other consumer needs. The development trend of e-commerce requires constant research and improvement based on basic social demands. As part of the research, the authors analyzed data on the use of e-commerce by the population. The increase in the volume of sales of goods and services through e-commerce is provided by Internet users. The use of Internet technologies has increased, with the creation of new types of services using Internet technologies increasing, and the number of websites has also increased. This research considers the issue of using Internet technologies in the business activities of organizations (Smirnova et al. 2022; Suglobov et al. 2020; Yelenevskaya et al. 2018).
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Results
The use of Internet technologies is carried out by optimizing business processes and becomes a way to make a profit (Romanovskaya et al. 2022; Smirnova et al. 2021). The development of e-commerce has a broad understanding and, in most cases, is characteristic of those countries where Internet technology is well-developed; such countries include Japan, the USA, and countries of Western Europe. The digital economy of these countries is used in almost all industries in the system of organizing economic activity. Such an economy includes electronic marketing, remote work, and e-commerce. Doing business with the use of e-commerce is developing rapidly. New technologies and new processes for organizing a management system are being introduced. There is a rapid exchange of information and the sale of goods through electronic access to the provision of services. The format of e-commerce, unlike traditional commerce, differs according to the following criteria: • • • • •
Ways to attract consumers; Psychology of service delivery; Form of information submission; Way of making purchase actions; Acquisition costs;
• The availability of goods; • Volume of information; • Number of the assortment of goods. Based on the foregoing, it can be concluded that the use of e-commerce by organizations is a positive effect on financial transactions performed using the Internet, with the help of which goods are bought and sold. The development of business processes through Internet technology increases the number of relationships with consumers and gives more opportunities to behave confidently in the economic market. The number of mobile purchases has increased several times. The main indicators of the expected results of the research forecast are shown in Fig. 1. The result of the analysis of data on the use of mobile shopping showed that the growth of mobile sales increased by 23% by the end of 2022. These indicators are characterized by the fact that in recent years people have increasingly begun to use mobile phones as a means of obtaining information, and the indicators of the introduction of advertising information have increased in parallel due to the Internet technology for the services offered and the sale of products. The results of the analysis of the use of mobile sales suggest that electronic trading platforms are mainly intended for organizations engaged in commercial activities. The practice of using Internet technologies in commercial organizations highlights the basic principles of trading platforms in this system of work: • Independent; • Industry; • Private. Each group can differ in its functionality, and each of them has its own advantages and disadvantages. Within its activities, e-commerce is distributed according to the location and distribution of computer networks. Thus, 2022
79%
2021
76%
2020
73%
2019
63% 0%
20%
40%
60%
80%
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Fig. 1 Share of online products in online commerce. Source Compiled by the authors
Trends in the Development of E-commerce in Enterprises
customers get the opportunity to choose a product or service, regardless of the graphical position of the organization. The electronic business format provides suppliers with the opportunity to increase their competitiveness and get closer to the customer. Many companies use e-commerce technology to support regular customers, which includes providing detailed information about products and instructions for using them. Electronic interaction between the customer and the organization increases the possibility of obtaining detailed information and the requirements of each customer for a specific product, as well as the rapid delivery of goods and the provision of services. E-commerce speeds up the transfer of information from the supplier to the buyer, which reduces the cost of organizing such delivery. Thus, it can be noted that e-commerce makes it possible to save on the costs of a purchase and sale transaction. The very conclusion of the transaction takes place in electronic format, thereby reducing the maintenance cost. The development of e-commerce opens up opportunities for the emergence of new goods and services, which contributes to the growth of world trade. With the development of e-commerce, the consumer’s lifestyle is also changing; each customer can purchase a certain product for any need without leaving their home. For example, selling airline tickets or cinema tickets makes the process simpler and more enjoyable: one can choose the options provided or refuse the purchase and receive a refund by electronic transfer to the user’s account. The range of goods offered through e-commerce is expanding every day. One can now buy clothes, jewelry, pet food, and even a pet on the Internet. Expanding the geography of selling goods through an electronic format will require developers and manufacturers to study local markets for the needs of a particular product and analyze regional requests for goods related to business. In the regions, a list of the most popular Internet portals is compiled. Internet resources enable residents to get acquainted with the news. The Russian e-commerce market today is a dynamically developing economy of the country. Over the past five years, the growth of e-commerce has been on the rise. Residents of the country are becoming increasingly accessible to Internet technologies to purchase goods through an electronic network. According to the results of the study on the development of e-commerce in Russia, there is a high growth rate (Fig. 2). According to statistical analysis, e-commerce is developing in the country; points of issue of goods and orders become intermediaries for providing goods and are the main delivery channel. In 2021, buyers received 85% of all shipments, while online sales amounted to 12% of the retail market.
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According to the association of e-commerce companies, the volume of the Russian market increased by 13% in 2022, with most of the sales coming from the domestic market. Association data for 2021 show that Russians made 2.7 billion online orders, regardless of age category, and amounted to more than 70 million participants. The growth in orders was recorded not only for online stores but also for mobile applications and web services. A study on product categories that are more often purchased through Internet services is given in Table 1. Thus, most purchases are related to digital and household appliances (25%). The average number of purchases is allocated to the purchase of clothing and food products by residents. Health and beauty products are bought less (8%). Considering the rating of consumers using e-commerce by region, the following can be noted. Most of the population falls on the population of Moscow and the Moscow region (30%). The Novgorod Region is 4%, and the Republic of Bashkortostan is 2%. Simultaneously, most commercial companies consider the sale of goods through Internet services as the main condition for business survival. The current situation associated with the COVID-19 pandemic has made it possible to expand the use of Internet services in the field of trade of small and medium-sized businesses. Working online has expanded the circle of customers and buyers for product promotion. It became possible to develop online platforms for creating online stores. The number and quality of services for residents are increasing. The development of electronic sales increases the demand for manufactured products and the quality of goods for the consumer. Commercial organizations are faced with the task of producing such a product so that it is more in demand and purchased in different regions of the country. According to information forecasts, in the near future, the growth of e-commerce will only increase and attract more Internet users with access to the Internet. This will increase the number of purchases, which will expand the business development infrastructure.
2022 2021 order growth dynamics over 5 years
2020 2019 2018 0%
50%
100%
Fig. 2 Growth dynamics of electronic orders. Source Compiled by the authors
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Table 1 Popular and frequently purchased product categories through e-commerce
Beauty and health
Food
Clothing and footwear
Household products
Digital and home appliances
8%
10%
14%
15%
25%
Source Compiled by the authors
Online stores will begin to strengthen through the interaction of small and large enterprises, helping them sell goods, resulting in new e-commerce directions related to financial and technical means. In this situation, the current system will gradually integrate e-commerce. In the field of e-commerce, e-business is being created in Russia. The organizers of the online trading market must constantly search for new suppliers of goods with low purchase prices, new services, and new goods. Introducing new goods and services will increase the economic income of commercial enterprises. The main advantages of e-commerce include a significant factor—the growth of participants using online stores. E-commerce is becoming one of the emerging technology in sales markets worldwide.
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Conclusion
Thus, e-commerce is the most common factor in the world associated with the use of Internet networks. The development of e-commerce is becoming commonplace for enterprises in the business sector, while the sale of goods and the provision of services become more accessible. The development of Internet technologies allows expanding the scope of companies. Online trading leads to faster exchange of information and is one of the most promising technologies for economic development.
References Andryashina NS, Smirnova ZV, Romanovskaya EV, Garina EP, Kuznetsova SN (2022) The mechanism of an integration solution in the financial and economic activities of construction organizations.
In: Popkova EG, Polukhin AA, Ragulina JV (eds) Towards an increased security: green innovations, intellectual property protection and information security. Springer, Cham, pp 507–513. https:// doi.org/10.1007/978-3-030-93155-1_55 Evdokimov FI, Belozubenko VS (2015) Indexes of the technical and technological components economical security of enterprise. Product Effi Ind Enterp 4:124–129 Garin AP, Pavlyukova AV, Eroshenko AA, Semakhin EA, Permovsky AA (2022) Formation of sectoral clusters as a mechanism for the integration development of the territorial economies. In: Popkova EG (eds) Imitation market modeling in digital economy: game theoretic approaches. Springer, Cham, pp 508–515. https:// doi.org/10.1007/978-3-030-93244-2_56 Kuznetsov VP, Adzhikova AS, Romanova MS, Kozlova EP, Semakhin EA (2020) Management of the development of economic systems in the context of their technological transformation. In: Popkova E, Sergi B (eds) Scientific and technical revolution: yesterday, today and tomorrow. Springer, Cham, pp 150–159. https://doi.org/10.1007/978-3-030-47945-9_17 Mizikovsky IE, Polikarpova EP, Kuznetsov VP, Garina EP, Romanovskaya EV (2022) Innovative calculating of products in industry enterprises. In: Popkova EG, Sergi BS (eds) Sustainable agriculture. Springer, Singapore, pp 449–457. https://doi.org/ 10.1007/978-981-16-8731-0_44 Romanovskaya EV, Smirnova ZV, Andryashina NS, Artemyeva MV, Kuznetsova SN (2022) Economic integration as a mechanism for managing service activities. In: Popkova EG, Polukhin AA, Ragulina JV (eds) Towards an increased security: green innovations, intellectual property protection and information security. Springer, Cham, pp 515–520. https://doi.org/10.1007/978-3-030-93155-1_56 Smirnova ZV, Katkova OV, Golubeva OV, Romanovskaya EV, Andryashina NS (2021) Innovative technologies in the training of university specialists. In: Popkova EG, Sergi BS (eds) “Smart technologies” for society, state and economy. Springer, Cham, pp 352–359. https://doi.org/10.1007/978-3-030-59126-7_39 Smirnova ZV, Chelnokova EA, Chaykina ZV, Semakhin EA, Kostylev DS (2022) Modern educational platforms for distance training on lean production. In: Ostrovskaya VN, Bogoviz AV (eds) Big data in the GovTech system. Springer, Cham, pp 23–28. https://doi.org/10.1007/978-3-031-04903-3_3 Suglobov AE, Zharylgasova BT, Savin V (2020) Audit: a textbook for bachelors, 4th edn. Dashkov and Co., Moscow Yelenevskaya EA, Kim LI, Christolyubov SN (2018) Accounting, analysis, audit: a textbook. Infra-M, Moscow
Effectiveness of Digital Marketing Technologies in Commercial Banks Laylo T. Abdukhalilova
Abstract
JEL Codes
The paper aims to examine contemporary bank marketing methods in the context of digital transformation and identify directions for further development. The research employed a variety of models, including linear, linear logarithm, logarithmic linear, and logarithm models. The data utilized in this investigation originates from the Global Economy Database, which serves as the primary source of information for this scholarly endeavor. The author used Stata to develop and analyze models using tables, formulas, and graphs. For model analysis, the author used the least squares method (OLS) and ANOVA table. The paper introduces a linear model for applying digital marketing in commercial banks. As per Gauss– Markov’s primary prerequisite, it is imperative for the total count of observations to exceed the number of variables by no less than a factor of six. In this case, we have 97 observations and three variables, thus satisfying this condition. Originality/value: The study employs econometric equations to determine the innovation index of 97 foreign countries in 2020–2021 and the efficiency indicators for commercial banks in the same period, including the ratio of bank expenses to income and the efficiency of digital technologies in banks. Analytical development was carried out based on cross-sectional data. This paper provides valuable insights into the use of digital marketing in commercial banking and identifies opportunities for further development.
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Keywords
Digital technology Commercial banking Digital economy Digital transformation Internet banking Information technology
L. T. Abdukhalilova (&) Tashkent State University of Economics, Tashkent, Uzbekistan e-mail: [email protected]
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Introduction
In contemporary times, adopting digital technologies has become an imperative requirement. It is virtually impossible to identify any industry or sector of the economy where information technology is not utilized. The financial sector is no exception because digital technologies are being extensively employed to enhance the quality of services rendered in the banking domain. These technologies include self-service terminals, social media platforms, websites, computers and tablets, smart televisions connected to the Internet, mobile applications, and email. Electronic banking has substantially decreased the number of banking personnel by substituting them with artificial intelligence-based carriers. Advanced software solutions have been developed to offer end-to-end (E2E) products that cater to various financial requirements of consumers (Korovkina 2017). Commercial banks are compelled to overhaul their marketing strategies in the current competitive landscape. Building customer loyalty and acquiring new customers depend on the extent to which contemporary sales promotion methods related to the development of digital technologies are employed. The relationship between a commercial bank’s IT strategy and its marketing concept is tightly intertwined. The development of information technologies necessitates specific adjustments to marketing strategies (Tsedinov and Badma-Goryaeva 2019). By modifying their IT strategy, banks can offer new customized services, increase customer loyalty, and expand their customer base. Fundamental changes are necessary for successful operations in the banking industry. In these circumstances, a new trade model is emerging, traditional approaches to expanding the customer base are being
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_35
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completely transformed, and the quality and speed of service are improving (Eshbayev et al., 2023). The contemporary configuration of the financial sector inherently calls for a compelling shift toward digital transformation, entailing the migration of banking products, services, marketing, sales, customer service, and operational processes to a digital milieu. With this in mind, the research aims to examine the digital strategies of bank marketing within the context of digital transformation and provide a framework for further development.
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on artificial intelligence and are expanding into virtual reality. The following services can be identified: • • • •
The adoption of cloud services. The integration of cryptocurrencies in banking services. The issuance of proprietary cryptocurrencies. The exchange of traditional fiat currencies for cryptocurrencies. • The creation of digital assets, etc. (Kazarenkova et al. 2015; Miroshnichenko et al. 2017).
Materials and Methods 3
Due to the extensive propagation of digital systems and technologies, the essential framework to facilitate the shift toward digital ecosystems, alongside innovative management and accounting systems, has been duly instituted. This milestone signifies the dawn of the Fourth Industrial Revolution, commonly referred to as Industry 4.0 and Society 5.0, denoting an epoch characterized by significant advancements in the digital domain, profoundly shaping human progress. Within this transformative phase, there is an observable trend of progressively erasing the conventional demarcations between physical, virtual, and natural advancements. Digitization is determined by subjective patterns within the developmental framework of the global economy; its growth is contingent on favorable conditions (Eshbayev et al., 2023). The banking sector has not been immune to the changes brought about by digitization. As a critical financial discipline, commercial banks have a direct impact on macroeconomic processes within a country (Manyika et al. 2017). At present, financial institutions known as banks play a paramount role in furnishing a diverse array of financial services, centering their core attention on extending credit to the tangible sectors of the economy. Banks are the largest operators in the domestic foreign exchange market, accounting for over 90% of the market share, as well as in the repo market (about 85%) and the bond market (over 65%). Moreover, it is imperative to underscore the crucial role of the banking sector in upholding the uninterrupted functioning of the national payment infrastructure in a synchronous manner. According to the Global Institute, Manyika et al. (2017) have predicted that up to 50% of the world’s operations will be automated within the next 20 years. This technological advancement is not exempt from the banking industry. Current trends in banking marketing are linked to the increased use of robotics, chatbots, and CRM systems to engage with customers during the lending process. Traditional banking operations are replaced by services that rely
Results
In this research, the author assembled the principal parameters of the four econometric equations and the Gauss– Markov condition test results (Table 1). Moreover, this investigation delves into the assessment of the innovation index pertaining to 97 foreign nations. It accomplishes this by scrutinizing the theoretical values and residual value indicators of the cost-to-income ratio exhibited by banks. Furthermore, the study incorporates the analysis of the efficiency indicators of the commercial banking system and the proficiency of digital technologies within these banks. The analysis is conducted using Table 1, which presents the indicators of each of the four econometric models and tests based on Gauss–Markov conditions. Based on the linear model formula, a one-unit change in the efficiency of the commercial banking system results in a one-unit change in the Global Innovation Index. The specific linear model used in this research takes the form: GII = 0.10ATM + 0.18CIR + 18.20. Table 2 presents the regression coefficients in the linear model, denoted by the symbols 0.10 and 0.18, correspondingly. Concurrently, the standard errors for these coefficients are reported as 0.02 and 0.07, respectively. The ANOVA table reports an actual value of F = 15.26, which is relatively high. With R2 being equal to 0.24 and an adjusted coefficient of determination of Adjusted R2 being 0.2290, the given model yields a positive quality value. In the context of the regression model under consideration, two hypotheses are posited: the null hypothesis (H0) assumes that the coefficient associated with the variable of interest, denoted as “y,” is equal to zero, while the alternative hypothesis (H1) contends that the said coefficient is not equal to zero. The significance levels, denoted as F and t, are both less than 0.05. Due to the lack of statistical significance in support of the primary hypothesis (H0: y = 0), we are compelled to reject it. Consequently, we turn our attention to the alternative hypothesis (H1: y 6¼ 0), which exhibits statistical significance. A thorough examination of the Gauss–Markov
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Table 1 Indicators of the study based on four different econometric models No.
Model pointers
Model one (linear model)
Model two (linear logarithm model)
Model three (logarithmic linear model)
Model four (logarithmic model)
1
GII
*
*
2
Ln (GII)
3
ATM
4
Ln (ATM)
5
CIR
6
Ln (CIR)
7
F test
15.26 (0.0000)
23.57 (0.0000)
17.69 (0.0000)
32 (008.0000)
8
R2
0.2451
0.3293
0.2735
0.4057
9
Adj R2
0.2290
0.3150
0.2580
0.3930
* 0.10 (0.02)
*
0.003 (0.0006) 6.99 (1.13)
0.18 (0.07)
0.22 (0.02) 0.004 (0.002)
7.45 (3.84)
0.16 (0.10)
10
Breusch–Pagan
0.09
0.16
0.2994
0.5079
11
Durbin–Watson
2.12
2.41
1.94
2.38
12
Vif
1.02
1.02
1.02
1.02
13
Shapiro–Wilk
0.00011
0.00011
0.05798
0.05243
Note Asterisk (*) emphasizes the importance of the Global Innovation Index in understanding and predicting the efficiency of the commercialbanking system in the context of digital marketing, as analyzed through the applied econometric models Source Developed by the author based on Stata software Table 2 Gauss–Markov second condition on the one linear model
Variable factors
The quantity of observations
The mean value
Standard deviation
Model
97
34.91753
5.87439
G II
97
34.91753
11.86579
Min
Max
25.69545
57.07421
17.3
66.1
Source Developed by the author based on Stata software
conditions within the framework of this model revealed the following observations. The initial prerequisite of the Gauss–Markov theorem necessitates that the sample size should be a minimum of sixfold greater than the number of variables in the linear regression model. With 97 observations and three variables, the first condition of Gauss–Markov is met for this linear model. The second condition of Gauss–Markov indicates that the residuals should be unbiased, homoscedastic, and have a constant variance. The observed or empirical values are equated to the summation of the corresponding theoretical values posited by the model, and this relationship is articulated as follows. The third condition of the Gauss–Markov linear model specifies that the residuals and factor signs must be uncorrelated and homoscedastic. The fourth assumption of the Gauss–Markov model was subjected to examination through the application of Breusch–Pagan’s test, resulting in a computed p-value of 0.09. The test’s null hypothesis
postulated that the coefficient of interest (y) equals zero, while the alternative hypothesis proposed that the coefficient deviates from zero (y 6¼ 0). Given that the obtained p-value surpasses the conventional significance level of 0.05, we substantiate the acceptance of the null hypothesis and, consequently, the rejection of the alternative hypothesis. This suggests that the fourth condition of the Gauss–Markov model is met because the value is greater than 0.005. Likewise, the computation of the Durbin–Watson statistic yielded a value of 2.12, accompanied by a p-value exceeding the significance threshold of 0.05. As a consequence, we ascertain the acceptance of the null hypothesis, concomitant with the rejection of the alternative hypothesis. Given that the value is greater than 0.005, the fourth condition of the Gauss–Markov model is fulfilled. The evaluation of the fifth condition of the linear model was conducted through the utilization of the Shapiro–Wilks test, yielding a remarkably low p-value of 0.00011. Within this context, the null hypothesis posits that the parameter “y” equals zero, while the alternative hypothesis suggests that
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“y” is not equal to zero. Given the significance level of 0.05, and in light of the obtained p-value, the null hypothesis is decisively rejected. Consequently, we infer that the fifth condition of the linear model is not satisfied. Finally, the linear logarithm model formula states that a one-percent change leads to a change of one unit. In this research, the linear logarithm model had the following expression: GII ¼ 6:99 Ln (ATM) þ 7:45 Ln (CIR) 21:33:
ð1Þ
As depicted in Formula (1), the factor symbols in the linear logarithm model were 6.94 and 7.45. The standard errors pertaining to the analyzed data were empirically determined as 1.13 and 3.84. Subsequently, the observed value presented in the analysis of variance (ANOVA) table was recorded as F = 23.07. This value was higher, and R2 in the model was 0.3293. An adjusted coefficient of determination Adjusted R equaled 0.3150. Thus, the quality of the given model was satisfactory. In the context of our regression model, we conducted a rigorous assessment of the primary hypothesis (H0: y = 0) alongside its corresponding alternative hypothesis (H1: y ¼ 6 0). The statistical analysis yielded crucial outcomes, with the computed values of F and t both falling below the critical threshold of 0.05. This observation substantiated the rejection of the null hypothesis (H0: y = 0) due to its lack of substantive significance. Consequently, the empirical evidence strongly supported the alternative hypothesis (H1: y 6¼ 0), thus rendering it statistically meaningful and viable for further consideration. When Gauss–Markov conditions were tested for this model, it was observed that the first condition was satisfied. The number of Gauss–Markov observations for the first condition was six times larger than the number of symbols; there were 97 observations and three variables. In accordance with the second condition of Gauss–Markov, the observed values are equivalent to the sum of the theoretical values in the model. They are expressed as follows. Based on the Breusch–Pagan test for Gauss–Markov’s fourth condition, the resulting value was 0.16. The null hypothesis (H0: y = 0) was rejected in favor of the alternative hypothesis (H1: y 6¼ 0) when the p-value, denoted as r, surpassed the predetermined significance level of 0.05. Given that the fourth condition of Gauss–Markov is satisfied, the value is greater than r > 0.005. Similarly, the Durbin–Watson statistic, which exhibits a value of 2.41, has been subjected to rigorous scrutiny using a significance level of r > 0.05 for both the null and alternative hypotheses. As a result of this meticulous analysis, the principal hypothesis can be deemed substantiated, while the alternative hypothesis, in accordance with established
scientific criteria, is refuted. This condition is also fulfilled since the value is greater than r > 0.005. The fifth condition elucidates that the computed result of the Shapiro–Wilk test yielded a p-value of 0.05798. At a predetermined level of significance (a) greater than 0.05, the null hypothesis (H0: y = 0) as well as the alternative hypothesis (H1: y 6¼ 0) has been subjected to rigorous scrutiny. Consequently, based on the obtained statistical evidence, the principal hypothesis achieves statistical significance, leading to the rejection of the alternative hypothesis. Given that the fifth condition of Gauss–Markov is met, the value is greater than r > 0.005. Based on the logarithmic linear model formula, a one-unit increase in the predictor variable results in a 100% change in the response variable. The logarithmic linear model employed in our study can be expressed as follows: LnGII ¼ 0:003 ATM þ 0:004 CIR þ 3:06:
ð2Þ
As illustrated in Eq. (2), the coefficients denoting the factors within the logarithmic linear model are 0.003 and 0.004, correspondingly. The standard errors are 0.0006 and 0.002. The ANOVA table shows an actual value of F = 17.69, an R2 value of 0.2735, and an adjusted R2 of 0.2580. These values indicate the high quality of the model. Furthermore, in our regression equation, the main hypothesis (H0: y = 0) is rejected as F < 0.05 and t < 0.05, indicating the statistical significance of the alternative hypothesis (H1: y 6¼ 0). Upon checking this model with Gauss–Markov conditions, the assumptions were satisfied. The primary requirement of the Gauss–Markov theorem stipulates that the minimum quantity of observations should be no less than sixfold the number of variables under consideration. In this case, there are three variables and 97 observations, which satisfy this condition for the logarithmic linear model. According to the second condition, the empirical values should equal the sum of the theoretical values. This is expressed as follows. The fourth assumption of the Gauss–Markov theorem was assessed through the application of the Breusch–Pagan test, yielding a calculated p-value of 0.2994. The null hypothesis (H0: y = 0) and the alternative hypothesis (H1: y ¼ 6 0) were considered in this test. In light of the significance level set at 0.05, we find that the p-value surpasses this threshold. Consequently, the null hypothesis is upheld, leading to the rejection of the alternative hypothesis. It can be deduced that the fourth condition of Gauss–Markov holds true, as the computed p-value exceeds the critical value of 0.005. In parallel, with respect to the Durbin–Watson test, the resultant statistic is ascertained to be 1.94, while considering the null hypothesis (H0: y = 0) and its corresponding alternative hypothesis (H1: y 6¼ 0). Given that the computed
Effectiveness of Digital Marketing Technologies …
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statistic surpasses the critical threshold of significance set at 0.05, we thereby embrace the null hypothesis while dismissing the alternative hypothesis. Moreover, this fulfillment is further confirmed, as the observed statistic’s magnitude remains greater than the specified level of 0.005. The fifth assumption of the Gauss–Markov theorem is underpinned by the utilization of the Shapiro–Wilk test, from which a p-value of 0.06243 was obtained. Given the specified null hypothesis (H0: y = 0) and alternative hypothesis (H1: y 6¼ 0) with a chosen significance level of 0.05, the statistical decision leads us to accept the null hypothesis, while rejecting the alternative hypothesis. This fulfillment of the condition arises due to the observed p-value exceeding the selected threshold of 0.05. According to the logarithmic model, a—percent change in variable X results in a one-percent change in Y. Our research utilized a logarithmic linear model with the following equation: LnGII ¼ 0:22 LnATM þ 0:16 LnCIR þ 2:
ð3Þ
As evidenced by the presentation of Formula (3), the linear logarithm model exhibited factor symbols of 0.22 and 0.16, correspondingly, alongside standard errors of 0.02 and 0.10. The ANOVA table reveals a noteworthy F-statistic of 32.08, signifying a considerable effect. Furthermore, the model yielded an R-squared value of 0.4057 and an adjusted coefficient of determination value of 0.3930, denoting a favorable outcome concerning the model’s efficacy. In our regression model, we subject the null hypothesis (H0: y = 0) to examination, while contrasting it with the alternative hypothesis (H1: y 6¼ 0), employing significance thresholds of F < 0.05 and t < 0.05. Given that the null hypothesis lacks substantive interpretability (H0: y = 0), we opt to reject it in favor of the alternative hypothesis, asserting its statistical significance. Furthermore, an evaluation of the Gauss–Markov assumptions for our model was conducted, revealing the fulfillment of the initial condition owing to the notable disparity between the number of observations (97) and the number of variables (3), wherein the former surpasses the latter by a factor of six. The second condition is also met because the empirical values are equal to the sum of the theoretical data of the model. Concerning the fourth condition, the Breusch–Pagan test yielded a p-value of 0.5079 for testing the null hypothesis (H0: y = 0) against the alternative hypothesis (H1: y ¼ 6 0). Given that this p-value surpasses the significance threshold of a = 0.05, we find empirical support for the null hypothesis, leading to the rejection of the alternative hypothesis. Consequently, we assert that the fourth assumption of Gauss–Markov, pertaining to the absence of heteroscedasticity, is met, thereby allowing us to proceed with the subsequent analysis.
The Durbin–Watson statistic, calculated at 2.38, was assessed in the context of null hypothesis (H0): the regression coefficient (y) is equal to zero, and alternative hypothesis (H1): the regression coefficient (y) is not equal to zero. A significance level (a) of greater than 0.05 was employed for the hypothesis testing procedure. The obtained results provide evidence in favor of the primary hypothesis, thereby resulting in the rejection of the alternative hypothesis. This is due to the fact that the value is greater than r ˃ 0.005, thus satisfying the condition of the fifth Gauss–Markov assumption. Additionally, the statistical analysis employed the Shapiro–Wilk test, resulting in an observed test statistic of 0.06243. This outcome lends support to the primary research hypothesis, wherein the null hypothesis (H0: y = 0) is rejected in favor of the alternative hypothesis (H1: y 6¼ 0) at a significance level denoted by r ˃ 0.05. Consequently, the research can confidently dismiss the alternative hypothesis. Moreover, the test statistic’s magnitude exceeding r ˃ 0.005 indicates the fulfillment of the fifth condition in the Gauss– Markov assumption.
4
Conclusions
Within the realm of worldwide economic integration, the advent of novel digital platforms, cutting-edge technologies, and sophisticated communication tools bears considerable ramifications for the socio-economic systems of nations, as they engender the establishment of a fresh paradigm of international relations and exert influence upon the banking market. The six countries leading in digital banking maturity (the USA, Spain, China, Turkey, Hong Kong, and Russia) are extensively using digital banking services to develop their banking strategies and provide services. Presently, biometric identification emerges as a compelling and pivotal domain of innovation within the realm of digital technologies. Its successful integration bears the potential to streamline access to a plethora of banking products and services, empowering financial institutions with enhanced customer surveillance capabilities. This technology manifests extensive utility across diverse facets of human endeavors, encompassing education, health care, public services, and the financial sector. It facilitates individual identification of citizens. However, data protection measures must be strengthened to ensure the successful implementation of digital technologies. Banks are investing heavily in advanced cybersecurity systems to address this issue. Notwithstanding the fiscal exigencies and impediments confronting the establishment of a comprehensive digital banking infrastructure, emergent banking technologies
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proffer substantial prospects to ameliorate banks’ operational efficacy and attain a competitive advantage. The process of digitization engenders enhanced operational efficiency within the banking domain while concurrently elevating the caliber of customer service provisions.
References Kazarenkova NP, Kolmykova TS, Stepenko SS, Stepenko MN (2015) Modern trends and directions of development of interaction between the real and banking sectors of the economy. Southwest State University, Kursk Korovkina EV (2017) The creation of a digital ecosystem of commercial bank. Sci Notes Young Sci 3:68–71 Manyika J, Chui M, Miremadi M, Bughin J, George K, Willmott P, Dewhurst M et al (2017) A future that works: automation, employment, and productivity. McKinsey Global Institute.
L. T. Abdukhalilova Retrieved from https://www.mckinsey.com/*/media/mckinsey/ featured%20insights/Digital%20Disruption/Harnessing%20 automation%20for%20a%20future%20that%20works/MGI-Afuture-that-works-Executive-summary.ashx. Accessed 24 Apr 2023 Miroshnichenko MA, Trelevskaya C-AI, Mamykina EV (2017) Studying the process of “digitalization” of the banking sector within the framework of the ecosystem of the digital economy in Russia. Polythemat Online Sci J Kuban State Agrarian Univ 133:434–447. https://doi.org/10.21515/1990-4665-133-034 Eshbayev O, Mirzaliev S, Sultonov M, Igamberdiev A, Kholikova N, Razikov N, ... & Aziz A (2023) A digital sustainability approach for effective knowledge and information management in education specific non-profit organizations: Culture Intelligent IS Solutions. In E3S Web of Conf 452:07023. EDP Sciences. https://doi.org/10. 1051/e3sconf/202345207023 Tsedinov OA, Badma-Goryaeva EO (2019) Development of bank marketing in conditions digital transformation. Bull Altai Acad Econ Law 2(1):170–177. Retrieved from https://s.vaael.ru/pdf/ 2019/2/308.pdf. Accessed 16 Dec 2022
Digital Technology in Courts as a Tool for Smart Regulation: Opportunities and Risks Marina Yu. Kozlova
and Marina L. Davydova
legal proceedings will maximize the benefits of this process for the successful development of society.
Abstract
The research aims to identify the opportunities and risks of the digitalization of courts as a means of smart regulation. The research applies the methods of description and interpretation, theoretical methods of formal and dialectical logic, and predictive methods. The research identifies the various tools of digitalization of judicial activity and their functions. The authors pay particular attention to the opportunities and risks of applying artificial intelligence in justice. Digitalization is seen as a means of smart regulation, a concept that offers a wide range of tools for public administration. Digitalization has the potential to improve the quality of judicial proceedings. However, it also brings significant risks that must be considered. Thus, online justice increases the accessibility and transparency of judicial proceedings. However, the remote form of interaction is dangerous due to the loss of the emotional and non-verbal components of communication, which makes it difficult to understand in situations where trust and empathy are important. Artificial intelligence automates the process of case review and decision-making, which allows for uniformity in judicial practice. Nevertheless, its application excludes free judicial discretion and reproduces the errors and biases of existing jurisprudence. Alternative ways of resolving disputes online, such as smart contract dispute platforms, can be seen as “surrogate” regulators, reducing the burden on the state court system. Simultaneously, alternative dispute resolution methods have a limited scope of application and are unlikely to be able to compete seriously with state justice even in the most distant future. Only a comprehensive understanding of all benefits and risks associated with various forms of digitalization of M. Yu. Kozlova (&) M. L. Davydova Volgograd State University, Volgograd, Russia e-mail: [email protected] M. L. Davydova e-mail: [email protected]
Keywords
Smart regulation Digital legal proceedings Smart court Artificial intelligence Alternative ways of dispute resolution JEL Code
K41
1
Introduction
Improving the efficiency of legal regulation is one of the significant priorities of current law-making policy. Popular in foreign law-making practice, the concept of smart regulation aims to understand this problem, particularly to develop tools to achieve the most significant regulatory effect with the least cost—material, organizational, time, etc. This approach is characterized by several specific features, including simplification of the regulatory process, increased accessibility of legal texts and procedures for ordinary users, algorithmization, and increased transparency of government decision-making. Achieving these goals is made possible by digitalization, which is a crucial element in the system of smart regulation. Digitalization changes legal activities in all sectors, including: • At the level of law-making (creation of machine-readable law); • In the law enforcement activities of executive authorities (state and municipal services); • In the contractual sphere (smart contracts); • In the routine work of every lawyer (contract designers, etc.).
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_36
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M. Yu. Kozlova and M. L. Davydova
The digitalization of legal proceedings occupies a special place on this list. In carrying out its functions, the state must ensure and protect the rights and freedoms of citizens and their associations. Justice must be fair, speedy, and effective; all legal avenues for protecting violated rights must be used. Digitalization in this area provides broad access to justice and the ability to resolve disputes without going to court, which affects the level of confidence in the judicial system and the country. Access to litigation is being simplified. The court system is becoming clearer and more transparent. Thus, the digitalization of legal proceedings is a tool for smart regulation. This research analyzes aspects of digitalization in the operation of courts, which can be seen as a tool for smart regulation. This research aims to identify the opportunities and risks of digitalizing courts as a means of smart regulation. The research objectives are to establish the advantages and disadvantages of digitalizing legal proceedings and the alternative dispute resolution process. The authors consider the research assumption that digitalization is a convenient and effective tool for smart regulation as a research hypothesis.
2
Materials and Method
Manny countries apply the concept of smart regulation, which becomes even more relevant in an era of great challenges. Issues related to smart regulation and the choice of specific tools to solve certain problems are discussed by Russian (Davydova 2020, 2022) and foreign scholars (Gunningham and Sinclair 2017). The achievements of behavioral sciences are applied in public administration (Sunstein 2014). Digitalizing certain areas of activity and various procedures can act as a means of smart regulation. Digitalizing legal proceedings and arbitration is widely used and is the subject of discussion and analysis (Kolokolov 2021; Ortolani 2019; Papagianneas 2022; Shi et al. 2021). The research uses methods of description and interpretation, theoretical methods of formal and dialectical logic, and the predictive method. The authors examine practices of digitalization of courts, analytical materials, and opinions of academic researchers (Supreme Court of the Russian Federation 2021; Lawyer’s Newspaper 2022; UNCITRAL 2017; Zasemkova 2020).
3
Results
Changes in the law due to digitalization are reflected in all areas of professional legal activity. The enormity of the ongoing processes sometimes leads to speculation about the possible extinction of the profession of lawyer, whose
functions will eventually be taken over by the computer (Ivanov 2017). However, without looking into the distant future, it is safe to say that the importance of lawyers, in general, is not reduced in the short term, although many areas of their activities are significantly changing. Digitalization primarily makes information more accessible and easier to work with. We are talking about regulatory and law enforcement acts, as well as legally significant facts fixed in various registries and databases. The difficulty lies not in the search for information but in choosing the right information from the vast array of data. The process of creating legal information is also being simplified: new opportunities for drafting legal documents appear, and the workflow is automated. Many procedures of law-making, law enforcement, and contractual activities are transformed under the influence of digital technology. These processes also affect judicial activity, leading to its evolution. In a sense, judicial activity is the core of the entire legal system. Therefore, it is the most important area of digital technology application. Various kinds of information technology are successfully used in the activities of state and arbitration courts, in alternative dispute resolution. The terms used to describe these processes (e.g., online justice, e-justice, smart court, algorithmic legal proceedings, etc.) cover a range of phenomena related to technologies for organizing and conducting the judicial process. The scientific literature proposes dividing such technologies into three groups. The first group includes assistive technologies that can be used to inform, support, and advise people involved in legal proceedings (e.g., posting information about the movement of a case on the Internet and remote participation in the process). The second group includes a substitute technology that can perform certain functions instead of people (e.g., online case registration and distribution of cases among judges). The third group includes breakthrough technologies that change how judges and lawyers work (using AI in adjudication) (Shi et al. 2021). The first group of technologies has now become the general rule for most countries. For example, the Supreme Court of the Russian Federation uses the concept of online justice, by which it means the remote implementation by the court or one or all participants in the judicial process of all or certain procedural actions stipulated by law through the use of information technology in the activities of the courts. Online justice includes the following: • Remote access to the court in electronic format; • Remote receipt of information about legal proceedings (court notices); • Remote participation in court hearings; • Remote access to case files, receipt of judicial acts, and their copies in electronic form;
Digital Technology in Courts as a Tool for Smart Regulation …
• Remote participation in events, including international (Supreme Court of the Russian Federation 2021). The second, deeper level of digitalization of legal proceedings may involve the use of technologies such as facial recognition to identify participants in the process, mobile applications to go to court and participate in trials, auto-notification systems for lawyers about the need to file court documents within the established deadlines, blockchain to store evidence, and artificial intelligence (AI). Development of virtual courtrooms and hologram technology is underway (Tech Wire Asia 2019). The third group of technologies involves the use of AI in reviewing cases. AI is a technology that makes it possible to imitate the cognitive functions of a human. For example, China has launched a “Smart Court” system, which is being developed in the process of judicial reform, the course for which was outlined in 2014. The reform calls for an online ecosystem where most tasks are automated, and judges are assisted by technology to make accurate, consistent, and transparent decisions. The reform aims to increase efficiency, consistency, transparency, oversight, and fairness in the judicial system. The reform should restore public confidence and credibility to the Chinese legal and governing system. As a result, digital court archives and case databases have been created to train smart systems and provide uniform law enforcement standards for resolving similar cases. The use of AI is expected to increase the number of cases handled by a single judge, which will increase the efficiency of judicial proceedings (Papagianneas 2022, pp. 329–330). The most debated issue related to the digitalization of legal proceedings is not the merits but the dangers and risks of such a process. For example, the UN report draws attention to the following problems. The first problem is the problem of accessibility of digital services in the broadest sense. Thus, the use of online justice requires digital literacy. For most users, procedures are simplified. However, some individuals have no sufficient experience in using digital devices due to age, disability, or economic reasons. Automation is geared toward the average user, which can limit the options for individuals who do not meet average standards. Therefore, digital services must involve investments in infrastructure, making it cheaper to use the Internet and preserving analog processes. Another problem is the problem of the quality of digital legal proceedings. Digital legal proceedings involve efficient and simple services, access to quick resolution of legal disputes, and reduced time or fewer court visits. However, the efficiency of justice does not always mean its quality. An efficient system that reduces costs to the user may make unenforceable decisions or be unable to protect violated
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rights. In this case, we can hardly talk about improving the system (UNDP 2022). Secondary sources also note such problems as the inertia of those responsible for implementation, the existence of complex cases of application of the law when a legal decision may be unfair, the lack of material, technical, and legislative base, the lack of qualified personnel, and the problem of unauthorized access and malicious use of data stored in the system of electronic justice (Kolokolov 2021, pp. 205–208). Of certain relevance is the issue of training AI from data that includes biases and inequalities, which will be reproduced in the future. Such biases are difficult to identify because the new system seems neutral and devoid of human discretion. Scholars also discuss the use of AI in justice. Attention is drawn to the difficulty of distinguishing decision-making responsibility between the judge and the AI. Judges may rely too much on the algorithm’s conclusion, contributing to an incorrect decision (Papagianneas 2022, pp. 338–339). It has been suggested that AI cannot replace the judge because the judge evaluates the interaction of legal norms and also considers economic or ethical efficiency. There is also a cultural component (Kommersant 2017). It is hardly necessary to exaggerate the problem’s magnitude. It is important to note that judicial discretion is not required in all court decisions. Moreover, most judicial rulings, though always a consequence of the mental element of thought, comparison, and weighing, do not include judicial discretion. These are easy cases and cases of medium difficulty. Only in exceptionally difficult cases does the judge encounter a mental state of thought and weighing but also judicial discretion (Barak 1999). Nevertheless, even the minimum number of such cases requires full legal and technical guarantees of quality justice. One of such guarantees may be the development of basic principles under which it is possible to use AI. Thus, the European Commission developed the following principles: the principle of respect for fundamental human rights, the principle of non-discrimination, the principle of quality and safety, the principle of transparency, impartiality, and fairness, and the principle of “user control” (Council of Europe 2019). Smart regulation involves extensive use of self-regulatory processes. With regard to the resolution of legal conflicts, it should be noted that dispute resolution is possible not only through recourse to state courts but also through arbitration courts or alternative means of dispute resolution. These methods are also characterized by digitalization, which helps the parties to resolve the conflict by affordable means without high monetary and time costs. Simultaneously, these methods, as well as the justice system, are designed to
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ensure and protect the rights of subjects of turnover without creating a burden on the state courts. Alternative methods of dispute resolution through the use of online proceedings are widespread (Online dispute resolution [ODR]). As noted in the UNCITRAL Technical Notes on Online Dispute Resolution, such a mechanism facilitates “…the parties in resolving a dispute in a simple, expeditious, flexible, and secure manner without the need to be physically present at any meeting or hearing” (UNCITRAL 2017). Blockchain technology can be used as a platform for alternative dispute resolution. Several platforms can be classified as a decentralized quasi-judicial system (Zasemkova 2020). Smart contracts are “self-executing,” which does not mean they are completely dispute-free. Additionally, the basis of contract law is composed of evaluative concepts such as good faith, reasonableness, and fairness, which cannot be programmed, which can lead to conflict between parties to a contract. Therefore, it is likely that blockchain technology will lead to self-sufficient private litigation systems in which awards can be enforced without relying on the support of state courts (Ortolani 2019). An example of this is the dispute resolution procedure used by the Aragon system. Aragon Network (Aragon) is a decentralized autonomous organization (DAO) that aims to act as a “digital jurisdiction” and enable organizations, entrepreneurs, and investors to do business without legal ties to a specific state. It was founded in 2016 using blockchain technology. A digital jurisdiction is governed by stakeholders who can vote to create or change the laws included in the network’s “constitution” (Messari n.d.). As a legal entity, the non-profit organization is registered in Switzerland. Aragon establishes the procedure for resolving disputes between participants. To initiate litigation, the person initiates the process and pays a deposit (in the form of tokens), which is blocked for the duration of the arbitration process and returned if the claim is satisfied. If one loses, the pledge is transferred to the system reserve. Five randomly selected volunteer judges are appointed. They review the basic rules of Aragon Network’s jurisdiction, any applicable rules for the particular entity, and the materials provided by the parties involved in the case. There is a seven-day period for the submission of evidence. During this period, the originator of the dispute may also decide to close the presentation of evidence at any time. The decision is made by a vote of the judges. The applicant may disagree with the decision. In this case, the applicant makes a larger deposit, and the case goes to the next level, in which all judges of the network participate and the “prediction market” is used. The judges review the case file and vote on their decision. In doing so, the judges try to predict what the majority decision will be (Aragon Court n.d).
M. Yu. Kozlova and M. L. Davydova
If the complainant does not agree with this decision, then the case goes to the Supreme Court of the Aragon Network jurisdiction. It features the top nine judges with the highest ratings in resolving cases. In this instance, the case is heard in the same way as in the lower courts, but the decision is final. In this way, the Aragon Network jurisdiction provides the tools needed to address all the issues that are not accounted for in the smart contract code (Aragon Court n.d). Some researchers believe that with the advent of blockchain technology, there is a new legal system of on-chain law, the source of which is the open-source code of blockchain networks (e.g., Ethereum, NEAR, or Cardano). Thanks to smart contracts and the principles of decentralized algorithms, the online law system is autonomous and self-regulating (Dubnevych 2023).
4
Conclusion
Various manifestations of digitalization in the justice sector can be considered as tools for smart regulation. Each of them has significant potential to improve the quality of judicial activity, although they are associated with certain risks. 1. Online justice is designed to increase the accessibility and transparency of court proceedings by enabling remote participation. While significantly expanding access to justice and reducing the economic and time costs of participants in the process, the distant form of interaction is fraught with the loss of the emotional and non-verbal component of communication, which makes it difficult to understand in situations where trust and empathy are important. 2. AI technologies automate the very process of case review and decision-making. This reduces subjectivity, avoids errors associated with incomplete information processing, and ensures uniformity in judicial practice. However, in this case, human communication definitively withdraws from the judicial process, including the free discretion inherent only in human beings. Simultaneously, we still do not get a guarantee of perfect judicial decisions because the algorithm, trained on an array of existing jurisprudence, absorbs its flaws and biases. 3. Alternative ways of resolving disputes online, such as smart contract dispute platforms, facilitate the resolution of disputes without recourse to the justice system. This corresponds to the idea of decentralization of legal regulation, the involvement of the so-called surrogate regulators, and creates variability in the choice of ways to protect one’s rights. The advantages of this form are increased participants’ confidence due to reliance on authority rather than coercion, as well as saving the resources of the state judicial system. However,
Digital Technology in Courts as a Tool for Smart Regulation …
alternative methods of dispute resolution have a limited scope and are unlikely to be able to compete seriously with state justice even in the most distant future. Only a comprehensive understanding of all the benefits and risks associated with various forms of digitalization of justice will maximize the benefits of this process for the successful development of society. Acknowledgements The study is financially supported by the Russian Science Foundation, Project No. 21-18-00484, https://rscf.ru/project/ 21-18-00484/.
References Aragon Court (n.d.) Decentralized dispute resolution protocol. Retrieved from https://handbook.aragon.org/aragon-solutions/ aragon-court. Accessed 24 Nov 2022 Barak A (1999) Judicial discretion (transl. from English). Norma, Moscow (original work published 1989) Council of Europe (2019) European ethical Charter on the use of artificial intelligence in judicial systems and their environment (adopted at the 31st plenary meeting of the CEPEJ, Strasbourg, 3–4 Dec 2018. Retrieved from https://www.coe.int/en/web/cepej/justiceof-the-future-predictive-justice-and-artificial-intelligence. Accessed 3 Nov 2022 Davydova ML (2020) Smart regulation as the basis for improving modern law-making. J Russ Law 11:14–29. https://doi.org/10. 12737/jrl.2020.130 Davydova ML (2022) New technologies and societal impact on legislation: moving towards transparency in law-making. In: Ferraro F, Zorzetto S (eds) Exploring the province of legislation. Springer, Cham, pp 155–177. https://doi.org/10.1007/978-3-03087262-5_9 Dubnevych N (2023) On-chain law series part 1: why blockchain networks are new legal systems. Legal Nodes. Retrieved from https://legalnodes.com/article/why-blockchain-networks-are-newlegal-systems. Accessed 10 Feb 2023 Gunningham N, Sinclair D (2017) Smart regulation. In: Drahos P (ed) Regulatory theory: foundations and applications. The Australian National University, Canberra, pp 133–148. https://doi.org/ 10.22459/RT.02.2017.08 Ivanov A (2017) On the depth of mechanization of law. Zakon.ru. Retrieved from https://zakon.ru/blog/2017/12/6/o_glubine_ mashinizacii_prava. Accessed 3 Dec 2022
211 Kolokolov NA (2021) Artificial intelligence in justice—the future is inevitable. Bull Mosc Univ Minist Intern Aff Russ 3:205–208 Kommersant (2017) Judge of the constitutional court of Russia doubts the ability of robots to judge people. Retrieved from https://www. kommersant.ru/doc/3297769. Accessed 3 Dec 2022 Lawyer’s Newspaper (2022) Will robots replace lawyers? Retrieved from https://www.advgazeta.ru/diskussii/zamenyat-li-advokatovroboty/. Accessed 15 Oct 2022 Messari (n.d.) Aragon network overview. Retrieved from https:// messari.io/asset/aragon-network/profile. Accessed 12 Jan 2023 Ortolani P (2019) The impact of blockchain technologies and smart contracts on dispute resolution: arbitration and court litigation at the crossroads. Unif Law Rev 24(2):430–448. https://doi.org/10.1093/ ulr/unz017 Papagianneas S (2022) Towards smarter and fairer justice? A review of the Chinese scholarship on building smart courts and automating justice. J Curr Chin Aff 51(2):327–347. https://doi.org/10.1177/ 186810262110214 Shi C, Sourdin T, Li B (2021) The smart court—a new pathway to justice in China? Int J Court Admin 12(1):4. https://doi.org/10. 36745/ijca.367 Sunstein CR (2014) Nudging: a very short guide. Discussion Paper No. 799. Harvard Law School, Cambridge. Retrieved from http:// www.law.harvard.edu/programs/olin_center/papers/pdf/Sunstein_ 799.pdf. Accessed 6 Sept 2022 Supreme Court of the Russian Federation (2021) The concept of informatization of the Supreme Court of the Russian Federation (approved by order of the Chairman of the Supreme Court of the Russian Federation dated 15 Feb 2021 No. 9-P). Moscow, Russia. Retrieved from http://www.vsrf.ru/files/29675/. Accessed 23 Nov 2022 Tech Wire Asia (2019) AI and holograms to soon make a debut in Malaysian courts. Retrieved from https://techwireasia.com/2019/01/ ai-and-holograms-to-soon-make-a-debut-in-malaysian-courts/. Accessed 10 Dec 2022 UNCITRAL (2017) UNCITRAL technical notes on online dispute resolution. United Nations, New York. Retrieved from https:// uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/ ru/17-00384_r_ebook_technical_notes_on_odr.pdf. Accessed 23 Nov 2022 UNDP (2022) e-Justice digital transformation to close the justice gap. United Nations, New York. Retrieved from https://www.undp. org/sites/g/files/zskgke326/files/2022-06/E%20justice-Report%2005. pdf. Accessed 5 Jan 2023 Zasemkova OF (2020) Methods of resolving disputes arising from smart contracts. Lex Russ 73(4):9–20. https://doi.org/10.17803/ 1729-5920.2020.161.4.009-020
Current Trends in the Development of the Financial and Credit System in the Context of Digitalization Ainura K. Askarova , Umut M. Abdyldaeva , Elnura I. Murzalieva , Darygul Sh. Zholboldueva , and Gulchekhra B. Abdyrakhmanova
Abstract
Keywords
The research discusses issues regarding the current state of the financial and credit system of Kyrgyzstan, as well as digitalization trends in this area, which determines the goals, directions, and principles of further development. Digitalization carries characteristic difficulties due to the different levels of development of the structural elements of the financial and credit system. Practical analysis of the financial and credit system shows the strengths and weaknesses of this system, its structural elements, possible threats, and further promising development, considering digitalization. The research aims to reveal the features of the development of the financial and credit system of Kyrgyzstan and study its further development in the context of digitalization. During the research, the authors applied analysis and statistical data processing. The main results of the research include the finding that the financial and credit system is the basis of the entire economy and a promising development direction, which must continuously introduce innovations, meeting the contemporary requirements of digitalization and the new realities of the global financial and credit system. The research value is that it, for the first time, attempts to generalize the development of the financial and credit system. This work can be used as a methodological and educational guide for further research of national financial and credit system and the development of regulatory documents in the field of the development of financial and credit system.
Financial system Credit system Digitalization Innovation
A. K. Askarova (&) D. Sh. Zholboldueva G. B. Abdyrakhmanova Jalal-Abad State University named after B. Osmonov, Jalal-Abad, Kyrgyzstan e-mail: [email protected] U. M. Abdyldaeva E. I. Murzalieva Kyrgyz State University named after I. Razzakov, Bishkek, Kyrgyzstan e-mail: [email protected]
Finance
JEL Codes
E50
1
G21
Introduction
In the formation and development of financial, credit, and economic relations, one of the most important roles is played by the credit system, which is a combination of various types of commercial banks, financial and credit institutions, individual non-banking financial and economic organizations, as well as their interaction. The stability of the functioning of the financial and credit system is the basis of the overall financial and economic security of the country. Insurance is one of the instruments that contribute to ensuring such stability. Simultaneously, the need for insurance protection is experienced not only by financial institutions but also by business entities and citizens involved in the financial and credit sphere. The harmonization and digitalization of the systems of state financial regulation of the financial and credit sphere in the economic space may face various difficulties because the national financial and credit markets of different countries differ significantly in their level of development and the basic conditions for the implementation of financial and credit activities.
2
Materials and Methods
The presented research is based on analysis (analysis of scientific and practical publications in the field of scientific issues) and economic and statistical methods involved in
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_37
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analyzing the subject area. The research also uses a comparative legal approach to studying the development of the financial and credit system in the context of digitalization. According to Article 2 of the Treaty on the EAEU, harmonization of legislation in the field of the financial and credit system is defined as “convergence of the legislation of the member states, aimed at establishing similar (comparable) regulatory legal regulation in certain areas.” By 2025, it is planned to complete the harmonization of the national legislations of the EAEU countries in the financial and credit sphere, which will result in a decision to create a supranational structure to regulate the financial and credit market and define its functions and powers (Council of the Eurasian Economic Commission 2020). In all EAEU countries, there are common features in the regulatory systems of the national financial and credit system. These features include the following: • legal acts of the financial and credit system; • developed and adopted strategic documents on the development of the financial and credit system in the medium and long terms; • relevant bodies are functioning; • professional personnel required for work in the state regulatory body and credit, financial, and insurance organizations are being trained; • professional standards of activity in financial and credit organizations have been developed; • professional activity standards have been adopted for specialties in providing services in the financial and credit sphere. Simultaneously, the different levels of development of the financial and credit system of the EAEU countries and
Table 1 SWOT analysis of the state and development of the financial and credit system for digitalization in Armenia
some other external and internal factors make it difficult to harmonize the systems of financial regulation of the financial and credit system of the participants in this integration association (Ismailova et al. 2016; Mazhurin 2016). Abdyldaeva and coauthors identified the following generalizing problems of digitalization and harmonization of the functioning of financial and credit system within the EAEU framework (Abdyldaeva and Mamyrbekov 2021; Abdyldaeva et al. 2022b): • the lack of identical forms and methods of supervision of the financial stability of banking institutions, nonfinancial institutions, and insurers; • the lack of uniformity in the assessment of assets, capital, and liabilities of organizations of the financial and credit system; • significant differences in the opening of organizations of the financial and credit system, regulation of their reorganization and liquidation. One of the challenges of conjugating national legislation is to find a compromise between harmonized rules and regulations, as stakeholders need to be considered. However, this circumstance is by no means an insurmountable obstacle during digitalization (Artamonova et al. 2016).
3
Results
Based on various research materials, the authors present a SWOT analysis of the financial and credit system of the EAEU countries, for example, in Armenia (Table 1).
Armenia Strengths (S)
Weaknesses (W)
1. The digitalization of the financial and credit system is developing 2. A risk-based approach to conducting state supervision of the financial and credit system is being introduced in stages
1. Some structural elements of the financial and credit system are slowly going through the stages of digitalization 2. High concentration of the insurance market in the financial system, with a low insurance culture
Opportunities (O)
Threats (real and potential) (T)
1. Further development of the risk-based approach in public financial supervision 2. The introduction of digital technologies is faster in all areas of the financial and credit system 3. Improvement of the current financial and credit legislation for the integration of markets
1. Political instability, sanctions 2. Macroeconomic risks 3. Tracking effects of the COVID-19 pandemic
Source Compiled by the authors based on (Council of the Eurasian Economic Commission 2020; Nekrasov 2013)
Current Trends in the Development of the Financial …
215
• Strengths (S):
2. Insufficient administrative measures to ensure the proper implementation of legal requirements regarding the digitalization of the financial and credit system.
Belarus
Russia
1. Increasing confidence in public policy. 2. Growth of confidence in the financial and credit system.
1. The lack of sufficient transparency in the financial and credit system. 2. Artificial restriction of competition of organizations of the financial and credit system.
Let us look at other countries:
Kazakhstan 1. Increasing demand for digital services in the financial and credit system. 2. Free competition is developing in the financial and credit system. Kyrgyzstan 1. There is a potential demand for the services of the financial and credit system. 2. Further improvement of the current financial and credit legislation.
• Opportunities (O): Belarus 1. Structural reforms are being carried out in the financial and credit system. 2. There is a gradual liberalization and digitalization of the financial and credit system. Kazakhstan
Russia
1. Further improvement of the current financial and credit legislation. 2. Further development of the competitive environment.
1. Growth in the number of service consumers. 2. Increasing the degree of reliability of organizations of the financial and credit system.
Kyrgyzstan
• Weaknesses (W): Belarus
1. Improvement of the current legislation in the financial and credit system. 2. Strengthening administrative measures to ensure the proper implementation of legal requirements.
1. The tax burden is quite high in the financial and credit system. 2. Presence of excessive regulatory barriers in the financial and credit system.
Russia
Kazakhstan
• Threats (real and potential) (T):
1. Digitalization in the financial and credit system is developing slowly. 2. The concentration of organizations of the financial and credit system occurs mainly in large cities; the regional network of branches is poorly developed.
Belarus
Kyrgyzstan 1. Low level of solvency of the insurance culture of the population and business entities, required for the proper development of financial and credit system services.
1. Reforming the digitalization control system. 2. Introduction of innovations in the financial and credit system.
1. Increasing inflation. 2. A fairly high level of monopolization of organizations in the financial and credit system. 3. Macroeconomic risks. 4. Political instability. Kazakhstan 1. Reduced free competition in the financial and credit system.
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2. Continued distrust of business and the population in the services of the financial and credit system. 3. Macroeconomic risks. Kyrgyzstan 1. Macroeconomic risks. 2. Political instability. Russia 1. Lack of control and supervision over intermediaries in the financial and credit system. 2. Continued economic sanctions by developed countries. 3. Macroeconomic risks and political situation. Action plan for the harmonization of legislation and digitalization of the EAEU countries in the financial and credit system for 2020–2025 states the following: • drawing up a list of basic concepts related to the financial and credit system, their definitions used in the participating countries, and their harmonization, considering the specifics of the legislation of the participating countries and international approaches (Abdyldaeva et al. 2022a); • developing a glossary containing harmonized definitions of concepts; • determination of a harmonized list of organizational and legal forms of professional subjects of the financial and credit system; • harmonization and digitalization of the procedure and conditions for the formation and licensing of participants in the financial and credit system; • harmonization and digitalization of requirements for the activities of participants in the financial and credit system, including professional; • harmonization and digitalization of the conditions and procedures for the liquidation of professional subjects of the financial and credit system; • harmonization and digitalization of the requirements for the protection of consumers of services of the financial and credit system; • harmonization and digitalization insurance in the financial and credit system (Abdyldaeva et al. 2020).
4
Discussion
To create an effective regulatory and legal framework for the financial and credit sphere of the financial space of the EAEU, it is necessary to find a “golden section” between the national and higher levels. Thus, general mechanisms at the
supranational level should be covered, including issues of registration of professional market entities (liquidation, insolvency, etc.), concessions, deprivation of licenses, investment sectors, control over the viability of companies in the financial and credit sector, and top management opportunities (Abdyldaeva and Mamyrbekov 2021). By-laws may include such specific details as the methodology for calculating the solvency of a subject of the financial and credit system, risk assessment of the financial group or its individual participants, the organization policy of the group’s management company, conditions for investment activities, etc. Simultaneously, a citizen must consider the Pan-Eurasian and domestic economic situation, which will limit and reduce the impact of negative factors associated with ongoing global crises. Harmonization and digitalization of national mechanisms for financial regulation of monetary systems in the EAEU countries and the creation of a unified monetary system are the decisive factors that ensure currency stability in the Eurasian space. As some researchers rightly point out, such an interpretation of the policy is quite possible, considering the exchange rate regulated by the agreement on the EAEU (Abdyldaeva and Mamyrbekov 2021; Pishchik and Alekseev 2017).
5
Conclusion
The direction and content of the policy harmonization process are influenced by various stages of economic development of the EAEU countries, geopolitics, industry specifics, and legal factors. For state fiscal regulation, the integration of the monetary policy of the EAEU countries is important (Askarova et al. 2022). Contemporary digital infrastructure creates new platforms for interaction between the government, the private sector, and the population, improves the quality of public services, expands social integration, creates new employment opportunities, and promotes the development of digital business and entrepreneurship (Askarova et al. 2021). The problems of harmonizing and digitalizing financial and credit system in the Eurasian space can only be solved based on the joint development and adoption of interstate legal codes that regulate the political aspects of finance and credit in the Eurasian space (Krasota et al. 2020). With the continuation of the process of harmonization of the systems of state financial regulation, the creation of not a single supranational body but a multitude of supranational institutional structures for each industry, including insurance activities, will be done gradually. Monetary and fiscal stabilization is necessary for the relevant sectors of the EAEU economy and an increase in the efficiency of the financial and credit system.
Current Trends in the Development of the Financial …
References Abdyldaeva UM, Mamyrbekov AA (2021) Problems of digitalization of management of the total capital of construction organizations. Bull Kyrgyz Econ Univ Named Ryskulbekov 4(53):65–67 Abdyldaeva UM, Murzalieva EI, Askarova AK (2020) Insurance in the banking system of the Kyrgyz Republic. Rev Esp 41(27):151–158. Retrieved from https://www.revistaespacios.com/a20v41n27/a20 v41n27p14.pdf. Accessed 17 Mar 2023 Abdyldaeva UM, Iskenderova AZ, Abdykadyrova A (2022a) The role of financial instruments in the financial system. Top Issues Mod Econ 1:34–38 Abdyldaeva UM, Murzaliev EI, Askarova AK (2022b) Transformation of commercial banks and management of their sustainable development. Webology 19(1):2235–2244. https://doi.org/10.14704/ WEB/V19I1/WEB19152 Artamonova GK, Rybkina MV, Mutalieva LS, Ivanov KM (2016) Harmonization of national laws as one of the ways to approximation of laws regulating similar social relations. Bull St Petersburg Univ State Fire Serv Minist Emerg Situat Russ 3:96–101 Askarova AK, Orozova ChS, Abdeshimova GA (2021) Features of the digitalization process in the Kyrgyz Republic. Bull Jalalabad State Univ 2:113–120 Askarova AK, Zholboldueva DS, Murzalieva EI (2022) Assessment of the implementation of projects for the digitalization of the economy of the Kyrgyz Republic. In: Shuvalov VP, Karacharova MP (eds) Infocommunication technologies: current issues of the digital
217 economy: collection of scientific papers of the II international scientific and practical conference. Ural Technical Institute of Communications and Informatics Branch of the SibSUTIS, Ekaterinburg, Russia, pp 192–195 Council of the Eurasian Economic Commission (2020) Order “On the plan of measures to harmonize the legislation of the member states of the Eurasian Economic Union”, vol 27. Legal Portal of the Eurasian Economic Union, Minsk, Belarus, 23 Nov 2020. Retrieved from https://docs.eaeunion.org/docs/ru-ru/01428184/err_21122020_27. Accessed 10 Apr 2023 Ismailova RA, Akhmetova AK, Yesmagulova ND (2016) Problems of stabilization and harmonization of the insurance market within the EAEU. Bull Omsk Univ Ser Econ 4:18–29 Krasota T, Bazhenov R, Abdyldaeva U, Bedrina S, Mironova I (2020) Development of the digital economy in the context of sustainable competitive advantage. E3S Web Conf 208:03042. https://doi.org/ 10.1051/e3sconf/202020803042 Mazhurin PV (2016) The comparative legal analysis of the scope of the financial market regulation in the European Union and the Eurasian Economic Union. Politics State Law 6. Retrieved from http:// politika.snauka.ru/2016/06/3998. Accessed 10 Apr 2023 Nekrasov AI (2013) Fundamentals of legal regulation of the European Union policy in the field of financial services. Int Law Int Organ 2:210–219 Pishchik VY, Alekseev PV (2017) Actual formation issues of the single financial market of the EAEU member states. Financ J 5(39): 102–111
Institutional Framework for Responsible Innovation in Society, Business, and the Country: A Contribution to Reducing the Ecological Footprint of the Economy
Analysis of the Methods of Intellectual Property Management in Innovation Ecosystems Nataliya A. Kashevarova
Abstract
1
The relevance of the research is due to the great importance of the task of intellectual property management for high-tech companies that participate in innovation ecosystems because the competent choice of methods of intellectual property management is one of the key factors in the effectiveness of innovation and competitive strategy. The research aims to review methods for managing intellectual property in today’s innovation ecosystems. The author applies descriptive and analytical approaches to the literature review to achieve the research goal. The analysis results show that in the context of business transition to innovative sustainable development, the problem of creation, transfer, and implementation of innovative sustainable technologies acquires special importance and is enriched with new issues. The success of the innovation ecosystem depends on R&D, knowledge capital, and production materials, which make the transfer of knowledge and technology of fundamental importance. Simultaneously, innovation ecosystems are becoming increasingly open, which leads to new methods of intellectual property management and their combinations. Keywords
Intellectual property Patents ecosystem Licensing
Innovation
Innovation
JEL Codes
O32
O34
O36
N. A. Kashevarova (&) Bauman Moscow State Technical University, Moscow, Russia e-mail: [email protected]
Introduction
Advanced innovation ecosystems are becoming increasingly complex, involving many economic actors (Drogovoz et al. 2021; Fedorova et al. 2021a). The mechanisms for forming ecosystems are diverse and depend on many factors, among which intellectual property (IP) is particularly important (Gorlacheva et al. 2019). IP (including patents, copyrights, and trademarks) is an important institutional component of the system of creating and disseminating innovative solutions. The IP management system directly affects the value-creation processes that turn intellectual capital into final products. Patent documents are openly published and accumulated in patent office databases, making it possible to identify participants in the innovation ecosystem and open up the possibility of expanding collaborative networks. Thus, this research aims to review the methods used in the world practice of intellectual property management in innovation ecosystems.
2
Methods
To achieve the research goal, the author applies descriptive and analytical approaches to the literature review. The author developed a strategy to search for scientific publications in the Scopus database. The search was based on the titles and abstracts of the articles and keywords “intellectual property management” and “innovation ecosystem.” The search was then conducted on documents that contained the terms “open innovation,” “technology transfer,” “licensing,” “patent,” “patent pledge,” and “standard essential patent” in their titles, abstracts, or keywords. So that the information is up-to-date, the author chose a period from 2012 to 2022. After removing duplicate or irrelevant materials, the author received 41 articles focusing on IP strategies in open innovation ecosystems, which served as the basis for this review. The results of the case study are shown below.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_38
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Results
Throughout the twentieth century, R&D was carried out exclusively by internal corporate departments. Companies sought to protect their developments from imitation, often abandoning patenting and using a trade secret regime. In the twenty-first century, this paradigm, called closed innovation, has stopped dominating largely due to the increased mobility of creative employees and the increased availability of venture capital (Chesbrough 2003). Chesbrough suggested calling the new paradigm open innovation. In the digital economy, innovation processes are no longer linear; innovation becomes the result of the joint creativity of consumers and producers, and business models go beyond the organization’s boundaries and form an innovative ecosystem (Bogers et al. 2018). Granstrand and Holgersson define it as “an evolving set of actors, activities, and artifacts, as well as institutions and relationships, including complementary and substitutive relationships that are important to the innovative activities of an actor or group of actors” (Granstrand and Holgersson 2020). They cite mobile telecommunications and the Apple ecosystem as examples and note the important role of intellectual property strategies in shaping these ecosystems. According to Trabucchi et al., the following strategic goals that drive companies to open innovation stand out (Trabucchi et al. 2021): 1. Identifying new directions for innovation through external knowledge. 2. Improving market position by taking a fresh look at market opportunities and strengthening networks and connections with partners. 3. Improving the innovation process. Open innovation is associated with the risks of imitation, blocking by competitors, and the need to maintain a strong negotiating position (Holgersson et al. 2018). In connection with these risks, intellectual property management methods become particularly important. Nowadays, there is a range of successful models of innovation ecosystems, from traditional closed structures that reject any form of cooperation in innovation to systems that provide for the free flow of ideas and product solutions. These models are based on the mechanisms of disseminating intellectual property. The intellectual property guarantees the security of knowledge sharing and is a mechanism for demonstrating the innovative potential to future partners and new employees (Hsu and Ziedonis 2013; Laursen and Salter 2014). Patents serve as a tool for codifying new knowledge and signal a company’s innovative potential, which can expand opportunities by attracting new business partners and creative employees (Hoenen et al. 2014; Pisano and Teece
2007). Empirical research shows that active patenting of new developments promotes the development of young companies in the field of open innovation and expands the range of technological markets available to the company (Holgersson and Granstrand 2021; Zobel et al. 2016). Hernández-Chea et al. define an IP strategy as a set of actions and guiding processes for making decisions regarding the research, creation, acquisition, protection, use, and periodic evaluation of all types of IP, as well as maximizing the value of an organization’s developments (Hernández-Chea et al. 2020). Somaya identifies three areas of IP-related management decision-making in the context of which an enterprise shapes its patent strategy: acquisition and preservation of exclusive rights, licensing, and protection (Somaya 2012). The complex configuration of innovation ecosystems requires that the practices of IP management include the protection and legal provision of own technology to partners and the provision of access to other companies’ technology. Argote et al. define the process of technology management in a company as managing the creation and use of external and internal technological knowledge (Argote et al. 2003). Since IP is directly related to technological knowledge, it can also be seen as internal and external. This also corresponds to the classification of innovation in the open innovation paradigm. Several papers consider models of maturity of internal IS management. Kjaer identifies four levels of maturity in the use of IP in the company: awareness of IP, protection of IP, management of IP, and operation of IP (Kjaer 2009). Kern and van Reekum proposed a typology of maturity levels and corresponding functions of patent management (Kern and Reekum 2012). The model of the maturity of patent management proposed by Moehrle et al. contains five maturity levels for each of the seven aspects (Moehrle et al. 2017): patent portfolio, patent creation, patent intelligence, patent exploitation, patent enforcement, organization, and culture. Licensing is the main mechanism of IP commercialization. It means activities related to the sharing of rights to use IP, including in the context of setting industry standards, forming partnerships, and open innovation. Ehrnsperger and Tietze propose the following taxonomy of patent licensing strategies based on the parameters of license availability and royalties (Ehrnsperger and Tietze 2019): 1. 2. 3. 4. 5. 6. 7. 8.
Exclusive, high-priced licenses. Exclusive, standard-priced licenses. Exclusive, low-priced licenses. Cluster-specific, high-priced licenses. Cluster-specific, standard-priced licenses. Cluster-specific, low-priced licenses. Non-exclusive, high-priced licenses. Non-exclusive, standard-priced licenses.
Analysis of the Methods of Intellectual Property Management …
Eppinger et al. propose a classification of IP strategy approaches, according to which IP sharing modes can be categorized based on the openness of access and concentration of rights (Tietze et al. 2017). Innovation ecosystems can form around technologies of broad application, such as artificial intelligence (AI). Innovators often seek to commercialize their developments without yet knowing their best applications (Shiboldenkov 2020; Tyulin et al. 2021) and use IP to totally limit access to the innovation, which, at this stage, can hinder its development and commercial success (Yang et al. 2022). An example of this failure is IBM’s Watson Health platform, the limited access to which did not facilitate collaboration between researchers and the accumulation of new knowledge, ultimately leading to a lack of interest among consumers. The practice of open source has long been recognized and widely used in the software industry. Studies on this topic highlight the following reasons for market participants to participate in open-source software development (Bonaccorsi and Rossi 2006; Dahlander and Magnusson 2005): 1. Economic. Companies releasing open-source software seek to maximize profits by selling additional services or to reduce R&D costs by having developers from the open-source community test the product and report bugs for free. 2. Technological. Companies get a flow of ideas from the open-source community, which helps further develop the technology. 3. Social. Open-source software development increases a company’s social and reputational capital. However, the software is protected not by patents but by copyright in most countries worldwide. Nevertheless, open-patent strategies have evolved markedly in the last decade. Additionally, the importance of mechanisms for free access to technology in medicine and pharmaceuticals was demonstrated by the COVID-19 pandemic (Tietze et al. 2022). One of the most notable examples of open access to patents is Tesla’s patent pledge, announced in 2014 when the company opened access to its patents to anyone (Wang and Peng 2020). Ehrnsperger and Tietze define a patent pledge as “a publicly announced intervention by patent-owning entities (‘pledgers’) to out-license active patents to the restricted or unrestricted public free from or bound to certain conditions for a reasonable or no monetary compensation using standardized written or social contracts” (Ehrnsperger and Tietze 2019). They give the following taxonomy of patent pledge, including the following categories:
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1. Restricted, priced patent pledge—the obligation that gives access to a limited number of people for a reasonable price. 2. Priced patent pledge—the obligation of the patentee to make the license available to a wide range of persons on fair, reasonable, and non-discriminatory terms. 3. Restricted patent pledge—the obligation of the patentee to provide a license for free to a limited number of persons. 4. Unrestricted patent pledge—the obligation to provide free access to patents to the general public. Although there is no direct commercial benefit, the patent pledge is not an irrational strategy. Sometimes companies explain their decisions on ethical grounds, as was the case, for example, with exclusive rights to technologies important to combat the COVID-19 pandemic (Contreras et al. 2020; Wang et al. 2022) or climate change (Reynolds et al. 2017). In most cases, however, an open-patent strategy is underpinned by long-term economic motives. Contreras provides the following classification (Contreras 2018): 1. Inducement—reducing patent barriers to encourage market participants to adopt the standard or technology platform offered by the patentee. 2. Collective action—achieving a common goal that benefits, among others, the patentee. An example of such a common goal is to counteract the “patent trolls” who make money from patent disputes. 3. Voluntary restraint—limiting the ability of the patentee to assert his exclusive rights, often in the interests of government agencies. 4. Philanthropic—solving problems significant for society, increasing the social and reputational capital of the patentee (Fedorova et al. 2021b). Contreras also notes that the mechanism for regulating patent obligations is currently poorly understood, and practical examples do not provide a universal model (Contreras 2018). Several scientific papers have investigated the impact of open-patent strategies on economic development. The work of de Rassenfosse and Palangkaraya (2021) shows that patent obligations contribute to technical progress, as evidenced by data on the citation of public patents in subsequent inventions. However, the authors note that these results do not apply to software patents. An earlier paper obtained the opposite results for green patents belonging to the Eco-Patent Commons (Hall and Helmers 2013)—the authors argue that the open patents of the community member companies are less valuable than the closed patents of the same companies.
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Some industries have technical standards and methodologies that are key to the interoperability of technology solutions and components produced by different suppliers. The patents underlying these standards are called standard essential patents (Bekkers et al. 2002). The benefits to companies from setting standards are manifold, including simplifying technology and products, building user confidence, ensuring growth, and opening new markets; because the standard is a public good, these benefits can extend to all market participants (Pohlmann et al. 2016).
4
Discussion
Some authors highlighted the use of patents by the patentee company to obtain direct or indirect economic benefits (Soranzo et al. 2016). However, the relationship between patent management and the innovation processes of the enterprise is not shown, which seems to be an omission, since the fundamental purpose of technology management is to maximize the economic return on investment in R&D (Ernst et al. 2016). In Table 1, the methods of internal IP management listed in this work are grouped according to the stages of the innovation process in which they occur and the objectives of IP management. Thus, at the stage of forming a business idea for an innovation project, it is necessary to identify the IP objects already possessed by a company that can be used in the project. It is important to assess the potential for commercialization of this IP and its ability to form a new market
Table 1 Methods of IP management at the stages of the innovation process
niche. At the stage of development and, in some cases of production, new IP objects arise as the results of R&D. Consequently, there is a need to decide on their legal protection as patents, know-how, etc. When promoting an innovative product on the market, the created IP can be used by the company as a competitive advantage, forming the consumer value of the product, or as a competitive tool to close the competitor’s access to certain markets through lawsuits. A company can commercialize its IP to generate additional income from it or create collaborations for further innovative projects. Additionally, the uses of IP include royalty-free transfer and open exchange of IP objects, such as open-source software. The IP portfolio directly affects the technological reputation of the company, which allows it to attract private and public investors.
5
Conclusion
In the context of business transition to innovative sustainable development, the problem of creation, transfer, and implementation of innovative sustainable technologies acquires special importance and is enriched by new issues. The scientific literature that investigates IP and innovation ecosystems in a complex manner recognizes the relevance of various IP assets to the system’s sustainability. The success of the innovation ecosystem depends on R&D, knowledge capital, and production materials, which makes the transfer of knowledge and technology fundamental. Ecosystems are becoming increasingly open, which is also reflected in the IP management methods that companies use.
Stage of the innovation process
Methods of IP management (Soranzo et al. 2016)
Tasks of IP management
Formation of the project concept
Attracting private or public investors; setting industry standards
Identification and selection of IP objects; assessment of IP commercialization potential
Design and production
Combining different forms of IP; creating short-term technological advantage; blocking competitors’ R&D; attracting, motivating, and rewarding researchers; ensuring future freedom to exploit, develop, and commercialize proprietary technologies; strengthening bargaining power; establishing cooperation
Creation of IP and its protection
Market promotion and sales
Protection against imitation by competitors; controlling or preventing market entry; building patent thickets; setting industry standards; selling; licensing; royalty-free transfer; preventing lawsuits; improving technological reputation
Use of IP as a competitive tool; commercialization and transfer of IP; infringement monitoring and litigation of IP
Source Compiled by the authors
Analysis of the Methods of Intellectual Property Management …
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225 Hernández-Chea R, Vimalnath P, Bocken N, Tietze F, Eppinger E (2020) Integrating intellectual property and sustainable business models: the SBM-IP canvas. Sustainability 12(21):8871. https://doi. org/10.3390/su12218871 Hoenen S, Kolympiris C, Schoenmakers W, Kalaitzandonakes N (2014) The diminishing signaling value of patents between early rounds of venture capital financing. Res Policy 43(6):956–989. https://doi.org/10.1016/j.respol.2014.01.006 Holgersson M, Granstrand O (2021) Value capture in open innovation markets: the role of patent rights for innovation appropriation. Eur J Innov Manag 25(6):320–339. https://doi.org/10.1108/EJIM-022021-0114 Holgersson M, Granstrand O, Bogers M (2018) The evolution of intellectual property strategy in innovation ecosystems: Uncovering complementary and substitute appropriability regimes. Long Range Plan 51(2):303–319. https://doi.org/10.1016/j.lrp.2017.08. 007 Hsu DH, Ziedonis RH (2013) Resources as dual sources of advantage: implications for valuing entrepreneurial-firm patents. Strateg Manag J 34(7):761–781. https://doi.org/10.1002/smj.2037 Kern S, van Reekum R (2012) The use of patents in Dutch biopharmaceutical SME: a typology for assessing strategic patent management maturity. In: Groen A, Oakey R, Van Der Sijde P, Cook G (eds) New technology-based firms in the new millennium. Emerald Group Publishing Limited, Bingley, pp 131–149. https:// doi.org/10.1108/S1876-0228(2012)0000009012 Kjaer K (2009) Supply and demand of intellectual property rights services for small and medium-sized enterprises: a gap analysis. Working paper. The Danish Patent and Trademark Office, Denmark Laursen K, Salter AJ (2014) The paradox of openness: appropriability, external search and collaboration. Res Policy 43(5):867–878. https://doi.org/10.1016/j.respol.2013.10.004 Moehrle MG, Walter L, Wustmans M (2017) Designing the 7D patent management maturity model—a capability based approach. World Patent Inf 50:27–33. https://doi.org/10.1016/j.wpi.2017.08.003 Pisano GP, Teece DJ (2007) How to capture value from innovation: shaping intellectual property and industry architecture. Calif Manage Rev 50(1):278–296. https://doi.org/10.2307/41166428 Pohlmann T, Neuhäusler P, Blind K (2016) Standard essential patents to boost financial returns. R&D Manag 46(S2):612–630. https://doi. org/10.1111/radm.12137 Reynolds JL, Contreras JL, Sarnoff JD (2017) Solar climate engineering and intellectual property: toward a research commons. Minn J Law Sci Technol 18(1):2. Retrieved from https://dspace.library.uu. nl/bitstream/handle/1874/347756/Reynolds_Contreras_and_Sarnoff_ 2017_Solar_Climate_Engineering_and_Intellectual_Property.pdf? sequence=1&isAllowed=y. Accessed 18 Aug 2022 Shiboldenkov VA (2020) Review of economic and mathematical modeling tools for the innovation diffusion process. AIP Conf Proc 2383:070002. https://doi.org/10.1063/5.0074533 Somaya D (2012) Patent strategy and management: an integrative review and research agenda. J Manag 38(4):1084–1114. https://doi. org/10.1177/0149206312444447 Soranzo B, Nosella A, Filippini R (2016) Managing firm patents: a bibliometric investigation into the state of the art. J Eng Tech Manage 42:15–30. https://doi.org/10.1016/j.jengtecman.2016.08. 002 Tietze F, Eppinger E, Sternkopf J, Vimalnath P (2017) IP strategies for sustainability. In: Proceedings of TEMSCON: 2017 IEEE technology and engineering management conference. Santa Clara, CA, pp 173–178. https://doi.org/10.1109/TEMSCON.2017.7998373 Tietze F, Vimalnath P, Aristodemou L, Molloy J (2022) Crisis-critical intellectual property: findings from the COVID-19 pandemic. IEEE Trans Eng Manage 69(5):2039–2056. https://doi.org/10.1109/TEM. 2020.2996982
226 Trabucchi D, Magistretti S, Pellizzoni E, Frattini F (2021) Framework linking open innovation strategic goals with practices. In: Fernandes G, Dooley L, O’Sullivan D, Rolstadås A (eds) Managing collaborative R&D projects. Springer, Cham, pp 121–138. https:// doi.org/10.1007/978-3-030-61605-2_7 Tyulin AE, Chursin AA, Drogovoz PA, Yudin AV (2021) Researching the processes determining the dominance of unique products in sales markets. AIP Conf Proc 2318:070013. https://doi.org/10.1063/ 5.0035790 Wang J, Peng X (2020) A study of patent open source strategies based on open innovation: the case of Tesla. Open J Soc Sci 8(7):386– 394. https://doi.org/10.4236/jss.2020.87031
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Overview of Technological Forecasting and Assessment of the Life Cycle Results of the Technological Innovation Market Vladimir A. Shiboldenkov
Abstract
Keywords
This research discusses non-expert infometric principles for evaluating quantitative multimodal indicators of technology readiness based on bibliometric and infometric approaches. The concepts and methodology of these principles are analyzed, and the adequacy from the side of availability and reliability is determined. The author offered a combined version of the optimal set of indicators for the multilateral assessment of technology from the side of technological readiness and market readiness. Emphasis is placed on the cumulative temporal characteristic of the innovation process and the relevant rules of time series research. The author describes models of the life cycle of the technological innovation market (technology life cycle (TLC) model, technology acceptance curve model, market expectations model, and hype cycle model). The author presents the model of the high-tech hype cycle, the structure of the phases, and the properties of the stages. The connection between the dynamics of infometric indicators and technological and market maturity is explained. During the research, the author applied publicly available software tools for patent and search semantic textual analysis of the high-tech market profile. The research presents a model for semantic analysis and ensembling the results of patent and search analysis for assessing the state of maturity of the high-tech market. A description of the experiment based on Patentinspiration, Orbit Intelligence, Google Trend, and Yandex Wordstat is presented. The paper describes the shortcomings of infometric analysis based on patents and patent claims, as well as methods to address them based on the international patent classification.
Innovation theory Innovation economy Innovation Innovation potential Technology readiness Innovation ecosystems
V. A. Shiboldenkov (&) Bauman Moscow State Technical University, Moscow, Russia e-mail: [email protected]
JEL Codes
O31
1
O32
O33
Introduction
Nowadays, the cornerstone of innovation policy is not the subject of innovation but the proper allocation of resources for its creation, dissemination, and consumption (Dehghanimadvar et al. 2022; Legrand and Weiss 2011; O’Leary 2008; Weiss and Legrandm 2011). According to the results of numerous surveys and analytical studies, the author found the phenomenon of the innovation gap (Weiss and Legrandm 2011), reflecting the significant inertia between the real state of the innovation potential of the organization and the declared expected state of the organization. One of the contradictions identified in the analysis of the main causes of the innovation gap in the modern post-industrial period is that many factors that previously contributed to the success of industrial organizations can now become barriers to creating innovative organizations. Previously successful industrial organizations were usually focused on stability, efficiency, and production optimization. They aimed to dominate clearly defined markets and achieve predictable outcomes. In this context, they developed quality control systems, optimized production processes, and established rigid hierarchical structures. However, in the modern dynamic and global economy, the requirements for a successful organization have changed. Innovative organizations need to be flexible, adaptive, and
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_39
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focused on continuous exploration and development of new opportunities. They must respond quickly to market changes, discover new niches, and meet evolving customer needs. Innovative organizations must strive for experimentation, relentlessly seek new ideas, and take risks to create new products and services (Legrand and Weiss 2011). The first fundamental reason for the innovation gap is a loose understanding of the definitions of innovation and innovative organization. Many problems arise from this root when discussing innovation and innovation activity, even at the conceptual level. Therefore, one of the important tasks of the author is to explain the system of concepts innovation, objects of innovation, innovative activity, and the result of innovative activity based on generally accepted international and national guidelines, standards, and other normative legal documents. It is necessary to note the existence of two views of innovation (as an object and as a process) that can be integrated by introducing definitions of innovation objects and innovation results. R&D is the foundation for achieving innovation. Continuous research and development enable organizations to stay up to date with the latest technologies and find new ways to solve complex problems. A business-oriented approach to defining the outcomes of innovation activities is important for connecting innovation with business value. The results of innovation should have practical value for the organization, such as improving products or services, optimizing processes, or increasing profitability. The idea that innovation is random, and haphazard is the second main reason for failures in innovation. It is often believed that innovations occur by chance and are inspired. However, in practice, innovations arise through systematic innovative thinking by individuals and small teams. Systematic innovative thinking and support from leaders, culture, and organizational practices play a key role in increasing the success of innovation. They should create incentives for creativity, encourage risk-taking, and provide resources for implementing new ideas. The third main reason for innovation gaps is the incorrect use of sustainable innovation tools. Either the organization lacks knowledge and management of tools for systematizing innovation activities, or the management systems are not appropriately utilized. The use of proper innovation management tools and methods is also critical for success. Organizations need to have knowledge and skills in innovation management and apply effective tools for systematizing and scaling innovation activities. Overall, successful innovation requires a combination of research and development work, a business-oriented approach, systematic innovative thinking, and effective
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innovation management. Organizations that understand these factors and work to improve them have a better chance of achieving innovation success (Legrand and Weiss 2011).
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Theoretical Provisions
To model the life cycle of the technological innovation market, the author applied (Dehghanimadvar et al. 2022) the technology life cycle model (TLC), the acceptance curve model (technology), the market expectations model (Trabucchi et al. 2021), and the hype cycle model (Bogers et al. 2018; Chesbrough 2003; Fenn and Raskino 2008; Shiboldenkov 2020). 1. Knowledge of the current state and degree of development (in the form of the Technology Life Cycle, or TLC) indeed provides advantages in assessing the future development of technology and evaluating investment decisions. Understanding where a technology stands in its lifecycle can help organizations make informed decisions about whether to invest in its development, adoption, or replacement. By analyzing the TLC, businesses can estimate the potential longevity, market demand, and potential risks associated with a particular technology. 2. The S-curve is a commonly used approach in TLC analysis that considers patent applications filed over time. It helps visualize the growth trajectory of a technology or innovation. The S-curve represents the rate of adoption or growth of a technology, and it typically shows a slow start, followed by rapid growth, and eventually reaching maturity. This curve can provide insights into the market potential and adoption rate of a particular technology. 3. The hype cycle model is a framework created by combining different ratios, including the innovation lag, to depict the waveform of the hype curve for the adoption of new technologies. It illustrates the typical pattern of market expectations and technology adoption over time. The hype cycle consists of different phases, including the “innovation trigger” that generates initial excitement, followed by the “peak of inflated expectations,” where expectations may become exaggerated. After that, there is a “trough of disillusionment” as the technology fails to meet those inflated expectations. Eventually, the technology reaches a “plateau of productivity” where it finds its practical applications and steady adoption. 4. Economic and technological factors influence the shape and duration of the S-curve and the hype cycle. External factors such as market demand, competition, regulatory environment, and availability of resources can significantly impact the development and adoption of a technology. For example, disruptive events or advancements
Overview of Technological Forecasting and Assessment …
in complementary technologies can accelerate or alter the trajectory of the S-curve. Similarly, market hype and media attention can influence the perception and adoption of a technology, even if its actual development is still in early stages. Understanding these external factors is crucial for accurately assessing the future development and potential of a technology. 5. The TLC and hype cycle analysis are not foolproof predictors of a technology’s success or failure. While these models provide valuable insights, they are based on historical trends and assumptions about future adoption patterns. The actual trajectory of technology adoption can deviate from these models due to various factors, such as market dynamics, unexpected breakthroughs, regulatory changes, or shifts in consumer preferences. Organizations and investors should use TLC and hype cycle analysis as one of many tools in their decision-making process, considering other factors like market research, competitive analysis, and expert opinions to gain a comprehensive understanding of the technology’s potential. Flexibility and adaptability are key when interpreting and applying these models to real-world scenarios. By combining the S-curve and the hype cycle model, organizations can gain a comprehensive understanding of the technology’s growth potential, market expectations, and adoption patterns. This knowledge can inform strategic decisions, such as timing investments, managing expectations, and developing appropriate marketing and adoption strategies. One of the best approaches for combining the concepts of the S-curve and the adaptation diagram is through the application of the “hype cycle” method. This tool serves as a model that illustrates the level of maturity and acceptance of technology, as well as demonstrates the potential of these technologies in solving various business problems and influencing society. The “hype cycle” provides insights into the evolution of technologies and their impact on society and consumers. Additionally, it serves as a visionary source to guide the achievement of specific business goals. The curve of the hype cycle includes five key stages: 1. Technology Trigger: This stage is associated with the announcement or demonstration of a new technology, which initiates the hype cycle. During this period, awareness of the technology begins to grow, attracting the attention of the media. Venture capitalists and companies interested in gaining an early advantage strive to capitalize on the opportunities of being early movers in the market. 2. Peak of Inflated Expectations: This stage is characterized by a rise in excitement and high expectations, often due
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to media coverage. The “winner-takes-all” effect leads companies to invest even without a clear strategy. 3. Trough of Disillusionment: Due to excessive enthusiasm and overinvestment, the technology faces commercial adaptations that do not meet performance or revenue expectations. Disillusionment spreads quickly during this time, negatively influenced by the media. 4. Slope of Enlightenment: After a certain period, some early investors who continue to use the technology begin to see tangible benefits and become motivated again. As more investors join, understanding of the new technology grows, leading to increased productivity. This is when the technology begins to socialize. 5. Plateau of Productivity: At this stage, the technology is evaluated realistically. Due to successful demonstrations in the marketplace, adaptation begins to accelerate, realizing its full potential. These stages of the hype cycle provide a valuable framework for understanding the journey of technology adoption and its perceived value in the market. The hype cycle model helps to understand the dynamics of technology adoption and provides valuable insights for organizations and businesses. By identifying where a technology stands on the curve, decision-makers can assess the risks and opportunities associated with its adoption. For example, during the peak of inflated expectations, it is crucial to validate the technology’s potential and separate the hype from reality. On the other hand, during the trough of disillusionment, it is important to assess the underlying value and potential long-term benefits of the technology before dismissing it entirely. Additionally, the hype cycle model reinforces the importance of timing in technology adoption. It suggests that companies and organizations should carefully choose when to invest in a particular technology. Jumping in too early may lead to wasted resources and unrealized expectations, while waiting too long may result in missed opportunities to gain a competitive edge or address critical business problems. Overall, the hype cycle model provides a structured framework for understanding the evolution of technology and its impact on businesses and society. It helps in making informed decisions about technology investments, managing expectations, and maximizing the benefits of technology adoption (Chursin et al. 2017a, b). Based on the “hype cycle” model, several similar models have emerged that also help visualize and analyze the life cycle of technologies. Here are some of them: 1. “Growth-Share Matrix” Model: This model, first introduced by the Boston Consulting Group (BCG), assesses products or services based on their growth and market
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share. The matrix consists of four quadrants: stars (high growth, high market share), question marks (high growth, low market share), cash cows (low growth, high market share), and dogs (low growth, low market share). This model helps companies determine which products or services they should focus their efforts on to achieve growth. 2. “Technology Adoption Life Cycle” Model: This model, developed by Everett Rogers, reflects the process of technology adoption by users. It includes five main categories: innovators, early adopters, early majority, late majority, and laggards. Each category is characterized by specific psychological and social attributes that influence technology adoption. 3. “Product Life Cycle” Model: This model describes the changes in sales and profits of a product or service throughout its existence. It includes four phases: introduction, growth, maturity, and decline. Each phase has its own characteristics, such as high growth in the introduction phase and market saturation in the maturity phase. The “Product Life Cycle” model allows companies to plan and adapt their strategies according to the current phase of the product life cycle. These models help understand the dynamics of technology and product adoption in the market, as well as formulate strategies to maximize their potential. They are valuable decision-making tools for companies and organizations, helping them determine their position in the market and develop corresponding development and marketing strategies. In science, the hype cycle model of the market is used to study various technologies (Bogers et al. 2018; Chesbrough 2003; Fenn and Raskino 2008; Holgersson et al. 2018; Shiboldenkov 2020; Trabucchi et al. 2021), both individual approaches or solutions and technological packages and systems, some of which are discussed in this paper. The Technology Landscape and Patent Landscape are concepts closely related to the analysis of technology development and patents in a specific field (Burmistrov and Kashevarova 2019). The Patent Landscape involves an analysis of patents in a particular domain. It examines patent documents registered in that field, identifies patented technological solutions, identifies patent holders, and highlights key innovations that have been patented. The Patent Landscape helps assess the prevalence and protection of technologies in a specific area and identifies potential gaps or opportunities for new innovations. On the other hand, the Technology Landscape, within the framework of the Technology Life Cycle (TLC), represents a graphical depiction of the structure and dynamics of technology development in a specific industry. It visualizes the stages of technology development, their interrelationships,
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and progress. The Technology Landscape includes information about various technological domains, their maturity levels, competitive relationships between different technologies, and an evaluation of prospects. The Technology Landscape and Patent Landscape are often interconnected since patents reflect innovations and technology development. Researching the Patent Landscape and its connection to the Technology Landscape allows for an assessment of technological trends, competitive advantages, and commercialization possibilities for specific technologies. Analyzing the TLC and Patent Landscape is a valuable tool for strategic planning, decision-making, and innovation activities across various industries.
3
Methodology
Analyzing high-innovation technologies and understanding their genetic relatedness, technology package, and the system requires sophisticated, relevant, reliable, and up-to-date data (Granstrand and Holgersson 2020). As mentioned above, this research applies the infometric (bibliometric) method and uses two main databases (Bonaccorsi and Rossi 2006; Drogovoz et al. 2021b; Yang et al. 2022). In addition to patent information, the following sources can be used to shape the patent and technological landscape (Drogovoz et al. 2021a, c; Fedorova et al. 2021a): 1. Scientific articles and publications: Research papers, journals, conferences, and other scientific and technical publications can provide information on current technologies, innovative developments, and emerging trends in the industry. 2. Technical reports and documentation: Official technical reports and documents from industrial organizations, research laboratories, universities, and government agencies can provide insights into new technologies, projects, and innovative ideas. 3. Expert interviews and opinions: Conversations with industry experts, scientists, and industry representatives can provide valuable insights and assessments of the current state and trends in various technological areas. 4. Public databases and repositories: Public databases, such as the World Intellectual Property Organization (WIPO) database, the United States Patent and Trademark Office (USPTO) database, and other repositories, provide access to information on patents, publications, and other technical materials. 5. Reports and analytical research: Companies and research organizations often publish reports and analytical research that analyze patent data, technological trends, competitive landscapes, and other aspects of the industry.
Overview of Technological Forecasting and Assessment …
These sources of information can be used to gain a comprehensive understanding of the patent and technological landscape, their interconnections, and development dynamics. By combining various sources, a more complete picture of the state and trends in a specific industry or technological field can be obtained. The search for a relevant patent related to a specific topic remains a challenging task, despite the availability of patents. Major companies in this field actively patent their innovative developments to protect them. However, the patenting process requires the mandatory publication of patents, which may limit their full accessibility in the market. Therefore, when conducting patent searches, it is necessary to utilize a specialized patent classification system, such as the Cooperative Patent Classification (CPC), along with relevant keywords. The CPC is a classification system that helps group and subclassify patents based on their semantic relevance and thematic connections. The use of classification codes and keywords enables the filtering of irrelevant patents and the exclusion of noise from the extracted database. To create a semantic profile of the analyzed technological package or entire technological family, an extensive literature review is conducted. This profile serves as the foundation for searching for relevant technologies based on their names (keywords). Subsequently, the obtained data is carefully checked using CPC codes to avoid irrelevant information and exclude potential noise (Fedorova et al. 2021b, c; Zobel et al. 2016). In addition, the patent search process often involves a combination of manual search techniques and the use of various databases and search tools. These resources help researchers to navigate through the vast amount of patent information available and locate patents relevant to their area of interest. Once the relevant patents are identified, they are further analyzed to extract key information, such as the patent claims, technical descriptions, and figures. This detailed analysis helps in understanding the scope and content of the patent, as well as its potential relevance to the research or innovation being pursued. It is important to note that patent landscapes are constantly evolving as new patents are regularly published and existing patents may expire or be invalidated. Therefore, ongoing monitoring and updating of the patent landscape are essential to stay informed about the latest developments and to assess the potential freedom to operate in a particular technological field. Overall, the process of navigating the patent landscape and extracting relevant patents requires a combination of domain expertise, comprehensive search strategies, and the use of classification systems and search tools. By leveraging
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these techniques, researchers and innovators can gain valuable insights into the state of the art, identify potential competitors, assess patentability, and make informed decisions regarding their own research, development, and intellectual property strategies. There are several international online databases that provide access to articles, patents, technical reports, and other materials necessary for the formation of the technological landscape. Some of the most popular and well-known databases include: 1. PubMed: PubMed is the largest medical database containing millions of scientific articles from various fields of medicine and biomedical research. 2. IEEE Xplore: This database includes content from Institute of Electrical and Electronics Engineers (IEEE) and contains many scientific articles, technical reports, and conference papers in the field of electrical and electronics engineering. 3. Scopus: Scopus is a large multidisciplinary database that includes publications from various scientific studies and provides information on scientific articles, conferences, patents, and technical reports. 4. Google Scholar: Google Scholar is a search engine for scientific publications that allows you to search for articles, dissertations, conference reports, and other scientific materials. 5. Espacenet: Espacenet is a database of the European Patent Office (EPO) and contains information about patents and publications from various countries, including patents published in the European Patent Journal. 6. PATENTSCOPE: This is a database of the World Intellectual Property Organization (WIPO) and includes information on patents and publications from various countries covered by the International Patent Cooperation Treaty (PCT). There are several online databases for patent search, but Patentinspiration is particularly well-suited for finding foreign patents. While other databases like the United States Patent and Trademark Office, the European Patent Office Espacenet, PATENTSCOPE, and others are available, Patentinspiration offers a more user-friendly search engine. The search engine on Patentinspiration allows users to search using CPC codes, which provides a higher level of detail and specificity in technology selection compared to the International Patent Classification (IPC) codes. CPC codes distinguish entire groups of codes for high technology, making it easier to identify relevant patents. To ensure a technology is easily identifiable, it should be patented with a specific CPC code. In some cases, a technology may be assigned two or more CPC codes.
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Additionally, the dedicated code for a technology may have applications in other unrelated technologies. As a result, combining codes and keywords may be necessary to ensure comprehensive search results. To analyze originally Russian-language patents (or, e.g., originally Chinese patents), it is better to use patent search tools by family compared to the International Patent Classification (IPC) codes: Orbit Intelligence.
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Results
We conducted a study based on available patent publications from 2004 using the approach. The results of the study allowed us to draw the following conclusions (Drogovoz et al. 2021d; Fedorova et al. 2021b, c; Tyulin et al. 2021): 1. Identification of the technological landscape: We successfully identified and selected all relevant patent publications related to the studied technology. Additionally, we distinguished between pending patent applications and granted patents. 2. Technological trends: Analyzing patent publications enabled us to identify existing technological trends in the studied field. We determined the most frequently mentioned technical problems and defects in the patent texts. This helped us identify important keywords and present the technological trends in the form of graphs. 3. Assessment of market penetration: We employed a macroeconomic methodology to assess the market penetration of the studied technology. Instead of solely focusing on the technology itself, we examined the market from the perspective of industry stakeholders. Furthermore, we conducted an analysis of search traffic data to understand how the adoption of new technologies occurs and to gather information from market players. 4. Significance and impact of the technology: Patents also allow for an assessment of the significance and impact of the technology. We analyzed patent families and patent citation data to determine the most valuable patents in the field. Through this research, we have obtained a more comprehensive understanding of the technological landscape, including its trends, market penetration, and the significance of the technology under study. These findings have the potential to guide the strategies for developing and commercializing the technology, as well as facilitate decisionmaking for the future. To achieve this, we extracted the global search traffic data for each technology using platforms such as Google Trend and Yandex Wordstat. Additionally, we employed an
implementation diagram that outlines the different stages of the Technology Lifecycle (TLC), allowing us to depict the hype cycle surrounding innovative technologies for the first time. Furthermore, we utilized the Technology Readiness Level (TRL) to assess the technology’s position within the hype cycle. This involved combining the S-curve model and adoption chart, which essentially gauges the status of the technology within the hype cycle. This methodology is based on two key assumptions: the patent trend reflects technological growth, and the search trend indicates technological (market) penetration. In addition to the trends, there are several other trends that can be identified through the analysis of the technological landscape (Pohlmann et al. 2016): 1. Technological Convergence: Examining patent publications can reveal technological domains that frequently intersect and merge. This indicates a trend toward integrating different technologies to create new, more complex systems or products. 2. Increasing Number of Patent Applications: Analyzing patent publications can uncover a growth in the number of filed patent applications within a specific technological domain. This suggests intensified competition and activity in the field, as well as an understanding of its potential benefits and development prospects. 3. Interconnections with Other Industries: The analysis of patent publications can unveil the interactions and relationships between the studied technological domain and other industries. This can shed light on the potential for knowledge transfer and innovation exchange across different domains, fostering synergy among them. 4. Geographical Trends: Analyzing patent publications can reveal geographical patterns and trends in technology development. This allows the identification of leading countries or regions in specific technological areas, as well as the exploration of potential opportunities for international collaborations and joint projects. While the assumptions of patent trend reflecting technological growth and search trend reflecting technological (market) penetration are well-known, we also considered other factors, such as technological attractiveness and technological acceleration, for a deeper examination and validation. Overall, our research has provided a more comprehensive understanding of the technological landscape, including its trends, market penetration, and the significance of the studied technology. These findings can be utilized to develop strategies and commercialize the technology, as well as support informed decision-making in the future.
Overview of Technological Forecasting and Assessment …
Although these assumptions are widely recognized, we also take into account additional aspects of the patent to assess and validate them. These include factors like technological attractiveness and technological acceleration, as discussed previously. By considering these features, we aim to gain a more thorough understanding of the relationship between patent trends and technological growth, as well as the connection between search trends and technological penetration in the market (Ernst et al. 2016; Gorlacheva et al. 2018, 2019a, b; Omelchenko et al. 2019).
5
Conclusion
Industries tend to invest in technologies that already have or are expected to gain market share, as this indicates potential profitability in terms of creating valuable intellectual property and delivering profitable goods or services. Therefore, the ratio and percentage of granted patents to published patents can serve as crucial indicators of the maturity of innovative technology within the technological hype cycle. As mentioned earlier, the technological lifecycle (TLC) is a fundamental requirement for constructing a technology hype cycle. Another essential aspect is public recognition. An effective approach for understanding social behavior toward adopting new technology is to examine the search query history, which can be extracted from platforms like Google and Yandex. The process of market adaptation or technology adoption can be divided into five distinct periods. Initially, the new technology receives limited positive feedback due to insufficient knowledge about its application, indicating that the market is not yet ready. Innovators, who are the early adopters, actively seek out new technologies to drive further improvements. Gradually, the technology gains more acceptance from early users, leading to increased approval. During the maturity period, the technology achieves its maximum market share as it becomes widely embraced by the early majority. Subsequently, the technology reaches a point of technological maturity, with most users employing it. At this stage, the rate of adoption slows down, and the technology enters a period of decline. Finally, the aging process occurs, and even the most reluctant users start adopting the technology. By understanding these periods of technology adoption, we gain valuable insights into the dynamics of innovation and market acceptance, allowing us to assess the technology’s stage within the hype cycle.
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234 Musabirov I (eds) Digital transformation and global society. Springer, Cham, pp 313–326. https://doi.org/10.1007/978-3-03037858-5_26 Gorlacheva EN, Omelchenko IN, Drogovoz PA, Yusufova OM, Shiboldenkov VA (2019b) Cognitive factors of production’s utility assessment of knowledge-intensive organizations. AIP Conf Proc 2171:090005. https://doi.org/10.1063/1.5133228 Granstrand O, Holgersson M (2020) Innovation ecosystems: a conceptual review and a new definition. Technovation 90– 91:102098. https://doi.org/10.1016/j.technovation.2019.102098 Holgersson M, Granstrand O, Bogers M (2018) The evolution of intellectual property strategy in innovation ecosystems: uncovering complementary and substitute appropriability regimes. Long Range Plan 51(2):303–319. https://doi.org/10.1016/j.lrp.2017.08.007 Legrand C, Weiss DS (2011) How leaders can close the innovation gap. Ivey Bus J 75(4):7–11. Retrieved from https:// iveybusinessjournal.com/publication/how-leaders-can-close-theinnovation-gap/. Accessed 24 Apr 2023 O’Leary D (2008) Gartner’s hype cycle and information system research issues. Int J Account Inf Syst 9(4):240–252. https://doi.org/ 10.1016/j.accinf.2008.09.001 Omelchenko IN, Drogovoz PA, Gorlacheva EN, Shiboldenkov VA, Yusufova OM (2019) The modeling of the efficiency in the new generation manufacturing-distributive systems based on the cognitive production factors. IOP Conf Ser Mater Sci Eng 630:012020. https://doi.org/10.1088/1757-899X/630/1/012020
V. A. Shiboldenkov Pohlmann T, Neuhäusler P, Blind K (2016) Standard essential patents to boost financial returns. R&D Manag 46(S2):612–630. https://doi. org/10.1111/radm.12137 Shiboldenkov VA (2020) Review of economic and mathematical modeling tools for the innovation diffusion process. AIP Conf Proc 2383:070002. https://doi.org/10.1063/5.0074533 Trabucchi D, Magistretti S, Pellizzoni E, Frattini F (2021) Framework linking open innovation strategic goals with practices. In: Fernandes G, Dooley L, O’Sullivan D, Rolstadås A (eds) Managing collaborative R&D projects. Springer, Cham, pp 121–138. https:// doi.org/10.1007/978-3-030-61605-2_7 Tyulin AE, Chursin AA, Drogovoz PA, Yudin AV (2021) Researching the processes determining the dominance of unique products in sales markets. AIP Conf Proc 2318:070013. https://doi.org/10.1063/ 5.0035790 Weiss DS, Legrandm C (2011) Innovative intelligence: the art and practice of leading sustainable innovation in your organization. Wiley, Mississauga Yang J, Chesbrough H, Hurmelinna-Laukkanen P (2022) How to appropriate value from general-purpose technology by applying open innovation. Calif Manage Rev 64(3):24–48. https://doi.org/10. 1177/00081256211041787 Zobel AK, Balsmeier B, Chesbrough H (2016) Does patenting help or hinder open innovation? Evidence from new entrants in the solar industry. Ind Corp Chang 25(2):307–331. https://doi.org/10.1093/ icc/dtw005
Digital Transformation of Marketing Activities as a Factor in the Development of International Trade Alexander A. Voronov , Tatyana S. Popova , Irina A. Shumakova , and Elena N. Danilevskaya
Abstract
Keywords
Digital technologies are transforming international relations, diplomacy, foreign policy, and trade. Considering systems, such as politics, law, social sphere, or economics at any level (the functioning of an individual enterprise or international economic relations), it can be argued that the development of information and communication technologies has a significant impact on these areas. The transition to a digital economy is the most important factor in developing national and global economies. Gradually, there is a transition from the targeted introduction of various digital technologies (artificial intelligence, the Internet of things, etc.) to the integrated construction of an international digital ecosystem. The research discusses the prerequisites, features, and prospects for the development of international trade in the context of the formation of a global digital economy. The active and widespread use of digitalization significantly speeds up export–import transactions, allows new participants to be involved in international relations, and expands the range of resources used in cross-border turnover.
Digital economy International relations World trade Marketing activities Information and communication technologies Digitalization E-commerce Internet platforms Artificial intelligence
A. A. Voronov Emperor Alexander I St. Petersburg State Transport University, St. Petersburg, Russia T. S. Popova (&) Volgodonsk Engineering and Technology Institute—Branch of the National Research Nuclear University “MEPhI”, Volgodonsk, Russia e-mail: [email protected] I. A. Shumakova Belgorod State National Research University, Belgorod, Russia e-mail: [email protected] E. N. Danilevskaya Krasnodar Branch of the Plekhanov Russian University of Economics, Krasnodar, Russia e-mail: [email protected]
JEL Codes
F02
1
F13
F15
F23
M3
L86
Introduction
World trade can be considered the most ancient form of international economic relations. The transcontinental delivery of goods does not seem to be something special and intricate in the era of globalization of all aspects of life. In his book “The Magnificent Exchange,” the well-known American economist William Bernstein wrote that trade interests worked wonders: they discovered new lands and continents, helped conquer and destroy empires, and built bridges between peoples and civilizations (Bernstein 2014). The development of international trade that led to the emergence of the world market in the middle of the nineteenth century was also a form of international economic relations. Moreover, it was one of the driving forces of globalization, which, on the one hand, brought countries closer together, making them interdependent and vulnerable, and, on the other hand, increased the importance of the search for reserves and competitiveness of countries in the world arena. Competences in the area of international trade allow people the following: • to analyze world markets and understand the interests of the country and the company in these markets;
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_40
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• to know and be able to use the mechanisms for promoting a product or service in world markets; • to protect the national interests of the country on the world stage; • to calculate the effectiveness of trade transactions; • to work with customs, migration authorities, and trade missions; • to attract financial resources; • to engage in consulting; • to work with international organizations; • to participate in international negotiations; • to engage in international procurement activities; • to trade on stock exchanges; • to engage in monitoring and control of the implementation of tasks in the field of global development and strategic partnerships; • to carry out international payments; • to work on the foreign exchange market, etc. Nowadays, international trade is characterized by the constant development of these processes, the improvement of market methods and technologies used, and the constant satisfaction of the growing needs of people in the global space. Digitalization is one of the main contemporary tools that can solve these problems.
2
Materials and Method
The totality of statistical-economic, calculation-constructive, balance, graphical, and economic-mathematical methods, as well as the analysis of literary sources, constitutes the content of the methodology of economic research of processes occurring in international relations and foreign trade. The research is based on a structural analysis of the impact of digitalization and digital transformation on the costs of traditional and new forms of international trade in goods and services. When conducting the research, the authors relied on the following works: • research by Vasilenko, who considers the potential of digitalization in the development of international trade (Vasilenko 2021); • research by Volodina actualizes the role of digital technologies in the recovery of the world economy after the COVID-19 pandemic (Volodina and Podolskaya 2021); • research by Gorodnova describes the importance of using artificial intelligence (AI) in economic diplomacy and international trade (Gorodnova 2021); research by Potapova, Poteeva, and Shklyaruk focuses on developing a strategy for the digital transformation of the economy (Potapova et al. 2021);
• research by Strelets assesses the scale, forms, and consequences of the digitalization of world trade (Strelets and Chebanov 2020); • research by Voronov, Gorlachev, and Mirzoeva considers the role of social and ethical marketing in improving the sustainable development of international business (Voronov et al. 2022).
3
Discussion
The digitalization of life, business, government, and international relations is precisely the phenomenon that explains the importance and expediency of using soft power, especially the importance of digital diplomacy, considering new world scenarios for developing international trade. The main area where people seek to use all the benefits of digitalization in Russia and other countries is the economy, which is gradually becoming digital everywhere. Nowadays, all data is processed and transmitted mainly only in digital ways. The manifestations of the digital economy that have simplified international trade transactions are the development of online services, Internet trading, electronic payments and acquiring, crowdfunding as a way of collective financing of projects, Internet advertising, electronic document management, etc. As digital tools become more widespread and adopted by an increasing number of state and non-state market players, strategies and tactics to use them more effectively are rapidly evolving. Therefore, the digital component of business becomes more relevant and important for the successful implementation of international transactions. Modern advances in the area of information and communication technologies (ICT) have led to significant changes in the process of international relations. Nations began to communicate with each other in a different way than it was in the “pre-digital” era. The entry into the digital age has allowed governments, as never before, to communicate with each other to solve international problems, for interethnic mutually beneficial interaction. But at the same time, digital transformation has increased the degree of possible risks associated with international online relations (cyberwars, industrial espionage, and other unscrupulous practices due to the digitalization of all aspects of life). For people and organizations, whose activities are directly or indirectly related to international trade relations, it’s important to understand and remember that the Internet and modern information and communication technologies have simplified communication between countries, but have also given rise to new methods of abuse in cyberspace, which must be taken into account in the process of implementing export–import operations. As communication
Digital Transformation of Marketing Activities as a Factor …
technologies continue to evolve, it needs to keep pace with these transformational processes in order to form a proactive response to the threats posed by people, who seek to misuse innovation. Digitalization is changing the global economic division of labor and working conditions worldwide. The presence of digital technologies in every aspect of human society is rapidly changing the way people, organizations, businesses, governments, and cultures interact. Digital tools can improve the efficiency of institutional efforts to deliver public and collective services, including by facilitating exchange and collaboration over long distances. However, they also create new challenges and risks. We live in an era of rapid changes in international trade. Digitalization creates ample opportunities and prerequisites for effective control and monitoring of the protection of the interests of participants in international transactions. The COVID-19 pandemic has exacerbated the need to assess a country’s e-commerce readiness and develop or optimize appropriate supporting strategies.
237
Governments and other stakeholders in this area must prioritize the following points (Fig. 1). Digitalization of business in recent years is not just a trend but a necessary condition for the company’s survival and sustainable development. Nevertheless, the essence of this process is still not clear to everyone. Digitalization is the transformation of company processes using innovative technologies and gradually replacing outdated ways of doing business with the latest digital tools. The meaning of digitalization lies in improving the quality and efficiency of business processes to make most operations automatically without the direct participation of a person. Digitalization is made possible by the so-called breakthrough technologies— revolutionary solutions that change the world and the life of every person, as the invention of electricity did once. These technologies include big data, AI, blockchain, cloud systems, the Internet of things, and virtual and augmented reality (VR/AR tools). Nevertheless, it should be remembered that digital transformation isn’t just about buying new hardware and
Increase merchant and consumer awareness of the benefits of digital transactions, support national e-commerce platforms, and increase digital literacy Create an enabling financial and digital regulatory framework that facilitates the use and ensures the security of digital transactions Encourage interoperability of digital applications to facilitate interbank transfers and reduce the complexity of integrating commercial interfaces in transactions Simplify digital transaction mechanisms (as well sa lower or reduce upfront costs) to encourage acceptance by lower income people Promote the digitalization of international trade through the adoption of WTO provisions on trade facilitation, the introduction of paperless documentation formats and single window processes Invest in transport infrastructure, which is critical to ensure cost-effective distribution of imported and exported goods ordered online Support the creation of information resources, portals, and platforms that help MSMEs and digital start-ups enter e-commerce markets Strengthen the capacity of the domestic IT sector to support digital transformation and create value at the local level Retrain personnel in organizations that support business activities in the area of e-commerce Revise lending criteria by banks, considering the need to create a digital economy, innovation, and e-commerce Support national e-commerce platforms accessible to all population groups and businesses
Fig. 1 Mechanisms for ensuring the digital transformation of international trade. Source Compiled by the authors
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software. Not all of its processes are related to technology; many of them are related to the change of culture, thinking, motivation, and goal setting. In the digital transformation process, the company’s structure, business processes, products and methods of their promotion, customer interaction practices, internal and external communications, and corporate culture are changing. Digitalization will fail in a company with rigid subordination, bureaucratization, conservative management models, and a long decision-making process. It is necessary to create a new digital corporate culture. Its values include the ability to apply digital technologies, adaptability and readiness for constant change, understanding the principles of behavior in the digital environment, strong horizontal connections, lifelong learning, and customer-centricity (focusing not on the product but on the convenience of clients and their needs).
4
Results
In 2021, the volume of world trade reached 28.5 trillion, which is a quarter more than a year earlier. Much of this growth is driven by rising commodity prices, the easing of pandemic-related restrictions, and the recovery in demand associated with economic stimulus measures. Globally, the merchandise trade grew by $200 million to $5.8 trillion. Trade in services is back to pre-COVID-19 levels, rising by $50 million last year to a total of $1.6 trillion. Russia is an equal participant in international trade. Table 1 demonstrates
data on the volume of exports and imports of goods in 2021 in the Russian Federation, including by category of goods. Table 2 presents data on the foreign trade balance of the Russian Federation, including with the CIS and non-CIS countries. Based on the data presented in Tables 1 and 2, the following conclusions can be drawn regarding the participation of the Russian Federation in international trade: • The largest share (54.3%) in the structure of Russia’s exports is occupied by goods of the fuel and energy complex. The volume of their export from the country increased by 159.3% compared to the previous year and amounted to $267,035 million. • In the structure of goods imported into the territory of the Russian Federation, products from the category “machinery, equipment, and vehicles” prevail—49.2% ($144,299 million). The growth rate in relation to 2020 was 130.8%. • The main partners in international trade with Russia in 2021 were non-CIS countries (87.8%). Last year, the share of transactions with designated countries accounted for $689,078 million. It’s obvious that the use of the achievements of the scientific and technological revolution, where digital technologies are indispensable companion of progress, contributes to the maintenance, development, and simplification of international relations.
Table 1 Exports and imports of the most important goods in the Russian Federation in 2021 2021
Including December 2021
Reference 2020 in % by 2019
million $
in % by 2020
in % of the total
million $
in % by November 2021
in % of the total
Export, including:
491,580
145.8
100
56,815
119.1
79.4
100
• Fuel and energy products
267,035
159.3
54.3
31,148
118.0
63.7
49.7
• Metals and products
51,125
146.5
10.4
5534
164.6
92.9
10.3
• Machinery, equipment, and vehicles
32,631
129.9
6.6
4548
124.9
89.7
7.5
• Products of the chemical industry and rubber
37,837
158.1
7.7
4604
117.9
88.2
7.1
• Wood, as well as pulp and paper products
16,985
137.4
3.5
1525
102.5
96.6
3.7
• Food products and agricultural raw materials
35,905
121.4
7.3
3968
100.3
119.1
8.8
Import, from it:
293,420
126.7
100
29,428
109.8
94.8
100
• Machinery, equipment, and vehicles
144,299
130.8
49.2
14,251
110.5
97.8
47.6
• Food products and agricultural raw materials for their production
33,940
114.1
11.6
3350
102.3
99.3
12.8
• Products of the chemical industry and rubber
53,741
126.7
18.3
5469
104.5
88.6
18.3
Source Compiled by the authors based on foreign trade turnover of Russia according to customs statistics for 2020–2021(Federal State Statistics Service of the Russian Federation 2022)
Digital Transformation of Marketing Activities as a Factor …
239
Table 2 Foreign trade turnover of the Russian Federation with the main trading partners in 2021 2021 million $
Reference 2020 in %
million $
in %
by 2020
of the total
by 2019
of the total
Foreign trade turnover, including:
785,000
138.0
100
568,773
85.0
100
• Foreign countries
689,078
139.2
87.8
495,189
84.3
87.1
• Which include: EU countries
282,047
146.6
35.9
192,374
…
33.8
95,922
130.4
12.2
73,585
90.4
12.9
• CIS member countries
Source Compiled by the authors based on foreign trade turnover of Russia according to customs statistics for 2020–2021(Federal State Statistics Service of the Russian Federation 2022)
The twenty-first century is called the era of innovation, in which digital metamorphoses have become one of the most discussed topics. In fact, business digitalization is already inevitable. The main result of the digitalization of society is changes in the behavior and demands of consumers under the influence of the widespread introduction of information technologies into human lives. Nowadays, almost every person uses gadgets, social networks, and digital services. New ways of consuming products and services have emerged. In the new digital reality, it would be strange to assume that companies can operate according to the old business model while maintaining the same efficiency. The digitalization of society has led to the fact that if business today does not use digital technologies and cannot meet the new high demands of consumers, it will be difficult for them to compete in the market. This is especially relevant when the business represents the international trade market. The role of digitalization in the current turbulent world cannot be overestimated. It brings the company to a completely new level of service and creation of a product or service and allows continuing working even in the most difficult economic conditions with constant and unexpected changes. Digitalization allows automatically performing such operations as assistance in selecting goods and placing an order, answering customer questions, and filling out electronic documents. This facilitates the work of staff and reduces the organization’s need for a large number of employees. Communication with customers goes to a completely different level. The processing speed of all applications and offers is increased. Omni-channel provides opportunities for seamless communication with clients on any platform convenient for them (e.g., social networks, chatbot, company website, and messenger). Additionally, digital technologies make it possible to collect the most detailed information about each user and use this data to personalize marketing communications.
Digitalization makes it possible to provide customers with fundamentally new goods and services or new ways to access them: marketplaces, food delivery services, taxi aggregators, and online banking. AI, machine learning, and predictive analytics help predict demand and allocate goods and resources in advance. Digital transformation requires large investments that will not pay off immediately. However, in the long run, it is more profitable than keeping legacy technology up and running. Digital tools make it possible to quickly develop and bring new products to the international market and promptly respond to any changes in the external environment. Adaptability to new realities and challenges is also increased.
5
Conclusion
After decades of growing inequality, polarizing trends, and the pandemic, economic recovery presents an opportunity to rebalance income distribution across countries. Restoration is unthinkable without a reorientation to the digital format of interstate interactions. The COVID-19 pandemic was the driver for the rapid growth of the pace of digitalization in Russia and in the world. With the closure of offline stores, it became necessary to restore the destroyed chains of interaction. The value of digital sales channels and communication with customers (website, mobile application, social networks, and instant messengers) has increased many times over. During quarantine, this has become the only opportunity to conduct business. The demand for tools and ready-made digitalization solutions has grown. World trade is increasingly immersed in a digital reality. Now, all countries are involved in “global e-commerce,” and all goods and services (which previously belonged to the category of “non-tradable” cross-border) are now included in international exchange. All this became possible thanks to the widespread introduction of platform technologies.
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References Bernstein W (2014) A splendid exchange: How trade shaped the world (I. Letberg transl. from English). AST, Moscow (original work published 2008) Federal State Statistics Service of the Russian Federation (2022) Foreign trade turnover of Russia according to customs statistics for 2020–2021. Retrieved from https://rosstat.gov.ru/storage/mediabank/26_23-02-2022.html. Accessed 11 Jan 2023 Gorodnova NV (2021) Artificial intelligence in economic diplomacy and international trade. Issues Innov Econ 11(2):565–580. https:// doi.org/10.18334/vinec.11.2.112214 Potapova EG, Poteeva PM, Shklyaruk MS (eds) (2021) Digital transformation strategy: write to do. Russian Presidential Academy of National Economy and Public Administration, Moscow Strelets IA, Chebanov SV (2020) Digitalization of world trade: scale, forms, and consequences. World Econ Int Relat 64(1):15–25. https://doi.org/10.20542/0131-2227-2020-64-1-15-25
A. A. Voronov et al. Vasilenko IV (2021) International trade and the potential of digitalization. In: Khasbulatov RI, Dianova VY, Polozhishnikova MA, Progunova LV, Zavyalov DV, Ordov KV, Byasharova AR (eds) Proceedings of the II international foreign economic scientific and practical forum “challenges and solutions for business: the energy of regions”. Plekhanov Russian University of Economics, Moscow, pp 62–65 Volodina AD, Podolskaya TV (2021) Digital technologies as a factor of global economy recovering after the COVID-19 pandemic. High-Tech Enterpr Econ 2(4):359–368 Voronov AA, Gorlachev PV, Mirzoeva EV, Rudenko VA, Popova TS (2022) Role of social and ethical marketing in improving sustainable business development. In: Bogoviz AV, Suglobov AE, Maloletko AN, Kaurova OV (eds) Cooperation and sustainable development. Springer, Cham, pp 1249–1255. https://doi.org/ 10.1007/978-3-030-77000-6_145
Developing a Theory of Tax Revenue Mobilization Using Social Media and Documentary Sources Lubinda Haabazoka
and Byrne Kaulu
Abstract
This research develops a theory of tax revenue mobilization for resource-rich nations. An inductive approach is used. Thematic, content, and grounded analysis are conducted in NVivo. Data in the research is collected from Facebook focus group discussions, tweets, and documentary sources. Prices or income from minerals, foreign direct investment, and foreign debt have been found to be key factors in mobilizing tax revenues through their impact on the tax base in resource-rich countries. The research contributes to the theory of tax revenue mobilization for resource-rich nations and, perhaps for the first time, uses social media data in doing so. The theory informs policy and scholarship. Keywords
Tax revenue Social media Theory development Qualitative analysis Resource-rich countries
JEL Classifications
H2
1
F38
H63
F21
N5
Introduction
Research is generally conducted through a hypothetical lens called a theory. Theory explicitly or implicitly underpins research. However, the theory does not fall from the sky like rain or snow; it is developed. While industry practitioners use theory to make management decisions and develop it
L. Haabazoka B. Kaulu (&) Graduate School of Business, University of Zambia, Lusaka, Zambia e-mail: [email protected]
subconsciously as they gain experience, scholars are methodical. The parable of how people learned to cook illustrates the importance of careful and systemic development of theory (Wright 2017). A version of this story is told by Kanter (1983). A father left his son to guard the house but the boy accidentally set the house on fire. Consequently, a pig that was wandering in and out of the house got burned inside. When the father nudged through the ruins on his return, he accidentally poked his finger into the hot pig. He put his finger in his mouth to cool it, only to discover that it was delicious. Hence, cooking was discovered. Going forward, a house was burned down together with a pig every time a villager needed a roast pig. Therefore; as Kanter (1983) concludes, “if you do not understand why the pig gets cooked, you are doomed to waste an awful lot of houses.” Likewise, if we do not have a theory behind phenomena (e.g., tax revenue mobilization), we are bound to waste resources, “burning down” a whole house of possible solutions when only a few are relevant. This underscores the significance of a clearly outlined theory development. This research develops a theory of tax revenue mobilization for resource-rich nations by asking the following questions: • What are the determinants of tax revenue mobilization? • How do the identified determinants influence tax revenue? • Why do the identified determinants influence tax revenue? The International Monetary Fund (IMF) classifies a country as resource-rich when the export of non-renewable natural resources from this country exceeds 25% of its total exports (Karatayev and Hall 2020). Resource-rich nations tend to depend on natural resources to raise revenue for projects and stabilization funds. Stabilization funds have been extensively studied by Haabazoka (2019).
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_41
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To begin with, we need to define and determine the essence of theory. A theory is a composition of variables, constructs, or concepts, the specification of how the relationships among them occur, the assumptions guiding these relationships, and the scope within which these relationships hold true (Wright 2017). Think of a theory as a complete set of four building blocks as suggested by Whetten (1989). The first three blocks are: “What,” “How,” and “Why.” The fourth block is a combination of three: “When-Where-Who.” The “What” block refers to the factors, constructs, or variables that explain a phenomenon in the theory. Two criteria (comprehensiveness and parsimony) are used to judge whether the right factors have been included in the theory or not. Comprehensiveness occurs when all factors are included. Parsimony occurs when factors that add little value to understanding are deleted. The “How” block focuses on how the factors are related. In a diagrammatic theoretical model, this can be represented by arrows showing relationships and causality. The “What” and “How” blocks together form the domain or subject of the theory. The third building block (“Why”) consists of the theory’s assumptions. It underscores the dynamics justifying the selection of the factors and their related relationships. The fourth building block (“When-Where-Who”) stipulates when the theory is valid, where it is applicable, and for whom. It sets the boundaries for the generalization of the developed theory.
Fig. 1 Building blocks of a theory. Source Compiled by the authors based on Whetten (1989)
Figure 1 illustrates the building blocks of a theory and confirms that a theory is a combination of factors, relationships among the factors, the assumptions holding these relationships together, and the context in which the entire model is applicable. According to Wilkins et al. (2019), theory must be generalizable. That is, it must be applicable in various settings. This can be achieved by adaptation of the theory so that it applies in many settings by revisiting the assumptions or constructs that make up the theory.
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Literature Review
Several studies have worked toward developing tax theory. An optimal tax theory is proposed by Ramsey (1927), improved on by other scholars (Diamond and Mirrlees 1971; Mirrlees 1976, 1986), and praised by Stiglitz (2015). A theory on the direct–indirect tax mix is proposed by Boadway et al. (1994). Other notable advances in tax theory are the cost of service theory, benefits received theory, social-political theory, the normative theory of tax incidence (Gordon 1972), and the exogenous growth model. However, none of these theories focus on determinants of tax revenue mobilization for resource-rich nations. This is the point of departure and contribution of the current study.
WHAT?
HOW?
Variables Constructs Factors
Relationships Among factors
BUILDING BLOCKS OF THEORY
WHERE? WHY Assumptions
Limitations within which theory holds
Developing a Theory of Tax Revenue Mobilization Using Social...
According to Seligman (1893), advocates of the theory of give-and-take contended that tax payable must be in proportion to the cost of services provided by government. Hence, in the cost of service theory, costs incurred by the government in providing services should be spread among the final service recipients. The first problem with this theory is that estimating the cost of government services provided to each taxpayer is a daunting task. Second, a tax is an unrequited movement of funds from the private to the public sector (Kaulu 2021a), not a price. Hence, the theory goes against the definition of a tax. What the cost of service theory calls tax is better categorized as fees or tolls rather than tax (Seligman 1893). As a result of the problems of the cost of service theory, a modernized version, the benefit theory, was born (Ha et al. 2022). It is attributed to Sandmo (2015) and Lindahl et al. (1967). Its principle is that government offers its services to the public on a quid pro quo basis. This means that taxpayers pay taxes according to the benefits received from the government. Three assumptions of this theory are problematic. First, it also views tax as a price rather than a compulsory, unrequited payment by citizens to the government (Kaulu 2021a). Second, it is not easy to measure how much benefit has been received by each individual. Third, measuring society’s willingness to pay for services is a daunting task. Opponents of the benefit theory argue that taxpayers must pay taxes according to the level of income made from the economy rather than according to the benefits obtained from the government. This brings in the ability-to-pay theory. The ability-to-pay theory holds that those with the highest income or wealth should pay the most taxes. Progressive tax, where lower earners get taxed less than higher earners, is advocated for in this case. Critiques of the ability-to-pay theory argue that it is unfair, discourages hard work, and incentivizes laziness. Hence, there are calls for a flat rate of taxation. Further, this theory rests on three assumptions, which Kendrick (1939) calls “defective.” These assumptions are as follows: • Money’s diminishing marginal usefulness (to the tax payer) as its supply grows; • The occurrence of sacrifice resulting from tax payment; • The measurement of this sacrifice (which is hard to do). The social-political theory also attempts to address weaknesses in the cost and benefit theories. In this theory, taxes are driven by political and social goals, which cure societal ills rather than the objectives of individual members of society. This situation increases the tax base as per the exogenous growth model. The latter states that external influences impact economic growth. The increased economic growth coupled with a right social-political philosophy should result in increased taxes to the government.
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The Intertemporal Budget Constraint (IBC) theory is more specific about tax revenue mobilization. It asserts that the present value of tax revenue mobilized must cover current and future government spending and debt (principal and interest). Therefore, government budgeting incorporates tax smoothing (Barro 1974; Casalin et al. 2020). Permanent losses of tax revenue are compensated for by bigger tax rates or reduced loan repayments. However, the debt remains unchanged. Debt is used to cover transitory losses of tax revenue and loan repayment challenges (Dornbusch 1984). The resulting enlarged debt is paid in the long run via increased taxes and reduced loan repayments per period. While all theories so far do an excellent job of explaining tax revenues, little attention has been paid to the determinants of tax revenue mobilization in resource-rich countries. These nations are usually victims of the resource curse such as the Dutch disease. The Dutch disease is a theory that explains why resource-rich nations are poor (Kaulu 2021b). Consequently, the current study moves toward a theory of tax revenue mobilization for resource-rich nations. A study by Ricciuti et al. (2019b) focuses on the role that political institutions play in fiscal capacity. Fiscal capacity is the ability of a fiscal system to raise tax revenue from its tax base (Besley and Persson 2011). Using the World Bank data from 47 developing countries, the study finds a positive correlation between constraints on the executive branch and the current fiscal powers of fiscal institutions (accountability and transparency). While it provides insight into the causes of low tax revenues in developing countries, the study does not focus on resource-rich countries. Another study focuses on the determinants of tax revenue in countries in South-East Asia using panel data analysis (Ha et al. 2022). The theories used are the cost of service, benefit, and social-political theories. Trade openness, debt, foreign direct investment (FDI), and industry value added were found to impact tax revenue positively. Development assistance had a negative impact. While the study is a great addition to tax revenue mobilization literature, it left out qualitative data in its analysis. Further, the theories used have challenges, as highlighted in the preceding paragraphs. Other notable studies on tax revenue mobilization (Aizenman et al. 2019; Gwaindepi 2021) also follow a similar pattern. First, there is little focus (if any) on resource-rich nations. Second, the underlying theories do not explain tax revenue mobilization directly. There is no explicit theory of tax revenue mobilization in the literature. This is despite the demand for such a theory, as evidenced by the growing number of publications on tax revenue mobilization. Hence, the current study seeks to contribute a theory of tax revenue mobilization for resource-rich nations.
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Methodology
This research uses qualitative data analysis. This section improves replicability by documenting the qualitative research procedures and data collection techniques in a robust manner (Bowen 2009).
3.1 Data This study uses data that extant literature leaves out in order to develop a theory of tax revenue mobilization. Particularly, it uses qualitative data from social media and documentary sources.
3.2 Data Collection The authors employed triangulation to increase validity. Triangulation is the use of several resources in the methodology (Merriam and Tisdell 2015; Natow 2020). A researcher can minimize the influence of biases in a single study by reviewing information acquired using several approaches and corroborating the findings across datasets. When a researcher triangulates, it guards against accusations that the study is a product of a single source, a single method, or a single researcher’s bias (Patton 2014). To seek triangulation and increase corroboration and convergence, the authors used multiple data sources in this research, as recommended by Yin (2014). These include data from documentary sources and social media (Facebook focus group discussions and tweets). Documentary data consisted of 50 relevant documents obtained until saturation was achieved and took into account efficient use of resources. The number is also considered enough compared with numbers used in the literature (Bowen 2009). The data was first put in context and coded for further analysis. The documents were a rich source of data and included; among others, reports and working papers on tax revenues prepared by pressure groups, development organizations, and government agencies. The data also included documentaries (films) by various media houses. This study also used social media data; a practice adopted from various studies which used Twitter (Chamberlain 2018; Fiesler and Proferes 2018; Gintova 2019) and Facebook. For instance, Zagheni et al. (2017) claim that Facebook data can be used to provide real-time data for a census. Some recommendations for conducting qualitative research using Facebook data are given by Franz et al. (2019). Further, Kosinski et al. (2004) discuss the use of Facebook as a research tool in the social sciences. The list goes on and on.
However, when it comes to public finance research, social media has not been extensively used for data collection. This is despite the growth of what Popkova and Haabazoka (2019) call the cybereconomy which highlights the importance of online systems and data. Considering privacy concerns, such as those discussed by Zimmer (2010), and Cooksey and McDonald (2019), the current study conducted focus group discussions on Facebook using a private group to which participants were invited. Over 500 participants were invited, of which 200 accepted to join the group. Each group discussion had from 5 to 10 people. For their privacy, the names of the participants are not mentioned. According to Anderson (2010), the choice of focus group participants must be justified. The research participants were chosen based on expertise or familiarity with tax issues. They included former government officials, accountants, tax experts, and employees of the public and private sectors familiar with taxation, as well as students studying business, economics, or related subjects. The participants were first identified from public sources and sent a Facebook invitation to the group. The group’s purpose was placed in the description so that participants understood it. For triangulation purposes, this study collected Twitter data in addition to Facebook focus group discussions and documentary sources. A total of over 11,300 tweets were collected from Twitter using Ncapture, an Internet browser plug-in that works in collaboration with Computer-Assisted Qualitative Data Analysis Software (CAQDAS); Nvivo. The Twitter data was collected after using the Boolean search for the hashtags “tax revenue” or “#government revenue.”
3.3 Data Analysis This research uses content, thematic, and grounded analysis based on the research objectives and the data collected. A summary of the data analysis, data sources, research protocol, and research questions are presented in Table 1. Some of the most popular CAQDAS are Nvivo, MAXQDA, QDA miner, and ATLAS.ti. This research uses Nvivo. Documentary data was manually coded using line-by-line coding in NVivo so that key themes emerged from the data. Social media data consisted of transcribed Facebook focused group discussions and thousands of tweets. The former was manually coded, and the latter was coded automatically due to the volume of the data. The codes were then refined after a literature review. The research results are presented in the next section based on key themes.
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Table 1 Research design Research questions
Study protocol
Data sources
Data analysis
What are the determinants of tax revenue mobilization?
Focus group discussions Documentary review
Focus group discussions on Facebook Twitter Documentary evidence
Grounded Content Thematic
How do the identified determinants influence tax revenue? Why is tax revenue at the level it is? Source Developed by the authors
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Findings
The findings (McGregor 2018) are presented in a theory-guided approach (Chenail 1995) using the four theory building blocks. Figure 2 presents a proposed model based on the key themes of tax revenue mobilization theory for resource-rich countries: The model suggests that FDI influences tax revenue by increasing the funds available for circulation in the economy. Therefore, it positively affects the tax base. For example, a focus group participant (FGP) stated the following: Foreign companies transfer modern equipment, production, technology, engineering solutions and management experience while being implemented in the local country. FDI is actually one of the factors for economic development, it stimulates trade. FDI has a positive impact on the host country’s economic development, job creation, capital injection and other new technologies—FGP1 (Focused Group Participant No.1).
This positive influence can be distorted by corruption, illicit financial flows, and tax dodging in general. Tax dodging is used to describe all of the ways (tax avoidance,
Fig. 2 Model for tax revenue mobilization for resource-rich nations. Source Developed by the authors
tax evasion, corruption, and offshore accounts) that companies and rich individuals employ to reduce their tax bills. They lobby governments for tax breaks and lower corporate tax rates, exploit obscure loopholes in tax laws, or shift profits into tax havens (Liu and Otusanya 2022). In the proposed tax revenue mobilization model, prices of natural resources are important for tax revenue mobilization in resource-rich nations. The model suggests that higher prices must result in a higher tax base and hence higher tax revenues. For instance, talking about oil-rich Nigeria, Alutu (2022) says: Since discovering oil in 1956, Nigeria has become heavily reliant on oil revenue for survival—in the boom period preceding the 2014 oil price plummet (2010–2013), the oil sector made up an average of over 74% of federally collected revenues.
Just like FDI, this positive influence of natural resource prices on tax revenue is moderated by the distortionary effects of lack of fiscal capacity and tax dodging from illicit financial flows. As one documentary source puts it, “companies are presented with various ways to avoid paying tax, including over-reporting of costs and under-reporting of
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production” (War on Want 2015). This source further goes on to explain how one country (Zambia) has potentially lost billions of tax dollars due to these factors. When countries do not have enough funds to finance government expenditure, debt may be used to finance projects. Therefore, if the government contracts debt responsibly, more tax revenue would accrue to a resource-rich nation. However, excessive and irresponsible borrowing moderates the positive debt-tax revenue nexus. Mutize (2021) indicates the following: Any debt-to-GDP ratio above 60% … is considered imprudent according to the International Monetary Fund (IMF) and African Monetary Co-operation Program’s threshold. Beyond the threshold, a country will be at high risk of debt default.
Consequently, external debt in addition to FDI inflows and natural resource prices are the major determinants of tax revenue mobilization for a resource-rich nation as revealed in various qualitative data. These relationships are mediated by the tax base. The underlying assumptions are that corruption, fiscal capacity, illicit financial flaws, and other similar factors are the means by which the tax base is influenced in these relationships and hence how the major determinants influence tax revenue. To extend the model, the following subsections present additional findings to support the model, addressing research question after research question.
4.1 What Are the Determinants of Tax Revenue Mobilization? The major determinants initially established from documentary sources are illicit financial flows, foreign direct investment (FDI), the informal sector, natural resource endowment, wasteful expenditure, governance, debt, and fiscal capacity. Corroboration of this with social media data (focus group discussions and tweets) reveals that the variables can be summarized into debt, problems emanating from excessive reliance on FDI, and management of a country’s resources in terms of production volumes and prices of the output. For instance, speaking about debt, Hambayi (2016) mentioned that:
L. Haabazoka and B. Kaulu knowledge and skills but the moment we become graduates we fail to capitalize on that same knowledge but rather rely much on foreign alternatives. This is one of the reasons why we continuously find ourselves in debts.
Regarding FDI (which has often been hailed as a culprit for illicit financial flows), one source (Liu and Otusanya 2022) states: But in both developed and developing countries, tax revenues are being undermined by the ability of some of the wealthiest taxpayers—including many transnational companies—to effectively opt out of the corporate tax system. They do this through a combination of ingenious (and lawful) tax haven transactions, and huge tax concessions awarded by governments.
Regarding dependence on natural resources, resource wealth is a boon to the tax base, but it is also a curse if overdependence and inefficiency are encouraged. Ricciuti et al. (2019a) states: There is no single answer to fixing a state’s ability to collect taxes. The reasons for not being able to do so efficiently depends on a number of factors. These include historical ones, such as internal or external conflicts, and political factors, such as weak institutions or a weak sense of national identity. And finally, economic factors like a country’s dependence on natural resources.
These sentiments are somewhat echoed in focus group discussions, where a participant said: Our leaders lack political will to have full control of our mines. It is very sad that whenever decisions to do with the mines are being discussed the investors are prioritized for instance giving them tax holidays at the expense of local people… It is high time that the government learn to put the interests of its people [first] in decisions that have to do with minerals—FGP99 (Focused Group Participant No. 99).
4.2 How Do the Identified Determinants Influence Tax Revenue Mobilization? One school of thought argues that resource-rich nations underperform in tax revenue mobilization due to what is known as the resource curse. This is a result of many factors. For instance, Chachu and Nketiah-Amponsah (2021):
Bilateral and multilateral donors have failed … by piling massive public debt on governments in the full knowledge of the history to the 1980s debt crisis. This is despite the fact that they lack fiduciary accountability to their people while causing depletion of natural resources. They have also turned a blind eye to these multinationals parking huge amounts of earnings in tax havens.
Countries with abundant natural resources—gold, diamonds, crude oil—often fail to transform that advantage into favorable development outcomes. This is known as the natural resource curse… Several explanations have been offered for the resource course. These include the lack of government accountability usually associated with large windfalls from natural resources relative to other sources of tax revenues.
This is echoed by a focus group participant who stated that:
Hence a negative relationship would be expected between resource abundance and tax revenue mobilization if governance and accountability are inadequate. However, another school of thought is that resources must lead to increased tax
It is so unfortunate that we fail to utilize or reallocate our resources properly. I believe we go to universities to acquire
Developing a Theory of Tax Revenue Mobilization Using Social...
revenue due to their potential to increase national income and the tax base. FDI is also expected to result in greater economic output. However, global mining operations are dominated by multinationals who engage in FDI with complex financial transactions covering several jurisdictions. This complexity makes it easier for multinational corporations (MNCs) to engage in illicit financial flaws. One documentary source (War on Want 2015) points out that tax administrators face four problems in relation to the taxation of MNCs. These include abuse of transfer pricing, falsification of production values, debt payments, and hedging. Regarding transfer pricing, the same source further states (War on Want 2015): Companies can reduce their overall tax payments by selling goods and services from an operating unit in a low tax jurisdiction to one in a higher tax jurisdiction at a relatively high transfer price. Income is transferred away from the high tax jurisdiction, where both taxable profits and tax payments fall. Correspondingly, taxable income increases in the low tax jurisdiction. Because the tax rate is lower there the company’s overall tax bill is reduced.
As for falsifying production figures, documented evidence suggests that some mining companies underestimate the volume of minerals produced or their composition. For example, a mine may produce a certain amount of copper in ore, but not disclose that a huge quantity of ore also contains gold. This causes distortions when it comes to taxation. In a documentary source, Manley (2013) states: … Another form of transfer pricing abuse is where mines report to the tax authority that the value of their production is less than is its actual market value. This can be done in a number of ways: mines may under-report the volume of production or the grade of the mineral, or they may fail to report by-products contained in the ore. Often multiple minerals are found within the same ore body.
Similar abuse is utilized when it comes to debt payments and hedging. In this case, a company may either lend money at exorbitant rates to its related company (parent or subsidiary) or create a hedging transaction where it sells goods at a loss to its related company. The tax evasion schemes aim to transfer profits, income, or some tax base to a low tax jurisdiction where tax rates are lower. These challenges result in a paradox where some of the most resource-rich nations are the ones that borrow heavily.
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Fiscal capacity (the ability of a tax authority to collect taxes from the tax base) is an important consideration in tax revenue mobilization. Extant discussions about tax revenue presume the existence of fiscal capacity. However, according to Ricciuti et al. (2019b), “being able to tax citizens, and collect revenues efficiently, is a cornerstone of state formation and survival”. Some countries, especially in Africa, have fiscal capacity challenges. For example, after his discussion with representatives from tax authorities in South Africa, Zambia, Uganda, Liberia, and Nigeria, Assassa (2021) states: Taxpayer documentation is still perceived as an insufficient source of information. African tax authorities lack the power to access customs data and foreign sources of information that could help to confirm the reliability of the documentation submitted before and during a tax audit.
These fiscal capacity challenges also have a bearing on tax administration and hence the tax base. For instance, Mutize (2021) states: … instead of borrowing more, governments must focus on mobilising greater domestic resources through effective tax administration and broadening the tax base. Increasing tax revenues will pay off budget deficits and public debt in the medium term.
Further, taxing citizens (individual and corporate) is easier than foreign entities. The higher a country’s local participation in economic activity, the more difficult it is to shift the tax base and, therefore, easier for the government to tax. Foreign players, especially multinationals, can shift tax bases from one jurisdiction to another. This concern is echoed by a focus group participant who stated that: … it is so unfortunate that we fail to utilize or reallocate our resources properly… but rather rely much on foreign alternatives. This is one of the reasons why we continuously find ourselves in debts—FGP25 (Focused Group Participant No. 25).
A documentary source suggests that the solution for resource-rich countries is to take their destiny into their own hands. Hambayi states, The solution lies in … taking control of their destiny by replacing foreign direct investment with local direct investment. (Hambayi 2016)
4.3 Why Do the Determinants Influence Tax Revenue Mobilization?
4.4 When, Where, and for Whom Do the Determinants Influence Tax Revenue Mobilization?
The documentary sources showed that fiscal capacity, tax base, tax administration, ease of taxation, and corruption are the major reasons why tax revenue mobilization is at the level it is in resource-rich nations.
This research focused on data from resource-rich nations. In a discussion on the measurement of resources, Lashitew et al. (2021) state that the definition of the concept has evolved with time. Taking this evolution into account,
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resource-rich nations are those with large amounts of oil, gas, coal, and minerals. The contribution of these resources to a country’s exports is often used in literature as a measure of how resource-rich a nation is, Karatayev and Hall (2020). Therefore, the theory proposed in this research is most applicable to resource-rich nations across the globe on historical and future data.
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Discussion
This research developed a theory of tax revenue mobilization for resource-rich nations. A battery of determinants of tax revenue mobilization was found, such as those indicated by Ha et al. (2022), and in support of the extant theory, such as the ability to pay, cost of service, and benefits theory. Corroboration of these determinants with various data sources for resource-rich nations shows that three determinants are prominent: resource prices and revenues, FDI into these resources, and debt. The other purported determinants are more auxiliary or inhibitory factors of tax revenues through which these three factors pass, affecting the tax base. This brings us closer to a theory of tax revenue mobilization for resource-rich nations. While existing theories (such as the ability to pay, cost of service, benefits, intertemporal budget, and optimal tax theory) advance tax theory, the proposed theory differs in that it focuses specifically on resource mobilization for resource-rich nations.
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Conclusion
This research used social media data and documentary sources to inductively develop a theory of tax revenue mobilization for resource-rich nations. Data is collected from focus group discussions through Facebook, publicly available tweets, and documentary sources to enable triangulation. Thematic, content, and grounded analysis is used to analyze the data qualitatively. The emerging themes show that FDI, resource prices, and external debt are key influencers of tax revenue mobilization through their influence on the tax base in resource-rich nations. The developed theory is useful for improving tax revenue mobilization. The study’s design (especially the use of social media data) informs future scholarship.
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Recommendations
The advent of social media has made extensive data available to researchers. Considering the ethical considerations, future researchers shall do well to consider this data in gaining rich insights. For policymakers and practitioners,
some resources in resource-rich nations are depleting assets. Diversification of economic and business activity can help maintain future tax revenues in times of falling revenue from resource extraction such as mining. Government expenditure may also be improved by increasing accountability and transparency to reduce debt. Fighting corruption can improve tax payer’s trust in government institutions. This, coupled with the right mix of capital project expenditure in relation to revenue expenditure, would ensure that resource-rich nations do not fall into perpetual debt traps. To reduce extensive borrowing, illicit financial flows (especially from foreign direct investors) must be minimized by strengthening capital flight regulation. In this case, fiscal discipline and fiscal consolidation are critical. Knowledge transfer from FDI must also be encouraged while strengthening tax laws.
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249 McGregor S (2018) Results and findings. Understanding and evaluating research: a critical guide. SAGE Publications, Thousand Oaks, CA, pp 532–595 Merriam SB, Tisdell EJ (2015) Qualitative research: a guide to design and implementation, 4th edn. Jossey-Bass, San Francisco, CA Mirrlees JA (1976) Optimal tax theory: a synthesis. J Publ Econ 6 (4):327–358. https://doi.org/10.1016/0047-2727(76)90047-5 Mirrlees JA (1986) The theory of optimal taxation. Handbook Math Econ 3:1197–1249. https://doi.org/10.1016/S1573-4382(86)03006-0 Mutize M (2021) African governments have developed a taste for Eurobonds: why it’s dangerous. In: The conversation. https:// theconversation.com/african-governments-have-developed-a-tastefor-eurobonds-why-its-dangerous-165469. Accessed 5 April 2022 Natow RS (2020) The use of triangulation in qualitative studies employing elite interviews. Qualit Res 20(2):160–173. https://doi. org/10.1177/1468794119830077 Patton MQ (2014) Qualitative research and evaluation methods: integrating theory and practice. SAGE Publications, Thousand Oaks, CA Popkova EG, Haabazoka L (2019) The cyber economy as an outcome of digital modernization based on the breakthrough technologies of industry 4.0. In: Filippov VM, Chursin AA, Ragulina JV, Popkova EG (eds) The cyber economy: opportunities and challenges for artificial intelligence in the digital workplace. Springer, Cham, pp 3–10. https://doi.org/10.1007/978-3-030-31566-5_1 Ramsey FP (1927) A contribution to the theory of taxation. Econ J 37 (145):47–61. https://doi.org/10.2307/2222721 Ricciuti R, Savoia A, Sen K (2019a) Developing countries would benefit from improved tax. What can help? [Blog]. UNU-WIDER. https://www.wider.unu.edu/publication/developing-countrieswould-benefit-improved-tax-collection. Accessed 4 April 2022 Ricciuti R, Savoia A, Sen K (2019b) How do political institutions affect fiscal capacity? Explaining taxation in developing economies. J Instit Econ 15(2):351–380. https://doi.org/10.1017/S1744137418 000097 Sandmo A (2015) The principal problem in political economy: income distribution in the history of economic thought. Handbook Income Distrib 2:3–65. https://doi.org/10.1016/B978-0-444-59428-0.00002-3 Seligman ERA (1893) The theory of progressive taxation. Polit Sci Quart 8(2):220–251. https://doi.org/10.2307/2139643 Stiglitz JE (2015) In praise of Frank Ramsey’s contribution to the theory of taxation. Econ J 125(583):235–268. https://doi.org/10. 1111/ecoj.12187 War on Want (2015) Exctracting wealth: how Zambia is losing $3billion a year from corporate tax doging. https://www.waronwant. org/sites/default/files/WarOnWant_ZambiaTaxReport_web.pdf. Accessed 5 April 2022 Whetten DA (1989) What constitutes a theoretical contribution? Acad Manag Rev 14(4):490–495. https://doi.org/10.2307/258554 Wilkins S, Neri S, Lean J (2019) The role of theory in the business/management PhD: how students may use theory to make an original contribution to knowledge. Int J Manag Educ 17 (3):100316. https://doi.org/10.1016/j.ijme.2019.100316 Wright PM (2017) Making great theories. J Manag Stud 54(3):384–390 Yin RK (2014) Case study research: design and methods. SAGE Publications, London Zagheni E, Weber I, Gummadi K (2017) Leveraging Facebook’ s advertising platform to monitor stocks of migrants. Populat Develop Rev 43(4):721–734. https://doi.org/10.1111/padr.12102 Zimmer M (2010) ‘But the data is already public’: on the ethics of research in Facebook. Ethics Inform Technol 12(4):313–325. https://doi.org/10.1007/s10676-010-9227-5
Methodology for Assessing the Competitiveness of Metal-Cutting Tools Vlada V. Kolocheva
and Nikita V. Boridko
Abstract
Keywords
The competitiveness of metal-cutting tools depends on many factors, including the dynamics of market changes, the development of technologies and competencies, and the expansion of the range of raw materials and components, which are thoroughly studied and analyzed. Simultaneously, it is necessary to have reliable information about the level of products’ competitiveness. In this regard, it is necessary to improve the theoretical and methodological foundations for forming a mechanism for evaluating and increasing the competitiveness of metal-cutting tools. The research presents the author’s methodology for assessing competitiveness based on two important indicators of the studied products—the total amount of material removed by the cutter and the cost of processing a cubic centimeter. The methodology is developed considering the market’s specifics and the instrument’s peculiarities. The proposed evaluation algorithm, which includes ten stages, gives and substantiates recommendations for forming a group of experts, creating certain conditions for the experiment, choosing the size of the assessed products and brands of the processed material, defining the composition of indicators, and deriving formulas for the total amount of material removed by the cutter per life cycle and the resulting index of the cutter’s competitiveness. The study of product competitiveness according to the proposed methodology makes it possible to obtain data that contribute to correcting the following indicators: cutting speed, minute feed rate, and tool life. Moreover, it makes it possible to improve pricing policy and promote the company’s strategy.
Market Competition Product competitiveness Metal-cutting tools Competitiveness assessment
V. V. Kolocheva (&) N. V. Boridko Novosibirsk State Technical University, Novosibirsk, Russia e-mail: [email protected]
JEL Classifications
D40
1
L11
L15
L61
M31
Introduction
Nowadays, the development of the metalworking industry in Russia is characterized by high growth rates. Machinebuilding and metalworking industries occupy a leading place in the national economy, which determines the important role they play in the national economy complex, having become the structural economic sectors in many cities and regions (Kshitij et al. 2022; Rodionov et al. 2020). Russian production companies are transitioning to a new level of development of quality and communication with the target consumer (Lyamzin 2021), which requires an appropriate level of competitiveness of the company’s products (Ahmad 2018). In these conditions, it is worth noting the increased competition in the machine-building and metalworking market, which requires market participants to search for and take a set of measures to improve their competitiveness. A special market is a market for carbide metal-cutting tools, the demand for which is growing along with the growth of the machine-building segment. A carbide metal-cutting tool is a type of cutting tool used to change the size and shape of a metal workpiece or part during its machining. Speaking of the Russian market of carbide metal-cutting tools, it is worth noting that it is quite diverse, having representatives from Europe, the USA, China, and Russia.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_42
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To understand the position of a company and its product in the market, it is necessary to have an idea of the product’s competitiveness. There is now no generally accepted methodology for assessing the competitiveness of products on the market of carbide metal-cutting tools, which is a problem for the customer and the manufacturing companies. Consequently, consumers do not have an objective mechanism for evaluating the quality of purchased metal-cutting tools (Kolocheva 2021), and manufacturers have no objective information about the competitiveness of their products. In this connection, the research aims to develop a methodology for assessing the competitiveness of carbide metal-cutting tools, considering the peculiarities and quality indicators of the tool and its cost in the considered market.
2
The head of the production enterprise is needed as a person most knowledgeable about the market of metal-cutting tools. This specialist will play a key role in the formation of a group of competing products. The programmer–technologist and production manager should be taken from companies that have specialized metalworking equipment for which the tools to be tested are intended and on the production base of which the tool will be tested. A team of experts forms a group of cutting tools from different manufacturers and brands.
2.2 Step Two: Determination of the Size of the Product to Be Evaluated and the Grade of the Material to Be Processed
Materials and Methods
The qualitatively developed method makes it possible to assess the products’ competitiveness as reliably as possible. The characteristics of the stages of the developed assessment methodology are presented below.
2.1 Stage One: Formation of the Group of Experts For objectivity, it is suggested to include the following specialists in the expert group: • Programmer–technologist of numerically controlled machine tools. • Metal-cutting tool production specialist. • Representative of the quality control department of the metal-cutting tool production enterprise. • Head of the production enterprise. The programmer–technologist of numerically controlled machine tools is competent in technical parameters (i.e., cutting speed, feed per tooth, and machining strategy) (You et al. 2022). Metal-cutting tool production specialist is required to control the cleanliness of the tests, compliance with the specified recommendations, technological modes, and compliance with the technological capabilities of the equipment recommended by the cutting tool manufacturer. A representative of the quality control department of a metal-cutting tool manufacturer performs incoming quality control of the cutting tools for compliance with the declared characteristics.
Even though there is a huge number of cutter sizes, it is necessary to be guided by the frequently used sizes (Table 1). From the data presented in Table 1, we can see that the most consumed diameters range from 8 to 12 mm due to the technological capabilities of the parts manufactured and the ratio of productivity and price. As the diameter increases, the cost of the cutter invariably increases, so does the final cost of manufacturing the product. Additionally, in some cases, there are technological limitations in the manufacture of parts, exceeding the allowable load on the moving parts of the machine, primarily on the spindle—the main working unit of the machine, the presence of internal radii of small dimensions. The length of the cutting surface is selected from a range of standard sizes due to the fact that they are more versatile and multifunctional when machining different sizes of parts. The number of teeth for machining steel of different grades is usually chosen in the number of four. This is due to the fact that this number of teeth provides optimum stiffness of the working part and efficient removal of steel chips from the cutting zone. In mechanical engineering, ferrous metals dominate among the materials processed. The following steels should be noted of the most commonly worked ferrous metals: Table 1 Most commonly used cutter sizes Diameter, mm
Length of the cutting surface, mm
Number of teeth, pcs
8
20
4
10
30
12
40
Source Compiled by the authors
Methodology for Assessing the Competitiveness of Metal-Cutting Tools
• Steel 20—this material is used to make parts that are subsequently welded. The small amount of carbon ensures less brittleness after welding. • Steel 45 is used in the manufacture of fasteners and key power components. • Steel 40X is a higher quality material (compared with Steel 45) used in the same range and better processed but at a higher price. • Steel 30KhGSA is a high-quality structural material often used in the aviation and aerospace industries to manufacture key high-strength parts.
253
5. A tool coating is a material applied to a tool’s working surface to extend the tool’s life and give it a competitive advantage. 6. The total amount of material removed by the cutter per life cycle is an indicator showing the total amount of material that has been processed by the cutter over the total operating time and is measured in cc. Of all indicators presented above, there are two main ones: “Price” (PC) and “Total material removed by the cutter per life cycle” (VF). The first indicator is set by producers (sellers). The second indicator is comprehensive and includes the other four indicators. To calculate the second indicator, it is necessary to derive several formulas.
2.3 Step Three: Formation of a Group of Competing Products At this stage, experts need to identify brands of products to be tested.
2.4 Step Four: Determination of Indicators for Assessing the Products’ Competitiveness There are six main indicators for metal-cutting tools (Bobzin et al. 2021; Chinchanikar and Choudhury 2013; Gaddafee and Chinchanikar 2020; Liu et al. 2022) by which their competitiveness can be evaluated. These indicators are as follows: 1. Price. Any market has premium products and budget options. Meanwhile, the price is not always an indicator of the high quality of a particular metal-cutting tool manufacturer. 2. Cutting speed is the rate at which the cutting edge moves about its axis in the material to be machined. It depends on the technological capabilities of the equipment to allow high-speed or conventional machining. The indicator is measured in meters per minute. A distinctive feature of high-speed machining is the ability to cut small depths of metal at high speeds of tool movement along the axes. This reduces the load on all elements of the metal-cutting equipment by removing a small allowance in one pass. Simultaneously, it increases productivity due to high feed rates. 3. Feed per minute is the speed at which the cutting tool or workpiece moves in relation to the cutting tool axes. The indicator is measured in millimeters per minute. 4. Tool life is the total period of the tool’s working time when it is in the process of cutting material. The indicator is measured in minutes.
2.5 Stage Five: Deriving the Formula for Calculating the Indicator “Total Material Removed by the Cutter Per Life Cycle” The first value to be calculated is the “Feed per minute” (FM). It is calculated by multiplying three indicators: “Feed per tooth,” “Number of teeth,” and “Spindle speed” (Formula 1). F M ¼ F Z z n;
ð1Þ
where FZ—feed per tooth; z—number of teeth; n—spindle speed. Feed per tooth is the amount of material removed per cutting edge of the tool per rotation around the axis. The number of teeth is the number of cutting elements located on the cutter. Spindle speed is the number of rotations made by the spindle in which the metal-cutting tool, in this case, the cutter, is attached. To calculate the index “Spindle speed,” it is necessary to use the formula for calculating the index “Cutting speed” (VC). This parameter must be considered because it directly affects the wear of the cutting tool and, consequently, the quality of the workpiece, as well as affects the load on the spindle. This value is found by Formula 2. VC ¼
pdn ; 1000
ð2Þ
where: VC—cutting velocity; p—mathematical constant (3.14); d—tool diameter; n—spindle speed. Using the above formula, we can derive a formula for calculating the “Spindle speed” (Formula 3). n¼
V C 1000 : pd
ð3Þ
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The resulting formula must be inserted into the formula for calculating the index “Feed per minute” (FM). Thus, we obtain the following expression (Formula 4):
2.6 Stage Six: Conducting Test Trials of Selected Product Samples
V C 1000 : FM ¼ FZ z pd
It is recommended to carry out tests at an enterprise engaged in serial production of metalworking products and having metalworking equipment that meets high-speed machining requirements. It is possible to conduct tests in a specialized laboratory. It should be considered that the quality and reliability of the tests carried out are significantly affected by the system’s rigidity, which includes a complex of four components: machine, fixture, tool, and workpiece. Insufficient rigidity of machine units leads to vibrations during material processing; they adversely affect the durability of the cutting tools. Insufficient rigidity of the fixture in which the workpiece is clamped can lead to deformation of the workpiece during machining and its displacement, which can lead to tool breakage. Increased tool outreach weakens the cutter’s rigidity, causes vibration, deforms the cutter, and usually breaks it. Insufficient rigidity of the part design contributes to poor fixation in the fixture. In the course of testing, we obtain all the necessary data to calculate the main indicators of competitiveness of metal-cutting products.
ð4Þ
After calculating “Feed per minute,” we can go on to calculate the total volume of material (VF) that the cutter removes per life cycle (Formula 5). V F ¼ S F M t;
ð5Þ
where: S—the area of the removed material; FM—feed per minute; t—tool life. The area of material removed is the area of material that the cutting edge removes in one rotation. This value is found by multiplying the cutting depth by the cutting width (Formula 6). S ¼ ap ae ;
ð6Þ
where: S—the area of the removed material; ap—cutting depth; ae—cutting width. The index “Depth of material cut” shows the depth of material removed from the workpiece by the cutter face, that is, the distance between the machined and unmachined surfaces, measured along the axis of the cutter. It is determined by Formula 7. ap ¼ kp d;
ð7Þ
where d—the diameter of the cutting tool; kp—coefficient determined based on specific conditions of metal processing and recommendations of the cutting tool manufacturer, and it is taken from 1 to 1.5. The “Width of material to be removed” shows the width of material cut by the cutter, measured perpendicular to the cutter’s axis of rotation from the raw surface, determined by Formula 8. ae ¼ ke d;
At this point, it is necessary to use the formulas derived in step five and calculate the indicators “Feed per minute” and “Total volume of processed material.”
2.8 Stage Eight: Analysis of the Obtained Data At this stage, it is necessary to analyze the data obtained.
ð8Þ
where ke—coefficient depending on the diameter of the cutter, technical capabilities of the equipment, and metal processing strategy; it is mainly taken as 0.1. Let us insert the described formula into the formula for calculating the total volume of material removed by the cutter. We get the following expression (Formula 9). V F ¼ ap ae F M t:
2.7 Stage Seven: Calculation of the Data Obtained During the Test
ð9Þ
2.9 Stage Nine: Calculation of the Resulting Competitiveness Indicator After calculating and analyzing the indicators obtained in the previous stages, we can derive the resulting indicator. This indicator is the “Cost per cubic centimeter of material removed,” which includes all three indicators defined in step four, beginning with the price and ending with the volume of material processed.
Methodology for Assessing the Competitiveness of Metal-Cutting Tools
The indicator “Cost per cubic centimeter” displays the cost of one cubic centimeter removed by a particular cutter. To calculate this indicator, it is necessary to find the ratio of the total amount of material removed over the life cycle of the cutter to its cost (Formula 10). P¼
Pc ; VF
ð10Þ
where P—the cost of removing one cubic centimeter of material; VF—the total volume of material removed by the cutter per life cycle; PC—cutter price.
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Table 2 Ranking by “Total amount of material milled per life cycle” Place
Company
Volume of processed material, cm3
1
Horn
894.27
2
Sandvic
848.41
3
Kiosera
722.29
4
Mitsubishi
573.25
5
Kennmetal
551.85
6
Wolf
286.68
7
Gesac
183.44
8
ZCC
171.97
Source Compiled by the authors
2.10 Stage Ten: Final Analysis of the Results At this stage, it is necessary to conduct a comparative analysis of the data obtained in the previous stages and draw conclusions.
3
Results
Using the developed methodology, the authors evaluated the competitiveness of carbide metal-cutting tools presented in the Novosibirsk market. A machine-building enterprise, one of the leaders of the domestic machine-building industry in the field of linear actuators, was chosen as the test base. It was decided to use a cutter with a diameter of 10 mm, a cutting length of 30 mm, and the number of teeth equal to four as a test-comparison sample. The cutting depth is 12 mm. Steel 45 was selected as the material to be machined. The following manufacturers were selected for testing: premium segment—Sandvic and Horn; mid-price segment— Kiosera, Mitsubishi, and Kennametal; budget segment— ZCC, Gesac, and Wolf. The calculation resulted in the ranking of the tested products by the indicator “Total volume of material processed by the cutter per life cycle” (Formula 9) presented in Table 2. When calculating the resulting competitiveness indicator “Cost per cubic centimeter of processed material” (Formula 10), we obtained the data presented in Table 3. Without resorting to a detailed comparison, we can see that the results presented in Table 3 differ significantly from those in Table 2. Premium companies have significantly lost their positions. “Horn” moved up to fourth place, and “Sandvic” moved to sixth place. The leading positions are occupied by companies in the mid-price segment: “Kiosera” and “Mitsubishi.” “Kennametal” remains within the midprice range and ranks fifth. Budget companies are still the outsiders in seventh and eighth places. “Wolf” moved from sixth place to third.
Table 3 Rating by “Cost per cubic centimeter” Place
Company
Price of 1 cm3
1
Kiosera
13.84
2
Mitsubishi
15.70
11.85
3
Wolf
16.57
16.48
4
Horn
17.89
22.64
5
Kennametal
18.12
23.62
6
Sandvic
18.86
26.62
7
Gesac
19.08
27.46
8
ZCC
23.26
40.50
Increase in price relative to the first place, %
Source Compiled by the authors
“Sandvic” takes sixth place and gives up its place in the rating to the second representative of the premium segment “Horn” and all representatives of the mid-price segment, which clearly indicates a significant overpayment for the brand. Premium brand “Horn” did better, but fourth place is not the level of the premium segment. Mid-priced companies “Kiosera” and “Mitsubishi” take the top positions. This result suggests that despite the fact that the companies belong to the medium-price segment, they can be much more profitable than representatives of premium brands. The third place occupied by “Wolf” products indicates a good price–quality ratio. Being a representative of the budget segment on the previous two indicators and occupying sixth place, the company’s products come in third place, expressed in the cost per cubic centimeter of machined material, in a comprehensive analysis and consideration of all factors. This company can be recommended to work on increasing brand awareness, improving its presence in the information environment of the target audience, and increasing customer loyalty (Gupta et al. 2020; Mamontov et al. 2021; Melović et al. 2016).
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Conclusion
The product evaluation methodology developed by the authors is suggested to be applied periodically considering the current situation in the market of carbide cutting tools, the appearance of new brands in the market (Shchekoldin and Tsoy 2018), the introduction of changes in the technological process of tool production, and the changes in the material transportation processes (Kukla et al. 2021). The proposed assessment methodology can be used for other types of products in this industry, subject to adjustments to formulas associated with the processing and the calculation of the volume of the processed material. Speaking about the resultant indicator, it is universal and applicable not only in the market of metalworking tools but also in the market of woodworking tools, where all kinds of cutters are used as cutting tools and their assortment is enormous.
References Ahmad M (2018) Assessment methodology for competitive manufacturing. Proced Manuf 17:843–851. https://doi.org/10.1016/j.promfg. 2018.10.136 Bobzin K, Brögelmann T, Maier HJ, Heidenblut T, Kahra C, Carlet M (2021) Influence of residual stresses in hard tool coatings on the cutting performance. J Manuf Process 69:340–350. https://doi.org/ 10.1016/j.jmapro.2021.08.011 Chinchanikar S, Choudhury SK (2013) Effect of work material hardness and cutting parameters on performance of coated carbide tool when turning hardened steel: an optimization approach. Measurement 46(4):1572–1584. https://doi.org/10.1016/j.measurement. 2012.11.032 Gaddafee M, Chinchanikar S (2020) An experimental investigation of cutting tool reliability and its prediction using Weibull and Gamma models: a comparative assessment. Mater Today Proceed 24(Part 2):1478–1487. https://doi.org/10.1016/j.matpr.2020.04.467 Gupta S, Gallear D, Rudd J, Foroudi P (2020) The impact of brand value on brand competitiveness. J Bus Res 112:210–222. https:// doi.org/10.1016/j.jbusres.2020.02.033
Kolocheva VV (2021) Criteria for auditing telecommunications equipment suppliers. In: Solovev DB, Savaley VV, Bekker AT, Petukhov VI (eds) Proceeding of the international science and technology conference “FarEastCon 2020.” Springer, Singapore, pp 911–920 Kshitij G, Khanna N, Yildirim ÇV, Dag S, Sarikaya M (2022) Resource conservation and sustainable development in the metal cutting industry within the framework of the green economy concept: an overview and case study. Sustain Mater Technol 34: e00507. https://doi.org/10.1016/j.susmat.2022.e00507 Kukla L, Maksimov S, Shchekoldin V, Nazarkina V (2021) Piggyback transportation as a factor in ensuring sustainable development of transport links between regions. E3S Web Confer 296:03008. https://doi.org/10.1051/e3sconf/202129603008 Liu X, Yue C, Liang SY, Wang L (2022) Systematic review on tool breakage monitoring techniques in machining operations. Int J Mach Tools Manuf 176:103882. https://doi.org/10.1016/j.ijmachtools.2022. 103882 Lyamzin O (2021) Situational analysis of the problem of assessing the effectiveness of cluster development of the territory as an aspect of the implementation of its sustainable development. E3S Web Confer 296:03007. https://doi.org/10.1051/e3sconf/202129603007 Mamontov SA, Saliy VV, Schmidt IA, Glebova DV (2021) Formation of integrated marketing communications in the cooperative economy sector. In: Bogoviz AV, Suglobov AE, Maloletko AN, Kaurova OV, Lobova SV (eds) Frontier information technology and systems research in cooperative economics. Springer, Cham, pp 869–877 Melović B, Ishkov A, Romanovich M (2016) Branding companies as a factor of competitiveness: relevance for the engineering management. Proced Eng 165:1563–1567. https://doi.org/10.1016/j.proeng. 2016.11.894 Rodionov A, Danilina M, Buslaev S (2020) Improving the sustainability of metal-producing industries in Russia. IOP Confer Ser Mater Sci Eng 1001:012036. https://doi.org/10.1088/1757-899X/ 1001/1/012036 Shchekoldin V, Tsoy M (2018) The application of modified RFM-analysis to increase the loyalty of consumers of industrial rubber articles. In: Proceedings of the APEIE 2018: XIV international scientific-technical conference on actual problems of electronics instrument engineering. Novosibirsk, pp 443–446. https:// doi.org/10.1109/APEIE.2018.8546229 You Z, Gao H, Guo L, Liu Y, Li J, Li C (2022) Machine vision based adaptive online condition monitoring for milling cutter under spindle rotation. Mech Syst Sig Process 171:108904. https://doi.org/ 10.1016/j.ymssp.2022.108904
Modeling the Motivation of Top Management of the Governing Structures of the Regions Using Logistic Regression Sergey N. Yashin , Egor V. Koshelev , Dmitrii A. Sukhanov , Ekaterina P. Garina , and Elena P. Kozlova
Abstract
Keywords
The research subject is the top management of the governing structures of the regions. The presented model covers the top management motivations in the administrative structures of the regions, the administrative structures of innovative enterprises, and informal associations of innovative industrial clusters in the country’s regions. Simultaneously, it is assumed that informal associations are integral to the governing structures of regions and innovative enterprises. Therefore, they are not analyzed separately. The key conclusion is that one of the sufficiently high-quality methods for processing a large amount of data is logistic regression. For this reason, logistic regression can be used to model the motivation of the top management of the governing structures of the regions and the management structures of innovative enterprises. Model implementation for top managers of state structures of the Novgorod region should be encouraged only financially at the end of 2019 and 2020.
Top management motivation Material motivation Non-material motivation Strategic potential Logistic regression
S. N. Yashin (&) E. V. Koshelev Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russia e-mail: [email protected] E. V. Koshelev e-mail: [email protected] D. A. Sukhanov NSEPI APE “Biota—Plus”, Nizhny Novgorod, Russia e-mail: [email protected] E. P. Garina E. P. Kozlova Minin Nizhny Novgorod State Pedagogical University, Nizhny Novgorod, Russia e-mail: [email protected]
JEL Classifications
G11
1
G18
H43
H54
O22
O35
Introduction
Issues of regional governing structures’ top management and informal associations of the innovation-industrial cluster are key to implementing the regional strategic goals. Simultaneously, motivation allows top managers to solve problems of a different nature—general state problems, improving the welfare, organizational, marketing. Data availability is necessary to optimize regional state management. Data science deals with these issues. However, several problems in data science need to be addressed. This is the main stimulus for its contemporary development (Angel and Washington 2020). “Informed decisions about whether and how to use digital datasets depend on understanding the quality of the underlying data and related information” (Peng et al. 2022). One of the sufficiently high-quality methods for processing a large amount of data is logistic regression. Of particular interest is how successfully logistic regression is applied in economics and finance. “The work of Al Khafaya is aimed at studying the economic consequences of various factors of an individual for determining the level of wealth or poverty of the selected population of countries. Additionally, a logistic regression model was created to estimate these levels” (Neamah et al. 2021).
E. P. Kozlova e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_43
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“The work of Li et al. considers and predicts the management of financial risks of an organization using a logistic regression model. Its application makes it possible to simultaneously analyze various risk factors as discrete and continuous variables, as well as analyze the interactions and mix external variables” (Li et al. 2022). In this paper, we will use logistic regression to model the motivation of top management of the governing structures of the country’s regions. This problem has long attracted the attention of various scientists (Hameduddin and Engbers 2021). The rational motivation of top managers is also important in large corporations, especially since some of the technologies used in this case can also be used in public service (Sun 2021). Based on the data of the Yashin et al. (2022) work “a three-objective problem of global optimization,” we now apply logistic regression for the same problem. Additionally, we will verify the resulting model.
2
Materials and Method
This model covers the material and non-material motivations of governing structures in regions, the management structures of innovative enterprises, and informal associations of innovative industrial clusters in the country’s regions. Simultaneously, we believe that informal associations are an integral part of the governing structures of regions and innovative enterprises. Thus, we will not analyze them separately (Fig. 1). Stage 1: building regression models. As an objective function, we consider demography (y). We believe that regions with innovation-industrial clusters develop successfully in them if this coefficient is positive. For logistic regression, the coefficient values are converted to binary format. If the value is positive, it will be 1 or “True.” If it is negative, then it will be 0 or “False.” The parameters that determine the target function for non-material and material
Collection and grouping of data for building regression models
1
Construction of logistic regressions of nonmaterial and material motivation 2
motivation of top management, as well as the availability of strategic potential in the regions, are collected for at least ten years. Given that we analyze only innovation-industrial regions, we get 20 regions out of 85 possible. As a result, a data matrix with dimensions is obtained for 10 years. The first three factors [GRP per capita (x1), investments in fixed capital per capita (x2), and internal innovation funding (x3)] characterize non-material incentives for top managers in government structures system. The next three factors [monetary earnings (per month) (x1), residential premises total area per capita (x2), and autotransport infrastructure (x3)] characterize material incentives system. The last three factors [tax revenue per capita (x1), employment rate (x2), and the number of students per 10,000 people (x3)] are strategic. The first three factors reflect the effectiveness of solving national problems. The next three factors reflect the effectiveness of solving priority tasks for the population. The priorities of the population are more important. Therefore, the effectiveness of their implementation must be materially motivated. We recommend non-material motivation for the implementation of national tasks. Stage 2 constructs logistic regressions of non-material and material motivation and strategic potential. In general, the logistic regression equation is as follows (Khalafyan 2007): y¼
ð1Þ
In probit and logit regression, the binary response is modeled as a continuous variable that takes values from the segment (Khalafyan 2007): If y 2 ½0; 0:5; then y ¼ 0; if y 2 ð0:5; 1; then y ¼ 1: ð2Þ We build logistic regressions for non-material and material motivation and strategic potential depending on the corresponding x1, x2, and x3 in the Statistic program. According to the well-known “curse of dimensionality”
Verification of the obtained regressions according to the data of the new 3
expfb0 þ b1 x1 þ . . . þ bn xn g : 1 þ expfb0 þ b1 x1 þ . . . þ bn xn g
Determinatio n of the leading regions of the planned parameters of the models 4
Assessment of the conformity of the regions to the planned parameters 5
Fig. 1 Stages of implementing the motivation model for the top management of the governing structures of the regions. Source Compiled by the authors
Modeling the Motivation of Top Management of the Governing...
problem, we build all three designated objective functions depending on a small number of variables (i.e., x1, x2, and x3), which allows us to reduce the model error on future test data (Grus 2019). Stage 3 verifies the obtained regressions according to the data of the new observation period. The year 2020 is taken as a new test period. Such verification of the model makes it possible to find out how successfully the logistic regression is built even without its machine learning. Stage 4 determines the leading regions and ranges of the planned parameters of the models. Based on the available input data, we find those regions for which the fact of an increase in the population growth rate (y = 1) more often coincides with the forecast according to the obtained logistic regressions. As a result, we obtain the ranges of places occupied by subjects in the Russian Federation, corresponding to the leading regions. Stage 5 assesses the conformity of the regions to the planned parameters of the models. At this stage, it is analyzed if such a correspondence is actually observed, and then top managers of state structures should be encouraged non-materially or materially, depending on which function of motivation the correspondence is observed. The presented algorithm is applied separately to the administrative structures of the regions and innovative enterprises.
3
Results
We create the model of the motivation of the top management of state structures of the country’s regions using logistic regression for this. In conclusion, we will draw conclusions for a specific region, i.e., the Novgorod Region. It is necessary to conduct a simulation of the motivation of the top management of the governing structures of the region. Strategic potential of the region logistic regressions (Rosstat) for ten years from 2010 to 2019 was obtained in the Statistic program. Regression equations are as follows: • For non-material motivation:
y¼
expf0:296939 0:03000692x1 0:006788157x2 þ 0:01531825x3 g : 1 þ expf0:296939 0:03000692x1 0:006788157x2 þ 0:01531825x3 g
• For material motivation:
y¼
expf3:441376 0:02086545x1 þ 0:08356386x2 0:01114076x3 g : 1 þ expf3:441376 0:02086545x1 þ 0:08356386x2 0:01114076x3 g
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• For strategic potential:
y¼
expf0:03351345 0:03047912x1 þ 0:04146308x2 0:03085751x3 g : 1 þ expf0:03351345 0:03047912x1 þ 0:04146308x2 0:03085751x3 g
1. Model verification is mostly successful—70% of a successful forecast for non-material and material motivation. For the strategic potential, a successful forecast equals only 45%, which is explained by the high probability of the free-term error in the logistic regression equation— 0.92. 2. In terms of the range of parameters of non-material and material motivation and strategic potential, the Novgorod Region has good indicators only for the parameters of material motivation in 2019 and 2020. 3. According to the equation of logistic regression of non-material motivation, the parameters of GRP and investments should decrease, while the costs of R&D should increase. This is done for the Novgorod Region. Therefore, there are chances to improve the parameters of non-material motivation in the future. For the parameters of the strategic potential according to the logistic regression equation, the parameters of tax receipts and the number of students should decrease, while the employment rate should increase. This is done for the Novgorod Region. Therefore, there are chances to improve the parameters of the strategic potential in the future. 4. According to the conclusion of paragraph 2, the top managers of state structures of the Novgorod Region should only be encouraged financially (2019 and 2020). Motivation of top management of the management structures’ logistic regression was built (Rosstat) for ten years from 2010 to 2019 based on the parameters of non-material (x1) and material motivation (x2) of top management and the strategic potential of the region (x3). The parameters “issued patents for inventions” (x1), “developed advanced production technologies” (x2), and “organizations R&D” (x3) were taken. The regression equation is as follows: y¼
expf0:6046861 0:04929069x1 þ 0:05561235x2 0:04639098x3 g : 1 þ expf0:6046861 0:04929069x1 þ 0:05561235x2 0:04639098x3 g
Linking three designated parameters in one logistic regression improves its quality: 1. Model verification is successful—60% of a successful forecast.
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2. In terms of the range of parameters of non-material and material motivation and strategic potential, the Novgorod Region had good performance in 2019 and 2020. That is, the region falls into the range of the leading regions— Moscow, the Republic of Tatarstan, and Tomsk Regions. 3. According to the logistic regression equation, the parameter of non-material motivation and strategic potential should be less, and the parameter of material motivation— more. This is not the case for the Novgorod Region. 4. According to the conclusion of paragraph 2, the top managers of state structures of the Novgorod Region should only be encouraged financially (2019 and 2020).
4. Approbation made it possible to conclude that the top managers of innovative enterprises in the Novgorod Region should be encouraged financially and nonfinancially according to the results of 2019 and 2020.
Acknowledgements The study was carried out within the framework of realizing the Strategic Academic Leadership Program “Priority 2030,” project H-426-99_2022-2023 “Socio-economic models and technologies for the creative human capital development in the innovative society.”
References The analysis of the same data using a multipurpose algorithm, carried out by Yashin et al. (2022), led to the conclusion that the maximum population growth will be observed in the case of focusing on the strategic potential. In this case, the values of six parameters should be equal to 1, and the remaining 3–75. We also found that the ranges of the planned model parameters obtained for the leading regions are important. Simultaneously, these ranges are compiled for each target function, i.e., non-material and material motivation.
4
Conclusion
Let us point to the key conclusions from the research results: 1. One of the sufficiently high-quality methods for processing a large amount of data is logistic regression. 2. For this reason, logistic regression can be used to model the motivation of the top management of the governing structures of the regions and the management structures of innovative enterprises. 3. Model implementation for top managers of state structures of the Novgorod region should be encouraged only financially at the end of 2019 and 2020.
Angel K, Washington D (2020) A text analysis of data-science career opportunities and US iSchool curriculum. J Educ Libr Inform Sci 61(2):270–293. https://doi.org/10.3138/jelis.2018-0067 Grus J (2019) Data science from scratch: first principles with Python, 2nd edn. O’Reilly, Sebastopol, CA Hameduddin T, Engbers T (2021) Leadership and public service motivation: a systematic synthesis. Int Public Manag J 25(1):86– 119. https://doi.org/10.1080/10967494.2021.1884150 Khalafyan AA (2007) Statistica 6. Statistical data analysis: textbook, 3rd edn. Binom-Press LLC., Moscow Li X, Yan S, Lu J, Ding Y (2022) Prediction and analysis of corporate financial risk assessment using logistic regression algorithm in multiple uncertainty environment. J Environ Public Health 2022:2733923. https://doi.org/10.1155/2022/2733923 Neamah MW, Mohammed MEAA, Al-Khafajy Z (2021) Utilizing the logistic regression model in analyzing the categorical data of economic effects. Turk J Comput Math Educ 12(4):638–646 Peng G, Lacagnina C, Downs RR, Ganske A, Ramapriyan HK, Ivánová I et al (2022) Global community guidelines for documenting, sharing, and reusing quality information of individual digital datasets. Data Sci J 21(1):8. https://doi.org/10.5334/dsj-2022-008 Sun S (2021) The relationship between public service motivation and affective commitment in the public sector change: a moderated mediation model. Front Psychol 12:631948. https://doi.org/10.3389/ fpsyg.2021.631948 Yashin SN, Koshelev EV, Sukhanov DA (2022) Modeling of motivation of key executives of government agencies of regions using a multi-objective genetic algorithm. Finan Credit 28(5): 972–999
The Use of Artificial Intelligence in Teaching Foreign Languages Marina L. Gruzdeva , Natalia Kh. Frolova , Zhanna V. Smirnova , Sergey D. Tsymbalov , and Alexander P. Garin
found that AI algorithms promote deep learning helping students until they improve their understanding of the topic they are learning at a particular moment.
Abstract
The research considers the issue of using AI in teaching foreign languages. The authors consider AI as augmented (enhanced) intelligence. AI provides the opportunity to receive additional information and draw conclusions necessary for making more informed and rational decisions. With the continuous development of big data and cloud computing, AI plays an important role in education. Traditional foreign language teaching cannot satisfy students’ individual, innovative, and collaborative learning styles. AI-powered mode brings new possibilities to foreign language teaching. The authors describe the use of AI technologies such as chatbots when teaching foreign languages, which allow students to practice speaking in real time, practice their skills, and gain confidence before they have to talk with real people. The authors are convinced that when teaching a foreign language, the greatest pedagogical effect is achieved through the use of certain AI algorithms, which in turn allows students to speed up the study of a particular language. Learners have the opportunity to learn the language by repeating phrase patterns that show relationships between words. AI has had a significant impact on the educational experience of students. Educators have M. L. Gruzdeva (&) Z. V. Smirnova S. D. Tsymbalov A. P. Garin Minin Nizhny Novgorod State Pedagogical University, Nizhny Novgorod, Russia e-mail: [email protected] Z. V. Smirnova e-mail: [email protected] S. D. Tsymbalov e-mail: [email protected] A. P. Garin e-mail: [email protected] M. L. Gruzdeva N. Kh. Frolova N.A. Dobrolyubov Linguistics, University of Nizhny Novgorod, Nizhny Novgorod, Russia e-mail: [email protected]
Keywords
Artificial intelligence Education Level of knowledge Phrase patterns Innovations JEL Classification
I23
1
Introduction
There is the growing scope of actions that can be performed using AI. For example, students’ written (so far) work (e.g., essays) can be assessed using AI algorithms; face detection by means of artificial intelligence can also be used to control online exams. The scientific and technical potential of AI makes it possible to teaching staff in pedagogical activities, comprehensive development of students. The future of graduate students depends precisely on those professions where AI is used, where the profile of work and work methods can change dramatically. The COVID-19 pandemic has rapidly pushed the associated opportunities for further interaction between technology and students through AI. Some commercial interest can also be attributed to this: current learning management systems use possible AI algorithms as a key tool in favor of sales, everywhere with the most common commercial learning technologies (e.g., paid language learning applications can be attributed) developed and based on some form of AI. Chronologically, computerization has made it possible to make the transition from mundane manual and cognitive activities to non-standard analytical and interactive tasks, envisioning that modern technologies, especially such as
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_44
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Table 1 Artificial intelligence potential in education
Students
• Early identification and elimination of individual problems with the learning of students • An individual approach to the choice of courses focused on students • Collecting data on the learning habits of each student and applying intelligent adaptive intervention based on their current learning state
Teachers
• Using students’ personal data to determine the best learning method for each student • Analysis and use of information about the student’s performance of the proposed tasks and exercises • Analysis of the curriculum and the content of educational materials to develop and use during training content specifically designed to meet the needs of each student
Administration of educational institutions
• Performance of work related to the supervision of the educational process, quick feedback from teachers and students • Personnel issues, financial, infrastructure management, privacy, health, and safety
Source Compiled by the authors
artificial intelligence, have an impact on higher education. Thus, the application of AI is a problem of technological innovation and a significant change in the relationship between higher education and the newly dictating socio-economic interests. At this moment in time, in an era of accelerated digital transformation, when social change is as significant as technological, higher education institutions need to quickly develop strong policies and diverse research programs regarding the application of AI and taking into account the diverse consequences. According to TIMSS (Federal Institute for the Assessment of the Quality Education 2023), AI can change many aspects of society, including education. From the numerous studies carried out, it becomes clear that AI has the potential to be used in the field of education in several different aspects (Table 1).
2
Method
AI is a machine technology that uses algorithms to provide predictions, diagnoses, suggestions, and estimates. The educational community has recognized the potential of AI to optimize the learning process in various contexts: scientific and technological advances affect the evolution of educational materials, methods, educational models, and types of educational systems and organizations (Smirnova et al. 2016). AI-based applications in education include personalized learning systems, data mining in education, intelligent agents, chatbots, teaching children with special needs, interaction with assistant bots, AI-based assessment systems, automatic creation of tests, and others. In teaching foreign languages, scientists break down the use of AI into several areas:
1. Artificial intelligence is used to recognize human speech. AI has the ability to help researchers develop natural language systems because it allows the most accurate speech recognition system to be programmed. Also, when conducting research, AI helps to recognize verbal communication, which in turn is especially common in people who are under stress. During the pilot study, small groups of 3–10 people were invited. The key feature was that their characteristics were drastically different, except for one thing, English was not their first language. Using AI in their study, the authors found that the platform was a linguistic coping strategy in which people developed language skills at precisely the moment when they were under stress due to physiological and psychological factors. In addition, the application and use of AI in psycholinguistics is particularly important because it allows the analysis of natural language processes in humans. To this end, it is becoming increasingly possible to program AI to build the relationship of communication between man and machine, which in the future will be more functional, faster, and simpler (Suglobov et al. 2020). 2. AI applies the method of flipped classrooms (flipped learning) for more efficient learning. In some educational institutions that use AI in their activities to learn a foreign language, integration often occurs with the so-called flipped learning. Especially often AI and flipped learning technologies are used in mixed classes. In this case, the students are more inclined to learn English. It was experimentally proven that students in the experimental group (training using AI technologies and flipped learning) were more confident in their speech than in the control group. Similarly, the ability to listen carefully in
The Use of Artificial Intelligence in Teaching Foreign Languages
the students in the experimental group outperformed those in the control group (Zuraina 2020). 3. AI contributes to the efficiency and effectiveness of teaching a foreign language. An analysis of the use of AI has shown that with the help of its tools it is possible to improve teaching and simplify the study of a foreign (in particular English) language. Communicating with AI-based program algorithms makes it possible to prepare students for live communication with native speakers. In parallel, it turned out that it can be indirectly strengthened. Also, the tool in question has several essential language skills (e.g., reading and writing can be attributed). Experts in various fields of science have come to the conclusion that the integration of AI in pedagogical activities aimed at learning English provides an opportunity for students to interact more effectively with each other and expand their educational horizons (Smirnova et al. 2016). 4. AI is used to evaluate the speech. In a study that studies language learning applications through web technology, it is found that AI is used in human communication through a computer. In other words, instead of using AI to communicate with a person with an application, the learner can now speak with another human speaker through a computer application (Smirnova et al. 2016). 5. Use of machine translation tools. Freely available online translation apps fulfill their primary role by providing users with impressively accurate translations and can also help language learners develop independent second language proficiency. Scholars believe that the tools must interact with learners meaningfully to optimize machine translation tools for educational contexts. Instead of providing a single translation that learners must accept, the output should provide learners with options that they can critically evaluate and thus participate in the process of negotiating meaning through human–machine interaction (Smirnova et al. 2016).
3
Results
In an educational context, it is best to consider AI as augmented (enhanced) intelligence. The use of AI helps all stakeholders to receive additional, expanded information and
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draw the final conclusions necessary for making informed decisions. The following are some of the factors that key stakeholders need to consider: • Learners: Individual learners need help in identifying areas of the curriculum where they need additional support or instructional assistance or where they need more attention. • Teachers: Traditionally, there may be 20–30 students in one primary school class. To assess the achievement of each of the 30 students across all key indicators, 390 different parameters must be tracked. This makes the task much more difficult for the secondary school teacher himself, who often teaches six or more groups of students of different grades or age groups. Career-choosing teachers demonstrate extraordinary dedication and skills, committing to apply them to the best of their ability to benefit students and their families. University professors or deans of departments have to deal with even larger groups of students, and one, as a rule, replaces another every year or even more often. • School administration: To manage an educational institution or lead the process of change, the head of an institution of preschool, secondary, secondary vocational, higher, or additional education needs to consider a wide range of factors and data. In addition to student data, data related to human resources, financial management, and infrastructure should be considered, as well as political aspects, management and oversight, privacy, health and safety, etc. (Duggan 2020). With the continuous development of big data and cloud computing, AI technology plays an important role in education. Traditional foreign language teaching cannot satisfy the individual, innovative, and collaborative learning styles of students. The mode supported by AI brings new possibilities to foreign language teaching. Teaching a second foreign language to students of language specialties of these universities was organized using (including) the use of AI, particularly by interacting with chatbots. It should be noted that AI-based chatbots have changed the way we communicate with customers. Chatbots interact with people online by simulating how people interact with each other. In the era of artificial intelligence, chatbots are increasingly being used by higher education institutions for educational purposes, while being useful for both employees and students. In the last few years alone, AI-based chatbots were implemented (most of them can be traced on the official websites of institutions) into their current activities, designed to provide a quick response to an incoming question from
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potential applicants (Luo et al. 2015). Also, it has the ability to perform a variety of substitute human roles and imitate some human behavior. At the same time, by accumulating experience, it continuously expands the user's communication skills and expands the boundaries of its knowledge and develops direct knowledge of how to build effective communication and improve its own rules of communication and reaction (Gruzdeva and Tukenova 2019; Romanovskaya et al. 2021). AndyRobot and YTranslateBot chatbots help to teach foreign languages. AndyRobot is a famous chatbot for learning English. It sends new words and exercises and can keep up the conversation on various topics using natural language. It cannot replace a real interlocutor but can help beginners start using English. YTranslateBot is a chatbot translator powered by Yandex. It understands phrases and translates them entirely, unlike other bot dictionaries. When learning foreign languages, the most positive effect is achieved due to the fact that the use of AI provides an opportunity for students to speed up the process of learning a particular foreign language. In this case, learners can learn the language by speaking patterns of phrases, which in turn demonstrate the relationship between words. A good example of the use of AI in learning a foreign language is the use of the popular, especially among the younger generation, Siri program, developed by Apple for seamless communication in English. The presented tool is especially relevant. This has been proven to help students improve their speech, particularly pronunciation and listening skills (Ellis 2003; Luo et al. 2015).
The aspects presented above are interconnected with each other, function closely, and cannot work separately.
4
References
Conclusion
AI has had a significant impact on the educational experience of students. Educators have found that AI algorithms promote deep learning helping students until they improve their understanding of the topic they are learning at a particular moment. Recent research illustrates many benefits that AI-based educational systems can provide to the educational process in a variety of ways. Thanks to AI algorithms, it is possible to track the student’s progress in terms of knowledge and understanding. The aspects of advanced artificial intelligence education are as follows: • Use of big data processing; • Informatization of education 2.0, that is, the introduction of IT in the educational process with aspects of AI; • Individual training based on the construction of a student’s profile.
1. First of all, intellectual data processing will certainly pose new challenges for teachers. In doing so, it will also provide them with an indispensable tool for collecting data that has never been collected before, which in turn is a rich enough source of data useful for creating student electronic profiles. 2. Secondly, a key part of informatization of education 2.0 is its connection with AI. It is insufficient for educational information to rely only on the e-learning platform as a repository of texts, tests, videos, and messages. AI technologies should be implemented on educational platforms in the same way as they are used in sales channels such as Amazon and others. This will ensure reliable educational innovations and actively promote new learning theories and practices. 3. Thirdly, individualized learning. A certain algorithm of actions will allow you to create a student profile, so that the application used in the learning process will allow the student to request and use information depending on his specific goals and objectives. This resource is especially important during testing, as well as in the ongoing training process, so that the user is always equipped with optimized information and up-to-date data. Especially, this solution will be effective and useful in the distance learning format (e.g., during global crises, a particularly striking crisis that turned the usual life for everyone is the coronavirus pandemic, at which time traditional education was suspended for a long periods).
Duggan S (2020) AI in education: change at the speed of learning. In: Parshakova A (ed) UNESCO IITE policy brief (Transl. from English; S. Knyazeva, Ed.). UNESCO Institute for Information Technologies in Education, Moscow. https://iite.unesco.org/wpcontent/uploads/2020/11/Steven_Duggan_AI-in-Education_2020.pdf. Accessed 28 Jan 2023 Ellis R (2003) Task-based language learning and teaching. Oxford University Press, Oxford. https://books.google.ru/books?id=coO0bxn BeRgC&lpg=PP11&ots=sXz9X0uxt_&lr&hl=en&pg=PP11#v= onepage&q&f=false. Accessed 28 Jan 2023 Federal Institute for the Assessment of the Quality Education (2023) Brief information about the TIMSS (trends in mathematics and science study). https://fioco.ru/timss. Accessed 28 Jan 2023 Gruzdeva ML, Tukenova NI (2019) Analysis of the current state of research and development in the construction of information and educational environments of higher educational institutions. Vestnik Minin Univ 7(2):1 Luo B-R, Lin Y-L, Chen N-S, Fang W-C (2015) Using smartphone to facilitate English communication and willingness to communicate in a communicative language teaching classroom. In: Proceedings
The Use of Artificial Intelligence in Teaching Foreign Languages of the IEEE 2015: 15th international conference on advanced learning technologies. Hualien, pp 320–322. https://doi.org/10. 1109/ICALT.2015.22 Romanovskaya EV, Andryashina NS, Kuznetsova SN, Smirnova ZV, Ivonina OG (2021) Digital technologies in Russia: trends, place and role in economy. In: Popkova EG, Sergi BS (eds) “Smart technologies” for society, state and economy. Springer, Cham, pp 344–351 Smirnova ZV, Gruzdeva ML, Chaykina ZV, Terekhina OS, Tolsteneva AA, Frolova NH (2016) The role of students’ classroom
265 independent work in higher educational institutions. Indian J Sci Technol 9(22):95568 Suglobov AE, Zharylgasova BT, Savin VY (2020) Audit: textbook for bachelors, 4th edn. Dashkov and Co., Moscow Zuraina A (2020) Artificial intelligence (AI): a review of its uses in language teaching and learning. IOP Conf Ser Mater Sci Eng 769:012043. https://doi.org/10.1088/1757-899X/769/1/012043
Does Understanding the Sustainable Development Concept Affect the Leaders’ Innovative Competencies? Yinan Dong
and Elena I. Lazareva
Abstract
Keywords
It is traditionally considered that the innovative ability or activity of small and medium-sized enterprises has become an important factor influencing the sustainability of their development in conditions of constant fluctuations. A new formulation of the research goal is to solve the inverse problem and prove the existence of an inverse relationship—the dependence between the innovative ability of the leader or manager of the small and medium-sized business (an important factor in the innovative activity of the company) and his or her comprehension of the sustainable development concept. As the basic methodology of the research, the authors took the innovation-cyclical paradigm of sustainable development and an econometric approach, which makes it possible to quantify the cause-effect relations between the parametric characteristics of the analyzed processes. The research result, which determined the list of elements of scientific novelty and its practical importance, is the econometric (correlation-regression) model developed by the authors using the entropic method of data analysis, the experiments with which make it possible to give a clear answer to the question formulated as the main goal— whether understanding of the sustainable development concept affects the leaders’ innovative competencies. The developed model makes it possible to reveal the existence of the required dependence “innovative ability of the chief—comprehension of the sustainable development concept” and forms a ready practical basis for the integration of sustainability (ESG) principles into organizations of various spheres of economic activity that raises its relevance and practical value.
Small and medium-sized enterprises Sustainable development concept Innovation capacity Entropy weight method Econometric model
Y. Dong E. I. Lazareva (&) Southern Federal University, Rostov-On-Don, Russia e-mail: [email protected] Y. Dong e-mail: [email protected]
JEL Classifications
C510
1
O30
Q01
Introduction
As progress in sustainable development (SD) is made, the SD concept is gaining more attention from people. Simultaneously, its wide range of economic, environmental, and social issues has had a profound impact on the subjects of many fields. Due to the diversity of SD contents, previous relevant studies have focused more on the impact of the sustainable development concept on the economies of countries, regions, and large enterprises (Dong and Zhang 2022; Lazareva and Karaycheva 2016). The number of studies on the impact of the SD concept on SMEs is relatively small. However, the impact of the SD concept on the development of SMEs is also very profound. The SD concept is more important for SMEs. SMEs rely on technological innovation. Thus, innovation capacity is particularly important for them. Simultaneously, SMEs are limited by their size and capital in terms of the degree of attention they pay to environmental and social responsibilities. Therefore, innovative technology positively affects the economic and production development of enterprises and, to a certain extent, solves environmental and social responsibility problems from the perspective of technological innovation. Enterprise innovation capacity is influenced by various factors. Many studies have discussed the impact of technology, capital investment, talent reserves, and other factors
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_45
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on enterprise innovation capacity. In addition to these factors, there is another factor that affects the innovation capacity of SMEs—the leadership of SMEs. Compared to large enterprises, SMEs are not competitive in terms of capital investment and talent reserves. Thus, the innovative competencies of leaders are even more important for the innovation capacity of SMEs. This research focuses on the innovation capacity of SMEs, starting from two perspectives—the SD concept understanding and the innovative competencies of SME leaders—to explore whether the SD concept thinking can affect the SME leaders’ innovation capacity. Through the entropy weight method, the SD concept understanding and leadership innovation capacity are evaluated; the causal relationship between the two is further explored through regression analysis. The research results show that the understanding of the SD concept of SME leaders has a positive impact on their innovation capacity. The authors also found that relevant, sustainable development training can effectively improve the SD concept thinking of leaders and enhance their innovation capacity. The research results have important theoretical and practical implications for the development of SMEs. SMEs can strengthen the understanding of the SD concept of leaders through any kind of sustainable development training and, thereby, improve their innovation capacity. This method is also widely applicable and effective in controlling economic costs. The following parts of the research are arranged as follows: • The second part is a literature review, which describes the related research on sustainability, SMEs, and innovation ability. • The third part is the introduction of research methods, which explains the two indicators obtained according to the entropy weight method. • The fourth part is the relevant data and measurement results. • The fifth part is the conclusion.
2
Literature Review
Implementing the SD concept is important for SMEs. Previous works discussed the significance of the sustainability concept for SMEs from two aspects. On the one hand, implementing the SD concept can promote the economic development of SMEs (Matinaro et al. 2019; Schaper 2002). By improving resource utilization efficiency (Dartey-Baah 2014) and reducing waste and emissions (Štreimikienė et al. 2023), SMEs can reduce production costs and improve competitiveness (Anopchenko et al. 2021; de Sousa et al.
2020). On the other hand, the SD concept can also help SMEs better adapt to market changes and enhance their attractiveness to consumers (Tripathi et al. 2020). SMEs can increase their market share by implementing SD strategies. Additionally, SMEs can contribute to society and enhance their credibility and sense of social responsibility (Pratap et al. 2021). Sustainability has become a primary concern for SMEs that integrate environmental and social issues into their strategies (Johnson 2015; Ruiz-Benitez et al. 2019). The concept of sustainability comprehensively considers economic, social, and environmental issues (Lozano et al. 2015). Innovation is the key asset for a company’s sustainability, growth, and survival (Cefis and Marsili 2006). SMEs need innovation to survive and create a competitive advantage (Bullinger et al. 2007). Previous research has shown that the personal characteristics of leaders, such as their personality and thinking style, are important factors that influence leadership innovation capacity (Gerlach et al. 2020). Some literature has also found that the professional knowledge and experience of leaders also affect their innovation capacity (Arici and Muzaffer 2022; Bagheri 2017). However, previous literature has not studied whether the leaders’ understanding of the sustainable development concept has an impact on their innovation capacity. The concept of sustainable development can affect the way leaders think and, in turn, their innovation capacity. Our research in innovation is reflected in two main aspects. First, in the choice of method, we chose entropy weighting as a method for evaluating the SD concept thinking and innovation capacity. Second, we chose a new perspective on innovation in SMEs, starting from the perspective of leaders’ SD thinking, exploring the influence of the SD concept of business leaders on innovation in enterprises and theoretically supplementing the literature on innovation management.
3
Materials and Methods
The entropy weight method is a method widely applied in decision analysis and fuzzy decision-making. In the past decades, the entropy weight method has been widely applied in many fields, such as resource management, risk assessment, decision support systems, and intelligent control (Dong et al. 2010; Yang et al. 2014). The entropy weight method was gradually introduced into the field of decision analysis and management science (Chen et al. 2012; Na and Zhao 2021). Leadership innovation capability can be divided into two levels: the level of innovation consciousness and the level of innovation action. We designed questionnaires and conducted surveys on these two aspects. Among them, the level of innovation consciousness can be divided into the following
Does Understanding the Sustainable Development Concept...
aspects: the importance of innovation to enterprises and the understanding of innovation of oneself. The level of innovation action is divided into R&D investment of enterprises, rewards for innovation of enterprises, and scientific research support. For the assessment of innovation ability, the authors borrowed the Innovation Ability Behavior Form from the research of Na and Zhao (2021) and used it as the evaluation standard for innovation ability. The implementation of the SD concept can be divided into three aspects: • Social (social responsibility, fairness consciousness, education). • Economic (innovation, economic development). • Environmental (environmental consciousness, ecological concept). A representative panel of 120 SMEs in the Chinese city of Nanyang was formed as the research object. The questionnaire survey of managers of the SMEs included in the study formed the information base for analyzing the dependence of innovative competence of business leaders on their understanding of the sustainable development concept. The entropy weight method was used to calculate the sustainable development concept index (SDCI) and innovation ability index (IAI) based on the survey questionnaire data collected. The econometric method was used to analyze the relationship between SDCI and IAI.
4
Results
For statistical analysis, the authors collected and processed 120 valid questionnaires from SME managers (the return rate of questionnaires during the survey was 93.8%). The main descriptive data characterizing the recipients and the results of the entropy weight calculation of the SDCI and IAI of SMEs leaders are presented in Table 1. The average value of the SDCI is * 0.49; the average value of IAI is * 0.51.
Table 1 Descriptive statistics
269
Based on the basic characteristics of SMEs leaders and the SDCI and IAI calculated by the entropy weight method, two quantitative economic models were constructed: Eq. (1) contains a dummy variable SDT, which represents whether the leader takes part in a sustainable development training. I represents the IAI, S represents the SDCI, and T contains the basic information of the leaders. I ¼ a þ b1 S þ b2 SDT þ c T þ n
ð1Þ
I ¼ a þ b1 S þ b2 SDT S þ c T þ n:
ð2Þ
Equation (2) contains an interaction term SDT*S, which represents the influence of SD concept understanding on the leader’s innovation ability. Table 2 presents the results of the econometric modeling, where the first column contains the dummy variable for whether the leader received SD education, and the second column contains the interaction term. From Table 2, we can see that the variables of age, educational background, and the SD concept thinking affect the index of the innovative ability of the leader at 95, 95, and 99% significance levels, respectively. Among the indicators, age has a negative impact on the index of innovative ability. As age increases, the index of innovative ability will decrease. On the other hand, educational background and the SD concept thinking have a positive impact. As the educational background and the SD concept improve, the index of innovative ability will also improve. There is a significant correlation between the SD concept understanding and sustainable development education and training. Figure 1 shows the relationship between the SD concept understanding and whether sustainable development education has been received. Figure 1 shows that accepting SD training helps improve the SD concept understanding of SME leaders (standard errors in parentheses). The results show that leaders who have received training have a 0.1 point higher score in SD rating than those who have not received training.
Variable
Obs
Mean
SD
Min
Max
Age
120
47.441
4.902
38
55
Gender
120
0.708
0.456
0
1
Education
120
2.933
1.275
1
5
Sdtraining
120
0.5
0.502
0
1
S_S
120
0.489
0.135
0.168
0.75
S_I
120
0.514
0.129
0.187
0.82
Note Obs—observations; SD—standard deviation; S_S—sustainable development concept index (SDCI); S_I—innovation ability index (IAI) Source Compiled by the authors
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Y. Dong and E. I. Lazareva
Table 2 Relationship between a leader’s innovation ability and his SD concept understanding Variables
(1)
(2)
Innovation
Innovation
− 0.0200**
Age
− 0.0212**
(0.0200)
(0.0204)
Gender
0.0120
0.0132
(0.0217)
(0.0222)
Education
0.0731**
0.0889**
(0.0304)
(0.0306)
SDT
0.0972***
S_S
0.342***
0.295***
(0.0775)
(0.0854)
(0.0209)
t_s_s
0.168*** (0.0414)
Constant
0.171
0.185
(0.111)
(0.113)
Observations
120
120
R2
0.372
0.347
Note Standard errors in parentheses *** p < 0.01, ** p < 0.05, * p < 0.1; SDT—sustainable development training; S_S—sustainable development concept index (SDCI); S_I—innovation ability index (IAI) Source Compiled by the authors
Dependent variable: the SD concept
Independent variable: training Econometric modeling
The result: The SD concept = 0.438+0,1000·Training, R2=0.138 (0.0163) (0.0230)
Fig. 1 Relationship between the SD concept understanding and training. Source Compiled by the authors
5
Discussion
Sustainability has become an important guiding principle for governments and businesses worldwide. In China, sustainability is also highly valued. More businesses are starting to implement sustainability strategies, such as improving resource efficiency, reducing waste and emissions, and protecting environmental resources to promote their own SD thinking. The concept of sustainability plays a guiding role in the development of SMEs, helping them better adapt to changes in economic development.
6
Conclusion
A survey and statistical analysis of 120 SME leaders showed that the understanding of the SD concept of SME leaders significantly affects their innovation capabilities. Based on the results, some recommendations can be made. First, sustainability education has an impact on the improvement of the sustainability concept understanding of SME leaders. Therefore, it is necessary to strengthen sustainability education for leaders in managing SMEs in the future. Second, the concept of sustainability significantly affects the innovation ability of SME leaders. Innovation is important for the development of SMEs. This provides a new idea and direction for the future practice of SMEs. SMEs can improve their innovation ability from the perspective of sustainability, which will help them achieve more comprehensive and high-quality development. Finally, the research reflects that SMEs do not attach great importance to the concept of sustainability; there is still a gap in the understanding and implementation of sustainability in SMEs. Therefore, it is necessary to further promote the concept of sustainability among SMEs and provide relevant support and guidance to help SMEs implement of sustainability strategies. Although the study shows that the concept of sustainability implementation affects the innovation ability of SME leaders, the selected sample size was limited to Nanyang City in China. Thus, the broader applicability of these findings requires further research to verify. In future research, relevant conclusions can be further verified by starting from a larger geographical area and a more diverse type of business.
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Does Understanding the Sustainable Development Concept... Chen J, Qing L, Hui Q (2012) Application of improved nemerow index method based on entropy weight for groundwater quality evaluation. Agris on-Line Papers Econ Inform 2(3):1284–1290. https:// doi.org/10.6088/IJES.002020300015 Dartey-Baah K (2014) Effective leadership and sustainable development in Africa: is there ‘really’ a link? J Glob Responsibil 5(2):203– 218. https://doi.org/10.1108/JGR-03-2014-0014 de Sousa L, Jabbour AB, Ndubisi NO, Pais Seles BMR (2020) Sustainable development in Asian manufacturing SMEs: progress and directions. Int J Prod Econ 225:107567. https://doi.org/10.1016/ J.IJPE.2019.107567 Dong Z, Zhang Z (2022) Does the business environment improve the sustainable development of enterprises? Sustainability 14(20): 13499. https://doi.org/10.3390/SU142013499 Dong Q, Ai X, Cao G, Zhang Y, Wang X (2010) Study on risk assessment of water security of drought periods based on entropy weight methods. Kybernetes 39(6):864–870. https://doi.org/10. 1108/03684921011046627 Gerlach F, Hundeling M, Rosing K (2020) Ambidextrous leadership and innovation performance: a longitudinal study. Leader Organ Develop J 41(3):383–398. https://doi.org/10.1108/LODJ-07-20190321 Johnson MP (2015) Sustainability management and small and medium-sized enterprises: managers’ awareness and implementation of innovative tools. Corpor Soc Responsibil Environ Manag 22(5):271–285. https://doi.org/10.1002/CSR.1343 Lazareva E, Karaycheva O (2016) Modern organizations reputational capital’ innovative management strategy specification in the international business integration network format. In: Proceedings of SGEM 2016: 3RD international multidisciplinary scientific conference on social sciences and arts. Sofia, Bulgaria, pp 419–426 Lozano R, Carpenter A, Huisingh D (2015) A review of theories of the firm and their contributions to corporate sustainability. J Clean Product 106:430–442. https://doi.org/10.1016/J.JCLEPRO.2014.05.007
271 Matinaro V, Liu Y, Lee TR, Poesche J (2019) Extracting Key factors for sustainable development of enterprises: case study of SMEs in Taiwan. J Clean Product 209:1152–1169. https://doi.org/10.1016/J. JCLEPRO.2018.10.280 Na W, Zhao ZC (2021) The comprehensive evaluation method of low-carbon campus based on an analytic hierarchy process and weights of entropy. Environ Develop Sustain 23(6):9308–9319. https://doi.org/10.1007/S10668-020-01025-0 Pratap SM, Chakraborty A, Roy M, Tripathi A (2021) Developing SME sustainability disclosure index for Bombay Stock Exchange (BSE) listed manufacturing SMEs in India. Environ Develop Sustain 23(1):399–422. https://doi.org/10.1007/s10668-019-00586-z Ruiz-Benitez R, López C, Real JC (2019) Achieving sustainability through the lean and resilient management of the supply chain abstract. Int J Phys Distrib Logist Manag 49(2):122–155. https:// doi.org/10.1108/IJPDLM-10-2017-0320 Schaper M (2002) The challenge of environmental responsibility and sustainable development: implications for SME and entrepreneurship academics. In: Radical changes in the world: will SMEs soar or crash. University of St Gallen KMU-HSG, St. Gallen, pp 525–534. https://www.kmu-hsg.ch/rencontres/IGW_Rencontres/BAND2002_ WEB/F_09_Schaper.pdf. Accessed 12 Feb 2023 Štreimikienė D, Mikalauskiene A, Ciegis R (2023) Sustainable development, leadership, and innovations. CRC Press, Boca Raton, FL Tripathi D, Priyadarshi P, Kumar P, Kumar S (2020) Microfoundations for sustainable development: leadership and employee performance. Int J Organ Anal 28(1):92–108. https://doi.org/10. 1108/IJOA-01-2019-1622 Yang Z, Zhang C, Ge L, Gong D, Gu Y, Huang T (2014) Comprehensive fuzzy evaluation based on entropy weight method for insulator flashover pollution. Dianli Zidonghua Shebei/Electr Power Autom Equip 34(4):90–94. https://doi.org/10.3969/J.ISSN. 1006-6047.2014.04.016
HR Ecosystem Development as a Driver of Increasing Management Sustainability Elena I. Lazareva , Julia V. Gavrilova , Nina Szczygiel , and Dmitry A. Shevchenko
motivational policy measures aimed at the sustainable development of educational organizations in the digital economy.
Abstract
The research substantiates the priority role of HR ecosystem development in improving the sustainability of a contemporary university’s strategic management in the new realities. The research aims to identify key HR risks and substantiate the HR ecosystem development strategy to rank the identified risks. To achieve the research goal, the authors compiled a questionnaire and surveyed employees of two universities—Russian and Chinese. The methodological basis of the research is the innovation-cyclical paradigm of sustainable development, the implementation of which is based on organization management, considering the achievement of economic and social goals. The research result is methodologically substantiated and empirically verified components of HR ecosystem development strategy in the university management system. The scientific novelty of this research consists in the substantiation of the Dematel toolkit and the algorithm of its application for the systemic evaluation of strategic decisions on the HR ecosystem development in the management of an educational organization. The research results have additional value because the tools proposed by the authors identify and rank the key HR risks and justify a strategy for developing an HR ecosystem to minimize the identified risks. The research results can serve as the basis for developing strategic and
E. I. Lazareva (&) J. V. Gavrilova D. A. Shevchenko Southern Federal University, Rostov-On-Don, Russia e-mail: [email protected] J. V. Gavrilova e-mail: [email protected] D. A. Shevchenko e-mail: [email protected] N. Szczygiel University of Aveiro, Aveiro, Portugal e-mail: [email protected]
Keywords
Human resources HR management HR ecosystem Sustainable organizational development Management sustainability JEL Classification
J24
1
C54
O15
M54
Introduction
Relevant in today’s conditions, the agenda of increasing the sustainability of organizational management makes a strategic policy of HR ecosystem development a priority for adapting to innovative (especially digital) technologies and rapid response to all kinds of exogenous fluctuations. The research aims to identify the key HR risks and substantiate the development strategy of the HR ecosystem of an educational organization aimed at minimizing them. In the era of the knowledge economy and expanding digitalization, the competition between companies is increasingly manifested in the competition of education systems and talents (Bai 2022). By adopting digital technologies, educational systems and institutions can contribute to dynamic socio-economic, technological and cultural shifts. Simultaneously, they can become the drivers of growth. In light of these tendencies, education is changing fast and is about to change faster, which places considerable pressure on higher education institutions and their human resources management (HRM). Higher education institutions need to develop HRM policies that would make it possible to retain efficient and
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_46
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effective employees, avoiding the loss of specialists (Siqueira and Alves 2016). As such, efficient HRM is critical to the success of organizations, in this case, higher education institutions (Paper and Kraft 2016). With technological advances, it is important that the employees are committed not only to their work but also to the institution’s mission (Siqueira and Alves 2016). This reinforces the importance of HRM policies, consequently increasing employee retention and decreasing turnover (Aboramadan et al. 2020). The basic practice of HRM related to attracting, selecting, and developing talent should be accompanied by institutional efforts to retain talent and reduce turnover to strengthen the organization’s quality (Paper and Kraft 2016). Therefore, HRM should focus on capitalization and the cost-effectiveness of human resources (Aboramadan et al. 2020). The results of one study of public universities in Uganda show that the university management recognizes the strategic importance of developing an HRM strategic approach in the context of a knowledge-based economy (Kasule and Bisaso 2019). Turnover is one of the main risks of failures in HRM policies in higher education institutions. Turnover and low retention of employees can lead to the loss of great talent and directly impact the quality of services offered. It further generates the risk of high training costs for newcomers because turnover tends to reduce productivity (Siqueira and Alves 2016). Some research suggests that certain ineffective HRM strategies can potentially be risky for a higher education institution, increasing staff turnover (Buck and Watson 2002). In general, failures in strategic HRM can pose considerable risks to an institution in the long run. HRM practices are extremely important to minimize these risks by mediating the relationship between commitment and the performance of employees (Aboramadan et al. 2020). To face these risks, an institution needs to analyze its turnover rates and identify possible failures in HRM and the resulting costs, paying attention to tendencies and recurrent situations (Paper and Kraft 2016). On the other hand, to reduce turnover, the institution must be able to improve the work environment, analyze the performance and increase the confidence and commitment toward the institution (Siqueira and Alves 2016). In this way, the university must be committed to competitive demand and attraction based on intentional choices, which predict the performance of the teaching staff in streamlining teaching activities. Management is important to support higher education institutions in times of change. Management skills are a collection of abilities of the individuals in a managerial position to fulfill some specific management activities and tasks. Management skills allow professionals to better lead, communicate, and budget. In other words, they support the management process in decision-making.
E. I. Lazareva et al.
One way to approach the qualities and skills of a successful manager is the one proposed by Reh (2019), in which the author endorses a hierarchical structure of skills that build upon each other and help achieve the organizational mission and the organization’s strategic and operational plans. Haynes’s Management Skills Pyramid offers some guidance on the structure and techniques that can be applied to HR teams. At the basis of the pyramid are basic management skills that enable managers to perform their duties at the right pace, quality, and cost, that is, planning, organizing, directing, and controlling, which are the basis for other levels of skills. For example, workforce planning at universities includes making decisions about the number of faculty members and the number of students admitted each year. Controlling involves recording student attendance and measuring performance through biometric devices and performance management platforms. The second level comprises skills required for building effective teams, soft skills, motivation, training, and employee involvement. In educational institutions, teaching and non-teaching staff need training to continuously improve, update, and broaden their knowledge and skills. The skills of the third level relate to own self-development and focus on developing a person’s abilities to control their work. This level includes such skills as self-management and time management (one of the key abilities primarily due to the constant underfunding by the government and the imbalance between the needs and capabilities of the institutions) (van Schalkwyk 2021). For example, the teaching staff is requested to combine teaching and management activities with research. Leadership lies at the top level of the Management Skills Pyramid. In today’s higher education institutions, leadership skills are strongly associated with managing change, resources, strategy, and self. They are expected from heads of services, deans of faculties, heads of departments, senior and junior lecturers, and non-teaching staff. Specifically, McCaffery argues that today’s higher education leaders need to know their environment, know their university, know their department, and know themselves as individuals (McCaffery 2019). According to Katz’s approach, successful management relies on three basic types of skills: technical [i.e., knowledge of basic methods and techniques (e.g., finance, information technology, and marketing)], human (interpersonal ability to work effectively with others in a team), and conceptual (ability to recognize the complex set of relationships and interdependencies in an organization) (Katz 1974). In pursuit of excellence in research and digitalization of teaching, universities frequently overlook the importance of back-office structures, such as HR services, needed to run complex organizations. While management skills are vital to allow HR officers to deal with everyday work challenges,
HR Ecosystem Development as a Driver of Increasing...
they are also essential in adapting to socio-demographic changes and the effects of economic recession, that is, emerging challenges that have strategic importance to the organization (Naidoo-Chetty and Plessis 2021). However, despite ongoing efforts to modernize HR, the HR departments of educational organizations are still viewed as administrative resources used solely for hiring, evaluating, and firing rather than as a means of advancing science and knowledge (Watson and Thompson 2018). In fact, the effective operation of these services can be a major factor in the attractiveness of an academic job offer (Gajendragadkar et al. 2019). The administrative services can be for prospective hires a “huge selling point” and have a more or less direct impact on the institution’s reputation (Gajendragadkar et al. 2019). One possible solution to solve the limitations of the traditional model of HRM has been proposed by Bai. It relies on big data to develop management innovation and decision-making models (Bai 2022). Failures in an organization’s motivational policies represent a significant HR risk due to the increasingly stressful nature of the teaching profession. Limitations in the opportunities for professional growth and career progression of employees of higher education institutions are a stressor with a likely demotivating effect, demonstrating flaws in the organization’s motivational policy (Buck and Watson 2002; Carlotto and Câmara 2007; Kang and Sidhu 2015). Not surprisingly, professionals have developed feelings of inadequacy, the inability to deal with job stressors and emotional exhaustion, job dissatisfaction, and a lack of motivation (Carlotto and Câmara 2017). The experienced limitations are closely related to personal and interpersonal skills and attitudes, the capacity for continuous learning and training, and intrinsic and extrinsic motivation (Mendonça et al. 2012). The productivity of higher education employees is a multifaceted phenomenon. It is highly dependent on their intrinsic motivation, which reinforces the importance of management policies (Moreno-Jiménez et al. 2010). A study by Bienkowska et al. (2019) has concluded that, so far, no consensus has been reached on what skills in the tertiary level of education are the best and what kind of teaching process is the most effective. In turn, Naidoo-Chetty and du Plessis (2021) argue that a significant imbalance between job resources and job demands can negatively translate into the employees’ perceived well-being. Abouelenein’s (2016) results show the importance of using technologies and innovative approaches to teaching and research. The definition of competence, understood as a set of demonstrable characteristics, skills, and abilities necessary to successfully and effectively perform job functions, is constantly evolving (Austin 2019). A competency-based
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education system at all levels allows students to develop knowledge, skills, and qualifications (Raitskaya and Tikhonova 2019). For this purpose, educational institutions must provide structures, processes, and people who can support the transfer of knowledge and the development of competencies (Ganal et al. 2019). Despite the intensive expansion and deepening of scientific research in the field of HR ecosystem development in today’s universities, many issues of the organization of the process of transformation of HRM require further study. The scientific novelty of this research consists in the substantiation of the Dematel toolkit and the algorithm of its application for the systemic evaluation of strategic decisions on the HR ecosystem development in the management of an educational organization. The research results have additional value because the tools proposed by the authors identify and rank the key HR risks and justify a strategy for the HR ecosystem development to minimize the identified risks. The research results can serve as the basis for developing strategic and motivational policy measures aimed at the sustainable development of educational organizations in the digital economy.
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Materials and Method
Achieving the goal of the research (to identify and rank key HR risks and substantiate the HR ecosystem developing strategy aimed at minimizing the identified risks) was carried out on the methodological basis of the innovation-cyclic paradigm of sustainable development, the implementation of which is based on the management of the organization, considering the achievement of its economic goals and the observance of social interests (Lazareva et al. 2023). The solution to the research problems was also based on the methodological foundations of the resource concept of human capital reproduction as a condition for increasing the competitiveness of an organization and the concept of subjective perception of well-being, considered from the standpoint of determining the degree of satisfaction with an individual’s position, level of authority, and salary. Additionally, given the holistic nature of the tools developed by the authors, an important place in the methodology was taken by the Dematel system analysis method, which makes it possible to form a complex relationship between the parameters characterizing HR risks and approaches to managing them (Fig. 1). The research is based on a questionnaire survey of 18 experts—employees of Chinese and Russian universities. In developing the questionnaire, the key risks of human resource management were integrated into four clusters of HR risks:
276 Fig. 1 Procedure of identifying key HR risks and justification of HR ecosystem development strategy. Source Developed and compiled by the authors
E. I. Lazareva et al.
Development of questionnaires Survey of experts Results processing Identification of cause-effect relationships and ranking of HR risks by Dematel Forming the HR- ecosystem development strategy
• The integrated risk of individual human capital management “lack of competencies of employees” (HR 1). • The integrated risk of “failure” in the strategic policy of the organization (HR 2). • The integrated risk of individual human capital management “lack of competencies of managers” (HR 3). • The integrated risk of “failure” in the motivational policy of the organization (HR 4) (Lazareva et al. 2021).
procedure as causal risks on the one hand and risk effects on the other one. The procedure of HR risk assessment by the Dematel method included six steps (Fig. 2). The Dematel method ranks and divides HR-integrated risks into two groups: a group of causes and an effect group.
3 When questioning, experts were asked to compare in pairs the integrated risks of HR 1, HR 2, HR 3, and HR 4 on a measuring scale from 0 to 4, where 0—no impact, 1—low impact, 2—medium impact, 3—high impact, and 4—very high impact. The survey results were used as estimates for constructing Dematel method matrices. The integrated HR risks used in the questionnaire were then identified in the Dematel method’s cause-effect relationships assessment Fig. 2 Procedure of HR risk assessment using the Dematel method. Source Developed and compiled by the authors
Table 1 Results of a comprehensive assessment of integrated HR risks by the Dematel method
Results
Assessment of integrated HR risks in the university management system using the Dematel method made it possible to form a system of relationships between them in the coordinates of “cause-effect” and identify the priorities of HR ecosystem development (Table 1). According to the results of the risk assessment, the priorities of the HR ecosystem development strategy of the
Stage 1. Converting expert estimates to matrix form
Stage 2. Сalculation of the matrix of average marks
Stage 3. Сonstruction of the relationship matrix
Stage 4. Setting the threshold level
Stage 5. Creating an acceptable causeeffect diagram
Stage 6. The final matrix of relations causes an effect
Integrated HR risks
Chinese university Cause group
HR 1
+
HR 2 HR 3
Effect group
+
Source Compiled by the authors
Cause group
2 +
HR 4
Russian university Rank 3
+ +
1 +
4
Effect group
1 2
+ +
Rank
4 3
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Russian university are activities aimed at minimizing the risks associated with staff motivation and high staff turnover. Next in priority are measures that help overcome the risks of lack of career growth and loss of employees in key positions. As such events, the updating of programs for attracting specialists and helping management, stimulating creativity on the part of employees, and changing systems of non-material motivation are proposed. The assessment of HR risks by experts from the Chinese university gave completely different results, which determine the imperative measures for the strategic development of the HR ecosystem. Such measures aim to overcome the risks characterized by a lack of skills and select employees with false competencies, poor personnel management, and high personnel costs. Accordingly, measures are recommended for professional retraining and internship of personnel planning a personal career path and systemic work on branding an organization.
4
Discussion
In the conditions of innovation-oriented development, a person (an employee) becomes a significant strategic resource of an educational organization. This fact actualizes the development of the HR ecosystem as a factor in increasing the sustainability of an organization’s HRM. The holistic assessment of integrated HR risks by the Dematel method demonstrated the relevance of system analysis of HR risks to form an adaptive strategy for developing the university’s HR ecosystem. The strategy should include mutually correlated activities to minimize the four integrated HR risks. The explanation of the differences in the obtained results of the risk assessment for Chinese and Russian universities, ranking measures to minimize HR risks, and determining the priorities of HR ecosystem development strategy, forms the subject of further research, in particular, to find out whether the university’s HRM depends on the cultural characteristics of a country.
5
Conclusion
The results obtained and the presence of specific recommendations given allow us to talk about the practical significance of the research. Educational organizations can use them as basic recommendations for developing the HR ecosystem. The advantage of using the Dematel toolkit is a qualitative and quantitative assessment of the characteristics of integral HR risks, as well as the justification based on the sequence of management decisions aimed at minimizing
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them. A comprehensive assessment of the integrated personnel risks of universities will make it possible to identify the unique characteristics of the university’s HR ecosystem and form an adaptive strategy for its development. Acknowledgements The study was carried out within the framework of the project “Digital Atlas of Political and Socio-Economic Threats and Risks of Development of the South Russian Border Area: National and Regional Context” (“Digital South”) within the framework of the Strategic Academic Leadership Program “Priority 2030” No. SP-14-22-06.
References Aboramadan M, Albashiti B, Alharazin H, Dahleez KA (2020) Human resources management practices and organizational commitment in higher education: the mediating role of work engagement. Int J Educ Manag 34(1):154–174. https://doi.org/10.1108/IJEM-042019-0160 Abouelenein YAM (2016) Training needs for faculty members: towards achieving quality of university education in the light of technological innovations. Educ Res Rev 11(13):1180–1193. https://doi.org/10.5897/ERR2015.2377 Austin Z (2019) Competency and its many meanings. Pharmacy 7 (2):32–39. https://doi.org/10.3390/pharmacy7020037 Bai Y (2022) Innovative mode of human resource management of university teachers based on intelligent big data analysis. Comput Intell Neurosci 2022:7345547. https://doi.org/10.1155/2022/ 7345547 Bienkowska A, Ludwikowska K, Tworek K, Walecka-Jankowska K (2019) Competences necessary in the work of HEI academic teachers: shaping the pedagogical skills profile. Trans Univers Košice 1:1–12 Buck JM, Watson JL (2002) Retaining staff employees: the relationship between human resources management strategies and organizational commitment. Innov High Educ 26:175–193. https://doi.org/10. 1023/A:1017916922194 Carlotto MS, Câmara SG (2007) Preditores da síndrome de burnout em professores. Psicologia Escolar e Educacional 11(1):101–110 Carlotto MS, Câmara SG (2017) Riscos psicossociais associados à síndrome de burnout em professores universitários. Avances En Psicología Latinoamericana 35(3):447–457 Gajendragadkar S, Pinder D, Rounsaville T, Wright J (2019) Building operational excellence in higher education. McKinsey. https://www. mckinsey.com/industries/education/our-insights/buildingoperational-excellence-in-higher-education. Accessed 8 Dec 2022 Ganal NN, Guiab MR, Sario MLP (2019) Assessing the training needs of teachers on the 21st century pedagogical skills and personal development. Normal Lights 13(2):177–200 Kang LS, Sidhu H (2015) Identification of stressors at work: a study of university teachers in India. Glob Bus Rev 16(2):303–320. https:// doi.org/10.1177/09721509145644 Kasule GW, Bisaso R (2019) Integration of strategic human resource management for efficiency in Uganda public universities. West East J Soc Sci 8(1):122–132 Katz RL (1974) Skills of an effective administrator. Harv Bus Rev 33 (1):33–42 Lazareva EI, Gavrilova JV, Murzin AD (2021) Development of HR-management tools for an innovation-oriented organization using system analysis. In: Shakirova OG, Bashkov OV, Khusainov AA (eds) Current problems and ways of industry development: equipment and technologies. Springer, Cham, pp 985–996
278 Lazareva EI, Rivza BA, Gavrilova JV (2023) The sustainability formula: a human-centered strategy for managing economic trends in the context of ESG-transformation. In: Lazareva EI, Murzin AD, Rivza BA, Ostrovskaya VN (eds) Innovative trends in international business and sustainable management. Springer, Singapore, pp 3–12 McCaffery P (2019) The higher education manager’s handbook: effective leadership and management in universities and colleges, 3rd edn. Routledge, London Mendonça JRC, Paiva KCM, Padilha MA, Barbosa MAC (2012) Competências profissionais de professores do ensino superior no Brasil: Proposta de um modelo integrado. In: Conferência do FORGES: Fórum da Gestão do Ensino Superior nos Países e Regiões de Língua Portuguesa. Lisboa Moreno-Jiménez B, Garrosa E, Rodríguez R, Martínez M, Ferrer R (2010) El burnout del profesorado universitario y las intenciones de abandono: un estudio multi-muestra. Revista De Psicología Del Trabajo y De Las Organizaciones 25(2):149–163 Naidoo-Chetty M, du Plessis M (2021) Job demands and job resources of academics in higher education. Front Psychol 12:631171. https:// doi.org/10.3389/fpsyg.2021.631171
E. I. Lazareva et al. Paper JP, Kraft MA (2016) The productivity costs of inefficient hiring practices: evidence from late teacher hiring. J Policy Anal Manag 35 (4):791–817. https://doi.org/10.1002/pam.21930 Raitskaya L, Tikhonova E (2019) Skills and competencies in higher education and beyond. J Lang Educ 5(4):4–8 Reh FJ (2019) Understanding the management skills pyramid. Liveaboutdotcom. https://www.liveabout.com/management-skillspyramid-2275888. Accessed 15 Dec 2022 Siqueira WR, Alves LC (2016) Rotatividade de professores universitários: o caso de um campus fora da sede. Revista De Administração, Contabilidade e Economia De Fundace 7(2):94–107 van Schalkwyk F (2021) Reflections on the public university sector and the COVID-19 pandemic in South Africa. Stud High Educ 46 (1):44–58. https://doi.org/10.1080/03075079.2020.1859682 Watson, R., & Thompson, D. (2018). HR departments are the pits of bureaucracy. The Times Higher Education. https://www.time shighereducation.com/opinion/hr-departments-are-pits-bureaucracy. Accessed 15 Dec 2022
Problems of Human Resource Management of the Innovation Economy Natalya I. Khosroeva , Larisa G. Mamsurova , Irina Kh. Kuchieva , Aida Sh. Begieva , and Zarina Kh. Bekmurzaeva
development exacerbates economic, social, environmental and other problems. These include contradictions in labor relations related to the capitalization of human resources, property relations, the readiness of society for a new technological reality, the consequences of technogenic and anthropogenic influence on the environment and humans. The results of this study can be used in forecasting the development of the forecast of the evolution of human resources, the formation of human capital, as well as in the creation of a socio-economic strategy. The main tenets of the article hold substantial relevance in substantiating methodologies and facilitating the practical implementation of approaches aimed at addressing the challenges pertaining to the formation and development of human resources. The authors strongly advocate for a comprehensive consideration of the potential issues, contradictions and other factors described in the article when developing mechanisms for human resource management.
Abstract
This article aims to comprehensively examine the intricacies of human resource management in the context of an innovative economy. With the relentless advancement of technology, the requisites for human resource development have witnessed a notable surge, in tandem with the evolving demands of the market and society. The formation of the most important resource requires more and more investments of various kinds. In parallel with this, both contradictions in the use of human resources and the rate of devaluation of human capital are increasing. The article develops the assumption that the ongoing progress in technologies affecting the development of human resources quickly devalues them, which causes many problems in the process of their use. The authors highlight the common features that characterize the context of modern research related to human resources and indicate that they are most often considered as separate sociotechnical systems. Throughout this study, the authors have emphasized the significance of contemplating human resource development and the augmentation of human capital within the framework of transforming social reproduction structures and economic functioning principles. The evolution of productive forces and industrial relations at various stages of the evolution of society is mediated by scientific and technological progress and the needs of society. The authors argue that the pace of modern technology N. I. Khosroeva (&) L. G. Mamsurova I. Kh.Kuchieva A. Sh.Begieva Z. Kh.Bekmurzaeva North Ossetian State University Named After K.L.Khetagurov, Vladikavkaz, Russia e-mail: [email protected] L. G. Mamsurova e-mail: [email protected] I. Kh.Kuchieva e-mail: [email protected] A. Sh.Begieva e-mail: [email protected]
Keywords
Human resources Innovative economy Contradictions Devaluation Management strategy JEL Classifications
J24
1
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Introduction
The knowledge economy, digital economy, artificial intelligence and other aspects of the technological transformation of society are destroying the traditional idea of human– machine interaction. The new nature of the functioning of socio-technical systems requires a higher level of professional and psycho-emotional training (Khosroeva and Blieva 2019; Lazareva and Khosroeva 2020).
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_47
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The relevance of this research topic is due to the need to identify the main contradictions arising during the formation and use of human resources in modern technological conditions. The purpose of the study is to try to answer a number of questions related to the readiness of modern management in the field of human resources to the destruction of the vertical of power, the absence of hierarchy, to new conditions of socio-technical interaction. To achieve this goal, the authors propose to solve the following tasks: to consider the theoretical and practical foundations of the realization of human potential, to reveal the basic concepts and organizational possibilities of using human resources, problems and contradictions of human resource management and the realization of human potential. Analysis of the potential of the organization's employees contributes to a beneficial effect on both the productivity and overall development of the organization. The study of human potential will help not only to analyze the work of personnel at the current time but also to form future resources. The study and understanding of the basics and essence of human potential in an organization play an important role in making managerial decisions. Begieva and Pashayeva (2019) consider and propose current directions for the effective use of the enterprise’s labor resources.
2
Materials and Methods
At the beginning of the new century, human resources became the focus of a number of concepts and approaches from different fields of science. The relevance of interdisciplinary consideration of various aspects of the formation and use of human resources is obvious. The study and understanding of the basics and essence of human resource management, which has a certain potential, plays a pivotal role in shaping managerial decisions of any scale and level and requires an interdisciplinary approach. Human resources are strategic resources, the rational use of which will increase the viability and competitiveness of economic and social systems and their integration (Lazareva and Khosroeva 2020). A number of researchers, including Yudin and Lukov (2009), Yudin (2002), propose to stratify human potential and distinguish the following levels: micro- (person), meso(group) and macro-(country). In the last two cases, the scale of the group needs to be clarified: it is logical to attribute a region or territory to the macro-level. In addition, the “totality of human potential” is designated as the cumulative human potential. In turn, Doktorovich (2015) identifies social potential at the level of a social group (meso-level) and indicates that society influences its formation (macro-level). It is
interesting to study the human potential of students and young people as a certain social group. For example, Lukov and Gnevasheva (2009) highlight the innovative potential of youth. Exploring this issue in an article on the structure of human potential, Lapshin (2013), summarizing some existing views, suggested that human potential can be “defined as a set of intellectual, innovative, spiritual, socio-cultural, biological resources, properties, qualities, abilities of an individual, group or society as a whole ….” Alieva, considering the interpretations of human potential, correlates the concepts of human capital and human potential. In her opinion, the interpretations of the human potential of various fields of science are “irreducible in a synthetic model” (Alieva 2015). Alieva (2015) sees “sociological reflection” in the “role of such a synthesizer” in relation to the phenomenon and the concept of “human potential.” This author sees the role of sociology in reducing the gap between the interpretation of the concept of “human potential” by the human sciences and economic theory. The latter carries out a “disguised attempt to alienate and capitalize human qualities” (Alieva 2015). The significance of an interdisciplinary approach cannot be overstated; however, both alienation and capitalization of employee qualities certainly occur in the process of work. The absence of alienation of human potential deprives it of meaning; the very logic of “potential” is such that it requires realization. The use of human resources in the labor process occurs through the activation and capitalization of potential, and therefore, we cannot speak of any “disguised attempt.” Rimashevskaya, describing the problems of the “preservation of the population” and the human potential of the country, identifies human and labor resources. In her opinion, this is “the population of a country or region and its demographic characteristics” (Rimashevskaya 2004). She also takes the position that “human capital acts as an economic form of realization of human potential and resources” (Rimashevskaya 2004). Radaev (2002) in his work on capital, the form of capital and its conversion, says, “In its incorporated state, human capital is a set of accumulated professional knowledge, skills and abilities acquired in the process of education and advanced training, which can subsequently generate income —in the form of wages, interest or profit.” Nureyev (2009) suggests considering human capital in a broad sense, “… a specific form of capital embodied in the person himself; is a person’s stock of health, knowledge, skills, abilities and motivations that contribute to the growth of his labor productivity and bring him income in the form of wages or rent.” Nureyev’s point of view is close to the economic understanding of human capital as a capitalized phenomenon.
Problems of Human Resource Management of the Innovation...
3
Results
Labor as a process of vital activity and conversion of human potential into human capital can be carried out by an employee as part of a single aggregate work of the enterprise. At the same time, it is necessary to understand that the enterprise as a materialized past work is private property, and employees are the owners of human capital. An individual, in order to realize his or her activity, strives to depend on the enterprise and makes efforts to enter a factory, a plant or a company In the process of labor, an employee transforms or masters the materialized capital in the means of production, thereby integrating it with the materialized human capital. The product is placed at the disposal of the enterprise and returned to the employee indirectly in the form of wages in accordance with established norms and rates. In the process of hiring, a contract is concluded that entitles the enterprise to dispose of the means of labor, since the counterparties are the enterprise and the employee. The development of human capital and means of production transpires indirectly, through the enterprise. Aggregate labor is formed due to the labor of all employees of the enterprise, each of whom performs a partial function in the integral production system. The partial function is due to the nature of the division of labor and the technological cycle of production. Having entered the enterprise, the employee subordinates the realization of individual human capital to the technological cycle and consumption of total human capital, being a detail laborer. The increase in productivity, efficiency and quality of labor is hindered by the different levels of technological effectiveness of equipment, the level of qualification of employees that does not meet modern requirements, and the different technical levels of partial operations in the technological chain. The contradiction of the partial links of the total labor for the production of a particular product, when some parts are produced on a machine or by a robot, and others to the same product—manually with different speed and quality. The imperfection of the organization of collective labor creates conditions for a complex of contradictions: the underutilization of employees, disruptions in work or downtime, inefficiency, etc. The consumption of human capital within a modern enterprise cannot always be quantified solely by time, since the intensity and productivity of an employee in machine or automated production conditions are shifted to a machine or automatic machine, the parameters of which are subject to accounting and measurement. For example, measuring the strength and skills that an employee spends on servicing a machine or machine, or the movements of workers mediated by technology, which receive rhythm and co-measurement. Under the given conditions, it is difficult to measure the
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human capital expended by employees engaged in intellectual or intellectual work, in particular, engineering and technical workers, management personnel. The result of the labor of workers engaged in mental labor does not give a direct economic effect; it can be manifested in new machine designs, in new technology and in a new production organization that can increase the productivity and intensity of other workers’ labor, i.e., the economic effect of mental labor is revealed through the actions of other people. It is possible to predict, hypothetically assuming and calculating what economic and other effects this or that implemented idea can give. The co-measurement of the amount of spent and consumed human capital of workers of various types as well as the amount of realized human capital of mental and physical labor workers can be done only through the development of time and cost criteria. The aggregate labor of society is the labor of the entire working population in the sphere of material and non-material production of the state that consists of aggregate links—independent economic units. Each enterprise represents a link in the total labor, regardless of the number of employees. The relations between enterprises are the relations between the aggregate links of production or the relations between the aggregate links of labor. These relations are based on the social division of labor. In conditions when aggregate labor can be carried out only by hiring workers who are carriers of individual human capital, successful functioning is based on the direct material interest of individual workers, since the satisfaction of the physical and spiritual needs of workers is possible through wages. The interest in getting the highest possible salary is the direct driving motive of employees. In an effort to get a high salary, employees try to maximize the realization of individual human capital, increasing the intensity and productivity of labor. The head of a modern enterprise is an authorized representative of the owner—the manager. The owner gives the head the will and authority to dispose of the company’s funds. Specific types of partial labor are subject to the will of the head of the enterprise. The manager acts as the bearer of the will of appropriation, and the employee acts as the bearer of human capital and the executor of the will of the head and the owner. The manager and the employee are subordinated to the labor rules and regulations, but one shows the will, the other executes. Various aggregate links of enterprises’ labor, being part of social labor, satisfy the links of the society’s consumption system. An enterprise, being an economic link in the social division of labor, must produce products that satisfy a certain social need, and the market establishes a correspondence between the links of socially useful labor and the links of public consumption, i.e., the dependence between producers, suppliers and consumers.
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Fig. 1 Contradictions in the use of human resources. Source Compiled by the authors I type of contradicons
II type of contradicons
III type of contradicons
•The development o uman capital and means of producon is carried out indirectly, through the legal form of appropriaon Paral workers realize individual human capital in the process of work, while the labor of employees is simultaneously paral, aggregate labor o he enterprise and aggregate labor of of society Workers as owners of human capital are essenally equal, but in the form of manifestaon, labor retains signs of social inequality
•The aggregate labor of workers, being the process of their life acvity, acts as a condion of life The aggregate labor of workers is public in essence, private in the form of manifestaon The aggregate labor of employees as an object of legal appropriaon is a condion for the existence of owners, as an object of consumpon – a condion for the life of society, individual workers
•Individual labor of employees is the process of their life acvity, acts as a condion of life The labor of workers essenally implements the will of the owners o he means of producon, and acts as the fulfillment o he will of the management o he enterprise The labor of workers is paral concrete labor, but acts as aggregate abstract labor
Earlier, while delving into the algorithm of production relations as a socio-economic form of the new technological order's productive forces development, we mentioned the dimensions of human capital and human labor (Khosroeva and Blieva 2019). The analysis of the system of relations of the act of production makes it possible to formulate the following types of contradictions in the use of human resources in the production process (Fig. 1). I type of contradictions: 1. The development of human capital and means of production is carried out indirectly, through the legal form of appropriation. 2. Partial workers realize individual human capital in the process of work, while the labor of employees is simultaneously partial, the aggregate labor of the enterprise and the aggregate labor of society. 3. Workers as owners of human capital are essentially equal, but in the form of manifestation, labor retains signs of social inequality, because partial labor can be mental or physical, simple or complex, the work of the bearer of will or the work of the bearer of execution. II type of contradictions: 1. The aggregate labor of workers, being a process of their life activity, acts as a condition of life. 2. The aggregate labor of employees is public in essence, private in the form of manifestation. 3. The aggregate labor of employees as an object of legal appropriation is a condition for the existence of owners, as an object of consumption—a condition for the life of society, individual workers.
III type of contradictions: 1. Individual labor of employees is the process of their life activity, acts as a condition of life. 2. The labor of workers essentially implements the will of the owners of the means of production and acts as the fulfillment of the will of the management of the enterprise and the market. 3. The labor of workers is partial concrete labor but acts as aggregate abstract labor.
4
Conclusion
Contradictions of production and labor relations exist in the act of production and labor as two aspects of the same process; they are essential for all other contradictions arising in the process of production, distribution, exchange and consumption of material goods. Each type of contradiction follows from a certain type of relationship and determines it. The combination of labor as a process of vital activity and labor as a condition of life will mean the transformation of labor into one of the basic necessities of life, when an individual, a carrier of human capital, will treat his work directly as a process of his vital activity. At the present stage, the work of an employee acts as a condition of life. If we proceed from the fact of technological development of production, then digital technologies partially provide the process of combining the will and the execution of labor, i.e., the transformation of a detail laborer into an organizer and producer of a useful product. Contradictions of aggregate and individual labor within enterprises should be solved by management through the use
Problems of Human Resource Management of the Innovation...
of human capital, the implementation of innovations, flexible planning, clear organization of production and labor, the dependence of wages on the results of production. The resolution of contradictions concerning the formation and utilization of society's total human capital within the context of an innovative economy, along with the challenges related to its growth and devaluation, necessitates the incorporation of a comprehensive human resource development strategy into the broader socio-economic development strategies of regions and the entire nation. All of these types are contradictions of growth and development are objective in nature, therefore, they need to be addressed before they grow into a crisis.
References Alieva RM (2015) Concepts and interpretations of human potential in sociological knowledge. Bull N Cauc Federal Univ 1(46):234–240 Begieva AS, Pashayeva ZS (2019) Actual directions of effective use of labor resources of the enterprise. Econ Entrep 8(109):735–738 Doktorovich AB (2015) The paradigm of socio-innovative development: human potential and intellectual capital of socio-economic changes. Space Time 1–2(19–20):84–90 Khosroeva N, Blieva J (2019) Algorithm of production relations as a socio-economic form of development of the productive forces of the
283 new technological order. In: Solovev D (ed) Smart technologies and innovations in design for control of technological processes and objects: economy and production. FarEastCon 2018. Smart innovation, systems and technologies. Springer, Cham, p 139. https:// doi.org/10.1007/978-3-030-18553-4_64 Lapshin VA (2013) The structural components of human potential. Knowle Understand Skill 1:259–263 Lazareva EI, Khosroeva NI (2020) Innovative management of human development trends in Russian regions through the prism of global sustainable development goals. Bull N Ossetian State Univ KL Khetagurov 3:167–177 Lukov VA, Gnevasheva VA (2009) The student’s human potential— the educational potential of the university: based on the materials of the monitoring “Russian University through the eyes of students” (stages of 2004–2008). Publishing House of the Moscow University for the Humanities, Moscow Lukov VA, Yudin BG (2009) To the concept of the Internet project “Human potential of Russia.” Knowl Understand Skill 4:251–256 Nureyev RM (2009) Human capital and the problems of its development in modern Russia. Soc Sci Modern 4:5–20 Radaev VV (2002) Term of capital, forms of capital and their conversion. Econ Sociol 3(4):20–32 Rimashevskaya NM (2004) The human potential of Russia and the problems of the “preservation of the population.” Russ Econ J 9– 10:22–40 Yudin BG (ed) (2002) The human potential of Russia. Intellectual, social, cultural dimensions: collection of scientific papers. Human Institute of the Russian Academy of Sciences, Moscow
Digital Platforms of Educational Services: Problems and Development Prospects Zhanna V. Smirnova , Elena G. Skachkova, Evgeny A. Semakhin , Elena V. Romanovskaya , and Natalia S. Andryashina
Abstract
JEL Classifications
This paper examines the issue of using the digital platforms that exist today in educational activities. Research focuses on introducing the information environment in teacher training as a means and method of the learning process. The possibilities of forming new forms of education are considered, including online learning that uses distance learning methods (the key aspect, first of all, is the interaction of the teacher in real time, while the students are in the so-called online audience) and asynchronous online learning (carrying one of the distance learning methods, which involves teaching students without direct contact with the teacher in real time). Authors highlight the main ways and prospects for developing digital learning at the present stage. During research, the authors identified the main educational platforms popular with teachers to prepare electronic learning courses.
R11
Keywords
Digital platforms Education Digital development Digitalization Information environment
Z. V. Smirnova E. G. Skachkova E. A. Semakhin E. V. Romanovskaya (&) N. S. Andryashina Minin Nizhny Novgorod State Pedagogical University, Nizhny Novgorod, Russia e-mail: [email protected] Z. V. Smirnova e-mail: [email protected] E. G. Skachkova e-mail: [email protected] E. A. Semakhin e-mail: [email protected] N. S. Andryashina e-mail: [email protected]
1
R12
R58
Q13
Introduction
The popularity of the development of digital education is becoming a hot topic for the development of educational activities in general. Innovative technological developments are rapidly being introduced into our lives in all areas of society. Technical development in the field of digitalization in Russia makes it possible to introduce digital technologies in educational institutions at all stages of activity (Andryashina et al. 2022).
2
Materials and Method
The existing problems in educational activities in Russia and other countries of the world largely depend on the transition of social activities (Evdokimov and Belozubenko 2015). Society faces a large amount of information flow (Garin et al. 2022). The Internet and computer technologies have been introduced into the educational process. Thus, digitalization in educational activities is topical. Many things become dependent not on the personality and skills of the teacher but on the technical capabilities of each participant (the presence of a laptop for each student, the presence of a stable and good Internet connection, etc.).
3
Results
New competencies of specialists are formed. The educational process is regulated and reorganized. The use of a digital educational resource in the educational process allows you to increase interest in learning: a text editor, the
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_48
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creation of video lectures, the development of electronic courses (Kuznetsov et al. 2020) and assistance in mastering educational material, as well as the integrated use of innovative information technologies. Today, the modern technologies of virtual reality systems presented in the world provide an increasing opportunity to use digital simulators, which have a distinctive feature associated with the lack of attachment to one workplace (Romanovskaya et al. 2022). Currently, most institutions of higher education use digital educational platforms that allow them to receive and provide new knowledge and education both in their region and in other countries. This opportunity creates the following new forms of education: • Online learning using distance learning methods, the key feature of which is real-time interaction with the teacher, while students simultaneously have the opportunity to be present in the online audience; • Asynchronous online learning—as one of the priority methods of distance learning. Using digital technologies for distance learning, the following educational platforms are helpful: • D-learning (distance learning) is one of the distance learning methods based on two-way interaction between a student and a teacher through the Internet; • E-learning is one of the types of distance learning that involves the student's activities in various seminars and graduation from the university (Smirnova et al. 2022a); • B-learning (blended learning) is one of the teaching methods that combines both traditional and distance learning; • Webinars or online learning—the most popular form of learning involving online seminars, online conferences, and courses via the Internet with an automated system that provides the opportunity to conduct training both with the direct participation of the teacher, and in his absence. However, despite the positive effect of digital educational platforms, many authors identify a number of certain problems (Smirnova et al. 2022b). Advanced technologies have been introduced into the educational process since the early 1990s. When studying the theoretical justification for educational institutions, such aspects can be distinguished into problem areas: • Problems related to the adaptation of the teacher in the digital environment; • The financial problem of educational institutions for the acquisition of digital equipment and digital management programs (Smirnova et al. 2022c); • The problem related to the limited time.
Z. V. Smirnova et al.
Over past three years, online education popularity has been growing: by 2021, the share of students studying online has increased almost times (from 14.5 to 41.3%). The main advantages and disadvantages of online learning are as follows: 1. The main advantages that consumers see in online learning are as follows: • Opportunity to study at a convenient time (53.1% of respondents); • Opportunity to study from anywhere in the world (39.7%); • Opportunity to save time and money (31.9%). 2. Among the problems of online education, consumers most often name the following: • Technical failures (36%); • There is often no contact with the teacher (27%); • The lack of motivation and control without a teacher (22.7%). However, there is an annual increase in the number of digital platforms, in connection with which the modern education system becomes directly connected with the economic labor market. In turn, today, the labor market is a key part of the market economy. It is he who exerts his influence on the economic and socio-demographic state of the country to a greater extent (Suglobov et al. 2020). The number of vacancies in the market is constantly growing. An increasing number of highly qualified personnel with knowledge and application of digital technology in various industries are in demand. Consider job growth statistics for 2020–2022 (Fig. 1). The demand for personnel with high knowledge of digital technologies is argued for a number of reasons. The modern world is becoming more and more digital and enterprises feel an urgent need for specialists who are able to work effectively with new technologies and follow new trends. Today, digital technologies make it possible to automate many tasks, speed up processes, and improve work efficiency. It is qualified personnel that can give the company an advantage over competitors by creating innovative products or improving existing ones. The IT, software development, digital marketing, Internet business, and other related industries are experiencing continuous growth and development, which in turn creates new opportunities for professionals with high digital skills. Such areas as the information technology market, the production sector, and specialists in the service sector stand out among the successful areas of professional activity. Nowadays, educational institutions are tasked with training highly qualified personnel demanded in the labor market. This task is solved by creating a digital educational platform using digital technologies.
Digital Platforms of Educational Services: Problems and... Fig. 1 Job growth statistics for the period 2020–2022. Source Compiled by the authors
287
25 20 15
10 2020
5
2022
0
4
Discussion
Analyzing the theoretical component of popular specialties, educational institutions prepare and develop digital electronic platforms for training specialists. Google Trends and Yandex services help to create electronic courses and online courses, while each course may differ depending on the audience, specialization, and duration by the number of hours studied, provided for in accordance with the regulatory documentation of the educational institution. The quality of training specialists using digital platforms will depend on the level of individual approach to learning provided: hours for individual online consultations, knowledge testing through testing using digital platforms, and training webinars (Yelenevskaya et al. 2018). There is a process of systematization of electronic services (Table 1). “Geek Teachers” can be of great interest to teachers in the education of learning activities. It is a large database of online resources, which includes such sections as webinars and broadcasts, posters, drawings, computer science, instant messengers, chats for work, interactive sheets, etc. Currently, there are many Russian digital educational platforms with great functionality and a complete set of Table 1 Electronic services for the educational process
materials in the main disciplines, which make it possible to provide digital resources for the educational process in educational institutions. The main and popular digital platforms are as follows: 1. “Argus-M” provides a quick and convenient preparation for successfully passing term exams, the Unified State Examination, the certification exam, or the employment test. 2. “University in your pocket” is an open online platform and an ecosystem of mobile applications for solving any educational problems, containing a knowledge base of answers to questions on the educational programs of the school and university, tests to test knowledge, and an essay constructor. 3. “Universarium” is an open system of electronic education. Universarium is a network inter-university platform that focuses on the widest target audiences. 4. “iSpring” is a platform for corporate training. The iSpring Learn platform provides a free trial period of 14 days. 5. “Young Professionals (WorldSkills Russia)” platform. These platforms make the educational process more productive than traditional teaching methods. The work of students in the digital environment improves the quality of
Purpose
Educational materials
Google Hangouts is a video conferencing system that provides the ability to record and publish webinar materials on YouTube
A variety of educational YouTube channels based on the use of Hangouts
Yandex Telemost—unlimited video conferencing service
Reference materials and service support at Yandex.ru
VKontakte—online video streaming
Thematic groups and forums, as well as educational materials
Odnoklassniki—organizing online classes using live broadcasts
Service for organizing distance learning
Source Compiled by the authors
288
Z. V. Smirnova et al.
mastering knowledge and increasing professional competencies in professional activities. It should be noted that Russian digital educational platforms have effective functionality for the content of educational material and allow students to independently study the necessary material and obtain additional educational information, which is an important part of the educational process.
5
Conclusion
Thus, e-educational institutions activate students, improve the quality of learning, and increase the professional level of specialist training. The amount of information received may be unlimited because digital platforms allow increasing the amount of the student’s independent work. The digital educational environment contributes to developing logical thinking, a culture of mental work, and independent work. Moreover, it influences the motivational sphere of the educational process. Digital learning makes it possible to conduct a remote process, considering the student’s individual characteristics. Students can independently choose a convenient time to receive information. This method of training is necessary for working specialists and various categories of people who do not have the opportunity to study in a full-time format.
References Andryashina NS, Smirnova ZV, Romanovskaya EV, Garina EP, Kuznetsova SN (2022) The mechanism of an integration solution in the financial and economic activities of construction organizations. In: Popkova EG, Polukhin AA, Ragulina JV (eds) Towards an increased security: green innovations, intellectual property protection and information security. Springer, Cham, pp 507–513
Evdokimov FI, Belozubenko VS (2015) Indexes of the technical and technological components economical security of enterprise. Product Effic Ind Enterp 4:124–129 Garin AP, Pavlyukova AV, Eroshenko AA, Semakhin EA, Permovsky AA (2022) Formation of sectoral clusters as a mechanism for the integration development of the territorial economies. In: Popkova EG (ed) Imitation market modeling in digital economy: game theoretic approaches. Springer, Cham, pp 508–515 Kuznetsov VP, Adzhikova AS, Romanova MS, Kozlova EP, Semakhin EA (2020) Management of the development of economic systems in the context of their technological transformation. In: Popkova E, Sergi B (eds) Scientific and technical revolution: yesterday, today and tomorrow. Springer, Cham, pp 150–159 Romanovskaya EV, Smirnova ZV, Andryashina NS, Artemyeva MV, Kuznetsova SN (2022) Economic integration as a mechanism for managing service activities. In: Popkova EG, Polukhin AA, Ragulina JV (eds) Towards an increased security: green innovations, intellectual property protection and information security. Springer, Cham, pp 515–520 Smirnova ZV, Chelnokova EA, Chaykina ZV, Semakhin EA, Kostylev DS (2022a) Modern educational platforms for distance training on lean production. In: Ostrovskaya VN, Bogoviz AV (eds) Big data in the GovTech system. Springer, Cham, pp 23–28 Smirnova ZV, Cherney OT, Chaykina ZV, Andryashina NS, Sidyakova VA (2022b) Improving the application of information technology in the economy of service organizations. In: Ostrovskaya VN, Bogoviz AV (eds) Big data in the GovTech system. Springer, Cham, pp 61–66 Smirnova ZV, Kaznacheeva SN, Gruzdeva ML, Romanovskaya EV, Andryashina NS (2022c) Introduction of lean technologies in the organization of practices of university students. In: Popkova EG, Sergi BS (eds) Digital education in Russia and Central Asia. Springer, Singapore, pp 375–381 Suglobov AE, Zharylgasova BT, Savin VY (2020) Audit: a textbook for bachelors, 4th edn. Dashkov and Co., Moscow Yelenevskaya EA, Kim LI, Christolyubov SN (2018) Accounting, analysis, audit: a textbook. Infra-M, Moscow
Characteristics of the Identity of Pregnant Women in the Context of an Approach to Socially Responsible Parenthood Irina A. Kolinichenko
and Svetlana A. Nikulina
Abstract
Keywords
The aim of the study is to study the identity of pregnant women from the perspective of cognitive psychology with optimal and non-optimal types of attitude to pregnancy. The subject of the study is the identity of pregnant women. The result of the study is the formation of the authors’ concept of socially responsible motherhood in pregnant women, the essence of which is as follows. The quality of adherence to group identity explains the observed relationships; pregnant women perceive themselves on the basis of their ideas about motherhood, which is associated with optimal adaptation to a new maternal role, since its formation takes a long time. Understanding the obligations of socially responsible parenthood, taking into account the congruence of the subconscious choice of the group formed during pregnancy, gives importance to their decisions. Perhaps commitment to the group category of identity with the image of the mother can serve as a sufficient basis for the further formation of socially responsible parenthood. The originality of the study is the analysis of the identity of pregnant women on the basis of the combination of E. Erikson’s psychosocial theory of human development and H. Tajfel’s social identity theory, as well as cognitive studies of personality and I. V. Dobryakov’ study of the features of the psychological component of gestational dominance (PCGD). The choice of a woman expecting a child to identify herself with the image of a future mother provides, according to her ideas, a higher status of a group of mothers in contrast to the status of a group of pregnant women.
Cognitive psychology attitudes to pregnancy
I. A. Kolinichenko (&) S. A. Nikulina Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected]
Identity categories Pregnant women
Types of
JEL Classifications
I2
1
I21
I23
Introduction
Women’s idea of the pregnancy and future motherhood, awareness of their future motherhood and the formation of their own self-image largely determine their attitude to pregnancy and the unborn child. The development of the properties, personality traits of a pregnant woman, adaptation to the new role of the mother during pregnancy forms a preference for socially responsible parenthood even before the birth of a child. In the article, we have attempted to combine separate scientific ideas about the types of relationships of pregnant women, the formation of women's social identity, their identification with their mother, maternal identity—separately existing and overlapping areas of research.
2
Methodology
The individual experience of being in the parental family leads to a selective response of a person to internal and external stimuli. The external and internal environment is often perceived through the prism of whether the unborn child is valuable and desirable for a pregnant woman (Nikulina 2017). The harmonious flow of pregnancy, the optimal fullness of positive emotions without persistent anxiety, as a result, according to Kartashova et al. (2010), affects the
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_49
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psychosomatic state of a woman and helps to build optimal relationships in the mother–child dyad. According to Myasishchev (1995), the attitude characterizes the personality and represents a single system of conscious, individually selective connections of the personality with reality that determines the process of development. According to Meshcheryakova, a woman’s experience of pregnancy, her subject-subject position is a personal formation that is part of the structure of general readiness for motherhood with her experience of communication received in childhood. At the same time, the attitude toward the unborn child further shifts to the real behavior of the mother, forms the direction of future upbringing and caring for the infant (Meshcheryakova 2000). Scientists such as Batuev et al. (2007) believe that a woman’s attitude to her pregnancy in the context of psychosocial reproductive health motives is explained by the level of desirability of motherhood, motivation for it, and pregnancy planning. According to Dobryakov, through the prism of the types of women's attitudes to pregnancy, there is a change in their perception of different stimuli. The latter, in turn, determines the intensity of joy or anger, anxiety, depression, and any emotional experiences of pregnant women. The motives of love, maternal love, are constructive and influence the attitude to pregnancy, determining its optimality, while destructive ones distort the value of the child's image and the process of gestation itself (Dobryakov 2010). Scientists studying the period of pregnancy consider it as a critical period in a woman's life, because her personal development is undergoing serious changes that largely determine her continued existence. Fesenko (2005) points out that a positive attitude to this period is influenced by both the qualities of a woman’s personality and her previous and current perception of her psychological state. Maternal qualities do not appear immediately, a pregnant woman will have to adapt to the role of a mother. There are specific features of the acceptance of the state of motherhood and awareness of parenthood. The formation of the image of the unborn child determines the style of interaction with him after birth. According to Zemzyulina (2009), the pregnancy period generates new meanings of the future and forms a woman’s psychological readiness for motherhood. This period attracts special attention of researchers. Thus, it was determined that an adequate attitude of pregnant women to the self-image helps to optimize the mental health of the mother and child. Part of the research [for example, Belogay (2014)] is devoted to sensations of corporeality, bodily suffering as the cause of subjective experiences of a pregnant woman, which cause the appearance of negative emotions in the absence of a favorable emotional background. From the position of Radosteva (2012), negative experiences of
I. A. Kolinichenko and S. A. Nikulina
bodily changes are stated in women who have a strong motivation to have a child, which compensates for loneliness and fear associated with the fact that pregnancy will distort the body, as well as lack of faith in the ability to give birth to a healthy child. Dobryakov took as a basis the idea of the types of relationships of pregnant women, the continuation of which was reflected in the works of Rabovalyuk et al. and others in the study of the relationship of age and socio-demographic differences with their personal characteristics. Rabovalyuk (2014) notes that women with an optimal attitude to pregnancy, unlike other types, are rational, have a high level of self-control, and are tolerant of the views of others. Within the framework of various studies, data on the influence of a woman's age on the formation of peculiarities of attitude to pregnancy have been obtained. So, Filippova (2018) diagnosed the severity of the optimal type of attitude of the subjects to pregnancy and noted that the risk of hypogestognosic type of experiencing pregnancy increases with age. Studies of the identity of pregnant women are few, but they are the object of attention in psychoanalytic research. This is especially evident in the works of Z. Freud, A. Freud, and D. Pines on the integral connection of a woman's development, taking into account her early (childish) identification with her mother, which she can transfer to a child. Winnicott (2004) believes that the state of maternal involvement in the period after childbirth is important in the occurrence of maternal experience with an infant. Brutman et al. (2000) wrote about identification with the mother, which is important for the formation of the maternal role of pregnant women, which occurs at the gender level, provided that they receive love and care from their own mother in childhood. Women carrying an unwanted child had a neurotic conflict with a source in the parental family, which characterized them as aggressive or infantile and egocentric (Kolinichenko et al. 2022; Nikulina 2017). Violation of the formation of maternal role identity, according to Magdenko (2012), leads to destructive reproductive motivation of identity and the role of the mother, according to the humanistic paradigm of self-awareness. Vorobyova (2015) described the social identity of women, a comparative analysis of their identity before and after the birth of a child. The beginning of the research of identity in general and social identity in particular was laid in the classic work of the ego-psychologist Erickson (1996). Tajfel and Turner (1986) note that the consequences of belief systems arising from social situations are likely to manifest themselves in the form of combined group actions, that is, in the form of group changes, preferences or preservation of the “status quo”. The change in the identity of pregnant women and the features of transitive identity were revealed during an
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291
experiment conducted in a group of pregnant women, which was previously described in several of our scientific papers (Kolinichenko et al. 2021, 2022).
relationship between commitment to one's group, with its moral permissions and prohibitions and positive or negative psychosocial functioning. The hypothesis was the assumption that there is a relationship between the qualities of the manifested identity of pregnant women and their age and the number of weeks of pregnancy, as well as the presence of differences in these parameters between the two groups of subjects (optimal and non-optimal). The obtained results using this measurement partially correlate with the results of the study by Tajfel and Turner (1986) and confirm the effectiveness of the method of studying the identity of subjects. In their opinion, in experimental studies of intergroup behavior, intragroup bias, i.e., the tendency to give preference to one's group in assessments and behavior over the external environment, is an analogue of ethnocentrism in real life. However, the subjects do not give preference to the real group of pregnant women, because they do not consider this group to be their own.
3
Methodology
The study was conducted in late 2022—early 2023 on the basis of women's consultations in Pyatigorsk and Georgievsk, the Stavropol Territory. The study involved 64 pregnant women of different ages from 17 to 41 years, with an average age of 28.9 years. In the course of the study, included observation, survey, testing, as well as the following psychodiagnostic techniques were used: M. Kuhn, T. McPartland “Who Am I?” [modified by Ulybina (2012)], the questionnaire “Judgments about Morality” (I.A. Kolinichenko), and I.V. Dobryakov’s questionnaire “Types of attitudes to pregnancy”. To solve the research tasks, a set of methods was used: theoretical analysis, empirical study of identity categories, and methods of mathematical and statistical data processing (correlation analysis and comparative analysis). The study included the study of categories of identity: general, personal, and membership categories, moral judgments and types of attitude to pregnancy of subjects: optimal, hypogestognostic, euphoric, anxious, and depressive. Since all categories indicate either a positive or a negative type of attitude to pregnancy, the data obtained were divided into optimal and non-optimal types, and then a comparative analysis of the categories was carried out taking into account the groups of subjects of these two types. Since we used a complex set of personality characteristics —her identity, attitude to morality, and attitude to the type of gestational dominant, pairwise comparisons were carried out using a correlation assessment. The assignment to a certain category of age and the number of weeks of pregnancy was determined on the basis of self-reports. The choice of a group identity can contribute to the formation of a certain set of goals, values, and beliefs that create a sense of the direction of the identity of the expectant mother. The study was carried out using Excel 19, Windows 10, and SPSS 11 programs and its algorithm consisted in conducting a survey and processing individual protocols of subjects, entering data into a common table, as well as statistical calculation of average values.
4
Results
The relationship of identity categories with variables of types of attitude to pregnancy. The first stage of the analysis of the current sample was to identify the
5
Discussion
Tables 1 and 2 present the results of the correlation analysis of three identity parameters with each of the variables used here. All correlations were significant at the level of 0.05 or less. Spearman’s correlation analysis of the types of attitudes to pregnancy, categories of identity and judgments about the morality of pregnant women in Group 1 (optimal) revealed 25 significant correlations, of which 15 are directly proportional and 10 are inversely proportional. In Group 2 (non-optimal), 33 correlations were found, 16 of them directly proportional and 17 inversely proportional. Correlations in both groups were manifested in all three directions: depending on age, weeks of pregnancy, attitude to one’s type, to morality and identity. We noticed that, depending on the age, the correlation is observed only in Group 2 (non-optimal): the older they are, the lower the indicators of group identity (the subgroup of mothers becomes less significant for them) (r − 0.33, p 0.039); thus, there is an attitude toward oneself as an older mother. Depending on the number of weeks of pregnancy, different attitudes to pregnancy were revealed among representatives of both groups. In Group 1 (optimal), a negative relationship is observed with respect to the number of weeks of pregnancy and the hypogestognosic type: the longer the gestation period, the less this ratio is expressed (r − 0.45, p 0.025), which is natural, since it is a sign that as the fetus grows, the formation of the maternal position occurs. This shows that there is an adaptation to pregnancy.
292 Table 1 Correlation analysis of types of attitudes to pregnancy, categories of identity and judgments about the morality of pregnant women (optimal)
I. A. Kolinichenko and S. A. Nikulina No.
Indicators
The correlation coefficient—Spearman r
1
GD (general desirable identity categories) Weeks of pregnancy
2
Hypogestognosic attitudes to pregnancy Weeks of pregnancy
− 0.455(*)
0.025
3
Euphoric attitude to pregnancy M-7 (moral dilemma 7)
− 0.446(*)
0.029
4
M-8 (moral dilemma 8) Weeks of pregnancy
− 0.469(*)
0.021
5
PC (personally changeable categories of identity) L (personal identity categories)
0.845(**)
0.0001
6
LD (personally desired categories of identity) L (personal identity categories)
0.719(**)
0.0001
7
LD (personally desired categories of identity) PC (personally changeable categories of identity)
0.702(**)
0.0001
8
M-6 (moral dilemma 6) GR (group categories of identity)
0.411(*)
0.046
0.547(**)
Significance level p 0.006
Source Developed and compiled by the authors **Correlation is significant at the .01 level *Correlation is significant at the .05 level
Table 2 Correlation analysis of types of attitudes to pregnancy, categories of identity and judgments about the morality of pregnant women (non-optimal)
No.
Indicators
The correlation coefficient—Spearman r
1
CG (changeable group identity categories) Age
2
Significance level p
− 0.328(*)
0.039
Anxious attitude to pregnancy M-1 (moral dilemma 1)
0.323(*)
0.042
3
Depressive attitude to pregnancy Weeks of pregnancy
0.340(*)
0.032
4
PC (personally changeable categories of identity) L (personal identity categories)
0.885(**)
0.0001
5
LD (personally desired categories of identity) L (personal identity categories)
0.847(**)
0.0001
6
LD (personally desired categories of identity) PC (personally changeable categories of identity)
0.839(**)
0.0001
7
Euphoric attitude to pregnancy GR (group identity categories)
0.314(*)
0.049
8
Hypogestognosic attitudes to pregnancy GR (group identity categories)
− 0.452(**)
0.003
Source Developed and compiled by the authors **Correlation is significant at the .01 level *Correlation is significant at the .05 level
In Group 2 (non-optimal), the relationship between the number of weeks and the type of attitude to pregnancy is observed in the depressive type, it is weak (r 0.34), but significant, at the level of 0.032: the depressive attitude to pregnancy increases with its duration. This may be a sign of unresolved intrapersonal conflict, a subconscious feeling that the child threatens the mother in her state of pregnancy.
The relationship between the number of weeks of pregnancy was found in relation to the assessment of identity. In Group 1 (optimal), the following relationship is observed: the longer the gestation period, the stronger the desirability of general categories of identity (r 0.56, p 0.006), i.e. awareness of the desirability of maternal status increases with the length of the pregnancy.
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The following relationship was revealed in Group 2 (non-optimal): as the gestation period increases, representatives of this group more often deny personal identity categories (r − 0.39, p 0.013) and personally desirable categories of identity (r − 0.36, p 0.018)—as the pregnancy progresses, individual personality traits are perceived as less desirable, i.e. the importance of personality traits for pregnant women in this group decreases.
(r 0.85/0.72), at a high level of significance p 0.0001. In Group 1 (optimal) and Group 2 (non-optimal), there is a direct relationship of personally desirable identity categories with personally changeable identity categories (r 0.70/0.84) at a high level of significance (p 0.0001). We believe that the representatives of Group 1 (optimal) accept themselves in a new role, all their choices seem desirable to them; they do not want to change anything at the moment.
The relationship between the attitude to morality and the types of attitude to pregnancy: One significant relationship was found between the attitude of women to morality and the type of pregnancy: the euphoric type was revealed in Group 1 (optimal) and the anxious type in Group 2 (non-optimal). A weak correlation between euphoric pregnant women and moral dilemma 7 (r − 0.45, p 0.029) was revealed in Group 1 (optimal): euphoria decreases in compassion for other people and protection of the weak. This result is not completely clear and probably needs more in-depth analysis. The euphoric type of relationship is centered on a woman, it is possible to strengthen the position that she needs care more than others. The same weak correlation is observed in relation to pregnant women of the anxious type and moral dilemma 1 (r − 0.31, p 0.042) in Group 2 (non-optimal): the more the anxious type is expressed in a woman’s attitude to her pregnancy, the less she feels inclined to believe that the behavior of the majority is determined by moral norms. Anxiety about the perception of a pregnant woman by other people increases, she believes that people do not accept her in a new condition, does not trust them, and is afraid of their negative attitude. The relationship of personal identity categories of pregnant women and their attitude to morality. In Group 1 (optimal), personal desirability categories of identity and moral dilemma three are negatively related (r − 0.52, p 0.007): a significant attitude to personality traits causes pregnant women to deny the moral norms of the past, this is due to a new stage of her life, a reassessment of moral values. Interestingly, several interrelated pairs of categories turned out to be equivalent in two groups of pregnant women. Thus, there is a relationship of personal identity categories of pregnant women with personal, changeable, and personal categories according to the criterion of desirability, as well as the relationship of personally desirable identity categories with personally changeable categories. In Group 1 (optimal) and Group 2 (non-optimal), personal identity categories are highly correlated with personally changeable identity categories and personal identity categories according to the desirability criterion
The relationship of group categories of identity with morality (optimal) and the type of attitude to pregnancy (non-optimal). In Group 1 (optimal)—the attitude to the group is related to morality (M6—the assessment of moral behavior depends on the opinion of the majority of people (r 0.41, p 0.046). In Group 2 (non-optimal)—the attitude to the group (group identity categories) is directly proportional to the euphoric type of attitude to pregnancy (r 0.31, p 0.049) and inversely proportional to the hypogestognosic type (r − 0.45, p 0.003). The euphoric type of attitude toward pregnancy is self-centered [according to Dobryakov (2010), this type is observed in women with the dominance of hysterical characteristics] and is dependent on the environment. Therefore, their attitude to the morality of the majority and social desirability is natural. With regard to pregnant women of the ignoring (hypogestognosic type), we can say that they themselves are the center, as well as the plans that they have outlined, the life path that they have included in this plan. So the fact that they are more independent in their judgments from the opinion of the group is also understandable. The present study presented evidence of the importance of the identity of the maternal status, compared with the status of a pregnant woman in the development of personality in the context of socially responsible parenthood, taking into account the quality of the formed obligations of identity, which has the greatest impact on well-being and other aspects of positive and negative psychosocial functioning.
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Conclusion
In continuation of the study, current and other data in the study of identity can be considered. They show that the lack of formation of internally motivated obligations of successful parenthood, probably affecting the emerging identity, or the formation of non-expressive obligations that lack internal motivation, which is typical for subjects with hypogestognosic type of pregnancy, significantly reduces the chance of forming a positive psychologically and socially responsible idea of parenthood. Most likely, the idea of socially
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responsible parenthood will be closer to pregnant women of the optimal type, since the euphoric type of pregnant women is characterized by hyperprotection, and hypogestognosic type—by hypoopection. This can be compensated by the formation of an identity with the image of the mother at the stage of pregnancy. Understanding the obligations of socially responsible parenthood, taking into account the congruence of the subconscious choice of the group that is formed during pregnancy, will give importance to the decisions that are made by women expecting a child. Pregnancy is a period that makes a significant contribution to the process of optimal adaptation to the new role of the mother. Perhaps success in forming adherence to the group identity of mothers in a subset of the group identity category can serve as a basis for the development of further successful parenthood. Psychologists in women’s clinics, perinatal psychologists should not underestimate the difficulties faced by pregnant women, they should make efforts to successfully coordinate these tasks.
References Batuev AS, Bezrukova ON, Koshavtsev AG (2007) Motherhood in the context of social and psychological problems of reproductive health. In: Batuev AS (ed) Biosocial nature of motherhood and early childhood. Petersburg State University, St. Petersburg, pp 41–119 Belogay KN (2014) Empirical study of female corporality in connection with reproductive function. Bull Kemerovo State Univ 1(57):108– 116 Brutman VI, Varga AY, Khamitova IY (2000) The influence of family factors on the formation of deviant behavior of the mother. Psychol J 21(2):79–87 Dobryakov IV (2010) Perinatal psychology. Peter, St. Petersburg Erickson E (1996) Identity: youth and crisis. Publishing group “Progress,” Moscow Fesenko PP (2005) The meaningfulness of life and the psychological well-being of the individual. Extended abstract of candidate’s thesis. L.S. Vygotsky Institute of Psychology, Moscow Filippova GG (2018) Psychology of motherhood: textbook for academic baccalaureate. Yurayt, Moscow Kartashova KS, Shelekhov IL, Mytnikova MI, Kozhevnikov VN (2010) Psychological feature of women at late stages of pregnancy. Bull Tomsk State Pedagog Univ 32:103–106
I. A. Kolinichenko and S. A. Nikulina Kolinichenko IA, Nikulina SA, Asrieva EN, Basanova EE (2021) Study of attitude to pregnancy and identity of pregnant women in modern: socio-economic conditions. In: Popkova EG, Sergi BS (eds) Modern global economic system: evolutional development versus revolutionary leap, vol 198. Springer, Cham, pp 120–128 Kolinichenko IA, Nikulina SA, Voronkina LB (2022) The idea of identity and types of attitudes to pregnancy of expectant mothers. In: Proceedings of the international anniversary scientific conference dedicated to the 50th anniversary of the establishment of the Institute of Psychology of RAS “History, modernity and prospects for the development of psychology in the System of the Russian Academy of Sciences” (November 16–18, 2022, Moscow). Publishing House of Institute of Psychology of RAS, Moscow, pp 431– 433 Magdenko OV (2012) Destructive reproductive motivations in pregnant women during the formation of maternal role identity (psychocorrectional aspect). Extended abstract of candidate’s thesis. Publishing House of the National Research Tomsk State University, Tomsk Meshcheryakova SY (2000) Psychological readiness for motherhood. Quest Psychol 5:8–28 Myasishchev VN (1995) Psychology of relationships. In: Bodaleva AA (ed) Selected psychological works. NGO “Modek,” Voronezh Nikulina SA (2017) Formation of emotional well-being of pregnant women by means of psychological counseling: monograph. PSU, Pyatigorsk. http://library.pglu.ru/plugins/library/library.php?info. 223. Accessed 12 March 2023 Rabovalyuk LN (2014) Value orientations of women with different variants of the psychological component of the dominant pregnancy. Extended abstract of candidate’s thesis. G.I. Nevelskoi Maritime State University, Tomsk Radosteva AG (2012) Personal characteristics of pregnant women according to age and socio-demographic differences. Fund Res 11 (5):1149–1153 Tajfel H, Turner JC (1986) The social identity theory of intergroup behavior. In: Worchel S, Austin WG (eds) Psychology of intergroup relations. Nelson Hall, Chicago, pp 7–24. https://www. demenzemedicinagenerale.net/images/mens-sana/Tajfel_e_ Turner__Social_Identity_Theory.pdf. Accessed 12 March 2023 Ulybina EV (2012) Immutability as a characteristic of the identity of football fans. Psychol Res 5(23):779 Vorobyova ME (2015) Features of the social identity of women before and after the birth of a child. Extended abstract of candidate’s thesis. Kursk State Medical University, Yaroslavl Winnicott D (2004) The family and individual development. Mother and child. Publishing house “LITUR,” Ekaterinburg Zemzyulina IN (2009) Experience of pregnancy in the context of a personality’s life way as a factor of readiness for maternity. Izvestia: Herzen University journal of humanities and sciences, vol 91. Publishing House of the Russian State Pedagogical University named after A.I. Herzen, St. Petersburg, pp 31–42
Theoretical and Methodological Foundations of Interaction Between Family and School as a High Social Responsibility in Child Development Elena N. Pristupa , Natalia A. Zaikina , Angela V. Babayan , Anna I. Shcherbina , and Olga S. Eremina
development of adaptive capabilities that allow flexible response to changes in the modern world.
Abstract
The article considers one of the EGS principles (S—high social responsibility) and raises the question of how the interaction of family and school affects the development of children. The article analyzes the scientific literature of domestic and foreign researchers in the field of principles of family education, interaction between family and school, as well as factors affecting the effectiveness of such interaction. It is determined that the key component of helping the family to perform its functions is the formation of parental competence. The qualitative formation of parental competence occurs only in the process of cooperation with the school, which, in turn, leads to conscious parenting and thereby affects the harmonious and comprehensive development of children. The authors, on the one hand, considered the existing forms of interaction between school and family, and on the other, presented alternative options. The article reveals the basics of building interaction between family and school, assuming a unified system of upbringing of the younger generation, embedded in the interplay with such social institutions as the family, educational institution, and society. The basics include the formation of conditions for successful personal growth and self-realization, the creation of active cognitive motivation, prevention and maintenance of mental and physical health, and the E. N. Pristupa Institute of Child Development, Health and Adaptation, Moscow, Russia e-mail: [email protected] N. A. Zaikina A. I. Shcherbina Moscow Pedagogical State University, Moscow, Russia e-mail: [email protected] A. V. Babayan (&) O. S. Eremina Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected] O. S. Eremina e-mail: [email protected]
Keywords
Interaction Family Effective conditions
School
Social responsibility
JEL Classification
A210
1
Z190
Introduction
In the modern world, EGS principles are becoming increasingly relevant, which implies the preservation and observance of the interests of nature and society. Thus, one of the most important principles is the principle of social responsibility to society. Education plays a crucial role in the life of every person, because in the process of learning, a person receives development and upbringing. Schooling begins with primary school, and this period is marked by the fact that the family has a strong influence on the upbringing and education of children, in addition to teachers. Therefore, it is the formation of active interaction between parents and the school that can serve as the basis for obtaining high-quality educational results within the framework of primary school. The current economic situation is such that many parents are forced to deal with material and financial issues, which in turn puts the issues of upbringing and education of children into the background. In addition, many parents experience difficulties in education due to lack of knowledge, practice, and personal experience. However, it should be emphasized that it is in the family that the main educational process takes place, within the framework of which children learn the values that their parents broadcast. With this in mind, the role of the school is to promote the personal development of
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_50
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universal, cultural, and moral values in children, which makes possible the comprehensive and qualitative formation of the child’s personality. All of the above leads us to the conclusion that one of the most important tasks of modern education is the formation and increase of parents’ motivation for active interaction with the school, the successful implementation of which should be based on a solid theoretical and methodological basis. In 2015, the “Strategy for the development of education in the Russian Federation for the period up to 2025” was adopted, where the main task is “assistance in the realization of the educational and cultural and educational potential of the family” (Decree of the Government of the Russian Federation of May 29, 2015 No 996-r 2015). The Federal State Educational Standard for Primary General Education of the new generation emphasizes that it is necessary to create conditions for supporting the family in the formation and improvement of psychological and pedagogical competence in relation to the upbringing and development of children (The Federal State Educational Standard of Primary Education approved by Order of the Ministry of Education of the Russian Federation No 286 2021). However, as practice shows, teachers do not have enough knowledge of the means and methods of interaction with parents of children, which makes it difficult to achieve the effectiveness of the learning process. The problems of interaction between family and school on issues of education and development were considered by Amonashvili (1995), Bayborodova (1992, 2020), Vasilyeva et al. (2019), Komensky (1955), Sukhomlinsky (1988), Ushinsky (1988), and others. The following aspects of the problem under consideration, presented in the works of Russian and foreign scientists in the field of psychology and pedagogy, formed the theoretical and methodological basis of this study: • the principles of family education were studied by Kapterev (1982), Lestgaft (1990), Locke (1997), Ushinsky (1988), and others; • Komensky (1955), Krupskaya (1965), Shatsky (1964) and others worked on the study of aspects of cooperation between the family and the school system; • the identification of the success factors of interaction between family and school in the works of Amonashvili (1995), Bayborodova (1992, 2020), Gritsai (2012), Sukhomlinsky (1988), etc.
2
Methodology
Successful teacher-parent collaboration is the most important tool that allows them to competently and comprehensively develop a child’s personality and responsibly address the
task set by the state. In addition, joint activities mutually enrich each side of the interaction participants with knowledge. These statements are reflected in the scientific domestic and foreign literature. Komensky (1955) in his scientific work “Mother’s School” emphasized the great role of family and school in the education of a child, described the basics of education, knowledge of which can help parents to form a child's personality. The English thinker John Locke emphasized the special significance of the idea of developing the relationship between family and school in his treatise “Thoughts about Education” (Locke 1997), which is a guidance to parents on the issues of upbringing children. He believed that the key role in the formation of personality belonged to the family. At the same time, he believed that some paternal functions can also be performed by an educator, who, nevertheless, should remain under the control of the father. Russian scientists K.D. Ushinsky, P.F. Kapterev, and P.F. Lesgaft wrote in their works about the need and importance of coordination of family and school education. Ushinsky (1988) emphasized the special influence of the family in the upbringing of a child and considered the family environment as natural in the educational process, since he believed that a personality was formed under the influence of its traditions, values, and relationships. P.F. Lesgaft in his scientific works “Family education of a child” and “Family education of the child and its value” identifies as the main goal for parents the creation of a family environment that involves the inclusion of children in adult activities to perform feasible tasks, which contributes to their harmonious and free development. In his opinion, this should lead to the formation of a “normal type” of the child and, moreover, such qualities as an emotional response to surrounding events and phenomena, independence, interest in cognitive activity, sincerity, truthfulness, etc. The main requirements for education from the point of view of Lesgaft (1990) are: purity, consistency of words and actions performed by parents in order to change the behavior of the child, absence of despotism, and humane attitude to the child with full recognition of his personality. Kapterev (1982) noted the need to prepare parents for the upbringing of children and wrote, “It is necessary to stimulate the child’s development process through the general improvement of the atmosphere surrounding the child’s family, as well as arming parents with scientific knowledge about the child”. This means that the task of the school is to provide support in the education of parents for the proper upbringing of their child. The main works of his scientific and practical activity are the following works dealing with these issues: “Encyclopedia of family education and training”, “Basic principles of family education”, and “Tasks and basics of family education”. In addition, his merit is the organization of a parent circle, whose activities included
Theoretical and Methodological Foundations of Interaction...
lectures in the field of pedagogy, psychology, and medicine, followed by their discussion of the problems of the formation of the growing generation. Krupskaya emphasized the importance of counseling on parenting, as well as the need to create such an opportunity for workers in close proximity to their workplaces at factories. She also owns such ideas as the creation of a textbook on family education for parents and radio broadcasts devoted to the problems of development and upbringing of children (Krupskaya 1965). Shatsky (1964) expressed the position that “it is necessary to develop the most serious pedagogical propaganda among the broad masses of the population, and the results of this difficult and long-term work should be of great help in the issues of mass education of children”. Gritsai (2012) noted the necessity and importance of forming a qualitative interaction between the institute of family and the institute of school, while emphasizing that such interaction can be successful only if their mechanical and formal unification is avoided. A.S. Makarenko said the following words about the role that family institutions and schools play in the formation of youth, “There are good families, and there are bad families. It is impossible to vouch for the fact that the family brings up the children properly. We cannot say that the family can bring up as it wants. We must organize family education, and the organizing principle should be the school, as a representative of state education”. A.S. Makarenko argued, “It is impossible to separate the family from the school”. He was actively engaged in the promotion of pedagogical education of parents, for which he proposed the organization of mandatory short-term courses in order to teach parents the basics of family pedagogy and positive experience of family education (Makarenko 2019). The merit of Sukhomlinsky (1988) is the substantiation of the principle of continuity and unity of social and family education, the implementation of which is possible only with the formation of trusting cooperation between teachers and parents, with a constant connection between family and school. Amonashvili (1995) also held the position that only the unity and integrity of the educational efforts of both the family and the school can contribute to the successful formation of the child’s personality. Summing up the review of the works of domestic and western teachers-researchers, we conclude that they all assigned a dominant role to the family in the formation of the growing generation in its interaction with the school institute. Thus, as can be seen from the review of the accumulated pedagogical experience on the problem under consideration, the issues of educating children have always been acutely raised. It should also be emphasized that in the historical
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development of this problem, the promotion of family education and responsible parenthood was actively conducted; there was a gradual decrease in the isolation of the institution of the family from the school and an increase in the desire of parents to cooperate with teachers of educational institutions on issues of education and upbringing of young people. In addition, public interest in the problems of the family and its potential in the educational aspect was growing. This was reflected in the appearance of periodicals aimed at educating and helping parents with educational problems (Epstein 2019). Vasilyeva et al. emphasize in their work that the highest level of interaction is that which arises within the framework of cooperation between family and school institutions, since it is based on achieving a common goal—the formation of conditions conducive to both the development and education of children and their subsequent social self-realization (Epstein 2019). So, we come to the conclusion that the most important factors in the content of modern education are the personal qualities and pedagogical enlightenment of parents. For the successful fulfillment of the task of harmonious development of the child’s personality, it is necessary to provide comprehensive support to adults in the formation of their parental competence, since through the transfer of their experience they develop children’s basic ideas about social norms and moral values. Domestic scientists E.V. Bondarevskaya, O.S. Gazman, and others argue that despite the fact that the responsibility for the formation and development of personality lies on the shoulders of the school due to the availability of professional knowledge and experience of teachers in pedagogical issues, and society should not diminish the role of the family in this matter. Socialization, the formation of the child’s personality, as well as the development of such qualities as initiative, determination, independence, responsibility, and many others that will be decisive in his social and personal self-realization occur under the key influence of the family (Kryuchkov 2002). Many foreign scientists note that it is necessary to take additional steps to ensure the continuous development of methods of interaction between family and school to support the individual characteristics and needs of pupils (Smith et al. 2019). This, in turn, increases the degree of responsibility of parents for the proper upbringing and effective development of children. For the purposes of forming and developing constructive social responsibility, it is necessary to organize a school environment that meets the requirements of modern society, which is certainly not possible without involving the family in the educational process (Prystupa 2006). To form a position of responsible parenting, an open dialogue between school and family and teachers and
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parents is necessary. Also, the purposeful process of children’s development requires the participation of parents in the planning of educational work. Moreover, it is important to include teachers, parents, and children in various joint activities. In this context, it seems especially important to identify conditions that can form effective interaction and cooperation between the family and the school in order to strengthen the high social responsibility on the part of both the family and the school in the formation of the rising generation. Such interaction of social institutions of family and school should contribute to the formation of an environment that allows a child to develop his personality in such a way that it will allow him to fully and successfully realize himself in society in the future, give him a basis for personal growth, constant self-development, preservation of mental and physical health, as well as the development of his ability to adapt to constantly changing conditions in the modern world. In general, the main goal of such interaction is the formation of a unified system of upbringing and education of the younger generation within the framework of society, school, and family. The analysis of the studied foreign and domestic literature allowed us to identify effective conditions for the interaction of family and school (Fig. 1). It is advisable to consider these conditions in more detail. One of the conditions for interaction between teachers and parents is common goals and objectives in the upbringing and development of children. Parents have difficulties in raising children due to lack of knowledge, so the constant interaction of the teacher with family members can provide assistance and support in matters of education and training (Bondareva et al. 2017). Many parents are interested in what conditions they should organize at home so that their child can successfully cope with his studies, as well as what recommendations can help relieve his fear of school, or the ability to find a common language with other children and teachers. Many problems of parents that arise during the school education of their children require an individual approach due to the fact that they are of a private nature, and rare conversations with a teacher or visits to parent meetings in these cases cannot provide the necessary assistance. Also,
Fig. 1 Conditions of interaction between family and school. Source Developed and compiled by the authors
parents need individual consultations from professional teachers in situations where they cannot find their own effective solution to an educational problem. Currently, the school is becoming an open sociopedagogical environment, striving for dialogue, interpersonal communication, thus contributing to the development of pedagogical culture and competence of parents, which generally increases the level of family education. Interaction between the school and the family can take place in various forms, the following of which are the most popular today: parent meetings, individual conversations, conferences, lectures, and seminars dedicated to the psychological and pedagogical aspects of the upbringing and development of the younger generation (Bayborodova 1992). However, along with the use of traditional forms of cooperation between parents and teachers, it is necessary to actively develop and introduce new ones, which can be: the organization of readers’ conferences, discussions and debates, round tables, library projects, the participation of parents, children, and teachers in psychological and role-playing games, as well as theatrical productions, excursions, competitions, the creation of family clubs, and many others (Bayborodova 2020). We are convinced that increasing the motivation of parents to interact with the school is the key to the effectiveness of such cooperation. To this end, various forms of encouragement, support, and dissemination of positive experiences of parents in the upbringing and development of children should be used. To increase the motivational component of parents, the following can be distinguished: the individual attention for each specific family, the expression of approval of the individual success of the child by the teacher, the manifestation of personal interest in the affairs, development, and education of the child, timely informing parents about important and current affairs at school, friendly and thoughtful response to requests and opinions of parents, and discussion of issues directly connected with the possibilities of improving the quality of children’s education within the framework of cooperation between the school and parents.
Conditions of interaction between family and school
common goals and objectives of teachers and parents in the education of children
a sufficient degree of motivation to interact and solve emerging issues
ensuring the diversity and accessibility of channels for interaction
Theoretical and Methodological Foundations of Interaction...
Currently, the role of information technology in the process of organizing interaction between the institutions of family and school has significantly increased, which is manifested in the creation of various electronic services that allow teachers to communicate more often and directly with parents, which means a more timely and targeted response to emerging problems. Digital technologies provide a fast and convenient way to communicate. In this regard, we can single out the third condition for effective interaction—ensuring the diversity and accessibility of interaction channels. It is digital technologies that make it possible to implement an individual, differentiated, and targeted approach to each family and child, which makes it possible to make this child’s education as effective as possible. Teachers who include in their work with parents various information and communication means (online conferences, electronic journals, electronic manuals, websites, etc.), as a rule can achieve the most effective interaction between the family and the school. The individual nature of such communication contributes to a greater degree of openness of parents in discussing a variety of issues, as well as finding solutions to complex educational problems. In addition, electronic forms of communication are characterized by greater accessibility, since they can occur at almost any time convenient for both sides, and without interrupting household or professional affairs. In addition to the fact that digital technologies contribute to solving the current educational issues of specific students, they play a great positive role in identifying gifted children and working with them individually, since recommendations can be given on the development of abilities and talents. And this, in turn, can significantly increase the effectiveness of the learning process and the comprehensive development of the child. Thus, innovative forms of interaction and cooperation between schools and families have a huge potential that teachers should definitely use in their professional activities.
3
Results
The analysis of the scientific literature of domestic and foreign authors allows us to conclude that the problem of school and family education continues to be relevant for modern society. The current Concept of the State Family Policy and the Education Development Strategy is aimed at supporting family education, assisting in the formation of a responsible attitude of parents and conditions for improving the social, communicative, and pedagogical competence of parents. Thus, there is a need for a combination of family and school education, since the socioeconomic conditions of life in an industrial society directly depend on the level of instruction and education in the child’s personality.
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The family is the environment in which such processes as primary socialization, the transfer of experience from the older generation to the younger, and the formation of ideas about norms and values take place. Therefore, the key component of helping the family to perform its educational functions is the development of parental competence. The social responsibility of parents in the development of the child can be formed only in an organized environment for effective cooperation between the school and the family. Effective conditions for the interaction of family and school for the successful development of children are: the common goals and objectives of the educational institution, on the one hand, and the family, on the other, in the upbringing of children; a sufficient degree of motivation for interaction and solving emerging issues; and the diversity and accessibility of channels for interaction.
4
Conclusion
The family plays a leading role in education. In the process of education, the child acquires the first social experience, behavior patterns, value attitude to the world, the development of feelings and emotions, and communication skills. The main personality traits of the child are formed and developed in the family environment. The task of the teacher in this case is to organize such interaction between the school and the family, which would have the maximum educational potential. The issues of high-quality interaction between family and school have been considered by numerous scientists, both abroad and in Russia. But right now there is a growing understanding in society of the need to combine family education with school education, since the socioeconomic conditions of life in the industrial society are directly determined by the level of instruction and education in a person. The huge impact of the interaction between family and school is determined by the high significance and success of the development and upbringing of children. The identified pedagogical conditions can significantly improve the effectiveness of cooperation between the family and the school, and therefore contribute to increasing the high social responsibility of issues linked to the development of the rising generation. The conditions of interaction between the family and the school are: common goals and objectives of both sides of the educational process, that is, both sides should understand what they plan to do, what is the goal, and what it means to achieve this goal, both sides should be sufficiently motivated to interact and resolve emerging issues. To ensure the diversity and accessibility of communication channels, various electronic forms of interaction should be used, such as
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online conferences, electronic journals, electronic manuals, websites, and especially remote communication, in order to solve any issues arising in the learning process from both sides as quickly and easily as possible. The interaction of family and school as a high social responsibility in the development of children is the result of purposeful and long-term work, which, first of all, involves a comprehensive and systematic study of the family, and the characteristics and conditions of the family education of the child.
References Amonashvili SA (1995) Thoughts about humane pedagogics. Shalva Amonashvili Publishing House, Moscow Bayborodova LV (1992) Forms of interaction between teachers, students and parents. Publishing House of Yaroslavl State Pedagogical Institute, Yaroslavl Bayborodova LV (2020) Conceptual ideas for the development of interaction between teachers and the family. In: The socio-cultural space of the village as a source of translation of family values. IP Afanasyev Vyacheslav, Saransk Bondareva TO, Khan NN, Pristupa EN, Dossanova AZ, Kremneva TL, Turysbek R (2017) The social and pedagogical characteristics of a future teacher’s readiness for developing the intellectual and creative potential of a junior schoolchild in the heterogeneous ethnic environment. Pertanika J Trop Agricult Sci 25:195–210 Decree of the Government of the Russian Federation of May 29, 2015 No 996-r (2015) Strategy for the development of education in the Russian Federation for the period up to 2025. In: Electronic fund of legal and regulatory documents. https://docs.cntd.ru/document/ 420277810. Accessed 15 March 2023 Epstein JL (2019) Theory to practice: school and family partnerships lead to school improvement and student success. In: Fagnano CL,
E. N. Pristupa et al. Werber B (eds) School, family, and community interaction, pp 39– 52. https://doi.org/10.4324/9780429305375 Gritsai LA (2012) The humanistic model of family education in the pedagogical heritage of N.N. Karintseva, I.O. Fesenko and P. P. Blonsky. Pedag Educ 2:34–45 Kapterev PF (1982) Selected pedagogical writings. Pedagogy, Moscow Komensky YA (1955) Selected pedagogical writings. Uchpedgiz, Moscow Krupskaya NK (1965) Selected pedagogical works. Prosveshcheniye, Moscow Kryuchkov VK (2002) Relationships in the system “teacher—child— parents.” Pedagogy 9:32–37 Lesgaft PF (1990) Selected pedagogical writings. Pedagogy, Moscow Locke D (1997) Thoughts about education. Teacher’s Library, Moscow Makarenko AS (2019) A pedagogical poem. AST, Moscow Prystupa EN (2006) Education of a socially healthy personality as a socio-political and socio-pedagogical task. Soc Policy Sociol 1:107–119 Shatsky ST (1964) Selected pedagogical writings. Prosveshcheniye, Moscow Smith TE, Reinke WM, Herman KC, Huang F (2019) Understanding family: school engagement across and within elementary—and middle-school contexts. School Psychol 34(4):363–375. https://doi. org/10.1037/spq0000290 Sukhomlinsky VA (1988) The wisdom of parental love. Molodaya gvardiya, Moscow The Federal State Educational Standard of Primary Education approved by Order of the Ministry of Education of the Russian Federation No. 286 (2021) On approval of the federal state educational standard of primary general education. In: The official internet portal of legal information. http://publication.pravo.gov.ru/ Document/View/0001202107050028. Accessed 15 March 2023 Ushinsky KD (1988) Pedagogical writings. Pedagogy, Moscow Vasilyeva PD, Tugulchieva VS, Bayborodova LV, Rozhkov MI, Alekseeva IA, Zhibrova TV (2019) Higher education: problems and transformations: a collective monograph. IP Kenshenskaya Victoria Valeryevna (Zebra publishing house), Ulyanovsk
Implementation of the Concept of Sustainable Development in the Activities of Transnational Corporations Elena A. Soloveva , Irina B. Andish , Maria A. Dyakonova , Olga V. Yefimova , and Denis A. Mirgorod
and innovative solutions, etc. As a result, companies gain additional competitive advantages, which, in turn, becomes a strong incentive for them to strengthen their activities in this area.
Abstract
The purpose of the issue is to identify the features, new forms and mechanisms of participation of transnational corporations in the implementation of sustainable development goals and to identify possible directions for further involvement of transnational business in achieving global sustainable development. The paper defines the concept of sustainable development, explains its key aspects, highlights and characterizes the main directions of usage in the activities of transnational corporations. Using a three-pronged approach, the SDG Compass, the methodology for monitoring progress toward achieving the SDGs, the classification of the SDGs by the criterion of “significance” for business, as well as the method of case studies, the contribution of corporations to achieving the sustainable development goals was measured and tracked. The cases of participation of individual TNCs (transnational companies Unilever, Coca-Cola, SBERBANK of Russia) in the implementation of the SDGs and their experience in reorienting their own business strategies to build sustainable development served as the basis for analysis and allowed the authors of the article to conclude that participation in the concept opens up broad prospects for transnational corporations—ensures the growth of consumer demand, allows to attract a PPP mechanism, highly qualified personnel, receive additional investments, benefits and subsidies from the state, opens up prospects for the implementation of new projects, makes it possible to enter the market with new services
E. A. Soloveva (&) I. B. Andish O. V. Yefimova D. A. Mirgorod Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected] M. A. Dyakonova State University of Management, Moscow, Russia
Keywords
Concept of sustainable development SDG Transnational corporations Business sustainability Business strategies JEL Classification
F 20
1
F 23
I 00
M 14
Introduction
Traditionally, the role of TNCs in the global economy has been determined by their dominant participation in the processes of international division of labor, internationalization of production and capital, development of knowledge-intensive industries, creation of innovations, etc. (Peisakhov and Soloveva 2021). However, recently there has been an increasing importance of transnational corporations in solving such global problems of the modern world economy as climate change, inequality and poverty problems (Botasheva and Adamova 2018). All of them are inextricably linked with the global paradigm of sustainability, including business sustainability. In these circumstances, the analysis of the role and mechanisms of participation of TNCs in the concept of sustainable development developed by the UN is of particular importance. The purpose of the issue is to identify new forms and mechanisms of participation of transnational corporations in the implementation of sustainable development goals and to identify possible areas for further involvement of transnational business in ensuring global sustainable development.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_51
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Methodology
The content of the concept of sustainable development, its goals, methods of achievement, competitive advantages and opportunities for TNC participation in its implementation are interpreted by such authors as Grangier (2017), Mensah and Casadevall (2019), Sachs (2015), Hylton (2019). The practice of sustainable development of individual countries and regions, including the regions of the Russian Federation, and the role of transnational business in its provision are reflected in the works of Jovovic et al. (2017), Medyanik and Mikhailyuk (2018). Corporate strategies of transnational corporations, including strategies of business sustainability, corporate social responsibility, etc., are summarized in the works of Afonichkina (2016), Vencetel (2017), Movchan (2017), Popova (2016), etc. The experience of participation of various transnational companies in ensuring global sustainable development is reflected in the studies of Zavyalova and Starikova (2018), Kerrigan and Kulasooriya (2020), Starikova (2019). Despite the large body of research devoted to the analysis of the participation of TNCs in ensuring global sustainable development, the analysis of the practical experience of the implementation of the SDGs in the activities of specific transnational companies, as well as trends and prospects for further business participation in the realization of the SDGs as a necessary driver of global sustainable development, have not received sufficient scientific understanding in modern economics. The methodological basis of the work was the historical method, which made it possible to trace the genesis of the concept of sustainable development. The practical experience of TNCs’ participation in the global paradigm of sustainability was assessed by the case study method. The systematization of the main strategies used by TNCs in achieving sustainable development was carried out through classification and ranking. The study used the three-pronged approach, which allowed all SDGs to be classified into social, economic and environmental, adding
Table 1 The pillars of the concept of sustainable development
to them another subgroup—management SDGs, identified by a number of authors (Sachs 2015). This made it possible to systematize and evaluate all areas of TNC participation in the implementation of the SDGs and, within each area, highlight the challenges and opportunities they face. The study used the classification of SKOLKOVO, differentiating the SDGs by the criterion of their “significance” for business. It made it possible to reflect the process of TNC participation in the 2030 Agenda. The methodology of monitoring progress in achieving the SDGs, based on 10 indicators developed within the framework of the “Global Partnership for Effective Development Cooperation”, has also found application. In particular, the institutional development of TNCs’ interaction with governments and civil society was assessed using the “quality of public–private dialogue” indicator. The measurement and monitoring of the contribution of corporations to the achievement of the SDGs, as well as the assessment of the compliance of the business strategy of TNCs with the sustainable development goals was carried out through SDG compass.
3
Results
The concept of sustainable development is a kind of model of the existence and evolution of humanity, as well as its way of life and attitude to the surrounding world, in which future generations must necessarily have sufficient resources for a comfortable and safe life, prosperity, universal progress, etc. (United Nations 2016). The environment, economy and society act as the basis for achieving this progress (Table 1). As an interdisciplinary scientific phenomenon (the relationship between economy, society and the environment), the concept of sustainable development was formed in the 60–70s of the twentieth century, but its modern sound is associated with the adoption in 2015 by the UN General Assembly of the “Agenda for Sustainable Development for the period up to 2030”. The key idea of the agenda is that humanity, its current and future generations will be able to
Economic
Socio-cultural
Environmental
• Ensuring economic growth without harm to nature and society, including cultural aspects of its development • Elimination of extremes of wealth and poverty, hunger problems • People’s awareness of the importance of voluntary donation and profit sharing
• Strong civil society • Equality • Universal compulsory education, social guarantees • Elimination of all forms of prejudice, generally accepted standards of honesty (tolerance, compassion, love)
• A holistic balance between nature and human beings • Unity in diversity; cleanliness; environmental protection, careful nature management
Source Compiled by the authors based on (Concept of Sustainable Development 2022)
Implementation of the Concept of Sustainable Development …
find a sustainable balance of development and achieve the sustainable development goals, subject to the following basic principles (elements): (1) a strong, healthy and fair society; (2) achievement of a sustainable economy; (3) availability of effective management mechanisms (UN. 2030). The adoption of the UN Agenda essentially means the movement of the world community toward an environmentally oriented economy designed to ensure the sustainable development of our civilization, a closer attention of the world community to the problems and challenges determined by the development of the global economy—the growth of energy consumption, increasing interdependence, etc. These problems affected all spheres of human activity. In particular, such problems as lack of resources and their exhaustion, environmental pollution, climate change and other environmental challenges, overpopulation of the planet, food security problems, etc.—all this has elevated the task of finding a new—sustainable—mechanism of production and consumption to the rank of priority. The UN Agenda pays special attention to the contribution of business community in achieving the sustainable development goals, in particular, its more active involvement in the implementation of the SDGs. This is explained by the fact that the achievement of global sustainability is inextricably linked with innovative development—of national economy, individual sectors of the national and world economy, the management sphere, behavioral models. The integration of innovative solutions and technologies in the economic and managerial spheres require significant financial costs, as well as significant expert and technological resources. This is where the role of the private sector is important, therefore its involvement is considered as a significant factor in achieving the SDGs, and the business community itself is determined by the key subject of their implementation (UN 2015). It is important to note that, despite the recognition of the importance of the entire business sector in the practical implementation of the 2030 Agenda, the role of transnational corporations with significant financial, technological, image, managerial and other resources is decisive. With regard to TNCs, the main long-term positive effects that they can gain from participating in the implementation of the SDGs are the following. According to the report of the US Council on International Business, participation in solving poverty problems (SDG1) provides TNCs with the growth of existing markets and consumer demand; participation in health initiatives (SDG3) opens up prospects for the implementation of new projects in this area, including through the format of public– private partnerships; educational projects (SDG4) help to attract qualified personnel and enter the education market
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with new services and innovative solutions; the creation of low-cost and clean energy (SDG7) due to more efficient energy consumption reduces the energy consumption of production, thereby significantly reducing costs and obtaining not only additional investments, but also tax breaks and subsidies from the state (Clark 2022). Experts predict that business participation in the implementation of the SDGs will create 380 million new jobs by 2030. As for the profit of the enterprises themselves, in monetary terms it is estimated at $12 trillion annually (CEO 2017). In addition to the value expression, the advantage of large business participation in the “Agenda 2030”, according to the Accenture consulting agency, is, firstly, the acquisition of long-term or qualitative value (legitimacy, investment attractiveness, image, reputation capital, brand awareness and consumer loyalty); secondly, short-term (quantitative) value—the growth of sales, an increase in profits due to the entry of new services and technologies into the market, as well as by reducing energy consumption (https://econsense. de/wp-content/uploads/2018/06/econsense_Companies-forChange_Handbook_2017_3MB.pdf). It should be noted that already today many transnational companies have their own projects designed to ensure the achievement of several sustainable development goals simultaneously (https://research.hktdc.com/tc/article/MzYzMDIzMDAw). This allows us to confirm the reality of the theses expressed by Accenture by providing examples of some case studies. For example, the British company Unilever, one of the world leaders in the production of food and household chemicals, in the early 2010s experienced one of the most serious crises in its 150-year history, provoked by the consequences of the global financial crisis. One of the first decisions of P. Palan, who came to the position of CEO at that time, was an appeal to shareholders to pay attention to the long-term healthy development of the company. As a result, the Unilever Sustainable Living Plan was launched, which defined the company’s goals for the next ten years, namely: doubling revenue, reducing the impact of products on the environment; expanding its positive social impact (Kerrigan and Kulasooriya 2020). The implementation of the sustainable action plan required an appropriate corporate plan to promote the sustainable development of the Unilever brand, promote innovation and simultaneously attract and retain talents. In 2015, the company entered the market with a new line of products under the brand “Sustainable Living Brands”. This line of “sustainable brands” was launched as part of the implementation of three SDGs at once—improving health, clean water and sanitation and combating climate change. According to the reporting documents of the company, it managed in 2017 to increase the number of sales of goods of this brand by 46%, exceeding the sales volumes of all other
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categories of goods, as a result of which the total turnover of Unilever increased by 70% (https://www.unilever.com/news/ press-and-media/press-releases/2018/unilevers-sustainableliving-plan-continues-to-fuel-growth/). To date, Unilever’s functionality in the field of sustainable development has significantly expanded. The company not only continues to implement the SDGs in its own business strategy and practice, but also develops partnerships in this area. Thus, Unilever is working closely with the British Foreign Office, the UK Aid foundation and EY (Building a Better Working World), implementing a joint project TRANSFORM. The project aims to provide financing and individual business support to help millions of people in Africa and Asia gain access to the necessary products and services and, thus, implement the SDGs (by 2025) related to improving the environment, health and well-being of the population. Unilever also cooperates with the UN system of institutions to implement other SDGs, such as gender equality (SDG 5, jointly with UNESCO), clean water and sanitation (SDG 6, jointly with UNICEF). One of the ways Unilever uses to transform its business strategy toward sustainable development is to collaborate with companies with similar concepts in the ecosystem. This strategy allows it to create a favorable business environment and work together to move toward achieving global sustainability. An example of a successful partnership in the application of an ecosystem approach is the collaboration of Unilever with Mars, Danone and Nestlé. In 2018, these four leading food companies jointly created the “Sustainable Food Policy Alliance” (SFPA) to promote the development of food-related regulations in such areas as nutrition, food safety, transparency for consumers and environment. The plans implemented by the alliance include facilitating the transition of the entire industry to a cyclical economy; minimization of production waste; design of reusable or biodegradable food packaging; as well as prolongation of the service life of the product. Such an ecosystem strategy allows companies to support the development of innovative business models, to create value for stakeholders and consumers, to jointly promote the transformation of sustainable food-related environmental policies through joint actions, effectively decentralize and reduce market risks, thereby accelerating the transformation of sustainable development. In general, the company’s revenue and profit have grown significantly since the start of the implementation of the Unilever’s Sustainable Plan. According to the company, the course toward achieving global goals created opportunities for it in the amount of $ 12 trillion, and also increased shareholder returns by 290% (by 2019) (Winston 2021). The growth of the company’s profits and assets continued in the following years. In 2020, Unilever’s annual net profit is € 5.58 billion, in 2021—€ 6.05 billion. The operating profit in
E. A. Soloveva et al.
2020 was € 9.4 billion, in 2021—€ 9.6 billion. The company’s turnover in 2020 and 2021 was € 52.44 and € 50.72 billion, respectively. In 2023, the Board of Directors plans to buy back own shares for up to € 3.0 billion (https://www.interfax.ru/business/821254). Thus, the experience of Unilever has fully demonstrated that the transformation of strategy toward sustainable development is an effective way of corporate governance and can create real value for the company. Coca-Cola is another leader of sustainable development. Today, the corporation carries out a large number of socially significant projects around the world, allowing to simultaneously implement many sustainable development goals. The most ambitious of them is the global initiative “5by20”, a program of financial assistance and training of women in practical business skills, designed to ensure economic rights and expand opportunities for women to participate in economic activities (SDG5—gender equality) (https://www.cocacolacompany.com/news/coca-cola-surpasses-5by20-goal). The concrete result of the program by 2017 was 1.75 million women in 64 countries of the world who managed to realize their own business projects. Already in 2019, only for one year of its operating, Coca Cola helped 1.3 million women achieve success in business, and the number of countries where this project was implemented increased to 94. As of the end of 2020, the total number of 5by20 programs has increased to 300 in 100 countries around the world. In the future, Coca Cola plans to reach the figure of 5 million women per year (https://www.coca-colacompany. com/news/coca-cola-surpasses-5by20-goal). The company implements individual socially oriented projects in various countries of the world (https://www. projectlastmile.com/project-last-mile-expands-to-liberia-andswazilandstrengthening-health-systems-across-africa/). So, in Brazil, Coca-Cola operates on the Coletivo platform. Among the main projects of the platform are the Coletivo Recycling program, the Coletivo Arts program for people of creative professions, which allows to bring art objects and other creative products created from recycled materials to the market, and other programs (there are about 135 sites in total, where more than 25 thousand young people have received training and 6 thousand small businesses have received support for more than 10 years of the program) (Coca-Cola World Without Waste Report 2020). Initially aiming to expand the company’s presence in foreign markets (by eliminating socio-economic barriers to business expansion and establishing communication with local consumers), Coca-Cola projects help the company not only to form a loyal attitude to the brand among the local population, but also to significantly increase profits. It is noted that the growth in the number of sales of Coca-Cola products in countries where the company implements similar
Implementation of the Concept of Sustainable Development …
projects is on average 9.5% higher than sales growth in countries where traditional market entry strategies are used (Zavyalova and Starikova 2018). In general, it can be argued that the participation of TNCs in the implementation of socially significant projects allows them to solve many of the sustainable development goals stipulated by the 2030 Agenda, as well as the tasks of promoting the corporation’s positions in foreign markets that are relevant for the development and further transnationalization of their own business. Russian corporations also do not stay away from the trend of sustainability. One of the successful examples in this regard is SBERBANK PJSC. In general, the recent trend of digitalization by many banks (the transfer of many operations to remote mode) leads to a significant increase in the energy efficiency of their activities, thereby reducing the direct impact on the environment (Eshtokin 2022). In 2021, the bank’s management adopted the Policy in the field of social and environmental responsibility, corporate governance and sustainable development (Mensah and Casadevall 2019), which allowed the company to integrate systematically into the implementation of the UN ESG Principles. Sber implements environmental protection projects, solves social problems, improves the quality of corporate governance through: • special interest rate conditions for ESG covenants—corporate borrowers who follow ESG principles. At the same time, the bank’s management plans to consistently increase the portfolio of “green” loans; • ESG index-based strategies for private investors (a special product “Responsible Investing”), the service of targeted charity SberTogether, the charitable foundation “Investment to the Future”, payment card “Gift of Love” etc.; • participation in the UN Global Compact on informing about the best sustainable business practices, in particular, in the field of industrialization and innovation (advanced developments, including in the field of artificial intelligence, to solve significant problems of sustainable development), the creation of sustainable cities (modernization of infrastructure through digital technologies), formation of a system of responsible consumption and production (processing of plastic cards, development of a system of virtual/digital Sber cards). The company plans to take a leading position in the field of ESG at the Russian and international levels (https://www.sberbank. com/common/img/uploaded/files/pdf/normative_docs/ sber_esg_policy_rus.pdf). Thus, awareness of the real and potential benefits of the SDGs for business contributes to the fact that many transnational corporations have begun to actively participate
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in achieving the sustainable development goals. Already today, many of them are developing and implementing socially oriented and energy-efficient business models into production, implementing their own innovative projects aimed at achieving several sustainable development goals simultaneously and maintaining their own sustainability. It is obvious that competition in this area will only intensify in the future, and the compliance of TNCs’ activities with sustainable development goals in the foreseeable future will become one of the main criteria for the effectiveness of their activities.
4
Conclusion
As our research has shown, participation in the implementation of the concept of sustainable development really opens up broad prospects and opportunities for transnational corporations to develop their own business. The growth of consumer demand, the use of PPP mechanisms, interaction with stakeholders and other types of multi-format cooperation, the attraction of qualified personnel, additional external investments, government benefits and subsidies, the promotion of new services and innovative solutions, the opening of new niche markets—all these are additional competitive advantages that TNCs receive as a result of participation in global sustainable development programs.
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The Comparative Analysis as a Tool for Evaluating the Effectiveness of Economic Sectors Tatiana V. Baibakova , Anastasia A. Sozinova , Aleksandr A. Voronov , Irina A. Shumakova , and Elena A. Fursova
crops. Moreover, the authors propose management tools by which the rate of yield growth will have a sustainable positive character.
Abstract
The research paradigm changed sufficiently at the beginning of the twenty-first century. Particularly, an interdisciplinary approach is being actively introduced in studying various phenomena and processes, making it possible to view the subject from different angles. In the industry analysis process, a considerable set of signs, criteria, and parameters are used to qualitatively and quantitatively evaluate the industry’s effectiveness. That is why it is important to apply such a set of indicators, the sufficiency level of which makes it possible to receive an objective evaluation of the industry’s effectiveness. This makes it possible to conduct the comparative analysis based on the law of sufficient reason, according to which each concept can be considered reliable only if there are sufficient grounds by virtue of which it can be considered true. Applying the comparative analysis to evaluate the economic effectiveness of industries allows us to characterize the object with a sufficiently high degree of accuracy and, as a result, to reduce the level of subjectivity in formulating conclusions. The research presents the algorithm and the results of the performed comparative analysis for evaluating the crop production effectiveness in the Russian Federation. The authors determine the type of relationship between crop yield, gross harvest, and crop acreage. Additionally, the authors conduct an evaluation of the effectiveness of growing T. V. Baibakova A. A. Sozinova (&) Vyatka State University, Kirov, Russia e-mail: [email protected] T. V. Baibakova e-mail: [email protected] A. A. Voronov E. A. Fursova Emperor Alexander I St. Petersburg State Transport University, St. Petersburg, Russia I. A. Shumakova Belgorod State National Research University, Belgorod, Russia e-mail: [email protected]
Keywords
Comparative analysis GDP Agriculture Crop production Crop acreage Gross harvest Crop yield JEL Classification
C15
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E63
L16
Introduction
In the context of a market economy, one of the fundamental industries is crop production, which provides a significant share of the products consumed by the population. Crop production is the basis for ensuring the food security of any country; the provision of food for the citizens of a country relies on its development (Government of the Russian Federation 2012; Russian Federation 2021; Ashinova et al. 2019; Kostenko 2019). The research aims to use the comparative analysis to evaluate the crop production effectiveness in Russia from 2017 to 2021. The research hypothesis is that comparative analysis can help more accurately evaluate the relationship between factors affecting the industry’s effectiveness.
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Methodology and Methods
The comparative analysis is based on the law of sufficient reason, according to which each concept can be considered reliable only if sufficient grounds have been given, by virtue of which it can be considered true.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_52
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The essence of the comparative analysis can be formulated in several provisions. First, we should make a detailed theoretical formulation of the compared objects’ characteristics. According to the tasks of scientific research, the number of these characteristics may vary, but this number is to be in sufficient quantity to formulate justified conclusions based on the analysis results. The characteristics should not lead to losing important information and should not overload the study with insignificant details (Federal State Statistics Service of the Russian Federation 2023; Kivarina and Yurina 2020; Kolesnikov 2004). Second, it is necessary to identify criteria for comparison, which should be clear, specific, and objective. Third, it is necessary to correlate the characteristics of the compared objects in accordance with the comparison criteria, identify general and special features of the considered objects, and explain the selected specifics. During this stage, it is necessary to see the characteristics of the studied objects and understand what the characteristics are related to. Based on this, the authors propose a scheme for conducting a comparative analysis of an industry. The whole process of the analysis includes three stages (Federal State Statistics Service of the Russian Federation 2021; Kotenko 2007; Prosyanyuk and Kislitsina 2020): 1. The entry into the comparative analysis; 2. The main stage of the comparative analysis; 3. The exit from the comparative analysis. The stage of entering the comparative analysis determines the industry’s role in the country’s economy. This stage aims to determine the degree of the industry’s influence on the country’s economy. During this stage, analyzing a group of introductory indicators is necessary. The group includes the following: • The share of agriculture in GDP; • The share of crop production in agriculture. After determining the degree of the industry’s influence on the country’s economy, we turn to the second stage, in which groups of quantitative and qualitative indicators are analyzed. For this purpose, the following algorithm is to be applied: 1. 2. 3. 4. 5.
To select objects for the comparative analysis; To select criteria and define their standards; To determine positions for contrast and comparison; To define reference points for contrast and comparison; To calculate indicators for the subsequent evaluation of the comparison and contrast criteria.
The research object is the branch of the economy—crop production. Two criteria are proposed to evaluate the crop production effectiveness: 1. The comparison criterion. This criterion is the growth rate of an indicator. If there is a steady increase in the indicator, then it allows us to talk about development. If there is a steady decline in the indicator, then we talk about a decline in the industry. If there are fluctuations of the indicators’ growth rates, then it allows dividing the entire analyzed period into sections in which there is a decline or an increase and, based on these data, to determine different management tools; 2. The contrast criterion. For this criterion, it is proposed to compare the growth rate of the gross harvest (Grgh) with the growth rate of crop acreage (Grca) and with the growth rate of crop yield (Grcy). As a result, the following identities are obtained, which help and allow us to determine the level of the industry development and effectiveness: Grcy > Grgh > Grca—the industry develops; resources are used effectively; Grcy < Grgh < Grca—the industry develops; resources are used ineffectively; Grcy > Grgh < Grca—the industry does not develop; resources are used effectively; Grcy < Grgh > Grca—the industry does not develop; resources are used ineffectively. The positions to be contrasted and compared are the two groups of indicators; each of them contains two indicators. The first group of indicators is a group of quantitative indicators that can be used to evaluate the resources availability and the result of their use. With regard to crop production, we have chosen the following indicators: • The sown territory of agricultural crops; • The gross harvest of agricultural crops. The second group of indicators is qualitative indicators that make it possible to evaluate the effectiveness level of using the resources involved. It includes the following indicators: • Crop yields in the farms of all categories got from one hectare of the harvested area; • The volume of crop production per capita. The reference point in this research is the period from 2017 to 2021; that is, the last five years. In the third stage (the exit stage), the authors formulate the result of comparative analysis. For this purpose, the contrast
The Comparative Analysis as a Tool for Evaluating the Effectiveness of Economic Sectors
criterion is evaluated, the conclusions are formulated, and the tools for improving the current situation are offered.
3
Data Availability
Data on the dynamics of the gross domestic product, agriculture, and crop production in the Russian Federation, in billion rubles, described in the next section of this research, are available at https://figshare.com/ with ID https://figshare. com/search?q=10.6084%2Fm9.figshare.22581499+.
4
Results and Discussion
4.1 The Entry Stage into the Comparative Analysis of Crop Production The main indicator that characterizes the Russian economy is the gross domestic product, the value of which depends on the state and development of industries. In 2021, the GDP was set at 93,391.3 billion rubles; 3471.5 billion rubles (3.72%) of the GDP was for the account of agricultural products (Consulting Company 2022; Fundina 2019; Paptsov et al. 2019; Tagunova 2017). Simultaneously, 3104.9 billion rubles (3.32% of the GDP) came from crop production. The dynamics of the gross domestic product, agriculture, and crop production in Russia are estimated with the use of the chain method in the form of growth rates. From 2017 to 2019, all indicators had positive dynamics; that is, an increase in all the indicators occurred. Nevertheless, the direction of these indicators changed every year. During 2017 and 2018, agricultural production grew by 1.71%, crop production—by 1.04%, and GDP—by 2.81%. From 2018 to 2019, agricultural production increased by 3.46%, crop production—by 3.44%, and GDP—by 2.20%. From 2019 to 2020, agricultural production increased by 0.17%, crop production—by 0.46%, and GDP decreased by 2.66%. From 2020 to 2021, agricultural production decreased by 1.29%, crop production increased by 4.75%, and GDP decreased by 1.04%. These results suggest that agricultural products, including crop production, play an insignificant role in GDP formation. That is, there is discordance: although the industry’s importance is very high for ensuring the country’s food security, its role in the GDP is minimal.
4.2 The Main Stage of the Comparative Analysis of Crop Production The most important stage of the comparative analysis of crop production is to analyze the two groups of indicators
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(Consulting Company 2022; Fundina 2019; Paptsov et al. 2019; Tagunova 2017). First, the dynamics of the indicators of the first group are analyzed (Table 1). In the last five years, the dynamics of the crop acreage of agricultural crops have been unstable. In 2017–2018, all crop acreage tended to decrease. In turn, from 2020 to 2021, all crop acreage tended to increase, except the crop acreage of potatoes and vegetables. The received data prove that the comparison criterion for the crop acreage of agricultural crops in Russia for the considered period is not achieved. That is, crop acreage is provided for the industry, but it faces risks of reduction. The crop acreage reduction is considered a consequential economic development risk. Notwithstanding this fact, the dynamics of the gross harvest of agricultural crops have a variable character. Similar to the dynamics of sown areas of agricultural crops, the dynamics of gross harvest are unstable. That is, the comparison criterion for gross harvest for the analyzed period is not achieved; there is no steady growth in the gross harvest of agricultural crops. After calculating quantitative indicators, qualitative indicators of crop production are calculated. The first indicator is the crop yield of agricultural crops. Grain and leguminous crops play a key role in the country’s food supply. The comparison criterion for crop yields for the analyzed period is not achieved; there is no steady increase in crop yields. The growth peaks in grain and leguminous crops fall in 2017–2018 and 2019–2020. The growth peak for other agricultural crops (sunflowers, potatoes, vegetables) falls in 2018–2019. The second qualitative indicator in evaluating crop production effectiveness is the crop production volume per capita. The growth peaks in production volumes per capita for grain and leguminous crops were observed in 2017–2018 and 2019–2020; for potatoes and vegetables, the peak was in 2018–2019. The peak of growth for sunflowers falls in 2018–2019; the peak of growth in crop production per capita is 2018–2019 and 2020–2021. Thus, the comparison criterion for the indicator “Volume of crop production per capita” is not achieved.
4.3 The Exit Stage from the Comparative Analysis In this stage, comparing the contrast criterion and the comparison criterion in the context of crops takes place. Two periods are selected for this purpose. The first period is the interval of the maximum growth of the key indicator, and the second period is the interval of the minimum growth of the key indicator or its maximum decline. The crop yield is the key indicator in crop production. In this regard, the peak of growth of the key indicator is 2019–2020; the peak of the
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T. V. Baibakova et al.
Table 1 Dynamics of crop acreage and gross crop yields in the Russian Federation Agricultural crops
Square, thousand ha 2017
2018
2019
2020
2021
Achievement/ non-achievement of the comparison criterion
Dynamics of crop acreage in the Russian Federation Total crop acreage
2505
2432
2305
2266
2347
Non-achievement
Grain and leguminous crops
455
428
421
438
536
Non-achievement
Sunflower seeds
37
37
34
37
44
Non-achievement
Potatoes
1049
1014
949
906
866
Vegetables
352
345
329
320
315
Non-achievement
39,405
36,760
Non-achievement
Dynamics of the gross harvest of agricultural crops in the Russian Federation Grain and leguminous crops
39,499
32,824
35,385
Sunflower seeds
3303
4242
5413
4650
5635
Non-achievement
Potatoes
2511
2841
2936
2721
2550
Non-achievement
Vegetables
2586
2559
2843
2970
2741
Non-achievement
Dynamics of crop yield of agricultural crops in the Russian Federation Grain and leguminous crops
29.2
25.4
26.7
28.6
26.7
Non-achievement
Sunflower seeds
14.5
16
18.3
15.9
16.2
Non-achievement
Potatoes
163
170
178
166
160
Non-achievement
Vegetables
241
243
251
245
242
Non-achievement
911
832
Non-achievement
Dynamics of production volume per capita in the Russian Federation Grain and leguminous crops
923
771
826
Sunflower seeds
71
87
105
91
107
Non-achievement
Potatoes
148
153
150
134
125
Non-achievement
Vegetables
93
93
96
95
92
Non-achievement
Source Developed by the authors based on (Federal State Statistics Service of the Russian Federation 2023)
Table 2 Evaluation of achieving the comparison criterion for grain and leguminous crops
Agricultural crops
Crop yield, center
Gross harvest, ton
Square, thousand ha
Equivalence
Fulfillment of the contrast criterion
− 13.01
− 16.9
− 5.93
Grcy > Grgh < Grca
Not fulfilled
7.12
11.36
− 1.69
Grcy < Grgh > Grca
Not fulfilled
Growth rate, 2018 to 2017, % Grain and leguminous crops Growth rate, 2020 to 2019, % Grain and leguminous crops
Source Developed by the authors
decline of this indicator is 2017–2018. The evaluation of achieving the contrast criterion for grain and leguminous crops is shown in Table 2. In 2017–2018, after reducing the sown areas of grain and leguminous crops by 5.93%, the gross harvest of these crops decreased by 16.9%, and the crop yield—by 13.01%. During 2019 and 2020, there was a decrease in the sown area by 1.69%; the gross harvest increased by 11.36%; the crop yield increased only by 7.12%. Despite the fact that the contrast criterion for grains and leguminous crops is not fulfilled, there are positive aspects expressed in the fact that when the resource used is
reduced, its return increases. In other words, in 2019– 2020, the main resource for growing grain and leguminous crops was used efficiently enough. Simultaneously, there are reserves because the rate of crop yield growth does not exceed the growth rates of gross harvest (Fundina 2019; Reznichenko and Andreev 2016). Thus, the results of the practical approval of the comparative analysis methodology have confirmed the research hypothesis, which is that using the comparative analysis helps us and makes it possible to evaluate the relationship of factors affecting the industry effectiveness more accurately.
The Comparative Analysis as a Tool for Evaluating the Effectiveness of Economic Sectors
5
Conclusions
Based on the performed research, the following conclusions can be made: 1. There is no direct relationship between crop yield, gross harvest, and crop acreage. 2. In the analyzed period, there is a decrease in the efficiency of growing grain and leguminous crops. 3. In the current perspective, it is necessary to improve such management tools, with which the growth rate of crop yields will prevail over the growth rates of gross harvest and the growth rate of crop acreage. 4. In this regard, three groups of development tools are proposed for crop production: • The first group is the tools with which the resources for growing crops will be in sufficient and necessary volume; • The second group is the tools aimed at increasing the gross harvest of agricultural crops; • The third group is the tools that make it possible to eliminate the constraining factors that have a negative effect on crop yields and make a contribution to the sustainable growth of the indicator in question. Making conclusion, it should be stressed that the Russian Federation put into effect the Federal law “On agricultural products, raw materials, and food with improved characteristics” on March 1, 2022. The law establishes and defines the basic requirements for producing green products. In particular, it is prohibited to use genetically engineered organisms and ionizing radiation; there are restrictions on the use of pesticides and mineral fertilizers. Products with improved characteristics will be marked with the trademark “Green Standard,” the copyright holder of which is the Ministry of Agriculture. According to the experts of the Russian Agricultural Bank, the law can become a driver for developing a new sub-branch of the agro-industrial complex producing environmentally pure agricultural products (Consulting Company 2022; Kulistikova 2022).
References Ashinova MK, Mokrushin AA, Chinazirova SK, Kostenko RV (2019) Digital transformation of the agriculture industry of the Russian
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Federation. New Technol 4:209–220. https://doi.org/10.24411/ 2072-0920-2019-10421 Consulting Company “Technologies of Growth” (2022) Report: 9 Promising crops for import substitution in Russia. Retrieved from https://t-rost.ru/market_research/business_ideas_farming/9_perspective_ agriculture_russia. Accessed 10 Mar 2023 Federal State Statistics Service of the Russian Federation (2021) Agriculture in Russia, 2021: statistical collection. Rosstat, Moscow, Russia. Retrieved from https://rosstat.gov.ru/storage/mediabank/SX_2021.pdf. Accessed 11 Mar 2023 Federal State Statistics Service of the Russian Federation (n.d.) Agriculture, hunting, and forestry. Retrieved from https://rosstat. gov.ru/enterprise_economy. Accessed 10 Mar 2023 Fundina EV (2019) The implementation of agricultural policies. Int Agric J 62(4):68–75. https://doi.org/10.24411/2588-0209-201910083 Government of the Russian Federation. (2012) The state program for the development of agriculture and regulation of agricultural products, raw materials and food markets (approved by Decree No. 717 on July 14, 2012). Moscow, Russia Kivarina MV, Yurina NN (2020) Analysis of the current state and dynamics of crop production development in Russia. Bull Agrarian Sci 5(86):130–138. https://doi.org/10.17238/issn2587-666X.2020. 5.130 Kolesnikov AS (2004) Philosophical comparative studies: East-West: textbook. Publishing House of St. Petersburg State University, St. Petersburg Kostenko RV (2019) Trends in the development of crop production. Colloquium-Journal 3–6(27):49–53 Kotenko VS (2007) Comparative studies—a new direction of methodology for the analysis of scientific activity and the development of science. Bibliosphere 3:21–27 Kulistikova T (2022) Analysts of Russian Agricultural Bank predict the growth of the market of green products. Agroinvestor. Retrieved from https://www.agroinvestor.ru/analytics/news/38771-analitikirosselkhozbanka-prognoziruyut-rost-rynka-zelenoy-produktsii/. Accessed 11 Mar 2023 Paptsov AG, Altukhov AI, Kashevarov NI, Pershukevich PM, Denisov AS, Rudoy EV, Sokolova ZE et al (2019) Forecast of scientific and technological development of the crop industry, including seed production and organic farming in Russia, in the period up to 2030. Novosibirsk State Agrarian University, Novosibirsk, Russia Prosyanyuk DV, Kislitsina ID (2020) Significance of problems of socio-economic development of Russian regions and their comparative analysis. Res Result Sociol Manage 6(4):87–111. https://doi. org/10.18413/2408-9338-2020-6-4-0-6 Russian Federation (2021) Federal Law “On agricultural products, raw materials and food with improved characteristics” (June 11, 2021 No. 159-FZ). Moscow, Russia Reznichenko SS, Andreev SYu (2016) Development of the agricultural sector of the economy on the basis of innovations. Young Sci 8(112):27–28 Tagunova IA (2017) Pedagogical comparative studies in the context of concepts and approaches of modern science. Otechestvennaya i Zarubezhnaya Pedagogika [National and Foreign Pedagogy] 1(4): 41–53
Impact of Government Support on Oilseeds Production Artem V. Lukomets
Abstract
1
State regulation is based on implemented regulatory documents that directly or indirectly concern crop production and its resource support. The research aims to identify the impact of state support on the production of crops, particularly oilseeds. The research methodology is to assess the impact of state subsidies on the financial results of agricultural organizations as the main producers of oilseeds. The author compares changes in the budget subsidy and changes in sown areas and gross harvest of oilseeds. The author concludes that the support was more compensatory than stimulating and did not cover inflation. Further improvement of state regulation should be based on the development of an optimal relationship between the strategy and tactics for the development of agriculture in the regions and individual priority sub-sectors. One of the measures to support the Russian seed market could be the introduction of quotas for the import of foreign seeds into the Russian Federation. Keywords
State regulation Agriculture Oilseeds Efficiency
Regional economy
JEL Classification
Q14
Q18
A. V. Lukomets (&) Federal Scientific Center “V.S. Pustovoit All-Russian Research Institute of Oil Crops”, Krasnodar, Russia e-mail: [email protected]
Introduction
The state agricultural support contributes to its effective development, considering the priority tasks of the economy. State support can be considered as a capital resource coming from the state. Therefore, the research determines the impact of state support on the crop production, particularly oilseeds. State support for agricultural industries is distinguished by the targeted nature of the provision, the impossibility of redistribution to finance other areas, compliance with certain criteria and requirements for recipients (including, for example, the presence of agricultural insurance contracts), the possibility of increasing volumes, and the possibility of operational change of usage structure. State regulation is based on implemented regulatory documents that directly or indirectly concern crop production and its resource support. State support measures are presented by several tools and mechanisms, including the following: • Preferential tariffs for the transportation by rail of agricultural products and products for organizing agricultural production. • Preferential leasing. • Concessional lending. • Compensatory and incentive subsidies. • Subsidies to reimburse part of the interest rate on investment loans. • Reimbursement of part of expenses for reclamation activities. • Compensation for part of the costs of certification of agricultural products. • Compensation for part of the direct costs incurred for the modernization or creation of agricultural facilities, etc.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_53
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314
Indirect regulatory measures of state support include the following: • Purchases of agricultural products and food for state needs. • Conducting a protectionist customs and tariff policy. • Price and tariff regulation. • Establishment of tax incentives. • Financial improvement of agricultural producers, procurement, and commodity interventions. The effectiveness of the use of budget support is assessed in various ways. The OECD uses a group of indicators characterizing support to assess support for the agricultural sector. These indicators are as follows: • Producers—the total volume of transfers to agricultural producers (producer support estimate [PSE]); nominal manufacturer protection factor—the ratio between the average manufacturer price and the sales price (producer nominal protection coefficient [producer NPC]) and others. • Agricultural conditions—annual transfers aimed at creating favorable conditions for agricultural producers through the development of private or public services, as well as at the expense of institutions and infrastructure (general services support estimate [GSSE]). • Consumers—the annual volume of transfers to consumers of agricultural products provided as part of the implemented support measures (consumer support estimate [CSE]) and others. • Agriculture—the annual monetary value of all gross transfers resulting from the implementation of measures aimed at supporting agriculture (total support estimate [TSE]) (Cherepanova et al. 2022). According to the OECD, the total support for agriculture in 2019–2021, on average, reached $817 billion per year, which exceeded the figures for 2018–2020 by 13% ($720 billion). The Ministry of Agriculture of the Russian Federation assesses the effectiveness of support in accordance with the approved methodology on the basis of the integral index evaluation of the results of the use of subsidies under the agreement on their provision. The use of the subsidy is considered effective if the value of the integral result of the effectiveness of the use of subsidies reaches 100%. When conducting control procedures, the Accounts Chamber evaluates the following criteria:
A. V. Lukomets
• The values of the results of the use of subsidies provided for in the agreements on the provision of subsidies have been fulfilled (100%). • Achievement of results by the constituent entities of the Russian Federation is ensured at the expense of the provided amount of budgetary funds. • Increase of agricultural production by recipients of incentive subsidies or preservation of agricultural production by recipients of compensating subsidies. The Ministry of Agriculture of the Russian Federation assesses the effectiveness of state support by the ratio of its volumes and tax revenues to the budgets of the regions. In 2020, a positive balance (taxes paid—the volume of state support) was observed in 18 regions, and a negative balance was observed in 66 regions. With this approach to assessing the effectiveness of state support, the Bryansk Region and the Republic of Tatarstan have the largest negative balances, which are leading in terms of the amount of state support received. When calculating the relative indicator, the most effective are St. Petersburg (6 times excess), the Rostov Region (2.08 times), and the Krasnodar Territory (1.93 times). The need to consider the effectiveness of state support in the distribution of subsidies is indicated by many scholars. Thus, A. N. Semin and co-authors note that the existing mechanism for allocating budget funds has low efficiency and is often aimed not at creating public goods but at lobbying private interests; there is no binding of allocated budget funds to the economic efficiency of organizations (Semin et al. 2019). The authors propose selecting enterprises for subsidies and subsequent assessment of the effectiveness of budget investments. A. N. Semin, A. L. Loginov, and N. V. Maltsev propose using a mechanism to distribute subsidies depending on the achievement of security for a particular type of food (Semin et al. 2022). Z. A. Mironova and N. P. Fedorova propose assessing the ratio of the increase in state budgetary support for agriculture and the increase in produced products or income (Mironova and Fedorova 2019). A. A. Valerianov and N. V. Alekseeva prove the existence of a relationship between budgetary support and investments in fixed assets (Valerianov and Alekseeva 2020). N. A. Alekseeva and V. A. Sokolov propose evaluating the effectiveness of state support based on comparing allocated amounts and areas of subsidies with product competitiveness. This approach makes it possible to timely adjust the feasibility of investments and introduce competition for obtaining subsidies (Alekseeva and Sokolov 2021). For individual crops, A. V. Kolesnikov proposes to assess the effectiveness of state support by determining the level of
Impact of Government Support on Oilseeds Production
its diversification and assessing the occurrence of state support per one hectare of grain crops on the profitability of their production (Kolesnikov 2020). R. S. Gubanovand N. S. Lukovnikova propose using an integral indicator determined through indices of the stock yield of agricultural machinery, labor productivity of agricultural workers, the use of material resources, and the share of depreciation (Gubanov and Lukovnikova 2019). To assess the effectiveness of subsidizing state support, we determined relative indicators that consider the resources involved—budget subsidies per 1 employed in the industry, budget subsidies per 1 hectare of sown area, gross production per 1 ruble of budget subsidies, and balanced financial result per 1 ruble of budget subsidies. The ratio of the cost of gross production with the volume of state support is important for reproduction because gross production contains elements of profit and its capitalization. The largest volume of subsidies was received by the Bryansk Region, the Republic of Tatarstan, and the Voronezh Region. Based on one person employed, the largest volume of subsidies was received in the Bryansk Region, the Republics of Adygea, and Tuva. Based on the indicator per 1 hectare of sown area, the leaders are the Yamal-Nenets Autonomous Area, Nenets Autonomous Area, and Sevastopol. Simultaneously, the effectiveness of agricultural production is the highest in the Rostov Region, which shows the most significant volume of agricultural products per 1 ruble of budget subsidies—however, the region is 14th in terms of the volume of subsidies received. The largest share of sown areas in the Russian Federation is occupied by cereals and oilseeds, which is determined by the export orientation of their production. By 2022, the total sowing area of oilseeds in the Russian Federation increased by almost 2000 thousand hectares, amounting to 18,602 thousand hectares. The gross harvest of all oilseeds exceeded 28,000 thousand tons, showing an increase of 3547 thousand tons compared to 2021. The most significant areas are occupied by sunflowers (10,033 thousand hectares). However, the largest increase is observed for sown areas for spring and winter rapeseed: over the year, the sown area increased by 654 thousand hectares. The volume of collected products increased for all oilseeds. The increase for rapeseed is the most significant— 1721 thousand tons. In 2022, 4510 thousand tons of rapeseed were harvested.
2
Materials and Method
The author applied the methods of calculating and comparing changes in budget subsidies, sown areas, and gross oilseeds. The efficiency of state support for agricultural organizations was calculated based on the methodology of
315
academician G. V. Bespakhotny and co-authors (Bespakhotny et al. 2005).
3
Results
In 2022, budget funds were allocated directly to stimulate certain crop industries in the following forms: • An interbudgetary transfer to reimburse grain producers for part of the costs—2310.58 million rubles. • Subsidies for the development of viticulture and winemaking—2661.52 million rubles. • Subsidy to stimulate an increase in the production of oilseeds—4892.77 million rubles. Table 1 presents the results of the assessment of the impact of the subsidy on increasing the production of oilseeds—changes in the sown areas and gross production of oilseeds (sunflower, soybeans, and rapeseed). In 2022, 42 regions received a subsidy for the production of oilseeds, of which 6 reduced the production, and 36 increased the production. Based on one region, the sown area under oilseeds increased by 23.84 thousand ha, and the gross production of oilseeds by 460.97 thousand cents. Of the regions that did not receive a subsidy for the production of oilseeds, the Republic of Mordovia received comparable indicators—an increase in sown areas by 26.5 thousand hectares and gross production by 552 thousand cents. In the Orenburg region, higher growth in the production of oilseeds was ensured by a significant increase in sown areas. Among the 30 regions that did not receive the subsidy, 23 regions increased production, although the secured growth was lower than among the regions that received the subsidy. In terms of 100 rubles of subsidies, sown areas under oilseeds increased in the country by 0.02 ha; gross production of oilseeds increased by 0.396 cents. With an average price of 3300 to 3700 rubles per cents in 2022, additional revenue will be 1307–1465 rubles, and the payback of the subsidy by products is 13.7–14.65 rubles. The impact of budgetary subsidies on crop production can also be shown by the example of changes in the profitability of crop production (Fig. 1). During the analyzed period (2016–2020), the change in the profitability of sunflower seed production due to budget subsidies amounted to 5.7% in 2017. In 2020, the change amounted to 0.3%, which did not even cover the inflation rate of this year at 4.91%. That is, state support was more compensatory than stimulating. The main producers of agricultural products and recipients of state support are agricultural organizations. The efficiency of support for agricultural organizations is calculated based on the methodology developed by
316
A. V. Lukomets
Table 1 Effect of subsidy on increased production of oilseeds Subsidy to stimulate an increase in the production of oilseeds, million rubles
Change in sown areas under oilseeds in 2022, thousand hectares
Change in gross oilseeds harvest in 2022, thousand cents
Russian Federation, total
4892.77
1461.2
16,280.5
Including Krasnodar Territory
129.83
136.5
5173.1
Amur Region
1134.35
92.2
4213.6
Stavropol Territory
337.55
107.9
2634.2
Kursk region
363.52
44.7
2039.3
Republic of Bashkortostan
14.80
89.5
1946.5
1001.3
19,360.9
… Total by regions receiving subsidies (42 regions)
4892.76
Per 100 rubles of subsidies
–
Per 1 region
116.49
0.020 23.84
0.396 460.97
Including those who reduced production (6 regions)
747.29
− 71.6
− 7544.7
Per one region
124.55
− 11.93
− 1257.45
Increased production (36 regions)
4145.47
1072.9
26,905.6
Per one region
159.44
41.27
1034.83
Total by regions that did not receive a subsidy (30 regions)
0.00
503.20
− 2089.30
Per one region
0.00
16.77
− 69.64
Including those who reduced production (7 regions)
0.00
89.90
− 7325.00
Per one region
0.00
12.84
− 1046.43
Increased production (23 regions)
0.00
380.20
4410.30
Per one region
0.00
16.53
191.75
Of which the Orenburg Region
0.00
229.5
2509.4
Republic of Mordovia
0.00
26.5
552.0
Source Calculated by the authors based on (Federal State Statistics Service of the Russian Federation 2022; Ministry of Agriculture of the Russian Federation 2022)
90 80 70 60 50 40 30 20 10 0
80.2 80.5 70.5 73.1
36.5
2016
42.2 33.1 33.3
2017 Including subsidies
2018
39.4 39.6
2019
2020
Excluding subsidies
Fig. 1 Impact of subsidies and budget on the profitability of production of sunflower seeds sold by agricultural organizations, %. Source Compiled and calculated by the authors from data (Federal State Statistics Service of the Russian Federation 2021)
Impact of Government Support on Oilseeds Production
317
Table 2 State support effectiveness for agricultural organizations in the Russian Federation Indicator name
2018
2019
2020
2020 by 2019,%
1. Revenue from sales of products and goods, works, services, million rubles
2,887,896
3,042,113
3,633,307
119.4
2. Cost of sales, million rubles
2,365,866
2,501,515
2,811,778
112.4
3. Subsidies from budgets of all levels attributable to the financial result of the reporting year, million rubles
155,077
142,025
138,804
97.7
4. Financial result of support (line 1 line 3/line 2), million rubles
189,294.8
172,717.8
179,358.9
94.7
5. Support efficiency (line 4/line 3), rubles/rubles
1.22
1.22
1.29
105.8
Source Compiled and calculated by the author based on (Shakurova 2022)
G. V. Bespakhotny and co-authors (Bespakhotny et al. 2005). The calculation showed (Table 2) that the financial result of support decreased by 5.3%, and the effectiveness of support amounted to 1.29 rubles in 2020 per 1 ruble of subsidy, which is 7 kopecks higher than in previous years. That is, the effectiveness of state support for agricultural organizations has increased. Currently, the indicators of self-sufficiency in oilseeds are still far from the target values established by the Food Security Doctrine of the Russian Federation (2023). According to the Federal State Budgetary Institution “Rosselkhoznadzor,” as of 2021, the share of domestic sunflower seeds in production crops is 23% against 77% of seeds of foreign selection. To ensure food security, the development of domestic breeding and seed production is necessary as the basis for successful agricultural production. A promising area is the creation of highly productive, disease and pest-resistant varieties and hybrids of oilseeds that provide stable yields and production profitability. One of the measures to support the domestic seed market could be the introduction of quotas for the import of foreign seeds into the Russian Federation. The quota for the import of seeds according to the TN VED code “seeds for sowing” can lead to a reduction in the import of F1 seeds in favor of parental forms for localization of their production (reproduction) within the country.
4
Conclusion
According to the research aim and results, it can be concluded that the volumes and directions of state support for the agricultural sector are not always linked to the set goals for the development of the economy and agricultural production. When allocating funds, the real production indicators of the regions are not considered, and the effectiveness of support is not assessed. Changes in the profitability of certain types of crop products due to budget subsidies do not cover inflation. Compensating and stimulating subsidies are aimed at virtually the same production indicators.
Further improvement of state regulation should consider the optimal relationship between the strategy and tactics for the agricultural development in the regions and individual priority sub-sectors to adjust the forms and mechanisms of state support used. For 2023, state support for crop production industries from the federal budget is planned in the form of stimulating support mainly for laying perennial plantings (20.82%) and compensating support for the development of vegetable and potato growing (32.09%).
References Alekseeva NA, Sokolov VA (2021) Realities, prospects and effectiveness of state support for agriculture. Manage Account 2–1:4–11 Bespakhotny GV, Mindrin AS, Tolmanov VE, Semin AN, Chemezov SM (2005) Methodology for assessing the efficiency of using budget funds in agriculture. Yekaterinburg, Russia Cherepanova DM, Nikulina YuN, Yanbykh RG (2022) Assessment of the level of state support for the agrarian sector in Russia and the European Union. Agric Sci Euro-North-East 23(5):740–750. https:// doi.org/10.30766/2072-9081.2022.23.5.740-750 Doctrine of Food Security of the Russian Federation Retrieved from https://mcx.gov.ru/upload/iblock/3e5/3e5941f295a77fdcfed2014f82 ecf37f.pdf. Accessed 15 Jan 2023 Federal State Statistics Service of the Russian Federation (2021) Agriculture in Russia, 2021: statistical collection. Rosstat, Moscow, Russia Federal State Statistics Service of the Russian Federation (2022) Sowing areas, gross harvest, and crop yields in the Russian Federation in 2022 (Part 1 and Part 2). Retrieved from https:// rosstat.gov.ru/compendium/document/13277. Accessed 15 Jan 2023 Gubanov RS, Lukovnikova NS (2019) About efficiency of use of budgetary appropriations for development of agriculture of Russia. Educ Sci Sci Personnel 1:88–92. https://doi.org/10.24411/20733305-2019-10020 Kolesnikov AV (2020) Impact of state support on grain production in Belgorod Region. Econ Labor Manage Agric 12(69):104–111. https://doi.org/10.33938/2012-104 Ministry of Agriculture of the Russian Federation (2022) Information on budget expenditures of the constituent entity of the Russian Federation (local budget), the source of financial support of which is subsidies and other interbudgetary transfers. Retrieved from https:// mcx.gov.ru/activity/state-support/funding/. Accessed 15 Jan 2023.
318 Mironova ZA, Fedorova NP (2019) Assessment of the effectiveness of state support for an economic entity. Sci Udmurtia 1(87):75–79 Semin AN, Maltsev NV, Loginov AL (2019) About need of improvement of the assessment mechanism of the state support in agrarian and industrial complex. Econ Agric Russia 9:2–11 Semin AN, Loginov AL, Maltsev NV (2022) Improving the assessment of the efficiency of the use of budgetary support for the agro-industrial complex. Econ Agric Process Enterprises 5:9–13. https://doi.org/10.31442/0235-2494-2022-0-5-9-13 Shakurova YuR (2022) The main changes in the reporting of agro-industrial complex producers for 9 months of 2022. The main
A. V. Lukomets ways to form a reporting analysis in the AIS is the APK code [PowerPoint Presentation]. Center for Expert Assessment of the Effectiveness of Activities in the Field of Agro-Industrial Complex, Sochi, Russia. Retrieved from http://cspapk.ru/upload/medialibrary/ 40b/Пpeзeнтaция%20Шaкypoвa%20ЮP.pdf. Accessed 15 Jan 2023 Valerianov AA, Alekseeva NV (2020) Assessment of the effectiveness of state support for the agro-industrial complex. Financ Econ 2:383–385
Digital Aspects of Analytics and the Effectiveness of Standard Communication Channels of Companies Oleg L. Lyamzin
and Anna I. Skurikhina
Abstract
JEL Classification
Currently, some communication channels of companies often receive new development and additional efficiency through a change in the concept of their application, digitalization, and automation. An example of such a metamorphosis is a modification of the company’s work with standard communication channels—email. With the spread of other forms of communication, this channel is considered to have lost its “modern sound” and a significant share of its effectiveness. However, whether this is the case and what email can give the company today in interaction with the clients is a question that requires clarification. The proposed research is devoted to the search for approaches to identifying and overcoming the problems of the use of the email tool in the communication activities of contemporary organizations. The object of observation was a company in the Russian cosmetics market that uses electronic mailing along with other forms of communication with customers. The research analyzes the company’s approaches to working with this tool within the framework of specialized software and identifies the problems of this activity. The authors present assessments of actions in the implementation of communication campaigns, study the statistical data obtained, and formulate conclusions and recommendations on the directions of effective use of the email channel in contemporary conditions. This research is intended for companies focused on improving the efficiency of their standard communication tools and using the opportunities provided by their digitalization and automation.
L29
Keywords
Marketing analytics Email Efficiency Management
Communications
O. L. Lyamzin (&) A. I. Skurikhina Novosibirsk State Technical University, Novosibirsk, Russia e-mail: [email protected]
1
L86
M15
M31
O22
Introduction
Nowadays, email marketing is one of the most controversial consumer communication channels. There are two opposing opinions among marketing specialists: 1. Email marketing is an outdated tool for communicating with customers, which is insufficiently effective in achieving company goals (Feld et al. 2012). According to the proponents of this idea, every company is currently adopting email marketing to interact with its customers, resulting in low email open rates (Losmakov 2022). Nowadays, people receive a massive number of emails from different firms (Pereira et al. 2021). This leads to fierce competition in email marketing for the reader’s attention. 2. Email marketing is an excellent tool with high effectiveness, provided the competent use and deep knowledge of its specifics. It makes it possible to attract customers’ attention quickly and with small financial resources, making email marketing one of the most effective communication channels between the company and its clients (Coussement and den Poel 2009; Djeundje et al. 2021). The literature on email marketing is relatively scarce. The available studies mainly focus on studying the key performance indicators of this customer communication tool, including open rate, click-through rate, unsubscribe rate, complaint rate, etc. (Kumar 2021). Additionally, there is research aimed at studying readers’ behavior and the incentives that make them close the email, continue reading it, or return to it again (Huang et al. 2009; Kumar 2021). The
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_54
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use of machine learning to deal with the issues and problems of email marketing that reduce the effectiveness of this channel (e.g., spam) is being actively studied (Dada et al. 2019; Mashaleh et al. 2022). Despite a small number of studies, there are clear advantages of email compared to other communication channels with customers. According to research, the profitability of email marketing is higher than traditional channels of communication with consumers: more than 34% of all people use email, sending 196 billion emails each day (109 billion of them are business emails); every dollar invested in email marketing later brings in an average of $40, which is two times higher than the ROI of media advertising (Tarasova and Isaenko 2020). Additionally, email marketing makes it possible to interact with current and potential customers (Rosário 2021). It provides an opportunity to build long-term communications and improve the brand image in the minds of clients (Davydenko 2020). Email marketing plays an important role in retaining and attracting customers by motivating them to repeat targeted actions with personalized offers and reminders (Desai 2019; Kim et al. 2006). Digital email services make this communication channel even more convenient and efficient, automating such processes as collecting a database of customer email addresses, creating and sending emails, and gathering analytics for a single email or an entire email campaign. Next, the authors consider the working principle of one of these services in detail using the example of a real-life Russian company’s activities.
2
Materials and Methods
The main advantage of digital email services is the automated collection of analytical data, on the basis of which the company can later draw conclusions about the effectiveness of using this communication tool. To demonstrate the principle of operation of such services, the authors set a goal to test the effectiveness of one of them to attract an audience to an event planned by a real-life Russian company. In the fall of 2022, one of the Russian companies engaged in the production and distribution of professional cosmetics for specialists planned to hold a scientific-practical congress for clients to increase the level of sales and improve the image and brand awareness. One of the ways to attract an audience to the event was an email campaign using one of the Russian digital services for automated communication with consumers through emails. The service has a wide range of possibilities: creating and sending emails, SMS, and Viber messages, creating a landing page, working with chatbots, an email validator, integration with other services, and automatic collection of email analytics.
To begin with, it is worth noting that the database of contacts in the service was already 19,882 email addresses at the time of the considered email campaign. The service used makes it possible to dial the contact database automatically in the following ways: 1. Creating a subscription form and adding it to the company’s website; 2. Creating a “smart” pop-up subscription form and adding it to the company’s website; 3. Integration with social media, instant messengers, and CMS and CRM systems, from where the contact database is automatically added to the email service; 4. API integration, which is used if the email service is not in the list of ready for integration. APIs are software components that automatically update data between clients and servers (Heshmatisafa and Seppänen 2023). The contact database of the considered company was filled as follows: 1. By adding a subscription form to the site; 2. Through registering clients on the site, in which they provide an email address; 3. Through targeted advertising with lead magnets; 4. Through conducting drawings and registering clients for training events. The next step in conducting an email campaign is creating a series of emails about the upcoming event to send out. The users of the service can do this in a ready-made template or create an email in the service’s email constructor, which makes it possible to add the necessary content blocks (text, picture, icon, or button), work with the font, change the colors of the blocks, add links, etc. Furthermore, the email builder has a preview function on a computer and smartphone, which makes it possible to make emails adaptive for different digital devices. Emails within the email campaign were created using the service’s email constructor. In total, the company’s marketers created three letters, each of which had a defined purpose. In the first email, it was necessary to announce the event, indicate the conditions of participation, briefly talk about the congress program, and stimulate the transition to the event website and further purchase of tickets. The second email talked about the theoretical part of the congress to increase the number of transitions to the event website. The third email focused on the practical part of the congress (the event program included a theoretical block and practical master classes), urgently stimulating demand for
Digital Aspects of Analytics and the Effectiveness of Standard …
321
active purchases of tickets to achieve the maximum occupancy of the congress hall. The next step in running an email campaign was setting up automated email sending. The service used by the company makes it possible to automate the following types of emails: • Welcome emails (a series of emails for new customers); • Pending activities (e.g., a reminder to buy a product that a customer forgot in the cart on the online store); • Congratulations on holidays, activation of passive clients, prepared content (a series of emails about an upcoming event, a training email, etc.); • Advanced email chains (flexible automatic email chain for any task). To set up the automatic sending of emails, it is necessary to prepare one or more emails in advance. Further, the user needs to choose the base of email addresses to send (e.g., mailing to clients or partners) and the date and time of mailing. The service will automatically send emails on the selected days and times. An email campaign to attract an audience to the congress was conducted from October 14, 2022, to November 10, 2022 (the event was held on November 23, 2022). During this period, emails were sent on the following days and times: 1. The first email—October 14 (Friday) at 15:00; 2. The second email—October 31 (Monday) at 15:00; 3. The third email—November 10 (Thursday) at 16:00. According to the service’s analytics for 2022, the most active days of the week (when the number of open emails and clicks on links within them was maximum) are Monday and Wednesday for the open rate and Monday and Friday for the click-through rate. Despite this, one of the three emails in Fig. 1 Result of analytics of reader daily activity by indicators open rate and click-through rate. Source Developed and compiled by the authors
16% 14%
13.84%
the advertising campaign took place on a Thursday, when the number of email opens was not as high as on the rest of the week. Emails were not sent on Saturday and Sunday. Thus, the data is not included in analytics. The result of analytics of reader daily activity by indicators of open rate and click-through rate is summarized in Fig. 1. During the email campaign, the service automatically collects general and summary analytics. It includes basic indicators (delivery rate, open rate, clicks rate, unsubscribe rate, and spam complaints), summary analytics (comparison of the effectiveness of emails among themselves), click map (what links in the email are clicked on more often), and the geography of readers (a detailed report by country and city). Thus, analytics was obtained for each of the three emails as part of the conducting email campaign, the results of which will be discussed below.
3
Results
In the result analysis, it is necessary to pay special attention to such indicators as the open rate and click rate (i.e., targeted actions) of email. The result of the analysis of the email campaign to attract an audience to the congress is presented in Table 1. The average percentage by open rate indicator of all three emails is 8.26%, while the norm of this indicator for the health and aesthetic medicine industry is 15–20%. The average percentage by click-through rate within all three emails is 0.85%, compared to the 4% norm for the health and aesthetic medicine industry. In addition to general analytics, the service makes it possible to find out the email addresses of those email readers who clicked the links. This list of readers who clicked the link was compared with the list of all clients who registered for the congress, where their email addresses were also indicated. Using the comparison method, the authors
13.17%
14.14% 12.33%
12.40%
12% 10% 8% 6% 4%
2.60%
2%
1.87%
2.34%
1.70%
3.37%
0% Monday
Tuesday Open Rate
Wednesday
Thursday
Click-Through Rate
Friday
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Table 1 The result of the analysis of the email campaign to attract an audience to the congress
Email number
Open rate (%)
Click-through rate (%)
Unsubscribe rate (%)
1
9.83
0.26
0.14
2
8.09
0.35
0.16
3
6.86
0.24
0.11
Source Developed and compiled by the authors
revealed that out of the visitors present at the congress (133 people), two people went to the event website from emails, which is 1.5% of the total number of visitors. This suggests that two persons could potentially make a target action within the email campaign—go to the event website and buy a ticket to it. This indicator is satisfactory because the normal conversion rate is 1.5%–2%. However, according to a survey of these two congress visitors, the incentive to buy a ticket to the event was another communication channel (not emails, which were only informational for them). To identify the overall effectiveness of using the email channel (not just within one advertising campaign), the service collected digital analytics for the entire 2022: open rate—10.94%, clicks rate—1.65%, and unsubscribe rate— 0.11%. The results of past email campaigns almost always did not reach the norm, which indicates problems in using the email tool by the considered company.
4
Discussion
In this respect, there are several reasons for the inefficient use of the email service: • Inactive database of email addresses; • Errors in the operation of the service (emails do not reach the readers); • Emails often go to the spam; • Poor creative (the creative content of the emails was unexciting; therefore, readers no longer expected anything interesting from emails during the advertising campaign).
campaigns on it, as well as on the rest of the existing database of addresses; 2. Comparison of the conversion of the test group with the conversion of earlier email campaigns. To implement the task of eliminating the identified problem, we selected a test group of 76 people. An email was sent to this group, and analytics was automatically collected based on the indicators of open rate, clicks on the link to the company’s website inside the email, and the number of unsubscribed. The obtained results are summarized in Table 2. For comparison, Table 2 also shows the average emails for the last year of using the service by the company. The email results for the test group are more than two times higher than the results for the emails of last year using the service, which indicates a clear sign of the company’s outdated contact database. To solve the problem, it is necessary to update the database of current contacts. This can be done using the “Email Validator” function of the service. This feature helps identify email addresses that have complained about emails to the anti-spam services, non-existent addresses, inactive addresses, and unsubscribed email addresses. Cleaning and updating the database of email addresses will help the company to eliminate the problem of low email efficiency by increasing them. Moreover, it will reduce the volume of financial costs required to use the service because the subscription price is directly related to the number of addresses in the contact database.
5 To solve the identified problem, the authors proposed the following solution: 1. Selection of an active test group, which is indeed the target audience of the company, and testing email
Table 2 Result of comparing the test group emails and last year's emails
Conclusions
During the research, the authors managed to identify the reasons for the inefficient application of the email channel in the considered company. In addition to updating the current database of customer email addresses, it would be necessary
Open rate (%)
Click-through rate (%)
Unsubscribe rate (%)
Test group emails
27.63
3.95
0.1
Last year emails
10.94
1.65
0.11
Source Developed and compiled by the authors
Digital Aspects of Analytics and the Effectiveness of Standard …
to conduct a survey of the test group about the regularity of receiving emails (to exclude malfunctions in the service) and the creative component (subjects of emails, design, usefulness of information, etc.). Additional surveys will help better customize the emails for the current target audience, raise the efficiency indicators of emails. This will positively affect the quality of communication with customers through email, as well as the image and brand awareness of the company. Digital email marketing services are a very convenient tool for communicating with customers due to ease of use and automation of most processes. However, the company's experience has shown that when using digital email services, regular monitoring and participation of an email marketing specialist are very important. It is necessary to regularly check and update the customer database, change the creative content of emails, and adjust the time of sending, adapting to the situation in the field of email marketing, current trends, and customer preferences. In this case, this tool can become one of the most effective channels of communication with customers for any company.
References Coussement K, den Poel DV (2009) Improving customer attrition prediction by integrating emotions from client/company interaction emails and evaluating multiple classifiers. Expert Syst Appl 36 (3):6127–6134. https://doi.org/10.1016/j.eswa.2008.07.021 Dada EG, Bassi JS, Chiroma H, Abdulhamid SM, Adetunmbi AO, Ajibuwa OE (2019) Machine learning for email spam filtering: review, approaches and open research problems. Heliyon 5(6): e01802. https://doi.org/10.1016/j.heliyon.2019.e01802 Davydenko E (2020) Email marketing as a tool for online branding. Brand Manage 1:68–77. https://doi.org/10.36627/2618-8902-20201-1-68-77
323 Desai V (2019) Digital marketing: a review. Int J Trend Sci Res Dev 196-200. https://doi.org/10.31142/ijtsrd23100 Djeundje VB, Crook J, Calabrese R, Hamid M (2021) Enhancing credit scoring with alternative data. Expert Syst Appl 163:113766. https:// doi.org/10.1016/j.eswa.2020.113766 Feld S, Frenzen H, Krafft M, Peters K, Verhoef PC (2012) The effects of mailing design characteristics on direct mail campaign performance. Int J Res Mark 30(2):143–159 Heshmatisafa S, Seppänen M (2023) Exploring API-driven business models: lessons learned from Amadeus’s digital transformation. Digital Bus 3(1):100055. https://doi.org/10.1016/j.digbus.2023. 100055 Huang C-C, Lin T-C, Lin K-J (2009) Factors affecting pass-along email intentions (PAEIs): integrating the social capital and social cognition theories. Electron Commer Res Appl 8(3):160–169. https://doi. org/10.1016/j.elerap.2008.11.001 Kim G, Shin B, Lee HG (2006) A study of factors that affect user intentions toward email service switching. Inf Manage 43(7):884– 893. https://doi.org/10.1016/j.im.2006.08.004 Kumar A (2021) An empirical examination of the effects of design elements of email newsletters on consumers’ email responses and their purchase. J Retail Consum Serv 58:102349. https://doi.org/10. 1016/j.jretconser.2020.102349 Losmakov O (2022) Return of offline marketing: why do not lay all hopes for digital marketing. Mark Commun 3:202–211. https://doi. org/10.36627/2619-1407-2022-3-3-202-211 Mashaleh S, Ibrahim NFB, Al-Betar MA, Mustafa HMJ, Yaseen QM (2022) Detecting spam Email with machine learning optimized with Harris hawks optimizer (HHO) algorithm. Proc Comput Sci 201:659–664. https://doi.org/10.1016/j.procs.2022.03.087 Pereira PJ, Cortez P, Mendes R (2021) Multi-objective grammatical evolution of decision trees for mobile marketing user conversion prediction. Expert Syst Appl 168:114287 Rosário T (2021) Email marketing: research and challenges. Int J Online Mark 11(4):4. https://doi.org/10.4018/IJOM.2021100104 Tarasova E, Isaenko V (2020) Personalization of email messages to potential users for the purpose of attracting them on the B2B platform. Bull Belgorod Univ Cooperation Econ Law 5(84):174– 186. Retrieved from http://vestnik.bukep.ru/arh/full/2020-5.pdf. Accessed 2 Oct 2022
Regionalisms as a Result of Cultural and Ethnic Contacts of Turkic-Speaking Peoples Siuita R. Abdykadyrova , Toichubek B. Kabylov , Sabyrkul Sh. Kalygulova, Khulkharai T. Abdurakhmanova , and Dinara A. Salieva
Abstract
Keywords
The linguistic study of the problem of contact between peoples is interesting task of contemporary areal linguistics. The problem of areal contact of peoples has recently become the subject of special study of linguists. In the past, mutual influences between languages were mainly limited to external borrowings that did not affect the essence of languages. The research aims to conduct a comparative-historical study of the functional-stylistic and semantic features of borrowings in the Turkic languages; produce a conceptual-thematic and historical-etymological classification of the studied layer of vocabulary; and clarify the existing classifications of regionalisms on specific theoretical and factual materials. The proposed research will provide theoretical and practical assistance in studying the culture and linguistic characteristics of the peoples of Central Asia and their common dialects. The work can be used in the development of such general linguistic problems as comparative lexicology, linguistic contact theory, borrowed and native language fund, etc., as well as in the study of stylistics, speech culture, history and mixing of languages, psycholinguistics, etc. From a theoretical and practical point of view, this research can be useful when studying the languages of the Central Asian region or compiling etymological, explanatory, and other dictionaries by lexicographers.
Language National Linguistics Borrowing Regionalisms
S. R. Abdykadyrova (&) T. B. Kabylov S. Sh.Kalygulova K. T. Abdurakhmanova D. A. Salieva Osh State University, Osh, Kyrgyzstan e-mail: [email protected] T. B. Kabylov e-mail: [email protected] D. A. Salieva e-mail: [email protected]
Areal
Turkic
JEL Classification
N9
1
N90
N95
Introduction
The study of ethnocultural and linguistic processes in a regional sense reveals a much broader and clearly multicomponent ethnic structure, processes of mutual acculturation and assimilation of the ethnic groups of the region, and common or close features in their language, folklore, life, customs, and traditions. The regional approach to the study of ethnic, cultural, and linguistic processes more clearly reveals the multicomponent ethnic composition, the processes of mutual acculturation and assimilation of the ethnic groups of the region, and the commonality or proximity of a significant layer of their culture—language, folklore, life, customs, and traditions. In the linguistics of the nineteenth century, the interaction between languages and their influence on changing their vocabulary, phonetic system, and grammatical structure was not popular. However, even then, some scientists considered the problem of language mixing to be one of the main ones in linguistics. For example, the linguist of the nineteenth century Schuchardt (1950) singled it out as the most important in linguistics of that time. The statement that any form of language interaction plays a crucial role in developing language and society is incorrect. Nevertheless, it must be borne in mind that the interaction of languages is a multifaceted phenomenon. It covers speech activity during the acquisition of a second language and bilingualism, the problem of the
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_55
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permeability of the language structure, and the interaction of the native-speaking peoples. Turkic areal linguistics is one of the youngest and insufficiently studied branches of linguistics. It was formed due to the wide scope of dialectological research and the formation of Turkic linguistic geography. The relevance of the topic is due to the following reasons: • The unexplored regionalisms in the different structural languages of Central and Asia Minor in linguageographical and areal-historical terms; • The role of regionalisms and the realities designated by them (household items, customs, concepts, ethical rules, etc.) in the awareness of the speakers of the respective languages of their geographical, historical, religious, and cultural communities; • The origin of regional lexemes in the languages of Central Asia. Each language has its way of conceptualizing the surrounding reality, which has universal and specific national features. Language is a fruit of the human mind; it shows to some extent how the human mind “works.” Human behavior is determined by knowledge, which includes general knowledge about the world and cultural and linguistic knowledge (knowledge of the language system). That is, as M. Pimenova writes, knowledge can be extra-linguistic and actually linguistic; the study of the structures of representation of such types of knowledge is a key issue of cognitive linguistics (Pimenova 2013).
2
Materials and Method
Prominent linguists Abaev (1952), Baskakov (1960), Borodina (1982), Makaev (1977), Gadzhiyeva (1975), Zhirmunsky (1966), and others studied the areal contacts of peoples. The geography of the language has long attracted the attention of researchers. In this paper, the authors will consider the vocabulary common to the languages of Central Asia. Interest in regional vocabulary is also due to the fact that it is actively used in the speech of the Russian-speaking population, where the Russian language functions along with the native one. The main part of this work uses such methods as synthesis, etymological, stylistic, and component analysis.
3
Results
Regarding geography, language has always been at the center of the attention of linguists. Back the famous Russian philologist-Slavist and ethnographer I. I. Sreznevsky wrote,
“Every region has its own language, its own dialect. To investigate exactly what language or dialect the people speak in a particular region and what exactly was the influence of local circumstances on the state of the language in different regions is the task of the geography of the language” (Sreznevsky 1959). In this regard, V. A. Nikonov argues that “geographical space is reflected in the language not directly, but always only through the history of society,” noting the complex and multifaceted relationship between language and space (Nikonov 2018). The study of the specificity of regionalisms was already defined in the 1980s. The term “regionalism” is understood differently by linguists of different countries. In this research, the authors adhere to the following definition of “regionalism”—these are words or expressions common in one region and recognizable to different ethnic groups living in this region. Regionalisms unite representatives not only of one ethnicity but of the whole polylingual community connected. The terms Turkism, orientalism, equivalentless words, oriental words, national vocabulary, and localisms are used as synonyms to the term “regionalism” and, to some extent, complement each other. They reveal the great potential for studying individual linguistic features that characterize a particular ethnicity. For example, V. D. Arakin considers Turkisms from two positions: 1. Turkic words borrowed into Russian—original Turkisms (belonging to the original vocabulary of Turkic languages); 2. Words borrowed from Turkic languages—historical Turkisms with the non-Turkic origin and assimilated by Turkic languages from Iranian, Arabic, Mongolian, and other languages) (Arakin 1989). The above two groups are combined in our work as regionalisms. L. A. Sheiman also singles out everyday regionalisms— words of foreign origin in Russian, denoting everyday phenomena common to the peoples of a certain region and new to the traditions of the speakers of this national culture (Sheiman 1989). This research understands regionalisms as the words of Turkic, Arabic, Persian, Mongolian, etc. origins that characterize the national specifics of the East, common to the languages of the Central Asian region (usually having two or more variants), and clearly expressing belonging to this region. The linguistic contacts in different spheres of life influenced the variation of regionalisms. In the study of regionalisms of this region, Turkisms are an integral part of the regional vocabulary. They denote words of Turkic and not of any other origin.
Regionalisms as a Result of Cultural and Ethnic Contacts of Turkic-Speaking Peoples
The linguistic study of the problem of contacting peoples is one of interesting tasks of contemporary areal linguistics. In other words, the geographical space of lexemes (in this case, regionalisms) indirectly reflects the history of society, the interaction of peoples, and the results of long-standing and later contacts. Combining the area of a word with the region of a certain ethnic group in the past or in the present is one of the most important techniques for identifying the source of borrowed words. Regional lexemes in different languages of the same region may have different semantic shades depending on the time and the way of penetration into the language. For example, the Arabian khidmat—service was borrowed by many Turkic languages and was subjected to certain semantic and phonetic changes. Compare: • • • • •
Uighur—khizmat; Uzbek—khizmat—duty, service; Karakalpak—khizmat—service, work; Turkmen—khizmat—service; Kazakh, Kyrgyz—kyzmat—labor, work; Or:
• • • • • • •
Arabian ayalat—family; Uighur aile—family; Uzbek. hayal—family, wife (colloquial); Turkmen ayal—wife, family; Karakalpak ayal, hayal; Kazakh eyel; Kyrgyz ayal—wife, woman (Nasilov et al. 2016; Radlov 1905; Sevortyan 2003).
The interaction of languages is based on the processes of contacting their native speakers in economic, political, and cultural life, in everyday life, and during historical development. One of the important signs of this interaction is the borrowing of certain linguistic phenomena from one language to another. Vocabulary should be recognized as the main sphere of borrowings because phonetic and grammatical phenomena are borrowed much less often. Examining the common features in the languages of Central Asia, it is impossible to attribute each of these phenomena to a particular language with absolute accuracy and draw conclusions about the influence of one language on the others. For this purpose, a special study of these phenomena is necessary. The study of them by methods of linguistic geography should be put in the first place. Analyzing such facts, V. G. Orlova concludes that such phenomena developed “in different historical circumstances, among which the genetic community of certain dialects
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played a role, as well as the existence for a certain period within the same linguistic community, which was determined to a certain extent by the fact that the speakers of these dialects were within the same state” (Orlova 1961). G. F. Blagova explains that regional features are common to a certain region (Blagova 1982). Similarities due to areal contacts can be found in phonetics, grammar, and, mainly, vocabulary. We can also call these common features regional. As is known, for the Turkic languages, the decisive influence was from the Arabic and Iranian (Tajik, Persian, and Sogdian) languages, which resulted in some changes in their phonetic structure and grammatical structure, not to mention a significant layer of Arab-Iranian lexical borrowings. The Mongolian dialects had a less noticeable influence on the Western Turkic languages when the Mongol tribes were assimilated by the Turks during the 12th–fifteenth centuries. In those Turkic languages whose native speakers had no direct ties with the Arabs, Arabic vocabulary penetrated through the medium of Uzbek, Kazakh, and Tajik languages. Consider “wazir.” In linguistics, there are two points of view on the origin of the word vizier. Some linguists think that the source of this regionalism is the Arabic language (Budagov 1960), others—the Iranian language (Baskakov et al. 2006). Due to the fact that this title is widely used in Turkic languages, some linguists mistakenly interpret it as Turkic. As a title, the word vizier first appeared in the seventh century. The title and the duties of the vizier are of Arab origin (the viziers appeared under the caliphs, who were the head of all Muslims). This title combined the position of the first minister and the head of the judicial system, which complemented the Sharia court and often replaced it (Bartold 1973). The proponent of the Iranian origin of the word is based on the fact that the Qutabs, the scribes from whom the viziers came, were predominantly Iranians. However, this is not yet strong proof. The Persians were perhaps the first to use the word vizier in its meaning “minister, vizier.” Nevertheless, the origin of this lexeme is undoubtedly the Arabic wasir “weight bearer” (in a figurative sense, “helping the sovereign to bear the burden of government”). In L. Ya. Budagov, the vizier is explained as “supporting the burden, the governor of the tsar, minister, or adviser” (Budagov 1960). In the Qur’an, the vizier is used not as a title but in the meaning of “assistant, deputy.” Variability is characteristic of most regionalisms. However, sometimes variants of one word begin to be understood as different words. In this regard, we will consider the regionalisms of Mullah and Mavlyan. Currently, word mullah functions in all Turkic languages of the Central Asian region in the meaning of
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“spiritual person.” The word mavlana is used only in some of them: Mavlono Ulugbek, Mavlono Navoi (Abdykadyrova et al. 2021; Budagov 1960; Koshchanov et al. 1983; Nasilov et al. 2016; Radlov 1905). Word seyid stands in the meaning of “noble clergyman.” In ancient times Muslims identified nobility as the descendants of the prophet. Genghisids were ranked among the nobility, while the rest, even the rich and endowed with power, were considered of less high origin. Barthold would later note that even in the nineteenth century, Bukhara emirs and Khiva khans forcibly took wives from the prophet’s descendants so that their descendants could attach the title of seyid to their titles (Bartold 1973). Currently, this word as a title is outdated and functions in contemporary Turkic languages as an anthroponym: Said, Sayid, Seid/Seit, Seitbekov, Seidakhmatov, etc. The political, economic, and cultural relations of the Turkic-speaking and Iranian peoples also date back to ancient times. In languages where Iranian borrowings penetrated mainly through oral communication of speakers, dialect differences are also observed. For example, the southern dialect of the Kyrgyz language in this respect differs significantly from the northern dialect and from the literary Kyrgyz language. Such phenomena are absent in those languages where Iranian elements penetrated mainly through written speech, for example, in Tatar, Bashkir, etc. While Iranisms were borrowed into the Turkic languages orally and in writing, Turkisms got into the Persian languages through direct contact of native speakers of these languages. Khoja is a privileged, wealthy representative of the Muslim aristocracy. The Khojis were also considered descendants of the prophet. Thus, this word is partly synonymous with the word seyid (the seyid were descended from the prophet’s daughter Fatima, and the Khojis from his wives). Both words denote high-born people, the so-called “white bone.” During the time of Amir Timur, khoja joining name as an anthropoformant and denoting a rich man, not even a descendant of the prophet—Khoja Abdu-Jabbar, Khoja Nasyr-addin. It is generally recognized that the regionalism dervish has Persian-Iranian roots (Baskakov 1960). Initially, it had the meaning of “poor man, beggar.” This word acquired the meaning of “ascetic, hermit, and saint” much later (Alizadeh 2007). Currently, the word dervish is not widely used in the Turkic languages, although the concept itself exists. Sometimes this token is used as a proper name: Derbishev, Derbisheva, etc. The Iranian vocabulary layer for the Turkic languages is more ancient than Arabic. Denoting mostly various household items (e.g., musical instruments, the name of monetary units, plants, and everyday things), Iranisms are sometimes
S. R. Abdykadyrova et al.
difficult to distinguish from Turkic words: mirza, caravan, bazaar, caravanserai, shah, plane tree, dinar, khanaka, shalvar, sarai, kalandar, dutar, karnai, antimony, persimmon, pool, sofa, and figs. The word pul is interesting. It means a monetary unit. In historical dictionaries, pul are copper pennies, that is, a small change coin. In some contemporary Turkic languages, pool is the name of money in general (in Uzbek and Kyrgyz dialects). The word mirza has only the meaning of “prince.” However, historically it has extensive semantics: “lord, prince,” “scholar, literate person.” In contemporary Turkic languages, the word myrza/mirza has started to be used as an address again in recent years. In addition to Arabic-Iranian borrowings, the lexemes of Chinese, Tibetan, Indian, and other languages are used in the Turkic languages. The foreignness of Indian and Tibetan words is felt quite clearly in the language, for example, raja, tutie, mumie, etc. Chinese lexemes are closest to the Turkic languages. Words like khan and bakhshi are perceived by the speakers of the latter as their own lexical units. The single use of Indo-Tibetan words makes it more relevant to consider Sinoisms that are part of regional lexemes. Such words as ginseng, khan, khanum, hansha (Sino-Turkic), raja, bakshi, paizza, mumiye, and maharaja are Chinese, Tibetan-Manchu, and Indian. Let us consider the semantic change of regionalisms on the example of the word bakshi. Initially, the word bakshi meant “teacher, mentor.” It later spread in the Turkic languages with the meaning “scribe,” “musician,” “magician,” etc. (Baskakov et al. 2006). According to A. V. Bartold, the generally accepted etymology of this word is “teacher, mentor” from the Middle Chinese language. In Chinese, this word is now obsolete (Bartold 1973). In the Mongolian and Turkic languages in the Middle Ages, bakshi regionalism had the meaning of “scribe.” This title was not awarded only to scribes who were particularly skilled in their work and had beautiful handwriting and a good syllable. Of the many scribes of Timur, only one person bore the title of bakshi. In the contemporary Kyrgyz language, bakshi has the meaning of “shaman, medicine man, healer.” In the dictionaries of the Kyrgyz and Kazakh languages, the etymology of the word bakshi/baksy is traced back to Sanskrit. The word is given in the meaning of a shaman, bakhshi, a healer who heals diseases by allegedly expelling spirits. This lexeme has the same meanings in the Kazakh and Uzbek languages. These peoples even have proverbs with this word: • Bak-darak korku gulundo, bakshynyn korku zhininde (folk)—The beauty of a tree in flower, the beauty of a witch in a demon. • Bakshi bolup, kyikyryp bakyrsan, catpeyt karylyk—If you become a witch and scream, old age will not pass.
Regionalisms as a Result of Cultural and Ethnic Contacts of Turkic-Speaking Peoples
Interaction with the Turkic and Mongolian languages was the most significant. The group of Mongolisms includes such words as aimak—territory, ulus—region, tuman—district, karaul—guard, esaul—officer, orchin—district, batyr —hero, uraan—military cry, balshag—mud, and tarkhan— people with privileges. We can say that regionalisms convey a number of information about the way of life, social structure, priorities, and mentality of the Turkic peoples. They point to the commonality of the historical past of the peoples of Central Asia.
4
Conclusion
The authors draw some conclusions based on the above. Etymological and comparative analysis of regional vocabulary makes it possible to establish historical contacts of peoples and clarify the meaning of some words. The identification of the genetic roots of regionalisms often helps restore kinship between words that are currently perceived as different and unrelated to each other. Arabic vocabulary shows growing Islam`s influence in Central Asian region. Iranisms demonstrate close contact between the Turks and Persians within the same state, that is, Maverannahr, during the reign of Timur. The above emphasizes the unity of the peoples of Central Asia and their spiritual and cultural closeness. Regional vocabulary can become a kind of key to the mentality of people and its national character, as well as reflect the commonality of the peoples of a certain region, being an integral and essential component of the national culture of these people.
References Abaev VI (1952) Add to selected about the principles of the etymological dictionary. Questions Linguistics 5:56–69 Abdykadyrova S, Kalygulova S, Belekova K, Sagyndykova R, Zheenbekova G, Ismailova A, Nazarova M et al (2021) Reflection of intercultural concepts in the work “Baburnama.” Open J Modern
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Linguistics 11(2):140–148. https://doi.org/10.4236/ojml.2021. 112012 Alizadeh AA (2007) Islamic encyclopedic dictionary. Ansar, Moscow Arakin VD (1989) Typology of languages and the problem of methodological forecasting: a textbook. Higher School, Moscow Bartold VV (1973) Works on the history and philology of the Turkic and Mongolian peoples, vol 8. Publishing House of Eastern Literature, Moscow Baskakov AN, Golubeva NP, Kyamyleva AA (2006) Large Turkish-Russian dictionary: 200 thousand words and phrases. Publishing House of Living Language, Moscow Baskakov NA (1960) Turkic languages. Publishing House of Eastern Literature, Moscow Blagova GF (1982) The Turkic declension in the areal-historical illumination (South-Eastern region). Nauka, Moscow Borodina MA (1982) Dialects or regional languages? (On the problem of the language situation in modern France). Questions Linguistics 5:29–38 Budagov LZ (1960) Comparative level of Turkish-Tatar dialects: in 2 volumes. Publishing House of Eastern Literature, Moscow Gadzhiyeva NZ (1975) Problems of Turkic areal linguistics: Central Asian area. Nauka, Moscow Koshchanov MK, Kabirov SF, Alhamova NA (1983) Russian-Uzbek dictionary: in 2 volumes. Tashkent Makaev EA (1977) General theory of comparative linguistics. Nauka, Moscow Nasilov DM, Kormushin IV, Borovkova TA, Dmitrieva LV, Zyrin AA (2016) Ancient Turkic dictionary. Gylym, Astana Nikonov V (2018) Introduction to toponymy, 2nd edn. LKI Publishers, Moscow Orlova VG (1961) Russian-Belarusian relations according to dialectological atlases. Materials and research on Russian dialectology, 2nd edn. Nauka, Moscow, pp 76–86 Pimenova MV (2013) The types of concepts and the stages of conceptual structure analysis. Bull Kemerovo State Univ 2–2 (54):127–131 Radlov VV (1905) Experience of the dictionary of Turkic dialects. Publishing House of the Emperor, Moscow Schuchardt H (1950) Selected articles on linguistics (A. S. Bobovich Transl. from German; R. A. Budagov Ed.). Publishing House of Eastern Literature, Moscow Sevortyan EV (2003) Etymological dictionary of Turkic languages. Common Turkic and inter−Turkic bases on the letters “L,” “M,” “N,” “P,” “S.” Publishing House of Eastern Literature, Moscow Sheiman LA (1989) Associative dictionary of Russian ethnocultural vocabulary. Mektep, Frunze Sreznevsky II (1959) Thoughts on the history of the Russian language. USSR Academy of Sciences, Moscow Zhirmunsky VM (1966) Add to selected about some questions of linguistic geography of Turkic dialects. Turkological collection. Nauka, Moscow, pp 54–63
Status and Personality Conditioning the Language Portrait of Politicians Valentina F. Belova , Galina A. Lebedenko , Ainabat E. Mirzakhanova , Natalia V. Papka , and Natalia S. Shavkun
Abstract
Keywords
The discourse of political actors is of particular interest as part of the socio-political situation that has developed in recent decades worldwide. The speech of politicians becomes the most important means of their communicative competence, on which their success largely depends. This research is devoted to the comparative analysis of the status and personal conditionality of the speech portrait of a politician on the material of the German and Russian languages on the example of their use in the speeches of A. Merkel and S. Lavrov. The analysis of the discursive practices of politicians on similar topics revealed the stylistic specificity of A. Merkel’s speeches as Chancellor and as former Chancellor of Germany compared with the speech specificity of Russian Foreign Minister Sergey Lavrov. The research draws conclusions about the relationship between the status and the speech activity of a politician, establishing the main verbal markers characteristic of the speech portrait of a representative of power. As the comparative analysis shows, the speech of the head of the Foreign Ministry is richer in linguistic allusions and phraseological expressions. References to other political figures are characteristic for A. Merkel, which implies frequent use of anthroponyms. Linguistic realia and other stylistic means, presented in the system of the speech portrait of politicians, reflect the national and cultural flavor. They are a tool for implementing politically advantageous actions, including the manipulation of public consciousness.
Speech portrait Status characteristics Stylistic uniqueness Language realia Comparative analysis
V. F. Belova G. A. Lebedenko (&) A. E. Mirzakhanova N. V. Papka N. S. Shavkun Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected] N. S. Shavkun e-mail: [email protected]
JEL Classification
D91
1
F5
K40
M39
P59
R5
Z19
Introduction
All politicians and linguists recognize the need to consider the culture of native speakers in the deep and comprehensive study of any language. In the framework of the socio-political situation that has recently developed all over the world, it is natural to turn to the discourse of political figures. The public speeches of German and Russian politicians demonstrate the purposeful use of linguistic realia, which shows the national and cultural flavor and can also be a linguistic tool to manipulate public opinion and create a favorable image of the politician. The authors see the relevance of the research topic in the need for a comprehensive consideration of the German and Russian languages, considering the culture and discursive features of the contacts of their speakers. The research aims to conduct a comparative study of the status and personal conditionality of the speech portrait of a politician on the material of the German and Russian languages on the example of their use in the speeches of A. Merkel and S. Lavrov. The research objectives include the examination of the stylistic peculiarities of Merkel’s speeches as Chancellor of the Federal Republic of Germany and as ex-Chancellor compared with the speech specifics of the Russian Foreign Minister Sergey Lavrov. The paper analyzes the discursive practices of politicians on similar topics. The material
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_56
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includes videos of public speeches of German and Russian politicians, interviews, and Internet blogs.
2
Materials and Method
Everything that happens in the history of society and its areas of activity has its unique reflection in language, which, in turn, receives more and more influence on these spheres. The language of politics is closely related to the common vocabulary and does not stand out as clearly as other functional languages (e.g., medical). Political words and expressions come into the common language vocabulary, losing their terminological character. Political discourse is the central concept of political linguistics. It is the text and speeches of political institutions, politicians (e.g., presidents, prime ministers, or other government members), and political parties at all levels (local, national, and international). To a large extent, a politician’s success depends on his or her rhetorical competence. Status-role relationships will always be present in any communicative space of political discourse. The functions inherent in political subjects order the status-role relations. Communication between the political leader (author) and, for example, the electorate (addressee) is carried out in a language that is understandable and consonant with a particular social group and within strictly established limits (Ravochkin 2018). In spite of the fact that the direct participants of communication are the author and the addressee, the strategies of speech behavior are, to a greater extent, directed to the audience (the third subject). The special status of a political figure requires compliance with certain norms and rules of behavior. A politician’s personal responsibility for their statements requires them to be thoughtful about any word that can have a destructive effect on the speaker’s authority and social and political events. Bulgarian scholars S. Vlakhov and S. Florin note that inaccuracies are more crushing than the “machinations of opponents” (Vlakhov and Florin 2016, p. 406). Relevance and diversity in the selection and application of linguistic means is a characteristic feature of the language of politics, which deserves separate attention. It is a special vocabulary and semantic connections between political concepts, metaphors, basic abstractions, and the construction of judgments (Kuzmina 2011, p. 192). A speech of a political subject is a kind of “product” filled with distinctive speech tools that allow us to identify its speaker. Manipulation of consciousness is also considered a characteristic feature of political discourse (Studies 2017, p. 266). The main role in this process is played by verbal and nonverbal messages, which generate stereotypes of opinion in the audience. In turn, we should not abuse discursive
power, which in psychology has such a term as “dominance.” V. Vinogradov speaks of methods of “refracting word meanings through ideological, evaluative, modal, semantic, and pragmatic fluidity of words” used for purposes of linguistic manipulation (Vinogradov 2004, p. 240). The phenomenon of political discourse has recently been studied by Belova (2014), Belova and Matveeva (2015), Demyankov (2002), Donskova et al. (2021), Karasik (2020), Sheigal (2008), Zheltukhina et al. (2021). The system-forming features of political discourse, such as institutionalism, are emphasized by most linguists. The “reduced” informativeness (up to its absence), the function of “appeasement,” and semantic uncertainty, phantomness (sphere of political consciousness), highlighted by Negrov (2008, pp. 23–29), cannot be leading in the speeches of significant politicians. The main stylistic qualities of publicist speech are correctness, the richness of language, brevity, clarity, precision, relevance, and emotionality. There are special words and expressions that are an integral and natural part of one language and culture. However, they are completely absent in another language. Linguistics attributes this phenomenon to the category of non-equivalent vocabulary. Such words are of great interest in the study of the relationship between culture and language because they “directly reflect the interaction with the life of the people who speak it” (Vereshchagin and Kostomarov 2017, p. 320). To be able to correctly convey the designations of the things and images in question, it is necessary to know historical, cultural, and local features. Background knowledge is “a set of ideas about what constitutes the real background on which the picture of the life of another country, another people unfolds” (Vernigorova 2019, p. 229). According to E. I. Shumager, background words contain valuable information about purely national extra-linguistic activity (Shumager 2019, p. 229). One of the categories of background knowledge is realia. Realia usually include names of geographical concepts, personalities of a certain time, and state institutions. G. D. Tomakhin also considers names of national and folklore heroes and mythological creatures, etc., to be realia (Tomakhin 1997, pp. 13–18). Realia has a pronounced national flavor peculiar to any language. When comparing different cultures and languages, the following peculiarities of the use of realia can be noted. Realia can be peculiar to one language group and absent in another or, if present in two languages, have additional meaning in one of them. Various changes are taking place in society all the time. When new realities emerge in the material or spiritual life of society, corresponding realia-words emerge immediately. Realia can be limited by time or even by the boundaries of a
Status and Personality Conditioning the Language Portrait of Politicians
particular team or institution. The socio-political realia of the German unification period is discussed in the research paper of Belova and Karaseva (2013).
3
Results
It can be concluded that realia is a very unusual and interesting part of the vocabulary of the language. This research presents the results of the analysis of realia and lexical and grammatical features based on political speeches of the former leader of the Christian Democratic Union party and the former German Chancellor Angela Merkel and Russian Foreign Minister Sergey Lavrov. Angela Merkel is certainly very interesting as a linguistic personality. The natural sciences have helped her develop undeniable logic in her reasoning and thoroughness in her selection of arguments. “Melkelismus” refers to the political style of the former Chancellor. In the German media, the word is more often used with a neutral assessment than with a negative one. An example is the article “Was ist Merkelismus?”. In it, the political course of the party of the former Chancellor is assessed as pragmatic: Ob man es “Merkelismus” nennt oder Pragmatismus–fest steht, die CDU bewegt sich auf neuen Pfaden [Whether you call it “Merkelismus” or pragmatism–one thing is certain: the CDU is moving along new paths] (Welt.de. 2009). Some realia that the politician uses reflect her own feelings, which is a very rare phenomenon in A. Merkel’s speeches, for example, the anthroponym: Herr Professor Neugenauer, whom she is happy to congratulate on assuming her new position. She even jokes on this topic, using the stable expression (associative realia) “fresh air” (frischer Wind), playing on the fact that the new president comes from distant eastern lands (Federal Government of Germany 2012a). A. Merkel uses the anthroponym (Justizminister Maas [Minister of Justice Maas], Innenminister de Maizière [Minister of the Interior de Maizière]) and expresses her support for the Minister of Justice in combating all hate speech that contradicts the principles of the German political field (Federal Government of Germany 2016). In the texts of Merkel’s speeches, one can find toponyms, sometimes in the form of comparisons, characterizing countries close to Germany in terms of content. In the following example, A. Merkel mentions Portugal as a great seafaring country, using the onomastic realia: “Portugal als große Seefahrernation …” [Portugal as a great maritime nation …] (Federal Government of Germany 2012b). The results of our study show that Angela Merkel, as a high-ranking politician, represented the main features of the German nation: pragmatism and restraint. Expressing
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emotions was not typical of a strong leader. Angela Merkel’s speech is publicistic, full of words and expressions related to the social and political sphere. She knows how to convince her listeners and achieve effective communication. She follows the strict rules imposed on any high-level politician, trying to level her personality as much as possible, acting as the nation’s protector and the EU’s peacemaker. The most common realia in Merkel’s speeches is anthroponyms, toponyms, and realia describing the country’s state and social structure. Cultural and civilizational changes, the winding down of ties between the West and Russia, and, last but not least, A. Merkel’s resignation as Chancellor have influenced the former Chancellor’s position and her speech style. It was especially evident in A. Merkel’s interview to Die Zeit. Her speech has more emotionality and colloquial elements in the vocabulary and grammar, for example: “Pferdeschwanz, tolle Sache” [Ponytail, great thing] (Hildebrandt and Lorenzo 2022). The phrases (an der Wurzel packen, im Kopf haben, unter die Nase halten [get to the root, have in mind, hold under the nose]), particles (mal, ja, bloß [well, just]), and exclamation sentences (Ich habe mir so viele Gedanken damals gemacht! [I thought so much about it at the time]) give her statements expressiveness and make them figurative. Rhetorical questions (Hatten Sie gedacht, ich komme mit Pferdeschwanz? [Did you think I would come with a ponytail?]) open and conclude the interview: “Wer kann schon Bundeskanzlerin der Bundesrepublik Deutschland werden? Ich habe das immer mit Freude gemacht, und jetzt ist trotzdem wieder eine gewisse Spannung da: Was kann jenseits dessen noch passieren?” [Who can become Chancellor of the Federal Republic of Germany? I have always enjoyed doing this, and now there is nevertheless a certain tension again: What can still happen beyond this?] (Hildebrandt and Lorenzo 2022). Of all the issues that journalists touched upon in the interview (A. Merkel’s physical and mental condition during the last year in power, refugee policy, Russia and Ukraine, Nord Stream 2, self-criticism, saving the climate, and others), the biggest reaction of misunderstanding was A. Merkel’s statement about the Minsk agreements, that the signing of agreements was an attempt to give Ukraine time to strengthen the country’s military potential (Hildebrandt and Lorenzo 2022). The main style of speech communication of Russian Foreign Minister Sergey Lavrov is a journalistic one. However, the politician is in constant relationship with the conversational style, as well as scientific and artistic style. In communication, he quite often demonstrates the dominant initiative while being polite, clear, and concise. All of the minister’s speeches (Ministry of Foreign Affairs of the Russian Federation 2015, 2016a, 2016b, 2017,
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2019a, 2019b, 2022; Russian 2015, 2021) show that S. Lavrov often uses successful speech strategies and tactics to achieve the effect of communication. For example, he often refers to other political figures; this tactic of illustration can be seen in many of his phrases: “Кaк aбcoлютнo cпpaвeдливo cкaзaл мoй кoллeгa Mиниcтp инocтpaнныx дeл Япoнии Ф. Киcидa …” [My colleague Foreign Minister of Japan Fumio Kishida was absolutely right to say…] (Ministry of Foreign Affairs of the Russian Federation 2017). The same anthroponyms can also be observed in other statements of the politician: “Гocпoдин Эpдoгaн…зaявил, чтo кpaткoe нapyшeниe пpocтpaнcтвa вoздyшнoгo пpocтpaнcтвa и гpaницы никoгдa нe мoжeт быть кaким-либo пpeдлoгoм для пpимeнeния cилы” [Mr. Recep Tayyip Erdogan … told that a brief airspace and border intrusion could not be a pretext for using force] (Ministry of Foreign Affairs of the Russian Federation 2015). Onomastic realia—toponyms—can naturally be traced in all speeches in which the political situation in Russia is discussed (Чeлябинcкaя oблacть [Chelyabinsk Region]) and in other countries (“пoддepжaть Cepбию в вoпpocax кocoвcкoгo ypeгyлиpoвaния … диaлoг мeждy Бeлгpaдoм и Пpиштинoй” [support Serbia on the issues of the Kosovo settlement … dialogue between Belgrade and Pristina]) (Ministry of Foreign Affairs of the Russian Federation 2016a). In Lavrov’s public speech, we found apparent negative evaluation and associative realia—a linguistic allusion—that contains a hint of the phraseology. S. Lavrov uses the phrase “xлoпнyть двepью” [slam the door] (Ministry of Foreign Affairs of the Russian Federation 2016b), which has a negative connotation of assessing the behavior of European leaders toward the implementation of the Minsk agreements with Ukraine. This connotation gravitates to the phraseology with the meaning “walk away with an annoyance.” The absolute correctness of this reaction can be seen after the interview of the former Chancellor to a German newspaper, which confirmed the clear sabotage of the Minsk agreements by the West. Another stable phraseology, namely associative realia, can be traced in the statement: “Moжнo тoлькo пocлoвицy пpo шaпкy вcпoмнить” [The proverb about the hat comes to mind] (Russian 2015). The politician again assesses the situation using the proverb “нa вope и шaпкa гopит.” [on the thief the hat is on fire: a guilty conscience gives itself away]. It is necessary to mention the famous phrase of the head of the Foreign Ministry, uttered in the program “Moscow. Kremlin. Putin”: “зa нaми нe зapжaвeeт” [the response will not take long] (Ministry of Foreign Affairs of the Russian Federation 2019a). Continuing to study the use of associative realia in proverbs used by the politician, we can also recall the phrase
V. F. Belova et al.
“Boлкoв бoятьcя—в лec нe xoдить” [If you are afraid of wolves, don’t get into the forest: Nothing ventured, nothing gained] during the opening ceremony of the embassy in Switzerland (Ministry of Foreign Affairs of the Russian Federation 2019b). The political figure’s lexicon is rich in the use of realia of the administrative and state structure of public life, anthroponyms, associative realia that include proverbs and phraseology, toponyms, and names of state and public institutions, which are also included in the section of onomastic realia. All of Lavrov’s speeches are mostly positive in tone; his arguments are clearly logical. He is polite and laconic. The communicative tactics that Lavrov uses are successful in influencing his audience. We can conclude that Lavrov is a politician with perfectly formed logicalargumentative sub-competence. In his reaction to Merkel’s remarks about the Minsk agreements, unlike the former Chancellor, Lavrov retains the dominance of logical argumentation: “Taкaя peaкция aбcoлютнo oтчeтливo пoкaзывaeт, чтo плaны Зaпaдa были copвaны” [This response clearly shows that the West’s plans were wrecked] (Ministry of Foreign Affairs of the Russian Federation 2022). As we can see, the choice of realia in the speeches of the two politicians has similar features. In Angela Merkel’s statements, we can trace onomastic realia describing the largest organization in Europe–the European Union, “…dass es gut ist, dass wir diese Europäische Union haben” [it is good that we have this European Union] (ZEIT 2021), she refers to other European countries in situation reports, but in order to evaluate the common European approach or common political actions positively: Deutschland [Germany], NATO, NATO-Staaten [NATO states], Russland [Russia]. Onomastic realia can also be seen in the statements of Sergey Lavrov, such as “Poccия” [Russia] and “Гepмaния” [Germany]. Everyday realia associated with traditional holidays and events are found in the speeches of both politicians: Poждecтвo [Christmas] and Weihnachten [Christmas]. However, Lavrov also uses everyday realia that is rather difficult to translate into a foreign language, such as “мeждycoбoйчики” [friends-only party] (TASS 2021). The above said makes us believe that the speech of Sergey Lavrov and Angela Merkel, as experienced political figures of the twenty-first century, contains numerous elements contributing to the strengthening of the image and reputation. We should note the most frequently used realia in Lavrov’s speech: B. B. Пyтин [V. V. Putin], Китaйcкaя Hapoднaя Pecпyбликa [People’s Republic of China], Mocквa [Moscow], and Coвeт Фeдepaции [Federation Council]. It is worth noting the realia that A. Merkel most frequently uses: Eвpocoюз [European Union], Eвpoпa [Europe], Oбъeдинeниe Гepмaнии [German reunification], and CШA [USA].
Status and Personality Conditioning the Language Portrait of Politicians
4
Conclusion
Both politicians are good orators who communicate effectively through argument, logic, clarity, and conciseness. They persuade not with their emotions but with skillful diplomatic features that imply a certain restraint and pronounced pragmatism in their speeches. The rich linguistic, cognitive, and communicative constructions, the various linguistic means, and the special intonation that politicians use allow them to influence the listener and achieve their political goals. As the comparative analysis shows, the speech of the Foreign Minister is richer in linguistic allusions and allusions to various phraseological expressions. For A. Merkel, as Chancellor, it was typical to refer to other political figures, which implies a frequent use of anthroponyms. The change in the political situation has also changed the style of her speech.
References Belova VF (2014) Replying component in German parliamentary discourse. Educ Transformation Issues 1:48–58 Belova VF, Matveeva GG (2015) Constructive-destructive communication (an analysis of the Bundestag’s and the European parliament’s reports). Vestnik Moscow State Linguistic Univ 20 (731):157–167 Belova V, Karaseva E (2013) Das Schicksal von Neologismen der Wendeperiode. Bull Pyatigorsk State Linguistic Univ 3:101–104 Demyankov VZ (2002) Political discourse as a subject of political philology. Pol Sci 3:32–43 Donskova OA, Grevtseva NV, Knyazev NA, Mirzakhanova AE (2021) Features of representation of the developing geopolitical concept of “Brexit” in English, Russian and German. In: Popkova E, Sergi B (eds) Modern global economic system: evolutional development vs. revolutionary leap. Springer Nature, Cham, pp 1568–1576. https:// doi.org/10.1007/978-3-030-69415-9_173 Federal Government of Germany (2012) Speech by Federal Chancellor Angela Merkel during her visit to the “BioEconomy” Leading-Edge Cluster on the occasion of the opening of the Fraunhofer Centre for Chemical-Biotechnological Processes. Retrieved from https:// politische-reden.eu/BR/t/1908.html. Accessed 28 Jan 2023 Federal Government of Germany (2012) Speech by German Chancellor Angela Merkel on the occasion of the German-Portuguese Business Meeting. Retrieved from https://politische-reden.eu/BR/t/1929.html. Accessed 28 Jan 2023 Federal Government of Germany (2016) Speech by Federal Chancellor Angela Merkel on the 2017 Budget Act to the German Bundestag in Berlin. Retrieved from https://www.bundesregierung.de/breg-de/ service/bulletin/rede-von-bundeskanzlerin-dr-angela-merkel379818. Accessed 28 Jan 2023 Hildebrandt T, di Lorenzo G (2022) Interview: “Hatten Sie gedacht, ich komme mit Pferdeschwanz?” ZEIT ONLINE. Retrieved from https://www.zeit.de/2022/51/angela-merkel-russlandfluechtlingskrise-bundeskanzler. Accessed 28 Jan 2023 Karasik VI (2020) Performativity in political discourse. In: Myskin SV, Tarasov EF (eds) Professional picture of the world: methodology. Variants. Practice. Moscow, Russia, pp 81–98
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Kuzmina SV (2011) Political discourse as an integral part of political communication. Izvestia Saratov Univ Sociol Political Sci 11(2), 54–56 Linguistic Studies. Linguistics in Germany (2017) Proceedings of the 21st Linguistic Colloquium, Groningen Ministry of Foreign Affairs of the Russian Federation (2015) Foreign Minister Sergey Lavrov’s interview with Russian and foreign media, Moscow. Retrieved from https://www.mid.ru/ru/press_ service/minister_speeches/1519130/. Accessed 28 Jan 2023 Ministry of Foreign Affairs of the Russian Federation (2016) Foreign Minister Sergey Lavrov’s statement and answers to media questions at a joint news conference following talks with First Deputy Prime Minister and Minister of Foreign Affairs of Serbia Ivica Dacic. Retrieved from https://www.mid.ru/ru/press_service/minister_ speeches/1525371/. Accessed 28 Jan 2023 Ministry of Foreign Affairs of the Russian Federation (2016) Foreign Minister Sergey Lavrov’s interview to Komsomolskaya Pravda newspaper and radio. Retrieved from https://www.mid.ru/ru/press_ service/photo/meropriyatiya_s_uchastiem_ministra/1529259/. Accessed 28 Jan 2023 Ministry of Foreign Affairs of the Russian Federation (2017) Foreign Minister Sergey Lavrov’s remarks and answers to media questions at a news conference following Russia-Japan two-plus-two format consultations. Retrieved from https://www.mid.ru/tv/?id=1544018 &lang=en. Accessed 28 Jan 2023 Ministry of Foreign Affairs of the Russian Federation (2019) Foreign Minister Sergey Lavrov’s answers to questions from the “Moscow, Kremlin, Putin” TV show. Retrieved from https://www.mid.ru/ru/ foreign_policy/news/themes/id/1477766/. Accessed 28 Jan 2023 Ministry of Foreign Affairs of the Russian Federation (2019) Foreign Minister Sergey Lavrov’s remarks at the opening of the renovated complex of the Swiss Embassy in Moscow attended by Head of the Federal Department (Minister) of Foreign Affairs of the Swiss Confederation Ignazio Cassis. Retrieved from https://www.mid.ru/ ru/press_service/minister_speeches/1464065/. Accessed 28 Jan 2023 Ministry of Foreign Affairs of the Russian Federation (2022) Foreign Minister Sergey Lavrov’s interview with Khabar 24 Kazakh TV channel. Retrieved from https://www.mid.ru/ru/foreign_policy/ news/1842999/. Accessed 28 Jan 2023 Negrov EO (2008) Transformation of official political discourse in modern Russia (Synopsis of Dissertation of Candidate of Political Sciences). St Petersburg University, St. Petersburg Ravochkin NN (2018) Politic discourse peculiarities. Vestnik Kostroma State Univ 24(3):244–250 Sheigal EI (2008) Gender identity problems of military men in modern American political discourse. Polit Linguist 1(24):93–102 Shumager EI (2019) Background vocabulary, its uniqueness and connection with culture. Lexis and culture: a collection of scientific works. Tver State University, Tver, pp 124–129 TASS. Russian News Agency (2015) [Speech] With regard to Erdogan’s statements, Lavrov recalled the proverb about the one on whom “a hat is on fire.” Retrieved from https://tass.ru/politika/ 2497595. Accessed 28 Jan 2023 TASS. Russian News Agency (2021) [Speech] Foreign Minister Sergey Lavrov called the US initiative to convene a “Summit for Democracy” a “friends-only party”. Retrieved from https://tass.ru/ politika/13076635. Accessed 28 Jan 2023 Tomakhin GD (1997) Realia in language and culture. Foreign Languages School 3:13–18 Vereshchagin EM, Kostomarov VG (2017) Linguo-country theory of the word. The Russian Language, Moscow Vernigorova VA (2019) Translation of realia as an object of intercultural communication. Young Sci 3(14):184–186
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Psychological Conditions for the Development of Student’s Personal Resources in the Educational Environment Svetlana V. Khrebina , Mariyam M. Erkenova , Maxim V. Khrebin , Rimma G. Zvereva , and Iana A. Kharchenko
Abstract
Keywords
The research focuses on the problem of studying the psychological conditions for developing a student’s personal resources in an educational environment. The methodological basis of the research is the conceptual model of personal potential developed by D. A. Leontiev. The tools of psychological diagnostics included methods aimed at studying the personal resources of students, acting as components of personal potential—psychological well-being, resilience, and meaningful life orientations. As a result of the research, the authors found that a significant number of students have a low level of psychological well-being, difficulties in organizing daily activities, and difficulties in determining goals and direction of life, feeling a lack of control over what is happening in life and the inability to change existing circumstances for the better, dissatisfaction with oneself, and the lack of self-acceptance. It has been experimentally proven that all studied personal resources represent a single, consolidated system. Therefore, the positive development of variable personal resources (psychological well-being, vitality, and life orientations) is a determinant of the harmonious development of a student’s personality. The authors present the results of the study of the student’s personal resources. Based on the results obtained, the authors, for the first time, developed the psychological conditions for the development of personal resources in the educational environment. The obtained research results can be used in programs for the psychological support of students, elaboration and implementation of programs for the development of personal resources, and the conduct of individual and group correctional and evolving work in the educational environment.
Personal resources Psychological well-being Vitality Meaningful orientations Student age
S. V. Khrebina M. M. Erkenova M. V. Khrebin R. G. Zvereva I. A. Kharchenko (&) Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected]
JEL Classification
I23
1
Introduction
A lack of stability in various areas of life characterizes the current stage of development of society. The social, political, and economic transformations occurring in Russia, as well as the complexity of the current social situation, significantly affect young people. In this context, student age attracts special attention because intense stress during this period often overlaps with the processes of personal and professional development, which leads to increased vulnerability to stress factors and the risk of various forms of maladjustment. Fundamentally, a new stage in a young person’s life begins with studying at the university, which differs from the life of a school student. Such difficulties include a significant increase in information loads, interpersonal relationships, and the need to establish a mode of life independently. This can lead to emotional stress, increased feelings of anxiety, and psychological distress. Student age is also characterized by the need to make an independent choice, the development of social responsibility, and the responsibility for one’s own future. The student period provides opportunities for choosing one’s own life path, autonomy, and further development. On the one hand, this alleviates subsequent life crises. On the other hand, if the stage fails, the infantile attitude, the fear of independence, and the need to take one’s place in adult life can remain (Abramova 1999).
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_57
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338
In this regard, the need to search for the psychological conditions for the development of the personal resources of today’s students becomes extremely relevant, which will allow students to adapt to new socio-cultural conditions while maintaining psychological health and well-being. Over the past decades, a resource approach has been widely developed in psychological science, which involves focusing not on overcoming weak and vulnerable sides but, on the contrary, on the development of positive and strong sides of the personality, which, in turn, makes it possible to cope with difficult situations while maintaining psychological health and well-being. The concept of resources is studied in detail by Russian researchers in line with the theory of psychological stress. Studying the problem of stress, V. A. Bodrov notes that resources are a set of physical and spiritual capabilities of a person that allow him or her to cope with stressful situations by implementing the methods and strategies of behavior necessary to relieve stress (Bodrov 2006). K. Muzdybaev understands resources as opportunities that help the individual cope with the environment’s requirements. According to the researcher, resources carry the potential to overcome difficulties (Muzdybaev 1998). N. E. Vodopyanova considers resources in the context of variables that provide resilience to stress. Variables contain emotional, cognitive, and behavioral components, which, being updated under difficult circumstances, help adapt and find ways, opportunities, and tools for effective interaction with stress factors (Vodopyanova 2009). Personal resources in the process of adaptation and overcoming difficult situations by a person have different meanings. L. V. Kulikov considers personal resources as opportunities to adapt and overcome difficult circumstances. The author emphasizes the role of an active life attitude based on the internal motivation to overcome, as well as on the perception of difficulties as an opportunity to gain new life experiences. Additionally, the strength of the self-concept, self-respect, self-sufficiency, and rational and positive thinking are distinguished as personal resources. The methodological basis of this research is a model of personal potential developed by D. A. Leontiev. In this model, personal resources are a system of human abilities that ensure successful functioning in the living environment by eliminating the contradictions in it and overcoming adverse circumstances, which, in turn, involves the transformation of the value-semantic sphere of the individual, setting its direction and creating a platform for self-realization (Kulikov 2004). D. A. Leontiev defines resources as the means by which a person achieves goals and maintains psychological well-being (Leontiev 2016). He emphasizes that, despite the fact that personal potential has an innate background, the leading role in its formation belongs to the individual’s own
S. V. Khrebina et al.
activity and the ability to take responsibility for its development, that is, self-determination. In a broad context, personal resources are individual psychological characteristics with the help of which a person can successfully function in a living environment, carry out the necessary activities, and create and maintain the basis for ensuring his or her psychological well-being (Diener and Fujita 1995). Personal resources also act as prevention factors for the occurrence of various deviations and violations of the personal plan. Contemporary psychological science distinguishes such personal resources as life-meaning orientations, optimism, resilience, vitality, psychological well-being, coping strategies, self-actualization, personal autonomy, and other psychological variables (Leontiev 2011). As the theoretical analysis showed, personal resources help students cope with various life circumstances, internal contradictions, and individual and age-related problems. They also contribute to the development of autonomy and personal and social responsibility. Considering the multidimensionality of personal potential and the fact that resources included in its composition represent a single system, the development of some variable personal resources will contribute to the evolution of other components of personal potential.
2
Methodology
The research was conducted based on Pyatigorsk State University. The subjects were students in the 1st–4th year of various training areas, totaling 56 people. A set of the methods of psychological diagnostics was selected aimed at studying such variable personal resources as psychological well-being (K. Riff’s scale of psychological well-being), resilience (Test of resilience adapted by D. A. Leontiev and E. I. Rasskazova), and self-efficacy.
3
Results
Personal resources among students were analyzed according to individual indicators in percentage terms using correlation analysis (Fig. 1). As can be seen from Fig. 1, a high level of the “positive attitude” indicator is observed in 11.5% of the test subjects, an average level is observed in 59.6%, and a low level is observed in 28.9%, which indicates that most participants have a sufficient degree of trust and openness in relations with others. However, pronounced trusting relationships, the ability to take care of the well-being of others, and the ability to build harmonious relationships with them are noted only in 11.5%. In turn, isolation and frustration in interpersonal
Psychological Conditions for the Development of Student’s …
70 59.6 60
59.6
55.7
57.7
61.5
59.6
59.6
50
high
relationships and unwillingness to compromise to maintain important ties with others are found in a significant number of students (28.9%). Further analysis shows that in terms of “autonomy” and “personal growth” indicators, high values are observed in a significant number of subjects (30.8% and 25%). This indicates that, despite the existing difficulties in managing the environment, setting goals, and focusing life, as well as in relationships with others and self-acceptance, student youth is characterized by the desire for independence, regulation of behavior based on their own views, and not on the pressure of society and its attempts to force them to think and act in a certain way. Additionally, the results obtained indicate that students have a feeling of ongoing, perception of themselves as a “growing” and self-fulfilling personality, open to new experiences and realizing their potential. In about a third of the subjects, the indicators “management of the environment” and “self-acceptance” (32.7% and 30.8%) have low values, despite the fact that a high level of these indicators is found in a small number of participants (7.7% and 11.5%). These data indicate that students have difficulties in organizing daily activities. They often feel powerless to change circumstances for the better. There is dissatisfaction with oneself and some personal qualities, as well as a desire to be not what they are. According to the indicator “goals in life,” high values are observed in 11.5% of the participants. This indicates the presence of goals for these students and the conviction that past and present life is full of meaning. Low values of this indicator are found in 27%, which allows us to say that many students have difficulties in determining their goals and direction in life, as well as a low understanding of its meanings. A high level of general indicator of psychological well-being, showing self-awareness of the integrity and
middle
13.5
9.6
Psychological wellbeing
Autonomy
Posive relaonship
0
11.5
7.7
10
26.9
low
17.3
13.5
self-acceptance
11.5
30.8
27
25
Goals in life
20
32.7
28.9 30.8
30
Personal growth
40
Environment management
Fig. 1 Results of the study of psychological well-being among students (in %). Source Calculated and built by the authors
339
meaningfulness of their lives, is observed only in 13.5% of the participants. Almost a third of students (26.9%) have low values of the general indicator of psychological well-being, which requires attention to creating special psychological conditions for developing this personal resource at student age. In the study of resilience (Fig. 2), it was found that in terms of “involvement,” “control,” and “general resilience” indicators, average values prevail. In terms of “risk acceptance,” high and medium values are found in the same amount. Along with the dominance of average values, it can be noted that a high level of the “involvement” indicator is observed in 18.5% of the subjects and a low level in 16.7%. This indicates that among the respondents, there are students who enjoy their own activities, seeking to find something interesting in what is happening. However, there are students with a low level of this indicator, showing a feeling of rejection and a feeling of being “outside” of life. According to S. Maddy’s ideas, resilience is characterized by its general indicator and the consistent expression of its autonomous components. According to the indicators “control” and “general indicator of resilience,” and especially according to the indicator “risk acceptance,” there is a significant inconsistency in the degree of severity of the component, when they diverge significantly—high values significantly prevail over low ones. For example, on the “risk acceptance” scale, the number of subjects with high values is 48.1%; the number of subjects with low values is 3.7%. On the one hand, the severity of this indicator shows the readiness of young people to act despite the existing risks and perceive any experience, including negative ones, as a life lesson. On the other hand, there may be a lack of development at the stage of adolescence and all
340 Fig. 2 The results of the study of resilience among students (in %). Source Calculated and built by the authors
S. V. Khrebina et al.
76
80 70
64.8
62.9
60 48.1 48.1
50
High
40
Middle 29.7
Low
30 20
18.5
18.5
16.7
10
5.5
7.4
3.7
0 Involvement
Control
self-regulation components, which can lead to an underestimation of the existing circumstances and risks, which, in turn, is fraught with insufficient coping. As the further analysis shows, a high level of overall hardiness score is observed in 29.7% of the subjects; a low level is observed in 7.3%, which indicates that students are characterized by a belief system that allows them to cope with stress and difficult situations. Simultaneously, based on the results obtained, we can state the need to create conditions for developing individual components of resilience and their consistency. Figure 3 presents the results of meaningful life orientations among students. Diagnostic analysis (Fig. 3) showed the predominance of medium and high values for all variables of meaningful life orientations. This indicates that students have life goals and time perspectives that fill life with meaning. They perceive their lives as meaningful, rich, productive, and interesting. They perceive themselves as people who can manage their lives, influence life circumstances in accordance with their
50 40
48.1 37.1
50 44.5 38.8
38.8
51.7
53.7
38.8
50 High
35.2 25.9
30 20
Resilience
goals and meanings, and transform difficult situations into situations of development. In terms of the “locus of control-life” indicator, there are fewer high values compared to other variables (25.9%). On the contrary, low values are higher (20.4%). The presence of a low level of this indicator shows that students are convinced that a person’s life is not subject to conscious control, with disbelief in freedom of choice. The combination of the results of the “environment management” scale according to the method of psychological well-being indicates that students have difficulties associated with the feeling that they cannot change the existing circumstances enough and do not have control over what is happening in life. The values of the “general indicator of meaningfulness of life” show that part of the student sample (14.8%) has a low level of this indicator. These students consider they do not have personally significant life goals. They do not feel their life as rich and filled with meaning. They do not believe in their strength and ability to influence their life.
60
14.8
Middle
20.4
16.7
14.8
11.2
9.5
10 General indicator of meaningful life orientaons
Locus of control-life
Locus of control-I
Life performance
life process
0 Goals in life
Fig. 3 Results of meaningful life orientations among students (in %). Source Calculated and built by the authors
Risk acceptance
Low
Psychological Conditions for the Development of Student’s …
Thus, the conducted diagnostic analysis showed that along with the generally positive trend in the development of meaningful life orientations among students, there are certain aspects of this personal resource that require support and the creation of special conditions for their further harmonious development. A correlation analysis was carried out to determine the strength and nature of the relationship between various variables of personal resources (Tables 1, 2, and 3). As shown by the correlation analysis (Tables 1, 2, and 3), there are dense positive relationships of statistical significance between all studied variables of personal resources. The results obtained reflect the fact that the components represent a single, consolidated system. Proceeding from this, the positive development of individual variable personal resources will definitely contribute to the development of other components of personal potential and ensure the harmonious development of the personality in student age. Summarizing the results obtained, we can note the need to develop all considered personal resources such as psychological well-being, vitality, and meaningful life orientations. For the harmonious development of student’s personal resources, it is necessary to create special psychological conditions. Since the educational environment plays a significant role in the personal and professional development of students, we have identified the conditions for the development of personal resources in the educational space. These include the following: • Consideration of the specifics of personality development in student age; • Psychological support for the development of personal resources; • Carrying out activities using the resources of the educational environment for the development of subjectivity, value-semantic sphere, and self-realization of students.
Table 1 Results of correlation analysis (revealing the relationship between variables of psychological well-being and variables of hardiness)
Psychological well-being variables
341
Choosing forms and content of correctional and developmental activities is necessary, considering individual and age characteristics. On the one hand, the adaptive capabilities of students are strained due to the increased intellectual, informational, and emotional loads in today’s world, as well as the need to solve important problems of selfdetermination and personal and professional development that arise before every person. On the other hand, it must be remembered that adolescence is extremely favorable for developing various personal resources. Simultaneously, it is important to apply such forms, methods, and technologies of correctional and developmental work that will be of interest to students and will allow them to master new models of interaction and social activity. We have chosen psychological support as a form of psychological support for the personality as the most important condition for developing students’ personal characteristics. Psychological support creates a favorable basis for overcoming individual and age-related problems and further positive development of the personality. Psychological support implies the creation of an atmosphere of acceptance and understanding, as well as faith in a person’s ability to develop, become stronger, and overcome difficulties. By creating a safe space for self-expression, psychological support contributes to the development of the subjectivity of the individual, which, in turn, will contribute to the development of such qualities as faith in oneself, faith in one’s ability to perform certain activities, and overcome difficulties, and the ability to find the best options for solving emerging problems and influencing one’s own life. Additionally, psychological support helps strengthen the value-semantic sphere and realize one’s life and personally significant goals. In the context of this research, psychological support should be aimed at developing the psychological well-being, resilience, and meaningful life orientations of student youth. When providing conditions for the development of personal resources, it is necessary to consider the requirements
Hardiness variables Involvement
Control
Risk acceptance
Vitality
Positive relationship
0.605**
0.388*
0.508**
0.560**
Autonomy
0.467**
0.543**
0.383*
0.529**
**
**
Environment management
0.707
0.684
0.599
0.750**
Personal growth
0.429*
0.464**
0.386*
0.480**
Goals in life
0.641
0.646
0.525
0.685**
Self-acceptance
0.573**
0.555**
0.613**
0.639**
**
**
**
0.729**
Psych. well-being
**
0.683
**
**
0.657
level of significance p < 0.05; ** level of significance p < 0.01; level of significance p < 0.001 Source Calculated and built by the authors *
***
**
0.606
342 Table 2 Results of the correlation analysis (revealing the relationship between the variables of psychological well-being and meaningful life orientations among students
S. V. Khrebina et al. Psychological well-being variables
Variables of Meaningful Orientations General index
Goals in life
Process of life
Effectiveness of life
Locus control —I
Locus of control— life
Positive relationship
0.408***
0.338**
0.388**
0.476***
0.452***
0.265*
Autonomy
0.442***
0.384**
0.436***
0.458***
0.385**
0.231*
***
***
***
***
***
Environment management
0.601
0.508
0.596
0.597
0.584
0.451***
Personal growth
0.563***
0.523***
0.452***
0.602***
0.516***
0.423***
Goals in life
0.605***
0.593***
0.564***
0.605***
0.612***
0.432***
***
***
***
***
***
Self-acceptance
0.594
0.468
0.567
0.608
0.530
0.490***
Psychological well-being
0.609***
0.532***
0.571***
0.633***
0.581***
0.436***
level of significance p < 0.05; ** level of significance p < 0.01; level of significance p < 0.001 Source Calculated and built by the authors *
***
Table 3 Results of the correlation analysis (revealing the relationship between the variables of resilience and meaningful life orientations among students
Variables of Meaningful Orientations Hardiness Variables
General index
Goals in life
Process of life
Effectiveness Of life
Locus control—I
Locus of control—life
Involvement
0.662***
0.550***
0.658***
0.641***
0.580***
0.513***
***
***
***
***
***
0.635
0.602
0.453**
0.543***
0.630***
0.478***
0.577***
***
***
***
0.564***
Control
0.693
0.557
0.635
Risk-taking
0.619***
0.423**
Vitality
***
0.738
***
0.583
0.694
0.709
Note * level of significance p < 0.05; ** level of significance p < 0.01; Source Calculated and built by the authors
of society and the contemporary education system for the personal, professional, and business qualities of students, as well as their ability to interact with the outside world. Therefore, as one of the conditions, we have chosen the organization of events using the resources of the educational environment for the development of subjectivity, the value-semantic sphere, and the self-realization of students. Events organized by an educational institution should be carried out with the active participation of students. Vigorous activity can form the subjectivity of individuals and their ability to solve emerging problems, make decisions, take responsibility, and overcome difficulties that arise. In other words, it is impossible to form resilience if a person remains in the role of an object to which educational or developmental activities are directed. Only by actively engaging in socially significant activities can one develop the ability to interact constructively, cope with difficulties, and solve life problems (Khrebina and Zvereva 2022). Implementing this condition, one can use various social actions, participate in volunteer movements, hold events to prevent deviant behavior, promote a healthy lifestyle, etc.
0.629 ***
– level of significance p < 0.001
A large organizational resource for creating and implementing special conditions and conducting remedial and developmental classes aimed at developing students’ personal resources belongs to the psychological services of universities.
4
Conclusion
The research allows us to conclude that the psychological well-being of students, their resilience, and life orientations as components of personal resources are interconnected with each other. Their positive growth at the stage of professional development at a university will ensure the harmonious evolution of the individual. Based on the conceptual provisions and the empirical data obtained, the authors determined the psychological conditions for developing students’ personal resources in the educational environment. These include: • Consideration of the specifics of personality development in student age;
Psychological Conditions for the Development of Student’s …
• Psychological support for the development of personal resources; • Carrying out activities using the resources of the educational environment for the development of subjectivity, value-semantic sphere, and self-realization of students. To implement psychological conditions, it is recommended to elaborate and use programs to cultivate personal resources and conduct individual and group correctional and developmental work in the educational environment.
References Abramova GS (1999) Developmental psychology: textbook, 4th edn. Publishing Center “Academy”, Moscow Bodrov VA (2006) Coping stress problem. Part II. Coping stress processes and resources. Psychol J 27(2):113–123
343 Diener E, Fujita F (1995) Resources, personal striving, and subjective well-being: a nomothetic and ideographic approach. J Pers Soc Psychol 68(5):926–935. https://doi.org/10.1037//0022-3514.68.5. 926 Khrebina SV, Zvereva RG (2022) Development of a successful student personality in educational practice. Pyatigorsk State University, Pyatigorsk Kulikov LV (2004) Psychohygiene of the individual. Issues of psychological resilience and psychological preventive measures: textbook. Piter, St. Petersburg Leontiev DA (ed) (2011) Personal potential, structure and diagnostics. Smysl, Moscow Leontiev DA (2016) Autoregulation, resources, and personality potential. Siberian J Psychol 62:18–37. https://doi.org/10.17223/ 17267080/62/3 Muzdybaev K (1998) The strategy of coping with life’s difficulties. Theoretical analysis. J Sociol Social Anthropol 1(2):100–109 Vodopyanova NE (2009) Psychodiagnostics of stress. Piter, St. Petersburg
Improvement of the Personnel Innovation Activity Management System Based on the Principles of Social Orientation Alla G. Zinchenko , Elena L. Neznahina , Sergei B. Sorokin , Dmitrii A. Kornilov , and Elena V. Kornilova
the avoidant type of motivation cannot innovate actively. The social orientation of the innovation activity management system is implemented through the possibility of choosing a preferable type of incentive for each employee, as well as determining the employee’s motivation for learning and development in their professional field.
Abstract
The research aims to improve the system for managing the innovative activity of personnel based on the principles of social orientation. Innovations are considered the main tool for the organization’s sustainable development. One of the problems of organizations’ innovative development is the low innovative activity of personnel. Resistance to innovation arises as a result of inefficient motivational decisions. Existing incentive systems are ineffective because they do not consider the employee’s personal characteristics. The main elements of the innovation activity management system are the employee as a generator of innovations and the organizational and managerial environment as an environment for implementing innovations. The innovative activity of an employee is determined by the necessary level of professional competence, personal initiative, motivation for development in their professional field, and motivation for work activity. To ensure these conditions, creating a socially oriented organizational and managerial environment is necessary. Determining the motivational type of an employee based on the typological model of V. I. Gerchikov makes it possible to consider the personal characteristics of an employee when forming a system of labor relations and increasing the effectiveness of corporate training to increase innovative activity. Employees with personal initiative can be expected to be more involved in innovation activities. Employees belonging to A. G. Zinchenko (&) E. L. Neznahina S. B. Sorokin D. A. Kornilov Nizhny Novgorod State Technical University named after R.E. Alekseev, Nizhny Novgorod, Russia e-mail: [email protected] S. B. Sorokin e-mail: [email protected] E. V. Kornilova Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russia
Keywords
Innovative activity Types of motivation Stimulation of innovations Types of motivation Social orientation JEL Classification
O15
1
O31
M50
M53
J24
Introduction
Nowadays, innovations are the main tool for the sustainable development of an organization. To remain competitive, organizations must strive to identify new opportunities and actively pursue them. Innovatively active personnel are one of the conditions for ensuring the revitalization of the organization’s innovative activities. The contemporary concept of organization management includes the principles of environmental friendliness, social orientation, and quality of corporate governance (ESG principles). Social principles reflect the attitude of the organization to its personnel. Introducing social principles into the organization’s work will increase the innovative activity of employees and ensure the organization’s sustainable development. Low innovative activity of personnel is one of the problems of the innovative development of organizations. According to studies conducted based on the results of Kuzina and Nefedova (2021) by the Institute for Statistical
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_58
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Research and Economics of Knowledge (ISREK) of the Higher School of Economics, 6.3% of employees showed innovative activity, 60% of employees proposed innovations on their own initiative, and 40% of employees implemented (carried out) innovative activity as part of their job responsibilities. Most authors believe that the reason for the low level of innovative activity of the staff is an inefficient system to encourage staff to participate in the organization’s innovative processes (Balabanova et al. 2019; Belkin et al. 2018; Kuvshinov and Vinogradova 2021; Vey et al. 2019; Zavyalova et al. 2014). Studies have shown that only 20% of organizations have a developed system for stimulating the innovative activity of personnel. In other organizations, rewards for the results of innovative activity are random (Kuvshinov and Vinogradova 2021).
2
Methodology
There are various understandings of the innovative activity of personnel. Many authors think that the innovative activity of personnel is the participation of employees in generating proposals to improve the organization’s efficiency (Balabanova et al. 2019; Belkin et al. 2018; Kuzina and Nefedova 2021; Matyugina et al. 2020; Vinogradova and Kuvshinov 2021). In some works (Gorshenin and Kildibaeva 2014), personnel innovativeness is considered more broadly: as the ability and opportunity not only to generate innovative ideas but also to effectively manage organizational changes “through the right set of knowledge, skills, and abilities of employees when using a motivational mechanism and creating favorable technical, technological, organizational, and production conditions.” Not every employee has the personal characteristics that make it possible to be an innovator. Innovative behavior is not mandatory and is usually not part of the job description. Innovative activity is conditioned by the internal motives of the employee and manifests itself voluntarily (Omarova and Pelymskaya 2021). Personal initiative is one of the personal characteristics that allow an employee to be innovatively active. An analysis of the concepts of “innovative activity of personnel” and factors influencing the management of innovative activity makes it possible to state that the main elements of the system of innovative activity are a person as a source of innovation and an organizational and managerial environment as a tool for implementing innovation. To generate innovative ideas and implement them, an employee must have the necessary level of professional competencies and be motivated for professional development. According to studies (Kuzina and Nefedova 2021),
employees are more actively involved in improving organizational processes in which they directly participate. The corporate training system is the organization’s subsystem that provides the necessary level of professional competence for employees. Motivation for learning (the desire to develop in one’s professional activity) (Sorokin et al. 2022) contributes to the personal growth of the employee and determines his or her innovative behavior. Currently, the reward system is the primary way to increase employees’ innovative activity. According to studies (Kuvshinov and Vinogradova 2021), employees showed greater innovative activity when they were encouraged by management and reduced innovative activity when they received unfair remuneration (Omarova and Pelymskaya 2021). However, the real systems of labor relations are not socially oriented and do not reflect the personal characteristics of employees. In this regard, when forming the innovative activity of an employee, it is important to consider two types of motivation: motivation for labor (work) activity and motivation for training and development in the professional field. The main difference between the types of motivation is that motivation for work activity characterizes the desire of an employee to perform work duties, and motivation for learning is the desire of an employee to develop in his or her professional activity, which together determines innovative behavior. The most important factor influencing the management of innovative activity of personnel is the organizational culture, which orients employees toward achieving the organizational goal. In accordance with the corporate strategy to increase the organization’s innovative activity, the corporate culture forms an innovatively active employee.
3
Results
Thus, an innovatively active employee is an employee who has the necessary level of professional competence, is motivated to develop in his or her professional field, and is motivated to be active in his or her work, possessing personal initiative. The main elements of the organizational and managerial environment that ensure the innovative activity of personnel are the system of labor relations in the organization (Belkin et al. 2018), the corporate training system, and organizational culture (Fig. 1). Low innovative activity is due to employees’ resistance to changes resulting from the introduction of innovations. Resistance is due to the rationality of human behavior. Employees resist change because they fear that change will worsen their current situation. The most common reason for resistance is that the employee does not see the personal benefits of change. Resistance occurs when inappropriate (non-working) motivators are applied to an employee.
Improvement of the Personnel Innovation Activity Management …
Organizational and managerial Corporate training system Personal characteristics Professional competence
Personal initiative
Innovative active worker Motivation for labor (work) activity
Organizational culture
Motivation for training and development in the professional field
Labor relations system
Fig. 1 The main elements of a socially oriented system for managing innovation activity. Source Developed by the authors
To ensure the social orientation of the innovation management system in developing innovation activity motivators, it is proposed to determine the motivational types of employees based on the typological model of labor motivation (Gerchikov 2012). The model shows the relationship between the employee’s motivational type and his expected work behavior. The model identifies five motivational types that can be combined (Table 1). However, one of the types is predominant. Table 1 Characteristics of motivational types
347
It is necessary to distinguish between achievement and avoidance motivation. Achievement motivation is based on the desire to receive rewards for work. Achievement motivation is possessed by professional, instrumental, mastery, and patriotic motivational types of workers. Avoidance motivation is based on the desire to avoid punishment for failure to complete tasks. The types of motivation determine the expected work behavior and the employee’s attitude to the performance of work duties. Each motivational type of employee is characterized by its own characteristics of behavior and reaction to the impact of the organizational and managerial environment. Employees with an instrumental type of motivation will conscientiously fulfill their labor duties if they are satisfied with the system of labor relations. Employees of the professional type need the opportunity for personal growth and self-realization. For employees of the patriotic type, it is important to recognize their participation in the organization’s achievements. Employees with economic motivation are effective when they are given independence in making decisions to achieve results. Employees of the avoidant motivational type need a sense of care from management, equality among colleagues, and a lack of high responsibility for the work performed. In the typological model for employees of each motivational type, their own assessments of the expected personal initiative, attitudes toward learning, and the most effective types of incentives are formulated.
Type of work motivation
Characteristics of the motivational type
Instrumental
For this type of workers, work is only a source of income or other benefits. The workers will work with maximum efficiency in any job if the work is fair and highly (in the worker’s understanding) paid
Professional
Employees of this type appreciate the work’s content and the opportunity to express themselves. They prefer independence in work and quickly become the best specialist in their professional field in the organization
Patriotic
Employees of this type are characterized by the conviction that they need for the organization; they are interested in implementing an important business for the organization. Public recognition of participation in common achievements is important
Master’s
Employees of this type perform work with maximum efficiency and take full responsibility for its performance. Simultaneously, they do not require high pay, interesting tasks, or additional instructions and control. An employee with this type of motivation is effective in terms of the cost-benefit ratio. However, they do not tolerate orders and punishments
Avoidant
Employees of this type have weak motivation and low qualifications. They try to avoid work associated with personal responsibility and have a negative attitude toward the activity of others. However, they are ready to perform work that others will not agree to. These employees agree to low wages, subject to their equality with others, and are highly dependent on the leader
Source Compiled by the authors based on Consulting company “Project ‘Delphi’” (2023) and Gerchikov (2012)
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Table 2 Correlation between the types of labor motivation of an employee and the conditions for innovative activity Type of work motivation
Personal initiative
Motivation for training and development in professional activities
Preferred types of incentives for labor activity
Instrumental
Only with special stimulation
Neutral or passive negative
All types of monetary incentives
Professional
High
Active, positive
Content, conditions, and organization of work, career, and development
Patriotic
High
Positive
All kinds of moral stimulation
Master’s
High within operation/function
Neutral negative
Participation in co-ownership and management
Avoidant
Absent
Active-negative
All types of natural incentives, negative (punishment, threats of job loss), concern for the employee
Source Compiled by the authors based on Consulting company “Project ‘Delphi’” (2023), Gerchikov (2012), and Rebrov (2009)
Table 2 shows the conditions for ensuring the innovative activity of employees in accordance with their motivational type. According to the model, the most active innovative behavior should be expected from workers with a professional and patriotic type of motivation because they have high initiative and are motivated to learn. Representatives of the instrumental type can show innovative activity under special managerial influences. It is also worth considering its negative attitude toward learning. Employees with a master type of motivation will be innovatively active within the existing competencies. Employees with avoidant motivation lack initiative; they have a negative attitude toward any type of training and, accordingly, cannot be innovatively active. The types of motivation and recommendations for stimulating various types of employees proposed by V. I. Gerchikov are consonant with the system for categorizing employees into A-players, B-players, and C-players proposed by the ex-general director of General Electric J. Welch (Welch and Byrne 2013). Employees belonging to the A-players are resultsoriented professionals who share organizational values. B-players are professional and responsible employees, but their personal benefit prevails over organizational values. C-players are usually bad at their jobs; they are also destroyers of organizational ideology. A-players (according to J. Welch) correspond to the avoidant motivational type (according to V. I. Gerchikov) (Oblomova 2020). Determining the motivational type of employees allows us to analyze the motivational structure of an organization, subdivision, and group to ensure its innovative activity. To form the organizational and managerial environment, it is important to determine the prevailing motivational type in the organization. D. Welch believes that the motivational structure of employees of an effective organization should consist of
20% of A-players, 70% of B-players, and 10% of C-players (Clennett 2020). Exceeding the number of C-players above 10% can change the corporate culture’s orientation from innovation-active to innovation-passive.
4
Conclusion
An innovatively active employee must have the necessary level of professional competence, be proactive, and have motivation for development in their professional field and motivation for work activity. To ensure these conditions, creating a socially oriented organizational and managerial environment is necessary. The use of a typological model makes it possible to consider the peculiarities of motivation for labor activity, motivation for training and professional development, and the likelihood of showing initiative among employees of different motivational types. Knowledge of the features of the type of motivation makes it possible to develop the most effective motivational incentives for each employee in the interest of increasing innovative activity.
References Balabanova ES, Efendiev AG, Gogoleva AS, Sorokin PS (2019) Innovative employee behavior: Evidence from domestic and foreign-owned companies operating in Russia. Vestnik of Saint Petersburg Univ Sociol 12(3):215–233. https://doi.org/10.21638/ spbu12.2019.301 Belkin VN, Belkina NA, Antonova OA (2018) Innovative activity of business managers as a condition for modernization of regional labor potential. Econ Region 14(4):1327–1340. https://doi.org/10. 17059/2018-4-21 Clennett R (2020) Jack Welch: how he justified his famous “fire the bottom 10%”. Ross Clennett: High Performance Recruitment Coach. Retrieved from https://rossclennett.com/2020/03/jack-
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welch-how-he-justified-his-famous-fire-the-bottom-10/. Accessed 11 Apr 2023 Consulting company “Project “Delphi” (n.d.) Typological model of motivation by V. I. Gerchikov. Retrieved from https://www.delfy. biz/methods/tmg. Accessed 11 Apr 2023 Gerchikov VI (2012) Human resources management: an employee in the company’s most effective resource: a study guide. INFRA-M, Moscow Gorshenin V, Kildibaeva Yu (2014) The factors of innovativeness of the personnel in a rapidly changing competitive environment. Bull South Ural State Univ Ser “Economics and Management” 8(4):95– 101 Kuvshinov MS, Vinogradova TA (2021) Material incentives for innovative activity of enterprise personnel based on key productivity indicators of innovation. Russ J Indu Econ 14(4):463–470. https://doi.org/10.17073/2072-1633-2021-4-463-470 Kuzina LS, Nefedova AI (2021) Innovation in the workplace. Science Technologies Innovation. Retrieved from Retrieved from https:// issek.hse.ru/news/495649678.html. Accessed 13 Apr 2023 Matyugina EG, Emelyanova NV, Vnukov GS (2020) Innovative activity of personnel: conditions of formation, features, component relationship. Rev Econ Law Sociol 1:31–36 Oblomova O (2020) How do employees influence the success of a company? Retrieved from 4brain https://4brain.ru/blog/kaksotrudniki-vlijajut-na-uspeh-kompanii/. Accessed 13 Apr 2023 Omarova AA, Pelymskaya IS (2021) Innovation activity of employees of industrial enterprises. In: Spring days of science: collection of papers of the international conference of students and young
scientists. Ural Federal University, Yekaterinburg, pp 260–264. Retrieved from http://hdl.handle.net/10995/99828. Accessed 11 Apr 2023 Rebrov AV (2009) Influence of the structure of motivation of workers of modern Russian organizations on the effectiveness of their work (Synopsis of Dissertation of Candidate of Sociological Sciences). HSE University, Moscow Sorokin SB, Neznahina EL, Zinchenko AG, Kornilov DA, Lykova ES (2022) Integration mechanism of educational process management based on value chain and life cycle model. In: Popkova EG (eds) Imitation market modeling in digital economy: game theoretic approaches. Springer, Cham, pp 611–619. https://doi.org/10.1007/ 978-3-030-93244-2_67 Vey VYu, Gorshkova YaS (2019) Personnel innovative activity as a basis for implementing effective management of high-tech enterprises. J Creative Econ 13(2):341–356. https://doi.org/10.18334/ce. 13.2.39961 Vinogradova TA, Kuvshinov MS (2021) Implementation of the assessment and analysis of the level of employees’ innovation behavior. Bull South Ural State Univ Ser Econ Manage 15(2):132– 139. https://doi.org/10.14529/em210215 Welch J, Byrne JA (2013) Jack: straight from the gut (Yu. E. Kornilovich Transl from English). Mann, Ivanov and Ferber, Moscow (Original work published 2001) Zavyalova EK, Tsybova VS, Yakhontova ES (2014) The relationship of human resource management and innovative activity of the Russian companies. Russ Manage J 12(3):3–32
International Experience in Reducing Ecological Footprints at the Level of Regional and National Economies and Groups of Countries
Prospects for Developing Public–Private Partnerships in Regions with Limited Potential for Self-development Zhanna A. Zakharova, Maxim V. Suraev, Zoya I. Bakhur, and Vyacheslav Fomin
Abstract
1
Paper aims to identify promising areas for developing public–private partnership mechanisms, mainly concession agreements. To achieve this goal, paper considers Central Russia regions development and the conditions under which public–private partnerships can increase the potential of their self-development. Based on practical experience in implementing concession agreements, the authors identified objective and institutional factors of projects. Paper concludes that public–private partnerships development in economic activities that integrate the internal resource capabilities is hindered by objective (e.g., the insufficient mass of entrepreneurs, limited investment opportunities at the expense of own capital, low level of return on assets and business capital, and low market capacity) and institutional factors (e.g., difficulties of making adjustments because of changes in environmental factors, institutional changes, insufficient development of tools to stimulate PPP at the regional level, overestimated criteria for obtaining resources of development institutions, etc.). Keywords
Region Self-development potential Public–private partnership projects Objective factors Institutional environment Concession agreements JEL Classification
O18
R22
Z. A. Zakharova (&) Nizhny Novgorod State Technical University Named after R.E. Alekseev, Nizhny Novgorod, Russia e-mail: [email protected] M. V. Suraev Z. I. Bakhur V. Fomin Vladimir Branch of the Russian Presidential Academy of National Economy and Public Administration, Vladimir, Russia
Introduction
Current trends (challenges) of Russia’s economic development (e.g., crisis, pandemic, digitalization, and sanctions) pose the need for the regions to solve problems that make it possible to maintain the stability of these territories for national development provided for by Presidential Decrees of 2012, 2018, and 2020 and directly for their own regional development (Buchwald 2018; Zubarevich 2021). Simultaneously, these goals fulfillment should be carried out at the expense of the existing potential of their own resource capabilities and income sources that support sustainable expanded reproduction of the gross regional product (Tatarkin and Doroshenko 2009; Tatarkin and Tatarkin 2009). However, recent research shows that only 40% of regions have total revenues that ensure the participation of these regions (to varying degrees) in solving national tasks. In 60% of regions, revenue sources do not make it possible to balance the revenues and expenditures of their budgets (Lavrovsky and Goryushkina 2021). Additionally, in some regions, increased powers (e.g., implementation of tasks within national projects) in the absence of sustainable sources of replenishment of regional budget revenues provoke an increase in government borrowing (e.g., the Kostroma Region). In other regions their self-development is reduced (e.g., the Vladimir Region) (Zakharova and Bogatyrev 2020). Self-development responds (actively adapts) to contemporary challenges (trends) of the economy based on a motivational (economic) mechanism by maximizing the use of internal sources and development factors (endogenous factors) in the presence of a developed institutional environment that sets the general vector of development (the policy of the Federal Center) (Zakharova and Bogatyrev 2018). Simultaneously, we see the resolution of this contradiction in stimulating public–private partnership precisely that integrate regional resource capabilities, in the development of which public authorities experience a shortage of resources (e.g., financial, labor, and entrepreneurial) and
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_59
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business experiences a lack of resources (e.g., long-term capital and innovation), low motivation (e.g., low level of profitability and low market capacity), and high risks of economic activity, which requires various kinds of guarantees from the country. Approximately 3.1 thousand concession agreements were in force in Russia at the beginning of 2020. 70% of total investment commitment are private investments. Concession agreements are used in 81 regions to boost investment activity. Ten regions concluded more than 100 concession agreements. Most concessions (94%) are concluded at the municipal level, of which 93% are in the utility and energy sectors. The average term of concession agreements is 12 years. The term of concession agreements in the transport sector is 21 years. Public–private partnership potential at the regional level is used insufficiently (Zeldner 2018). Investment obligations account for only 1.6% of the country’s GDP (for comparison, 6.6% in the UK, 6.9% in Australia and New Zealand, and 8.1% in Canada). The research aims to identify areas promising for public– private partnership mechanisms and factors contributing concession agreements effective implementation.
2
Methodology
Using the information of the PPP Development Center, the work compares projects implemented. Simultaneously, using political, economic, and institutional approach, the authors identified objective factors (prerequisites) that contributed to the implementation of concession agreements and considered the institutional environment created by state policy for the concession agreements effectiveness. When studying the conditions of entrepreneurial activity and identifying objective factors, authors used normative and positive methods. Individual indicators are compared with normative ones.
3
Results
The study of the conditions of entrepreneurial activity in Center Russia regions we highlighted several factors (objective, institutional) that contribute to and hinder the concession development and effective implementation. First of all, we highlighted demand by society (enterprises and population) for products and services of certain types of economic activity. However, it can often be an increased unsatisfied market demand for project services. Most projects based on public–private partnerships (Moscow) are implemented mainly in the social sector. Simultaneously, these regions have barriers in transport infrastructure construction (e.g., toll roads due to the high concentration of economic activity and the deterioration of
traffic quality), information and communication, utility and energy, etc. (Zakharova and Suraev 2022). Concession agreements are largely concluded in the field of utility and energy infrastructure, mainly in territories where there is a more stable demand for the services of these enterprises. However, there is a demand for such projects (Table 1). According to Table 1, under current economic conditions (post-pandemic realia, crisis, and sanctions) there are activities whose goods and services are in demand by the population (e.g., rest, treatment, recuperation, demand for housing, consumption of fish products, etc.). Additionally, resource potential is available in the development of these areas (i.e., undeveloped agricultural and forest lands, the presence of picturesque places, recreation, water resources, etc.). However, organizations working in these types of economic activities cannot achieve sustainable dynamics due to insufficient development of advanced and high-quality infrastructure, the need to use advanced technologies and a high-risk component. Public authorities are trying to solve many of these problems through program measures. However, this does not make it possible to sufficiently stimulate the satisfaction of internal social needs (in fish farming products, forestry industry, and recreation) and extra-regional queries (Association “PPP Development Center” 2017). In addition to the demand for the main objective factors, several features of the implementation of projects based on concession agreements in different types of regions should be highlighted (Table 2). In self-developing regions PPP projects is most in demand in sector of intangible production and having a predominantly social connotation. Most projects are implemented in the engineering and energy infrastructure sectors, which is more economic in nature and is characteristic of the regions’ specialization (i.e., the Vladimir, Yaroslavl, and Kostroma regions have a production profile). Since enterprises in self-developing regions have their own capital and a capacious market, most projects are implemented at the expense of private financing. In regions with limited self-development potential, projects are implemented by combining budgetary resources, funds from development institutions, and private investment. Projects of small, medium, and large scale are implemented in the conditions of self-developing regions. Multi-scale does not work (i.e., only small and medium-scale projects are being implemented) due to the lack of significant capital, the high capital intensity of large-scale projects. Simultaneously, many objective restrictions in the implementation of projects based on concessions in different types of regions can be removed by working out a high-quality institutional environment and, accordingly, choosing the necessary concession model. Important
Prospects for Developing Public–Private Partnerships … Table 1 Concessions prerequisites, promising directions in various spheres
355
Application areas
Background
Promising areas of projects
Tourist and recreational sphere
• The tourism sector largely depends on the amount of expenses that can be spent by households to pay for services. Digitalization of the economy contributes to this • Synergetic effect of business activity growth due to related industries • Investment attractiveness based on increased demand from the population of megacities
• Reconstruction projects • Tourism projects of (i.e., rehabilitation, automobile, environmental, etc.) • Projects for the construction of hotels and collective accommodation facilities
Housing construction
• High level of demand for housing • Savings of the population, which make it possible to buy housing at their expense and at the expense of a mortgage • Support of the level of demand from buyers (subsidies to certain categories of citizens) • The growth of the percentage of emergency housing stock creates a deferred demand for housing construction • Growing demand for high-quality social infrastructure • Reduction of mortgage lending rates
• Projects for the construction of apartments
Recycling
• Consumption of the population growth in cities and municipalities of the regions • Removal of municipal solid waste from Moscow to landfills of nearby regions (Vladimir, Ivanovo, Yaroslavl, and other regions)
• Construction projects of large waste processing plants and complexes
Utility and energy infrastructure
• The growing demand for energy capacities, especially in those territories where industrial production and housing construction are being developed • The need to increase resource conservation and energy efficiency imposes requirements on advanced technologies and new environmentally friendly equipment [the use of renewable energy sources (peat briquettes, pellets, etc.)] • Guaranteed demand for the services of municipal infrastructure enterprises and public funds received in the form of utility bills (maintaining demand for low-income groups of the population)
• Projects for constructing solid fuel boilers using local renewable energy sources (peat, wood processing waste (wood chips and pellets)), and transferring inefficient fuel oil and coal boilers to these energy sources
Transport infrastructure
• Insufficient level of development of the automobile and air transport in terms of passenger movement and cargo delivery • Unsatisfied demand of the population of the regions of Vladimir, part of the Ivanovo and Novgorod regions in affordable flights
• The project of construction of a bypass road of the city of Ivanovo • Airport construction project in the city of Vladimir
Source Compiled by the authors
institutional factor contributing to the conclusion and effective implementation of concession agreements is a welldeveloped regulatory framework.
Additional financial instruments are used (e.g., subsidies for repayment of interest rates on loans, subsidies for reimbursement of costs associated with project design, etc.), criteria are being developed, financial support measures are
356 Table 2 Features of the implementation of projects based on concessions
Z. A. Zakharova et al. Factor
A self-developing region
A region with limited self-development potential
Demand by society (enterprises, population) for products and services
The social connotation is mainly in the sector of intangible production, transport infrastructure, and information and communication infrastructure
The economic connotation in the engineering and energy infrastructure sectors
The presence of a critical mass of entrepreneurship
The optimal number of entrepreneurs
Insufficient mass of entrepreneurs
The presence of equity in the business and the level of profitability
There are opportunities for investing at the expense of own capital
Limited investment opportunities
Availability of multi-scale capital
The optimal ratio of large, medium, and small businesses, which makes it possible to implement the multi-scale principle (i.e., large, medium, and small-scale projects are being implemented)
Only medium- and small-scale projects are being implemented
Opportunities to activate the innovative potential
There are opportunities (i.e., technologies and financial resources) to activate the innovative potential
Limited opportunities to activate the innovative potential
Availability of opportunities to expand the sales market or diversify economic activities
In view of the significant capacious sales market, there are opportunities for diversification of economic activities
There are opportunities to expand the sales market in territories with population of at least 250 thousand people
Source Compiled by the authors
being provided, and methodological developments are being carried out. However, there is a problematic issue in the form of the insufficient perception by the subjects of these relations of institutional changes, possibly due to objective circumstances. For example, not every budget of a region (e.g., Kostroma and Ivanovo Regions) or municipality can afford to establish a concession fee, which creates difficulties in implementing concession agreements in various fields. In this connection, it is expedient in the legislation to provide a list of conditions under which adjustments can be made to the implemented contractual relations. Another problematic point is the non-compliance of the objects’ structure, for example, utilities and energy facilities with territorial development plans of regions or municipalities (chaotic buildings). Thus, finalizing the regulatory framework and territorial development plans is necessary. Their main function is to perform mainly organizational and informational support of the implementation of concession agreements. An important institutional factor is a possibility of attracting funds from development institutions (e.g., Vnesheconombank Group of Companies, funds from the Housing and Communal Services Reform Fund) and federal budget funds (e.g., budget infrastructure loans, etc.). Most often, main criteria for obtaining federal support are a socially and economically sound investment project, the project’s cost, the creation of a cluster, and the funds
attracted from extra-budgetary sources in an amount not less than the level of support (except for the Housing and Communal Services Reform Fund, where the volume of private investment can be at least 20% of the project cost). However, given the objective processes, it is quite difficult to count on such a ratio of budget and private investments. Another institutional factor is sectoral strategies that give a certain orientation to business in the areas planned to be developed in the region. It should be noted that such a popular issue as the accumulation of solid household waste and its processing is practically not reflected in the current development strategies.
4
Conclusion
Results: • Based on the analysis of a considerable number of PPP projects and concession agreements, authors identified actors contributing to conclusion and effective implementation of concessions. Objective factors contributing to the effective implementation of PPP projects include the following: – Demand by society (enterprises, population) in the products and services of the project;
Prospects for Developing Public–Private Partnerships …
– The presence of a “critical mass” of interested entrepreneurship in the implementation of such projects; – The availability of own resources (capital) of the “critical mass of entrepreneurship”; – The readiness of the business of enterprises in the region for innovation; – The possibility of expanding the sales market or diversifying economic activities; – High budget security. • The institutional factors that ensure the effective implementation of concession agreements are as follows: – Changes in the regulatory framework; – Adequate perception by the authorities of the region or municipality of institutional changes; – The creation of coordinating bodies (performing mainly organizational and informational functions); – The possibility of attracting resources from development institutions (e.g., Vnesheconombank Group), etc. • PPP in economic activities that integrate the internal resource capabilities is constrained by objective (e.g., the insufficient mass of entrepreneurs, limited investment opportunities, and low market capacity) and institutional factors (e.g., difficulties of making adjustments to PPP projects as a result of changes in environmental factors, insufficient perception by the state authorities of the region of institutional changes, insufficient development of tools to stimulate PPP at the regional level, inflated criteria for obtaining resources of development institutions, etc.) • Considering the above factors, many promising areas of development of concession agreements require the joint efforts of the regional authorities of the Vladimir, Ivanovo, Yaroslavl, and Kostroma Regions (integration approach) in implementing large-scale projects (e.g., cleaning the bottom of the Klyazma and Volga rivers, reservoirs for breeding river and lake fish, passenger transportation by water transport and the creation of tourist routes along the Volga river, the development of certain types of tourism (e.g., rehabilitation, automobile, environmental, etc.), the construction of large waste processing plants and complexes). Simultaneously, institutional environment determines the effective implementation of projects based on concessions. Recommendations: – Making adjustments as a result of changes in environmental factors (the establishment in the legislation of a list of conditions under which it is possible to change the concession agreement);
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– The establishment of adequate criteria for obtaining the resources of development institutions (e.g., the volume of private investment is not less than 20% of the project cost); – Additional mechanisms to encourage private investors to participate in projects with the state (targeted tax policy, the introduction of one or two taxes instead of the general taxation system following the example of China in the organization of special economic zones); – Finalizing plans and strategies for the development of territories, etc.
References Association “PPP Development Center” (2017) Private investment in the infrastructure of the Moscow region—partnership in action: Analytical research. The current state and prospects for the use of public-private partnership mechanisms in the Moscow region. Association “PPP Development Center”, Moscow Buchwald EM (2018) “Self-development” of regions and the regulation priorities of the spatial structure of the economy of Russia. Federalism 2:32–45 Lavrovsky BL, Goryushkina EA (2021) Fiscal federalism in Russia: To be or not to be? Voprosy Ekonomiki [Issues of Economics] 1:143– 160. https://doi.org/10.32609/0042-8736-2021-1-143-160 Tatarkin AI, Doroshenko SV (2009) Institute of strategic planning in the conditions of formation of self-developing regions. Soc Econ 11–12:100–120 Tatarkin AI, Tatarkin DA (2009) Self-developing regions: macroeconomic conditions of formation and mechanisms of functioning. Sci Expert 1–2:32–54 Zakharova ZA, Bogatyrev V (2018) Interconnection between the categories of region’s self-development and population’s living standards. In: Popkova EG (ed) The impact of information on modern humans. Springer, Cham, pp 440–447. https://doi.org/ 10.1007/978-3-319-75383-6_56 Zakharova ZA, Bogatyrev VV (2020) Economic contradictions in the regions that lack the capacity of self-development. In: Popkova EG (ed) Growth poles of the global economy: Emergence, changes and future perspectives. Springer, Cham, pp 637–646. https://doi.org/ 10.1007/978-3-030-15160-7_64 Zakharova ZA, Suraev MV (2022) Challenges and opportunities for development of the tourist and recreational sphere of the region in the context of the COVID-19 pandemic. Reg Econ Theor Pract 20 (4):775–796. https://doi.org/10.24891/re.20.4.775 Zeldner AG (2018) Public-private partnership as an instrument of regional development policy. In: Buchwald EM (ed) The policy of regional development in modern Russia: priorities, institutions, tools. IE RAS, Moscow, pp 208–227 Zubarevich NV (2021) Influence the pandemic at socio-economic development and regional budgets. Issues Econ Theor 1:48–60. https://doi.org/10.24411/2587-7666-2021-10104
Contemporary Approaches to Managing Investment Flows in the Regional Economy Elena A. Bratukhina, Eleonora V. Nagovitsyna, and Dmitry S. Tusin
Abstract
JEL Classification
In the current conditions, serious problems of economic transformation are changing the vector of investment flows. Thus, the issue of improving investment management is incredibly relevant. Investing in production is characterized by a long payback period and, therefore, requires competent investment management to control the resources attracted to a particular sector of the economy. A number of unstable factors affected the development of the global economy and made future economic prospects even more confusing. The research aims to explain which contemporary approaches and trends in investment flow management are most relevant for the socio-economic development of Russian regions. The methodology used in this research is to assess the world experience and practice of managing investment flows. The theoretical understanding of investment management is clarified, and economic instruments for attracting investments to real sectors of the economy of the country’s regions are determined. The authors analyzed a step-by-step mechanism for managing investment flows to create production agglomerations. Since this is a fairly extensive study, it cannot cover all factors in detail. Nevertheless, this research explains in detail the factors that are of great importance for Russian regions. The research results can be applied to the correct and effective planning of investment activities in Russian regions.
E22
Keywords
Investment Innovation Investment flow management Industrial park Industrial agglomeration Investment activity Investment potential Technopark Technological park
E. A. Bratukhina (&) E. V. Nagovitsyna D. S. Tusin Vyatka State University, Kirov, Russia e-mail: [email protected]
1
Introduction
In recent years, the scale of Russian enterprises has reached a certain growth. Looking ahead, companies need to use diversified investments to achieve breakthroughs in new and emerging areas. To achieve quality growth in a complex and changing internal and external environment, enterprises need to create mature investment management capabilities that meet their needs to improve the efficiency and effectiveness of investments. In recent years, the Russian Federation paid much attention to finding innovative ways of economic development, expanding the processes of cooperation between various economic entities, and localizing production as key factors for the formation of a sustainable economic system of the country (Panteleev et al. 2023; Popkova et al. 2021a, 2021b; Rodygina 2022). One of the tools for activating the process of investment activity of industrial enterprises is the development of industrial production based on industrial parks. Creating an industrial park requires a huge amount of time. Despite this, due to organizational and economic features (e.g., geographical concentration, depth of technological and intercompany interaction, infrastructural conditions and outsourcing of non-production functions, tax and administrative preferences, opportunities to reduce transaction costs, etc.), industrial parks create competitive advantages for investors over traditional production formats. In turn, this has all prerequisites for increasing the investment flow to a promising business entity. In 2021, Russia took first place in investing in such parks. In total, there are 369 industrial parks in 67 regions of Russia; this figure is growing annually. The total investment volume
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_60
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Fig. 1 Existing and newly created industrial parks.Zhuravsky et al. 2022 Source Compiled by the authors based on ()
of resident companies exceeded 1.5 trillion rubles at the end of 2021. Simultaneously, Russian investments amounted to 709 billion rubles, and foreign investments— 798 billion rubles (Zhuravsky et al. 2022). Figure 1 shows the dynamics of the creation of industrial parks in Russia over nine years. Figure 1 demonstrates exceptionally positive dynamics over the course of nine years in the creation and development of technology parks. The average annual growth rate of industrial estates in 2021 was 21%, which is higher than in a number of commercial real estate sectors. Figure 2 shows the volume of investments made by residents of existing industrial parks for nine years.
According to Fig. 2, from 2013 to 2021, the volume of investments in production and infrastructure is only growing yearly. According to the most conservative estimates, investments made by residents of operating industrial parks in 2021 amounted to at least 133 billion rubles, which is higher than the same indicator in 2020. This fact suggests that industrial parks are becoming sustainable institutional units capable of becoming a center of attraction for investments, innovations, transfer of technologies, and competencies. Therefore, the process of planning an industrial park makes it possible to manage investment flows and direct them in the right direction of the regional economy, developing certain industries.
Fig. 2 The volume of investments in the production and infrastructure of industrial parks.Zhuravsky et al. 2022 Source Compiled by the author based on ()
Contemporary Approaches to Managing Investment Flows in the Regional Economy
2
Materials and Method
The analysis of recent economic literature testifies to the insufficient knowledge of the problem posed, especially in Russian economic practice. Most domestic and foreign studies pay attention only to certain elements of investment flow management. These studies often do not address the issues of managing the creation of industrial clusters. For the emergence and successful functioning of industrial zones, it is very important to pay attention to the following aspects:
parks will have to restore supply chains, acting as the assembly point of the falling-out production processes. In the next few years, we can safely predict an increase in demand for industrial areas with ready-made industrial infrastructure. The mechanism for managing the creation of such an infrastructure will increase the potential and capabilities of enterprises, which will have a positive impact on the entire socio-economic development of the regions.
3 (1) Business plan, including a preliminary feasibility study; (2) Preliminary determination of the list of potential territories for suitable industrial park sites; (3) Conducting a detailed analysis of the possibility of implementing the project at the selected sites; (4) Management of the financial structure and agreements with investors. It is impossible to properly build the implementation of the investment process without competent management. Management is the process of organizing, directing, and controlling resources that belong to a legal entity in a specific environment to achieve established organizational goals (Almazán et al. 2017). Control is understood as a set of methods and forms by which the influence on the process is carried out (Ford 2019). An analysis of contemporary scientific literature has shown that existing approaches to a greater extent consider industrial parks as a way to increase the investment attractiveness of the region (Borovskikh 2019), a way of innovative development of the territory (Lyapina et al. 2019; Mironov 2018; Nikitaeva and Andryushchenko 2018), and a way to increase the competitiveness of resident enterprises (Tikhonov et al. 2016). The authors also consider the efficient functioning of industrial parks (Burtseva and Savelyev 2017). The papers do not pay attention to the management process along the entire path of the emergence and operation of such projects. Thus, we believe it is extremely important to assign a certain role to manage investment flows in planning and creating industrial parks. Under the influence of ongoing events in the global economy, industrial parks will play a significant role in developing the country’s regions. Due to the challenging global situation, Russia is now on the path to new industrialization aimed at accelerated import substitution. Over the past decade, all enterprises localized in Russia have already faced an unprecedented shortage of components. Finding new local suppliers is the priority for most industries. Individual components and technological operations fall out of global industrial cooperation chains and must be immediately replaced either by supplies from new jurisdictions or local resources. Industrial
361
Results
The current economic and political conditions increase the uncertainty of the business activities of many enterprises (Nagovitsyna and Tusin 2022). Therefore, after analyzing the experience of creating industrial parks in Russia and other countries of the world, it can be concluded that the successful creation and operation of business districts requires careful planning and control. The planning of the industrial park includes several stages: 1. The first stage is the preparation of the business case, including informing the project sponsor about the basic needs of the investor and the corresponding recommendations for the cost of the technopark through a preliminary feasibility study; 2. The second stage is based on a preliminary feasibility study, a list of potential sites suitable for the location of the park should be determined; 3. The third stage is a detailed project feasibility study for the selected site should be made, including marketing, environmental and social due diligence, site master plan and financial modeling, etc.; 4. The fourth stage is when agreements are concluded with the relevant financial institutions and sponsors (Gallego 2013). Industrial parks provide a potentially valuable tool for governments to help them overcome some of the constraints they face in raising capital. Parks can bring attractive financial returns for the creators of the industrial park and corporate clients. However, the park’s construction must be justified to realize these goals. Thus, the business case should explain why there is a need for industrial land with facilities and the benefits of the technology park project after its completion. The business case must be completed at the very beginning of the project implementation. A wellthought-out business case should include the opportunities and risks of the project and be able to convincingly explain the main principles of the project in detail. In many developing countries, the business rationale and positioning of industrial parks are often not given sufficient attention; as a
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result of which, the services provided by industrial parks cannot adequately meet the needs of enterprises. It is extremely important that the projects of industrial parks are market-oriented and can meet the real investment needs and needs of investors. The construction of a park in this region will be feasible only when there is a strong demand in the region’s economy for industrial land from potential investors and the location of the industrial site meets the expectations of these companies. Demand forecasting is an assessment of a future event in the present, which includes the following elements: 1. Assessment of the structure of investment and trade at the global, national, and regional levels. This analysis can shed light on the sectors that will make up the bulk of investment, as well as identify emerging trends; 2. Assessment of the sources of comparative advantages of a particular region where the industrial zone will be located and of the Federal District as a whole. Such sources can be the competence and cost of the labor force, proximity to target markets, climate, natural resource potential, etc.; 3. Obtaining direct feedback from investors to identify the most important decision-making criteria for the location and object of investment in the industrial zone; 4. Setting benchmarks by comparing the industrial park with other available sites inside and outside the market and then correctly compare the choice of investors in this context; 5. The government’s decision-making process aims to ensure the necessary political and social consensus for the construction of technology parks through official policy on industrial clusters, as well as the necessary political commitment, platform, resources, and support (Farole 2011). A good business case, successful planning, and development and operation of a business district require the consideration of the views of many stakeholders, as well as integrating the work of various specialists. Early identification and contact with various stakeholders can ensure that the widest possible range of opinions is considered to determine and plan the appropriate characteristics of industrial park projects. A common understanding of the objectives of an investment project and the interaction, intersection, and integration of inputs from various stakeholders is essential to a good business case and subsequent final overarching planning process. A pre-feasibility study provides a broad perspective for evaluating the overall potential of industrial park projects and helps decision-makers assess whether a project is viable. Data on labor supply, consumer income levels, competitors,
E. A. Bratukhina et al.
economic activity levels, major sectors of the economy, population, infrastructure, and legal framework are important indicators for assessing the potential sustainability of industrial parks. Topics covered by pre-feasibility studies can serve as guidance for the following areas: location and site selection in the context of appropriate market suitability, market (industry) identification and forecasting, financial analysis, policy analysis and stakeholder analysis, guarantees, economic forecast, and others. Site selection is an important step in cluster design as it is related to industry suitability, level of demand, project cost, and overall project success potential. The location must be selected within a wide geographic area in accordance with certain general market indicators and requirements. It is necessary to pay attention to the distance from the district, regional center, and cost. Some parameters are critical. For example, industrial parks are trying to be located in close proximity to transport hubs, especially due to the presence of several modes of transport. Similarly, if the park’s activities are not primarily export-oriented, there should be a market adjacent to the industrial park with high demand for the park’s products and services, which is usually very important for the success of the park’s businesses and the long-term commercial viability of the park. Depending on the industry, the significance of the parameters will be different. The location of a heavy industry requires a rich and cost-effective energy supply. In contrast, labor-intensive industries are usually attracted to areas with low wages, while capital-intensive industries are often attracted to areas with a highly skilled labor force. It should be noted that the qualifications of the labor force depend on the level of objects of education and the effectiveness of vocational training courses. To ensure the right location and the highest likelihood of the success of an industrial park, regardless of the industry specifics, managers need to select the optimal industrial site. The choice usually depends on the factors listed in Table 1. Before deciding on creating and financing an industrial park, managers need to conduct a comprehensive and reliable technical and economic analysis of a specific object and make clear justifying conclusions. Various criteria have a vital influence on whether the industrial park project should eventually be continued (Harding and Javorcik 2011). These components include comprehensive and detailed identification of the target market and demand forecasting, large-scale and phased master planning, technical design, cost–benefit analysis of the project, management system analysis, assessment of infrastructure requirements and development plans inside and outside the park, financial modeling and structural planning, as well as economic modeling impacts, etc. The feasibility study consists of the following main elements:
Contemporary Approaches to Managing Investment Flows in the Regional Economy Table 1 Matrix of standard site selection parameters
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No
Key success factors
Evaluation parameters
1
Status of land
• • • • •
2
Connection
• Distance of the relevant section from the nearest railway line, motorway, airport, etc. • Remoteness from large settlements and distribution centers
3
Raw materials and supplies
• Availability of raw materials associated with a regional and domestic business; or ease of getting it
4
Physical characteristics
• • • • •
Area, shape, and location of the plot Landscape Deposits of fossils Soil type Other
5
Environmental and social factors
• • • •
Environmental standards and recommendations for a specific facility Building codes and recommendations for a specific object Availability of labor force and its characteristics Support and commitment from local authorities and civil society groups
6
Business considerations
• • • • •
Commercial location of the region availability of auxiliary facilities and services availability of competitive facilities operating costs and utilities Favorable business environment
Availability Land price Land ownership rights Time of purchase Other
Source Compiled by the author based on the source (Memedovic 2018)
1. A business plan that includes determining the location of the technopark, logistics positioning (supported by relevant materials on the study of transport and logistics economics), positioning of market competition and differentiation factors (supported by comparative analysis), the proposed provision of services and facilities, any investment incentives provided by law (supported by regulatory studies, accompanying materials, which discuss market failures and appropriate response policies), as well as its main pricing strategies for land and services for users of the industrial park. This element also includes the preparation of conceptual master plans, redevelopment plans, utility plans, and infrastructure plans (Harding and Javorcik 2012). 2. Technical assessment and planning explaining the physical conditions of the site, geographical and technical characteristics of the project, as well as relevant engineering, construction, and transport management plans. 3. Market analysis of potential and phased investors, including identification of industries that can stimulate investment and park occupancy, competitors and degree of competition, key investment and production trends in the target industry, expected investment volume and investment growth timeframe, sales forecasts (including exports) and potential markets, as well as related land employment projections that affect the revenue model of the project. This element also includes identifying the specific means of promoting marketing activities,
potential market threats, and various methods to overcome such threats. 4. Financial modeling and forecasting of required funds, including operating costs, revenues, and return on investment. Also, there should be an analysis of available sources of capital, an analysis of financial stability and mechanisms for the distribution of financial risks by stakeholders. However, many factors can affect the overall cost of the project. 5. An economic impact study covering the competitiveness of the “common value chain”; the expected level of investments and their segmentation (by sectors, sources), employment and fiscal impact; the impact on national food security policy and rural transformation. 6. Environmental and social assessment. This aspect evaluates the project’s impact on the ecosystem, residents, property, and social services of the community and suggests appropriate management and restoration plans or compensation if necessary. The environmental assessment covers basic data on the soil and hydrological characteristics of the area. From a social welfare perspective, assessment and planning should also include appropriate social and environmental management strategies (Memedovic 2018). The overall goal of the feasibility study is to finally decide whether the construction of a technology park in the selected area is feasible based on objective evidence.
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Nowadays, there is a fairly large number of domestic and foreign software products for calculating investment projects. The most popular product worldwide is the COMFAR computer program, which can be purchased at the UNIDO office. This program is a kind of universal tool for describing and calculating all main stages of investment design. COMFAR is currently available in 19 languages, including Russian, and is accompanied by manuals, training materials, and related software for project development and preparation. COMFAR also includes specialized modules such as the Clean Development Mechanism (CDM) and Environmental Management and Accounting (EMA) (HophmayerTokich 2006). It is also worth noting such Russian software products for calculating investment projects as “Investor” and “Alt-Invest.” “Investor” allows the user to solve almost the entire complex of investment design tasks while the program has a fairly simple interface, which facilitates the process of using this program. “Alt-Invest” makes it possible to obtain basic financial reports, performance indicators of investment investments, and a conclusion on the viability of a project or an entire portfolio. After completing all preliminary stages, the management enters into agreements with the relevant financial institutions and sponsors to translate the business project into reality.
4
Conclusion
Thus, industrial parks are currently one of the most costeffective ways to attract investment. Localization of the production of various companies within the limited territory of the production site contributes to the development of integration and cooperation processes between residents. The model of industrial parks organization reveals reserves for reducing production costs and saving resources and provides opportunities for long-term cooperation while increasing the innovation potential and competitiveness of individual companies and the region (Hyung-gon 2016). The accumulated positive experience of creating industrial parks in Russia and other countries makes it possible to assert the need to continue directing investment flows into their development. This will make it possible to intensify the development of the scientific base, the training of highly qualified personnel, attract foreign direct investment, and increase the number of high-tech enterprises, which will ensure a balance, proportionality, and complexity of the socio-economic development of the territory (Belenov et al. 2013). Even though industrial parks open up many economic opportunities, they also involve many risks, whether from the point of view of planning, development, or operation, suspension of business, and environmental or social
consequences. With high uncertainty of the external environment and instability in the macro system, management needs to manage risks effectively (Bratukhina et al. 2022). Additionally, the industrial park is a complex system consisting of many users who interact with each other, communities, and various regulatory authorities and are obliged to comply with many agreements, rules, and standards. The industrial park is a complex mechanism that attracts huge investment flows. Therefore, the issue of managing the creation of industrial parks is extremely important. The research shows that it is important to carefully study all stages of planning an industrial park before the start of its construction and approach this issue systematically, using the maximum amount of information resources to minimize the risks that may arise during the construction, operation, and management of an industrial park.
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Management Innovation and Economic Development of Chinese Universities in the Information Age Yanyan Zhang , Elena I. Lazareva , Elena A. Repina , Wenjun Li , and Ziqiang Zhao
Abstract
1
The twenty-first century is the new double-E (Education and Economy) information age. Higher education is an important guarantee to improve the quality and skills of human capital. It is an important means to change labor-intensive and extensive production. The research aims to discover the problems in the process of university management innovation and explore the optimization method of Chinese university management innovation and development. This paper uses literature, historical, comparative, and data analysis as guidance research methods. Through the analysis of the current situation and problems of China’s university management and economic development in the information age, the authors conclude that the innovation of university education management is to put forward suggestions in the aspects of university education fund investment, talent optimization, government power, and responsibility innovation and establish an information-sharing platform between universities and enterprises. Keywords
Management innovation Universities Economic development Information age Countermeasures JEL Classification
O150
O470
I230
I250
Y. Zhang (&) E. I. Lazareva E. A. Repina W. Li Z. Zhao Southern Federal University, Rostov-on-Don, Russia e-mail: [email protected] E. I. Lazareva e-mail: [email protected] E. A. Repina e-mail: [email protected] Z. Zhao e-mail: [email protected]
Introduction
China’s higher education has entered the stage of popularization. The 2035 goal for China’s modernization drive has been defined to build a high-quality education system, improve the quality of higher education, and put innovation in university education management at the core of the modernization drive. This paper tries to start from the theory, centering on the two endogenous factors affecting universities’ management innovation and economic development. It puts forward that the key point of university education management innovation is to establish an information-sharing platform between universities and enterprises. Such a platform breaks through the communication barriers between universities and enterprises and provides countermeasures in the aspects of university education investment, talent optimization, and government rights and responsibilities. The two-way causal relationship between education and economic growth occurs in all countries (Dhrifi et al. 2021). Whether secondary or higher education, education is vital to economic growth at the national level and is nonlinear (Marquez-Ramos and Mourelle 2019). Education can enhance consumption power, optimize consumption structure, and promote economic growth (Ning and Weifang 2005). Higher education can measure the country’s development level and potential and drive the deepening of the national economy (Anopchenko et al. 2021; Kruss et al. 2015). The development of educational management innovation has regenerative significance for economic development (Thomas et al. 2006). Under the background of information technology, economic development poses new challenges to higher education management. The trends and strategies of higher education management in the information age should be put forward from the dimensions of teaching, student, and entrepreneurial management (Guan 2019). In the process of innovation and economic development of university education management, it is an inevitable
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_61
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trend and way to innovate and develop university education, education management innovation, and education management system construction (Xie 2021).
2
Methods
This paper analyzes the status quo of Chinese university education management by data comparison analysis. From 2011 to 2021, China’s GDP, per capita GDP, and access to higher education accounted for more than half of the country’s total achievements in the 44 years of reform and opening up (1978–2021). China’s real GDP totals 1446 trillion yuan, of which the total of this decade is 852 trillion yuan, accounting for 58.9% (Sun 2012). The illiteracy rate dropped from 4.1% in 2010 to 2.7% in 2020. In 2022, the investment in education will be about 5.30 trillion yuan, accounting for 4.22% of the GDP (Mu 2019). In 2021, 10.013 million students were enrolled in undergraduate and vocational colleges. The country enrolls 1,176,500 graduate students (National Bureau of Statistics 2022). A total of 44.3 million students are enrolled in various forms of higher education. The Ministry of Education released its 2022 departmental budget, which totaled 543.599 billion yuan this year, an increase of more than 44.7 billion yuan over last year. Education accounted for the largest share of the budget, with more than 377.4 billion yuan, all of which went to higher education under the general education category, totaling 3500.7 billion yuan (China Commercial Industry Research Institute 2019). In the information age, with the rapid development of the economy, many new features have appeared in the educational management of Chinese universities. The authors use historical research methods, comparative research methods, and data analysis to present the problems of China’s educational management innovation. The research aims to find out the problems in the innovation of university education management and prepare for the countermeasures (Table 1).
Table 1 Results of national censuses and major sample surveys
From 2010 to 2020, the average length of schooling for people aged 15–64 in China increased by about 0.7 years. Compared with other populous countries in the world, China’s educational development is also roughly at a median level. Taking the education development history of various countries as a reference, the average number of years of schooling for China’s working-age population in 2020 is about the same as that of the USA in the 1950s. Science and Technology Development Center of the Ministry of Education released the China University Informatization Development Report, which showed that the average business system to realize data exchange and data sharing accounted for only 26% of the survey questionnaire of 1183 universities in China (Science and Technology Development Center of Ministry of Education 2020). Data sharing and liquidity are insufficient. The “information island” phenomenon is very common in colleges and universities. The number of systems connected to the data exchange and sharing center in the top universities is the highest, reaching 68 on average. This indicates that many non-traditional information systems have been included in the data exchange and sharing category. The number of data exchange and sharing centers in universities with first-class disciplines has reached 35 on average. The improvement space is mainly in the aspect of further expanding the ability of data application. The data exchange and sharing centers of other colleges and higher vocational colleges have only about 13 and 8 systems connected on average, which indicates that the problem of basic data sources has not been effectively solved, and the phenomenon of data island is still widespread. Figure 1 shows the 2022 departmental budget of universities directly under the Ministry of Education of China. The total budget amount is 589.04 billion yuan; 15 universities in total exceed 10 billion yuan. Tsinghua University led the way with 36.211 billion yuan. The second is Zhejiang University, with about 26.103 billion yuan (Ministry of Education of the People’s Republic of China 2022). From
Major countries in each region since the 1960s The average number of years of education from 15 to 64 and its growth 1960s
1970s
1980s
1990s
Twenty-first century
7.24
8.45
9.34
10.29
11.32
Years of education (year) Economically advanced countries Europe and Central Asia
6.70
8.20
9.42
10.53
11.44
Latin America and the Caribbean
4.31
5.37
6.56
7.58
8.78
East Asia and the Pacific
3.90
5.17
6.28
7.35
8.79
China
3.78
5.29
6.31
7.48
8.33
Middle East and North Africa
2.79
4.01
5.58
6.89
8.31
Source Developed by the authors
Management Innovation and Economic Development of Chinese …
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Fig. 1 2022 budget for universities directly under the Ministry of Education (100 million yuan). Source Developed by the authors based on Ministry of Education of the People’s Republic of China (2022)
a regional perspective, the average expenditure of universities in Western regions is significantly lower than that of universities in Eastern regions. Xi’an Jiaotong University (13.372 billion yuan, 9th place) was the only university with a budget of more than 10 billion yuan. The educational institution cost per student of higher education in the Eastern region has significantly exceeded that of the Western region, forming the apparent uneven distribution among regions. The uneven distribution of higher education funds restricts the overall efficiency of resource allocation in the long run and the steady and rapid progress of higher education cause.
3
Results
The following recommendations for innovation-oriented development of Chinese universities in the context of digitalization were substantiated as a result of the research: • To increase assistance to poor areas. In remote and sparsely populated rural and pastoral areas, it is necessary to provide different forms of help to local students, take necessary measures to improve the layout of schools, improve the conditions for running schools, improve the quality of education, eliminate the existing inequalities
that affect their access to education, and narrow the quality differences between regions. • To reduce the scientific research funds of universities in Eastern and Western China, increasing investment in higher education in the Western region and in provinces with poor economic strength. Education in Western China is mainly the government’s responsibility. Thus, the government should implement an unbalanced investment strategy for education in Western China from the educational financial system, educational investment system, and investment mode and determine the proportion of regular investment for education in Western China through the form of legislation. • To optimize and improve teacher training. Universities try to provide opportunities and formulate and implement a series of management systems from a strategic perspective to encourage and support teachers to further their studies through a series of training and development projects to shorten the training cycle of universities to meet the demand for talent in the data industry. It is necessary to update their knowledge system, learn new ways to think about problems, and constantly enhance their professional level of teaching and management. • To open up the closed loop between enterprises and universities, promoting economic development. It is necessary to open up the communication barriers between
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Fig. 2 School-enterprise information sharing platform. Source Developed by the authors
Sharing data
Big data talent training platform
Cloud platform
teaching method
Software environment
feedback
Enterprise
Universities
practice platform
enterprises and universities and improve the depth and breadth of the integration of schools and enterprises. Enterprises have industrial technological resources; universities have talent and intellectual resources. It is critically important to open up the closed-loop information channel between enterprises and universities and establish a school-enterprise information-sharing platform (Fig. 2).
4
Server
Discussion
Under the environment of information education, the educational management of universities has new characteristics and development direction. This paper tries to analyze the status quo of Chinese university management and economic development and finds the phenomenon of data island in the innovation process of university education management in the information age due to the differences in regional economic development, the offside of government resource allocation, and the unequal distribution of university education funds. The corresponding countermeasures and suggestions are given. The analyzed long-term and short-term impacts of higher education management on China’s economy, as well as the important role of higher education management in sustainable economic development, make it possible to propose three policy suggestions: increasing
Students
Employment and inauguration
policy support, implementing the strategy of regionalization of higher education, and establishing university science and technology parks (Wang and Wang 2018). Economic and higher education development present apparent time series and can be determined to have a certain correlation (Wang 2019). Local governments should help the local economy and higher education achieve win–win development (Zou and Li 2018).
5
Conclusion
This paper theoretically collects a considerable number of problems that appear between the innovation of higher education management and economic development in the process of the Chinese information age. The authors explore the internal relationship between the mode of economic development and the mode of higher education development and find out the influencing factors of the mode of higher education development in China to make higher education the driving factor of economic development. From the three dimensions of the interaction between the government, universities, and society, the authors put forward the theoretical basis, which is a new attempt at basic research. However, due to the complexity of economic development in the post-pandemic period, the innovation and methods of university education management are still being explored.
Management Innovation and Economic Development of Chinese …
Due to the special needs of the topic selection, the research perspective and methods adopted in this study mainly stay at the medium and macro levels; the methods of logical reasoning and theoretical demonstration are mainly used to clarify the whole issue. The in-depth demonstration of the impact of big data on the development of higher education with empirical cases is still insufficient, which is also the space for further expansion of this research.
References Anopchenko TY, Lazareva EI, Murzin AD, Revunov RV, Roshchina EV (2021) Diversification of regulatory powers in social, environmental, and economic relations as a factor for stimulating regional development. In: Bogoviz AV (ed) The challenge of sustainability in agricultural systems. Springer, Cham, Switzerland, pp 561–570. https://doi.org/10.1007/978-3-030-72110-7_62 China Commercial Industry Research Institute (2019) Research report on market prospects and investment opportunities of China’s education industry (2019–2024). China Bus Inf Netw 16(7):22–31 Dhrifi A, Alnahdi S, Jaziri R (2021) The causal links among economic growth, education and health: evidence from developed and developing countries. J Knowl Econ 12:1477–1493. https://doi. org/10.1007/s13132-020-00678-6 Guan H (2019) Research on university education management and innovation practice. Metallurgical Industry Press, Shandong, China Kruss G, McGrath S, Petersen I, Gastrow M (2015) Higher education and economic development: the importance of building technological capabilities. Int J Educ Dev 43(7):22–31. https://doi.org/10. 1016/j.ijedudev.2015.04.011 Marquez-Ramos L, Mourelle E (2019) Education and economic growth: an empirical analysis of nonlinearities. Appl Econ Anal 27(79):21–45. https://doi.org/10.1108/AEA-06-2019-0005
371 Ministry of Education of the People’s Republic of China (2022) Ministry of Education departmental budget for 2022. Retrieved from http://www.moe.gov.cn/srcsite/A05/s7499/202203/ t20220324_610512.html. Accessed 24 Mar 2022 Mu X (2019) China focus: China issues plans to modernize education. Xinhua News Agency. Retrieved from https://www.xinhuanet.com/ english/2019-02/23/c_137845216.htm. Accessed 30 Mar 2023 National Bureau of Statistics (2022) China statistical abstract 2022. China Statistics Press, Beijing, China Ning K, Weifang M (2005) Institutional innovation of higher education resource allocation in China’s economic transformation. High Educ Res 26(6):1–8 Science and Technology Development Center of Ministry of Education (2020) China university informatization development report. https:// www.cahe.edu.cn/site/content/14965.html. Accessed 20 May 2020 Sun X (2012) The national medium- and long-term educational reform and development guideline (2010–2020): expectations, strategies, and significance. Chin Educ Soc 45(3):9–22 Thomas B, Packham G, Miller C (2006) Technological innovation, entrepreneurship, higher education and economic regeneration in Wales: a policy study. Ind High Educ 20(6):433–440. https://doi. org/10.5367/000000006779882922 Wang D (2019) Research on the relationship between China’s economic development and higher education development and innovation. High Educ Expl 15(3):49–52 Wang S, Wang Y (2018) Contribution of educational management in innovative schools to economic development. J Beijing Technol Bus Univ (Soc Sci Ed) 10(3):89–92 Xie F (2021) Innovation of university education management and economic development. Economic Management Press, Beijing, China Zou Y, Li L (2018) Analysis on the degree of coordinated development between higher education and regional economy. High Educ Expl 20(6):433–440
Online Education in BRICS Countries: New Opportunities for Post-pandemic Development Sergey V. Ponomarev , Ekaterina E. Mirgorod , Anna F. Beilina , Alexandra A. Chudaeva , and Artur A. Maksaev
Abstract
Keywords
Paper studies features of the development of online education sector in the BRICS countries in pre-pandemic and pandemic dynamics, assess its prospects as a strategic direction of the alliance, and propose measures for improvement. This research aims to reveal the state of the online education sector in the BRICS countries in pre-pandemic and pandemic dynamics, assess its prospects as a strategic direction of the alliance, and propose measures for improvement. Paper investigates literacy rates in the BRICS countries and justifies the need to find tools to improve literacy and human development. The research analyzes the implementation of online primary, secondary, tertiary, and vocational education programs in the BRICS countries based on available international data. The authors assess the dynamics of the online education sector in the BRICS. Paper concludes acceleration of digitalization processes and online education in all BRICS countries. The research proposes measures aimed at mitigating the problems of low literacy in the BRICS countries through online educational platforms.
Online education Higher education BRICS Pandemic University Distance learning format Primary and secondary education
S. V. Ponomarev (&) Kaluga Branch of the Financial University Under the Government of the Russian Federation, Kaluga, Russia e-mail: [email protected] E. E. Mirgorod Plekhanov Russian University of Economics, Moscow, Russia e-mail: [email protected] A. F. Beilina Voronezh State Pedagogical University, Voronezh, Russia e-mail: [email protected] A. A. Chudaeva Samara State University of Economics, Samara, Russia e-mail: [email protected] A. A. Maksaev Krasnodar Cooperative Institute (Branch) of Russian University of Cooperation, Krasnodar, Russia e-mail: [email protected]
JEL Classification
I24
1
I25
I28
O33
Introduction
In 2020, the pandemic resulted in a 4.3% contraction of the global economy and a decline in consumer spending, while spending on online services increased (Kituyi 2021). With the simultaneous growth of e-commerce by 25% in March 2020, the online education sector has begun to grow vigorously. The primary, secondary, higher, and vocational education sectors, as well as all sorts of open educational courses, became available in the online environment. On the one hand, for most educational institutions, it was a forced measure implemented as an emergency aimed at maintaining the normal flow of the educational process during self-isolation. On the other hand, educational organizations that had digital platforms in the pre-pandemic times began to use them actively and benefited from earlier investments in their development. Another part of educational organizations, which did not have the technical capabilities to carry out educational activities remotely, took the path of accelerated digitalization, made a breakthrough, and secured a competitive position in the educational market. These changes and accelerated digitalization have allowed developed and developing countries to align their positions as the centers of the global leadership shift. In this aspect, it is appropriate to consider the situation with online education in the BRICS countries. This alliance of countries is now seen as the main competitor of the G7 alliance of developed
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_62
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countries, which annually strengthens its position (Karpunina et al. 2020). An examination of the strategic guidelines for creating a unified educational digital platform for improving literacy is necessary to assess the prospects of the BRICS alliance on the world stage.
(primary and secondary online education, higher education, and vocational education) using information technology. Methods include content analysis of open sources, graphic and systemic methods.
3 2
Results
Methodology
The topic of online education has become increasingly relevant as countries’ digital potential has strengthened. The expansion of the digital infrastructure, the increased access of users to the Internet, and the increase in the range of digital educational platforms have made online education an accessible and convenient way of acquiring knowledge in many countries (Beketova and Demina 2018; Maksaev et al. 2020; Yuan and Powell 2013). In order for all actors of educational activities to be able to maximize the benefits of educational programs online, certain requirements must be met, including the technical equipment of educational institutions, professional and digital competence of teachers, capabilities of students, and uninterrupted operation of digital platforms (Karpunina et al. 2022; Yakovleva et al. 2020). Researchers consider expanding the global impact of the BRICS alliance through the formation of a unified online educational platform to address the challenge of improving literacy and human capital building (Drobot et al. 2021; Karpunina et al. 2021; Sadovnichiy et al. 2014). This research aims to reveal the state of the online education sector in the BRICS countries in pre-pandemic and pandemic dynamics, assess its prospects as a strategic direction of the alliance, and propose measures for improvement. Objectives: 1. Online education programs in the BRICS countries comparation; 2. To evaluate the development of the sector, including during the pandemic; 3. To propose a set of measures to ensure the future development of the online education sector. Research object is a set of online education programs implemented in the BRICS countries at all educational levels Table 1 BRICS human development index
An important trend in the educational policy of the BRICS countries is the integration of the educational systems of the member states (BRICS 2014; Fedchuk 2015) (Table 1). Table 1 suggests that the human development index in all BRICS countries will grow steadily in 2015–2021. Russia is the group’s leader (0.822 in 2021), while India is the outsider (0.633 in 2021). If we compare this indicator with the group of developed countries, all BRICS countries fall far behind (e.g., the HDI in Switzerland is 0.962, in Germany— 0.942, in the UK—0.929, and in the USA—0.921) (UNDP 2022). The data presented also show a decrease in the HDI during the pandemic in all countries except China. Let us consider the indicators of literacy in the BRICS countries (Table 2). China has a large share of its adult population with less than secondary education (3.4 times the OECD average), while Russia has the lowest share of such adults among all BRICS countries (4%). Tertiary education in the BRICS countries as a whole is lower than in the OECD countries, with the highest value (17%) in Brazil and the lowest in Russia and China (3% each). In 2019, the literacy of adults aged 25–34 was higher, with 46% of the population in Brazil, 33% in Russia, and 77% in South Africa (the OECD average of 40%). Thus, the BRICS countries are characterized by the problem of low literacy rates and lagging behind the developed countries. The project “ProInfo” aims to provide public schools with computer equipment, communications, and free software and develop network infrastructure (Stan-1 [Blog] 2011). In 2009, the number of laboratories and educational institutions equipped with Linux systems was 53,000, providing access to the Internet and group content for 52 million students and creating opportunities for regional educational centers to improve the technical skills of teachers. During the pandemic, Brazil was active in the use of national integrated digital educational platforms created to use online learning
Country
2015
2016
2017
2018
2019
2020
2021
Brazil
0.744
0.755
0.754
0.759
0.761
0.765
0.754
Russia
0.778
0.798
0.804
0.816
0.824
0.824
0.822
India
0.586
0.609
0.624
0.640
0.647
0.645
0.633
China
0.719
0.727
0.738
0.752
0.758
0.761
0.768
South Africa
0.658
0.666
0.666
0.699
0.705
0.709
0.705
Source Compiled by the authors based on Nonews (2020)
Online Education in BRICS Countries: New Opportunities … Table 2 BRICS literacy indicators, 2019
375
Country
Adults aged 25– 64 with less than a high school education, %
Adults aged 25–64 with above-average education, %
Adults aged 25–64 with a tertiary education, %
Adults aged 25–34 with upper secondary or post-secondary education, %
Adults aged 25–34 with tertiary education, %
Brazil
14
35
17
46
21
4
18
3
33
62
11
19
10
–
–
Russia India China
47
15
3
–
–
South Africa
12
59
5
77
6
OECD average
14
39
18
40
45
Source Compiled by the authors based on OECD (2020)
technologies in schools: PAR Platforma Educational, Plurall, E-docente, and PROFS (Sukhanova 2021). Of Brazil’s 2000 universities, most are private and offer partial online courses and full distance learning programs. To encourage the population to pursue education, the Ministry of Education is implementing measures to expand higher education programs in distance mode. In 2018, about 9.37 million people were enrolled in distance learning courses in Brazil (an increase of 18 times compared to 2009), of which about 2.36 million people participated in accredited courses, 324,300 people were enrolled in distance learning courses for teacher degrees, and 3,088,000 people for MBA programs (Statista 2021). According to Statista, 52% of online learners mastered at least one free distance learning course in 2019; 24% of all undergraduate students were enrolled in online learning (Statista 2020). As a rule, higher education institutions in Brazil do not invest financial resources in the creation of a national platform but use developed global digital Massive Open Online Courses (MOOC) platforms in the educational process of their universities (Semenova et al. 2018). Online educational technologies are also actively used for vocational education and retraining, including the activities of online learning centers as platforms for people in rural and remote areas to access higher education, SP Stars programs (for selecting startups with subsequent training at large high-tech companies), and online courses for professional development through entrepreneurial value. Russia lags far behind European countries in terms of the number of citizens who use the Internet for educational purposes. In 2019, the Internet for education was used by 3% of the population in Russia, 21% in Finland, 20% in Iceland, 19% in the UK, 18% in Sweden, and 16% in the USA and Norway each. At that, the greater part of such users fell into the age group of 16–24 years old (9.53%). There is also a greater activity of women receiving distance education (Leven and Suslov 2020). Until 2020 in Russia distance technology was used in the form of electronic educational
resources for periodic homeschooling, primarily for children with disabilities; in other words, it was not widespread (Kim 2020). From 2016 to 2019, online services in the early childhood education sector increased from $8 million to $44.1 million, with the overall market for elementary and secondary education services declining. During the same period, the general secondary education sector grew by 12%, and online education increased from 0% in 2016 to 1.5% in 2019 ($133.8 million) (Ruchkov 2022). The growth of the online segment of general secondary education occurred due to an increase in the volume of private capital, changes in market demand, and the flow of students from public to private educational institutions, including during the pandemic. The reasons for the sector’s growth include a general increase in demand for distance and homeschooling, including due to the increased mobility of the population and the increased popularity of the distance format of work among employees and employers. The greatest coverage of online learning technologies is inherent. Between 2016 and 2019, educational programs total number delivered using e-learning increased by 30%, while the number of programs delivered using distance technologies increased by 37%, and the segment’s volume increased from $90 million to $246 million (Ministry of Education and Science of the Russian Federation 2023). Increased competition among higher education institutions in the struggle for potential applicants pushes educational organizations to expand training formats further and improve online services. In 2020–2021, the range of educational programs implemented has significantly expanded. This was facilitated by the requirements of social distance and the limitation of face-to-face communication (Leven and Suslov 2020) (Fig. 1). Education market in India driver is a booming population of 1.4 billion people, of whom 360 million (26%) are under the age of 14. However, school education, which has become a fundamental right (up to 14 years old), is more solid compared to higher education (Ruchkov 2022).
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1936924
2000000 1500000 1000000
534437
500000
40019
0
74225
The number of students enrolled in including with the use of higher education programs using exclusively distance technologies distance learning technologies 2019
2020
Fig. 1 Dynamics online tertiary students in Russia, people, 2019–2020. Source Compiled by the authors based on Ministry of Education and Science of the Russian Federation (2023)
Additionally, India’s growing wealth has stimulated active investment in children’s education. The pandemic has forced private and public schools to increase the number of available online resources, which has opened new opportunities for EdTech startups in the Indian market (Singh 2020). Thanks to this trend, India came second after the USA (with $8.3 billion in investment) in terms of venture capital raised in online education ($3.8 billion) at the end of 2021 (Bashlykov 2022). Under the influence of the pandemic, the following segments of the online education market in India have emerged by 2021: • 28.6% of the Indian education market is online and hybrid exam preparation solutions (represented by digital platforms Aakash, Toppr, Vedantu, and Unacademy); • 23.8% of the market is tutoring (Whitehat Jr, BrightChamps, and Cuemath); • 22.3% of the market is content for self-study as part of the school curriculum using specially developed teaching materials (LEAD school and Extramarks); • 19.2% of the market is additional professional education, products, and services for higher education, online certification and advanced training, and online MBA (upGrad, Emeritus, and Great Learning);
Fig. 2 Changes in the sectoral structure of online education in China, %, 2012–2018. Source Compiled by the authors based on IResearch Global Group (2021)
70 60 50 40 30 20 10 0
• 6% of the market is the infrastructure and support (learning management systems, resource planning, tuition payment installment services, and course designers represented by Teachmint and Classplus) (Bashlykov 2022). Meanwhile, the full implementation of online learning at the higher education level is hampered by low technical equipment of students (75.6% of respondents do not have a laptop to participate in online learning), the lack of general access to broadband Internet (79.5% of respondents do not have it), and the lack of stable mobile Internet (64.3% of respondents do not have it) (Singh 2020). According to iResearch, the volume of the market of online education in China reached $37.4 billion in 2020, increasing by 35.5%. The online education sector in China has a distinct structure: primary and secondary online education sector, higher online education sector, and professional online education sector (Fig. 2). Before 2016, online technologies were mainly used for adult education. In 2017, with the development of live-streaming technologies, new channels for the monetization of online education emerged. Between 2012 and 2018, there was a noticeable redistribution of forces between sectors, with a 95% increase in the primary and secondary
61.8
9
53.3 25.7
17.6
Higher online education The primary and sector secondary online education sector 2012
2018
24.8
Vocational Education Sector
Online Education in BRICS Countries: New Opportunities …
education sector and a decline in the higher (− 13.8%) and vocational (− 3.5%) sectors. The COVID-19 pandemic largely contributed to this. Particularly, the switching to the online format of preschool education and K-12 education in 2020 led to a rise in their market share to 18% and 12%, respectively (Statista 2023). Increased demand and, consequently, supply for online education services in the vocational education sector has been generated. This rapid growth of China’s online education sector results from increased investment. By 2020, the amount of one investment event in the online education sector reached $25.8 million (IResearch Global Group 2020). Thanks to investments, Internet giants such as Tencent, ByteDance, and Baidu are steadily strengthening their position in the primary and secondary online education sector. As the pandemic gradually subsides, offline forms of education are strengthening (IResearch Global Group 2021). The availability and effectiveness of schooling in South Africa remain below global levels. South Africa only began adopting the international online learning trend in 2007. Simultaneously, the country is implementing projects for the digital transformation of education, which are gradually making online education a central element in South Africa’s educational policy: the country’s six largest distance education programs bring together 65,000 students taking various courses (Gusachek 2016). The country has networked with national and regional associations to advance distance education. For example, the Distance Education Association of Southern Africa (DEASA) provides online programs to enhance the skills of professional staff. Online learning in South Africa is primarily aimed specifically at those who are already qualified as teachers and already working as full-time teachers to sharpen their skills and learn new teaching tactics. Additionally, an additional requirement for applying for online training in South Africa is a National Senior Certificate (NSC) (50% teaching and learning language proficiency, 40% math proficiency, or 50% math literacy proficiency). South African students can take online courses through MOOCs by providers such as Coursera, edX, and FutureLearn; many students can take an online degree abroad (Erasmus+ 2023). The reasons holding back the growth of online education in South Africa are the lack of necessary technological infrastructure, the lack of funds for the digitalization of educational institutions, and the low qualifications of teachers (Gusachek 2016). Given the identified problems of low literacy in most BRICS countries, the development of online educational platforms in the BRICS space becomes an important measure to improve literacy. Recommended measures: 1. Digital infrastructure development;
of
the
BRICS
countries
377
2. The creation of the BRICS Digital Literacy School based on the participating countries with more developed scientific and educational potential, training strong teaching staff to implement online educational programs of higher and professional education; for example, Russia, which has a quality system of higher qualification training, can use its potential to improve the education and skills of specialists of other BRICS countries, including in a distance format; 3. The implementation of initiatives to popularize Internet technologies in education to unlock the potential of online learning for all categories of the population; 4. The formation of own educational strategies of BRICS countries with simultaneous integration of educational systems of member countries, including through the development of the BRICS Network University, implementation of joint open informational educational projects, and exchange of positive experiences between the alliance countries; 5. The launch of cross-education and double-degree programs within the BRICS integration association on the principle of European Erasmus Mundus, through a system of grants and scholarships for students, internships, and cross-national educational projects; 6. The creation of prerequisites for the development of the R&D sphere by increasing government spending on the development of the scientific sphere, as well as the creation of continuous vertical educational chains; 7. Building national cybersecurity systems and ensuring the safety of activities in the Internet space.
4
Conclusions
The research analyzed the potential of online education in the BRICS countries and examined the prerequisites for developing the integration association on the world stage in the context of creating a unified educational digital platform for improving literacy in the member states. The authors identified the problems of the BRICS countries that determine their lagging behind developed countries in the development of online education. The research provided a comparative analysis of the implemented online programs at all levels of education in the BRICS countries. The limitations hinder the full realization of the potential of online technologies in education. Changes in online education programs implementation during the pandemic were assessed. The authors substantiated the measures for the improvement of online educational platforms in the BRICS space as an important measure to improve literacy.
378
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Risks of Socio-economic Uncertainty for the Well-Being of the Population: The Experience of Developed and Developing Countries Ekaterina V. Lisova , Maryna V. Andryiashka , Natalia V. Ruzhanskaya , Olga V. Shugaeva , and Nadezhda V. Klimovskikh
Abstract
Keywords
The purpose of the study is to identify current risks of uncertainty for the well-being of the population of various countries and to form a set of effective measures to manage them and adapt economic systems to external and internal changes. The authors investigated the current risks of uncertainty of the external environment and their impact on the development of various countries. Moreover, the authors identified the corresponding risks for economic systems. The research analyzes the indicators of the well-being of the population of G7 and the Eurasian Economic Union countries in dynamics. The state policy measures that provided some of the studied countries with positive results of maintaining the level of well-being in 2020–2021 are systematized. The authors concluded that success in overcoming modern risks of socio-economic uncertainty does not always depend on the degree of economic development of the country and the high level of well-being of the population. The authors revealed a high differentiation in the effectiveness of state policy of different countries for the population’s well-being. A set of measures for risk management for the population’s welfare to adapt economic systems to external and internal changes is substantiated.
Population welfare Well-being Pandemic Socio-economic uncertainty Standard of living Poverty Unemployment
E. V. Lisova (&) Institute of Business Career, Moscow, Russia e-mail: [email protected] M. V. Andryiashka Baranovichi State University, Baranovichi, Belarus N. V. Ruzhanskaya The Komi Republican Academy of State Service and Administration (Krassa), Syktyvkar, Russia O. V. Shugaeva Southwest State University, Kursk, Russia N. V. Klimovskikh Kuban State Agrarian University named I.T. Trubilin, Krasnodar, Russia
JEL Classification
E21
1
E24
E61
O57
Introduction
The prospects of this study are defined by the growing socio-economic uncertainty for the economies at the current stage. We are talking about factors that increasingly lead to the development of economic and financial crises, which grow from local crises into global ones and become decisive for the economies of most countries. The growth of socio-economic uncertainty factors in 2020–2022 is associated with an unfavorable epidemic situation in the global environment due to the spread of COVID-19 infection (Karpunina et al. 2022). The crisis phenomena were in the labor market, social production, financial sphere, etc. (Shurchkova et al. 2022). The containment of economic and social activity during the pandemic led to an increase in social discontent and an aggravation of the conflict of interests of various social groups and countries. This was realized in the clashes of protesters within national states and in the form of military actions at the international level. The processes of redistribution of global leadership have strengthened. The ongoing processes do not pass without a trace. They undermine the established processes of life and affect the quality and standard of living of citizens, their material well-being, and social security; that is, they bring changes to the welfare system of the population (Kuzmenko et al. 2022). In times of crisis, the country becomes the institution that can neutralize emerging risks and stabilize
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_63
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the population’s well-being. An example is the successful practices of implemented measures in some developed and developing countries, which can be adapted by other countries, considering the growing wave of uncertainty risks.
2
Methodology
The category of the population’s welfare is closely related to the standard of living of citizens, their incomes, and the ability to meet basic needs (Bobkov and Gulyugina 2012; Ovcharova 2014). To systematize indicators that assess the level of the population’s well-being, researchers use various approaches. For example, Krinitcyna et al. (2016) suggest calculating the standard of living (well-being) based on the material standard of living, housing satisfaction, accessibility of medical care and accessibility of education. Nayden and Belousova (2018) propose a system of indicators for calculating the integral index of the population’s welfare. Researchers identify threats and risks that hinder the improvement of the population’s well-being (Crocker and Snow 2013; Giglio et al. 2015; Nikulina and Pecherkina 2017; Sitnikova and Kochetova 2015) and the government’s support in maintaining the population’s well-being (Kuklin and Chichkanov 2017). The purpose of the study is to identify current risks of uncertainty for the well-being of the population of various countries and to form a set of effective measures to manage them and adapt economic systems to external and internal changes. Table 1 Gross domestic product per capita in the G7 and EAEU countries, US dollars, constant prices, 2017–2020
Country/indicator
The research objectives: 1. To study the risks of the uncertainty of the external environment that determine the nature of the current development of the countries; 2. To identify changes in the population’s well-being in the G7 and the Eurasian Economic Union countries, considering the implemented state policy measures; 3. To substantiate a set of effective risk management measures for the population’s welfare to adapt economic systems to external and internal changes. The methods applied in this research include content analysis of open sources of information, economic analysis, comparison, graphical method, method of systematization, and morphological analysis.
3
Results
Let us analyze some of the consequences of the pandemic for developed (G7 countries) and developing countries (EAEU countries), reflected by indicators, considering the implemented economic policy measures and social transfers (Table 1). Table 1 shows the leading and outsider countries in terms of GDP per capita. These are the USA (in 2019—$62,478 per capita) and Germany ($53,874 per capita). The value of this indicator in 2019 in the developed G7 countries, on average, exceeds the same indicator in the EAEU countries
GDP per capita in 2017 (US dollars)
GDP per capita in 2018 (US dollars)
GDP per capita in 2019 (US dollars)
GDP per capita in 2020 (US dollars)
France
44,577
45,246
45,923
42,233
3.0
− 8.0
Germany
53,071
53,431
53,874
51,840
1.5
− 3.8
Italy
41,581
42,046
42,739
39,065
2.8
− 8.6
Japan
41,444
41,739
41,697
39,935
0.6
− 4.2
Change in GDP per capita, % (2019–2017)/ 2017 * 100
Change in GDP per capita, % (2020–2019)/ 2019 * 100
G7 countries
United Kingdom
46,372
46,878
47,362
41,984
2.1
− 11.4
USA
59,915
61,356
62,478
60,168
4.3
− 3.7
Canada
48,317
48,962
49,172
46,064
1.8
− 6.3
The countries of the Eurasian Economic Union (EAEU) Armenia
12,510
13,231
14,318
13,358
14.5
− 6.7
Belarus
18,356
18,975
19,279
19,226
5.0
− 0.3
Kazakhstan
24,863
25,544
26,352
25,362
5.9
− 3.8
Kyrgyzstan
5047
5133
5258
4726
4.2
− 10.1
25,926
26,656
27,255
26,584
5.1
− 2.5
Russia
Source Compiled by the authors based on World Bank (2022a)
Risks of Socio-economic Uncertainty for the Well-Being …
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by 2.7 times. Note that the growth rate of GDP per capita in a relatively stable period of 2017–2019 in all G7 and EAEU countries is different. However, there are positive dynamics everywhere. The maximum growth rate of GDP per capita in Armenia (14.5% from 2017 to 2019). In all EAEU countries, the growth rate during this period is higher than in the G7 countries (the maximum in the USA was 4.3% in 2017– 2019). The only exception is Japan, where in 2019, there was a decrease in this indicator compared to the previous year. The pandemic year 2020 has significantly changed the dynamics of GDP growth per capita. In all studied countries, without exception, there was a decrease in the indicator, which indicates a decrease in the well-being. Simultaneously, the largest reduction is typical for the UK (− 11.2% compared to 2019) and Kyrgyzstan (− 10.1%). Relative stability was demonstrated by Belarus, where GDP per capita remained virtually unchanged: $19,279 and $19,226 per capita in 2019 and 2020, respectively, or − 0.3%. Socio-economic uncertainty has changed the labor market and the ratio between the countries studied. First, we note the trend of record growth in unemployment. According to the International Labor Organization, by the end of 2020, the unemployment rate (of the population over 15 years old) in the world amounted to 6.5%, exceeding the previous peak value of the indicator in 2002–2003 during the oil market crisis in 6.2% by 0.3% (Center for Strategic Research 2021) (Table 2). Japan is implemented an effective employment policy. Germany follows. In Italy and France, the unemployment
rate is traditionally higher than in other G7 countries and even in some EAEU countries. Traditionally, Belarus and Russia had unemployment rates at the average European level. However, the pandemic has undermined the sustainability of labor markets in many countries. According to the values of the 2020 indicators, it is possible to judge a surge in unemployment in all countries, while the abnormal situation is typical for the USA (+ 4.4%), Canada (+ 3.8%), and Armenia (+ 2.9%). In 2021, there was a tendency to increase the stability of various forms of employment, as well as positive dynamics of the labor market development. According to experts, the reason for the decline in the unemployment rate in France was, first, a decrease in the number of people actively looking for work during the quarantine measures. Second, in France and Italy, employers used the potential of such a measure as short-term work, which is considered a more effective measure than unemployment insurance and universal transfers (Giupponi and Landais 2020; Lydon et al. 2019). In these countries, the number of employees with short-term contracts increased at the expense of managers, interns, and self-employed (Govorova 2020). In many European countries, short-term work schemes have proven to be effective as a flexible way for firms to retain the most highly qualified and productive employees with great value (Lydon et al. 2019). Additionally, Italy has implemented initiatives aimed at training and employment of young people within the framework of the European Pillar of Social Rights in terms of European Commission (2020). Japan is a country with minimal
Table 2 Dynamics of unemployment in the G7 and EAEU countries, % of the total workforce, 2017–2021 Country/indicator
Unemployment, total (% of the total labor force), 2017
Unemployment, total (% of the total labor force), 2018
Unemployment, total (% of the total labor force), 2019
Unemployment, total (% of the total labor force), 2020
Change (2020– 2019), p. p.
Unemployment, total (% of the total labor force), 2021
G7 countries France
9.4
9.0
8.4
8.0
− 0.4
8.1
Germany
3.8
3.4
3.1
3.8
+ 0.7
3.5
Italy
11.2
10.6
9.9
9.2
− 0.7
9.8
Japan
2.8
2.4
2.4
2.8
+ 0.4
2.8
United Kingdom
4.3
4.0
3.7
4.5
+ 0.8
4.5
USA
4.4
3.9
3.7
8.1
+ 4.4
5.5
Canada
6.3
5.8
5.7
9.5
+ 3.8
5.5
The countries of the Eurasian Economic Union (EAEU) Armenia
17.7
19.0
18.3
21.2
+ 2.9
20.9
Belarus
5.7
4.8
4.2
4.8
+ 0.6
4.7
Kazakhstan
4.9
4.8
4.8
4.9
+ 0.1
4.9
Kyrgyzstan
6.9
6.9
6.9
8.7
+ 1.8
9.1
Russia
5.2
4.8
4.5
5.6
+ 1.1
5.0
Source Compiled by the authors based on World Bank (2022b)
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unemployment and low fluctuations over a long period. Companies that proved that their cash flow was significantly deformed in Japan were granted a one-year deferral on tax payments and insurance deductions. More employers in Japan were able to receive reimbursement for the payment of benefits or partially paid leave to employees (Sinyavskaya 2020). Social insurance measures were provided for employees (deferral of tax payments and insurance deductions for one year, simplification of the application procedure and assessment of compliance with the program’s requirements, expansion of access to monetary sickness benefits for persons who are quarantined or diagnosed with coronavirus) and non-insurance social protection measures (e.g., speeding up the time for issuing loans for people who are experiencing current difficulties in providing living expenses, purchase of reusable masks by the government, and cash distribution) (Sinyavskaya 2020). In Kazakhstan, 201 thousand people (74% of able-bodied recipients of targeted social assistance) were involved in active measures to promote employment; 1.4 thousand families received preferential micro-loans to develop their businesses (Prime Minister of the Republic of Kazakhstan 2021). Instability in the labor market carries social and economic risks for the population’s well-being, primarily in terms of reducing the level of income and, therefore, reducing consumption and increasing poverty (Fig. 1). For example, in the USA, France, and the UK, household incomes per capita in 2019–2021 increased by 9.9%, 10.4%, and 12.7%, respectively. In the USA, this was the result of emergency government support for households (Lebedeva 2021). Additionally, the government adopted an emergency measures according to the law “Coronavirus Aid, Relief, and Economic Security Act 27.03.2020” to support the incomes of people who have become unemployed; their unemployment benefits have raised by 600 dollars per week (USLAW 2020). State support was also provided to small businesses within the framework of the payment protection program (Paycheck Protection Program). To solve the problem of falling disposable incomes of the population and reducing the tax burden for employers, the US government also used tax
Fig. 1 Household income per capita, 2019–2021. Source Compiled by the authors based on Ceicdata (2022)
40000 35000 30000 25000 20000 15000 10000 5000 0 France 2019 2020 2021
24557.7 25230.7 27122.5
tools—deferred tax payments, tax benefits, and suspension of payroll tax collection until the end of 2020 (SSA 2020). The UK government has implemented a salary compensation program for employees and self-employed citizens temporarily out of work due to coronavirus in the amount of up to 80% of salary but not more than 2.5 thousand pounds per month per employee. Thus, the government supported 9.3 million British citizens in the amount of 25 billion pounds (Yakovleva 2020). To prevent a drop in household incomes, Belarus took measures such as warehouse work, deferred payments, etc. Nevertheless, the effectiveness of these measures remains questionable because they can exacerbate the non-payment crisis in the long term. Due to falling incomes and the political crisis, there was an outflow of deposits from the banking system and an active purchase of foreign currency by the population. Economic factors have had a particularly strong impact on people with low incomes. The most important tool for supporting citizens in a difficult life situation is the system of state-targeted social assistance. In 2020, over 305 thousand people received it (+ 3.5% compared to 2019); the amount of assistance provided increased by 19% (National Legal Internet Portal of the Republic of Belarus 2021). During the period of part-time employment or downtime, employees were provided with an additional payment up to the minimum wage; enterprises received benefits and preferences from the state on tax and property relations; all social guarantees were preserved for employees during sick leave. The pandemic has pushed business structures to implement active measures for digitalization and the introduction of new flexible forms of employment (SATIO 2022). In Russia, the population has experienced a deterioration in their financial situation compared to the pre-pandemic period. This was manifested in a reduction in household income per capita in 2020 (− 8.3% in 2020 compared to 2019) (Soboleva and Sobolev 2021). The threshold of the real minimum wage in Russia in 2020 was increased; in 2021, it was gradually reduced. The governments of other countries also used a mechanism for regulating the size of the real minimum wage to support the most vulnerable segments of the population (Fig. 2).
United Kingdom 31255.6 33306.1 35231.6
USA
Belarus
Kyrgyzstan
Russia
33140.8 33740.8 36430
4144.2 3941.5 4288.7
977.46 872.8 942.5
6550.3 6003.4 6493.1
Risks of Socio-economic Uncertainty for the Well-Being … Fig. 2 Real minimum wage, US dollars, 2019–2021. Source Compiled by the authors based on OECD (2022b)
383
30000 25000 20000 15000 10000 5000 0 2019 2020 2021
France
Germany
22917.4 23081.6 22932.6
24889.4 24494.2 24531
Under the influence of the risks of socio-economic uncertainty in 2020, consumer spending of the population of all studied countries has changed. For example, Russia has seen the following changes: 1. The share of consumer spending on goods and services decreased to 76.1% in 2020 (for comparison: 80.8% in 2019), of which 59.0%—purchase of goods (− 0.8% compared to 2019) and 15.9%—payment for services (− 11.7% compared to 2019); 2. Payment of mandatory payments and contributions increased by 1% over the year and amounted to 15.5%; 3. Savings of the population increased 2.2 times during the year and amounted to 8.4% (4.1%—in bank deposits; 4.4%—in cash) (Ovcharova 2021). The increase in demand for cash was due to the increased anxiety of the population in the conditions of the pandemic and the desire to have funds at hand “just in case,” as well as the intensification of shadow trade in attempts to earn money under strict restrictions (Ovcharova 2021). In 2020, the US population spent $12.5 trillion on durable and non-food goods and services, which is 8% less than in 2019. The largest reduction occurred in the group of expensive goods (cars, recreation, recreation, real estate), while spending on food, household goods, financial services, and insurance increased (Mitterling et al. 2020). The pandemic provoked a sharp rise in the savings of the Japanese population: from 3.2% of household disposable income in 2019 to 12.1% in 2020. The same dynamics are observed in Canada: 2.04% in 2019 and 13.85% in 2020. In France, the savings rate of the population is traditionally higher than in Japan and Canada; in 2019, it was 9.21% of household disposable income, increasing to 15.46% in the pandemic year of 2020. In Italy, the population’s savings amounted to 2.4% of disposable income in 2019 and 10.26% in 2020 (OECD 2022a). Such dynamics of savings indicators suggests that the population perceives the uncertainty caused by the pandemic as a threat to their well-being; a high level of anxiety for their future forces the population to save rather than spend.
United Kingdom 22288 23360.8 23512.5
USA
Canada
Russia
15983.2 15788.4 15080
21784.8 22181.9 21956
5494.4 5715.1 5648.9
According to Statista, in 2020, the poverty rate in the USA was estimated at 11.5% (for comparison: 10.5% in the same period of 2019) in conditions of a high level of state support ($260 billion—benefits and $140 billion—unemployment assistance) (Statista 2022c). In 2020, the number of people with relatively low incomes in the UK increased to 11.73 million people (10.98 million people in 2019). According to Statista, in 2021, the number of relatively poor decreased to 10.46 million people (including housing costs —13.4 million people) (Statista 2022a). In Germany, in 2020, the number of people at risk of poverty reached 17.7 million (an up of 24.31%) (Statista 2022b). In Belarus, in 2020, the poverty level decreased by 1.1% compared to 2019. Under the influence of a decline in business activity during the pandemic and a reduction in real cash incomes in 2020, the poverty level in Russia rose by 1% and amounted to 13.3% (Starostina 2020). In Armenia, the general dynamics of poverty during the pandemic are as follows: in 2020, the poverty level increased by 1.2% compared to 2019 (Macrotrends 2023). The successful experience of European countries in organizing short-term contracts can be used to solve the problem of labor market imbalance and unemployment growth. This requires an appropriate adjustment of the regulatory regulation of the labor market. However, the expansion of flexible forms of employment is the most effective measure of adapting the labor market to conditions of high turbulence and socio-economic uncertainty. The use of digital tools (e.g., online labor exchanges and digital HR management technologies) can help reduce tension in the labor market. Changes in the labor market have led to the emergence of new niches and areas of employment. Thus, it is necessary to adjust the labor supply to changing conditions. This will be facilitated by the revision of educational programs of universities, the formation of regional educational clusters, and the building chains of training and professional retraining of personnel. The problem of income reduction should be solved not through a system of lump-sum payments to the population, which has a temporary effect, but through programs to stimulate entrepreneurial
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initiatives of the population from a strategic perspective. In this aspect, such measures as improving the financial literacy of the population, launching specialized educational programs, including in online format, as well as providing grants and subsidies when launching startups and state support for payment protection programs will be productive. The use of tax instruments to stimulate entrepreneurial activity should not be of a short-term nature. It should be a system of systemically applied tools at all stages of business development. In the period of pandemic, digital technologies have become a link for maintaining industrial relations, communication, education, and other life processes. To do this, it is needed to enhancing the digital infrastructure, emphasizing ensuring the digital security of all subjects. In developing countries, especially in Russia, it is necessary to stimulate the attraction of savings of the population to meet the investment needs of economic sectors.
4
Conclusions
The research gives an idea of the changes in the level of well-being of the population in the G7 and EAEU countries during the pandemic. The authors studied the indicators of the population’s well-being, as well as systemically presented public policy measures that provided the studied countries with positive results of maintaining the level of well-being in 2020–2021. It is concluded that restrictive measures imposed by governments of different countries, as well as social support for the population, had completely different results for the well-being. Economically developed countries have not always coped with the challenges of uncertainty. The authors proposed directions of adaptation of the positive experience of maintaining the level of the population’s well-being for countries that have not overcome the challenges of the pandemic.
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to the European Parliament, the council, the European economic and social committee and the committee of the regions (COM(2020) 276 final). Brussels, Belgium. Retrieved from https://eur-lex.europa. eu/legal-content/EN/TXT/HTML/?uri=CELEX:52020DC0276& from=EN. Accessed 12 Feb 2023 Giglio S, Kelly BT, Pruitt S (2015) Systemic risk and the macroeconomy: an empirical evaluation. NBER working paper 20963. National Bureau of Economic Research, Cambridge, MA. Retrieved from http://www.nber.org/papers/w20963.pdf. Accessed 12 Feb 2023 Giupponi G, Landais C (2020) Building effective short-time work schemes for the COVID-19 crisis. Institute for Fiscal Studies. Retrieved from https://ifs.org.uk/publications/building-effectiveshort-time-work-schemes-covid-19-crisis. Accessed 12 Feb 2023 Govorova N (2020) European labour market in pandemic reality. Sovrem Evr [Contemp Eur] 7:67–78 Karpunina EK, Moiseev SS, Bakalova TV (2022) Tools for strengthening the economic security of the state in the period of socio-economic and geopolitical instability. Drucker’s Bull 5(49): 24–34. https://doi.org/10.17213/2312-6469-2022-5-24-34 Krinitcyna ZV, Mikhailova TR, German MV (2016) Quality of life as the basis for achieving social welfare of the population. SHS Web Conf 28:01060. https://doi.org/10.1051/shsconf/20162801060 Kuklin AA, Chichkanov VP (eds) (2017) Complex methodology of diagnostics of the well-being of the individual and the territory of residence. Institute of Economics of the Ural Branch of the Russian Academy of Sciences, Yekaterinburg, Russia Kuzmenko NI, Lapushinskaya GK, Lisova EV, Tleptserukov MA, Karpunina EK (2022) Russian regions: assessment of factors of growth in the living standard and well-being of the population. In: Popkova EG, Sergi BS (eds) Geo-economy of the future. Springer, Cham, Switzerland, pp 619–639. https://doi.org/10.1007/978-3030-92303-7_66 Lebedeva LF (2021) US households incomes under pandemic. World Econ Int Relat 65(12):27–32. https://doi.org/10.20542/0131-22272021-65-12-27-32 Lydon R, Mathä T, Millard S (2019) Short-time work in the great recession: firm-level evidence from 20 EU countries. IZA J Labor Policy 8:2. https://doi.org/10.1186/s40173-019-0107-2 Macrotrends (2023). Armenia poverty rate 1999–2023. Retrieved from https://www.macrotrends.net/countries/ARM/armenia/poverty-rate. Accessed 12 Feb 2023 Mitterling T, Tomass N, Wu K (2020) The decline and recovery of consumer spending in the US. Brooking, 14 Dec. Retrieved from https://www.brookings.edu/blog/future-development/2020/12/14/ the-decline-and-recovery-of-consumer-spending-in-the-us/. Accessed 12 Feb 2023 National Legal Internet Portal of the Republic of Belarus (2021) Igor Petrishenko: in 2020 there will be an increase in the level of income of the population—the main indicator of the well-being of citizens. Retrieved from https://pravo.by/novosti/obshchestvennopoliticheskie-i-v-oblasti-prava/2021/mart/60448/. Accessed 12 Feb 2023 Nayden SN, Belousova AV (2018) Methodological tools to assess the population welfare: interregional comparison. Econ Reg 14(1): 53–68. https://doi.org/10.17059/2018-1-5 Nikulina NL, Pecherkina MS (2017) The welfare of individual and the area of residence: risk assessment. In: Proceedings of the SGEM 2017: 4th international multidisciplinary scientific conferences social sciences & arts, Albena, Bulgaria, pp 937–943 OECD (2022a) Household savings. Retrieved from https://data.oecd. org/hha/household-savings.htm#indicator-chart. Accessed 12 Feb 2023 OECD (2022b) Real minimum wages. Retrieved from https://stats. oecd.org/Index.aspx?DataSetCode=RMW. Accessed 12 Feb 2023
Risks of Socio-economic Uncertainty for the Well-Being … Ovcharova LN (ed) (2014) Dynamics of monetary and non-monetary characteristics of the standard of living of Russian households over the years of post-Soviet development: analytical report. Liberal Mission Foundation, Moscow, Russia. Retrieved from https://www. hse.ru/data/2014/04/10/1320216966/ovcharova.pdf.pdf. Accessed 12 Feb 2023 Ovcharova LN (ed) (2021) Monitoring of the socio-economic situation and social well-being of the population. HSE University, Moscow, Russia Prime Minister of the Republic of Kazakhstan (2021) Wage increase, protection of workers’ interests, social support for vulnerable segments of the population, 10 June. Retrieved from https:// primeminister.kz/ru/news/reviews/povyshenie-zarabotnoy-platyzashchita-interesov-trudyashchihsya-socialnaya-podderzhka-uyazvimyhsloev-naseleniya-s-shapkenov-o-deyatelnosti-mtszn-1053624. Accessed 12 Feb 2023 SATIO (2022) The impact of the COVID-19 pandemic on social and economic processes in Belarus. Retrieved from https://satio.by/case/ covid-impact-on-economic-processes/. Accessed 12 Feb 2023 Shurchkova JV, Zinovyeva IS, Polujanova NV, Galitskaya YN, Berlizev RN (2022) Tools for overcoming the crisis phenomena of the pandemic in the socio-economic development of the countries. In: Popkova EG, Sergi BS (eds) Geo-economy of the future. Springer, Cham, Switzerland, pp 175–187. https://doi.org/ 10.1007/978-3-030-92303-7_20 Sinyavskaya OV (ed) (2020) Review of international practices of economic and population support in the fight against coronavirus pandemic in Armenia, China, Denmark, Finland, France, Germany, Italy, Japan, Kazakhstan, Netherlands, Spain, Sweden, South Korea, UK, USA. HSE University. Retrieved from https://isp.hse.ru/data/ 2020/04/29/1544579194/COVID-19_stimulus%20packages_countries 260420.pdf. Accessed 12 Feb 2023 Sitnikova YaV, Kochetova LM (2015) Theoretical foundations of risk classification of the economic system. Symb Sci 3:121–125
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Current Trends in the Regional Economic Systems Development: Key Determinants of Economic Growth Marina E. Buyanova , Irina S. Averina , and Elena Yu. Horuzhaya
Abstract
JEL Classification
The study of the composition and significance of factors that define the balance, quality, and continuity of economic growth of Russian regions will create the basis for designing a comprehensive system of their development in the future, considering current realities. The conducted SWOT highlighted “pain points” (weaknesses and threats), as well as strengths and opportunities that are available or potentially exist from the position of the list of key determinants that are determined within the given above framework. Most significant factors influencing the balance and quality of economic growth of mesoeconomic systems identification create opportunities for the concentration of efforts on the part of the federal level and regional authorities on the efficient and purposeful stimulation of the necessary components of the system and leveling existing threats. Regional changes are associated with economic and institutional determinants, which together define the conditions in regional and national aspects in the near future, as well as provide the basis for sustainable economic growth in the future and determine the prospects for obtaining advantages within a competitive environment.
O11
Keywords
Economic systems Economic growth Economic development Regional economy Determinants of economic growth
M. E. Buyanova I. S. Averina (&) E. Yu.Horuzhaya Volgograd State University, Volgograd, Russia e-mail: [email protected] M. E. Buyanova e-mail: [email protected] E. Yu.Horuzhaya e-mail: [email protected]
1
O40
O47
P51
R10
R11
R13
Y1
Introduction
Currently, accumulated changes in economic framework of various (macro, meso, micro) levels, caused by the realities of the Revolution 4.0 and digital transformation, are becoming increasingly important. These factors define the importance of research in the field of studying the key determinants of their development in the current conditions, identifying the most significant challenges and threats, and further searching for an efficient way to overcome and eliminate them to ensure high-quality economic growth for economic systems. The factors affecting the conditions and quality of economic growth within the regional economic systems also require their own definition and are no less significant than the country-wide parameters since the state’s position in the economic and political arena depends on the balanced economic development of the mesolevel. These factors are directly correlated with the subsystems of the national economy, namely with the economic and institutional components, which predefine the classification of these determinants according to the criterion mentioned above. The study of the composition and significance of factors that define the balance, quality, and continuity of economic growth of Russian regions will create the basis for designing a comprehensive system of their development in the future, considering current realities.
2
Materials and Method
Regions are studied by Isard (1966), Animitsa and Sharygin (2013), Belokrylova et al. (2015), Bode (1998), Granberg (1992), Hoover (1971), Siebert (1991), Inshakov (2007),
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_64
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Kuznetsova (2015), Minakir (2011), Moses (1960), Nekrasov (1978), Pottier (1963), Tatarkin and Animitsa (2012), Tinbergen and Bos (1962), and others. Transformation processes of regional economies are considered by Bac (2022), Grigorieva (2020), Yesenkova and Evchenko (2023), Ivanova (2021), Klyunya and Kostuchenko (2020), Kondakova (2022), Kuzmina et al. (2019), Lagutin and Kharchenko (2019), Litvinenko (2016), Lobkova (2022), Lukin (2021), Neif et al. (2019), Prikhodchenko and Piyaltsev (2021), Baulina et al. (2018), Startseva (2007), Khudov (2022), Tufetulov (2009), and others. The mesoeconomic systems features, including at the present stage, are studied by Domar (1946), Harrod (1939), Kuznetsova (2002), Romer (1990), Rostow (1961), Radygin and Entov (2008), and others. Through a systemic analysis of these studies, the authors analyzed and summarized the regional factors. Using correlation and regression analysis (generalization with a seventeen-year time lag), the authors revealed the most significant determinants that define the availability, quality, and balance of economic growth at the mesoeconomic level of management. These factors are further classified according to the criterion of the “elementary composition of subsystems of the economic mechanism.”
• • • • • • • • •
Industrial growth, % (annual)—X9. AIC growth, %—X10. Index of retail trade turnover physical volume, %—X11. Internet access, %—X12. Its use, %—X13. Inflation rate, %—X13. Mobile subscribers, units—X14. Expenses of the consolidated budget, million rubles—X15. State budget balance, million rubles—X16.
This list is explained by the completeness and accessibility of the data used and can be supplemented later during further research by interested users. The above indicators were studied in dynamics from 2005 to 2021. The time interval of the study is 17 years. The studied model can be represented by the following regression equation. Two models were built based on statistical data (Table 1): • The generalized least squares (GLS) model is as follows: ln Y ¼ 1:16 0:37X1 þ 0:098X2 þ 0:052 ln X3 þ 0:007X4 þ 0:002X5 þ 0:001 ln X6 þ 0:003 ln X7 0:385X8 þ 0:245 ln X9 þ 0:282X10 þ 0:059X11 þ 0:239X12 0:043X13 þ 0:042X14 þ 0:082 ln X15 þ 0:027 ln X16 :
3
The definition of the key determinants by correlation and regression analysis makes it possible to determine the most significant criteria that balanced economic growth in today’s conditions. Current methods consider several complex components that affect economic growth and the digitalization of economic systems, leaving the analysis of defining factors affecting the speed of transformations occurring in national economic systems outside of research. This circumstance determines the need for research on this aspect. The authors investigated the factors influencing the digital transformations of economic systems of mesolevel and determine their significance. The authors analyzed the countries mentioned above according to 16 indicators: • • • • • • • • •
ð1Þ
Results
GRP per capita—Y. Unemployed, thousand people—X1. Employed, thousand people—X2. Households revenue, million rubles—X3. Enterprises and organizations number, pcs.—X4. Students number, thousand—X5. Investments in fixed capital, million rubles—X6. Availability of fixed assets, million rubles—X7. Degree of fixed assets depreciation, %—X8.
• The fixed effects (FE) model is as follows: ln Y ¼ 2:94 0:004X1 þ 0:0016X2 þ 0:009 ln X3 þ 0:004X4 þ 0:007X5 þ 0:512 ln X6 þ 0:007 ln X7 0:191X8 þ 0:003 ln X9 þ 0:365X10 þ 0:030X11 þ 0:272X12 0:016X13 þ 0:020X14 þ 0:664 ln X15 þ 0:034 ln X16 : ð2Þ
The results are given in Table 1. Proceeding from the above analysis and based on the greater rationality of applicability of the “GLS” model, it follows that the most significant factors affecting the economic growth and its nature within the Russian regional economies are as follows: • • • • • • • •
The number of unemployed; The number of employed; Real monetary incomes; Fixed assets availability and their degree of depreciation; Production of agricultural products of all categories; The physical volume of retail trade turnover; Number of connected mobile subscriber; Consolidated budget revenues.
Current Trends in the Regional Economic Systems … Table 1 Model evaluation
Indicator X1
389 GLS
FE
Coeff.
Standard error
Coeff.
Standard error
− 0.037*
0.019
− 0.004*
0.003
X2
0.098**
0.042
0.0016***
X3
0.052*
0.063
0.009*
0.005
X4
0.007**
0.003
0.004***
0.001
X5
0.002
0.0003
0.007
0.0004
X6
0.001
0.001
0.512
0.001
0.0004
X7
0.003**
0.017
X8
− 0.385***
0.122
− 0.191*
X9
0.245
0.003
0.003
0.003
X10
0.282
0.063
0.365***
0.00890750
X11
0.059
0.032
0.030**
0.040
X12
0.239***
0.012
0.272**
0.010
0.007***
0.003 0.010
X13
− 0.043***
0.016
− 0.016**
0.010
X14
0.042
0.009
0.020*
0.003
X15
0.082
0.098
0.664
0.082
X16
0.027*
0.014
0.034*
0.0001
Constant
1.16
Observations used
1445
0.034
2.94
0.033
1445
Akaike criterion
388.378
325.337
Schwarz criterion
393.329
177.781
Adjusted R2
0.974
0.969
Note Significance levels Source Compiled by the authors based on Federal State Statistics Service of the Russian Federation (2021)
4
Conclusion
The list of the factors indicated above is a set of determinants: • Social (the number of unemployed, the number of employed, agricultural production, consolidated budget revenues, and inflation rate); • Institutional (the number of enterprises and organizations); • Information and communication (consolidated budget revenues, etc.). The indicated list of factors is not exhaustive and can be supplemented and expanded in the future. Comparing the indicators of the studied regions, the authors revealed that the growth rates of GRP per capita by regions correlate most closely with these indicators. The calculation of the growth rates of the main mesoeconomic indicator and the growth rates of these determinants confirms a close correlation with the above model.
The analyzed data are limited in their completeness to 2021, as well as a list of indicators of institutional and information and communication components presented by official statistics in free access and in the required time range. For completeness of the analysis, the authors summarize the results obtained in a SWOT table, which conditionally identifies possible key points that indicate the main strengths and weaknesses of the regions, the threats facing them, and the possibilities of their further development within the framework of qualitative and balanced growth of the economic system (Table 2). The conducted SWOT highlighted “pain points” (weaknesses and threats), as well as strengths and opportunities that are available or potentially exist from the position of the list of key determinants that are determined within the given above framework. Most significant factors influencing the balance and quality of economic growth of mesoeconomic systems identification creates opportunities for the concentration of efforts on the part of the federal level and regional authorities on the efficient and purposeful stimulation of the necessary components of the system and leveling existing threats.
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Table 2 SWOT analysis model based on key determinants S (strengths)
W (weaknesses)
1. Availability of raw material resource base 2. Developed agriculture 3. Developed trade turnover and trading platforms of regional importance 4. Moderate inflation 5. Employment growth 6. Growth of real monetary incomes of the population 7. Increase in consolidated budget revenues 8. Stable growth of enterprises and organizations 9. Increasing the availability of the Internet and mobile communications
1. Absence of raw material resource base 2. Low level of agricultural development due to inefficient management or natural and climatic conditions 3. Absence of regional trading platforms, low share of trade turnover 4. High inflation rate 5. Rising unemployment 6. Decrease in real monetary incomes 7. Decrease in consolidated budget revenues
O (opportunities)
T (threats)
1. Stimulating the development of the resource component 2. Stimulating the development of the agriculture activities, creation of business incubators, and tax benefits 3. Development of retail trade and creation of regional platforms 4. The fight against high inflation through an effective monetary policy of the state 5. Improving the efficiency of filling state budget revenues 6. Creation of programs to stimulate the development of enterprises and other system components 7. Introduction of innovative developments into production 8. Development of the information and communication sector
1. Curtailment of production of natural resource component enterprises 2. Unfavorable natural and climatic conditions 3. Ineffective programs to stimulate of agriculture activities in the regions 4. High dependence on distributors in other regions of the country 5. Relatively low wages compared to other regions 6. Outflow of qualified personnel, aging, and population decline 7. Inefficient fiscal policy of the regions 8. Imports share growth in the market in the region, which has a disincentive impact on regional enterprises 9. The lack of growth in the share of the IT industry in the region’s economy
Source Compiled by the authors
The components of digital transformation remained outside the correlation and regression analysis, reflected by relatively new indicators in the official statistics (data presented by Rosstat since 2017), the share of organizations that used end-to-end technologies (data presented by Rosstat since 2020), etc. The time lag for assessing the significance of these indicators is not sufficient. Therefore, it is not considered in the model. However, in current realities, these factors can also be identified as key. Thus, listed main determinants totality and their further study in the framework of the analysis of the Russian regions will help identify common patterns of development and opportunities for qualitative and balanced growth, considering the differential inequalities between them. Acknowledgements The research was carried out within the state assignment of the Ministry of Science and Higher Education of the Russian Federation (theme No. FZUU-2023-0002).
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Baulina OA, Klyushin VV, Silyunina AM (2018) Model of transformation of traditional way of regional economy in economy of knowledge. Eurasian Sci J 10(6):4 Belokrylova OS, Kiseleva NN, Khubulova VV (2015) Regional economics and management: a textbook. Alfa-M, Infra-M, Moscow, Russia Bode E (1998) Lokale wissendiffusion und regionale divergenz in Deutschland [Local knowledge diffusion and regional divergence in Germany]. Kiel Institute for the World Economy, Mohr Siebeck, Kiel, Germany Domar ED (1946) Capital expansion, rate of growth and employment. Econometrica 14(2):137–147. https://doi.org/10.2307/1905364 Federal State Statistics Service of the Russian Federation (2021) Official website. Retrieved from https://rosstat.gov.ru/. Accessed 28 Feb 2023 Granberg AG (1992) Regional section of economic reform. Econ Life 39(6):14–15 Grigorieva NS (2020) Digital transformation of the regional economy. Bull Belgorod Univ Cooper Econ Law 6(85):86–96 Harrod RF (1939) An essay in dynamic theory. Econ J 49(193):14–33. https://doi.org/10.2307/2225181 Hoover E (1971) An introduction to regional economics. Alfred Knopf, New York, NY Inshakov OV (ed) (2007) Strategy of socio-economic development of Volgograd Region (2008–2025). Publishers of Volgograd State University, Volgograd, Russia Isard W (1966) Methods of regional analysis: an introduction to regional science. In: Gokhman VM (transl from English). Progress, Moscow, USSR (original work published 1960) Ivanova NA (2021) New directions of Russia’s regional policy in the context of economic transformation. J Econ Entrep 15(7):480–482 Khudov AM (2022) Theoretical and methodological aspects of the organization of the control mechanism regional economy on the
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391 Neif NM, Yashina ML, Treskova TV (2019) Digital transformation of regional economy and public administration. Econ Agric Russ 10:2–9. https://doi.org/10.32651/2110-2 Nekrasov NN (1978) Regional economy: theory, problems, methods, 2nd edn. Economics, Moscow, USSR Pottier P (1963) Axes de communication et développement économique [Communication and economic development]. Rev Écon [Econ Rev] 14(1):58–132. https://doi.org/10.3406/RECO.1963. 407543 Prikhodchenko OS, Piyaltsev AI (2021) Topical issues of regional digital transformation of the economy. Proc Southwest State Univ Ser Econ Sociol Manage 11(3):241–251 Radygin A, Entov R (2008) In search of institutional characteristics of economic growth (New approaches on the border-line of XX–XXI centuries). Vopr Ekon 8:4–12. https://doi.org/10.32609/0042-87362008-8-4-27 Romer PM (1990) Human capital and growth: theory and evidence. Carn-Roch Conf Ser Public Policy 32:251–286. https://doi.org/10. 1016/0167-2231(90)90028-J Rostow WW (1961) The stages of economic growth. Frederick A. Praeger, New York, NY Siebert HA (1991) Schumpeterian model of growth in the world economy: some notes on a new paradigm in international economics. Weltwirtsch Arch 127(4) Startseva OA (2007) Systemic approach to the transformation of the regional economy. Reg Econ Theory Pract 5(4):94–97 Tatarkin AI, Animitsa EG (2012) Formation of a paradigmatic theory of regional economy. Econ Reg 3(31):11–21 Tinbergen J, Bos H (1962) Mathematical models of economic growth. McGraw-Hill, New York, NY Tufetulov AM (2009) Integration processes of transformation of the structure of the regional economy. INION RAN, Moscow, Russia Yesenkova GA, Evchenko AV (2023) Stratification of the regional potential of sustainable development in the context of institutional transformation of society, economy and management. Innov Econ Prospect Dev Improv 1(67):90–97
Digital Development of Russian Regions: Prospects and Contradictions in a Period of Turbulence Nadezhda V. Pilipchuk , Zhanna A. Aksenova , Svetlana V. Lupacheva , Olga M. Markova , and Ruslan M. Tamov
conditions. It is proved that the expansion of turbulence factors requires adaptation measures to uncertain conditions. The authors propose the directions of adaptation of Russian regions to the conditions of turbulence.
Abstract
This paper studies modern factors of turbulence and assessing ability of Russian regions to adapt to the changes by implementing accelerated digitalization. The research systematizes the factors of turbulence that influence on regions. The paper identifies turbulence factors as economic systems challenges, studies global turbulence at the stage of maximum manifestation of uncertainty and chaos, concludes and proposes options for managing regional economic systems during global turbulence. The expansion of turbulence factors requires measures to adapt to uncertain conditions. (1) The increase in demand from the population for online goods and services. (2) Ensuring opportunities for rural and urban areas to become a separate area of regional policy. (3) Improvement of the educational complex of the region in terms of creating digital platforms for training and retraining the population of regions. (4) Further stimulating the digitalization of public administration and the social sphere. (5) Strengthening the cybersecurity of regional economic entities. The paper lets to conclude that during the turbulence of 2019–2021, the digital development of Russia’s regions accelerated the varying degrees of adaptation of regional economic systems to changing
N. V. Pilipchuk (&) Tver State University, Tver, Russia e-mail: [email protected] Z. A. Aksenova Saint-Petersburg Mining University, St. Petersburg, Russia S. V. Lupacheva Northern (Arctic) Federal University named after M. Lomonosov, Arkhangelsk, Russia O. M. Markova Financial University Under the Government of the Russian Federation, Moscow, Russia R. M. Tamov Belgorod State National Research University, Belgorod, Russia
Keywords
Region Turbulence Pandemic Economic system Regional governance Contradictions of regional development Cybersecurity
JEL Classification
O33
1
R11
R13
R58
Introduction
The years 2020–2022 have stepped up numerous turbulence factors that manifested themselves in almost one time period, including military-political conflict and destabilized the relatively stable and predictable Russian economy (Dmitrieva et al. 2021; Filatova et al. 2021; Ilinova et al. 2021). Traditional models of consumer behavior have been transformed in a significant way for public administration system. Many sectors of the economy have faced challenges that have undermined their former stability (Karpunina et al. 2021). Simultaneously, new horizons of activity and new directions of development have opened up. We are primarily talking about the digitalization of regional economies. During the period of the severe impact of external factors of turbulence, economic systems determine the most effective way to overcome them—expansion of digital infrastructure, provision of greater access to the Internet for subjects, organization of remote communication channels, and optimization of online services for the purchase of goods and services. This became possible during the interweaving of three turbulence factors. How did regional economic
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_65
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systems cope with the new challenges of turbulent times? What contradictions of digital development were revealed on their way? What are the prospects for further digitalization of Russian regions? These questions will be answered within the framework of this research.
2
Methodology
Economies turbulence is presented by Brenner (1998), Gladkov (2018), Karpunina et al. (2022b), Minakov and Minakova (2021), Polulyakh (2017), Shchetinina et al. (2016), Sheremet (2020), and Zhuravleva and Manokhina (2013). Readiness of regions to this turbulence is presented by Bychkova et al. (2020), Karpunina et al. (2020a), and Molchan et al. (2019). It helps to identify such factors as the lack of a well-formed regional digital infrastructure, the scale of territories and differentiation in territories, etc. Researchers pay attention to COVID-19 and focus on the intensification of digitalization during the global lockdown (Gorelova et al. 2021; Gukasyan et al. 2022; Karpunina 2022; Minakov et al. 2022). The paper objectives include: 1. To identify turbulence factors as economic systems challenges; 2. To study global turbulence at the stage of maximum manifestation of uncertainty and chaos; 3. To conclude and propose options for managing regional economic systems during global turbulence. Methodology: Induction, deduction, systematization, comparative analysis, economic analysis, graphical method, and systemic approach.
3
Results
Economic turbulence is considered a chaotic abrupt movement of the economic system with significant fluctuations in economic indicators and changes in the nature of the flow and development trajectories. The current factors of turbulence can be attributed to the COVID-19 pandemic, fluctuations in the energy market, and the military-political conflict between Russia and Ukraine. First, the coronavirus infection that has spread rapidly around the world has seriously impacted the stability of economic systems in various countries and regions. In 2020, an epidemiological threat was realized, which led to disruption of global value chains, the formation of conditions of large-scale uncertainty and changes in consumer behavior, and, as a result, the transformation of business models at all levels of the economy (Karpunina et al. 2020c, 2021; Nikitin et al. 2019). State policy (closure of cross-border movement, lockdowns
and restrictions on the operation of enterprises, and quarantine measures for self-isolation) also contributed to the imbalance of economic systems. In such conditions, forecasting the timing and scale of a disaster becomes almost impossible. Therefore, the way out of the situation is to develop mechanisms for adapting economic systems to rapidly changing environmental conditions. Secondly, the decline in economic activity of economic entities under the influence of the pandemic. In turn, this has led to a change in global demand and prices for energy resources. The result was global economic fluctuations and disruption of the balanced development of the Russian energy market (Filatova et al. 2021; Samylovskaya et al. 2022; Vedomosti 2020). Quarantine restrictions affected, first of all, the transport sector; its reduction entailed negative consequences for the entire oil market. The reduction in oil demand to 30% in April 2020 caused a skew in the market due to an oversupply (Dudina et al. 2021). The result was a record fall in prices (3.5 times) for Brent oil and the sale of WTI futures at a negative price (Vedomosti 2020). Only thanks to the achievement by producers of a collective reduction in production by OPEC countries, as well as countries outside the coalition, it was possible to avoid the development of the most pessimistic scenario. However, this did not lead to a rapid stabilization of the market. Demand in the gas industry also decreased, with the fall in world gas prices to the level of domestic ones, the reduction was 3– 5%. However, in this area, Russian companies have faced manifestations of a price war and a decrease in the supply of Russian pipeline gas to European countries. In general, changes in global demand and prices for energy resources caused the loss of 60% of export revenues and a reduction in Russian exports of oil, gas, and coal at the same time (about 7–8 trillion rubles in 2020 and 5.5 trillion rubles in 2021) (Ponomarenko et al. 2022). Since it is difficult to predict the further development of the situation in the energy markets, and given the aggravation of the military-political conflict with Ukraine, it does not seem appropriate to expect an increase in revenue from energy exports in the near future (Cherepovitsyn and Solovyova 2022; Karpunina 2022; Karpunina et al. 2022a). Third, another turbulence factor for the Russian economy is the aggravation of the military-political conflict with Ukraine. In itself, the development of the situation between the two countries resulted from the containment of public energy during the pandemic, the increase in the redistribution processes of global leadership, and the strengthening of socioeconomic uncertainty and chaos. Such global problems have caused significant changes of an economic and social nature. These changes manifested themselves in the form of breaking most international interactions and searching for new foreign partners, developing new ties and building production chains as a reaction to sanctions restrictions from the European Union
Digital Development of Russian Regions …
395
and the United States. In addition, there was a restructuring of traditional business models and a corresponding adjustment of management methods at the micro, meso, and macro levels (Karpunina et al. 2022a). The military-political conflict, which has taken on a protracted character, increases economic turbulence. Turbulence can be measured by: • • • •
digital infrastructure indicators; goods and services indicators; indicators of digitalization of public administration; regional security indicators (Korableva 2021) (Table 1).
Information transmitted over a fixed connection increased 1.9 times during turbulence. In other words, turbulence contributed to the intensive growth of the subscriber base and the volume of transmitted information. This is despite an increase in tariffs for providing a subscriber with a subscriber line for permanent use in some regions of the country by 1.2–2.3% from 2019 to 2021. In 2022, due to the relative recovery of population activity after the pandemic and the beginning of a special operation in Ukraine, mobile Internet consumption in Russia fell for the first time in history (by 2.5%) (Table 2). All regions of Russia began to use digital goods and services more in 2019–2021. Growth in the number of organizations that have received orders for industrial goods
through Internet services also confirms the assumption of expanding the areas of online activity and demonstrates the high adaptability of Russian organizations to the changes taking place. However, in 2020–2021, some regions of Russia saw a decrease in individual indicators associated with the return of subjects to normal modes of life after lockdowns and the resumption of opportunities for the offline. Sanctions by the EU countries and the USA (2022), as well as the inability to carry out banking transactions with a number of countries, reduced the volume of foreign purchases by the population of Russia to a minimum. Additionally, there were panic moods of buyers and excessive demand for some product categories (Skvortsov 2022). Indicators of the digitalization of public administration and the social sphere are presented in Table 3 (Federal State Statistics Service of the Russian Federation 2022) (see the Data Availability section). During sanitary quarantines, the demand of the population for online public services increased sharply. Thus, in 2020, attempts by the authorities to normalize the situation in society are manifested in the form of increased use of the Internet by state organizations (the growth rates in the regions by 15–30%). During 2021, the situation normalized, and the indicators of Internet use by regional authorities came to a typical growing dynamic (growth rate of no more than 20% per year).
Table 1 Digital infrastructure in Russian regions, 2019–2021 Region/indicator
Subscribers with fixed broadband Internet access
Subscribers with mobile broadband Internet access
Fixed-line information transmitted
Mobile information transmitted
The tariff for providing the subscriber with permanent use of the subscriber line, rubles per month
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
Central Federal District
26.8
27.9
28.9
109.5
110.7
120.2
14,828
18,038
22,585
4152
6088
7992
204.6
204.8
207.1
North-Western Federal District
24.2
24.8
24.9
106.5
110.8
122.7
6860
9465
12,157
1557
2277
3058
204.1
205.3
208.8
Southern Federal District
18.4
19.8
20.3
84.7
90.0
97.9
2814
4073
5177
1532
2213
2846
185.7
183.5
187.1
North Caucasus Federal District
9.2
10.2
10.8
70.3
70.8
73.4
911
1518
2245
820
1188
1517
161.3
160.2
159.4
Volga Federal District
22.0
22.7
23.5
91.0
96.1
103.2
7963
12,219
14,854
2757
4140
5486
184.6
184.7
186.9
Ural Federal District
25.3
25.6
26.7
98.2
100.9
108.4
3846
5166
6946
1365
2022
2544
206.3
207.1
204.0
Siberian Federal District
20.9
21.4
22.0
93.0
96.6
103.6
3852
5000
5978
1608
2376
3157
186.9
186.8
190.6
Far Eastern Federal District
18.5
19.0
19.0
95.0
98.7
104.2
2677
3681
4541
844
1221
1638
224.1
222.7
226.9
Source Compiled by the authors based on Federal State Statistics Service of the Russian Federation (2022)
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Table 2 Some indicators of the use of digital goods and services, 2019–2021, % Region/indicator
Internet users
B2C e-commerce
E-government
Employees of organization who resorted to using Internet
B2B e-commerce
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
Central Federal District
82.1
85.1
88.4
41.9
49.0
57.7
67.0
74.2
79.4
38.7
46.0
47.3
26.6
27.6
28.3
North-Western Federal District
83.3
84.5
87.6
42.1
45.0
55.4
41.1
46.6
55.2
36.9
42.2
44.5
25.8
25.8
27.0
Southern Federal District
81.0
84.8
88.8
31.6
34.9
43.7
58.4
53.6
74.2
34.4
37.3
38.2
22.4
22.0
24.5
North Caucasus Federal District
82.7
86.9
90.1
22.3
36.9
35.4
38.5
48.2
51.7
30.2
35.8
36.5
13.9
16.4
19.4
Volga Federal District
80.4
81.7
85.1
33.5
36.3
40.6
64.6
61.3
71.2
34.4
38.1
39.7
24.6
25.3
27.0
Ural Federal District
82.7
86.1
88.5
39.0
44.6
45.7
56.9
56.9
69.2
31.7
35.1
36.7
25.3
27.4
29.2
Siberian Federal District
79.2
82.1
84.3
31.8
31.6
37.7
46.7
47.4
57.5
34.8
38.2
39.5
21.9
22.3
24.2
Far Eastern Federal District
79.9
83.8
87.2
29.0
31.4
37.9
40.0
44.0
53.1
32.7
36.0
38.2
19.3
20.9
22.2
Source Compiled by the authors based on Federal State Statistics Service of the Russian Federation (2022)
The education system turned out to be the most adaptive to the conditions of turbulence. In 2020, distance education programs growth trend (by an average of 1.5 times) continued throughout 2021 in all regions of the country. The situation is worse in the healthcare system. Thus, in the active stage of the pandemic there was excessive load on the healthcare system (on average from 4 to 10%). Healthcare system demonstrated its adaptability by increasing this indicator in all regions of the country (2021). This makes it possible to improve the interaction of healthcare organizations with patients through the introduction of electronic document management, create secure databases, simplify data management, and increase productivity. In 2022, the trends of digitalization of the healthcare system continued their development. In particular, digital transformation in the healthcare sector aims to ensure the prediction and prevention of the development of diseases and the personalization of therapy and participation on the part of the patient. It should also guarantee accessibility and high standards of medical care (Zdrav Expert 2022). During the turbulence of 2019–2021, the problem of ensuring the intensification of their digital development increased information openness (Federal State Statistics Service of the Russian Federation 2022) (Table 4) (see the Data Availability section). However, Russian regions are taking measures to ensure information security, which may have negative consequences in the form of real economic and image damage from the implementation of cyber risks (Karpunina 2022; Karpunina et al. 2020b; Molchan et al. 2019) (Table 4). Despite the significant expansion of the population’s presence in the online space during the pandemic, their use of information security tools in 2019–2021 decreased in all regions of Russia. This also poses a serious problem and
increases the population’s vulnerability to data leakage and cybercrime. For example, with the beginning of the special operation in Ukraine, Russia faced unprecedented external aggression in the information space (the number of cyberattacks on Russia in 2022 increased by 80%); the lack of preventive information protection measures can lead to large-scale negative consequences (Regnum 2022). The expansion of turbulence factors requires measures to adapt to uncertain conditions. (1) The increase in demand from the population for online goods and services, which occurred during the lockdown period and transformed numerous consumer habits, has become a regular trend. However, the readiness of Russian organizations to switch to the online trading format remains low. Currently, it is necessary to improve the requirements of their access to digital infrastructure. Regional authorities can create effective mechanisms for motivating organizations to solve this problem. (2) Ensuring opportunities for rural and urban areas to become a separate area of regional policy (Minakov et al. 2020). (3) Improvement of the educational complex of the region in terms of creating digital platforms for training and retraining the population of regions. During the pandemic, released workers need to update their existing skills for future employment in an unbalanced labor market. Universities and professional educational institutions of the regions can take over this function. (4) Further stimulating the digitalization of public administration and the social sphere. (5) Strengthening the cybersecurity of regional economic entities. To do this, it is necessary to focus on improving the digital literacy of all participants in online interaction through the organization of educational courses based on educational institutions in the region, as well as in an online format. The state authorities should support the developers
Digital Development of Russian Regions …
of Russian analogues of information security systems. The rapid movement of economic activity to the Internet requires the development of its institutional foundations and the creation of specialized regulatory structures to maintain the security of all participants.
4
Conclusions
The article examines the factors of regional economies turbulence. The paper describes the peculiarities of oil and gas market, military and political conflict digitalization of public administration and the social sphere, and indicators of information security. The conclusion is made about the Russian regions acceleration during turbulence of 2019– 2021 and the varying degrees of adaptation of economic systems of regions to changing conditions. The directions of adaptation of the regions of Russia to the conditions of turbulence through the improvement of regional management systems are determined. Data Availability Table 3 data is available in https://figshare.com/ with DOI https://doi.org/10.6084/m9.figshare.21908838. Table 4 data is available in https://figshare.com/ with DOI https://doi.org/ 10.6084/m9.figshare.21908898.
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Effect of Relational Capital, Structural Capital, and Human Capital on the Performance of Insurance Brokers in Zambia Maikisa Ilukena, Taonaziso Chowa , and Lubinda Haabazoka
Abstract
Keywords
This paper seeks to determine whether relational capital, structural capital, and human capital have positive effects on the performance of insurance brokers in Zambia. The authors use data gathered from chief executive officers by way of a structured survey. The target population of interest are insurance brokers that have operated for at least three consecutive years (i.e., 2019, 2020, and 2021). A review shows that only 45 insurance brokers meet this criterion. The results indicated that relational capital and human capital have positive effects on insurance brokers’ performance in Zambia, whereas structural capital has a negative effect on the performance of insurance brokers in Zambia. The research recommends that insurance brokers should employ qualified staff whom they will later invest in through training and development programs to enhance productivity. The research also recommends that insurance brokers should form partnerships, alliances, mergers, etc., among themselves to compete effectively with the market leaders or form partnerships with other reputable institutions and non-broking entities, such as banks and mobile network operators that cover a wide geographical area and use advanced distribution channels. This paper is unique as it is the first to address the effect of relational capital, structural capital as well as human capital on the performance of insurance brokers in Zambia and highlights areas insurance brokers can work on to improve their performance.
Resource-based view Insurance brokers Intangible resources Relational capital Human capital Structural capital Firm performance
M. Ilukena (&) L. Haabazoka Graduate School of Business, The University of Zambia, Lusaka, Zambia e-mail: [email protected] T. Chowa Graduate School of Business/School of Natural Sciences, The University of Zambia, Lusaka, Zambia
JEL Classification
C10 M15
1
C12 D30 O30
G22
G24
G34
L10
L25
Introduction
Whenever a misfortune happens to an individual, property, or business, arguably one of the most important questions is whether such an individual, property, or business was insured. Although insurance is distributed using various channels, most insurance policies are sold through an insurance intermediary, usually an insurance broker (Cummins and Doherty 2006). As such, insurance brokers are critical players in the insurance market. Despite the increase in the number of licensed insurance brokers (from 42 in December 2012 to 61 in December 2021) in Zambia (Pensions and Insurance Authority 2012–2021), few brokers continue to dominate the market in terms of performance. Previous studies on insurance brokers worldwide have focused on the functions of insurance brokers (Cummins and Doherty 2006), competition in the insurance brokerage sector (Miano 2011), the financial performance of insurance brokers (Owusu-Sekyere and Kotey 2019), factors for poor growth of brokers (Chimedza 2014), and the challenges that bancassurance possesses to the insurance brokers’ survival (Masiyiwa 2014). However, no study has considered the effects of relational capital, structural capital, as well as human capital on the performance of insurance brokers. Additionally, most studies on insurance brokers in Africa have been conducted in Kenya (Miano 2011; Nduyu 2018),
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_66
399
400
M. Ilukena et al.
Zimbabwe (Chimedza 2014; Masiyiwa 2014), and Ghana (Owusu-Sekyere and Kotey 2019). Nevertheless, not a single study has been conducted in Zambia, let alone to examine the reasons for the differences in performance of insurance brokers in the country. This research concentrates on three intangible resources: human, structural, and relational capitals. Human capital is selected because it is crucially important to every organization and is a primary component of intangibles (Barney 1991; Wright et al. 1994). Structural capital is chosen because it is a component of intangibles and adds to the differentiation of a company (Collis and Montgomery 1995). Relational capital is chosen because it is an important intangible and is often than not unique and rare (Srivastava et al. 1998). The research endeavors to answer the research questions below: (1) Whether human capital’s effect on the performance of insurance brokers in Zambia is positive; (2) Whether structural capital’s effect on the performance of insurance brokers in Zambia is positive; (3) Whether relational capital’s effect on the performance of insurance brokers in Zambia is positive.
2
Theoretical Literature Review
The theoretical framework used in the research is that of the resource-based view theory, which hypothesizes that superior performance of a firm is attained when a firm acquires and controls resources (Barney 1991). These resources must have four attributes: value, rarity, inimitability, and non-substitutability (Barney 1991). The resources must have value to allow the firm to maximize opportunities and counteract threats in a firm’s market environment. The resources must be rare to enable the firm to apply a value-creation strategy from competitors (Barney 1991, 2002). The resources must be inimitable, making it hard for other companies to replicate and duplicate (Cummins and Doherty 2006) and non-substitutable, making it difficult to be substituted by other resources (Barney 1991, 2002).
3
Empirical Literature Review
3.1 Relational Capital Kale et al. (2002) considered the role of alliances in assessing the impact of resources on financial performance and found that the creation and management of effective relationships with external constituents lead to firm
success. Choi and Wang (2009) upheld that strategic alliances are valuable to a firm as they integrate the complementary resources of a business partner, making imitation by rivals difficult, thus giving a firm superior performance. Mwanaumo et al. (2020) found that public private partnerships (PPPs) are suitable for projects in water sanitation and electricity, transportation, and health or social services. From the above, the study adopted alliances, partnerships, and distribution channels as constructs for relational capital.
3.2 Structural Capital Droge and Vickrey (1994) found that products that meet customers’ needs are a basis of competitive advantage. Studies, such as those done by Sougiannis (1994), Lev and Sougiannis (1996), Aboody and Lev (1998), Hsieh et al. (2003), and Kinot (2009) have found that there exists a positive association concerning research and development and firm performances. Additionally, studies, such as those by Rhee et al. (2010), Cristima (2012), Njoroge et al. (2016), and Lisboa et al. (2011) have shown the existence of a positive relationship between technology and firms performance. Furthermore, studies, such as those by Mu et al. (2009), Hakala (2011), and Haabazoka (2019) have found that technological innovations positively affect firm’s performance. From the above studies, the study adopted innovation, research and development, and technology as constructs for structural capital.
3.3 Human Capital A study by Coff and Kryscynski (2011) found that an educated workforce leads to more productive human resources. Studies, such as those done by Wernerfelt (2011), Mackey et al. (2014), Jiang et al. (2012), as well as Nyberg et al. (2014) have established that for firms to attain superior performance, the employees and management of firms must be better educated and possess advanced knowledge and superior skills. Further studies, such as those conducted by Gakeni (2015) and Njoroge et al. (2015) have found the existence of a strong nexus between firms’ performance and its human capital resources. The study adopted years of experience, decision-making ability, knowledge, and skills as constructs for human capital. Given the foregoing analysis, the following were the null hypotheses of the research: 1. H01: There exists no positive relationship between human capital and the performance of insurance brokers in Zambia.
Effect of Relational Capital, Structural Capital, and Human …
401
2. H02: There exists no positive relationship between structural capital and the performance of insurance brokers in Zambia. 3. H03: There exists no positive relationship between relational capital and the performance of insurance brokers in Zambia.
4
Methodology
The research used structured survey data collected from chief executive officers who were the single informants in line with past resource-based view research (Hall 1992; Spanos and Lioukas 2001). The target population of interest was insurance brokers who operated for at least three consecutive years from 2019 to 2021 in Zambia. The time horizon of the research was three years. Three years were chosen since past resource-based view researchers have used three years as the minimum time required to approximate the sustainability of firm success (Hall 1992; McMillian and Joshi 1997; Powell and Dent-Micallef 1997; Rouse and Daellenbach 1999; Spanos and Lioukas 2001). A review of the annual reports of the Pensions and Insurance Authority (2019–2021) showed that only 45 insurance brokers met this criterion, and as such, the sample size was 45. Of this number, 41 answered the survey representing a response rate of approximately 91%. Stata was used as software for the analysis of the data collected. The reliability of the data collection instrument used in the study was measured using Cronbach Alpha with a cut-off value of 0.7; the instrument was found to be reliable. The study also conducted pre-regression diagnostic tests comprising of normality, linearity, multicollinearity, and heteroscedasticity, which confirmed that the data used in the research fitted the model. To ensure internal validity, the University of Zambia approved the study. With regard to external validity, the findings from the study were generalized to the Zambian setting. The linear regression below was used in the study: Y ¼ B0 þ B1HC þ B2SC þ B3RC þ E
ð1Þ
where Y B0 B1, B2, B3 HC SC RC E
Insurance broker’s performance measured by Commission; Constant; Slope; Human Capital; Structural Capital; Relational Capital; Error term.
5
Results and Discussion Y ¼ 10:9 þ 9:73HC 3:30SC þ 0:47RC þ E
ð2Þ
In testing the hypotheses, the regression considered two dummy variables, which were introduced as control variables to the influence of majority shareholding of the broker and relationships with foreign insurance brokers or foreign international companies as these could influence the outcomes.
5.1 Hypothesis 1—Human Capital H01: There exists no positive relationship between human capital and the performance of insurance brokers in Zambia. Table 1 highlights that the coefficient of human capital equals 9.7, t-statistic—2.86, and p-value—0.008. Given that the coefficient for human capital is positive, it can be inferred that there exists a positive relationship between human capital and performance of insurance brokers in Zambia and as such, the null hypothesis is rejected. Additionally, human capital’s p-value is 0.008, which is below 0.05, implying that it is significant. In this regard, it can be inferred human capitals’ effect on performance of insurance brokers is not only positive but significant too. The findings of the positive effect of human capital on performance are in tandem with the findings of researchers such as Jiang et al. (2012), Nyberg et al. (2014), Gakeni (2015), and Njoroge et al. (2015), whose studies found similar outcomes. The results are also in tandem with previous studies such as those done by Saruchi et al. (2019) and Yousaf (2022) that show that human capital contributed the most to performance. Therefore, from a resource-based view, human capital, as it relates to the performance of insurance brokers, is valuable and unique. Hence, it is difficult to duplicate and replicate by competitors, which leads to superior performance (Swart 2006).
5.2 Hypothesis 2—Structural Capital H02: There exists no positive relationship between structural capital and the performance of insurance brokers in Zambia. Table 1 highlights that the coefficient of structural capital is − 3.3, the t-statistic is − 3.33, and the p-value—0.001. Therefore, the null hypothesis of the absence of a positive relationship between structural capital and the performance of insurance brokers is not rejected because the coefficient for structural capital is negative. In this regard, it can be inferred that structural capital has a negative effect on insurance brokers’ performance in Zambia.
402 Table 1 Results of the effect of relational, structural, and human capital on the performance of insurance brokers in Zambia
M. Ilukena et al. Number of observations
41
F-statistic (9, 31)
5.51
Probability > F
0.0002
R2
0.6153 2
Adjusted R
0.5036
Root MSE
1.8349
Dependent variable = performance
Linear regression results Coefficients
Human capital
t-statistic
P-value
9.73
2.89
0.008
Structural capital
− 3.30
− 3.55
0.001
Relational capital
0.47
0.62
0.538
Dummy 1: majority shareholders Private individuals (foreign)
0.29
0.21
0.838
Foreign company
6.72
2.69
0.011
Other shareholders
1.34
0.89
0.381
Dummy 2: foreign company relations Subsidiary of a foreign company
− 0.56
− 0.23
0.821
Associate of a foreign company
− 0.82
− 0.52
0.604
3.61
3.65
0.001
10.9122
5.45
0.000
Other foreign company relations Constant
Source Created by the authors based on collected data from the survey
The findings of the negative effect of structural capital on performance corroborates with the findings of past research such as those conducted by Chowdhury et al. (2019) and Forte et al. (2019) who found that structural capital has a negative effect on performance. In this regard, from a resource-based view, structural capital, as it relates to insurance brokers, is not unique as it can be easily duplicated or replicated by competitors and, as such, does not contribute to the superior performance of insurance brokers.
Kale et al. (2002), Choi and Wang (2009), Febriana et al. (2020) and Ryu et al. (2021) who found that relational capital is vital to the performance of firms. From a resource-based view, relational capital, as it relates to insurance brokers, can be said to be unique, valuable, and difficult to imitate, thereby contributing to the performance of insurance brokers.
6 5.3 Hypothesis 3—Relational Capital H03: There exists no positive relationship between relational capital and the performance of insurance brokers in Zambia. Table 1 displays that the relational capital coefficient is 0.47, the t-statistic—0.62, and the p-value—0.538. Therefore, the null hypothesis is rejected because the coefficient of relational capital is positive, implying that relational capital has a positive effect on the performance of insurance brokers in Zambia. Even though the coefficient of relational capital is positive, its p-value is more than 0.05; hence, it is insignificant. In this regard, it can be inferred that relational capital has a positive and insignificant effect on insurance broker’s performance in Zambia. The results of the positive relationship between relational capital and performance are in tandem with the findings of
Conclusion and Recommendations
This research sought to investigate whether relational, structural, and human capital positively affect the performance of insurance brokers in Zambia. The findings showed that there exists a positive relationship between human capital and performance of insurance brokers in Zambia. Structural capital has a negative effect on the performance of insurance brokers in Zambia. Relational capital positively affects the performance of insurance brokers in Zambia. The study recommends that for insurance brokers to improve their performance, they should employ qualified staff whom they will later invest in through training and development programs to enhance productivity. The research also recommends that insurance brokers should form partnerships, alliances, mergers, etc., among themselves to compete effectively with the market leaders or form partnerships with other reputable institutions or non-broking entities
Effect of Relational Capital, Structural Capital, and Human …
(e.g., banks) that cover a wide geographical area and use advanced distribution channels to distribute more insurance policies if they are to be more competitive.
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Analysis of Climate Conditions of the Batken Region Idirisbek G. Kenzhaev, Oskonbai U. Dilishatov, Bakhtyiar U. Khasanov, Zhahnbolot Zh. Tursunbaev, and Bakytbek E. Kudaiberdiev
Abstract
JEL Classification
This research touches upon the problems associated with clarifying and determining the patterns of changes in weather conditions in the southwestern part of the Kyrgyz Republic, namely in the Batken Region. The research object is the natural climatic conditions of the Batken Region. The research subject is archival data on air temperature and precipitation at weather stations in the Batken and Osh Regions. The conducted research aims to supplement the missing information in the database of meteorological stations with reliable information necessary for the completeness of the analysis of average annual temperatures and precipitation in the Batken Region. The studies used a statistical method of analysis, namely the method of regression analysis. As a result of the research, the authors compiled a climatogram of the Batken Region, determined the values of the air humidity coefficient, and supplemented the information data of weather stations with reliable information on air temperature and precipitation.
L94
Keywords
Air temperature Precipitation Meteorological station Climatic conditions Humidity coefficient Determination coefficient Selyaninov’s hydrothermal coefficient Regression analysis Precipitation Sum of effective
I. G. Kenzhaev (&) Z. Zh.Tursunbaev B. E. Kudaiberdiev Osh State University, Osh, Kyrgyzstan e-mail: [email protected] O. U. Dilishatov Kyrgyz-Uzbek International University named after B. Sydykov, Osh, Kyrgyzstan B. U. Khasanov Science Research Center “Alterenergo” of the Kyrgyz-Uzbek International University named after B. Sydykov, Osh, Kyrgyzstan e-mail: [email protected]
1
Q40
Q41
Introduction
Nowadays, one of the most pressing problems facing humankind is the problem associated with climate change on the globe, that is, with global warming of the atmosphere. The cause of climate change is the dynamic processes occurring on the earth (volcanic activity of the earth, the concentration of greenhouse gases, the increase in the volume of the oceans, the melting of glaciers, etc.) and external influences, such as changes in solar radiation and the earth’s orbit. By definition (Chirkov 1979; Dilishatov 2016; UNDP in the Kyrgyz Republic 2007), the weather is the daily state of the atmosphere. Weather is a chaotic nonlinear dynamic system. The climate is an average state of the weather and is predictable. Climate includes such variables as average temperature, rainfall, number of sunny days, and other variables that can be measured in a particular place.
2
Research Methods
In this work, we have carried out analytical studies of the climatic conditions of the Batken Region of the Kyrgyz Republic. The need for analytical research to obtain more reliable information about the patterns of changes in natural and climatic conditions in the southwestern part of the Kyrgyz Republic, namely in the Batken Region, arose for several reasons. These reasons are as follows: • The lack of a long-term analysis that makes it possible to establish patterns of changes in the climatic conditions of the region;
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_67
405
406
I. G. Kenzhaev et al.
• The absence in the region of the required number of stationary weather stations equipped with advanced equipment; • The impossibility of conducting a reliable forecast and assessment of climate change in the region.
3
Results and Discussion
The Batken Region is located in the southwestern part of the Kyrgyz Republic. The region borders Tajikistan in the south, west, and northwest, Uzbekistan in the north, and the Osh Region in the east. The region’s area is 17 thousand km2, which is 8.5% of Kyrgyzstan’s territory. The territory’s length from east to west is—350 km, and from north to south—100 km. The regional center is the city of Batken. Geographically, the region is divided into three districts. Kadamzhai district is located in the eastern part of the region, Batken district is located in the central part, and Leilek district is located in the western part. The Batken Region occupies the southern foothill part of the Fergana Valley with the front chains, spurs, and foothills of the Turkestan Range and the Alai Range. The region’s climate is generally continental, dry, moderately warm in summer, and moderately cold in winter. The region’s rivers belong to the Syr Darya basin. The main food source for these rivers is melted snow and glacial waters. There are more than 530 glaciers in the Batken Region, with a total area of more than 720 km2. They are located on the northern slopes of the Alai (568.1 km2) and Turkestan ranges (151 km2). According to the standard (Chirkov 1979), the maximum coverage of the territory of one meteorological station should be no more than 50 km2. Unlike other regions where the above-mentioned standard is more or less observed, there are only three meteorological stations of Kyrgyzhydromet in the Batken Region. Weather stations are located in the village of Markaz and in the cities of Batken and Isfana. The remoteness of these meteorological stations from each other is more than a hundred kilometers. It should also be noted that omissions of informational data were found when reviewing the archived data. Therefore, the reliability of the weather forecast for the entire region based on data obtained from these meteorological stations is questionable. Additionally, the problems associated with climate change in the region over the recent period, namely during the period of global warming of the earth’s atmosphere, have not been studied for the last sixty years. The research was carried out to supplement the missing information in the database of meteorological stations with reliable information necessary for the completeness of the analysis of average annual temperatures and precipitation in the Batken Region.
To achieve this goal, we used a statistical method of analysis, namely the method of regression analysis. The technique for restoring values using regression equations is as follows. If the database of a particular weather station does not contain information on some days of the month, regression equations are calculated by obtaining information from the database of other similar weather stations for the same days. When using this method, data of parallel observations of a meteorological station located in the city of Osh were selected as an analog point. The average annual temperatures of the Osh and Batken meteorological stations in the regression analysis showed relatively similar results, which confirm their reliability. Using the main equation of linear regression analysis (Hargreaves and Samani 1982), we supplemented the information on the weather conditions of the region for the period from 1961 to 2021 and, on their basis, obtained the dependences of changes in the average values of air temperature and precipitation (Figs. 1 and 2) in the region for the considered period. Figure 1 shows a linear graph of changes in the average annual air temperatures, built based on statistical data obtained from the archive of stationary weather stations in the Batken Region for 1961–2021 after a linear regression analysis. The average annual values of air temperature shown in Fig. 1 are calculated from their average monthly values. Figure 1 shows that the dynamics of changes in the average annual temperature for the period 1961–2021 has an upward trend. Simultaneously, the linear trend equation (straight line) with a positive regression coefficient of 0.0135 on the graph indicates an annual increase in temperature. The calculations carried out to determine the dynamics of temperature changes for the period 1961–2021 showed that the temperature in the region is increasing by an average of 0.013° per year. When constructing a linear graph of changes in average annual precipitation values in the Batken Region for the period 1961–2021 (Fig. 2), the authors used statistical data obtained from weather stations. Annual precipitation values are calculated as the sum of monthly values. The constructed graph shows that the amount of precipitation increases over time. A linear trend equation (straight line) with a positive coefficient of 0.022 in the graph indicates an annual increase in precipitation. Calculations carried out to determine the dynamics of precipitation changes for the period 1961–2021 showed that the amount of precipitation in the region increased by an average of 0.35 mm. Calculations were carried out to determine the change in linear regression, obtained with a value of the coefficient of determination of 0.92. The coefficient of determination indicates the tightness of the linear relationship between two
Analysis of Climate Conditions of the Batken Region
407
Fig. 1 Average annual air temperatures for the period 1961– 2021. Source Designed by the authors
Precipitation
Fig. 2 Average annual precipitation for the period 1961– 2021. Source Designed by the authors
400,0
precipitation,mm
350,0
y=0,0227x+208,1
300,0 250,0 200,0 150,0 100,0 10,0
2017 2019 2021
2013
2015
2011
2009
2005
precipitation
year
variables; in our case, these variables are temperature data taken from the database of Osh and Batken meteorological stations. Table 1 shows the values of the coefficient of determination of linear regression by months with an intra-annual distribution between the data of the Osh and Batken meteorological stations. The largest value of the coefficient is 0.95, and the smallest value is 0.74. The numerical values of the coefficient of determination for all months on the Chaddock scale are evaluated as data that have a high positive relationship between the variables (Baraz 2005). Using the linear regression equation, the series of missing data were supplemented with the calculated values. For the convenience of a comparative analysis of the dynamics of climate change in the region, depending on the
2007
2003
2001
1997
1999
1993
1995
1991
1989
1985
1987
1981
1983
1979
1978
1975
1971 1973
1969
1967
1965
1961
1963
0,0
rapidly growing global warming, the authors divided the considered period (1961–2021) into two sub-periods: • 1961–1990—conditionally considered the base period; • 1991–2021—considered the subsequent period. Based on the foregoing, the next stage of our research was to carry out calculations to clarify the intra-annual distribution of air temperatures for the base and subsequent periods. A comparative analysis of temperatures within the year showed that the air temperature for the subsequent period (1991–2021) compared to the base period (1961–1990) has a deviation in the positive direction, except for May, June, and July, where a deviation in the negative side is revealed (traced).
Table 1 Values of the coefficient of determination of linear regression between the data of Osh and Batken meteorological stations 1
2
3
4
5
6
7
8
9
10
11
12
R2 = 0.92
R2 = 0.95
R2 = 0.94
R2 = 0.94
R2 = 0.90
R2 = 0.86
R2 = 0.89
R2 = 0.76
R2 = 0.78
R2 = 0.92
R2 = 0.97
R2 = 0.74
Source Designed by the authors
408
In 1991–2021, compared with the base period, there was an increase in air temperature by 0.36°. Simultaneously, an important factor is to identify specific months in the intra-annual distribution in which there are the largest deviations. To obtain information on the change in the amount of precipitation for the reviewed period, studies similar to those given above were carried out. It was revealed that the decrease in precipitation occurs in the months of March, April, and October; the largest increase occurs in the months of May, June, November, and December. The calculations have established that, compared with the base period (1961– 1990), the average annual precipitation increased by 24 mm in the subsequent period (1991–2021). The results of the studies presented above are aimed at identifying the numerical values of changes in air temperature and precipitation in the region over the considered period. Given that excellent varieties of rice and apricots are grown in the Batken Region, several studies have been carried out to determine the temperature and humidity regime in the region. To determine the change in the humidity regime in the region, the method of determining the coefficient of air humidification or the so-called hydrothermal coefficient (HTC) by Selyaninov (Allen 1995, 1996; Baraz 2005; Hargreaves and Samani 1982; Kelchevskaya 1971; Kobysheva 2008; Zinkovsky and Zinkovskaya 2018) was used. Proposed by the Russian climatologist G. T. Selyaninov (1887–1966), the hydrothermal coefficient of air humidification (HTC) makes it possible to assess the level of moisture supply in a particular territory. It is widely used in agronomy to generally assess the climate and the allocation of zones of different levels of moisture availability to determine the feasibility of growing certain agricultural crops. The calculation of the HTC is the ratio of the amount of precipitation in millimeters for a specific period with temperatures above + 10 °C to the sum of temperatures in degrees Celsius (°C) for the same time. Depending on the calculated value, the HTC is usually divided into the following zones: • • • • •
Excessive moisture or drainage zone (HTC > 1.3); Provided humidification (1.0–1.3); Arid (0.7–1.0); Dry farming (0.5–0.7); Irrigation (HTC < 0.5).
We have carried out comparative analyzes to determine the changes in the GTK for the base (1961–1990) and
I. G. Kenzhaev et al.
subsequent (1991–2021) periods. It was found that the greatest increase in the value of the HTC falls on May, June, and August. It should be noted that the increase in precipitation (Fig. 2) falls on the same months as the months defined by us. The numerical value of the HTC is 0.81 for the growing seasons of 1960–1990 and 0.96 for the period 1991–2021. This indicates that the humidity regime, as well as the temperature regime, is changing upward in this region. As a result of the studies carried out to analyze the climatic conditions of the Batken Region, the following types of work were performed: • In accordance with the works (Khromov 2004; Morgunov 2005; Voeikov Main Geophysical Observatory 1993), a climatogram of the Batken Region has been compiled, which makes it possible to determine the patterns of change and the intra-annual distribution of air temperature and precipitation over the reviewed period; • The values of the coefficient of humidification of the air in the Batken Region for the reviewed period were determined; • Information data from weather stations on air temperature and precipitation have been supplemented.
4
Conclusion
Based on the studies carried out to analyze the climatic conditions of the Batken Region, the authors conclude the following: • The increase in average air temperatures over a long period in the Batken Region falls on October–March; • The increase in the average amount of precipitation over a long period in the Batken Region falls on May–July; • The value of the average annual increase in air temperature for the reviewed period is 0.013°C per year; • The volume of precipitation increases over time. The average increase is 0.35 mm per year. Compared to the base period (1961–1990), the total annual precipitation increased by 24 mm in the subsequent period (1991– 2021); • Based on a comparative analysis of the numerical values of the HTC, it was found that the value of the HTC averaged 0.81 for the growing season of 1960–1990 and 0.96 for the period 1991–2021. These findings make it possible to conclude that there is an increase in air humidity in this region.
Analysis of Climate Conditions of the Batken Region
References Allen RG (1995) Evaluation of procedures for estimating mean monthly solar radiation from air temperature. FAO, Rome, Italy Allen RG (1996) Assessing integrity of weather data for reference evapotranspiration estimation. Irrig Drain Eng 122(2):97–106. https://doi.org/10.1061/(ASCE)0733-9437(1996)122:2(97) Baraz VR (2005) Correlation-regression analysis of the relationship between business indicators using Excel: textbook. Ural State Technical University—UPI, Yekaterinburg, Russia Chirkov YuI (1979) Agrometeorology: textbook. Gidrometeoizdat, Leningrad, USSR Dilishatov OU (2016) Influence of the climate of mountainous regions on the operational characteristics of low-potential solar installations. In: Shirokov ON, Abramova LA, Yakovleva TV, Burkovskaya EV (eds) Innovative technologies in science and education: materials of the V international scientific and practical conference. CNS Interactive Plus, Cheboksary, Russia, pp 63–66 Hargreaves GH, Samani ZA (1982) Estimating potential evapotranspiration. J Irrig Drain Eng 108(3):225–230 Kelchevskaya LS (1971) Methods for processing observations in agroclimatology: textbook. Leningrad, USSR
409 Khromov SP (2004) Meteorology and climatology: textbook. Moscow, Russia Kobysheva NV (2008) Guidelines for specialized climatological services for the economy. Voeikov Main Geophysical Observatory, St. Petersburg, Russia Morgunov VK (2005) Fundamentals of meteorology, climatology. Meteorological instruments and methods of observation: textbook. Sibirskoye Soglasheniye, Novosibirsk, Russia UNDP in the Kyrgyz Republic (2007) Kyrgyzstan. Environment and natural resources for sustainable development. Bishkek, Kyrgyzstan. Retrieved from https://www.adb.org/sites/default/files/ institutional-document/32187/environment-natural-resourcessustainabledevt.pdf. Accessed 11 Dec 2022 Voeikov Main Geophysical Observatory (1993) Recommendations for the analysis of the results of spatial monitoring of regime hydrometeorological information. Gidrometeoizdat, St. Petersburg, Russia Zinkovsky VN, Zinkovskaya TS (2018) Considering atmospheric precipitations at agromeliorative calculations. Int Res J 5(71):130– 135. https://doi.org/10.23670/IRJ.2018.71.019
The Constructs of Short-Term Consumer Credit from the Perspective of Merchants and Employers as Key Stakeholders in Zambia Henry L. Chikweti, Lubinda Haabazoka , and Jackson Phiri
Abstract
JEL Classification
The research focuses on comprehending key stakeholders in Zambia. Its primary objective is to establish a foundational understanding that can aid in considering its suitability, feasibility, and acceptability. To achieve this, the authors utilized a detailed action research model. The data collected was presented in textual form and underwent analysis in two distinct steps. In the initial phase, thematic analysis was employed to derive concepts from the meaning units. Subsequently, in the second phase, the authors conducted a relational analysis using semantic analysis. Both types of analysis were performed using the NVivo package on a computer. The results of the analysis revealed an average suitability and acceptability rate of 80% and a feasibility rate of up to 90%. These findings imply that the acquired knowledge is well-suited to guide the development of an appropriate short-term consumer credit model, one that is feasible, acceptable, and capable of addressing the issue of high-interest rates.
B14 E51
Keywords
Consumer credit Short-term Credit stakeholders
Interest rates
H. L. Chikweti (&) L. Haabazoka Graduate School of Business, University of Zambia, Lusaka, Zambia e-mail: [email protected] L. Haabazoka e-mail: [email protected] J. Phiri School of Natural Sciences, University of Zambia, Lusaka, Zambia e-mail: [email protected]
Model
1
B15 G23
B52 G41
C12 C83 G51
D40
E42
E43
Introduction
The credit industry has much evidence suggesting that short-term consumer credit facilities can be problematic as they can lead to poor consumer outcomes due to being associated with high-interest rates (Dasgupta and Mason 2020; Ministry of Finance of the Republic of Zambia 2021; OECD 2019; Schwartz and Robinson 2018; Servon 2017; Skiba 2012). However, the continuous uptake of short-term consumer credit products indicates relatively strong market demand (Bogoviz et al. 2021; Malone and Skiba 2020; Ministry of Finance of the Republic of Zambia 2021). This conundrum has since brought about opposed reactions from key short-term consumer credit stakeholders, such as consumers, employers, and merchants, to the detriment of society as a whole (Bankers Association of Zambia (BAZ) 2021; Malone and Skiba 2020; OECD 2019). For the purpose of this research, the consumers are those who buy goods and services from merchants, usually using money from their employers for their services. A cause for concern arises when consumers fall into debt because of the servicing of expensive consumer credit, as this usually has a negative impact on other key stakeholders, employers, and merchants (OECD 2019). The ominous cycle begins with consumers getting financially distressed due to servicing high-cost credit. This makes them less productive at their workplaces, resulting in losses for employers. Servicing high-interest loans also results in lower residual income for consumers, leading them to buy less and less from merchants, resulting in lower sales for merchants (Schwartz and Robinson 2018; Servon 2017; Skiba 2012).
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_68
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The concern is that this vicious cycle will continue forever unless the problem of high-interest rates is addressed. High-cost reason appears to be a flaw inherent in the interest rate model of today’s short-term consumer credits (Arrow and Debreu 1954; Fisher 1930; Hudson et al. 2004). The flaw is the interest aspect in the credit pricing blueprint, which principally works well when borrowing for investment and not consumption. Nevertheless, this model is imperfect when borrowing for short-term consumption because short-term consumption credit rarely leads directly to the creation of tangible value that can be used to repay the amount borrowed with interest. Hence, it has a higher risk than other credit facilities and, therefore, a higher price. Thus, Fisher’s model by default makes short-term consumer credit high-cost because of the higher risk resulting from reliance on a less certain source of income to repay the loan compared to a loan taken out for investment (Fisher 1930). This study is based on the observation that despite the research done on short-term consumer credit in Zambia, there have been no studies that have focused on addressing the high cost of today’s short-term consumer credit by taking a risk management perspective and addressing this issue through interest rate cost factors (Miller 2013). Previous studies have either just highlighted the problem or advocated for reactive remedies, such as regulatory policy responses, despite their failure so far (Bhutta et al. 2015; Bogoviz et al. 2020b; Fekrazad 2020; OECD 2019; Skiba and Tobacman 2011; Yin 2018). The main reason for this is to generate foundational knowledge on the causes of the high-interest rate and related phenomenon that could be used for constructing a more appropriate (suitable, feasible, and acceptable) short-term consumer credit interest rate model. This would be a model that can deal with the adverse aspects of the current model that makes short-term consumer credit to be associated with high-interest rates while promoting its positive attributes that continue to drive its demand. Therefore, employers and merchants have since been espoused as the social actors to provide meanings that would inform a suitable, acceptable, and feasible model. In view of the foregoing, the research is very important to policymakers, producers of goods and services, consumers, merchants, financial institutions, and academia because it basically aims to set a basis upon which to address the downside of short-term consumer credit that causes high-interest rates while promoting its upside. This is because the current position is unsustainable for stakeholders and detrimental to all economic players. If the study is not done, it will lead to undesirable developments such as perpetual household financial distress, poor productivity due to having a stressed workforce, liquidity constraints, and several other adverse developments for stakeholders, unpleasantly affecting the general financial welfare.
H. L. Chikweti et al.
2
Literature Review
2.1 Money, Capital, and the Credit System Credit has existed ever since civilized humans can be traced in various forms (Hudson et al. 2004). It has also existed in many forms and ways. However, credit, as known in the twenty-first century, dates back to eighteenth century; the conversion of money into capital through production (Duncan 1976). The original premise was to make it feasible for producers of goods and services to get money from third parties, such as banks and other financial establishments. The understanding was that the borrowers would use the money to produce products that would be sold at a higher rate of return than that of the interest charged by the third party from where they got the initial money, as illustrated in Fig. 1. This was the background against which the credit market as known in the twenty-first century was birthed. Therefore, the entire interest rate model or blueprint of credit facilities pricing was premised on the preceding ideology. This blueprint was credible for the credit market until the rise to prominence of short-term consumer credits. By the mid-2000s, this industry had skyrocketed to nearly $50 billion in value (Bhutta et al. 2015; Servon 2017; Stegman 2007). This sector specializes in providing small, unsecured loans based on the borrower’s near-term income, like their current salary (Bhutta et al. 2015; Schwartz and Robinson 2018; Servon 2017; Stegman 2007). The main driver behind the popularity of short-term loans is the convenience they offer in terms of quick liquidity (Islam and Simpson 2017). However, high-interest rates and the potential exploitation of borrowers have also raised concerns (Schwartz and Robinson 2018). According to Schwartz and Robinson (2018), borrowers who cannot repay their loans have three options: (1) extending the loan, (2) repaying the loan and immediately borrowing again, or (3) defaulting and incurring additional fees, such as bounced check fees and insufficient funds fees, while still owing the original loan amount. Schwartz and Robinson (2018) argue that these practices can lead to debt traps and cause financial distress for borrowers. As a result, policymakers, academics, and other stakeholders are concerned about the rapid growth of payday lending, which could be an indication of growing worries (Servon 2017). In most countries, the economic situation is supportive of the growth of short-term consumer credit, leading to predictions of continued growth (Servon 2017; Yankovskaya et al. 2021). These challenges are prevalent in affluent and developing countries like Zambia.
The Constructs of Short-Term Consumer Credit …
413
Fig. 1 Money—capital cycle. Source Developed by authors based on Duncan (1976)
STAGE 1: Industrialist Appears on the Market with Money
STAGE 5: Commodities are sold at a higher value then capital (Transforming capital back into money)
STAGE 4: Commodities are Produced
2.2 The Zambian and Developing World Context The banking sector in Zambia experienced a substantial increase in lending to households between 2009 and 2018 (Bank of Zambia 2018). This shift in lending patterns is reflective of changes in the financial services industry in Zambia; it can also be seen in other emerging nations (Morgun et al. 2021). The surge in household lending during that period can be attributed to the emergence of a new market niche catering to short-term financing needs for individuals who found themselves in situations requiring immediate financial assistance without the necessity of substantial loan amounts. These borrowers sought to address pressing financial needs, particularly to repay their long-term loans with commercial banks. In 2009–2018, many households obtained long-term loans from commercial banks, particularly first-time borrowers who lacked the experience of using these loans effectively (Bank of Zambia 2018). Furthermore, a notable aspect of these loans was that they were often not invested in income-generating businesses. Consequently, borrowers experienced a decrease in their net income after the loan deductions were made. The two main groups of borrowers who obtained these long-term loans were those who bought consumables (e.g., household items or vehicles) and those who bought land to enter the real estate market. Both groups faced difficulties due to insufficient loan amounts and decreased revenue, making it challenging for them to meet unexpected financial needs.
STAGE 2: Industralist Turns Money Into Capital by buying/combining Labor Power and Means of Production
STAGE 3: Production takes Place
As a result of this, there emerged a market of short-term loan borrowers who also serviced their long-term loans with other financial institutions. Nonetheless, commercial banks and other prominent financial institutions exhibited limited interest in this market niche primarily due to the elevated risk associated with these borrowers. In most cases, the costs of mitigating this risk outweighed the potential benefits for commercial banks and financial institutions, leading to the emergence of alternative financial organizations that offered short-term loans at high-interest rates due to the perceived danger.
3
Review of Similar Studies and Critique
Despite studies conducted in Zambia on short-term consumer credits, none have specifically addressed the high cost of today’s short-term consumer credits by taking a risk management perspective and addressing this issue through interest rate cost factors, which is the impetus for this research (Miller 2013). Although they have so far failed, prior research has either pushed for reactive measures, including policy and regulatory actions or just highlighted the issue (Bhutta et al. 2015; Fekrazad 2020; OECD 2019; Skiba and Tobacman 2011; Yin 2018). A study that aims to comprehend the concepts of short-term consumer loans from the perspectives of important stakeholders (e.g., employers and merchants) is required in light of the aforementioned background. The fundamental goal of this is to build a solid understanding of what drives high-interest rates and related
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phenomena so that it may be utilized to build a short-term consumer credit interest rate model that is more appropriate (suited, attainable, and acceptable). This would be a model that can address the drawbacks of the current model, which links short-term consumer borrowing to high-interest rates while highlighting its advantages, which continue to fuel the demand. Employers and businesses have thus been advocated as the social actors who can supply meanings that would guide the development of a viable, agreeable, and workable model.
The questions also seem to be too many for in-depth interviews. However, the rationale was that since all the questions were somewhat related and open-ended, most of the questions were answered without even asking them directly through explanations of the asked questions which were asked at first. This means that the purpose of creating these questions was to guide the interviews so that if respondents missed an important area for the study when answering the questions posed, they could be asked directly.
5.2 Employers
4
Lessons Learnt Employers were asked the following questions:
The high consumer interest rate and its related problems cannot entirely be solved by highlighting the problem or advocating for more regulation because it is essentially a risk management issue that originates from the model currently being used to price short-term consumer credit. Though regulation can bring positive changes (Bernier and Plouffe 2019; OECD 2019), relying solely on it has been shown to have limited success. This is because lenders tend to alter their loan practices to sidestep regulations regarding interest rates, loan durations, loan amounts, and payment methods, often by allowing loans to roll over (He and Tian 2020; Malone and Skiba 2020). The implementation of regulations also faces challenges arising from jurisdictional variations and the intricate nature of short-term consumer debt risk drivers. These factors can impact borrowers’ ability to manage such debts effectively (Li et al. 2012; OECD 2019). On the other hand, literature shows that aspects concerning interest rates, demand, and stakeholder behaviors from the perspective of employers and consumers can be used to understand the short-term consumer credit constructs (Skiba 2012). In view of this, a constructivist inquiry with regard to interest rates, demand, and behavior was adapted to inform the study. The qualitative aspect is presented in the form of themes or semantic units, which are disclosed below.
5
Methodology
5.1 Qualitative Study Overview The research adopts the suitability, acceptability, and feasibility format. However, being based on the constructivist worldview, the questions were open-ended, and the suitability, acceptability, and feasibility framework were only used as a lens through which to view the questions (Creswell 2009). The following are the qualitative questions that were asked in the in-depth interviews with employers and merchants. It is worth acknowledging that these questions were asked only to employers and merchants (Zinko et al. 2007).
1. Do you know about your employees getting short-term loans, such as payday loans, and why do they get them? 2. What do you think about the fact that payday loans are high-cost loans? 3. If your employees were offered payday loans at a zero-interest rate on the condition that they would not receive money, would this be good for your employees? Would you encourage or facilitate your employees to sign up for such loans? 4. Can it be possible for employees at your organization to express grievances about low salaries as a result of decreased net income from repaying high-interest shortterm loans? 5. Is it possible that you could increase the net income of your members of staff by them simply?
5.3 Merchants Merchants were asked the following questions: 1. What happens to your sales when individual consumers have an increase in net income? 2. Could you sell your goods or services on credit for an average of 30 days if the risk of default was reduced to zero by paying through the employer’s payroll, insurance company, underwriter, or all of these options combined? If yes, what would be the motivation for doing this? If not, what would be the reason for this? 3. Can you sell your products on credit for an average period of 30 days? 4. Could such information will become permanent information about him or her that will be available to other merchants, his or her peers, or any other person(s) who want to do business with him or her, increase your confidence that you expect him or her to default, and why?
The Constructs of Short-Term Consumer Credit …
5. Do you think that people’s gender, age, parental status, and level of education or experience at work or business (for entrepreneurs) have a bearing on whether or not they can be trusted in debt-based business transactions? Merchants and employers who sell or produce essential goods and services, such as food or electricity, or water utility suppliers, were sampled by availability sampling (Bogoviz et al. 2020a; Mwanaumo et al. 2021).
6
415
the NVivo package. Responses obtained from the employers are in Table 1. The responses obtained from the merchants are presented in Table 2. Tables 1 and 2 provide an overview of the viewpoints of employers and consumers concerning the elements of short-term consumer credit. These results are from an average of twenty-four (24) interviews with employers and merchants from across nine provinces in Zambia. The average suitability of an alternative low-cost interest model was 81.5%, acceptability was about 80.8%, and 78.35% for feasibility.
Results
Qualitative data presented in textual form was analyzed in two stages. The first stage aimed to establish concepts from the meaning units. Thematic analysis was adopted. In the second phase, relational analysis was done using semantic analysis. Both stages were performed on the computer using Table 1 Summary of employers’ responses to short-term consumer credit
7
Conclusion
The primary objective of the research was to gain insights into the various aspects of short-term consumer credit as perceived by employers and merchants in Zambia. By
Indicator
Core
Interest rates
This notion is subscribed to by 76.9% of respondents
Benefits of low-interest rates in short-term loans
This notion is subscribed to by 82.4% of respondents
Employer’s knowledge of staff utilization of short-term loans and reasons for usage
55.6% being aware of their usage and purposes, while 22.2% are unsure of the reasons
Increase in net income with affordable short-term loans
66.7% agreement
Adverse impact
86.7% express agreement
Source Developed by the authors
Table 2 Merchants responses analysis
Indicator
Core
Consumer net income increase and boosts in merchant sales volume
Mostly results in increased sales volume
Suitability
80% of respondents concur with this notion
Merchants reliance on consumer trust for debt-based transactions
Consider work experience, entrepreneurial background, and education level
Acceptability
64.29% of respondents share agreement with this notion
Merchants extending 30-day credit with reduced default risk
The majority would offer credit facilities
Feasibility
90.4% of respondents express agreement with this notion
Payroll, insurance, or underwriters reduce default risk for extending credit facilities
The majority consider these as suitable
Acceptability
83.4% agree
Reputation playing a role in credit facility decisions
The majority
Acceptability
80% of respondents agree with this notion
Merchants determine the right time
The majority consider at least six months
Acceptability
89.5% agree
Consumer commitment to maintaining a good reputation is valued
The majority
Suitability
80.9% agree
Source Developed by the authors
416
understanding the underlying factors contributing to high-interest rates and related phenomena, the research aimed to establish foundational knowledge that could be utilized in constructing a more suitable, feasible. The overall findings, combined with existing literature, yielded valuable information that could guide the development of an appropriate low-cost, short-term consumer credit interest rate model. This research serves as a solid foundation for addressing the challenges associated with short-term consumer credit, leading to the creation of a model that meets the criteria of being suitable, acceptable, and feasible.
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Methodological Aspects of Budgetary Monitoring of the Implementation of National Projects in the Regions of Russia Nadezhda I. Yashina , Svetlana N. Kuznetsova , Elena P. Kozlova , Ekaterina P. Garina , and Evgeniy Yu. Denisov
Abstract
1
The research aims to form methods and techniques for budgetary monitoring of the implementation of national projects in Russia in the context of internal and external changes and contradictions in the development of the state budget system. The authors carried out budget monitoring based on economic analysis, mathematical statistics, and other scientific methods. The selected methodological mechanism was tested on the information of the Federal Treasury of Russia for 2021 and the Federal State Statistics Service of the Russian Federation. Identification of potential threats to the implementation of national projects in the context of regions based on their classification with high, satisfactory and minimal levels of risk makes it possible for public authorities at all levels to regulate public financing. The methodological mechanism of budget monitoring is based on the unification of indicators of the Ministry of Finance of Russia, which can be expanded by taking into account target criteria. Keywords
Budgetary monitoring Value oriented Budget strategy National projects Budget indicators Budget system Risk of national projects JEL Classification
H7
H61
L5
R11
N. I. Yashina (&) Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russia e-mail: [email protected] S. N. Kuznetsova E. P. Kozlova E. P. Garina E. Yu.Denisov Minin Nizhny Novgorod State Pedagogical University, Nizhny Novgorod, Russia e-mail: [email protected]
Introduction
Scientists and practitioners in Russia note the important mission of implementing national projects. Aganbegyan et al. note that “the reconfiguration of the system of national projects through the redistribution of funds” should contribute to the “development of technology and human capital” (Aganbegyan et al. 2020). Bondarenko notes that it is important to refer to the experience of countries that used the project approach to forming and evaluating national projects and government programs and offer their own mechanism for the implementation of national projects and identifying implementation problems on the example of other countries to adapt their best practices (Bondarenko 2020).State funding of science and education for the country’s economy was studied in the scientific works of Hamdan et al. (2020). To provide financial support for national projects, it is necessary to assess the financial potential and sustainability of regional and local budgets (Kuzenkova 2021). Vaganova et al. pay great attention to the information base used to assess the effectiveness of public funding through the “Electronic Budget” system and the “Budget for Citizens” project (Vaganova et al. 2020). Analyzing methods of financial monitoring, it should be noted that none of them is perfect, which confirms the lack of a unified system for evaluating efficiency. Therefore, complex diagnostics should be used, which includes several methods for calculating indicators. The first stage includes the analysis of information from the Ministry of Finance of Russia on implementing national projects: demography, health, education, etc. In total, there are 14 national projects. Implementing these projects will solve important tasks to improve the lives of people in Russia. Russian regions live in conditions of sanctions obstacles, a special military operation, economic restructuring, problems, and the transformation of the social sector. These factors are a powerful catalyst for implementing mechanisms that allow us to strive to achieve national goals in the social
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_69
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sector, construction, ecology, digital transformation, and technological security. Target indicators and financial provisions of national projects should be subject to comprehensive monitoring.
2
Materials and Method
The iminfin.ru portal presents the implementation of the budgets of the constituent entities of the Russian Federation under national projects. Methodological tools include analytical and logicalstructural approaches, comparative economic methods, analysis, and statistical methods of information processing. Budget monitoring includes the following indicators: • Budget revenues as of January 1, 2022, rubles per person (I1). • Growth rate of budget revenues as of January 1, 2022, per person (I2). • Execution of the budget in the context of national projects, in percent (I3). • Execution of the budget in the context of national projects per inhabitant, in rubles (I4). Next, we form the normative values of budget indicators of budget monitoring that characterize the implementation of national projects. The second stage is the unification of budget indicators. They vary from 0 to 1 according to formulas (1) and (2). When maximizing budget indicators, we apply the following formula: Iij ¼
Ii max Iij : Ii max Ii min
ð1Þ
When minimizing budget indicators, we apply the following formula: Iij ¼
Iij Ii min ; Ii max Ii min
ð2Þ
where Iij—actual value and Iij*—the standardized value, Ii max—the greatest and Ii min—the lowest calculated value of the ith budget indicator among the regions. The best budget indicator has a unified value of zero. The worst budget indicator has a unified value of one. The third stage is the identification of two budget monitoring groups based on four indicators. The first group is the level of financial support for national projects (NFNP) in the region: • Budget revenues as of January 1, 2022, rubles per person (I1).
• Growth rate of budget revenues as of January 1, 2022, per person (I2). • Execution of the budget in the context of national projects, in percent (I3). The second group is the level of accessibility of national projects to each inhabitant (DNPZh) of the country. It shows the execution of the budget in the context of national projects per inhabitant in rubles (I4). The range of indicators can and should be expanded. It is expedient for the Ministry of Finance to select intermediate and final indicators together with interested state and public structures. It is important that the indicators also relate to the indicators of the implementation plan. These are indicators of states, contingents, as well as financial support for wage growth and the purchase of special equipment. Further, the regions are ranked in two groups according to the values of unified budget indicators Ivolj , according to which the highest level is assigned to the region with the lowest value. jIj ¼
n X i¼1
Ilij ;
ð3Þ
where jIj —is a complex unified budget indicator of the jth region of the national project implementation; the smaller its value, the better. The final ranking was carried out according to the complex unified budget indicator of the jth region of the national project implementation. If we consider the functionality of financial monitoring as a mechanism that is in a state of constant modernization, then it is necessary to determine the initial stage of this process. As a rule, comprehensive diagnostics is the first phase of any restructuring. Let us say diagnostics are carried out, and the main flaws that require intervention are found. A set of measures for improvement and modernization is being carried out. However, this is not enough. It is necessary to periodically analyze to maintain the current state and improve it in the future. Suppose that one of the regions has an excellent performance in implementing national projects for a given period. We can confidently say this is not a reason to abandon periodic financial diagnostics and further modernize financial monitoring. The world is rapidly developing, new changes are entering the life of the state and the entire planet, and the operational mechanism of financial monitoring is losing its effectiveness. Therefore, the emergence of new approaches to financial monitoring is an integral part of budget management.
Methodological Aspects of Budgetary Monitoring …
3
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Results
The results of the proposed methodology are formed based on empirical calculations and are presented in Table 1. As calculations show, the regions with the best results in implementing national projects include Yakutia, the Sakhalin Region, the Vologda Region, the Moscow Region, Moscow, Tatarstan, the Republic of Karelia, etc. The regions with average results in implementing national projects include the Novgorod Region, St. Petersburg, Primorye Territory, Belgorod Region, Sverdlovsk Region, Kursk Region, the Republic of Crimea, Sevastopol, the Republic of Bashkortostan, etc. The Nizhny Novgorod Region belongs to the second level. According to the Governor, “National projects are a driver for the development of the entire region, already an integral part of our life. New schools and kindergartens, modern equipment and transport to hospitals, hundreds of kilometers of repaired roads, new and updated treatment facilities, liquidated landfills are only part of the implemented activities. It is
simply impossible to list all the implemented activities due to their large number. Some national projects with colleagues were rated as “excellent”: culture, ecology, roads, support for small and medium-sized businesses, increasing labor productivity.” In 2021, the Nizhny Novgorod Region spent 31 billion rubles of public funds to finance national projects, 95.5% of the plan, and in 2020, the Nizhny Novgorod Region spent 31.2 billion rubles of public funds to finance national projects, 97% of the plan. In 2022, the Nizhny Novgorod Region spent 45.2 billion rubles of public funds to finance national projects, 97.4% of the plan, including from the federal budget—30.7 billion rubles, 97.9% of the plan, from the regional budget—14.5 billion rubles, 96.4% of the plan. Many operational tasks to ensure state funding for the functioning of institutions in the non-productive sector are now being solved at the expense of financing state programs in all country’s regions. An important national project is the national project “Healthcare.” Its implementation period is from January 1, 2019, to December 31, 2024. Another important project is
Table 1 Risks of implementation of budgetary indicators of budgetary monitoring characterizing the implementation of national projects (a fragment of calculations) The subject of the Russian Federation
Complex indicator of the first group
Score for the first group
Complex indicator of the second group
Score for the second group
Complex indicator of two groups
The final score of the two groups
First level Sakhalin Region
1.57
9
5.58
8
7.14
Vologda Region Chechen Republic
5
1.23
2
6.34
17
7.57
8
1.74
14
6.60
27
8.34
16
Tyumen Region
1.06
1
7.34
72
8.40
19
Moscow
1.51
6
6.96
46
8.48
22
Tatarstan
1.56
8
6.97
48
8.53
23
Lipetsk Region
1.69
11
7.16
57
8.86
30
Republic of Ingushetia
2.96
76
5.91
10
8.88
31
Volgograd Region
1.88
24
7.00
49
8.88
32
Second level
Amur Region
2.15
41
6.73
33
8.88
33
Samara Region
2.38
56
6.67
28
9.05
44
Kurgan Region
2.05
31
7.03
50
9.08
45
Saint-Petersburg
1.38
3
7.71
88
9.09
46
Tver Region
2.99
78
6.11
12
9.09
47
Primorye Territory
1.93
25
7.16
56
9.09
48
Belgorod Region
1.78
17
7.36
75
9.14
49
Sverdlovsk Region
1.86
23
7.29
68
9.15
50
Rostov Region
2.79
73
7.51
81
10.30
81
Omsk Region
4.58
88
7.59
86
12.17
88
Third level
Source Compiled by the authors
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the national project “Demography,” with the implementation period from January 1, 2019, to December 31, 2024. The national project “Healthcare” aims to increase life expectancy to 78 years. The goal of the national project “Demography” is to increase the proportion of the population (up to 70%) that is actively involved in sports and physical education. The main indicator is the growth of the Russian population. The values of life expectancy are rather disappointing. It is not age over 80. Russia is a state of widows. The life expectancy of men is almost ten years less. Russia is one of the “saddest” in terms of this indicator. The Great Patriotic War, for the first time, outlined a “bitter” problem. Then this gap was nine years. Reforming the financial policy in the country, it is important to set goals and objectives, the implementation of which will contribute to the development and happiness of the country’s population. Life expectancy indicators testify to a social catastrophe. The strategic goal of increasing life expectancy to 80 years and older has not been achieved. In 2021, the Novgorod Region participated in 12 national projects, for the implementation of which federal and regional funds were allocated in the amount of 31.2 billion rubles—97% of the planned amount. The following reasons cause the high risks of the implementation of national projects: • Non-fulfillment by contractors of obligations under state contracts, violation of the deadlines for the performance of work.
Table 2 Achievement of the strategic goals for life expectancy and population, declared in the national projects
• Savings in appropriations as a result of competitive procedures, non-fulfillment by contracting organizations of obligations under contracts. • The duration of the competition. • Untimely submission of documents by contractors for the final payment for the work performed. • Non-fulfillment of budget assignments associated with a decrease in the price of the contract as a result of competitive procedures, etc. Cost-effective management tools (e.g., quality competition in procurement and economic incentives to achieve planned results) are not used enough. Table 2 demonstrates the achievement of the strategic goals for life expectancy and population declared in the national projects. The information is compiled based on forecast and statistical data from Russia and the Government of the Novgorod Region. The Social Ministries of the Government pay attention to the reasons for the gap between the life expectancy of men and women. Men are prone to risky behavior, which leads to injuries; they die more often in accidents and other dangerous situations. Moreover, men visit doctors less often; diseases start, and their treatment begins late. Additionally, men consume more alcohol. In Russia, there are such opportunities because the tax burden in the country is low. The year 2023 expects a gross domestic product of 150 trillion rubles and federal budget revenues of 26 trillion rubles, including non-oil and gas of 16 trillion rubles.
Years
Russia life expectancy
Population of Russia
Life expectancy in the Novgorod Region
Population of Novgorod Region
2022 forecast
72.4
145,478,097
70.26
3,108,918
2021
70.06
146,171,015
68.93
3,176,552
2020
71.54
146,748,590
70.33
3,202,946
2019
73.34
146,780,720
72.32
3,214,623
2018
72.91
146,880,432
71.69
3,234 752
2017
72.7
146,804,372
71.88
3,247,713
2016
71.87
146,544,710
70.75
3,270,203
2015
71.39
146,267,288
70.17
3,281,496
2014
70.93
143,666,931
69.53
3,281,496
2013
70.76
143,347,059
69.42
3,289,841
2012
70.24
143,056,383
68.98
3,296,947
2011
69.83
142,865,433
68.48
3,307,648
2010
68.90
142,833,502
67.0
3,310,597
Source Compiled by the authors
Methodological Aspects of Budgetary Monitoring …
National projects are necessary to ensure the normal prosperous life of the people of Russia. They are aimed at obtaining a social effect in the future, but it is important to finance a happy future now and in every region. Each national project addresses the problem of the future, has goals and public funding, and is aimed at obtaining results. Results are target indicators. However, the lack of methodological support for the assessment of indicators and transparent results of their implementation, indicating sources of information for assessing their implementation, makes it difficult to investigate problematic points of non-fulfillment and accelerate the achievement of the target result. The disadvantages include the lack of transparency in the criteria for national projects and state programs, their duplication, and the lack of transparency of state funding for achieving target indicators. “Electronic budget” allows you to do this. Shaping the future of the country through the implementation of national projects is their distinctive feature, which requires adjustments to the rational use of budgetary funds to improve the quality and standard of living of people. Budgetary monitoring of national projects will prevent violations and hold accountable for the inefficient use of public funds. During the implementation of national projects, control bodies identify both misuse of budgetary funds and fraud in public procurement. Achieving strategic national goals is related to improving life, investing in the social sphere to increase the country’s population and life expectancy up to 80 years, and eliminating the poor. To implement these tasks, professional resources with a high moral life position are needed. The implementation of large-scale social transformations is possible with high morality in society. High moral categories and traditional values are taught by teachers and family. This requires government financial support. Doctors are a special category of people. Without them, it is impossible to increase life expectancy up to 80 years and provide medical care, including high-tech. In this case, we need government financial support. Comparing the period of Russia with the Soviet period, we understand that public funding of social sectors was at a higher level. Regional assessment and grouping in accordance with the levels of financial support of national projects and the availability of national projects to each inhabitant of the country showed that the inclusion of a particular region in a certain level, in accordance with the proposed methodology, makes it possible to develop measures for the speedy implementation of national goals and national projects. In modern Russia, there are problems with the functioning of the healthcare system, which includes personnel, current financial and material support, investments. Doctors have low wages, and therefore, young doctors burn out in 2– 3 years and leave the profession. New medical equipment also requires the training of doctors, which increases
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funding. National projects and state programs should solve these problems. However, the target results were not achieved. The authorities should analyze the healthcare system in the country. It is important to analyze the history of the development of the Soviet healthcare system. One of the positive aspects is the abolition of the insurance system and the transfer of its functions to the Russian Ministry of Finance. Reducing the excessive management structure will save public funding for the provision of medical care to the population of the country. Authorities at all levels should increase funding for medical institutions and stimulate the development of new medical technologies, so that Russia has “national sovereignty to receive quality medical care.” The proposed methodological toolkit for evaluating the effectiveness of the implementation of national projects makes it possible to identify negative aspects and eliminate them. The methodological tools are applicable to assess the effectiveness of the implementation of both individual national projects and their totality. The largest share is occupied by national projects in the field of health and demography. The understanding of the demographic problem reflects the national project “Demography.” Stages of perestroika, “shock therapy.” transition to the market affected the birth rate and mortality in the country. It should be noted that there have been an average of 1.5 children per family since this time period. This is the path to extinction. It is clear that in order to increase the population, each family must have 3–4 children. The average age at which a woman gives birth to her first child is 25 years, and the high mortality rate for men of childbearing age is 25–45 years. Consequently, national projects should be implemented now and be aimed at simultaneously stimulating the birth rate and reducing the death rate of men. State funding of these national projects will improve demographic processes, achieve “ensuring sustainable natural growth in the population of the Russian Federation.” The criteria for the implementation of national projects should cover the entire demographic process: conception, birth, education, personality formation, talent development and the acquisition of a profession. Almost 25 years! All national projects are aimed at increasing the well-being of the country’s population. The methodology reflects the implementation of all national projects. However, this methodological toolkit makes it possible to evaluate each national project, identifying the strengths and weaknesses of its implementation. The technique makes it possible to evaluate the goal of implementation, as well as the achievement indicators. However, it draws attention to the fact that some methods for calculating indicators, their measurement, and the final goal are not sufficiently developed and blurred. State regional programs, which should be associated with the implementation of national goals, are not developed insufficiently in terms of
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indicators and financial volumes. On the other hand, financial monitoring of reporting data indicates that national projects are underfunded. According to Decree No. 204, the main result is the goals set by the national projects. A significant drawback is the lack of a “step-by-step” plan for achieving goals. Ministries and departments need to develop timelines and measures to achieve goals. Line ministries should be responsible for achieving targeted social well-being indicators and improving the population’s quality of life (Yashin et al. 2018).
4
Conclusion
As a result of assessing the implementation of national projects for the financial support of national projects and the availability of national projects to each inhabitant of the country, the following negative trends can be identified: • The development of indicators for national projects is not always linked to the real possibilities of their financing. • Underfunding of national projects violates the complexity of the implementation of national goals, which reduces the effectiveness of solving socio-economic problems. • Insufficient control over the implementation of national projects by the representative and executive authorities. • The lack of sufficient state statistical reporting leads to inefficient spending of budget funds and their dissipation.
References Aganbegyan AG, Klepach AN, Porfiryev BN, Uzyakov MN, Shirov AA (2020) Post-pandemic recovery: the Russian economy and the transition to sustainable social and economic development. Stud Russ Econ Dev 31:599–605. https://doi.org/10.1134/ S1075700720060027 Bondarenko TG (2020) Comparative analysis of implementation targets of national projects in developed countries managing socio-economic indicators in Russia. Utop Prax Latinoam 25 (Esp. 5):370–378. https://doi.org/10.5281/zenodo.3984269 Hamdan A, Sarea A, Khamis R, Anaswehc M (2020) A causality analysis of the link between higher education and economic development: empirical evidence. Heliyon 6(6):e04046. https://doi. org/10.1016/j.heliyon.2020.e04046 Kuzenkova VM (2021) Effective development institutions. Public Adm Issues 5(SII):161–175. https://doi.org/10.17323/1999-5431-2021-05-161-175 Vaganova O, Konshina L, Polevoy I, Palashenkov B, Sizyoongo M (2020) Implementation of national projects as the main instrument for increasing the economic growth of Russia. In: Proceedings of the DEFCS 2020: 8th international conference on contemporary problems in the development of economic, financial and credit systems. Atlantis Press, Belgorod, Russia, pp 270–274. https://doi. org/10.2991/aebmr.k.201215.057 Yashin SN, Yashina NI, Pronchatova-Rubtsova NN, Kashina OI (2018) Methodical approaches to assessing the budget potential of the region taking into account the innovative development of high-tech industries. In: European financial systems 2018: proceedings of the 15th international scientific conference. Masaryk University, Brno, Czech Republic, pp 849–856
Organizational and Economic Mechanisms of Sustainable Development of Industry in the Kyrgyz Republic Svetlana V. Zatravina , Mukaddas A. Dzhorobaeva , Aizhamal A. Bekturganova , Kubanych K. Toktorov , and Guras D. Zhaparov
Abstract
1
The research aims to study the prospects for accelerating and improving the efficiency of Kyrgyzstan’s neo-industrialization. Paper determines the contribution of such mechanisms as quality certification and environmental certification of industrial products in the implementation of SDGs using the method of correlation analysis. The research is conducted in the dynamics of 2013–2022 based on the experience of the Kyrgyz Republic. The key conclusion is that no single mechanism is sufficient to support the SDGs fully. To provide the fullest and most balanced support of the SDGs in industry, the authors recommend the systemic application of the considered mechanisms in the Decade of Action. The research results also lay the foundation for the continuity of neo-industrialization of the Kyrgyz Republic and strengthen the scientific and methodological basis for strategic industrial development of the Kyrgyz Republic in 2024 and after that. Keywords
Sustainable development SDGs Industry Neo-industrialization Kyrgyz Republic
JEL Classification
Q01
L52
N65
O14
O25
O31
O32
S. V. Zatravina (&) G. D. Zhaparov Scientific Research University “Kyrgyz Economic University named after M. Ryskulbekov,”, Bishkek, Kyrgyzstan e-mail: [email protected] M. A. Dzhorobaeva K. K. Toktorov Osh State University, Osh, Kyrgyzstan A. A. Bekturganova Kyrgyz State University named after I. Arabaev, Bishkek, Kyrgyzstan
O33
Introduction
Twenty-first century marked a shift in priorities in the sectoral specialization of the economy. In contrast to the previous period, when the course of post-industrialization was implemented, one of the arguments of which was an environmental improvement, a series of events of the early twenty-first century formed a solid argument, which served as the basis for the consolidation of neo-industrialization. Recession in 2008 showed that post-industrial economies are particularly vulnerable to crises and most prone to recession. Pandemical crisis, as well as the subsequent aggravation of the international sanctions crisis in 2022– 2023, has pointed to the unacceptability of dependence of economic systems on external supplies of industrial products (including agro-industrial products) because it is associated with high risks of shortages. Recognizing this, contemporary economic systems actively develop the real sector. Primary industrialization began with the first industrial revolution and reached its peak in the twentieth century. There is now a repeated and more complex process of industrial development, which can be called neo-industrialization. The peculiarity of industrial progress is that its priority is to support sustainable development, the essence of which is most fully and accurately reflected in the 17 SDGs. In the Kyrgyz Republic, the neo-industrialization of the economy is carried out in accordance with the National Strategy (Ministry of Justice of the Kyrgyz Republic 2023). In the Decade of Action, it is reasonable to expect the continuity of neo-industrialization processes in the Kyrgyz Republic and the adoption in 2024 of a new strategy, which will focus on the following years. The problem lies in the uncertainty of the organizational and economic mechanisms (O&E Ms) of sustainable industrial development in the Kyrgyz Republic, which makes it challenging to implement the strategy in practice and hinders and reduces the effectiveness of
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_70
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neo-industrialization. This research seeks to contribute to solving the problem and aims to study the O&E Ms of sustainable industrial development of the Kyrgyz Republic and determine the prospects for better disclosure of the potential of these mechanisms to accelerate and improve the efficiency of neo-industrialization of the Kyrgyz Republic.
The research is conducted in the dynamics of 2013–2022 based on the experience of the Kyrgyz Republic (Table 1). Based on the values of the correlation coefficients, the authors make conclusions about the extent to which the considered mechanisms support the SDGs.
4 2
Nowadays, two alternative approaches to managing sustainable industrial development have emerged. The first approach involves quality management in industry (Gallego and Gutiérrez Ramírez 2023). This approach focuses on standardization, certification, management, and quality control of industrial products (Daoud Ben Arab 2022; Yadav et al. 2022). Great importance is given to improving the environmental properties of industrial products (Mavlyanova et al. 2015) and developing green industrial production (Turginbayeva and Shaikh 2022). In this approach, quality and environmental certification of products act as O&E Ms of sustainable industrial development (Fokina et al. 2021; Petrenko and Stolyarov 2019; Su et al. 2022; Wang 2023). Simultaneously, the technological mode of the industry remains unchanged. The second approach involves the active participation of industries in the Revolution 4.0 (Lobova et al. 2020). Sustainability in the industry is supported by the introduction of smart technology (Sergi and Popkova 2022). The O&E M of sustainable industrial development in this approach is the development of high-tech industrial production (Liu et al. 2023; Tu et al. 2023). Although the described approaches are widely represented in the published scientific literature, the contribution of the O&E Ms corresponding to these approaches to the sustainable development of the industry is poorly understood and uncertain. This is the research gap that this research seeks to fill. To this end, the research conducts an econometric study, which analyzes the contribution of alternative O&E Ms of sustainable industrial development in implementing SDGs in Kyrgyz Republic.
3
Results
Literature Review
Method
Research determines the contribution of O&E Ms of sustainable industrial development—quality certification, environmental certification of industrial products (WIPO 2023)—to implementation of SDGs (UN 2023) is separately determined by using the method of correlation analysis.
To determine the support of 17 UN SDGs by the O&E Ms of sustainable industrial development of the Kyrgyz Republic in 2013–2022, the authors conducted a correlation (Table 2) in percent. The mechanism of environmental certification in the industry contributes to the sustainable development in the following aspects: • Supporting employment, economic growth (SDG 8), better human development through green jobs (SDG 4), and green innovation (SDG 9). • Improving water supply, sanitation (SDG 6), and clean energy development (SDG 7). • Eliminating hunger based on green agro-industry (SDG 2), sustainable territorial development (SDG 11), ecosystem conservation (SDG 14), and improved health through green industrial growth (SDG 3). • Strengthening effective institutions (SDG 16). The mechanism of industrial quality certification contributes to the sustainable development in the following aspects: • Improving water supply and sanitation (SDG 6). • Improving the industrial products quality (SDG 9). • Developing responsible production and consumption (SDG 12). • Strengthening institutions (SDG 16) and partnerships (SDG 17). The mechanism for the development of high-tech industries in the industry contributes to the sustainable development of the Kyrgyz Republic in the following aspects: • Creating gender-neutral workplaces (SDG 5) and generally fair workplaces (SDG 10). • Improving the sustainability of industry: responsible production and consumption of industrial products (SDG 12), climate-responsible industrial production (SDG 13), and ecosystem protection (SDGs 14–15); • Developing partnerships for sustainable development (SDG 17).
Organizational and Economic Mechanisms of Sustainable …
427
Table 1 O&E Ms for sustainable industrial development and implementation of 17 UN SDGs in the Kyrgyz Republic Year
“ISO 14001 environmental certificates” (WIPO 2023)
“ISO 9001 quality certificates” (WIPO 2023)
“High-tech manufacturing, %” (WIPO 2023)
“Goals scores” (UN 2023) 1
2
3
4
5
6
7
2013
0.5
0.8
3.9
77.6
58.6
67.8
82.8
63.5
64.7
79.2
2014
0.5
0.8
3.1
84.8
58.9
68.4
84.6
65.6
64.9
79.0
2015
0.4
0.7
4.6
81.1
60.2
70.0
85.1
63.2
65.2
76.4
2016
0.3
0.4
3.5
84.6
60.3
71.4
86.2
62.5
65.5
77.8
2017
0.3
0.1
3.4
84.7
60.3
72.7
95.4
61.6
65.7
81.6
2018
0.2
0.1
2.6
88.1
61.6
74.0
94.9
60.6
65.9
78.6
2019
0.6
0.7
2.1
90.3
61.6
75.8
95.1
60.5
66.1
80.0
2020
1.4
1.0
2.0
82.3
61.6
75.8
94.9
58.9
66.5
80.0
2021
0.6
0.9
1.6
82.9
61.6
74.8
94.9
58.9
66.5
80.0
2022
0.2
0.7
1.2
85.7
61.6
74.8
94.9
58.9
66.5
80.0
Year
“Goals scores” (UN 2023) 8
9
10
11
12
13
14
15
16
17
2013
55.5
15.0
94.8
82.8
95.2
91.9
58.9
71.0
63.4
76.9
2014
57.6
12.8
96.6
83.3
95.1
92.2
58.9
70.9
62.1
72.9
2015
58.8
13.8
94.5
85.4
95.1
93.6
58.9
70.9
63.6
74.1
2016
59.1
16.4
96.6
85.7
95.0
93.9
58.9
70.9
63.8
73.1
2017
62.7
21.8
96.6
87.8
95.0
94.3
58.9
70.9
64.4
71.5
2018
62.5
29.6
96.3
89.5
94.9
93.0
58.9
70.9
67.3
70.2
2019
63.0
32.2
93.5
86.8
94.9
93.3
58.9
70.9
67.3
70.1
2020
61.3
32.4
93.5
89.6
94.9
93.2
58.9
70.9
67.7
70.1
2021
61.0
32.4
93.5
85.1
94.9
93.2
58.9
70.9
67.5
70.1
2022
61.2
32.4
93.5
85.1
94.9
93.2
58.9
70.9
67.5
70.1
Source Compiled by the authors on UN (2023) and WIPO (2023)
5
Discussion
The systemic application of the considered O&E Ms is recommended for the most complete and balanced support of the SDGs in industry. This means that it is not a choice between quality management (as opposed to Daoud Ben Arab (2022), Gallego and Gutiérrez Ramírez (2023), and Yadav et al. (2022)), environmental certification (as opposed to Fokina et al. (2021), Mavlyanova et al. (2015), Petrenko and Stolyarov (2019), Su et al. (2022), Turginbayeva and Shaikh (2022), and Wang (2023)), and industrial innovation management (in contrast to Liu et al. (2023), Lobova et al. (2020), Sergi and Popkova (2022), and Tu et al. (2023)), but a systemic implementation of these mechanisms. Consequently, the existing approaches should be considered not as alternatives but as a combination of appropriate O&E Ms to accelerate the pace and maximize the effectiveness of neo-industrialization in the Kyrgyz Republic.
6
Conclusion
According to the research results, we can conclude that the Kyrgyz Republic provided considerable support to 17 UN SDGs through O&E Ms. The mechanism of quality management is the most promising one. It contributes to 10 out of 17 UN SDGs (58.82%) and, on average, supports them by 23.38%. The mechanism of innovation management in the industry is also promising. It contributes to 10 out of 17 UN SDGs (41.18%) and, on average, supports them by 61.94%. The mechanism of environmental certification is the least promising but also significant. It contributes to 10 out of 17 UN SDGs (29.41%) and, on average, supports them by 7.52%. Each of the three mechanisms supports only a certain set of SDGs; this set differs among the mechanisms. Prospects for fuller disclosure of the potential of these mechanisms to accelerate and improve the efficiency of the neo-industrialization are related to the systemic application
428 Table 2 Support of 17 UN SDGs by O&E Ms of sustainable industrial development of the Kyrgyz Republic in 2013–2022
S. V. Zatravina et al. Sustainable Development Goals (SDGs)
Organizational and economic mechanisms for sustainable industrial development in the Kyrgyz Republic Mechanism of ecological certification in the industry
Mechanism of certification of the quality of industrial products
Mechanism for the development of high-tech industries in the industry
SDG 1
Does not support
Does not support
Does not support
SDG 2
Supports by 18.18%
Does not support
Does not support
SDG 3
Supports by 30.02%
Does not support
Does not support
SDG 4
Supports by 15.47%
Does not support
Does not support
SDG 5
Does not support
Does not support
Supports by 78.30%
SDG 6
Supports by 29.41%
Supports by 9.69%
Does not support
SDG 7
Supports by 20.06%
Does not support
Does not support
SDG 8
Supports by 2.53%
Does not support
Does not support
SDG 9
Supports by 29.21%
Supports by 9.42%
Does not support
SDG 10
Does not support
Does not support
Supports by 53.85%
SDG 11
Supports by 30.01%
Does not support
Does not support
SDG 12
Does not support
Supports by 0.81%
Supports by 84.09%
SDG 13
Does not support
Does not support
Supports by 1.69%
SDG 14
Supports by 30.15%
Does not support
Supports by 51.90%
SDG 15
Does not support
Does not support
Supports by 82.07%
SDG 16
Supports by 28.77%
Supports by 9.05%
Does not support
SDG 17
Does not support
Supports by 8.62%
Supports by 81.65%
Source Calculated and compiled by the authors
of all three mechanisms. This will systemically support the 17 UN SDGs in industry. The recommendations support the practical implementation of the strategy (Ministry of Justice of the Kyrgyz Republic 2023). The results of this research also lay the foundation for the continuity of the neo-industrialization of the Kyrgyz Republic and strengthen the scientific and methodological basis of this process, which will be useful in the development of the next strategy for the next Decade of Action, which is expected to be adopted in 2024.
References Daoud Ben Arab S (2022) Quality management practices and innovation: the moderating effect of ISO 9001 certification. J Knowl Econ 13(3):2177–2202. https://doi.org/10.1007/s13132021-00805-x Fokina OV, Sofiina EV, Denisov IV, Abuzyarova MI (2021) Future scenarios of sustainable development depending on the recovery of the world economy after the 2020 crisis. In: Popkova EG, Sergi BS (eds) Modern global economic system: evolutional development vs. revolutionary leap. Springer, Cham, Switzerland, pp 764–772. https://doi.org/10.1007/978-3-030-69415-9_87 Gallego JM, Gutiérrez Ramírez LH (2023) Quality certification and firm performance. The mediation of human capital. Int J Prod Perform Manag 72(3):710–729. https://doi.org/10.1108/IJPPM-122020-0643
Liu X, Chen X, Wu Q, Deveci M, Delen D (2023) Measuring efficiency of the high-tech industry using uncertain multi-stage nonparametric technologies. Expert Syst Appl 216:119490. https://doi.org/10. 1016/j.eswa.2022.119490 Lobova SV, Alekseev AN, Litvinova TN, Sadovnikova NA (2020) Labor division and advantages and limits of participation in creation of intangible assets in industry 4.0: humans versus machines. J Intellect Cap 21(4):623–638. https://doi.org/10.1108/JIC-11-20190277 Mavlyanova NG, Denisov I, Lipatov V (2015) A review of Central Asian trans-border issues associated with environmental problems and hazard mitigation. In: Culshaw M, Osipov V, Booth S, Victorov A (eds) Environmental security of the European cross-border energy supply infrastructure. Springer, Dordrecht, Netherlands, pp 49–60. https://doi.org/10.1007/978-94-017-95388_4 Ministry of Justice of the Kyrgyz Republic (2023) Strategy for the sustainable development of industry in the Kyrgyz Republic for 2019–2023 (approved by the Resolution No. 502 of the Government of the Kyrgyz Republic dated September 27, 2019). Bishkek, Kyrgyzstan. Retrieved from http://cbd.minjust.gov.kg/act/view/ruru/157190. Accessed 19 Feb 2023 Petrenko Y, Stolyarov N (2019) Features of the management of international projects, taking into account intercultural differences of the partners. Entrepreneursh Sustain Issues 6(4):2037–2051. https://doi.org/10.9770/jesi.2019.6.4(34) Sergi BS, Popkova EG (2022) Towards a ‘wide’ role for venture capital in OECD countries’ industry 4.0. Heliyon 8(1):e08700. https://doi. org/10.1016/j.heliyon.2021.e08700 Su W, Lei G, Guo S, Dan H (2022) Study on the influence mechanism of environmental management system certification on enterprise
Organizational and Economic Mechanisms of Sustainable … green innovation. Int J Environ Res Public Health 19(19):12379. https://doi.org/10.3390/ijerph191912379 Tu W, Zhang L, Sun D, Mao W (2023) Evaluating high-tech industries’ technological innovation capability and spatial pattern evolution characteristics: evidence from China. J Innov Knowl 8(1):100287. https://doi.org/10.1016/j.jik.2022.100287 Turginbayeva A, Shaikh AA (2022) How price sensitivity influences green consumer purchase intention? In: Vrontis D, Weber Y, Tsoukatos E (eds) Sustainable business concepts and practices: 15th annual conference of the EuroMed academy of business. EuroMed Press, Palermo, Italy, pp 1388–1390 UN (2023) The sustainable development goals report 2022. Retrieved from https://unstats.un.org/sdgs/report/2022/. Accessed 19 Feb 2023
429 Wang ML (2023) Effects of the green finance policy on the green innovation efficiency of the manufacturing industry: a difference-in-difference model. Technol Forecast Soc Change 189:122333. https://doi.org/10.1016/j.techfore.2023.122333 WIPO (2023) Global innovation index 2022, 15th edn. Retrieved from https://www.wipo.int/publications/en/details.jsp?id=4622. Accessed 19 Feb 2023 Yadav N, Heriyati P, Kumar H, Tamara D (2022) Influence of quality management and allied certifications on consumers. Int J Qual Serv Sci 14(3):421–441. https://doi.org/10.1108/IJQSS-09-2021-0120
Comparing the Agricultural Sectors of the EAEU Countries Through the Sustainability Index Irina B. Mukambaeva , Nelli I. Akylbekova , Nurbek J. Mukambaev , Ermeka J. Lailieva , and Inna E. Nam
Abstract
Keywords
This study takes the aim to select factors determining the agricultural sector sustainable development in the EAEU countries, quantify them, and rank the countries according to the proposed integral index. The ideology of the integral index is grounded in the steady progression triune concept. The work methodologically substantiates selection of indicators for its calculation, reflecting the important aspects of the sector’s development: society, economy, and ecology. According to the author’s methodology, the ranking of the EAEU countries according to the above index shows the highest result for Belarus and the second highest result for Russia, followed by Kazakhstan, Kyrgyzstan, and Armenia. The analysis showed that each country has the potential for its further steady sectoral increase by improving the indicators included in the integral index. The methodological approaches outlined above made it possible to calculate an integral index to determine the position of each country in the agricultural development of the EAEU and, thus, created a basis for developing measures to improve the performance of each country in the union, as well as to coordinate their overall development.
Triune concept Sustainable development Green economy Ecosystem Agricultural sector Nondimensionalization Integral index
I. B. Mukambaeva (&) N. I. Akylbekova N. J. Mukambaev E. J. Lailieva I. E. Nam Kyrgyz National University Named After Jusup Balasagyn, Bishkek, Kyrgyzstan e-mail: [email protected] N. I. Akylbekova e-mail: [email protected] N. J. Mukambaev e-mail: [email protected] E. J. Lailieva e-mail: [email protected] I. E. Nam e-mail: [email protected]
JEL codes
O1
1
O44
Q5
Q15
Introduction
The time of global changes in the direction and volume of investment, trade, and human flows requires radical decisions on the development of nodal sectors to ensure the stability of the functioning of national economies. According to the authors’ opinion, such a sector for each country is the agricultural sector. This sector is of socio-economic importance, guaranteeing food security, saturating domestic and export markets with agricultural products, and providing the population with sources of income and employment. In general, the deep decline in global food production in 2020, provoking a sharp rise in food prices from 2021, shows the urgent need to develop interstate coordination of agricultural development of the countries united in the Eurasian Economic Union (EAEU), namely Armenia, Belarus, the Republic of Kazakhstan (RK), the Kyrgyz Republic (KR), and the Russian Federation (RF). Hence, the relevance of the methodology for counting the integral index of the sectoral sustainable development for the mentioned countries is beyond doubt. This research aims to select factors exerting an influence on the agrarian sector sustainable development in the EAEU countries, quantify them, and assign ranks to the countries. The research novelty is due to the author’s approach of calculating an integral index for assessing the specified sectors sustainable development in the EAEU
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_71
431
432
I. B. Mukambaeva et al.
countries. We look at the agricultural sectors without the processing industry, only as part of agriculture, forestry, and fisheries.
2
Theory
A number of widely known international documents set forth the definition and fundamental principles of sustainable development, including the triune concept, which stipulates the coverage of social, economic, and environmental characteristics of all measured processes, indicated in the World Commission on Environment and Development Document (UN 1987) and Rio Declaration on Environment and Development (UN General Assembly 1992). Kennet et al. equate green economy and sustainable development (2011). According to “Towards a Green Economy,” the green economy is not a substitute for sustainable development. However, achieving sustainability depends on good economic management, which includes such levers as the value of natural resources and social justice (UNEP 2011). The concept of a green economy has recently become an important environmental area of a steady progression. According to the Green Industrial Policy report, the economic and social co-benefits of green transformation must be identified when developing a conceptual framework for green industrial policy. Any structural changes and productivity improvements must consider social and environmental concerns (Altenburg and Assmann 2018). Noting the devastating effects of the triple planetary crisis (i.e., climate change, loss of nature and diversity, and pollution and waste), the UNEP annual report calls for accelerated green transformation (UNEP 2022). One of the areas of transition to a green economy is the ESG initiative outlined in the report “The State of Climate Tech” (PWC 2020), aimed at reducing or completely eliminating greenhouse gas emissions. Experts widely use the method based on the calculation of integral indices when assessing development. Tarasova and Kruchinina outline the classification of indicators for calculating integral indices ( 2000). We should not compare the agricultural sector only with rural areas because these areas are only a part of a region; in fact, no countries or regions consist exclusively of rural areas. The country dimension of the considered processes implies their assessment in the whole territory of the country. Therefore, when determining the territorial aspect of the agricultural sector sustainability, according to Mukambaeva, we should talk not about rural areas but about the whole region, such as the country (Mukambaeva 2018a). That is, to comprehensively assess the country’s agricultural sector, it is necessary to consider the territory and population of the
entire country, not only those represented by its rural part. These criteria help develop a methodical approach for calculating the index of assessment of the agricultural sector. The methodology for selecting indicators, as well as the calculation of integral indices for the EAEU countries, is based on the research by Mukambaeva (2018a, 2018b). According to our assumption, the introduction of the sectoral steady progression integral index in the EAEU countries will make it possible to link the country development parameters in terms of social, economic, and environmental aspects, as well as to rank these countries.
3
Materials and Method
The social indicators of sustainable sectoral development include the following: • Life expectancy at birth, years, EEC (Eurasian Economic Commission 2021). It is a generalizing characteristic of the quality of life. • Gini coefficient, %, EEC (Eurasian Economic Commission 2021), which shows deviations of the actual distribution of the population’s income from absolute equality. • The sector economy is represented by the following indicators: • Gross output of the agricultural sector per capita in the country, $, EEC (Eurasian Economic Commission 2021). This indicator shows the economic return of the country’s agricultural sector. • The share of the sector in total GDP, calculated by value added, %, EEC (Eurasian Economic Commission 2021). The indicator reflects the agricultural sector essentiality in the country’s economy. • Average annual yield of milk from 1 cow, kg, EEC ( 2021). This indicator characterizes the efficiency of cattle housing. The indicators reflecting the environmental aspects of sectoral sustainable development by country are as follows: • Share of forest lands in the total territory, %, EEC ( 2021). Mostly ecosystems in the EAEU countries are represented by forests, which ensure the preservation of ecological functions and biodiversity. Additionally, with the transition of a number of countries to new models of forest management, a term such as agroforestry, where tenants grow fruit trees on unforested areas belonging to the state forest fund, has appeared. That is, the forest area becomes a factor in the development of agricultural production. • Methane emissions calculated per $1 billion of agricultural GDP, thousand tons, World Bank Open Data (2020). One-third of global warming is due to methane
Comparing the Agricultural Sectors of the EAEU Countries Through the Sustainability Index
433
Table 1 Indicators for the estimation of the EAEU countries integral index, 2020 Indicator
Armenia
Belarus
RK
KR
RF
1. Life expectancy at birth, years
76.0
74.8
74.0
74.2
73.2
2. Gini coefficient (%)
0.363
0.266
0.291
0.344
0.406
3. Gross output in the agricultural sector per capita ($)
566
979
783
484
580
4. Share of the sector in total GDP, calculated by value added (%)
11.2
6.8
5.4
13.5
3.7
5. Average annual milk yield from one cow (kg)
2398
5268
2364
2006
4839
6. Share of forest area in the total area of the territory (%)
11.5
43.2
1.3
6.9
49.8
7. Methane emissions (2018) calculated per $1 billion of agricultural GDP, thousand tons
1.55
1.23
0.81
1.4
0.22
Source Compiled by the authors based on EEC Statistics (2021) and World Bank Open Data ( 2020)
emissions. Guided by the table of anthropogenic sources of methane emissions noted by the IEA, according to which the livestock industry is responsible for 30% of methane emissions and the crop industry for 15% (International Energy Agency 2023), we calculated 45% of the total methane emissions for each country; that is, we determined the methane volumes due to livestock and crop production. To offset the impact of the country’s absolute emissions, which ultimately depend on the scale of its agricultural production, we determined the volume of methane emissions per $1 billion of GDP of the country’s agricultural sector. Table 1 presents indicators for the estimation of the EAEU countries integral index. As seen in Table 1, in accordance with the triune concept and due to their availability in public sources, we have given social, economic, and environmental parameters to calculate integral indicators.
4
Results and Discussion
Indicators for calculating the integral index must be accessible. Apparently, the indicators selected to calculate the integral index will have different units of measurement. To bring Table 2 Integral index of sustainable development in the EAEU countries, 2020
them into a comparable form, we used nondimensionalization and laid out by Dougherty (2016). In our research, the indicators that directly affect the development of the sector in the form of the calculated index will be normalized by the standard formula: Ki ¼
Xi P ; XM P
ð1Þ
where Xi —current value of the parameter, XM —maximum value of the parameter, P—some scale unit, in our case, to simplify calculations P = 0. Direct indicators include the GDP of the agricultural sector, the share of the agricultural sector, average annual milk yield, life expectancy, and the share of forest area. Indicators inversely affecting the sustainable development of the said sector (Gini coefficient and methane emissions) are normalized by the following formula: Ki ¼ 1
Xi : XM
ð2Þ
According to the methodology evaluated by Mukambaeva, the highest value for each indicator is taken as the maximum value in any EAEU country. As a result, the index of this indicator will be equal to one in this country. One means the largest contribution of a direct-action indicator to the integral index of sustainability. Zero indicates that the
Figures given
Armenia
Belarus
RK
KR
RF
1. Life expectancy index
1.0
0.98
0.97
0.98
0.96
2. Gini coefficient
0.11
0.36
0.28
0.15
0.0
3. Index of GDP of the agricultural sector per capita ($)
0.56
1.0
0.79
0.49
0.59
4. Index of the agricultural sector share in total GDP
0.83
0.50
0.40
1.0
0.27
5. Index of average annual milk yield from one cow
0.45
1.0
0.45
0.38
0.92
6. Index of forest area
0.23
0.87
0.03
0.14
1
7. Methane emission index
0.0
0.21
0.48
0.1
0.85
8. Integral development index
0.45
0.70
0.49
0.46
0.66
Source Compiled by the authors based on EEC Statistics (2021) and World Bank Open Data (2020)
434
indicator inversely affects the index of sustainable development and has no positive impact on it (Mukambaeva 2018b). The data on the integral index of agrarian sector sustainable development in the EAEU countries show that the situation with sustainability is stably ordered, with Belarus having the highest index and the Russian Federation having the second highest result (Table 2). The lowest country index in 2020 deviates from the EAEU average only by 18.1%. It is possible to improve individual indicators until they reach the value of one for each country. In this case, the indicators selection for calculating the EAEU countries integral index was due to their availability in public sources; the authors do not consider the number of indicators to be sufficient. Methodologically, it would be more reasonable to take three indicators reflecting each development aspect: society, economy, and ecology. To characterize society, in addition to life expectancy and the Gini coefficient, when calculating the mentioned integral index, in a more efficient way would be placing reliance on a multidimensional poverty indicator, estimated on three dimensions of poverty: health, education, and poverty level. However, the latest publication of the Global Multidimensional Poverty Index, by Alkire et al., covered only countries with relatively high poverty levels (2021); for that reason, this review did not cover Belarus and the Russian Federation. Hence, to calculate the offered integral index, it would be suitable including the usual level of poverty counted according to a common methodology. Currently, EEC statistics provide such data for the Commonwealth countries but indicate different approaches in determining the national level of these indicators, which does not ensure their comparability. In our opinion, a preferable third indicator for the economic aspect of agricultural sustainable development, which would replace the data on the share of the agricultural sector in the GDP of the EAEU countries, would be the indicator “unused arable land.” The indicator of the share of the agricultural sector in the country’s GDP to be replaced shows not so much the importance of this sector as the underdevelopment of the industrial and other sectors of the economy, as, for example, in the Kyrgyz Republic. Statistics on unused arable land are not publicly available from national statistics of all countries studied. For environmental aspects, a more appropriate characteristic concerning forests would be the indicator of reforestation or the proportion of forest area increment. Nevertheless, this indicator is not currently available in the public domain for all EAEU countries. The choice of the methane emission indicator relates primarily to climatic change issues. However, climate change in the form of global warming can lead to land degradation and salinization. Reducing methane emissions will provide environmental and economic benefits. In this
I. B. Mukambaeva et al.
case, it should also be noted that a significant decrease in methane emissions from livestock may be due to either a decrease in the number of cattle or a change in their diet (Wahyono et al. 2023). This is an extremely sensitive issue for Kyrgyzstan. Given the essentiality of livestock for the KR economy growth, as well as the predominant share of its producers in the form of small-scale farmers and households, the authors believe that it is impossible to reduce methane emissions from keeping cattle without state support. In view of the insufficient but in principle positive development of digitalization in the Kyrgyzstani oblasts (Kozhoshev et al. 2022), the writers propose tracking cattle quantity on a continuous basis (like the monitoring of natural resources set out by Demidchik et al. (2021)) to create a reliable database. This will further ensure that cattle from all producers are covered by statistics when developing a methane reduction program, for example, through widespread changes in livestock rations. Additionally, the two presented environmental indicators for calculating the integral index of the agricultural sector progression could be supplemented by data on pesticides utilization. According to Fedorov and Yablokov (2004), the use of pesticides and their variants in the form of herbicides, insecticides, and fungicides leads to the poisoning of people and animals, pollutes the air, water, and soil, and characterizes the use of brown agricultural production technologies. The pesticide use indicator is not publicly available in the national statistics of all EAEU countries. Thus, this research presents calculating the integral index of sustainable sectoral development for the EAEU countries, using data from open sources, and considering their comparability. The authors also proposed additional indicators to be included in further scientific works.
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Conclusion
The approach used makes it possible to calculate integral indices to determine the development of processes in the compared regions and countries, in this research—the development of the agricultural sectors of the EAEU countries. The indicators for calculations are selected considering the requirements of the triune concept, which allows us to assess, compare, and rank the sustainable development of the studied sectors. The ranking of the EAEU countries according to this index shows the highest result for Belarus and the second highest result for Russia, followed by Kazakhstan, Kyrgyzstan, and Armenia. Integral indicators for individual countries do not have sharp deviations from the average arithmetic index for the EAEU. For example, the lowest index in 2020 for Armenia deviates from the average only by 18.1%, for the KR—by 16.3%, and for the RK—by 10.9%.
Comparing the Agricultural Sectors of the EAEU Countries Through the Sustainability Index
For a more comprehensive assessment of the mentioned sector sustainable development and regular work with these indices, it is necessary to show (in the open press) nine indicators reflecting society, the economy, and the environment in the EEC statistics. Optimally, the social aspects of the agricultural sector steady progression by country could be reflected in such indicators as life expectancy, the Gini coefficient, and the poverty rate. Economic aspects can be represented by such indicators as the gross output of the agricultural sector per capita of the country, average annual milk yield from one cow, and unused arable land area per one hundred hectares of arable land. Environmental indicators of the sectoral sustainable progression by country could be reported as the following parameters: reforestation (area of restored forest land per one hundred hectares of forest land), methane emissions per $1 billion of agricultural GDP, and pesticide use (herbicides, insecticides, fungicides) per 100 km2 of territory. This research showed that each country has the potential for its further sustainable sectoral development by improving the indicators included in the integral index. The increase in the values of individual country indices to one means that they have reached their maximum level. In this case, it will be possible to use their best global values as barrier indicators for further research. The outlined methodological approaches make it possible to use them in calculations to determine the position of each country in the agricultural sectors sustainable progression in the EAEU, as well as the coordination of their development.
References Alkire S, Kanagaratnam U, Suppa N (2021) Global multidimensional poverty index 2021. Oxford Poverty and Human Development Initiative, University of Oxford, Oxford. Retrieved from https:// ophi.org.uk/multidimensional-poverty-index. Accessed 4 May 2022 Altenburg T, Assmann C (eds) (2018) Green industrial policy. Concept, policies, country experiences. UN Environment; German Development Institute, Germany Demidchik NN, Kudaibergenova MD, Kintonova AZh (2021) Using the internet of things (IoT) for natural resources monitoring system. In: IEEE international conference on smart information systems and technologies (SIST), Nur-Sultan, Kazakhstan. https://doi.org/10. 1109/SIST50301.2021.9465979 Dougherty C (2016) Introduction to econometrics, 5th edn. Oxford University Press, Oxford Eurasian Economic Commission (2021) Statistic yearbook of the Eurasian Economic Union. Eurasian Economic Commission, Moscow
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Fedorov LA, Yablokov A (2004) Pesticides—the chemical weapon that kills life (the USSR’s tragic experience). Pensoft Publishers, Sofia International Energy Agency (2023, February 21) Methane tracker. Interactive database of country and regional estimates for methane emissions and abatement options. IEA, Paris. Retrieved from https://www.iea.org/data-and-statistics/data-tools/methane-tracker. Accessed 2 Feb 2023 Kennet M, Courea E, Black K, Bouquet A, Pipinyte I (2011) Handbook of green economics: a practitioner’s guide. The Green Economics Institute, Redding Kozhoshev AO, Kulueva ChR, Saiakbaeva AA, Nuralieva ChA, Akylbekova NI (2022) Issues of the development of digital entrepreneurship in the regions of Kyrgyzstan. In: Bogoviz AV, Popkova EG (eds) Digital technologies and institutions for sustainable development. Springer, Cham, pp 149–154. https://doi.org/ 10.1007/978-3-031-04289-8_25 Mukambaeva IB (2018a) Estimation methods for Agri sector sustainable development through the Kyrgyz Republic territory. Alley Sci J 4(20):389–392 Mukambaeva IB (2018b) Integral index of the sustainable development through the Kyrgyz Republic territory. Alley Sci J 5(21):625–630 PWC (2020) The state of climate tech 2020: the next frontier for venture capital. PWC, London. Retrieved from https://www.pwc. com/gx/en/services/sustainability/assets/pwc-the-state-of-climatetech-2020.pdf. Accessed 2 May 2022 Tarasova NP, Kruchinina EB (2000) Indexes and indicators of sustainable development. In: Sustainable development: naturesociety-human, Part II, pp 127–144 UN General Assembly (1992) Rio declaration on environment and development (adopted at UN conference on environment and development on June 3–14, 1992). Rio de Janeiro, Brazil. Retrieved from https://www.un.org/en/development/desa/population/migration/ generalassembly/docs/globalcompact/A_CONF.151_26_Vol.I_ Declaration.pdf. Accessed 19 Nov 2019 UN (1987) Our common future: report of the world commission on environment and development. Oxford University Press. https:// sustainabledevelopment.un.org/content/documents/5987our-commonfuture.pdf. Accessed 19 Nov 2019 UNEP (2011) Towards a green economy. Pathways to sustainable development and poverty eradication: a synthesis report for government authorities. UNEP, Moscow. https://sustainable development.un.org/content/documents/126GER_synthesis_en.pdf. Accessed 4 Jan 2023 UNEP (2022) Annual report 2022. Retrieved from https://www.unep. org/resources/annual-report-2022. Accessed 4 Jan 2023 Wahyono T, Widodo S, Kurniawati A, Anggraeny YN, Widiawati Y, Rofiq MN, Herliatika A, Priyoatmojo D, Syahputra AR, Sasongko WT (2023) Green medicated supplement (Green MS) can reduce enteric methane emission from forage-based ruminant rations: in vitro study. IOP Conf Ser Earth Environ Sci 1133:012058. https://doi.org/10.1088/1755-1315/1133/1/012058 World Bank Open Data (2020) Methane emissions (kt of CO2 equivalent). World Bank, Washington. Retrieved from https://data. worldbank.org/indicator/en.atm.meth.kt.ce?view=chat. Accessed 3 Feb 2022
Correlation of Educational and Labor Migration of the Population of Russia Tatiana Yu. Sinyuk , Mikhail A. Surzhikov , Natalia G. Kazimirova , Tatiana V. Voronina , and Natalia V. Mishina
Abstract
JEL codes
The research verifies the hypothesis that there is a direct close connection between such signs as labor and educational migration. Based on statistical data and dynamic series for seven years, the authors compile trend models with a reliability of up to 60%, which makes it possible to determine the migration contour of educational and labor migration in Russia for the next three years. The research results show that migration processes require an interdisciplinary approach to study. The research aims to explore the interrelationships of educational and labor migration, the primary approach, without considering restrictions and factors of influence. To test the hypothesis, the authors apply such methods as trend modeling, comparative analysis, and correlation analysis. The research results prove a close relationship between educational and labor migration. The quality and reliability of the data are checked based on the calculation of the correlation coefficient, its comparison with the Cheddock scale, and the evaluation of the coefficient of determination.
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Keywords
Educational migration Labor migration Trend models Forecast
Correlation
T. Yu.Sinyuk (&) M. A. Surzhikov N. G. Kazimirova Rostov State University of Economics, Rostov-on-Don, Russia e-mail: [email protected] T. V. Voronina Southern Federal University, Rostov-on-Don, Russia N. V. Mishina Financial University Under the Government of the Russian Federation, Moscow, Russia e-mail: [email protected] N. V. Mishina Moscow International University, Moscow, Russia
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Introduction
A significant number of modern research works touch upon the study of international labor and educational migration issues. From 2017 to 2022, 82 papers were published in the international Scopus database. The first group of scientific publications reveals the impact of international labor migration on national economies, GDP growth, its risks, and threats to national labor markets (Dodd et al. 2017; Lialina 2019; Mai et al. 2019). When analyzing international labor migration in the world and the Russian Federation, the authors noted the concentration of international migrants in the largest cities and global financial centers as current trends (Bulatov et al. 2021; Mkrtchyan and Florinskaya 2018), as well as the increase in women labor migration. Another part of the work reveals the inefficiency of the current migration policy on the scale of integration associations (the EU and Gulf Cooperation Council) or individual countries (the Russian Federation). In this context, the authors propose directions for the modernization of migration policy to improve its effectiveness. These directions include differentiation, selectivity, increased responsibility for migration violations (Tran et al. 2019; Ushakov and Rubinskaya 2018), policy alignment, and intercultural and social adaptation of migrants, including women (Rychikhina 2020). The research hypothesis is as follows. From our point of view, it is fair to highlight the direct relationship between the indicators of labor and educational migration. The research novelty lies in the fact that it aims to identify the interdependence between different types of migration, not to determine the most significant internal or external factors that determine the trends of migration processes.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_72
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T. Yu. Sinyuk et al.
The purpose of this study can be defined as a primary approach to the study of educational and labor migration, without taking into account the limitations and influencing factors. The purpose of the study predetermined the necessity of solving the following tasks: • to analyze research in the field of educational and labor migration of the population; • to identify data sources; • to build trend models for indicators of educational and labor migration of the Russian population; • to conduct a correlation analysis between these factors; • to assess the identified dependencies.
2
Methodology
The following methods are used in the paper to verify the hypotheses: trend modeling, comparative, and correlation analysis. Before conducting the economic and mathematical feasibility study, the basic categorical apparatus used in this research is formed. The importance of labor and educational migration for the development of the state is beyond doubt. Thus, some authors call educational migration “soft power” (Suvorova and Bronnikov 2019) because the migration flow, on the one hand, compensates for the natural decline in the population and, on the other hand, is a source of labor resources (Presidential Executive Office 2018). The “Concept of the State Migration Policy of the Russian Federation for 2019–2025” (Presidential Executive Office 2018) notes that the main factors causing migration are economic and social processes. According to Suvorova and Bronnikov, educational migration is the movement of people to obtain or continue education (2019). Kuznetsova assigns educational migration to the role of a factor in the development of human capital and the main driving force for strengthening competitive positions (2019). An interesting interpretation of educational migration is given by Stepaniuk (2017), where she identifies the definition through the following resultant features: periodicity, change of residence, change of work, process of socio-economic and demographic character. In our view, the author was trying to say that this migration includes able-bodied people who change their place of residence in search of higher-paying jobs but cannot leave on a work visa and migrate on an educational visa. Foreign authors also study educational migration. Thus Mustika et al. (2022) consider the issues of educational migration in Indonesia. The authors also point out that there are limitations in the original data set because the survey periods were periodic. Mustika et al. (2022) associate educational migration with the quality of the population’s
life and study the factors determining educational migration. The authors note that educational migration has a negative character. It threatens the socio-economic development of the territory because those who have left for training, in most cases, do not return to their homeland and are employed at the place of their stay (McQuaid and Hollywood 2008). The researchers also noted the delayed effect of educational migration, which consists of the fact that “educational migrants” who have received qualification skills and have not found employment at their main place of residence become potential labor migrants. In other words, having received a better education, first-class specialists cannot find a job at their place of residence due to the backwardness of the territory of residence. Thus, the territory of residence does not have the necessary infrastructure and technologies, which means that specialists cannot apply their knowledge and skills. Rakhmonov notes that educational migration is one of the channels of emigration for many people (2022). The author also says that the current system of registration of migrants in the Russian Federation does not reflect either their actual number or their real place of stay. If we talk about accounting for “educational” migrants, there is no reliable data as well because some of the data can be obtained from universities or the Ministry of Education. However, there is no accounting for those who went to study at the expense of personal funds, international scholarships, or on a work visa with the primary intent to receive an education. Chernykh and Izgarskaya argue that educational and labor migration is associated with the development of human capital and understand it as the movement of specialized educational subjects (individuals) in the space of a settlement, region, country, or outside the country by the desire to study or retrain (to get an education or improve existing) (2020). The work of Zamotin (2016) is of primary concern. The author declares in it that migration requires an interdisciplinary approach to study and brings together the field of subject research of migration processes within various disciplines. The absolute advantage of the work is that the author provides a description and classification of various types of migration. Zamotin cites the difference between educational migration and learning migration, arguing that educational migration is a broader concept. It is necessary to point out that many Russian researchers do not distinguish between educational and learning migration. There is no such distinction in the works of foreign researchers either. From the point of view of context and terminological apparatus, the authors support the position of Zamotin. Given the availability of initial data sets, from statistical parameters, for the purposes of this study the authors understand educational and training migration as synonyms. Samofalova (2010) and Zamotin (2016) adhere to the position that educational
Correlation of Educational and Labor Migration of the Population of Russia
migration is a part of the sociology of migration, reflecting purposeful movement for education (Samofalova 2010; Zamotin 2016). Labor migration is quite complex, which is noted by the UN Economic Commission for Europe (UNECE and UNFPA 2011). In the Practical Guide for the countries of Eastern Europe and Central Asia (UNECE and UNFPA 2011), it is noted that despite the UN Recommendations of 1998, many difficulties arise when migration flows are considered. These difficulties are predetermined by the heterogeneity of labor flows, socio-economic or political agreements between partner countries, and distortion of labor migration statistics due to the inclusion of migrants who have the right to work and their family members. Additionally, double counting of one migrant worker is possible because more than one work permit can be obtained, or a migrant worker can be hired by several employers. Cebula (2022) considers labor migration to the USA as the basis of the quality of life of the population and studies the impact of the cost of rent and distance from working time (time spent on the way to the workplace) on the dynamics of migration processes. The problems of labor migration in India are considered by Dr. Lawand (Shinde and Lawand 2022), who focuses on the fact that the labor force migrates due to the unemployment rate. Studying the issues of labor migration and the problems of the outflow of highly qualified specialists, Borisova (2019) focuses on the discrepancy of statistical data in foreign and Russian sources. The author has a similar point of view with us that educational and labor migration are interrelated. Borisova notes the trend of obtaining an education at a bachelor’s degree level in the Russian Federation and moving abroad to obtain a master’s degree and employment. The author also emphasizes that the temporary nature of labor and educational migration, to a greater extent, passes into the format of permanent and irrevocable. From our point of view, labor
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migration can be divided into internal and external. Internal labor migration is the inflow of labor capital to the territory of Russia in the format of arrived labor migrants. External labor migration is the outflow of labor capital from Russia. Thus, despite numerous studies in the field of educational and labor migration, there is a rather large problem field. There is no unity in understanding and classification. Moreover, there is a significant number of limitations for statistical accounting. For the purposes of this research, the authors understand educational migration as a set of migrants who have indicated “education” as the purpose of moving (with no consideration of their personal motives). Labor migration is a set of migrants who indicated “work” as the key priority when moving (without taking into account personal motives). The initial data array includes publicly available statistics.
3
Results
Next, we present an array of data characterizing labor migration over the past seven years (2005–2021), reflecting the dynamics of labor migrants for the purposes of the trip (Table 1). Analysis of the above data shows that the number of migrants arriving for work decreased sharply in 2020 and gradually increased in 2021, amounting to 1,083,397 and 2,597,974, respectively. If we consider the ratio of migrants who arrived to work to migrants who arrived to study, then the share of educational migration is about 9–11% depending on the period. When comparing the quantity of unemployed and the quantity of migrants who arrived to work, it can be noted that the value of migrants who arrived to work in 2021 and 2022 does not cover the number of unemployed by 323,086 and 1,026,669 people, respectively. There is a negative trend in terms of the number of migrants who
Table 1 Labor migration indicators of the Russian Federation for 2015–2021 Year
Number of unemployed
Number of able-bodied population in working age
The ratio of the unemployed to the able-bodied population (%)
Average annual workforce: foreign citizens
Number of labor migrants who came to work
Number of migrants who came to study
The number of Russian citizens who went to work abroad
2015
4,263,927
82,461,298
5.2
3,387,528
No data
Data
55,138
2016
4,243,492
81,354,223
5.2
2,834,413
4,284,200
406,100
59,999
2017
3,966,522
80,186,144
4.9
2,598,583
4,854,000
449,000
55,781
2018
3,656,963
79,453,659
4.6
2,664,922
5,047,800
536,500
58,044
2019
3,461,175
79,812,428
4.3
3,059,430
4,094,891
476,662
57,638
2020
4,316,023
80,050,797
5.4
2,143,317
1,083,937
118,387
45,463
2021
3,624,643
80,240,098
4.5
3,126,830
2,597,974
286,247
53,149
Source Compiled by the authors based on (EMISS State Statistics 2021a, 2021b, 2021c; Federal State Statistics Service of the Russian Federation 2018, 2020, 2021, 2022a, 2022b; Kuznetsova 2019; UNIPAGE 2017)
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T. Yu. Sinyuk et al.
70000 60000 50000 40000
y = -369.02x2 + 1767.1x + 55342 R² = 0.3727
30000 20000 10000 0
2015
2016
2017
2018
2019
2020
2021
Fig. 1 Forecast of the number of Russian citizens who went to work abroad. Source Compiled by the Authors
arrived for training. The decline in these indicators is largely due to COVID-19 and its consequences for the entire world community. It should be noted that the structure of statistical data in 2015 is different compared to later periods. In 2015, when registering migrants, data was not collected by those who came to study or work. It should also be noted that the collection of statistical data characterizing educational mobility in the context of the number of people traveling abroad for training or internship is significantly difficult; most sources refer to UNESCO databases (2022). Nevertheless, similar to the statistical collections of the Russian Federation, the latest data this source provides is 2015. It is reliably known that the number of Russian students studying abroad was 56,328 in 2015 (UNESCO Institute for Statistics 2022); 7155 students completed an internship abroad for at least one semester Ministry of Science and Education of the
Fig. 2 Forecast of the number of migrants who arrived for training and work. Source Compiled by the Authors
Russian Federation (2013–2022). The number of researchers sent to work (internship) in foreign organizations for six years has a negative trend and is 3515 people in 2015 (National Research University Higher School of Economics 2016), 3425 people in 2016, 3494 people in 2017, 3173 people in 2018, 3057 people in 2019, and 948 people in 2020 (MIIRIS 2020). Based on the presented data sets, the authors build trend models that make it possible to forecast labor and educational migration (Figs. 1 and 2). The significance of the models was checked based on the accuracy coefficient of the approximation R2. Given the limitations on the formation of the initial data array and the inaccuracy and unreliability of the data, the authors did not set the task of searching and constructing the most reliable statistical models within the framework of this research. Trend models of the second-order polynomial were used as the simplest and most illustrative. The reliability of forecasts ranges from 37 to 59%. The results of the calculation of the forecast data are presented in Table 2. By employing the analysis of paired correlation coefficients and the assessment of their significance by constructing a matrix of paired correlation coefficients, the authors measure the closeness of the relationship between the features (Table 3). Calculations prove that the relationship between the attributes is direct. The increase in the number of migrants who arrived for training depends on the number of labor migrants who arrived for work by 98%. The change in the indicator of the number of Russian citizens who went abroad
Number of labor migrants who came to work
Number of migrants who came to study y = -20684x2 + 97618x + 350860 R² = 0.4713
600,000 6,000,000
y=
-144604x2
+ 420965x + 4E+06 R² = 0.5899
500,000
5,000,000 400,000
4,000,000
300,000
3,000,000 2,000,000
200,000
1,000,000
100,000
0
0 2016 2017 2018 2019 2020 2021
Table 2 Forecast of values of educational and labor migration in the Russian Federation
2016
2017
2018
2019
2020
2021
Forecast period
The number of labor migrants who arrived to work
Number of migrants arriving for training
The number of Russian citizens who went to work abroad
1
4,276,361
427,794
5,674,008
2
3,842,549
463,360
5,740,012
3
3,119,529
457,558
5,732,212
Source Compiled by the Authors
Correlation of Educational and Labor Migration of the Population of Russia Table 3 Matrix of pairwise correlation coefficients of educational and labor migration indicators
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Comparative signs
Number of foreign arrivals (international migration)
The number of labor migrants who arrived to work
Number of migrants arriving for training
Number of foreign arrivals (international migration)
1.00
Number of labor migrants who arrived to work
0.15
1.00
Number of migrants arriving for training
0.28
0.98
1.00
The number of Russian citizens who went to work abroad
0.36
0.93
0.98
The number of Russian citizens who went to work abroad
1.00
Source Compiled by the Author
to work is determined by 93% by the change in the number of labor migrants who came to work, and by 98% by the change in the number of migrants who came to study. Thus, we have identified a close direct relationship between educational and labor migration.
4
Discussion
Educational and labor migration has positive and negative effects. On the one hand, the potential in the workforce is increasing. On the other hand, the requirements for the competence and qualifications of employees are growing, the level of remuneration for qualified specialists is decreasing due to an excess of labor, the unemployment rate is rising, and the social stratum of non-adapted migrants is growing, which can lead to an increase in crime. Despite the complexity of migration registration, the lack of unified databases, the presence of errors and unreliable data in the state information systems of passport and visa documents and migration registration, and the discrepancy of data in the databases of the Ministry of Internal Affairs and Rosstat, the available statistics allow us to understand the migration contour. The presented migration contour reflects the existence of a direct relationship between the indicators of educational and labor migration and makes it possible to present forecast values characterizing a gradual increase in the number of migrants arriving for work and training and the number of Russians leaving for work abroad.
5
Conclusion
The obtained results of the study allowed us to confirm the hypothesis. At the initial stage, we assumed there were problems with access to open data and the quality of
statistical data. Nevertheless, the set of problems with the collection of statistical data is quite serious and limits the research search. The further vector of research can be directed either at detailing intra-country educational and labor migration or at investigating hidden motives of educational and labor migration, the dependence of labor and educational migration on the level of education of migrants, the socioeconomic development of territories, etc. The authors also formulated another hypothesis in the direction that the present research can develop. The hypothesis is put forward that the relationship between labor and educational migration can be reversed. That is, the value of the indicator of educational migration decreases with the growth of the indicator characterizing labor migration and vice versa. We believe this may be due to the fact that the able-bodied active population migrates in search of better working conditions and wages, which leads to an outflow of human capital in a certain territory and, consequently, a decrease in its socio-economic attractiveness. Simultaneously, with the formation of certain scientific and educational clusters, the flow of educational migrants increases. However, the able-bodied population that is not involved in education does not find a job and is forced to move.
References Borisova AA (2019) Labor migration of Russian youth: state programs to support repayment. Labor Econ 6(1):599–612. https://doi.org/10. 18334/et.6.1.39758 Bulatov A, Habarta A, Sergeev E (2021) Global financial centers as channels for international labor migrant inflow into cities of Europe. World Econ Int Relat 65(10):122–132. https://doi.org/10.20542/ 0131-2227-2021-65-10-122-132 Cebula R (2022) Migration, the quality of life, and economic opportunities in the U.S. Revisited: impacts of round-trip work
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T. Yu. Sinyuk et al. Ministry of Science and Education of the Russian Federation (2013– 2022) Form No. VPO-1 Information on the organization carrying out educational activities in educational programs of higher education—bachelor’s programs, specialist’s programs, master’s programs. Retrieved from https://minobrnauki.gov.ru/action/stat/ highed/. Accessed 5 Feb 2023 Mkrtchyan NV, Florinskaya YuF (2018) Labor migration in Russia: international and internal aspects. Zhournal Novoi Ekonomicheskoi Associacii [J New Econ Assoc] 1(37):186–193. https://doi.org/10. 31737/2221-2264-2018-37-1-9 Mustika MDS, Remi SS, Fahmi M, Setiawan M (2022) Analysis of educational migration decision in Indonesia. J Edu Soc Res 12 (6):226. https://doi.org/10.36941/jesr-2022-0158 National Research University Higher School of Economics (2016) Data from a specialized survey conducted by the Institute for statistical research and economics of knowledge of the national research university higher school of economics, commissioned by the Russian Ministry of Education and Science; federal statistical observation according to the form No. 2-science “Information on the implementation of scientific research and development”; results of the project “Monitoring of highly qualified scientific personnel.” HSE University, Moscow Presidential Executive Office (2018) Executive Order “On state migration policy concept of the Russian Federation for 2019– 2025 (October 31, 2018 No. 622). Moscow, Russia. Retrieved from http://kremlin.ru/events/president/news/58986. Accessed 5 Feb 2023 Rakhmonov AKh (2022) Educational migration from Tajikistan to Russia: trends and consequences. Upravlenie [Management] 10(3): 58–66. https://doi.org/10.26425/2309-3633-2022-10-3-58-66 Rychikhina NS (2020) Modern trends of women’s international labor migration. Woman Russ Soc 1:45–54. https://doi.org/10.21064/ WinRS.2020.1.4 Samofalova EI (2010) Educational migration: problem field and main characteristics. SciPeople Sci Netw. Retrieved from http://scipeople. ru/publication/69692/. Accessed 5 Mar 2023 Shinde ShB, Lawand PM (2022) Labor migration and the future work in India. Int J Adv Res Sci Commun Technol 2(3):166–171. Retrieved from https://ijarsct.co.in/Paper3237.pdf. Accessed 10 Dec 2022 Stepaniuk N (2017) Development of educational migration in Ukraine. Ann Mark Manag Econ 3(2):101–111. https://doi.org/10.22630/ AMME.2017.3.2.21 Suvorova VA, Bronnikov IA (2019) International educational migration as a “soft power resource” in the globalization era. Upravlenie [management] 7(4):131–139. https://doi.org/10.26425/2309-36332019-4-131-139 Tran AH, Minh NLT, Ushakov D (2019) Evaluating the efficiency of migration regimes and their role in the progress of common European labor market. Int J Recent Technol Eng 8(2S11):3883– 3888. Retrieved from https://www.ijrte.org/wp-content/uploads/ papers/v8i2S11/B15160982S1119.pdf. Accessed 5 Mar 2023 UNECE and UNFPA (2011) Statistics on international migration: a practical guide for countries of Eastern Europe and Central Asia. UN, Geneva, Switzerland. Retrieved from https://unece.org/DAM/ stats/publications/International_Migration_Practical_Guide_ENG.pdf. Accessed 25 Nov 2022 UNESCO Institute for Statistics (2022) Global flow of tertiary-level students, 2022. Retrieved from http://uis.unesco.org/en/uis-studentflow#slideoutmenu. Accessed 5 Mar 2023
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Pandemic and Sanctions: A Study of Economic Shocks in the Russian Economy Ekaterina A. Isaeva , Elena S. Materova , Gulnaz F. Galieva , Elvira A. Gatina , and Tatyana G. Sobolevskaya
labor and employment markets. Public policy measures aimed at leveling out the negative effect of economic shocks on Russia’s economic system are proposed.
Abstract
The research is aimed at studying the causes and factors of modern economic shocks and their manifestations in the Russian economy, as well as the search for measures to reduce their negative impact on the economic system. The research reveals the content of the “paradox of economic shock during the pandemic and sanctions restrictions” in Russia and reveals features of its manifestation. The external economic shock from the pandemic provoked the emergence of internal economic shock from implementing the policy of containment of the spread of coronavirus infection. The degree of impact of the external economic shock on the Russian economy was amplified by the simultaneous destabilization of the energy resources market. The adaptation of the Russian economy to the external economic shock of the pandemic coincided with the emergence of the sanctions economic shock. The authors analyzed the effects of economic shocks on the economy of Russia. The authors identified side effects of economic shocks on the Russian economy in the form of the launch of accelerated digitalization in the sectors of the national economy, increased access to digital infrastructure, and structural transformation of the E. A. Isaeva (&) Financial University Under the Government of the Russian Federation, Moscow, Russia e-mail: [email protected] E. S. Materova Samara State University of Economics, Samara, Russia G. F. Galieva Ufa State Petroleum Technological University, Ufa, Russia G. F. Galieva Ufa Branch of the Financial University under the Government of the Russian Federation, Ufa, Russia E. A. Gatina Kazan (Privolzhsky) Federal University, Kazan, Russia
Keywords
Economic shock Socio-economic development Uncertainty Pandemic Sanctions restrictions Russian economy Digitalization Import substitution
JEL codes
O11
1
O16
O21
O33
Introduction
In recent decades, Russia has faced different economic shocks. The first shock 2008–2009 was provoked by the global financial crisis, which spread worldwide due to the collapse of the US banking system. This has led the global economy to an 8% drop in GDP, a sharp increase in unemployment and an increase in both economic and social tensions (Babaeva 2014; Dullien et al. 2010; Vedev et al. 2020). In 2014–2015, Russia’s economic system experienced a new economic shock: due to the events in Ukraine, Russia faced economic sanctions imposed by the USA and the EU, which caused a sharp decline in energy prices and a reduction in demand for Russian exports. Consequently, the outflow of foreign capital outside the country was launched, stock markets weakened, problems arose in the interbank market, solvency, and liquidity of enterprises decreased, the population welfare reduced, and inflation jumped (Karpunina et al. 2022a, 2022b). It takes time for the economic system to adapt to shocks. Meanwhile, the realities of the time are such that one sharp fluctuation is followed by a new one. Thus, the Russian economy found itself at a crossroads
T. G. Sobolevskaya Moscow State University of Food Production, Moscow, Russia © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_73
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before the choice of more effective economic solutions to level the negative consequences of several shocks. The latest stretch of social and economic development is defined by the sudden spread of the coronavirus infection. The 2020 pandemic was a new shock to the economic systems of countries worldwide. Russia was no exception. The impact of the pandemic has become an external unpredictable economic shock in the absence of tools to prevent it. The nature of government actions to prevent the spread of infection turned out to be intuitive and, in many ways, without results. However, over time, some features of government regulation began to emerge that could form the necessary experience in managing epidemic risks (Gukasyan et al. 2022; Karpunina et al. 2022c, 2020). Having no time to recover from the pandemic, Russia faced a new economic shock—a series of economic sanctions on the part of developed countries in response to the escalating Russian-Ukrainian conflict. The blocking of economic entities’ external relations forced enterprises to urgently reconstruct relationships with suppliers, contractors, and logistics chains, as well as to form new models of import substitution to adapt the economic system to new conditions as quickly as possible. The situation has been complicated by the destabilization of energy markets, which is especially significant for the Russian market, which depends on world prices for hydrocarbons, and domestic demand is largely determined by revenues from oil and gas exports (Vedev et al. 2020). Thus, today it is especially important to study the impact of economic shocks from the pandemic and sanctions restrictions on the Russian economy. This will make it possible to quickly identify and implement tools for adapting the national economy to new conditions and maintain the country's leading positions on the world stage.
2
Methodology
The concept of “economic shock” is associated with the impact of non-price determinants on supply and demand curves, which sharply throws them out of equilibrium and requires adaptation to return the economic system to an equilibrium state (Pesotsky 2021). Shocks can be caused by internal and external environmental factors. Some scientists argue that shocks arise at the moment when the next cycle in the development of the economy is completed, and it moves to the next cycle; in other words, the shocks are based on cyclical changes (Pilipenko 2011). Other researchers, on the contrary, argue that shocks have a random impulsive nature —they become the causes of cyclical changes in the economic system (Slutsky 1927). Simultaneously, an inherent characteristic of an economic shock is its abrupt unpredictable character, which manifests itself in the short run. Shocks can lead an economic system to radical changes.
However, they do not always have negative consequences for it (Treschenkov 2019). As a result of a shock, the economic system adapts to the new conditions for a certain period and returns to a state of equilibrium. This often happens with the help of special measures of state regulation (Layshi 2020). In terms of its impact on economic systems, a pandemic can be identified as a shock. Many authors assess the impact of the pandemic on the economy, the labor and employment markets, the social sector, and the psychological health of the population (Gukasyan et al. 2022; Karpunina et al. 2022c, 2021; Pesotsky 2021). The topic of sanctions restrictions and their effects on the economy became particularly relevant in 2014 when the Russian-Ukrainian political conflict developed. It was then that a layer of research aimed at identifying the impact of sanctions on various sectors of the economy, as well as the justification of effective tools for adapting to them, was formed (Karpunina et al. 2022a, 2022b). A new wave of scientific works appeared in 2022 with the introduction of new sanctions packages by the EU and the USA in connection with the aggravation of the military and political conflict between Russia and Ukraine. This includes the works of Karpunina et al. (2022a, 2022b) and Vedev et al. (2020). The research is aimed at studying the causes and factors of modern economic shocks and their manifestations in the Russian economy, as well as the search for measures to reduce their negative impact on the economic system. The research objectives: 1. to identify economic shocks in the modern Russian economy; 2. to investigate internal and external causes of economic shocks, in particular from the coronavirus pandemic and sanctions of the European Union and the USA on the Russian economy; 3. to propose economic policy measures aimed at smoothing the negative effect of economic shocks on the economic system of Russia. The research methods are analysis, synthesis, systematization, graphical method, economic and statistical analysis, comparison, and systemic approach.
3
Results
The global spread of coronavirus infection in 2020 corresponds to the content of the concept of “external economic shock” (Fig. 1). In 2020, the world economy faced a coronavirus epidemic. This epidemic has become one of the largest in history and has put at risk the life, health, and socio-economic well-being of a person. The lack of experience in preventing such a virus at the national and global level, the rapid nature
Pandemic and Sanctions: A Study of Economic Shocks in the Russian Economy Fig. 1 Features of an external economic shock. Source Compiled by the Authors
External shock
447
sharp short-term impact on the economic system
strong transformational effect triggering structural changes in the life of society and internal shocks the destructive nature of the impact, requiring efforts to prevent negative consequences
of its spread, the unpredictable timing of the end of the pandemic, and the lack of the necessary medical base created the conditions for the realization of the epidemic threat and the projection of its impact in the form of damage to economies. In Russia, the population’s mortality rate reached a record 1.8%. For comparison, the mortality rates are 1.2% in China, 1.1% in the USA, and 0.43% in Germany (Fig. 2). The high lethality rate in Russia evidences the unpreparedness of the Russian healthcare system for the urgent spread of viral infection, in contrast to developed countries (Germany and the USA) and Asian countries (particularly China, which has experience in responding to regularly occurring viruses). The pandemic had a transformative effect on the economic systems of the countries and triggered structural changes in the life of society. In contrast to developed economies, the growth of Russia’s nominal GDP in the active stage of the pandemic was characterized by sharply negative dynamics (Table 1). Such a strong reduction in nominal GDP growth was not observed in other countries. By 2021, the situation had changed, and the growth rate was almost equal to that of developed countries. The main reason for the decline in GDP in 2020, in our view, is the so-called external economic shock paradox: Fig. 2 Lethality from coronavirus infection in Russia, USA, China, and Germany, %, 2022. MinfinMedia 2022 Source Compiled by the Authors based on ()
1. The external economic shock of the pandemic triggered the internal economic shock of implementing policies to contain the spread of COVID-19; 2. The degree of impact of the external economic shock on the Russian economy was intensified by the simultaneous destabilization of the energy market; 3. The process of adaptation of the Russian economy to the external economic shock of the pandemic coincided with the emergence of another economic shock—the imposition of sanctions by developed countries against Russia. For example, the lockdown measures implemented have led to a decrease in final domestic demand, an increase in net exports of goods and services (Starostina 2021). There was a strong decrease in value added in service industries, including hotels and restaurants (− 24.1%), cultural and sports institutions (− 11.4%), and transport enterprises (− 10.3%). In 2021, OPEC + decided to reduce oil production in Russia. This has become another test for Russia, manifested in the form of lower oil prices, a reduction in oil and gas production (- by 10.3% in natural terms). Due to the decline in global demand and prices for energy and raw materials, the extractive industry suffered, and its revenues decreased by 9.5% (Open-Broker 2021). Increased spending on health care and COVID-19 pandemic prevention has triggered a 3.9% increase in final consumption by the
120000000 100000000 80000000 60000000 40000000 20000000 0 Sick, people Russia USA China Germany
21807431 102668952 439995 37369865
Recovered, people 21217574 99546779 364120 36663800
Died, people
Lethality, %
393805 1118376 5250 161465
1.80 1.10 1.20 0.43
448 Table 1 Nominal GDP growth in Russia, USA, China, and Germany, %, 2019–2021
E. A. Isaeva et al. Country / Period Russia
2019 1.96
2020
2021
− 12.23
11.18
USA
4.07
− 2.24
China
3.05
3.29
14.16
− 1.11
10.01
Germany
− 2.23
9.69
Source Compiled by the Authors based on (Prognostica 2022)
government and nonprofit sector serving households compared to the same period in 2019 (Starostina 2021). The internal economic shock is the result of the implementation of measures to curb the spread of coronavirus infection. It was he who created problems in the real sector of the Russian economy, destabilized the labor market, and increased the burden on the social sphere. It also led to a jump in inflation. Thanks to state support measures, Russia managed to cope with a jump in inflation in 2020. However, 2021 showed that the termination of the implemented programs is fraught with consequences. For example, the inflation rate, as measured by the consumer price index, in Russia in 2020 was 3.38%, which is 1.09% less than in 2019. In 2021, it was 6.69%, which is 3.31% more than in 2020. The situation is similar in the USA, where the inflation rate was 1.23% in 2020 (− 0.58% relative to 2019) and reached 4.70% in 2021 (+ 3.46% relative to 2020). In 2020, Germany’s inflation rate was 0.51%, which is 0.94% lower than in 2019. In 2021, it was 3.14%, which is 2.64% higher than in the pandemic 2020. An example of effective public policy can be seen in China, where the inflation rate, beginning in 2019, declined steadily and was 2.90% in 2019, 2.42% in 2020, and 0.98% in 2021 (MacroTrends 2022). Russia’s labor market responded to the challenges of the COVID-19 pandemic by increasing unemployment to 5.59% in 2020 (in 2019—4.5%). A similar trend was observed in developed countries and China. For example, in 2020, only in the USA the unemployment rate exceeded the Russian indicator, while in other countries the growth was more restrained (Table 2). The main blow of the pandemic hit the labor market because one of the most common reactions of Russian enterprises to the pandemic crisis was staff optimization and the corresponding release of personnel (Fraymovich et al. 2022; Gukasyan et al. 2022; Karpunina et al. 2022c). Among hired workers, those employed in the small business sector Table 2 Unemployment rates in Russia, USA, China, and Germany, %, 2019–2021
Country/period
(without forming a legal entity) and those employed by individuals suffered the most. The most significant drop in income was experienced by workers in air and rail passenger transport, the hotel and restaurant business, and the sector of culture. The government implemented measures aimed at preserving the jobs and labor income of the population through the support of business structures and increased social payments to workers in the sectors of the economy most impacted by the quarantine. However, the current situation, as well as the fact that the unemployment rate in 2021 did not return to its pre-documentary level, indicates the low efficiency of government measures aimed at stabilizing the labor market in Russia. The decline in business activity and the rise in unemployment were reflected in the level of disposable household income per capita. Measures of social support during the COVID-19 pandemic did their job and stabilized its level. However, the termination of social assistance led to the opposite effect: at the stage of recovery from the active stage of the pandemic, the level of disposable household income per capita fell below the pre-pandemic level. These dynamics are characteristic of Russia, the USA, and Germany (Data 2022). Falling incomes and the deteriorating financial situation of households in Russia reduced their consumption in 2020 by almost 4% (Soboleva and Sobolev 2021). The process of adapting the Russian economy to the external economic shock of the pandemic coincided with the emergence of the sanctions economic shock. By February 2022, 2695 sanctions had been imposed against the Russian economy by the EU and USA, as well as 12,879 sanctions during 2022 (FederalPress. 2022). The cumulative effect on the economy of the sanctions is currently difficult to calculate. The Russian Central Bank predicts an 8–10% decline in GDP in 2022, which coincides with the forecast of the World Bank, which forecasts a fall of 8.9% (Journal.Tinkoff 2022). By the end of 2022, imports are expected to decrease by 37%. 2019
2020
2021
Russia
4.5
5.59
5.01
USA
3.67
8.05
5.46
China
4.52
5.0
4.82
Germany
3.14
3.81
3.54
Source Compiled by the Authors based on (MacroTrends 2022)
Pandemic and Sanctions: A Study of Economic Shocks in the Russian Economy
Sanctions on Russian oil, included in the sixth package of EU sanctions, are imposed, and the decline in oil production is to reach 4–8%. This will lead to a 10–15% reduction in the state budget. To support the economy under the sanctions shock, the Russian government plans to spend eight trillion rubles, of which five trillion is for financial support, including tax deferrals, which will create the threat of a state budget deficit in 2022. The withdrawal of foreign companies from the country will actualize the threat to the Russian labor market; it may lose 350 thousands of jobs, which will cause a jump in unemployment, primarily in regions with a pronounced industrial structure of the economy (the Kurgan Region, the Komi Republic, the Republic of Karelia, the Ulyanovsk Region, and the Kostroma Region). The other side of the paradox of the external economic shock from the pandemic was the positive structural transformations in Russia. In particular, it concerns the launch of processes of accelerated digitalization in education, production, trade, social sector, and public administration. The access to digital infrastructure increased. There have been structural shifts in the labor market and employment, and new types of activities and forms of labor organization have appeared. Quarantine restrictions contributed to the population’s growing need to communicate, perform professional activities, and be involved in learning processes. Consequently, the share of households with broadband Internet access in Russia increased by 4.6% in 2020, and the growth of fixed Internet traffic was 34.2% compared to 2019 (Abdrakhmanova and Utyatina 2021). The expansion of digital infrastructure has become the basis for the intensive development of the e-commerce sector, which during 2020 grew by 26% compared to the previous year (Abdrakhmanova and Utyatina 2021; Federal State Statistics Service of the Russian Federation and National Research University Higher School of Economics 2020). In 2020, there was a development of online services for citizens (who began to use online public services more often (+ 4.5% compared to 2019)) and organizations (+ 1.2%). In 2020, it was also observed the penetration of online education (online education market growth in 2020 was 13% with further expansion in 2021 by 37.7%) (Ruchkov 2022). The financial sector also received a boost to growth during the pandemic and was able to respond quickly to changes in consumer demand by expanding the supply of payment services to households and economic entities based on digital technologies. Thus, the volume of non-cash transactions in 2020 increased by 20.0% in number and 9.2% in volume compared to 2019 (Central Bank of the Russian Federation 2020). The increased demand for digital financial services due to the intensive development of online banking, insurance, and consumer lending led to a 7.9% increase in value added in finance and insurance in 2020.
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Economic shocks led to a structural transformation of the labor and employment market and the emergence of new activities and forms of work organization. The accelerated introduction of remote forms of work during the pandemic has largely confirmed the effectiveness of remote access technologies and forced businesses to manage “remote” employees. As early as April 2020, 16.7% of the Russian population had a remote job as an earner, and 57% of the population was actively looking for one. In May 2020, the number of freelancer registrations on the freelance exchange increased 3.5 times; the number of customers of freelance service increased 2.8 times. Overall, at the end of 2020, the number of freelancers in Russia increased by 76%; the number of customers for freelance services increased (+ 38%) (Center for Strategic Research 2020). This form of employment allows workers to combine the unconditional advantages of freelancing (independence from the employer, not being tied to the place of work, free schedule, and the possibility of increasing their earnings) and save on daily living and living expenses by living in regions far from the federal center of the country (Gurvich 2019). In the face of rising unemployment in many traditional sectors, the development of online freelancing exchanges can solve employment problems. This is facilitated by continuous digitalization and the changing global structure of labor demand due to the development of ICT and the emergence of new trends of innovative economic development (EMISS State Statistics 2022). The most in-demand segments of the job market at the moment are the areas of Data Science, financial analytics, and business services (Kommersant 2020). Under the impact of economic shocks on the national economy, the close attention of the Government to the resulting contradictions is required to take measures to stabilize the national economy. First, economic policy measures aimed at stabilizing the situation by creating effective incentives to improve the competitiveness of Russian industry through import substitution, including in the area of digital products (since the level of dependence on imports in this market segment is over 90%) (Karpunina et al. 2022b; Muzykantov 2022). First, this applies to industries with high import dependence (from 60 to 90%): heavy machine building, electronic industry, machine tool building, aircraft building, textile industry, and medical and pharmaceutical production. Government initiatives should be focused on: • developing of electronic import substitution exchanges for interaction between producers and consumers; • improving the institutional regulation of import substitution with an emphasis on the use of domestic software; • establishing of a ban on public procurement of foreign industrial goods, etc.;
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• the organizational measures to reduce the burden on business structures in these industries (including a moratorium on scheduled inspections of small and medium-sized enterprises). Second, social policy measures aimed at improving the welfare of the population should include: • increasing the real accrued wages of employees; • ensuring the growth of the share of financial assets and cash in the structure of the use of income of the population; • maintaining an increase in the real size of pensions; • stimulating the growth of business income; • ensuring the growth of the per capita monetary income of the population. Third, digital development and cybersecurity policy measures include: • improving of digital infrastructure; • creating incentives for increasing ICT spending by business structures; • establishing conditions for improving the digital literacy of the population; • launching of specialized information security programs and institutional regulation of activities on the Internet.
4
Conclusions
The research presents the author’s approach to studying economic shocks during the pandemic and implementing the policy of sanctions restrictions against Russia. The research reveals the content of the “paradox of economic shock” during the pandemic and sanctions restrictions in Russia through the combination of four conditions. The external economic shock from the pandemic provoked an internal economic shock from implementing the policy of sanitary restrictions. The degree of impact of the external economic shock on the Russian economy was increased by the simultaneous destabilization of the energy market. In Russia, the process of adaptation of the economy to the external economic shock from the pandemic coincided with the emergence of a new economic shock of the pandemic. The authors analyze the consequences of economic shocks on the national economy of Russia. The research substantiates the state policy measures capable of smoothing the negative effect of economic shocks on Russia’s economic system.
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Pandemic and Sanctions: A Study of Economic Shocks in the Russian Economy Karpunina E, Butova L, Sobolevskaya T, Badokina E, Pliusnina O (2021) The impact of the COVID-19 pandemic on the development of Russian national economy sectors: analysis of dynamics and search for stabilization measures. In: Proceeding of the 37th IBIMA conference. Cordoba, Spain, pp 1213–1226 Karpunina EK, Karpunin DV, Alekhina OF, Shvetsova IN, Suslyakova ON, Vitiutina TA, Astakhin AS (2022) Modern approaches to ensuring the economic security of the state and regions in the era of uncertainty. Ruscience, Moscow Karpunina EK, Moskovtceva LV, Zabelina OV, Zubareva NN, Tsykora AV (2022) Socio-economic impact of the COVID-19 pandemic on OECD countries. In: Popkova EG, Andronova IV (eds) Current problems of the world economy and international trade. Emerald Publishing Limited, Bingley, pp 103–114. https:// doi.org/10.1108/S0190-128120220000042011 Kommersant (2020, December 24) The growth in the number of freelancers in Russia is estimated at 76%. Retrieved from https:// www.kommersant.ru/doc/4627662. Accessed 12 Jan 2023 Layshi Y (2020) Economic shocks. Student handbook. Retrieved from https://spravochnick.ru/mikro-makroekonomika/ekonomicheskie_ shoki/. Accessed 12 Jan 2023 MacroTrends (2022) Germany unemployment rate 1991–2023. Retrieved from https://www.macrotrends.net/countries/DEU/ germany/unemployment-rate. Accessed 12 Jan 2023 MinfinMedia (2022) Coronavirus: statistics by country. Retrieved from https://index.minfin.com.ua/reference/coronavirus/geography/. Accessed 12 Jan 2023 Muzykantov S [Blog] (2022, April 12) Situation with import substitution in Russia in 2022. LiteBox. Retrieved from https://litebox.ru/ blog/for-business/importozameshchenie-v-rossii-v-2022-godu/. Accessed 8 Dec 2022 Journal Open-Broker (2021, April 21) Rosstat raised the estimate of Russia’s GDP in 2020. Retrieved from https://journal.open-broker.
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Current Challenges in the Development of the Kyrgyz Republic: Modernization of the Economy and the Financial Sector Sergei R. Semenov , Kalybek Zh . Abdykadyrov , and Aizada J. Otorchieva
Abstract
Keywords
The relevance of the selected research topic lies in determining the country’s readiness for current challenges in matters of modernization of the economy and finance and digitalization. The research aims to analyze the implementation of the national development programs (NDP) of the Kyrgyz Republic (KR) until 2026 and further improvement of the country’s economic development reflected in the NDS of the KR until 2040. The research tasks are to determine the current development of the economy of the KR in priority areas and suggest ways of modernization. The authors applied methods of statistical analysis of time series and dynamics of basic indicators. Based on certain categories of industries, the authors identified promising directions and ways of development. The application area of the research findings is the sphere of micro- and macroeconomics of economic structures of the state. The research revealed the presence of positive indicators and trends in the development of the economic, investment, and financial sectors. Topical problematic issues that require a comprehensive solution include issues of financing, investment, innovative development, and digitalization of economic sectors. The dynamics of the country’s economy are associated with certain changes in all areas of the world economy, including crisis factors that actively affect the development and stability of the national sectors of the economy.
Industry Agriculture Investments Finance Banking system Modernization of the economy Analysis of indicators Management economics Digitalization
JEL codes
O1
1
O2
P4
Q10
Introduction
It is highly relevant to assess the economy of the Kyrgyz Republic (KR) and its main indicators at the present stage of development within the framework of the orientation of the economy to the external and internal markets of the country. The necessary organizational and financial conditions for ensuring the economy are based on attracting investments and the digitalization of economic and social management systems. The research aims to show the direction of economic growth of the KR, determine the ways of economic development, and substantiate the advantages of certain areas of economic modernization, including digitalization.
2
Methodology
The author applied the methods of statistical analysis and dynamics of indicators of the economy of the KR. Sources of information for the research are as follows:
S. R. Semenov (&) K. Z. .Abdykadyrov A. J. Otorchieva International University of the Kyrgyz Republic, Bishkek, Kyrgyzstan e-mail: [email protected]
1. National development program (NDP) of the Kyrgyz Republic until 2026. 2. Action plan of the Cabinet of Ministers of the Kyrgyz Republic for the implementation of national programs of the Kyrgyz Republic.
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_74
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454
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3. “Agriculture of the Kyrgyz Republic” by the National Statistical Committee of the Kyrgyz Republic (NSC). 4. Brief statistical reference book “Kyrgyz Republic” developed by the NSC of the KR. 5. “Investments. Industry indicators” developed by the NSC of the KR. 6. Program of the Government of the Kyrgyz Republic to attract investments for 2022–2026. 7. “Main directions for the development of the banking system for 2022–2025” developed by the National Bank of the Kyrgyz Republic. 8. Program of the Government of the Kyrgyz Republic for the development of exports for 2019–2022.
3
Results
The global economy is constantly developing. Thus, it actively influences the transformation of economic processes in all countries, which causes certain changes in society’s life. Growth in the economy of the KR makes it possible to provide the population with jobs and expand and improve the level of municipal and public services. In recent years, the economy of the KR has been demonstrating the growth of its development, including in difficult crisis circumstances of changes in the world economy. To improve the country’s position at the international level, anti-crisis measures were proposed during the COVID-19 period, a reform was carried out in the public sector of the management system, and a certain environment was formed for the development of the economy. NDP of the KR until 2026 aims to improve the population’s welfare and the economy’s growth. Further improvement of economic processes in the country, developed based on the NDP of the KR, is reflected in the framework of the NDS of the KR until 2040, focused on maintaining long-term strategic goals (Cabinet of Ministers of the Kyrgyz Republic 2021b). The Cabinet of Ministers of the KR determined the directions in the field of economic management and development of the country, including the main ones, including the following:
Table 1 Small and medium businesses in the KR (units)
• Readiness of the country’s management system to the conditions of the crisis. • Further development of institutions of executive power. • Business support. • Optimization of budget expenditures and increase of its efficiency. • Ensuring the growth of employment of the population. • Accumulation of financial reserves, and development of measures to ensure financial independence. • Support for cooperation and foreign trade (Cabinet of Ministers of the Kyrgyz Republic 2021a). The economy of the KR had positive indicators. Nevertheless, there are also unresolved problems (modernization, innovations, and others). Thus, in recent years, the industry of the KR has already seen a slight increase, which indicates the attention to business. It is also necessary to support small and medium businesses that form the basis of economic development. In 2021, the share of industry in the KR was 21% of the GDP. The industry of the KR provides 18% of tax revenues and 81% of export deliveries. In 2021, products worth 357 billion som were produced (an increase of 9%). The rise of the industry occurred with the growth of production volumes in the main categories: metals, wood and paper products, food products, mining, oil products, and printing activities. In agriculture (2021), gross output amounted to 324 billion som (KABAR News Agency 2022), ensuring an increase in wheat production by 1.6 times, barley—by two times, fodder crops—by 13%, corn for grain —by 6%, vegetable crops—by 6%, fruit and berry crops— by 5%, sugar beet—by 28%, and oilseeds—by 10%. The share of crop production in the total production volume is 50%. Currently, three-fourths of arable land in the KR are privately owned; 90% of agricultural production are provided by the private sector. In 2021, the total share of small and medium businesses in agriculture increased by 0.2% compared to the previous year and amounted to 17,050 units, which includes 6252 small enterprises and 798 medium enterprises (Table 1) (National Statistical Committee of the Kyrgyz Republic 2022a). Modernization of the industry based on digital technologies will ensure the growth of
Indicators
2017
2018
2019
2020
2021
Total number
14,653
15,289
16,978
17,019
17,050
small enterprises
13,858
14,520
16,199
16,302
16,252
medium enterprises
795
769
779
717
798
individual entrepreneurs
389,778
40 658
411,405
418,763
429,985
peasant (farm) households
428,730
439,602
452,308
461,581
467,423
Source Compiled by the authors based on the data from the NSC of the KR (National Statistical Committee of the Kyrgyz Republic 2022a, 2022b)
urrent Challenges in the Development of the Kyrgyz Republic …
455
Table 2 Structure of FID inflows in 2018–2022 in the KR ($ thousand) Indicators
2017
2018
Equity
191,545.6
104,279.8
Financial leasing Reinvested profit
– 127,459.5
2019 –
20,747.9
2020
32,742.8 – 578,816.3
2021
13,992.5 – 289,370.5
2022
66,985.6 – 489,345.8
34,723.5 – 438,717.2
Other investments, including
297,788.0
540,115.9
465,359.6
234,190.8
449,759.8
484,874.2
Loans received from non-residents
211,701.8
343,026.8
316,428.7
207,708.2
359,682.8
426,609.6
Trade credits
72,750.6
195,790.0
148,867.6
23,861.7
90,065.7
58,264.1
Other accounts payable
13,329.8
1 299.1
63.3
2 620.9
4.0
Other liabilities Total
5.8 616,793.1
– 851 43.6
– 1,076,918.7
– 537,553.8
–
7.3
0.5
1,006,091.2
958,314.9
Source Compiled by the authors based on data from the NSC of the KR (National Statistical Committee of the Kyrgyz Republic n.d.; Semenov and Semenov 2022)
agricultural production, which is the industry’s reserve. Unified information system and the digitalization of agriculture are key problems in creating a common information space and information relations (Semenov and Semenov 2022, p. 27). The use of digital technologies will make it possible to introduce progressive methods of information exchange in the economy and optimize the work of e-business structures. It is necessary to modernize the economy, including its innovative orientation at enterprises (organizational, production, technological, and marketing), and increase investment in sectoral development. In 2021, investment development was carried out by external sources of financing (an increase of 8.7%) and internal sources (an increase of 1.9%); the total volume of foreign direct investment (FDI) amounted to $698 million. In 2020, due to COVID-19, there was a decrease in the investment flow in the world, and in the economy of the KR; a decrease in FDI was recorded. In 2020, the volume of FDI decreased and amounted to $537.6 million. The inflow of FDI for nine months of 2022 increased by 1.9 times compared to the same period in 2021 and amounted to $958 million (Table 2). In 2022, the FDI structure was about 46%. Another large source in the FDI structure is loans received from non-residents, which account for about 44%. The share of equity is only 3.6%. The structure of FDI in the KR shows that most FDI is carried out by existing investors. The share of newly attracted investors is insignificant. The attractiveness of the KR for foreign investors is decreasing. Currently, the country cannot use additional sources of value-added; only a small share of FDI is directed to increase the sector of the economy (Cabinet of Ministers of the Kyrgyz Republic 2021c). If we consider the main countries from which there is a large inflow of FDI, we can observe that only a few countries occupy a dominant position. Canada is a main investor
in KR due to the development of gold (the international company Kumtor Gold Company). In 2021, the volume of investments in this production amounted to $1,782,404 thousand (28.1%). China gradually increased the inflow of FDI into the economy of the KR: in 2021, the total inflow amounted to $546,922 thousand (8.6%). Other main investors are Russia ($2,100,365 thousand (33.2%)), Turkey ($474,060 thousand (7.5%)), the UK ($121,523 thousand (1.9%)), the Netherlands ($88,806.1 thousand (1.4%)), the UAE ($55,292 thousand (0.9%)), Korea ($42,900 thousand (0.67%)), and Uzbekistan ($33,816 thousand (0.5%)). The total FDI inflows from foreign countries to the economy of the KR in 2021 amounted to $6,331,356 thousand. In 2021, the total FDI outflow amounted to $779,878.5 thousand. The reasons are significant political events that took place in 2017–2018, such as the country’s presidential elections and the COVID-19 pandemic. Many large investors chose the position of “wait and see,” which affected the country’s economy. The challenges of the COVID-19 pandemic and the continued recovery of economic ties better highlight the importance of a long-term strategy for industrialization, innovation, digitalization, and sustainable infrastructure. Countries with a diversified industrial sector and developed infrastructure have weathered the economic impact of COVID-19 better and recovered faster than other countries (UNESCAP 2023). The economy of the KR has great potential to attract a large flow of FDI in various sectors of the economy based on the advantage of location, low electricity costs, trade and tax preferences, etc., which directly affects the investment attractiveness of the KR. Integration of the financial sector into the world economy has brought considerable changes to the banking system, through which globalization affects the lives of millions of citizens and society. Globalization makes it possible to borrow new types of services and develop the financial system, including credit and banking, through access to
456
banking and financial innovations. Foreign banks and financial structures may impede the activities of local economic groups and influence the entire banking system. The globalization of the banking system contributes to and is accompanied by a significant increase in the role of the banking and financial system of the current capitalist economy. Under the influence of the growing trend toward globalization, the banking system is increasingly fulfilling its redistributive purpose on a global scale. In recent decades, global and mainly financial globalization has been the determining force with different processes, which determines the scale, vector, speed, and internal logic of the transformation of global economic relations. Globalization resolves the historical dispute between the national, international, and global in favor of the latter. Banking innovations strengthen the economic, organizational, managerial, institutional, financial, information, and technological sustainability of banking activities in the economy of the KR. The total introduction in various areas of the banking business, as well as various innovations, gives banks ample opportunities to work not only with the national but with the global clientele. Introducing new innovative organizational, technological, product, and management solutions turns contemporary banks into high-tech market systems. The experience of developed countries makes it possible to come to such a vision that the Internet and mobile banking are becoming the main directions for the development of new banking services. The advantages of Internet banking are versatility, accessibility, and flexibility of the network environment, as well as prompt access to the global information network. The features of mobile banking include convenient input of information, personality, portability, computing abilities, and the presence of a screen (display). These features provide visibility when receiving information, accessibility, and ease of perception. Nowadays, in the period of digitalization, the main direction is the transition to digital management methods. Therefore, enterprises and organizations of the KR can improve their financial performance and business processes, thereby converting them to digital format, which will lead to customer satisfaction of their needs. Active digitalization of the banking system in the country, launched in light of ongoing reforms on the digital transformation of public administration, contributed to the transition to digital technologies in the banking system of the KR. This direction was carried out in three stages. Within the first (2003–2008), second (2012–2017), and third (2018– 2022) stages, a state program to increase the share of non-cash payments modernized the banking system. Recent years saw the implementation of several projects, including a card for a recipient of budgetary funds, a pensioner and social payments from a bank to payment cards, and a transfer of the fiscal form of payments in a non-cash form. The
S. R. Semenov et al.
consistent and systemic development of the banking payment infrastructure has involved businesses in making payments in a non-cash form, which has simplified some business processes in the KR. The National Bank of the KR has developed a program for developing the banking system for 2022–2025, which is aimed at creating and developing the level of financial intermediation, introducing innovations, and increasing non-cash payments (National Bank of the Kyrgyz Republic 2021). The banking system of the KR will strive to develop digital operating business models, which will obtain various banking products and services with the connection to the banking system of a larger number of customers who would prefer remote forms of service based on digital technologies.
4
Conclusion
Balanced investment measures by the Government of the KR form a favorable economic, financial, and legal regime for the activities of foreign investors. The positive dynamics of production in the industrial and agricultural sectors achieved over the past year have affected GDP growth, which has increased exports and competitiveness products of the KR. This direction was formulated in the program of the Government of the KR to develop exports for 2019–2022, where an action plan for its implementation was also determined. The focus on the comprehensive implementation of the action plan of this program will make it possible in the near future (turn of 5 years) to develop all enterprises in the agricultural production sector, which will help strengthen the position of agribusiness enterprises in the domestic market of the country and increase the share of national goods in foreign markets (Government of the Kyrgyz Republic 2018). The above development paths are aimed at reducing the level of the financial crisis, as well as diversifying and increasing production volumes, which will stabilize the economy of the KR and ensure its growth.
References Cabinet of Ministers of the Kyrgyz Republic (2021a) Action plan of the cabinet of ministers of the Kyrgyz republic for implementing the national development program of the Kyrgyz Republic until 2026 (Appendix to the Decree of December 25, 2021 No. 352, as amended February 10, 2023 No. 61). Bishkek, Kyrgyzstan. Retrieved from http://cbd.minjust.gov.kg/act/view/ru-ru/158853. Accessed 1 Mar 2023 Cabinet of Ministers of the Kyrgyz Republic (2021b). National development program of the Kyrgyz Republic until 2026 (adopted by the Decree of the President of the Kyrgyz Republic of October 14, 2021). Bishkek, Kyrgyzstan. Retrieved from https://www.gov. kg/ru/programs/16. Accessed 1 Mar 2023
urrent Challenges in the Development of the Kyrgyz Republic … Cabinet of Ministers of the Kyrgyz Republic (2021) Program for attracting investments to the Kyrgyz Republic for 2022–2026 (Appendix to the Decree of December 25, 2021 No. 352,). Bishkek, Kyrgyzstan. Retrieved from http://cbd.minjust.gov.kg/act/view/ruru/159444. Accessed 1 Mar 2023 Government of the Kyrgyz Republic (2018) Program of the government of the Kyrgyz Republic for the development of exports of the Kyrgyz Republic for 2019–2022 (Appendix to the Decree of December 20, 2018 No. 596). Bishkek, Kyrgyzstan. Retrieved from http://cbd. minjust.gov.kg/act/view/ru-ru/12808. Accessed 1 Mar 2023 KABAR News Agency (2022, January 14) The volume of industrial production in 2021 was more than 357 billion som—National Statistical Committee of the Kyrgyz Republic. Retrieved from https://kabar.kg/news/ob-em-promyshlennoi-produktcii-v-2021-godusostavil-bolee-357-mlrd-somov-natcstatkom/. Accessed 1 Mar 2023 National Bank of the Kyrgyz Republic (2021) Main directions for the development of the banking system of the Kyrgyz Republic for 2022– 2025 (Appendix to Resolution of the Board of the National Bank of the Kyrgyz Republic dated December 29, 2021 No. 2021-P-35/75-7(BS)). Bishkek, Kyrgyzstan. Retrieved from http://cbd.minjust.gov.kg/ act/view/ru-ru/800814. Accessed 1 Mar 2023
457 National Statistical Committee of the Kyrgyz Republic (2022a) Agriculture of the Kyrgyz Republic, 2017–2021. Bishkek, Kyrgyzstan. Retrieved from http://www.stat.kg/ru/publications/sbornikselskoe-hozyajstvo-kyrgyzskoj-respubliki/. Accessed 1 Mar 2023 National Statistical Committee of the Kyrgyz Republic (2022b) Brief statistical reference book “Kyrgyzstan,” 2017–2019; 2018–2020; 2019–2021. Bishkek, Kyrgyzstan. Retrieved from http://www.stat. kg/ru/publications/kratkij-statisticheskij-spravochnik-kyrgyzstan/. Accessed 1 Mar 2023 National Statistical Committee of the Kyrgyz Republic (n.d.) Investments. Retrieved from http://stat.kg/en/statistics/investicii. Accessed 1 Mar 2023 Semenov SR, Semenov NS (2022) Development of information and consulting services in the system of information relations in the agricultural industry of the Kyrgyz Republic. Vestsi Natsyyanal’nay akademii navuk Belarusi. Seryya agrarnykh navuk [Proc Nat Acad Sci BSSR. Agrarian Ser] 60(1):23–34. https://doi.org/10.29235/ 1817-7204-2021-60-1-23-34 UNESCAP (2023, March 6) SDG 9: Industry, innovation and infrastructure. Retrieved from https://www.unescap.org/kp/2023/ sdg-9-industry-innovation-and-infrastructure. Accessed 1 Mar 2023
Impact of Money Supply on Inflation in Uzbekistan—VAR Approach Aktam U. Burkhanov , Mohichekhra T. Kurbonbekova , and Bunyod Usmonov
Abstract
1
Many scholars have examined the significance of the money supply for macroeconomics in developed countries. However, few studies have explored this assumption in developing countries. Therefore, this research presents the Vector AutoRegression (VAR) model for the developing countries. Within the econometric model, money supply, refinancing interest rate, money market rate, and inflation rates are obtained on a monthly basis. According to the analysis, while money supply and money market rates have significantly affected inflation, the effect of Central Bank refinancing effect on inflation was insignificant. Meanwhile, the inflation growth has partially increased money supply but increased money market rates and refinancing interest rates. Additionally, the increase in inflation in the previous months is negatively correlated with the inflation in the next month. Keywords
Money supply Broad money Money market rate Inflation Refinancing interest rate JEL codes
E41
E42
E43
Central Banks achieve these goals through several monetary policy channels by regulating the money supply. Specifically, the technique to achieve these goals is widely applied in developed countries. The operation of the interest rate channel is very simple. If we consider that the price level is not subject to change (changes in interest rates in the short term do not impact the price level), the reduction of the nominal interest rate by the Central Bank causes a decrease in real interest rates. This fact will cause a decrease in the expenses for raising financial resources by companies. The opposite may also be the case. We researched methodology proposed by scientists in their works (Ando and Modigliani 1963; Bernanke and Gertler 1995; Blinder and Stiglitz 1983; Mishkin 2021; Usmonov 2023). Currently, fundamental research devoted to making sure a ramping up the efficiency of the inflation targeting regime, maintaining the national currency stable, streamlining the way in which the channels of the transmission mechanism of monetary policy is employed, making sure that monetary policy is not overused compared to fiscal policy and vice versa, as well as providing transparency of the monetary policy, is being conducted in the countries worldwide.
2
A. U. Burkhanov (&) M. T. Kurbonbekova B. Usmonov Tashkent State University of Economics, Tashkent, Uzbekistan e-mail: [email protected] M. T. Kurbonbekova e-mail: [email protected] B. Usmonov e-mail: [email protected]
Introduction
Literature Review
Famous financier Mishkin admits the essential role played by Central Banks in terms of open market and discount operations in regulating the money supply. He underscores that open market operations possess several benefits. His view is that Central Bank’s open market operations offer a number of benefits: 1: Federal Reserve System (Fed Bank). When it comes to discount operations, the Fed Bank can raise or lower
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_75
459
460
banks’ demand for discount loans by altering the discount rate though it cannot directly supervise the amount of discount loans. 2: Open market operations are considered precise and flexible. They can be of any scope. If the Central Bank aims to modify the reserve or monetary base marginally, then it can accomplish its purpose by trading a small amount of securities. If the Central Bank intends to amend the reserves considerably, it will trading a large amount of securities. 3: Open market operations possess the features of easy recoverability. If the Fed Bank makes an error in implementing open market operations, it can rescind the transaction instantly. If the interest rate on interbank loans falls noticeably because the Fed buys a large amount of securities on the open market (in this case, the Fed), the sale of securities will begin (Mishkin 2021). From the point of view of a group of economists, the main drawback of Taylor’s monetary rule is that the GAP essential monetary indicators (Devereux and Engel 2003; Taylor 1999). Mukherjee and Bhattacharya support the assumption that for the interest rate channel in monetary policy to impose an efficient effect on the economy, the national banking system must first be liberalized and sufficiently developed (2011). According to Horvath and Maino, for the interest rate channel to have a positive effect, the real sector must have at least a partial relation to the stock market. They performed a Vector AutoRegression (VAR) analysis of the Belarusian economy based on 1996–2005 statistics and concluded that underdevelopment or inefficiency in small economies is due to the strong dollarization of the economy (Maino and Horváth 2006). In the research by Saborowski and Weber, devoted to the evaluation of the determination of the interest rate channel through the conditional impulse response function, the authors used monthly statistics instead of annual statistics in columnar VAR analysis. In this way, they observed the long-term impact of the interest rate channel in assessing the impact on the economy and the dynamics of the impact of this channel in the short term. The results suggest that the structural characteristics of interest rate activity are connected with the exchange rate flexibility in the country, the quality of regulators, financial market development, dollarization, inflation, liquidity and asset quality indicators, and bank loan portfolio (Saborowski and Weber 2013). The US economist Laurence Ball supposes that the Central Bank has to determine the demand for money and analyze the factors that influence it intending to carry out the
A. U. Burkhanov et al.
money supply optimally. Particularly, the impact of interest rates on national income and demand for money has been assessed separately. According to post-World War II statistical analysis, the elasticity between the demand for money and national income accounted for 0.5; the elasticity between the interest rate and the demand for money was quite insignificant and equaled − 0.05 (Ball 2001). It should be noted that we face a problem in applying Laurence Ball’s conclusions in Uzbekistan. In our national practice and other similar countries, the demand for money is subject to impact by other factors. Using the VAR model, Yugang He conducted an empirical money supply (M2) research and revealed its connection with particularly real GDP, inflation, and interest rates in reliance upon statistics from 2000 to 2016 evidence from the Chinese economy. Increasing the money supply raised real GDP as well. The increase in inflation resulted in money supply growth. Additionally, a rise in interest rates caused a decrease in the money supply. This reason is basically explained by the money multiplier (He 2017). In our opinion, it is impossible to account for GDP within the empirical analysis. The reason for this is that we have received monthly statistics and can cite the fact that the official monthly statistical data on GDP are not provided. Steffen Murau studied the impact of shadow money on the US economy. In his analysis, Steffen Murau examines the impact of three categories of shadow money on money market securities, overnight repurchase agreements, and commercial bills secured by assets within the period covering pre-2007 and post-2009. The analysis has illustrated that while some shadow money was injected into the public money supply as a result of the measures undertaken in 2007–2014, some shadow money from the bankruptcy of Lehman Brothers was demonetized by the public and reduced to a great extent in relation to bank deposits (Murau 2017). In the authors’ opinion, the assessment of the impact of such shadow money on the total money supply will further enhance the quality of the analysis. However, the main reasons why the authors have not made such an analysis in this research are that the volume of securities, overnight repurchase agreements, and commercial bills secured by assets are very small in developing countries, and their impact on the total money supply is insignificant. Benati Luca, Robert E. Lucas Jr., et al. studied the demand for aggregate M1 in reliance upon the statistical data in terms of countries from 1851 to 2015. They conducted research in two focus areas to determine the demand for money. The first focus area implied studying the effect of short-term interest rates on demand for money with the velocity of money. The second focus area was devoted to the research on the effect of GDP and short-term interest rates on money demand. Their final findings demonstrate that the
Impact of Money Supply on Inflation in Uzbekistan—VAR Approach
461
impact of these indicators on money demand was quite significant in the USA and the UK. Moreover, the impact of these indicators on demand for money was significant in countries with high inflation but varied in countries with low inflation. In such countries, the impact of short-term interest rates on the velocity of money has a more acute effect (Benati et al. 2018). Benchimol Jonathan and Irfan Qureshi are one of the scientists who analyzed household demand for money as evidence from the USA. In their analysis, the scholars examined the elasticity of interest rates with the population’s consumption and savings. According to empirical analysis, the elasticity between these indicators was relatively high in the 1970s when inflation was high. However, the elasticity between these indicators decreased by one-third in the 1980s compared to the 1970s due to the development of financial innovations. This downward trend ceased in 2010 (Benchimol and Qureshi 2020). In our opinion, it is recommended to apply the conclusions and proposals made by Benchimol Jonathan and Irfan Qureshi in the economy of Uzbekistan because most products manufactured in the majority of countries are consumed by the population, which implies that the population’s share in aggregate demand is high. Therefore, determining their demand is useful and applicable in assessing inflationary expectations. One of the factors in Uzbekistan is that the consumption of the population is not covered by bank loans. The domestic economist A. T. Absalamov considered this problem. According to his analysis, the share of loans issued by the commercial banks of Uzbekistan to the population constitutes 4%–6% of the GDP. This drawback does not enable the Central Bank to determine the population’s demand for money in the process of the money supply regulation (Absalamov 2020). Moreover, Absalamov has studied the effect of alterations in the money supply and interest rates by the Central Bank on inflation and GDP in reliance upon quarterly statistics using the Vector Error Correction Model (VECM).
In fact, the VAR is a system of econometric equations, each of which is considered an autoregressive and distributed lag model. Herewith, if we consider yi, i = 1,…,k as time series, this model can be presented with the following formula:
3
Methodology
This research uses the VAR model. The official monthly inflation statistics State Committee for Statistics for 2016– 2020 have been used in Uzbekistan. The Vector AutoRegression (VAR) was proposed by Christopher Sims as an alternative to a system of equations containing significant theoretical constraints. The VAR model is considered the model that is free from the limitations of structural models. Despite this fact, the problem with the VAR model is that there is a sharp rise.
yit ¼ ai0 þ
k X j¼1
j ai1j yt1 þ
k X j¼1
j ai2j yt2 þ þ
k X j¼1
j aipj ytp þ eit
Time series vectors (e.g., yt = (yt1 ; yt2 ; . . .; ytk )) are introduced for this purpose. Herewith, the above equation can be expressed in vector form for each time series in the form of the following single formula: yt ¼ a0 þ A1 yt1 þ A2 yt2 þ þ Ap yt9 þ et p X ¼ a0 þ Am ytm þ et m¼1
where Am − aimj —is considered a matrix of elements. However, the model specified above is closed. That is, it acts as a variable that explains the lag of endogenous variables. However, this model can be supplemented by some exogenous variables and their lags. In this case, this model is called open. It can be seen as follows in the form of a matrix: y t ¼ a0 þ
p X m¼1
Am ytm þ
q X
Bn xtn þ et
n¼0
The VAR model specified above has been used in many research papers over the last 30 years. In evaluating the effect of monetary policy on the economies in developing countries, the authors consider recent research papers that have used this model. In particular, one of the South Korean economists, Yugang He, studied the effect of money supply on macroeconomic fluctuations as evidenced by China. When using this model, the effects of money supply, GDP, inflation, and interest rates have become apparent (He 2017). In this regard, if Ahmet Tiryaki, Reshat Ceylan, and Levent Erdogan have studied the effect of money supply on the exchange rate of the Turkish economy through this model (Tiryaki et al. 2019), then Mohammed Ershad Hussain and Mahfuzul Haque have used it to determine the added value of the money supply on the GDP (Hussain and Haque 2017). We can give many similar examples. Therefore, we used the VAR model in our research. In this econometric model, monthly changes, monthly refinancing rate transformations, monthly inflation rates for 2016M1–2020M6 were accepted for analysis. These figures were converted to real indicators in relation to the inflation rate compared to January 2016. Moreover, to reduce the number of indicators, all selected indicators are of a naturally logarithmic character.
462
4
A. U. Burkhanov et al.
Results
The Central Bank achieves these goals by implementing a prudent money supply. Unlike the Central Banks of developed countries, developing countries, including the Central Bank of Uzbekistan, challenge certain difficulties in achieving these goals. In this research, the authors use empirical analysis of the effect of the Central Bank’s money supply on inflation using the VAR or VECM models. The authors mean to create the model illustrating the correlation between the Central Bank’s real refinancing interest rate (INRt ), real money supply (M2t ), the interest rate at the money market (MMRt ), and inflation rate (CPIt ) during the period 2016M1–2020M6. As a first step in making an empirical analysis in reliance upon this model, the authors have performed descriptive statistics analysis to determine the variance of the selected indicators. Once the authors have determined the frequency of fluctuations of the selected parameters, it is required to reveal their correlation with each other (Table 1). There is no strong correlation. That is, the correlation between them constitutes 0.37. We can observe the correlation specified above through the figure as well. That is, the impact of changes in the money supply on the inflation rate is witnessed after 3–4 months. In particular, the increase in money supply in eight months of 2017 is making an impact on inflation in one month of 2018. The augmented Dickey-Fuller Test relied upon four selected indicators at the next stage. The ADF model is presented as follows: DR M2t ¼ a3 þ b3 t þ c3 R M2t1 þ x1 DR M2t1 þ þ xp1 DR M2tðp1Þ þ ht DINRt ¼ a4 þ b4 t þ c4 INRt1 þ l1 DINRt1 þ þ lp1 DINRtðp1Þ þ rt
where a1 ; a2 ; a3 ; a4 —constant values, and b1 ; b2 ; b3 ; b4 — coefficients varied due to the time trend result. All selected indicators are in a stationary state. Since all indicators selected for the model are in a stationary state, the VAR model is applied in reliance upon these indicators. Using the above analysis, having made empirical analysis, the authors created the model demonstrating the interrelation between the real refinancing rate of the Central Bank (INRt ), real money supply (M2t ), the interest rate at the money market (MMRt ), and the inflation rate (CPIt ): CPIt ¼
i¼1
þ
Table 1 Correlation matrix of indicators, %
di CPIti þ
i¼1
4 X i¼1
ci DRINRti
xi RMMRti þ a1 þ p1 e1
DRMMRt ¼
4 X i¼1
þ
4 X i¼1
bi DRM2ti þ
ci DRMMRti þ
4 X
4 X
di CPIti
i¼1
xi INRti þ a2 þ p2 e2
i¼1
VAR model illustrates a 1.0% increase in the monthly real money supply raises the monthly inflation rate by 0.4% after four months. While economic literary sources suggest that the correlation between these indicators will provide a very short-term impact, changes in the money supply make a slower impact on the money market in countries like Uzbekistan than in developed countries. Particularly, rise in the real interest rate of the Central Bank increases monthly inflation as well. However, the overall impact remains negative. Stated differently, the Central Bank’s impact on inflation through interest rates is not developed at an adequate level. Thus, the Central Bank of Uzbekistan plays an essential role in curbing inflation.
Conclusion and Recommendations
INR
MMR
CPI
– –
INR
37.00
MMR
36.94
99.99
− 37.19
− 99.94
CPI
4 X
By contrast with developed countries, some scientists investigated the impact of the Central Bank’s money supply on the fluctuations of macroeconomic indicators in
M2 M2
4 X
bi DRM2ti þ
i¼1
DRMMMRt ¼ a1 þ b1 t þ c1 RMMMRt1 þ d1 DRMMMRt1 þ þ dp1 DRMMMRtðp1Þ þ et 5 DCPIt ¼ a2 þ b2 t þ c2 CPIt1 þ u1 DCPIt1 þ þ up1 DCPItðp1Þ þ st
4 X
Source Authors’ calculations
– − 99.95
–
Impact of Money Supply on Inflation in Uzbekistan—VAR Approach
463
developing countries. Taking this fact into consideration, the authors have analyzed the impact of the money supply on inflation. Although many research papers have been published regarding this issue, the issue has not been thoroughly investigated in developing countries. Therefore, this scientific research presents the VAR model as a case study of the Republic of Uzbekistan, which is one of the developing countries. In the econometric model, the money supply, refinancing interest rate, money market interest rate, and inflation rates are obtained on a monthly basis. Moreover, the increase in inflation in the previous months is negatively correlated with the inflation in the following month. Furthermore, the analysis results show that, unlike the research made as evidence from the developed countries, the impulse response of the money supply to inflation in developing countries will not be significant. There are several reasons for it, in particular:
Ball L (2001) Another look at long-run money demand. J Monet Econ 47(1):31–44. https://doi.org/10.1016/S0304-3932(00)00043-X Benati L, Lucas Jr RE, Nicolini J-P, Weber W (2018) Long-run money demand redux. In: NBER working paper 22475. National Bureau of Economic Research, Cambridge Benchimol J, Qureshi I (2020) Time-varying money demand and real balance effects. Econ Model 87:197–211. https://doi.org/10.1016/j. econmod.2019.07.020 Bernanke BS, Gertler M (1995) Inside the black box: the credit channel of monetary policy transmission. J Econ Perspect 9(4):27–48. https://doi.org/10.1257/jep.9.4.27 Blinder AS, Stiglitz JE (1983) Money, credit constraints, and economic activity. Am Econ Rev 73:297–302. https://doi.org/10.7916/ D87371XD Devereux MB, Engel C (2003) Monetary policy in the open economy revisited: price setting and exchange-rate flexibility. Rev Econ Stud 70(4):765–783. https://doi.org/10.1111/1467-937X.00266 He Y (2017) A study on the relationship between money supply and macroeconomic variables in China. Mediterr J Soc Sci 8(6):99. https://doi.org/10.1515/mjss-2017-0046 Hussain ME, Haque M (2017) Empirical analysis of the relationship between money supply and per capita GDP growth rate in Bangladesh. J Adv Econ Finance 2(1):54–66. https://doi.org/10. 22606/jaef.2017.21005 Maino R, Horváth B (2006) Monetary transmission mechanisms in Belarus. IMF Working Paper 06(246). https://doi.org/10.5089/ 9781451865066.001 Mishkin FS (2021) The economics of money, banking and financial markets. Pearson Education, London Mukherjee S, Bhattacharya R (2011) Inflation targeting and monetary policy transmission mechanisms in emerging market economies. IMF Working Paper 11(229). https://doi.org/10.5089/ 9781463921293.001 Murau S (2017) Shadow money and the public money supply: the impact of the 2007–2009 financial crisis on the monetary system. Rev Int Polit Econ 24(5):802–838. https://doi.org/10.1080/ 09692290.2017.1325765 Saborowski C, Weber S (2013) Assessing the determinants of interest rate transmission through conditional impulse response function. IMF Working Paper 13(23). https://doi.org/10.5089/ 9781475525717.001 Taylor JB (1999) The robustness and efficiency of monetary policy rules as guidelines for interest rate setting by the European Central Bank. J Monet Econ 43(3):655–679 Tiryaki A, Ceylan R, Erdoğan L (2019) Asymmetric effects of industrial production, money supply and exchange rate changes on stock returns in Turkey. Appl Econ 51(20):2143–2154. https://doi. org/10.1080/00036846.2018.1540850 Usmonov B (2023) The impact of the financial ratios on the financial performance. A case of Chevron Corporation (CVX). In: Koucheryavy Y, Aziz A (eds) Internet of Things, smart spaces, and next generation networks and systems. NEW2AN 2022. Lecture notes in computer science, vol 13772. Springer, Cham. https://doi.org/ 10.1007/978-3-031-30258-9_28
• Reliance of the economy in developing countries on monopoly competition; • The use of protectionism to protect against external influences and thereby limited participation in globalization; • Setting informal dollarization in small countries and strengthening its impact on the economy; • Pricing of basic goods and services is implemented only by the government; • The fact that food consumer goods can be subject to speculation; • High influence of seasonal factors. This reason occurs mainly due to the fact that it is more forcible in agro-industrialized countries like ours. It is also possible to evaluate the effect of money supply on inflation and other macroeconomic indicators, particularly GDP, lending expansion, exchange rates, and balance of payments.
References Absalamov AT (2020) Analysis of factors affecting credit channel. J Int Finance Acc 5(5):1–16 Ando A, Modigliani F (1963) The “life cycle” hypothesis of saving: aggregate implications and tests. Am Econ Rev 53(1):55–84
Directions of Trade Relations of Uzbekistan with the Countries of Central Asia Mehri Kh. Vokhidova
and Alomatkhan R. Abdullaeva
Abstract
1
Research develops recommendations on prospective directions of mutual cooperation, determining the impact of trade turnover with Central Asian countries and Uzbekistan. The authors analyzed 2000–2021 foreign trade turnover using regression correlation, in which the influence of the trade turnover of Uzbekistan with each Central Asian country on the country’s foreign trade turnover was studied. The analysis results show that the development of foreign trade relations of Uzbekistan with Kazakhstan, Kyrgyzstan, and Turkmenistan is promising. The biggest problem in increasing foreign trade turnover of Uzbekistan is not that the country is not a WTO member but the need to modernize production. For this reason, there is a need for an economic–mathematical analysis of the modernization of the branches of the chemical industry and the attraction of foreign investments in this direction. Keywords
Central Asia Uzbekistan Export Import Trade volume Foreign trade turnover Cooperation JEL Classifications
F0
F1
F18
F15
M. Kh.Vokhidova (&) Tashkent State University of Oriental Studies, Tashkent, Uzbekistan e-mail: [email protected] A. R. Abdullaeva Fiscal Institute Under the State Tax Committee of the Republic of Uzbekistan, Tashkent, Uzbekistan e-mail: [email protected]
Introduction
After 2016, Uzbekistan’s trade relations with Central Asian countries are also developing. In particular, these countries include two of Uzbekistan’s five largest export partners (Kazakhstan—11%, Kyrgyzstan—8.2%) and one import partner (Kazakhstan—11%) are these countries. The country has active trade with all Central Asian countries. For example, with Kazakhstan: + 30.4% more than in 2020, $4.2 billion in January–November 2022 (+ 18.8%), of which $1.27 billion are export (+ 20.2%) and $2.93 billion are import (+ 18.1%). The main export positions include vehicles (27.8%), food products (19.1%), services (14%), plastics and products made from them (5%), textiles (4.5%), ferrous metals (4.2%), and others. The main import products are flour products (27.3%), ferrous metal products (17.8%), energy products (10.5%), ore and slag (12.7%), construction materials (5%), transport tools (4.6%), and others. It is necessary to note that 60% of Uzbekistan’s mutual trade with Central Asian countries, totaling $7 billion, corresponds to Kazakhstan. Currently, mutual trade between Uzbekistan and Kazakhstan makes up 25% of regional internal trade in Central Asia ($16.5 billion) (Vokhidova 2021). Uzbekistan conducts trade and economic relations with Kyrgyzstan within the framework of bilateral agreements, SCO, and CIS. From 2016 to 2020, Uzbekistan’s trade with Kyrgyzstan increased 3.5 times and reached $903 million (Baqtigulov and Yoqubov 2021; Sputnik Uzbekistan 2022). There are 187 enterprises with Kyrgyz investment in Uzbekistan (their number was 49 in 2016), 98 of which are joint ventures in energy, light industry, pharmaceuticals, automobile industry, construction materials, and agricultural production. The potential of the “China-Kyrgyzstan-Uzbekistan” transport corridor, which is useful for Uzbekistan’s trade
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_76
465
466
M. Kh. Vokhidova and A. R. Abdullaeva
potential, is very high. It allows the country to access the sea and the countries of Southeast Asia (Olimjonov and Yakubova 2020; UzDaily 2022). Each Central Asian country has its own potential in Uzbekistan’s foreign trade turnover. The similarity of the ethnic composition of these countries increases mutual trade opportunities. However, the fact that Kazakhstan, Kyrgyzstan, and Tajikistan are WTO members and Uzbekistan and Turkmenistan are not WTO members complicates trade relations. The research aims to develop recommendations on prospective directions of mutual cooperation.
entire region. In this place, it is also assumed that Kyrgyzstan has the World Trade Organization. However, the role of countries such as Kazakhstan and Uzbekistan, which are important in the region’s foreign trade turnover, is not considered. The calculation of the research results is carried out according to the data in Table 1. According to it, the influence of Uzbekistan’s trade for 2000–2021 is analyzed using regression correlation. According to results, recommendations will be developed for developing cooperation and trade–economic relations with it.
2
3
Materials and Method
The research conducted by Liu (2019) talks about energy diplomacy in Central Asia. Ma et al. (2018) used an approach based on the VAR index to study the risk of exchange rate fluctuations between countries with multiple routes. It is noted that the internal interaction in the currency markets of Central Asia is weak (Batsaikhan and Dabrowski 2017). The Kyrgyz currency plays an important role in the Table 1 Volume of trade turnover of Uzbekistan with Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan in 2000–2021 ($ million)
Years
Total (Uzbekistan)
Results
According to Table 2, the correlation coefficient of the influence of Kazakhstan on the volume of trade turnover of Uzbekistan was 0.98, that of Kyrgyzstan was 0.82, that of Tajikistan was 0.10 (the lowest), and that of Turkmenistan was 0.79. Therefore, increasing the trade turnover of Uzbekistan with Kazakhstan, Kyrgyzstan, and Turkmenistan will lead to an increase in the country’s foreign trade turnover. In the next section, we will get a broader result by
With Kazakhstan
With Kyrgyzstan
With Tajikistan
With Turkmenistan
284
387.5
2000
6212.1
53.9
156.8
2001
6307.3
224.3
108.8
238
Not given
2002
5700.4
78.7
81.9
205
Not given
2003
6689.2
229.9
50.2
200
Not given
2004
8669.0
409
57
235
Not given
2005
9500.1
476
71.5
218
Not given
2006
11,171.4
679
58.5
243
Not given
2007
15,719.6
1367
194.7
301
Not given
2008
21,197.3
1742
141
229
Not given
2009
21,209.6
1158
140.9
198
Not given
2010
22,199.2
1539
126.6
81
Not given
2011
26,365.9
1911
201.4
2012
26,416.1
2103
0
2013
28,269.6
2074
2014
27,530.0
2060
2015
24,924.2
2016
24,232.2
2017 2018
69.4
Not given
62
Not given
251.4
12.1
Not given
265
12.8
373.9
1629
151.5
12
278.7
1490
193.1
67.3
183
26,566.1
2243
322
76.5
151.5
33,429.9
2870
511
295
254.2
2019
41,751.0
3170
775
376
426.5
2020
36,256.1
2890
912
401.2
439
2021
42,170.5
3740
934
428.1
784.6
Source Compiled by the authors based on CAAN data (2022)
Directions of Trade Relations of Uzbekistan with the Countries... Table 2 Regression equations
467 Regression line equation
Reporting linear regression in APA style
Uzbekistan-Kazakhstan
Ŷ = 5035.5438 + 10.5955X
X predicted Y, R2 = 0.97, F (1,20) = 607.5, p < 0.001 b = 10.6, p < 0.001, a = 5035.54, p < 0.001. b = 10.6, p < 0.001, a = 5036.14, p < 0.001
Uzbekistan-Kyrgyzstan
Ŷ = 12,021.9179 + 35.2363X
X predicted Y, R2 = 0.68, F (1,20) = 42.65, p < 0.001 b = 35.24, p < 0.001, a = 12,021.92, p < 0.001
Uzbekistan-Tajikistan
Ŷ = 19,624.7752 + 9.601X
R2 = 0.011, F(1,20) = 0.23, p = 0.63 b = 9.6, p = 0.635, a = 19,624.78, p < 0.001
Uzbekistan-Turkmenistan
Ŷ = 21,718.5266 + 28.7481X
X predicted Y, R2 = 0.62, F(1,6) = 9.81, p = 0.020 b = 28.75, p = 0.020, a = 21,718.53, p = 0.001
Source Compiled by the authors based on CAAN data (2022)
analyzing the export and import positions of Uzbekistan with Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan. Table 2 shows that Uzbekistan exports vehicles, mineral fuel, knitwear, clothes, fruits, and vegetables to the countries of Central Asia. Imports include mineral fuels, oils and distillers, salt, sulfur, soil, stone, plaster, lime and cement, groats, machinery, nuclear reactors, and boilers dominate. Uzbekistan also exports food products to Central Asian countries under other approvals. In general, their prices are not high. Uzbekistan’s trade balance has a negative balance (as of November 2022). This can be seen in foreign trade turnover with Central Asian countries. For example, Uzbekistan has a negative balance with all Central Asian countries except Tajikistan. Uzbekistan-Kazakhstan exports are as follows:
Uzbekistan-Kyrgyzstan exports are as follows:
• • • • •
Uzbekistan-Tajikistan exports are as follows:
Vehicles ($325.06 million); Fruits, nuts, and melons ($112.77 million); Vegetables ($74.43 million); Plastic ($58.08 million), Machinery, nuclear reactors, and boilers ($49.38 million), etc.
• • • • •
Clothing ($187.48 million); Knitted and crocheted goods ($97.52 million); Other textile goods ($33.66 million); Plastic ($31.51 million); Vegetables ($28.95 million), etc.
Uzbekistan-Kyrgyzstan imports are as follows: • Mineral fuels, oils, and distillers ($44.11 million); • Salt, sulfur, soil, stone, gypsum, lime, and cement ($33.03 million); • Iron and steel ($21.05 million); • Machinery, nuclear reactors, and boilers ($8.65 million); • Glass and glass containers ($6.96 million), etc.
• • • • •
Mineral fuel ($54.83 million); Food industry waste ($43.79 million); Ammunition ($30.13 million); Plastic ($17.69 million); Iron and steel ($17.46 million), etc.
Uzbekistan-Kazakhstan imports are as follows: Uzbekistan-Tajikistan imports are as follows: • • • • •
Groats ($649 million); Iron and steel ($474.3 million); Ores ($347.21 million); Mineral fuels, oils, and distillates ($288.80 million); Vehicles other than railways and trams ($119.95 million), etc.
• Salt, sulfur, soil, stone, gypsum, lime, and cement ($33.77 million); • Mineral fuels, oils, and distillers ($22.99 million); • Iron and steel ($17.96 million); • Aluminum ($8 28 million); • Cotton ($5.62 million), etc.
468
M. Kh. Vokhidova and A. R. Abdullaeva
Uzbekistan-Turkmenistan exports are as follows: • • • • •
Fertilizers ($48.41 million); Salt, cement, and gypsum ($5.79 million); Fruits, nuts, and melons ($5.49 million); Animal and animal fats ($3.74 million); Stone, gypsum, and asbestos ($3.47 million), etc.
Uzbekistan-Tajikistan imports are as follows: • • • • •
Mineral fuels, oils, and distillates ($633.54 million); Plastics ($31.00 million); Glass and glassware ($7.76 million); Human-made yarn ($2.08 million); Machinery, nuclear reactors, boiler houses ($1.94 million), etc.
Uzbekistan exports vehicles, fruits, vegetables, animal, animal fats, iron, steel, food industry waste, clothing, knitwear, and textile products to Central Asian countries. Ores, mineral fuels, oils, distillers, groats, machines, nuclear reactors, and boilers dominate in the composition of imports from Central Asian countries. This can be justified by several factors, including the following: • The fact that mineral fuels, oils, and distillers available in the country, as a result, cause the need for imports; • The lack of development of production of machines, nuclear reactors, and boilers in Uzbekistan; • The preservation of non-modernized sectors of the chemical industry and the need to introduce innovations in the chemical industry.
4
Conclusion
The following proposals were formulated: • The biggest problem in increasing foreign trade turnover of Uzbekistan is not the fact that it is not a WTO member but the need to modernize production. For this reason, the need for economic–mathematical analysis of the modernization of the branches of the chemical industry and the attraction of foreign investments in this direction arises; • It is necessary to analyze the possibility of production of machines, nuclear reactors, and boilers. It is possible to start the production of these products in cooperation with Kyrgyzstan and Turkmenistan;
• To develop industrial cooperation between Central Asian countries. For example, it is possible to establish a cooperative in the production process of salt, sulfur, soil, stone, gypsum, lime, cement, and plastic. This creates an opportunity for the development of the networks and sectors included in the cooperation; • It is also desirable to establish cross-border special economic zones that serve to develop cross-border relations between countries (Khasanovna 2020). • Trade relations between Uzbekistan and Turkmenistan are a promising direction. In addition to fruits and vegetables, there is an opportunity to increase the volume and develop the composition of exports of other food products, clothing and knitted products, to the Turkmen Uzbekistan’s market. Increasing the import of mineral fuels, oils, distillates, plastic, glass, glass containers, and chemical products derived from oil can benefit Uzbekistan’s economy.
References Baqtigulov S, Yoqubov E (2021) Uzbekistan and Kyrgyzstan: complex pages in mutual relations closed account. https://www.uzanalytics. com/xalqaromunosabat/9826/. Accessed 17 Jan 2023 Batsaikhan U, Dabrowski M (2017) Central Asia: twenty-five years after the breakup of the USSR. Russ J Econ 3(3):296–320. https:// doi.org/10.1016/j.ruje.2017.09.005 CAAN data (2022) Taken from the data of the statistical offices of Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan. https://www.caa-network.org/archives/19734/ekonomika-i-covid19-v-czentralnoj-azii. Accessed 17 Jan 2023 Khasanovna VM (2020) Development of transboundary trade and economic relations in Central Asia. Central Asian J Innov Tour Manag Finan 1(4):24–34 Liu J (2019) Investments in the energy sector of Central Asia: corruption risk and policy implications. Energy Policy 133:110912. https://doi.org/10.1016/j.enpol.2019.110912 Ma H, Wang J, Sun X (2018) A study on the dynamics of exchange rate volatility network: evidence from Central Asia. Proced Comput Sci 139:76–81. https://doi.org/10.1016/j.procs.2018.10.220 Olimjonov OO, Yakubova EHT (2020) Prospects for deepening interregional cooperation between Uzbekistan and the countries of Central Asia. Econ Anal Forecasts 5–6:88–93 Sputnik Uzbekistan (2022) Uzbekistan and Kyrgyzstan want to increase joint projects in the automotive industry. https:// sputniknews-uz.com/20220726/ozbekiston-va-qirgizistonavtomobilsozlik-sohasidagi-qoshma-loyihalarni-kopaytirmoqchi26543226.html. Accessed 17 Jan 2023 UzDaily (2022) Experience of trade and economic cooperation between Uzbekistan and Turkmenistan in the modern period. https://www. uzdaily.uz/ru/post/70320. Accessed 17 Jan 2023 Vokhidova MX (2021) Characteristics of foreign economic relations of Central Asian countries. J Innov Econ 4(9):82–95
Ensuring the Sustainable Development of Russian Regions: The Practice of New Times Elena S. Materova , Igor V. Petrov , Nadezhda V. Pilipchuk , Sergey V. Ponomarev , and Irina N. Shvetsova
Abstract
Keywords
Many tasks in pandemic active phase were excluded from the list of strategically important. This contributed to a decrease in regional population well-being and now requires intensified efforts of the state in the recovery phase. Paper investigates a set of economic, social, and environmental tasks to reveal measures aimed at their return to the trajectory of sustainable development during post-pandemic recovery. The authors conducted an analysis of social, economic, and environmental data of 2019–2021, which allowed them to compare the dynamics of indicators in the period before the pandemic, in its acute stage, and in the post-pandemic recovery stage. The authors research sustainable development indicators. However, some responses to the crisis have mitigated its effects, more on the economic and social sphere than on implementing environmental measures. Paper recommends strengthen investment in building competencies in environmental knowledge, the need to form a regional reserve fund to finance projects to develop “clean” infrastructure, as well as introduction of lean consumption technologies in the activities of regional businesses.
Region Regional economic system Sustainable development Pandemic Russia Transformation Changes Sustainability Environmental protection measures
E. S. Materova (&) Samara State University of Economics, Samara, Russia e-mail: [email protected] I. V. Petrov I.T. Trubilin Kuban State Agrarian University, Krasnodar, Russia N. V. Pilipchuk Tver State University, Tver, Russia S. V. Ponomarev Financial University Under the Government of the Russian Federation, Kaluga Branch, Kaluga, Russia I. N. Shvetsova Pitirim Sorokin Syktyvkar State University, Syktyvkar, Russia
JEL Classifications
R11
1
Introduction
Numerous instability factors influence defines the newest period of development of society. The pandemic was characterized by its unpredictability in time and the nature of its impact on society (Fraymovich et al. 2022; Karpunina et al. 2022b). Russia’s special operation in Ukraine began during the country’s economic recovery from two years of recession and exacerbated pre-existing problems. For example, the disruption of global supply chains, which had previously been under pressure amid the pandemic, led to higher prices, supply delays, and other problems (Karpunina et al. 2022a). Under the influence of changing external environment factors, the subjects require rapid adaptation and restructuring of life-support processes. Only in this case is it possible to overcome the whole range of threats and stay afloat. In times of uncertainty, many regional development tasks are substituted by the solution of primary problems and lose their relevance (Golubeva et al. 2022), primarily due to the redirection of funding to eliminate contradictions that require urgent solutions. However, after the acute phase of the next crisis phase is over, this task again attracts attention and requires immediate solutions because time has been lost and the scale has deepened. On the one hand, during COVID-19 pandemic some tasks were excluded from the list of strategically important for the
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_77
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regions of Russia; regional budget expenditures for their elimination were reduced; the number of activities carried out was optimized, primarily environmental protection measures (Reshetova 2021). On the other hand, the COVID-19 crisis has forced people to pay attention to the problems of preserving life and health and protecting against infection. In other words, the vector of state support was built within the sustainable development policy. However, not all regions coped with implementing this vector to the same extent.
2
Methodology
Methodological foundations for assessing regions’ sustainable development level are researched by Golubeva et al. (2022), Tretyakova et al. (2018), and Volkov and Golubeva (2021). These authors apply approaches based on using socio-environmental and economic data. Pandemic influence on the regional economy is reflected in the studies of Averina et al. (2021), Kapustina et al. (2022b), Moiseev et al. (2022), and Strelnikova et al. (2022). Problems of ensuring the SDGs are presented by Fraymovich et al. (2022), Karpunina et al. (2022b), and Mejokh et al. (2020). Paper seeks to find trajectory of sustainable development during post-pandemic recovery. Research objectives: • To analyze the key indicators; • To identify zones of tension in the regional economy with deviations from the sustainable development trajectory; • To determine strategic directions for regional economy progress in the context of changes. Research methods include method of gathering statistical information from open sources, comparative analysis, economic analysis, graphic method, systematization, and logical approach.
3
Results
According to the UN recommendations, there are several groups of indicators of sustainable development: 1. Social indicators (that characterize the social and demographic situation) (Golubeva et al. 2022) (Table 1); 2. Economic indicators (that characterize fixed capital, enterprises efficiency) (Table 2); 3. Environmental indicators (which characterize costs aimed at preventing and leveling the damage caused) (DESA 2018; Golubeva et al. 2022) (Fig. 1).
All regions of Russia reacted to the pandemic by reducing the population (compared to 2019) due to the harmful effects of the coronavirus on people's lives and health. They also focused on solving the problem of shortage of medical personnel by creating appropriate material and non-material incentives for employees serving patients with COVID-19. Thus, state authorities in these regions were partially able to level out the areas of tension that had formed by 2021. Similar dynamics are characteristic of the indicator of life expectancy: reduction in the pandemic year 2020 and relative stabilization by 2021. In 2021, the situation remained unchanged in most regions. In turn, this led to increased unemployment and decreased the population’s real income. On average, this indicator increased by 1.15% during 2020. However, the index did not reach the pre-pandemic level everywhere. During this period, two multidirectional trends emerged: disposable revenue growth (− 3.5% in 2020), a decrease in poverty. These trends were probably facilitated by additional support the growth of per capita monetary incomes, ensure the growth of average monthly wages, and support the growth of old-age pensions. The government also stimulated the growth of income from property (+ 34.6%) and the maintenance of income growth from industrial activity and entrepreneurship (+ 22.5%) (Postnews 2021). Morbidity indicators serve as important characteristics of public health and quality of life. In 2020, total and primary morbidity decreased for all major classes of diseases except respiratory diseases. This was due to the introduction of self-isolation, decreased social contacts, fewer cases of routine medical care (without urgent intervention), and decreased patient referrals to medical organizations (Shcherbakova 2022). Economic indicators manifested labor market deformation problem (Strelnikova et al. 2022). Thus, the procedure for calculating benefits for temporary disability was revised (based on the minimum wage; in the usual calculation, it is less than the minimum wage). Special payments were made to medics who work directly with the sick with COVID-19. Incentive payments to medical workers were organized. A remote procedure for registration on the labor exchange was introduced. Measures aimed at increasing the availability of social support implemented by the government included monthly payments in connection with the birth of a child, as well as housing and communal subsidies for payments to children aged 3–7 years. Unemployment benefits were increased. A maximum unemployment benefit for citizens laid off after March 1, 2020, and declared unemployed were established (Pavlyushina et al. 2021). However, the crisis phenomena appeared here only by 2021. Uneven investment dynamics in fixed capital in different regions are noticeable. The mobilization of domestic resources to invest in highly profitable infrastructure projects
Ensuring the Sustainable Development of Russian Regions: The...
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Table 1 Social data on regions of Russia sustainable development, 2019–2021 Period/indicator value
“Federal district” “Central”
“North Western”
“Southern”
“North Caucasus”
“Volga”
“Ural”
“Siberian”
“Far Eastern”
Population index, % to the previous year 2018–2019
100.1
100.1
100.1
100.7
99.6
100.1
99.7
99.8
2019–2020
99.6
99.7
99.7
100.3
99.2
99.7
99.3
99.6
2020–2021
99.5
99.7
100.1
100.4
99.3
99.7
99.3
99.4
Life expectancy, % to the previous year 2018–2019
100.7
100.6
100.3
100.5
100.7
100.7
100.6
100.0
2019–2020
97.3
97.7
97.8
97.3
97.1
97.6
97.9
98.5
2020–2021
97.6
97.7
97.4
98.9
98.1
98.3
98.1
98.4
The area of living quarters on average per person, % to the previous year 2018–2019
101.9
102.2
102.8
101.4
102.2
101.9
102.0
101.3
2019–2020
102.2
103.2
102.4
101.8
102.6
102.3
102.0
102.1
2020–2021
105.3
102.4
102.3
103.2
102.9
102.3
102.3
102.1
Poverty, % compared to previous year 2018–2019
99.8
100.1
100.6
100.5
99.5
98.6
100.5
99.1
2019–2020
87.4
97.7
97.7
99.4
96.5
96.7
97.2
97.2
2020–2021
93.9
95.1
95.6
92.9
94.2
96.5
93.3
94.8
2019
2.9
3.6
5.3
11.0
4.2
4.3
5.9
6.0
2020
3.9
5.0
6.1
13.9
5.2
5.5
7.3
6.5
2021
3.5
3.9
5.1
12.4
4.1
4.3
5.8
5.7
Unemployment rate, %
Morbidity per 1000 people, % to the previous year 2018–2019
99.9
98.8
102.8
102.0
98.8
101.4
97.3
100.3
2019–2020
99.9
95.7
92.8
96.2
97.7
99.8
96.6
96.9
2020–2021
112.8
116.5
114.1
111.6
111.1
112.7
112.4
112.1
Source Compiled by the authors based on Federal State Statistics Service of the Russian Federation (2019, 2020, 2021)
is constrained by the need to allocate significant funds to fight the pandemic, the fall in budget revenues due to low economic activity, and the contraction of the tourism industry and commodity prices. Particularly, in 2020 the part of regions saw a growth of the index (Galcheva 2020; Moiseev et al. 2022; UNDP 2020). The pandemic has helped to reduce the burden on the natural environment. This trend continued in 2020 in all Southern regions. Percentage of atmospheric capture of pollutants emitted by stationary sources decreased in most regions of the country in 2020, indicating a decrease in environmental protection measures’ effectiveness. During the COVID-19 pandemic, the average amount of waste increased by 20–30% in different regions. This was facilitated by the recommendations on the use of disposable packaging and disposable personal protective equipment in the process of customer service (Fig. 2). In 2020, some regions of Russia have reduced funding for environmental protection measures. The exceptions were the
North Caucasus, Volga, and Ural Federal Districts. In 2021, regional authorities began to pursue policy of increasing spending on environmental protection. Greenpeace notes that the pandemic increased waste in Russia and overshadowed the environmental agenda (Reshetova 2021). Funds previously allocated in the regions for developing more environmentally friendly technologies went to support healthcare, assistance to the unemployed, and other social initiatives requiring prompt solutions. With the beginning of the pandemic, at the initiative of the Russian Union of Entrepreneurs and Industrialists, some environmental regulations were relaxed to reduce the burden on business. At the federal level, the amount of funding for environmental programs, such as renewable energy sources (RES), has also been revised. HSE experts also conclude that Russia’s current environmental policy does not separate environmental, economic, and technological objectives (HSE University 2021).
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Table 2 Economic data on regions of Russia sustainable development, 2019–2021 Period/indicator value
“Federal district” “North Western”
“Southern”
“North Caucasus”
“Volga”
“Ural”
“Siberian”
“Far Eastern”
“North Western”
Index of the number of people employed in the economy, % to the previous year 2018–2019
99.9
99.8
99.6
99.8
98.2
99.5
99.3
98.1
2019–2020
98.1
98.4
98.8
95.8
97.6
97.7
97.1
98.6
2020–2021
100.7
101.3
103.2
102.7
102.5
102.2
102.5
101.2
Gross regional product, % to the previous year 2018–2019
102.9
101.9
101.4
100.4
101.9
105.3
102.4
103.5
2019–2020
101.8
101.7
101.2
101.7
102.0
100.7
101.2
103.0
2020–2021
99.2
98.0
98.5
99.8
97.0
95.2
96.6
98.1
Investments growth, % 2018–2019
115.0
84.1
89.1
107.7
102.9
94.1
106.8
108.8
2019–2020
101.2
97.5
97.4
106.5
97.2
100.8
100.3
93.0
2020–2021
113.4
100.9
100.3
97.8
104.4
99.0
108.9
110.6
Depreciation, % 2018–2019
100.5
102.7
102.4
100.6
101.9
100.8
101.4
96.3
2019–2020
101.9
103.7
102.5
99.6
101.7
101.0
103.0
102.7
2020–2021
100.7
102.3
101.2
100.0
102.0
103.5
100.0
100.7
Index of industrial production, % to the previous year 2018–2019
108.0
103.4
103.2
101.6
102.2
107.2
101.7
106.6
2019–2020
99.5
99.7
100.1
100.4
99.3
99.7
99.3
99.4
2020–2021
123.6
105.2
105.7
109.2
107.9
104.7
103.2
103.6
Share of loss-making organizations, % to the previous year 2018–2019
98.8
90.8
101.5
110.9
97.7
94.3
101.3
100.5
2019–2020
100.0
100.0
100.3
107.8
97.4
105.4
101.7
102.1
2020–2021
91.5
87.2
85.7
89.0
87.1
90.2
84.9
92.0
Source Compiled by the authors based on Federal State Statistics Service of the Russian Federation (2019, 2020, 2021)
Fig. 1 Volume of emissions from stationary sources per unit value of GRP in the regions of Russia, % to the previous year, 2019–2021. Federal State Statistics Service of the Russian Federation (2019, 2020, 2021 Source Compiled by the authors based on)
120 100 80 60 40 20 0 Central Federal District 2019 2020 2021
104.8 103.3 92.9
North North Southern Western Caucasus Federal Federal Federal District District District 95.7 80.7 107.8 94.3 105.1 101.2 100.2 106.7 108.9
Volga Federal District
Ural Federal District
Siberian Federal District
99.3 94.7 99.7
100 94.7 104.9
107.9 99.3 98.6
Far Eastern Federal District 107.1 101.9 113.8
Ensuring the Sustainable Development of Russian Regions: The... Fig. 2 The physical volume of environmental protection expenditures in the regions of Russia, index, % to the previous year, 2019–2021. Federal State Statistics Service of the Russian Federation (2019, 2020, 2021 Source Compiled by the authors based on)
160 140 120 100 80 60 40 20 0 Central Federal District 2019 2020 2021
108.1 105.4 107.3
North North Southern Western Caucasus Federal Federal Federal District District District 96.6 106.3 98.8 93.7 104.8 103.9 91.5 120 98.1
Simultaneously, during the pandemic, initiatives in collecting, separating, and recycling garbage, protecting and restoring forest and water resources, lean consumption, and disseminating healthy lifestyles became widespread in many regions of Russia (Project “Tepertak” 2021). The COVID-19 pandemic has forced people to reconsider their views on life and health; it has contributed to a transformation in the perception of these issues by government and business. In this regard, many expenditures on environmental and social initiatives began to be perceived as investments in human well-being, in sustainable and long-term economic development, despite the fact that they have so far become massive. Separate regional projects are related to environmental monitoring and increasing the openness of environmental data for residents (Seleznev 2022). The spread of COVID-19 and the need to control it greatly diverted the organizational resources of governments and hindered the coordination of actions. Additionally, the pandemic led to a significant increase in medical and other hazardous waste, which contradicts the concept of the positive environmental impact of the pandemic (Kapustina et al. 2022b).
4
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Conclusions
Social, economic, environmental 2019–2021 data allowed the authors to compare their dynamics in the period before the pandemic. According to the authors, the return of regional economies to the trajectory of sustainable development is possible by maintaining their adaptability during the post-pandemic recovery. Such adaptability can be provided by investments in the human capital development due to the need to serve regional economies as resource-saving technologies are introduced,
Volga Federal District
Ural Federal District
Siberian Federal District
99 115.2 90.8
103.3 103.4 144.7
112.6 101.2 103.9
Far Eastern Federal district 106.3 102.2 102.7
and the complexity of eco-innovations increases, contributing to the productivity and competitiveness of Russian regions. In this aspect, the system of training in the region can be transformed at three levels—preschool, school, and vocational education. We recommend involvement of young people in projects to implement “clean” areas, and participation in research work in the field of environmental innovation. This direction is practically not affected by turbulence factors, such as pandemics and global crises, because it does not require large-scale funding and can be organized regularly in the educational institutions of the region. A measure to help achieve sustainable development goals in the post-coveted recovery phase could be to discuss initiatives to form a regional reserve fund to finance the development of “clean” physical infrastructure and determine an algorithm for integrating it into the region’s management system. The regional reserve fund should be formed at the expense of the population, business structures, and state subsidies to implement regional development programs, particularly through a system of regional grants for youth, entrepreneurs, and community groups. Online crowdfunding platforms, the potential of social networks, and the resources of charitable organizations can be used to achieve these goals. For example, to create such civil society institutions, European countries successfully apply mechanisms of annual allocations from the state budget, allocation of grants, donations from individuals and enterprises, tax levies for nature protection, and nature conservation trust funds. The mechanism of redirecting part of the funds received from tourists to the restoration of disturbed areas is often used (Ozlib 2021). Digitalization of houses, enterprises, and transport systems have the greatest potential. For this purpose, developed European countries at the state level consolidate the principles of policy, which stimulate improvements in the
474
efficiency of urban infrastructure. It requires the use of energy-efficient materials in the implementation of projects, improving services and maintaining the quality of service (HSE University 2019). However, progress in energy efficiency has stalled during the pandemic and may become difficult to achieve without government incentives. On the other hand, during the pandemic, many enterprises adjusted their approaches to business organization, transformed production processes, switched to new solutions, and increased efficiency. Therefore, applying lean production tools has become a measure that contributes to increased output through the more efficient use of equipment and personnel (Kapustina et al. 2022a). The implementation of projects on regular practice-oriented training of specialists of regional enterprises will contribute to changes in production processes at regional enterprises in accordance with the lean consumption principles.
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Modern Principles of Management of the Russian Political Leadership Rodion A. Kandyba , Denis A. Mirgorod , Elena A. Shabanova , Stanislav I. Sergeev , and Irina M. Vilgonenko
Abstract
Keywords
Political institutions act as actors capable of ensuring a balance between political, economic and public interests. The main purpose of the article is to clarify the role of the Presidential Executive Office of the Russian Federation in the political life of the country and the promotion of advanced management principles. This study examines the organizational the origins of this state body as a political institution; clarifies its legal and regulatory status; the most significant functions implemented by the Administration are highlighted; the importance in ensuring the legitimacy of the Russian government is characterized, an analogy is drawn between the ESG principles used by commercial structures and the management approaches used by the Administration. The authors use institutional, systemic and structural–functional approaches as scientific methods. The authors consider the apparatus of the Central Committee of the CPSU as a prototype of the Presidential Administration of Russia, and the Presidential Executive Office of the RSFSR as its direct predecessor. The Administration is considered as a constitutional body, a political institution derived from the institution of the President of the Russian Federation, and does not have its own powers other than those of the President. The authors believe that the coordinated work of the Administration contributes to the technocratic legitimacy of the first person of the state. The importance of the role of this state body as a powerful channel for recruiting high-level professionals is emphasized.
Presidential administration Political system Political institution Powers Technocratic legitimacy Constitution Principles of management Sustainable development
R. A. Kandyba (&) D. A. Mirgorod E. A. Shabanova Pyatigorsk State University, Pyatigorsk, Russia e-mail: [email protected] S. I. Sergeev I. M. Vilgonenko Pyatigorsk Institute (Branch) of North Caucasus Federal University, Pyatigorsk, Russia
JEL Classifications
A31
1
B52
D83
H11
Introduction
Global environmental problems resulting from the unbalanced growth of the world economy have acted as incentives for the international community to search for an optimal development trajectory based on a balance of interests related to environmental quality, the level of development of the economy and society. Political institutions are actors capable of ensuring a balance between political, economic and public interests. Precisely at the level of the international political institute, the UN, in 2015, the Sustainable Development Goals were formulated, which served as guidelines for the goal setting and activities of both state institutions and business. In the modern world, which is becoming less stable and predictable, politicians constantly have to make responsible decisions that require the collection, systematization, analysis of huge amounts of information. The higher the status of a politician, the greater the responsibility for the results of his decisions. It is the head of state who makes the greatest contribution to the formulation and implementation of goals that contribute to the stable progress of the nation-state in relation to the global challenges of the present. It is obvious that the highest official, who is at the top of the political and managerial pyramid, is not able to independently work out the huge amount of information necessary for
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7_78
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decision-making, so he has to delegate responsibilities, create a formally organized staff of advisers and assistants. Similar institutions exist in almost all countries of the world. The Administration of the President of the Russian Federation, established in 1991, has gone through a long path of development, has undergone many reorganizations, has turned into an extensive hierarchical structure, a universal tool that allows the President to effectively exercise the powers assigned to him. The main purpose of this study is to clarify the role of the Presidential Administration in the political system. To achieve this goal involves the implementation of the following tasks:
works of Avdeev (2017), Kerimov (2016), Kozhevnikov (2020), Mushtuk (2016). Institutional, systemic and structural–functional approaches were used as scientific methods in our study. Within the framework of the institutional approach, we consider the Administration as a specific institution that is derived from the institute of the President of the Russian Federation. Systemic and structural–functional approaches make it possible to clarify the position of the Administration as an element of the political system and to identify the forms of its interaction with other elements of the political system and with society.
• to consider the organizational origins of the Presidential Administration of Russia; • to clarify the legal and regulatory status of the Administration; • to characterize the importance of this body in ensuring the legitimacy of the Russian government; • to assess the role of new management principles in the activities of the Presidential Administration of Russia.
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Methodology
The issues of the formation and development of the Presidential Administration of Russia, the consolidation of its legal status for several years have been the subject of research by Zuikov (2009, 2011, 2012), Zuikov and Valueva (2012, 2016). The works of Volkov and Konjakulyan (2012), Volkov and Lyutyagina (2012), Praskova (2014) are devoted to the constitutional and legal status of the Administration. The role of the Presidential Administration in Russian politics is analyzed in the works of Kopaev (2013), Radchenko and Uglanova (2017, 2018). Boriskova (2015), Prokofiev (2015, 2018) studied the powers of the Administration and its interaction with other political institutions. Careful study of a large amount of empirical material related to recruitment channels and career trajectories of the management staff of the Administration allows Tev (2020) to move to significant theoretical generalizations in his research. Mitrokhin’s (2009) research is devoted to the study of the functioning of the Central Committee of the CPSU Apparatus as a body in the USSR state administration system that ensured the preparation of decisions of the Politburo, the Secretariat and the actual head of the Soviet state, the General Secretary of the Central Committee of the CPSUx. Various aspects of the legitimacy of power in modern Russia, including those related to the activities of state bodies and the political elite, are considered in the
Results
Structures ensuring the exercise of the powers of the first person of the state exist in almost all countries, for example, the Privy Council in the UK, the Executive Office of the President in the USA (Kopaev 2013), the President’s House (Presidential office) in France (Zuikov 2009). We do not entirely agree with Prokofiev, who considers the organizational evolution of the mechanisms of effective functioning of the head of state. In his work, he mentioned the creation of the CPSU Secretariat in the USSRin 1952 (Prokofiev 2018). We believe that the CPSU Secretariat was rather a “shadow government”. But certain parallels can be drawn between the Central Committee apparatus, which acted under the Secretariat and ensured the preparation of decisions taken by the leadership of the CPSU and the actual head of the Soviet state (General Secretary of the CPSU Central Committee), and the Administration. For example, there are similarities in some of the functions assigned to these bodies, such as participation in the preparation of decisions and control over their execution, personnel issues (Mitrokhin 2009). The staff of the Central Committee of the CPSU participated in the development of decisions taken by the leadership of the party, and the Administration—made by the President. It is noteworthy that the number of these bodies is comparable—about 2000 people (Federal State Statistics Service 2017; Mitrokhin 2009), some administrative structures are located on the Old Square, where the Central Committee of the CPSU previously worked. The direct predecessor of the Administration of the President of the Russian Federation is the Administration of the President of the RSFSR, established in July 1991 after Boris Yeltsin was elected head of state. At the same time, this state body has no continuity with the apparatus of the President of the USSR, except that the latter acted as a resource donor in relation to the Administration in terms of material infrastructure: in December 1991 the Economic Department of the Presidential Executive Office of the
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RSFSR took over its balance sheet and maintenance “all buildings, structures, including the Moscow Kremlin, residential buildings, medical and recreational, healthcare organizations, and other institutions with their immovable and movable property previously owned by the Office of the President of the USSR and the Interstate Economic Committee” (Zuikov 2009). After the collapse of the USSR, the Presidential Executive Office of the RSFSR was transformed into the Administration of the President of the Russian Federation. Article 1 of the Constitution of the Russian Federation (1993) establishes the republican form of government in Russia, but does not specify its type. Under the 1993 Constitution, Russia developed a mixed (presidentialparliamentary) form of government with strong presidential power. The President, being the head of state, is above all the three branches of power, is not directly part of any of them, and in accordance with article 80 of the Constitution ensures the coordinated functioning and interaction of bodies that are part of a single system of public power. He defines the main directions of the domestic and foreign policy of the state (Constitution of the Russian Federation 1993). These powers of the President are key to the functions that the Administration has. The Administration of the President of the Russian Federation is a constitutional body, since the right to form it for the implementation of its powers is enshrined in Article 83 of the Constitution. It should be noted that the status of the Administration is determined by a presidential decree, that is, not by law, but by a subordinate normative act, therefore, the definition of the structure and powers of the Administration is the prerogative of the President. Obviously, this strengthens the autonomy of the presidential power from any influence on the part of the legislative power. We disagree with Radchenko and Uglanova (2017), who consider the Administration “in the system of separation of powers, not only as a “working” auxiliary apparatus of the head of state, but as an independent executive body”. In our opinion, the Administration is a political institution derived from the institution of the President of the Russian Federation, and does not have its own powers other than those of the President. We consider the most important general functions of the Administration to be the implementation of the powers of the President to determine the main directions of domestic and foreign policy, ensuring the coordinated functioning of not only branches, but also levels of government in Russia, as well as monitoring the implementation of Presidential decisions, ensuring communication and feedback not only between the president and various elements of the political system, primarily, public authorities at all levels, but also between the President and society.
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At the level of government institutions, this function is performed by such Administration officials as Presidential plenipotentiaries in the State Duma, the Federation Council, the Constitutional Court, and federal districts. The functions of the Administration related to providing the President with reliable information on the situation in Russia and abroad in the form of analytical reports, certificates, and other necessary documents contribute to the implementation of feedback (Decree of the President of the Russian Federation of 06.04.2004 N 490 2022). Russian citizens are given the opportunity of such a feedback form as sending appeals to the head of state through the reception offices of the President in various Russian cities and towns, using electronic mail or post. The Administration keeps records and analyzes applications from citizens and associations of citizens, including legal entities, and submits relevant reports to the President of the Russian Federation (Decree of the President of the Russian Federation of 06.04.2004 N 490 2022). These tasks are solved by the Office of the Presidential Directorate for Correspondence from Citizens and Organizations. It should be noted that the ESG principles, which are a guideline for the development and activities of many commercial corporations in different countries, are derived from the Sustainable Development Goals adopted within the framework of the international political institute—the UN in 2015 (Sokolova and Teymurov 2021). It is political institutions that can often act as actors capable to ensure a balance between political, economic and public interests. The Administration is not a separate institution, it acts as a link in the political and administrative cycle, therefore, the vector of the management principles used by it is directed not inside the organization itself, but at the political system and society. Nevertheless, it is possible to draw some analogy between the ESG principles used by commercial structures and the management approaches used by the Administration. Russia does not share the main provisions of the EU climate agenda, but pays considerable attention to the problems of ecology and climate change. The principle of responsible attitude to the environment is reflected in the structure of the Administration by the presence of the positions of Presidential Adviser, for example, the Special Representative of the President on Climate Issues R. Edelgeriev, as well as S. Ivanov, who is a member of the Presidential Administration leadership, responsible for ecology, environmental protection and transport (Leadership and key officials of the Administration 2023). There is a parallel with the principle of social responsibility in the activities of the Administration to prepare proposals to the President on measures in the field of social policy, policy on the development of the human potential of
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civil servants within the framework of the Office of the Presidential Civil Service and Personnel Directorate. The Administration has established itself as an institution that is a powerful channel for recruiting high-level professionals. The proof of this is the further career trajectory of the management staff of the Administration. Here are just a few examples. S. Sobyanin, who headed the Administration in 2005–2008, in 2008–2010 held the position of Deputy Prime Minister, head of the government staff, and in 2013 was elected Mayor of Moscow. S. Naryshkin, who was head of the Administration in 2008–2011, in 2011–2016 was Chairman of the State Duma, and in 2016, he headed the Foreign Intelligence Service. The current chairman of the State Duma, V. Volodin, held the position of First Deputy Head of the Administration in the period 2011–2016. In turn, the Administration itself participates in personnel policy at the highest level of the civil service. This body assists the head of state in the exercise of his powers on personnel issues, maintains databases of personal data of officials appointed by the President, as well as heads of regions (Decree of the President of the Russian Federation of 06.04.2004 N 490 2022). First since 2017, First Deputy Head of the Presidential Administration S. Kiriyenko has been supervising the competition “Leaders of Russia”, the flagship project of the presidential platform “Russia is a Country of Opportunities”, which is a channel of vertical mobility for new generation leaders, including contributing to the creation of a personnel reserve of the civil service. An analogy with the principle of high quality and efficiency of corporate governance can be drawn by considering the activities of the Presidential Directorate for Public Relations and Communications Office, which ensures the implementation by the President of his constitutional powers in the field of state information policy. The State information policy contributes to the realization by citizens of their constitutional right to access information, in particular, regarding various aspects of the activities of authorities and their policies, reporting on the results of their activities. The Administration promotes the development of feedback by providing the interaction of the President with such an important non-governmental political institution as political parties, as well as civil society institutions such as public and religious associations, trade unions, chambers of commerce and industry, entrepreneurs’ organizations. The Administration provides a dialogue with civil society structures, promotes their development and strengthening (Decree of the President of the Russian Federation of 06.04.2004 N 490 2022). The legitimacy of political power is an essential attribute of democracy. In a modern state, it has complex character and cannot be reduced to any one type. At the federal level in Russia, in our opinion, the personal legitimacy of V. Putin, who has been in power for more than 20 years, dominates. Even in the period 2008–2012, when he was
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prime minister, the second official of the state, he remained a national leader in the minds of Russians. Rational-legal legitimacy is also the foundation of Russian democracy, since the President and government officials emphasize that they act within the legal framework, in accordance with the Constitution and Laws. We agree with the statement of Mushtuk (2016), who highlights technocratic legitimacy, “For those who exercise power or seek to achieve it by taking over the helm of government, politics acquires a professional character and requires special knowledge and experience as a mandatory condition”. In our opinion, V. Putin’s personal legitimacy certainly has a technocratic component, because in the public space he manifests himself as a person prepared, knowledgeable, well-informed, able to operate with facts and data, effectively setting tasks to solve complex problems for all branches of government. It should be noted the importance for the technocratic legitimacy of the coordinated work of the Administration, which receives, summarizes, systematizes, and provides the President with the information necessary for the exercise of his powers. The Administration has such important functions as preparation of analytical, reference, informational materials, and recommendations for the President; preparation of talking points and appeals of the President; organization of preparation of draft laws for submission by the President to the State Duma; preparation, coordination, and submission to the President of draft decrees, orders, instructions (lists of instructions) and Presidential appeals (Decree of the President of the Russian Federation of 06.04.2004 N 490 2022). Perhaps the most famous employee of the Administration is the Deputy Head of the Administration, the press secretary of the President Dmitry Peskov. He regularly conveys the point of view of the president to the public. The realities of the information society make it necessary to process a huge amount of information for making political and managerial decisions. Rational decision-making technology based on the analysis of extensive empirical data brings together management approaches in both public administration and business. The paradox lies in the fact that a powerful staff of analysts, advisers, referents, the so-called technostructure, whose importance is constantly increasing, remains in the shadow of politicians, in particular the president, and is little known to the general public. Even the head of the Administration, Vaino (2012), practically does not create informational occasions, and, thanks to journalists, is known to the public mainly as one of the inventors of the Nooscope, described in more than 50 patents, capable of “forecasting and preventing crisis events on the development roadmap”. The scientific work of the head of the Administration Vaino (2012) provides an idea of his worldview. In particular, it is based on the doctrine of the noosphere, which is the philosophical basis for ESG management. Considering the market economy, he speaks from humanistic positions.
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Among the features inherent in the market, Vaino (2012) highlights “the presence of the conscience of the market as a projection of the image of goodness, transmitting trust and generating innovations and the rules of the game of the free human spirit”.
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Conclusion
So, the apparatus of the Central Committee of the CPSU can be considered as a prototype of the Administration of the President of the Russian Federation. The direct predecessor of the Administration of the President of the Russian Federation is the Administration of the President of the RSFSR, established in July 1991 after Boris Yeltsin was elected president. The Administration of the President of the Russian Federation is a constitutional body; a political institution derived from the institution of the President of the Russian Federation, and does not have its own powers other than those of the President. The Presidential Administration acts as one of the actors able to strike a balance between political, economic and public interests. This political institution, which ensures the implementation of its powers by the head of state, uses management principles in its activities that are consonant with the Sustainable Development Goals, and therefore with ESG principles. The coordinated work of the Administration, which receives, summarizes, systematizes, and provides the President with the information necessary for the exercise of his powers, contributes to the technocratic legitimacy of the first person of the state.
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Ecological Footprint of the Economy on the Threshold of the Fifth Industrial Revolution: The Challenges of Advanced Technology and Responsible Innovation (Conclusion)
Bruno S. Sergi, Elena G. Popkova, Anna A. Ostrovskaya, Alexander A. Chursin, Yulia V. Ragulina Advanced technology and responsible innovation significantly reduce the ecological footprint of today’s economy in the context of the Fourth Industrial Revolution. This book provides scientific evidence for this based on practical experience from international economic practice. The advantage of advanced technology and environmental innovation as mechanisms of public and corporate environmental governance is that they improve the environment in developing countries and reduce global environmental inequality, making green economies massively accessible. It must be recognized that further acceleration of economic growth is inextricably linked to rising environmental costs, which are particularly high in the digital economy. The impending Fifth Industrial Revolution brings high environmental risks. A further increase in the level of automation based on robots and artificial intelligence brings a dramatic increase in the energy intensity of economic processes. This problem is partially solved by developing renewable energy based on Smart Grids. However, the development of electric transport causes an increased load on the electric power industry. Therefore, the Fifth Industrial Revolution, the time limits of which are still blurred but are projected between 2030 and 2050, will be a period for ambitious and breakthrough environmental projects. The current experience of using advanced technologies and responsible innovations to
reduce the economy’s ecological footprint, systematized in this book, will serve as an empirical and scientific platform for subsequent research into the development of green innovation and technologies in Industry 4.0. Given the growing scale of environmental problems and their new wave, we can assume that the Fifth Industrial Revolution will create challenges for the energy economy. An effective response to these challenges is associated with creating breakthrough (disruptive, according to C. Christensen) energy innovations that combine high-tech with environmental responsibility. Examples include biofuel for robots or solar-powered artificial intelligence. Thus, the global trend demonstrated in this book of an increasing ecological footprint in today’s economy, as well as the significant but limited opportunities to reduce it through advanced technology and responsible innovation, calls for continued research. The question of how the Fifth Industrial Revolution will affect the ecological footprint of the economy remains open. It is also worth considering how advanced technologies and environmental innovations will be created and implemented in an Industry 5.0 environment. Nowadays, there are all prerequisites for their creation and implementation by artificial intelligence. Therefore, it must be endowed with ecological responsibility. It is suggested that future research be devoted to finding answers to the research questions raised during the preparation of this book.
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2024 B. S. Sergi et al. (eds.), Ecological Footprint of the Modern Economy and the Ways to Reduce It, Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-031-49711-7
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